Appeal details
Counselvise Citation
[2015] 140 COUNSELVISE.COM (IT) 94520 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 10 month(s) 1 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
15-10-2015
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
D
Next Hearing Date
02-09-2015
Assessment Year
2007-2008
Appeal Filed On
14-12-2012
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD - , , BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER SL. NO(S) ITA NO(S) ASSESSMENT YEAR(S) APPEAL(S) BY APPELLANT VS. RESPONDENT APPELLANT RESPONDENT 1. 915/AHD/2010 2007-08 ACIT CEN.CIRCLE-4 SURAT (REVENUE) M/S.SARNA CHEMICALS PVT.LTD. PLOT NO.1708, PHASE-III, GIDC VAPI PAN:AADCS 4427 R (ASSESSEE) 2. 2830/AHD/12 2007-08 M/S.SARNA CHEMICALS PVT.LTD. (ASSESSEE) DCIT CEN.CIRCLE-4 SURAT 3. 916/AHD/10 2007-08 ACIT CEN.CIRCLE-4 SURAT (REVENUE) SUPREET CHEMICALS PVT.LTD. PLOT NO.A-1/5402, PHASE IV GIDC, VAPI PAN : AADCS 4428A (ASSESSEE) 4. 2832/AHD/12 2007-08 SUPREET CHEMICALS P.LTD. (ASSESSEE) DCIT CENTRAL CIRCLE-4 SURAT REVENUE BY : SHRI ALBINUS TIRKEY, SR.DR ASSESSEE BY : MS.URVASHI SHODHAN, AR / DATE OF HEARING 02/09/2015 ! / DATE OF PRONOUNCEMENT 15/10/2015 ITA NO.915/AHD/2010(BY REVENUE) AND ITA NO.2830/AHD/2012 (BY ASSESSEE ) ACIT VS. M/S.SARNA CHEMICALS P.LTD. AY 2007-08 & ITA NO.916/AHD/2010(BY REVENUE) AND ITA NO.2832/AHD/2012 (BY ASSESSEE ) ACIT VS. SUPREET CHEMICALS P.LTD. AY 2007-08 - 2 - / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS BUNCH OF FOUR APPEALS; TWO BY THE REVENUE AN D TWO BY THE DIFFERENT ASSESSEES ARE DIRECTED AGAINST THE SEPARA TE ORDERS OF THE LD.CIT(A)-II, AHMEDABAD. SINCE COMMON ISSUES AND FACTS ARE INVOLVED IN THESE APPEALS, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONV ENIENCE. 2. FIRST, WE TAKE UP THE REVENUES APPEAL IN ITA NO .915/AHD/2010 FOR AY 2007-08 IN THE CASE OF M/S.SARNA CHEMICALS P .LTD. AND ASSESSEES APPEAL (M/S.SARNA CHEMICALS P.LTD.) IN I TA NO.2830/AHD/2012. THE REVENUE IS IN QUANTUM PROCEE DINGS AND THE ASSESSEE IS IN PENALTY PROCEEDINGS. REVENUES APPE AL IS DIRECTED AGAINST THE ORDER OF THE LD.CIT(A)-II, AHMEDABAD DATED 07/0 1/2010, WHEREIN FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE:- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE LOOSE PAPERS, BASED ON WHICH THE ADDITION WAS MADE IS NOT RELATING TO THE ASSESSEE COMPANY AS THE SAME WAS FOUND AT THE PREMI SES OF H.S SARNA AND NOT IN THE COMPANY'S PREMISES, IGNORING THAT TH E SHRI S.S.SARNA THE MAIN PERSON OF THE ASSESSEE GROUP HAS VOLUNTARILY MADE A DISCLOSURE OF RS.44,40,000/- IN THE STATEMENT RECORDED U/S 132(4) DATED 26.02.2007 ON ACCOUNT OF DISCREPANCIES FOUND IN THE LOOSE PAPE R FILES SEIZED. ITA NO.915/AHD/2010(BY REVENUE) AND ITA NO.2830/AHD/2012 (BY ASSESSEE ) ACIT VS. M/S.SARNA CHEMICALS P.LTD. AY 2007-08 & ITA NO.916/AHD/2010(BY REVENUE) AND ITA NO.2832/AHD/2012 (BY ASSESSEE ) ACIT VS. SUPREET CHEMICALS P.LTD. AY 2007-08 - 3 - 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN H OLDING THAT THE ASSESSMENT OF INCOME ONLY ON THE BASIS OF STATEMENT , WITHOUT CONSIDERING THE EVIDENCE FOUND IN THE SURVEY IS NOT JUSTIFIED, IGNORING THAT THE ASSESSE HAS NEITHER FILED ANY RETRACTION N OTE NOR FILED ANY SUBMISSION REBUTTING THE ACTION OF THE ASSESSING OF FICER . 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN N OT APPRECIATING THE RATIO LAID DOWN IN THE JUDGMENT OF THE HON'BLE HIG H COURT OF KERALA IN THE CASE OF V.KUNHAMBU & SONS(1996) 219 ITR 235, WH EREIN THE HON'BLE HIGH COURT HAS HELD THAT VOLUNTARY STATEMEN T MADE BY THE ASSESSEE, UNDER 132(4) WITH REFERENCE TO THE SEARCH AND SEIZURE, THERE IS NO REASON WHY THE ASSESSING OFFICER SHOULD NOT MAKE USE OF IT, IF IT IS NOT OBTAINED BY COERCION OR INTIMIDATION. 4. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACT S IN IGNORING THE RATIO OF THE FOLLOWING CASE LAWS WHILE DECIDING TO DELETE THE ADDITIONS BASED ON THE DISCLOSURE OF THE ASSESSEE WHICH WAS NOT RET RACTED BY THE ASSESSEE. DECISION OF HON,BLE ITAT,AHD IN THE CASE OF NILESH C SHAH VS ACIT (2007) BOMBAY HIGH COURT IN THE CASE OF RAMESHCHANDRA AND CO.VS CIT(1987) 168 ITR 375 THIRU JOHN VS RETURNING OFFICER, AIR 1977 (SC)1724 SURJIT SINGH CHHABRA (1997) ISCC 508,509(SC) HON,BLE SUPREME COURT IN PULANGODE RUBBER PRODUCE C O LTD VS STATE OF KERALA(1973) 91 ITR 18 HOTEL KIRAN VS ACIT (1971) 82 ITR 453(PUNE) COUNCIL OF INSTITUTE OF CHARTERED ACCOUNTANTS OF IN DIA VS MUKESH R SHAH (2004) 186 CTR (GUJ) 579 BY GUJARAT H IGH COURT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT (A) OUGHT TO HAVE UPHELD THE ORDER OF THE A. O. ITA NO.915/AHD/2010(BY REVENUE) AND ITA NO.2830/AHD/2012 (BY ASSESSEE ) ACIT VS. M/S.SARNA CHEMICALS P.LTD. AY 2007-08 & ITA NO.916/AHD/2010(BY REVENUE) AND ITA NO.2832/AHD/2012 (BY ASSESSEE ) ACIT VS. SUPREET CHEMICALS P.LTD. AY 2007-08 - 4 - 6. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT (A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. 3. GROUND NOS.1 TO 4 ARE INTER-CONNECTED AND, THERE FORE THE SAME ARE DECIDED TOGETHER. GROUND NOS.5 & 6 ARE GENERAL IN NATURE WHICH REQUIRE NO INDEPENDENT ADJUDICATION. 3.1. BRIEFLY STATED FACTS ARE THAT SEARCH AND SEIZU RE OPERATION WAS CARRIED OUT IN THE CASE OF SARNA GROUP OF VAPI, ON 23/01/2007. A SURVEY ACTION U/S.133A OF THE INCOME TAX ACT,1961 (HEREINA FTER REFERRED TO AS THE ACT) WAS CONDUCTED AT THE BUSINESS PREMISES O F THE ASSESSEE. SUBSEQUENTLY, A RETURN OF INCOME DECLARING TOTAL IN COME OF RS.2,68,77,143/- WAS FILED ON 29/10/2007. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND ASSESSMENT U/S.143(3) OF TH E ACT WAS FRAMED VIDE ORDER DATED 31/10/2008, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE ADDITION OF RS.12,19,203/- ON ACCOUNT OF DISCR EPANCY IN STOCK AND ADDITION OF RS.31,95,297/- ON ACCOUNT OF INCOME FRO M UNRECORDED TRANSACTIONS. THE AO ALSO MADE AN ADDITION OF RS.4 4,40,000/- BEING THE AMOUNT VOLUNTARILY ADMITTED BY SHRI S.S. SARNA, DIR ECTOR OF THE ASSESSEE- COMPANY AS UNDISCLOSED INCOME FOR THE RELEVANT ASSE SSMENT YEAR ON BEHALF OF THE COMPANY IN RESPECT OF DISCREPANCY IN STOCK AND UNACCOUNTED SALES. THE ASSESSEE BEING AGGRIEVED B Y THE ASSESSMENT ORDER, PREFERRED AN APPEAL BEFORE THE LD.CIT(A), WH O AFTER CONSIDERING ITA NO.915/AHD/2010(BY REVENUE) AND ITA NO.2830/AHD/2012 (BY ASSESSEE ) ACIT VS. M/S.SARNA CHEMICALS P.LTD. AY 2007-08 & ITA NO.916/AHD/2010(BY REVENUE) AND ITA NO.2832/AHD/2012 (BY ASSESSEE ) ACIT VS. SUPREET CHEMICALS P.LTD. AY 2007-08 - 5 - THE SUBMISSIONS OF THE ASSESSEE PARTLY ALLOWED THE APPEAL, THEREBY RESTRICTED THE ADDITION TO THE EXTENT OF RS.12,19,2 03/-. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENUE IS FURTHER IN A PPEAL BEFORE US. 4. THE LD.SR.DR SUBMITTED THAT THE LD.CIT(A) WAS NO T JUSTIFIED IN DELETING THE ADDITION. HE SUBMITTED THAT, IN THIS CASE, A SURVEY ACTION WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSE SSEE ALONG WITH SEARCH ACTION U/S.132 OF THE ACT IN THE CASE OF SA RNA GROUP OF VAPI ON 23/01/2007. DURING THE COURSE OF SEARCH, S/SHRI H. S.SARNA AND S.S.SARNA HAVE MADE DISCLOSURE OF RS.85.5 LAKHS EACH FOR S.S. SARNA GROUP AND H.S.SARNA GROUP MAKING A TOTAL DISCLOSURE OF RS.1.7 1 CRORES IN BOTH THE GROUPS. THE LD.SR.DR SUBMITTED THAT AS PER THE BIFU RCATION OF DISCLOSURE OF RS.85.5 LAKHS MADE BY SHRI H.S.SARNA, THE MAIN P ERSON OF H.S.SARNA GROUP, HE HAS MADE DISCLOSURE OF RS.36.10 LAKHS IN HIS INDIVIDUAL CASE AND RS.5,20,036/- IN THE PARTNERSHIP FIRM M/S.S.S. ENTERPRISE AND RS.44,19,964/- IN THE CASE OF M/S.SARNA CHEMICALS P VT.LTD., WHICH INCLUDES RS.15 LAKHS DISCLOSED IN RESPECT OF STOCK DIFFERENCE AND AN AMOUNT OF RS.29,19,964/- FOR COVERING THE DISCREPAN CIES FOUND IN THE LOOSE-PAPERS SEIZED DURING THE COURSE OF SEARCH. I T CAN BE SEEN THAT THE DISCLOSURE OF RS.44,19,964/- IS NOT OFFERED BY THE ASSESSEE IN THE RETURN OF ITA NO.915/AHD/2010(BY REVENUE) AND ITA NO.2830/AHD/2012 (BY ASSESSEE ) ACIT VS. M/S.SARNA CHEMICALS P.LTD. AY 2007-08 & ITA NO.916/AHD/2010(BY REVENUE) AND ITA NO.2832/AHD/2012 (BY ASSESSEE ) ACIT VS. SUPREET CHEMICALS P.LTD. AY 2007-08 - 6 - INCOME FILED BY THE ASSESSEE NEITHER IN THE CASE OF THE COMPANY NOR IN INDIVIDUAL CAPACITY. 4.1. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE S UPPORTED THE ORDER OF LD.CIT(A) AND SUBMITTED THAT THE AO WAS NOT JUSTIFI ED IN MAKING THE ADDITION. HE SUBMITTED THAT THE DOCUMENT WAS FOUND AT THE PREMISES OF SHRI H.S.SARNA AND NOT AT THE ASSESSEES PREMISES. THESE PAPERS WERE NOT RELATED TO THE ASSESSEE-COMPANY AND THESE WERE RELA TED TO SHRI H.S.SARNA. IT WAS FURTHER CONTENDED THAT NO SPECIFIC DISCLOSUR E WAS MADE IN THE HANDS OF THE COMPANY AT THE TIME OF SEARCH, THEREFO RE UNDER THESE FACTS, THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION IN THE HANDS OF THE ASSESSEE-COMPANY. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) HAS GIVEN A FINDING IN P ARA-5.2 THAT PAPERS WERE FOUND IN THE PREMISES OF SHRI H.S.SARNA AND NO T IN THE COMPANYS PREMISES OR IN SHRI S.S.SARNA, DIRECTOR OF THE COMP ANY. FURTHER, THE PAPERS WERE NOT RELATED TO THE ASSESSEE-COMPANY AS THESE WERE RELATED TO SHRI H.S.SARNA, HENCE NO ADDITION IS CALLED FOR IN THE ASSESSEES HANDS. UNDISPUTEDLY, THE IMPUGNED ADDITION HAS BEEN MADE O N THE BASIS OF THE STATEMENT OF SHRI S.S.SARNA WHICH IS ENCLOSED AT PA GE NOS.3 TO 5-B OF THE ITA NO.915/AHD/2010(BY REVENUE) AND ITA NO.2830/AHD/2012 (BY ASSESSEE ) ACIT VS. M/S.SARNA CHEMICALS P.LTD. AY 2007-08 & ITA NO.916/AHD/2010(BY REVENUE) AND ITA NO.2832/AHD/2012 (BY ASSESSEE ) ACIT VS. SUPREET CHEMICALS P.LTD. AY 2007-08 - 7 - PAPER-BOOK. THE LD.CIT(A) HAS ALSO GIVEN A FINDING THAT THIS DISCLOSURE WAS NOT RELATED TO THE ASSESSEE-COMPANY. SINCE TH E FINDING IS NOT CONTROVERTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD, THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WI TH THE ORDER OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THUS, GROUND N OS.1 TO 5 OF REVENUES APPEAL ARE REJECTED. AS A RESULT, REVEN UES APPEAL IN ITA NO.915/AHD/2010 FOR AY 2007-08 IS DISMISSED. 5.1. NOW, WE TAKE UP THE ASSESSEES APPEAL IN ITA N O.2830/AHD/2012 FOR AY 2007-08. THE ONLY EFFECTIVE GROUND IN THIS APPEAL IS AGAINST CONFIRMATION OF PENALTY U/S.271(1)(C) OF THE ACT. 5.2. BRIEFLY STATED FACTS ARE THAT THE AO HAD INITI ATED PENALTY PROCEEDINGS WHILE FRAMING THE ASSESSMENT ORDER. SU BSEQUENTLY, THE AO HAS LEVIED A PENALTY OF RS.4,10,383/- ON THE ADDITI ON CONFIRMED BY THE LD.CIT(A). THE ASSESSEE BEING AGGRIEVED BY THIS OR DER, CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUB MISSIONS OF THE ASSESSEE REJECTED THE APPEAL AND SUSTAINED THE PENA LTY. NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. ITA NO.915/AHD/2010(BY REVENUE) AND ITA NO.2830/AHD/2012 (BY ASSESSEE ) ACIT VS. M/S.SARNA CHEMICALS P.LTD. AY 2007-08 & ITA NO.916/AHD/2010(BY REVENUE) AND ITA NO.2832/AHD/2012 (BY ASSESSEE ) ACIT VS. SUPREET CHEMICALS P.LTD. AY 2007-08 - 8 - 5.3. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT UNDER THE FACTS OF THE PRESENT CASE, THE PENALTY IS NOT JUSTIFIED. TH E AO HAD MADE ADDITION ON THE BASIS OF ESTIMATION OF GP. THE LD.COUNSEL F OR THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF SURVEY, THE STO CK DIFFERENCE, IF ANY, WAS DULY RECONCILED. THE LD.COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURIN G AND ALSO SUBJECTED TO CENTRAL EXCISE ACT. THE LD.COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THE ASSESSEE IS MAINTAINING THE RECORDS AS REQUIRED UND ER THE CENTRAL EXCISE ACT. THE CENTRAL EXCISE AUTHORITIES HAVE NOT GIVEN ANY ADVERSE REMARKS. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED T HAT THE PENALTY ON THE ADDITION MADE ON THE BASIS OF ESTIMATION CANNOT BE SUSTAINED. 5.4. ON THE CONTRARY, THE LD.SR.DR SUPPORTED THE OR DER OF THE AUTHORITIES BELOW AND OPPOSED THE SUBMISSION MADE B Y THE LD.COUNSEL FOR THE ASSESSEE. HE SUBMITTED THAT THE AUTHORITIE S HAVE GIVEN A FINDING THAT THE STOCK DISCREPANCY WERE NOTICED DUE TO SALE S OUT OF BOOKS. 5.5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED T HE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE LD.COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT AS PER CLAUSE (III) OF ANNEXURE A TO AUDITORS REPORT OF THE ASSESSEE FOR RELEVANT ASSESSMENT ITA NO.915/AHD/2010(BY REVENUE) AND ITA NO.2830/AHD/2012 (BY ASSESSEE ) ACIT VS. M/S.SARNA CHEMICALS P.LTD. AY 2007-08 & ITA NO.916/AHD/2010(BY REVENUE) AND ITA NO.2832/AHD/2012 (BY ASSESSEE ) ACIT VS. SUPREET CHEMICALS P.LTD. AY 2007-08 - 9 - YEAR, THE ASSESSEE HAS MAINTAINED PROPER RECORDS OF ITS INVENTORY AND NO MATERIAL DISCREPANCIES WERE NOTICED ON PHYSICAL VER IFICATION AND METHOD OF VALUATION ADOPTED BY THE ASSESSEE IS FOLLOWED CO NSISTENTLY FOR EACH OF THE FINANCIAL YEAR. THE LD.CIT(A) CONFIRMED THE AD DITION ON THE BASIS THAT THE DIRECTOR OF THE ASSESSEE-COMPANY HAS MADE VOLUNTARY DISCLOSURE OF RS.44.40 LACS DURING THE COURSE OF SURVEY WHICH INCLUDES STOCK DISCREPANCY OF RS.12,19,203 BUT WHILE FILING THE RE TURN OF INCOME SUCH INCOME WAS NOT SHOWN WHICH ITSELF SUGGESTS THAT WHE N ASSESSEE WAS AWARE OF UNDISCLOSED INCOME WHICH WAS VERY WELL ADM ITTED AT THE TIME OF SURVEY, SUCH INCOME OUGHT TO HAVE BEEN OFFERED TO T AX AND BY NOT OFFERING SUCH INCOME TO TAX, ASSESSEE HAS WILLFULLY CONCEALED ITS INCOME. HOWEVER, THE CONTENTION OF THE LD.COUNSEL FOR THE A SSESSEE IS THAT THE ENTIRE ADDITION IS BASED UPON THE STATEMENT OF SHRI S.S.SARNA. THE REVENUE HAS NOT BROUGHT ANY CORROBORATIVE MATERIAL ON RECORDED. ADMITTEDLY, THE AUDITORS HAVE NOT RECORDED ANY ADVE RSE REMARKS. UNDER THESE FACTS, THE PENALTY OUGHT NOT TO HAVE BEEN LEV IED. WE FIND MERIT INTO THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE A S THE ADDITION IS SOLELY BASED UPON THE STATEMENT OF SHRI S.S.SARNA AND THER E IS NO CORROBORATIVE MATERIAL AVAILABLE ON RECORD DEMONSTRATING THAT THE ASSESSEE HAS DELIBERATELY NOT FURNISHED THE MATERIAL BEFORE THE REVENUE AUTHORITIES. UNDISPUTEDLY, THE AO MADE ADDITION BY ESTIMATING GR OSS PROFIT @ ITA NO.915/AHD/2010(BY REVENUE) AND ITA NO.2830/AHD/2012 (BY ASSESSEE ) ACIT VS. M/S.SARNA CHEMICALS P.LTD. AY 2007-08 & ITA NO.916/AHD/2010(BY REVENUE) AND ITA NO.2832/AHD/2012 (BY ASSESSEE ) ACIT VS. SUPREET CHEMICALS P.LTD. AY 2007-08 - 10 - 15.89% ON WHICH PENALTY HAS BEEN SUSTAINED. THEREF ORE, UNDER THESE FACTS, IN OUR VIEW, THE AO WAS NOT JUSTIFIED IN IMP OSING THE PENALTY. THUS, ASSESSEES GROUND OF APPEAL IS ALLOWED. AS A RESULT, ASSESSEES APPEAL IS ALLOWED. 