M/s. Plywood House , Kolkata v. ACIT, Circle - 25, Kolkata

ITA 2696/KOL/2018 | 2015-2016
Pronouncement Date: 28-02-2020 | Result: Partly Allowed

Appeal Details

RSA Number 269623514 RSA 2018
Assessee PAN AADFP3813D
Bench Kolkata
Appeal Number ITA 2696/KOL/2018
Duration Of Justice 1 year(s) 1 month(s) 27 day(s)
Appellant M/s. Plywood House , Kolkata
Respondent ACIT, Circle - 25, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 28-02-2020
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 28-02-2020
Date Of Final Hearing 22-01-2020
Next Hearing Date 22-01-2020
Last Hearing Date 22-01-2020
First Hearing Date 03-12-2019
Assessment Year 2015-2016
Appeal Filed On 31-12-2018
Judgment Text
ITA NO. 2696/KOL/2018 ASSESSMENT YEAR: 2015-2016 M/S. PLYWOOD HOUSE 1 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA B BENCH KOLKATA BEFORE SHRI P.M. JAGTAP VICE-PRESIDENT AND SHRI A.T. VARKEY JUDICIAL MEMBER I.T.A. NO. 2696/KOL/2018 ASSESSMENT YEAR: 2015-2016 M/S. PLYWOOD HOUSE ................................ .....................................APPELLANT 191/3 N.S.C. BOSE ROAD BANSDRONI KOLKATA-700040 [PAN: AADFP3813D] -VS.- ASSISTANT COMMISSIONER OF INCOME TAX .............. ........................RESPONDENT CIRCLE-25 KOLKATA AAYAKAR BHAWAN DAKSHIN 2 GARIAHAT ROAD (SOUTH) KOLKATA-700068 APPEARANCES BY: SHRI A.K. TULSIAN FCA FOR THE APPELLANT SHRI DHRUBOJYOTI ROY JCIT FOR THE RESPONDEN T DATE OF CONCLUDING THE HEARING : JANUARY 22 2020 DATE OF PRONOUNCING THE ORDER : FEBRUARY 28 2020 O R D E R PER SHRI P.M. JAGTAP VICE-PRESIDENT :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-7 KOLKATA DAT ED 22.11.2018. 2. AT THE TIME OF HEARING BEFORE THE TRIBUNAL THE LD. COUNSEL FOR THE ASSESSEE HAS NOT PRESSED GROUND NO. 1 RAISED BY THE ASSESSEE IN THIS APPEAL. THE SAME IS ACCORDINGLY DISMISSED AS NOT PR ESSED. 3. THE ISSUE RAISED IN GROUND NO. 2 RELATES TO THE ADDITION OF RS.4 34 700/- MADE BY THE ASSESSING OFFICER AND CON FIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF GROSS PROFIT @ 10% ON TH E SHORTAGE OF STOCK FOUND DURING THE COURSE OF SURVEY. ITA NO. 2696/KOL/2018 ASSESSMENT YEAR: 2015-2016 M/S. PLYWOOD HOUSE 2 4. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM WHICH IS ENGAGED IN THE BUSINESS OF TRADING OF PLYWOOD. THE SURVEY UNDER SECTION 133A WAS CARRIED OUT AT THE BUSINESS PREMISES OF TH E ASSESSEE ON 27.02.2015. THEREAFTER THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY THE ASSESSEE ON 01.09.20 15 DECLARING TOTAL INCOME OF RS.94 19 640/-. DURING THE COURSE OF SURV EY THE INVENTORY STOCK ON PHYSICAL VERIFICATION WAS FOUND TO BE RS.3 81 61 309/-. THE ASSESSEE HOWEVER POINTED OUT CERTAIN MISTAKES IN THE VALUATION OF STOCK AS PHYSICALLY INVENTORIED DURING THE COURSE OF SURV EY AND AFTER CORRECTING THE SAID MISTAKES THE VALUE OF STOCK WAS ARRIVED A T RS.2 86 11 177/-. AS FOUND BY THE ASSESSING OFFICER THE VALUE OF STOCK AS PER THE BOOKS OF ACCOUNT OF THE ASSESSEE ON THE DATE OF SURVEY HOWE VER WAS RS.3 29 58 186/-. WHEN THE ASSESSEE WAS CALLED UPON TO EXPLAIN THIS DIFFERENCE OF RS.43 47 009/- IT WAS SUBMITTED ON B EHALF OF THE ASSESSEE THAT THE SHORTAGE IN STOCK AS FOUND DURING THE COUR SE OF SURVEY COULD BE ASSUMED TO BE THE SALES AND ONLY PROFIT THEREOF COU LD BE TAXED. ACCORDINGLY THE ASSESSING OFFICER APPLIED THE GROSS PROFIT RATE OF 10% ON THE UNDISCLOSED SALES OF RS.43 47 009/- AND MADE AN ADDITION OF RS.4 34 700/- TO THE TOTAL INCOME OF THE ASSESSEE I N THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 28.12.2017. ON APPEAL THE LD. CIT(APPEALS) CONFIRMED THE SAID ADD ITION MADE BY THE ASSESSING OFFICER FOR THE FOLLOWING REASONS GIVEN I N PARAGRAPH NO. 4.2 OF HIS IMPUGNED ORDER:- 4.2. I HAVE CONSIDERED THE SUBMISSION OF THE AR OF THE APPELLANT IN THE BACKDROP OF THE ASSESSMENT ORDER. I FIND THAT IN THE INSTANT CASE-A SURVEY WAS CONDUCTED ON 27.02 .2015 AT THE BUSINESS PREMISES OF THE APPELLANT. DURING THE COURSE OF SURVEY THE SURVEY TEAM HAS PHYSICALLY FOUND AND IN VENTORIED THE STOCK AND CALCULATED THE VALUE AT RS.3 81 61 30 9/- LATER ON 26.05.2015 THE APPELLANT HAD OBJECTED TO THE CAL CULATION CITING SOME ARITHMETICAL AND CALCULATION MISTAKES AFTER CORRECTION OF CITED CALCULATION MISTAKES THE VALUE OF STOCK CAME TO RS.2 86 11 177/-. HOWEVER IN THE BOOKS OF ASSESSEE THE VALUE OF STOCK WAS SHOWN RS.3 29 58 186/-. THER EFORE IT WAS A CLEAR CASE OF OUT OF BOOKS SALE AMOUNTING TO RS.43 47 009/- (I.E. RS.3 29 58 186/- MINUS RS.2 86 11 177/-). I FIND THAT THE AIR OF THE APPELLANT COULD NOT EXPLAI N THE DISCREPANCY BEFORE THE AO AS WELL AS BEFORE ME. IN FACT THE AR ITA NO. 2696/KOL/2018 ASSESSMENT YEAR: 2015-2016 M/S. PLYWOOD HOUSE 3 HAS EMPHASIZED UPON THE FACT THAT ENTIRE SALES CANN OT BE TAKEN AS INCOME AND ONLY THE PROFIT EMBEDDED IN SUC H OUT OF BOOKS SALES CAN BE TAXED AS INCOME OF THE APPELLANT . THUS I FIND THAT THE DIFFERENCE OF VALUE OF STOCK IS NOTH ING BUT OUT OF BOOKS SALES ONLY AND REMAINS UNEXPLAINED BY THE APP ELLANT. I FIND THAT THE AO HAS SCIENTIFICALLY AND CONSIDERING THE PREVIOUS YEAR DATA BY GOING THROUGH THREE YEARS OF GROSS PROFIT OF THE ASSESSEE FIRM AND TAKING THE TRADE ST ANDARDS COMPARABLE IN THE SAME BUSINESS APPLIED G.P. RATE OF 10% ON THE UNEXPLAINED SALE PROCEED AND ADDED A SUM OF RS.4 34 700/- TO THE INCOME OF THE ASSESSEE FROM BU SINESS. IN VIEW OF THE DETAILED REASONING GIVEN BY THE AO AND NO MATERIAL BROUGHT ON RECORD BY THE APPELLANT THE AC TION OF AO IS HELD TO BE JUSTIFIED. THIS GROUND IS DISMISSED. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE METHOD OF V ALUATION ADOPTED BY THE SURVEY TEAM FOR DETERMINING THE VALUE OF STOCK AS FOUND DURING THE COURSE OF SURVEY WAS DISPUTED BY THE ASSESSEE. HE H AS CONTENDED THAT THE QUANTIFICATION AND VALUATION OF STOCK MADE DURING T HE COURSE OF SURVEY WAS IMPROPER AND SPECIFIC MISTAKES IN THIS REGARD W ERE POINTED BY THE ASSESSEE. HOWEVER AS RIGHTLY SUBMITTED BY THE LD. D.R. SUCH MISTAKES POINTED OUT BY THE ASSESSEE WHEREVER FOUND ACCEPTA BLE WERE TAKEN INTO CONSIDERATION AND ACCORDINGLY THE VALUATION OF STOC K AS MADE DURING THE COURSE OF SURVEY AT RS.3 81 61 309/- WAS REDUCED TO RS.2 86 11 177/-. MOREOVER A SPECIFIC OPPORTUNITY WAS GIVEN BY THE AS SESSING OFFICER TO THE ASSESSEE TO EXPLAIN THE DIFFERENCE IN STOCK AS FINA LLY WORKED OUT AFTER CORRECTING THE MISTAKES POINTED OUT BY THE ASSESSEE AND IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT SUCH DIFFERENCE TO T HE EXTENT OF RS.43 47 009/- COULD BE TREATED AS UNDISCLOSED SALE S AND ONLY PROFIT THEREOF COULD BE BROUGHT TO TAX. KEEPING IN VIEW AL L THESE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE VIEW THAT THE ADDITION OF RS.4 34 700/- MADE BY THE ASSESSING OFFICER BY APPL YING THE GROSS PROFIT RATE OF 10% TO THE SHORTAGE IN STOCK AS FOUND DURIN G THE COURSE OF SURVEY BY TREATING THE SAME AS UNDISCLOSED SALES OF THE AS SESESE WAS FAIR AND REASONABLE. WE THEREFORE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) IN CONFIRMING THE SAID ADDITION MA DE BY THE ASSESSING ITA NO. 2696/KOL/2018 ASSESSMENT YEAR: 2015-2016 M/S. PLYWOOD HOUSE 4 OFFICER AND UPHOLDING THE SAME WE DISMISS GROUND N O. 2 OF THE ASSESEES APPEAL. 6. THE ISSUE RAISED IN GROUND NO. 3 RELATES TO THE ADDITION OF RS.2 06 874/- MADE BY THE ASSESSING OFFICER AND CON FIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF DIFFERENCE IN CASH AS FO UND DURING THE COURSE OF SURVEY. 7. DURING THE COURSE OF SURVEY CASH OF RS.7 84 349 /- WAS FOUND IN THE BUSINESS PREMISES OF THE ASSESSEE AS AGAINST THE C ASH BALANCE OF RS.11 72 925/- APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. SINCE NO SATISFACTORY EXPLANATION COULD BE OFFERED BY THE ASSESSEE IN RESPECT OF THE DIFFERENCE OF RS.2 06 874/- IN CASH THE ASSESS ING OFFICER TREATED THE SAME AS THE INCOME OF THE ASSESSEE AND AN ADDITION OF RS.2 06 874/- WAS MADE BY HIM TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL THE LD. CIT(APPEALS) CONFIRMED THE SAID ADDITION MADE BY TH E ASSESSING OFFICER. 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT SOME OF THE CAS H BELONGING TO THE ASSESSEE-FIRM WAS LYING WITH THE PARTNERS AT THEIR RESIDENCE AT THE TIME OF SURVEY AND THEREFORE THE PHYSICAL CASH AS FOUND D URING THE COURSE OF SURVEY WAS LESS THAN THE CASH BALANCE APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE-FIRM. MOREOVER AS RIGHTLY CONTENDE D BY HIM THE SHORTAGE IN CASH AS FOUND ON PHYSICAL VERIFICATION DURING TH E COURSE OF SURVEY CANNOT BE TREATED AS INCOME OF THE ASSESSEE BY ANY STRETCH OF IMAGINATION AND NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE A SSESSEE ON THE BASIS OF SUCH SHORTAGE IN CASH. THERE IS NO PROVISION IN THE INCOME TAX ACT WHICH WOULD ENABLE TO TREAT SUCH SHORTAGE IN CASH A S INCOME OF THE ASSESSEE. WE THEREFORE HOLD THAT THE ADDITION MAD E BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) BY TR EATING THE SHORTAGE IN CASH AS FOUND DURING THE COURSE OF SURVEY ON PHYSIC AL VERIFICATION IS NOT ITA NO. 2696/KOL/2018 ASSESSMENT YEAR: 2015-2016 M/S. PLYWOOD HOUSE 5 SUSTAINABLE AND DELETING THE SAME WE ALLOW GROUND NO. 3 OF THE ASSESSEES APPEAL. 9. THE ISSUE INVOLVED IN GROUND NO 4 RELATES TO THE DISALLOWANCE OF RS.41 651/- MADE BY THE ASSESSING OFFICER AND CONFI RMED BY THE LD. CIT(APPEALS) OUT OF VARIOUS EXPENSES CLAIMED BY THE ASSESSEE. 10. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND BY THE ASSESSING OFFICER ON VERIFICATION OF THE RELEVANT B ILLS AND VOUCHERS PRODUCED BY THE ASSESSEE THAT THE EXPENSES CLAIMED BY THE ASSESSEE UNDER VARIOUS HEADS AGGREGATING TO RS.4 16 513/- WE RE NOT FULLY VERIFIABLE AND SOME OF THE SAID EXPENSES WERE PERSO NAL IN NATURE. HE THEREFORE DISALLOWED THE SAID EXPENSES TO THE EXTE NT OF 10% WHICH THE LD. CIT(APPEALS) CONFIRMED. 11. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES O N THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. IT IS OBSERVED THAT GOING BY THE NATURE OF THE EXPENSES CLAIMED BY THE ASSESSEE ON BUSINESS PROMOTION LOCAL CONVEYANCE TELEPHONE STAFF WELFA RE ETC. THE INVOLVEMENT OF PERSONAL ELEMENT CANNOT BE RULED OUT AND SINCE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER TO THE E XTENT OF 10% OF THE EXPENSES CLAIMED BY THE ASSESSEE FOR SUCH PERSONAL ELEMENT IS FAIR AND REASONABLE WE FIND NO JUSTIFIABLE REASON TO INTERFE RE WITH THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) AND CONFIRM THE SAME. WE ACCORDINGLY FIND NO MERIT IN GROUND NO.4 AND DISMISS THE SAME. 12. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 28 2020. SD/- SD/- (A.T. VARKEY) (P. M. JAGTAP) JUDICIAL MEMBER VICE-PRESIDENT) KOLKATA THE 28 TH DAY OF FEBRUARY 2020 ITA NO. 2696/KOL/2018 ASSESSMENT YEAR: 2015-2016 M/S. PLYWOOD HOUSE 6 COPIES TO : (1) M/S. PLYWOOD HOUSE 191/3 N.S.C. BOSE ROAD BANSDRONI KOLKATA-700040 (2) ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-25 KOLKATA AAYAKAR BHAWAN DAKSHIN 2 GARIAHAT ROAD (SOUTH) KOLKATA-700068 (3) COMMISSIONER OF INCOME TAX (APPEALS)-7 KO LKATA; (4 CIT- KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES KOLKATA LAHA/SR. P.S.