SHRI BHADRASA CHEMICALS PVT. LTD., V. THE ITO, WARD -8(3),

ITA 1234/AHD/2003

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9934 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 07-09-2010
• Assessment Year: 1996-1997
• Appeal Filed On: 28-03-2003
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Keywords: Reassessment proceedings
• Section: 143(3); 147; 145; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' BEFORE SHRI T K SHARMA,JM & SHRI A N PAHUJA,AM ITA NO.1234/AHD/2003 (ASSESSMENT YEAR:-1996-97) SHRI BHADRADA CHEMICALS PVT. LTD., 253, NEW CLOTH MARKET, OUTSIDE RAIPUR GATE, AHMEDABAD-380002 [PAN: AADCS 0488 E] V/S INCOME-TAX OFFICER, WARD- 8(3),AHMEDABAD [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI DEEPAK SONI, AR REVENUE BY:- SHRI R K DHANESTA, DR O R D E R A N PAHUJA: THIS APPEAL BY THE ASSESSEE AGAINST AN ORDER DATED 27- 01-2003 OF THE LD. CIT(APPEALS)-XIII, AHMEDABAD, RA ISES THE FOLLOWING GROUNDS:- 1. THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INC OME-TAX (APPEALS) IS CONTRARY TO THE PROVISIONS OF LAW AND FACTS AND IS BAD IN LAW. IT IS SUBMITTED THAT IT BE SO CANCELLED NOW. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING THE ASSESSMENT ORDER PASSED U/S. 143(3) READ WITH SECTION 147 OF THE I.T. ACT. YOUR APPELLANT SUBMITS THAT IT HAS FURNISHED ALL THE INFORMATION AND DETAILS ALONGWITH THE RETURN OF INC OME AND THERE IS NOW NO NEW INFORMATION FOR WHICH THE ASSESSMENT HAS BEEN R E-OPENED AND ACTION OF THE ASSESSING OFFICER CONFIRMED BY THE COMMISSIO NER INCOME-TAX (APPEALS) AND THEREFORE, THE ORDER PASSED IS BAD IN LAW.IT IS SUBMITTED THAT IT BE SO HELD NOW AND ASSESSMENT MADE BE CANCELLED NOW. 3 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS.15,58,316/- CONSIDERI NG THE SAME AS SHORT PRODUCTION OF 47.42 MT. YOUR APPELLANT SUBMITS THAT THE ADDITIONS HAVE BEEN MADE ON CERTAIN ASSUMPTIONS AND PRESUMPTIONS A ND WITHOUT ANY BASIS. YOUR APPELLANT SUBMITS THAT THE LEARNED CIT (APPEALS) IS NOT AT ALL JUSTIFIED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN COMPARING THE PRODUCTION OF CURRENT YEAR WITH EARLIER YEAR AND MA KING ADDITIONS ON THE GROUND OF SHORT PRODUCTION AS ALLEGED. THE LEARNED CIT (APPEALS) HAS NOT APPRECIATED THE FACTS THAT IT HAS CHANGED THE MANUF ACTURING OF CHEMICAL FROM POWDER FORM TO LIQUID FORM AND ALSO THE REASON S FOR LOW G.P. YOUR APPELLANT SUBMITS THAT IN THE FACTS AND CIRCUMSTANC ES, THE LEARNED CIT ITA NO.1234/AHD/2003 FOR AY 1996-97 SHRI BHADRADA CHEMICALS P. LTD. 2 (APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ADDITI ON OF RS.15,58,316/- AND HOLDING THAT THERE IS DEFINITELY SHORT PRODUCTION. YOUR APPELLANT SUBMITS THAT IT BE SO HELD NOW AND THE ADDITION MADE BE DELETED NOW. 4 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING DISALLOWANCE OF RS.2,80,000/- BEING EXPE NDITURE OF BROKERAGE. YOUR APPELLANT SUBMITS THAT BROKERAGE HAS BEEN PAID IN CONNECTION WITH LEASE OF OFFICE PREMISES. YOUR APPELLANT SUBMITS TH AT EXPENDITURE HAS BEEN INCURRED FOR THE PURPOSE OF EARNING THE INCOME. THE RE IS THEREFORE NO JUSTIFICATION IN DISALLOWING THE SAME. YOU APPELLAN T SUBMITS THAT IN THE FACTS AND CIRCUMSTANCES, THE SAME ALLOWABLE. YOUR APPELLA NT SUBMITS THAT IT BE SO ALLOWED NOW. 5 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS.2,62,896/- IN VALUE O F CLOSING STOCK. YOUR APPELLANT SUBMITS THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS NOT CONSIDERED THE FACTS THAT YOUR APPELLANT HA S CHANGED THE MANUFACTURING OF CHEMICALS FROM POWDER FORM TO LIQU ID FORM AND VALUED THE CLOSING STOCK ON THE BASIS OF ACCOUNTING STANDARDS. YOUR APPELLANT SUBMITS THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ADDITI ON OF RS.2,62,896/-. YOUR APPELLANT SUBMITS THAT IT BE SO HELD NOW AND THE AD DITION MADE BE DELETED NOW. YOUR APPELLANT PRAYS FOR LEAVE TO ADD, ALTER AND/OR AMEND ALL OR ANY OF THE GROUNDS BEFORE THE FINAL HEARING OF APPEAL. 2 AT THE OUTSET, THE LEARNED AR ON BEHALF OF THE AS SESSEE DID NOT PRESS GROUND NOS.1 AND 2 RELATING TO REOPENING OF T HE ASSESSMENT U/S 147 OF THE INCOME-TAX ACT,1961[HEREINAFTER REFE RRED TO AS THE ACT] AS ALSO GROUND NO.4 RELATING TO DISALLOWANCE OF RS.2,80,000/- ON ACCOUNT OF BROKERAGE. THEREFORE, THESE THREE GRO UNDS ARE DISMISSED AS SUCH. 3 ADVERTING NOW TO GROUND NO.3 IN THE APPEAL, FACTS , IN BRIEF, AS PER RELEVANT ORDERS ARE THAT THE RETURN, DECLARING LOSS OF RS.1,09,726/- FILED ON 30-11-1996 BY THE ASSESSEE, MANUFACTURING CHEMICALS, WAS PROCESSED U/S 143(1)(A) OF THE ACT. SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED U/S 147 OF THE ACT WITH THE SERVICE OF A NOTICE DATED 08-06-2000 U/S 148 OF THE ACT. IN RE SPONSE, THE ITA NO.1234/AHD/2003 FOR AY 1996-97 SHRI BHADRADA CHEMICALS P. LTD. 3 ASSESSEE FILED RETURN DECLARING LOSS OF RS. 1,09,72 6.DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE ASSESSING O FFICER[AO IN SHORT] NOTICED THAT THE ASSESSEE REFLECTED GROSS L OSS OF RS.8,48,025/- ON SALES OF RS.7,14,155/- VIS-A-VIS L OSS OF RS.1,36,371/- ON SALES OF RS.13,46,394/- IN THE PRE CEDING ASSESSMENT YEAR. TO A QUERY BY THE AO, THE ASSESSEE SUBMITTED WORKING OF GROSS PROFIT IN THE PRECEDING THREE ASSE SSMENT YEARS AND CONTENDED THAT IN THE PRECEDING YEARS, THE ASSESSEE WAS MANUFACTURING CHEMICALS IN POWDERED FORM WHEREAS IN THE YEAR UNDER CONSIDERATION FOR THE FIRST TIME THE ASSESSEE STARTED MANUFACTURING CHEMICALS IN LIQUID FORM. AS REGARDS DECLINE IN GROSS PROFIT, THE ASSESSEE SUBMITTED THAT CERTAIN GOODS W ERE SPOILED DUE TO THEIR NON-MOVEMENT FOR A LONG TIME AS ALSO DUE TO THEIR DEPOLYMERISATION IN HOT WEATHER OF AHMEDABAD BESID ES INCREASE IN ELECTRICITY CHARGES AND THIS BEING FIRST YEAR OF PR ODUCTION OF A NEW PRODUCT, RESULTING IN HIGHER RATE OF REJECTIONS. H OWEVER, THE AO DID NOT ACCEPT THESE SUBMISSIONS OF THE ASSESSEE FOR TH E FOLLOWING REASONS RECORDED IN THE ASSESSMENT ORDER:- I ) ON VERIFICATION OF STOCK REGISTER PRODUCED BEFOR E ME IT IS NOTICED THAT DAILY BATCH WISE CONSUMPTION OF RAW MA TERIALS AND ITS PRODUCTS ARE NOT MAINTAINED IN THE STOCK REGIST ER. IN STOCK REGISTER THE ASSESSEE HAS MAINTAINED DETAILS OF OPE NING STOCK AND RAW MATERIALS PURCHASED ONLY. II) ON VERIFICATION OF CHART FURNISHED BY THE ASSES SEE GIVING DETAILS OF OPENING BALANCE OF FINISHED PRODUCTS OF CHEMICALS, NEW PRODUCTS OF CHEMICALS MANUFACTURED DURING THE Y EAR, SALES AND CLOSING STOCK OF FINISHED GOODS, IT REVEALS THA T THE ASSESSEE HAS MANUFACTURED POLYDON AJT IN LIQUID FOR M AND OTHER CHEMICALS AS DETAILED BELOW:- POLYDON/AJT 7032 KGS MONOSIZE KT 4500 KGS POLYNOL PE 330 KGS FILISIZE O 800 KGS POLYDON COT 8830 KGS ITA NO.1234/AHD/2003 FOR AY 1996-97 SHRI BHADRADA CHEMICALS P. LTD. 4 III) ON VERIFICATION OF THE ABOVE CHART IT ALSO REV EALS THAT THE ASSESSEE HAD CONVERTED OPENING STOCK OF FINISHED GO ODS OF POLYCOT 6050 KGS VALUED AT RS. 315871/- INTO OTHER PRODUCTS. IN ABSENCE OF MAINTENANCE OF PROPER STOCK REGISTER IT IS NOT POSSIBLE TO VERIFY WHICH NEW PRODUCTS OF CHEMICALS WAS MANUFACTURED OUT OF 6050 KGS OF POLYCOT AS STATED A BOVE. IV) AS REGARDS BATCH OF POLYDON NOT USABLE FOR PROC ESS, THE ASSESSEE HAS FURNISHED CERTIFICATE FROM DIPAK C. EN GINEER DATED 29/10/01. THIS CERTIFICATE CANNOT BE CONSIDER ED AS GENUINE SINCE THE SAID CERTIFICATE IS NOT OBTAINED DURING THE ACCOUNTING PERIOD RELEVANT TO AY 96-97. V) THE ASSESSEE COMPANY IS A REPUTED MANUFACTURER H AVING EXPERIENCE OF MANUFACTURING FOR ABOUT 20 YEARS AND COMPANY HAD SPENT RESEARCH EXPENSES OF RS.21,220/- WHICH IN CLUDES CERTAIN AMOUNT OF RESEARCH PAID TO AHMEDABAD TEXTIL E RESEARCH ASSOCIATION AND THEREFORE, REASONS GIVEN F OR HUGE LOSS INCURRED IN MANUFACTURE OF CHEMICALS CANNOT BE ACCEPTED. VI) THE ASSESSEE COMPANY HAS FURNISHED CERTAIN LETT ERS RECEIVED FROM MAHARSHI MAHESHWARI SIZING MILLS (P) LTD., REG ARDING DEFECTIVE GOODS RETURNED BACK TO THE ASSESSEE. ON V ERIFICATION OF BOOKS OF ACCOUNTS IT REVEALED THAT THE GOODS VAL UED AT NOMINAL AMOUNT WERE RETURNED BACK. THE ASSESSEE HAS FURNISHED CERTAIN LETTERS OF CHEMI DYES MARKETING R EGARDING GOODS RETUNED WHICH PERTAINS TO A.Y. 95-96; VII) IN MANUFACTURE OF CHEMICALS IN LIQUID FORM THE RE IS ALWAYS LESS MANUFACTURING EXPENSES THAN CHEMICALS MANUFACTURED IN POWDER FORM; VIII) DURING THE YEAR THE ASSESSEE COMPANY HAS SHOW N INFLATED PURCHASES OF RS.2,98,000/- FROM U.D. TRADERS. 4. IN VIEW OF THE FOREGOING, THE AO REJECTED THE BO OK RESULTS, INVOKING THE PROVISIONS OF SECTION 145 OF THE ACT A ND ESTIMATED SHORTFALL IN PRODUCTION OF 47.42 MT ON THE BASIS OF EXPENDITURE OF RS. 9,58,214/-INCURRED IN MANUFACTURING 57MT OF CHEMICA LS IN THE PRECEDING ASSESSMENT YEAR, RESULTING IN ADDITION OF RS.15,58,316/-. ITA NO.1234/AHD/2003 FOR AY 1996-97 SHRI BHADRADA CHEMICALS P. LTD. 5 5. ON APPEAL, THE LEARNED CIT(A) UPHELD THE FINDING S OF THE AO MERELY ON THE BASIS OF ALTERNATE ARGUMENTS OF THE A SSESSEE, IN THE FOLLOWING TERMS:- 3.1 OBJECTING TO THE SAID ADDITION, THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT SUBMITTED THAT THE ADDITIONS HAVE BEEN MA DE BY THE ASSESSING OFFICER ON CERTAIN ASSUMPTIONS AND PRESUMPTIONS AND WITHOUT ANY BASIS. IT WAS SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JU STIFIED IN COMPARING THE PRODUCTION OF CURRENT YEAR WITH THAT OF THE EARLIER ASSESSMENT YEAR AND NOT JUSTIFIED IN MAKING ADDITIONS ON ACCOUNT OF SHORT P RODUCTION AS ALLEGED. IT WAS FURTHER SUBMITTED THAT THE FACTS OF THE CURRENT YEAR WERE ALTOGETHER DIFFERENT FROM EARLIER ASSESSMENT YEAR AS THE APPEL LANT HAS CHANGED MANUFACTURING OF CHEMICALS FROM POWER FORM TO LIQUI D FORM. THEREFORE, MANUFACTURING OF PRODUCTION OF LIQUID FORM OF CHEMI CALS CANNOT BE COMPARED WITH THE MANUFACTURING OF PRODUCTION OF PO WDER FORM OF CHEMICALS. AS THIS IS THE FIRST YEAR IN WHICH THE A PPELLANT HAS SHIFTED THE MANUFACTURING PATTERN FROM POWDER FORM TO LIQUID FO RM ON EXPERIMENTAL BASIS, THE COST OF MANUFACTURING THE PRODUCTION WAS HIGH. THE AUTHORIZED REPRESENTATIVE RELIED ON THE VARIOUS SUBMISSIONS MA DE BEFORE THE AO DURING RECTIFICATION PROCEEDINGS VIDE LETTERS DATED 22-1-2000, 17-1-2002, 19-2-2002 AND 21-3-2002. IT WAS FURTHER SUBMITTED T HAT WITHOUT PREJUDICE TO THE ABOVE ARGUMENT OF THE APPELLANT THAT THE COST O F PRODUCTION FOR THE CURRENT YEAR COULD NOT BE COMPARED WITH THAT OF EAR LIER YEAR BECAUSE OF CHANGE OF MANUFACTURING PROCESS AND THE CHANGE OF P RODUCT IN LIQUID FORM FROM POWDER FORM ,EVEN IF IT WAS ACCEPTED THAT THER E WAS SHORT PRODUCTION OF 47.42 MT, THE WORKING OF ADDITION ON THE BASIS O F THE PAST YEAR'S RESULT ACCORDING TO THE AUTHORIZED REPRESENTATIVE WOULD B E OF RS.7,93,007/- ONLY AT THE RATE OF RS.16,723/- AS COST OF MANU FACTURING PER MT FOR 47.42 MT. THEREFORE, IT WAS ARGUED THAT THE ASSESSING OFF ICER SHOULD HAVE MADE ADDITION OF RS.7,93,007/- INSTEAD OF ADDITION OF RS .15,58,316/-. THUS IT WAS CLAIMED THAT EXCESS DISALLOWANCE TO THE TUNE OF RS. 7,65,309/-SHOULD BE REDUCED. 3.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTHOR IZED REPRESENTATIVE CAREFULLY AND HAVE GONE THROUGH THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. I FIND T HAT THE AUTHORIZED REPRESENTATIVE HAS MADE AN ALTERNATIVE ARGUMENT THA T THE ADDITION OF RS.7,93,007/- SHOULD HAVE BEEN MADE FOR SHORT PRODU CTION OF 47.42 MT OF CHEMICALS. THIS MEANS THERE IS DEFINITELY SHORT PR ODUCTION. I DO NOT AGREE WITH THE SUBMISSION OF THE AUTHORIZED REPRESENTATIV E THAT THE SHORT PRODUCTION SHOULD BE VALUED AT THE COST OF PRODUCTI ON. I FIND THAT THE ASSESSING OFFICER HAS MADE THE ADDITION AT THE SELL ING RATE OF RS.32,862/- PER MT FOR THE SHORT PRODUCTION OF 47.42 MT . AS IT IS QUITE LIKELY THAT THE SHORT PRODUCTION SHOWN BY THE APPELLANT IN CHEMICAL S MIGHT HAVE BEEN ITA NO.1234/AHD/2003 FOR AY 1996-97 SHRI BHADRADA CHEMICALS P. LTD. 6 SOLD IN THE MARKET THE ADDITION MADE BY THE ASSESSI NG OFFICER IS IN ORDER AND SO THE SAME IS CONFIRMED. 6. THE ASSESSEE IS NOW IN APPEAL AGAINST THE AFORES AID FINDINGS OF THE LEARNED CIT(A). THE LEARNED AR ON BEHALF OF THE ASSESSEE WHILE CARRYING US THROUGH THE IMPUGNED ORDER, CONTE NDED THAT THE RESULTS OF THE YEAR UNDER CONSIDERATION WERE NOT CO MPARABLE WITH THE RESULTS OF THE PRECEDING ASSESSMENT YEARS, SINCE MA NUFACTURING PROCESS HAD UNDERGONE CHANGE IN THE YEAR UNDER CONS IDERATION DUE TO PRODUCTION OF CHEMICALS IN LIQUID FORM AS AGAINS T POWDERED FORM IN THE PRECEDING ASSESSMENT YEARS. TO A QUERY BY TH E BENCH, THE LEARNED AR ADMITTED THAT THE FINDING OF THE AO, REJ ECTING THE BOOK RESULTS, INVOKING THE PROVISIONS OF SECTION 145 OF THE ACT, WERE NOT DISPUTED BEFORE THE LD. CIT(A) NOR EVEN BEFORE US. ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE FINDINGS OF THE LEARNED CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. UNDISPUTEDLY, THE FINDINGS OF THE AO, REJ ECTING THE BOOK RESULTS, INVOKING THE PROVISIONS OF SECTION 145 OF THE ACT, WERE NOT CHALLENGED BEFORE THE LD. CIT(A) NOR EVEN BEFORE US . THEREFORE, THE ONLY DISPUTE BEFORE US IS IN RESPECT OF ESTIMATED A DDITION OF RS.15,58,316/-. WE FIND THAT THE LEARNED CIT(A) IN THE IMPUGNED ORDER CONCLUDED THAT THERE WAS DEFINITELY SHORT PRODUCTION ONLY ON THE ALTERNATE PLEA OF THE ASSESSEE THAT THE ADDITIO N OF RS.7,93,007/- AT THE RATE OF RS.16,723/- PMT OF COST OF MANUFACTU RING CHEMICALS, COULD AT THE MOST BE MADE. THE LD. CIT(A) HAVE DID NOT RECORDED ANY FINDINGS ON THE PLEA MADE BY THE ASSESSEE THAT RESULTS OF THE YEAR UNDER CONSIDERATION WERE NOT COMPARABLE WITH T HE RESULTS OF THE PRECEDING YEAR, DUE TO CHANGE IN THE MANUFACTURING PROCESS INVOLVED IN PRODUCING CHEMICALS IN LIQUID FORM AN D THAT THEIR COST OF PRODUCTION WAS HIGH DUE TO MANUFACTURING ON EXPE RIMENTAL BASIS. NEITHER THE AO NOR THE LD. CIT(A) CITED ANY COMPARA BLE INSTANCES. ITA NO.1234/AHD/2003 FOR AY 1996-97 SHRI BHADRADA CHEMICALS P. LTD. 7 NO DOUBT THE AO/CIT(A) ARE REQUIRED TO MAKE AN HONE ST AND FAIR ESTIMATE OF THE INCOME EVEN IN A BEST JUDGMENT ASSESSMENT AND SHOUL D NOT ACT TOTALLY ARBITRARILY, BUT THERE IS NECESSARILY SOME AMOUNT OF GUESS WORK INVOLVED IN A BEST JUDGMENT ASSESSMENT, AND IT IS THE ASSESSEE HIMSELF WHO IS T O BLAME AS HE DID NOT SUBMIT PROPER ACCOUNTS AND DETAILS.[ KACHWALA GEMS VS JCIT , 288 ITR 10 (2007)(SC) ]. WE ARE OF THE OPINION THAT EVEN IN THE BEST JUDGMEN T ASSESSMENT ,IT IS NOT OPEN TO THE AO TO MAKE ANY ADDITION ON ESTIM ATE BASIS OR ON PURE GUESS WORK. IN THESE CIRCUMSTANCES, ESPECIALLY WHEN THE L D. CIT(A) HAVE NOT RECORDED ANY FINDINGS ON THE PLEA MADE BY THE ASSES SEE THAT RESULTS OF THE YEAR UNDER CONSIDERATION WERE NOT COMPARABLE WITH THE RESULTS OF THE PRECEDING YEAR, DUE TO CHANGE IN THE MANUFAC TURING PROCESS INVOLVED IN PRODUCING CHEMICALS IN LIQUID FORM AN D THAT THEIR COST OF PRODUCTION WAS HIGHER DUE TO MANUFACTURING ON EXPER IMENTAL BASIS, WHILE NO COMPARABLE INSTANCES HAVE BEEN CITED EIT HER BY THE AO OR THE LD. CIT(A), WE CONSIDER IT FAIR AND APPROPRIATE TO RESTORE THE ISSUE RELATING TO THE ESTIMATED ADDITION TO THE FI LE OF THE LD. CIT(A) WITH THE DIRECTIONS TO READJUDICATE THE MATTER IN THE LIGHT OF OUR AFORESAID OBSERVATIONS AFTER ALLOWING SUFFICIENT OP PORTUNITY TO BOTH THE PARTIES AND PASS A SPEAKING ORDER, RECORDING HI S SPECIFIC FINDINGS ON THE PLEA MADE BY THE ASSESSEE BEFORE H IM, CITING COMPARABLE INSTANCES,IF ANY. WITH THESE DIRECTIONS , GROUND NO.3 IS DISPOSED OF 8. THE NEXT GROUND NO.5 IN THE APPEAL RELATES TO AD DITION OF RS.2,62,896/- TO THE CLOSING STOCK. THE AO NOTICED THAT THE ASSESSEE DID NOT VALUE THE FINISHED STOCK OF CHEMICALS CORRE CTLY. SINCE THE ASSESSEE WAS FOLLOWING THE METHOD OF COST OR THE MARKET VALUE, WHICHEVER IS LOWER, IN VALUING THE STOCK OF FINI SHED GOODS, THE AO ADOPTED THE COST OF PRODUCTION @ RS.63,375/- PMT[1077375/17) FOR VALUING THE STOCK OF FINISHED GOODS, RESULTING IN A N ADDITION OF RS.3,83,310/-. ITA NO.1234/AHD/2003 FOR AY 1996-97 SHRI BHADRADA CHEMICALS P. LTD. 8 9. ON APPEAL, THE LEARNED CIT(A) ACCEPTED THE PLEA OF THE ASSESSEE THAT CLOSING STOCK OF FINISHED GOODS SHOUL D BE VALUED AT THE COST OR MARKET PRICE, WHICHEVER IS LOWER AND ADOPTED REALIZABLE VALUE OF RS.32,862/- PMT AS AGAINST THE RATE OF RS. 63,375/-PMT, RESULTING IN REDUCTION OF ADDITION BY RS.2,44,104/- . 10. THE ASSESSEE IS NOW IN APPEAL AGAINST THE AFORE SAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED AR ON BEHALF OF THE ASSESSEE REITERATED THEIR SUBMISSIONS BEFORE THE LEARNED CIT (A) WHILE THE LEARNED DR SUPPORTED THE FINDINGS OF THE LEARNED CI T(A). 11. WE HAVE HEARD BOTH THE PARTIES AND HAVE GONE TH ROUGH THE FACTS OF THE CASE. UNDISPUTEDLY, THE ASSESSEE IS FO LLOWING THE METHOD OF COST OR MARKET VALUE, WHICHEVER IS LOWER FOR VALUATION OF ITS FINISHED GOODS. ACCEPTING THE PLEA OF THE ASSES SEE, THE LEARNED CIT(A), ACCORDINGLY, VALUED THE STOCK AT REALIZABLE VALUE. THE LEARNED AR ON BEHALF OF THE ASSESSEE DID NOT POINT OUT ANY INFIRMITY IN THESE FINDINGS OF THE LEARNED CIT(A). IN THE ABS ENCE OF ANY BASIS, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LEARNED CIT(A). THEREFORE, GROUND NO.5 IS DISMISSED. 12. NO ADDITIONAL GROUND HAVING BEEN RAISED IN TERM S OF RESIDUARY GROUND, ACCORDINGLY, THIS GROUND IS DISMISSED. 13. IN THE RESULT, APPEAL IS PARTLY ALLOWED, BUT FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT TODAY ON 9-09-2010 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 9 -09-2010 ITA NO.1234/AHD/2003 FOR AY 1996-97 SHRI BHADRADA CHEMICALS P. LTD. 9 COPY OF THE ORDER FORWARDED TO: 1. SHRI BHADRADA CHEMICALS PVT. LTD., 253, NEW CLOT H MARKET, OUTSIDE RAIPUR GATE, AHMEDABAD-380002 2. ITO, WARD-8(3), AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XIII, AHMEDABAD 5. DR, BENCH-A, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD