Kaliash Lal Chowdhary, Howrah vs Assessee

I .T.A . N o. 30 / KOL ./ 20 1 5 As ses sm e nt y e ar : 20 08 - 20 0 9

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IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA 'SM C' BENCH, KOLKATA

Before Shri George Mathan, Judicial M ember

I.T .A. No . 30 /KOL/ 20 15 Assess ment year : 2008 -2 00 9 Ka ila sh La l Chowd hury,................. ........ .............................A pp e lla nt Prop . of M/s. Univ ersal Sa les corp ora tion , 4, S ta tion Roa d , Lilua h, Howra h -7 11 204 [PA N : A BYPC 8427 E]

-Vs.- Income Ta x Offic er,........ .............................. ........ ...................Resp ond e nt Wa rd -48(4), Kolka ta , 3, Gove rnment Pla c e (West), Kol ka ta -700 001

Appeara nces by : Shri Mir aj D. Shah, Ad vocate, f or the as sessee Shri Rajesh Ku mar, JCIT, Sr. D.R., for th e Depart ment

Dat e of concluding t he hearin g : Feb ruary 27, 2015 Dat e of pr onouncing th e order : Feb ruary 27, 2015

Per Ge orge M athan:

This is an app eal filed by the assess ee a gain st th e order of ld. Commissioner of Inco me Ta x (Appea ls)-XXX, Kolkata in Appeal No. 347/CIT(A)-XXX/Wd-48(4) /201 0-11 d ated 10.11. 2014 for the assessmen t year 2 008-09.

2. Sh ri Mi raj D. Sh ah, Advocate, rep resented on beh alf o f the assess ee and Shri Rajesh Kumar, JCIT, Sr. D.R. rep resented on behalf of the Revenue.

3. At th e time of hea rin g, it was submitted by the ld. A.R. that the only issu e in the ass essee's app eal was agains t th e action of the ld. CIT(App eals ) in co n firmin g th e addition m ade by the As se ssi ng Offic er of an amount of Rs.2,31, 119/- representi ng un accounted stock. It was th e submission th at there was a surv ey on the p remi ses of th e a ssessee on 18.07.2007. It was the submi s sion that th e assessee is in the busin ess of I .T.A . N o. 30 / KOL ./ 20 1 5 As ses sm e nt y e ar : 20 08 - 20 0 9

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trading in ch emical s and min erals as also manu factu rin g in small scal e liquid soap and lake colours through his pro p rieto rship business. It was the submis sion that on the dat e of su rv ey, the assessee was in Ch ennai for the medical t reatment of his ailing wif e. The asse ss ee's son was p re sen t at the p remis es. Physical stock was found and the same was valued at Rs. 12,99,366/-, wh ere as the a ss ess ee's book value sho wed the s ame at Rs. 10,68,247/-. It was the submi ssion that the st atem ent was reco rded fro m the as sessee's son and on the basis of th e statement the add ition has been made. It was the submission that at the outset, in the co urs e of state ment re corded, no st at emen t f rom th e as ses se e's son regardin g exces s stock was taken . Further th e ass es see's son is not connect ed with the as se sse e's busines s and i s not even the employee of the as sesse e and co nsequently his st atement could not have been relied upon. It was the furthe r submi ssion th at the valuation a s done by th e survey tea m wa s on estim ate basis and no t by applying th e p rinciples of FIF O and LIFO. In fact, the assessee wa s followin g the co st on ma rket value whicheve r wa s lower. He plac ed befo re me th e copy of th e stat emen t reco rded from th e as se sse e's son dat ed 18. 07.2007. It was the submis sion th at the add ition mad e on the b asi s of th e s aid survey statem ent was liable to be d elet ed.

4. In reply , ld. Sr. D.R. vehemently su pported th e ord er o f th e Assessing Of ficer and ld. CIT(Appeal s). It was the submi ssion that exces s stock to an exten t of R s.2,31,119/- was found in the course of su rvey. It was th e sub mis sion that the addition wa s liab le to be confi rmed.

5. In reply , ld. A.R. submitted that in the course of assessm ent also, the asse ssee had pro duced quantit ative analysi s of purchases and sales. It was also th e submission th at as on the close of th e busin es s on 18.07.2007, the book stock was R s.11,35,797/- and the survey tea m had valu ed the stock at Rs.12,99,366/-. It was the fu rther submi ssion that ce rtain stock h as al so been consid e red in which th e assessee nev er d ealt.

I .T.A . N o. 30 / KOL ./ 20 1 5 As ses sm e nt y e ar : 20 08 - 20 0 9

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6. I have consid ered th e rival submi ssion s . At the outset, a p erusal of the st at em ent record ed in the co u rs e of surv ey f ro m Shri Mukesh Chowdhury, th e son of the assessee, clearly shows that though the state ment has been record ed, the as ses se e's son h as speci fic ally mention ed that he does not agree wit h the sto ck as taken . Further the as se sse e's son h as been co mpelled to give five cheques bearin g Cheque Nos.2 74488 to 274492 toward s the e sti mat ed tax li ability and these ch eques were also un si gn ed. Th e comm itment s eem s to have be en taken fro m the assess ee's son i.e. fath er will come and si gn the cheques on a later date bein g 03 .08.2007. Now coming to the stock inventory taken in co nnection with the survey operation at the busin ess p remi s es of the as se sse e on the item s f ro m Varni sh, Nitric Acid, Coal Ta r, Lime Stone, Tar Acid, Ultra Oil, Urea, etc., there are 53 item s in th e stock statement. Intere stin gly the quantities of all th ese items are i n round fi gu res. This itself shows that the stock taken is also purely on an estim at e basi s and is not to the actual stock as p er physical v erifi cation. In these circu mstanc es, I am of the view that no addition on account of the differential of stock can be made in so f ar as n o actu al sp ecifi c diffe ren ce has been point ed out. Even th e rate which h as been appli ed i s no t support ed by any documents or m ethods. This stat emen t has b een record ed f ro m a thi rd pa rty who has n o rel ation to the busin ess of th e as se sse e. F urth er ev en after takin g f i ve cheq ues the A ss es sin g Office r co uld rai se additio n al dem and of Rs.50,000/- on the asses see, wh ich it self shows that the su rvey did not actually bring out any un disclosed income in the hands of the ass essee. In the se ci rcu mstances, the A sses sin g Offi ce r is di rect ed to d el ete th e addition ma de in respect of the und isclos ed stock.

7. In the result, the appeal filed by the ass eessee is allo wed.

Orde r p ronounced in th e open Co urt on 27 t h Feb rua ry, 2015.

Sd /-

George Mathan (Judicial M embe r) Kolkata, th e 27 t h day of Feb ruary , 2015 I .T.A . N o. 30 / KOL ./ 20 1 5 As ses sm e nt y e ar : 20 08 - 20 0 9

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Co pies to : (1) Ka ila sh La l Chowd hury, Prop . of M/s. Univ ersal Sa les corp ora tion , 4, S ta tion Roa d , Lilua h, Howra h -7 11 204

(2) Income Ta x Office r, Wa rd -48(4), Kolka ta , 3, Gove rnment Pla c e (West), Kol ka ta -700 001

(3) Comm iss ioner of Income-tax (Appeal s) (4) Com mis sioner of Incom e Tax (5) The Depar tmental R epr es entative (6) Guard Fil e By order

Assistant Registrar Income Tax App ellate Tribunal Kolkata ben ch es, Kolkata Laha/Sr. P.S.