A.K.Fabrics, Surat V. The Income Tax Officer, Ward-2(1), Surat

ITA 2080/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6219 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-03-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 10-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH POPHE RE
• Assessee Lawyers: RASESH SHAH
• Keywords: Unexplained cash credit; Charitable institution; Opportunity of being heard; Cost of acquisition
• Section: 143(3); 194C; 28; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CAMP AT SURAT BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER A.K. FABRICS, C/O. ATUL K. SOLAPURWALA, 3, KRISHNA ROW HOUSE, HONEY PARK ROAD, RANDER, SURAT - 395009 PAN: AAFFA9859G (APPELLANT) VS THE ITO, WARD 2(1), SURAT (RESPONDENT) REVENUE BY : S H RI ASHISH POPHE RE , SR. D . R. ASSESSEE BY: S H RI RASESH SHAH , A.R. DATE OF HEARING : 06 - 03 - 2 017 DATE OF PRONOUNCEMENT : 12 - 04 - 2 017 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS A SSESSEE S APPEAL FOR A.Y. 2006 - 07 , AR ISES FROM ORDER OF THE CIT(A) - II, SURAT DATED 13 - 05 - 2014 IN APPEAL NO. CAS - II/519/08 - 09 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 208 0 / A HD/20 14 A SSESSMENT YEAR 200 6 - 07 I.T.A NO. 2080 / AHD/2014 A.Y. 2006 - 07 PAGE NO A.K. FABRICS VS. ITO 2 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE ID. CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN FRAMING ASSESSMENT U/S. 143(3) AS AGAINST ASSESSMENT U/S.144 /143(3) R.W.S 145 OF THE ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE ID. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN DISALLOWING RS.32,32,774/ - ON ACCOUNT OF PAYMENT MADE TO CONTRACTORS U/S 40(A)(IA) OF THE ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE ID CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN MAKING ADDITION OF RS.41,008/ - ACCOUNT OF LOW CLOSING STOCK. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE ID CIT (A) HAS I ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN MAKING ADDITION OF RS.24000/ - ON ACCOUNT OF UNEXPLAINED CASH CREDIT. GROUND NO. 1 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT AS PER THE ASSESSMENT ORDER THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS ATTENDED AND FURNISH THE DETAILS DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAS ALSO DISCUSSES THE CASE WITH HIM. THEREFORE, WE DO NOT FIND MERIT IN THE CONTENTIONS OF THE ASSESSEE. THE APPEAL OF THE ASSESSEE IS DISMISSED ON THIS GROUND. GROUND NO . 2 I.T.A NO. 2080 / AHD/2014 A.Y. 2006 - 07 PAGE NO A.K. FABRICS VS. ITO 3 3. THE B RIEF FACTS OF THE CASE IS THAT RETURN OF INCOME DECLARING INCOME OF RS. 39,727/ - WAS FILED ON 27/12/2006. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S 143(2) OF THE ACT ON 12/07/2007. THE ASSESSEE FIRM WAS ENGAGED IN THE BUSINESS OF MANUFACTURING OF ART SILK CLOTH AND SELLING. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AS SESSING OFFICER OBSERVED THAT T HE ASSESEE PAID AMOUNT RS. 32,32,774/ - ON ACCOUNT OF JOB WORK CHARGES ON WHICH TAX WAS NOT DEDUCTEDTHE DETAILS OF JOB CHARGES PAID BY THE ASSESSEE ON WHICH TDS WAS NOT DEDUCTED UNDER THE PROVISIONS OF SEC. 194C OF THE ACT ARE AS UNDER: - SR.NO. NAME OF THE PARTY NATURE OF SERVICE AMOUNT PAID 1 A RAJNIKANT CHEVLI LABOUR WORK (CONTRACT) RS.1,16,043/ - 2 H. S. TEXTILE LABOUR WORK (CONTRACT) RS.38,932/ - 3 JAI RANCHOD TEXTILE LABOUR WORK (CONTRACT) RS.5,10,430/ 4 SAHIL TWISTERS LABOUR WORK (CONTRACT) RS.3,83,668/ - 5 SHREEJI TEX LABOUR WORK (CONTRACT) RS. 1,26,337/ - 6 USHA TEXTILES LABOUR WORK (CONTRACT) RS.3,50,499/ - 7 MAHADEV TEXTILES LABOUR WORK (CONTRACT) RS.8,53,720/ - 8 SHREE SAI TEXTI LES LABOUR WORK (CONTRACT) RS.8,53,145/ - I.T.A NO. 2080 / AHD/2014 A.Y. 2006 - 07 PAGE NO A.K. FABRICS VS. ITO 4 TOTAL RS. 32,32,774/ - THE ASSESSING OFFICER DISALLOWED THE AMOUNT OF RS. 32,32,774/ - UNDER THE PROVISION OF SEC 40(A)(IA) OF THE ACT ON THE GROUND THAT THE ASSESSEE FAILED TO DEDUCT TAX ON THE PAYMENT MADE TO JOB WORK CONTRACTOR AS PER PROVISION OF SEC. 194 OF THE ACT . 4. AGGRIEVED AGAINST THE DECISION OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS SUSTAINED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER: - 7.3 THE APPELLANT S CONTENTION HAS BEEN EXAMINED. AS REGARDS EXPL ANATION - IV TO SECTION 194 C , THE SAID EXPLANATION IS NOT AN EXHAUSTIVE DEFINITION OF WORK AND JUST MENTIONS CERTAIN .ITEMS WHICH, ARE TO BE INCLUDED IN THE DEFINITION OF WORK . 7.4 ON THE CONTRARY, THE HON 'BL E SUPREME COURT HAS DEFINED ' WORKS CONTRACT'. THE HON 'BLE COURT HAS DISTINGUISHED A CONTRACT OF SALE FROM ' WORKS - CONTRA CT X AND HAS HELD THAT A TRANSACTION WHICH IS NOT A 'CONTRACT OF SALE' IS A ' WORKS CONTRACT' . RELIANCE IS PLACED ON THE DECISION OF VENGUARD ROLLING SHUTTER & STEEL WORKS REPORTED IN 1977 CTR ( SC) 190 . 7.5 THE APEX COURT OF THE LAND AND SEVERAL HIGH COU RTS HAVE HELD THAT IF A PARTICULAR ' WORD IS NOT DEFINED IN INCOME TAX ACT / WEALTH TAX ACT, THE MEANING OF THAT WORD CAN BE CONSTRUED IN THE LIGHT OF THE DEFINITION OF THAT ' WORD ' IN OTHER ACTS. SOME SUCH CASES ARE AS UNDER : - [A] U.P. CO - OPERA TIVE CANE UNION FEDERATION LTD VS. CIT REPORTED IN 237 IT 574 ( SC) DATED 30.01.1997 (SUPREME COURT) [B] DIT VS. SHREE VISHESHWAR NATH MEMORIAL PUBLIC CHARITABLE TRUST REPORTED IN 333 ITR 248 DTT 18.04.2010 HIGH COURT OF DELHI I.T.A NO. 2080 / AHD/2014 A.Y. 2006 - 07 PAGE NO A.K. FABRICS VS. ITO 5 (C) LADHU RAM TAPARIA VS. O.K. GHOSH & ORS REPORTED IN 33 ITR 407 DT 17. 04.1957 HIGH COURT OF CALCUTTA. (D). COMMISISONER OF WEALTH TAX VS. SB ZAINAB NOORUL SAYEEDA & ORS REPORTED IN 262 ITR 306 DATED 13.03.2003 HIGH COURT OF ANDHRA PRADESH. 7 .6 THEREFORE, THE DEFINITION OF WORKS CONTRACT ' FROM SALES TAX ACTS OR TRADE/COMMERCIAL TAX ACT CAN BE USED FOR INTERPRETATION OF THE WORD HERE. IN FACT, JOB WORK MEANS GIVING WORK TO OUTSIDE PARTIES ON CONTRACT BASIS, AND THE JOB WORK CAN BE FOR A LARGE NUMBER OF THINGS. TO SAY THAT JOB WORK WILL NOT COME UNDER THE DEFINITION OF ' WORK IS PREPOSTEROUS. THE SECOND ARGUMENT OF THE APPELLANT THAT THE ASSESSING OFFICER SHOULD HAVE PASSED THE ORDER U/S 144 AND NO DISALLOWANCE U/S 40A(IA) SHOULD HAVE BEEN MADE AS THE ASSESSEE DID NOT PRODUCE ITS BOOKS OF ACCOUNTS IS ALSO WITHOUT ANY BASIS. 7.7 AS PER ASSESSMENT ORDER PARA NO.3, THE APPELLANT FILED VARIOUS DETAILS IN RESPONSE TO THE NOTICE ISSUED BY THE ASSESSING OFFICER. ONLY IN RESPECT OF ADDITION FOR CLOSING S TOCK OF RS. 41,008/ - WHICH IS BEING CONTESTED IN GROUND NO. 2, THE APPELLANT WAS NOT ABLE TO FILE BILLS/ VOUCHERS IN RESPECT OF VALUATION OF CLOSING STOCK. TO SAY THAT FOR THIS REASON, THE ASSESSING OFFICER MUST PASS AN ORDER U/S 144 OF THE ACT AND ON THAT GROUND SHOULD NOT MADE ADDITION U/S 40A(IA) IS AN ARGUMENT WHICH, CANNOT BE ACCEPTED AS LEADS TO ABSURD INTERPRETATION OF LAW. 7.8 THE APPELLANT FILED ITS TAX AUDIT REPORT, ALONG WITH AUDITED ANNUAL ACCOUNTS, BALANCE SHEET, PROFIT AND LOSS ACCOUNT, ETC DUR ING ASSESSMENT PROCEEDINGS. THE FACT OF NON - DEDUCTION OF TDS HAS BEEN DETECTED IN THESE ACCOUNTS AND THE CORRESPONDING DISALLOWANCE HAS BEEN MADE U/S 40A(IA) OF THE ACT. TO SAY THAT DISALLOWANCE SHOULD NOT HAVE BEEN MADE AS CERTAIN BILLS / VOUCHERS IN RE SPECT OF VALUATION OF CLOSING STOCK, WERE NOT FURNISHED IS A STRANGE ARGUMENT. 7.9 SINCE THE PROVISIONS OF SECTION 40A(IA) ARE ANTI EVASION MEASURES AND THE DEFAULT HAS BEEN ACCEPTED BY THE APPELLANT, THE GROUND NO. 1 OF THE APPEAL IS DISMISSED AND THE ADD ITION MADE BY THE ASSESSING OFFICER IS CONFIRMED. 5 . DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. COUNSEL CONTENDED THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE IMPUGNED I.T.A NO. 2080 / AHD/2014 A.Y. 2006 - 07 PAGE NO A.K. FABRICS VS. ITO 6 ADDITION MADE BY THE ASSESSING OFFICER. HE ALSO FURNISHED PAPER BOOK CONTA INING WRITTEN SUBMISSION MADE BEFORE THE LD. CIT(A) AND JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE. THE LD. COUNSEL FURTHER CONTENDED THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING R. 32,32,774/ - A S THE DEFINITION OF WORK HAS ENLARGED BY SUBSTITUTING PROPER OF SE C . 194C OF THE ACT BY THE FINANCE ACT 2009 WITH EFFECT FROM 01 - 10 - 2009. IN THIS CONNECTION, THE LD. COUNSEL HAS ALSO PLACED RELIANCE ON THE JUDICIAL PRONOUNCEMENT ON THE DECISION OF THE CO - ORDINATE BENCH ITAT AHMEDABAD IN THE CASE OF M/S. SID DHI VINAYAK VS. ITO VIDE ITA NO. 2233/2009. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE LD. CIT(A). 6 . WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON R ECORD. WE NOTICED THAT THE ASSESSEE FIRM WAS ENGAGED IN MANUFACTURING ART SILK CLOTH AND IT HAD MADE PAYMENT FOR JOB WORK CHARGES RELATING TO CLOTHES ON WHICH TAX WAS NOT DEDUCTED. WE HAVE ALSO PERUSED THE SUBMISSION OF THE ASSESSEE THAT THE DEFINITION OF WORK HAS BEEN ENLARGED BY SUBSTITUTING OF SECTION 194 C OF THE ACT BY THE FINANCE ACT, 2009 WITH EFFECT FROM 01 - 10 - 2009. THE DEFINITION OF WORK SHALL HAVE THE SAME MEANING AS PROVIDED IN EXPLANATION III TO SECTION 194 C OF THE IT ACT WHICH PROVIDES THAT FOR THE PURPOSE OF THIS SECTION, THE EXPRESSION 'WORK' SHALL ALSO INCLUDE : (A) ADVERTISING, (B) BROADCASTING AND TELECASTING INCLUDING PRODUCTION OF PROGRAMMES FOR SUCH BROADCASTING OR TELECASTING. I.T.A NO. 2080 / AHD/2014 A.Y. 2006 - 07 PAGE NO A.K. FABRICS VS. ITO 7 (C) CARRIAGE OF GOODS AND PASSEN GERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS, (D) CATERING. THE ABOVE DEFINITION OF 'WORK' HAS BEEN ENLARGED BY SUBSTITUTING PROVISIONS OF SECTION 194C OF THE IT ACT BY THE FINANCE ACT , 2009 WITH EFFECT FROM 01 - 10 - 2009. ACCORDING TO THE NEW PROVISIONS OF SECTION 194C OF THE IT ACT APPLICABLE WITH EFFECT FROM 01 - 10 - 2009, SUB CLAUSE (E ) TO THE DEFINITION OF 'WORK' IN SUB SECTION (IV) TO EXPLANATION TO SECTION 194C OF THE IT ACT HAS BEEN INSERTED WHICH PROVIDES: 'MANUFACTURING OR SUPPLYING A PRODUCT ACCORDING TO REQUIREMENT OR SPECIFI CATION OF A CUSTOMER BY USING MATERIAL PURCHASED FROM SUCH CUSTOMERS, BUT DOES NOT INCLUDE MANUFACTURING OR SUPPLYING A PRODUCT ACCORDING TO REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCHASED FROM A PERSON OTHER THAN SUCH CUSTOMERS.' WE HAVE FURTHER NOTICED THAT THE CO - ORDINATE BENCH OF ITAT AHMEDABAD IN THE CASE OF M/S. SIDDHI VINAYAK ITA 2233/AHD/2009 ON IDENTICAL ISSUE HELD AS UNDER: - ' THE ASSESSEE PLEADED BEFORE THE AO THAT IT HAS MADE PAYMENT OF WEAVING EXPENSES, TWISTING EXP ENSES AND WARPING EXPENSES TO THE MANUFACTURER IN RESPECT OF MANUFACTURING OF GREY CLOTHS. THE ABOVE EXPENSES ARE JOB WORK AND CLASSIFIED AS MANUFACTURER. THEREFORE, THE ASSESSEE PLEADED THAT IT SHOULD NOT BE CONSIDERED AS PAYMENT MADE TO THE CONTRACTOR. T HE ASSESSEE ALSO PLEADED THAT THE ABOVE PROVISIONS IS MEANT FOR AMOUNTS PAYABLE TO THE CONTRACTOR OR SUB - CONTRACTORS UNDER THE SUB SECTION AND IT IS NOT MADE APPLICABLE WHERE PAYMENT IS MADE DURING THE FINANCIAL YEAR. IT WAS ALSO PLEADED THAT IT WAS A DIRE CT COST/EXPENDITURE COVERED BY SECTION 28 OF THE IT ACT. THE AO ADMITTED THAT THE ASSESSEE SUPPLIED MATERIAL TO THE JOB WORKERS FOR PRODUCTION OF MATERIAL AS PER SPECIFICATION GIVEN BY THE ASSESSEE AND T HAT THE MATERIAL HAS TO BE I.T.A NO. 2080 / AHD/2014 A.Y. 2006 - 07 PAGE NO