M/s. Vaibhav, Islampur v. ITO Ward (2), Sangli, Sangli

ITA 1244/PUN/2004 | 1996-1997
Pronouncement Date: 30-03-2011 | Result: Dismissed

Appeal Details

RSA Number 124424514 RSA 2004
Bench Pune
Appeal Number ITA 1244/PUN/2004
Duration Of Justice 6 year(s) 7 month(s) 14 day(s)
Appellant M/s. Vaibhav, Islampur
Respondent ITO Ward (2), Sangli, Sangli
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 30-03-2011
Date Of Final Hearing 17-03-2011
Next Hearing Date 17-03-2011
Assessment Year 1996-1997
Appeal Filed On 16-08-2004
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI I C SUDHIR JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER I.T.A. NO. 1244/PN/04 (ASSTT. YEARS: 1996-97) M/S VAIBHAV .. APPELLANT GANDHI CHOWK ISLAMPUR VS. INCOME-TAX OFFICER .. RESP ONDENT WARD-2 SANGLI APPELLANT BY: SHRI M.K. KULKAR NI RESPONDENT BY: SHRI A.S. SINGH ORDER PER G.S. PANNU AM THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) KOLHAPUR DATE D 15.6.2004 WHICH IN TURN HAS ARISEN FROM AN ORDER OF THE ASSESSING OFFICER D ATED 28.02.2002 PASSED UNDER SECTION 143(3) READ WITH SECTION 263 OF THE INCOME- TAX ACT 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEARS 1996-97. 2. THE DISPUTE RAISED IN THIS APPEAL RELATES TO THE ADDITION OF RS 1 05 000/- MADE BY THE ASSESSING OFFICER AS CONCEALED INCOME D ECLARED DURING THE COURSE OF SURVEY. THE FACTS IN BRIEF ARE THAT THE ASSESSEE DEALS IN READYMADE GARMENTS ON RETAIL BASIS. DURING THE COURSE OF SURVEY ACTION UN DER SECTION 133A OF THE ACT CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE EXCESS STOCK OF RS 1 04 389/- WAS DETECTED AND THE ASSESSEE OFFERED THE SAME AS A DDITIONAL INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT DETERMIN ING THE TOTAL TAXABLE INCOME AT RS 36 910/-. HOWEVER THE COMMISSIONER OF INCOME-TA X SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE ASSESSING OFFICER TO REFRAME THE ASSESSMENT IN THE LIGHT OF HIS DIRECTIONS GIVEN IN ORDER UNDER SECTION 263 OF THE ACT. ACCORDINGLY THE ITA NO 1244/PN/04 M/S VAIBHAV ISMALPUR 2 ASSESSING OFFICER REFRAMED THE ASSESSMENT BY ENHANC ING THE NET PROFIT DECLARED AT R 10 743/- BY THE SUM OF RS 1 05 000/- BY MAKING TH E FOLLOWING DISCUSSION: THE ADMISSION OF EXCESS STOCK FOUND DURING THE COU RSE OF SURVEY HAS BEEN FURTHER CONFIRMED BY THE ASSESSEE BY OFFERING SUM OF RS 1 0 5 000/- AS AN ADDITIONAL INCOME IN THE TRADING ACCOUNT. THE ONLY POINT FOR ADJUDICA TION IS WHETHER AGAINST THE ADDITIONAL INCOME DECLARED THE ASSESSEE CAN CLAIM INTEREST ON CAPITAL AND SALARY TO THE PARTNERS. SINCE THE SUM OF RS 1 05 000/- REPRES ENTING EXCESS STOCK FOUND DURING THE COURSE OF SURVEY IS CHARACTERIZED AS ADDITIONAL INCOME OVER AND ABOVE THE REGULAR INCOME THE ASSESSEE IS NOT JUSTIFIED IN SE TTING OFF EXPENDITURE ON ACCOUNT OF INTEREST AND SALARY TO THE PARTNERS. IN THE CIRCUMS TANCES THE NET PROFIT DECLARED AT RS 10 743/- IS ENHANCED BY RS 1 05 000/-. AGAINST THE SAME ASSESSEE WENT IN APPEAL BEFORE T HE COMMISSIONER OF INCOME- TAX (APPEALS). 3. BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) IT WAS SUBMITTED THAT THE ASSESSING OFFICER WRONGLY TAXED EXCESS STOCK OF RS 1 05 000/- EVEN WHEN THE PERCENTAGE OF GROSS PROFIT PRIOR TO SURVEY WAS RECO RDED AT 39.2% AS COMPARED TO EARLIER YEARS GROSS PROFIT OF 20%. IT WAS ALSO ARG UED THAT AN AMOUNT OF RS 1 05 000/- WAS ALREADY INCLUDED IN THE CLOSING STOC K AND THUS THE ADDITION NOW MADE WOULD CONSTITUTE DOUBLE ADDITION. FURTHER ASS ESSEE CONTENDED THAT IT HAD FILED AN AFFIDAVIT RETRACTING THE STATEMENT MADE AT THE TIME OF SURVEY AND THAT IN ANY CASE A STATEMENT RECORDED DURING THE SURVEY OPERATI ON DOES NOT HAVE ANY EVIDENTIARY VALUE AND THUS ADDITION WAS NOT CORRECT . 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E THE COMMISSIONER OF INCOME-TAX (APPEALS) OBSERVED THAT DURING THE COURS E OF SURVEY THE PARTNER OF THE ASSESSEE FIRM HAD ADMITTED THAT DIFFERENCE DETECTED BY THE SURVEY PARTY IN THE STOCK REPRESENTED ADDITIONAL INCOME OF THE ASSESSEE FIRM FOR THE ASSESSMENT YEAR 1996- 97. HE FURTHER HELD THAT THE ARGUMENT OF THE ASSESS EE THAT THE PARTNER OF THE FIRM HAD RETRACTED HIS STATEMENT SUBSEQUENTLY COULD NOT BE ACCEPTED AS IT WAS SELF- SERVING AND WAS AN AFTERTHOUGHT. HE FURTHER HELD TH AT THE STATEMENT OF THE PARTNER OF THE ASSESSEE FIRM DURING THE COURSE OF SURVEY WAS C ORROBORATED WITH THE MATERIAL FACT OF THE EXCESS STOCK AND HENCE IT HAD EVIDENTIA RY VALUE. HE FURTHER HELD THAT THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX UNDE R SECTION 263 OF THE ACT ON THE BASIS OF WHICH THE ASSESSING OFFICER HAD MADE T HE IMPUGNED ADDITION HAS BEEN ITA NO 1244/PN/04 M/S VAIBHAV ISMALPUR 3 ACCEPTED BY THE ASSESSEE AND IT HAS BECOME FINAL. T HE DIRECTIONS ISSUED BY THE COMMISSIONER OF INCOME-TAX WERE ACCEPTED BY THE ASS ESSEE INASMUCH AS THE APPEAL FILED BY THE ASSESSEE BEFORE THE INCOME-TAX APPELLATE TRIBUNAL PUNE BENCH WAS WITHDRAWN BY THE ASSESSEE. THE COMMISSIO NER OF INCOME-TAX (APPEALS) ALSO DID NOT FIND ANY MERIT IN THE ARGUME NT OF THE ASSESSEE THAT ASSESSEE HAD DISCLOSED HIGHER PERCENTAGE OF GROSS PROFIT AND HENCE NO ADDITION ON THE BASIS OF DECLARATION COULD BE MADE. IN THIS MANNER THE C OMMISSIONER OF INCOME-TAX (APPEALS) AFFIRMED THE ADDITION MADE BY THE ASSESSI NG OFFICER AT RS 1 05 000/-. NOT BEING SATISFIED THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. BEFORE US THE LEARNED COUNSEL FOR THE APPELLANT REITERATED THE SIMILAR SUBMISSIONS AS MADE BEFORE THE COMMISSIONER OF INCO ME-TAX (APPEALS). IT IS ALSO POINTED OUT THAT THE ASSESSEE HAD DECLARED THE ADDI TIONAL VALUE IN THE STOCK AS DETERMINED BY THE SURVEY PARTY AND THEREFORE THE IMPUGNED ADDITION WOULD TANTAMOUNT TO A DOUBLE ADDITION. 6. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPR ESENTATIVE RELIED UPON THE ORDER OF THE ASSESSING OFFICER IN SUPPORT OF THE CA SE OF THE REVENUE. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. IN THIS CASE THE DISCUSSION IN THE ASSESSMENT ORDER WHICH HAS BEEN EXTRACTED BY US IN PARA 2 ABOVE CLEARLY BRINGS OUT THE REASONS FOR THE ADDIT ION OF RS 1 05 000/-. THE ASSESSING OFFICER HAS OBSERVED THAT EXCESS STOCK FO UND DURING THE SURVEY OF RS 1 05 000/- HAS INDEED BEEN DECLARED BY THE ASSESSEE AS ADDITIONAL INCOME IN THE TRADING ACCOUNT. AS PER THE ASSESSING OFFICER THE POINT OF DISPUTE IS AS TO WHETHER AGAINST THE ADDITIONAL INCOME SO DECLARED ASSESSEE CAN CLAIM INTEREST ON CAPITAL AND SALARIES TO PARTNERS. ACCORDING TO THE ASSESSIN G OFFICER THE ASSESSEE IS NOT ENTITLED TO SETTING OFF OF EXPENDITURE ON ACCOUNT O F INTEREST AND SALARY PAID TO THE PARTNERS AND THEREFORE HE HAS ENHANCED THE NET PR OFIT DECLARED AT RS 10 743/- BY A SUM OF RS 1 05 000/-. IT IS QUITE EVIDENT THAT IT I S NOT A CASE OF A DOUBLE ADDITION AS SOUGHT TO BE MADE OUT BY THE ASSESSEE BEFORE US OR EVEN BEFORE THE COMMISSIONER ITA NO 1244/PN/04 M/S VAIBHAV ISMALPUR 4 OF INCOME-TAX (APPEALS). SINCE THE ASSESSEE HAS ADM ITTED AND DECLARED THE ADDITIONAL INCOME IN THE TRADING ACCOUNT THERE IS ALSO NO SCOPE FOR THE ASSESSEE HAVING RETRACTED FROM THE ADMISSION MADE DURING THE SURVEY. ALL THESE ASPECTS IN OUR VIEW DO NOT AFFECT THE CASE MADE OUT BY THE AS SESSING OFFICER THAT THE SUM OF RS 1 05 000/- REPRESENTING THE EXCESS STOCK FOUND D URING THE SURVEY IS LIABLE TO BE CHARACTERIZED AS ADDITIONAL INCOME OVER AND ABOVE R EGULAR INCOME AND THEREFORE ASSESSEE IS NOT ENTITLED TO SETTING OFF OF EXPENDIT URE ON ACCOUNT OF INTEREST AND SALARY PAID TO THE PARTNERS ON SUCH AMOUNT. IN THE ABSENCE OF ANY PLEA BY THE ASSESSEE AGAINST THE AFORESAID CONCLUSION OF THE AS SESSING OFFICER WE FIND NO REASONS TO DELETE THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER. HENCE ON THIS ASPECT THE ASSESSEE HAS TO FAIL. 8. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISS ED. DECISION PRONOUNCED IN THE OPEN COURT ON THIS 30TH DAY OF MARCH 2011. SD/- SD/- (I.C. SUDHIR) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER PUNE: DATED: 30 TH MARCH 2011 B COPY OF THE ORDER IS FORWARDED TO : 1. M/S VAIBHAV ISLAMPUR 2. THE ITO WD-2 SANGLI 3. THE CIT(A) KOLHAPUR 4. THE CIT KOLHAPUR 5. THE D.R B BENCH PUNE TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT PUNE ITA NO 1244/PN/04 M/S VAIBHAV ISMALPUR 5