Addl. CIT, Noida v. Sh. Partha Mukharjee, Noida

ITA 1167/DEL/2011 | 2006-2007
Pronouncement Date: 09-09-2011 | Result: Allowed

Appeal Details

RSA Number 116720114 RSA 2011
Assessee PAN AGKPM0886E
Bench Delhi
Appeal Number ITA 1167/DEL/2011
Duration Of Justice 6 month(s) 5 day(s)
Appellant Addl. CIT, Noida
Respondent Sh. Partha Mukharjee, Noida
Appeal Type Income Tax Appeal
Pronouncement Date 09-09-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted B
Tribunal Order Date 09-09-2011
Date Of Final Hearing 24-08-2011
Next Hearing Date 24-08-2011
Assessment Year 2006-2007
Appeal Filed On 04-03-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH B DELHI ] BEFORE SHRI R. P. TOLANI JM AND SHRI K. D. RANJ AN AM I. T. APPEAL NO. 1167 (DEL) OF 2011. ASSESSMENT YEAR : 2006-07. ASSTT. COMMISSIONER OF INCOME-TAX SH RI PARTHA MUKHERJEE C I R C L E VS. R 24 6 JALVAYU VIHAR N O I D A. SECTOR : 21 N O I D A. PAN / GIR NO. AGK PM 0886 E. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI V. K. SABHARWAL ADV.; DEPARTMENT BY : SHRI SALIL MISHRA SR. D. R . O R D E R. PER K. D. RANJAN AM : THIS APPEAL BY THE REVENUE FOR ASSESSMENT YEAR 200 6-07 ARISES OUT OF ORDER OF THE LD. CIT (APPEALS) GHAZIABAD. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS FOLLOWS :- LD. CIT (APPEALS) HAS ERRED IN LAW AND ON FA CTS BY ALLOWING RELIEF OF RS.20 77 899/- TO THE ASSESSEE ON ACCOUNT OF PURCHA SE OUTSIDE BOOKS BY TREATING THIS ADDITION IS NOT CORRECT INSTEAD OF APPRECIATI NG THE FACTS MENTIONED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IN RESPEC T OF NEGATIVE. 2 I. T. APPEAL NO. 1167 (DEL) OF 2011. 3. THE ONLY ISSUE FOR CONSIDERATION RELATES TO ALLO WING RELIEF OF RS.20 77 899/- ON ACCOUNT OF PURCHASE OUTSIDE THE BOOKS BY TREATING THE ADDITION MADE BY THE ASSESSING OFFICER AS INCORRECT. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE ASSESSEE AN INDIVIDUAL DURING THE RELEVANT ASSESSMENT YEAR WAS ENGAGED IN THE BUSINESS OF MANU FACTURE OF READY-MADE GARMENTS UNDER THE NAME AND STYLE OF M/S. SPRIT OF INDIA. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO OBTAINED MONTH WISE DETAILS OF OPENING STOCK PURCH ASES CONSUMABLES AND EXPORT SALES. THE AO FROM MONTH WISE DETAILS FILED BY THE ASSESSEE NOTIC ED NEGATIVE STOCK OF RS.23 52 272/- WHILE THE ASSESSEE HAS SHOWN EXPORT SALES OF RS.48 78 104/- F OR THE MONTH OF APRIL. THE ASSESSING OFFICER ON THE BASIS OF GP MARGIN SHOWN WORKED OUT NET COST OF GOODS PURCHASED FOR EXPORT BEING MADE OUTSIDE THE BOOKS AT RS.20 77 899/-. 4. BEFORE THE LD. CIT (APPEALS) IT WAS SUBMITTED TH AT MONTH WISE DETAILS SHOWED NEGATIVE STOCK OF RS.23 52 272/- AS AGAINST SALES OF EXPORT OF RS.48 78 104/-. IN THIS TALLY EXPENDITURE OF POWER AND FUEL CONSUMABLES DYEING CHARGES JOB WO RK CHARGES HAVE BEEN SHOWN IN THE BOOKS OF ACCOUNTS. IF THESE EXPENSES WITH GROSS PROFIT MARG IN SHOWN BY THE ASSESSEE WAS DEDUCTED FROM EXPORT SALES THEN COST OF GOODS WOULD HAVE BEEN RS. 39 36 768/-. IT WAS ALSO SUBMITTED THAT THERE WAS FLUCTUATION IN GP RATE AS COMPARED TO PAST YEAR AND ALSO FROM MONTH TO MONTH WITHIN THE YEAR. THE LD. CIT (APPEALS) AFTER CONSIDERING THE SUBMISSIONS AND THE EVIDENCE PRODUCED BEFORE HIM OBSERVED THAT THE AO HAD PROCEEDED TO MAKE ENTI RE ANALYSIS/WORKING OF CLOSING STOCK BASED ON RESULT OF A PARTICULAR MONTH. HE NOTED THAT THE METHOD ADOPTED BY THE AO FOR VERIFICATION OF ACCOUNTS WAS NOT CORRECT. THERE WAS VARIATION/FLUC TUATION IN THE GP RATE. THE ASSESSEE HAD FURNISHED ALL THE DETAILS AND WORKING OF EACH AND E VERY PRODUCT MONTH WISE SALE AND PURCHASE BILLS AND HAD ALSO PRODUCED BOOKS OF ACCOUNTS. THE AO HAD NOT CONTROVERTED SUCH EVIDENCE. THE ASSESSEE WAS AN HUNDRED PER CENT EXPORT ORIENTE D UNIT AND THERE WAS NO REASON FOR REDUCING ANY INCOME AND MAKING PURCHASES OUT OF BOOKS. AS R EGARDS NEGATIVE STOCK WORKED OUT BY THE AO ON HYPOTHETICAL BASIS WAS NOT FACTUALLY CORRECT LD. CIT (APPEALS) DELETED THE ADDITION. 5. BEFORE US THE LD. SR. DR SUBMITTED THAT FROM THE FACTS STATED IN THE ASSESSMENT ORDER IT IS CLEAR THAT THERE WAS STOCK OF RS.18 58 869/- IN THE MONTH OF APRIL AS AGAINST THIS EXPORT SALES OF 3 I. T. APPEAL NO. 1167 (DEL) OF 2011. RS.48 78 104/- WERE MADE. THE ASSESSEE HIMSELF HAD WORKED OUT COST OF EXPORTED GOODS AT RS.39 36 768/-. THEREFORE THERE WAS NEGATIVE STOC K OF RS.20 77 899/-. THE AO THEREFORE HAS RIGHTLY MADE THE ADDITION. THE LD. CIT (APPEALS) H AS DELETED THE ADDITION WITHOUT APPRECIATING THE FACT THAT THERE WAS NEGATIVE STOCK. ON THE OTH ER HAND THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT (APPEALS). IT WAS SUBMITT ED BY HIM THAT THERE WAS NO INCENTIVE TO THE ASSESSEE TO MAKE PURCHASE OUTSIDE THE BOOKS OF ACCO UNTS WHEN THE ASSESSEE IS HUNDRED PER CENT EXPORT-ORIENTED UNIT. HE ALSO SUBMITTED THAT THE G P RATE VARIES FROM MONTH TO MONTH AND YEAR TO YEAR BASIS. THEREFORE THE LD. CIT (APPEALS) HAS R IGHTLY DELETED THE ADDITION. 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE ABOUT THE FACT THAT IN THE MONTH OF A PRIL THE ASSESSEE HAD MADE EXPORT SALES OF RS.48 78 104/-. THE ASSESSEE HAD WORKED OUT THE CO ST OF EXPORTED GOODS AT RS.39 36 768/- WHICH INCLUDES GROSS PROFIT OF RS.4 67 261/-. THE GROSS PROFIT AND OTHER EXPENSES HAVE BEEN INCLUDED BY THE ASSESSEE HIMSELF. THERE IS NO DISPUTE ABOUT THE FACT THAT THE ASSESSEE HAD MADE PURCHASES OF RS.17 30 345/-. THE OPENING BALANCE OF THE STOC K WAS AT RS.1 28 524/-. THEREFORE THE TOTAL STOCK OF RS.18 58 869/- WAS AVAILABLE IN THE MONTH OF APRIL 2005 WHEN THE COST OF GOODS EXPORTED HAS BEEN DETERMINED AT RS.39 36 768/- BY T HE ASSESSEE HIMSELF. IT IS NOT UNDERSTOOD AS TO HOW THE STOCK AS PER BOOKS OF ACCOUNTS AVAILABLE WITH THE ASSESSEE FOR THE MONTH OF APRIL 2005 AT RS.18 58 869/- WILL BE SUFFICIENT TO AFFECT THE SALE OF RS.48 78 104/-. NO DOUBT THE GP RATE IN THE BUSINESS FLUCTUATES MONTH TO MONTH AND FROM TRANSACTION TO TRANSACTION BUT IN THE INSTANT CASE THE ASSESSEE HAD HIMSELF ADOPTED GROS S PROFIT OF RS.4 67 261/- ON EXPORT SALES OF RS.48 78 104/- WHICH GIVES RATE OF 9.58 PER CENT. THE ASSESSEE HAD NOT BEEN ABLE TO RECONCILE THE DIFFERENCE OF RS.20 77 899/- IN THE COST OF GOODS A S PER BOOKS OF ACCOUNTS AND COST OF GOODS EXPORTED WORKED OUT BY THE ASSESSEE HIMSELF. THE AS SESSING OFFICER WORKED OUT UNACCOUNTED STOCK OF RS. 20 77 899/- ASSUMING THAT NO STOCK WAS AVAILABLE WITH THE ASSESSEE AFTER EXPORT OF RS 48 78 104 WAS MADE. IN CASE OF A GOING CONCERN S TOCK CANNOT BE NIL. MANUFACTURING ACTIVITIES ARE NOT STOPPED. BE IT AS IT MAY. THE FACT IS THAT THE AVAILABILITY OF STOCK IN THE MONTH OF APRIL DOES NOT MATCH WITH EXPORTS MADE BY THE ASSESSEE. THE LD. CIT (APPEALS) HAS DELETED THE ADDITION WITHOUT APPRECIATING THE FACTS THAT THE AS SESSEE HAD STOCK AVAILABLE WITH HIM AT RS.18 58 869/- WHICH WAS NOT SUFFICIENT TO AFFECT T HE SALES OF RS 48 78 104/-. THE ASSESSEE MUST 4 I. T. APPEAL NO. 1167 (DEL) OF 2011. HAVE PURCHASED STOCK OF RS 20 77 899/- FOR THE PURP OSES OF SALES OF RS 48 78 104/-. UNDER THESE CIRCUMSTANCES THE ADDITION MADE BY THE ASSESSING OF FICER ON ACCOUNT OF AVAILABILITY OF STOCK IN THE BOOKS OF ACCOUNTS FOR EFFECTING THE SALES OF RS .48 78 104/- HAS TO BE SUSTAINED. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT (A) AND RESTO RE THE ORDER OF THE ASSESSING OFFICER. 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 09 TH SEPTEMBER 2011. SD/- SD/- [ R. P. TOLANI ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 09 TH SEPTEMBER 2011. *MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT (APPEALS) 5. DR ITAT NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR ITAT.