D.C.I.T Cir - 3,Asansol, Asansol V. M/s Sparsh Agro - Pro (P) Ltd., Raniganj

ITA 16/KOL/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0492 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 03-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PINAKI MUKHERJEE
• Assessee Lawyers: S M SURANA
• Keywords: Non-deduction of tax; Revenue expenditure; Capital expenditure

Judgement Text

I.T.A. NO . 16 / KOL ./20 1 3 ASSESSMENT YEAR: 200 8 - 200 9 PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.K. BANSAL , ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH , JUDICIAL MEMBER I.T.A. NO. 16 / KOL / 20 1 3 ASSESSMENT YEAR : 200 8 - 20 0 9 DEPUTY COMMISSIONER OF INCOME TAX, ............. .. . .. .APP ELL ANT CIRCLE - 3 , ASANSOL , PARMAR BUILDING, 54, G.T. ROAD (WEST), ASANSOL - 713 304 - VS. - M/S. SPARSH AGRO - PRO (P) LIMITED, . ....... ... . RESPONDENT 240, P.N. MALIA ROAD, RANIGANJ - 713 347, DISTRICT - BURDWAN [PAN : A AJCS 2982 H ] APPEARANCES BY : SHRI P INAKI MUKHERJEE , J CIT, SR. D.R., FOR THE DEPARTMENT SHRI S. M. SURANA , ADVOCATE , FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : MAY 27 , 2 01 5 DATE OF PRONOUNCING THE ORDER : JUNE 09 , 201 5 O R D E R PER P.K. BANSAL : THIS A PPEAL HA S BEEN FILED BY THE REVENU E AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) , ASANSOL D ATED 1 2 . 10 .20 1 2 FOR THE ASSESSMENT YEAR 200 8 - 0 9 BY TAKING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: - ( 1 ) THAT THE LD. CIT(A), ASANSOL HAS ERRED IN LAW AND ON FACTS B Y ALLOWING THE RELIEF OF RS.90,000/ - DISALLOWED BY THE ASSESSING OFFICER UNDER SECTION 40(A)(IA) FOR FAILURE TO DEDUCT TAX AS REQUIRED UNDER SECTION 194C. ( 2 ) THAT THE LD. CIT(A), ASANSOL HAS ERRED IN LAW AND ON FACTS BY ALLOWING THE RELIEF OF RS.94,741/ - , DI SALLOWED BY THE ASSESSING OFFICER ON ACCOUNT OF ROC EXPENSES TREATING AS CAPITAL EXPENDITURE WHICH LED TO THE INCREASE IN AUTHORIZED CAPITAL. I.T.A. NO . 16 / KOL ./20 1 3 ASSESSMENT YEAR: 200 8 - 200 9 PAGE 2 OF 9 ( 3 ) THAT THE LD. CIT(A), ASANSOL HAS ERRED IN LAW AND ON FACTS BY ALLOWING THE RELIEF OF RS.69,826/ - , DISALLOWED BY T HE ASSESSING OFFICER ON ACCOUNT OF TREATING THE AMOUNT AS CAPITAL EXPENDITURE DEBITED IN PROFIT & LOSS A/C. ( 4 ) THAT THE LD. CIT(A), ASANSOL HAS ERRED IN LAW AND ON FACTS BY ALLOWING THE RELIEF OF RS.75,00,000/ - DISALLOWED BY THE ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE IN CLOSING STOCK BETWEEN AUDITED BALANCE SHEET AND STOCK SHOWN IN INSURANCE POLICY CERTIFIED BY BANK. 2. GROUND NO. 1 IN TH IS APPEAL RELATES TO THE DELETION OF ADDITION OF RS.90,000/ - . BRIEF FACTS RELATING TO THIS GROUND ARE THAT THE ASSESSI NG OFFICER NOTED THAT THE ASSESSEE HAS NOT DEDUCTED ANY TAX IN RESPECT OF PAYMENT OF RS.90,000/ - ON WHICH TDS WAS DEDUCTIBLE. HE, THEREFORE, DISALLOWED THE SAID SUM UNDER SECTION 40(A)(IA) OF THE ACT. WHEN THE MATTER WENT IN APPEAL BEFORE THE CIT(APPEALS), CIT(APPEALS) DELETED THE DISALLOWANCE FOLLOWING THE DECISION DATED 29.03.2012 OF ITAT, SPECIAL BENCH, VISHAKHAPATNAM IN THE CASE OF MERILYN SHIPPING & TRANSPORT LIMITED IN ITA NO. 477/VIZAG./2008, WHEREIN IT WAS HELD THAT THE DISALLOWANCE UNDER SECTION 40 (A)(IA) CAN BE MADE ONLY IN RESPECT TO THE EXPENDITURE WHICH IS PAYABLE AS ON 31 ST MARCH OF THE YEAR. 3. AFTER HEARING THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERING THE SAME WE NOTED THAT THE DECISION OF ITAT, SPECIAL BENCH, VISHAKHAPATNAM, DATED 29.03 .2012 OF MERILYN SHIPPING & TRANSPORT LIMITED REPORTED IN 16 ITR (TRIBUNAL) 1, BUT THE SAID DECISION HAS NOT BEEN APPROVED BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CRESCENT EXPORTS SYNDICATE IN ITA NO. 23 OF 2013. THE HON BLE HIGH COURT TOOK THE FOLLOWING VIEW: - BEFORE DEALING WITH THE SUBMISSIONS OF THE LEARNED COUNSEL APPEARING FOR THE ASSESSEES IN BOTH THE APPEALS WE HAVE TO EXAMINE THE CORRECTNESS OF THE MAJORITY VIEWS IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS . WE ALREADY HAVE QUOTED EXTENSIVELY BOTH THE MAJORITY AND THE MINORITY VIEWS EXPRESSED IN THE AFORESAID CASE. THE MAIN THRUST OF THE MAJORITY VIEW IS BASED ON THE I.T.A. NO . 16 / KOL ./20 1 3 ASSESSMENT YEAR: 200 8 - 200 9 PAGE 3 OF 9 FACT THAT THE LEGISLATURE HAS REPLACED THE EXPRESSION AMOUNTS CREDITED OR PAID WITH THE EXPRESSION PAYABLE IN THE FINAL ENACTMENT. COMPARISON BETWEEN THE PRE - AMENDMENT AND POST AMENDMENT LAW IS PERMISSIBLE FOR THE PURPOSE OF ASCERTAINING THE MISCHIEF SOUGHT TO BE REMEDIED OR THE OBJECT SOUGHT TO BE ACHIEVED BY AN AMENDMENT. THIS IS PRECISELY WHAT WAS DONE B Y THE APEX COURT IN THE CASE OF CIT VS. KELVINATOR REPORTED IN 2010(2) SCC 723. BUT THE SAME COMPARISON BETWEEN THE DRAFT AND THE ENACTED LAW IS NOT PERMISSIBLE. NOR CAN THE DRAFT OR THE BILL BE USED FOR THE PURPOSE OF REGULATING THE MEANING AND PURPORT OF THE ENACTED LAW. IT IS THE FINALLY ENACTED LAW WHICH IS THE WILL OF THE LEGISLATURE. THE LEARNED TRIBUNAL FELL INTO AN ERROR IN NOT REALIZING THIS ASPECT OF THE MATTER. THE LEARNED TRIBUNAL HELD THAT WHERE LANGUAGE IS CLEAR THE INTENTION OF THE LEGIS LATURE IS TO BE GATHERED FROM THE LANGUAGE USED . HAVING HELD SO, IT WAS NOT OPEN TO SEEK TO INTERPRET THE SECTION ON THE BASIS OF ANY COMPARISON BETWEEN THE DRAFT AND THE SECTION ACTUALLY ENACTED NOR WAS IT OPEN TO SPECULATE AS TO THE EFFECT OF THE SO - CAL LED REPRESENTATIONS MADE BY THE PROFESSIONAL BODIES. THE LEARNED TRIBUNAL HELD THAT SECTION 40(A)(IA) OF THE ACT CREATES A LEGAL FICTION BY VIRTUE OF WHICH EVEN THE GENUINE AND ADMISSIBLE EXPENSES CLAIMED BY AN ASSESSEE UNDER THE HEAD INCOME FROM BUSIN ESS AND PROFESSION : IF THE ASSESSEE DOES NOT DEDUCT TDS ON SUCH EXPENSES ARE DISALLOWED . HAVING HELD SO WAS IT OPEN TO THE TRIBUNAL TO SEEK TO JUSTIFY THAT THIS FICTION CANNOT BE EXTENDED ANY FURTHER AND, THEREFORE, CANNOT BE INVOKED BY ASSESSING OFFI CER TO DISALLOW THE GENUINE AND REASONABLE EXPENDITURE ON THE AMOUNTS OF EXPENDITURE ALREADY PAID ? DOES THIS NOT AMOUNT TO DELIBERATELY READING SOMETHING IN THE LAW WHICH IS NOT THERE? WE, AS SUCH, HAVE NO DOUBT IN OUR MIND THAT THE LEARNED TRIBUNAL REA LIZED THE MEANING AND PURPORT OF SECTION 40(A)(IA) CORRECTLY WHEN IT HELD THAT IN CASE OF OMISSION TO DEDUCT TAX EVEN THE GENUINE AND ADMISSIBLE EXPENSES ARE TO BE DISALLOWED. BUT THEY SOUGHT TO REMOVE THE RIGOUR OF THE LAW BY HOLDING THAT THE DISALLOWANCE SHALL BE RESTRICTED TO THE MONEY WHICH IS YET TO BE PAID. WHAT THE TRIBUNAL BY MAJORITY DID WAS TO SUPPLY THE CASUS OMISSUS WHICH WAS NOT PERMISSIBLE AND COULD ONLY HAVE BEEN DONE BY THE SUPREME COURT IN AN APPROPRIATE CASE. REFERENCE IN THIS REGARD MAY B E MADE TO THE JUDGMENT IN THE CASE OF BHUWALKA STEEL INDUSTRIES VS. BOMBAY IRON & STEEL LABOUR BOARD REPORTED IN 2010(2) SCC 273. I.T.A. NO . 16 / KOL ./20 1 3 ASSESSMENT YEAR: 200 8 - 200 9 PAGE 4 OF 9 UNPROTECTED WORKER WAS FINALLY DEFINED IN SECTION 2(11) OF THE MATHADI ACT AS FOLLOWS: - UNPROTECTED WORKER MEANS A MA NUAL WORKER WHO IS ENGAGED OR TO BE ENGAGED IN ANY SCHEDULED EMPLOYMENT. THE CONTENTION RAISED WITH REFERENCE TO WHAT WAS THERE IN THE BILL WAS REJECTED BY THE SUPREME COURT BY HOLDING AS FOLLOWS: IT MUST, AT THIS JUNCTURE, BE NOTED THAT IN SPITE OF SECTION 2(11), WHICH INCLUDED THE WORDS BUT FOR THE PROVISIONS OF THIS ACT IS NOT ADEQUATELY PROTECTED BY LEGISLATION FOR WELFARE AND BENEFITS OF THE LABOUR FORCE IN THE STATE , THESE PRECISE WORDS WERE REMOVED BY THE LEGISLATURE AND THE DEFINITION WAS MA DE LIMITED AS IT HAS BEEN FINALLY LEGISLATED UPON. IT IS TO BE NOTED THAT WHEN THE BILL CAME TO BE PASSED AND RECEIVED THE ASSENT OF THE VICE - PRESIDENT ON 05 - 06 - 1969 AND WAS FIRST PUBLISHED IN THE MAHARASHTRA GOVERNMENT GAZETTE EXTRAORDINARY, PART IV ON 13 - 06 - 1969, THE AFOREMENTIONED WORDS WERE OMITTED. THEREFORE, THIS WOULD BE A CLEAR POINTER TO THE LEGISLATIVE INTENT THAT THE LEGISLATURE BEING CONSCIOUS OF THE FACT AND BEING ARMED WITH ALL THE COMMITTEE REPORTS AND ALSO BEING ARMED WITH THE FACTUAL DATA, DELIBERATELY AVOIDED THOSE WORDS. WHAT THE APPELLANTS ARE ASKING WAS TO READ IN THAT DEFINITION, THESE PRECISE WORDS, WHICH WERE CONSCIOUSLY AND DELIBERATELY OMITTED FROM THE DEFINITION. THAT WOULD AMOUNT TO SUPPLYING THE CASUS OMISSUS AND WE DO NOT THINK THAT IT IS POSSIBLE, PARTICULARLY, IN THIS CASE. THE LAW OF SUPPLYING THE CASUS OMISSUS BY THE COURTS IS EXTREMELY CLEAR AND SETTLED THAT THOUGH THIS COURT MAY SUPPLY THE CASUS OMISSUS, IT WOULD BE IN THE RAREST OF THE RATE CASE AND THUS SUPPLYING OF THIS CASUS OMISSUS WOULD BE EXTREMELY NECESSARY DUE TO THE INADVERTENT OMISSION ON THE PART OF THE LEGISLATURE. BUT, THAT IS CERTAINLY NOT THE CASE HERE. WE SHALL NOW ENDEAVOUR TO SHOW THAT NO OTHER INTERPRETATION IS POSSIBLE. THE KEY WORDS USED IN SECTION 40(A)(IA), ACCORDING TO US, ARE ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B . IF THE QUESTION IS WHICH EXPENSES ARE SOUGHT TO BE DISALLOWED? THE ANSWER IS BOUND TO BE THOSE EXPENSES ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B. ONCE THIS IS REALIZED NOTHING TURNS ON THE BASIS OF THE FACT THAT THE LEGISLATURE USED THE WORD PAYABLE AND NOT PAID OR CREDITED . UNLESS ANY AMOUNT IS PAYABLE, IT CAN NEITHER BE PAID NOR CREDITED. IF A N AMOUNT HAS NEITHER BEEN PAID NOR CREDITED, THE RE CAN BE NO OCCASION FOR CLAIMING ANY DEDUCTION. THE LANGUAGE USED IN THE DRAFT WAS UNCLEAR AND SUSCEPTIBLE TO GIVING MORE THAN ONE MEANING. BY LOOKING AT THE DRAFT IT COULD BE SAID THAT THE LEGISLATURE WANTED TO TREAT THE PAYMENTS MADE OR CREDITED IN F AVOUR OF A CONTRACTOR O R SUB - CONTRACTOR DIFFERENTLY THAN THE PAYMENTS ON ACCOUNT OF INTEREST, COMMISSION OR BROKERAGE, FEES I.T.A. NO . 16 / KOL ./20 1 3 ASSESSMENT YEAR: 200 8 - 200 9 PAGE 5 OF 9 FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES BECAUSE THE WORDS AMOUNTS CREDITED OR PAID WERE USED ONLY IN RELATION TO A CONTRACTOR O R SUB - CONTRACTOR. THIS DIFFERENTIAL TREATMENT WAS NOT INTENDED. THEREFORE, THE LEGISLATURE PROVIDED THAT THE AMOUNTS, ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER XVII - B PAYABLE ON ACCOUNT OF INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FE ES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES OR TO A CONTRACTOR O R SUB - CONTRACTOR SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME OF AN ASSESSEE IN CASE HE HAS NOT DEDUCTED, OR AFTER DEDUCTION HAS NOT PAID WITHIN THE SPECIFIED TIME. THE LANGUA GE USED BY THE LEGISLATURE IN THE FINALLY ENACTED LAW IS CLEAR AND UNAMBIGUOUS WHEREAS THE LANGUAGE USED IN THE BILL WAS AMBIGUOUS. A FEW WORDS ARE NOW NECESSARY TO DEAL WITH THE SUBMISSION OF MR. BAGCHI AND MS. ROYCHOWDHURI. THERE CAN BE NO DENIAL THAT THE PROVISION IN QUESTION IS HARSH. BUT THAT IS NO GROUND TO READ THE SAME IN A MANNER WHICH WAS NOT INTENDED BY THE LEGISLATURE. THIS IS OUR ANSWER TO THE SUBMISSION OF MR. BAGCHI. THE SUBMISSION OF MR. ROYCHOWDHURI THAT THE SECOND PROVISO SOUGHT TO BECOM E EFFECTIVE FROM 1 ST APRIL, 2013 SHOULD BE HELD TO HAVE ALREADY BECOME OPERATIVE PRIOR TO THE APPOINTED DATE CANNOT ALSO BE ACCEDED TO FOR THE SAME REASON INDICATED ABOVE. THE LAW WAS DELIBERATELY MADE HARSH TO SECURE COMPLIANCE OF THE PROVISIONS REQUIRING DEDUCTIONS OF TAX AT SOURCE. IT IS NOT THE CASE OF AN INADVERTENT ERROR. FOR THE REASONS DISCUSSED ABOVE, WE ARE OF THE OPINION THAT THE MAJORITY VIEWS EXPRESSED IN THE CASE OF MERILYN SHIPPING & TRANSPORTS ARE NOT ACCEPTABLE. THE SUBMISSIONS ADVANCED BY LEARNED ADVOCATES HAVE ALREADY BEEN DEALT WITH AND REJECTED. SINCE THE HON BLE JURISDICTIONAL HIGH COURT DID NOT APPROVE THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING & TRANSPORT LTD VS. - ACIT, ON THE BASIS OF WHICH THE LD. CIT(APPEALS) HAS ALLOWED THE RELIEF TO THE ASSESSEE , W E, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) AND RESTORE THIS ISSUE TO THE FILE OF THE CIT(APPEALS) WITH A DIRECTION THAT THE LD. CIT(APPEALS) SHALL RE - DECIDE THE APPEAL OF THE ASSE SSEE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING PROPER AND SUFFICIENT OPPORTUNITY TO THE ASSESSEE. 4. GROUN D NO. 2 RELATES TO THE ALLOWANCE OF RELIEF OF RS.94,741/ - BY THE CIT(APPEALS). AFTER HEARING THE RIVAL SUBMISSIONS, WE NOTED THAT THE CIT(APPEALS) H AS NOT ALLOWED THE RELIEF TO THE ASSESSEE AMOUNTING TO RS.94,741/ - . BEFORE THE CIT(APPEALS), THE ASSESSEE SUBMITTED THAT THE I.T.A. NO . 16 / KOL ./20 1 3 ASSESSMENT YEAR: 200 8 - 200 9 PAGE 6 OF 9 ROC EXPENSES IS PART OF PRELIMINARY EXPENSES AND PRE - OPERATIVE EXPENSES AS MENTIONED IN SCHEDULE 8 AND ONLY 1/5 TH OF SUCH EXPENSES HAS BEEN CLAIMED AS DEDUCTION. CIT(APPEALS) RESTORED THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER MENTIONING THAT ASSESSING OFFICER WHILE GIVING EFFECT TO THIS ORDER WILL RE - CHECK THE AMOUNT ACTUALLY CLAIMED BY THE ASSESSEE AND GIVE CONSEQUENTIAL RELIEF . THIS GROUND OF APPEAL IS ALLOWED SUBJECT TO THE DIRECTIONS GIVEN ABOVE. 5. IN VIEW OF THIS FINDING OF CIT(APPEALS), IN OUR OPINION, THE GROUND TAKEN BY THE REVENUE IS MISCONCEIVED. WE ACCORDINGLY DISMISS THIS GROUND. 6. THE THIRD GROUND RELATES TO THE RELIEF GIVEN BY THE CIT(APPEALS) AMOUNTING TO RS.69,825/ - , WHICH WAS DISALLOWED BY THE ASSESSING OFFICER. 7. AFTER HEARING THE RIVAL SUBMISSIONS, WE NOTED THAT THESE EXPENSES HAVE BEEN INCURRED BY THE ASSESSEE AS INSPECTION, PROCESSING AND RATING CHARGES FOR OBTAINING BANK LOAN DURING THE COURSE OF BUSINESS. THESE EXPENSES BY NO STRETCH OF IMAGINATION CAN BE REGARDED TO THE CAPITAL EXPENDITURE. THE EXPENSES RELATE TO OBTAINING CASH CREDIT FACILITIES AND ARE OF RECURRING NATURE. WE, THEREFORE, DO NOT FIND A NY INFIRMITY OR ILLEGALITY IN THE ORDER OF CIT(APPEALS) TREATING THIS EXPENDITURE TO BE THE REVENUE EXPENDITURE AND ALLOWING THE RELIEF TO THE ASSESSEE. WE ACCORDINGLY CONFIRM THE ORDER OF CIT(APPEALS) ON THIS GROUND. THUS THIS GROUND STANDS DISMISSED. 8. GROUND NO. 4 RELATES TO THE ALLOWING RELIEF TO THE ASSESSEE OF A SUM OF RS.75,00,000/ - DISALLOWED BY THE ASSESSING OFFICER. 9. AFTER HEARING THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERING THE SAME, WE NOTED THAT THE ASSESSING OFFICER NOTED THAT THE ASS ESSEE HAS DEBITED A SUM OF RS.1,05,729/ - UNDER THE HEAD INSURANCE . ON EXAMINATION OF THE INSURANCE PROPOSAL IT WAS NOTICED BY THE ASSESSING I.T.A. NO . 16 / KOL ./20 1 3 ASSESSMENT YEAR: 200 8 - 200 9 PAGE 7 OF 9 O FFICER THAT THERE IS MATERIAL IN GODOWN FOR RS.1,25,00,000/ - . THERE WAS ANOTHER POLICY FOR BUILDING OF RS.15,00,0 00/ - , AND STOCK/CONTENTS OF RS.40,00,000/ - , PLANT AND MACHINERY FOR RS.32,00,000/ - , SPARE FOR MACHINERY AND SPARE ELECTRIC MOTOR FOR RS.3,00,000/ - AND ELECTRICAL INSTALLATION/ELECTRICAL EQUIPMENT FOR RS.5,00,000/ - . THE ASSESSING OFFICER NOTED THAT THE ASSE SSEE HAS SHOWN STOCK IN ITS AUDITED BALANCE SHEET AS ON 31.03.2008 AT RS.74,09,486/ - . THE ASSESSING OFFICER, THEREFORE, NOTED THAT THE AVERAGE BY APPLYING THE AVERAGE RATE OF PURCHASE, THE VALUE OF CLOSING STOCK WAS ALMOST THE SAME, I.E. RS.75,00,000/ - APP ROX. THE DIFFERENCE BETWEEN THE INSURANCE VALUE AND THE STOCK SHOWN BY THE ASSESSEE IS THE SAME AND THE ASSESSING OFFICER TREATED THE SAME AS UNDISCLOSED STOCK AND MADE THE ADDITION OF RS.75,00,000/ - . 10. WHEN THE MATTER WENT BEFORE THE CIT(APPEALS), LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE HAS TAKEN THE INSURANCE POLICY FOR RS.1.25 CRORES WHILE THE STOCK AS PER THE BOOKS WERE RS.75 LAKHS. THE DIFFERENCE WAS RS.50,00,000/ - BY MISTAKE. THE ASSESSING OFFICER HAS WORKED OUT THE SAME AT RS.7 5,00,000/ - , IN FACT, HE MADE AN ADDITION OF RS.50,00,000/ - . CIT(APPEALS) AFTER HEARING THE SUBMISSIONS OF THE ASSESSEE AND AFTER NOTING THAT THE INSURANCE POLICY WAS TAKEN ON 12.02.2008 TOOK THE VIEW T HAT THE ASSESSEE WAS NOT HAVING STOCK FOR WHICH THE IN SURANCE POLICY HAS BEEN TAKEN AND, THEREFORE, HE DELETED THE ADDITION BY OBSERVING AS UNDER: - AS STATED ABOVE, THE AO HAS RELIED ON THE CASE OF DHANSI RAM AGARWAL 201 ITR 192 (SUPREME COURT0 BUT THE FACTS OF THE APPELLANT S CASE ARE ENTIRELY DIFFERENT. TH E AO IS SEEN TO CONCLUDE THAT THE APPELLANT HAS SUBMITTED FALSE DETAILS OF ITS STOCK AS ON 31.03.2008 TO THE BANK. NO EVIDENCE TO SUPPORT THIS CONCLUSION HAS BEEN BROUGHT TON RECORD BY THE AO. IF THE AO HAD DOUBTS REGARDING THE APPELLANT S STATEMENTS TO TH E BANK, I DO NOT SEE WHAT PREVENTED HIM FROM MAKING DIRECT ENQUIRIES AND FINDING OUT WHAT DETAILS OF FINISHED GOODS, AS ON 31.03.2008 HAS BEEN SUBMITTED TO THE BANK. NO SUCH ENQUIRY IS EVIDENT ON RECORD. THE IMPLICATIONS DRAWN BY THE AO FAIL IN THE FACE OF THE FAILURE TO CONDUCT SUCH ENQUIRIES. IT IS NOTED THAT THE AO HAD WRITTEN A LETTER TO THE BANK WHICH WAS NOT REPLIED TO BEFORE THE PASSING OF THE ORDER. IN THAT EVENT, ENQUIRIES I.T.A. NO . 