The ITO, Ward-4(3), Surat V. M/s. Sparsh Synthetics Pvt.Ltd., Surat

ITA 107/AHD/2011

• Counselvise Citation: 10720514 RSA 2011
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-12-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 13-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R B SHAH A R
• Keywords: Opportunity of being heard

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD .., !'# $ $ $ $ %% % &, ' ( # BEFORE SHRI G.D.AGARWAL, VICE-PRESIDENT AND SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER $./ I.T.A. NO.107/AHD/2011 ( * * * * / / / / ASSESSMENT YEAR : 2001-02) THE ITO WARD-4(3) SURAT / VS. SPARSH SYNTHETICS PVT.LTD. 5004, TRADE HOUSE RING ROAD SURAT '+ (, $./- $./ PAN/GIR NO. : AADCS 3509 G ( +. / // / APPELLANT ) .. ( /0+. / RESPONDENT ) +. 1 ( / APPELLANT BY : SHRI SAMIR TEKRIWAL, SR. D.R. /0+. 2 1 ( / RESPONDENT BY : SHRI R.B.SHAH, A.R. % 3 2 &, / / / / DATE OF HEARING : 02/12/2011 45* 2 &, / DATE OF PRONOUNCEMENT : 02/12/2011 (6 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE W HICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-IV, SURAT DATED 18/10/2010 AND THE ONLY GROUND READS AS UNDER:- (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A)-IV, SURAT HAS ERRED IN DELETING THE A DDITION OF RS.8,90,750/- MADE ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK. ITA NO. 107/AHD/2011 ITO VS. SPARSH SYNTHETICS PVT.LTD. ASST.YEAR - 2001-02 - 2 - 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) R.W.S.254 OF THE I.T. ACT, 1961 DATED 27/03/2008 WERE THAT THE ASSESSEE-COMPANY IS IN THE BUSINESS OF MANUFACTURING OF GREY CLOTH. THE PRESENT ASSESSMENT WAS THE SECOND ROUND OF PROCEEDINGS DUE TO THE REASON THAT THE CO-ORDINATE BENCH ITAT A AHMEDABAD IN ITA NO.2208/AHD/2004 FOR A.Y. 2001-02 TITLED AS ITO V/S. M/S.SPARSH SYNTHETICS PVT.LTD. VIDE ORDER DATED 25/05/2007 HAS RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER AS PER FOLLOWING DIRECTIONS. 3. AT THE TIME OF HEARING BEFORE US, THE LEARNED D .R. CONTENDED THAT WHILE ADJUDICATING THE ISSUE UNDER CONSIDERATI ON, THE CIT(A) HAS ADMITTED NEW EVIDENCES LIKE SALE VOUCHERS OF DI FFERENT MONTHS SHOWING TYPE OF FABRICS AND RATE PER METER OF SALE AND THE STOCK STATEMENT SUBMITTED TO THE BANK AUTHORITY, ETC., WH ICH ACCORDING TO HIM, WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER . WE FIND FORCE IN THE CONTENTION OF THE LEARNED D.R. ACCORD INGLY, WE SET ASIDE THE ORDER OF THE CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH , AND IN ACCORDANCE WITH LAW, AFTER TAKING INTO CONSIDERATIO N THE DOCUMENTS FURNISHED BY THE ASSESSEE BEFORE THE CIT( A) OR OTHER DOCUMENTS, IF ANY, WHICH THE ASSESSEE MAY FURNISH B EFORE HIM. NEEDLESS TO MENTION, THE A.O. WILL AFFORD REASONABL E OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 3. THE ISSUE WAS IN RESPECT OF UNDER-VALUATION OF C LOSING STOCK OF PROCESSED FABRIC. THE ASSESSEE WAS ASKED TO PRODUC E THE SALES VOUCHERS OF DIFFERENT MONTHS TO ASCERTAIN THE GENUINENESS OF THE TRANSACTION. ON THAT BASIS, THE ASSESSING OFFICER HAS THEREAFTER PR OCEEDED TO DETERMINE THE VALUATION OF THE CLOSING STOCK. HE HAS ARRIVED AT A CONCLUSION THAT THE ASSESSEE HAD TAKEN A HIGHER PRICE RATE AT RS.25/- P ER METER, HOWEVER, VALUE OF THE CLOSING STOCK WAS SHOWN AT THE CONSTAN T RATE OF RS.19/- PER ITA NO. 107/AHD/2011 ITO VS. SPARSH SYNTHETICS PVT.LTD. ASST.YEAR - 2001-02 - 3 - METER OF FABRIC TO THE BANK AUTHORITIES. AS PER AS SESSING OFFICER, THE ASSESSEE HAS NOT GIVEN ANY BASIS OF TAKING THE COST OF FABRIC AT RS.19/- PER METER, THEREFORE HE HAS FINALLY CONCLUDED THAT THER E WAS NO JUSTIFICATION OFFERED BY THE ASSESSEE IN RESPECT OF THE VALUATION OF THE CLOSING STOCK DECLARED AT RS.24,18,754/- AND THE SAME WAS REJECTE D. THEREAFTER, THE ASSESSING OFFICER HAS CALCULATED THE VALUATION OF T HE STOCK AS FOLLOWS; REPRODUCED BELOW THE COMPUTATION OF THE ASSESSING O FFICER. B. VALUE OF 110713 METERS OF FRESH