The DCITNavsari Circle,, Navsari v. M/s. Shiv & Co.,, Navsari

ITA 31/AHD/2009 | 2005-2006
Pronouncement Date: 30-09-2011 | Result: Dismissed

Appeal Details

RSA Number 3120514 RSA 2009
Assessee PAN ABBFS3828C
Bench Ahmedabad
Appeal Number ITA 31/AHD/2009
Duration Of Justice 2 year(s) 8 month(s) 28 day(s)
Appellant The DCITNavsari Circle,, Navsari
Respondent M/s. Shiv & Co.,, Navsari
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 30-09-2011
Date Of Final Hearing 29-09-2011
Next Hearing Date 29-09-2011
Assessment Year 2005-2006
Appeal Filed On 02-01-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD BEFORE SHRI T.K. SHARMA JUDICIAL MEMBER AND SHRI A. K. GARODIA ACCOUNTANT MEMBER I.T.A. NO. 31/ AHD/2009 (ASSESSMENT YEAR 2005-06) DCIT NAVSARI CIRCLE NAVSARI VS. M/S. SHIV & CO. NEAR PANDYA TOWER OPP. SHOPPING CENTRE DUDHIA TALAV NAVSARI PAN/GIR NO. : ABBFS3828C (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI S P TALATI SR. DR RESPONDENT BY: SHRI S N SOPARKAR AR DATE OF HEARING: 29.09.2011 DATE OF PRONOUNCEMENT: 30-09-2011 O R D E R PER SHRI A. K. GARODIA AM:- THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDE R OF LD. CIT (A) VALSAD DATE 19.09.2008 OF THE ASSESSMENT YEAR 2005- 06. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE A.O. ON ACCOUNT OF UNSTRATED OF SURVEY DISCLOSURE OF RS.13 92 691/-. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT (A) OUGHT TO HAVE UPHELD THE ORDER OF T HE A.O. AND DISMISSED THE PLEA OF THE ASSESSEE. 3) IT IS THEREFORE PRAYED THAT THE ORDER OF CIT(A) BE SET ASIDE AND THAT OF THE ORDER OF A.O. BE RESTORED. I.T.A.NO. 31 /AHD/2009 2 2. THE BRIEF FACT TILL THE ASSESSMENT STAGE ARE NOT ED BY THE LD. CIT(A) IN PARA 2 OF HIS ORDER WHICH ARE REPRODUCED BELOW: THE FACTS OF THE CASE IN BRIEF ARE THAT THE APPELL ANT FIRM IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND HAD FILED THE RETURN OF INCOME ON 25.08.2005 DECLARING TOTAL INCOME AT RS. 17 25 750/-. THE ASSESSMENT WAS FINALIZED U/S. 143(3) OF THE ACT AND THE TOTAL INCOME WAS ASSESSED AT RS. 31 18 440/-. IN THE PREV IOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL A SUR VEY ACTION U/S. 133 A OF THE ACT WAS CARRIED OUT AT THE BUSINESS PR EMISES OF THE APPELLANT ON 01.03.2005. DURING THE COURSE OF SURVE Y CERTAIN UNACCOUNTED INVESTMENTS / EXPENSES OF RS. 13 93 250 7- AND UNACCOUNTED CASH OF RS. 4 16 300/- WERE FOUND AND T HE APPELLANT HAD SURRENDERED THE SAME AS INCOME OF THE FINANCIAL YEAR. WHILE FINALIZING THE ASSESSMENT BY ESTIMATING THE NORMAL PROFIT AT RS. 13 08 889/- AND ADDING THERETO THE SURVEY DISCLOSUR E OF RS. 18 09 5507- THE AO DETERMINED THE TOTAL INCOME AT R S. 31 18.4897- AND AFTER ADJUSTING THE TOTAL INCOME OF RS. 17 25 7 487- AS OFFERED BY THE APPELLANT IN THE RETURN OF INCOME MADE THE ADDITION OF RS. 13 92 697- ON ACCOUNT OF UNDERSTATEMENT OF SURVEY D ISCLOSURE AND THE ORDER WAS FINALIZED U/S. 143(3) ON 31.12.2007. THE ASSESSING OFFICER STATED THAT THE APPELLANT FIRM HAD NULLIFIE D THE SURVEY DISCLOSURE BY DEBITING AND CREDITING THE TRADING AC COUNT BY RS. 13 93 2507- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN BUILDING MATERIAL DISCLOSED AS ADDITIONAL INCOME AT THE TIME OF SURVEY. HE ALSO STATED THAT THE APPELLANT FIRM HAD CLAIMED EXP ENSES AGAINST THE UNACCOUNTED CASH OF RS. 4 16 3007- WHICH WAS CREDIT ED TO PROFIT & LOSS ACCOUNT AND ACCORDINGLY HAD NOT FULLY OFFERED TO TAX THE INCOME DISCLOSED AT THE TIME OF SURVEY AS ITS ADDIT IONAL INCOME. 3. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A). BEFORE CIT(A) THIS ARGUMENT WAS TAKEN BY THE ASSESSEE THAT THERE WEE THREE EFFECTS OF ENTRIES RELATED TO DECLA RATION ON ACCOUNT OF PURCHASE OF RS.13 93 250/- WHICH INCLUDE ONE ENTRY ON DEBIT SIDE AND TWO ENTRIES ON CREDIT SIDE. IT WAS THE CONTENTION RAISED BEFORE THE CIT (A) THAT THE CLOSING STOCK OF W.I.P. SHOWN AT RS.42 46 500/- INCLUDES THE I.T.A.NO. 31 /AHD/2009 3 AMOUNT O MATERIAL DECLARED BY THE ASSESSEE IN THE C OURSE OF SURVEY. ON PAGE 5 OF HIS ORDER IT IS NOTED BY THE CIT (A) THA T A WORKING HAS BEEN GIVEN BY THE ASSESSEE AS PER WHICH TOTAL AMOUNT OF CORPORATE CONTROL EXPENSES LABOUR MAJOOR WORK AND PROPORTIONATE COS T OF LAND ETC. IS ONLY RS.34.95 LACS AND HAVE CONSTRUCTION INCOME (SALES) IS REDUCED THERE FROM OF RS.6.66 LACS AND NET IS ONLY RS.28.29 LACS AND H ENCE THE CLOSING STOCK OF W.I.P. SHOWN AT RS.42 46 500/- INCLUDES THE ADDI TIONAL MATERIAL DECLARED IN THE COURSE OF SURVEY. LD. CIT (A) HAS DELETED THE ADDITION AND NOW REVENUE IS IN APPEAL BEFORE US. 4. IT IS SUBMITTED BY THE LD. D.R. OF THE REVENUE T HAT THE WORKING GIVEN BEFORE LD. CIT (A) WAS NOT GIVEN BEFORE THE A .O. AND HENCE THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE A .O. FOR FRESH DECISION. 5. AS AGAINST THIS LD. A.R. OF THE ASSESSEE SUPPO RTED THE ORDER LD. CIT (A). THIS QUERY WAS RAISED BY THE BENCH AS TO WHETHER THE WORKING OF THE VALUATION OF CLOSING STOCK OF W.I.P. WAS MAD E AVAILABLE TO THE A.O. LD. A.R. COULD NOT SHOW US THAT THE SAME WAS MADE A VAILABLE TO THE A.O. HE PLACED RELIANCE ON THE TRIBUNAL DECISION RENDERE D IN THE CASE OF ITO VS SEVEN EARTH IN I.T.A.NO. 3951/AHD/2008 DATED 15. 03.2011. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT THE ADDITION MADE BY THE A.O. ON THIS BASIS TH AT HE ADDITIONAL INCOME DECLARED BY THE ASSESSEE IN THE COURSE OF SURVEY W NOT INCLUDED BY THE ASSESSEE IN THE PROFITS SHOWN BY HIM WHEREAS THE SA ME WAS DELETED BY THE LD. CIT(A) ON THIS BASIS THAT THIS INCOME WAS INCLU DED IN THE PROFITS SHOWN BY THE ASSESSEE IN ITS TRADING AND P & L ACCO UNT AND THE BASIS OF THIS IS THIS THAT CLOSING STOCK OF W.I.P. SHOWN BY THE ASSESSEE AT I.T.A.NO. 31 /AHD/2009 4 RS.42 46 500/- INCLUDES THIS AMOUNT OF ADDITIONAL M ATERIAL DECLARED BY THE ASSESSEE IN THE COURSE OF SURVEY. TO EXAMINE THE V ERACITY OF THIS CONTENTION RAISED BY THE ASSESSEE BEFORE LD. CIT(A) AND HIS DECISION IT IS IMPORTANT TO SEE THE WORKING REGARDING VALUATION OF CLOSING STOCK OF W.I.P. BUT THE SAME IS NOT AVAILABLE IN THE PAPER B OOK AND THE LD. A.R. OF THE ASSESSEE COULD NOT SHOW US ANY SUCH WORKING WAS MADE AVAILABLE BY THE ASSESSEE BEFORE THE A.O. LD. CIT(A) HAS NOTED T HE ARGUMENT OF THE LD. A.R. ON PAGE 5 OF HIS ORDER THAT THE TOTAL AMOU NT OF COST INCURRED AND DEBITED IN THE P & L ACCOUNT IS AMOUNT OF/RS.34.95 LACS OUT OF WHICH THE ASSESSEE DECLARED CONSTRUCTION INCOME (SALES) OF RS .6.66 LACS AND HENCE NET AMOUNT OF EXPENSES IS AMOUNT OFR?S.28.29 LACS A ND THEREFORE THE CLOTTING STOCK OF W.I.P. SHOWN BY THE ASSESSEE AT R S.42 46 500/- INCLUDES AMOUNT OF ADDITIONAL MATERIAL DECLARED BY THE ASSES SEE OF RS.13 93 280/-. HE HAS IMMEDIATELY ACCEPTED THE ARGUMENT OF THE LD. A.R. ON THIS BASIS THAT IF IT IS ACCEPTED THAT THE CLOSING STOCK OF W. I.P. OF RS.42 46 500/- IS WITHOUT INCLUDING THE VALUATION OF MATERIAL DECLARE D BY THE ASSESSEE IN THE COURSE OF SURVEY OF RS.13 93 280/- IT WILL RESULT I NTO GROSS PROFIT OF RS.219.54%. WE DO NOT FIND ANY INFIRMITY IN THE FI NDING OF LD. CIT(A) BECAUSE ADMITTEDLY THE VALUE OF CLOSING STOCK CANN OT EXCEED THE COST INCURRED BY THE ASSESSEE AND SINCE THE TOTAL COST D EBITED IN THE P & L ACCOUNT IS ONLY; RS.34.95 LACS OUT OF WHICH THE ASS ESSEE HAS SHOWN CONSTRUCTION INCOME (SALES) OF RS.6.66 LACS THE CO ST FROM SUCH SALES HAS TO BE REDUCED FROM SUCH EXPENSES AND ONLY ;THE BALA NCE AMOUNT CAN BE THE CLOSINGS STOCK OF W.I.P. WITHOUT INCLUDING THE DECLARATION OF MATERIAL IN THE COURSE OF SURVEY OF RS.13.93 LACS. WHICH WE DO SO. WE FIND THAT IF WE EXCLUDE THE VALUE OF MATERIAL DECLARED OF RS.13 93 250/- FROM THE I.T.A.NO. 31 /AHD/2009 5 CLOSING STOCK OF W.I.P. SHOWN BY THE ASSESSEE AT RS .42 46 500/- THE GROSS PROFIT COMES TO RS.68 940/- WHICH IS ABOUT 10% OF T HE CONSTRUCTION INCOME (SALES). CONSIDERING ALL THESE FACTS WE FE EL THAT LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE A.O. AND N O INTERFERENCE IS CALLED FOR IN THE ORDER OF LD. CIT(A). 7. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEP. 2011. SD/- SD/- (T.K. SHARMA) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED : 30 -09-2011. SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR AHMEDABAD BY ORDER 6. THE GUARD FILE AR ITAT AHMEDABAD 1. DATE OF DICTATION. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER.. OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..