Income Tax Appellate Tribunal - Delhi
Yash Pal Jain,, New Delhi vs Department Of Income Tax on 9 July, 2009
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'I': NEW DELHI
BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER &
SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER
ITA no. 3747/Del/2009
Assessment Year : 2004-05
Asstt. Commissioner of Shri Yash Pal Jain,
Income Tax, Prop. M/s. Popular Jewellers Mart,
Circle - 29(1), Vs. 37, Gali Paranthewali,
New Delhi Chandni Chowk, Delhi
(Appellant) (Respondent)
PAN: AAAHY 0227 K
Appellant by : Ms. Mona Mohanty, DR
Respondent by : Shri S. M. Mathur, CA
ORDER
PER: C.L. SETHI, J.M. This appeal, filed by the revenue against the order dated 09.07.2009 passed by the ld. CIT(A) is pertaining to the A.Y. 2004-05.
2. The revenue has taken the following grounds:
"1. On the facts and in the circumstances of the case Ld. CIT(A) has erred in deleting the addition on account of unaccounted excess stock of Rs. 5,97,681/-.
2. On the facts and in the circumstances of the case Ld. CIT(A) has erred in deleting the addition on account of disallowance of car depreciation at Rs. 10,497/-."
3. From the aforesaid grounds it is found that the total amount of addition deleted by the CIT(A) and disputed by the revenue in this appeal is as under:-
ITA no. 3747/Del/2009
(i) On account of unaccounted excess stock Rs. 5,97,681/-
(ii) Disallowance of car depreciation of Rs. 10,497/-
Total Rs. 6,08,178/-
4. Thus, the amount involved is Rs. 6,08,178/-, which has been deleted by the ld. CIT(A) and is subject matter of this present appeal filed by the revenue. The tax payable on the aforesaid amount of Rs. 6,08,178/- being calculated @ 30% would come to Rs. 1,82,453/-. In the present case, the total income assessed by AO was Rs. 37,70,640/-. Therefore, the tax so determined @ 1,82,453/- shall be increased by surcharge calculated @ 10%.
The surcharges come to Rs. 18,245/-. Thus, aggregate tax would be Rs. 1,82,453/- + 18,245/- (= ) 2,00,698/-. In other words, the total tax effect on the amount involved in the present case is Rs. 2,00,698/-, which is in excess of Rs. 2 lacs. Thus, the assessee's contention that this appeal is not maintainable in view of the Board's instructions of not filing the appeal if tax effect is below Rs. 2 lacs, is rejected.
5. We shall now come to decide the issue on merit. The addition of Rs. 5,97,681/- has been made by the AO after making certain calculations about the stock position for the pre-survey period vis-à-vis` post-survey period.
6. During the appellate proceedings, the assessee submitted before the CIT(A) that the valuation of the stock at the time of the survey was made by Page 2 of 5 ITA no. 3747/Del/2009 the Government valuer on the basis of market price, whereas the valuation for the purpose of determining the profit in the books of accounts is to be valued by applying Weighted Average Method as followed by the assessee, and in this manner the excess stock should be worked out at Rs. 24,85,677/- as against Rs. 30,83,358/- determined by the survey team. The assessee, therefore, disclosed sum of Rs. 24,85,677/- as additional income in the return of income as against Rs. 30,83,358/- determined at the time of the survey.
7. After considering the assessee's submissions, the CIT(A) deleted the addition by observing that only dispute was with regard to the method of valuation of stock. The CIT(A) observed that the survey team got the stock valued by the Government valuer on the basis of prevailing market price, which was not in line with the regular method of Weighted Average Method constantly followed by the assessee for many years. The CIT(A) accepted the method of valuation adopted by the assessee and then deleted the addition of Rs. 5,97,681/- being the difference between valuation of stock determined by the survey team and the valuation of the stock determined by the assessee.
8. After considering the submissions of both the parties and the factual position pointed out by the CIT(A), we are of the considered view that the CIT(A) has rightly deleted the addition. It is well settled that the closing Page 3 of 5 ITA no. 3747/Del/2009 stock are to be valued as per the method regularly employed by the assessee from year to year. It is not the case of the Department that the assessee was not following Weighted Average Method to determine the value of stock in earlier years. It is also not the case of the Department that the assessee has been showing stock in the books on market value. It is well settled that closing stock are to be valued either at the cost or market price, whichever is lower. Therefore, Weighted Average Method adopted by the assessee from year to year should have been made basis to determine the amount of unexplained stock. The assessee already disclosed the sum of Rs. 24,85,677/- as income from on account of unaccounted stock by adopting the value of stock at Weighted Average Method The order of the CIT(A) on this issue is, thus, upheld.
9. Next issue is with regard to the addition of Rs. 10,497/- out of car depreciation. This issue has been discussed and decided by the CIT(A) as under:-
"10. The other ground of appeal deal with the additions of Rs. 3,000 out of telephone, Rs. 2,159 out of car maintenance expenses and Rs. 10,497 our of car depreciation expenses on account of personal use of telephone and car by the assessee. Whereas, the personal element in the use of telephone and car cannot be ruled out, the disallowance out of depreciation of car is not tenable. Since the essential condition for allowance of depreciation - the use of car during the previous year by the appellant - was satisfied, the depreciation on car is fully allowable. Therefore, the addition of Rs. 10,497/- on account of car depreciation Page 4 of 5 ITA no. 3747/Del/2009 expense is deleted. The disallowance of Rs. 3,000 out of telephone expense and Rs. 2,159 out of car maintenance expense are confirmed."
10. In the light of the reason given by the CIT(A) and in the absence of any material to rebut the findings of the CIT(A), we are inclined to upheld the order of the CIT(A) on this issue. Thus, this ground raised by the revenue is also rejected.
11. In the result, the appeal filed by the revenue is dismissed.
12. This decision is pronounced in the open court on 12th March, 2010.
Sd/- Sd/-
( SHAMIM YAHYA) (C.L. SETHI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 12th March, 2010
*Nitasha
Copy to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT, New Delhi.
By Order
Deputy Registrar
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