The ACIT, Circle-2, Bhavnagar V. M/s. Saibaba Ship Breaking Corporation, Bhavnagar

ITA 2275/AHD/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8512 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 08-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Keywords: Fair market value
• Section: 143(3); 14A; 145

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO. 2152/AHD/2014 / ASSESSMENT YEAR: 2010-11 SAIBABA SHIP BREAKING CORPORATION, JIVAN MANSION, LATI BAZAR, BHAVNAGAR-364 001 PAN : AAHFS 6244 D VS. JOINT COMMISSIONER OF INCOME-TAX, RANGE-1, BHAVNAGAR [ ./ ITA NO. 2275/AHD/2014 / ASSESSMENT YEAR: 2010-11 ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-2, BHAVNAGAR VS. SAIBABA SHIP BREAKING CORPORATION, JIVAN MANSION, LATI BAZAR, BHAVNAGAR-364 001 PAN : AAHFS 6244 D / (APPELLANT) / (RESPONDENT ASSESSEE BY : SHRI VARTIK CHOKSI, AR REVENUE BY : SHRI V K SINGH, SR DR ' / DATE OF HEARING : 03/04/2018 / DATE OF PRONOUNCEMENT: 12/04/2018 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER: THESE ARE THE CROSS-APPEALS FILED BY THE ASSESSEE A ND REVENUE RESPECTIVELY AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XX, AHMEDABAD DATED 16.05.2014, ARISING OUT OF ORDER UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINA FTER REFERRED TO AS THE ACT), FRAMED ON 14.03.2013 BY THE JCIT, BHAVNAGAR RANGE-2 , BHAVNAGAR. 2. ASSESSEE HAS RAISED FOLLOWING GROUNDS IN ITS APP EAL:- 2.0 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS )-XX, AHMEDABAD [HEREINAFTER REFERRED TO AS THE 'CIT(A)'] ERRED ON FACTS AS ALSO IN LAW IN ITA NOS. 2152 & 2275/AHD/2014 ASSESSEE : SAIBABA SHIP BREAKING CORPN AY : 2010-11 - 2 UPHOLDING THE ACTION OF AO IN REJECTING BOOKS OF AC COUNT U/S 145(1) OF THE ACT. THE REJECTION OF BOOKS OF ACCOUNT IS TOTALLY UNJUST IFIED ON FACTS AS ALSO IN LAW AND IT MAY KINDLY BE DIRECTED TO BE ACCEPTED. 3.0 THE ID. CIT(A) ERRED ON FACTS AS ALSO IN LAW IN SUSTAINING PART DISALLOWANCE OF EXPENSES AMOUNTING TO RS.54,872/- MADE U/S. 14A OF THE ACT. THE DISALLOWANCE IS TOTALLY UNJUSTIFIED AND MAY KINDLY BE DELETED. 4.0 THE LEARNED CIT(A) ERRED ON FACTS AS ALSO IN LA W IN SUSTAINING ESTIMATED ADDITION OF RS.5,00,000/- ON LUMP SUM BASIS OUT OF THE TOTAL ADDITION OF RS.30,00,000/- MADE BY THE AO ON ACCOUNT OF ALLEGED UNACCOUNTED SALE OF DG SETS ETC. THE ADDITION CONFIRMED BY THE ID. CIT(A) IS TOTALLY UNJUSTIFIED ON FACTS AS ALSO IN LAW AND MAY KINDLY BE DELETED. 5.0 THE LEARNED CIT(A) ERRED ON FACTS AS ALSO IN L AW IN SUSTAINING ESTIMATED ADDITION OF RS.1,00,000/- ON LUMP SUM BASIS ON ACCO UNT OF ALLEGED UNACCOUNTED SALE OF OIL. THE ADDITION IS TOTALLY UNJUSTIFIED ON FACTS AS ALSO IN LAW AND MAY KINDLY BE DELETED. 6.0 THE LEARNED CIT(A) ERRED ON FACTS AS ALSO IN LA W IN CONFIRMING THE ADDITION OF RS.3,01,452/- MADE ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK ON THE ALLEGED GROUND THAT THE SAME HAS TO BE VALUED INCLU DING THE RECYCLING CHARGES PAID BEING PART OF COST OF CLOSING STOCK. THE ADDIT ION MADE MAY KINDLY BE DELETED. 7.0 YOUR HONOR'S APPELLANT CRAVES LEAVE TO ADD , AMEND, ALTER, OR WITHDRAW ANY OR MORE GROUNDS OF APPEAL ON OR BEFORE THE HEAR ING OF APPEAL. 3. THE SOLE GROUND RAISED BY THE REVENUE IS AS FOLL OWS:- THE LD. CIT(A)-XX, AHMEDABAD HAS ERRED ON FACTS AN D CIRCUMSTANCES OF THE CASE IN ACCEPTING LUMPSUM AMOUNT OF RS.5 LAC AS UNA CCOUNTED SALES INSTEAD OF RS.30,00,000/- ADDED BY THE AO U/S 143(3) OF THE AC T, EVEN WHEN CIT(A) HAS HIMSELF ACCEPTED THAT ASSESSEE HAS NOT DISCLOSED SA LE OF SUCH MACHINERIES AND EVEN WHEN AO HAS SCIENTIFICALLY ESTIMATED THE SALE PRICE OF MACHINERIES REFERRING TO BILLS/INVOICES OF OTHER CONCERNS. 4. BRIEFLY STATED FACTS, AS CULLED OUT FROM THE RECORD S, ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF SHIP BREAKING AT ALANG SHIP BREAKING YARD, ALANG, BHAVNAGAR. FOR THE YEAR UNDER CONSIDERATION , THE ASSESSEE HAS FILED ORIGINAL RETURN OF INCOME ON 01.10.2010 DECLARING T HE TOTAL INCOME OF RS.2,05,94,660/-. THEREAFTER, THE CASE WAS SELECTE D FOR SCRUTINY AND ASSESSMENT U/S 143(3) OF THE ACT WAS FRAMED ON 14.03.2013, AFT ER MAKING VARIOUS ADDITIONS ITA NOS. 2152 & 2275/AHD/2014 ASSESSEE : SAIBABA SHIP BREAKING CORPN AY : 2010-11 - 3 ON ACCOUNT OF UNACCOUNTED SALES (RS.30,00,000), UND ISCLOSED OIL SALE (RS.4,32,503/-), DISALLOWANCE OF U/S 14A (RS.3,10,7 07/-), UNDERVALUATION OF STOCK (RS.3,01,452/-) AND EARLIER YEARS DUTY EXPENS ES (RS.10,83,749/-). 4. AGGRIEVED BY THE ORDER SO PASSED BY THE LEARNED ASSESSING OFFICER, THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A) WHO H AS GIVEN PART RELIEF TO THE ASSESSEE BY DELETING (I) RS.25,00,000/- OUT OF RS. 30,00,000/- ON ACCOUNT OF UNACCOUNTED SALES, (II) RS.3,32,503/- OUT OF RS.4,3 2,503/- ON ACCOUNT OF UNDISCLOSED OIL SALE, (III) RS.2,55,835/- OUT OF RS .3,10,707/- ON ACCOUNT OF DISALLOWANCE U/S 14A OF THE ACT AND (IV) RS.10,83,7 49/- ON ACCOUNT OF UNEXPLAINED PAYMENT OF DUTY CHARGES; HOWEVER, CONFI RMED THE ADDITION OF RS.3,01,452/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF UNDERVALUATION OF STOCK. 5. FIRST, WE WILL TAKE UP GROUND NO.2 RAISED BY THE ASSESSEE AGAINST THE ACTION OF THE ASSESSING OFFICER REJECTING BOOKS OF ACCOUNTS UNDER SECTION 145(1) OF THE ACT AND THEREBY MAKING ADDITIONS ON ESTIMATE D BASIS FOR THE ALLEGED UNACCOUNTED SALES ON DG SETS, UNACCOUNTED SALES OF OIL AND UNDERVALUATION OF CLOSING STOCK. AS REGARD THE ALLEGED ADDITION FOR UNACCOUNTED SALES OF DG SALES, THE LEARNED ASSESSING OFFICER MADE ADDITION OF RS.30,00,000/- WHICH WAS CURTAILED TO RS.5,00,000/- BY LD. CIT(A) FOR WHICH REVENUE IS ALSO IN APPEAL. 6. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE, WHIC H IS ENGAGED IN THE BUSINESS OF SHIP BREAKING ACTIVITY, DECLARED INCOME OF RS.2, 05,94,660/- IN THE RETURN OF INCOME FILED ON 01.10.2010. DURING THE COURSE OF A SSESSMENT PROCEEDINGS, PURSUANT TO THE SELECTION OF CASE FOR SCRUTINY, LEA RNED ASSESSING OFFICER CALLED FOR VARIOUS DETAILS ABOUT THE BREAKAGE OF SHIPS, BI FURCATION OF ITEMS AS WELL AS THEIR SALE AND THE STOCK IN HAND. THE ASSESSEE GAV E DETAILED REPLY; HOWEVER, LEARNED ASSESSING OFFICER, FOR WANT OF DAY-TO-DAY Q UANTITATIVE DETAILS, WENT AHEAD TO REJECT THE BOOKS OF ACCOUNTS UNDER SECTION 145(1) OF THE ACT AND MADE VARIOUS ADDITIONS. ITA NOS. 2152 & 2275/AHD/2014 ASSESSEE : SAIBABA SHIP BREAKING CORPN AY : 2010-11 - 4 7. WHEN THE MATTER CAME UP BEFORE THE LEARNED CIT(A ), DETAILED SUBMISSIONS WERE FILED BY THE ASSESSEE SHOWING THAT IN THE PAST ALSO BOOKS RESULTS HAVE BEEN ACCEPTED BY THE DEPARTMENT. SHORT AGE SHOWN DURING THE YEAR IS MARGINALLY INCREASED TO 10.98% AS AGAINST 9.96%. FURTHER, LEARNED CIT(A), EVEN AFTER APPRECIATING THE NATURE OF SHIP BREAKING INDUSTRY AS WELL AS APPRECIATING THE DIFFICULTIES FACED BY THE ENTREPRE NEURS IN SUCH INDUSTRY TO MAINTAIN THE DAY-TO-DAY CONSUMPTION AND SHORTAGE RE CORD BECAUSE OF THE VOLUME AND VARIOUS CONSTRAINS IN MEASURING THE SAME , STILL CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY MERELY MENTIONIN G THAT THE POSSIBILITY FOR LEAKAGE OF THE REVENUE CANNOT BE RULED OUT. NOW, T HE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 8. LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND FURTHER ADDED THAT NO SPECIFIC ERROR HAS BEEN POINTED OUT IN THE AUDITED BOOKS OF ACCOUNTS AND RE GISTER UNDER THE CENTRAL EXCISE AND VAT AND THE UNIT IS COVERED 24 HOURS BY EXCISE BARRIERS WHICH DO NOT ALLOW NOTHING TO MOVE WITHOUT HAVING VALID GATE PASS. ASSESSEE REFERRED AND RELIED UPON THE FOLLOWING DECISIONS:- (I) HONBLE GUJARAT HIGH COURT DECISION IN THE CASE OF CIT VS. VIKRAM PLASTIC & ORS, 239 ITR 161, 163; (II) HONBLE HIGH COURT OF DELHIS DECISION IN THE CASE OF CIT VS. JACKSON HOUSE, 39 DTR (DEL) 212; (III) HONBLE HIGH COURT OF PUNJAB & HARYANAS DECISION IN THE CASE OF CIT VS. OM OVERSEAS, 315 ITR 185 (P&H); (IV) HONBLE CALCUTTA HIGH COURT DECISION IN THE CASE OF ASHOKE REFRECTORIES PVT LTD VS. CIT, 279 ITR 457 (CAL) (V) HONBLE ITAT, JAIPUR BENCH DECISION IN THE CASE OF ITO VS. AMAR SINGH JAIN, 43 TTJ (JP-TRIB) 11 ITA NOS. 2152 & 2275/AHD/2014 ASSESSEE : SAIBABA SHIP BREAKING CORPN AY : 2010-11 - 5 9. ON THE OTHER HAND, LEARNED DEPARTMENTAL REPRESEN TATIVE VEHEMENTLY ARGUED SUPPORTING THE ORDERS OF THE LOWER AUTHORITI ES. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. LOOKING TO THE FACT THAT SOME OF THE GR OUNDS ARE COMMON, WE TAKE UP BOTH THE APPEALS TOGETHER FOR ADJUDICATING THE I SSUES. ASSESSEE IN ITS GROUND NO.2 HAS CHALLENGED THE FINDING OF THE LD. CIT(A) U PHOLDING THE ACTION OF THE ASSESSING OFFICER IN REJECTING BOOKS OF ACCOUNTS UN DER SECTION 145(1) OF THE ACT. THE OTHER GROUND NOS. 4, 5 AND 6 OF ASSESSEES APPE AL AND GROUND NO.1 OF REVENUES APPEAL EMANATE OUT OF ORDER OF THE ASSESS ING OFFICER MAKING VARIOUS ADDITIONS CONSEQUENT TO REJECTION OF BOOKS OF ACCOU NTS. SO, WE WILL FIRST DEAL WITH GROUND NO. 2 OF ASSESSEES APPEAL THAT WHETHER THE LD. ASSESSING OFFICER WAS JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE. WE OBSERVE THAT THE ASSESSEE IS CONSISTENTLY ENGAGED IN THE BUSINES S OF SHIP BREAKING ACTIVITY. BOOKS OF ACCOUNTS ARE REGULARLY AUDITED. THE CASE OF THE ASSESSEE WAS SUBJECT TO SCRUTINY UNDER SETION 143(3) OF THE ACT AND IN THE ASSESSMENT ORDERS FOR ASSESSMENT YEARS 2008-09 AND 2009-10, DATED 20.12.2 010 AND 24.11.2011 RESPECTIVELY, THE BOOKS RESULTS OF THE ASSESSEE HAV E BEEN ACCEPTED AND NO ADDITION TOWARDS SUPPRESSED SALE OR UNDERVALUATION OF CLOSING STOCK OR ESTIMATION OF PROFITS HAVE BEEN MADE. REVENUE HAS ALSO NOT DISPUTED THE FACT THAT THE ACTIVITY CARRIED OUT BY THE ASSESSEE ARE I N CONSONANCE WITH THE ACTIVITY CARRIED OUT BY IT IN THE PRECEDING YEARS. WE FIND THAT THE LEARNED ASSESSING OFFICER WENT IN DEPTH IN THE BOOKS OF ACCOUNTS ON A CCOUNT OF OBSERVING INCREASE IN THE SHORTAGE OF STOCK WHICH ROSE TO 10.98% AS A GAINST 9.96%. DURING THE PROCEEDINGS BEFORE THE LEARNED FIRST APPELLATE AUTH ORITY, THE ASSESSEE SUBMITTED A DETAILED STUDY REPORT GIVEN BY METALLUR GICAL AND ENGINEERING CONSULTANTS FORMED BY THE FERROUS SCRAP COMMITTEE O F MINISTRY OF STEELS, GOVERNMENT OF INDIA (IN SHORT KNOWN AS MECON REPOR T) WHICH PROVIDES PERCENTAGE OF WEIGHT LOSS OF ITEMS OBTAINED ON BREA KING DIFFERENT TYPES OF SHIPS. THE SHORTAGES SHOWN BY THE ASSESSEE ARE ALM OST WITHIN THE SAME RANGE ITA NOS. 2152 & 2275/AHD/2014 ASSESSEE : SAIBABA SHIP BREAKING CORPN AY : 2010-11 - 6 OF THE WEIGHT LOSS SHOWN IN THIS REPORT. FURTHER, IN THE DECISION OF THE CO- ORDINATE BENCH IN THE CASE OF AAPEE SHIP BREAKERS P VT LTD VS. CIT, IN ITA NO.7522/MUM/2007, THE SHORTAGE OF 15% IS HELD TO BE REASONABLE AND, SIMILARLY, IN ANOTHER DECISION OF THE CO-ORDINATE B ENCH IN THE CASE OF GOYAL TRADERS VS. ITO IN ITA NO.4431/MUM/2010, THE SHORTA GE CLAIM IN THE RANGE OF 10-20% IN SHIP BREAKING BUSINESS IS HELD TO BE REAS ONABLE. IN LIGHT OF MECON REPORT AS WELL AS DECISIONS OF CO-ORDINATE BENCH, W E ARE OF THE CONSIDERED VIEW THAT THE SHORTAGE DECLARED BY THE ASSESSEE AT 10.98 % WAS NOT EXCESSIVE OR UNREASONABLE. 11. WE FURTHER FIND THAT DURING THE ASSESSMENT PROC EEDINGS, BOOKS OF ACCOUNTS, AUDITED REPORTS ETC. WERE PRODUCED AND NE ITHER THE AUDITOR NOR THE ASSESSING OFFICER HAVE POINTED OUT ANY DEFECT THERE IN. THESE RECORDS ARE ALSO UNDER THE SURVEILLANCE OF CENTRAL EXCISE AND THE BU SINESS PLACE OF THE ASSESSEE IS UNDER THE CUSTOM BOUND AREA AND EACH MOVEMENT OF GOODS IS PASSED THROUGH GATE PASS. NO DEFECT OR OMISSION HAS BEEN FOUND BY THE CENTRAL EXCISE DEPARTMENT AS SUBMITTED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES. 12. AS REGARDS THE OBSERVATION OF THE ASSESSING OFF ICER THAT THE DAY-TO-DAY CONSUMPTION AND PRODUCTION OF RAW MATERIAL AND FINI SHED GOODS BEING NOT MAINTAINED, WE FIND FORCE IN THE CONTENTIONS OF THE ASSESSEE THAT IN THIS INDUSTRY IT IS NOT PRACTICABLE TO MEASURE THE DAY-TO-DAY SHO RTAGE IN THE PRODUCTION BECAUSE THE DISCARDED SHIPS, WHICH ARE MOSTLY VERY OLD, THERE ARE VARIOUS ITEMS OF MACHINERIES AND ARTICLE WHICH ARE NOT READILY SA LEABLE IN THE MARKET DUE TO THEIR COMPLEX NATURE, OUT OF DATE TECHNOLOGY AND NO T IN WORKING CONDITION. ALL SUCH ITEMS ARE SCRAP IN NATURE. HOWEVER, THE ASSES SEE HAS MAINTAINED DAY-TO- DAY SALE REGISTER SHOWING THE DESCRIPTION OF THE GO ODS, WEIGHT AND QUANTITY FOR THE PURPOSE OF EXCISE RECORDS. THE ITEMS OBTAINED FROM DIFFERENT SHIPS ARE NOT IN UNIFORM WEIGHT AND QUANTITY; THEREFORE, THERE CA NNOT BE A SET BENCHMARK TO ITA NOS. 2152 & 2275/AHD/2014 ASSESSEE : SAIBABA SHIP BREAKING CORPN AY : 2010-11 - 7 CALCULATE THE COST OR FAIR MARKET VALUE OF EACH AND EVERY PRODUCT AS IT VARIES FROM CASE TO CASE BASIS AS WELL AS THE SHIPS WHICH ARE BROKEN. 13. LEARNED ASSESSING OFFICER HAS MADE MAJOR PORTIO N OF THE ADDITION TOWARDS UNRECORDED SALES OF DG SETS TO THE TUNE OF RS.30 LAKHS, BUT IT IS CONTENDED BY THE ASSESSEE THAT ALL DETAILS WHICH WE RE SUBMITTED BEFORE THE ASSESSING OFFICER REGARDING THE SALES OF SCRAP ITEM S DURING THE YEAR THE AMOUNT RECEIVED WAS MUCH MORE THAN THE ADDITION MAD E AND THEY HAVE ALREADY BEEN DISCLOSED IN THE REGULAR BOOKS OF ACCO UNTS; BUT THE ASSESSING OFFICER DID NOT VERIFY THE SAME. 15. LOOKING TO THESE FACTS, WHICH HAVE ALSO BEEN AP PRECIATED BY THE LD. CIT(A) IN HIS FINDINGS, WE FIND THAT THE ASSESSING OFFICER HAS MERELY MADE A GUESS WORK FOR REJECTING THE BOOKS OF ACCOUNTS AND HE HAS NOT BROUGHT ON RECORD ANY CONCRETE EVIDENCE TO SUPPORT HIS ACTION. NO ENQUIRY HAS BEEN MADE TOWARDS THE ALLEGED SUPPRESSED SALES AND LUMP-SUM A DDITION HAS BEEN MADE. FOR THE PURPOSE OF REJECTING THE BOOKS OF ACCOUNTS, IT IS INCUMBENT UPON THE ASSESSING OFFICER TO PINPOINT THE SPECIFIC MISTAKE IN THE REGULAR BOOKS OF ACCOUNTS WHICH AFFECTS THE INCOME WHICH IS NOT DONE IN THE PRESENT CASE. LEARNED ASSESSING OFFICER ALSO IGNORED THE FACT THA T THE MARGINAL DECREASE IN THE GROSS PROFIT WAS ON ACCOUNT OF CERTAIN RAISE IN THE SALES FROM 7.24 CRORES (APPROX) TO 35.15 CRORES (APPROX). AS REGARDS TO THE OBSERVATIONS OF THE ASSESSING OFFICER REGARDING THE SALE OF ENGINE MADE BY M/S. SHANTI SHIP BREAKERS PVT LTD, M/S. MAHAVEER SHIP BREAKERS AND M /S. SHYAM EXPORTS, WE FIND THAT THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD THE FACTS AND FEATURES OF THESE CASES. SUCH TRANSACTIONS TOOK PLACE BEFOR E REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE. WE FURTHER OBSERVE THAT T HE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. VIKRAM PLASTIC & ORS (SUPRA) HAS UPHELD THE ORDER OF THE TRIBUNAL DECIDING IN FAVOUR OF THE ASS ESSEE CONCLUDING THAT THE PROVISIONS OF SECTION 145 (2) COULD NOT BE INVOKED AS THERE WAS NO DISCREPANCY OR DEFECT POINTED OUT IN THE BOOKS OF ACCOUNTS WHIC H WERE REGULARLY MAINTAINED ITA NOS. 2152 & 2275/AHD/2014 ASSESSEE : SAIBABA SHIP BREAKING CORPN AY : 2010-11 - 8 AND ALSO NO FINDING WAS THERE TO ESTABLISH THAT PUR CHASE/EXPENSES WERE INFLATED OR SALES SUPPRESSED. SIMILAR VIEW WAS ALSO TAKEN B Y THE HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. JACKSONS HOUSE (SUPRA) AND HONBLE PUNJAB AND HARYANA IN THE CASE OF CIT VS. OM OVERSEAS (SUPRA). WE ALSO FIND THAT IN THE CASE OF KOLKATA HIGH COURT IN THE CASE OF ASHOKE R EFRECTORIES PVT LTD (SUPRA) HAS HELD THAT THE ACCOUNTS BOOKS CANNOT BE REJECTED MERELY ON THE GROUND THAT ITEM-WISE STOCK WAS NOT MAINTAINED IN THE STOCK REG ISTER. WE, THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENTS OF THE HONBLE COURTS, AS REFERRED ABOVE, AS WELL AS IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, ARE OF THE VIEW THAT THE ACTION OF THE ASSESSING OFFICER REJECTING THE B OOKS OF ACCOUNTS UNDER SECTION 145(1) OF THE ACT WAS NOT JUSTIFIED. WE ACCORDINGLY ALLOW GROUND NO.2 OF THE ASSESSEES APPEAL. 16. AS WE HAVE ALREADY HELD THAT THE ACTION OF THE ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNTS WAS NOT JUSTIFIED A ND THE BOOK RESULTS OUGHT TO HAVE BEEN ACCEPTED, THE GROUND NOS. 4, 5 AND 6 OF T HE ASSESSEES APPEAL AND GROUND NO. 1 OF REVENUES APPEAL RELATING TO SUPPRE SSION OF SALES OF DG SETS, UNACCOUNTED SALES OF OIL AND ALLEGED UNDERVALUATION OF CLOSING STOCK BECOME INFRUCTUOUS AND, ACCORDINGLY, WE DELETE THE ADDITIO N OF RS.30,00,000/- FOR THE UNACCOUNTED SALES, RS.4,32,503/- FOR UNDISCLOSED OI L SALE AND RS.3,01,452/- FOR UNDERVALUATION OF STOCK. IN THE RESULT, GROUND NO S. 4, 5 & 6 OF ASSESSEES APPEAL ARE ALLOWED AND GROUND NO. 1 OF REVENUES APPEAL IS DISMISSED. 17. NOW WE TAKE UP GROUND NO.3 OF ASSESSEES APPEAL RELATING TO DISALLOWANCE OF RS.3,10,707/- UNDER SECTION 14A OF THE ACT. WE FIND THAT THE ASSESSING OFFICER MADE THE DISALLOWANCE UNDER SECTI ON 14A AT RS.3,10,707/- WHICH INCLUDED TWO COMPONENTS; FIRSTLY DISALLOWANCE OF INTEREST EXPENDITURE OF RS.2,55,835/- AND RS.54,872/- BEING 0.5% OF THE AVE RAGE INVESTMENT TOWARDS ADMINISTRATIVE COST. THE ASSESSEE HAS EARNED EXEMP TED DIVIDEND INCOME OF RS.49,680/- DURING THE YEAR. FURTHER, THE FINDING OF THE LD. CIT(A) ATTAINED ITA NOS. 2152 & 2275/AHD/2014 ASSESSEE : SAIBABA SHIP BREAKING CORPN AY : 2010-11 - 9 FINALITY DELETING THE INTEREST DISALLOWANCE OF RS.2 ,55,835/- AS THE REVENUE IS NOT IN APPEAL BEFORE US. AS FAR AS THE REMAINING AMOUN T OF RS.54,872/- IS CONCERNED, WE FIND THAT THE YEAR UNDER APPEAL IS AS SESSMENT YEAR 2010-11 AND FROM ASSESSMENT YEAR 2008-09 ONWARDS THERE HAS BEEN AN AMENDMENT IN THE METHOD PROVIDED IN RULE 8D OF IT RULES R.W.S. 14A O F THE ACT, WHICH PROVIDES FOR CALCULATING THE DISALLOWANCE TOWARDS ADMINISTRA TIVE COST TO BE CALCULATED @ 0.5% OF THE AVERAGE INVESTMENT. FURTHER, IN THE WO RKING SHEET PROVIDED BY THE ASSESSEE AT PAGE NO.38 OF THE PAPER-BOOK, WE OBSERV E THAT THE ASSESSEE ITSELF HAS ACCEPTED THAT THE MAXIMUM AMOUNT WHICH CAN BE DISAL LOWED IS RS.54,872/- WHICH ACCORDINGLY LEAVES NO ROOMS FOR THE ASSESSEE TO SUCCEED IN THIS GROUND. WE ACCORDINGLY SUSTAIN THE DISALLOWANCE UNDER SECTI ON 14A OF THE ACT AT RS.54,872/- AND DISMISS THE GROUND NO.3 RAISED BY T HE ASSESSEE. 18. OTHER GROUNDS ARE GENERAL IN NATURE WHICH NEEDS NO SEPARATE ADJUDICATION. 19. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THAT OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 12 TH APRIL, 2018 AT AHMEDABAD. SD/- SD/- (MAHAVIR PRASAD) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER AHMEDABAD; DATED, / /2018 ' '() *)/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. , / CONCERNED CIT 4. , ) ( / THE CIT(A)- 5. ) '' , , /DR,ITAT, AHMEDABAD, 6. 5 / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT.REGISTRAR) ITAT, AHMEDABAD