M/s. Sanjivani Medical Agency, Anand v. The Income tax Officer, Ward-1,, Anand

ITA 228/AHD/2006 | 2002-2003
Pronouncement Date: 06-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 22820514 RSA 2006
Bench Ahmedabad
Appeal Number ITA 228/AHD/2006
Duration Of Justice 3 year(s) 11 month(s) 7 day(s)
Appellant M/s. Sanjivani Medical Agency, Anand
Respondent The Income tax Officer, Ward-1,, Anand
Appeal Type Income Tax Appeal
Pronouncement Date 06-01-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 06-01-2010
Date Of Final Hearing 21-10-2013
Next Hearing Date 21-10-2013
Assessment Year 2002-2003
Appeal Filed On 30-01-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD - AHMEDABAD D BENCH (BEFORE DR.O.K. NARAYANAN VICE-PRESIDENT AND SHRI MAHAVIR SINGH JUDICIAL MEMBER) ITA NO.228/AHD/2006 [ASSTT.YEAR : 2002-2003] M/S.SANJIVANI MEDICAL AGENCY NR.BANK OF BARODA STATION ROAD ANAND. VS. ITO WARD-1 ANAND. ASSESSEE BY : SHRI SAMIR N. DIVATIA REVENUE BY : SHRI C.K.MISHRA DATE OF ORDER RESERVED : 04-01-2010 O R D E R PER DR. O.K. NARAYANAN VICE-PRESIDENT : THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEA R IS 2002-2003. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISS IONER OF INCOME-TAX (APPEALS)-IV BARODA DATED 29.11.2005 AND ARISES OU T OF THE ASSESSMENT COMPLETED UNDER SECTION 143(3) OF THE INCOME TAX AC T 1961. 2. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE STOCK DETAILS AVAILABLE AS PER THE BANK RECORDS WER E DIFFERENT FROM THE PHYSICAL STOCK OBSERVED IN THE COURSE OF SURVEY CAR RIED OUT IN THE BUSINESS PREMISES OF THE ASSESSEE. ON THE BASIS OF THE ALLE GED STOCK DISCREPANCY A DIFFERENCE OF RS.26 79 424/- WAS WORKED OUT BY THE ASSESSING AUTHORITY AND SAME WAS ADDED TO THE INCOME OF THE ASSESSEE UN DER SECTION 69 OF THE INCOME TAX ACT 1961. IN FIRST APPEAL THE CIT(A) MODIFIED THE ADDITION TO RS.24 63 410/- AFTER ALLOWING A MARGIN OF 20% TO WARDS INFLATION REFLECTED IN THE STOCK VALUE. THE ASSESSEE IS HIGH LY AGGRIEVED BY THE PAGE - 2 ITA NO.228/AHD/2006 -2- ADDITION SUSTAINED BY THE CIT(A) AND THEREFORE THIS SECOND APPEAL BEFORE THE TRIBUNAL. 3. THE ASSESSEE IS A FIRM ENGAGED IN THE WHOLESALE BUSINESS OF PHARMACEUTICAL DISTRIBUTION. THE FIRM RETURNED A T OTAL INCOME OF RS.1 22 957/- FOR THE ASSESSMENT YEAR UNDER APPEAL. THERE WAS A SURVEY UNDER SECTION 133A ON 25-2-2002 AT THE BUSINESS PRE MISES OF THE ASSESSEE GROUP AT NADIAD AND ANAND. INVENTORY OF C ASH STOCK-IN-TRADE AND BOOKS OF ACCOUNTS WERE VERIFIED IN THE COURSE O F SURVEY AND STATEMENT OF SHRI ASHOK DOSHI PARTNER OF THE FIRM WAS ALSO R ECORDED. IT WAS OBSERVED IN THE COURSE OF SURVEY THAT THE PHYSICAL STOCK WAS WORTH RS.40 89 704/- WHEREAS THE BOOK STOCK WAS AT RS.12 01 521/-. IT WAS EXPLAINED BY THE PARTNER OF THE FIRM THAT THE VALUA TION OF STOCK WAS MADE ON LABEL PRICE (MRP) WHICH INCLUDED THE PROFIT ELEM ENT AS WELL. EXPLAINING THE DISCREPANCIES THE ASSESSEE FILED DE TAILED SUBMISSIONS ON 27-3-2002 AND WORKED OUT THE STOCK DIFFERENCE TO RS .1 20 016/-. 4. THE CONTENTION OF THE ASSESSEE IS THAT THE ALLEG ED DISCREPANCY IN STOCK FOUND AT THE TIME OF SURVEY WAS EXPLAINED BEF ORE THE LOWER AUTHORITIES WITH THE DETAILS AND PARTICULARS RELATI NG TO SALES AND PURCHASE. IT IS THE CASE OF THE ASSESSEE THAT THE ACTUAL STOC K VARIATION COMPUTED BY THE ASSESSEE IN THE LIGHT OF THE ACCOUNTS AND DETAI LS AVAILABLE WITH IT WAS NOT ACCEPTED BY THE ASSESSING AUTHORITY. THE AO MI STOOK THE LOWER FIGURE WORKED OUT BY THE ASSESSEE AS RETRACTION FRO M EARLIER STAND TAKEN BY THE FIRM IN THE COURSE OF SURVEY. THE ASSESSEE EXP LAINED THAT NO SUCH ADMISSION WAS MADE IN THE COURSE OF SURVEY AND THER EFORE THERE WAS NO QUESTION OF ANY RETRACTION FROM THE AMOUNT AGREED E ARLIER. PAGE - 3 ITA NO.228/AHD/2006 -3- 5. IN THE LIGHT OF THE ABOVE FACTS AND CIRCUMSTANCE S WE HEARD THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE AND THE ADDL. COMMISSIONER OF INCOME TAX APPEARING FOR THE REVENUE AND PERUSED THE DETAILED ORDERS PASSED BY THE LOWER AUTHORITIES AND ALSO THE SUBMIS SIONS FURNISHED BY THE ASSESSEE IN THE PAPER BOOK FILED BEFORE US. 6. THE ONLY DISPUTE IN THE PRESENT CASE IS REGARDIN G THE ACTUAL VOLUME OF STOCK DIFFERENCE FOUND IN THE COURSE OF SURVEY O PERATION. THE INFLATION OF STOCK VALUE BY THE GROSS PROFIT ELEMENT HAS ALRE ADY BEEN POINTED OUT BY THE ASSESSEE FIRM AND ACCEPTED BY THE LOWER AUTHORI TIES. WHILE POINTING OUT THE NECESSITY TO EXCLUDE THE PROFIT ELEMENT FRO M THE VALUATION OF STOCK THE ASSESSEE FIRM HAS ALSO EXPLAINED THE COU RSE OF RECONCILIATION ADOPTED BY THE FIRM TO PLACE ON RECORD ITS ARGUMENT THAT THE STOCK VARIATION ALLEGED BY THE AO WAS WITHOUT ANY BASIS. WE AGREE WITH THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE THAT THE RE WAS NO ADMISSION OF ANY PARTICULAR AMOUNT BY WAY OF STOCK VARIATION IN THE COURSE OF SURVEY PROCEEDINGS. WHEN THE SURVEY PARTY HAS APPROXIMATE LY ESTIMATED THE STOCK VARIATION AT A HIGHER AMOUNT THE ASSESSEE HA S SOUGHT TIME TO EXPLAIN THE POSITION AND IMMEDIATELY AFTER THE SURV EY FILED DETAILED SUBMISSIONS BEFORE THE ASSESSING AUTHORITY. THERE FORE IT IS NOT PROPER TO SAY THAT THE ASSESSEE HAD MADE ANY ADMISSION OF SUP PRESSION IN THE COURSE OF SURVEY AND LATER RETRACTED THE EARLIER ADMISSION . NO SUCH CASE IS COMING OUT OF THE RECORDS. 7. NOW REGARDING THE EXACT QUANTIFICATION OF STOCK DIFFERENCE THE LOWER AUTHORITIES HAVE NOT ACTUALLY VERIFIED THE ST OCK POSITION ON THE DATE OF SURVEY WITH REFERENCE TO THE EXPLANATIONS AND RE CONCILIATIONS ATTEMPTED BY THE ASSESSEE FIRM. THEREFORE WE ARE OF THE CON SIDERED VIEW THAT THE PAGE - 4 ITA NO.228/AHD/2006 -4- AMOUNT OF ADDITIONS SUSTAINED BY THE CIT(A) AT RS.2 4 64 410/- IS APPARENTLY EXCESSIVE. AS THIS IS NOT A CASE OF EXA CT FIGURES AND SHARP PARTICULARS IT IS NOT POSSIBLE TO WORK OUT THE ACC URATE AMOUNT OF STOCK VARIATION EXISTED AT THE TIME OF SURVEY. WE FIND T HAT NEITHER THE AMOUNT ADMITTED BY THE ASSESSEE FIRM IN ITS SUBMISSIONS NO R THE ADDITION SUSTAINED BY THE CIT(A) EXHIBITS THE CORRECT STATE OF AFFAIRS. IN THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIX THE VALUE OF STOCK DIFFERENCE AT A LUMPSUM AMOUNT OF RS.5 00 000/-. IN OUR OPINION T HIS ADDITION OF RS.5 00 000/- WILL MEET THE ENDS OF JUSTICE. THE A DDITION SUSTAINED BY THE CIT(A) IS MODIFIED TO THE ABOVE EXTENT. 8. IN RESULT THE APPEAL FILED BY THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED ON WEDNESDAY THIS SIXTH DAY OF JAN UARY 2010. SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (DR.O.K. NARAYANAN) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 06-01-2010 COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR ITAT AHMEDABAD