M/s Cicon Environment Technologies P. Ltd., Bhopal V. The ACIT, 1(1), Bhopal

CO 30/IND/2011

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6762 (ITAT-INDORE)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 25-07-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: YESHWANT SHARMA
• Assessee Lawyers: ANADI VERMA

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO./114/IND/2010 A.Y.2002-03 ASSTT. COMMISSIONER OF INCOME TAX 1(1), BHOPAL ... APPELLANT VS M/S CICON ENVIRONMENT TECHNOLGIES PRIVATE LIMITED BHOPAL PAN AAAC-6656P ... RESPONDENT CO NO. 30/IND/2011 ARISING OUT OF ITA NO./114/IND/2010 M/S CICON ENVIRONMENT TECHNOLGIES PRIVATE LIMITED BHOPAL OBJECTOR VS ASSTT. COMMISSIONER OF INCOME TAX 1(1), BHOPAL RESPONDENT APPELLANT BY : SHRI ANADI VERMA RESPONDENT BY : SHRI YESHWANT SHARMA 2 DATE OF HEARING 13.12.2011 DATE OF PRONOUNCEMENT 16.12.2011 O R D E R PER R.C. SHRMA, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 25.2.201 1 FOR THE ASSESSMENT YEAR 2002-03. 2. THE GRIEVANCE OF THE REVENUE RELATES TO DELETION OF ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF VALUATION OF CLOSING STOCK, WORK IN PROGRESS OF CHEMICALS AS PER DETAILS GIVEN IN SCHEDULE-D OF THE BALANCE SHEET. AS PER THE STOCK STATEMENT DATED 5.4.2002 SUBMITTED BY THE ASSESSEE TO DENA BANK, THE CLOSING STOCK, WORK IN PROGRESS AND BOOK DEBTS TOTALLING TORS. 1,90,61,348/- HAVE BEEN SHOWN. AFTER EXCLUDING BOOK DEBTS OF RS. 30,97,632/- THE CLOSING STOCK AND WORK IN PROGRESS AS 3 ON 31.3.2002 WORK OUT TO RS. 1,59,63,716/- AS AGAINST CLOSING WORK IN PROGRESS 65,29,040/- CREDITED IN THE PROFIT AND LOSS ACCOUNT. THE DIFFERENCE OF RS. 94,34,676/- IN THE CLOSING WORK IN PROGRESS WAS ADDED BY THE ASSESSING OFFICER TO THE ASSESEES INCOME. 3. AFTER CALLING FOR THE REMAND REPORT, COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION AFTER HAVING MADE THE FOLLOWING OBSERVATIONS :- 4. I HAVE PERUSED THE ORDER OF THE A.O. AND CONSIDERED THE SUBMISSIONS OF THE AR. IN MY OPINIO N THE ADDITION MADE BY THE A.O. WAS NOT WARRANTED ON THE FACTS OF THE CASE. THE ASSESSEE HAS RELIED UPON MANY JUDICIAL PRONOUNCEMENTS WHEREIN IT HAS BEEN BY NOW SETTLED THAT NO ADDITION CAN BE MADE ON MERE COMPARISON OF THE STOCK DECLARED TO THE BANK AND TH E ONE SHOWN IN THE BOOKS OF ACCOUNTS. MOREOVER, I FI ND THAT THE FIGURE OF WORK IN PROGRESS (WIP) GIVEN IN THE STATEMENT TO BANK WAS PURELY AD HOC ESTIMATED LUMP 4 SUM FIGURE GIVEN IN ROUND SUMS, AS ACCEPTED BY THE A.O. IN HIS REMAND REPORT ALSO. SUCH ESTIMATED FIGU RE COULD NOT BE USED TO MAKE ADDITION AS DONE BY A.O. FURTHER, THE A.O. HAS ONLY CONSIDERED THE FIGURE OF WIP AND HE HAS NOT CONSIDERED THE FIGURE OF BOOK DEBTS GIVEN IN THE SAME STOCK STATEMENT. AND TAKEN TOGETHER STOCK AND BOOK DEBTS SHOWN TO BANK IN THE STOCK STATEMENT WERE NOT EXCESS AND WERE RATHER SHO RT AS COMPARED TO THAT SHOWN IN THE BALANCE SHEET OR CONVERSELY, THE SUM OF STOCK AND BOOK DEBTS SHOWN I N THE BALANCE SHEET WAS MORE WHEREAS THE SAME WAS LES S IN THE STOCK STATEMENT SUBMITTED TO BANK. MOREOVER , NO DEFECTS OR DISCREPANCY WAS FOUND BY THE A.O. IN THE FIGURE OF PURCHASE, SALES, EXPENSES, ETC. AND THE B OOKS OF ACCOUNTS WERE NOT REJECTED BY THE A.O. NEITHER A .O. NOR THE BANK OFFICIALS HAVE VERIFIED THE IMPUGNED S TOCK PHYSICALLY WHICH WAS HYPOTHECATED AND NOT PLEDGED. THE A.O. ALSO HAVE NOT BROUGHT ON RECORD ANY CORROBORATIVE EVIDENCE IN SUPPORT OF HIS ADDITION. HENCE, IN MY VIEW OF THE ABOVE FACTS AND CONSIDERIN G THE DECISIONS RELIED UPON BY THE AR PARTICULARLY IN THE CASE OF ACIT V. JYOTI WOOLEN MILLS (2009) 125 TTJ 810 (DELHI ITAT) AND CIT V. DAS INDUSTRIES (2008) 5 303 ITR (199) (ALL HC), THE ADDITION MADE BY THE A. O. IS DELETED. THE ASSESSEE SHALL GET RELIEF OF RS. 94,34,676/-. 5. AGAINST THE ABOVE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), THE REVENUE IS IN APPEAL BEFORE US. 6. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, GONE THROUGH THE MATERIAL AVAILABLE ON RECORD AND FIND THAT THE FIGURE OF WORK IN PROGRESS GIVEN BY THE ASSESSEE IN THE STATEMENT TO BANK WAS PURELY AD HOC ESTIMATE GIVEN IN THE ROUND SUMS WHICH WAS ALSO ACCEPTED BY THE ASSESSING OFFICER IN HIS REMAND REPORT. WE ALSO FIND THAT WHILE COMPUTING THE DIFFERENCE IN THE STOCK, THE ASSESSING OFFICER HAS ONLY CONSIDERED THE FIGURE OF WORK IN PROGRESS AND HAS NOT CONSIDERED THE FIGURE OF BOOK DEBTS AS GIVEN IN THE 6 SAME STOCK STATEMENT. A FINDING OF FACT HAS BEEN RECORDED BY THE COMMISSIONER OF INCOME TAX (APPEALS) TO THE EFFECT THAT AFTER TAKING INTO ACCOUNT BOTH THE STOCK OF BOOK DEBTS SHOWN TO THE BANK IN THE STOCK STATEMENT, STOCK WAS NOT EXCESS AND WERE SHORT AS COMPARED TO THAT SHOWN IN THE BALANCE SHEET. WE ALSO FIND THAT NO DEFECT OR DISCREPANCY WAS FOUND BY THE ASSESSING OFFICER IN THE FIGURE OF SALE, PURCHASE, EXPENSES, ETC. AND THAT BOOKS OF ACCOUNTS WERE NOT REJECTED. THE DETAILED FINDING RECORDED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AT PAGES 6 TO 12 HAS NOT BEEN CONTROVERTED BY THE DEPARTMENT BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE 7 COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON THE BASIS OF VALUE OF WORK IN PROGRESS SHOWN IN THE BALANCE SHEET VIS--VIS THE STOCK STATEMENT FILED WITH THE BANK. 7. IN THE CROSS OBJECTION THE ASSESSEE HAS AGITATED THE ADDITION OF RS.2,65,684/- AS SUSTAINED BY THE COMMISSIONER OF INCOME TAX (APPEALS) ON ACCOUNT OF SUPPRESSION OF CLOSING WORK IN PROGRESS. 8. AS ALREADY DISCUSSED HEREINABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN DECIDING THE ISSUE OF ADDITION MADE BY THE ASSESSING OFFICER AND THE ADDITION RETAINED TO THE EXTENT OF RS.2,65,684/- ON ACCOUNT OF VALUATION OF CLOSING WIP. WE 8 ACCORDINGLY UPHOLDING THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN RETAINING THE ADDITION TO THE EXTENT OF RS.2,65,684/-. 9. IN THE RESULT, THE APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. SD SD (JOGINDER SINGH) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DECEMBER 16 TH , 2011 COPY TO APPELLANT,RESPONDENT,CIT, CIT(A), DR DN/-