M/s. Chand Engineering, Amritsar V. The Deputy Commissioner of Income tax, Amritsar

ITA 154/ASR/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5781 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-12-2010
• Assessment Year: misc
• Appeal Filed On: 18-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R C KHANNA
• Assessee Lawyers: AMRIK CHAND
• Keywords: Principle of natural justice
• Section: 143(3); 10B; 143(1)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.L. KARWA, VICE PRESIDENT AND SH. MEHAR SINGH, ACCOUNTANT MEMBER I.T.A. NO.168(ASR)/2010 ASSESSMENT YEAR:2006-07 PAN :AACFC6235D THE ASSTT. COMMR. OF INCOME-TAX, VS. M/S. CHAND ENG INEERING, CIRCLE-IV, VILL. CHHOTA NAUSHEHRA, AMRITSAR. AMRITSAR. (APPELLANT) (RESPONDENT) I.T.A. NO. 154(ASR)/2010 ASSESSMENT YEAR:2006-07 M/S. CHAND ENGINEERING VS. THE ASSTT. COMMR. OF IN COME-TAX, AMRITSAR. CIRCLE IV, AMRITSAR. (APPELLANT) (RESPONDENT) DEPARTMENT BY: SH. R.C. KHANNA, CA ASSESSEE BY: SH. AMRIK CHAND, DR ORDER PER MEHAR SINGH, AM, THESE ARE CROSS APPEALS ONE BY THE REVENUE AND A NOTHER BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT( A), AMRITSAR, DATED 13.01.2010, PASSED UNDER SECTION 250(6) OF THE INCO ME-TAX ACT, 1961 ( HEREINAFTER REFERRED TO IN SHORT THE ACT) FOR THE ASSESSMENT YEAR 2006-07. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL: 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING ADDITION OF RS.11,83,4 78/- MADE BY THE AO BY HOLDING THAT GAIN ON ACCOUNT OF EXCHAN GE RATE FLUCTUATION IS INTEGRAL PART OF EXPORT TURNOVER AND PROFIT DERIVED FROM INDUSTRIAL UNDERTAKING AND IS THUS ELIGIBLE FO R EXEMPTION U/S 10B OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E LD. CIT(A) HAS ERRED IN REDUCING ADDITION TO THE EXTENT OF RS. 4,60,174/- AS AGAINST THE ADDITION OF RS.11,53,180/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ESTIMATED SALE OF SCRAP BY HO LDING THAT THE SALE OF SCRAP ESTIMATED BY THE ASSESSING OFFICER IS TO BE CONSIDERED AS PART OF TOTAL TURNOVER AND PART OF IN DUSTRIAL UNDERTAKING AS PER THE PROVISIONS OF SUB SECTION (4 ) OF SECTION 10B OF THE ACT. 3. IN THE FIRST GROUND OF APPEAL, THE REVENUE CONTE NDED THAT THE LD. CIT(A), ERRED IN DELETING THE ADDITION OF RS.11,83, 478/- MADE ON ACCOUNT OF EXCHANGE RATE FLUCTUATION. IN THE BRIEF AND NEAT FA CTS OF THE CASE, AS CULLED OUT, FROM THE RELEVANT RECORDS ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME ON 31.10.2006 DECLARING NIL INCOME, WHICH WAS PROCE SSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUT INY ASSESSMENT AND THE ASSESSMENT WAS FINALIZED UNDER SECTION 143(3) OF TH E ACT ON 29.12.2008 . THE ASSESSEE IS A PARTNERSHIP ENGAGED IN THE MANUFA CTURING OF ENGINEERING GOODS VIZ ANTI VIBRATION PRODUCTS, DUCTING & PIPING ACCESSORIES ETC. AND 100% EXPORTS THEREOF. IT HAS ESTABLISHED A 100% EXP ORT ORIENTED UNDERTAKING DULY APPROVED AS EOU WITH DEVELOPMENT COMMISSIONER, NOIDA SPECIAL ECONOMIC ZONE (NOIDA EXPORT PROCESSING ZONE), NOID A AND ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 10B OF THE ACT. THE A O RELYING ON VARIOUS JUDICIAL RULINGS AS MENTIONED IN THE ASSESSMENT ORD ER, CAME TO THE CONCLUSION THAT THE EXCHANGE RATE FLUCTUATION OF RS.11,83,478/ - INCLUDED IN THE PROFIT 3 WAS NOT THE PROFIT DERIVED FROM THE INDUSTRIAL UNDE RTAKING ELIGIBLE FOR DEDUCTION U/S 10B OF THE ACT, AS IT WAS IN THE NAT URE OF WIND FALL DEPENDING ON THE CONVERSION RATE OF CURRENCY ON THE DAY OF RE CEIPT OF SALE PROCEEDS. ON APPEAL TO THE CIT(A), THE CIT(A), DELETED THE ADDIT ION. NOW AGGRIEVED WITH THE ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL B EFORE US. 4. THE LD. DR, RELIED ON THE ORDER OF THE ASSESSI NG OFFICER. 5. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, RELIED ON THE ORDER OF THE CIT(A) AND REITERATED THE SUBMISSIONS MADE BEFORE HIM. 6. WE HAVE HEARD BOTH THE PARTIES AND GIVEN OUR THO UGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS, EXAMINED THE FACTS OF THE CASE, EVIDENCE AND MATERIAL PLACED ON RECORD AND ALSO GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. A CAREFUL PERUSAL OF THE IMPUGNED APPELLATE ORDER DATED 13.01.2010, CLEARLY REVEALS THAT THE LD. CIT(A), HAS CONSIDERED AND ADJUDICATED THE ISSUE, IN QUESTION, IN GREATER DETAIL, AFTER APPRECIATION OF THE EVIDENCES AND MATERIAL ON RECORD, AS ALSO THE LEGAL AND FACTUAL POSITION OF THE CASE. NEEDLESS TO SAY THAT THE IMPUGNED APPELLATE ORDER IS WELL REASONED AND BASED ON THE COGENT AND CREDIBLE MATERIAL AND FACTS OF THE CASE. HOWEVE R, IT WOULD PERTINENT TO REPRODUCE ONLY THE CONCLUSIVE PART OF THE DECISION OF THE CIT(A), FOR THE PURPOSE OF PROPER APPRECIATION OF THE SAME: THE AO HAS DISALLOWED THE CLAIM OF DEDUCTION U/S 10B IN RESPECT OF PROFIT FROM EXCHANGE RATE FLUCTUATION ON THE GROUND THAT SUCH PROFIT CAN NOT BE SAID TO BE DERIVED FROM THE INDUSTRIAL U NDERTAKING. HOWEVER, THERE ARE LARGE NUMBER OF ITATS DECISION S INCLUDING THOSE RELIED ON BY THE APPELLANT HOLDING THAT GAIN ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION IS DIRECTLY RELATABLE TO THE ARTICLE OR THINKS EXPORTED BY THE ASSESSEE AND IS, THEREFORE, IN THE SAME NATURE AS 4 SALE PROCEEDS. THE FOREIGN EXCHANGE FLUCTUATION GAI N EMANATE FROM EXPORT AND IS INTEGRAL PART OF EXPORT WHICH CANNOT BE DIFFERENTIATED FROM THE EXPORT PROCEEDINGS SIMPLY ON THE GROUND TH AT THE RATES HAS INCREASED SUBSEQUENT TO SALE BUT PRIOR TO REALIZATI ON. THE GAINS ARE TO BE INCLUDED IN TURNOVER IN THE YEAR OF EXPORT. IN THE CASE OF CHANGE POND TEHNOLOGIES PVT. LTD., H ONBLE ITAT A BENCH, CHENNAI ( 119 TTJ 18) HAS HELD THAT GAIN FRO M THE FLUCTUATION OF FOREIGN EXCHANGE IS DIRECTLY RELATED WITH THE EX PORT ACTIVITIES AND SHOULD BE CONSIDERED AS INCOME DERIVED FROM EXPORT ACTIVITIES ELIGIBLE FOR EXEMPTION U/S 10A. IN THE CASE OF RENAISSANCE JEWELLERYPVT. LTD., ITAT G BENCH, MUMBAI (104 TTJ 382) HAS HELD THAT PROFIT ON FLUCTUATION IN RATE OF EXCHANGE OF FOREIGN CURRENCY IS PROFIT DERIVED FROM EXPORT BUSINESS ENTITLED TO EXEMPTION U/S 10A. IN THE CASE OF SUJATA GROVER, ITAT E BENCH, DELHI (74 TTJ 347) H AS HELD THAT INCOME FROM FOREIGN CURRENCY FLUCTUATION IS PART OF EXPORT TURNOVER. THE BASIC CHARACTER OF THE RECEIPT OF FOREIGN CURRE NCY REMAINS THE SAME AND IS A SORT OF ADDITIONAL SALE PRICE. SIMILA RLY, HONBLE ITAT, DELHI, H BENCH IN THE CASE OF SONY INDIA (P) LTD. (118 TTJ 865) HAS HELD THAT FOREIGN EXCHANGE GAIN IS INCLUDIBLE IN TH E PROFITS ELIGIBLE FOR DEDUCTION U/S 10A AND 10B OF THE ACT. IN THE CASE OF BANYAN CHEMICALS PVT. LTD., ITAT, AHMEDABAD (121 TTJ 751) HAS HELD THAT GAIN ON CONVERSION TO RUPEE DUE TO CHANGE IN RATE O F FOREIGN EXCHANGE IS INCOME DERIVED FROM EXPORT ORIENTED UNIT AND IS ELIGIBLE FOR EXEMPTION U/S 10B . FURTHER, ITAT, MUMBAI IN THE CA SE OF KIRAN EXPORTS (10SOT) 148) HAS HELD THAT IN CASE EXPORT S ALE PROCEEDS ARE RECEIVED WITHIN A PERIOD OF SIX MONTHS OR WITHIN EX TENDED TIME, THEN EXCHANGE RATE DIFFERENCE IS REQUIRED TO BE INCLUDED IN THE EXPORT TURNOVER OF THE YEAR IN WHICH EXPORTS WERE MADE. FO R THE SAME REASONING, IN CASE THE EXCHANGE RATE GAIN DIFFERENC E PERTAINED TO THE EXPORT MADE IN EARLIER YEAR BUT RECEIVED WITHIN SIX MONTHS OR EXTENDED PERIOD, IT WAS REQUIRED TO BE INCLUDED IN THE EXPORT TURNOVER OF THE YEAR IN WHICH GOODS WERE EXPORTED. IN FACT, WHAT ACCOUNTING PROCEDURE IS FOLLOWED WHEN THE EXPORT IS MADE IS THAT AN INVOICE IS RAISED IN THE CURRENCY O F THE COUNTRY TO WHICH THE GOODS ARE EXPORTED. SUBSEQUENTLY, THE AMO UNT IS REALIZED IN THAT FOREIGN CURRENCY AND THEN CONVERTED INTO INDIA RUPEE. THE ENTIRE AMOUNT IS RELATABLE TO THE EXPORTS MADE. IN FACT, I T IS ONLY THE TRANSLATION OF INVOICE VALUE FROM THE FOREIGN CURRE NCY TO THE INDIAN 5 RUPEES. THE AMOUNT REALIZED IN INDIAN RUPEES REMAIN S ATTRIBUTABLE TO THE EXPORTS MADE IN FOREIGN CURRENCY. IF THE EXCHA NGE RATE GAIN FROM THE DATE OF SALE TO THE DATE OF YEAR END IS PART OF EXPORT TURNOVER, HOW A DIFFERENT CHARACTER CAN BE ASSIGNED TO THE SIMILA R EXCHANGE RATE GAIN FROM THE DATE OF YEAR END TO THE DATE OF ACTUAL REA LIZATION. IN VIEW OF THE FACTS STATED ABOVE AND THE JUDICIAL RULINGS ON THIS ISSUE, IT IS ABUNDANTLY CLEAR THAT GAIN ON ACCOUNT OF EXCH ANGE RATE FLUCTUATION IS INTEGRAL PART OF EXPORT TURNOVER AND PROFIT DERIVED FROM THE INDUSTRIAL UNDERTAKING. THE AO WAS NOT JUSTIFIED TO TREAT THE SAME AS A KIND OF WIND FALL. THE ADDITION OF RS.11,83,478/- MADE BY THE AO BY DISALLOWING THE CLAIM OF DEDUCTION UNDER SECTION 10B ON ACCOUNT OF EXCHANGE RATE FLUCTUATION IS, THEREFORE, DELETED. THIS GROUND OF APPEAL IS ALLOWED. 6.1. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIR MITY IN THE FINDINGS OF THE CIT(A), AS THE SAME ARE BASED ON PROPER APPREC IATION OF THE LEGAL AND FACTUAL POSITION OF THE CASE. ACCORDINGLY, THIS GRO UND OF APPEAL OF THE REVENUE IS DISMISSED. 7. IN THE SECOND GROUND, THE REVENUE CONTENDED THAT THE LD. CIT(A) ERRED IN REDUCING ADDITION TO THE EXTENT OF RS.4,6 0,174/- AS AGAINST THE ADDITION OF RS.11,53,180/- MADE BY THE A.O. ON ACCO UNT OF ESTIMATED SALE OF SCRAP. THE BRIEF AND NEAT FACTS OF THE CASE, AS CUL LED OUT, FROM THE RELEVANT RECORDS ARE THAT THE ASSESSEE VIDE QUESTIONNAIRE DA TED 31.10.2008 WAS REQUESTED TO FURNISH DETAILS OF MANUFACTURING PROCE SS WITH VARIOUS STAGES OF MANUFACTURING, CONSUMPTION OF RAW MATERIALS AND PRO DUCTION OF FINISHED GOODS TOGETHER WITH YIELD AND SCRAP GENERATED AT VA RIOUS STAGES OF MANUFACTURING PROCESSES AS WELL AS THE DETAILS OF O PENING AND CLOSING STOCK WITH METHOD OF VALUATION. THE APPELLANT, INSTEAD OF SUBMITTING SUCH DETAILS, PREFERRED TO SUBMIT THAT VIDE VARIETY OF ITEMS WITH VARIED SPECIFICATIONS AND 6 DESIGNS ARE MANUFACTURED AND IT WAS NOT FEASIBLE TO FIND OUT QUANTUM OF RAW MATERIAL CONSUMED IN EACH ITEM OF FINAL PRODUCT. TH E ASSESSEE SUBMITTED A VAGUE REPLY THAT THE SCRAP GENERATE IS EITHER RECYC LED OR HELD IN STOCK FOR DOMESTIC CLEARANCE. THE ASSESSEE CONSISTENTLY REFUS ED TO FURNISH THE DETAILS OF MONTHLY CONSUMPTION AND PRODUCTION. IN NUTSHELL, THE ISSUE OF GENERATION OF SCRAP IN THE MANUFACTURING PROCESS REMAINED UNVE RIFIED. THE AO CONSIDERED THE ISSUE IN DISPUTE FROM ALL ASPECTS AN D MADE AN ADDITION OF RS.11,53,180/- ON ACCOUNT OF ESTIMATED SALE OF SCRA P. ON APPEAL, THE LD. CIT(A), DELETED THE ADDITION MADE BY THE A.O. NOW A GGRIEVED WITH THE ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFOR E THIS BENCH. 8. THE LD. DR RELIED ON THE ORDER OF THE ASSESSIN G OFFICER. 9. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, RELIED ON THE ORDER OF THE CIT(A) AND REITERATED THE SUBMISSIONS MADE BEFORE HIM. 10. WE HAVE PERUSED AND CONSIDERED THE RIVAL SUBMIS SIONS, EXAMINED THE FACTS OF THE CASE, EVIDENCE AND MATERIAL PLACED ON RECORD AND ALSO GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. A CARE FUL PERUSAL OF THE IMPUGNED APPELLATE ORDER DATED 13.01.2010, CLEARLY REVEALS THAT THE LD. CIT(A), HAS CONSIDERED AND ADJUDICATED THE ISSUE, I N QUESTION, IN GREATER DETAIL, AFTER APPRECIATION OF THE EVIDENCES AND MAT ERIAL ON RECORD, AS ALSO THE LEGAL AND FACTUAL POSITION OF THE CASE. NEEDLESS TO SAY THAT THE IMPUGNED APPELLATE ORDER IS WELL REASONED AND BASED ON THE C OGENT AND CREDIBLE MATERIAL AND FACTS OF THE CASE. HOWEVER, IT WOULD P ERTINENT TO REPRODUCE ONLY THE CONCLUSIVE PART OF THE DECISION OF THE CIT (A), FOR THE PURPOSE OF PROPER APPRECIATION OF THE SAME: 7 THE APPELLANT HAS RELIED ON THE DECISION OF HONB LE DELHI ITAT IN THE CASE OF CLAAS INDIA LTD. (119 TTJ (DEL) 173) WH EREIN IT HAS BEEN HELD THAT THE SCRAP GENERATED, IF SOLD, GOES TO RE DUCE THE COST OF MATERIAL CONSUMED IN THE MANUFACTURING PROCESS, THE EXPORT PROFIT THUS REMAINING THE SAME. HOWEVER, IN SEVERAL JUDGME NTS DISCUSSED BELOW, THE SCRAP HAS BEEN HELD TO BE PART OF PROFIT AND PART OF TOTAL TURNOVER. IN THE CASE OF FENNER (INDIA) LTD., HONB LE MADRAS HIGH COURT ( 241 ITR 803) HAS HELD THAT INCOME FROM SALE OF SCRAP GENERATED DURING THE COURSE OF MANUFACTURE IS CONSI DERED TO BE PART OF PROFITS ELIGIBLE TO DEDUCTION. THE SCRAP HAS DIREC T LINK AND NEXUS WITH THE INDUSTRIAL UNDERTAKING. THE HONBLE MADRAS HIGH COURT IN THE CASE OF SUNDARAM INDSTRIES LTD. (253 ITR 396) HELD THAT THE PROFIT FROM THE SALE OF SCRAP MATERIALS IS ELIGIBLE FOR DE DUCTION U/S 80HH. SIMILARLY, HONBLE ITAT, DELHI H BENCH IN THE CAS E OF SONY INDIA (P) LTD (118 TTJ 865) HAS HELD THAT SALE OF SCRAP R EPRESENTS ITS OPERATIONAL INCOME BEING DIRECTLY RELATED TO THE DO MINANT BUSINESS OF THE ASSESSE COMPANY AND ELIGIBLE FOR DEDUCTION U/S 80HHC. IN THE CASE OF BIOLTECH MEDICALS PVT. LTD; HONBLE ITAT HY DERABAD (119 ITD 143) HAS HELD THAT RECEIPT FROM SALE OF SCRAP G ENERATED DURING MANUFACTURING ACTIVITY IS PROFIT DERIVED FROM INDUS TRIAL UNDERTAKING ELIGIBLE FOR RELIEF U/S 80IB/80HH. THE BANGALORE TR IBUNAL IN THE CASE OF MOTOROLA INDIA ELECTRONICS PVT. LTD. (295 ITR (A T) 376) HELD THAT ENTIRE PROFITS DERIVED FROM THE BUSINESS OF UNDERTA KING SHOULD BE TAKEN INTO CONSIDERATION WHILE COMPUTING THE ELIGIB LE DEDUCTION U/S 10A/10B OF THE ACT BY APPLYING THE MANDATORY FORMUL A LAID DOWN IN SUB-SECTION (4). THUS, THE SALE OF SCRAP ESTIMATED BY THE AO IS CONSIDERED AS PART OF TOTAL TURNOVER AND PART OF PR OFIT OF INDUSTRIAL UNDERTAKING. ON SUCH CONSIDERATION, THE DISALLOWANC E OF DEDUCTION ON ACCOUNT OF ESTIMATE DOMESTIC SALE OF SCRAP WORKS OU T TO RS.4,60,174/- AS UNDER IN VIEW OF THE CLEAR PROVISIONS OF SUB SEC TION (4) OF SECTION 10B OF THE ACT. INCREASED PROFIT AFTER INCLUSION OF ESTIMATE SALE O F SCRAP: RS.4,53,24,369/- + RS.11,53,180/- + RS.4,64,77,549/ - INCREASED TURNOVER AFTER INCLUSION OF ESTIMATED SAL E OF SCRAP: RS.11,53,18,007/- + RS.11,53,180/- + RS.11,64,71,18 7/- PROFIT DERIVED FROM EXPORT+ PROFIT X EXPORT TURN O VER TOTAL TURNOVER RS.4,64.77.549/- X RS.11,53,18,007/- 8 RS.11,64,71,187 RS.4,60,17,735/- THEREFORE, THE ADDITION TO THE EXTENT OF RS.4,60,17 4/-, WOULD BE REQUIRED TO BE MADE AS AGAINST THE ADDITION OF RS.1 1,53,180/- MADE ON ACCOUNT OF ESTIMATE SALE OF SCRAP. THE BALANCE ADDI TION STANDS DELETED. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 10.1. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFI RMITY IN THE FINDINGS OF THE CIT(A), AS THE SAME ARE BASED ON PROPER APPREC IATION OF THE LEGAL AND FACTUAL POSITION OF THE CASE. ACCORDINGLY, THIS GRO UND OF APPEAL OF THE REVENUE IS DISMISSED. 11. NOW, WE TAKE UP APPEAL FILED BY THE ASSESSEE, W HERE THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER PASSED BY THE LD. A.O. IS ILLEGA L, ARBITRARY AND CONTRARY TO THE FACTS AND WORTHY CIT(A) HAS ERRED I N PARTIALLY CONFIRMING THE SAME. 2. THAT THE LD. AO HAD ERRED ON FACTS AND IN LAW IN MAKING AN ADDITION OF RS.11,53,180/- ALLEGEDLY FOR SALE OF SC RAP OUTSIDE THE BOOKS OF ACCOUNTS AND THE WORTHY CIT(A) HAS SI MILARLY ERRED IN UPHOLDING THAT QUANTUM OF ADDITION AS SALE OUTSIDE BOOKS OF ACCOUNTS, BUT RESTRICTING THE ADDITION TO RS.4,60,174/- KEEPING IN VIEW THE CLEAR PROVISIONS OF SUB-SECTION (4) OF SECTION 10B OF THE ACT. THE ADDITION CONFIRMED OF RS.460174 /- REQUIRES TO BE DELETED. 3. THAT THE LD. AO HAS FAILED TO DISCHARGE ANY ONUS TOWARDS, SALE OF SCRAP OUTSIDE BOOKS OF ACCOUNTS IN FACE OF DECIS ION OF JURISDICTIONAL HIGH COURT IN OUR FAVOUR AND THE WOR THY CIT(A) HAS ERRED IN CONFIRMING THIS ACTION OF THE A.O. 4. THAT THE A.O. HAS ERRED ON FACTS AND IN LAW IN L OSING SIGHT OF THE FACT THAT STATUTORY RECORDS UNDER CENTRAL EXCISE AC T ARE REQUIRED TO BE MAINTAINED AND THESE ARE PERIODICALLY CHECKED BY THE 9 EXCISE DEPTT. AND THERE WAS NO SALE RECORDED IN SAI D RECORDS AND THE WORTHY CIT(A) HAS SIMILARLY ERRED IN CONCURRING WITH THE SAID ACTION OF LD. AO 12. GROUND NO.1 IS GENERAL IN NATURE AND NEEDS NO A DJUDICATION, HENCE, THE SAME IS DISMISSED. 13. GROUND NOS. 2, 3,& 4 RAISED BY THE ASSESSEE ARE INER-LINKED AND RELATE TO CONFIRMATION OF ADDITION OF RS.4,60,174/- OUT OF THE TOTAL ADDITION OF RS.11,53,180/-. 14. THE FACTS OF THIS GROUND HAS ALREADY BEEN DISCU SSED ABOVE WHILE DECIDING THE APPEAL OF THE REVENUE. IN THE COURSE O F PRESENT APPELLATE PROCEEDINGS, THE LD. COUNSEL HAS TAKEN A STAND THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION TO THE TUNE OF RS.4,60,174/- FOR SALE OF SCRAP OUTSIDE THE BOOKS OF ACCOUNT. 15. THE LD. DR, ON THE OTHER HAND, RELIED ON T HE ORDER OF THE CIT(A). 16. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CO NSIDERED THE RIVAL SUBMISSIONS WITH REFERENCE TO FACTS, EVIDENCE AND M ATERIAL PLACED ON RECORD. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, THE ASSESSEE WAS SPECIFICALLY ASKED TO FILE DETAILS OF CLOSING STOCK. HOWEVER, THE ASSESSEE HAS EXPRESSED ITS INABILITY REGARDING AVAILABILITY OF SUCH DETAIL S. IN VIEW OF THIS, THE CONTENTION OF THE ASSESSEE, CANNOT BE APPRECIATED, IN THE ABSENCE OF SUCH DETAILS. HOWEVER, IN ORDER TO MEET ENDS OF NATURAL JUSTICE, THE ADDITION IS 10 RESTRICTED TO RS. 3 LACS INSTEAD OF RS.4,60,174/-. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 17. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 10TH JUNE, 2011. SD/- SD/- (H.L. KARWA) (MEHAR SINGH) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 10TH JUNE, 2011 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE:M/S. CHAND ENGINEERING , AMRITSAR. 2. THE DCIT, CIRCLE IV, ASR. 3. THE CIT(A), AMRITSAR. 4. THE CIT,AMRITSAR 5. THE SR DR, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH : AMRITSAR.