ITO 15(1)(1), MUMBAI v. SUNRISE GOLD, MUMBAI

ITA 5030/MUM/2009 | 2006-2007
Pronouncement Date: 15-07-2011 | Result: Dismissed

Appeal Details

RSA Number 503019914 RSA 2009
Bench Mumbai
Appeal Number ITA 5030/MUM/2009
Duration Of Justice 1 year(s) 10 month(s) 12 day(s)
Appellant ITO 15(1)(1), MUMBAI
Respondent SUNRISE GOLD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 15-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 15-07-2011
Date Of Final Hearing 02-06-2011
Next Hearing Date 02-06-2011
Assessment Year 2006-2007
Appeal Filed On 02-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH L MUMBAI BEFORE SHRI P.M. JAGTAP A.M. AND SHRI V. DURGA RAO J.M. ITA NO. 5030/MUM/2009 ASSESSMENT YEAR: 2006-07 INCOME TAX OFFICER-15(1)(1) . APPELLANT 116 MATRU MANDIR TARDEO MUMBAI 7. VS. M/S SUNRISE GOLD RESPONDENT BY PARTNER MADAN SANCHETI 203A BHAVNA COMPLEX BHAVANI SHANKER ROAD DADAR WEST MUMBAI 400 029 APPELLANT BY : MR. G.P. TRIVEDI RESPONDENT BY : MR. MANISH SANGHVI ORDER PER V. DURGA RAO J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)-XV MUMBAI PASSED ON 29/06/2009 FOR THE ASS ESSMENT YEAR 2006-07. 2. THE GROUND RAISED BY THE REVENUE IN THIS APPEAL IS AGAINST THE DELETION OF ADDITION OF RS. 18 17 345/- BY THE CIT( A) ON ACCOUNT OF GOLD JEWELLERY. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS A PARTNERSHIP FIRM SINCE 05/12/2003 ENGAGED IN THE BU SINESS OF JEWELLERY AND LABOUR JOB WORK OF REPAIRING AND MANU FACTURING OF THE GOLD JEWELLERY. THE ASSESSEE FILED ITS RETURN OF IN COME ON 31/10/06 DECLARING TOTAL LOSS OF RS. 1 48 623/-. THERE WAS A SURVEY U/S 133A ITA NO. 5030/M/2009 SUNRISE GOLD 2 ON 17/08/005 IN WHICH STOCK REGISTER FOUND WHICH WAS WRITTEN UP TO 28/05/06 AND RECONCILED UP TO 17/08/05. AS PER THE STOCK REGISTER SO UPDATED STOCK OF GOLD JEWELLERY WAS OF 7936.633 GMS WHEREAS SURVEY PARTY HAD NOTED THE PHYSICAL STOCK 3868.98 GMS. OF GOLD JEWELLERY. THUS THERE WAS A DIFFERENCE OF 4067.453 GMS AND FU RTHER IT WAS FOUND BY THE SURVEY PARTY THAT STOCK OF 7206.220 GM S WAS LYING WITH MR. MADAN SANCHETI ONE OF THE PARTNERS AT BANGALO RE THUS FINALLY THERE WAS EXCESS STOCK OF 3138.767 GMS. THE EXCESS STOCK SO FOUND WAS VALUED AT RS. 18 17 346/- AND THE ASSESSEE THRO UGH PARTNERS HAD ADMITTED THE SAME AS UNACCOUNTED STOCK WHICH WAS OF FERED IN P&L A/C AS ADDITIONAL INCOME. HOWEVER DUE TO CLAIM OF THEFT OF GOD JEWELLERY OF 840.100 GMS ON 31/05/05 AND 2110.110 G MS ON 11/11/05 ASSESSEE HAD CLAIMED LOSS IN THE P&L A/C WHICH HAD RESULTED INTO LESS RETURN OF INCOME EVEN AFTER INCL USION OF UNDISCLOSED INCOME OF INVESTMENT IN STOCK OF RS. 18 17 346/-. T HE AO HAD NOT ACCEPTED THE CLAIM OF THE ASSESSEE ON THE GROUND TH AT SO CALLED THEFT OF THE GOLD JEWELLERY WAS NOT CORRECT AS ACCORDINGL Y TO THE AO THERE WAS NO REAL THEFT OF GOLD ORNAMENTS AND THE STORY O F THEFT WAS NOTHING BUT CONCOCTED STORY COOKED UP BY THE ASSESSEE TO AV OID THE TAX BURDEN. WHILE REACHING TO THIS CONCLUSION THE AO H AD OBSERVED THAT THE ASSESSEE HAD NOT REDUCED THE SO CALLED QUANTITY OF THEFT FROM THE EXCESS STOCK ON THE DATE OF SURVEY I.E. ON 17/08/20 05 THUS THERE WAS NO REAL LOSS OF GOLD ORNAMENTS AND THEFT WAS AN AFTER THOUGHT. IT WAS FURTHER MENTIONED BY THE AO THAT WITH A VIEW TO VERIFY THE VERACITY OF CLAIM OF THE ASSESSEE THAT GOODS SO STO LEN WAS INSURED ONE A LETTER DATED 18/11/2008 WAS SENT TO THE SURVEYORS OF THE INSURANCE COMPANY NAMELY UNITED INDIA INSURANCE CO. REQUEST ING HIM TO INTIMATE THE AO AS TO WHETHER ASSESSEE HAD FILED AN Y INSURANCE CLAIM AGAINST THE THEFT OF GOODS. IN COMPLIANCE TO THE LE TTER OF AO THE SURVEYORS RESPONDED THROUGH LETTER DATED 24/11/08 S TATING THAT THE ASSESSEE HAD FILED INSURANCE CLAIM BUT FOR SUBMIS SION OF DOCUMENTS AO SENT A REMINDER ON 07/06/06 TO THE ASSESSEE WHI CH WAS NOT COMPLIED WITH. FINALLY THE INSURANCE COMPANY CLOSE D THE FILE AS NO ITA NO. 5030/M/2009 SUNRISE GOLD 3 CLAIM. THE AO NOTICED THAT FIR REGISTERED AT POLICE STATION AND THE AO CAME TO CONCLUSION THAT THE ASSESSEE WAS NOT SER IOUS IN MAKING THE POLICE COMPLAINT INSTANTLY. THE AO FINALLY MADE THE ADDITION OF RS. 18 17 346/- ON THE GROUND OF THAT THEFT CLAIM OF TH E ASSESSEE WAS A COOKED UP STORY. AGGRIEVED THE ASSESSEE CARRIED TH E MATTER IN APPEAL BEFORE THE CIT(A). 4. BEFORE THE CIT(A) THE ASSESSEE VEHEMENTLY CONTE NDED THAT THE AO HAD MERELY DOUBTED THE CLAIM OF THE ASSESSEE AND HAD GIVEN UNDUE FORCE TO THE WRITTEN COMMUNICATION OF THE SUR VEYOR WITHOUT APPRECIATING THE FULL FACTS AND SERIES OF OCCURRENC ES RIGHT FROM THEFT TO THE PROCESS OF LODGING OF FIR. IT WAS FURTHER ME NTIONED THAT THE AO HAD NOT MADE ANY ENQUIRY FROM THE POLICE STATION TO KNOW THE VERACITY OF THE THEFT WHEREAS THE FACT OF THE CASE IS THAT T HERE WAS A REAL THEFT. THE CIT(A) REPRODUCED THE WRITTEN SUBMISSION OF THE ASSESSEE WHICH REVEALED THE FACTUAL ASPECTS AND COUNTER ARGUMENTS AT PAGES 5 6 & 7 OF HIS ORDER. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THE CIT(A) DELETED THE ADDITION MADE BY THE AO BY OBSER VING AS UNDER:- 7. I HAVE CIRCUMSPECTED THE FACTS IN ITS ENTIRETY A ND HAVE ALSO PERUSED THE VARIOUS EVIDENCES SUBMITTED BY THE APPE LLANT IN PAPER BOOK WHICH WERE ALSO PRODUCED BEFORE OR LYIN G WITH ASSESSING OFFICER. LD. AO HAS DISALLOWED THE CLAIM MAINLY ON THE GROUND THAT THEFT WAS APPEARING TO HIM IS A FAKE ON E AND SURVEYOR OF THE INSURANCE COMPANY HAD FOUND THAT AP PELLANT WAS NOT SERIOUS FOR ENFORCING THE REMITTANCE. ALL THESE GROUNDS DO NOT SUPPORT THE FINDING OF THE AO BECAUSE OF THE REASON THAT WHEN ANYTHING WAS DOUBTFUL THEN IT WAS THE DUTY OF THE AO TO INVESTIGATE INTO THE MATTER TO ITS LOGICAL END. AS IS SEEN FROM THE ASSESSMENT ORDER THAT AO HAS MAINLY MADE BASIS OF L ETTER OF THE SURVEYOR FOR DISALLOWANCE OF THE CLAIM IGNORING THE OTHER SUBSTANTIAL PART OF THE HAPPENING. WHILE VERIFYING THE EVIDENCES PRODUCED IN APPELLATE PROCEEDINGS I FIND THAT FIRS T THEFT WAS CLAIMED TO BE ON 31/05/2005 WHICH DETAILS WAS DULY AVAILABLE ON 17/08/05 I.E. THE DATE OF SURVEY BECAUSE SIMULTA NEOUS TO THE SURVEY AT THE PREMISES OF THE APPELLANT SURVEY TEA M HAD ALSO VERIFIED AND INVENTORISED DOCUMENTS/RECORDS LYING A T THE PREMISES OF SUDHIR TANDOM CO. 399/3 WILD TEACELL 14 TH ROAD KHAR MUMBAI 400 052 VIDE ANNEXURE A OF RECOVERED MATERIAL WHICH CONTAINS A FILE VIZ. MAHAVIR FILES IN WHICH C OPY OF FIR DATED 31/05/2005 PURCHASE BILLS DATED 28/02/2005 23/05/2005 01/04/2005 11/04/2005 AND LETTER DATE D ITA NO. 5030/M/2009 SUNRISE GOLD 4 07/06/2005 OF M/S SUDHIR TANDON & CO. ADDRESSED TO THE PARTNER OF THE APPELLANT FIRM. THIS FACT PROVES TH AT CLAIM OF THEFT DATED 31/05/2005 WAS NOT MADE LATER ON I.E. AFTER T HE DATE OF SURVEY MEANS THERE WAS NO COOKED UP STORY. IN FACT THESE EVIDENCES RECOVERED ON THE DATE OF SURVEY PROVED TH E FACT THAT THERE WAS A THEFT DUE TO THAT CLAIM OF INCIDENCE WA S ALSO MADE AND CORRESPONDING EVIDENCES WERE SUBMITTED TO THE S URVEYOR. AO HAS NOT COMMENTED ON THIS VITAL EVIDENCE WHILE ADVA NCING THE ARGUMENTS IN RESPECT OF VERACITY OF THE CLAIM OF TH E APPELLANT NOT ONLY THAT IT IS ALSO WORTHWHILE TO MENTION THAT IN RESPONSE TO THE LETTER OF SURVEYOR DATED 07/06/2005 APPELLANT HAS G IVEN A DETAILED REPLY BY LETTER DATED 07/07/05 WHICH WAS A LSO LYING IN MAHAVIR FILES DULY INVENTORISED DURING THE COURSE O F SURVEY. OBVIOUSLY LD. AO HAS IGNORED THIS VITAL PART OF EVI DENCE. SIMILARLY AO DID NOT TAKE NOTE OF A LETTER DATED 0 9/01/2007 WRITTEN TO THE BRANCH MANAGER OF UNITED INDIA INSUR ANCE CO. FOR REOPENING OF THE CLAIM OF THE APPELLANT. NOT ONLY T HAT APPELLANT HAD FURTHER WRITTEN TO THE INSURANCE COMPANY FOR RE MITTANCE OF THE CLAIM. THEREFORE I SEE NO PROPRIETY ON THE PAR T OF THE LD. AO TO DOUBT THE VERACITY OF THE CLAIM OF THEFT FURTHE R THE CONTENTION OF THE LD. AO IS NOT TENABLE THAT APPELLANT WAS NOT SERIOUS IN MAKING POLICE COMPLAINT. IN FACT COMPLAINT WAS LOD GED AT SWARGATE/BHOR POLICE STATION ON 11/11/2005 AND TORN ED REXIN BAG IS STILL LYING AT BHOR POLICE STATION. IN SUCH SCENARIO IF AO WAS HAVING AT ALL ANY DOUBT HE COULD HAVE MADE ENQ UIRY FROM BHOR POLICE STATION. IT IS SEEN FROM THE ASSESSMENT ORDER THAT NO SUCH EFFORT WAS MADE THEREFORE SUCH DISALLOWANCE B ASED ON DOUBT OF UNSUBSTANTIATED REFERENCE CANNOT BE UPHEL D. FURTHER I FIND SUBSTANCE IN THE ARGUMENTS OF THE LD. AR AS ME NTIONED EARLIER AND THEREFORE CONSIDERING THE FULL FACTS A ND CIRCUMSTANCES OF THE CASE DISALLOWANCE OF THE CLAIM OF THE APPELLANT OF THEFT OF GOLD JEWELLERY IS DELETED AND AO IS DIRECTED TO ALLOW THE SAME. 5. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 6. THE LEARNED DR HAS STRONGLY SUPPORTED THE ORDER OF AO AND THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE OR DER OF CIT(A). 7. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE ORDE RS OF THE AUTHORITIES BELOW. WE FIND THAT AO HAS DISALLOWED T HE CLAIM OF THE ASSESSEE MAINLY ON THE GROUND THAT THEFT WAS APPEAR ING TO BE FAKE AND COOKED UP STORY AND THE SURVEYOR OF THE INSURAN CE COMPANY HAD ITA NO. 5030/M/2009 SUNRISE GOLD 5 FOUND THAT ASSESSEE WAS NOT SERIOUS FOR ENFORCING T HE REMITTANCE WHEREAS THE CIT(A) WAS OF THE VIEW THAT THE FINDING OF THE AO WAS WRONG BECAUSE OF THE REASON THAT WHEN ANYTHING WAS DOUBTFUL THEN IT WAS THE DUTY OF THE AO TO INVESTIGATE INTO THE MATT ER TO ITS LOGICAL END. THE CIT(A) THEREFORE HELD THAT SINCE THE AO HAS N OT ORDERED ANY ENQUIRY/INVESTIGATION TO ESTABLISH THAT THE CLAIM O F THE ASSESSEE IS GENUINE OR FAKE THE DISALLOWANCE MADE BY THE AO BA SED ON DOUBT OF UNSUBSTANTIATED REFERENCE CANNOT BE UPHELD. WE ARE ALSO OF THE VIEW THAT WHEN THE AO GOT DOUBT ON THE CLAIM OF THE ASSE SSEE HE COULD HAVE INVESTIGATED THE MATTER TO KNOW THE GENUINENES S OF THE CLAIM. THEREFORE WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) IN DELETING THE DISALLOWANCE MADE BY THE AO ON THE THEFT CLAIM OF GOLD JEWELLERY THEREFORE THE ORDER OF CIT(A) IS HEREBY UPHELD AND DISMISS THE GROUND RAISED BY THE REVENUE. 8 IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED . PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF JULY 2011. SD/- SD/- (P.M. JAGTAP) (V. DURG A RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI DATED: 15 TH JULY 2011 KV ITA NO. 5030/M/2009 SUNRISE GOLD 6 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE L BENCH I.T .A.T. MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR I.T.A.T. MUMBAI.