16 / KOL ./20 1 3 ASSESSMENT YEAR: 200 8 - 200 9 PAGE 8 OF 9 COULD HAVE BEEN CONDUCTED THROUGH AN INSPECTOR OR SUMMONS TO THE BANK MANAGE R COULD HAVE BEEN ISSUED. TO DRAWN SURMISES WITHOUT MAKING ANY ENQUIRIES CANNOT BE HELD TO BE JUSTIFIABLE. THE DECISION RELIED ON BY THE AO IS THEREFORE, NOT SEEN TO BE APPLICABLE TO THE FACTS OF THE CASE. AS ALREADY STATED ABOVE, THE AO HAS HELD, INTER A LIA, THAT THE APPELLANT HAS SUBMITTED FALSE DETAILS OF ITS STOCK OF FINISHED GOODS TO THE BANK AS ON 31.03.2008 TO ENABLE IT TO CERTIFY THE SAME BEFORE THE INSURER. HOWEVER, SINCE THE INSURANCE POLICY WAS TAKEN OUT ON 12.02.2008 NO QUESTION OF SUBMISSION O F SUCH DETAILS CAN ARISE. THEREFORE, IT IS CLEAR THAT THE INSURANCE POLICY, TAKEN ON 12.02.2008, HAS ESTIMATED THE VALUE OF STOCK TO BE INSURED. IN THAT CASE, THE CONCLUSION DRAWN BY THE AO CANNOT BE SAID TO BE JUSTIFIED AS PER FACTS ON RECORD. KEEPING IN VIEW THE FACTS DISCUSSED ABOVE, I DIRECT THE DELETION OF THIS ADDITION. THIS GROUND OF APPEAL IS ALLOWED . 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDER OF TAX AUTHORITIES BELOW. IN OUR OPINION, NO INTERFER ENCE IS CALLED FOR IN THE ORDER OF CIT(APPEALS). THE ASSESSEE HELD THE INSURANCE OF THE STOCK OF RS.1.25 CRORES, BUT IT DOES NOT MEAN THAT THE ASSESSEE WAS HAVING THE SAID STOCK IN ITS BOOKS OF ACCOUNTS. EVEN OTHERWISE, THE STOCK POLICY HAS BEEN TAKEN ON 12.02.2008 WHILE T HE VALUE OF STOCK IN THE BALANCE SHEET HAS TO BE TAKEN AT THE END OF THE YEAR, I.E. 31.03.2008 IN THE IMPUGNED CASE. THE BASIC PRESUMPTION MADE BY THE ASSESSING OFFICER IS INCORRECT WHILE MAKING THE ADDITION ON THE BASIS OF DIFFERENCE IN THE STOCK AS TAKE N IN THE BOOKS OF ACCOUNTS. WE ACCORDINGLY CONFIRM THE ORDER OF CIT(APPEALS). THUS THIS GROUND STANDS DISMISSED. 12 . IN THE RESULT, THE APPEAL FILED BY THE REVENU E IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH JUNE , 201 5 . SD/ - SD/ - MAHAVIR SINGH P.K. BANSAL ( JUDICIAL MEMBER) ( ACCOUNTANT MEMBER) KOLKATA, THE 9 TH D AY OF JUNE , 201 5 I.T.A. NO . 16 / KOL ./20 1 3 ASSESSMENT YEAR: 200 8 - 200 9 PAGE 9 OF 9 COPIES TO : (1) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 3, ASANSOL, PARMAR BUILDING , 54, G.T. ROAD (WEST), ASANSOL - 713 304 (2) M/S. SPARSH AGRO - PRO (P) LIMITED, 240, P.N. MALIA ROAD, RANIGANJ - 713 347, DISTRICT - BURDWAN (3) COMMISSIONER OF INCOME - TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX ( 5 ) THE DEPARTMENTAL REPRESENT ATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA B ENCHES, KOLKATA LAHA/SR. P.S .