ITA No. 186 of 2010 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 186 of 2010 (O&M) Date of Decision: 1.7.2010 Commissioner of Income Tax, Hisar ....Appellant. Versus Smt. Shakuntla Devi ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Sanjeev Kaushik, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1. The revenue has filed the present appeal under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) for the assessment year 2003-04 impugning the order dated 16.7.2009 passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'B' Chandigarh (hereinafter referred to as “the ITAT”) in ITA No. 752/Chandi/2008 claiming the following substantial question of law:- “Whether the ITAT was justified in law in ignoring documentary and oral evidence while deleting the addition made on account of unaccounted stock of oil and binola amounting to Rs.16,83,150/- which was treated as unexplained investment made by the assessee?” 2. The facts as mentioned in the appeal are that the assessee filed its return of income on 31.10.2003 declaring an income of ITA No. 186 of 2010 -2- Rs.1,97,580/-. The said return was processed under Section 143 (1) of the Act. The stock having been found excess by the Market Committee during survey/inspection of the business premises of the assessee, the proceedings under Section 147 of the Act were initiated on 6.12.2002. Notice under Section 148 of the Act was issued to the appellant and in response thereto, the assessee filed return on 15.9.2005 declaring the same income as was declared in the original return of income. 3. The Income Tax Officer (ITO) vide order dated 6.12.2006 (Annexure A-1) made an addition of Rs.16,83,150/- and Rs.33,158/- on account of excess stock of cotton seed oil weighing 779 quintals and 14 quintals cotton seed which are the production of 779 quintals Narma and 22.50 quintals Narma, respectively, as per the yield shown by the assessee in its audited balance sheet and profit earned on it. The assessee feeling aggrieved against the aforesaid addition on account of unexplained investment in stock and profit earned thereon, preferred an appeal before the Commissioner of Income Tax (Appeals) [in short “CIT (A)”]. The CIT (A) vide order dated 2.6.2008 (Annexure A-2) while deleting the aforesaid addition had recorded as under:- “7. The issue involved and the submissions made by the appellant have been considered. The issue of excess stock of cotton seed oil weighing 779 Qtls and 14 Qtls of cotton seeds which have been alleged to be the production of 779 Qtls. Narma and 22.50 Qtls. Narma respectively as per the yield shown by the assessee in its audited balance sheet, and the charging of Market fees HRDF and penalty has been ITA No. 186 of 2010 -3- discussed in detail by the Assessing Officer in the assessment order. The appellant is maintaining regular books of accounts. A perusal of Form M dated 7.12.2002 shows that it does not mention any excess stock having been found in survey, also no specific inventory was made; it shows that stock taking was done on 6.12.2002 in which 58 QH oil was found in excess which is from 779 Qtls of Narma. Market fee of Rs.33,663/- has been shown to have been charged. Thus the alleged stock is based on assumption and estimation. There is no evidence to establish that there was any actual stock of Narma of 779 Qtls. which has not been recorded in the books of accounts of the appellant. Further, the statement of Sh. Shailesh Verma, E.O. cum Secretary Market Committee recorded by the Assessing Officer on 27.10.2006 in the case of M/s Suresh Cotton Oil & General Mills and his cross examination by Shri Sudhir Jain C.A. & AR of that assessee clearly shows that no physical inventory of the stock was made, it was a routine checking in which the valuation stock was made on estimate basis and further that it was not possible to actually measure/weigh the stock; Sh. Verma has further stated that in the estimation there may be variation of 10 to 15% in weight. Also, statement of Sh. Hawa ITA No. 186 of 2010 -4- Singh who had appeared on behalf of Market Committee had denied that he was not even the officer of the Market Committee on the dates on which survey was conducted in the case of the appellant. Moreover, in cross examination, he stated that he was totally unaware of the facts on the date of survey and secondly, no actual physical verification of stock was carried out on the date of survey and, valuation of stock was based on estimation. The Assessing Officer thus has failed to discharge his burden u/s 69 of the Act by relying solely on Form M and disregarding the evidence furnished by the appellant including the books of accounts. In view of the aforesaid addition of Rs.16,83,150/- made by the Assessing Officer treating 801.50 Qtls. Narma as purchases outside the books of accounts is deleted. The grounds of appeal are allowed. 8. Ground No.4 of appeal is regarding addition of Rs.33,158/- on account of alleged profit in alleged excess stock of Narma/Kapas. Since the addition on account of unexplained investment in stock has been deleted above, the addition of Rs.33,158/- on account of alleged profit does not survive and the same is deleted and the ground of appeal is allowed.” 4. The aforesaid deletion was affirmed by the Tribunal vide order dated 16.7.2009 (Annexure A-3) on appeal by the revenue. ITA No. 186 of 2010 -5- 5. We have heard the learned counsel for the revenue and perused the record with his assistance. 6. The CIT (A) as well as the Tribunal after examining the material on record had concurrently recorded a finding of fact that the addition on account of alleged stock is based on assumption and estimation without there being any specific evidence to support that the actual stock of Narma of 779 Qtls. had not been recorded in the books of account of the assessee. It was further recorded that no actual physical verification of the stock was carried out on the date of survey. It was also held that the burden cast on the Assessing Officer under Section 69 of the Act had not been discharged by merely placing reliance on Form M by disregarding the evidence and the books of account produced by the assessee. The learned counsel for the revenue could not refer to any material to show that the orders passed by the CIT (A) and the ITAT deleting the addition made by the Assessing Officer were perverse in any manner. 7. In view of the concurrent findings recorded by the CIT (A) and ITAT, no substantial question of law as claimed by the revenue arises for consideration of this Court in this appeal. Consequently, finding no merit in the appeal, the same is hereby dismissed. (AJAY KUMAR MITTAL) JUDGE July 01, 2010 (ADARSH KUMAR GOEL) gbs JUDGE