The ITO, Ward-4(3), Ahmedabad V. Lincoln Polymers Pvt. Ltd., Ahmedabad

ITA 2125/AHD/2006

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9361 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 04-08-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 06-10-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P M SHUKLA SENIOR
• Assessee Lawyers: G C PIPARA
• Keywords: Business income; Income from undisclosed sources; Commercial expediency; Onus to prove; Set aside
• Section: 271(1)(c); 131; 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' (BEFORE S/SHRI P K BANSAL AND MAHAVIR SINGH) ITA NO.2125/AHD/2006 (ASSESSMENT YEAR: 2002-03) A N D ITA NO.1559/AHD/2007 (ASSESSMENT YEAR: 2003-04) THE INCOME-TAX OFFICER, WARD-4(3), AHMEDABAD V/S LINCOLN POLYMERS P. LTD., 308, SHANTI MALL, NEAR SARTHAK SCHOOL, SATTADHAR CORSS ROAD, GHATLODIA, AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY :- SHRI P M SHUKLA, SENIOR DR RESPONDENT BY:- SHRI G C PIPARA, CA O R D E R PER P K BANSAL (ACCOUNTANT MEMBER) : THESE TWO APPEALS HAVE BEEN FILED BY THE REVENUE AGAINST TWO SEPARATE ORDE RS OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-VIII, AHMEDABA D [CIT(A) FOR SHORT] DATED 21-07-2006 AND 29-01-200 7 FOR ASST. YEARS (AY) 2002-03 AND 2003-04 RESPECTIVELY. THE FO LLOWING EFFECTIVE GROUNDS OF APPEAL HAVE BEEN TAKEN BY THE REVENUE:- FOR AY 2002-03 : 1 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THI S CASE IN DIRECTING TO DELETE THE ADDITION OF RS.14,30,985/- MADE ON ACCOUNT 2 OF UNACCOUNTED PRODUCTION AND SALE OF FINISHED PROD UCTS AND WASTAGE AFTER DETAILED ANALYSIS OF THE CONSUMPTION OF VARIOUS MATERIALS AND THE DISCREPANCIES NOTICED IN THE STOC K POSITION SUBMITTED TO THE BANK VIS--VIS THE BOOKS AND IGNOR ING THE RELEVANT MATERIALS AND THE LETTER OF THE SR. MANAGER, PNB, D ATED 07-03- 2005, WHICH SHOWS THAT THE BANK HAS CERTIFIED / CLA RIFIED THAT THE STOCK POSITION SUBMITTED IN ANY MONTH REPRESENTS TH E STOCK POSITION OF THE LAST DATE OF EARLIER MONTH. 2 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DIRECTING TO DELETE THE ADDITION OF RS.1,32,000/- B EING THE UNACCOUNTED PURCHASE OF LDPE GRANULES ON THE BASIS OF OBSERVATION IN TOTAL CONTRAST TO THE FINDING OF THE AO BY ALLOWING FRESH EVIDENCES. 3 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DIRECTING TO DELETE THE ADDITION OF RS.25.000/- MAD E U/S 68 BEING UNSECURED LOAN IGNORING THE FACT THAT ASSESSEE DESP ITE SEVERAL OPPORTUNITIES FAILED TO PRODUCE THE CREDITOR. RELIA NCE IN THIS REGARD IS PLACED ON THE DECISIONS IN THE CASES REPO RTED AT 187 ITR 596 (CAL), 232 ITR 820 (SC), 176 CTR 300 (RAJ) AND 255 ITR 573 (KER). FOR AY 2003-04 : 1 THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING TO DELETE THE ADDITION OF RS.6,90,300/- M ADE BY THE AO ON ACCOUNT OF COMMISSION PAYMENT TO M/S SWISS POLYPLAS T. 2 THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING TO DELETE THE ADDITION OF RS.3,71,727/- M ADE ON ACCOUNT OF LOWER VALUATION OF CLOSING STOCK OF FINISHED GOO DS. ITA NO.2125/AHD/2006 FOR AY: 2002-03 :- 2 THE BRIEF FACTS OF THE CASE RELATING TO GROUND N O.1 IN THIS APPEAL AS NOTED BY THE AO IN THE ASSESSMENT ORDER A RE THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING OF PP AND HDPE WOVEN SACKS . DURING THE PREVIOUS YEAR RELEVANT TO AY 2002-03 THE ASSESSEE H AS SHOWN TOTAL SALES OF RS.3,52,62,066/-. FROM THE DETAILS FURNISHED IN AN NEXURE H TO THE AUDIT 3 REPORT IT IS SEEN THAT THE YIELD OF FINISHED GOODS IS SHOWN BY THE ASSESSEE- COMPANY AT 100.68%. THE ASSESSEE WAS ASKED TO FURNI SH THE MONTH-WISE FIGURES OF PURCHASE OF RAW MATERIAL, MATERIAL ISSUE D FOR PRODUCTION, THE FINISHED GOODS PRODUCED, WASTAGE GENERATED AT EACH STAGE OF PRODUCTION AND ALSO THE CLOSING STOCK. THE DETAILS HAVE BEEN FURNI SHED BY THE ASSESSEE VIDE LETTER DATED 24-01-2005. THE DETAILS OF MONTHLY STO CK STATEMENTS SUBMITTED BY THE ASSESSEE TO ITS BANKERS AGAINST CREDIT FACIL ITIES WERE ALSO CALLED FOR FROM THE ASSESSEES BANKERS, VIZ., PUNJAB NATIONAL BANK, SHAHIBAUG, AHMEDABAD. THE FIGURES OF MONTH-WISE CLOSING STOCK FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WERE COMPARED WITH THE FIGURES SUBMITTED TO THE BANK. ON THE BASIS OF THIS COMPARISON, IT WA S NOTICED BY THE AO THAT THERE WERE CERTAIN DISCREPANCIES. ACCORDINGLY, A SH OW CAUSE NOTICE DATED 21- 02-2005 WAS ISSUED TO THE ASSESSEE. THE RELEVANT P ARAS ARE REPRODUCED HEREUNDER:- 2 AS PER THE AUDIT REPORT FILED WITH THE RETURN OF INCOME THE YIELD OF FINISHED GOODS HAS BEEN SHOWN AT 587.621 K GS. WHICH IS 108.68% (ANNEXURE H). SUBSEQUENTLY, WHILE FURNISH ING THE RELEVANT DETAILS YOU HAVE MODIFIED THE YIELD TO BE INCLUSIV E OF WASTAGE. DURING THE COURSE OF HEARING ON 03-02-2005 THE RELE VANT EXCISE RECORDS BOTH FOR YOUR PRODUCTION AS WELL AS THE JOB WORK, GOT DONE BY YOU AND ALSO THE JOB WORK DONE BY YOU WERE PRODUCED FOR VERIFICATION. IT IS SEEN FROM THE - - - -- AS PER YOUR OWN FIGUR ES THE TOTAL YIELD WILL BE 91.87% AND WASTAGE WILL BE OF 8.13%. 3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, YOU WERE REQUESTED TO FURNISH THE MONTH-WISE DETAILS OF RAW MATERIALS (GRANULES) PURCHASED, CONSUMED AND STOCK IN TERMS O F QUANTITY AND VALUE. FROM THE DETAILS FURNISHED VIDE YOUR LETTER DATED 24-01-2005, THE CLOSING STOCK OF HDPE GRANULES HAS BEEN VERIFIE D WITH REFERENCE TO THE MONTHLY STOCK STATEMENTS SUBMITTED TO PUNJAB NATIONAL BANK, SHAHIBAG. THE FOLLOWING PICTURE EMERGES AS A RESULT OF THE COMPARISON. 4 CLOSING STOCK AS ON AS PER BANK (IN KGS.) AS PER BOOKS (IN KGS.) DIFFERENCE 30-04-2001 21225 375 20850 31-05-2001 8425 8625 -200 30-06-2001 9575 9800 -225 31-07-2001 26825 27050 -225 31-08-2001 29750 29975 -225 30-09-2001 16600 16825 -225 31-10-2001 550 825 -275 30-11-2001 8525 11175 -2650 31-12-2001 5025 7200 -2175 31-01-2002 14850 13025 -1825 28-02-2002 21425 22300 -875 31-03-2002 27550 17850 9700 190325 165025 25300 THE COPIES OF MONTHLY STOCK STATEMENT SUBMITTED TO PUNJAB NATIONAL BANK INDICATES THAT THE STOCK IS VERIFIED BY THE BA NKERS. 4 IT IS SEEN FROM THE ABOVE CHART, PREPARED ON THE BASIS OF THE FIGURES FURNISHED BY YOU TO THE BANK AND TO THE DEP ARTMENT, THAT AS ON 30-04-2001 THE STOCK AVAILABLE WITH YOU WAS 21225 K GS. AS PER THE STOCK STATEMENT SUBMITTED TO BANK WHEREAS IN THE DE TAILS FURNISHED DURING THE COURSE OF HEARING THE STOCK AS ON 30-04- 2001 IS ONLY 375 KGS. ON THE OTHER HAND, AS ON 31-05-2001 THE STOCK AS PER THE STATEMENT GIVEN TO THE BANK IS 8425 KGS. WHILE AS P ER BOOKS IT IS 8625 KGS. WHICH NEARLY MATCHES. THIS MEANS THAT YOU HAD STOCK OF 20850 KGS. WHICH WAS NOT REFLECTED IN THE BOOKS OF ACCOUN TS. YOU ARE, THEREFORE, REQUESTED TO SHOW CAUSE AS TO WHY THE SA ID STOCK OF 20850 KGS. SHOULD NOT BE TREATED TO HAVE BEEN CONSUMED FO R UNACCOUNTED PRODUCTION AND WHY THE SAME PROCEEDS THEREOF SHOULD NOT BE TREATED AS YOUR INCOME. THE ASSESSEE SUBMITTED REPLY VIDE LETTER DATED 25-0 2-2005. THE RELEVANT PARAS ARE REPRODUCED HEREUNDER:- IN CONTINUATION OF OUR PREVIOUS SUBMISSION AND A S FURTHER DESIRED BY YOUR GOODSELF VIDE YOUR LETTER DATED 21-02-2005. WE ARE PLEASED TO SUBMIT AS UNDER:- 5 1 THAT YOUR GOODSELF HAVE OBSERVED THAT (ANNEXURE-H) TO THE AUDIT REPORT SHOWS THE PRODUCTION OF 587.621 MT. AN D PERCENTAGE SHOWN AS 108.68. IN THIS CONNECTION WE HAVE TO STATE THAT THE PRODUC TION FIGURES MENTIONED AT 587.621 MT. IS CORRECT BUT WITH RESPEC T TO PERCENTAGE, THE FIGURES MENTIONED IN ANNEXURE-H IS 100.68% AND NOT 108.68%. IT APPEARS THAT THERE IS AN APPARE NT ERROR DUE TO WHICH 100.68% IS MISREAD AS 108.68%. THE PERCENT AGE IS WORKED OUT AS UNDER: YIELD IN MT. 587.621 --------------- = ---------- = 100.68% CONSUMPTION IN MT. 583655 SO THERE IS MARGINAL GAIN OF ABOUT 0.68% WHICH IS O N ACCOUNT OF THREAD & OIL USED IN PRODUCTION PROCESS AND DURING STITCHING OF SACKS. 2 FURTHER THE TOTAL PRODUCTION IS SHOWN INCLUSIVE OF WASTAGE BECAUSE IN THE CASE OF ASSESSEES NATURE OF PRODUCT ION THE WASTAGE IS REALIZABLE BY PRODUCT AND THE COMPANY HA S SOLD THE SAME IS MARKET AND REALIZED REVENUE OF RS.325694. 3 REGARDING DIFFERENCE IN STOCK OF HDPE SUBMITTED TO THE BANK AND AS SHOWN IN THE BOOKS OF ACCOUNTS WE MOST RESPE CTFULLY SUBMIT THAT STOCK OF 30-4-2001 AS PER BOOKS WHICH I S SHOWN IN YOUR LETTER DT. 21-2-05 AT 21225 KGS. WHEREAS IN BA NK STATEMENT THE FIGURE AS PER YOUR LETTER IS 375 KGS. IN THIS CONNECTION WE HAVE TO STATE THAT FIGURES OF STOCK PER BANK STATEMENT IS OF 5 TH MAY 2001 WHEREAS STOCK AS PER BOOKS OF ACCOUNT IS OF 30 TH APRIL, 2001. FURTHER IN BANK STATEMENT THE STOCK AT 5 TH MAY 01 IS INCLUSIVE OF TRANSIT MATERIAL WHICH IS RECOVERED AFTER 30 TH APRIL, 2001. THIS FACT IS ALSO MENTIONED IN BANK STATEMENT. HENCE THERE IS DIFFERENCE, WHICH IS DULY RECONCILED IN THE MONTH OF MAY-05 IN WHICH THERE IS DIFFERENCE OF ONLY 200 KGS. WHICH IS ALSO ON ACCOUNT OF MASTER BATCH QTY. NOT INCLUDED BY YOUR GOODSELF WHICH IS ALSO REFLECT ED IN BANK STOCK STATEMENT. FURTHER THE DIFFERENCE IN SUBSEQUENT MONTHS I.E. OF 31-5-2001 I.E. 200 KGS. 30-6-2001 31-7-2001 225 KGS. IS ALL O N ACCOUNT OF THE FACT THAT YOUR HONOUR WHICH WRITING FIGURE OF B ANK 6 STATEMENT, FIGURES OF MASTER BATCH QUANTITIES ARE N OT ADDED. IF THE QUANTITIES OF MASTER BATCH IS INCLUDED THERE WI LL BE NO DIFFERENCE AS PER BANK AND AS PER BOOKS. REGARDING STOCK AS ON 31-3-2002. THE BANK STOCK STA TEMENT SHOWN POSITION AS OF 4 TH APRIL, 2002 WHEREAS BOOKS OF ACCOUNT SHOW STOCK OF 31 ST MARCH, 2002. SO NATURALLY THERE WILL BE DIFFERENT IN STOCK. HOWEVER AT THE END OF MAY NEXT IT WOULD BE AUTOMATICALLY RECONCILED DUE TO PURCHASE AFTER 31-3 -2002. THE ASSESSEE ALSO SUBMITTED THE RECONCILIATION AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE AO OBSERVED AS UNDER:- FROM THE ABOVE DISCUSSION AND ANALYSIS OF THE FACT S OF THE CASE OF THE ASSESSEE COMPANY, FOLLOWING ISSUES EMERGES: (I) THE SHIFTING STAND OF THE ASSESSEE THAT YIELD OF PRODUCTION IS INCLUSIVE OF WASTAGE. (II) ASSUMING THE YIELD OF PRODUCTION TO BE INCLU SIVE OF WASTAGE AS CLAIMED BY THE ASSESSEE, THE OVERALL YIELD INCLUSIVE OF WASTAGE CANNOT BE AND SHOULD NOT BE MORE THAN 100%, THE CLAIM OF 100.68% IS FACTUALLY INCORRECT. (III) CONSISTENT DISCREPANCIES IN THE QUANTITY FURN ISHED TO THE PUNJAB NATIONAL BANK AND THE ASSESSEES FAILURE TO EXPLAIN ALL THE DISCREPANCIES AND MORE PARTICULARLY THE DIFFERENCE OF 20.850 KGS. OF APRIL, 2001, WHICH HAS DISAPPEARED IMMEDIAT ELY IN THE SUBSEQUENT MONTH. (IV) THE NON RECORDING OF THE RECEIPT OF THE GOODS IN TIME DISCUSSED WITH EVIDENCES FROM THE SUPPLIER WHILE MAKING AN AD DITION OF RS.1,32,000/-. IN VIEW OF THE INABILITY OF THE ASSESSEE COMPANY TO EXPLAIN THE DISCREPANCY OF 20.850 KGS. OF GRANULES FOR APRIL 20 01, IT IS HELD THAT THE SAID QUANTITY HAS BEEN UTILIZED FOR MANUFACTURI NG OF BAGS. THIS PRODUCTION AND THE SALE PROCEEDS THEREOF ARE NOT RE CORDED IN THE BOOKS OF ACCOUNTS. ACCORDINGLY, THE SALE PROCEEDS OF THE UNACCOUNTED PRODUCTION ARE REQUIRED TO BE TAXED AS INCOME OF TH E ASSESSEE FOR THE 7 YEAR UNDER CONSIDERATION I.E. AY. 2002-03. THE COMP UTATION OF SUCH UNACCOUNTED INCOME IS AS UNDER:- RAW MATERIAL CONSUMED 20,850 KGS. FINISHED PRODUCTS WITH YIELD OF 91.87%19,155 KGS. WASTAGE @ 8.13% 1.695 KGS. THUS, THE ASSESSEE MANUFACTURED AND SOLD 19,155 KGS . OF FINISHED GOODS AND 1,695 KGS OF WASTAGE WITHOUT RECORDING TH E SALE PROCEEDS IN THE BOOKS OF ACCOUNTS. THE SALE OF WASTAGE, AS SHOWN BY THE ASSESSEE IS 41 4424 KGS. AND THE AMOUNT REALIZED OUT OF WASTAGE IS RS.325694/-. THUS , THE AVERAGE RATE REALIZED PER KG. IS RS.7.86/-. FROM THE DETAILS FIL ED WITH THE AUDIT REPORT, IT IS SEEN THAT THE TOTAL SALES OF FINISHED PRODUCTS IS 3,90,760 KGS. CONSISTING OF 3,07,145 KGS. OF WOVEN SACKS AND 83615 KGS. FABRICS. THE SALE PRICE REALIZED IS RS.2,89,20,945/ -. THUS, THE AVERAGE SALE PRICE IS RS.74.01 PER KG. ACCORDINGLY, THE VALUE OF UNACCOUNTED PRODUCTION AN D SALE OF FINISHED PRODUCTS OF 19,155 KGS., WORKS OUT TO RS.14,17,662/ -AND THE VALUE OF UNACCOUNTED SALE OF WASTAGE OF 1,695 KGS. WORKS OUT TO RS.13,323/-. THE TOTAL UNACCOUNTED SALES IS, THEREFORE, RS.14,30 ,985/-. THE SUM OF RS.14,30,985/- IS ACCORDINGLY ADDED TO THE TOTAL IN COME OF THE ASSESSEE AS SALE PROCEEDS OF UNACCOUNTED PRODUCTION . PENAL PROCEEDINGS U/S 271(1)(C) ARE BEING SEPARATELY INIT IATED. 3 WHEN THE MATTER WENT IN APPEAL BEFORE THE CIT(A) , THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UND ER:- 2.2 I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT O RDER AND ALSO THE SUBMISSIONS MADE BY THE APPELLANTS COUNSEL. IT IS QUIET APPARENT AS PER THE DETAILS AVAILABLE IN THE ASSESSMENT ORDER A S WELL AS THE WRITTEN SUBMISSIONS MADE BEFORE ME THAT THE AO HAS COMMITTE D A FUNDAMENTAL ERROR IN NOT RECONCILING THE FIGURES FO R THE MONTHS OF APRIL, 2001 AND MAY, 2001. HE ONLY RELIED ON THE LE TTER FROM THE BANK THAT STOCK STATEMENT WAS FOR THE MONTH OF APRIL AND IN DOING SO, HE DID NOT CARE TO EXAMINE THE APPELLANTS CLAIM THAT THE STOCK STATEMENT FOR THE MONTH OF APRIL, 2001 SUBMITTED TO THE BANK WAS IN FACT FOR THE PERIOD ENDED 05-05-2001 AND HENCE INCLUDED THE PURC HASES UPTO 05- 05-2001. IF AT ALL THE AO HAD ANY DOUBT AS TO THE V ERACITY OF THE APPELLANTS CLAIM THEN HE SHOULD HAVE VERIFIED THE PURCHASES AND CONSUMPTION FOR THE MONTH OF MAY WITH REFERENCE TO THE YIELD. IT IS 8 HERE THAT THE APPELLANTS CLAIM PREVAILS THAT IF TH E AOS PRESUMPTION OF UNACCOUNTED PRODUCTION IS TO BE TAKEN AS CORRECT THEN FOR THE MONTH OF MAY THE RAW MATERIAL AVAILABLE EXCLUDING PURCHAS ES UPTO 05-05- 2001 WOULD BE ONLY 53,850 KGS. AND THE DECLARED PRO DUCTION IS 74,700 KGS. REPRESENTING THE YIELD OF 138.31%. THUS, IT WO ULD BE AGAINST ALL PROBABILITY AND HENCE THE VERY BASIS OF AOS PRESUM PTION IS UNFOUNDED. I FIND MERIT IN THE APPELLANTS ARGUMENT THAT THE PURCHASES UPTO 05-05-2001 WERE DECLARED IN THE STOCK STATEMEN T FOR THE MONTH OF APRIL WITH THE MENTION AS FOR PERIOD ENDED 05-05-20 01. THIS FACTUAL ASPECT HAS NOT BEEN APPRECIATED BY THE AO, WHICH HA S RESULTED IN THE ABOVE ADDITION. AN ANALYSIS OF PRODUCTION AND SALES OUTSIDE THE BOOKS CANNOT BE MADE IN AN ISOLATED MANNER WITHOUT GIVING DUE WEIGHTAGE TO ATTENDANT EVENTS. THE ADDITION IS THEREFORE, UNC ALLED FOR AND IS DIRECTED TO BE DELETED. 4 BEFORE US, THE LEARNED DR RELIED ON THE ORDER OF THE AO 5 THE LEARNED AR, ON THE OTHER HAND, SUPPORTED THE ORDER OF THE CIT(A). 6 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND, PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDER OF THE TAX AUTHORITIES BELOW. WE HAVE NOTED FROM PAGES 19 AND 29 OF THE PAPER BOOK THAT THE STOCK STATEMENT SUBMITTED T O THE BANKER SHOWS THE QUANTITY AS ON 5TH MAY, 2001 AND 4TH APRI L, 2002 RESPECTIVELY. THE QUANTITY FOR THE GRANULES IS 2122 5 KGS., AND 27550 KGS., RESPECTIVELY. THE AO WHILE WORKING OUT THE DIFFERENCE PRESUMED THIS QUANTITY TO BE AS ON 30TH APRIL, 2001 AND 31ST MARCH, 2002 RESPECTIVELY. THE ASSESSEE HAS EXPLAINED THE REASONS BUT THE AO MADE THE ADDITION ON THE BAS IS OF TAKING THE QUANTITY AS ON THE DATE FOR WHICH THE STATEMENT HAS BEEN SUBMITTED TO THE BANKER. AT PAGE-33 THE ASSESSEE HA S RECONCILED AND WORKED OUT THE QUANTITY AS ON 5TH MAY, 2001 AND 4TH APRIL, 2002. THE QUANTITY AS ON 5TH MAY, 2001 AND 4TH APRI L, 2002 AS 9 SUBMITTED TO THE BANKER CANNOT BE TAKEN AS ON 30-04 -2001 AND 31-03-2002 WHILE WORKING OUT THE DIFFERENCE SHORTAG E. WE WENT TO THE FIGURES AS WORKED OUT BY THE AO. WE NOTED TH AT IF WE ARRIVE AT THE FIGURE AS ON 30-04-2001 AND 31-03-200 2 INSTEAD OF 05-05-2001 AND 04-04-2002, THERE IS A DIFFERENCE IN EACH OF THE MONTHS AND THE TOTAL DIFFERENCE EXCLUDING THE DIFFE RENCE FOR THE MONTH OF APRIL, 2001 AND MARCH, 2002 COMES TO 5250 KGS., FROM THE MONTH OF MAY, 2001 TO 20-02-2002. WE, THEREFORE , DO NOT AGREE WITH THE FINDING OF THE CIT(A) THAT NO ADDITI ON IS CALLED FOR IN THE ORDER OF THE AO. IN OUR OPINION, TO THE EXTENT THERE IS A DIFFERENCE IN THE STATEMENT OF THE BANKER AND THE S TATEMENT AS PER THE BOOKS OF ACCOUNTS AND ASSESSEE IS NOT ABLE TO EXPLAIN THE REASONS FOR THE DIFFERENCE, THE NATURAL INFERENCE W ILL BE THAT THE ASSESSEE HAS SOLD THE GOODS PRODUCED OUTSIDE THE BO OKS OF ACCOUNTS. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO WORK OUT THE FINISHED PRODUCTS WHI CH THE ASSESSEE COULD HAVE MADE OUT OF THE RAW MATERIAL OF 5250 KGS., AND ALSO WASTAGE THEREON. AFTER WORKING OUT THAT, T HE AO SHOULD WORK OUT THE AVERAGE PER KG. OF THE WASTAGE AND THE AVERAGE RATE OF KG OF THE FINISHED PRODUCTS MULTIPLYING WITH THE PRODUCTION AND THE WASTAGE, THE ADDITION BE WORKED OUT. TO THA T EXTENT THE ADDITION IS SUSTAINED. THUS, THIS GROUND IS PARTLY ALLOWED. 7.1 GROUND NO.2 RELATES TO DELETION OF THE ADDITIO N OF RS.1,32,000/-. THE BRIEF FACTS OF THE CASE ARE THAT FROM THE DETAILS OF MONTH WISE STOCK OF LDPE, THE AO NOTICED THAT THERE WAS DIFFERENCE IN THE STOCK SUBMITTED BY THE ASSESS EE TO THE BANK AND THE FIGURES AS PER THE BOOKS OF ACCOUNTS. ACCOR DING TO THE AO, THE STOCK AS ON 31-03-2002 WAS 3200 KGS AS PER THE BOOKS OF 10 ACCOUNTS WHILE AS PER THE STOCK STATEMENTS SUBMITTE D TO THE BANK THE STOCK IS 6200 KGS. THE AO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, HELD THAT THE EXCESS STOCK OF 3000 KGS. SHOWN IN THE BANK STATEMENT BUT NOT RECORDED IN THE BOOKS OF ACCOUNT IS PURCHASED OUT OF UNDISCLOSED INCOME. ACCORDINGLY, T HE INVESTMENT IN UNACCOUNTED LDPE WAS WORKED OUT AT RS.1,32,000/- AND THE ADDITION OF RS.1,32,000/- WAS MADE BY THE AO. WHEN THE MATTER WENT IN APPEAL BEFORE THE CIT(A ), THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER:- 3.2 I HAVE CAREFULLY EXAMINED THE RELEVANT FACTS A ND AM CONVINCED THAT THE APPELLANTS ARGUMENTS ARE SUPPORTED BY MAT ERIAL FACTS AND EVIDENCES. THE AO HAS NOT EVEN VERIFIED WHETHER THE SAID PURCHASE WAS ACCOUNTED BEFORE PROCEEDING TO MAKE AN ADDITION TOWARDS UNACCOUNTED STOCK. IN ANY CASE, IT IS PROVED BEYOND DOUBT THAT THE SAID PURCHASE WAS ACCOUNTED IN APRIL, 2002, WHICH IS VER IFIABLE WITH EXCISE RECORDS AS WELL. AS IN GROUND NO.1, HERE ALSO THE A O HAS MISLED HIMSELF WITHOUT CONSIDERING ALL THE ASPECTS AND MAK ING AN ISOLATED VIEW. THE ADDITION IS THEREFORE, WITHOUT ANY BASIS AND DESERVES TO BE DELETED AND I DIRECT SO. 7.2 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS AND, PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDER OF THE TAX AUTHORITIES. WE NOTED THAT THE AO HAS MADE THE IMPUGNED ADDITION MERELY ON SURMISES AND PRESUMPTIONS / ASSU MPTIONS AS WELL AS GROSS MISUNDERSTANDING OF THE FACTS OF THE CASE. THE ASSESSEE HAS SUBMITTED THE RECONCILIATION STATEMENT WHICH IS SELF EXPLANATORY IN ITSELF. THE DIFFERENCE OF 3000 KGS. AS ALLEGED BY THE AO WAS ON ACCOUNT OF PURCHASE OF 3000 KGS OF LD PE ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS AND EXCISE R ECORDS ON 02- 04-2002 I.E. THE DATE ON WHICH THE ASSESSEE RECEIVE D THE DELIVERY OF THE SAID GOODS. THE STOCK GIVEN TO THE BANK AS O N 04-04-2002 WAS INCLUSIVE OF THE SAID PURCHASE. WE DO NOT FIND ANY ILLEGALITY 11 OR INFIRMITY IN THE ORDER OF THE CIT(A). WE ACCORDI NGLY CONFIRM THE ORDER OF THE CIT(A) IN THIS REGARD. THUS, THIS GROUND STANDS DISMISSED. 8.1 GROUND NO.3 RELATES TO DELETION OF ADDITION OF RS.25,000/- MADE U/S 68 BEING UNSECURED LOAN. THE F ACTS IN BRIEF ARE THAT THE ASSESSEE RECEIVED CERTAIN LOANS DURING THE YEAR UNDER CONSIDERATION, AS UNDER:- INDRAJIT P RAJPUT RS. 25,000/- INDUMATI I RAJPUT RS. 25,000/- SUREKHA JAIN RS.3,50,000/- AS REGARDS THE LOAN RECEIVED FROM INDUMATI I RAJPUT OF RS.25,000/-, THE AO OBSERVED THAT THE ASSESSEE HAS FAILED TO PROVE THE IDENTITY OF THE DEPOSITOR, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE DEPOSITOR. HE ACCORDINGLY MADE THE ADDITION OF RS.25,000/-. WHEN THE MATTER W ENT IN APPEAL BEFORE THE CIT(A), THE CIT(A) DELETED THE AD DITION BY OBSERVING AS UNDER:- 4 . BEFORE ME, THE LEARNED COUNSEL FOR THE APPELL ANT VEHEMENTLY REPRESENTED THAT THE IDENTITY, GENUINENE SS OF THE TRANSACTION AS WELL AS THE CREDITWORTHINESS OF THE CREDITOR HAVE ALL BEEN PLACED BEFORE THE AO AND HENCE THE AD DITION WAS OUT OF PLACE. IT IS SEEN FROM THE COPY OF BANK ACCOUNT DETAILS OF THE CREDITOR THAT ALL THE ABOVE INGREDIE NTS STOOD PROVED AND THE APPELLANT CANNOT BE FOUND FAULT WITH FOR MAKING ADDITION U/S 68. THE ABOVE FACTS ARE SEEN EV EN IN THE ASSESSMENT ORDER. JUST BECAUSE THE CREDITOR IS NOT ASSESSED TO INCOME-TAX FOR WANT OF TAXABLE INCOME, THE CREDI T CANNOT BE DISALLOWED FOR ADDITION U/S 68 ASSUMING LACK OF CREDITWORTHINESS. APPARENTLY, THE AO MISLED HIMSELF IN MAKING THIS ADDITION. FRO THE FACTS OBTAINING ON RE CORDS, NO ADDITION U/S 68 IS WARRANTED. THE APPELLANT HAS DIS CHARGED ITS ONUS AND HENCE THE ADDITION IS DIRECTED TO BE D ELETED. 12 8.2 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS AND, PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDER OF THE TAX AUTHORITIES. WE FIND THAT THE CIT(A) HAS RIGHTL Y OBSERVED THAT THE ASSESSEE HAS DULY DISCHARGED ITS ONUS TO PROVE THE THREE INGREDIENTS AS LAID DOWN U/S 68 OF THE ACT. IT IS A LSO ESTABLISHED FROM THE COPY OF BANK ACCOUNT DETAILS OF THE CREDIT OR THAT ALL THE ABOVE INGREDIENTS STOOD PROVED AND THERE WAS NO REA SON TO MAKE ANY ADDITION U/S 68 OF THE ACT. THE CIT(A) HAS ALSO RIGHTLY OBSERVED THAT JUST BECAUSE THE CREDITOR IS NOT ASSE SSED TO INCOME- TAX FOR WANT OF TAXABLE INCOME, THE CREDIT CANNOT B E DISALLOWED FOR ADDITION U/S 68 ASSUMING LACK OF CREDITWORTHINE SS. APPARENTLY, THE AO MISLED HIMSELF IN MAKING THIS AD DITION. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER O F THE CIT(A) IN DELETING THE IMPUGNED ADDITION. WE ACCORDINGLY UPHO LD THE ORDER OF THE CIT(A). THUS, THIS GROUND STANDS DISMISSED. ITA NO.1559/AHD/2007 FOR AY 2003-04 : 9.1 GROUND NO.1 IN THIS APPEAL RELATES TO DELETION OF ADDITION OF RS.6,90,300/- MADE BY THE AO ON ACCOUNT OF COMMISSION PAYMENT TO M/S SWISS POLYPLAST. THE BRIE F FACTS OF THE CASE ARE THAT THE ASSESSEE HAS PAID RS.6,90,300 /- TO M/S SWISS POLYPLAST, A PARTNERSHIP FIRM IN WHICH THE DAUGHTER -IN-LAW OF THE DIRECTOR IS A PARTNER. THE AO ASKED THE ASSESSEE TO FURNISH THE DETAILS. THE ASSESSEE SUBMITTED A COPY OF LEDGER AC COUNT FOR COMMISSION ON EXPORT SALES. ACCORDING TO THE LEDGER ACCOUNT, VIDE JOURNAL ENTRIES DATED 31-3-2003 RS.6,90,300/- WAS SHOWN AS PAYMENT TO SWISS POLYPLAST AND THE AMOUNT WAS DEBIT ED TO THE P&L ACCOUNT. SINCE THE SPECIFIC DETAILS REGARDING T HE PERSON TO WHOM THE COMMISSION WAS PAID AND ALSO THE DETAILS O F SERVICES 13 PROVIDED BY THE PAYEE WERE NOT FURNISHED BY THE ASS ESSEE, THE ASSESSEE WAS AGAIN ASKED TO FURNISH THE DETAILS. TH E ASSESSEE VIDE LETTER DATED 22-2-2006 STATED THAT THE COMMISSION I S PAID TO M/S SWISS POLYPLAST ON ACCOUNT OF SALE PROCURED BY M/S SWISS POLYPLAST FROM FRIENDS AND FRIENDS SHIPPING AND M/S FRIEND SAULT INDUSTRIES. THESE FIRMS ARE DOING EXPORT OF M ERCHANDISE. THE ASSESSEE STATED THAT DUE TO EXPORT SUPPLY THE C OMPANY SAVED 16% EXCISE DUTY ON SUCH SALE. AS SUCH THE COMMISSIO N OF RS.6,90,300/- WAS PAID TO M/S SWISS POLYPLAST WHICH RESULTED IN GREAT BUSINESS AND PROFITS TO THE ASSESSEE-COMPANY. THE ASSESSEE WAS REQUESTED TO PRODUCE THE MANAGING DIRECTOR OF M /S SWISS POLYPLAST FOR VERIFICATION WITH REFERENCE TO THE PA YMENT OF COMMISSION. THE ASSESSEE PRODUCED MR. RAMESH PATEL, THE MANAGING PARTNER OF THE SAID FIRM FOR VERIFICATION BUT NO DETAILS OR RECORDS SUCH AS THE BOOKS OF ACCOUNTS OR THE BAN K STATEMENTS, ETC., WERE BROUGHT FOR VERIFICATION. A STATEMENT OF SHRI RAMESH PATEL WAS RECORDED U/S 131 OF THE IT ACT. THE AO CO NCLUDED THAT THE MANAGING PARTNER OF THE FIRM M/S SWISS POLYPLAS T DID NOT KNOW ABOUT THE TRANSACTIONS OF THE PARTIES CONNECTE D TO THE ASSESSEE COMPANY. THERE WAS NO AGREEMENT WITH THE A SSESSEE COMPANY REGARDING TERMS AND CONDITIONS FOR PAYMENT OF COMMISSION. COMMISSION WAS PAID ON SOLITARY TRANSAC TION OF SUPPLY OF MATERIALS TO M/S FRIENDS & FRIENDS, AN EX PORT CONCERN AND ACCORDINGLY, THE AO DISALLOWED THE EXPENDITURE AS NOT INCURRED WHOLLY FOR THE PURPOSE OF BUSINESS. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) DELETED THE DISA LLOWANCE BY OBSERVING AS UNDER:- 2.2 I HAVE CAREFULLY EXAMINED THE VARIOUS ARGUMENT S AND SUBMISSIONS OF THE APPELLANT AND ALSO PERUSED THE A SSESSMENT ORDER IN THIS REGARD. THE FACT THAT SUPPLY WAS MADE IN BULK TO AN EXPORT HOUSE 14 WAS NOT IN DOUBT. IT IS ALSO ON RECORD THAT THE ORD ER WAS PROCURED FOR A HIGHER SALE PRICE THAN THE AVERAGE SALE PRICE TO OT HER PARTIES. THE ONLY DISPUTE WAS THAT THE PAYMENT OF COMMISSION WAS MADE TO A CONCERN COVERED BY SECTION 40A(2)(B). THE MANAGING PARTNER OF THE RECIPIENT FIRM IN HIS STATEMENT U/S 131 CONFIRMED THE SOLITAR Y TRANSACTION OF PROCUREMENT ORDER. THE PAYMENT OF COMMISSION IS ALS O NOT IN DISPUTE. AS CONTENDED BY THE APPELLANT THERE IS NO DIVERSION OF LEGITIMATE PROFIT TO FAVOUR THE SISTER CONCERN TAKING INTO ACC OUNT THE SAVING IN EXCISE DUTY ON THIS SUPPLY TO AN EXPORT HOUSE. THE RATE OF SUPPLY IN TERMS OF SALE PRICE WAS ALSO HIGH. IN THIS VIEW OF THE MATTER, THERE IS NO COMPELLING EVIDENCE TO HOLD THAT IT IS A MAKE BE LIEVE CASE FOR DIVERTING TAXABLE PROFIT. THE COMMISSION PAID AT RE .1/- PER BAG IS ALSO NOT HIGHER. THUS, THE DISALLOWANCE WOULD APPEAR TO BE A CASE OF DISBELIEVING RATHER THAN ONE OF NON-GENUINE TRANSAC TION. IN THE LIGHT OF THE ABOVE DISCUSSION THERE IS NO MATERIAL TO HOLD T HAT THE APPELLANT COMPANY SUPPRESSED ITS NORMAL TAXABLE INCOME TO THE EXTENT OF COMMISSION PAYMENT. THE MERE FACT THAT THE RECIPIEN T FIRM IS AN ASSOCIATE CONCERN CANNOT RENDER THE PAYMENT AS TOTA LLY FOR NON- BUSINESS CONSIDERATION. FROM THE ANGLE OF EXCISE DU TY SAVINGS ON THE ATTAINED PROFITS, I HOLD THAT THIS TRANSACTION AS A NORMAL ONE AND NOT ONE OF COLOURFUL DEVICE. ACCORDINGLY, THE DISALLOWA NCE MADE BY THE AO IS DIRECTED TO BE DELETED. 9.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFU LLY CONSIDERED THE SAME. WE HAVE ALSO GONE THROUGH THE ORDER OF THE TAX AUTHORITIES BELOW. WE FIND THAT THE CIT(A) HAS DEALT WITH THE ISSUE IN DETAIL AND HAS RIGHTLY OBSERVED THAT IT IS THE COMMERCIAL EXPEDIENCY AND BUSINESS PRUDENCE AS JUDGED BY THE B USINESSMAN AND THE PAYMENT BEING GENUINE CANNOT BE DISALLOWED ON GROUNDS OF ASSOCIATE CONCERN, AS THERE IS NO DIVERSION OF L EGITIMATE PROFIT TO FAVOUR THE SISTER CONCERN TAKING INTO ACCOUNT TH E SAVING IN EXCISE DUTY ON THIS SUPPLY TO AN EXPORT HOUSE. THE RATE OF SUPPLY IN TERMS OF SALE PRICE WAS ALSO HIGH AND THERE WAS NO EVIDENCE TO HOLD THAT IT IS A MAKE BELIEVE CASE FOR DIVERTING T AXABLE PROFIT. WE, THEREFORE, DO NOT SEE ANY REASON TO INTERFERE W ITH THE ORDER OF THE CIT(A) IN DELETING THE DISALLOWANCE. THUS, T HIS GROUND STANDS DISMISSED. 15 10.1 THE NEXT GROUND RELATES TO DELETION OF THE AD DITION OF RS.3,71,727/-. THE FACTS ARE THAT AS PER SCHEDULE-6 TO THE BALANCE SHEET, THE ASSESSEE AS ON 31-3-2003, SHOWED INVENTO RIES AS UNDER:- 1 RAW MATERIAL RS.3,80,875/- 2 WORK IN PROGRESS RS.2,46,272/- 3 FINISHED GOODS RS.19,29,141/- THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF VA LUATION OF INVENTORIES. THE ASSESSEE FURNISHED THE DETAILS AS REPRODUCED IN THE ASSESSMENT ORDER. THE AO OBSERVED THAT THE ASSE SSEE HAS VALUED THE RAW MATERIAL, THE SEMI FINISHED GOODS AN D THE FINISHED GOODS AT MARKET PRICE WHICH IS SHOWN LOWER THAN THE COST. THE AO DID NOT ACCEPT THE EXPLANATION FURNISHED BY THE ASSESSEE AND HELD THAT THE VALUATION OF FINISHED GOODS AS SUBMIT TED BY THE ASSESSEE CANNOT BE ACCEPTED. THE ASSESSEE HAS NO BA SIS TO DETERMINE THE MARKET VALUE OF THE STOCK ON THE DATE OF BALANCE SHEET I.E. 31-3-2003. AS SUCH, THE VALUATION OF FIN ISHED GOODS IS ADOPTED AT RS.20,01,706/- (COST) AS AGAINST RS.16,2 9,979/- DECLARED BY THE ASSESSEE. THE DIFFERENCE OF RS.3,71 ,727/- IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER: 3.1 BEFORE ME THE LEARNED COUNSEL CONTENDED THAT A S SPECIFICALLY STATED IN THE TAX AUDIT REPORT, THE VALUATION OF FI NISHED GOODS WAS MADE AT COST OR MARKET VALUE WHICHEVER WAS LOWER TH OUGH INCLUDING EXCISE DUTY ELEMENT ON FINISHED GOODS. HE REFERRED TO THE FINAL ACCOUNTS. WHEREIN THE VALUATION OF FINISHED GOODS A T 40749 KGS. WAS TAKEN AT RS.40/- PER KG. ON THE BASIS OF MARKET RAT E AND ACCORDINGLY, THE COST OF RS.L6,29,980/- WAS ARRIVED AT. WHEN ASK ED ABOUT THE DUTY 16 ELEMENT WITH REFERENCE TO SECTION 145A, IT WAS EXPL AINED THAT THE EXCISE DUTY OF 16% ON THE FINISHED GOODS AT RS.2.66 ,089/- WAS SEPARATELY ADDED IN ARRIVING AT THE TOTAL INVENTORY OF R.19,29,14L/- FOR FINISHED GOODS. THUS, IN SHORT THE APPELLANT CONTEN DED THAT THE METHOD OF VALUATION WAS CONSISTENTLY FOLLOWED YEAR AFTER Y EAR WITHOUT ANY CHANGE AND THAT THERE WAS NO VIOLATION OF SECTION 1 45A. IN THIS REGARD THE ADDITION WAS SOUGHT TO BE DELETED. 3.2 I HAVE PERUSED THE ASSESSMENT ORDER IN THIS REG ARD CAREFULLY AND ALSO EXAMINED THE SUBMISSIONS OF THE APPELLANT. IT IS A MATTER OF FACT ON RECORD THAT RAW MATERIAL AND OTHER STORES WERE V ALUED AT COST. ONLY THE VALUATION OF FINISHED GOODS WAS TAKEN AT MARKET VALUE BEING LOWER THAN THE COST WITH REFERENCE TO SALE BILLS CLOSE TO THE YEAR END. HOWEVER, THE EXCISE DUTY ELEMENT ON FINISHED GOODS WAS SEPARATELY ADDED, THEREBY COMPLYING WITH SECTION 145A. THERE W AS NO SUDDEN CHANGE IN THIS YEAR AS REGARDS METHOD OF VALUATION. THIS FACT IS STATED CLEARLY IN THE TAX AUDIT REPORT. AS PER PEIIIIISIB1 E ACCOUNTING STANDARDS AND THE METHOD OF ACCOUNTING CONSISTENTLY FOLLOWED B THE APPELLANT IS TENABLE AND NO IRREGULARITY COULD BE A TTRIBUTED TO THIS. THE BASIS OF VALUATION IS ALSO EXPLAINED AS THE SALE BI LLS IN APRIL, 2003 WHICH IS QUITE IN THE VICINITY OF THE YEAR END WISE 31/3.2003. VIEWED FROM THIS PERSPECTIVE, I DO NOT FIND ANY INFIRMITY IN THE METHOD OF VALUATION OF FINISHED GOODS FOR THIS YEAR AND THE B ASIS HAVE BEEN EXPLAINED WITH VERIFIABLE EVIDENCES. ACCORDINGLY, I AM TO HOLD THAT INTERMEDIATE ALTERATIONS IN THE CONSISTENT METHOD W OULD BE OF NO PURPOSE WHEN NOTHING TO, THE CONTRARY HAS BEEN PROV ED. THE METHOD BEING CONSTANT AND REGULAR AND ALSO IN ACCORDANCE W ITH THE PERMISSIBLE CONCEPT OF VALUATION OF INVENTORY, THE DECLARED STO CK OF INVENTORY AT RS.25.56 LAC INCLUDING THE VALUE OF FINISHED GOODS OF RS.19.29 LAC DOES NOT CALL FOR ANY ADJUSTNENT AND ACCORDINGLY, T HE ADDITION MADE BY THE ASSESSING OFFICER IS DIRECTED TO BE DELETED. AS A CONSEQUENCE THERE SHALL NOT BE ANY ADJUSTMENT TO THE OPENING STOCK VA LUE AS ON 1/4/2003. 10.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREF ULLY CONSIDERED THE SAME. WE HAVE ALSO PERUSED THE ORDER OF THE CIT(A). WE NOTED THAT THE CIT(A) HAS HELD THAT THE BASIS OF VALUATION IS EXPLAINED AS THE SALE BILLS IN APRIL, 2003 WHICH IS QUITE IN THE VICINITY OF THE YEAR END WISE 31/3/200 3. THE METHOD OF VALUATION BEING CONSTANT AND REGULAR AND ALSO IN ACCORDANCE 17 WITH THE PERMISSIBLE CONCEPT OF VALUATION OF INVENT ORY, THE DECLARED STOCK OF INVENTORY AT RS.25.56 LACS INCLUD ING THE VALUE OF FINISHED GOODS OF RS.19.29 LACS DOES NOT CALL FO R ANY ADJUSTMENT. WE, THEREFORE, DO NOT FIND ANY ILLEGALI TY OR INFIRMITY IN THE ORDER OF THE CIT(A) IN DELETING THE ADDITION . WE ACCORDINGLY UPHOLD THE ORDER OF THE CIT(A) IN THIS REGARD. THUS, THIS GROUND ALSO STANDS DISMISSED. 11 IN THE RESULT, THE APPEAL FOR AY 2002-03 IS PAR TLY ALLOWED WHILE THE APPEAL FOR AY 2003-04 IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 21-08-2009 SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (P K BANSAL) ACCOUNTANT MEMBER DATE : 21-08-2009 COPY OF THE ORDER FORWARDED TO : 1. LINCOLN POLYMERS P. LTD., 308, SHANTI MALL, NEAR SARTHAK SCHOOL, SATTADHAR CORSS ROAD, GHATLODIA, AHMEDABAD 2. THE ITO, WARD-4(3), AHMEDABAD 3. THE CIT CONCERNED 4. THE CIT(A)-VIII, AHMEDABAD 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY .R/AR, ITAT, AHMEDABAD