M/s Aanchal Ispat Pvt. ltd., Kolkata V. CIT, KOLKATA-1, Kolkata

ITA 1183/KOL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5086 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 26-05-2014
• Court: TRIBUNAL
• Department Lawyers: ASHWANI KUMAR SINHA
• Assessee Lawyers: S M SURANA
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI WASEEM AHMED , AM] I.T.A NO.1183/KOL/2014 ASSESSMENT YEAR: 2009-10 M/S. AANCHAL ISPAT PVT. LTD. VS. COMMISSIONER O F INCOME-TAX, KOL-1. (PAN:AAACV8542M) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 29.01.2016 DATE OF PRONOUNCEMENT: 29.02.2016 FOR THE APPELLANT: SHRI S.M. SURANA ADVOCATE & SH . SUNIL SURANA, FCA FOR THE RESPONDENT: SHRI ASHWANI KUMAR SINHA, CI T, DR ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF REVISION ORDER OF CIT-I, KOLKATA VIDE M. NO. CIT,KOL-1,KOL/263/2013-14/10942-44 DATED 31.03.2014 . ASSESSMENT WAS FRAMED BY ITO, WD- 1(4), KOLKATA U/S. 143(3) OF THE INCOME TAX ACT, 19 61 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2009-10 VIDE HIS ORDER DATED 26.12. 2011. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT PASSED U/S. 263 OF THE ACT REVISING THE ASSESSMENT FRAMED U/S. 143(3) OF T HE ACT BY THE AO. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS EN GAGED IN MANUFACTURE OF M.S TOR, RIBBED BARS AND ANGLES ETC. THE ASSESSEE IS FOLLOWING MERC ANTILE SYSTEM OF ACCOUNTING. THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS PRODUCE D COMPLETE BOOKS OF ACCOUNT LIKE LEDGER, VOUCHERS, STOCK REGISTER ETC., WHICH WERE TEST CHEC KED BY THE AO. ORIGINAL ASSESSMENT WAS COMPLETED BY AO U/S. 143(3) OF THE ACT VIDE HIS ORD ER DATED 26.12.2011. SUBSEQUENTLY, CIT-1, KOLKATA ISSUED SHOW CAUSE NOTICE U/S. 263 OF THE AC T FOR REVISING THE ASSESSMENT VIDE SHOW CAUSE NOTICE (IN SHORT SCN) DATED 12/14.02.2013 STA TING THE FOLLOWING REASONS: 1. IN THIS CASE THE ASSESSEE FILED ITS RETURN OF I NCOME FOR ASSESSMENT YEAR 2009-10 ON 25.02.2010 SHOWING A TOTAL INCOME AT RS.36,01.960/- . THE CASE WAS DULY PROCESSED U/S 143(1) AND SUBSEQUENTLY, THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 26.12.2011 AT A TOTAL INCOME OF RS.69,66,890/-. 2. DURING THE RELEVANT PREVIOUS YEAR PERTAINING TO A. Y. 2009-10 THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURING OF 'M. S. TOR, RIBBED BAR S, ANGLES ETC. IT IS OBSERVED FROM THE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2009 TH AT THE ASSESSEE HAD DEBITED AN AMOUNT OF RS.33,60,25,649/- TOWARDS COST OF MATERIALS (RAW MA TERIALS CONSUMED) AT SCHEDULE-8. AS PER 2 ITA NO.1183/KOL/2014 AANCHAL ISPAT PVT. LTD., AY 2009-10 SCHEDULE 13B (S1.NO.3B) OF NOTES ON ACCOUNTS-QUANTI TATIVE INFORMATION OF RAW MATERIALS (INGOTS, BILLETS) DURING THE A.Y 2009-10 OF THE AUD ITED ACCOUNTS WERE SHOWN AS UNDER : - PARTICULARS QUANTITY VALUE OPENING STOCK 1910.92 M.T. RS. 40,129,320/- PURCHASES 16989.53 M.T. RS.384,300,671/- CONSUMPTION 15330.00 M.T. - CLOSING STOCK 3570.45 M.T. RS.89,546,886/- 3. FROM THE ABOVE, CONSUMPTION VALUE OF RAW MATERIA LS WOULD COME TO RS.33,48,83.105/- I.E. (RS.4.01,29,320/-. + RS. 38,43,00,671/- - RS.8,95,4 6.886/-). WHEREAS, AS PER SCHEDULE -8 OF THE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31.03.2009 COST OF MATERIALS (RAW MATERIALS CONSUMED) IS SHOWN AT RS.33,60,25,649/-, INSTEAD OF RS.33,48,83,105/-. THUS, THERE WAS AN EXCESS ALLOWANCE OF RS.11,42,544 /- ON ACCOUNT OF RAW MATERIALS CONSUMPTION (RS.33.60,25,649/- - RS.33,48,83,105/-) WHICH WAS R EQUIRED TO BE DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. THIS HAS RESULTED IN UNDERASSESSMENT OF INCOME TO T HE EXTENT OF RS. 11,42,544/-. 4. THE ONLY REASON STATED IN THE ABOVE SCN WAS THAT THERE WAS DIFFERENCE IN THE ACCOUNTS IN REGARDS TO CONSUMPTION OF RAW MATERIAL RECORDED TO THE TUNE OF RS.33,48,83,105/- AS AGAINST THE COST OF MATERIAL I.E. RAW MATERIAL CONSUMED IN THE ACCOUNTS MAINTAINED AS PER COMPANIES ACT AT RS.33,60,25,649/-. ACCORDING TO CIT, THERE IS EXCE SS ALLOWANCE OF RS.11,42,544/- ON ACCOUNT OF RAW MATERIAL CONSUMPTION. HENCE, HE ISSUED ABOVE S CN TO REVISE THE ASSESSMENT. THE ASSESSEE EXPLAINED THAT THERE HAS BEEN TYPOGRAPHICAL ERROR I N THE ACCOUNTS MAINTAINED AS PER COMPANIES ACT, 1956 AND I.E. WHILE DRAFTING THE BALANCE SHEET IN THE CLOSING STOCK MENTIONED IN QUANTITY OF RAW MATERIAL. ACCORDING TO ASSESSEE, THE CLOSING ST OCK WAS WRONGLY MENTIONED AT RS.8,95,46,886/- INSTEAD OF CORRECT CLOSING STOCK O F RS.8,84,04,342/-. THE ASSESSEE HAS GIVEN THE RAW MATERIAL CONSUMED AS UNDER: OPENING STOCK 4,01,29,320 ADD: PURCHASES 38,43,00,671 LESS: CLOSING STOCK 8,84,04,342 CONSUMPTION - 33,60,25,649 BUT CIT WAS NOT CONVINCED WITH THE EXPLANATION AND HE SET ASIDE THE ASSESSMENT AND DIRECTED THE AO TO VERIFY/SCRUTINIZE THE DETAILS VIDE PARA 13 OF HIS ORDER AS UNDER: 13. I HAVE GONE THROUGH THE ISSUES ON HAND AND TH E SUBMISSIONS OF THE ASSESSEE COMPANY. THE MAIN ISSUE IS THAT THE AO HAS FAILED TO APPLY HIS M IND TO THE SPECIFIC FACTS OF THE CASE AND HAS NOT SCRUTINIZED/VERIFIED THE DETAILS IN RESPECT OF THE ISSUES RAISED VIDE NOTICE DATE 12/14.02.2014. THE ORDER PASSED IS, THEREFORE, PART SET ASIDE TO THE F ILE OF AO WITH THE DIRECTION THAT THE DETAILED FACT S SHOULD BE BROUGHT ON RECORD, SCRUTINIZED AND VERIFI ED. THEREAFTER, A DECISION SHOULD BE ARRIVED AT 3 ITA NO.1183/KOL/2014 AANCHAL ISPAT PVT. LTD., AY 2009-10 AS PER PROVISIONS AND TO ARRIVE AT A CONCLUSION AS PER I. T. LAW. THE ASSESSMENT IS, THUS, SET ASIDE ON THE LIMITED ISSUE TO BE COMPLETED DE NOVO. AGGRIEVED, ASSESSEE PREFERRED SECOND APPEAL BEFORE TRIBUNAL. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SHRI SUNIL SURANA, FCA DREW OUR ATTENTION TO PAGE 11 OF ASSESSEES PAPER BOOK WHEREIN COST OF RAW MATERIAL IS GIVEN IN THE ACTUAL ACCOUNT I.E. ACCOUNTS PREPARED AS PER I. T. ACT, THE RAW MATERIAL CONSUME D IS DECLARED AT RS.8,84,04,342/- BUT WRONGLY MENTIONED IN THE NOTES ON ACCOUNT AT RS.8,95,46,887 /-. IT WAS EXPLAINED BY LD. COUNSEL FOR THE ASSESSEE THAT THE MISTAKE IN SCHEDULE NOS. 13 36 IS SIMPLY AN INADVERTENT TYPOGRAPHICAL ERROR WHEREIN ALL OTHER DOCUMENTS THE AMOUNTS I.E. OPENIN G STOCK, CHARGES OF CONSUMPTION OF RAW MATERIAL HAS CORRECTLY BEEN MENTIONED. HE EXPLAINE D THAT THE RAW MATERIAL, THE TOTAL OF OPENING STOCK AND CHARGES WOULD MATCH WITH THAT OF THE TOTA L CONSUMPTION OF CLOSING STOCK. HE EXPLAINED FIGURES THAT THE CLOSING STOCK BY ADDING OPENING STOCK OF RS.4,01,29,320/-, PURCHASES OF RS.38,43,00,671/- AND AFTER DEDUCTING THE CONSUM PTION OF RS.33,60,25,649/- THE CLOSING STOCK WOULD COME TO RS.8,84,04,342/- AND NOT RS.8,95,46,8 86/-. FROM THE EXPLANATION OF THE ASSESSEES COUNSEL AND RECONCILIATION OF FIGURES FR OM THE ACCOUNTS, WE FIND NO INFIRMITY IN THE EXPLANATION SUBMITTED BY THE ASSESSEE WHICH IS SUPP ORTED BY DOCUMENTARY EVIDENCE LIME ACCOUNTS OF THE ASSESSEE. HENCE, WE QUASH THE REVI SION ORDER PASSED BY CIT U/S. 263 OF THE ACT AND ALLOW ASSESSEES APPEAL. 6. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.02.1016 SD/- SD/- (WASEEM AHMED) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29TH FEBRUARY, 2016 JD. SR. P.S COPY OF THE ORDER FORWARDED TO: 1. APPELLANT M/S. AANCHAL ISPAT PVT. LTD., C/O RAJES H MOHAN & ASSOCIATES, CHARTERED ACCOUNTANTS, UNIT NO. 18, 5 TH FLOOR, 34, GANESH CHANDRA AVENUE, KOLKATA-700013. 2. RESPONDENT CIT, KOLKATA-1, KOLKATA. 3. CIT(A) , KOLKATA 4. CIT , KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .