The ACIT, Circle 2, RAJKOT-GUJARAT v. M/s Nirav Precision Pvt Ltd, RAJKOT-GUJARAT

ITA 35/RJT/2011 | 2007-2008
Pronouncement Date: 09-09-2011 | Result: Dismissed

Appeal Details

RSA Number 3524914 RSA 2011
Assessee PAN AAACN7262Q
Bench Rajkot
Appeal Number ITA 35/RJT/2011
Duration Of Justice 7 month(s)
Appellant The ACIT, Circle 2, RAJKOT-GUJARAT
Respondent M/s Nirav Precision Pvt Ltd, RAJKOT-GUJARAT
Appeal Type Income Tax Appeal
Pronouncement Date 09-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 09-09-2011
Assessment Year 2007-2008
Appeal Filed On 09-02-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI N.R.S. GANESA N (JM) I.T.A. NO.351/RJT/2011 (ASSESSMENT YEAR 2007-08) THE ACIT CIR.2 VS M/S NIRAV PRECISION PVT LTD RAJKOT SHED NO.C-14/208/3 GIDC-II AJI VASAHAT RAJKOT PAN : AAACN7262Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI JC RANPURA RESPONDENT BY: SHRI JM SAHAY DATE OF HEARING : 02-09-2011 DATE OF PRONOUNCEMENT : 09-09-2011 O R D E R PER N.R.S. GANESAN JM THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-III RAJKOT DATED 30-11-2010 AND PERTAINS TO ASSESSMENT YEAR 2007-08. 2. SHRI MK SINGH THE LD.DR SUBMITTED THAT THERE WA S A SURVEY U/S 133A OF THE ACT IN THE PREMISES OF THE ASSESSEE. DURING TH E COURSE OF SURVEY OPERATION PHYSICAL VERIFICATION OF STOCK OF RAW MATERIAL SEM I FINISHED GOODS AND FINISHED GOODS WERE TAKEN. DURING THE COURSE OF SURVEY OPER ATION THE WATCH STRAP HAS BEEN VALUED AT RS.22 ON THE BASIS OF THE STATEMENT RECORDED FROM ONE OF THE DIRECTORS. SINCE THE VALUATION WAS MADE ON THE BAS IS OF THE STATEMENT MADE BY THE DIRECTOR DURING THE COURSE OF SURVEY OPERATION THE ASSESSING OFFICER FOUND THAT THERE WAS EXCESS STOCK TO THE EXTENT OF RS. 22 02 290. ACCORDINGLY THE SAME WAS ADDED AS INCOME OF THE ASSESSEE. HOWEVER ON APPEAL BY THE ITA NO.351/RJT/2011 2 ASSESSEE THE CIT(A) ACCEPTED THE CASE OF THE ASSESS EE THAT THE VALUE OF WATCH STRAP WAS RS.7 TO RS.8 THEREFORE NO ADDITION WAS CALLED FOR. ACCORDING TO THE LD.REPRESENTATIVE THE RATE OF THE WATCH STRAP WAS VALUED ON THE BASIS OF THE STATEMENT MADE IN THE COURSE OF SURVEY PROCEEDINGS THEREFORE THERE IS NO JUSTIFICATION FOR GOING BACK FROM THE STATEMENT MAD E AT THE TIME OF SURVEY OPERATION. 3. ON THE CONTRARY SHRI JC RANPURA THE LD.REPRESE NTATIVE FOR THE ASSESSEE SUBMITTED THAT ADMITTEDLY THERE WAS SURVEY OPERATIO N IN THE PREMISES OF THE ASSESSEE ON 13-12-2006. ACCORDING TO THE LD.REPRES ENTATIVE THE STATEMENT MADE DURING THE COURSE OF SURVEY OPERATION IS NOT A DMISSIBLE AS EVIDENCE. THE MATERIAL ON RECORD CLEARLY SUGGESTS THAT THE WATCH STRAP ONLY COSTS RS.7 TO RS.8 PER STRAP. ON THE BASIS OF THE MATERIAL THE ASSES SEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE ASSESSEE WAS DEALING IN LOW COST WRIST WATCHES AND THE WATCH STRAP COSTS ONLY RS.7 TO RS.8. HOWEVER THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE MERELY ON THE BASIS OF THE STATEMENT GIVEN AT THE TIME OF SURVEY OPERATION. THE ASSESSI NG OFFICER HAS FAILED TO APPRECIATE THE MATERIAL AVAILABLE ON RECORD WHICH S HOWS THAT THE COST OF WATCH STRAP IS ONLY RS. 7 TO RS.8 PER PIECE. THEREFORE THE CIT(A) AFTER CONSIDERING THE MATERIALS ON RECORD FOUND THAT THE WATCH STRAP VALU ES ONLY RS.7 TO RS.8 AND IN FACT IT WAS SOLD IN THE COURSE OF BUSINESS FOR RS. 7 TO RS.8. EVEN IF THE EXCESS STOCK FOUND AS CONTENDED BY THE ASSESSING OFFICER I S HELD AS CORRECT THEN ON SALE OF THE SAME STRAP FOR RS.7 TO RS.8 THE ASSESSE E HAS SUFFERED LOSS ON SALE OF ITA NO.351/RJT/2011 3 SUCH WATCH STRAPS AND THEREFORE IT HAS TO BE ALLOWE D AS A BUSINESS LOSS AND THE NET RESULT WILL BE NIL. THE CIT(A) AFTER CONSIDER ING THE EXPLANATION OF THE ASSESSEE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTED LY THERE WAS A SURVEY OPERATION U/S 133A OF THE ACT IN THE PREMISES OF TH E ASSESSEE ON 13-12-2006. DURING THE COURSE OF SURVEY OPERATION THE WATCH STR AP FOUND WAS VALUED BETWEEN RS.20 TO RS.22 PER STRAP ON THE BASIS OF THE STATEM ENT MADE BY THE DIRECTOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE DI RECTOR EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE VERY SAME STRAP IS WORTH ABOUT RS.7 TO RS.8 PER STRAP. THE ASSESSEE HAS PRODUCED NECESSARY MATERIAL TO SUP PORT THE CONTENTION THAT THE WATCH STRAP IS VALUED ABOUT RS.7 TO RS.8 PER ST RAP. HOWEVER THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS ACCEPTED THE VALUE OF THE STRAP DURING THE COUR SE OF SURVEY OPERATION. SURVEY PROCEEDINGS U/S 133A DOES NOT AUTHORISE THE INCOME-TAX OFFICERS TO ADMINISTER OATH. THEREFORE ANY STATEMENT MADE BY THE ASSESSEE DURING SURVEY PROCEEDINGS U/S 133A MAY NOT BE AN ADMISSIBLE EVIDE NCE. IN FACT THE KERALA HIGH COURT IN THE CASE OF PAUL MATHEW FOUND THAT TH E INCOME-TAX OFFICERS ARE NOT AUTHORIZED TO ADMINISTER OATH DURING THE COURSE OF SURVEY PROCEEDINGS THEREFORE THE STATEMENT RECORDED IS NOT ADMISSIBLE. MOREOVER THE CIT(A) ON VERIFICATION OF THE RECORD FOUND THAT THE VERY SAME WATCH STRAP WAS SOLD SUBSEQUENTLY FOR RS.7 TO RS.8. THEREFORE AS CONTENDED BY THE LD.RE PRESENTATIVE FOR THE ASSESSEE ITA NO.351/RJT/2011 4 EVEN IF WE TAKE THE VALUE OF THE STRAP AT RS.20 TO RS.22 THE LOSS SUFFERED BY THE ASSESSEE ON SALE OF THE SAME AT RS.7 TO RS.8 HAS TO BE ALLOWED AS BUSINESS LOSS. IN SUCH A CASE THE RESULT WOULD BE NIL AS F OUND BY THE CIT(A). THEREFORE IN OUR OPINION THE CIT(A) HAS RIGHTLY DELETED THE ADDITION. THE ORDER OF CIT(A) IS CONFIRMED. 5. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 09-09-2011. SD/- SD/- (A.L. GEHLOT) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT DT : 09 TH SEPTEMBER 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-III RAJKOT 4. THE CIT-II RAJKOT 5. THE DR I.T.A.T. RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT RAJKOT