Income Tax Appellate Tribunal - Cuttack
Sunley Jewellers, Koraput vs Ito, Ward-2, Jeypore on 23 July, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL,
CUTTACK BENCH, CUTTACK
BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER
AND PAVAN KUMAR GADALE, JUDICIAL MEMBER
ITA No.435/CTK/2016
Assessment Year : 2009-2010
Sunley Jewellers, C: Natabar Vs. ITO, Ward-2, Jeypore
Nath, At-3rd Lane, Gandhi
Nagar, PO: Koraput, Dist:
Koraput.
PAN/GIR No.ABOFS 2219 Q
(Appellant) .. ( Respondent)
Assessee by : Shri P.K.Mishra, AR
Revenue by : Shri D.K.Pradhan, DR
Date of Hearing : 23/07/ 2018
Date of Pronouncement : 23 /07/ 2018
ORDER
Per N.S.Saini, AM
This is an appeal filed by the assessee against the order of the CIT(A)- 1, Bhubaneswar dated 30.8.2016 for the assessment year 2009- 2010.
2. Ground Nos.1 to 4 read as under:
"1. For that, the impugned orders passed by the Forums below are not just and proper under the facts and in the circumstances of the case, as such the same is liable to be quashed in the interest of justice.
2. For that, the learned C.I.T(A) should not have confirmed the addition of unexplained closing stock of Rs.53,22,013.00 determined and added by the learned A.O, particularly when there is no difference in closing stock. The impugned addition being illegal and contrary to the facts on record needs to be deleted in the interest of justice.
3. For that, the learned Forums below should not have valued the closing stock in a wrong manner ignoring the opening stock valuation. The impugned addition thus is liable to be deleted in the interest of justice.2
4. For that, the valuation of closing stock by the learned A.O and subsequently confirmed by the learned C.I.T(A) is illegal, wrong and contrary to the facts on record, as such the impugned valuation is liable to be deleted in the interest of justice."
3. Brief facts of the case are that a survey under section 133A of the Act was conducted on 3.3.2009 in the business premises of the assessee. During the course of survey, the stock of gold and silver ornaments was physically taken and valued at Rs.1,10,27,460/-. The Assessing Officer observed that in the course of assessment proceedings, the assessee submitted the valuation of stock as on 31.3.2009 at Rs.57,05,496/-. Thus, there was a difference between physical stock inventory and the stock position as furnished by the assessee of Rs.53,21,964/-. The Assessing Officer observed that the quantity-wise stock value as determined in the course of survey was as under:
"Shop No.1 Gold ornaments 7770.561 gm @ Rs.1200/-per gm: Rs.93,24,673/-
Shop No.2 Gold ornaments 1419.030 gm @ Rs.1200/-per gm :Rs.17,02,836/-
Total value duly certified by the assessee : Rs.1,10,27,509/
Less:closing stock as on 3.3.2009 disclosed by the assessee: Rs.57,05,496
Difference : Rs.53,22,013/-
The Assessing Officer observed that ld A.R. of the assessee was asked to reconcile the discrepancy. The assessee submitted that the closing stock as submitted by the assessee was correct. Therefore, the Assessing Officer inferred that the assessee had no explanation to offer for this stock discrepancy and hence, he made an addition of Rs.53,22,013/- to the income of the assessee u/s.69A of the Act.3
4. Before the CIT(A), the assessee filed written submissions, which were forwarded to the Assessing Officer and after considering the report of the Assessing Officer dated 21.8.2014, the CIT(A) confirmed the addition observing that an attempt has been made by the assessee to prepare computerised books of account in software package after the survey to explain the unexplained stock found at the time of survey. In view of the same, the claim of the assessee that part of the stock belonged to another concern being proprietary concern of Sri Natbar Nath cannot be given any credence.
5. Ld A.R. of the assessee submitted before us that in the remand report dated 21.8.2014, which is quoted by the CIT(A) at para 4.2 of the order, submitted by the Assessing Officer, it is stated that the assessee has not produced books of account during the course of assessment proceedings but only produced during the fag end of the proceedings. Therefore, he inferred that the assessee has managed the affairs to establish the genuineness of the difference in stock. Hence, it was his argument that the books of account were produced by the assessee and the difference in stock was reconciled. It was the duty of the Assessing Officer to verify the books of account and if found correct, same should have been accepted. The Assessing Officer was not justified in brushing aside the evidence filed by the assessee and making the addition to the income of the assessee u/s.69A of the Act of Rs.53,22,013/-. Hence, he prayed that the matter should be restored back to the file of the Assessing Officer for adjudication of the issue afresh. 4
6. Ld D.R. had no objection to the above submission of the ld A.R. of the assessee.
7. In view of above facts of the case, we are of the considered opinion that the Assessing Officer was not justified in not accepting the books of account produced before him. He should have verified the same and if found correct should have accepted the books result of the assessee. We, therefore, set aside the orders of lower authorities and remand the matter back to the file of the Assessing Officer to re-adjudicate the issue afresh as per law after considering the books of account of the assessee and after allowing reasonable and proper opportunity of hearing to the assessee. The Assessee is directed to co-operate with the Assessing Officer in disposing of the assessment expeditiously. With these directions, Ground Nos.1 to 4 of appeal are restored to the file of the Assessing Officer for fresh adjudication.
