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Income Tax Appellate Tribunal, “B” BENCH, CHENNAI
Before: HON’BLE SHRI MAHAVIR SINGH, VP & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
आयकर अपीलीय अिधकरण “बी” �ायपीठ चे�ई म�। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHENNAI माननीय �ी महावीर िसंह, उपा ! एवं माननीय �ी मनोज कुमार अ&वाल ,लेखा सद) के सम!। BEFORE HON’BLE SHRI MAHAVIR SINGH, VP AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ (िनधा*रण वष* / Assessment Year: 2019-20) M/s. BMN Steel Emporium (Chennai) DCIT बनाम No.5 , Menabedu Road, Central Circle-1(3), SIDCO Industrial Estate, Chennai. / Vs. Chennai-600 098. �थायीलेखासं./जीआइआरसं./PAN/GIR No. AAIFB-0783-D (अपीलाथ�/Appellant) : (� थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Shri D. Anand (Advocate)- Ld. AR � थ�कीओरसे/Respondent by : Shri D. Hema Bhupal (JCIT)- Ld. DR सुनवाईकीतारीख/Date of Hearing : 03-07-2023 घोषणाकीतारीख /Date of Pronouncement : 03-07-2023 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member)
Aforesaid appeal by assessee for Assessment Year (AY) 2019-20 arises out of the order of learned Commissioner of Income Tax (Appeals)-18, Chennai [CIT(A)] dated 03-01-2023 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s.143 of the Act on 19-09-2021. The grounds taken by the assessee are as under:
1. 1. The order of the learned Commissioner of Income Tax (Appeals)- 18, is wrong, illegal and is opposed to law.
2. The Ld. Commissioner of Income Tax (Appeals)-18 ought to have seen that the entire addition made in the assessment order is not based out of any material evidences collected at the time of survey and is based only on the sworn statement recorded at the time of survey. It is a settled law that statement recorded at the time of survey does not have evidentiary value.
The Ld. Commissioner of Income Tax (Appeals)-18 ought to have seen that the assessment order is based on statement obtained from the appellant at odd hours and that the learned CIT(A) while adjudicating the case of the appellant failed to consider the CBDT circular F.No.286/2/2003-IT(Inv) dated 10.03.2003 which emphasizes confession statement obtained during search, seizure and survey do not serve any useful purposes unless they are backed by credible evidences.
4. The learned CIT(A) failed to see that the appellant maintains regular books of account and that the failure of the survey team to inspect the premises of the appellant at No.15, Pillaiyar Koil Street, Kanchanakuppam, Ambattur, Chennai-600 098 and take inventory of the stock premises in the said premises cannot be used against the appellant for difference in physical stock and stock as per books.
The learned CIT(A) ought to have seen that the appellant is assessed to both income tax and sales tax for over a period of decade and that the said premises forms part of the disclosure. The appellant therefore submits that the assessing officer cannot take shelter under the survey statement for the failure of survey team to inventories the stock in the said premises especially when it is a fact that statement was taken at odd hours and when there was no proper application of mind considering the mental state of the appellant at the time of survey.
The learned CIT(A) ought to have seen that the appellant is in the business of trading in carbon and alloy steel iron bars ever since its inception and is not in the business of processing for generation of scrap. The learned CIT(A) therefore ought to have seen that addition in sale of scrap is totally unwarranted and baseless and therefore erred in confirming the addition of income on sale of scrap.
As is evident, the assessee is aggrieved by estimated addition on account of stock difference and assessment of scrap income. Having heard rival submissions and upon perusal of case records, the appeal is disposed off as under. Assessment Proceedings 2.1 The assessee being resident firm was subjected to survey on 08- 03-2019 wherein difference in stock for Rs.39.46 Lacs was noted. The book stock was more than the physical stock. The assessee could not explain the difference on the date of survey. However, the assessee subsequently submitted that survey team did not consider stock available in another premises / godown. This claim was held by Ld. AO to be mere after-thought and accordingly, Ld. AO estimated gross profit of 14.91% on this stock which resulted into an addition of Rs.5.60 Lacs in the hands of the assessee. Based on survey statement, Ld. AO also made another addition of Rs.1.56 Lacs on account of scrap income rejecting the assessee’s argument that it was only a trading concern and generation of scrap will not arise in its case. 2.2 The Ld. CIT(A) upheld the action of Ld.AO, against which the assessee is in further appeal before us. Our findings and Adjudication 3. From the facts, it emerges that the estimated addition on stock has been made merely on the basis of survey statement which do not have much evidentiary value. The difference in stock is arising only due to the fact that the survey team failed to take physical inventory of the stock that was available at another premises of the assessee. Therefore, the impugned estimated addition on account of stock is not sustainable. Similarly, the assessee is only a trader and therefore, question of income from scrap would not arise in its case. The additions are not supported by any cogent material on record. Therefore, this addition is also not sustainable. We order so.
The appeal stand allowed. Order pronounced on 03rd July, 2023