L.M.P. Gujarat Agro Exports Ltd., Baroda. V. The Dy. CIT, Circle-1, Baroda.

ITA 1378/AHD/2004

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0183 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 28-10-2009
• Assessment Year: 1998-1999
• Appeal Filed On: 27-04-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: M K PATEL
• Keywords: Capital asset converted into stock in trade; Business income; Set aside
• Section: 43B; 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER DATE OF HEARING: 28.10.09 DRAFTED ON: 28.10 .09 ITA NO. 1378/AHD/2004 ASSESSMENT YEAR : 1998-1999 L.M.P. GUJARAT AGRO EXPORTS LTD. SURAJ PLAZA, SAYAJIGUNJ, BARODA. VS. DY. C.I.T., CIRCLE-1, AYAKAR BHAVAN, RACE COURSE, BARODA. PAN/GIR NO. : AAACL 3378 B (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI M.K.PATEL A.R. RESPONDENT BY: SHRI C.K. MISHRA SR. D.R. O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD.CIT(APPEALS)-I, BARODA, DATED 27.02.2004. 2. GROUND NOS.1 TO 3 OF THE APPEAL ARE DIRECTED A GAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)CONF IRMING THE ADDITION ON ACCOUNT OF UNRECORDED SALES OF RS.40,62 ,908/- TO THE TOTAL INCOME OF THE ASSESSEE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE LEARNED ASSESSING OFFICER OBSERVED THAT THE FIRST GROUND OF APPEAL IS REGARDI NG ADDITION OF RS.40,62,908/- ON ACCOUNT OF DIFFERENCE IN SALES. T HE LEARNED ASSESSING OFFICER HAS STATED IN THE ORDER THAT DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE PRODUCED BILL-WISE DETAIL S OF SALES AND PURCHASES ITA NO 1378/AHD/2004. M/S.LMP GUJARAT AGRO EXPORTS LTD. ASST.YEAR -1998-99 - 2 - MADE FOR THE YEAR UNDER CONSIDERATION. ON COMPARISO N WITH THE PURCHASE REGISTER, THE TOTAL PURCHASE OF RAW MATERIAL WERE R S.63,83,680/- AND THE SALES WERE RS.2,52,03,151/-. AS AGAINST THE SAME AL ONG WITH RETURN OF INCOME, THE FINAL ACCOUNTS SHOWED PURCHASE OF RAW M ATERIALS AT RS.34,57,477/- AND SALES AT RS.2,39,34,497/-. BESID ES, THE CLOSING STOCK OF RAW MATERIAL FOR RS.2,38,000/- WAS SHOWN, WHEREAS, AS PER SALES AND PURCHASE REGISTERS (AS WELL AS PRINTED COPIES OF TH E SAME PLACED ON RECORD), IT WAS SEEN THAT THE ENTIRE SALES IS ONLY UPTO 29.1 2.1997 WHEREAS THE RAW ONION PURCHASED AFTER 29.12.1997 IS FOR A SUM OF RS .7,18,751/-. IN FACT THE ENTIRE RAW ONION PURCHASED IS ONLY FOR THE MONTH OF MARCH 98 AS IT IS A SEASONAL ITEM. THERE IS NO PURCHASE FOR THE PERIOD 30.09.1997 TO 08.03.1998. 4. THE ASSESSEE HAS ALSO CLAIMED LOSS ON ACCOUNT OF CYCLONE FOR RS.24,89,231/-IN ITS PROFIT AND LOSS ACCOUNT WHEREA S THE CLAIM SETTLED BY THE INSURANCE IS ONLY TO THE TUNE OF RS.12,92,832/- . THE ASSESSEE HAD CLAIMED GROSS LOSS OF RS.38.82/- LACS AND AFTER ADJ USTING THE INSURANCE SETTLEMENT HAS CLAIMED THE NET LOSS OF RS.24.89 LAC S. IN VIEW OF THE ABOVE NOTED DISCREPANCIES, THE ASSESSEE WAS ASKED TO SHOW CAUSE WHY THE TRADING RESULTS AS SHOWN IN THE BOOKS OF ACCOUNTS SHOULD NO T BE REJECTED UNDER SECTION 145(2). THE ASSESSEE ENCLOSED RECONCILIATIO N CHART REGARDING PURCHASES AND SALES OF ONIONS WHICH IS REPRODUCED I N THE ASSESSMENT ORDER. THE MAIN DIFFERENCE UNDER THE HEAD PURCHASES WAS CREDIT FOR WASTE ONION DISPOSAL (PURCHASE RETURN) OF RS.27,94,225/-. UNDER THE HEAD SALES, THE MAIN DIFFERENCE AROSE DUE TO REVERSAL ENTRY FOR CRE DITS ON ACCOUNT OF WASTE ONION DISPOSAL I.E. PURCHASE RETURN WRONGLY INCLUDE D IN SALES. ITA NO 1378/AHD/2004. M/S.LMP GUJARAT AGRO EXPORTS LTD. ASST.YEAR -1998-99 - 3 - 5. THE LEARNED ASSESSING OFFICER HELD THAT THE CONT ENTION OF THE ASSESSEE IS NOT TENABLE BECAUSE AS PER THE PURCHASE REGISTER, THE TOTAL COST OF PURCHASE OF ONION INCLUDING FARM EXPENSES IS RS.63, 83,680/-. THE ASSESSEE HAS FILED TO PRODUCE THE NECESSARY BILLS AND VOUCHE RS FOR THE PURCHASE OF RAW ONION AND THE PURCHASES ARE MADE PRIMARILY ON C ASH BASIS. SIMILARLY, IN SALES, THE ASSESSEES OWN SUBMISSIONS ARE CONTRA DICTORY I.E. INITIALLY IT HAD CONTENDED THAT IT HAS REDUCED THE ENTIRE AMOUNT OF RS.27,94,225/- FROM THE PURCHASES AND AGAIN OUT OF THIS AMOUNT, IT HAS FURTHER REDUCED RS.12.68 LACS FROM SALES AS WRONGLY CREDITED THERE. NO BASIS OR EVIDENCE FOR SUCH AN EXPLANATION AND REVERSAL TRANSACTIONS ARE SUBMITTED . THE TAX AUDIT REPORT IS SILENT ON THE SUBJECT. NO STOCK REGISTER IS MAINTAI NED BY THE ASSESSEE AND THE ENTIRE PURCHASES ARE IN CASH. HE, THEREFORE, HE LD THAT THE BOOKS WERE NOT RELIABLE AND INVOKED THE PROVISIONS OF SECTION 145( 2) OF THE ACT AND MADE A NET ADDITION RS.40,62,908/-BEING THE DIFFERENCE BET WEEN THE FIGURES AS PER BOOKS AND THOSE SHOWN IN THE PROFIT AND LOSS ACCOUN T. 6. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(A PPEALS), THE ASSESSEE SUBMITTED THAT THE LEARNED ASSESSING OFFIC ER INCORRECTLY HAS INVOKED THE PROVISIONS OF SECTION 145(2) WHICH HAVE BEEN AMENDED FROM 01.04.1997. THE BOOKS OF ACCOUNT WERE AUDITED AND T AX AUDIT REPORT WAS ALSO FILED. ACCOUNTING STANDARDS ARE MANDATORY AND CONSISTENTLY FOLLOWED AND IN FACT BOOKS WERE ACCEPTED IN PRECEDING YEARS. THE LEARNED ASSESSING OFFICER HAS NOT SPECIFIED AS TO WHAT ACCO UNTING STANDARDS HAVE NOT BEEN COMPLIED WITH. SECONDLY, ON MERITS REGARDING THE ADDITION ON ACCO UNT OF SALES OF RS.40,62,908/-, IT IS SUBMITTED THAT COPY OF SALES REGISTER IS ENCLOSED WHICH WOULD INDICATE THAT WASTE ONION SALES AMOUNTING TO RS.12,68,653/- HAD BEEN INCORRECTLY INCLUDED IN THE SALE OF FINISHED G OODS WHEREAS THESE WERE ITA NO 1378/AHD/2004. M/S.LMP GUJARAT AGRO EXPORTS LTD. ASST.YEAR -1998-99 - 4 - TO BE REDUCED FROM THE PURCHASE EFFECTED BY THE APP ELLANT FROM VARIOUS PARTIES DURING THE YEAR. IF THESE SALES WERE REDUCE D FROM THE SALES AS PER SALES REGISTER, THE FIGURE WOULD TALLY WITH THE PRO FIT AND LOSS ACCOUNT AT RS.2,39,34,497/-. SECONDLY, IT IS NOT CLEAR HOW THE LEARNED ASSESSING OFFICER HAS CALCULATED TURNOVER AT RS.2,92,66,059/- . IT IS PROBABLY BY ADDING THE SALES AS PER SALES REGISTER, SALE OF WAS TE ONION AND DIFFERENCE IN PURCHASE REGISTER. IT IS NOT DISPUTED THAT THE SALE S REGISTER SHOWED THE FIGURE OF RS.2,52,03,151/-. FROM THIS, RS.12,68,653/- BEIN G PURCHASE RETURN WERE REDUCED TO GIVE THE FIGURE SHOWN IN THE PROFIT & LO SS ACCOUNT. THE FIGURE OF RS.27,94,225/- REDUCED FROM THE PURCHASES ARE NO THING BUT PURCHASE RETURNS EFFECTED BY THE COMPANY DURING THE YEAR AND FOR WHICH COMPLETE DETAILS ARE AVAILABLE. AS THE FIGURES FROM THE BOOK S CAN BE RECONCILED WITH THE FIGURES FROM THE BOOKS CAN BE RECONCILED WITH T HE FIGURES OF PROFIT & LOSS ACCOUNT, THE ADDITION MADE IS NOT CORRECT. 7. GROUND NO.4 OF THE APPEAL IS DIRECTED AGAINST TH E ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMING ADDI TION OF RS.4,80,751/- MADE BY THE LEARNED ASSESSING OFFICER ON ACCOUNT OF SUPPRESSION OF VALUE OF CLOSING STOCK. 8. THE BRIEF FACTS OF THE CASE ARE THAT THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS SHOWN CLOSING STOCK OF RAW MATERIALS FOR RS.2,38,000/- WHEREAS AS PER SALES AND PURCHASE REG ISTER AS WELL AS PRINTED COPIES OF THE SAME PLACED ON RECORD, IT IS SEEN THA T THE ENTIRE SALES IS ONLY UP TO 29.12.1997, WHEREAS THE RAW ONION PURCHASE AF TER 29.12.1997 IS FOR A SUM OF RS.7,18,751/-. IN FACT, THE ENTIRE RAW ONION PURCHASE IS ONLY FOR THE MONTH OF MARCH 98 AND IT IS A SEASONAL ITEM. THERE IS NO PURCHASE FOR THE PERIOD 30.09.1997 TO 8.03.98. THE ASSESSEE SUBMITT ED THAT THERE WAS HEAVY STORM AND RAINS AT THE FACTORY SITE NEAR PADR A ON 01.06.97 MIDNIGHT. ITA NO 1378/AHD/2004. M/S.LMP GUJARAT AGRO EXPORTS LTD. ASST.YEAR -1998-99 - 5 - DUE TO THIS CYCLONIC CONDITION, THEY LOST RAW MATER IAL, SEMI FINISHED AND FINISHED GOODS. FIR WAS FILED BEFORE THE NEW INDIA ASSURANCE CO. LTD., RAOPURA, VADODARA. THEY DEPUTED A SURVEYOR WHO SUBM ITTED A REPORT. THE ASSESSEE COMPANY CLAIMED LOSS OF RAW ONION, SEMI FI NISHED GOODS, FINISHED GOODS, DAMAGE TO FACTORY PREMISES AND LABOUR CHARGE S PAID FOR SORTING THE SPOILED MATERIAL. THE TOTAL CLAIM WAS OF RS.37.82 L ACS. THE INSURANCE COMPANY SETTLED THE CLAIM AT RS.12.92 LACS. THE TRE ATMENT GIVEN IN THE BOOKS WAS THAT AFTER ADJUSTING THE CLAIM AMOUNT REC EIVED FROM THE TOTAL CLAIM OF RS.37.82 LACS, THE BALANCE OF RS.24.89 LAC S WAS DEBITED TO PROFIT & LOSS ACCOUNT. THE LEARNED ASSESSING OFFICER DID N OT ACCEPT THE ENTIRE EXPLANATION STATING THAT THE ASSESSEE HAS CLAIMED T HAT AFTER GIVING EFFECT TO THE LOSS ON ACCOUNT OF CYCLONE, IT HAD ADJUSTED THE OPENING STOCK OF RAW MATERIAL AS WELL AS OF FINISHED GOODS AS ON 01.04.9 7 INSTEAD OF GIVING EFFECT OF THE SAME AS ON THE DATE OF CYCLONE IN THE MONTH OF JUNE97. THIS ITSELF SHOWS THAT NO PROPER DAY TO DAY RECORD FOR PURCHASE S, CONSUMPTION AND SALES WAS MAINTAINED. THE ASSESSEE ALSO COULD NOT E XPLAIN HOW THERE WAS CLOSING STOCK OF ONLY RS.2,38,000/- AS AGAINST RS.7 ,18,751/- IN THE MONTH OF MARCH WHICH WAS NEITHER PROCESSED NOR SHOWN AS P ART OF CLOSING STOCK. ACCORDINGLY, THE LEARNED ASSESSING OFFICER MADE ADD ITION OF RS.4,80,751/- ON ACCOUNT OF DIFFERENCE IN VALUATION OF STOCK. 9. IN APPEAL, BEFORE THE LEARNED COMMISSIONER OF IN COME TAX(APPEALS), THE ASSESSEE SUBMITTED THAT THE APPEL LANT COMPANY HAD PURCHASED 227.640 METRIC TONES RAW MATERIAL DURING MARCH OF WHICH PRODUCTION OF 133.44 METRIC TONS WAS CONSUMED OUT L EAVING A STOCK OF 94.26 METRIC TONES. THE AVERAGE PURCHASE PRICE BEIN G RS.3,157.80/- PER METRIC TONE. THE LEARNED ASSESSING OFFICERS STATEM ENT THAT NO PRODUCTION WAS CARRIED OUT IN MARCH WAS ALSO INCORRECT AND ONL Y BASED ON CONJECTURE. THE APPELLANT COMPANY HAS BEEN VALUING THE STOCK AT AVERAGE PURCHASE ITA NO 1378/AHD/2004. M/S.LMP GUJARAT AGRO EXPORTS LTD. ASST.YEAR -1998-99 - 6 - METHOD OF ENTIRE YEAR EVEN IN THE PAST AND THE SAME HAS BEEN ACCEPTED BY THE DEPARTMENT. THE TOTAL PURCHASE PRICE FOR THE PU RCHASES DURING THE YEAR WHERE RS.2527.56 PER METRIC TONE AND THE STOCK COME S TO RS.2,38,000/- WHICH IS DISCLOSED IN THE BALANCE SHEET. HENCE, THE RE IS NO UNDERVALUATION OF CLOSING STOCK AS STATED BY THE LEARNED ASSESSING OFFICER. RELIANCE WAS PLACED ON VARIOUS CASE LAWS TO HOLD THAT IF THE ASS ESSEE HAS BEEN FOLLOWING A CONSISTENT METHOD OF ACCOUNTING, THE LEARNED ASSE SSING OFFICER CANNOT APPLY A DIFFERENT METHOD AND REJECT THE BOOKS OF AC COUNT. 10. LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AFT ER CONSIDERING THE ABOVE SUBMISSIONS OF THE ASSESSEE HELD AS UNDER : ON GOING THROUGH THE ENTIRE SUBMISSIONS AND THE DE TAILS SUBMITTED BY THE APPELLANT, I FIND THAT THE APPELLANT HAS SOM E MERIT IN ITS CLAIM THAT THE FIGURES CAN BE TALLIED IF THE WASTE MATERIAL IS ADJUSTED AS PURCHASE RETURNS AND THAT NORMAL PURCHASE RETURNS ARE SEPARA TELY SHOWN. IT IS ALSO SEEN FROM THE PURCHASE REGISTER THAT PURCHASES HAVE BEEN MADE MAINLY IN THE FIRST FOUR MONTHS OF THE FINANCIAL YEAR. SUBSEQ UENTLY, ALL THE BALANCE PURCHASES ARE IN MARCH98. HOWEVER, THE SALES ARE M AINLY TILL DECEMBER. IN THE SALES ACCOUNT, THERE ARE CASH AND BANK CONTR A ENTRIES IN RESPECT OF WASTE ONION SALES ACCOUNT WHICH DO NOT STAND EXPLAI NED IN ANY WAY. QUERIES REGARDING WASTE ONION HAVE BEEN EXPLAINED T HROUGH A WASTE ONION SALES ACCOUNT WHICH REFERS MAINLY TO SALES OF THESE ITEMS AND THERE ARE CREDITS ONLY. THEREFORE, IT IS NOT UNDERSTANDABLE A S TO HOW THEY CAN BE REDUCED FROM THE PURCHASES. IN VIEW OF THIS POSITIO N, IT IS NOT POSSIBLE TO ACCEPT THE APPELLANTS EXPLANATION IN RESPECT OF TH E ADJUSTMENTS MADE AND I, THEREFORE, HOLD THAT THE EXPLANATION OF THE ASSE SSEE IN RESPECT OF THE DIFFERENCE BETWEEN THE BOOKS AND THE FINAL ACCOUNTS DOES NOT STAND EXPLAINED. HENCE, THE FIRST ADDITION ON ACCOUNT OF DIFFERENCE IN BOOKS IS ITA NO 1378/AHD/2004. M/S.LMP GUJARAT AGRO EXPORTS LTD. ASST.YEAR -1998-99 - 7 - UPHELD AND THE SECOND ADDITION ON ACCOUNT OF DIFFER ENCE IN CLOSING STOCK IS ALSO UPHELD. 11. THE LEARNED AUTHORISED REPRESENTATIVE OF THE AS SESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED COMMISSIONE R OF INCOME TAX(APPEALS) AND LEARNED DEPARTMENTAL REPRESENTATIV E SUPPORTED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS). 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, THE LEARNED ASSESSING OFFICER OBSERVED THAT FROM TH E PURCHASE REGISTER AND SALES REGISTER PRODUCED BEFORE HIM BY THE ASSESSEE DURING THE COURSE OF HEARING THAT PURCHASES AS PER THE SAID REGISTER COM ES TO RS.63,83,680/- AS AGAINST RS.34,57,477/- SHOWN IN THE PROFIT & LOSS A CCOUNT. SIMILARLY, THE LEARNED ASSESSING OFFICER OBSERVED THAT SALES AS PE R THE SALES REGISTER COMES TO RS.2,52,03,151/- AS AGAINST WHICH SALES AS PER AUDITED PROFIT & LOSS ACCOUNT OF THE ASSESSEE IS RS.2,39,34,497/-. THUS, THE LEARNED ASSESSING OFFICER OBSERVED THAT THERE WAS DIFFERENC E WAS RS.27,94,225/- IN PURCHASES AND DIFFERENCE OF RS.12,92,832/- IN SALES . THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ABOVE DIFFERENC E COULD NOT BE EXPLAINED BY THE ASSESSEE WITH NECESSARY VOUCHERS A ND EVIDENCES AND HE THEREFORE, ADDED THE DIFFERENCE OF RS.40,62,908/- T O THE INCOME OF THE ASSESSEE. THE LEARNED ASSESSING OFFICER FURTHER OBS ERVED THAT THE PURCHASE OF RAW MATERIAL SHOWN IN THE MONTH OF MARCH 98 WAS RS.7,18,751/- AND THERE IS NO SALES IN THE MONTH OF MARCH AND THEREFO RE, ACCORDING TO THE LEARNED ASSESSING OFFICER, THE CLOSING STOCK OF THE ASSESSEE OUGHT TO HAVE BEEN RS.7,18,751/- WHEREAS THE ASSESSEE HAS SHOWN C LOSING STOCK OF RS.2,38,000/- ONLY AND THEREFORE, THE LEARNED ASSES SING OFFICER ADDED THE DIFFERENCE AMOUNT OF RS.4,80,751/- TO THE INCOME OF THE ASSESSEE. THE ITA NO 1378/AHD/2004. M/S.LMP GUJARAT AGRO EXPORTS LTD. ASST.YEAR -1998-99 - 8 - ABOVE ACTION OF THE LEARNED ASSESSING OFFICER WAS C ONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE FILED A C OPY OF THE AUDITED BALANCE SHEET OF THE ASSESSEE AND POINTED OUT THAT THE ASSESSEE HAS SHOWN CLOSING STOCK OF FINISHED GOODS OF RS.7,15,000/- AL SO IN ADDITION TO THE CLOSING STOCK OF RAW MATERIAL OF RS.2,38,000/-. IT WAS EXPLAINED THAT OUT OF 227.640 METRIC TONES OF RAW MATERIAL PURCHASED IN MARCH, 133.44 METRIC TONES WAS UTILISED FOR PROCESSING AND ASSESSEE HAD CLOSING STOCK OF ONLY 94.26 METRIC TONES OF RAW MATERIAL AS ON 31.03.1998 WHICH WAS VALUED IN ACCORDANCE WITH THE PAST CONSISTENT SYSTEM OF VALUA TION OF RAW MATERIAL. WE FIND THAT THE LOWER AUTHORITIES HAS NOT TAKEN IN TO CONSIDERATION THE CLOSING STOCK OF FINISHED GOODS SHOWN BY THE ASSESS EE AND HAS NOT GIVEN ANY REASON TO SHOW THAT THE RAW MATERIAL PURCHASED IN MARCH COULD NOT HAVE BEEN UTILISED FOR THE PURPOSE OF PROCESSING BY THE ASSESSEE. FURTHER, IN RESPECT OF DIFFERENCE IN PURCHASES AND SALES THE AS SESSEE HAS FILED THE RECONCILIATION STATEMENT BEFORE US WHICH IS AS FOLL OWS. F Y 1997-98 A Y 1998-99 SUBMITTED HERE BELOW IS THE RECONCILIATION OF PURCH ASE ACCOUNT FIGURES AS APPEARING IN PROFIT & LOSS ACCOUNT AND PURCHASE REG ISTER:- PURCHASE:- [RS.] TOTAL PURCHASE AS PER PURCHASE REGISTER 62,51,7 02.34 LESS: CREDIT FOR WASTE ONION DISPOSAL [PURCHASE RETURN] 27,94 ,225.27 ========== NET PURCHASE AS SHOWN IN RM CONSUMED -SCH 04 OF P&L A/C. 34,57,477.07 SUBMITTED HERE BELOW IS RECONCILIATION OF SALES ACC OUNT FIGURES AS APPEARING IN P&L ACCOUNT AND SALES REGISTER:- SALES:- [RS.] TOTAL SALES AS PER SALES REGISTER (INCLUDING PURCHASE RETURN SUBSEQUENTLY REVISED) 252,03,151.41 LESS : REVERSAL ENTRY FOR CREDIT ON ACCOUNT OF WASTE ONION DISPOSAL I.E. PURCHASE RETURN WRONGLY INCLUDE D ITA NO 1378/AHD/2004. M/S.LMP GUJARAT AGRO EXPORTS LTD. ASST.YEAR -1998-99 - 9 - IN SALES 12,68,653.80 ========== SALES FIGURE AS SHOWN IN SCH 01 OF P&L A/C. 239,34,497.61 --------------------- 13. IN OUR CONSIDERED OPINION THE ABOVE RECONCILIAT ION STATEMENT REQUIRES VERIFICATION BEFORE DECIDING ABOUT THE ACC EPTABILITY OR OTHERWISE OF THE SAME. IN THE ABOVE FACTS AND CIRCUMSTANCE, IN O UR CONSIDERED OPINION, IT SHALL BE IN THE INTEREST OF THE JUSTICE TO RESTORE THE ISSUES TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR NECESSARY VERIFICATIO N AND ADJUDICATION OF THE MATTER AFRESH IN THE LIGHT OF THE OBSERVATION M ADE HEREIN ABOVE IN ACCORDANCE WITH LAW AFTER ALLOWING PROPER OPPORTUNI TY OF HEARING TO THE ASSESSEE. WE ACCORDINGLY, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND RESTORE THE MATTERS BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER. THUS, THE GROUNDS OF APPEAL ARE ALLOWED FOR STATISTICAL P URPOSES. 14. GROUND NO.5 OF THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRM ING THE ADDITION OF RS.1,58,443/- MADE UNDER SECTION 40A(3) OF THE A CT. 15. AT THE TIME OF THE HEARING, THE LEARNED AUTHORI SED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSING T HIS GROUND OF APPEAL ACCORDINGLY, THIS GROUND OF APPEAL IS DISMISSED AS NOT PRESSED. 16. GROUND NO.6 OF THE APPEAL IS DIRECTED AGAINST E TH ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRM ING DISALLOWANCE OF RS.46,135/- OUT OF P.F. AND P.P.F PAYMENT. 17. THE BRIEF FACTS OF THE CASE ARE THAT THE LEARNE D ASSESSING OFFICER DISALLOWED THE PAYMENT OF P.F AND P.P.F OF RS.46,13 5/- WHICH WERE PAID ITA NO 1378/AHD/2004. M/S.LMP GUJARAT AGRO EXPORTS LTD. ASST.YEAR -1998-99 - 10 - BEYOND THE DUE DATE PRESCRIBED UNDER THE P.F. ACT. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ASSESSEE SUBMIT TED THAT THE PAYMENT WAS MADE BEFORE THE EXPIRY OF FINANCIAL YEA R AND HENCE SHOULD BE ALLOWED DEDUCTION. THE LEARNED COMMISSIONER OF INCO ME TAX(APPEALS) HELD THAT A PAYMENT IS NOT MADE WITHIN THE DUE DATE IS NOT ALLOWABLE UNDER SECTION 43B MERELY BECAUSE THE PAYMENT WAS NOT MADE DURING THE PREVIOUS YEAR AND CONFIRMED THE ACTION OF THE LEARNED ASSESS ING OFFICER. 18 THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE SUBMITTED THAT IN VIEW OF THE DECISION OF HON'BLE SUPREME COU RT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. VINAY CEMENT LTD. (2 007) 213 CIR (SC) 268, WHEREIN IT WAS HELD THAT CONTRIBUTION MADE TO PROVIDENT FUND BEFORE FILING OF THE RETURN COULD NOT BE DISALLOWED UNDER S. 43B AS IT STOOD PRIOR TO THE AMENDMENT W.E.F. 1ST APRIL, 2004, THE MATTER SH OULD BE RESTORED BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR DECID ING THE SAME AFTER VERIFICATION OF THE DATE OF PAYMENT MADE BY THE ASS ESSEE. 19. THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO A GREED WITH THE SUBMISSIONS MADE BY THE LEARNED AUTHORISED REPRESEN TATIVE OF THE ASSESSEE. 20. AFTER HEARING THE RIVAL SUBMISSION AND PERUSING THE ORDERS OF THE LOWER AUTHORITIES, WE FIND THAT THE DISALLOWANCE FO R DEDUCTION OF P.F. AND P.P.F. PAYMENT MADE BY THE ASSESSEE OF RS.46,135/- WAS MADE FOR THE REASON THAT THE PAYMENTS WERE MADE AFTER THE DUE DA TE PRESCRIBED IN THE P.F. ACT. THE HON'BLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. VINAY CEMENT LTD. (2007) 213 CIR (SC ) 268, HAS HELD THAT NO DISALLOWANCE FOR P.F. PAYMENTS CAN BE MADE UNDER SECTION 43B OF THE ACT IF THE PAYMENTS ARE MADE BEFORE THE DUE DATE OF FILING OF RETURN OF ITA NO 1378/AHD/2004. M/S.LMP GUJARAT AGRO EXPORTS LTD. ASST.YEAR -1998-99 - 11 - INCOME BY THE ASSESSEE. HENCE, WE SET ASIDE THE ORD ERS OF THE LOWER AUTHORITIES AND REMAND THE MATTER BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR ALLOWING THE DEDUCTION TO THE ASSESSEE ON ACCOUNT OF P.F. AND P.P.F PAYMENTS, IF THEY ARE MADE BEFORE THE DUE DAT E OF FILING OF RETURN BY THE ASSESSEE AFTER VERIFICATION. THUS, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 21. GROUND NO.7 OF THE APPEAL IS GENERAL IN NATURE AND REQUIRES NO ADJUDICATION BY US. 22. IN THE RESULT, THE APPEAL OF THE ASSESSEE PARTL Y IN THE MANNER INDICATED ABOVE. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 30/10/2009. SD/- SD/- ( MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 30/10/2009 PREPARED AND COMPARED BY: PARAS ITA NO 1378/AHD/2004. M/S.LMP GUJARAT AGRO EXPORTS LTD. ASST.YEAR -1998-99 - 12 - COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-I, BARODA. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD