M/s. HITKARI PACKAGING PVT. LTD., Baroda V. The DCIT.,CIRCLE.1(2), Baroda

CO 88/AHD/2009

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7903 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 02-08-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 18-05-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Assessee Lawyers: ANIL R SHAH
• Keywords: Depreciation; Additional depreciation; Retraction
• Section: 43B; 133A; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI G.C.GUPTA , VICE PRESIDENT AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 1160/AHD/2009 ASSESSMENT YEAR :2003-04 & C.O. NO.88/AHD/2009 ASSESSMENT YEAR :2003-04 DCIT., CIR.1 (2), BARODA HITKARI PACKAGING PVT. LTD. 339, GIDC ESTATE, WAGHODIA, DIST. BARODA. V/S . V/S. HITKARI PACKAGING PVT. LTD. 339, GIDC ESTATE, WAGHODIA, DIST. BARODA. DCIT., CIR.1 (2), BARODA PAN NO. AA AC H5261K (APPELLANT) .. (RESPONDENT) BY REVENUE SHRI RAHUL KUMAR SR.D.R. /BY ASSESSEE SHRI ANIL R. SHAH, A.R. /DATE OF HEARING 02.08.2012 /DATE OF PRONOUNCEMENT 05.10.2012 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE AND C.O. OF THE ASSESSEE WHICH HAS EMANATED FROM THE ORDER OF CIT(A )-V, BARODA, ORDER DATED 19.01.2009 FOR ASSESSMENT YEAR 2003-04. THE REVENUES APPEAL AND ASSESSEES C.O. WERE HEARD TOGETHER AND ARE BEING D ISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 1160/AHD/2009 A.Y. 03-04 PAGE 2 & C.O. NO.88/AHD/2009 ITA NO. 1160/AHD/2009 2. THE EFFECTIVE GROUNDS OF REVENUES APPEAL ARE AS UNDER: 1(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE G.P. ADDITION OF R S.23,86,074/-. 1(B) THE CIT(A) FAILED TO APPRECIATE THAT THE ASSES SING OFFICER WHILE DEALING THE ISSUE HAD CLEARLY ESTABLISHED THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE NOT RELIABLE AND ACCORDINGLY THEY WERE REJECTED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 145A OF T HE ACT. THE ASSESSEE FAILED TO PRODUCE THE PURCHASE AND SALE BI LLS, PRE SURVEY AND POST SURVEY FIGURES OF GP, EVIDENCE OF INCREASE IN FURNACE OIL AND LDO PRICES ETC. THUS, THE ASSESSEE FAILED TO JUSTIFY T HE FALL IN GP OF 6.1% AS COMPARED TO THE IMMEDIATE PRECEDING YEAR. 2(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.7,6 5,000/- BEING STOCK DIFFERENCE FOUND DURING THE COURSE OF SURVEY U/S.13 3A OF THE ACT. 2(B) THE CIT(A) FAILED TO APPRECIATE THAT THE ASSES SEE HAD FAILED TO PRODUCE ANY STATEMENT/ACCOUNT BEFORE THE ASSESSING OFFICER SHOWING THAT RS.765000/- WAS ADDED IN THE STOCK OF THE COMP ANY. 3(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.3,5 0,000/- ON ACCOUNT OF UNACCOUNTED SCRAP SALES. 3(B) THE CIT(A) FAILED TO APPRECIATE THE FACT THAT THIS ADDITION WAS BASED ON THE STATEMENT OF THE DIRECTOR, SHRI GURSHA RAN SETHI RECORDED DURING SURVEY U/S. 133A WHEREIN HE HAD ACCEPTED THA T THE SCRAP IS GENERATED IN THE PROCESS OF MANUFACTURING OF CORRUG ATED BOXES AT 5 TO 8% AND OFFERED THE SAME AS ADDITIONAL INCOME. 3. THE A.O. OBSERVED THAT THE APPELLANT HAD FAILED TO PRODUCE THE PURCHASE AND SALE BILLS ORDER DATED AS CALLED FOR D URING THE COURSE OF ASSESSMENT PROCEEDING. FURTHER, THERE WAS A SURVEY AT THE ASSESSEES ITA NO. 1160/AHD/2009 A.Y. 03-04 PAGE 3 & C.O. NO.88/AHD/2009 PREMISES ON 11.02.2003 SURVEY US.133A. DURING THE COURSE OF SURVEY IN STATEMENT ONE OF THE DIRECTOR, NAMELY SHRI GURSHARA M SETHI HAD ADMITTED THAT STOCK REGISTER OF THE COMPANY WAS NOT BEING MAINTAI NED. THE LD. A.O. COMPARED THE GP RATE WITH THE IMMEDIATE PRECEDING Y EAR AND HE ALSO REJECTED THE BOOK RESULT U/S. 145 OF THE IT ACT DUE TO ASSES SEES BOOKS OF ACCOUNT WERE NOT RELIABLE. THEREFORE, HE ESTIMATED THE GP RATE @ 23.03% AS AGAINST 16.04% AND MADE THE ADDITION OF RS.23,86,074. THE ASSESSEE WAS BEFORE THE CIT(A) WHO HAD DELETED THE ADDITION AND OBSERV ED THAT THE APPELLANT HAD SUBMITTED DETAILED REPLY BEFORE THE A.O. AS WELL A S BEFORE HIM. THE APPELLANT ALSO RELIED ON VARIOUS CASE LAWS BEFORE HIM, PARTIC ULARLY, CIT VS. SANJAY OIL CAKE INDUSTRIES REPORTED IN 197 CTR 520 (GUJ.) WHEREIN THE FACTS OF THE CASE WERE IDENTICAL TO THE ASSESSEES CASE. IT HAS BEEN HELD THAT WHEN APPELLANT HAS BEEN MAINTAINING RECORDS, WITHOUT POINTING OUT ANY OMISSION OR SUPPRESSION IN APPELLANTS BOOKS, NO ADDITION COULD BE MADE. HE FURTHER RELIED UPON HONBLE PUNJAB AND HARYANA HIGH COURT D ECISION IN CASE OF SURINDER KUMAR CHARANJIT KUMAR VS. CIT REPORTED IN (2006) 282 ITR 78 WHEREIN IT WAS HELD THAT WHEN THE APPELLANT IS MAIN TAINING RECORDS FOR PURCHASE, SALE AND PRODUCTION THEN STOCK AT ANY POI NT OF TIME WOULD BE CORRECTLY WORKED OUT. IT IS FURTHER HELD THAT NON- MAINTENANCE OF STOCK REGISTER IS NOT A SUFFICIENT CAUSE FOR REJECTION OF BOOK RES ULT U/S. 145 OF THE IT ACT. HE ALSO RELIED UPON FOLLOWING CASE: (I) PUSHPANJALI DYEING & PRINTING MILLS (P) LTD. VS. JCIT 72 TTJ PAGE 886 (AHD) & (II) GEETANJALI WO OLLENS PVT. LTD. VS. ACIT 121CTR PAGE128 (AHD). ITA NO. 1160/AHD/2009 A.Y. 03-04 PAGE 4 & C.O. NO.88/AHD/2009 5. NOW THE REVENUE IS BEFORE US. LD. SR. D.R. VEHE MENTLY RELIED UPON THE ORDER OF THE A.O. AND HE ARGUED THAT THE APPELLANT HAD NOT BEEN MAINTAINING THE STOCK REGISTER AS ADMITTED BY THE DIRECTOR DURI NG THE COURSE OF SURVEY PROCEEDING AND REQUESTED TO CONFIRM THE ADDITION MA DE BY THE A.O. FROM THE SIDE OF THE ASSESSEE, IT IS CONTENDED THAT BOOKS OF ACCOUNT ARE RELIABLE. THE COMPANY IS A PRIVATE LIMITED COMPANY AND MAINTAININ G ALL THE BOOKS OF ACCOUNT WHICH HAS BEEN ACCEPTED BY THE EXCISE DEPAR TMENT AS WELL AS SELLS TAX DEPARTMENT. THE ACCOUNTS ARE BEING AUDITED. T HE LD. A.O. HAS NOT BROUGHT ON RECORD ANY INSTANCE TO SUGGEST THAT THE BOOKS OF ACCOUNT ARE NOT RELIABLE. HE SIMPLY RELIED UPON THE STATEMENT OF T HE ONE OF THE DIRECTOR THAT STOCK REGISTER HAD NOT BEEN MAINTAINED. HE HAS NOT SERVED ANY SHOW CAUSE NOTICE ON THIS ISSUE. IT IS FACT THAT STOCK REGIST ER WAS NOT MAINTAINED BY THE APPELLANT BUT OTHER RECORDS OF PURCHASE, CONSUMPTIO N OF MATERIALS FOR MANUFACTURING, DETAILS OF PRODUCTION AND SALES REGI STER WERE MAINTAINED BY THE ASSESSEE BY WHICH THE STOCK POSITION COULD BE EASIL Y ARRIVED. ALL THE SALE AND PURCHASE BILLS WERE PRODUCED BEFORE THE LD. A.O. AT THE TIME OF ASSESSMENT PROCEEDING. THE COPY OF THE LETTER WAS PRODUCED BE FORE THE LD. CIT(A) WHO HAS TAKEN REMAND REPORT AND REJOINDER THEREOF WHICH PROVE THAT THE SALE AND PURCHASE BILLS WERE PRODUCED FOR VERIFICATION BEFOR E THE LD. A.O. THE PRE AND POST SURVEY FIGURES OF GP RATE WERE GIVEN TO THE A. O. AT THE TIME OF ASSESSMENT PROCEEDING. THERE WAS AN INCREASE IN FU RNACE OIL AND LDO PRICE WHICH WERE PRODUCED BEFORE THE A.O. DURING THE COUR SE OF ASSESSMENT PROCEEDING. THE DETAILS OF RAW MATERIAL IN IMMEDIA TE PRECEDING YEAR AND THE ITA NO. 1160/AHD/2009 A.Y. 03-04 PAGE 5 & C.O. NO.88/AHD/2009 GP RATE WAS ABNORMAL WHICH CANNOT BE COMPARED WITH CURRENT YEAR. THUS, HE REQUESTED TO CONFIRM THE ORDER OF THE CIT(A). 6. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BE LOW, HEARD THE ARGUMENTS FROM BOTH THE SIDES AND GONE THROUGH THE PAPER BOOK FILED BEFORE US. THE GP RATE WORKED OUT BY THE A.O. IN YEAR UND ER CONSIDERATION @16.04% WHICH WAS 23.01% IN IMMEDIATE PRECEDING YEA R. HE WAS MAINTAINING OTHER BOOKS I.E. PURCHASE REGISTER, SAL ES REGISTER, DETAILS OF MANUFACTURING CASH BOOK AND LEDGER ETC. THE BOOKS OF ACCOUNT ARE AUDITED WHICH HAS BEEN ACCEPTED BY THE OTHER DEPARTMENTS. THE LD. A.O. HAD NOT BROUGHT ON RECORD ANY PARTICULAR DEFECTS IN THE BOO KS OF ACCOUNT. THEREFORE, WE DO NOT FIND ANY REASON TO INTERVENE IN THE ORDER OF THE CIT(A). THE REVENUES APPEAL IS DISMISSED ON THIS GROUND. 7. AS DISCUSSED IN GROUND NO.1 THAT THERE WAS A SUR VEY AT THE BUSINESS PREMISES OF THE ASSESSEE. THERE WAS A DISCREPANCY IN STOCK OF RS.7,61,290/-. SHRI GURSHARAN SETHI, ONE OF THE DIRECTOR, HAD OFFE RED FOR TAXATION AMOUNT OF RS.7,65,000/- AS ADDITIONAL INCOME FOR THE CURRENT YEAR. THE APPELLANT HAD NOT EXPLAINED BEFORE THE A.O. THAT DISCLOSURE HAS BEEN INCLUDED IN THE INCOME OF THE COMPANY. THEREFORE, HE MADE ADDITION OF RS.7,6 5,000/- . THE LD. CIT(A) HAS DELETED THE ADDITION ON THE BASIS OF ENTRY MADE IN THE BOOKS OF ACCOUNT FOR ADDITIONAL INCOME. 8. NOW THE REVENUE IS BEFORE US. LD. SR. D.R. ARGU ED THAT THE APPELLANT HAD RETRACTED FROM THE DISCLOSURE MADE DURING THE C OURSE OF SURVEY PROCEEDING. THE LD. A.O. WAS RIGHT IN ADDING RS.7, 65,000/- IN THE INCOME OF ITA NO. 1160/AHD/2009 A.Y. 03-04 PAGE 6 & C.O. NO.88/AHD/2009 THE ASSESSEE. FROM THE OTHER SIDE, LD. COUNSEL FOR THE APPELLANT CONTENDED THAT THE DISCLOSURE OF RS.7,65,000/- HAD ALREADY MA DE PART OF INCOME. THEREFORE, CIT(A) HAD RIGHTLY ALLOWED THE APPEAL IN FAVOUR OF THE ASSESSEE. HE ALSO DRAWN OUR ATTENTION ON PAGE NOS. 85 AND 16 WHEREIN THE DISCREPANCY IN STOCK OF RS.7,65,000/- HAD BEEN INCLUDED IN THE CLOSING STOCK AND CREDITED IN THE P&L ACCOUNT. THUS, HE PRAYED TO CONFIRM THE ORDER OF THE CIT(A). 9. WE HAVE PERUSED THE ORDER OF THE AUTHORITIES BEL OW AND GONE THROUGH THE PAPER BOOK ON PAGE NOS. 85 AND 16. THE APPELLA NT HAD BEEN ADDED DISCREPANCY IN STOCK IN THE INCOME OF THE YEAR UNDE R CONSIDERATION BY CREDITING THE DISCREPANCY OF STOCK IN P&L ACCOUNT. THUS, WE DO NOT FIND ANY REASON TO INTERVENE IN THE ORDER OF THE CIT(A). THE REVENUE APPEAL IS DISMISSED ON THIS GROUND. 10. THE A.O. DID NOT FIND DISCLOSURE MADE BY ONE OF THE DIRECTOR ON ACCOUNT OF UNACCOUNTED SCRAP SALE OF RS.3,50,000/- DURING T HE COURSE OF SURVEY PROCEEDING. THE APPELLANT CLAIMED BEFORE THE A.O. THAT THE SCRAP SALE HAS BEEN INCLUDED IN THE INCOME OF THE ASSESSEE COMPANY AND NO RETRACTION HAS BEEN MADE BY THE APPELLANT. THERE WAS AN ENTRY PAS SED IN THE BOOKS OF ACCOUNT ON 13.02.2003 AS BILL FOR SALE OF SCRAP AND CASH IN HAND AS ON 13.02.2003. LD. CIT(A) DELETED THE ADDITION BY CON SIDERING THE ASSESSEES SAME REPLY. 11. NOW THE MATTER IS BEFORE US. LD. SR. D.R. VEHE MENTLY RELIED ON THE ORDER OF THE A.O. AND ARGUED THAT THE ASSESSEE HAD RETRACTED FROM THE ADDITIONAL INCOME DISCLOSED. THEREFORE, THE LD. A. O. WAS RIGHT IN ADDING ITA NO. 1160/AHD/2009 A.Y. 03-04 PAGE 7 & C.O. NO.88/AHD/2009 RS.3,50,000/- ON ACCOUNT OF UNRECORDED SCRAP SALE. BUT FROM THE SIDE OF THE ASSESSEE, IT WAS CONTENDED THAT THE ONE OF THE DIRE CTOR, SHRI GURSHARAN SETHI DISCLOSED ADDITIONAL INCOME OF RS.3,50,000/- ON ACC OUNT OF SCRAP SALE BEFORE THE SURVEY AUTHORITY. ACCORDINGLY, THE AMOUNT OF R S.3,50,000/- WAS ADDED IN THE SALE OF ACCOUNT. NO RETRACTION WAS MADE BY THE APPELLANT. THE ENTRIES HAD BEEN PASSED TO CREDIT SALE OF SCRAP IN THE BOOK S OF ACCOUNT. DUE TO THIS THE PROFIT OF THE COMPANY HAD INCREASED CONSIDERABL Y BUT ADDITIONAL DEPRECIATION CLAIMED BY APPELLANT THE NET EFFECT IS LESS. HE HAS ALSO DRAWN OUR ATTENTION ON PAGE NO. 84 OF THE PAPER BOOK, WHE RE THERE IS AN ITEM SALE OF BOXES AT RS.2,05,26,681/- IN WHICH SCRAP AMOUNT OF RS.3,50,000/- HAS BEEN INCLUDED. THUS, HE REQUESTED TO CONFIRM THE ORDER OF THE CIT(A). 12. WE HAVE GONE THROUGH THE ORDER OF THE AUTHORITI ES BELOW AND PAPER BOOK. AT PAGE NO.84, THE ASSESSEE HAS INCLUDED SCR AP SALE IN SALE OF BOXES AND MADE PART OF P&L ACCOUNT OF THE YEAR UNDER CONS IDERATION. THUS, WE DO NOT FIND ANY REASON TO INTERVENE IN THE ORDER OF TH E CIT(A). THE REVENUE APPEAL IS DISMISSED ON THIS GROUND. 13. IN RESULT, THE REVENUES APPEAL IS DISMISSED. C.O. NO.88/AHD/2009 14. THE GROUNDS OF ASSESSEES C.O. ARE AS UNDER: 1. THE APPEAL FILED BY THE DEPARTMENT WITH REGARD TO DELETION BY LEARNED C.I.T.(A) OF THE FOLLOWING IS REQUIRED TO B E DISMISSED. (A) DELETION OF G.P. ADDITION OF RS.23,86,074/- ITA NO. 1160/AHD/2009 A.Y. 03-04 PAGE 8 & C.O. NO.88/AHD/2009 (B) DELETION OF ADDITION OF RS.7,65,000/- BEING DIF FERENCE IN STOCK DURING SURVEY UNDER 133A. (C) DELETION OF ADDITION OF RS.3,50,000/- ON ACCOUN T OF UNACCOUNTED SALE OF SCRAP. IT IS SUBMITTED THAT THE ORDER OF THE LD. C.I.T.(A) IS WELL REASONED, ON FACTS OF THE CASE AND KEEPING IN MIND THE VARIOU S CASE-LAWS AND HENCE IT IS SUBMITTED THAT THE SAME BE UPHELD A ND APPEAL OF THE INCOME TAX DEPARTMENT BE DISMISSED. 2. WITHOUT PREJUDICE TO ABOVE, IT IS SUBMITTED THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE A.O. A S UNDER:- (A) DEPRECIATION ON BOILER WAS RIGHTLY CLAIMED BY T HE APPELLANT AT RS.1,00,103/- AS PER RULES AND IT IS SUBMITTED T HAT AS PER FACTS OF THE CASE AND AS PER PROVISIONS OF LAW, THE LD.C.I.T.(A) OUGHT TO HAVE ALLOWED DEPRECIATION AT RS.1,00,103/-. (B) DISALLOWANCE OF RS.15,506/- U/S. 43B OF THE I.T . ACT. 15. GROUND OF C.O. HAS BEEN DEALT IN REVENUES APPE AL. THEREFORE, NO SEPARATE FINDING IS BEING GIVEN. 16. GROUND NO. 2(A) HAS NOT BEEN PRESSED. THEREFOR E, THE SAME IS DISMISSED. 17. GROUND NO.2(B) IS DIRECTED AGAINST DISALLOWANCE OF RS.15,506/- U/S.43B OF THE IT ACT. THE LD. COUNSEL FOR THE APPELLANT C ONTENDED THAT THE PPF AMOUNT HAD BEEN PAID WITHIN DUE DATE OF FILING RETU RN. THEREFORE, THE A.O. IS DIRECTED TO VERIFY THE PAYMENT. ACCORDINGLY, THE M ATTER IS SET ASIDE TO THE A.O. FOR VERIFICATION AND TAKING DECISION AS PER LAW. 18. IN THE COMBINED RESULT, THE REVENUES APPEAL IS DISMISSED AND THE ASSESSEES C.O. IS PARTLY ALLOWED. ITA NO. 1160/AHD/2009 A.Y. 03-04 PAGE 9 & C.O. NO.88/AHD/2009 THIS ORDER PRONOUNCED IN OPEN COURT ON 05.10.2012 SD/- SD/- (G.C.GUPTA) (T.R. MEENA) VICE PRESIDENT ACCOUNTANT MEMBER TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. '#$ / APPELLANT 2. &'#$ / RESPONDENT 3. )*)+ ' ', / CONCERNED CIT 4. ' ',- ' / CIT (A) 5. 01'' +, ' ''' +, 34 * / DR, ITAT, AHMEDABAD 6. 167 89 / GUARD FILE. BY ORDER/ , :/3' )' ' ''' +, 34 * < STRENGTHEN PREPARATION & DELIVERY OF ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 07 & 20.09.2012 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE XXX 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 21.09.2012 4) DATE OF CORRECTION 24.09.2012 5) DATE OF FURTHER CORRECTION XXX 6) DATE OF INITIAL SIGN BY MEMBERS 05.10.2012 7) ORDER UPLOADED ON ,, ,, 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 05.10.2012