PROCESSED FABRIC 110713X20.19 = RS .31,20,999 4. WHEN THE MATTER REACHED BEFORE THE FIRST APPELLA TE AUTHORITY, THE LEARNED CIT(APPEALS) HAS DELETED THE ADDITION AS PE R THE FOLLOWING OBSERVATION:- 2.3. I HAVE GONE THROUGH THE FACTS OF THE CASE. I T IS SEEN THAT ALL EVIDENCES IN THE NATURE OF SALES BILLS FOR DIFFEREN T MONTHS HAD BEEN PROVIDED TO THE A.O. DURING THE COURSE OF SET ASIDE PROCEEDINGS AND THIS HAS ALSO BEEN MENTIONED IN THE ASSESSMENT ORDER. THE A.O. MADE THE SAME ADDITION AS IN THE ORIGINAL ASSE SSMENT ONLY BECAUSE CONFIRMATION FROM THE SALE PARTIES WAS NOT AVAILABLE AND CURRENT ADDRESSES OF THE SAID PARTIES COULD NOT BE PROVIDED BY THE APPELLANT. IN MY OPINION, THE APPELLANT HAD COMPL IED WITH THE DIRECTIONS OF THE TRIBUNAL BY PROVIDING THE EVIDENC ES AS SUBMITTED BY HIM BEFORE THE LEARNED CIT(APPEALS). TO EXPECT THE APPELLANTS TO PROVIDE CURRENT ADDR4ESSES OF AND CONFIRMATIONS FROM SALES PARTIES AFTER SEVEN YEARS OF TRANSACTIONS IS NOT CO RRECT. THE APPELLANT HAD PROVIDED THE LEDGER ACCOUNTS; BILLS R AISED AND BANK ITA NO. 107/AHD/2011 ITO VS. SPARSH SYNTHETICS PVT.LTD. ASST.YEAR - 2001-02 - 4 - STATEMENTS TO PROVE THE GENUINENESS OF THE TRANSACT IONS OF SALES. THEREFORE, IN MY OPINION, THE VALUATION OF CLOSING STOCK MADE ON THE BASIS OF THE SALES BILLS SHOULD HAVE BEEN ACCEP TED, AS THE APPELLANT FOLLOWS COST OR MARKET VALUE WHICHEVER I S LOWER FOR VALUING ITS CLOSING STOCK. I THEREFORE HAVE NO REA SON TO DIFFER WITH THE DECISION OF MY PREDECESSOR. THE ADDITION MADE ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK IS THEREFORE DELET ED. THIS GROUND OF THE APPELLANT IS ALLOWED. 5. AT THE OUTSET, AFTER HEARING LD.DR MR.SAMIR TEKR IWAL, A QUERY WAS RAISED BY THE BENCH THAT HOW THE ASSESSING OFFICER HAD MADE THE ABOVE CALCULATION. IT WAS POINTED OUT TO LD.DR THAT BY M ULTIPLICATION OF RS.20.19 THE VALUE OF 1,10,713 METERS OF FABRIC SHO ULD BE 22,35,295 BUT AS AGAINST THAT, THE ASSESSING OFFICER HAS CALCULAT ED THE FIGURE OF VALUATION AT RS.31,20,999/- WHICH APPARENTLY IS INC ORRECT. IT HAS ALSO BEEN ASKED THAT IF THE VALUATION AS DISCLOSED BY TH E ASSESSEE WAS AT RS.24,18,754/-, THEN THERE WAS NO OCCASION OF HOLDI NG THAT THE ASSESSEE HAS UNDER-VALUED THE STOCK. THERE WAS NO REPLY FRO M THE SIDE OF THE REVENUE IN RESPECT OF THE QUERY RAISED BY US. IT W AS A GLARING MISTAKE ON THE PART OF THE ASSESSING OFFICER TO ALLEGE THAT TH ERE WAS UNDER-VALUATION OF CLOSING STOCK. THE FACTS OF THE CASE HAVE REVEA LED THAT DUE TO WRONG CALCULATION, THERE WAS A MISTAKE ON THE PART OF THE REVENUE TO HOLD THAT THE VALUATION OF THE ASSESSEE WAS UNDER-VALUED. EV EN ON MERITS, WE FIND NO FORCE IN THE GROUNDS OF THE REVENUE DUE TO THE P RIMARY REASON THAT THE ASSESSEE HAS FURNISHED NECESSARY EVIDENCE, SUCH AS, BILLS, ETC. TO DEMONSTRATE THE CORRECTNESS OF THE VALUATION OF THE STOCK MADE BY THE ITA NO. 107/AHD/2011 ITO VS. SPARSH SYNTHETICS PVT.LTD. ASST.YEAR - 2001-02 - 5 - ASSESSEE. THE FINDINGS ON FACTS GIVEN BY THE LEAR NED CIT(APPEALS) ARE ALSO HEREBY AFFIRMED. IN THE RESULT, WE FIND NO FO RCE IN THIS GROUND OF THE REVENUE, HENCE HEREBY DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/12/2011 SD/- SD/- ( G.D. AGARWAL ) ( MUKUL KR. SHR AWAT ) VICE PRESIDENT J UDICIAL MEMBER AHMEDABAD; DATED 02 / 12 /2011 7.. , . ../ T.C. NAIR, SR. PS (6 2 /&8 (8*& (6 2 /&8 (8*& (6 2 /&8 (8*& (6 2 /&8 (8*&/ COPY OF THE ORDER FORWARDED TO : 1. +. / THE APPELLANT 2. /0+. / THE RESPONDENT. 3. $$ & %9 / CONCERNED CIT 4. %9() / THE CIT(A)- 5. 8<= /& , , / DR, ITAT, AHMEDABAD 6. = >3 / GUARD FILE. (6 % (6 % (6 % (6 % / BY ORDER, 08& /& //TRUE COPY// ! !! !/ // / $ $ $ $ ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION.. 2.12.2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 2.12.2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S2.12.2011 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2.12.2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER