ITO Wd 3(2), Kolkata, Kolkata V. M/S S.G.Foundry & Rolling Mills (p) Ltd, Kolkata

ITA 1646/KOL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3079 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2013
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 09-11-2012
• Court: TRIBUNAL
• Department Lawyers: L K S DEHIYA
• Assessee Lawyers: A MUKHERJEE

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , KOLKATA [ () . .. . . .. . , ,, , , !' #! $'# #! $'# #! $'# #! $'#, ,, , ] ]] ] [BEFORE HONBLE SRI K.K.GUPTA, AM & HONBLE SRI MAHAVIR SINGH, JM] '& '& '& '& /ITA NO.1646/KOL/2012 $'( !)*/ ASSESSMENT YEAR : 2008-09 (,- / APPELLANT ) - !' - ( /0,- /RESPONDENT) I.T.O., WARD-3(2), . M/S. S.G.FOUNDRYS ROLLING MI LLS(P)LTD. KOLKATA -VERSUS- KOLKATA (PAN: AADCS 7889 M) ,- 1 2 / FOR THE APPELLANT SHRI L.K.S.DEHIYA, SR.DR /0,- 1 2 / FOR THE RESPONDENT SHRI A.MUKHERJEE '!3 1 4 /DATE OF HEARING : 18.04.2013 5) 1 4 /DATE OF PRONOUNCEMENT : 19.04.2013. 6 / ORDER PER SHRI K.K.GUPTA, AM THE REVENUE IS IN APPEAL HAVE RAISED THE SOLE ISSU E THAT THE ADDITIONS MADE BY THE AO HAVE BEEN DELETED BY THE LD. CIT(A) ACCEPTIN G FRESH EVIDENCES IN VIOLATION TO RULE 46A OF IT RULES, 1962. 2. THE LD. DR INITIATING HIS ARGUMENTS SUBMITTED T HAT THE ASSESSEE COMPANY FILED ITS RETURN DECLARING TOTAL INCOME OF RS.3,14,020/- WHEN THE DISCREPANCY IN THE OPENING AND CLOSING STOCK WAS CONSIDERED BY THE AO FOR INVO KING THE PROVISION OF SECTION 147/148 OF THE ACT. THEREAFTER HE CONSIDERED THE CO NSUMPTION OF ELECTRICITY ON THE BASIS OF EXPENDITURE CLAIMED AS PER THE BILLS AND V OUCHERS WHEN HE OBSERVED THAT THE PRODUCTION DID NOT COMPLY WITH THE CONSUMPTION OF E LECTRICITY IN SO FAR AS THE PURCHASES WHICH RESULTED IN MANUFACTURING AND SALE WERE UNDER STATED. THEREAFTER HE COMPUTED THE CAPITAL UTILIZATION FOR THE PURPOSE OF RETURN OF EQUITY WHEN HE DETERMINED THE UNDER STATEMENT OF INVESTMENT IN PRO DUCTION NOT RENDERED TO TAX. HE ITA NO.1646 /KOL/2012 2 BROUGHT TO TAX A SUM OF RS.2,09,77,246/- WHEN INTE R ALIA HE ALSO BROUGHT TO TAX ARITHMETIC CALCULATION THEREUPON ON ON ACCOUNT OF G ROSS PROFIT RATE WHICH WAS RENDERED FOR TAXATION. AGGRIEVED THE ASSESSEE PREFERRED AN A PPEAL BEFORE THE FIRST APPELLATE AUTHORITY AGITATING THAT THE AO HAVING INVOKED THE PROVISION OF SECTION 145(3) OF THE ACT COMPUTED THE INCOME OF THE ASSESSEE ON MERE SUR MISES AND ESTIMATION WHICH HAS NO BEARING TO THE FACT FINDING FOR THE REJECTION OF THE BOOKS OF ACCOUNT TO COMPUTE CORRECT INCOME. SIMILARLY A SUM OF RS.5,92,192/- WA S BROUGHT TO TAX BY THE AO PURELY ON ASSUMPTION AND GUESS WORK ON ACCOUNT OF UNDER ST ATEMENT OF THE PRODUCTION AS UNDISCLOSED INCOME EVEN WHEN THE AUDITED BOOKS OF A CCOUNT INCLUDING CENTRAL EXCISE , BILLS, VOUCHERS AND WRITTEN SUBMISSION WERE PRODUCE D DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS ARGUED THAT ADDITION OF RS.2,09 ,77,246/- WAS COMPUTED BY THE AO ON WHIMS AND FANCIES BEING CAPITAL REQUIRED FOR THE UNDISCLOSED SALES, IN SO FAR AS HE CANNOT STEP INTO THE SHOES OF THE ASSESSEES BUSINE SS BY IMPOSING THE WAY THE BUSINESS HAS TO BE CONDUCTED FOR MANUFACTURING AND TRADING R ENDERING SOME INCOME. THE LD. CIT(A) AFTER CAREFUL CONSIDERATION OF THE ASSESSMEN T ORDER AND THE WRITTEN SUBMISSION, NOTED THAT THE ASSESSEE COMPANY WAS BOTH MANUFACTUR ER AND TRADER OF IRON AND STEEL ITEMS AND THEREFORE IT WAS NOT THE CASE OF THE AO T O EXAMINE THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS WHO ACCEPTED THE CONSUMPTION OF ELECTRICITY FOR THE COMBINED PRODUCTION TO DECLARE THE GROSS PROFIT RATE RESULTI NG IN SHORT FALL OF RS.5,92,192/-. HE OBSERVED THAT ON THE BASIS OF THIS ADDITION ON ACCO UNT OF ALLEGED UNDER STATEMENT OF PRODUCTION OF 535.83 MT THE AO COMPUTED THE UNDISCL OSED SALES FIGURE OF RS.1,13,01,377/- AND FURTHER COMPUTED THE UNDISCLOS ED FIGURES UTILIZED FOR THE SAID PRODUCTION TO BRING TO TAX AN ADDITION OF RS.2,09,7 7,246/- BUT PROPORTIONATELY THEREFORE THE BASIS HAD NO LEGS TO STAND IN SO FAR AS, THE AO WAS TO CORRESPONDINGLY CONSIDER THE SAME AFTER HAVING INVOKED THE PROVISIO N OF SECTION 145(3) OF THE ACT AS THE ACCOUNTING OF THE BUSINESS TRANSACTION BY THE A SSESSEE WERE NOT FOUND FAULTY AND DULY AUDITED AS PER THE REQUIREMENTS OF LAW. 3. THE LD. DR AS OF NOW HAS NOT BEEN ABLE TO BRING OUT HOW THE COMPUTATION OF UNDISCLOSED SALES LEADING TO INVESTMENT IN SALES CO ULD BE COMPUTED BY THE AO AS CAPITAL NOT DISCLOSED IN SO FAR AS AFTER HAVING VER IFIED THE FINANCIAL STATEMENT THE LD. ITA NO.1646 /KOL/2012 3 CIT(A) FOUND THE BOOKS OF ACCOUNTS CORRECT AND ACCE PTABLE FOR THE PURPOSE OF COMPUTING THE CORRECT INCOME AS WAS DECLARED BY THE ASSESSEE IN THE FIRST PLACE. THE LD. COUNSEL FOR THE ASSESSEE RESPONDENT HAS SUBMITT ED THE PAPER BOOK WHICH INTER-ALIA INDICATES THAT THERE WAS NO CASE FOR THE AO TO ESTI MATE PRODUCTION VIS--VIS SALES IN SO FAR AS, THE CONSUMPTION OF ELECTRICITY EXPENSES HAD BEEN ACCEPTED BY IT. THEREFORE WAS NOT THE BASIS FOR COMPUTING THE CORRECT INCOME AS T HE SAME CANNOT BE INSCRIBED IN THE BOOKS OF ACCOUNTS THE METHOD AS INSCRIBED IN HIS OR DER. THE LD. CIT(A) FOUND FAULT IN THE COMPUTATION THERE AFTER BY THE AO WHEN HE HELD THAT THE SPECIFIC DEFECTS HAD TO BE POINTED OUT FOR THE PURPOSE OF COMPUTING THE INCOME IN SO FAR AS THE AO HAS HIMSELF COMPUTED THE INCOME WHICH IS PURELY HYPOTHETICAL AN D TENDS TO BE DOUBLE TAXATION OF INCOME ON THE BASIS OF PRODUCTION AND SALES. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS NOT VIOLATED THE PROVISIO N OF RULE 46A OF IT RULES AS AGITATED BEFORE US IN SO FAR AS INTERPRETATION OF T HE FINANCIAL STATEMENTS HAVE TO BE ON THE BASIS OF FINANCIAL STATEMENTS PRODUCED AND NOT ON THE BASIS OF ASSESSEE REQUIRING TO EXPLAIN THE NEGATIVE PRODUCTION/CONSUMPTION WHICH T HE AO HIMSELF HAS COMPUTED WHETHER WOULD BE ABLE TO ESTABLISH THE UNDISCLOSED PORTION THEREIN WHICH IS ALREADY ACCOUNTED FOR. THE PRODUCTION HAS BEEN DISCLOSED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS WHICH PRODUCTION, THEREFORE CANNOT BE RECO NCILED BY THE AO IN THIS MANNER WAS CONSIDERED APPROPRIATELY BY THE LD. CIT(A). IN THIS VIEW OF THE MATTER WE DISMISS THE APPEAL FILED BY THE REVENUE. 4. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE COURT ON 19.04.2013. SD/- SD/- [ .#! $'# , ] [ .., ,, , ] [MAHAVIR SINGH ] [K.K.GUPTA] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (4 4 4 4) )) ) DATE: 19.04.2013. R.G.(.P.S.) ITA NO.1646 /KOL/2012 4 6 1 /$$7 87)9- COPY OF THE ORDER FORWARDED TO: 1. M/S. S.G.FOUNDRY & ROLLING MILLS (P) LTD., ROOM NO. M-4, JABAKSUM BUILDING, 34, C.R.AVENUE, KOLKATA-700012. 2 I.T.O., WARD-3(2), KOLKATA. 3 . CIT KOLKATA 4 . CIT(A)-I, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 07 /$/ TRUE COPY, 6'/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES