G.Gurupackiam, Sivakasi v. ITO, Virudhunagar

ITA 570/CHNY/2010 | 1997-1998
Pronouncement Date: 29-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 57021714 RSA 2010
Assessee PAN ADEPG5831E
Bench Chennai
Appeal Number ITA 570/CHNY/2010
Duration Of Justice 1 year(s) 3 month(s) 1 day(s)
Appellant G.Gurupackiam, Sivakasi
Respondent ITO, Virudhunagar
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 05-08-2011
Date Of Final Hearing 26-07-2011
Next Hearing Date 26-07-2011
Assessment Year 1997-1998
Appeal Filed On 27-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI BEFORE SHRI U.B. BEDI J.M. AND SHRI N.S. SAINI AM .. I.T.A. NO. 570/MDS/2010 ASSESSMENT YEARS : 1997-98 SMT. G. GURUPACKIAM PROPX. M/S ANANDAM JAVULI STORES 92 EAST CAR STREET SIVAKASI (PAN NO. ADEPG 5831 E) VS. THE INCOME-TAX OFFICER WARD - I(1) VIRUDHUNAGAR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PHILIP GEORGE DEPARTMENT BY : SHRI SHAJI P. JACOB SR. DR O R D E R PER N.S. SAINI A.M :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER PASSED BY THE LD. CIT(A)-II MADURAI DATED 24.03.20 10 FOR ASSESSMENT YEAR 1997-98. PAGE 2 OF 5 I.T.A. NO. 570MDS/2010 2. GROUND NO. 1 OF THE APPEAL READS AS UNDER: THE LEARNED COMMISSIONER OF INCOME TAX (A) MADURA I HAS PARTLY ALLOWED IN ITA NO. 279/2008-2009 FOR RS. 2 87 520/ - AS AGAINST THE ADDITION OF RS. 12 95 544/- FOR THE ASSESSMENT YE AR 1997-98 WHICH IS AGAINST THE PROVISIONS OF LAW AND NATURAL JUSTIC E. THE LEARNED COMMISSIONER OF INCOME TAX (A) MADURAI HAS ESTIMATED THE PROFIT AT 5% ON TOTAL UNACCOUNTED SAL ES OF RS.5750389 /- IN STEAD OF PROFIT ESTIMATED @5%ON UN ACCOUNTED SALES MENTIONED AS PER THE LEARNED ASSESSING OFFICER ORDE R DT.26.12.2008 IN PARA 6.2 OF RS.3053283/- AND THUS THE LEARNED CI T(A) HAS TAKEN MORE UNACCOUNTED SALES OF RS.26971 06 FOR ESTIMATIO N OF PROFIT PURPOSE IN STEAD OF CORRECT UNACCOUNTED SALES OF RS .3053283/- WHICH IS UNFAIR AND UNLAWFUL AND AGAINST THE PRINCI PLES OF NATURAL JUSTICE. 3. AT THE TIME OF HEARING THE LD. A.R. OF THE ASSE SSEE DID NOT MAKE ANY SUBMISSION ON THE ABOVE GROUND OF APPEAL. THEREFORE THE SAME IS DISMISSED FOR WANT OF PROSECUTION. 4. GROUND NO. 2 OF THE APPEAL READS AS UNDER: REGARDING CLOSING STOCK AT RS.708975/- THE LEARNE D CIT(A) MADURAI HAS MADE ADDITION ONCE AGAIN WITHOUT ANY BA SIS. THE APPELLANT SUBMIT THAT THE LEARNED CIT(A)HAS NOT FOL LOWED THE PAGE 3 OF 5 I.T.A. NO. 570MDS/2010 ACCOUNTING PRINCIPLES. THE LAO HAS COMPUTED CLOSING STOCK FOR A SMALL PERIOD OF 10.11.96 TO 31.03.97 BY ONLY TAKEN OF THE PURCHASE AND SALES DURING THAT PERIOD. THE LEARNED AO HAS NO T CONSIDERED THE OPENING STOCK PURCHASE SALES FOR WHOLE PERIOD OF FINANCIAL YEAR BUT THE CIT(A) MADURAI HAS COMPUTED AT 5%ON SA LES OF WHOLE PERIOD WHICH IS INCLUSIVE OF CLOSING STOCK BUT NOT GIVEN DUE CREDIT. ONCE COMPUTED THE PROFIT ON ESTIMATION BASIS OF 5% WHICH IS MEANT FOR THE CONSIDERATION OF THE ENTIRE BUSINESS TRANSACTION SUCH AS OPENING STOCK PURCHASE.SALES CL OSING STOCK AS PER THE PRINCIPLES OF ACCOUNTING METHOD AN D STANDARD PRACTICE AND CYCLICAL OF COMMERCE ACTIVITIES. FURTHER IT IS NOT POSSIBLE TO ISOLATE EACH ONE SEP ARATELY FOR COMPUTATION OF INCOME LIKE CLOSING STOCK OPENING S TOCK PURCHASE AND SALES AND THEREFORE THE ADDITION MADE WITH RES PECT OF CLOSING STOCK IS UNTENABLE AND UNLAWFUL AND AS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE THE ASSESSING OFFICER FOUND UNDISCLOS ED PURCHASES OF RS. 17 37 429/- UPTO 31.3.1997 AND UNDISCLOSED SALES O F RS. 10 82 583/- UPTO THAT DATE. ON THE BASIS OF AFORESAID FIGURE THE ASSESSING OFFICER ARRIVED AT UNDISCLOSED CLOSING STOCK AT RS. 7 08 9 75/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. PAGE 4 OF 5 I.T.A. NO. 570MDS/2010 6. ON APPEAL THE LD. CIT(A) CONFIRMED THE ACTION O F THE LD. CIT(A). 7. BEFORE US THE LD. A.R. CONTENDED THAT WHEN PROF IT IS ESTIMATED ON UNDISCLOSED SALES THEN NO SEPARATE AD DITION IN RESPECT OF CLOSING STOCK COULD BE MADE. THE LD. A.R. COULD NOT GIVE ANY REASON FOR HIS ABOVE CONTENTION. WE DO NOT FIND AN Y FORCE IN THE ABOVE CONTENTION OF THE LD. A.R. 8. WE FIND THAT IN THE INSTANT CASE THE ASSESSEE H AS NOT DISPUTED THE FACT THAT THERE WERE PURCHASES TO THE EXTENT OF RS. 17 37 429/- WHICH WERE OUTSIDE THE BOOKS OF ACCOUNT AND THERE W ERE SALES OF RS. 10 82 583/- WHICH WERE ALSO NOT RECORDED IN THE REG ULAR BOOKS OF ACCOUNT. FURTHER WE FIND THAT THE ASSESSEE HAS AL SO NOT DISPUTED THE FINDING OF THE ASSESSING OFFICER THAT THERE WAS ADDITIONAL STOCK OF RS. 7 08 975/- AS AT THE END OF THE RELEVANT PR EVIOUS YEAR. IN THE ABOVE CIRCUMSTANCES THE REVENUE WAS JUSTIFIED IN M AKING ADDITION IN RESPECT OF VALUE OF ADDITIONAL CLOSING STOCK TO THE EXTENT TO WHICH THE ASSESSEE COULD NOT ESTABLISH THE SOURCE OF ACQU ISITION OF THE SAME. IN THE INSTANT CASE WE FIND THAT THE ASSESS ING OFFICER HAS PAGE 5 OF 5 I.T.A. NO. 570MDS/2010 ESTIMATED THE INCOME OF THE ASSESSEE AT RS. 54 129/ - ON UNDISCLOSED SALES WHICH HAS BEEN ALSO CONFIRMED BY US IN GROUND NO. 1 OF THIS APPEAL AND THEREFORE VALUE OF CLOSING STOCK TO THE EXTENT OF THE SAID INCOME CAN BE TAKEN AS EXPLAINED FROM THAT SOURCE A S REVENUE HAS BROUGHT NO MATERIAL TO SHOW THAT THE SAID INCOME WA S UTILIZED FOR ANY OTHER PURPOSE. IN OTHER WORDS THE ASSESSEE IS ELIGIBLE FOR TELESCOPING OF RS. 54 129/- AGAINST THE ADDITION O F RS. 7 08 975/-. WE THEREFORE MODIFY THE ORDERS OF THE LOWER AUTHO RITIES TO THE EXTENT MENTIONED ABOVE AND PARTLY ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 9. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 29 TH JULY 2011. SD/- SD/- (U.B.S BEDI ) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI DATED THE 29 TH JULY 2011. VL COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE