Delhi High Court
Cit vs Panna Lal Roshan Lal Jewellers Pvt ... on 17 January, 2012
Author: Sanjiv Khanna
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 23/2012
% Date of Decision : 17th January, 2012.
CIT ..... Appellant
Through Mr. Anupam Tripathi, sr. standing
counsel with Ms. Anusha Singh, Adv.
versus
PANNA LAL ROSHAN LAL JEWELLERS
PVT LTD ..... Respondent
Through
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE R.V. EASWAR
1. Whether Reporters of local papers may be allowed to see the judgment?
2. To be referred to the Reporters or not ?
3. Whether the judgment should be reported in the Digest?
SANJIV KHANNA,J: (ORAL)
The present appeal under Section 260A of the Income Tax Act,
1961 impugns the order dated 17.6.2011 passed by the Income Tax
Appellate Tribunal (Tribunal, for short) in the case of Panna Lal Roshan
Lal Jewellers Pvt. Ltd. The appeal pertains to assessment year 2006-07.
The impugned order has been passed by the tribunal in ITA
1262/(Del.)/2011.
2. Ld. counsel for the appellant submits that the impugned order is
perverse and the tribunal has erred in accepting the stand of the
respondent-assessee. It is contended that the tribunal has ignored and not
given due credence to the valuation made at the time of the survey.
3. In the present case, survey under Section 133A was conducted in
the business premises of the respondent-assessee on 13.12.2005. The
assessee thereafter filed their income tax return on 14.11.2006 declaring
total income of Rs.47,97,730/-. This included undisclosed investment of
Rs.42,65,924/- found at the time of the survey.
4. The Assessing Officer made an addition of Rs.61,64,407/- under
Section 69B. He observed that at the time of the survey, the stock found
was valued at Rs.1,95,94,828/- and the stock as per books of accounts was
Rs.91,64,407/-. Thus the assessee had undisclosed stock of
Rs.1,04,30,431/- and not of Rs.42,65,924/- declared and accepted by the
respondent-assessee.
5. It is noticeable that the assessment order records that the
respondent-assessee had given detailed reconciliation of the stock with
specific explanation. The aforesaid reconciliation was referred to in the
assessment order but has not been dealt with and considered. The
assessment order is cryptic and does not meet the contentions of the
respondent-assessee.
6. Before the CIT (Appeals) the assessee submitted various
computation and details. The CIT (Appeals) held that the assessee had
been able to show and establish that undisclosed stock to the extent of
Rs.23,08,033/- belonged to third parties. Accordingly, relief to that extent
was granted. In respect of the balance amount, the CIT (Appeals) did not
agree with the respondent-assessee. He held that the assessee should have
taken objection to the valuation at the time of survey.
7. Revenue did not prefer any appeal against deletion of addition of
Rs.23,08,033/-. The assessee however, preferred an appeal before the
Tribunal against the balance amount of Rs.38,56,574/-. By the impugned
order, the appeal of the respondent-assessee has been allowed. It is
noticeable that the assessee in their explanation had pointed out that the
valuation reports had taken the value of 24 carat gold at Rs.790 per gram
but did not correspondingly reduce the value of 18 carat and 22 carat gold.
Further, even the stock, recorded in the books of account, was valued as
per the market rates, which is not correct, because no profit arises till the
stock is sold and under the mercantile system of accounting an assessee is
entitled to value the stock in hand (declared stock) on the basis of the rule
"cost price or market price, whichever is lower". The respondent-assessee
had valued the stock at cost price. The cost price as recorded in the books
was not rejected or adversely commented upon in the assessment order.
Thus an obvious mistake has been corrected by the tribunal. We do not
understand how the decision can be categorized or regarded as perverse.
As noticed above in respect of unrecorded/unaccounted stock found at
the time of survey, the respondent-assessee had surrendered
Rs.42,65,924/-.
8. The Appeal is dismissed. No costs.
SANJIV KHANNA,J
R.V.EASWAR, J
JANUARY 17, 2012/vld