8. Ground Nos.5 & 6 are as under:
" 5. For that, the disallowance of sundry creditors of Rs.21,10,792.00 by the learned A.O should not have been confirmed by the learned C.I.T(A), rather should have been deleted in the interest of justice.
6 For that the addition of trade creditors by the learned A.O subsequently confirmed by the learned C.I.T(A) being illegal and unsustainable in the eye of law is liable to be deleted in the interest of justice."
9. The brief facts of the case are that the Assessing Officer observed that the assessee has shown sundry creditors of Rs.21,10,792/- in the balance sheet as at 31.3.2009. To ascertain the genuineness of above creditors, the Assessing Officer directed the Income Tax Inspector to conduct enquiry about the existence of the creditors. The report of the 5 Income Tax Inspector revealed that the claim of credits of Rs.21,10,92/- are bogus creditors. The report of the Income Tax Inspector reads as follows:
"As against the total list of 28 cases of gold for repair and 21 cases of Puruna gold replacement which are Sundry Creditors, only eleven copies of voter cards are furnished by the assesses which were subject matter for verification.
1. Sri Pramod Kumar Dhal, S/o. Sri Ghanshyam Dhal.
2. Sri Krushna Chandra Mohapatra, S/o. Sri Satyabadi Mohapatra.
3. Sri Sanatan Bai, S/o. Sri Anant Bai.
4. Sri Jagabandhu Nath, S/o. Sri Kahnu Nath,
5. Sri G.Srinivas Rac, S/o. Sri G. Koteswar Rao.
6. Sri Brundaban Nayak, S/o. Sri Praphu! Nayak,
7. Sri Anam Charan Nath, S/o. Sri Damodara Nath
8. Sri Baburam Bai, S/o. Sri Chandramani Bai.
9. Sri Kunananda Bai, S/o. Sri Chandramani Bai.
10. Sri Kandaru Bidya Bhaskar Acharya, S/o, Sri Kandaru Sibasankar Acharya.
11. Sri Gokula Kumar Panigrahi, S/o. Sri Gaur Panigrahi.
Out of the above list, only two cases appeared in the lists furnished by the assessee. The name of Sri Brundaban Nayak was in the list of gold for repair and Sri Goku! Kumar Panigrahi in the list of 1 Puruna Gold Replacement. 5 met the above two persons who clearly denied to have repaired or replaced any gold ornament with the assessee M/s.Sunely Jewellers. Hence, i would recommend to treat the entire amount of Rs,21,10/792/- as bogus creditors in the account of M/s. Sunely Jewellers".
10. The assessee was allowed opportunity to submit identity proof, detail postal address with quantity of gold etc, which was not submitted before the Assessing Officer. Hence, he treated the alleged creditors of Rs.21,10,792/- as not genuine and added to the income of the assessee.
11. On appeal, the CIT(A) observed that in the first round of remand proceedings, the assessee could not prove the genuineness of the 6 impugned credits before the Assessing Officer. In the second round of remand proceedings, 12 creditors out of 49 creditors were produced before the Assessing Officer and examined. Since 12 creditors confirmed the transaction, therefore, he deleted credits in their names aggregating to Rs.5,30,566/- and confirmed balance addition of Rs.15,80,226/-.
12. Before us, ld A.R. submitted that he is in a position to produce balance 37 creditors whose amounts aggregating to Rs.15,80,226/- before the Assessing Officer if one more opportunity is granted to the assessee.
13. Ld D.R. vehemently opposed to granting further opportunity to the assessee for verification of the creditors on the ground that sufficient opportunity was granted by the Assessing officer as well as the CIT(A).
14. As we have restored the issue involved in Ground Nos.1 to 4 of appeal relating to unexplained closing stock of Rs.53,22,013/- to the file of the Assessing Officer, this issue also is restored back to the file of the Assessing Officer for adjudicating the same as per law after allowing reasonable and proper opportunity of hearing to the assessee. The assessee is directed to fully co-operate with the Assessing Officer and produce all the details and documents as and when called upon to do so.
15. Ground Nos.7 to 9 of appeal are general in nature and hence, requires no separation adjudication.
7
16. In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on 23/07/2018.
Sd/- sd/-
(Pavan Kumar Gadale) (N.S Saini)
JUDICIALMEMBER ACCOUNTANT MEMBER
Cuttack; Dated 23 /07/2018
B.K.Parida, SPS
Copy of the Order forwarded to :
1. The Appellant : Sunley Jewellers, C: Natabar Nath, At-3rd Lane, Gandhi Nagar, PO:
Koraput, Dist: Koraput
2. The Respondent. ITO, Ward-2, Jeypore
3. The CIT(A)-1, Bhubaneswar
4. Pr.CIT-1, Bhubaneswar
5. DR, ITAT, Cuttack BY ORDER,
6. Guard file.
//True Copy// SR.PRIVATE SECRETARY ITAT, Cuttack