ITO, Tirunelveli V. Sri A.Ramakrishnan, Puliyangudi

ITA 1352/CHNY/2010

• Counselvise Citation: 135221714 RSA 2010
• Duration Of Justice: 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 16-08-2010

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL: A- BE NCH: CHENNAI (BEFORE SHRI ABRAHAM P GEORGE, AM & SHRI G EORGE MATHAN, JM) ITA NO.1352/MDS/2010 & CO NO.97/MDS.10 ASSESSMENT YEAR 2007-08 THE ITO, VS. SHRI A.RAMAKRISHNAN, WARD I(3), TIRUNELVELI PROP. S.K. JEWLLERS, 51F MAIN ROAD, PULLYANGUDI 627855 (PAN AHLPR0254K) (APPELLANT) (RESPONDENT- APPELLANT BY: SHRI SHAJI P. JACOB RESPONDENT-CROSS OBJECTOR BY: SHRI V.SUBBARAYAN ORDER PER ABRAHAM P.GEORGE, ACCOUNTANT MEMBER THESE ARE APPEAL OF THE REVENUE AND CROSS OBJECTIO N OF THE ASSESSEE, BOTH DIRECTED AGAINST AN ORDER DATED 17-05-2010 OF THE CIT(A)-II, MADURAI. REVENUE IN ITS APPEAL IS AGGRIEVED ON TWO COUNTS. F IRST IS THAT THE CIT(A) REDUCED THE ADDITION FOR UNACCOUNTED STOCK TO ` `` ` .8,09,424/- FROM ` `` ` .14,99,100/-MADE BY THE AO. SECOND IS THAT CIT(A) D ELETED AN ADDITION OF ` `` ` 4 LAKHS MADE BY AO CONSIDERING CERTAIN DEPOSITS IN A BANK ACCOUNT TO BE UNEXPLAINED. ON THE OTHER HAND, ASSESSEE IN HIS CRO SS OBJECTION IS AGGRIEVED ITA NO.1353 & CO 197MDS/10 2 THAT THE CIT(A) DID NOT GIVE CREDIT FOR HIS OVERDRA FT OF ` `` ` .5 LAKHS FROM M/S. PANDIAN GRAMA BANK, PULIANGUDI WHILE CONSIDERING TH E ALLEGED UNEXPLAINED INVESTMENT IN STOCK. 2. FACTS GIVING RISE TO THESE APPEAL AND CROSS OBJE CTION EMANATE FROM A SURVEY CONDUCTED IN THE PREMISES OF THE ASSESSEE ON 23-01-2007. ASSESSEE, AN INDIVIDUAL DOING RETAIL BUSINESS IN GOLD AND SIL VER JEWELLERY HAD FILED HIS RETURN FOR THE IMPUGNED AY DECLARING TOTAL INCOME O F ` `` ` .2,41,030/, IN ADDITION TO AGRICULTURAL INCOME OF ` `` ` .1,93,150/-. SURVEY OFFICIALS, DURING THE SURVEY PROCEEDINGS PREPARED A PHYSICAL INVENTORY OF THE S TOCK HELD BY ASSESSEE IN HIS SHOP AS O 23-01-2007 AND THIS WAS QUANTIFIED A T 2083.650 GMS. OF GOLD JEWELLERY AND 21355 GMS. OF SILVER. IT SEEMS A STAT EMENT WAS TAKEN FROM THE ASSESSEE DURING THE COURSE OF SURVEY, WHEREIN ASSES SEE ACCEPTED THAT HE WAS NOT MAINTAINING ANY STOCK BOOKS AND THAT THE STOCK OF GOLD JEWELLERY AS ON THE BEGINNING OF THE RELEVANT PREVIOUS YEAR I.E 01 -4-2006 WAS 370 GMS. AO WAS OF THE OPINION THAT OUT OF THE PHYSICAL STOCK O F 2083.650 GMS. OF GOLD JEWELLERY, AFTER DEDUCTING OPENING STOCK OF 370 GMS ., THE WHOLE OF THE BALANCE OF 1713 GMS. WAS EXCESS. IN SO FAR AS SILVE R IS CONCERNED, IT SEEMS THE WHOLE 213555 GMS. FOUND AT THE TIME OF SURVEY W AS CONSIDERED UNEXPLAINED, FOR WHICH AN ADHOC VALUE OF ` `` ` 3 LAKH WAS FIXED. ASSESSEE DURING THE COURSE OF THE ASSESSMENT DID BRING TO THE NOTIC E OF THE AO THAT HE HAD AVAILED A CASH CREDIT FACILITY FROM M/S PANDIAN GRA MA BANK AND A SUM OF ` `` ` .5 LAKHS WAS OUTSTANDING IN SUCH ACCOUNT ON 31-03-200 6. AS PER THE ASSESSEE, ITA NO.1353 & CO 197MDS/10 3 SAID AMOUNT HAD TO BE CONSIDERED AS SOURCE UTILISED FOR ACQUIRING GOLD JEWELLERY AND SILVER. NEVERTHELESS, AO WAS NOT APPR ECIATIVE OF THIS CONTENTION, FOR, ACCORDING TO HIM, ASSESSEE HAD NOT INCLUDED SUCH OVERDRAFT BALANCE IN THE BALANCE SHEET FILED ALONGWITH LTHE R ETURN FOR PRECEDING AY 2006-07, NOR MADE SUCH A CLAIM IN THE RETURN FOR TH E IMPUGNED A.Y. AO FURTHER NOTED THAT ASSESSEES EXPLANATION REGARDIN G STOCK FOUND AT THE TIME OF SURVEY, TO HAVE COME OUT OF PURCHASES DONE DURIN G THE PERIOD 01-04-2006 TO 23-01-2007, COULD ALSO NOT BE ACCEPTED SINCE THE SAID PURCHASES WERE NOT SUPPORTED BY PROPER BILLS AND NO STOCK BOOKS WERE M AINTAINED. NEVERTHELESS, AO MADE AN ATTEMPT TO JUSTIFY WHY HE CONSIDERED 171 3 GMS. OF GOLD AS EXCESS ON THE DATE OF SURVEY BASED ON THE BOOKS OF ACCOUNTS PRODUCED BY ASSESSEE AND MADE A STOCK-WORK-OUT AS PER SUCH BOO K. FOR THIS PURPOSE, AO CONSIDERED THE PURCHASE OF GOLD JEWELLERRY FOR TH E PERIOD 01-04-2006 TO 23- 01-2007 AT A SUM OF ` `` ` .18,56,210/-AND SALE FOR THE SAME PERIOD AT ` `` ` 2102376/-. HE TOOK AN AVERAGE PRICE OF ` `` ` .700/- PER GRAM FOR PURCHASE AND ` `` ` .800/- PER GRAMS FOR SALE AND BASED ON THIS HE MADE A WORK OUT THE BOOK STOCK AS UNDER: GRAM MILLIG RAM OPENING STOCK OF GOLD AS ON 01-04-06 ADD: PURCHASES TOTAL AMOUNT ` `` ` 18,56,210 ` `` ` 700 370 2651 000 718 TOTAL 3021 7828 ITA NO.1353 & CO 197MDS/10 4 THUS ACCORDING TO HIM, POSSIBLE STOCK OF GOLD JEWEL LERY AS ON DATE OF SURVEY WOULD HAVE BEEN ONLY 393.758 GMS., WHICH WHEN COMPA RED WITH THE PHYSICAL STOCK OF 2083.650 GMS. PROVED THAT THE EXCESS STOC K WAS MORE OR LESS IN THE VICINITY OF 1713 GMS. HE THEREFORE, CAME TO THE CON CLUSION THAT THE VALUE OF 1713 GMS. OF GOLD FIXED BY HIM AT ` `` ` 11,99,100/- WAS UNEXPLAINED STOCK. SIMILARLY SILVER STOCK OF 21355 GMS. VALUED BY HIM AT ` `` `3 33 3 LAKHS WAS ALSO CONSIDERED AS UNACCOUNTED STOCK AND ADDITION OF LIK E AMOUNTS WERE MADE. 3. AO ALSO NOTED THAT ASSESSEE HAD MADE CERTAIN DEP OSITS IN BANK ACCOUNT WITH STATE BANK OF INDIA IN HIS ACCOUNT NO.30380019 7758, OF ` `` ` 4 LAKH ON 28- 09-2006, ` `` ` 2 LAKHS ON 12-10-2006 AND ` `` ` 50,000/- ON 30-10-2006. ASSESSEE WAS REQUIRED TO EXPLAIN THE SOURCE OF SUCH DEPOSITS , WHEREUPON HIS REPLY WAS THAT THERE WERE WITHDRAWAL OF FUNDS SUBSEQUENT TO T HE DEPOSITS AND IT WAS ONLY RECYCLING OF THE AMOUNTS. HOWEVER, AO WAS OF T HE OPINION THAT THE INITIAL DEPOSIT OF ` `` ` 4 LAKHS ON 29-04-2006, REMAINED UNEXPLAINED AND AN ADDITION OF THIS AMOUNT WAS ALSO MADE. 4. ASSESSEE IN HIS APPEAL SUBMITTED THAT VIS-A-VIS ADDITION MADE TO STOCK, AO HAD SIMPLY WENT BY PHYSICAL STOCK AS ON 23-01-20 07 AND AFTER DEDUCTING LESS: SALES FROM 01-04-06 TO 23-01-07 ` `` ` 21,02,376 ` `` ` 800 2627 970 POSSIBLE STOCK AS PER BOOKS 393 758 ITA NO.1353 & CO 197MDS/10 5 OPENING STOCK OF 370 GMS. OF GOLD AS ON 01-04-2006 CONSIDERED THE WHOLE OF THE STOCK AS UNEXPLAINED, WITHOUT TAKING INTO ACCOU NT THE PURCHASES AND SALES DURING THE PERIOD 01-04-2006 TO 23-01-2007. A CCORDING TO THE ASSESSEE, AO WAS BLOWING HOT AND COLD SAME TIME BY MAKING A WORK-OUT BASED ON THE BOOKS WHICH HE HAD REJECTED AT THE FIR ST INSTANCE, TO JUSTIFY SUCH ADDITION. ASSESSEE ALSO SUBMITTED A DETAILED WORK OUT OF THE POSSIBLE STOCK OF JEWELLERY AND SILVER BASED ON THE BOOKS OF ACCOUNT WHICH RAN AS UNDER: STOCK OF GOLD JEWELLERY VALUE ( ` `` ` ) QUANTITY (GRAMS) OP.STOCK AS ON 1-4-2006 186722.00 370.000 SAME AS CONSIDERED BY THE AO. ADD: PURCHASES UPTO 23-01-2007 (AVERAGE RATE ` `` ` 600 PER GRAM). 2430010.00 4040.015 AS PER LF-PAGE 39. TOTAL 4420.015 LESS: SALES UPTO 23-01-2007 (AVERAGE RATE ` `` ` 725 PER GM.) 2265702.00 3125.105 AS PER LF-PAGE 30 BALANCE 1294.910 QUANTITY FOUND DURING SURVEY 2083.650 DIFFERENCE 788.740 VALUE OF EXCESS STOCK AT ` `` ` . 700 PER GM. 552300.00 ITA NO.1353 & CO 197MDS/10 6 STOCK OF SILVER JEWELLERY VALUE ( ` `` ` ) QUANTITY (GRAMS) OP.STOCK AS ON 1-4-2006 -- -- ADD: PURCHASES UPTO 23-01-2007 . 149772.00 10698.00 0 AS PER LF- PAGE 45 TOTAL 10698.000 LESS: SALES UPTO 23-01-2007 123341.00 7708.810 AS P ER LF PAGE 36 BALANCE 2989.190 QUANTITY FOUND DURING SURVEY 21355.000 DIFFERENCE 18365.000 VALUE OF EXCESS STOCK AT ` `` ` . 14 PER GM. 257124.00 TOTAL EXCESS STOCK OF GOLD & SILVER ` `` ` 5,52,300 + 2,57,124/- = ` `` ` 8,09,424/- FURTHER AS PER THE ASSESSEE, EVEN SUCH EXCESS STOCK OF ` `` ` 8,09,424/- WAS EXPLAINED TO THE EXTENT OF ` `` ` 5 LAKHS BY THE OVERDRAFT ACCOUNT TAKEN FROM M/S PANDIAN GRAMA BANK, PULLANGUDI BRANCH. 