Income Tax Appellate Tribunal - Kolkata
Rabindra Nath Kumar, Kolkata vs Department Of Income Tax on 13 January, 2014
आयकर अपीलीय अधीकरण, Ûयायपीठ - "C" कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH: KOLKATA
(सम¢)Before ौी पी,
पी के. वनशल लेखा सदःय एवं/and ौी महावीर िसंह, Ûयायीक सदःय)
[Before Shri P. K. Bansal, AM & Shri Mahavir Singh, JM]
आयकर अपील संÉया / I.T.A No. 387/Kol/2012
िनधॉरण वषॅ/Assessment Year: 2006-07
Income-tax Officer, Wd-30(3), Kolkata. Vs. Shri Rabindra Nath Kumar
(PAN:AFTPK1930R)
(अपीलाथȸ/Appellant) (ू×यथȸ/Respondent)
Date of hearing: 13.01.2014
Date of pronouncement: 31.01.2014
For the appellant: Shri A. P. Ray, JCIT, Sr. DR
For the respondent: N o n e
आदे श/ORDER
Per Shri Mahavir Singh, JM:
This appeal by revenue is arising out of order of CIT(A)-XIV, Kolkata in Appeal No.333/CIT(A)-XIV/08-09 dated 22.12.2011. Assessment was framed by ITO, Ward-30(3), Kolkata u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for Assessment Year 2006-07 vide his order dated 30.12.2008.
2. The only issue in this appeal of revenue is as regards to the order of CIT(A) deleting the addition of closing stock being difference in value of closing stock as per statement given before bank and as disclosed in the books of account. For this, revenue has raised following ground no.1:
"1. That the Ld. CIT(A) erred in law as well as on facts in deleting the addition of Rs.14,48,829/- made by the AO u/s. 69B on account of difference in the value of closing stock as on 31.03.06 as per statement submitted before the bank and that disclosed in the books of accounts of the assessee relying on a case law. CIT Vs. Veerdip Rollers Pvt. td. 307 ITR 3 (SC), the facts of which is not applicable to the facts of the instant case as because in the instant case, on the contrary to the said case law, no quantiative stock statement was given by the assessee to the concerned bank."
3. We have heard Ld. Sr. DR and gone through facts and circumstances of the case. We have also rejected the adjournment petition filed by assessee as this is a simple case where the issue can be decided without the presence of the assessee. Briefly stated facts are that the assessee is a proprietor of REFCON and deals in electronics and electrical goods like TV, Refrigerator, washing machine etc. During the course of assessment proceedings, AO required the assessee, the details of hypothecation of collateral securities against the cash credit limit sanctioned by bank. The bank vide letter dated 26.12.2008 informed that as on 31.03.2006 the 2 ITA No. 387/K/2012 Shri Rabindra Nath Kumar, AY:2006-07 value of stock declared with bank is at Rs.23,66,234/-. The AO further noticed from the audited accounts of the assessee attached with the return of income the value declared as on 31.03.2006 is at Rs.9,17,405/-. According to AO, there was understatement of value in closing stock by the sum of Rs.14,48,829/-. The AO has not asked for any explanation from the assessee but treated the difference as deemed income of the assessee as per the provisions of section 69B of the Act in view of the decision of Hon'ble Gauhati High Court in the case of CIT Vs. Dhansiram. Agarwal (1993) 201 ITR 192 (Gau). Aggrieved against the addition, assessee preferred appeal before CIT(A), who deleted the addition by observing in para 4 as under:
"4. I have carefully considered the submission of the appellant and the assessment order. The ground Nos. 1 & 2 have been raised against the addition of Rs. 14,48,829/- made by the Assessing Officer on account of difference in the value of stocks per statement submitted before the bank and that disclosed in the books of account. It is seen from the assessment order that the Assessing Oflìccr has not pointed out any discrepancy between the stock of statement fìled with the hank as compared to that disclosed in the books of account in respect of quantity of stock. On the contrary the appellant has asserted that the assessee has not shown higher quantity of stock with the bank and in fact the appellant has estimated higher value of stock to the bank. It is further argued that the balance sheet filed with the return contains quantitative details of the stock and its value was Rs.9,17,405/-. It is further argued by the appellant that the quantity and value of stock was also disclosed with the , Sales Tax department and that was same as disclosed with the Income-tax Department. In light of this fact it is crystal clear that the A.O. had not recorded any discrepancy in the stock in quantitative term. The stock was hypothecated with the bank and its value was estimated at higher figure to avail of higher credit. On these facts, this case is squarely covered by the ratio laid down in the case of CIT Vs. Veerdip Rollers Pvt. Ltd. -- 323 ITR 341 (Gujrat). In the said case the Hon'ble High Court held that no addition can be made on the ground that the statement submitted by the assessee to the bank was at higher value to avail of better credit from the bank and that there is no justification in making any addition. Againsl this judgment , the department went to the Hon'ble Supreme Court and the special leave petition against this judgment was dismissed (2008) 307 ITR (St.)3). It is also significant that the aforesaid judgment of Hon'ble Gujarat High Court was rendered after considring the case of CIT Vs. Dhansiram Agarwal 201 ITR 192 (Gauhati) relied upon by the A.O. Therefore, the following ratio laid down in the case of CIT Vs. Veerdip Rollers Pvt. Ltd. cited supra which has been affirmed by the Hon'ble Supreme Court, it is held that the Assessing Officer was not justified in making the addition of Rs.14,48,829/- on account of difference of value of closing stock. Hence, the AO is directed to delete the addition of Rs.14,48,829/-. Ground Nos. 1 & 2 are accordingly allowed."
Aggrieved, revenue came in appeal before us.
4. We find from the facts of the case that the assessee has filed audited accounts with the Sales Tax Authorities also. With the introduction of VAT system, any dealer, who purchases goods from registered dealer and paid VAT on the said purchases, gets credit as input credit from the gross VAT payable by the dealer. The details of purchase made by the assesse during FY 2005-06 was submitted before Sales Tax Authorities and on the basis of the same, assessee got benefit of input credit and this total input credit benefit was at Rs.8,04,095/-. As per the 3 ITA No. 387/K/2012 Shri Rabindra Nath Kumar, AY:2006-07 assessment order dated 16.09.2008 the total turnover determined by Sales Tax Authorities of the assessee is at Rs.49,44,802/-. According to assessee and as per records as well as from the orders of the authorities below, it is clear that opening stock as on 01.04.2005, purchases during FY 2005-06 and sales during FY 2005-05 tallies with the figures mentioned in P&L Account and Balance Sheet filed with the Income tax return. It is clear from the above that the assessee disclosed the value of Rs.23,66,234/- as stock before the bank but no quantity was mentioned to the bank. Even the stock statement submitted before the Bank was not verified by the bank and it is unverified statement. No quantity was mentioned by the bank and assessee has not shown any higher quantity of stock with the bank. However, it has estimated higher value of stock to the bank what was available in its books. Once this is the position, merely on the basis of difference in value of stock cannot be considered as difference in stock in term of quantity also. In case, there is no difference in quantity in term of stock, no addition can be sustained. The CIT(A) has rightly deleted the addition and we confirm the same. Appeal of revenue is dismissed.
5. In the result, appeal of revenue is dismissed.
6. Order is pronounced in the open court on 31.01.2014 Sd/- Sd/-
पी,
पी के. वनशल,
वनशल लेखा सदःय महावीर िसंह, Ûयायीक सदःय
(P. K. Bansal) (Mahavir Singh)
Accountant Member Judicial Member
Dated : 31st January, 2014 Pronounced by
Sd/- (A. P. George) Sd/- (M. Singh)
AM JM
वǐरƵ िनǔज सिचव Jd.(Sr.P.S.)
आदे श कȧ ूितिलǒप अमेǒषतः- Copy of the order forwarded to:
1. अपीलाथȸ/APPELLANT - ITO, Ward-30(3), Kolkata
2 ू×यथȸ/ Respondent - Shri Rabindra Nath Kumar, 232 Rashbehari Avenue,
Kol-19.
3. आयकर किमशनर (अपील)/ The CIT(A), Kolkata
4. आयकर किमशनर/ CIT Kolkata
5. ǒवभािगय ूितनीधी / DR, Kolkata Benches, Kolkata
स×याǒपत ूित/True Copy, आदे शानुसार/ By order,
सहायक पंजीकार/Asstt. Registrar.