M/s. Base Industries Ltd., SILVASSA V. The ACIT.,Vapi Circle, Vapi

CO 187/AHD/2012

• Counselvise Citation: [2018] 117 COUNSELVISE.COM (IT) 2437 (ITAT-SURAT)
• Duration Of Justice: 5 year(s) 11 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-09-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 15-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Assessee Lawyers: SALIL KAPOOR SMT SOUMYA SINGH
• Keywords: Gross profit estimation; Opportunity of being heard; Corroborative evidences; Set aside

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT , , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . / ITA NO.1593/AHD/2012/SRT & C.O NO.187/AHD/2012/SRT / ASSESSMENT YEAR: 2009-10 ASST. COMMISSIONER OF INCOME TAX, VAPI CIRCLE, VAPI. VS. M/S. BASE INDUSTRIES LTD., BEHIND HANUMAN MANDIR, NR. CANAL, DEMNI ROAD, DARDA, SILVASSA. [PAN: AACCR 6479B] ( ' / APPELLANT) ( #$' /RESPONDENT) / ASSESSEE BY : SHRI SALIL KAPOOR, ADVOCATE SMT. SOUMYA SINGH, ADVOCATE /REVENUE BY : SHRI O.P. SINGH, CIT-D.R /DATE OF HEARING : 31-08-2018 / DATE OF PRONOUNCEMENT : 19-09-2018 / ORDER PER C.M.GARG, JUDICIAL MEMBER: THIS APPEAL HAS BEEN FILED BY THE REVENUE AND THE CROSS OBJECTION (CO) HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORD ER OF COMMISSIONER OF INCOME TAX (APPEALS), VALSAD (CIT(A) FOR SHORT ) DATED 11.05.2012 FOR THE ASSESSMENT YEAR (A.Y) 2009-10. 2 ITA NO.1593/AHD/2012/SRT & CO NO.187/AHD/2012/SRT ( A.Y: 2009-10) M/S. BASE INDUSTRIES LTD. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ITA NO.1593/AHD/2012/SRT READ AS FOLLOWS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN NOT GRANTING ADDITIONS MADE BY ASSESSING OFFICER ON ACCOUNT OF UNVERIFIABLE PURCHASES OF RS. 7,48,31,193/-. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN NOT GRANTING ADDITIONS MADE BY ASSESSING OFFICER OF RS. 4,13,360/- ON ACCOUNT OF EXPENSES CL AIMED REGARDING LOADING & UNLOADING CHARGES, CLEARING & F ORWARDING CHARGES AND REPAIRS & MAINTENANCE CHARGES. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN NOT GRANTING ADDITION MADE BY A SSESSING OFFICER OF RS. 5,62,960/- ON ACCOUNT OF ADMINISTRAT IVE EXPENSES. 3. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE C.O NO.1593/AHD/2012/SRT READ AS FOLLOWS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE ID. CIT(A) HAS RIGHTLY DELETED THE ADDITIONS MADE B Y LEARNED ASSESSING OFFICER ON ACCOUNT OF UNVERIFIABLE PURCHA SES OF RS. 7,48,31,193/-. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE ID. CIT(A) HAS RIGHTLY DELETED THE ADDITIONS MADE B Y LEARNED ASSESSING OFFICER OF RS. 4,13,360/- ON ACCOUNT OF E XPENSES CLAIMED REGARDING LOADING 8T UNLOADING CHARGES, CLE ARING & FORWARDING CHARGES AND REPAIRS & MAINTENANCE CHARGE S. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE ID. CIT(A) HAS RIGHTLY DELETED THE ADDITIONS MADE B Y LEARNED ASSESSING OFFICER OF RS.5,62,960/- ON ACCOUNT OF ADMINISTRATIVE EXPENSES. GROUND NO.1 OF THE REVENUE & CO NO.1 OF THE ASSESSE E : 4. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON THE RECORD OF THE T RIBUNAL. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT THE AO WAS RIGHT IN MAKING ADDITION OF 15% OF IMPUGNED PURCHASES IN ABS ENCE OF BOOKS OF 3 ITA NO.1593/AHD/2012/SRT & CO NO.187/AHD/2012/SRT ( A.Y: 2009-10) M/S. BASE INDUSTRIES LTD. ACCOUNTS, THE NAME AND ADDRESSES OF THE PURCHASED P ARTIES, COPY OF PURCHASE BILLS ETC. AND THE PURCHASES CLAIMED BY TH E ASSESSEE COULD NOT BE VERIFIED IN ABSENCE OF SAID DOCUMENTARY EVIDENCE . THE LD. DR FURTHER SUBMITTED THAT THE AO GRANTED AMPLE OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS R ELEVANT FOR VERIFICATION OF PURCHASES, BUT THE SAME WAS NOT PRODUCED BY THE ASSESSEE HENCE, THE AO WAS RIGHT IN MAKING ADDITION OF 15% OF TOTAL ALL EGES PURCHASES. THE LD. DR SUBMITTED THAT THE LD. FIRST APPELLATE AUTHO RITY HAS REDUCED THE ADDITION TO 7.88% OF PURCHASES WITHOUT ANY BASIS AN D WITHOUT ALLOWING THE AO TO VERIFY THE SUBMISSIONS OF THE ASSESSEE THEREF ORE, IMPUGNED ORDER MAY KINDLY BE SET ASIDE BY RESTORING THAT OF THE AO . 5. REPLYING TO THE ABOVE, THE LD. ASSESSEES REPRES ENTATIVE (AR) SUBMITTED THAT THE ASSESSEE IS IN THE BUSINESS OF M ANUFACTURING OF POLYESTER YARN AND THERE WAS FALL IN GP IN COMPARIS ON OF PRECEDING AY 2009-10 IN THE PRESENT AY 2010-11 AS THE GP IN THE PRECEDING YEAR WAS 8.85% OF TURNOVER, WHICH WAS REDUCED TO 6.88% DURIN G THE PRESENT ASSESSMENT YEAR AND THIS FALL WAS NOTED BY THE AO F OR TAKING ACTION AGAINST THE ASSESSEE IN THIS REGARD. THE LD. AR FU RTHER SUBMITTED THAT THE AO HAS ACCEPTED THE QUANTITY OF SALES AND PURCHASES OF THE ASSESSEE WITHOUT ANY DISPUTE HOWEVER, NOT AGREEING WITH GP R ATE DECLARED BY THE ASSESSEE MADE ADDITION BY ESTIMATING THE GP @ 15% O F TOTAL TURNOVER, WHICH WAS NOT REASONABLE AND SUSTAINABLE THEREFORE, THE LD. CIT(A) AFTER 4 ITA NO.1593/AHD/2012/SRT & CO NO.187/AHD/2012/SRT ( A.Y: 2009-10) M/S. BASE INDUSTRIES LTD. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF T HE CASE REDUCED THE ADDITION TO 7.88% OF THE TURNOVER ON REASONABLE AND JUSTIFIED BASIS. THE LD. AR SUBMITTED THAT THE REASON OF FALL IN THE GP RATE WAS ACTION OF THE BANKS AGAINST THE ASSESSEE FOR RECOVERY OF DUES/OVE RDRAFT AMOUNT WHICH RESULTED INTO WEAK FINANCIAL SITUATION OF THE ASSES SEE AND MENTAL PANIC AND HARASSMENT CONSEQUENTLY THE MANAGEMENT PUT ITS ENERGY TO CONTROL THE LITIGATION AND DISPUTES WITH THE BANKS AND THAT DIVERSION OF EFFORTS ADVERSELY EFFECTED THE EARNING CAPACITY OF THE ASSE SSEE FIRM RESULTED INTO LOW GP RATE. THE LD. AR DREW OUR ATTENTION TOWARDS RELEVANT PARAS 5.4 & 5.5 OF THE IMPUGNED ORDER AND SUBMITTED THAT THE LD . CIT(A) HAS CONSIDERED FINDINGS OF THE AO AS WELL AS EXPLANATIO N OF THE ASSESSEE AND THEREAFTER, IN SUBSEQUENT PARAS 5.6 CONSIDERED THE REASONS WHICH RESULTED INTO FALL IN THE GP RATE AND THEREAFTER, I N SUBSEQUENT PARAS 5.7 & 5.8 CONCLUDED THAT HE CANNOT MAKE ADOPT DISALLOWANC E OF 15% OF PURCHASES WITHOUT IDENTIFYING THE PARTY FROM WHOM T HE GOODS WERE PURCHASED AND WITHOUT BRINGING ADVERSE EVIDENCE ON RECORD AGAINST THE ASSESSEE. THE LD. AR FURTHER SUBMITTED THAT THE DI SALLOWANCE MADE BY THE AO WAS DISMISSED AND CONSIDERING THE ENTIRE FAC TS AND CIRCUMSTANCES AND SHORTFALL OF 1.97% IN THE GP DURING THE PRESENT YEAR THE LD. CIT(A) ENHANCED THE GP FROM 6.88% TO 7.88% WHICH IS QUITE CORRECT AND JUSTIFIED THEREFORE, IMPUGNED ORDER MAY KINDLY BE UPHELD BY D ISMISSING GROUND OF ASSESSEE. THE LD. AR DID NOT PRESS THE ASSESSEES GROUND IN C.O NO.1. 5 ITA NO.1593/AHD/2012/SRT & CO NO.187/AHD/2012/SRT ( A.Y: 2009-10) M/S. BASE INDUSTRIES LTD. 6. THE LD. DR PLACING REJOINDER TO THE ABOVE SUBMIS SIONS, SUBMITTED THAT NO BOOKS OF ACCOUNTS, BILL AND VOUCHERS PERTAI NING TO PURCHASES WERE PRODUCED BY THE ASSESSEE FOR VERIFICATION DESPITE S EVERAL OPPORTUNITIES WERE GIVEN BY THE AO THEREFORE, THE AO WAS ENTITLED TO MAKE DISALLOWANCE IN THIS REGARD. THE LD. DR ALSO SUBM ITTED THAT THE LD. CIT(A) HAS MADE DECISION ON THE BASIS OF COMPARISON OF GP RATE OF PRECEDING YEAR WITH THE PRESENT YEAR WITHOUT CONFRONTING THE AO REGARDING THE CONTENTIONS OF THE ASSESSEE AND SUBSTANTIAL RELIEF HAS BEEN GRANTED TO THE ASSESSEE WITHOUT ALLOWING THE OPPORTUNITY OF BEING HEARD TO THE AO, THEREFORE, IMPUGNED ORDER MAY KINDLY BE SET ASIDE B Y RESTORING THAT OF THE AO. 7. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSI ONS, FIRST OF ALL, WE OBSERVE THAT THE LD. AR HAS NOT PRESSED GROUND IN C .O NO.1 OF THE ASSESSEE HENCE, THE SAME IS DISMISSED AS NOT PRESSE D. SO FAR AS DISALLOWANCE OF 15% OF PURCHASES IS CONCERNED, ON C AREFUL AND VIGILANT READING OF THE AUTHORITIES BELOW, WE OBSERVE THAT T HE AO TOOK ACTION BY OBSERVING THE FALL IN GP RATE DECLARED BY THE ASSES SEE IN THE PRESENT YEAR. THE AO MADE DISALLOWANCE OF 15% OF PURCHASE S ON THE ALLEGATION OF FAILURE OF THE ASSESSEE IN PRODUCING BOOKS OF AC COUNTS AND RELEVANT BILLS & VOUCHERS PERTAINING TO THE PURCHASES, BUT T HERE IS NO DELIBERATIONS ON THE EXPLANATION OFFERED BY THE ASSESSEE JUSTIFYI NG THE FALL IN THE GP RATE. HOWEVER, DURING FIRST APPELLATE PROCEEDINGS, THE LD. CIT(A) 6 ITA NO.1593/AHD/2012/SRT & CO NO.187/AHD/2012/SRT ( A.Y: 2009-10) M/S. BASE INDUSTRIES LTD. CONSIDERED CAUSES SHOWN BY THE ASSESSEE WHICH RESUL TED INTO FALL IN THE GP RATE IN PARA 5.6 OF THE IMPUGNED ORDER AND ON PE RUSAL OF THE FINDINGS OF THE FIRST APPELLATE AUTHORITY, WE ARE IN AGREEME NT WITH THE FINDINGS RECORDED BY HIM REGARDING CAUSES SHOWN BY THE ASSES SEE JUSTIFYING THE FALL IN THE GP RATE. WE ARE ALSO IN AGREEMENT WITH THE CONCLUSION DRAWN BY THE FIRST APPELLATE AUTHORITY THAT WHEN PURCHASE S AND SALES HAVE BEEN ACCEPTED AND ACCOUNTS OF THE ASSESSEE WERE DULY AUD ITED AND TAX AUDIT REPORT AS PRESCRIBED U/S. 44AB OF THE ACT HAS BEEN FILED ALONG WITH THE RETURN OF INCOME THEN, NO DISALLOWANCE CAN BE MADE ON ACCOUNT OF PURCHASES. THE LD. CIT(A) IN PARA 5.7 ALSO NOTED T HAT WHEN ALL PURCHASE BILLS ARE AVAILABLE THEN, THE AO OUGHT NOT TO HAVE MADE ESTIMATED DISALLOWANCE OF 15% OF SUCH PURCHASES. 8. IN VIEW OF ABOVE DISCUSSION, WE ARE INCLINED TO HOLD THAT THE AO WAS NOT RIGHT IN MAKING ADHOC DISALLOWANCE OF 15% OF PU RCHASES UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE LD. CIT (A) WAS RIGHT IN DISMISSING THE ACTION OF THE AO. SO FAR AS ENHANCE MENT OF GP RATE FROM 6.88% TO 7.88% DIRECTED BY THE LD. CIT(A) IS CONCER NED, FROM RELEVANT PARA 5.8 OF THE FIRST APPELLATE ORDER, WE CLEARLY O BSERVE THAT THE LD. CIT(A) HAS CONSIDERED GP RATE OF IMMEDIATELY PRECEDING YEA R WHICH WAS 8.85% AND IN THE CONCLUDING OBSERVATIONS DIRECTED THE AO TO RECALCULATE THE GP @ 7.88% TO COVER ALL THE POSSIBLE REVENUE LOSS. IN THIS SITUATION, IT IS ALSO RELEVANT TO NOTE THAT THE FIRST APPELLATE AUTHORITY RIGHTLY OBSERVE THAT IF THE 7 ITA NO.1593/AHD/2012/SRT & CO NO.187/AHD/2012/SRT ( A.Y: 2009-10) M/S. BASE INDUSTRIES LTD. PURCHASED DISALLOWANCE OF 15% IS SUSTAINED THEN, TH E GP RATE WOULD SHOOT UP TO 18.34% WHICH CANNOT BE A JUSTIFIED AND REASONABLE IN THE LINE OF BUSINESS OF THE ASSESSEE. 9. WHEN WE LOGICALLY ANALYZE CONCLUSION DRAWN BY TH E FIRST APPELLATE AUTHORITY THEN, FIRST OF ALL, WE MAY POINT OUT THAT THE AO ACCEPTED THE GP RATE OF 8.85% IN THE IMMEDIATE PRECEDING YEAR AND T HE LD. CIT(A) HAS CONSIDERED THE CAUSES, WHICH RESULTED INTO FALL IN THE GP RATE IN THE PRESENT AY 2009-10 AND THE GP WAS DECLARED @ 6.88% OF THE TURNOVER. THE LD. CIT(A) HAS DIRECTED THE AO TO TAKE GP RATE OF 7.88% FOR THE PRESENT YEAR, WHICH IS MARGINALLY LESS BY 0.97% IN COMPARISON TO THE IMMEDIATE PRECEDING YEAR AND THIS MARGINAL DECLINE IS JUSTIFIED IN VIEW OF THE ADVERSE CIRCUMSTANCES FACED BY THE ASSESSEE DUR ING THE PRESENT ASSESSMENT YEAR. FINALLY, WE HAVE NO HESITATION TO HOLD THAT THE LD. CIT(A) TOOK A QUITE JUSTIFIED AND BALANCING APPROAC H IN DIRECTING THE AO TO CALCULATE THE GP @ 7.88% OF TURNOVER WHICH CERTAINL Y COVERS ALL THE POSSIBLE LEAKAGES OF REVENUE ON ALL FOUR CORNERS. THEREFORE, WE ARE UNABLE TO SEE ANY AMBIGUITY, PERVERSITY OR ANY OTHE R VALID REASON TO INTERFERE WITH THE CONCLUSION AND FINDINGS RECORDED BY THE LD. CIT(A) AND THUS, WE UPHOLD THE SAME. CONSEQUENTLY, GROUND NO. 1 OF THE REVENUE BEING DEVOID OF MERITS IS DISMISSED. 8 ITA NO.1593/AHD/2012/SRT & CO NO.187/AHD/2012/SRT ( A.Y: 2009-10) M/S. BASE INDUSTRIES LTD. GROUND NO.2 OF REVENUE AND GROUND OF CO. NO.2 OF TH E ASSESSEE : 10. THE LD. AR SUBMITTED THAT THE ASSESSEE DOES NOT WANT TO PRESS GROUND OF CO NO.2 HENCE, THE SAME IS DISMISSED AS N OT PRESSED. APROPOS GROUND NO.2 OF THE REVENUE, WE HAVE HEARD T HE ARGUMENTS OF BOTH SIDES AND CAREFULLY PERUSED THE RELEVANT MATER IAL PLACED ON THE RECORD OF THE TRIBUNAL. THE LD. DR SUBMITTED THAT THE LD. CIT(A) WAS NOT CORRECT AND HAS ERRED IN NOT GRANTING ADDITIONS MAD E BY ASSESSING OFFICER OF RS. 4,13,360/- ON ACCOUNT OF EXPENSES CLAIMED RE GARDING LOADING & UNLOADING CHARGES, CLEARING & FORWARDING CHARGES AN D REPAIRS & MAINTENANCE CHARGES. THE LD. DR SUBMITTED THAT THE IMPUGNED ORDER MAY KINDLY BE SET ASIDE BY RESTORING THAT OF THE AO AS THE LD. CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE WITHOUT ANY BASIS AN D REASON. 11. THE LD. AR SUPPORTED THE FIRST APPELLATE ORDER AND SUBMITTED THAT THE FINDINGS ARRIVED BY THE LD. CIT(A) ARE QUITE CORREC T AND JUSTIFIED, THEREFORE THE SAME MAY KINDLY BE UPHELD. 12. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISS IONS, FROM PARA 6.3 OF THE FIRST APPELLATE ORDER, WE OBSERVE THAT AFTER CONSIDERING THE OBSERVATIONS OF THE AO AND SUBMISSIONS OF THE APPEL LANT/ASSESSEE THE LD. CIT(A) RIGHTLY HELD THAT THE ASSESSEE HAS ACHIEVED TURNOVER OF RS. 65.26 CRORES AND THE SAME WAS NOT POSSIBLE WITHOUT MAKING EXPENSES LOADING & UNLOADING CHARGES, CLEARING AND FORWARDING CHARGES, REPAIRS & 9 ITA NO.1593/AHD/2012/SRT & CO NO.187/AHD/2012/SRT ( A.Y: 2009-10) M/S. BASE INDUSTRIES LTD. MAINTENANCE CHARGES, WHICH ARE VERY MEAGER LOOKING INTO THE HUGE TURNOVER OF THE ASSESSEE. IN OUR CONSIDERED OPINIO N, THE LD. CIT(A) WAS RIGHT IN HOLDING THAT THE EXPENDITURE IN QUESTION A RE COMPLEMENTARY MEANS NECESSARY TO THE BUSINESS ACTIVITY OF THE ASS ESSEE AND THE AO WAS NOT JUSTIFIED IN MAKING ADHOC DISALLOWANCE OF 1 5% OF TOTAL CLAIMED EXPENSES. 13. FINALLY, WE HOLD THAT THE AO WAS NOT CORRECT IN MAKING ADHOC DISALLOWANCE OF 15% OF CLAIMED EXPENDITURE AND LD. CIT(A) WAS RIGHT IN DELETING THE SAME. WE ARE UNABLE TO SEE ANY VALID R EASON TO INTERFERE WITH THE FINDINGS RECORDED BY THE LD. CIT(A), AND WE UPH OLD THE SAME. CONSEQUENTLY, GROUND NO.2 OF THE REVENUE IS ALSO DI SMISSED. GROUND NO.3 OF THE REVENUE AND CO NO.3 OF THE ASSES SEE: 14. THE LD. AR SUBMITTED THAT THE ASSESSEE DOES NOT WANT TO PRESS GROUND NO.3 HENCE, THE SAME IS DISMISSED AS NOT PRE SSED. APROPOS GROUND NO.3 OF THE REVENUE, WE HAVE HEARD THE ARGUM ENTS OF BOTH SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON THE RECORD OF THE TRIBUNAL. 15. THE LD. DR SUPPORTED THE ACTION OF THE AO AND S UBMITTED THAT THE APPELLANT WAS ASKED TO PRODUCE THE BOOKS OF ACCOUNT S, BILL AND VOUCHERS FOR VERIFICATION WHICH WERE NOT PRODUCED AND IN ABS ENCE OF SUPPORTING EVIDENCE, THE AO RIGHTLY MADE ADHOC ADDITION OF 15% OF EXPENSES 10 ITA NO.1593/AHD/2012/SRT & CO NO.187/AHD/2012/SRT ( A.Y: 2009-10) M/S. BASE INDUSTRIES LTD. DEBITED UNDER THE HEAD OF MANUFACTURING. THE LD. D R SUBMITTED THAT THE IMPUGNED ORDER MAY KINDLY BE SET ASIDE BY RESTORING THAT OF THE AO. 16. THE LD. AR SUBMITTED THAT IN PARA 7.3OF FIRST A PPELLATE ORDER, THERE ARE DETAILED FINDINGS OF THE LD. CIT(A) WHICH DESER VE TO BE UPHELD THEREFORE, GROUND NO.3 OF REVENUE MAY KINDLY BE DIS MISSED. 17. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISS IONS, WE OBSERVE THAT THE AO MADE ADHOC DISALLOWANCE OF 15% OF MANUF ACTURING EXPENSES CLAIMED BY THE ASSESSEE ON THE ALLEGATIONS OF NON-P RODUCTION OF BOOKS OF ACCOUNTS AND NON-COOPERATION OF THE ASSESSEE DURING ASSESSMENT PROCEEDINGS BY NOT FURNISHING SUPPORTING EVIDENCE. THE MAIN BONE OF CONTENTION OF THE ASSESSEE BEFORE THE AUTHORITIES B ELOW WAS THAT THE BOOKS ARE AUDITED WITHOUT ANY QUALIFICATION AND SUC H DISALLOWANCE IS NOT LEGALLY TENABLE AND SUSTAINABLE. IT WAS ALSO A CON TENTION OF ASSESSEE THAT WITHOUT MANUFACTURING EXPENSES SUCH HUGE TURNOVER O F MANUFACTURED GOODS COULD NOT HAVE BEEN MADE THEREFORE, ADHOC DIS ALLOWANCE IS NOT SUSTAINABLE. CONSIDERING THE ENTIRE FACTS AND CIRC UMSTANCES OF THE CASE, WE ARE INCLINED TO HOLD THAT THE LD. CIT(A) WAS RIG HT IN CONCLUDING THAT THE EXPENDITURE IN QUESTION ON MANUFACTURING ACTIVITIES IS COMPLEMENTARY OR INCIDENTAL TO THE MAIN BUSINESS ACTIVITY OF MANUFAC TURING OF POLYESTER YARN AND WITHOUT MAKING OR INCURRING SUCH EXPENDITURE ON MANUFACTURING ACTIVITIES THE PRODUCTION OF FINISHED GOODS AND HUG E SALE TURNOVER WAS NOT 11 ITA NO.1593/AHD/2012/SRT & CO NO.187/AHD/2012/SRT ( A.Y: 2009-10) M/S. BASE INDUSTRIES LTD. POSSIBLE. FINALLY, WE ARE UNABLE TO SEE ANY REASON TO INTERFERE WITH THE FINDINGS ARRIVED BY THE LD. CIT(A) AND THUS, WE UPH OLD THE SAME. CONSEQUENTLY, GROUND NO.3 OF THE REVENUE IS ALSO DI SMISSED. 18. IN THE RESULT, APPEAL OF THE REVENUE AS WELL AS C.O OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 9 TH SEPTEMBER, 2018 / SURAT ; DATED : 19 TH SEPTEMBER, 2018 EDN # & / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT ; 3. $ ( ) / THE CONCERNED CIT(A); 4. THE CONCERNED PRL. CIT; 5. , , / DR, ITAT, SURAT; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // * / ASSISTANT REGISTRAR , / ITAT, SURAT SD/- SD/- ( ) ( O.P.MEENA ) / ACCOUNTANT MEMBER ( ) (C.M.GARG) /JUDICIAL MEMBER