M/s. Shree Goverdhan Rice & Pulse Mills, Ahmedabad V. The Income tax Officer,Ward-6(1), Ahmedabad

ITA 2053/AHD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5800 (ITAT-AHMEDABAD)
• Duration Of Justice: 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 14-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SJRO P R GHOSH
• Assessee Lawyers: K I THAKKAR

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC AHMEDABAD BEFORE SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER M/S SHREE GOVARDHAN RICE & PULSE MILLS, DHOLKA ROAD, BAVLA. VS. INCOME-TAX OFFICER, WARD 6(1), AHMEDABAD. (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI K. I. THAKKAR, AR REVENUE BY:- SJRO P. R. GHOSH, DR O R D E R PER D. C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING F OLLOWING GROUNDS :- (1) THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF A SUM OF RS.25,000/- OUT OF RS.67,500/- IN RESPECT OF GUNNY BAGS. IT IS SUBMITTED THAT THE QUANTITY ACCOUNT HAS BEEN MAINTA INED AND AS SUCH NO ADDITION COULD BE MADE. IT IS THEREFORE SUB MITTED THAT THE ADDITION CONFIRMED MAY KINDLY BE DELETED. (2) THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION MAD E IN RESPECT OF KHARAJAT EXPENSES TO THE EXTENT OF RS.55,688/- B EING 20% OF THE TOTAL EXPENSES. THE APPELLANT SUBMITS THAT BOOK S OF ACCOUNTS ARE AUDITED, VOUCHERS ARE MAINTAINED, NOT A SINGLE VOUCHER HAS BEEN MENTIONED IN THE ORDER WHEREIN THERE IS A DEFE CT. IT IS ONLY ON ESTIMATE AND WITHOUT ANY EVIDENCE. IT IS THEREFO RE SUBMITTED THAT THE ADDITION MAY KINDLY BE DELETED. (3) THE ORDER PASSED BY THE LD. CIT(A) IS BAD IN LAW AN D CONTRARY TO THE PROVISIONS OF LAW AND FACTS. IT IS SUBMITTED TH AT THE SAME BE HELD SO NOW. ITA NO.2053/AHD/2010 ASST. YEAR :2006-07 2 2. THE FIRST ISSUE INVOLVED IS ABOUT ADDITION IN RE SPECT OF GUNNY BAGS. 3. THE FACTS ARE THAT ASSESSEE IS ENGAGED IN MILLIN G OF RICE. IT HAS ALSO SHOWN PURCHASE OF GUNNY BAGS WORTH RS.3,49,992/-. I T HAS NOT SHOWN ANY OPENING STOCK AND ALSO NO CLOSING STOCK WAS SHOWN. THE ASSESSEE SUBMITTED FOLLOWING SUMMARY OF BARDANA PURCHASED AN D DISPOSED OF:- 60/50 KG. 25 KG. PURCHASE 29626 PURCHASE 4700 OUTWARD 29593 OUTWARD(RICE SALE) 4608 SALES RICE 26509 KUSKI 2818 KANKI 266 29593 STOCK(WASTAGE) 33 STOCK (WASTAGE) 92 THE AO FOUND THAT ASSESSEE DID NOT ACCOUNT ANY GUNN Y BAGS IN THE CLOSING STOCK AND IT FAILED TO FURNISH MONTH-WISE D ETAILS OF THE CONSUMPTION OF GUNNY BAGS OR THE NAMES AND ADDRESSE S OF PARTIES FROM WHOM GUNNY BAGS WERE PURCHASES. ACCORDINGLY HE DISA LLOWED 25% OF THE TOTAL EXPENSES CLAIMED RESULTING IN AN ADDITION OF RS.67,500/-. 4. LD. CIT(A) RESTRICTED THE ADDITION TO RS.25,000/ - AS ACCORDING TO HIM THERE IS NO DIFFERENCE IN THE STOCK OF VARDANA. 5. THE LD. AR SUBMITTED THAT WHATEVER VARDANA IS PU RCHASED HAS BEEN CONSUMED IN SELLING RICE AND KASKI AND KANKI. THERE WAS ONLY A WASTAGE OF 33 VARDANA OF 60/50 KGS. AND 92 VARDANA IN 25 KG . EVEN IF THIS WASTAGE IN TOTAL TURNOVER IS JUST MINIMAL, IN 60/50 KGS. CATEGORY THIS WASTAGE COMES TO 1% WHEREAS IN 25 KG. CATEGORY IT C OMES TO ABOUT 2%. 3 THIS WASTAGE IS MINIMAL AS ASSESSEE HAD SOME POOR Q UALITY OF GUNNY BAGS OR THEY MAY GET DESTROYED IN PACKING THE GOODS. 6. THE LD. DR ON THE OTHER HAND, RELIED ON THE ORDE RS OF AUTHORITIES BELOW. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS I AM OF THE VIEW THAT THERE IS NO CASE FOR MAKING ADDITION OF RS.25,000/-. THE REASONS ARE THAT ASSESSEE HAS HUGE TURNOVER. IT HAS USED 29,593 GUNN Y BAGS IN SALES IN THE CATEGORY OF 50/60 KG AND 4,608 GUNNY BAGS IN 25 KG. CATEGORY. NO MATERIAL IS SHOWN AS TO THE UNACCOUNTED SALES RESUL TING IN UNACCOUNTED USE OF VARDANA. THE WASTAGE SHOWN BY THE ASSESSEE O N THE OTHER HAND IS VERY NOMINAL AND IS ALLOWABLE. THUS THERE IS NO BAS IS FOR MAKING ADDITION OF EVEN RS.25,000/-. AS A RESULT I DELETE THE ADDIT ION. 8. THE NEXT ISSUE RELATES TO SUSTAINING ADDITION OF 20% OF MISCELLANEOUS EXPENSES. THE ASSESSEE WAS NOT ABLE T O SHOW THAT ENTIRE EXPENDITURE WAS INCURRED FOR BUSINESS PURPOSES. CON SIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, I RESTRICT THE ADDITION TO 1/6 TH OF THE TOTAL CLAIM AS AGAINST 1/5 TH . THE ASSESSEE GETS PARTIAL RELIEF. 9. AS A RESULT, APPEAL FILED BY THE ASSESSEE IS PAR TLY ALLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 7/7/2010 SD/- (D.C.AGRAWAL) ACCOUNTANT MEMBER AHMEDABAD, DATED : 7/7/2010 4 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD