M/s. Mahavir Steel Corporation, Ahmedabad V. The Addl. CIT, Range-2, Ahmedabad

ITA 2313/AHD/2013

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0849 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 27-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 16-09-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Assessee Lawyers: M K PATEL
• Keywords: Corroborative evidences

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH, AHMADABAD BEFORE: SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH , ACCOUNTANT MEMBER ITA NO. 2313/AHD/2013 ASSESSMENT YEAR : 2008-09 M/S. MAHAVIR STEEL CORPORATION, 1495/41, SWAMINARAYAN GODAM, O/S DARIYAPUR GATE, BARDOLPURA, AHMEDABAD - 380004 V S . THE ADDL.CIT, RANGE-2, AHMEDABAD PAN NO. AADFM4383M (APPELLANT) .. (RESPONDENT) /BY ASSESSEE SHRI M. K. PATEL, A.R. /BY REVENUE SHRI S. K. DEV, SR. D.R. /DATE OF HEARING 28.11.2018 /DATE OF PRONOUNCEMENT 03/12/2018 O R D E R PER : RAJPAL YADAV, JUDICIAL MEMBER THE PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF T HE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A)-6, AHMEDABAD, DATED 22. 01.2013 PASSED FOR A.Y. 2008-09. 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT L EARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.5,50,153/- WHICH W AS ADDED BY THE ITA NO. 2313/AHD/13 A.Y.2008-09 (M/S. MAHAVIR STEEL CORPORATION VS. ACIT) PAGE 2 ASSESSING OFFICER BY DISALLOWING THE SHORTAGE CLAIM ED BY THE ASSESSEE ON ACCOUNT OF USE OF DIFFERENT WEIGH-BRIDGES. 3. THE REGISTRY HAS POINTED OUT THAT THE APPEAL IS TIME BARRED BY 142 DAYS. IN ORDER TO EXPLAIN THE DELAY, ASSESSEE HAD FILED A N APPLICATION ALONGWITH AFFIDAVIT OF SHRI PRAKASHCHANDRA G. JAIN, PARTNER IN M/S. MAHAVIR STEEL CORPORATION. IN THE APPLICATION, IT HAS BEEN PLEAD ED THAT PARTNERS IN FIRM WAS CONSISTING OF TWO PARTNERS, NAMELY, SHRI GAMBHIRCHA ND JAIN (FATHER) AND SHRI PRAKASHCHANDRA JAIN (SON). THE MAIN PARTNER SHRI G AMBHIRCHAND JAIN WAS CONVERSANT WITH THE ACCOUNTS AND TAXATION MATTERS. HOWEVER, DURING THE PERIOD FROM JANUARY 2013 TO OCTOBER 2013, HE WAS NO T KEEPING GOOD HEALTH AND SUFFERING FROM UROLOGICAL AND HEART PROBLEMS AS WELL AS PARKINSON. HE HAD TO FREQUENTLY CONSULT VARIOUS DOCTORS FROM TIME -TO-TIME WHO HAD ADVISED HIM TO REST. THE ASSESSEE HAS PLACED ON RECORD THE MEDICAL PRESCRIPTIONS FROM DR. RAJESH N. JAIN. IT HAS ALSO PLACED ON RECORD D IFFERENT REPORTS OF BLOOD TESTS SHOWING THAT SHRI GAMBHIRCHAND JAIN WAS UNDER TREATMENT OF VARIOUS AILMENTS. HE ULTIMATELY DIED IN 2015 AND DEATH CER TIFICATE HAS ALSO BEEN PLACED ON RECORD. THE LEARNED DR SUBMITTED THAT IF ONE OF THE PARTNER WAS UNDER TREATMENT THEN THE SON OF SHRI GAMBHIRCHAND W HO HAPPENS TO BE THE OTHER PARTNER OF THE FIRM I.E. SHRI PRAKASHCHANDRA JAIN, WHO IS SON OF SHRI GAMBHIRCHAND JAIN COULD TAKE CARE OF FILING OF THE APPEAL BEFORE THE TRIBUNAL. ON DUE CONSIDERATION OF THE ABOVE EXPLAN ATION, WE ARE OF THE VIEW THAT ASSESSEE WAS PREVENTED BY THE SUFFICIENT REASO NS FOR NOT FILING THE APPEAL WITHIN TIME. THE ASSESSEE WOULD NOT GAIN ANYTHING BY MAKING THE APPEAL TIME BARRED. THERE CANNOT BE ANY DELAY TACTICS ATT RIBUTABLE TO THE ASSESSEE. THE DELAY HAPPENED ON ACCOUNT OF BAD HEALTH OF THE SENIOR PARTNER. THEREFORE, WE ALLOW THIS APPLICATION AND CONDONE TH E DELAY IN FILING THE APPEAL. WE PROCEED TO DECIDE THE APPEAL ON MERIT. ITA NO. 2313/AHD/13 A.Y.2008-09 (M/S. MAHAVIR STEEL CORPORATION VS. ACIT) PAGE 3 4. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE ORDER OF THE ITAT DATED 01. 11.2018 PASSED IN AY 2009-10 & 2010-11. HE PLACED ON RECORD THE COPY OF THE TRIBUNALS ORDER PASSED IN ITA NOS. 1495/AHD/2014 & 1206/AHD/2015. THE LEARNED DR WAS UNABLE TO CONTROVERT THIS CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 5. WE FIND THAT IDENTICAL WEIGHT LOSS WAS CLAIMED B Y THE ASSESSEE IN AY 2009-10 & 2010-11. THIS LOSS WAS DISALLOWED TO THE ASSESSEE BY THE AO. HE MADE ADDITION OF RS.5,50,153/-, WHICH HAS BEEN CONF IRMED BY THE CIT(A). WE HAVE PERUSED THE ORDER OF THE TRIBUNAL IN AY 200 9-10 AND 2010-11. WE FIND THAT IDENTICAL ISSUE WAS EXAMINED BY THE TRIBU NAL IN THOSE YEARS. THE DISCUSSION MADE BY THE TRIBUNAL READS AS UNDER: 3. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, WE HAVE GONE THROUGH, THE RECORD CAREFULLY. THE ASSESSEE AT THE RELEVANT TIME WAS TRADING IN IRON AND STEEL. ON SCRUTINY OF ACCOUNTS, THE LD.AO FOUND THAT THE A SSESSEE HAS CLAIMED WEIGHT-LOSS OF 17.393 MTS. AND 17.13 MTS. IN THE ASSTT.YEARS 20 09-10 AND 2010-11 RESPECTIVELY. THE DETAILS OF STOCK QUA WHICH SHORTA GE HAS BEEN CLAIMED IS BEING NOTICED ON PAGE NO.2 OF THE ASSESSMENT ORDER IN BOT H THE YEARS. IT READS AS UNDER: ASSTT.YEAR 2009-10 SR.NO. PARTICULARS SHORTAGE (MT) EXCESS 1. ANGLE 2.670 2. CHANNEL 7.818 3. PLATE 1.021 4. BEAM /JOIST 5.884 TOTAL 17.393 ASSTT.YEAR 2010-11 SR.NO. PARTICULARS SHORTAGE (MT) EXCESS 1. ANGLE 2.835 2. CHANNEL 9.330 3. PLATE 0.160 4. BEAM/JOIST 4.805 TOTAL 17.130 ITA NO. 2313/AHD/13 A.Y.2008-09 (M/S. MAHAVIR STEEL CORPORATION VS. ACIT) PAGE 4 4. THE LD.AO HAS CONFRONTED THE ASSESSEE AS TO WHY THIS SHORTAGE BE ALLOWED TO IT. IN RESPONSE TO THE QUERY, ASSESSEE SUBMITTED ITS REPLY, WHICH HAS BEEN NOTICED BY THE AO IN BOTH THE YEARS. FOR THE FACILITY OF RE FERENCE, THE EXPLANATION OF THE ASSESSEE FROM THE ASSTT.YEAR 2009-10 READS AS UNDER : 'THE SHORTAGE OF STOCK IS NORMAL LOSS AND NOT THE A BNORMAL. IN WHOLESALE TRADING OF STEEL, IT IS THE NORMAL PHENOMENON OVER WHICH ASSESSEE CANNOT HAVE CONTROL. SHORTAGE ACCOUNT SHOWS THE VALUE OF D IFFERENCE IN BILLED QUANTITY AND ACTUAL QUANTITY RECEIVED. THE SUPPLIER OF GOODS AT MADHYA PRADESH & CHATTISGARH SEND THE NOTE OF WEIGH BRIDGE AND PREPARE INVOICE ON THE BASIS OF THE WEIGHT GIVEN BY WEIGH BRIDGE. T HE DIFFERENCE IS ASCERTAINED WHEN GODOWN KEEPER AT AHMEDABAD, WEIGHT THE TRUCK, LOADED WITH MATERIAL, BEFORE AND AFTER UNLOADING THE TRUCK . AT BOTH THE PLACE (AT THE TIME OF LOADING OR UNLOADING) THE WEIGHT IS MEA SURED AND NOTED BY EMPLOYEES OF THE BUSINESSMEN. IT IS THE NORMAL BUSINESS TRADITION THAT SUCH NORMA L WEIGHT LOSS CANNOT BE ACCEPTED BY SUPPLIER OF GOODS AND SUPPLIER WILL NEV ER ENTERTAIN ANY CLAIM FOR SUCH NORMAL LOSS OF WEIGHT. THE LOSS DUE TO SHORTAGE IS LESS THAN 1% OF MATERIA L PURCHASED. THUS IT IS ONLY 0.18%. THE TRANSPORT COMPANY ALWAYS PRINT IN T HEIR TERMS AND CONDITION THAT WEIGHT LOSS BELOW 0.50% WILL NOT BE ENTERTAINED'. 5. THE LD.AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. HE MULTIPLIED ABOVE SHORTAGE WITH AVERAGE VALUE OF THE STOCK AVAILABLE WITH THE ASSESSEE IN THE CLOSING STOCK AND WORKED OUT ADDITI ON IN BOTH THE YEARS. APPEAL TO THE LD.CIT(A) DID NOT BRING ANY RELIEF TO THE ASSES SEE. 6. BEFORE US, THE LD.COUNSEL REITERATED HIS SUBMISS IONS AS WERE TAKEN BEFORE THE AO. ON THE OTHER HAND, THE LD.DR SUBMITTED THAT ITEM IN WHICH THE ASSESSEE HAS BEEN DEALING IS OF SUCH A NATURE WHERE SHORTAGE WOU LD NOT HAPPEN. 7. ON DUE CONSIDERATION OF THE ABOVE FACTS AND CIRC UMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSEE IS NOT DEALING IN PERISHABLE ITEMS OR ANY ITEMS SUCH AS COAL, SAND, PETROLEUM PRODUCTS ETC. WHICH CAN BE CONSIDER ED AS THOSE ITEMS, WHICH CAN RESULT IN PILFERAGE OR EVAPORATION OR SHRINKAGE ETC . THE ASSESSEE HAS BEEN DEALING IN IRON RODS, ANGLE, CHANNELS ETC. WHERE NORMALLY L OSS OF SUCH NATURE IS NOT POSSIBLE. THE CLAIM OF THE ASSESSEE IS THAT THIS DI FFERENCE HAS BEEN CREPT IN BECAUSE OF DIFFERENT METHOD OF WEIGHMENT AT THE PLACE OF SU PPLIER VIS-A-VIS AT THE PLACE OF RECEIPTS. THE LOSS IS LESS THAN 0.18% OR LESS THAN 1%. IN OUR OPINION, TO SOME EXTENT EXPLANATION OF THE ASSESSEE IS PLAUSIBLE BEC AUSE ON ACCOUNT OF DIFFERENT WEIGH-BRIDGES, POSSIBILITY OF DIFFERENT MEASUREMENT S IN WEIGHT COULD NOT BE RULED OUT. HOWEVER, THE ASSESSEE HAS BEEN SHOWING THE LOS S CONSISTENTLY IN THE SAME RATIO ON SIMILAR PRODUCTS. IN OTHER WORDS, IN THE ASSTT.Y EAR 2009-10, IT HAS MADE PURCHASES OF 9990.716 NTS. IN THE NEXT YEAR IT HAS MADE PURCHASES OF 10995.363 NTS. AND IN BOTH THE YEARS, THE LOSS CLAIMED AT 17. 393/17.130 NTS. IT CREATES A SUSPICION OF BEING ADOPTED A PARTICULAR MODUS OPERA ND! BY THE ASSESSEE TO INFLATE PURCHASES AND MANIPULATE VALUE OF CLOSING STOCK, BU T AGAIN WE DO NOT HAVE ANY SUPPORTING EVIDENCE QUA THIS SUSPICION. THEREFORE, LOOKING TO THE FACTS AND ITA NO. 2313/AHD/13 A.Y.2008-09 (M/S. MAHAVIR STEEL CORPORATION VS. ACIT) PAGE 5 CIRCUMSTANCES, WE ARE OF THE VIEW THAT AN ADHOC DIS ALLOWANCE TO THE EXTENT OF RS.2,00,000/- IN EACH ASSESSMENT YEAR IS BEING SUST AINED, THEN IT CAN TAKE CARE OF ANY SUCH STEPS AT THE END OF THE ASSESSEE. ACCORDIN GLY, ADDITION IS RESTRICTED TO RS.2,00,000/- (RUPEES TWO LAKH ONLY) TO EACH ASSESS MENT YEAR AND THE BALANCE IN BOTH THE YEARS IS DELETED. GROUND OF APPEAL OF THE ASSESSEE IN BOTH THE YEARS IS PARTLY ALLOWED. IN THIS YEAR, THE LOSS CLAIMED WAS WORKED OUT TO 0. 14% OF THE TOTAL PURCHASES. IN OTHER YEARS, THE LOSS WAS CLAIMED AT 0.18%. THUS, WE ARE OF THE VIEW THAT THERE IS NO DISPARITY ON FACTS. CONSIDER ING THE ORDER OF THE TRIBUNAL IN OTHER TWO YEARS, WE RESTRICT THE DISALLOWANCE TO THE EXTENT OF RS.2LAKHS IN THIS YEAR ALSO. THE ORDERS OF THE LEARNED REVENUE AUTHORITIES ARE MODIFIED TO THE ABOVE EXTENT. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 03/12/20 18 SD/- SD/- (AMARJIT SINGH) (RAJPAL YADAV) ACCOUNTANT MEMBER J UDICIAL MEMBER AHMEDABAD: DATED 03/12/2018 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. ! '# $ / CONCERNED CIT 4. $ - / CIT (A) 5. %&' (('# , '# , ! / DR, ITAT, AHMEDABAD 6. '+, / GUARD FILE. BY ORDER/ , / '# , !