Commissioner Of Income Tax, Hisar v. Ita

ITA No. 186 of 2010 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Commissioner of Income Tax, Hisar Versus Smt. Shakuntla Devi ITA No. 186 of 2010 (O&M)Date of Decision: 1.7.2010 ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Sanjeev Kaushik, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1.The revenue has filed the present appeal under Section260A of the Income Tax Act, 1961 (in short, “the Act”) for theassessment year 2003-04 impugning the order dated 16.7.2009 passedby the Income Tax Appellate Tribunal, Chandigarh Bench 'B'Chandigarh (hereinafter referred to as “the ITAT”) in ITA No.752/Chandi/2008 claiming the following substantial question of law:- “Whether the ITAT was justified in law in ignoringdocumentary and oral evidence while deleting theaddition made on account of unaccounted stock of oiland binola amounting to Rs.16,83,150/- which wastreated as unexplained investment made by theassessee?” 2.The facts as mentioned in the appeal are that the assesseefiled its return of income on 31.10.2003 declaring an income of Rs.1,97,580/-. The said return was processed under Section 143 (1) ofthe Act. The stock having been found excess by the Market Committeeduring survey/inspection of the business premises of the assessee, theproceedings under Section 147 of the Act were initiated on 6.12.2002.Notice under Section 148 of the Act was issued to the appellant and inresponse thereto, the assessee filed return on 15.9.2005 declaring thesame income as was declared in the original return of income. 3.The Income Tax Officer (ITO) vide order dated 6.12.2006(Annexure A-1) made an addition of Rs.16,83,150/- and Rs.33,158/- onaccount of excess stock of cotton seed oil weighing 779 quintals and 14quintals cotton seed which are the production of 779 quintals Narmaand 22.50 quintals Narma, respectively, as per the yield shown by theassessee in its audited balance sheet and profit earned on it. Theassessee feeling aggrieved against the aforesaid addition on account ofunexplained investment in stock and profit earned thereon, preferred anappeal before the Commissioner of Income Tax (Appeals) [in short “CIT(A)”]. The CIT (A) vide order dated 2.6.2008 (Annexure A-2) whiledeleting the aforesaid addition had recorded as under:- “7. The issue involved and the submissions made bythe appellant have been considered. The issue ofexcess stock of cotton seed oil weighing 779 Qtlsand 14 Qtls of cotton seeds which have been allegedto be the production of 779 Qtls. Narma and 22.50Qtls. Narma respectively as per the yield shown bythe assessee in its audited balance sheet, and thecharging of Market fees HRDF and penalty has been “7. The issue involved and the submissions made bythe appellant have been considered. The issue ofexcess stock of cotton seed oil weighing 779 Qtlsand 14 Qtls of cotton seeds which have been allegedto be the production of 779 Qtls. Narma and 22.50Qtls. Narma respectively as per the yield shown bythe assessee in its audited balance sheet, and thecharging of Market fees HRDF and penalty has been discussed in detail by the Assessing Officer in theassessment order. The appellant is maintainingregular books of accounts. A perusal of Form Mdated 7.12.2002 shows that it does not mention anyexcess stock having been found in survey, also nospecific inventory was made; it shows that stocktaking was done on 6.12.2002 in which 58 QH oilwas found in excess which is from 779 Qtls ofNarma. Market fee of Rs.33,663/- has been shownto have been charged. Thus the alleged stock isbased on assumption and estimation. There is noevidence to establish that there was any actual stockof Narma of 779 Qtls. which has not been recorded inthe books of accounts of the appellant. Further, thestatement of Sh. Shailesh Verma, E.O. cumSecretary Market Committee recorded by theAssessing Officer on 27.10.2006 in the case of M/sSuresh Cotton Oil & General Mills and his crossexamination by Shri Sudhir Jain C.A. & AR of thatassessee clearly shows that no physical inventory ofthe stock was made, it was a routine checking inwhich the valuation stock was made on estimatebasis and further that it was not possible to actuallymeasure/weigh the stock; Sh. Verma has furtherstated that in the estimation there may be variation of10 to 15% in weight. Also, statement of Sh. Hawa Singh who had appeared on behalf of MarketCommittee had denied that he was not even theofficer of the Market Committee on the dates onwhich survey was conducted in the case of theappellant. Moreover, in cross examination, he statedthat he was totally unaware of the facts on the date ofsurvey and secondly, no actual physical verificationof stock was carried out on the date of survey and,valuation of stock was based on estimation. TheAssessing Officer thus has failed to discharge hisburden u/s 69 of the Act by relying solely on Form Mand disregarding the evidence furnished by theappellant including the books of accounts. In view ofthe aforesaid addition of Rs.16,83,150/- made by theAssessing Officer treating 801.50 Qtls. Narma aspurchases outside the books of accounts is deleted.The grounds of appeal are allowed. 8. Ground No.4 of appeal is regarding addition ofRs.33,158/- on account of alleged profit in allegedexcess stock of Narma/Kapas. Since the addition onaccount of unexplained investment in stock has been deleted above, the addition of Rs.33,158/- onaccount of alleged profit does not survive and thesame is deleted and the ground of appeal is allowed.” 4.The aforesaid deletion was affirmed by the Tribunal videorder dated 16.7.2009 (Annexure A-3) on appeal by the revenue. 5.We have heard the learned counsel for the revenue andperused the record with his assistance. 8. Ground No.4 of appeal is regarding addition ofRs.33,158/- on account of alleged profit in allegedexcess stock of Narma/Kapas. Since the addition onaccount of unexplained investment in stock has been deleted above, the addition of Rs.33,158/- onaccount of alleged profit does not survive and thesame is deleted and the ground of appeal is allowed.” 4.The aforesaid deletion was affirmed by the Tribunal videorder dated 16.7.2009 (Annexure A-3) on appeal by the revenue. 5.We have heard the learned counsel for the revenue andperused the record with his assistance. 6.The CIT (A) as well as the Tribunal after examining thematerial on record had concurrently recorded a finding of fact that theaddition on account of alleged stock is based on assumption andestimation without there being any specific evidence to support that theactual stock of Narma of 779 Qtls. had not been recorded in the booksof account of the assessee. It was further recorded that no actualphysical verification of the stock was carried out on the date of survey.It was also held that the burden cast on the Assessing Officer underSection 69 of the Act had not been discharged by merely placingreliance on Form M by disregarding the evidence and the books ofaccount produced by the assessee. The learned counsel for therevenue could not refer to any material to show that the orders passedby the CIT (A) and the ITAT deleting the addition made by theAssessing Officer were perverse in any manner. 7.In view of the concurrent findings recorded by the CIT (A)and ITAT, no substantial question of law as claimed by the revenuearises for consideration of this Court in this appeal. Consequently,finding no merit in the appeal, the same is hereby dismissed. (AJAY KUMAR MITTAL) JUDGE July 01, 2010gbs (ADARSH KUMAR GOEL)JUDGE