5. VIS--VIS DEPOSIT IN STATE BANK OF INDIA ACCOUNT CONTENTION OF THE ASSESSEE BEFORE THE CIT(A) WAS THAT ONLY AMOUNTS EA RLIER WITHDRAWALS FROM THE BANK WERE USED FOR DEPOSITS AND SUBSEQUENT WITH DRAWALS THEREFORE UTILIZED FOR PURCHASE OF JEWELLERY AND TO THIS EXTE NT ALSO THE ALLEGED STOCK AS ON 23-01-2007 STOOD EXPLAINED. 6. LD. CIT(A) WAS APPRECIATIVE OF THE CONTENTIONS OF THE ASSESSEE TO A CERTAIN EXTENT. ACCORDING TO HIM, AO MADE A MISTAKE IN QUANTIFYING AND ITA NO.1353 & CO 197MDS/10 7 VALUING THE STOCK AS ON THE DATE OF SURVEY VIZ. 23- 01-2007 WITHOUT CONSIDERING THE PURCHASES AND SALES DURING THE INTE RREGNUM. NEVERTHELESS, ACCORDING TO HIM, THE CREDIT OF ` `` ` 5 LAKHS ON OVER DRAFT FROM M/S. PANDIAN GRAMA BANK COULD NOT BE GIVEN SINCE SUCH OVERDRAFT PERTAINED TO THE EARLIER YEAR. HE THEREFORE, RELYING ON THE WORKING GIVEN BY ASSESSEE, REDUCED THE ADDITION FOR UNEXPLAINED JEWELLERY AT THE TIME OF S URVEY TO ` `` ` 8,09,424/-. VIS- -VIS THE ADDITION MADE FOR DEPOSIT IN STATE BANK O F INDIA ACCOUNT, LD. CIT(A) WAS OF THE OPINION THAT THIS WAS TO BE SET OFF AGAI NST THE ADDITION MADE TOWARDS UN ACCOUNTED STOCK AND A SEPARATE ADDITION WAS NOT CALLED FOR. ON THIS VIEW OF THE MATTER, HE DELETED THIS ADDITION. 7. NOW BEFORE US, LD. DR STRONGLY ASSAILING THE ORD ER OF LD.CIT(A) SUIBMITTED THAT THE AO HAD NOT SIMPLY GONE BY THE S TOCK QUANTITY FOUND AT THE TIME OF SURVEY, BUT ON THE OTHER HAND, MADE AN ANALYSIS OF PURCHASES AND SALES EFFECTED BY ASSESSEE AS PER HIS BOOKS, DURING THE PERIOD 01-04-2006 TO 23-01-2007 AND BASED ON SUCH WORKING CONCLUDED THAT THERE WAS UNACCOUNTED STOCK AS ON THE DATE OF SURVEY COMING T O 1713 GMS. OF GOLD AND 21355 GMS. OF SILVER. ACCORDING TO HIM, LD.CIT(A) HAD SIMPLY WENT BY THE WORKING GIVEN BY THE ASSESSEE AND ALLOWED THE CLAIM . INSOFAR AS THE DEPOSIT IN STATE BANK OF INDIA WAS CONCERNED, LD.DR SUBMITT ED THAT THE INITIAL DEPOSIT OF ` `` ` 4 LAKHS MADE ON 28-09-2006 WAS NOT REFLECTED IN THE BOOKS OF THE ASSESSEE AND THEREFORE NO TELESCOPING WITH UNEXPLAI NED STOCK. ACCORDING TO ITA NO.1353 & CO 197MDS/10 8 THE LD.D.R., BOTH WERE INVESTMENTS OF THE ASSESSEE WHICH WERE UNEXPLAINED AND HENCE THE QUESTION OF TELESCOPING ONE WITH THE OTHER WOULD NOT ARISE. 8. PER CONTRA, LD. AR SUBMITTED THAT IN THE FIRST PLACE A AO HAD REJECTED BOOKS OF THE ASSESSEE FOR A REASON THAT PROPER BIL LS AND STOCK BOOK WAS NOT MAINTAINED BY IT. ACCORDING TO HIM AFTER SUCH REJEC TION, AO MADE A WORK-OUT FOR FINDING THE POSSIBLE STOCK OF GOLD JEWELLERY AS ON 23-01-2007 AND MADE AN EFFORT TO JUSTIFY HIS CONTENTION THAT THERE WAS ALLEGED EXCESS STOCK OF 1730 GMS. OF GOLD. LD. AR POINTED OUT THAT THERE WA S NO WORK-OUT WHATSOEVER MADE BY AO VIS--VIS SILVER JEWELLERY, B UT HE HAD SIMPLY TAKEN THE WHOLE OF IT AS UNEXPLAINED. AS REGARDS OVERDRAF T FROM PANDIAN GRAMA BANK, ARGUMENT OF THE LD.AR WAS THAT THIS OVERDRAFT COULD HAVE ATLEAST BEEN ALLOWED TO BE TELESCOPED WITH THE DEPOSIT WITH THE STATE BANK OF INDIA OF ` `` ` 4 LAKHS MADE ON 28-09-2006. FURTHER AS PER LD. AR THE WITHDRAWALS THEREAFTER FROM THE STATE BANK OF INDIA WOULD ALSO NEED TO BE TAKEN INTO ACCOUNT WHILE WORKING OUT THE UNEXPLAINED STOCK AS ON THE DATE OF SURVEY. 9. IN REPLY, LD. DR SUBMITTED THAT ASSESEE HAD GIVE N A STATEMENT ;DURING THE COURSE OF SURVEY WHEREIN HE ACCEPTED EXCESS STO CK OF 1713 GMS. OF GOLD JEWELLERY AND 21355 GMS. OF SILVER ARTICLES. THEREF ORE, ACCORDING TO HIM, WHEN ASSESSEE HIMSELF HAD ADMITTED SUCH STOCK AND A LSO ACCEPTED THAT NO PROPER BOOKS WERE MAINTAINED, THE ADDITIONS WERE RI GHTLY DONE BY THE AO. ITA NO.1353 & CO 197MDS/10 9 10. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. IN THE FIRST PLACE WE FIND THAT THE AO WHILE CONSIDERING 1 713 GMS. OF GOLD JEWELLERY AND 21355 GMS. OF SILVER AS UNEXPLAINED, HAD SIMPLY WENT BY THE PHYSICAL INVENTORY TAKEN BY THE SURVEY OFFICIALS AS ON 23-01 -2007, DEDUCTING ONLY THE OPENING STOCK OF 370 GMS. OF GOLD. HE HAD CLEARLY IGNORED THE PURCHASES AND SALES DURING THE PERIOD 01-04-2006 TO 23-01-2007. N O DOUBT, ACCORDING TO THE LD.A.O, BOOKS OF THE ASSESSE WERE NOT RELIABLE , SINCE PURCHASES AND SALES WERE NOT PROPERLY SUPPORTED BY BILLS. NEVERTHELESS IT ALSO REMAINS A FACT THAT HE TRIED TO JUSTIFY THE ADDITION FOR ALLEGED UNEXPL AINED STOCK BASED ON THE ASSESSEES BOOKS. FOR THIS PURPOSE HE CONSIDERED TH E PURCHASES DURING THE PERIOD 01-04-2006 TO 23-01-2007 AS ` `` ` .18,56,210/- AND SALES AS ` `` `.21,02,376/. .21,02,376/. .21,02,376/. .21,02,376/. THESE FIGURES ITSELF WERE NOT CORRECT. COPY OF RELE VANT LEDGER PAGES, FILED BY THE ASSESSEE (PAGE NO.A1) WOULD CLEARLY SHOWS THAT THE PURCHASES UPTO 23- 01-2007 WAS OF THE VALUE OF ` `` ` 24,30,010/-AND SALES (PAGE A2) ` `` ` 22,65,702/-. SIMILARLY SILVER PURCHASES DURING THE ABOVE PERIOD ( PB PAGE NO.A3) CAME TO ` `` `1 11 1,49,772 ,49,772 ,49,772 ,49,772/ // /- -- - AND SALES(PAGE A4 AND SALES(PAGE A4 AND SALES(PAGE A4 AND SALES(PAGE A4) ) ) ) ` `` `1,23,341/ 1,23,341/ 1,23,341/ 1,23,341/- -- -. . . . NOW IF WE LOOK NOW IF WE LOOK NOW IF WE LOOK NOW IF WE LOOK AT AT AT AT HOW HOW HOW HOW T TT THE HE HE HE LD. AO LD. AO LD. AO LD. AO ARRIVED AT THE QUANTITY ARRIVED AT THE QUANTITY ARRIVED AT THE QUANTITY ARRIVED AT THE QUANTITY OF SALES AND PURCHASES, OF SALES AND PURCHASES, OF SALES AND PURCHASES, OF SALES AND PURCHASES, HE PRESUMED PURCHASE HE PRESUMED PURCHASE HE PRESUMED PURCHASE HE PRESUMED PURCHASE PRICE PRICE PRICE PRICE OF OF OF OF GOLD A GOLD A GOLD A GOLD AS SS S `700/ `700/ `700/ `700/- -- - PER GRAM AND SALE PER GRAM AND SALE PER GRAM AND SALE PER GRAM AND SALE PRICE PRICE PRICE PRICE A AA AS `800/ S `800/ S `800/ S `800/- -- - PER GRAM. ASSESSEE HAD ON PER GRAM. ASSESSEE HAD ON PER GRAM. ASSESSEE HAD ON PER GRAM. ASSESSEE HAD ON OTHER HAND FOR THE WORK OTHER HAND FOR THE WORK OTHER HAND FOR THE WORK OTHER HAND FOR THE WORK- -- -OUT OUT OUT OUT TAKEN THE AVERAGE RATE AT TAKEN THE AVERAGE RATE AT TAKEN THE AVERAGE RATE AT TAKEN THE AVERAGE RATE AT `600/ `600/ `600/ `600/- -- - AND `725/ AND `725/ AND `725/ AND `725/- -- - RESPECTIVELY. IN SO RESPECTIVELY. IN SO RESPECTIVELY. IN SO RESPECTIVELY. IN SO FAR AS THE RATES FAR AS THE RATES FAR AS THE RATES FAR AS THE RATES ADOPTED ADOPTED ADOPTED ADOPTED WE WEWE WERE CONCERNED, NOTHING HAS BEEN RE CONCERNED, NOTHING HAS BEEN RE CONCERNED, NOTHING HAS BEEN RE CONCERNED, NOTHING HAS BEEN BROUGHT ON RECORD BY AO TO SHOW THAT THE AVERAGE PU RCHASE PRICE OF GOLD BROUGHT ON RECORD BY AO TO SHOW THAT THE AVERAGE PU RCHASE PRICE OF GOLD BROUGHT ON RECORD BY AO TO SHOW THAT THE AVERAGE PU RCHASE PRICE OF GOLD BROUGHT ON RECORD BY AO TO SHOW THAT THE AVERAGE PU RCHASE PRICE OF GOLD DURING THE RELEVANT PERIOD WOULD HAVE BEEN `700/ DURING THE RELEVANT PERIOD WOULD HAVE BEEN `700/ DURING THE RELEVANT PERIOD WOULD HAVE BEEN `700/ DURING THE RELEVANT PERIOD WOULD HAVE BEEN `700/- -- - PER GRAM PER GRAM PER GRAM PER GRAM AND AVERAGE SALE AND AVERAGE SALE AND AVERAGE SALE AND AVERAGE SALE PRICE `800/ PRICE `800/ PRICE `800/ PRICE `800/- -- - PER GRAM. THUS LD. PER GRAM. THUS LD. PER GRAM. THUS LD. PER GRAM. THUS LD. AO HAD SIMPLY MADE AN ESTIMATE AO HAD SIMPLY MADE AN ESTIMATE AO HAD SIMPLY MADE AN ESTIMATE AO HAD SIMPLY MADE AN ESTIMATE OF THE ALLEGED OF THE ALLEGED OF THE ALLEGED OF THE ALLEGED ITA NO.1353 & CO 197MDS/10 10 UNEXPLAINED STOCK VALUE. AS AGAINST THIS WE FIND THAT UNEXPLAINED STOCK VALUE. AS AGAINST THIS WE FIND THAT UNEXPLAINED STOCK VALUE. AS AGAINST THIS WE FIND THAT UNEXPLAINED STOCK VALUE. AS AGAINST THIS WE FIND THAT ASSESS ASSESS ASSESS ASSESSEES WORK EES WORK EES WORK EES WORK- -- -OUT OUT OUT OUT HAS HAS HAS HAS MORE VERACITY MORE VERACITY MORE VERACITY MORE VERACITY. A . A. A . A TLEAST THE FIGURES OF PURCHASE AND SALES TAKEN BY H IM WERE AS PER HIS OWN BOOKS OF ACCOUNT. INSOFAR AS SILVER ART ICLES ARE CONCERNED, THE FIGURE CONSIDERED BY LD. AO AT ` `` ` 3 LAKHS WAS SIMPLY ADHOC, WITH NO BASIS WHATSOEVER. IN THIS SITUATION WE ARE OF THE OPINION THAT LD.CIT(A) HAD RIGHTLY RELIED ON THE WORKING GIVEN BY ASSESSEE AND FOUND T HAT THE EXCESS STOCK AS ON 23-01-2007 WOULD HAVE BEEN OF VALUE ` `` ` 8,09,424/- ONLY AS GIVEN AT PARA-4 ABOVE. WE CANNOT FIND ANYTHING WRONG WITH THIS FIND ING OF THE CIT(A). BUT NEVERTHELESS, WE FIND THAT SUCH EXCESS STOCK COULD NOT BE FULLY CONSIDERED AS FULLY UNEXPLAINED ALSO. THIS IS FOR THE REASON THAT ASSESSEE HAD AN OVERDRAFT ACCOUNT OF ` `` ` 5 LAKHS FROM M/S PANDIAN GRAMA BANK AS ON 31-03-200 6. NO DOUBT, THIS DID NOT FIND A PLACE IN HIS BOOKS OF AC COUNT NOR IN HIS BALANCE SHEET. AT THE SAME TIME WE FIND THAT ASSESSEE HAD M ADE ON 28-09-2006 A DEPOSIT OF ` `` ` .4 LAKHS IN HIS ACCOUNT WITH STATE BANK OF INDIA. C OPY OF THE SAID ACCOUNT HAS BEEN PLACED BY ASSESSEE AT PAPER BOOK PAGE A5. IF WE LOOK AT THIS ACCOUNT WE CAN SEE THAT THE BALANCE PRIOR TO S UCH DEPOSIT WAS ONLY ` `` ` 1,523-41. WE CANNOT SAY THAT THE DEPOSIT OF ` `` ` 4 LAKHS WAS NOT HAVING ANY SOURCE, WHEN THERE WAS AN OVERDRAFT BALANCE OF ` `` `5 55 5 LAKHS DUE FROM THE ASSESSEE TO M/S PANDIAN GRAMA BANK AS ON 31-03-200 6. BOTH OF THESE WERE NOT APPEARING IN THE BOOKS OF ACCOUNT. HENCE IN THE FACTS AND CIRCUMSTANCES, WE HAVE TO ALLOW TELESCOPING, THE FACTUM OF ASSESSE E HAVING TAKEN A OVERDRAFT HAVING NOT REBUTTED. IT WAS NOT CONSIDERE D BY THE LOWER AUTHORITIES ITA NO.1353 & CO 197MDS/10 11 ONLY FOR A REASON THAT THE OVERDRAFT PERTAINED TO T HE EARLIER YEARS. BUT NEVERTHELESS, ASSESSEE CLEARLY HAD THE WHEREWITHAL TO MAKE THE DEPOSIT OF ` `` ` 4 LAKHS WITH THE STATE BANK OF INDIA ACCOUNT ON 28-09 -2001. IF WE CONSIDER THIS ` `` ` 4 LAKHS TO HAVE BEEN EXPLAINED BY VIRTUE OF THE OVE RDRAFT ACCOUNT WITH PANDIAN GRAMA BANK, WE WILL HAVE TO CONSIDER WITHDR AWALS FROM THE SAID BANK ACCOUNT WITH STATE BANK OF INDIA ALSO. THE BAL ANCE IN THE ACCOUNT WITH STATE BANK OF INDIA AS ON THE DATE OF SURVEY VIZ. 2 3-01-2007 WAS ONLY ` `` ` 1,536-41. SO THIS IN OTHER WORDS MEAN THAT THE WHOL E OF THE SUM OF ` `` ` 4 LAKHS DEPOSITED ON 28-09-2006 WAS WITHDRAWN BY THE ASSESS EE. ATLEAST TO THAT EXTENT IT CAN ALWAYS BE CONSIDERED STOCK AS ON 23-0 1-2007 WAS FINANCED BY SUCH WITHDRAWALS. SO IN OUR OPINION WHAT WE CAN FIN D IS THAT ASSESSEE HAS AN OVERDRAFT ACCOUNT WHICH HAD A BALANCE OF ` `` ` 5 LAKH AS ON 31-03-2006. ASSESSEE HAD MADE DEPOSIT OF ` `` ` 4 LAKHS TO HIS BANK ACCOUNT WITH STATE BANK OF INDI A ON 2809-2006. THE LAPSE OF TIME BETWEEN THE DRAWING F ROM PANDIAN GRAMA BANK AND DEPOSIT WITH STATE BANK OF INDIA, IN OUR O PINION, WAS NOT SUCH LONG AS TO NOT GIVE CREDIT FOR THE OVERDRAFTS. THUS THE DEPOSIT STANDS EXPLAINED, THE SOURCE BEING CLEAR. HENCE, WE ARE O F THE OPINION THAT LD.CIT(A) WAS ABSOLUTELY CORRECT IN DELETING ADDITI ON OF ` `` ` 4 LAKHS WHICH WAS CONSIDERED BY AO AS UNEXPLAINED IN STATE BANK OF IN DIA ACCOUNT, THOUGH FOR DIFFERENT REASONS AS MENTIONED ABOVE. SIMILARLY WE ALSO FIND THAT ASSESSEE HAD WITHDRAWN THE WHOLE OF ` `` ` 4 LAKHS FROM THE STATE BANK OF INDIA ACCOUNT BEFORE THE DATE OF SURVEY VIZ. 23-01- 2007 AND THEREFORE OUT OF THE ITA NO.1353 & CO 197MDS/10 12 UNEXPLAINED STOCK SUSTAINED BY LD.CIT(A) AT ` `` ` 8,09,424/-, A SUM OF ` `` ` 4 LAKHS STOOD EXPLAINED AS COMING OUT OF THE WITHDRAWALS F ROM THE ACCOUNT OF STATE BANK OF INDIA. AS FOR THE CLAIM OF THE REVENUE THA T ASSESSEE HAD ADMITTED THE EXCESS STOCK, HON. JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KHADER KHAN SONS (300 ITR 57) HAD CLEARLY HELD THAT THERE IS NO EVIDENTIARY VALUE FOR ANY ADMISSION MADE IN A STATEMENT RECORDED IN A SUR VEY UNDER SEC. 133A, UNLESS CORROBORATED. THEREFORE WHILE DISMISSING TH E APPEAL OF THE REVENUE, WE PARTLY ALLOW THE CROSS OBJECTION OF THE ASSESSEE AND DIRECT THE AO TO CONSIDER A SUM OF ` `` ` 4 LAKHS OUT OF THE UNACCOUNTED STOCK OF ` `` ` 8,09,424/- FIXED BY LD. CIT(A) TO HAVE BEEN EXPLAINED. 11. RESULTANTLY, THE ADDITION MADE FOR UNACCOUNTED STOCK SHALL BE ` `` ` 409424/- ONLY. THE DELETION OF THE ADDITION MADE FO R DEPOSITS WITH STATE BANK OF INDIA STANDS CONFIRMED. 12. TO SUMMARISE THE RESULT, APPEAL OF THE REVENUE STANDS DISMISSED WHEREAS CROSS OBJECTION OF THE ASSESSEE IS PARTLY A LLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30- 03-2011 . . SD/- (GEORGE MATHAN) JUDICIAL MEMBER SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER CHENNAI: 30TH MARCH, 2011. CC: THE ASSESSEE 2)THE ASSESSING OFFICER 3)THE C IT(A) 4) THE CIT, 5)THE D.R 6)GUARD FILE. ITA NO.1353 & CO 197MDS/10 13 NBR