Jainik Industries, Ahmedabad V. The CIT-III, Ahmedabad

ITA 15/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60223 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-03-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 02-01-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR SRDR
• Assessee Lawyers: R K SHAH
• Keywords: Corroborative evidences
• Section: 263; 154

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, A BENCH . .. . . .. . , !'# !'# !'# !'#, , , , $ $ $ $ %&'( %&'( %&'( %&'(, , , , )* + ) )* + ) )* + ) )* + ) # # # # I BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER ITA NO.15 AND 362/AHD/2009 [ASSTT.YEAR : 2005-2006] JAINIK INDUSTRIES PLOT NO.605/A, GIDC ESTATE PHASE-4, VATVA, B/H. MARUTI WEIGH BRIDGE MAHEMDABAD ROAD AHMEDABAD 382 445. /VS. CIT-III AHMEDABAD. ITA NO.411/AHD/2009 [ASSTT.YEAR : 2005-2006] ACIT-CIR.6 AHMEDABAD. / VS. JAINIK INDUSTRIES PLOT NO.605/A, GIDC ESTATE PHASE-4, VATVA, B/H. MARUTI WEIGH BRIDGE MAHEMDABAD ROAD AHMEDABAD 382 445. ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) 1& 2 3 )/ ASSESSEE BY : SHRI R.K. SHAH + 2 3 )/ REVENUE BY : SHRI RAHUL KUMAR, SR.DR 5 2 &(*/ DATE OF HEARING : 14 TH MARCH, 2012 678 2 &(*/ DATE OF PRONOUNCEMENT : 04-04-2012 ITA NO.15 AND 362/AHD/2009 -2- )9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THESE ARE THREE APPEALS TWO BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX-III, FOR THE ASSESSMENT YEAR 2005-200 6 AND ONE APPEAL BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE CI T(A)-XI, AHMEDABAD DATED 6.12.2008 FOR THE SAME ASSESSMENT Y EAR. THESE ARE BEING DISPOSED OF WITH THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.15/AHD/2008 : A.Y.2005-2006 (ASSESSEES APPE AL) (UNDER SECTION 263 OF THE I.T. ACT) 2. THE ONLY ISSUE IN THIS APPEAL IS REGARDING VALID ITY OF THE ORDER PASSED BY THE CIT UNDER SECTION 263 OF THE I.T.ACT. THE LEARNED COUNSEL FOR THE ASSESSEE, AT THE OUTSET, FAIRLY CON CEDED THAT THE ADDITION OF RS.2,84,776/- MADE BY THE AO IN THE ASS ESSMENT AS A RESULT OF ORDER PASSED BY THE CIT, UNDER SECTION 26 3 OF THE ACT HAS BEEN NULLIFIED BY ALLOWING DEDUCTION OF THE IDENTIC AL AMOUNT OF RS.2,84,776/- IN THE SUCCEEDING ASSESSMENT YEAR 200 6-2007 VIDE ORDER OF THE AO DATED 11-9-2009 PASSED UNDER SECTION 154 OF THE ACT. THE LEARNED DR SUBMITTED THAT NO PREJUDICE IS CAUSED TO THE ASSESSEE SINCE THE ASSESSEE HAS GOT THE RELIEF IN THE SUCCEEDING A SSESSMENT YEAR, AND THEREFORE, THE PRESENT APPEAL BECOMES INFRUCTUOUS. 3. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE PE RUSED THE ORDER OF THE CIT PASSED UNDER SECTION 263 OF THE AC T AND THE ORDER OF THE AO PASSED UNDER SECTION 154 OF THE ACT FOR THE SUCCEEDING ASSESSMENT YEAR 2006-2007. WE FIND THAT AS A RESUL T OF ORDER PASSED BY THE CIT UNDER SECTION 263 OF THE ACT, THE AO MAD E THE ADDITION OF ITA NO.15 AND 362/AHD/2009 -3- RS.2,84,776/- VIDE HIS ASSESSMENT ORDER DATED 26.8. 2009. HOWEVER, THE AO VIDE HIS ORDER DATED 11-9-2009 PASSED UNDER SECTION 154 OF THE ACT FOR THE SUCCEEDING ASSESSMENT FOR 2006-2007 HAS ALLOWED DEDUCTION OF THE SAME AMOUNT OF RS.2,84,776/- BEING DIFFERENCE IN THE OPENING STOCK, AND THEREFORE, THE PRESENT APPE AL OF THE ASSESSEE BEFORE US IS OF ACADEMIC NATURE ONLY AND HENCE INFR UCTUOUS AND REQUIRES NO ADJUDICATION. HOWEVER, WE MAKE IT CLEA R THAT WE ARE NOT GOING INTO THE MERIT OF THE SUBMISSIONS OF THE ASSE SSEE THAT THE ORDER OF THE AO WAS NOT ERRONEOUS OR PREJUDICIAL TO THE I NTEREST OF THE REVENUE, AND THAT OUR DECISION SHALL NOT AFFECT THE MERIT OR OTHERWISE OF THE ASSESSEES CASE FOR OTHER YEAR(S) DUE TO DIS MISSAL OF THE PRESENT APPEAL OF THE ASSESSEE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ITA NO.362/AHD/2009 : A.Y.2005-2006 (ASSESSEES APP EAL) 5. 1. ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 60,000/- IN GROSS PROFIT. 6. WE HAVE HEARD PARTIES. WE FIND THAT THERE WERE NUMBER OF DEFECTS POINTED OUT BY THE AO IN THE ACCOUNT BOOKS MAINTAINED BY THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE HAS TRIED TO EXPLAIN THE DISCREPANCY, BUT IN OUR VIEW, THE DISCREPANCY COULD NOT BE WHOLLY EXPLAINED ON BEHALF OF THE ASSESSEE. ACCORDINGLY, WE SUSTAIN THE ORDER OF THE CIT(A) AND CONFIRM THE REJECTION OF TH E BOOKS OF ACCOUNTS OF THE ASSESSEE. WE FIND THAT THE CIT(A) AFTER CON SIDERING FACTS OF THE CASE HAS SUSTAINED GP ADDITION OF RS.60,000/- AS AG AINST THE ADDITION OF RS.2,62,240/- MADE BY THE AO. THE CIT(A) HAS TA KEN A BALANCED ITA NO.15 AND 362/AHD/2009 -4- VIEW AND HAS PASSED SPEAKING ORDER AND THERE WAS VA RIATION DUE TO RISE IN COST OF RAW-MATERIAL DURING THE YEAR, AND THEREF ORE, WE HOLD THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT( A), WHICH IS CONFIRMED AND THE GROUND NO.1 OF THE ASSESSEE IS DI SMISSED. 7. THE GROUND NO.2 OF THE ASSESSEES APPEAL READS A S UNDER: 2. ON FACT AND CIRCUMSTANCES OF THE CASE, THE LD.C IT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.12,0 26/- OF EXHIBITION EXPS. 8. WE HAVE HEARD BOTH THE PARTIES. WE FIND THAT TH E AO HAS RECORDED A FINDING THAT THE ASSESSEE HAS NOT FURNIS HED DETAILS AND SUPPORTING EVIDENCES WITH REGARD TO EXHIBITION EXPE NSES, AND THEREFORE, DISALLOWANCE OF 1/10 TH OF THE EXPENSES WAS MADE. THERE BEING NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A), THE SAME IS CONFIRMED, THE GROUND NO.2 OF THE ASSESSEE IS DISMI SSED. 9. THE GROUND NO.3 OF THE ASSESSEES APPEAL READS A S UNDER: 3. ON FACT AND CIRCUMSTANCES OF THE CASE, THE LD.C IT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.56,1 04/- OF COMMISSION EXPS. 10. WE HEARD BOTH THE PARTIES. THE CASE OF THE REV ENUE IS THAT THE ASSESSEE COULD NOT FILE THE COPIES OF THE AGREEMENT WITH THE PAYEES OF THE COMMISSION, AND THEREFORE, THE DISALLOWANCE WAS JUSTIFIED. THE CASE OF THE ASSESSEE IS THAT ALL THE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES AND COPIES OF THE DEBIT AND CREDIT EN TRIES WERE FILED BEFORE THE AO ALONG WITH THE CONFIRMATIONS FROM THE PAYEES. WE FIND THAT THERE IS NO LEGAL REQUIREMENT TO HAVE A WRITTE N AGREEMENT WITH THE PAYEES OF THE COMMISSION. THE ASSESSEE HAS FILED O THER EVIDENCES IN ITA NO.15 AND 362/AHD/2009 -5- SUPPORT OF HIS CASE, AND THEREFORE BEING NO DOUBT I N THE GENUINENESS AND BUSINESS PURPOSES OF THE PAYMENT MADE TO THE PA YEES, WE HOLD THAT THE DISALLOWANCE MADE WAS UNCALLED FOR, AND AC CORDINGLY, WE DELETE THE ADDITION OF RS.56,104/- OUT OF COMMISSIO N EXPENSES AND GROUND NO.3 OF THE ASSESSEE IS ALLOWED. 11. THE GROUND NO.4 OF THE ASSESSEES APPEAL READS AS UNDER: 2. ON FACT AND CIRCUMSTANCES OF THE CASE, THE LD.C IT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.17,2 45/- OF MISC. EXPS. 12. WE HAVE HEARD BOTH THE PARTIES. WE FIND THAT T HE AO HAS RECORDED A FINDING THAT THE ASSESSEE COULD NOT FILE DETAILS AND SUPPORTING EVIDENCE OF THE EXPENSES CLAIMED BY THE ASSESSEE. THE CASE OF THE ASSESSEE WAS THAT IT HAS PRODUCED THE R ELEVANT DETAILS AND EVIDENCES. IN THE FACTS OF THE PRESENT CASE, WE AR E OF THE VIEW THAT THE DISALLOWANCE OUT OF MISC. EXPENSES SHOULD BE RESTRI CTED TO 10% AS AGAINST 20% DISALLOWANCE SUSTAINED BY THE CIT(A), A ND ACCORDINGLY, GROUND NO.4 OF THE ASSESSEE IS PARTLY ALLOWED. 13. THE GROUND NO.5 OF THE ASSESSEES APPEAL READS AS UNDER: 5. ON FACT AND CIRCUMSTANCES OF THE CASE, THE LD.C IT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.20,0 00/- OF STAFF WELFARE EXPS. 14. WE HAVE HEARD THE PARTIES. THE AO HAS RECORDED A FINDING THAT THE NECESSARY BILLS AND VOUCHERS WERE NOT PRODUCED DURING THE ASSESSMENT PROCEEDINGS. THE LEARNED COUNSEL FOR T HE ASSESSEE HAS SUBMITTED THAT THE VOUCHERS WERE PRODUCED BEFORE TH E AO. IN THE ABSENCE OF ANY EVIDENCE TO SUPPORT THE CONTENTION O F THE ASSESSEE, WE ITA NO.15 AND 362/AHD/2009 -6- HOLD THAT NO INTERFERENCE IS CALLED FOR IN THE ORDE R OF THE CIT(A) ON THIS ISSUE, WHICH IS CONFIRMED AND THE GROUND NO.5 OF THE ASSESSEES APPEAL IS DISMISSED. 15. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. ITA NO.411/AHD/2009 : A.Y.2005-2006 (REVENUES APPE AL) 16. THE GROUND NO.1 OF THE ASSESSEES APPEAL READS AS UNDER: 1 THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN R ESTRICTING THE ADDITION FOR ALL IN GP FROM RS.2,62,240/- TO RS .60,000/- 17. WE HAVE HEARD THE PARTIES. THE ISSUE IN THE FI RST GROUND OF THE REVENUE IS COVERED WITH THE GROUND NO.1 IN THE ASSE SSEES APPEAL IN ITA NO.362/AHD/2009 FOR THE RELEVANT ASSTT.YEAR 200 5-2006. FOR THE REASONS RECORDED WHILE DISPOSING OF THE GROUND NO.1 OF THE ASSESSEE FOR THE FOREGOING PARA OF THIS ORDER, WE HOLD THAT THERE IS NO MERIT IN THE GROUND NO.1 OF APPEAL OF THE REVENUE, WHICH IS ACCORDINGLY DISMISSED. 18. THE GROUND NO.2 OF THE REVENUES APPEAL READS A S UNDER: 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE OF RS.3,77,366/- TOWARDS THE VALU E OF DIFFERENCE IN CLOSING STOCK. 19. THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAS SHOWN HIGHER VALUE OF CLOSING STOCK TO ITS BANKER AND THEREFORE, THE DIFFERENCE BETWEEN VALUE OF THE CLOSING STOCK WITH THE ASSESSE E AND AS DECLARED BEFORE THE BANKER OF RS.3,77,366/- WAS RIGHTLY ADDE D BY THE AO. HE RELIED ON THE ORDER OF THE AO. THE LEARNED COUNSEL FOR THE ASSESSEE ITA NO.15 AND 362/AHD/2009 -7- SUBMITTED THAT THERE IS NO DIFFERENCE IN THE QUANTI TATIVE DETAILS FILED WITH THE BANK AND AS APPEARED IN THE BOOKS OF ACCOU NTS OF THE ASSESSEE, AND THEREFORE, MERELY BECAUSE THE ASSESSE E HAS SHOWN THE HIGHER VALUE OF STOCK, IN ORDER TO GET BETTER LOAN FACILITIES FROM ITS BANKER, IS NO GROUND TO MAKE THE ADDITION. THE LEA RNED DR, IN HIS REJOINDER COULD NOT CONTROVERT THE SUBMISSIONS OF T HE ASSESSEE THAT THERE IS NO DIFFERENCE IN THE QUANTITATIVE DETAILS OF THE ASSESSEE. 20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE FACT THAT THE QUANTITY OF THE ASSESSEES STOCK, AS SUBMITTED BY T HE ASSESSEE TO ITS BANKER AND AS APPEARED IN ITS BOOKS OF ACCOUNTS ARE THE SAME, AND THERE IS NO DIFFERENCE BETWEEN THE TWO. THE DIFFER ENCE IS ONLY IN THE VALUATION OF THE STOCK SHOWN TO ITS BANKER BY THE A SSESSEE, WHICH IS STATED TO HAVE BEEN INFLATED IN ORDER TO GET BETTER FINANCIAL FACILITY. IN THE FACTS OF THE PRESENT CASE, SINCE THERE IS NO DI FFERENCE IN THE QUANTITY OF THE STOCK, AS APPEARED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND AS SUBMITTED TO ITS BANKER, WE HOLD TH AT THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION AND THE GROUND N O.2 OF THE REVENUES APPEAL IS DISMISSED. 21. IN THE RESULT, ASSESSEES APPEALS IN ITA NO.15/ AHD/2009 IS DISMISSED AND ITA NO.362/AHD/2009 IS PARTLY ALLOWED AND THE REVENUES APPEAL IN ITA NO.411/AHD/2009 IS DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !'# !'# !'# !'# /VICE-PRESIDENT