A.K. FABRICS VS. ITO 8 CONSUMED BY THE JOB WORKERS AND THE FINISHED PRODUCTS HAS TO BE RETURNED TO THE ASSESSEE. THE AO THEREAFTER DID NOT VERIFY WHETHER THE ASSESSEE HAS IN FACT MADE PAYMENT DURING THE FINANCIAL YEAR ITSELF OR ANY AMOUNT WAS PAYABLE. THE AO HAS ALSO NOT VERIFIED WHETHER THE EXPENDITURE WAS TAKEN TO THE DIRECT COST AS IS PLEADED BY THE ASSESSEE. THE AO HAS ALSO FORGOT TO NOTE THAT THE MEANING OF 'WORK' AS ASSIGNED IN SUB CLAUSE (IV) (E) TO EXPLANATION III TO SECTION 194C OF THE ACT WAS ENLARGED BY SUBSTITUTING THE PROVISIONS OF SECTION 194C WITH EFFECT FROM 01 - 10 - 2009. THUS, THE AO ON WRONG PREMISES PROCEEDED WITH THE MATTER AND ON IRRELEVANT FACTORS DENIED THE CLAIM OF THE ASSESSEE. THE LEARNED CIT(A) HAS ALSO NOT ADDRESSED TO THE POINTS RAISED BY THE ASSESSEE. THE DECISIONS CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE NOW BEFORE THE TRIBUNAL WERE ALSO NOT BEFORE THE AUTHORITIES B ELOW FOR BETTER APPRECIATION AND UNDERSTANDING OF THE RELEVANT PROVISIONS OF LAW. CONSIDERING THE ABOVE DISCUSSIONS, WE ARE OF THE VIEW THAT THE MATTER REQUIRES RECONSIDERATION AT THE LEVEL OF THE AO. WE ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THE ISSUE TO THE FILE OF THE AO WITH DIRECTION TO RE - DECIDE THE ABOVE ISSUE IN LIGHT OF THE PROVISIONS OF LAW AND THE DECISIONS CITED BY THE ASSESSEE BEFORE US. THE AO SHALL GIVE REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE AS SESSEE. IN THE RESULT, GROUNDS NO. 2 AND 3 OF THE APPEAL OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. WE HAVE CONSIDERED THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE HAS GIVEN THE YARN TO THE CONCERNS FOR JOB WORK AND RECEIVED THE GRAY CLOTH AFTER PROCESSING OF THE YARN. HE FURTHER CONTENDED THAT AS PER EXPLANATION III TO SEC.194C THE WORK INCLUDES ADVERTISEMENT, BROADCASTING AND TELECASTING, CARRIAGE OF GOODS AND PASSENGERS AND CATERING. HE FURTHER STATED THAT OF COURSE THE DEFINITION AND EX PLANA TION III TO SECTION 194C IS NOT INCLUSIVE DEFINITION AND THE WORK MAY INCLUDE THE OTHER WORK NOT DEFINED IN THE SAID EXPLANATION BUT AS PER EXPLANATION TO SECTION 4 0(A)(IA), IT HAS BEEN CLEARLY MENTIONED THAT WORK SHALL HAVE BEEN SAME MEANING AS PER EXPLANATION III TO SECTION 194C . I.T.A NO. 2080 / AHD/2014 A.Y. 2006 - 07 PAGE NO A.K. FABRICS VS. ITO 9 WE OBSERVED THAT THE JUDICIAL FINDINGS ELABORATED IN THE DECISION OF THE COORDINATE BENCH AND THE POINTS RAISED BY THE ASSESSEE AS STATED ABOVE ARE REQUIRED TO BE EXAMINED AND RECONSIDERED BY THE ASSESSING OFFICER .THEREF ORE, IN THE INTEREST OF JUSTICE WE RESTORE T HIS ISSUE TO THE FILE OF ASSESSING OFFICER TO DECIDE THE ISSUE DE - NOVO AFTER PROVIDING PROPER OPPORTUNITIES TO THE ASSESSEE . GROUND NO. 3 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON REC ORD. WE NOTICED