Shamli Papers Mills, Shamli V. ACIT, Muzaffarnagar

ITA 1386/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87001 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 03-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 08-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Assessee Lawyers: SAMPATH KRISHNA
• Keywords: Depreciation

Judgement Text

1 ITA 1386/DEL/2013 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI G.D. AGRAWAL : VICE PRESIDENT AND SHRI GEORGE GEORGE K.: JUDICIAL MEMBER ITA NO. 1386/DEL/2013 ASSTT. YR: 2009-10 SHAMLI PAPERS MILLS VS. ACIT, CIRCLE-1, SUBHASH CHOWK, SHAMLI MUZAFFARNAGAR (UP). PAN: AAECS 3641 L ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI SAMPATH KRISHNA ADV. RESPONDENT BY : SHRI B.R.R. KUMAR SR. DR DATE OF HEARING : 04/03/2015. DATE OF ORDER : 10/03/2015. O R D E R PER G.D. AGRAWAL, V.P. : THIS APPEAL, BY THE ASSESSEE, IS DIRECTED AGAINST C IT(A)S ORDER DATED 02-11-2012, RELATING TO A.Y. 2009-10. 2. GROUND NO. 1 OF THE ASSESSEES APPEAL READS AS U NDER: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN S USTAINING AN ADDITION OF RS. 7,16,517/- ON ACCOUNT OF OPENING STOCK OF IMPORTED WASTE P0APER. 2 ITA 1386/DEL/2013 3. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LD. COUNSEL THAT THE STOCK OF IMPORTED WASTE PAPER (IWP IN SHORT) OF RS. 7,16,517/- WAS DISCLOSED IN THE BALANCE-SHEET AS ON 31-3-2003. SIM ILAR BALANCE OF THE IWP WAS SHOWN IN THE BALANCE-SHEET AS ON 31-3-2004, 31- 3-2006, 31-3-2007 AND 31-3-2008. DURING THE ACCOUNTING YEAR RELEVANT TO A SSESSMENT YEAR UNDER CONSIDERATION IT WAS FOUND THAT IWP WAS NOT USABLE FOR THE MANUFACTURING OF PAPER, FOR WHICH IT WAS PURCHASED. THEREFORE, IWP W AS UTILIZED AS FUEL FOR GENERATION OF POWER. HE SUBMITTED THAT THE AO HAS A LLEGED THAT THE PAPER MUST HAVE BEEN SOLD OUT OF BOOKS. HOWEVER, THE AO H AS NOT POINTED OUT ANY CORROBORATIVE EVIDENCE IN SUPPORT OF SUCH ALLEGATIO N. HE ALSO POINTED OUT THAT THE CARRIED FORWARD DEPRECIATION OF MORE THAN RS. 7 CRORES WAS AVAILABLE TO THE ASSESSEE AND EVEN AFTER THE SET OFF OF RS. 1 .33 CRORES DURING THE YEAR UNDER CONSIDERATION THE CARRIED FORWARD DEPRECIATIO N AVAILABLE FOR SET OFF IN THE SUBSEQUENT YEAR IS ABOUT RS. 6.50 CRORE. THUS, THERE WOULD BE NO QUESTION OF ANY MOTIVE FOR SUPPRESSING THE VALUATIO N OF CLOSING STOCK. 4. THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORD ERS OF AUTHORITIES BELOW AND STATED THAT NO EVIDENCE IS BROUGHT ON REC ORD BY THE ASSESSEE THAT THE IWP HAD BECOME UNUSABLE FOR THE MANUFACTURING O F PAPER. SIMILARLY, NO EVIDENCE IS PRODUCED BY THE ASSESSEE FOR BURNING OF IWP OF RS. 7,16,517/- AS FUEL. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE A SSESSEE HAD PURCHASED IWP DURING FY 2002-03. THUS, DURING THE RELEVANT FINANC IAL YEAR IT HAD ALREADY BECOME OLD BY SIX YEARS. THEREFORE, WITHOUT ANY DOC UMENTARY EVIDENCE, IN 3 ITA 1386/DEL/2013 OUR OPINION, PASSAGE OF SEVEN YEARS IS GOOD ENOUG H TO ACCEPT THE ASSESSEES CONTENTION THAT THE IWP HAD BECOME UNFIT FOR THE MA NUFACTURING OF PAPER. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS ALSO IN THE BUSINESS OF MANUFACTURE OF POWER AND COAL, PADDY HUSK & BAGGASSE ARE BEING UT ILIZED AS A FUEL. IF THE ASSESSEE HAS SOME STOCK OF WASTE PAPER WHICH CANNO T BE UTILIZED FOR THE PURPOSE FOR WHICH IT WAS PURCHASED, THEN IF THE AS SESSEE HAS UTILIZED THE SAME AS FUEL, HIS ACTION IS BONA FIDE AND SHOULD NO T HAVE BEEN DOUBTED WITHOUT ANY BASIS. THE AO PRESUMED THAT IWP MUST HA VE BEEN SOLD OUTSIDE THE BOOKS BUT THERE IS NO IOTA OF EVIDENCE FOR ARR IVING AT SUCH CONCLUSION. WE, THEREFORE, FIND NO JUSTIFICATION TO SUSTAIN THE ADDITION OF RS. 7,16,517/-. THE SAME IS DELETED. 6. GROUND NO. 2 OF THE ASSESSEES APPEAL READS AS U NDER: 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN S USTAINING DISALLOWANCE OF RS. 75,000/-. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS THE AO FOUND THAT THE ASSESSEE HAD DEBITED VARIOUS EXPENSES IN THE P& L A/C WHICH COULD NOT BE VERIFIED FOR WANT OF COMPLETE BILLS AND VOUCHER S. THE AO, THEREFORE, MADE A LUMP SUM DISALLOWANCE OF RS. 1,50,000/- ON ESTIMATE BASIS. 8. ON APPEAL, THE CIT(A) SUSTAINED THE DISALLOWANCE AT RS. 75,000/-. 9. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSE L FOR THE ASSESSEE NEITHER PRODUCED ANY DETAIL OF THE EXPENSES NOR POI NTED OUT AS TO HOW THE 4 ITA 1386/DEL/2013 ORDER OF THE CIT(A) WAS NOT JUSTIFIED. IN THE ABSEN CE OF PROPER DETAILS OF THE EXPENSES AND THE EXPLANATION, WE DO NOT FIND ANY JU STIFICATION TO INTERFERE WITH THE ORDER OF THE CIT(A). THE SAME IS SUSTAINED . GROUND NO. 2 OF THE ASSESSEE IS REJECTED. 10. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON 10/03/2015. SD/- SD/- ( GEORGE GEORGE K. ) ( G.D. AGRAWAL) JUDICIAL MEMBER VICE PRESIDENT DATED: 10/03/2015. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI.