The ACIT,S.K.Circle, Himatnagar V. Umiya Industries Pvt.Ltd., Himatnagar

ITA 2749/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89665 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 06-12-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: TUSHAR HAMANI
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD BEFORE S/SHRI N. S. SAINI, A.M. & S. S. GODARA, J. M. ITA NO.2749/AHD/2012 ASST. YEAR 2008-09 ASSTT. CIT, SABARKANTHA CIRCLE, HIMATNAGAR VS UMIYA INDUSTRIES LTD., AT DOLGADH, PO- VAKTAPUR, HIMATNAGAR. (APPELLANT) (RESPONDENT) PA NO. AAACU 6788Q APPELLANT BY SHRI DINESH SINGH, SR. DR RESPONDENT BY SHRI TUSHAR HAMANI, AR DATE OF HEARING: 19.6.2015 DATE OF PRONOUNCEMENT: 25/06/2015 O R D E R PER N. S. SAINI, ACCOUNTANT MEMBER. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)VIII, AHMEDABAD DATED 28.09.2012. THE SOLE GROUND OF APPEAL TAKEN BY THE REVENUE IS THAT THE CIT(A) ERRE D IN DELETING THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF EXCESS ST OCK OF COTTON BALES OF RS.44,28,368/- AND EXCESS COTTON SEEDS OF RS.13,92,287/- WITHOUT APPRECIATING THE STATEMENT RECORDED UNDER S ECTION 131 OF THE ITA NO.2749/AHD/2012 ASST. YEAR_2008-09 2 INCOME-TAX ACT DURING THE COURSE OF SURVEY AND DIRE CTOR AGREED WITH THE WORKING OF SOCK TAKEN BY SURVEY TEAM. 2. BRIEF FACTS OF THE CASE ARE THAT A SURVEY WAS CO NDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 4.3.2008 AND A CCORDING TO THE SURVEY PARTY QUANTITY OF PHYSICAL STOCK OF COTTON B ALES IN THE PREMISES WAS 6,13,980 KGS. AND AS PER BOOKS OF ACCOUNT IT WA S 5,34,902 KGS AND THUS THERE WAS A DIFFERENCE OF 79078 KG. CONSI DERING RS.56/- PER KG. ON DIFFERENCE WEIGHT OF COTTON BALES, VALUE WAS WORKED OUT AT RS.44,28,368/-. SIMILARLY PHYSICAL STOCK OF COTTON SEEDS IN THE PREMISES WAS FOUND TO BE 9,83,826 KGS AND THE STOCK AS PER BOOKS OF ACCOUNT WAS 8,72,451 KGS AND THE DIFFERENCE COMES T O 1,11,375 KG. CONSIDERING THE RATE AT RS.12.50 PER KG. ON DIFFERE NCE WEIGHT OF COTTON SEEDS, VALUE WAS WORKED OUT AT RS.13,92,187/ -. IT WAS SUBMITTED BEFORE THE AO THAT AFTER VERIFICATION OF COTTON BALES SALES REGISTER IT WAS FOUND THAT THE WEIGHT OF EACH COTTO N BALES WAS NOT COMING EXACTLY 162 KG. AND THEREFORE WITHOUT TAKIN G WEIGHT OF EACH COTTON BALES IT WAS NOT POSSIBLE TO COME TO ANY CON CLUSION AND THE SAME WAS NOT DONE IN CASE OF THE ASSESSEE. IT WAS A LSO SUBMITTED THAT THE AVERAGE WEIGHT OF 3790 COTTON BALES WAS 15 4.38 KG. ONLY ITA NO.2749/AHD/2012 ASST. YEAR_2008-09 3 WHICH WAS NOT ACCEPTED BY THE AO FOR THE REASONS TH AT THE WEIGHT OF THE COTTON BALE CAN BE REDUCED ALSO AND THE SAME MI GHT HAVE BEEN DONE BY THE ASSESSEE TO JUSTIFY HIS ARGUMENT THAT T HE WEIGHT OF COTTON BALE WAS WRONGLY TAKEN AT 162 KG. PER BALE. THE ASS ESSEE FURTHER SUBMITTED THAT SUBSEQUENTLY THE ASSESSEE HAD MADE S ALES OF 3790 COTTON BALES AND WEIGHT OF EACH BALE WAS AVERAGE 15 4.38 KG. AND OUT OF THEM 500 BALES WERE EXPORTED AND COMPLETE DETAIL S OF EXPORT SALES MENTIONED IN BILLS OF LADING WITH QUANTITY AND WEIG HT WERE AVAILABLE. IT WAS SUBMITTED THAT SURVEY PARTY HAD NOT WORKED OUT ACTUAL STOCK AND MADE INVENTORY AS ON DATE OF SURVEY. AS PER BOOKS O F ACCOUNTS OF THE ASSESSEE THE TOTAL STOCK WAS 1407353 KG. COMPRISING OF COTTON SEEDS 87245 KG. AND COTTON BALES 534902 AND IT WAS NOT PO SSIBLE TO TAKE WEIGHT OF LOOSE COTTON SEEDS OF 872451 KG. AND WEIG HT OF 3790 BALES OF 534902 KG. WITHIN 15 HOURS OF SURVEY. THE SURVEY TEAM HAD TAKEN APPROXIMATE WEIGHT OF COTTON BALES AND COTTON SEEDS AND THEY HAVE NOT MAINTAINED ITEM WISE AND QUANTITY WISE INVENTOR Y IN ANNEXURE B OF INVENTORY REPORT AND WORKED OUT STOCK DIFFERENCE OF RS.5820555/-. THE AO HAD NOT ACCEPTED THE EXPLANATION OF THE ASSE SSEE AND HE MADE ADDITION FOR THE DIFFERENCE MOUNT OF STOCK BET WEEN THE BOOKS OF ACCOUNTS STOCK AND STOCK TAKEN BY THE SURVEY PARTY AND ADDITION OF ITA NO.2749/AHD/2012 ASST. YEAR_2008-09 4 RS.44,28,368/- WAS MADE ON ACCOUNT OF EXCESS STOCK OF COTTON BALE AND RS.13,92,187/- ON ACCOUNT OF EXCESS STOCK OF CO TTON SEEDS. 3. BEFORE THE CIT(A) THE ASSESSEE REITERATED THE SU BMISSIONS MADE BEFORE THE AO AND FURTHER ARGUED THAT IF PRODU CTION LOSS AT THE RATE OF 4.45 % WAS CONSIDERED THEN NO VARIATION IN CLOSING STOCK FOR THE YEAR UNDER CONSIDERATION WOULD BE THERE. THE CI T(A) OBSERVED THAT AVERAGE PRODUCTION LOSS SUBMITTED BY THE ASSES SEE WAS 4.45% IN THIS BUSINESS WHICH WAS CONSIDERED IN THE EARLIE R YEARS WHICH ARE IN LINE WITH THE GUIDELINES OF THE REPORT OF AHMEDA BAD TEXTILE INDUSTRIES RESEARCH ASSOCIATION. THE CIT(A) OBSERVE D THAT THE STATEMENT OF THE ASSESSEE IS VINDICATED TO SOME EXT ENT AFTER GOING THROUGH THE ORDERS OF THE EARLIER YEARS. THE PRODUC TION LOSS IS ON HIGHER SIDE AS THE CALCULATION BY THE ASSESSEE DURI NG THE YEAR IS 2.93% FOR THE YEAR AS HAS BEEN CALCULATED KEEPING I N MIND THAT OTHER FACTORS ARE CONSTANT. ACCORDINGLY HE DIRECTED THE A O TO GIVE THE DEDUCTION OF PRODUCTION LOSS AT 2.93% FOR THE YEAR AND ACCORDINGLY CALCULATE THE STOCK DIFFERENCE OF THE ASSESSEE FOUN D DURING THE SURVEY TIME. ITA NO.2749/AHD/2012 ASST. YEAR_2008-09 5 4. BEING AGGRIEVED BY THIS ORDER OF CIT(A) THE REVE NUE IS IN APPEAL BEFORE US. THE DR SUPPORTED THE ORDER OF THE AO WHEREAS THE AR SUPPORTED THE ORDER OF CIT(A).. 5. WE FIND THAT THE AO MADE ADDITION OF RS.44,28,36 8/- ON ACCOUNT OF EXCESS STOCK FOUND OF COTTON BALE AND RS .13,92,187/- ON ACCOUNT OF EXCESS STOCK FOUND OF COTTON SEEDS DURIN G THE SURVEY AT THE BUSINESS PREMISES OF THE ASSESSEE ON 4.3.2008. ON APPEAL THE CIT(A) HELD THAT IN THE EARLIER YEARS THE ASSESSEE WAS ALLOWED DEDUCTION FOR PRODUCTION LOSS WHICH WAS IN THE LINE OF GUIDELINES OF AHMEDABAD TEXTILE INDUSTRIES RESEARCH ASSOCIATION. THE CIT(A) OBSERVED THAT FOR THE YEAR AS PER THE WORKING PRODU CTION LOSS COMES TO 2.93% AND HE DIRECTED THE AO TO ALLOW PRODUCTION LOSS OF 2.93% AND THEREAFTER CALCULATE THE DIFFERENCE IN STOCK FO UND AT THE TIME OF SURVEY AND MAKE ADDITION. IN OUR CONSIDERED VIEW I F THERE WAS PRODUCTION LOSS THEN THE SAME WILL RESULT IN REDUCT ION OF STOCK AND THE SAME CANNOT BE AN EXPLANATION FOR WHICH EXCESS STOC K FOUND ON PHYSICAL VERIFICATION DURING THE COURSE OF SURVEY. THUS THE REASONING GIVEN BY THE CIT(A) TO ACCEPT A PART OF THE EXCESS STOCK FOUND CANNOT BE APPRECIATED IN THE CIRCUMSTANCES. IN OUR CONSIDE RED VIEW IT SHALL ITA NO.2749/AHD/2012 ASST. YEAR_2008-09 6 BE JUST AND IN THE INTEREST OF JUSTICE TO RESTORE T HE ISSUE BACK TO THE FILE OF THE CIT(A) FOR ADJUDICATION AS PER LAW BY P ASSING A SPEAKING ORDER ON THE ISSUE. IT IS NEEDLESS TO MENTION THAT THE CIT(A) SHALL ALLOW REASONABLE OPPORTUNITY OF HEARING TO BOTH THE PARTIES BEFORE DECIDING THE ISSUE. THIS GROUND OF APPEAL IS ALLOWE D FOR STATISTICAL PURPOSE. 6. IN THE RESULT, THE APPEAL OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 25/6/2015 SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (N. S. SAINI) ACCOUNTANT MEMBER DATED 25/6/2015 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD ITA NO.2749/AHD/2012 ASST. YEAR_2008-09 7 1. DATE OF DICTATION: 19/06/2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 22/06/2015 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 25/6/2015 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: