Iapl/212/2016 Of Pr. Commissioner Of Income Tax Varanasi v. Rupesh Kumar And Brothers

Court No. - 35 Case :- INCOME TAX APPEAL No. - 212 of 2016 Appellant :- Pr. Commissioner Of Income Tax Varanasi-Respondent : Rupesh Kumar And Brothers-Counsel for Appellant : S.S.C. I.T.,Ashish Agrawal-Counsel for Respondent : Suyash Agarwal Hon'ble Bharati Sapru,J.Hon'ble Piyush Agrawal,J. (Delivered by Hon'ble Piyush Agrawal, J.) Heard Mr. Ashish Agrawal, learned counsel forthe appellant and Mr. Suyash Agarwal, learnedcounsel for the respondents. The present appeal has been filed against the order dated 25.02.2016 in ITA No. 238/Alld/2012 forthe Assessment Year 2010-11, passed by Income TaxAppellate Tribunal, Allahabad Bench, Allahabad. The aforesaid appeal was admitted on 20.8.2016and following questions of law were framed by theCourt, which read as follows:- "(A) Whether on the facts and circumstances of the case and inlaw the ITAT was correct and justified in deleting the additionof Rs. 2,70,77,374/- made towards undisclosed stock incomplete disregard of physical stock and records found duringsearch action? (B) Whether on the facts and circumstances of the case and inlaw the ITAT was correct and justified in deleting the additionof Rs. 4,70,282/- as unexplained cash in complete disregard ofrelevant documents found during the search action? (C) Whether the ITAT has erred in law and facts in deleting theaddition of Rs. 7,80,200/- made on protective basis related tounexplained stock found at the premises of M/s Ram ChandraHanuman Prasad without considering the situation that theCommissioner of Income Tax (Appeals) has deleted the abovesaid addition in M/s Ram Chandra Hanuman Prasad onsubstantive basis?" Brief facts which arise in the present appeal arethat the respondent is engaged in the business ofmanufacture and export of handmade woolen carpets.The business premises of the respondents were searched on 30.03.2010 and 31.03.2010. During thecourse of search various documents, cash, jewelleryetc. were found and seized. The computerised harddisk were also seized in which it was alleged that theaccounts of the firm was being maintained but in thesaid disk the accounts were not up to date. Thereafter, assessment proceedings wereinitiated. The assessing authority while framing theassessment order in the year under dispute, issuednotice and same was replied by the respondents. Theassessing authority, on the basis of materials foundduring the search and after verification of book &account rejected the same under Section 145(3) of theIncome Tax on three counts- (i) that no books of account were found during the course of search and seizure operation; (ii) most of the manufacture expenses and carpetpurchases were done in cash and outstanding liabilitiestowards weaving charges through self made vouchers;and (iii) lastly, that the respondents did not maintainany stock register. Further, the Assessing Officer made an addition of Rs. 2,70,77,374/- on account of undisclosed stocks,Rs. 4,70,282/- was found in cash at the time of searchand Rs. 7,80,200/- unexplained stock investment indies and chemicals which were made on protectivebasis. Against the aforesaid assessment order dated30.12.2011 the respondent had filed an appeal beforethe Commissioner of Income Tax (appeals), Varanasi,who, vide its order dated 2.4.2012 allowed the appealand deleted all additions made by the AssessingOfficer. Feeling aggrieved by the aforesaid order, theRevenue preferred an appeal before Income TaxAppellate Tribunal, Allahabad Bench, Allahabad. TheTribunal by the impugned order has dismissed theappeal of the Revenue. Hence, the present appeal. A perusal of the record, shows that the CIT(Appeals) and Tribunal had recorded a concurrentfinding of fact in favour of the respondent and oncethe finding of fact recorded in favour of the assesseewith regard to correctness of the books of accountmaintained by the assessee, no adverse inference canillegally be drawn against him. Feeling aggrieved by the aforesaid order, theRevenue preferred an appeal before Income TaxAppellate Tribunal, Allahabad Bench, Allahabad. TheTribunal by the impugned order has dismissed theappeal of the Revenue. Hence, the present appeal. A perusal of the record, shows that the CIT(Appeals) and Tribunal had recorded a concurrentfinding of fact in favour of the respondent and oncethe finding of fact recorded in favour of the assesseewith regard to correctness of the books of accountmaintained by the assessee, no adverse inference canillegally be drawn against him. The CIT (Appeals) while deleting the addition ofRs. 2,70,77,374/- in para 8 of the order dated 2.4.2012has observed as follows:- "8. As regards the addition of Rs. 2,70,77,374/- as undisclosed stock, it is seen that physical stock found in the business premises ofthe assessee was valued at Rs. 4,39,94,860/-. After assuming 25%stock with the weavers and weaving centres worth Rs. 89,86,339/- thetotal stock was inventorised by the Search Party at Rs. 4,49,31,695/-.However, the A.O. has inferred that the exported goods of Rs.2,08.91,764/- and stock of carpet of Rs. 52,48,775/- sold locally werenot recorded on computer and thus according to her, the difference ofRs. 2,70,77,374/-, between stock inventorized by search party at Rs.4,49,31,695/- and the Book Stock found during search at Rs.4,39,94,860/- minus stock of Rs. 2,61,40,539/- not recorded oncomputer, is undisclosed stock. The appellant on the other hand hascontended the data on computer was not update in as much thecomputer has been showing the stock of Rs. 3,59,45,356/- sinceDecember, 2009 till the date of search on 30.03.2010. It was furthercontended that the annual account of the assessee as on 31.03.2010shows closing stock at Rs. 6,29,62,463/-. Since there was no any newdevelopment in stock in a single day after search, its stock wasgreater than the stock inventorized by the Search Party at Rs.4,49,31,695/-. The Search Party took the data from computer whichaccording to assessee was not updated on the day of search. However,it was duty of the A.O. to consider assessee's submission whenassessee filed reconciliation statement during assessment proceedings and produced the Purchase register in conformity withthe final audited accounts filed along with the return of income. Thefollowing chart will show how different treatment has been given on the stock by the Search Party and Assessing Officer:" The Tribunal being last court of fact hasconfirmed the order of CIT (Appeals) in para 12 asunder:- "12. We heard the rival submissions and carefully considered thesame along with the order of the Tax authorities below. Learned DReven though vehemently relied upon the order of the Assessing Officerbut could not pin point mistakes in the working of the CIT(A). TheCIT(A) has given a finding of fact and after verifying the working ofthe assessee. He took the view that since the assessee has shown morestock; therefore, no addition can be made on the basis of theundisclosed stock. We, therefore, confirm the order of the CIT(A).Thus the ground no. 4 stand dismissed." Once a finding of fact has been recorded infavour of the assessee by the two authorities fordeleting the said amount, there is no good ground tointerfere in such finding until and unless they arepreserves. Similar is the case of deletion of Rs. 4,70,282/-and 7,80,200/- once the proceeding has been droppedunder Section 145(3) of the Act which goes to showthat the books of accounts of the assessee has beenaccepted and the same is not under challenge in thepresent appeal, therefore, the aforesaid addition cannotbe sustained. In view of the above facts and circumstances ofthe case, the present appeal lacks merit and is,dismissed. accordingly, The questions of law are answered in favour ofthe assessee and against the Revenue. Order Date :- 7.2.2019SY