DCIT, Circle - 49, Kolkata, Kolkata V. Shri Amar Nath Banerjee, Kolkata

ITA 1084/KOL/2010

• Counselvise Citation: [2013] 119 COUNSELVISE.COM (IT) 3019 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 26-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P NAG
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI P.K.BANSAL, A.M. & SHRI GEORGE MATHAN, J.M. ] I.T.A. NO.1084/KOL/2010 ASSESSMENT YEAR : 2006-2007 D.C.I.T., CIRCLE-49, KOLKATA -VS- SHRI AM AR NATH BANERJEE, 8, ISWAR CHANDRA BANERJEE LANE KOLKATA 700 057 (PAN:AEAPB 7102A) ( APPELLANT ) ( RESPONDENT ) DATE OF CONCLUDING THE HEARING : 06.02.2013 DATE OF PRONOUNCING THE ORDER : 06.02.2013 APPEARANCES : FOR THE APPELLANT : SHRI R. P. NAG, SR.D.R. : FOR THE RESPONDENT : NONE O R D E R PER BENCH : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE LD. CIT(A)-XXXII, KOLKATA DATED 23 RD DECEMBER, 2009 FOR THE ASSESSMENT YEAR 2006- 2007 BY TAKING THE FOLLOWING EFFECTIVE GROUNDS OF A PPEAL. I) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A), HAS ERRED IN CALCULATING THE VALUATION OF STOCK. II) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.17,92,764 /- ON ACCOUNT OF BOGUS & INFLATED TRANSPORTATION CHARGES. III) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.9,59,909/ - ON ACCOUNT OF BOGUS/INGENUINE SUNDRY CREDITORS. 2. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE. SINCE THE MATTER IS VERY OLD AND HAS BEEN ADJOURNED SEVERAL T IMES, WE DECIDED TO DISPOSE OFF THIS APPEAL, AFTER HEARING THE LD. D.R. 2 I.T.A. NO.1084/KOL/2010 SHRI AMAR NATH BAN ERJEE ASSES SMENT YEAR : 2006-07 3. BRIEF FACTS IN RESPECT OF GROUND NO.1 ARE THAT T HE AO NOTICED, DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT IN RESPECT OF THE PROPRIETORSHIP CONCERN, M/S. ABHISHEK PLASTIC INDUSTRIES, 138800 KGS. OF RA W MATERIALS WAS CONSUMED WHICH YIELDED 112947 KGS OF FINISHED GOODS AND SCRA P OF 25853 KGS. THE AO ALSO NOTICED FROM THE MANUFACTURING AND TRADING ACCOUNT THAT THE COST OF PRODUCTION OF FINISHED GOODS WAS RS.1,33,51,420/- AND THE AVERAGE COST OF PRODUCTION PER KG. THUS WORKED OUT TO RS.118.21. THE CLOSING STOCK SHO WN BY THE ASSESSEE WAS 12506 KGS. THE AO, BY APPLYING THE RATE OF RS.118.21 PER KG., WORKED OUT THE VALUE OF THE CLOSING STOCK AT RS.14,78,334/-, WHILE THE ASSE SSEE HAS SHOWN THE VALUE OF THE CLOSING STOCK AT RS.8,16,648/-. THE AO DID NOT AGRE E WITH THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE IS FOLLOWING THE SAME ME THOD OF VALUATION OF THE CLOSING STOCK FROM THE EARLIER. THEY VALUED THE CLOSING STO CK TO THE EXTENT IT RELATES TO THE OPENING STOCK IS TAKEN, THE SAME AS HAS BEEN BROUGH T FORWARD FROM THE EARLIER YEAR IN RESPECT OF OPENING STOCK AND TO THE EXTENT CLOSI NG STOCK IS ENHANCED BY THE OPENING STOCK. AS SUCH, INCREASED STOCK IS VALUED B Y THE IDENTICAL AMOUNT. THE AO MADE AN ADDITION OF RS.6,61,686/-. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A), AFTER GOING THROUGH THE SUBMISSION OF THE A SSESSEE, DELETED THE ADDITION OF RS.6,44,921/- BY OBSERVING AS UNDER: I HAVE PERUSED THE SUBMISSIONS OF BOTH THE AO AS WE LL AS THAT OF THE A/R AND CERTAINLY FIND FORCE IN THE ARGUMENTS OF THE A /R, EXCEPT FOR THE FACT THAT A SUM OF RS.5,76,000/- BEING LABOUR CHARGES FOR JO B WORK, ACCORDING TO THE A/R TO BE NOT FORMING PART OF MANUFACTURING COST O F PLASTIC BAGS IS NOT ACCEPTABLE. ON A PERUSAL OF THE MANUFACTURING ACCO UNT IT IS PERCEIVED THAT THE AMOUNT OF LABOUR CHARGES OF RS.5,76,000/- IS O N THE CREDIT SIDE OF THE ACCOUNT AND HENCE CORRESPONDING EXPENSES MUST BE O N THE DEBIT SIDE, HENCE, WHEN BOTH EXPENSE AND INCOME ELEMENTS ARE INCLUDED IN THE MANUFACTURING ACCOUNT THE BALANCE IN MANUFACTURING ACCOUNT CANNO T BE FURTHER REDUCED. HOWEVER, AS PER ABOVE EXPLANATIONS AND EVIDENCES P RODUCED SUMS OF RS.17,04,444/- AND RS.23,97,240/- ARE DEDUCTIBLE F ROM RS.L,33,51,420/- TO DETERMINE THE VALUATION OF CLOSING STOCK. THE VALU ATION OF CLOSING STOCK THUS COMES TO RS.8,33,413/- [ RS.9249736/L38800 KGS INT O VALUATION STOCK OF 12506.06 KGS] AS AGAINST RS.14,78,334 WORKED OUT B Y THE AO. THE APPELLANT, THUS, GETS A RELIEF OF RS.6,44,921/-. 3 I.T.A. NO.1084/KOL/2010 SHRI AMAR NATH BAN ERJEE ASSES SMENT YEAR : 2006-07 4. THE LD. D.R. EVEN THOUGH, VEHEMENTLY CONTENDED BUT COULD NOT SUBMIT ANY COGENT MATERIALS OR EVIDENCE WHICH MAY FIND FAULT W ITH THE WORKING OF THE CIT(A) IN RESPECT OF THE VALUATION OF THE CLOSING STOCK. A FTER HEARING THE LD. D.R., WE ARE OF THE OPINION THAT NO INTERFERENCE IS CALLED FOR I N THE ORDER OF THE CIT(A). THE CIT(A) HAS GIVEN A FINDING OF FACT, AFTER APPRECIAT ING THE WORKING OF THE CLOSING STOCK AS WORKED OUT BY THE ASSESSEE AND BY THE AO, NO MISTAKES IN THE WORKING OF THE CIT(A) WAS BROUGHT TO OUR KNOWLEDGE BY THE LD. D.R. UNDER THESE FACTS, WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY REDUCED THE VALUATION OF THE CLOSING STOCK AS WORKED OUT BY THE AO AND THEREBY ALLOWED T HE RELIEF TO THE ASSESSEE. WE, THEREFORE, CONFIRM THE ORDER OF THE CIT(A) ON THIS GROUND AND DISMISS THE GROUND NO.1 TAKEN BY THE REVENUE. 5. GROUND NO.2 RELATES TO DISALLOWANCE OF TRANSPORT ATION CHARGES AMOUNTING TO RS.17,92,764/-. BRIEF FACTS RELATING TO THIS GROUND ARE THAT THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED TRANSPORT CHARGES OF RS.20,88, 053/- PAID TO M/S. MAHESH ROAD CARRIERS. THE AO NOTICED FROM THE INFORMATION RECEIVED UNDER SECTION 133(6) FROM M/S. MAHESH ROAD CARRIERS THAT ONLY A S UM OF RS.2,95,289/- WAS ALLOWED AS TRANSPORT CHARGES TO THE PARTY. HE, THER EFORE, DISALLOWED A SUM OF RS.17,92,764/-. WHEN THE MATTER WENT BEFORE THE CIT (A), THE ASSESSEE SUBMITTED A COPY OF LEDGER ACCOUNT OF SHRI A.N.BANERJEE IN THE BOOKS OF M/S. MAHESH ROAD CARRIERS SHOWING THE BALANCE AS ON 30.11.2005 AND A S ON 31.3.2006 IN RESPECT OF TRANSPORT CHARGES RECEIVED FROM THE ASSESSEE. SIMIL ARLY, COPY OF THE LEDGER ACCOUNT OF M/S. MAHESH ROAD CARRIERS IN THE BOOKS OF THE AS SESSEE ALONG WITH THE COPY OF THE BILLS WERE ALSO FILED BEFORE THE CIT(A) WHICH S HOWS THE TRANSPORT CHARGES TO THE EXTENT OF RS.20,88,053/-. THE ASSESSEE EXPLAINE D HOW THE AO WORKED OUT THE FIGURE OF RS.2,95,269/- IGNORING THE COPY OF THE AC COUNTS OF THE ASSESSEE IN THE BOOKS OF M/S. MAHESH ROAD CARRIERS. THE CIT(A), AFT ER PERUSING THE COPY OF THE LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF M/S. MAHESH ROAD CARRIERS FOR THE RELEVANT YEAR, FOUND THAT NO DISCREPANCY EXISTED IN THE AMOUNT OF THE EXPENDITURE 4 I.T.A. NO.1084/KOL/2010 SHRI AMAR NATH BAN ERJEE ASSES SMENT YEAR : 2006-07 CLAIMED BY THE ASSESSEE ON ACCOUNT OF M/S. MAHESH R OAD CARRIERS AND THEREFORE, HE DELETED THE ADDITION MADE BY THE AO. 6. BEFORE US, THE LD. D.R. RELIED ON THE ORDER OF T HE AO BUT COULD NOT ADDUCE THE EVIDENCE WHICH MAY PROVE THAT THERE EXISTS ANY DISCREPANCY IN THE AMOUNT OF THE EXPENDITURE CLAIMED BY THE ASSESSEE AND THE TRA NSPORT CHARGES RECEIVED BY M/S. MAHESH ROAD CARRIERS FROM THE ASSESSEE AS EXISTING IN THE BOOKS OF M/S. MAHESH ROAD CARRIERS. THE CIT(A) HAS GIVEN A FINDING OF FA CT. IN OUR OPINION, THE ONUS IS ON THE REVENUE, IF THE REVENUE CAME IN APPEAL TO AD DUCE THE EVIDENCE THAT THE FINDING GIVEN BY THE CIT(A) IS NOT CORRECT. IN THE ABSENCE OF ANY COGENT MATERIAL BEING BROUGHT OUT ON RECORD OR BEING SUBMITTED BEFO RE US, WE DO NOT HAVE ANY ALTERNATE EXCEPT TO CONFIRM THE ORDER OF THE CIT(A) . WE ACCORDINGLY CONFIRM THE ORDER OF THE CIT(A) AND DISMISS THE GROUND TAKEN BY THE REVENUE. HENCE, THE GROUND NO.2 STANDS DISMISSED. 7. GROUND NO.3 RELATES TO THE DELETION OF ADDITION OF RS.9,59,909/- MADE BY THE AO ON ACCOUNT OF THE SUNDRY CREDITORS. THE AO OBSER VED, WHILE MAKING THIS ADDITION, THAT A SUM OF RS.12,80,618/- WAS PAYABLE BY THE ASSESSEE TO M/S. MAHESH ROAD CARRIERS, AS PER THE LIST OF THE SUNDRY CREDIT ORS BUT AS PER INFORMATION RECEIVED FROM M/S. MAHESH ROAD CARRIERS UNDER SECTI ON 133(6), ONLY A SUM OF RS.3,20,709/- WAS RECEIVABLE BY M/S. MAHESH ROAD CA RRIERS FROM THE ASSESSEE. THEREFORE, THE AO ADDED A SUM OF RS.9,59,909/-. THE AO IGNORED THE CONTENTION OF THE ASSESSEE THAT THE AO HAS NOT CONSIDERED THE PAYMENT OF RS.9,52,553/- DIRECTLY RECEIVED BY M/S. MAHESH ROAD CARRIERS FROM THE CLIENT IN NEPAL, BELONGING TO THE ASSESSEE AND NOT ACCOUNTED FOR BY THE ASSESSEE TILL 31.03.2006. THIS FACT WAS DULY STATED IN THE COPY OF THE LETTER DATED 03.09.2008 WRITTEN BY M/S. MAHESH ROAD CARRIERS ADDRESSED TO THE AO. THERE WAS A NOMINAL DIFFERENCE OF RS.7,356/- ON ACCOUNT OF THE DIFFERENCE IN THE QUAN TUM OF THE BILLS RAISED AND ACCOUNTED DURING THE YEAR BY BOTH THE PARTIES. BEFO RE THE CIT(A), THE ASSESSEE REPEATED THE SUBMISSIONS MADE BEFORE THE AO. THE CI T(A), AFTER APPRECIATING THE 5 I.T.A. NO.1084/KOL/2010 SHRI AMAR NATH BAN ERJEE ASSES SMENT YEAR : 2006-07 MATERIALS AND DOCUMENTS FILED BY THE ASSESSEE, FOUN D THE CONTENTION OF THE ASSESSEE TO BE CORRECT AND DELETED THE ADDITION OF RS.9,59,9 09/- 8. BEFORE US, EVEN THOUGH THE LD. D.R. VEHEMENTLY R ELIED ON THE ORDER OF THE AO BUT COULD NOT CONVINCE US THAT THE FACTUAL POSIT ION AS STATED BY THE CIT(A) IS NOT CORRECT. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND THAT IT IS A FIT CASE WHICH WARRANTS OUR INTERFERENCE IN TH E ORDER OF THE CIT(A), AFTER APPRECIATING THE EVIDENCE GIVEN IN THE FINDING OF F ACT. UNDER THESE FACTS, WE CONFIRM THE ORDER OF THE CIT(A) DELETING THE ADDITI ON OF RS.9,59,909/-. THUS, THIS GROUND NO.3 IS DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE D AY OF HEARING ITSELF I.E. ON 6 TH FEBRUARY, 2013. SD/- SD/- (GEORGE MATHAN) (P. K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 6 TH FEBRUARY, 2013 COPY OF THE ORDER FORWARDED TO: 1. SHRI AMAR NATH BANERJEE, 8, ISWAR CHANDRA BANERJEE LANE, KOLKATA 700 057 2 D.C.I.T., CIRCLE-49, KOLKATA 3. THE CIT(A), KOLKATA 4. CIT, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, ASSTT. REGISTRAR , ITAT, KOLKATA TALUKDAR(SR.P.S.) 6 I.T.A. NO.1084/KOL/2010 SHRI AMAR NATH BAN ERJEE ASSES SMENT YEAR : 2006-07