ITO, Pune v. Shri Abdul Mazeed H Memon, Pune

ITA 1614/PUN/2012 | 2007-2008
Pronouncement Date: 31-10-2013 | Result: Dismissed

Appeal Details

RSA Number 161424514 RSA 2012
Assessee PAN ABBPM0454E
Bench Pune
Appeal Number ITA 1614/PUN/2012
Duration Of Justice 1 year(s) 3 month(s) 5 day(s)
Appellant ITO, Pune
Respondent Shri Abdul Mazeed H Memon, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 31-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 31-10-2013
Assessment Year 2007-2008
Appeal Filed On 26-07-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE: SHRI G. S. PANNU ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO. 161 4 /PN/201 2 ASSESSMENT YEAR : 2007 - 08 INCOME TAX OFFICER WARD - 4(5) PUN E P.M.T. BUILDING SWARGATE PUNE VS. SHRI ABDUL MAZEED H MEMON PROP. M/S. GALLANT TRADERS 186 SOLAPUR BAZAR PUNE (APPELLANT) (RESPONDENT) PAN NO. ABBPM0454E APPELLANT BY: SHRI P.L. PATHADE RESPONDENT BY: SHRI NIKHIL PATHAK / SHRI SUHAS P. B OR A DATE OF HEARING : 29 - 10 - 2013 DATE OF PRONOUNCEMENT : 31 - 10 - 2013 ORDER P ER R.S. PADVEKAR JM : - IN THIS APPEAL THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER OF THE LD. CIT(A) - II PUNE DATED 26 - 03 - 2012 FOR THE A.Y. 2007 - 08 . THE REVENUE HAS TAKE N THE MULTIPLE GROUNDS BUT THE SOLITARY ISSUE IS WHETHER THE LD. CIT(A) JUSTIFIED IN DELETING THE ADDITION OF RS.20 26 125/ - WHICH HAD BEEN MADE IN THE ASSESSMENT BY THE ASSESSING OFFICER TOWARDS ALLEGED UNDER VALUATION OF CLOSING STOCK. 2. THE BRIEFLY STATED FACTS ARE AS UNDER. THE ASSESSEE IS DOING THE BUSINESS OF WASTE PAPER UNDER THE NAME AND STYLE OF M/S. GALLENT TRADERS. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 2007 - 08 DECLARING TOTAL INCOME OF RS.7 75 849/ - . THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY. THE ASSESSING OFFICER HAS NOTED THAT ON VERIFICATION OF THE BOOKS OF ACCOUNT THE ASSESSEE HAS SHOWN PURCHASES OF RS. 9 98 79 704/ - IN WHICH THERE ARE CASH AS WELL AS PURCHASES THROUGH BANK CHEQUES. THE ASSESSING OFFICER HAS D ESCRIB ED THE CASH PURCHASES AS URD PURCHASES AND PURCHASES BY THE CHEQUES AS RD 2 ITA NO. 161 4 /PN/2012 SHRI ABDUL MAZEED H MEMON PUNE PURCHASES. AS NOTED BY THE ASSESSING OFFICER THE OPENING STOCK WAS VALUED AT RS.6 89 409/ - ON THE QUANTITY OF 97873 KG WHICH WORKED OUT TO AVERAGE COST AT RS.7.04 / - PER K G. AS NOTE D BY THE ASSESSING OFFICER C LOSING STOCK DECLARED BY THE ASSESSEE IS TO THE TUNE OF RS.33 46 870/ - ON QUANTITY OF 1193999 KG AND THE AVERAGE COST WORKED OUT IS RS.2.80/ - PER KG. T HE ASSESSING OFFICER THEREFORE ARRIVED AT A CONCLUSION THAT CLOSING STOCK IS VALUED AT MUCH MORE LOWER FIGURE COMPARE TO THE VALUATION OF THE OPENING STOCK. THE ASSESSING OFFICER SOUGHT THE EXPLANATION OF THE ASSESSEE. THE ASSESSEE EXPLAINED THAT IN THE KIND OF BUSINESS OF THE WASTE PAPER THERE IS A LOSS OF STOCK DUE TO OLD P APER AND ALSO DUE TO THE MOISTURE CONTENT AND PILFERAGE AND AT TIMES SOME STOCK HAS TO BE DISCARDED WHICH IS NOT WORTHY FOR SENDING TO THE PAPER MILLS. HENCE THE VALUE IS LOW. THE ASSESSING OFFICER WAS NOT IMPRESSED WITH THE EXPLANATION OF THE ASSESSEE COMPANY CONSIDERING THE AVERAGE VALUE BASED ON THE QUANTITY OF THE OPENING STOCK AND AVERAGE VALUE OF THE CLOSING STOCK WHICH WAS WORKED OUT TO RS.3.12 / - PER KG AND THE VALUE OF CLOSING STOCK AS PER THE BOOKS OF ACCOUNT WAS WORKING AT RS.2.80/ - PER KG. TH E ASSESSING OFFICER THEREFORE PROCEEDED TO REVISE THE VALUE OF THE CLOSING STOCK BY A DOPTING THE RATE OF RS. 4.50/ - PER KG AND HE WORKED OUT THE DIFFERENCE WHICH WAS AT RS.20 26 125/ - AND MADE ADDITION TO THE TOTAL INCOME OF THE ASSESSEE. THE WORKING OF THE ASSESSING OFFICER IS GIVEN IN PAGE NO. 3 OF THE ASSESSMENT ORDER. THE ASSESSEE CHALLENGED THE SAID ADDITION BEFORE THE LD. CIT(A). THE LD. CIT(A) DELETED THE ADDITION ACCEPTING THE PLEA OF THE ASSESSEE THAT THE ASSESSING OFFICER WAS NOT BOUGHT ANY CO GENT MATERIAL ON RECORD B Y POINTING OUT ANY SPECIFIC DEFECT OR DISCREPANCY IN THE BOOKS OF ACCOUNT FOR REJECTING THE BOOK RESULT. THE OPERATIVE PART OF FINDING OF THE LD. CIT(A) IS AS UNDER: IN THE PRESENT CASE THE ASSESSING OFFICER HAS NOT BOUGHT ANY C OGENT MATERIAL ON RECORD BEFORE POINTING OUT ANY SPECIFIC DEFECT OR DISCREPANCY IN THE BOOKS OF ACCOUNT THEREBY REJECTING THE BOOK RESULT AND RES ORTING TO ESTIMATE OF INCOME. THE A.O. WHILE VALUING THE CLOSING STOCK AT ESTIMATE D VALUE COMPLETELY DISREGARD ED THE AUDITED 3 ITA NO. 161 4 /PN/2012 SHRI ABDUL MAZEED H MEMON PUNE BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT. THE A.O. HAS ALSO NOT COMPARED THE GROSS PROFIT WITH SIMILAR TRADE SO AS TO ARRIVE AT REASONABLE CONCLUSION RATHER HAS RESORTED TO BASE THE ADDITION MERELY ON ESTIMATE AND OVERLOOKING THE OTHER ASPECTS AND THE SUBMISSION OF THE APPELLANT. THE A.O. HAS MADE NO ENQUIRIES WHATSOEVER IN THIS REGARD AND WITHOUT ANY BASIS HAS ESTIMATED TO CLOSING STOCK VALUE. IN SUCH A SITUATION IT IS DIFFICULT TO SUSTAIN THE ADDITION MADE BY THE A.O. NOW THE R EVENUE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. IN THIS CASE THERE IS NO DISPUTE THAT THE AVERAGE VALUATION OF THE OPENING STOCK AND THE CLOSING STOCK IS WORKING DIFFERENTLY. WE FURTHER FIND THAT THE ASSESSING OFFICER ESTIMATED THE RATE OF THE CLOSING STOCK AT 4.50 PER KG AND THE SAID RATE WAS APPLIED TO THE TOTAL QUANTITY OF THE CLOSING STOCK AND THE DIFFERENCE WAS WORKED AT RS.20 26 125/ - . THE LEARNED COUNSEL DR EW OU R ATTENTION TO THE PAGE NOS. 7 AND 8 OF THE PAPER BOOK WHERE THE STATEMENT OF CLOSING STOCK IS PLACED. HE POINTED OUT THAT THERE ARE 81 VARIETIES IN THE SCRAP PAPERS AND THE VALUATION IS DEPENDING ON THE QUANTITY OF THE SCRAP PAPER. HE ALSO POINTED OUT THAT IN CASE OF INFERIOR QUALITY OF THE PAPERS THE VALUATION RANGE S FROM RS.1.10 PER KG AND AT THE SAME TIME IN CASE OF HIGH QUA LITY WASTE I.E. TEXT BOOK WASTE PRINTED WASTE AND WHITE RECORD SUPER THE VALUE IS TAKEN AT RS.6.94 TO RS.8.40. HE THEREFORE PLEADED THAT AT THE FIRS T INSTANCE THE FORMULA OF THE AVERAGE RATE APPLIED BY THE ASSESSING OFFICER IS TOTALLY BASELESS AND TH ESE FACT S AND FIGURES WERE ALREADY BEFORE THE ASSESSING OFFICER . THE NEXT LIMB OF THE ARGUMENT OF THE LEARNED COUNSEL IS THAT IN THE SCRAP PAPER BUSINESS THERE IS A LOT OF LOSS ALSO DUE TO THE PILFERAGE WASTE AND THE SAID SCRAP PAPER CANNOT BE USED FOR RECYCLING. HE ARGUES THAT NO ASSESSEES BOOKS OF ACCOUNT IS AUDITED OTHERWISE NO DEFECTS IS POINTED OUT BY THE ASSESSING OFFICER. 4. PER CONTRA THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. WE FIND FORCE IN THE ARGUMENT OF THE LEARNED COUNSEL. WE HAVE ALSO 4 ITA NO. 161 4 /PN/2012 SHRI ABDUL MAZEED H MEMON PUNE PERUSED THE STOCK STATEMENT PLACED AT PAGE NOS. 7 AND 8 OF THE PAPER BOOK. WE FIND THAT THE DIFFERENT CLASSIFICATION IS MADE AND VALUATI ON IS ALSO DIFFERENT. THE ASSESSING OFFICER ADOPTED THE AVERAGE VALUATION. IN OUR OPINION AS RIGHTLY ARGUED BY THE LEARNED COUNSEL IS TOTALLY BASELESS. THE ASSESSING OFFICER HAS NOT DISCUSSED AT ALL ANYTHING IN RESPECT OF THE CLASSIFICATION AND THE VALU ATION OF THE CLOSING STOCK OF SCRAP PAPERS AND WHAT THE ASSESSING OFFICER HAS DONE IS ONLY THE ESTIMATED EXERCISE AND NOTHING BEYOND THAT KEEPING ASIDE THE GROUND REALITIES . W E CONCUR WITH THE FINDING OF THE LD. CIT(A) THAT THERE IS NO BASE FOR ASSESSING OFFICER TO MAKE THE ADDITION ON THE CHARGE OF ALLEGED UNDER VALUATION OF THE CLOSING STOCK. WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). ACCORDINGLY SAME IS CONFIRMED AND A LL THE GROUNDS TAKEN BY THE REVENUE ARE DISMISSED. 5. IN TH E RESULT THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 31 - 10 - 2013 SD/ - SD/ - ( G.S. PANNU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE DATED : 31 ST OCTOBER 20 1 3 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - II PUNE 4 THE CIT - II PUNE 5 THE DR ITAT A BENCH PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE