DCIT, New Delhi v. M/s Shruti Fastners Ltd., New Delhi

ITA 4518/DEL/2010 | 2007-2008
Pronouncement Date: 31-03-2011 | Result: Dismissed

Appeal Details

RSA Number 451820114 RSA 2010
Assessee PAN AAACS2175H
Bench Delhi
Appeal Number ITA 4518/DEL/2010
Duration Of Justice 5 month(s) 19 day(s)
Appellant DCIT, New Delhi
Respondent M/s Shruti Fastners Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 31-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 31-03-2011
Date Of Final Hearing 29-03-2011
Next Hearing Date 29-03-2011
Assessment Year 2007-2008
Appeal Filed On 12-10-2010
Judgment Text
ITA NOS. 4219&4518/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI A.D. JAIN JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NOS. 4219/DEL/2010 A.Y. : 2007-08 M/S SHRUTI FASTNERS LTD. C/O O.P. SAPRA & ASSOCIATES C-763 NEW FRIENDS COLONY NEW DELHI 110 0025 (PAN/GIR NO. : AAACS2175H) VS. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-8(1) NEW DELHI AND ITA NO. 4518/DEL/2010 A.Y. 2007-08 DY. COMMISSIONER OF INCOME TAX CIRCLE-8(1) ROOM NO. 163 C.R. BUILDING NEW DELHI VS. M/S SHRUTI FASTNERS LTD. KALKAJI NEW DELHI 1666-B GOVINDPURI EXTENSION (PAN/GIR NO. : AAACS2175H) (APPELLANT (APPELLANT (APPELLANT (APPELLANT S SS S ) )) ) (RESPONDENT (RESPONDENT (RESPONDENT (RESPONDENT S SS S ) )) ) ASSEESSEE BY : SH. O.P. SAPRA ADVOCATE DEPARTMENT BY : SH. KISHORE B. (D.R.) ORDER ORDER ORDER ORDER PER PER PER PER BENCH BENCH BENCH BENCH THESE CROSS APPEALS BY THE ASSESSEE AND BY THE RE VENUE EMANATE OUT OF THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 14.7.2010 PERTAINING TO ASSESSMENT Y EAR 2007-08. ITA NOS. 4219&4518/DEL/2010 2 2. IN THIS CASE A SURVEY OPERATION IN ASSESSEES P REMISES U/S 133A OF THE IT ACT WAS CONDUCTED. DURING THE COURSE OF SURVEY INVENTORY OF STOCK WAS TAKEN BY THE SURVEY TEAM IN THE PRESENCE O F THE MAIN DIRECTOR OF THE ASSESSEE COMPANY SMT. ASHA RANI SINGH AL AND INVENTORY WAS VALUED AT ` 7 02 39 612/-. THE DETAI LS OF THIS INVENTORY ALONGWITH VALUATION WERE PROVIDED TO AUTHORIZED RE PRESENTATIVE FOR HIS COMMENTS. THE ASSESSEES REPRESENTATIVE FILED A LET TER IN WHICH INVENTORY AND THE VALUATION WAS EXCEPT THE FOLLOWI NG ITEMS:- SR. NO. NAME CODE SIZE QUANTITY TOTAL RATE VALUE 26 ZIP YKK SFL 43X2000 86000 191.57 16475020 47 ZIP YKK TAPE 100X1000 100000 191.57 19157000 154 ZIP YKK SCHC36 12X200 2400 191.57 459 768 2.1 ASSESSEE CONTENDED THAT VALUATION OF THE DEPART MENT WAS NOT PROPER. ASSESSEE SUBMITTED AS UNDER:- 1. ITEM LISTED SL. NO. 26 ON PAGE NO. 11 WE DO NOT HAVE ANY ITEM IN ZIP WHICH IS HAVE ANY NAME OR AS SFLLFC32. NO R WE HAVE ANY ITEM OF 43 ROLLS X 2000 MTR. EACH MAKING TOTAL OF 86000 MTRS. YOU STAFF HAD MADE MISTAKE DURING RECORDI NG ON THE DATE OF SURVEY AND MISSED THE DETAILS PRINTED ON LABELS OR CARTONS ETC. 2. SAME WAY ITEM NO. 47 ON PAGE NO. 11 ANOTHER ITEM A S ZIP TAPE 100 X 1000 MTR. MAKING TOTAL OF 100000 MTRS. HER E ALSO THE CORRECT RECORDING OF DETAILS ARE MISSED. ITA NOS. 4219&4518/DEL/2010 3 3. SOME WAY ITEM NO. 154 AS LISTED ON PAGE 15 ZIPS S CHC36 AS 12 BUNDLES X 200 MTRS. MAKING TOTAL OF 2400 MTRS. WE DO NOT HAVE ANY SUCH ITEM AND DETAILED PRINTED LA BELS OR CARTON ARE MISSING. THE PRICE OF ALL ABOVE THREE ITEMS HAD BEEN VALUED BY YOUR DEPARTMENT AS ` 191.57 PER MTR. WE OR YKK DOES HAVE AS LFC-32 AND THEY SELL THIS ITEM AS READY ZIPPER ONLY AND THEY NEVER SELL IN PARTS AS CHAIN IN ROLLS AND SLID ERS. JUST FOR SAKE OF ARGUMENT IF WE ACCEPT THAT IT WA S THE SAME ITEM THE SIMILAR READY ZIPPER IS LISTED ON PAGE 1 IT EM NO. 21 SIZE 32 INCH IS VALUED AS ` 6.93 PER PC. EVEN IF WE PRESUME AS THIS WAS THE SAME ITEM IN ROLL THE PER MTR. COST WILL NOT MORE THAN ` 5.85 PER MTR. PLEASE SEE YKK INDIA DEALER PRICE LIST AS ATTACHED. THEREFORE THE VALUATION OF THIS ITEM BY DEPARTMENT IS STILL WRONG. SECONDLY THE ITEM AS TAPE IS ALSO NOT RECORDED CORR ECTLY HERE. WE DO NOT HAVE ANY ITEM OF CHAIN IN ROLL OF 1 000 MTR. EACH NOR IS ANY ITEM LISTED IN YKK AS TAPE. TAPE IS A PART OF ZIP IN ROLL AND SIDE PART OF ANY ZIP IS CALLED AS T APE. IF THAT WAS JUST A TAPE ONLY IT CAN BE HARDLY OR ANY VALUE OF ` 2 PER MTR. MORE OVER WE HAD NEVER BUY OR SOLD ANY ITEM NAMED AS JUST TAPE. THEREFORE THE VALUATION OF THIS ITEM BY DEPARTMENT IS WRONG. ITA NOS. 4219&4518/DEL/2010 4 THIRDLY THE LAST ITEM AS RECORDED ON PAGE 15 ITEM N O. 154 AS SCHC36. YKK DOES NOT SELL SIMILAR ITEM (CHC 36) IN PARTS AS CHAIN IN ROLL AND SLIDERS. EVEN IF WE PRESUME IT WAS THE SAME ITEM PLEASE SEE PRICE ON PAGE NO. 7. ITEM NO. 194 SIZE 22 INCH IS VALUED @ ` 34.29 PC. THEREFORE THE MAXIMUM PRICE OF THIS ITEM CAN VALUED AS ` 35.88 PER MTR. ONLY. PLEASE SEE YKK INDIA DEALER PRICE LIST AS ATTACHED . THEREFORE THE VALUATION OF THIS ITEM BY DEPARTMENT IS WRONG. EVEN IF WE PRESUME AS THESE ARE TOP MOST THREE HIGH VOLUME AND HIGH VALUE ITEMS SOLD BY YKK INDIA TO ME THE PRICE OF TOP HIGH VALUE ITEMS ARE ` 33.56 PER MTR. ` 27.97 PER MTR AND ` 3.32 PER MTR. ONLY. WE HEREBY REQUEST YOUR OFFICE TO ACCEPT THESE VALU E OF ABOVE THREE ITEMS. 2.2 HOWEVER ASSESSING OFFICER DID NOT AGREE WITH THE CONTENTIONS OF THE ASSESSEE. HE MADE THE ADDITION AS UNDER:- I HAVE CONSIDERED THE ABOVE REPLY AND HAVE ALSO GO NE THROUGH THE PRICE LIST OF M/S YKK AVAILABLE IN THE SURVEY F OLDER AND IT IS SEEN THAT NONE OF THE ITEMS ARE PRICED AT MORE THAN 40 RUPEES AND ON GOING THROUGH THE VALUATION DONE BY THE SU RVEY TEAM IT IS SEEN THAT THERE IS ONE ITEM WHOSE PRICE IS MAXIMU M AT ` 59.48 MENTIONED AT SL. NO. 96 OF PAGE 9. THEREFORE IN OR DER TO BE JUST AND FAIR THE PRICE OF THESE ITEMS IS TAKEN AT ` 59 .48 INSTEAD OF 191.57. THE DIFFERENCE IN VALUE COMES TO ` 2 48 8 5 756/-. IF THIS VALUE IS REDUCED FROM THE VALUATION OF ` 7 02 39 61 2/- THEN THE NEW VALUATION OF STOCK COMES TO ` 4 53 53 856/-. AS AGAINST THIS ITA NOS. 4219&4518/DEL/2010 5 THE VALUATION AS PER THE BOOKS OF ACCOUNT AS ON THE DATE OF SURVEY I.E. 7 TH SEPTEMBER 2006 COMES TO 3 99 06 530/-. THE DIFFERENCE IN THE VALUATION OF PHYSICAL STOCK AS WO RKED OUT HERE IN ABOVE AND THE BOOKS STOCK AS WORKED OUT BY THE ASSE SSEE ON THE DATE OF SURVEY IS ` 54 47 326/-. 3. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) ELABORATELY CONSIDERED THE ISSUE. THIS ISSUE TO BE DECIDED BE ME AS TO WHETHER THE R ATE APPLIED AT ` 59.48 PER METER BY THE ASSESSING OFFICER IS CORR ECT OR NOT. AFTER GOING THROUGH THE RECORDS I AM ALSO OF THE OPI NION THAT THE ASSESSING OFFICER HAS TAKEN THE MAXIMUM RATE AS GIVE N IN S.NO. 96 OF THE THIRD INVENTORY. THERE ARE VARIOUS RATE S FOR VARIOUS ITEMS BUT THE APPELLANT HAS ALSO FAILED TO ESTABLISH THAT THERE WAS NO CONCEALMENT IN INVENTORY. HAD IT BEEN SHOW THER E WOULD HAVE BEEN NO OCCASION FOR DIFFERENCE IN CLOSING STOCK. THE APPELLANT FAILED TO RECONCILE ON THE DATE OF SURVEY AND TRIED TO RECONCILE THE SAME AT THE LEVEL OF THE ASSESSING OFFICER AFTER 3 YEARS AND 3 MONTHS AND ALSO BEFORE ME ON 29.4.10 I.E. AFTER ABOUT 4 YEARS FROM THE DATE OF SURVEY. ALTHOUGH THE ENTIRE PROCES S OF EXPLAINING THE THING AFTER 3 YEARS BEFORE THE ASSES SING OFFICER IS A HIGHLY QUESTIONABLE MODE TO EXPLAIN THE ITEM AT T HE SAME TIME AT THIS STAGE I CANNOT ACCEPT THE FIGURE OF THE ASS ESSING OFFICER WHICH IS THE HIGHEST FIGURE OF THE RATE FOR THE ENT IRE PERIOD. THE FACT REMAINS THAT THERE WAS DISCREPANCY QUANTITY WI SE IN THE INVENTORY AND THE SAID MATTER HAS NOT BEEN REFUTED BY THE APPELLANT EITHER BEFORE THE ASSESSING OFFICER OR B EFORE ME. VIDE ITA NOS. 4219&4518/DEL/2010 6 LETTER DATED 07.07.2010 THE APPELLANT STATED BEFORE ME AS BELOW:- FURTHER WE VERIFIED ALL THE PURCHASED MADE DURING THE YEAR AND FOUND THAT PURCHASE OR ROLLS DONE IN GOOD QUALITIES IS OF ` 33.56 PER METER AND AS ALL ITEMS O F STOCK UNDER DISPUTE ARE IN METER HENCE AT THE MOST ALL IT EMS CAN BE VALUED AT ` 33.56 PER METER WITHOUT PREJUDICE T O THE VALUATION SUBMITTED EARLIER BY THE ASSESSEE. IF WE TAKE THE VALUE OF ALL ITEMS @ 33.56 PER METE R AND THE TOTAL IS ` 188 400 METER VALUING ` 63 22 70 4/- AS AGAINST VALUATION OF ` 1 12 06 032/- DONE BY THE AS SESSING OFFICER @ ` 59.48 PER METER. ACCORDINGLY ADDITION OF ` 48 83 328/- BE DELETED AND THE ASSESSEE ILL BE GIV EN RELIEF FOR THE SAME. CONSIDERING THE CASE IN TOTALITY I HOLD THAT TRUTH LIES SOMEWHERE IN BETWEEN AND IT (THE RATE) IS NOT ` 59.48 PER MET ER AS COMPUTED BY THE ASSESSING OFFICER AND AGAIN IT IS NOT ` 33.56 PER METER AS OFFERED BY THE APPELLANT VOLUNTARILY B EFORE ME ON 7.7.10. CONTRARY TO THE FIGURE OF THE BOTH THE A PPELLANT AND THE ASSESSING OFFICER I FIND ` 37.96 IS THE RATE PER METER FOR GOOD NUMBER OF ITEMS AND JUSTICE WILL BE DISPENSED IF WE KEEP THE RATE AT ` 37.96 PER METER AND THE NEW CALCULATION WILL B E AS BELOW:- S.NO. DESCRIPTION PRICE 1. TOTAL QUANTITY OF 1 88 400 METER ON THREE ITEMS @ ` 191.57 AS SHOWN IN THE SURVEY REPORT. 3 60 91 788/- 2. TOTAL QUANTITY OF 1 88 400 METER @ 59.48 AS APPLIED BY THE ASSESSING OFFICER ON 1 12 06 032/- ITA NOS. 4219&4518/DEL/2010 7 THE BASIS OF HIGHEST PRICED ITEM AS SUBMITTED BY THE APPELLANT BEFORE THE ASSESSING OFFICER 3. THE VALUATION OF INVENTORY TAKEN BY THE DEPTT ON DATE OF SURVEY I.E. ON 07/09/06 IN PRESENCE OF APPELLANT. 7 02 39 612/- 4. VALUATION OF INVENTORY AS SHOWN BY THE APPELLANT IN THE RETURN FOR A.Y. 07-08. 3 99 06 530/- 5. TOTAL QUANTITY OF 1 88 400 METER @ ` 37.96 AS SHOWN IN THE SURVEY REPORT 71 51 664/- 6. REDUCE VALUATION OF INVENTORY WITH RESPECT TO ASSESSING OFFICER (2-5) 40 54 368/- 7. DIFFERENCE IN VALUATION AS PER ASSESSING OFFICER I.E. CONCEALMENT IN STOCK 54 47 326/- 8. DIFFERENCE IN VALUATION I.E. ACTUAL CONCEALMENT IN STOCK NOW COMPUTED (7-6) 13 92 958/- HENCE THE CONCEALMENT IS RESTRICTED TO ` 13 92 958 /- AND THE APPELLANT WILL GET A RELIEF OF ` 40 54 368/-. 4. AGAINST THE ABOVE ORDER THE ASSESSEE AND REVE NUE IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. WE FIND THAT SURVEY TEM HAS DONE THE VALUATION @ 19 1.60. WE FIND THAT THE ASSESSING OFFICER HAS ADOPTED THE RATE OF 59.48 FOR VALUATION OF THE INVENTORY. THIS RELATES TO THE I TEM WHICH HAD THE MAXIMUM RATE. WE FAIL TO UNDERSTAND HOW THIS CAN BE APPLIED WITHOUT FINDING ANY RELATIONSHIP OF THIS RATE WITH THE IMPUGNED ITEM. LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN TH E FINDING THAT ASSESSING OFFICER HAS TAKEN THE MAXIMUM RATE AS GIVEN IN SL. NO. 96 OF THE 3 RD INVENTORY. LD. COMMISSIONER OF INCOME TAX (APPEALS ) NOTED THAT ASSESSEE HAS FAILED TO ESTABLISH THAT THERE WA S NO CONCEALMENT IN INVENTORY. HE HAS NOTED THAT ASSESSEE HAS FAILED TO RECONCILE ON THE ITA NOS. 4219&4518/DEL/2010 8 DATE OF SURVEY AND TRIED TO RECONCILE THE SAME AT T HE LEVEL OF THE ASSESSING OFFICER AFTER THREE YEARS AND THREE MONTH S. HE HAS FOUND THAT THIS IS A VERY QUESTIONABLE PROCESS. HE HAS NOTED THAT THE FACT REMAINS THAT THERE WAS DISCREPANCY QUANTITY WISE IN THE INVENTORY AND THE SAID MATTER HAS NOT BEEN REFUTED BY THE ASSESSE E EITHER BEFORE THE ASSESSING OFFICER OR BEFORE HIM. UNDER THE CIRCUMSTA NCES LD. COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT E STIMATE IS NEEDED TO BE MADE WHILE THE ASSESSING OFFICER HAD A PPLIED ` 59.48 RATE. ASSESSEE OFFERED ` 33.56 PER METER. LD. COMMIS SIONER OF INCOME TAX (APPEALS) HAS PROCEEDED TO APPLY THE RATE OF 3 7.96. IN OUR CONSIDERED OPINION IN ABSENCE OF DIRECT EVIDENCES E STIMATE IS INEVITABLE ON THE FACTS AND CIRCUMSTANCES OF THE CAS E. IN OUR CONSIDERED OPINION LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS MADE A REASONABLE ORDER WHICH DOES NOT NEED ANY IN TERFERENCE ON OUR PART. ACCORDINGLY WE UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 6. IN THE RESULT THE BOTH THE APPEALS FILED BY THE ASSESSEE AND THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/03/2011. SD/- SD/- [ [[ [A.D. JAIN A.D. JAIN A.D. JAIN A.D. JAIN] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 31/03/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER ITA NOS. 4219&4518/DEL/2010 9 A.R. ITAT DELHI BENCHES