Shri Yashpal Navalakha, RAJSAMAND v. ACIT, UDAIPUR

ITA 456/JODH/2009 | 2005-2006
Pronouncement Date: 30-11-2011 | Result: Allowed

Appeal Details

RSA Number 45623314 RSA 2009
Assessee PAN AAKPN8955D
Bench Jodhpur
Appeal Number ITA 456/JODH/2009
Duration Of Justice 2 year(s) 4 month(s)
Appellant Shri Yashpal Navalakha, RAJSAMAND
Respondent ACIT, UDAIPUR
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 30-11-2011
Date Of Final Hearing 28-11-2011
Next Hearing Date 28-11-2011
Assessment Year 2005-2006
Appeal Filed On 30-07-2009
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH JODHPUR (BEFORE SHRI R.K. GUPTA AND SHRI .N.L. KALR A ) ITA NOS.456/JU/2009 ASSESSMENT YEARS : 2005-06 PAN: AAKPN 8955 D SHRI YASHPAL NAVALAKHA VS. THE DCIT PROP: M/S. NAVALAKHA MARBLE TRADING CO. CIRCLE- 2 SEHLOTO KI GALI 6 NEW FATEHPURA RAJASAMAND 313326 UDAIPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT KOTHARI DEPARTMENT BY: SHRI G.R. KOKANI DATE OF HEARING: 28-11-2011 DATE OF PRONOUNCEMENT: 30.11.2011. ORDER PER N.L. KALRA AM:- THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD.CIT(A) UDAIPUR DATED 14-05-2009 FOR THE ASSESSMENT YEAR 2005-06 WHEREIN THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRM ING THE ADDITION OF RS 2 12 959/- MADE BY THE AO ON ACCOUNT OF STOCK FOUND DURING THE COUR SE OF SURVEY . 2.1 SURVEY U/S 133A OF THE ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 28-02-2005. THE DISCREPANCIES AND THE A MOUNTS OFFERED FOR TAXATION AS A RESULT OF SURVEY ARE AS UNDER:- ON PHYSICAL VERIFICATION AS PER BOOKS DIFFERENCE OFFERED FOR TAXATION IN THE ROI STOCK OF SLABS AND TILES VALUED AT RS. 12 13 084/- BY RS. 2 40 850 RS. 9 72 234 RS. 9 72 234 2 THE ASSESSEE CASH RS. 10 88 809 RS. 5 05 809 RS. 5 83 000 RS. 5 33 000 DEBTORS UNACCOUNTED RS. 2 50 000 NIL RS. 2 50 000 RS. 2 50 000 TOTAL RS. 18 05 234 RS. 17 45 234 2.2 DURING THE COURSE OF SURVEY THE STOCK OF 8429 CUBIC FEET OF MARBLE SLABS WAS FOUND. IN ORDER TO ASCERTAIN THE VALUE OF MARBLE SL ABS THE ASSESSEE STATED THAT MARBLE SLABS IS CONVERTED INTO MARBLE TILES AND THE YIELD IS TO THE EXTENT OF 75%. TAKING THE COST OF MARBLE TILES AT RS. 15.25 PER SQ. FT. THE ASSES SEE ASCERTAINED THE COST OF MARBLE SLABS AT RS. 9 64 066/-. THE AO WAS OF THE OPINION THAT THE CONTENTION OF THE ASSESSEE FOR 75% OF THE RECOVERY IS WITHOUT ANY BASIS. THE AO HAS NOTIC ED THAT IN MARBLE INDUSTRY THE CONVERSION FORMULA IS TAKEN AT 0.851 AND THE SAME I S APPLIED. THE STOCK WHICH WILL BE AVAILABLE FROM MARBLE SLABS WILL BE OF 77 182 SQ. F T. INSTEAD OF 63 217 5 SQ. FT.. THUS THE AO MADE ADDITION OF RS. 2 12 959/-. 2.3 BEFORE THE LD.CIT(A) IT WAS SUBMITTED THAT THE ASSESSEE ACCEPTED THE RATE OF SLAB OF RS. 15.75 PER SQ. FT. KEEPING IN VIEW OF THE 75% RECOVERY OF SLABS. THE STOCK IS VALUED AT THE COST PRICE OR MARKET PRICE WHICHEVER IS LESS . IF 75% RECOVERY IS NOT ACCEPTABLE THEN RATE PER SQ. FT FOR MARBLE SLABS WILL BE RS. 13.38 PER SQ. FT.. SURVERY PARTY ACCEPED THE RECOVERY OF 75% AND THE VALUE WAS CALCULATED AT THE TME OF SURVEY. THE ASSESSEE SURRENDERED THE AMOUNT WHICH HE OFFERED FOR TAXATIO N DURING THE COURSE OF SURVEY AND THE REVENUE SHOULD NOT WITHDRAW FROM THE ACCEPTED SURRE NDER. 2.4 BEFORE THE LD.CIT(A) THE RELIANCE WAS PLACED O N THE DECISION OF HON'BLE APEX COURT IN THE CASE OF CIT VS BHATACHARGEE (BN) 118 ITR 461. THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS CONFIRMED THE ADDITION AFTER OBSERVING AS UNDER: 3 9 I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSION OF THE LD. AR AND FOUND THAT THE AO MADE THE ADDITION ON ACCOUNT OF DIFFERENCE IN STOCK OF 8 429 CU. FEET . DURING THE COURSE OF SURVEY THE APPELLANT SURRENDERED THE VAL UE OF 75% OF EXCESS STOCK 8 429 CU. FEET MARBLE SLABS @ RS. 15.2 5 AT RS. 9.64 066/-. DURING THE COURSE OF ASSESSMENT PROCEED INGS THE AO ASKED THE ASSESSEE TO FURNISH THE AVERAGE PURCHASE RATE OF SLABS. IN REPLY THE ASSESSEE SUBMITTED THAT THE APPELLANT TA KEN 75% AS RECOVERY ON PROCESSING . THE AO HAS TAKEN THE VALUE OF TOTAL EXCESS STOCK OF 77 182. SQ. FT. INSTEAD OF 63 217.5 SQ. FT. THEREBY ADDING THE VALUE OF DIFFERENCE OF 13 964.5 SQ. FT. . THE LD. AR HAS SUBMITTED THAT THE APPELLANT HAD PURCHASED THE MARB LE BLOCKS OF UNEVEN SHAPE AND SIZE AND AFTER THE PROCESS OF SAWI NG TRIMMING ETC. THE RECOVERY IS 75%. HE FURTHER SUBMITTED THAT THE APPELLANT VALUING THE STOCK OF SLABS AT COST PRICE OR MARKET PRICE WHICHEVER IS LESS. IN THE PRESENT CASE THE COST PRICE OF SLABS COMES TO RS. 13.38 PER SQ. FT.. ON GOING THOUGH THE ORDER IT IS REVEA LED THAT THE AO HAS TAKEN THE COST OF BLOCK @ RS. 15.78 PER SQ. FT. AS STATED BY THE APPELLANT IN THE STATEMENT. FOR VALUING THE EXCESS STOCK FOUND THE AO ADOPTED THE COST PRICE. THE EXCESS STOCK FOUND I S IN RESPECT OF UNDECLARED PURCHASES. FOR VALUING THE BLOCKS THE W ASTAGE OR SHORTAGE IS IMMATERIAL AS THE APPELLANT IS PAYING T HE PURCHASE COST PRICE AFTER CONSIDERING ALL THESE ASPECTS. THE AR HAS ALSO NOT SUBMITTED ANY EVIDENCE OF LESSER COST. IF THERE IS ANY PROCESS LOSS THAT WILL BE TAKEN INTO ACCOUNT IN FINISHED PRODUCT AND VALUATION THEREOF. FOR VALUING THE BLOCK AT COST PRICE THE Q UESTION OF REDUCTION OF 25% DOES NOT ARISE. FURTHER THE METHOD OF VALUATION I.E. COST PRICE OR MARKET RATE WHICHEVER IS LESS IS APPLICABLE ONLY ON CLOSING STOCK AND NOT ON THE UNDISCLOSED STOCK FOUN D DURING THE COURSE OF SURVEY. HERE THE VALUATION OF EXCESS STOC K HAS BEEN MADE SOLELY FOR THE PURPOSE OF ARRIVING TO UNDISCLOSED I NVESTMENT IN 4 EXCESS STOCK. THERE IS ALSO NO COMPULSION ON THE AO TO ADOPT THE FIGURES GIVEN IN THE STATEMENT. IF THERE IS ANY DIS CREPANCY FOUND DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO CAN INCREASE OR DECREASE THE FIGURES MENTIONED IN THE STATEMENT BY SURVEY PARTY. THERE IS NO REASON FOR GIVING REDUCTION OUT OF UNDI SCLOSED STOCK FOR WASTAGE OR SHORTAGE AS THE VALUE TAKEN BY THE AO AS COST PRICE. THEREFORE THE AO RIGHTLY MADE THE ADDITION ON ACCO UNT OF VALUE OF EXCESS STOCK. THE ACTION OF THE IS CONFIRMED AND AP PEAL IS DISMISSED ON THIS GROUND. 2.5 DURING THE COURSE OF PROCEEDINGS BEFORE US TH E LD. AR SUBMITTED THAT THE VALUE OF THE STOCK WAS TAKEN ON THE BASIS OF SLABS AFTER CONSIDERING THE RECOVERY OF THE FINISHED GOODS. THE LOSS IS BOUND TO OCCUR WHEN THE TILES AR E TO BE MADE FROM MARBLES. SURVEY PARTY RECORDED THE STATEMENT OF THE ASSESSEE AND TH E ASSESSEE WORKED OUT THE STOCK AT THE TIME OF SURVEY. IT WAS THEREFORE SUBMITTED THAT TH E LD.CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 2 12 959/-. 2.6 BEFORE US THE LD. DR SUPPORTED THE ORDERS OF T HE AUTHORITIES BELOW. 2.7 WE HAVE HEARD BOTH THE PARTIES. THE PAPER BOOK CONTAINING PAGES 23 TO 27 CONTAINS THE COPY OF BILLS. WHILE SELLING THE SLAB THE ASSESSEE IS REDUCING MEASUREMENT ON ACCOUNT OF CRACK. IN THE CLOSING STOCK ALSO THE RATE PER SQ. FT. IS RS. 13.38 AND THE YIELD WAS NOT CONSIDERED FOR ASCERTAINING THE VALUE OF TH E SLAB ON THE BASIS OF THE COST OF TILES. MOREOVER AT THE TIME OF SURVEY THE ASSESSEE MADE CALCULATION AND THIS CALCULATION WAS ACCEPTED BY THE REVENUE PARTY. THE CALCULATION WAS DONE IN VIEW OF THE PHYSICAL INSPECTION OF THE SLAB. NOW THE AO HAS ESTIMATED TH E COST OF SLAB BY CONSIDERING THE YIELD AT 85%. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAD OBTAINED THE YIELD OF 85%. THE SURVEY WAS CONDUCTED IN THE MID OF THE YEAR AND THE AO SHOULD HAVE GATHERED THE 5 INFORMATION FROM THE RECORDS AS TO HOW SUCH SLAB WA S UTILIZED BY THE ASSESSEE FOR THE PURPOSE OF SALE. WE THEREFORE FEEL THAT THERE WAS NO CASE OF MAKING ADDITION OF RS. 2 12 959/- AS THE CLOSING STOCK WITHOUT CONSIDERING THE YIELD WAS VALUED AT RS. 13.38 FOR THE MARBLE SLABS. 3. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30. 11.2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED: 30 /11/2011 MISHRA COPY TO: 1. SHRI YASHPAL NAVALKHA RAJASMAND 2. THE ACIT CIRCLE-6 DAIPUR 3.THE LD. CIT (A) BY ORDER 4.THE CIT 5.THE D/R 6.THE GUARD FILE (ITA NO. 456/JU/09) A.R.. ITAT: JAIPUR