THAT THE ASSESSEE HAS NOT FURNISHED THE SUPPORTING DETAILS FOR VALUATION OF CLOSING STOCK DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER. THEREFORE, THE ASSESSING OFFICER VALUED THE CLOSING STOCK AT THE AVERAGE R ATES AS AVAILABLE ON RECORD AND THE DIFFERENCES FOUND IN THE VALUATION OF CLOSING STOCK IN THE BOOK OF ACC OUNTS OF RS. 41 , 008/ - WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE LD. CIT(A) HAS SUSTAINED THE ADDITION BY OBSERVING AS UNDER: - 8. THIS GROUN D PERTAINS TO THE ADDITION OF RS 41,008/ - IN RESPECT OF 'CLOSING STOCK VALUATION' . THE ASSESSING OFFICER VALUED THE CLOSING STOCK AT THE AVERAGE PURCHASE COST WHICH LED TO THIS ADDITION TO THE EXTENT OF - RS. 41,008/ - . THE ONLY ARGUMENT APPELLANT HAS TAKEN IN THE WRITTEN SUBMISSION DATED 23.12.2013 IS THAT SINCE THE GROSS PROFIT IS MORE THAN THE GP LAST YEAR, NO ADDITION SHOULD HAVE BEEN MADE, APART FROM REITERATING THIS ARGUMENT IN RESPECT OF GROUND NO. 1 THAT THE ASSESSMENT ORDER SHOULD HAVE BEEN PASSED U /S 144. IN ABSENCE OF ANY SUBMISSION TO ESTABLISH HOW THE VALUATION ADOPTED BY THE ASSESSING OFFICER IS NOT CORRECT, THE ADDITION MADE IS CONFIRMED AND THE GROUND NO. 2 OF THE APPEAL IS ALSO DISMISSED. I.T.A NO. 2080 / AHD/2014 A.Y. 2006 - 07 PAGE NO A.K. FABRICS VS. ITO 10 THE ASSESSING OFFICER HAS VALUED THE CLOSING STOCK ON THE BASIS OF AVERAGE COST PRICE ON THE OTHER HAND THE ASSESSEE HAD CONTENDED THAT IT HAS VALUED THE CLOSING STOCK ON ACTUAL COST. IT WAS ALSO CONTENDED THAT THE ASSESSING OFFICER HAS NOT CONSIDERED THAT THE GROSS PROFIT OF THE ASSESSEE WAS 9.08% WHICH WAS MORE THAN 5.09% OF THE L A ST YEARS. WE SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION OF THESE FACTS TO DECIDE THE ISSUE A FRESH AFTER PROVIDING OPPORTUNITY TO THE ASSESSEE. GROUND NO. 4 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE NOTICED THAT ADDITION OF RS . 24000/ - U/S. 68 OF THE ACT WAS MADE IN RESPECT OF LOAN RECEIVED FROM MR. PARESH KR. KANIYALAL FROM WERE CONFIRMATION ALONG WITH OTHER DOCUMENTS COULD NOT BE FURNISHED. THE LD. COUNSEL CONTENDED THAT THIS ADDITION WAS MADE BECAUSE PARTICULAR REPLY COULD NOT BE FURNISHED BY THE ASSESSE TO THE LETTER OF THE ASSESSING OFFICER. WE CONSIDER IT WILL BE MORE APPROPRIATE TO RESTORE THIS ISSUE ALSO TO THE FILE OF THE ASSESSING O FFICER TO DECIDE AFRESH AFTER PROVIDING DUE OPPORTUNITY TO THE ASSESSEE. 10. GROUND NO. 5 & 6 ARE GENERAL GROUND S OF APPEAL, SO, THEY DO NOT REQUIRE ANY ADJUDICATION. I.T.A NO. 2080 / AHD/2014 A.Y. 2006 - 07 PAGE NO A.K. FABRICS VS. ITO 11 1 1 . IN THE RESU L T, THE APPEAL OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PR ONOUNCED IN THE OPEN C OURT ON 12 - 04 - 201 7 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 12 /04 /2017 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,