M/S. GOOJAR MAL GANPAT RAI (P) LTD.,NEW DELHI vs. ITO, NEW DELHI

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ITA 1730/DEL/2014Status: DisposedITAT Delhi30 November 2015AY 2006-073 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the assessee provided sufficient documentation, including challans, proving the items were for display and were returned. Therefore, they could not be treated as the assessee's inventory.

What were the facts?

During a survey, the IT department found excess inventory of Rs. 7,75,164/-. The assessee claimed these were display items received from a principal, M/s Coima India Pvt. Ltd.

What were the issues?

Whether the excess inventory found during a survey, claimed to be display items, can be added as unexplained investment under Section 69C.

Which sections of the Income-tax Act were involved?

Section 69C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “SMC-1” NEW DELHI

Before: SHRI P.K. BANSAL :

For Appellant: Shri T.R. Talwar Adv
For Respondent: Shri P. Dam Kanunjna Sr. DR
Hearing: 13/11/2015

Date of hearing : 13/11/2015. Date of order : 30/11/2015. O R D E R

This appeal has been filed by the assessee against the order dated 31/01/2014, passed by the CIT(A)-VI, New Delhi, in appeal no. 116/12-13 for A.Y. 2006-07.

2.

The only issue involved in this appeal relates to the addition of Rs. 7,75,164/- as unexplained investment u/s 69C of the Income-tax Act.

3.

Brief facts of the case are that during the course of survey, the survey team found excess inventory to the extent of Rs. 7,75,164/-, to which the assessee claimed as value of items, received for the purpose of display from its principal

2 ITA 1730/Del/2014 M/s Coima India Pvt. Ltd. The AO did not accept the explanation of the assessee and made the addition of Rs. 7,75,164/-. When the matter went before the CIT(A), the CIT(A) dismissed the appeal of the assessee.

4.

I heard the rival submissions and carefully considered the same, along with the orders of the tax authorities below as well as paper book filed before me. I noted that in this case the assessee had given details of Rs. 7,75,164/-, taken by the revenue to be the excess stock. I noted that the assessee’s explanation to the AO vide his letter dated 20-5-2006 that all these items, which were taken to be excess by the survey team, related to the display items being supplied by M/s Coima India Pvt. Ltd. The items in number are 21. The assessee has given the detail as well as the challan number and the quantity, how these items have been sent by assessee and how the assessee has returned these items to M/s Coima India Pvt. Ltd. The copy of the challan of items, which were for display, are also available at page nos. 9 to 15 of the PB. From these challan items, the summary of which is available at page 4, it is apparent that these items were received by the assessee from M/s Coima India Pvt. Ltd. for display purpose and were subsequently returned by the assessee to M/s Coima India Pvt. Ltd. The assessee had reiterated these facts to the AO but the AO, instead of verifying the fact, did not believe the version of the assessee. From the copy of the challan it is apparent as to which of the items were for display. Since the items, which were on display, did not belong

3 ITA 1730/Del/2014 to the assessee, therefore, they cannot be treated as the inventory of the assessee. In view of these facts, I set aside the order of CIT(A) and delete the addition made u/s 69C of the Act.

5.

In the result, the appeal filed by the assessee is allowed.

Order pronounced in open court on 30/11/2015.

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