D.C.I.T.-2(3), MUMBAI V. SIX SIGMA ALCHEMCY PVT LTD, MUMBAI

ITA 1892/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79209 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 13-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 07-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHANKAR BALASUBRAMANIAN

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ./I.T.A. NO. 1892/M/2011 ( AY: 2007 - 2008 ) DCIT - 2(3), MUMBAI. / VS. M/S. SIX SIGMA ALCHEMCY PVT LTD., 725/726 CORPORATE PART, NIRMAL LIFE STYLE, L B S MARG, MULUND (W), MUMBAI - 80. ./ PAN : AAGCS2222R ( / APPELLANT) .. ( / RESPONDENT ) / A PPELLANT BY : SHRI JEEVANLAL LAVIDIYA / RESPONDENT BY : SHRI SHANKAR BALASUBRAMANIAN / DATE OF HEARING : 01.07 .2014 / DATE OF PRONOUNCEMENT : 01.07 .2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 7.3.2011 IS AGAINST THE ORDER OF THE CIT (A) - 6, MUMBAI DATED 1.12.2010 FOR THE ASSESSMENT YEAR 2007 - 2008. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE ORDER OF THE CIT (A) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE ADDITION OF RS. 26.64 LAKHS ON ACCOUNT OF SUPPRESSION OF STOCK WITHOUT APPRECIATING THA T THE ASSESSEE FAILED TO INCLUDE COST OF THE SOFTWARE OF RS. 26.64 CRS WHICH REMAINED UNSOLD. 3. FOR THESE AND OTHER GOURDS THAT MAY BE URGED AT THE TIME OF HEARING, THE DECISION OF THE CIT (A) MAY BE SET ASIDE AND THAT OF THE AO RESTORED. 3. AT THE OUTSET, SHRI SHANKAR BALASUBRAMANIAN , LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE GROUNDS AND MENTIONED THAT THE REVENUE IS AGGRIEVED AGAINST THE RELIEF GRANTED BY THE CIT (A) ON APPRECIATION OF THE FACTS. BRINING OUR ATTENTION TO THE PARA 7.3 OF THE IMPUGNED ORDER, LD COUNSEL MENTIONED THAT THE 2 AS SESSING OFFICER WAS OF THE OPINION THAT THERE WERE SALES MADE BY THE ASSESSEE BEYOND THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION I . E . , APRIL 2007. BUT THE FACT IS THAT THE ASSESSING OFFICER MISUNDERSTOOD THE FACTS DURING THE ASSESSMENT PROCEE DINGS AND IT IS AN UNDISPUTED FACT THAT THE SALES WERE MADE IN NOVEMBER / DECEMBER 2006 O N L Y AND NOT IN APRIL 2007 AS UNDERSTOOD BY THE AO DURING THE REGULAR ASSESSMENT PROCEEDINGS. REGARDING THE A FFECT OF SALES PRIOR TO THE PURCHASES, IT IS THE SUBMISSION OF T HE LD COUNSEL THAT THE SALE PROCEEDS ARE RECEIVED IN ADVANCE FOR REMITTING THE SAME TOWARDS IMPORTS. ASSESSEE IS IN THE BUSINESS OF IMPORT OF SOFTWARE AND TRADING THE SAME IN INDIA. THIS METHOD OF ACCOUNTING IS CONSISTENTLY FOLLOWED BY THE ASSESSEE. 4. O N THE OTHER HAND, LD DR RELIED ON THE ORDER OF THE AO AND ALSO CRITICAL OF THE MANUAL CORRECTION MADE IN PAGE 21 OF THE PAPER BOOK WITH REFERENCE TO THE DATES APPEARING THEREIN. IN REPLY, LD COUNSEL BROUGHT OUR ATTENTION TO THE INVOICE NO.731, 743 & 761 A ND ALSO BROUGHT OUR ATTENTION TO THE DATES APPEAR IN CORRESPONDING COPIES OF THE INVOICE BILLS PLACED AT PAGE 37, 41 AND 44 OF THE PAPER BOOK AND RECONCILED THE DATES AND JUSTIFIED THE CORRECTIONS MADE AT PAGE 21. 5. WE HAVE HEARD BOTH THE PARTIES AND PERU SED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. ON PERUSAL OF THE ORDER OF THE CIT (A) IN GENERAL, PARA 7.3 AND 7.4 IN PARTICULAR, WE FIND THE SAME ARE RELEVANT HERE AND FOR THE SAKE OF COMPLETENESS OF THIS ORD ER, THE SAID PARAS ARE REPRODUCED WHICH READ AS UNDER: 7.3. I HAVE CONSIDERED THE FACTS OF THE ISSUE AND THE SUBMISSIONS MADE BY THE AR. IN HIS REMAND REPORT, WHILE THE AO HAS NOT CONTESTED THE SUBMISSIONS REGARDING PRIOR BOOKING F SALES BEFORE THE PURCHASES WERE RECORDED, THE AO HAS MENTIONED THAT CERTAIN SOFTWARE VALUED AT RS. 8,34,375/ - PURCHASED IN NOVEMBER AND DECEMBER 2006 (AT SR. NOS. 6, 7, 8 AND 9 OF THE SCHEDULE FURNISHED BY THE APPELLANT) WAS REFLECTED AS SOLD IN APRIL 2007. THE AO THEREFO RE SUBMITTED THAT SINCE NO CLOSING STOCK AS ON 31.3.2007 WAS REFLECTED BY THE APPELLANT, THE AFORESAID PURCHASES VALUED AT RS. 8,34,375/ - SHOULD BE CONSIDERED AS UNDERSTATEMENT OF STOCK. IN HIS REPLY TO THE REMAND, THE AR HAS REITERATED THE SUBMISSIONS MA DE EARLIER THAT THERE WAS NO OPENING OR CLOSING STOCK AND THAT SALES WERE BOOKED FIRST AND THEN PURCHASES WERE BOOKED. 7.4. A PERUSAL OF THE STATEMENT OF PURCHASES AND SALES OF SOFTWARE AS WELL AS THE COPIES OF INVOICES FURNISHED BY THE AR REFLECTS THAT TH E AO HAS WRONGLY MENTIONED THE SALES (AT SR. NOS. 6, 7, 8 AND 9 OF THE SCHEDULE FURNISHED BY THE APPELLANT) HAVING BEEN AFFECTED IN APRIL 2007. THE SAID SALES WERE ACTUALLY MADE IN NOVEMBER AND DECEMBER 2006. THE DATES ON THE SAID INVOICES ARE 4 TH NOVEMB ER 2006 AND 4 TH DECEMBER 2006. THUS, THERE IS MERIT IN THE ARS CONTENTION THAT THERE WAS NO CLOSING STOCK AT THE END OF THE YEAR. HENCE, THE ADDITION MADE BY THE AO IS DELETED AND THIS GROUND IS ALLOWED. 3 6. CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE CIT (A) HAS RIGHTLY ADJUDICATED THE ISSUE AND THE DECISION TAKEN BY THE CIT (A) BY DELETING THE ADDITION MADE BY THE AO IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED . 7 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST JULY, 2014. S D / - S D / - (SANJAY GARG ) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 1.7.2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI