Binay Krishna Das, Burdwan v. ACIT, Kolkata

ITA 1676/KOL/2012 | 2009-2010
Pronouncement Date: 11-04-2014 | Result: Allowed

Appeal Details

RSA Number 167623514 RSA 2012
Assessee PAN ACPPD8075K
Bench Kolkata
Appeal Number ITA 1676/KOL/2012
Duration Of Justice 1 year(s) 4 month(s) 22 day(s)
Appellant Binay Krishna Das, Burdwan
Respondent ACIT, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 11-04-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 11-04-2014
Assessment Year 2009-2010
Appeal Filed On 19-11-2012
Judgment Text
I.T.A. NO.: 1676/KOL./20 12 & ITA NO. 1790/KOL/2012 ASSESSMENT YEAR : 2009-201 0 PAGE 1 TO 8 1 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA A BENCH KOLKATA CORAM : SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI ABRAHAM P. GEORGE (ACCOUNTANT MEMBER) I.T.A. NO.: 1676/KOL./2012 ASSESSMENT YEAR : 2009-2010 BINAY KRISHNA DAS ................................. ........................APPELLANT B.C. ROAD BARABAZAR P.O. RAJBATI DIST. BURDWAN-713 104 [PAN : ACPPD 8075 K] -VS.- ASSISTANT COMMISSIONER OF INCOME TAX .............. .....RESPONDENT CIRCLE-1 KOLKATA AAYAKAR BHAWAN BURDWAN COURT COMPOUND P.O. & DIST. BURDWAN-713 101 & I.T.A. NO.: 1790/KOL./2012 ASSESSMENT YEAR : 2009-2010 ASSISTANT COMMISSIONER OF INCOME TAX .............. .....APPELLANT CIRCLE-1 KOLKATA AAYAKAR BHAWAN BURDWAN COURT COMPOUND P.O. & DIST. BURDWAN-713 101 -VS._ BINAY KRISHNA DAS ................................. ........................RESPONDENT B.C. ROAD BARABAZAR P.O. RAJBATI DIST. BURDWAN-713 104 [PAN : ACPPD 8075 K] APPEARANCES BY: SHRI SOMNATH GHOSH ADVOCATE FOR THE ASSESSEE SHRI VIKASH KUMAR AGARWAL JCIT SR. D.R FOR THE D EPARTMENT DATE OF CONCLUDING THE HEARING : APRIL 09 2014 DATE OF PRONOUNCING THE ORDER : APRIL 11 2014 O R D E R PER ABRAHAM P. GEROGE : 1. THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AN D REVENUE RESPECTIVELY DIRECTED AGAINST AN ORDER DATED 18.09 .2012 OF LD. COMMISSIONER OF INCOME TAX (APPEALS) ASANSOL. GROU NDS 1 TO 3 OF THE I.T.A. NO.: 1676/KOL./20 12 & ITA NO. 1790/KOL/2012 ASSESSMENT YEAR : 2009-201 0 PAGE 1 TO 8 2 ASSESSEE AND THE GROUNDS RAISED BY THE REVENUE IN I TS APPEAL EMANATE FROM A COMMON SET OF FACTS. 2. ASSESSEE A JEWELLER HAD FILED HIS RETURN FOR T HE IMPUGNED ASSESSMENT YEAR DECLARING INCOME OF RS.17 18 701/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE WAS REQUIRED TO PR ODUCE BOOKS OF ACCOUNTS AND STOCK REGISTER WHICH WERE DULY PRODUC ED BY HIM BEFORE THE ASSESSING OFFICER. FROM THE PROFIT & LOSS A/C. ASSE SSING OFFICER NOTED THAT ASSESSEE HAD PURCHASED 15510.598 GRAMS OF GOLD BARS AT A COST OF RS.1 82 68 676.85. THE CLOSING STOCK HELD BY THE AS SESSEE WAS 17862.879 GRAM FOR WHICH THE ASSESSEE HAD ASSIGNED A VALUE OF RS.1 12 35 750.89. ASSESSING OFFICER WAS OF THE OPINION THAT THE CLOSI NG STOCK WAS UNDER- VALUED SINCE AVERAGE PURCHASE RATE PER GRAM OF GOLD DURING THE RELEVANT PREVIOUS YEAR CAME TO RS.1 178/- WHEREAS THE AVERA GE RATE OF CLOSING STOCK OF GOLD ORNAMENTS CAME TO RS.628/- PER GRAM O NLY. CLARIFICATIONS WERE SOUGHT. REPLY OF THE ASSESSEE WAS THAT THE CLO SING STOCK WAS VALUED AT COST PRICE AND A CONSISTENT METHOD OF VALUATION HAS BEEN FOLLOWED. AS PER THE ASSESSEE GOLD ORNAMENTS SOLD WERE GENERALL Y MADE OUT OF NEWLY PURCHASED GOLD BARS. THIS AS PER THE ASSESSEE WAS N ECESSARY SINCE MAJOR PART OF THE SALE WERE OF ORNAMENTS MADE AS PER THE ORDERS OF THE CUSTOMERS USING THE GOLD BARS. OPENING STOCK CONSI STED OF GOLD ORNAMENTS AND NOT GOLD BARS. CUSTOMERS PREFERRED NE W MODELS OF JEWELLERY AND SUCH JEWELLERY COULD BE MADE ONLY FRO M NEWLY PURCHASED GOLD BARS. IN OTHER WORDS AS PER THE ASSESSEE THE CLOSING STOCK SUBSTANTIALLY CONSISTED OF OPENING STOCK AND THIS RESULTED IN LOWER PER GRAM VALUE. ASSESSEE ALSO MENTIONED THAT THE PHYSIC AL STOCK WAS PERSONALLY TAKEN BY HIM AND OUT OF THE TOTAL CLOSIN G STOCK OF 17862.879 GRAM OF ORNAMENTS ONLY 1994.400 GRAM OF ORNAMENTS WERE NEW WHEREAS THE OTHER PART CAME OUT OF THE OPENING STOCK. 3. HOWEVER THE ASSESSING OFFICER WAS NOT IMPRESSED BY THE ABOVE EXPLANATIONS. ACCORDING TO HIM ASSESSEE HAD NOT FU RNISHED CORRECT I.T.A. NO.: 1676/KOL./20 12 & ITA NO. 1790/KOL/2012 ASSESSMENT YEAR : 2009-201 0 PAGE 1 TO 8 3 QUANTITATIVE FIGURES. AS PER THE ASSESSING OFFICER AT LEAST 50% OF THE STOCK AVAILABLE AT ITS BEGINNING OF THE PREVIOUS Y EAR WOULD HAVE BEEN SOLD IN THE RELEVANT PREVIOUS YEAR. HE CONCLUDED TH AT OUT OF THE TOTAL CLOSING STOCK QUANTITY OF 17862.879 GRAM OF ORNAMEN TS 55% ALONE WOULD HAVE COME OUT OF THE OPENING GOLD STOCK. BALANCE 45 % ACCORDING TO HIM COMPRISED OF NEW ORNAMENTS MADE BY THE ASSESSEE DUR ING THE RELEVANT PREVIOUS YEAR FROM THE GOLD BARS PURCHASED. THUS FO R 9824.58345 GRAM OF GOLD OLD ORNAMENTS ASSESSING OFFICER ADOPTED A RAT E OF RS.560/- PER GRAM FOR VALUATION BEING THE RATE ADOPTED BY THE ASSESS EE FOR VALUING THE OPENING STOCK. FOR THE BALANCE 8038.29555 GRAM OF S TOCK HE ADOPTED THE RATE OF RS.1178/- PER GRAM BEING THE AVERAGE PURCHA SE COST. CLOSING STOCK THUS VALUED BY THE ASSESSING OFFICER CAME TO RS.1 4 9 70 890/-. AN ADDITION OF RS.37 35 140/- WAS MADE. 4. ASSESSEE MOVED BEFORE THE LD. CIT(APPEALS) AGAIN ST THE ABOVE ADDITION. ARGUMENT OF THE ASSESSEE BEFORE THE LD. C IT(APPEALS) WAS THAT THE ASSESSING OFFICER MADE AN AD HOC ESTIMATION OF PERCENTAGE OF OLD ORNAMENTS IN THE CLOSING STOCK WITHOUT ANY MATERIAL EVIDENCE. LD. CIT(APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF T HE ASSESSEE WAS OF THE OPINION THAT THE ESTIMATE DONE BY THE ASSESSING OFF ICER COULD NOT BE FULLY DEFENDED. AT THE SAME TIME ACCORDING TO HIM THE C LOSING STOCK BEING ENTIRELY OF ORNAMENTS ASSESSEE SHOULD HAVE INCLUDE D THE COST OF CONVERSION WHILE VALUING SUCH A STOCK. AS PER LD. C IT(APPEALS) NO PRUDENT BUSINESSMAN WOULD CARRY OBSOLETE STOCK. FURTHER AS PER THE LD. CIT(APPEALS) ASSESSEE HAD NOT GIVEN DETAILED BREAK -UP OF THE STOCK BEFORE THE ASSESSING OFFICER. HE THEREFORE SET AS IDE THE ISSUE REGARDING VALUATION OF CLOSING STOCK AND REMITTED IT BACK TO THE ASSESSING OFFICER WITH A DIRECTION TO WORK OUT SUCH VALUATION BASED O N A CORRECT BIFURCATION OF THE QUANTITY OF GOLD ORNAMENTS HELD IN CLOSING S TOCK. 5. NOW BEFORE US ASSESSEE IS AGGRIEVED VIDE ITS G ROUNDS 1 TO 3 THAT LD. CIT(APPEALS) GAVE DIRECTION TO THE ASSESSING OFFICE R FOR RE-EVALUATING THE I.T.A. NO.: 1676/KOL./20 12 & ITA NO. 1790/KOL/2012 ASSESSMENT YEAR : 2009-201 0 PAGE 1 TO 8 4 CLOSING STOCK. AS AGAINST THIS DEPARTMENT IS AGGRI EVED THAT THE LD. CIT(APPEALS) DIRECTED THE ASSESSING OFFICER TO RE-C OMPUTE THE VALUATION OF CLOSING STOCK AFTER CONSIDERING FRESH EVIDENCE THEREBY DISTURBING THE ADDITION MADE IN THIS REGARD. 6. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD FURNISHED ALL EVIDENCES BEFORE THE ASSESSING OFFICE R AS WELL AS LD. CIT(APPEALS). RELYING ON PAPER BOOK PAGE NO. 15 LD . A.R. SUBMITTED THAT QUANTITATIVE DETAILS OF GOLD ORNAMENTS PURCHASED AN D SOLD WERE FURNISHED ON A MONTH-WISE BASIS TO THE ASSESSING OFFICER. ACC ORDING TO THE LD. A.R. THE BUSINESS OF JEWELLERY WAS FASHIONED ON LATEST T RENDS AND GENERALLY LAST IN FIRST OUT METHOD ALONE COULD BE APPLIED. AS SESSEE COULD NOT INSIST ON CUSTOMERS TO BUY THE OLD STOCK HELD BY THE ASSES SEE. ASSESSING OFFICER HAD NOT BROUGHT OUT ANY EVIDENCE TO DISPUTE THE SAL E OR PURCHASES. ASSESSEE HAD MAINTAINED STOCK REGISTER AND THIS WAS PRODUCED BEFORE THE ASSESSING OFFICER. QUANTITATIVE PARTICULARS WERE NO T DOUBTED. ASSESSEE HAD MADE A QUANTITATIVE ANALYSIS OF THE CLOSING STO CK AND ACCORDINGLY VALUED THE CLOSING STOCK AT COST. THE SAME METHOD W AS BEING FOLLOWED CONSISTENTLY SINCE LAST MANY YEARS. ASSESSING OFFIC ER HAD SIMPLY WENT ON A PRESUMPTION AND ESTIMATED SUBSTANTIAL PART OF THE CLOSING STOCK TO BE COMING OUT OF NEW ORNAMENTS. WITHOUT FINDING ANY OM ISSION IN THE STOCK REGISTER PRODUCED BY THE ASSESSEE AS PER THE LD. A .R. LD. CIT(APPEALS) UNJUSTLY REMITTED THE ISSUE BACK TO THE ASSESSING O FFICER. 7. PER CONTRA AND IN SUPPORT OF ITS APPEAL LD. DEP ARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ADDITION WAS CORR ECTLY DONE BY THE ASSESSING OFFICER. LD. CIT(APPEALS) ACCORDING TO H IM HAD DIRECTED THE ASSESSING OFFICER TO RE-COMPUTE THE CLOSING STOCK DESPITE THERE BEING CLEAR FINDINGS GIVEN BY THE ASSESSING OFFICER. CLAI M OF THE ASSESSEE THAT LIFO METHOD WAS BEING FOLLOWED BY IT WAS NEVER SUB STANTIATED. ASSESSING OFFICER HAD ESTIMATED 45% OF THE CLOSING STOCK TO B E COMPRISING OF NEW ORNAMENTS AND 55% OF OLD ORNAMENTS. SUCH ESTIMATE W AS A VERY I.T.A. NO.: 1676/KOL./20 12 & ITA NO. 1790/KOL/2012 ASSESSMENT YEAR : 2009-201 0 PAGE 1 TO 8 5 REASONABLE ONE. THEREFORE ACCORDING TO HIM ASSESS ING OFFICERS ORDER IN RESPECT OF THE ADDITION SHOULD BE REINSTATED. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE THAT ASSES SEE HAD PRODUCED STOCK REGISTER BEFORE THE ASSESSING OFFICER. ASSESSING OF FICER HIMSELF HAS MENTIONED THIS IN THE ASSESSMENT ORDER. ASSESSEE HA D GIVEN QUANTITATIVE PARTICULARS OF THE PURCHASES AND SALES INCLUDING TH E OPENING STOCK FOR EACH OF THE MONTH COMPRISED IN THE RELEVANT PREVIOU S YEAR SEPARATELY. A LOOK AT PAPER BOOK PAGE 15 FILED BY THE ASSESSEE W HICH GIVES THE DETAILS OF SUCH QUANTITATIVE PARTICULARS CLEARLY SHOWS THA T THE ASSESSEE HAD ARRIVED AT THE CLOSING STOCK VALUE FOR EACH MONTH A FTER CONSIDERING THE QUANTITY OF SALES AND THE PART OF THE SALE WHICH WE NT OUT OF OPENING STOCK AND THE PART OF THE SALE WHICH WENT OUT OF ORNAMENT S MADE DURING THE RELEVANT PREVIOUS YEAR. ONCE ASSESSEE HAS GIVEN PAR TICULARS OF STOCK ON A MONTH-WISE BASIS IN OUR OPINION WITHOUT FINDING A NY DEFECTS IN SUCH RECORDS AN ADDITION OUGHT NOT HAVE BEEN MADE. CLAI M OF THE ASSESSEE THAT HE HAD PERSONALLY VERIFIED THE STOCK AND VALUED IT CONSIDERING THE PART OF THE STOCK WHICH COMPRISED OF NEW ORNAMENTS AND PART OF THE STOCK COMING OUT OF OPENING CANNOT BE BRUSHED ASIDE. ASSE SSEE HAD ALSO PRODUCED THE BOOKS OF ACCOUNTS AND ITS ACCOUNTS WER E AUDITED. THE COST PER GRAM OF THE OPENING STOCK OF 17779.912 GRAM OF ORNAMENTS WAS RS.99 40 393.20 AND AVERAGE RATE PER GRAM WORKED OU T TO RS.559.08 PER GRAM. PURCHASES OF GOLD BARS FOR THE YEAR WERE OF 1 5510.598 GRAM COSTING RS.1 82 68 676.85 WHICH AVERAGED TO RS.1178/- PER G RAM. TOTAL SALE DURING THE YEAR WAS 15427.631 GRAM. THE CLOSING STO CK WAS 17862.879 GRAM VALUED AT RS.1 12 35 550.89 AVERAGING TO RS.6 29/- PER GRAM. THUS WHAT CAN BE SEEN IS THAT OPENING STOCK WAS HAVING A N AVERAGE VALUE OF RS.559/- PER GRAM WHEREAS CLOSING STOCK WAS HAVING A VALUE OF RS. 629/- PER GRAM. THUS THE CLOSING STOCK VALUE HAD GONE UP. AGAINST RS.559.08 PER GRAM FOR THE OPENING STOCK IT HAD INCREASED TO RS. 629/- PER GRAM. SUCH INCREASE IN VALUE WOULD HAVE ARISEN ONLY DUE TO THE CURRENT PURCHASES I.T.A. NO.: 1676/KOL./20 12 & ITA NO. 1790/KOL/2012 ASSESSMENT YEAR : 2009-201 0 PAGE 1 TO 8 6 WHICH WERE MADE AT A HIGHER RATE. IN OTHER WORDS C ONTENTION OF THE ASSESSEE THAT HE HAD BIFURCATED THE CLOSING STOCK A PPROPRIATELY BASED ON PHYSICAL VERIFICATION APPEARS TO BE TRUE. IF HE HAD NOT DONE SO THEN NO DOUBT CLOSING STOCK ALSO WOULD HAVE BEEN VALUED AT THE SAME RATE AT WHICH THE OPENING STOCK WAS VALUED. IN SUCH A SITUA TION IN OUR OPINION IT WAS NOT PROPER FOR THE ASSESSING OFFICER TO BRUSH A SIDE THE VALUE FIXED BY THE ASSESSEE BASED ON PHYSICAL VERIFICATION WHICH WAS DULY SUPPORTED BY STOCK REGISTER. WE FIND THAT THE ADDITION WAS NOT P ROPERLY DONE AND THE LD. CIT(APPEALS) FELL IN ERROR IN REMITTING THE MAT TER BACK TO THE ASSESSING OFFICER WITHOUT CONSIDERING THE EVIDENCE ON RECORD. WE THEREFORE HAVE NO HESITATION IN DELETING THE ADDIT ION MADE BY THE ASSESSING OFFICER. 9. GROUNDS NO. 1 TO 3 OF THE ASSESSEE ARE ALLOWED WHEREAS RELATED GROUNDS RAISED BY THE REVENUE STAND DISMISSED. 10. THIS LEAVES WITH ONLY ONE OTHER ISSUE WHICH HAS BEEN RAISED BY THE ASSESSEE. IT IS ON AN ADDITION OF RS.1 19 809/- MAD E BY THE ASSESSING OFFICER UNDER SECTION 40A(3) OF THE ACT AND SUSTAI NED BY THE LD. CIT(APPEALS). 11. FACTS APROPOS ARE THAT ONE MR. BHUPAL BASAK HAD STATED THAT HE HAD RECEIVED THE FOLLOWING MAKING CHARGES FROM THE ASSE SSEE FOR MAKING ORNAMENTS: DATED AMOUNT 27.01.2009 RS.40 448/- 21.08.2009 RS.26 208/ - 20.11.2008 RS.26 153/ - 19.01.2009 RS.27 000/ - I.T.A. NO.: 1676/KOL./20 12 & ITA NO. 1790/KOL/2012 ASSESSMENT YEAR : 2009-201 0 PAGE 1 TO 8 7 AS PER THE ASSESSING OFFICER THE PAYMENTS EXCEEDED RS.20 000/- IN EACH CASE AND SECTION 40A(3) STOOD ATTRACTED. A DISALLOW ANCE OF MAKING CHARGES OF RS.1 19 809/- WAS MADE. 12. IN HIS APPEAL BEFORE LD. CIT(APPEALS) ARGUMENT OF THE ASSESSEE WAS THAT THE BILLS RAISED BY THE CONCERNED PERSON ON DI FFERENT DATES WERE OF AMOUNTS LESS THAN RS.20 000/-. THE PAYMENTS WERE AC CUMULATED BY THE PARTY. LD. CIT(APPEALS) WAS NOT IMPRESSED. ACCORDIN G TO HIM THE PAYMENTS MADE TO SHRI BHUPAL BASAK EXCEEDED OF RS.2 0 000/- ON EACH OCCASION AND THEREFORE THE ADDITION WAS RIGHTLY DO NE UNDER SECTION 40A(3) OF THE ACT. 13. NOW BEFORE US LD. A.R. SUBMITTED THAT THE LEDG ER ACCOUNT OF THE CONCERNED PERSON AND THE PAYMENTS EFFECTED WERE NOT PROPERLY CONSIDERED BY THE LOWER AUTHORITIES BEFORE EFFECTIN G SUCH DISALLOWANCE. FURTHER THE STATEMENT TAKEN FROM BHUPAL BASAK WAS N EVER PUT TO THE ASSESSEE AND ASSESSEE NOT GIVEN A CHANCE OF EXAMINI NG HIM. 14. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE SUP PORTED THE ORDER OF AUTHORITIES BELOW. 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFUL LY PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CLAIM OF THE ASSE SSEE IS THAT EACH PAYMENT AS PER ITS BOOKS WAS LESS THAN RS.20 000/-. IT MAY BE TRUE THAT SHRI BHUPAL BASAK HAD ADMITTED THE RECEIPTS ON DIFF ERENT DATES IN CASH EXCEEDING RS.20 000/-. BUT WHETHER SUCH RECEIPTS WE RE GROUPED BY THE SAID SHRI BHUPAL BASAK IS NOT CLEAR. ASSESSEE WAS N EVER GIVEN A CHANCE TO EXAMINE SHRI BHUPAL BASAK. WE ARE THEREFORE OF TH E OPINION THAT THE MATTER REQUIRES A FRESH LOOK BY THE ASSESSING OFFIC ER. WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND REMIT THE ISSUE REGARDING DISALLOWANCE UNDER SECTION 40A(3) BACK TO THE FILE OF ASSESSING OFFICER FOR CONSIDERATION AFRESH IN ACCORDANCE WITH LAW. I.T.A. NO.: 1676/KOL./20 12 & ITA NO. 1790/KOL/2012 ASSESSMENT YEAR : 2009-201 0 PAGE 1 TO 8 8 16. IN THE RESULT GROUNDS NO. 4 & 5 OF THE ASSESSE E ARE ALLOWED FOR STATISTICAL PURPOSES. 17. TO SUMMARIZE THE RESULT THE APPEAL OF THE ASSE SSEE IS ALLOWED PROTANTO WHEREAS THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH DAY OF APRIL 2014. SD/- SD/- MAHAVIR SINGH ABRAHAM P. GEORGE (JUDICIAL MEMBER) (ACC OUNTANT MEMBER) KOLKATA THE 11 TH DAY OF APRIL 2014 COPIES TO : (1) BINAY KRISHNA DAS B.C. ROAD BARABAZAR P.O. RAJBATI DIST. BURDWAN-713 104 (2) ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-1 KOLKATA AAYAKAR BHAWAN BURDWAN COURT COMPOUND P.O. & DIST. BURDWAN-713 101 (3) CIT(APPEALS) (4) CIT (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES KOLKATA LAHA/SR. P.S.