M/s. Malli Ram Jewellery House, Amritsar. V. The Income-tax Officer, Amritsar.

MA 48/ASR/2012

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 1051 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 1 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-11-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 26-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income
• Section: 143(3)

Judgement Text

1N THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER M.A.NO.48(ASR)/2012 ARISING OUT OF I.T.A. NO.364(ASR)/2011 ASSESSMENT YEAR:2007-08 PAN :AANFM5546L M/S. MALLI RAM JEWELLERY HOUSE, VS. THE INCOME TAX OFFICER, 32-A, THE MALL, AMRITSAR. WARD-5(3), AMRITSAR. (APPLICANT) (RESPONDENT) APPLICANT BY:SH.ANIL PURI, ADVOCATE RESPONDENT BYSH.MAHAVIR SINGH, DR DATE OF HEARING:01/11/2013 DATE OF PRONOUNCEMENT:27/11/2013 ORDER PER BENCH ; THIS MISCELLANEOUS APPLICATION OF THE ASSESSEE ARI SES FROM THE ORDER OF THE ITAT, AMRITSAR BENCH PASSED IN ITA NO.364(AS R)/2011 DATED 11.09.2012 FOR THE ASSESSMENT YEAR 2007-08.THE ASS ESSEE HAS FILED THE MISCELLANEOUS APPLICATION UNDER SECTION 254(2) OF T HE ACT, WHICH FOR THE SAKE OF CONVENIENCE IS REPRODUCED AS UNDER: IN CONNECTION WITH THE ABOVE MATTER AND WITH REF ERENCE TO THE ORDER PRONOUNCED ON 11.09.2012 BY THE HONBLE BENCH, IT I S RESPECTFULLY SUBMITTED AS UNDER: MA NO.48(ASR)/2012 2 1. VARIOUS SUBMISSIONS MADE AND THE ATTENTION DRAWN TO THE RELEVANT DOCUMENTS BY THE ASSESSEE RESPONDENT, IN T HE PAPER BOOK FILED BY THE APPELLANT, HAVE NEITHER BEEN REFE RRED TO NOR DISCUSSED IN THE SAID ORDER. 2. IN PARA-8 THE HONBLE BENCH HAS HELD: IT WAS OBSERVED BY THE LD. CIT(A) AT PAGE 30 THA T THE IMPUGNED YEAR IS THE FIRST YEAR OF BUSINESS WHEREAS THE AO HAD MENTIONED ABOUT THE LAST YEARS GP RATE ON THE SALES. IT WAS OBSE RVED BY THE LD. CIT(A) THAT PERHAPS, MISCONCEPTION OF THIS VERY FA CT HAS LED THE AO TO MAKE FURTHER ENQUIRIES TO FIND OUT THE TRUE TAXABL E INCOME OF THE ASSESSEE. WE HAVE PERUSED THE ORDER OF THE AO WHER E THE AO HAD MENTIONED ABOUT LAST YEARS GP RATE AT 21.40% AND THE SALES AT RS.10087660/- AS MENTIONED IN THE PRECEDING PARAS. THERE IS CONTROVERSY IN THE FACTS NOTED BY BOTH THE AUTHO RITIES WHICH REQUIRES A VERIFICATION AND EXAMINATION OF THE RECORD AT TH E LEVEL OF THE A.O. THE LD. CIT(A) HAD MADE SUCH OBSERVATIONS WITHOUT GIVING ANY OPPORTUNITY TO THE AO AND WITHOUT TAKING FOR ANY REMAND REPORT FROM THE AO. THE HONBLE BENCH HAS GIVEN A FINDING ON THE ISSUE , FOR WHICH THERE WAS NO SUCH CONTROVERSY, OR FOR NOT HAVING BEEN GI VEN ANY OPPORTUNITY, AS NEITHER IT HAS BEEN RAISED IN THE GROUNDS OF APPEAL NOR REFERRED TO ANYWHERE IN THE ARGUMENTS MADE BY THE DR DURING THE HEARING IN RESPECT OF THE SAME. THE SAID MISTAKE I S VERY MUCH APPARENT FROM THE RECORDS. 3. FURTHER, INM PARA 8.1 THE HONBLE BENCH HELD: IT WAS ALSO ARGUED BY THE LD. COUNSEL FOR THE ASS ESSEE THAT THE ASSESSEE IS NOT MANUFACTURER OF DIAMONDS AND GOLD ORNAMENTS BUT IS A TRADER. IT IS ALSO MENTIONED BY THE LD. CIT(A) AT PAGE 30 THAT THE ASSESSEE IS ENGAGED IN THE TRADING OF DIAMOND STUD DED GOLD JEWELLERY. THERE IS ALSO CONTROVERSY IN THE FACTS NOTED BY BO TH THE AUTHORITIES BELOW WHICH REQUIRES EXAMINATION OF THE RECORD AT AOS LEVEL. THE LD. CIT(A) HAD COME TO THE CONCLUSION WITHOUT GIVI NG ANY OPPORTUNITY TO THE AO AND WITHOUT CALLING THE REM AND REPORT FROM THE AO. THE HONBLE BENCH HAS GIVEN A FINDING ON THE ISSUE , FOR WHICH THERE WAS NO SUCH CONTROVERSY, NEITHER IN THE GROUNDS OF APPEAL NOR IN THE ARGUMENTS MADE OR IN THE WRITTEN SUBMISSIONS FILED BY THE LD. DR MA NO.48(ASR)/2012 3 DURING THE HEARING OF THE APPEAL. ON THE CONTRARY, THE LD. DR HAS HIMSELF ADMITTED THE FACT IN THE VERY FIRST LINE I N PARA 1 OF HIS WRITTEN SUBMISSIONS. THE ASSESSEE ENGAGED IN TRADIGN IN DIAMOND AND GOLD ORNAMENTS. THE SAID MISTAKE IS V ERY MUCH APPARENT FROM THE RECORDS. 4.FURTHER, IN THE SAME PARA 8.1 THE HONBLE BENCH H ELD: THE LD. CIT(A) HAD OBSERVED THAT THE ASSESSEE H AD APPLIED STANDARD METHOD OF VALUATION OF CLOSING STOCK WHIC H IS ALSO GENERALLY APPLIED BY IDENTICAL BUSINESS HOUSES ENGAGED IN TH IS LINE OF BUSINESS. THIS OBSERVATION OF THE LD. CIT(A) IS AGAIN CONTRO VERSIAL TO THE FACTS NOTED BY THE AO AND WITHOUT CALLING FOR ANY REMAND REPORT FROM THE AO. HERE ALSO THE HONBLE BENCH HAS GIVEN A FINDING ON THE ISSUE FOR WHICH THE APPELLANT HAS NOT RAISED ANY SUCH CONTRO VERSY, IN THE GROUNDS OF APPEAL IN THE ARGUMENTS MADE OR IN THE WRITTEN SUBMISSIONS FILED BY THE LD. DR DURING THE HEARING OF THE APPEAL. 5. FURTHER, IN THE SAME PARA 8.2 THE HONBLE BENCH HELD: IN THIS REGARD, WE ARE OF THE VIEW THAT THE CLOS ING STOCK AT THE CLOSE OF THE YEAR IS NOT AVAILABLE AT THE TIME OF THE AS SESSMENT AND, THEREFORE, IT IS NOT POSSIBLE FOR THE AO TO GET TH E VALUATION DONE FROM THE APPROVED VALUER. HERE ALSO THE HONBLE BENCH OMITTED THE FACT THAT THE LIST OF CLOSING STOCK WAS DULY FILED WITH THE AO DURING THE ASSESS MENT PROCEEDINGS, THE SAME IS AVAILABLE AT PAGE NO.7 OF THE PAPER BO OK, FILED BY THE DEPARTMENT AND IS FURTHER SUPPORTED BY THE CALCULA TIONS OF 22 & 18 CARATS GOLD ORNAMENTS ON PAGE NO. 9 & 8 AND DETAIL FOR VALUATION OF DIAMOND STUDDED JEWELLERY IS AVAILABLE ON PAGE NO. 27 WITH ITS CALCULATIONS ON PAGE NO.27 WITH ITS CALCULATIONS O N PAGE NO. 24 TO 26 OF THE PAPER BOOK. DURING THE HEARING ATTENTION OF THE HONBLE BENCH WAS CATEGORICALLY DRAWN TO PAGE NO. 27, 15 AND 33 & 36, EXPLAINING THAT THE VALUATION ON AVERAGE COST BASIS RS.5,68,965/- PURCHASE MINUS COST OF SALE I.E. NET COST BASIS RS.5,67,146 AND ITEM WISE VALUATION RS.5,67,527 MA NO.48(ASR)/2012 4 RESPECTIVELY, FOR TYPE 3, COMES TO THE SAME FIGURE . THE SAID VALUATION HAS BEEN ACCEPTED BY THE AO IN PARA 7 AT PAGE 6 O THE ASSESSMENT ORDER AND ALSO ADMITTED BY THE D.R. IN PARA 4 ON P AGE 2 OF HIS WRITTEN SUBMISSIONS. ALL THE SAID SUBMISSIONS AND FACTS OF THE CASE HAVE BEEN OMITTED TO BE CONSIDERED WHILE PASSING THE ABOVE S AID ORDER. 6. FURTHER, IN PARA 8.3. THE HONBLE BENCH HAS HEL D: WE ARE OF THE VIEW THAT WHEN THE ASSESSEE HAS NO T MAINTAINED PURCHASES, SALES AND THE CLOSING STOCK WITH RESPEC T TO EACH AND EVERY ITEM THEN IT IS NOT POSSIBLE FOR THE AO TO KNOW AND COMPUTE THE EXACT QUANTITY OF THE PURCHASE AND SALES AND THE C LOSING STOCK AND THEREFORE, IT MAY NOT BE POSSIBLE TO MAKE COMPARIS ON WITH OTHER JEWELERS AT THIS MOMENT. HERE ALSO THE HONBLE BENCH OMITTED THE FACT THAT COMPLETE DATE WISE PURCHASES AND SALES OF DIAMOND JEWELLERY WITH WEIG HT & VALUE, STOCK TALLIES AND CLOSING STOCK DETAILS FOR TYPE 1, 2 AN D 3 WERE DULY FILED WITH THE A.O. DURING ASSESSMENT PROCEEDINGS AND AR E AVAILABLE ON PAGES NOS. 26,25,24, 21-23, 17-20 AND 16 OF THE PA PER BOOK FILED BY THE ASSESSEE. THE HONBLE BENCH OMITTED TO LOOK INTO THE LETTER DATED 31.12.2009, COPY AVAILABLE AT PAGE NO.204 OF THE PAPER BOOK EN CLOSING PURCHASE INVOICES ALONGWITH LIST THERE OF AS WELL AS COPIES OF SALE INVOICES OF CONVENTIONAL 22 CARAT GOLD ORNAMENTS (WITHOUT DIAM ONDS), 18 CARAT DIAMOND STUDDED GOLD ORNAMENTS, WHERE IN NAMES OF THE CUSTOMERS ARE AVAILABLE AND THE PAYMENTS HAVE BEEN RECEIVED THROUGH CREDIT CARDS, REFER PAGE NOS. 124 TO 203, 56 TO 64, 93 TO 104 AND 123. 7.THE HONBLE BENCH OMITTED TO CONSIDER THE MOST I MPORTANT FACTS OF THE CASE APPRECIATED BY THE CIT(APPEALS) IN PARA 6 .1 OF HIS ORDER ON PAGE NOS. 27 TO 29, ATTENTION OF THE HONBLE BENCH WAS CATEGORICALLY DRAWN TO THE SAME, DURING HEARING OF THE APPEAL. T HE HONBLE BENCH OMITTED TO LOOK INTO THE SAID FACTS, AS THE SAME H AS NEITHER BEEN DISCUSSED NOR REFERRED TO IN THE ABOVE SAID ORDER OF THE HONBLE BENCH. PARTICULARS PURCHASES SALE %AGE OF SALE CLOSING STOCK GROSS PROFIT RATE OF PROFIT MA NO.48(ASR)/2012 5 18 CT. DIAOND STUDDEMD JEWELLERY TYPE 1 1,10,35,871 24,51,992 8% 92,14,438 6,30,469 25.71% TYOE 2 1,01,09,084 36,92,484 12.05% 70,00,949 5,84 ,349 15.83% TYPE 3 BRANDED NAKSHTRA & SANGINI 8,60,933 1,75,857 0.57% 7,25,168 40,092 22.80% TOTAL 2,20,05,888 63,20,333 20.62% 1,69,40,465 12,54,910 19.86% EXCESS VALUE OF STOCK DUE TO ADOPTION OF AVERAGE COST 54,272 52,272 TOTAL 2,20,05,888 63,20,233 1,69,40,465 13,09,182 20.71% BRANDED AGNI 2,62,376 1,07,644 0.35% 1,69,762 15,030 13.96% 22 CARAT CONVENTIONAL GOLD ORNAMENTS 3,83,66,469 2,42,27,568 79.03% 1,67,14,041 25,75,140 10.63% NAGINAS 83,158 83,158 GRAND TOTAL 6,07,17,891 3,06,55,545 100% 3,39,61,698 38,99,352 12.72% A) THE AO AND THE LD. DR HAVE DISCUSSED IN THE ASS ESSMENT ORDER AND WRITTEN SUBMISSIONS ABOUT DIAMOND JEWELLERY TY PE 1, ON WHICH THE G.P. SHOWN IS 25.71%. B) THE G.P. SHOWN ON SALE OF TYPE 2 DIAMOND JEWELL ERY WHICH IS 12.05% OF TOTAL SALES IS 15.83%. VALUATION OF CLOS ING STOCK FOR THE SAME HAS ALSO BEEN MADE ON AVERAGE COST PRICE AS D ONE FOR TYPE 1 & 3. C) THE G.P. SHOWN ON SALE OF TYPE 3 DIAMOND JEWELL ERY WHICH IS 0.57% OF TOTAL SALES IS 22.80%. VALUATION OF CLOSI NG STOCK FOR THE SAME HAS ALSO BEEN MADE ON AVERAGE COST PRICE, NET COST BASIS AND ITEM WISE VALUATION, WHEREIN THE VALUATION COMES N EARLY THE SAME BY ADOPTING ALL THE THREE METHODS. D) THE MAJOR SALE IS 22 CARAT GOLD ORNAMENTS RS.2, 42,27,568 I.E. 79.03% OF TOTAL SALES, SHOWING G.P. RATE OF 10.63% FULLY SUPPORTED BY COMPLETE DETAILS OF PURCHASES, SALES CLOSING STOCK AND STOCK TALLY REFER PAGES 6 TO 9 OF THE PAPER BOOK. IN RESPECT OF THE SAME NEITHER THE AO MA NO.48(ASR)/2012 6 NOR THE DR HAS DISCUSSED ANY DISCREPANCY AS CONFIR MED BY THE HONBLE CIT(A) IN SUB PARA [H] OF PARA 6.1 ON PAGE 31 OF HIS ORDER. 8. THE HONBLE BENCH FURTHER OMITTED TO DISCUSS AN D DECIDE THE ISSUE RAISED BY THE APPELLANT NO GROUND NO.2 RELAT ING TO THE METHOD OF VALUATION OF CLOSING STOCK RELATING TO DIAMOND JEW ELLERY TYPE 1, 2 & 3 HAS BEEN ACCEPTED BY THE ADDL. CIT, RANGE-5, AMR ITSAR IN THE ASSESSMENT YEAR 2009-10 AS PER ORDER DATED 27.12.2 011 PASSED U/S 143(3) COPY OF ORDER WAS FILED WITH THE HONBLE B ENCH DURING THE HEARING OF ABOVE APPEAL. THE SAME HAS ALSO NOT BEE N CONSIDERED WHILE PRONOUNCING THE ABOVE ORDER DATED 11.09.2012. ON GOING THROUGH THE ABOVE, IT IS HOPED THAT THE H ONBLE BENCH SHALL APPRECIATE THE SAME, AGREEING WITH THE ABOVE STAT ED MISTAKES VERY MUCH APPARENT FROM THE RECORDS AND BE KIND ENOUGH IN RECALLING THE ORDER DATED 11.09.2012 TO BE DECIDED AFRESH OR PAS S ANY OTHER ORDER AS DEEMED PROPER. APPLICATION FEE OF RS.50 HAS DULY BEEN DEPOSITED O N 22.11.2012, COPY OF DIRECT TAX CHALLAN REPORT IS ENCLOSED HEREWITH. SUBMITTED FOR KIND CONSIDERATION. 2. THE LD. COUNSEL FOR THE ASSESSEE, MR. ANIL PURI, ADVOCATE READ THE MISCELLANEOUS APPLICATION IN ITS ENTIRETY AND SUBMI TTED THAT THERE ARE VARIOUS MISTAKES APPARENT FROM RECORD WHICH REQUIRE RECTIFI CATION U/S 254(2) OF THE ACT OF THE ORDER OF THE ITAT, AMRITSAR BENCH, DATED 11.09.2012, AS MENTIONED HEREINABOVE. 3. THE LD. DR, MR. MAHAVIR SINGH (JT. CIT) ON THE O THER HAND, ARGUED THAT THE MISCELLANEOUS APPLICATION FILED BY THE ASS ESSEE IS NOTHING BUT AN ATTEMPT TO GET THE ORDER OF THE TRIBUNAL REVIEWED, WHICH IS OUTSIDE THE MA NO.48(ASR)/2012 7 PURVIEW OF SECTION 254(2) OF THE ACT. THE ITAT IS A FINAL FACT FINDING BODY WHICH CAN GIVE THE FINDING AS PER CIRCUMSTANCES AND FACTS, WHETHER THEY HAVE BEEN ARGUED BY THE PARTIES OR NOT. THE GRIEVANCE OF THE LD. COUNSEL FOR THE ASSESSEE IS MAINLY THAT THE FINDINGS OF THE ITAT IN THE ORDER DATED 11.09.2012 ARE SUCH AS WERE NOT ARGUED BY THE LD. D R OR THE LD. AR BEFORE ITAT IN DEPARTMENTS APPEAL OR WERE NOT THE GROUNDS OF APPEAL. THE FINDINGS GIVEN BY ITAT ARE VERY RELEVANT. THE DIAMO ND STUDDED GOLD JEWELLERY HAD BEEN CATEGORIZED BY THE ASSESSEE AS TYPE 1, II & III AS PER HIS CONVENIENCE AND WHICH IS NOT THE METHOD OF KEEPING THE STOCK AND IS NOT A RECOGNIZED METHOD, WHICH IN FACT, HAS BEEN ACCEPTED BY THE LD. CIT(A) FOR THE REASONS BEST KNOWN TO HIM AND ACCORDINGLY THE D ETAILS FOR THE PURCHASE, SALE AND CLOSING STOCK OF SUCH STOCK WAS NEITHER MA INTAINED BY THE ASSESSEE NOR HAS BEEN PRODUCED EITHER BEFORE THE AUTHORITIES BELOW OR EVEN BEFORE THE ITAT AND FOR THIS REASON, THE ITAT IN ITS ORDER DAT ED 11.09.2012 HAS GIVEN FINDING THAT IT IS NOT POSSIBLE FOR THE A.O. TO EVE N GET THE VALUATION DONE OR TO DEDUCE ACCURATE INCOME OR COMPUTE THE EXACT QUA NTITY OF PURCHASE AND SALE OF STOCK AND ALSO NOT POSSIBLE TO MAKE COMPA RISON WITH OTHER JEWELERS. THERE IS NO MISTAKE APPARENT FROM RECORD. THE LD. DR PRAYED ACCORDINGLY THAT THE MISCELLANEOUS APPLICATION OF THE ASSESSEE BE REJECTED. MA NO.48(ASR)/2012 8 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE MAIN CONTENTIONS IN PARA 1, 2, 3 & 4 OF THE MIS CELLANEOUS APPLICATION RAISED BY THE ASSESSEE WERE THAT THE ITAT VIDE ITS ORDER DATED 11.09.2012 HAS GIVEN THE FINDING IN WHICH THE ASSESSEE HAS NOT RAISED ANY SUCH CONTROVERSY OR GROUNDS OF APPEAL IN THE ARGUMENTS M ADE OR IN THE WRITTEN SUBMISSION FILED BY THE LD. DR. IN THIS REGARD, ON PERUSAL OF OUR ORDER, WE FIND NO MISTAKE APPARENT FROM RECORD, WHICH REQUIRE S RECTIFICATION U/S 254(2) OF THE ACT. THE RELEVANT PARAS OF THE MISTAKES POIN TED OUT BY THE ASSESSEE IN THE MISC. APPLICATION ARE NOTHING BUT AN ATTEMPT TO GET OUR ORDER DATED 11.09.2012 REVIEWED UNDER THE GARB OF SECTION 254(2 ) OF THE ACT. THE FINDINGS HAVE BEEN GIVEN AS PER CIRCUMSTANCES AND F ACTS OF THE CASE. ACCORDINGLY, THE MISTAKES POINTED OUT IN PARAS 1 TO 4 ARE REJECTED. 5. AS REGARDS THE MISTAKES POINTED OUT BY THE ASSES SEE IN PARAS 4, 5,6,7& 8, THE SAME ARE WITH REGARD TO PURCHASE, SALES AND THE CLOSING STOCK IN WHICH THE CLEAR CUT FINDINGS HAVING BEEN GIVEN IN PARAS 8 TO 8.4 OF OUR ORDER AS PER CIRCUMSTANCES AND FACTS OF THE CASE AND WE FIND NO MISTAKE APPARENT FROM RECORD. THE ASSESSEE THROUGH HIS COUNSEL HAS TRIED TO GET OUR ORDER DATED 11.09.2012 REVIEWED, WHICH IS OUTSIDE THE SCOPE OF SECTION 254(2) OF THE ACT. ACCORDINGLY, THE MISTAKES POINTED OUT BY THE LD. COUNSEL FOR THE MA NO.48(ASR)/2012 9 ASSESSEE IN PARAS 4, 5,6,7 & 8 OF THE MISC. APPLICA TION ARE NOT THE MISTAKES APPARENT FROM RECORD AND ARE REJECTED. 6. IN THE RESULT, M.A. NO.48(ASR)/2012 FILED BY TH E ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH NOVEMBER., 2013. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27TH NOVEMBER, 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S, MALLI RAM JEWELLERS HOUSE, AMRITS AR. 2. THE ITO WARD 5(3),ASR. 3. THE CIT(A), ASR 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR. MA NO.48(ASR)/2012 10