M/s. Chemfilt, Anand V. The Dy.CIT, Cent.Circle-I, Baroda

ITA 1001/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1577 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-04-2016
• Assessment Year: 1997-1998
• Appeal Filed On: 05-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A R REWOR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NO: 1001/AHD/2011 (ASSESSMENT YEAR: 1997-98) M/S. CHEMFILT 1304/A, GIDC, VITTHAL UDYOGNAGAR, ANAND, GUJARAT V/S THE DCIT, CENTRAL CIRCLE- 1, BARODA (APPELLANT) (RESPONDENT) PAN: AABFC5751D APPELLANT BY : SHRI URVASHI SHODHAN, AR RESPONDENT BY : SHRI A.R. REWOR, SR. D.R. ( )/ ORDER DATE OF HEARING : 29 -04-20 16 DATE OF PRONOUNCEMENT : 04 -05-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. WITH THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE C ORRECTNESS OF THE ORDER OF THE LD. CIT(A)-IV, AHMEDABAD DATED 11.02.2 011 PERTAINING TO A.Y. 1997-98. ITA NO. 1001 /AHD/2011 . A.Y. 1997-9 8 2 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE ASSES SEE RELATES TO THE ALLEGED SHORTAGE OF STOCK ON THE DATE OF SURVEY AND APPLYING OF G.P RATE ON UNRECORDED SALES. 3. THIS IS THE SECOND ROUND OF LITIGATION. IN THE FIRS T ROUND, THE ASSESSMENT WAS MADE U/S. 143(3) VIDE ORDER DATED 20 .03.2000 AT THE ASSESSED INCOME OF RS. 13,07,330/- WHICH INCLUDED G ROSS PROFIT ADDITION @ 26.67% ON UNACCOUNTED SALES OF RS. 23,11 ,017/- AT RS. 6,16,348/-. THE MATTER TRAVELLED UP TO THE TRIBUNAL AND THE TRIBUNAL VIDE ORDER DATED 31.03.2008 IN ITA NO. 3444/AHD/200 2 RESTORED THE MATTER TO THE FILES OF THE A.O WITH THE DIRECTIONS TO EXAMINE THE ISSUE AFRESH AFTER AFFORDING SUFFICIENT OPPORTUNITY OF BE ING HEARD. 4. THE ENTIRE DISPUTE REVOLVES AROUND THE DIFFERENCE B ETWEEN THE PHYSICAL STOCKS FOUND AT THE TIME OF SURVEY VIS--VIS THE BO OK STOCK ON THAT DATE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE CAREFU LLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE RELEVANT ASSESSMENT ORDER MADE IN THE FIRST ROUND A ND ALSO THE DIRECTIONS OF THE TRIBUNAL. 6. AS MENTIONED ELSEWHERE, THE ENTIRE DISPUTE REVOLVES AROUND THE DIFFERENCE BETWEEN THE STOCK FOUND PHYSICALLY VIS- -VIS THE BOOK STOCK. 7. AT THIS STAGE, IT WOULD BE PERTINENT TO UNDERSTAND THE STOCK PHYSICALLY FOUND VIS--VIS THE BOOK STOCK ON THE DATE OF SURVE Y. ITA NO. 1001 /AHD/2011 . A.Y. 1997-9 8 3 M/S. CHEMFILT. DT. 30.12.1996 BREAK UP STORE (LIST) TOTAL A RS. 5,61,103/- STORE (LIST) TOTAL B RS. 3,46,863/- STORE (LIST) TOTAL C RS. 61,090/- MAIN LIST PAGE NO. 1 TO 11 RS. 35, 32,524 GRAND TOTAL RS. 45,01,580/- THE TOTAL OF MAIN LIST FROM PAGE NO. 1 TO 11 AS SUM MARIZED ABOVE IS OBTAINED FROM PAGE NO. 34 ON SURVEY FOLDER AS UNDER PAGE NO. QUANTITY OF M.S. IN KG QUANTITY OF SS IN KG OTHERS IN RUPEES 1 2280 - 2 15168 7431 - 3 8135 1075 - 4 4680 - - 5 6990 - 1,11,000 6 29101 - 1,21,0 00 7 9080 - - 8 15791 - - 9 2722 183 - 10 1223 - 3,55,000 11 - - 4,70,400 TOTAL 83889 10 969 10,57,400 @RATE RS/ 16/- @RATE RS. 100/- PAGE NO. 12 M.S. SCRAP 6000KG @ RATE OF RS. 6/ - RS. 36,000/- M S 83889 KG @ RATE OF RS. 16/- RS. 13,42,224/- S S 10969 KG @ RS. 100/- RS. 10,96,9 00 & OTHERS RS. 10,57,40 0/- TOTAL RS. 35,32,524/- ITA NO. 1001 /AHD/2011 . A.Y. 1997-9 8 4 6. THE BOOK STOCK ON THE DATE OF SURVEY IS WORKED O UT AS PER PAGE NO. 46 OF SURVEY FOLDER AS UNDER. CHEMFILT 30.12.1996 STOCK POSITION AS PER BOOKS AS ON 30.12.1996 OPENING STOCK: 1/4/96 RS. 99, 43,795 ADD. PURCHASE BETWEEN 1.4.96 TO 18.12.1996 RS. 2,08,76,052.00 RS. 3,08,19,847.00 LESS: SALES BETWEEN 1/4/96 TO 29/12/96 EXPORT RS. 3,56,37,210.00 INDIGENOUS RS. 32,47,000.00 RS. 3,88,84,210.00 LESS G.P. MARGINS. (1) ON EXPORTS SALES ($ 36-8%) S.S RS. 49,49,612.00 NORMAL GP @ 16% RS. 57,01,953.00 RS. 106,51,565.00 (2) GP @ 16% ON LOCAL SALES RS. 5,19,520.00 RS. 111,71,085/- RS1,11,71,0 95/- RS 2,77,13,125.00 STOCK AS PER BOOKS RS. 31, 06,722.00 8. THUS, THE DIFFERENCE OF EXCESS STOCK FOUND WERE OUT AT RS. 1,39,458/- A CURSORY LOOK AT THE AFOREMENTIONED CHART WOULD SH OW THAT THE REVENUE HAS TAKEN PURCHASES MADE BETWEEN 01.04.1996 TO 18.12.1996 WHEREAS IT HAS DEDUCTED SALES BETWEEN 01 .04.1996 TO 29.12.1996. THEREFORE, THERE IS A VALID ARGUMENT PU T FORTH ON BEHALF OF ITA NO. 1001 /AHD/2011 . A.Y. 1997-9 8 5 THE ASSESSEE THAT WHY PURCHASES WHICH TOOK PLACE FR OM 19.12.1996 TO 29.12.1996 HAVE NOT BEEN INCORPORATED. TO THIS EXTE NT, WE FIND FORCE IN THE CLAIM OF THE ASSESSEE PURCHASES BETWEEN 19.1 2.1996 TO 29.12.1996 AMOUNTING TO RS. 7,11,440/- IS ADDED BAC K TO THE BOOK STOCK OF RS. 31,06,722/-. THUS, THE CORRECT BOOK ST OCK AS ON THE DATE OF SURVEY COMES TO RS. 38,18,162/- WHICH BRINGS DOW N THE DIFFERENCE TO RS. 6,83,418/- WHICH SHOULD BE THE CORRECT FIGUR E OF THE EXCESS STOCK FOUND. WE DO NOT ACCEPT THE CONTENTION OF THE ASSESSEE THAT MANUFACTURING EXPENSES NEED TO BE ADDED BACK TO THE VALUE OF CLOSING STOCK. FOR THE SIMPLE REASON, THAT THE VALUATION HA S BEEN DONE ON PHYSICAL QUANTITY QUA THE RATE. THE ASSESSEE IS NOT IN DISPUTE FOR THE PHYSICAL QUANTITY QUA THE RATE, THE ONLY CLAIM OF T HE ASSESSEE RELATES TO THE MANUFACTURING EXPENSES WHICH ARE NEITHER ADD ED IN THE PHYSICAL INVENTORY OF THE STOCK NOR ON THE BOOK VALUE OF THE STOCK. THE SECOND GRIEVANCE OF THE ASSESSEE RELATES TO THE APPLICABIL ITY OF G.P. RATE. WE FIND THAT THE A.O HAS APPLIED THE G.P. RATE AS OFFE RED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. WE DO NOT FIND AN Y LOGIC IN TAKING THE G.P. RATE OF THE IMMEDIATELY PRECEDING ASSESSMENT Y EAR. 9. EXCEPT FOR THESE TWO ARGUMENTS, THE ASSESSEE HAS GR OSSLY FAILED IN EXPLAINING THE EXCESS STOCK OF RS. 6,83,418/-. EVEN , WHEN THE PURCHASES MADE BETWEEN 19.12.1996 TO 29.12.1996 HAV E BEEN ACCEPTED TO BE ADDED TO THE BOOK VALUE OF STOCK. MO DIFYING THE FINDINGS OF THE LD. CIT(A), WE DIRECT THE A.O. TO R ESTRICT THE ADDITION TO THE TUNE OF RS. 6,83,418/- BEING THE EXCESS STOCK F OUND AT THE TIME OF SURVEY. ITA NO. 1001 /AHD/2011 . A.Y. 1997-9 8 6 10. IN THE RESULT, THE APPEAL IS DISMISSED AS PER MODIF ICATION. ORDER PRONOUNCED IN OPEN COURT ON 04 - 05 - 2016 . SD/- SD/- (RAJPAL YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD