Smt. G.Gurupackiam, Sivakasi V. ITO, Virudhunagar

MA 181/CHNY/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 7156 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-10-2011
• Assessment Year: 1997-1998
• Appeal Filed On: 02-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHA HJI P JACOB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER, AND SHRI N.S. SAINI, ACCOUNTANT MEMBER M.P. NO. 181/MDS/2011 I.T.A. NO. 570/MDS/2010 (ASSESSMENT YEAR : 1997-98) SMT. G. GURUPACKIAM PROPX. M/S ANANDAM JAVULI STORES NO. 92, EAST CAR STREET PAN : V-701 (APPELLANT) VS. THE INCOME-TAX OFFICER WARD 0 _(1) VIRUDHUNAGAR (RESPONDENT) ASSESSEE BY : SHRI PHILIP GEORGE DEPARTMENT BY : SHRI SHA HJI P. JACOB DATE OF HEARING : 21.10.2011 DATE OF PRONOUNCEMENT : 31.10.2011 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER : IN THIS MISCELLANEOUS PETITION FILED BY THE ASSESSE E, IT SEEKS RECTIFY CERTAIN MISTAKES APPARENT ON RECORD OF ORDE R DATED 29 TH JULY, 2011 OF THIS TRIBUNAL IN I.T.A. NO. 570/MDS/2 010. MP. NO. 181/MDS/11 2 2. THE ASSESSEE IN THE MISCELLANEOUS APPLICATION HA S STATED THAT THE TRIBUNAL AT PAGE 4 PARA 7, WHILE CONSIDERING TH E SUBMISSIONS OF THE LD. A.R. WITH REGARD TO THE SUBMISSION THAT WHE N PROFIT IS ESTIMATED ON UNDISCLOSED SALES, THEN NO SEPARATE AD DITION IN RESPECT OF CLOSING STOCK CAN BE MADE, HAD OBSERVED THAT THE LD. A.R. COULD NOT GIVE ANY REASON FOR HIS ABOVE CONTEN TION. HOWEVER, WHILE MAKING SUBMISSIONS, THE LD. A.R. HAD RELIED O N THE DECISION OF THE HON'BLE RAJASTHAN HIGH COURT-JAIPUR BENCH IN TH E CASE OF DHANDIA JEWELLERS VS. CIT REPORTED IN [1995] 214 IT R 712 [RAJ]. THE ASSESSEE HAS STATED THAT THE BENCH DID NOT CONSIDER THE DECISION RELIED ON BY THE LD. A.R. AND HELD WE DO NOT FIND ANY FORCE IN THE ABOVE CONTENTION OF THE LD. A.R.. THE ASSESSEE HA S, THEREFORE, PRAYED THAT THE MISTAKE APPARENT ON THE FACE OF REC ORD MAY BE RECTIFIED AND THE ORDER MAY BE MODIFIED AFTER CONSI DERING THE ABOVE MENTIONED DECISION RELIED ON AT THE TIME OF ORIGINA L HEARING. 3. THE LD. A.R. RELIED ON THE MISCELLANEOUS APPLICA TION FILED BY THE ASSESSEE AND THE LD. D.R. FULLY SUPPORTED AND J USTIFIED THE ORDER OF THE TRIBUNAL. MP. NO. 181/MDS/11 3 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD AS WELL AS THE ORDER OF THE TRIBUNAL DATED 29.07.2011 IN THE C ASE OF THE ASSESSEE. THE TRIBUNAL IN RESPECT OF GROUND NO. 2, VIDE ITS ORDER DATED 29.7.2011 HELD AS UNDER: 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AV AILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER FOUND UNDISCLOSED PURCHASES OF RS. 17,37,429/- UPTO 31. 3.1997 AND UNDISCLOSED SALES OF RS. 10,82,583/- UPTO THAT DAT E. ON THE BASIS OF AFORESAID FIGURE, THE ASSESSING OFFICER AR RIVED AT UNDISCLOSED CLOSING STOCK AT RS. 7,08,975/- AND AD DED THE SAME TO THE INCOME OF THE ASSESSEE. 6. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ACTION O F THE LD. CIT(A). 7. BEFORE US, THE LD. A.R. CONTENDED THAT WHEN PROFI T IS ESTIMATED ON UNDISCLOSED SALES, THEN NO SEPARATE ADD ITION IN RESPECT OF CLOSING STOCK COULD BE MADE. THE LD. A.R . COULD NOT GIVE ANY REASON FOR HIS ABOVE CONTENTION. WE DO NO T FIND ANY FORCE IN THE ABOVE CONTENTION OF THE LD. A.R. MP. NO. 181/MDS/11 4 8. WE FIND THAT IN THE INSTANT CASE, THE ASSESSEE H AS NOT DISPUTED THE FACT THAT THERE WERE PURCHASES TO THE EX TENT OF RS. 17,37,429/- WHICH WERE OUTSIDE THE BOOKS OF ACC OUNT AND THERE WERE SALES OF RS. 10,82,583/- WHICH WERE ALS O NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT. FURTHER, WE FIND THAT THE ASSESSEE HAS ALSO NOT DISPUTED THE FINDING OF THE ASSESSING OFFICER THAT THERE WAS ADDITIONAL STOCK O F RS. 7,08,975/- AS AT THE END OF THE RELEVANT PREVIOUS YE AR. IN THE ABOVE CIRCUMSTANCES, THE REVENUE WAS JUSTIFIED IN MAKI NG ADDITION IN RESPECT OF VALUE OF ADDITIONAL CLOSING S TOCK TO THE EXTENT TO WHICH THE ASSESSEE COULD NOT ESTABLISH THE SOURCE OF ACQUISITION OF THE SAME. IN THE INSTANT CASE, WE FI ND THAT THE ASSESSING OFFICER HAS ESTIMATED THE INCOME OF THE A SSESSEE AT RS. 54,129/- ON UNDISCLOSED SALES WHICH HAS BEEN ALS O CONFIRMED BY US IN GROUND NO. 1 OF THIS APPEAL AND TH EREFORE, VALUE OF CLOSING STOCK TO THE EXTENT OF THE SAID INC OME CAN BE TAKEN AS EXPLAINED FROM THAT SOURCE AS REVENUE HAS B ROUGHT NO MATERIAL TO SHOW THAT THE SAID INCOME WAS UTILIZE D FOR ANY OTHER PURPOSE. IN OTHER WORDS, THE ASSESSEE IS ELIG IBLE FOR TELESCOPING OF RS. 54,129/- AGAINST THE ADDITION O F RS. 7,08,975/-. WE, THEREFORE, MODIFY THE ORDERS OF TH E LOWER AUTHORITIES TO THE EXTENT MENTIONED ABOVE AND PARTLY ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. MP. NO. 181/MDS/11 5 5. IN THE INSTANT MISCELLANEOUS APPLICATION, THE AS SESSEE CLAIMED THAT AT THE TIME OF ORIGINAL HEARING, HE RELIED UPO N THE DECISION OF THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF DHA NDIA JEWELLERS VS. CIT [SUPRA]. IN SUPPORT OF HIS CONTENTION THAT WHEN PROFIT IS ESTIMATED ON SALE, THEN NO ADDITION SEPARATELY ON A CCOUNT OF UNDISCLOSED STOCK CAN BE MADE, WE FIND THAT THE HON 'BLE RAJASTHAN HIGH COURT IN THE AFORESAID CASE HELD AS UNDER: I) THAT THE GROSS PROFIT RATE WHICH HAD BEEN ACCEPT ED BY THE ASSESSEE IN 1970-71 WAS 18%. IT WAS ADMITTED T HAT IN THE RELEVANT ACCOUNTING YEAR THE EXPORT SALES HAD GONE UP CONSIDERABLY. HENCE THE ESTIMATE OF GROSS PROFIT RATE AT 25% WAS JUSTIFIED. II) THAT THERE WAS NO JUSTIFICATION FOR ADDITION ON THE GROUND OF BOGUS SALES, AS ADDITION HAD ALREADY BEEN MADE ENHANCING THE GROSS SALES AND THE GROSS PROFIT S. 6. THE HON'BLE RAJASTHAN HIGH COURT HAS NOT HELD AN YWHERE THAT WHEN PROFIT IS ESTIMATED ON SALES, THEN NO SEPARATE ADDITION CAN BE MADE IN RESPECT OF EXCESS UNDISCLOSED STOCK FOUND I N THE POSSESSION MP. NO. 181/MDS/11 6 OF THE ASSESSEE WHEN THE AMOUNT OF UNDISCLOSED STOC K IS MORE THAN THE AMOUNT OF PROFIT ESTIMATED ON SALES. WE THUS DO NOT FIND ANY ERROR IN THE ORDER OF THE TRIBUNAL. THEREFORE, THE INSTANT MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS DISMISSED. 7. IN THE RESULT, THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 21 ST OCTOBER, 2011. SD/- SD/- (HARI OM MARATHA) (N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 21 ST OCTOBER, 2011. VL COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A), CHENNAI (4) CIT, CHENNAI (5) D.R. (6) GUARD FILE