Lalsons Enterprises, New Delhi v. ACIT, New Delhi

ITA 3515/DEL/2009 | 2006-2007
Pronouncement Date: 20-01-2010 | Result: Allowed

Appeal Details

RSA Number 351520114 RSA 2009
Bench Delhi
Appeal Number ITA 3515/DEL/2009
Duration Of Justice 5 month(s) 9 day(s)
Appellant Lalsons Enterprises, New Delhi
Respondent ACIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 20-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 20-01-2010
Date Of Final Hearing 20-01-2010
Next Hearing Date 20-01-2010
Assessment Year 2006-2007
Appeal Filed On 10-08-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SHRI D.R.SINGH JM AND SHRI R.C.SHARMA AM ITA NO.3515/DEL/2009 ASSESSMENT YEAR : 2006-07 M/S LALSONS ENTERPRISES 23-B/6 NEW ROHTAK ROAD KAROL BAGH NEW DELHI 110 005. PAN NO.AAAFL0045J. VS. ASSTT.COMMISSIONER OF INCOME TAX CIRCLE-33(1) NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJAY VOHRA ADVOCATE AND SHRI GAURAV JAIN AND MS.NIDHI SARIN CAS. RESPONDENT BY : SMT.KAVITA BHATNAGAR CIT-DR. ORDER PER R.C.SHARMA AM : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT DATED 8.6.2009 PASSED U/S 263 OF THE IT ACT. 2. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FROM THE RECORD WE FOUND T HAT ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) ON 30.12.2008 WHEREIN ADDITION WAS MADE BY THE AO IN RESPECT OF SHORTAGE IN PHYSICAL STOCK ACTUALLY FOUN D DURING THE COURSE OF SURVEY WHICH WAS ALLEGED TO BE SOLD OUTSIDE THE BOOKS OF A CCOUNT. THE AO WORKED OUT GROSS PROFIT RATE ON THE ALLEGED SALES MADE OUTSIDE THE BOOKS AND MADE ADDITION IN RESPECT OF GP EARNED THEREON AMOUNTING TO RS.64 119 /- ON ACCOUNT OF GOLD AND RS.1 27 476/- ON ACCOUNT OF DIAMONDS. THE CIT IN H IS ORDER U/S 263 OBSERVED THAT AO SHOULD HAVE ADDED ENTIRE AMOUNT OF SALES AS UNEX PLAINED INCOME OF THE ASSESSEE RATHER THAN ONLY GROSS PROFIT. ACCORDINGL Y ORDER FRAMED BY THE AO U/S 143(3) WAS SET ASIDE ON THIS POINT AND AO WAS DIREC TED TO EXAMINE THE ISSUE AFRESH AND TO FRAME THE ASSESSMENT DE-NOVO. ITA-3515/DEL/2009 2 3. AGGRIEVED BY THIS ORDER OF CIT U/S 263 THE ASSE SSEE IS IN FURTHER APPEAL BEFORE US. IT WAS ARGUED BY LEARNED AR THAT ORDER OF THE AO WAS NOT ERRONEOUS THEREFORE CIT HAS WRONGLY EXERCISED HIS POWERS U/S 263 INSOFAR AS BOTH THE CONDITIONS REGARDING ORDER BEING ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE IS REQUIRED TO BE SATISFIED. HE FURTHE R DREW OUR ATTENTION TO THE STOCK OF GOLD AND DIAMONDS AS FOUND DURING THE COURSE OF SURVEY AS WELL AS AS PER THE BOOKS OF ACCOUNT. THE AO HAS CLEARLY STATED IN HIS ORDER THE SHORTAGE IN STOCK. THERE WAS NO ALLEGATION REGARDING PURCHASE OF SUCH STOCK OUTSIDE THE BOOKS OF ACCOUNT THEREFORE ONLY ADDITION OF GROSS PROFIT ON SALE OF SUCH STOCK SOLD OUTSIDE THE BOOKS OF ACCOUNT WAS TO BE MADE AND THE AO HAS CORRECTLY MADE THE SAME. SINCE THE AO HAS ALREADY MADE ADDITION ON ACCOUNT O F SUCH GROSS PROFIT THE CIT WAS NOT JUSTIFIED IN HIS ORDER U/S 263 FOR TREATING THE ENTIRE SALE AS UNDISCLOSED INCOME OF THE ASSESSEE. 4. ON THE OTHER HAND LEARNED DR ARGUED THAT AO HAS APPLIED THE SAME RATE OF PROFIT BOTH ON THE GOLD AND DIAMONDS ALLEGED TO BE SOLD OUTSIDE THE BOOKS OF ACCOUNT WHEREAS THERE IS ALWAYS DIFFERENCE IN THE G P RATE WITH RESPECT TO THE GOLD AND DIAMONDS. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE TO THE WELL-SETTLED LEGAL PROPOSITION THAT WHILE EXERCISING POWERS U/S 263 BOTH THE CONDITION S WITH REGARD TO ORDER OF THE AO BEING ERRONEOUS AS WELL AS CONDITION FOR PREJUDI CE BEING CAUSED TO THE REVENUE ARE REQUIRED TO BE SATISFIED. EVEN IF ONE OF THE CONDITIONS IS NOT SATISFIED POWER U/S 263 CANNOT BE INVOKED. IN THE INSTANT CA SE ON THE DATE OF SURVEY PHYSICAL STOCK WAS TAKEN AND THE SAME WAS COMPARED WITH THE STOCK AS PER THE BOOKS OF ACCOUNT. ON COMPARISON IT WAS FOUND THAT PHYSICAL STOCK WAS LOWER THAN THE QUANTITY OF STOCK RECORDED IN THE BOOKS OF ACCO UNT THEREFORE IT WAS INFERRED THAT SHORTAGE IN THE STOCK WAS SOLD BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNT. THE AO HAS DEALT WITH ENTIRE ISSUE IN GREAT DETAIL AND AFTER RECORDING THE DETAILS OF ITA-3515/DEL/2009 3 QUANTITY FOUND DURING THE SURVEY AS WELL AS DETAILS OF QUANTITY OF GOLD AND DIAMONDS AVAILABLE IN THE BOOKS OF ACCOUNT WORKED O UT THE SHORTAGE IN STOCK. THEREAFTER HE APPLIED THE GP RATE AS PER THE TAX A UDIT REPORT AND WORKED OUT PROFIT WHICH THE ASSESSEE MIGHT HAVE EARNED ON SUCH SALE O UTSIDE THE BOOKS OF ACCOUNT AND ADDED THE SAME IN THE INCOME OF THE ASSESSEE. SINCE IT WAS NOT THE CASE OF THE DEPARTMENT THAT THE STOCK FOUND IN EXCESS WAS NOT R ECORDED IN THE BOOKS OF ACCOUNT THERE IS NO REASON FOR MAKING THE ADDITION ON ACCOUNT OF SUCH PURCHASE. SINCE ENTIRE PURCHASE WAS ALREADY RECORDED IN THE B OOKS OF ACCOUNT NO SEPARATE ADDITION IS WARRANTED ON ACCOUNT OF SUCH STOCK. TH E ONLY ADDITION WHICH IS REQUIRED TO BE MADE ON ACCOUNT OF SALE OF SUCH STOC K HAVING BEEN NOT SHOWN IN THE BOOKS OF ACCOUNT IS ON ACCOUNT OF GP EARNED BY THE ASSESSEE ON SUCH SALES. AFTER ELABORATELY DISCUSSING THE ISSUE THE AO HAS APPLIE D HIS MIND AND MADE ADDITION ON ACCOUNT OF GP EARNED BY THE ASSESSEE ON SUCH SAL ES OUTSIDE THE BOOKS OF ACCOUNT. THE ORDER OF THE AO IS NOT ERRONEOUS. WE ARE THEREFORE INCLINED TO AGREE WITH THE LEARNED AR THAT NO ADDITION IS WARRANTED O N ACCOUNT OF ENTIRE SALE THE COST OF ACQUISITION OF WHICH IS NOT DISPUTED AND FO UND DULY RECORDED IN THE BOOKS OF ACCOUNT. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. DECISION PRONOUNCED IN THE OPEN COURT ON 20 TH JANUARY 2010. SD/- SD/- (D.R.SINGH) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :20.01.2010. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT DEPUTY REGISTRAR ITA-3515/DEL/2009 4