6. NOW, WE TAKE UP THE REVENUES APPEAL IN ITA NO.9 16/AHD/2010 FOR AY 2007-08 IN THE CASE OF SUPREET CHEMICALS P.L TD. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN H OLDING THAT THE ASSESSMENT OF INCOME ONLY ON THE BASIS OF STATEMENT ,WITHOUT CONSIDERING THE EVIDENCE FOUND IN THE SURVEY IS NOT JUSTIFIED, IGNORING THAT THE ASSESSEE HAS NEITHER FILED ANY RETRACTION NOTE NOR FILED ANY SUBMISSION REBUTTING THE ACTION OF THE ASSESSING OFFICER . 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN N OT APPRECIATING THE RATIO LAID DOWN IN THE JUDGMENT OF THE HON'BLE HIGH COURT OF KERALA IN THE CASE OF V.KUNHAMBU & SONS(1996) 219 ITR 235, WH EREIN THE HON'BLE HIGH COURT HAS HELD THAT VOLUNTARY STATEMEN T MADE BY THE ASSESSEE, UNDER 132(4) WITH REFERENCE TO THE SEARCH AND SEIZURE, THERE IS NO REASON WHY THE ASSESSING OFFICER SHOULD NOT MAKE USE OF IT, IF IT IS NOT OBTAINED BY COERCION OR INTIMIDATION. 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACT S IN IGNORING THE RATIO OF THE FOLLOWING CASE LAWS WHILE DECIDING TO DELETE THE ADDITIONS BASED ON THE DISCLOSURE OF THE ASSESSEE WHICH WAS N OT RETRACTED BY THE ASSESSEE. DECISION OF HON,BLE ITAT,AHD IN THE CASE OF NILESH C SHAH VS ITA NO.915/AHD/2010(BY REVENUE) AND ITA NO.2830/AHD/2012 (BY ASSESSEE ) ACIT VS. M/S.SARNA CHEMICALS P.LTD. AY 2007-08 & ITA NO.916/AHD/2010(BY REVENUE) AND ITA NO.2832/AHD/2012 (BY ASSESSEE ) ACIT VS. SUPREET CHEMICALS P.LTD. AY 2007-08 - 11 - ACIT (2007) ; BOMBAY HIGH COURT IN THE CASE O F RAMESHCHANDRA AND CO.VS CIT(1987) 168 ITR 375 THIRU JOHN VS RETURNING OFFICER,AIR 1977 (SC)1724 SURJIT SINGHCHHABRA(L 997) ISCC 508,509(SC) HON,BLE SUPREME COURT IN PULANGODE RUBBER PRODUCE C O LTD VS STATE OF KERALA(1973)91ITR18 HOTEL KIRAN VS ACIT (1 971) 82 ITR 453(PUNE) COUNCIL OF INSTITUTE OF CHARTERED ACCOUNTANTS OF IN DIA VS MUKESH R SHAH (2004) 186 CTR (GUJ)579 BY GUJARAT HI GH COURT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT (A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 5. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE C IT (A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. 6.1. GROUND NOS.1 TO 4 ARE INTER-CONNECTED AND, THE REFORE THE SAME ARE DECIDED TOGETHER. GROUND NOS.5 & 6 ARE GENERAL IN NATURE WHICH REQUIRE NO INDEPENDENT ADJUDICATION. 6.2. BRIEFLY STATED FACTS ARE THAT A SEARCH AND SEI ZURE OPERATION WAS CARRIED OUT IN THE CASE OF SARNA GROUP OF VAPI, ON 23/01/2007. A SURVEY ACTION U/S.133A OF THE INCOME TAX ACT,1961 (HEREINA FTER REFERRED TO AS THE ACT) WAS CONDUCTED AT THE BUSINESS PREMISES O F THE ASSESSEE. SUBSEQUENTLY, A RETURN OF INCOME DECLARING TOTAL IN COME OF RS.3,01,91,197/- WAS FILED ON 29/10/2007. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND ASSESSMENT U/S.143(3) OF TH E ACT WAS FRAMED ITA NO.915/AHD/2010(BY REVENUE) AND ITA NO.2830/AHD/2012 (BY ASSESSEE ) ACIT VS. M/S.SARNA CHEMICALS P.LTD. AY 2007-08 & ITA NO.916/AHD/2010(BY REVENUE) AND ITA NO.2832/AHD/2012 (BY ASSESSEE ) ACIT VS. SUPREET CHEMICALS P.LTD. AY 2007-08 - 12 - VIDE ORDER DATED 31/10/2008, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE ADDITION OF RS.35,46,503/- ON ACCOUNT OF DISCR EPANCY IN STOCK. THE ASSESSEE BEING AGGRIEVED BY THE ASSESSMENT ORDER, P REFERRED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUB MISSIONS OF THE ASSESSEE PARTLY ALLOWED THE APPEAL, THEREBY RESTRIC TED THE ADDITION TO THE EXTENT OF RS.12,58,092/-. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENUE IS FURTHER IN APPEAL BEFORE US. 7. THE LD.SR.DR SUBMITTED THAT THE LD.CIT(A) WAS NO T JUSTIFIED IN RESTRICTING THE ADDITION. HE SUBMITTED THAT THE AS SESSMENT WAS COMPLETED ON TOTAL INCOME OF RS.3,37,37,700 ON 31/10/2008 AFT ER MAKING THE ADDITION OF RS.35,46,503/- ON ACCOUNT OF STOCK DISC REPANCIES. THE ADDITION WERE MADE IN THREE HEADS; I.E. DISCREPANCI ES IN RESPECT OF STOCK OF FINISHED PRODUCTS OF RS.20,14,600/-, DISCREPANCI ES IN RESPECT OF STOCK OF RAW-MATERIAL OF RS.2,73,811/- AND GP ESTIMATION @ 17.54% ON ACCOUNT OF DEFICIT FOUND IN STOCK FINISHED GOODS OF RS.12,58,092/-. ON APPEAL, THE LD.CIT(A) HAS DELETED THE ADDITIONS OF RS.14,80,211/- AND SUSTAINED THE BALANCE ADDITION OF RS.8,08,200/- OUT OF THE TOTAL ADDITION OF RS.22,88,411/- MADE ON ACCOUNT OF STOCK DISCREPANCI ES. THE LD.CIT(A) DELETED THE ABOVE ADDITIONS HOLDING THAT THE STOCK DIFFERENCE IS MAINLY ON ACCOUNT OF THE FACT THAT THE STOCK REGISTER IS ON R EAL BASIS (BILLABLE ITA NO.915/AHD/2010(BY REVENUE) AND ITA NO.2830/AHD/2012 (BY ASSESSEE ) ACIT VS. M/S.SARNA CHEMICALS P.LTD. AY 2007-08 & ITA NO.916/AHD/2010(BY REVENUE) AND ITA NO.2832/AHD/2012 (BY ASSESSEE ) ACIT VS. SUPREET CHEMICALS P.LTD. AY 2007-08 - 13 - QUANTITY) AND MATERIAL AS PER PHYSICAL COUNT IS ON AS IS BASIS WHICH CONTAINS MOISTURE, WHICH LEADS TO WEIGHT DIFFERENCE . THE LD.CIT(A) FURTHER STATED THAT THE SUBMISSION OF THE ASSESSEE IS VERIFIABLE FROM THE ENTRIES MADE IN THE STOCK REGISTER, EXCISE REGISTER AND INVOICES, WHICH THE AO HAS REFUSED TO VERIFY DURING THE COURSE OF ASSES SMENT PROCEEDINGS ON THE GROUND THAT THE ASSESSEE HAS NOT EXPLAINED THE SAME AT THE TIME OF SURVEY. THE LD.SR.DR SUBMITTED THAT A SURVEY AC TION WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ALONG WITH SE ARCH ACTION U/S.132 OF THE ACT IN THE CASE OF SARNA GROUP OF VAPI ON 23/01 /2007. DURING THE COURSE OF SEARCH, THE MAIN PERSON OF THESE GROUP, S/SHRI H.S.SARNA AND S.S.SARNA HAVE MADE DISCLOSURE OF RS.85.5 LAKHS EAC H FOR S.S.SARNA GROUP AND H.S.SARNA GROUP MAKING A TOTAL DISCLOSURE OF RS.1.71 CORRES IN BOTH THE GROUPS. THE LD.SR.DR SUBMITTED THAT THE C ONTENTION OF THE LD.CIT(A) THAT THE STOCK DIFFERENCE IN STOCK IS MAI NLY ON ACCOUNT OF MOISTURE AND ITS PURITY IS NOT ACCEPTABLE SINCE THE SAME WAS NEVER RAISED WHILE TAKING THE STOCK DURING THE COURSE OF SURVEY NOR IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE LD.SR.DR SUBMITTED THA T AS PER THE BIFURCATION FO DISCLOSURE OF RS.85.5 LAKHS MADE BY SHRI H.S.SARNA, THE MAIN PERSON OF H.S.SARNA GROUP, HE HAS MADE DISCLOS URE OF RS.57 LAKHS IN HIS INDIVIDUAL CASE AND RS.28.5 LAKHS IN THE SIS TER CONCERN M/S.SUPREET CHEMICAL PVT.LTD., WHICH INCLUDES RS.15 LAKHS DISCL OSED IN RESPECT OF ITA NO.915/AHD/2010(BY REVENUE) AND ITA NO.2830/AHD/2012 (BY ASSESSEE ) ACIT VS. M/S.SARNA CHEMICALS P.LTD. AY 2007-08 & ITA NO.916/AHD/2010(BY REVENUE) AND ITA NO.2832/AHD/2012 (BY ASSESSEE ) ACIT VS. SUPREET CHEMICALS P.LTD. AY 2007-08 - 14 - STOCK DIFFERENCE. IT CAN BE SEEN THAT THE DISCLOSU RE OF RS.28.5 LAKHS WS NOT OFFERED BY THE ASSESSEE IN THE RETURN OF INCOME FIL ED BY THE ASSESSEE NEITHER IN THE CASE OF THE COMPANY NOR IN INDIVIDUA L CAPACITY. 7.1. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE AO HAS NOT TAKEN INTO ACCOUNT THE FACTUAL ASPECTS OF T HE MATTER. IT WAS CONTENDED BEFORE THE AO THAT THE DIFFERENCE IS DUE TO THE FACT THAT THE RAW-MATERIALS WHICH ARE LIQUID AND DURING THE PHYSI CAL VERIFICATION, THE STOCK IS TAKEN BY CONVERTING AS PER CALIBRATION TAK EN AND MINOR DIFFERENCE ARISE ON THIS COUNT AS THE MATERIAL IS LYING IN THE TANKS AND CORRECT MEASUREMENT IS NOT POSSIBLE. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) HAS GIVEN A FINDING ON F ACT AT PARA-4 TO 4.5 OF HIS ORDER, WHICH ARE IN THE FOLLOWING TERMS:- 4. I HAVE CONSIDERED THE FACTS AND THE SUBMISSIONS . I FIND THT IN RESPECT OF EXCESS STOCK OF FINISHED PRODUCT, THE AS SESSING OFFICER HAS REJECTED EXPLANATION OF THE APPELLANT ONLY ON T HE GROUND THAT AT THE TIME OF SURVEY, IT WAS NOT EXPLAINED HENCE T HE REFUSED TO VERIFY THE VOUCHERS, STOCK REGISTER AND EXCISE REGI STER WHEREAS THE SUBMISSION OF THE APPELLANT IS VERIFIABLE FROM THE ENTRIES MADE IN THE STOCK REGISTER, EXCISE REGISE4ER AND SALES INVO ICES. ITA NO.915/AHD/2010(BY REVENUE) AND ITA NO.2830/AHD/2012 (BY ASSESSEE ) ACIT VS. M/S.SARNA CHEMICALS P.LTD. AY 2007-08 & ITA NO.916/AHD/2010(BY REVENUE) AND ITA NO.2832/AHD/2012 (BY ASSESSEE ) ACIT VS. SUPREET CHEMICALS P.LTD. AY 2007-08 - 15 - 4.1. THE APPELLANT WAS REQUIRED TO REDUCE THE SAME AND ON TEST CHECK BASIS, IT IS SEEN THAT IN RESPECT OF NAPSA AS PER INVOICE NO.273 DTD. 20/01/2007, REAL WEIGHT IS 2064 KG @ RS .174/- PER KG. AND THE BILLING AMOUNT IS RS.3,59,136/- BUT ON THE INVOICE ITSELF IT IS MENTIONED THAT NET IS 3000 KG. AND PURITY IS 68. 8% AND THE REAL WEIGHT IS 2064KG. THE CORRESPONDING ENTRY IN THE S TOCK REGISTER ON 20/01/2007 IS FOR REAL WEIGHT OF 2064 KG. AND THE V ALUE SHOWN IS RS.3,59,136/-. IN ANOTHER INVOICE TAKEN FOR THE TE ST CHECK DATED 25/01/2007, REAL WEIGHT IS 2538 KG. AND ON THE INVO ICE ITSELF, THE NET WEIGHT IS 3700KG AND THE PURITY IS 68.6% AND TH E REAL WEIGHT IS 2538 KG AND IN THE STOCK REGISTER, REAL WEIGHT IS W RITTEN AS 2538KG. 4.2. IN RESPECT OF NASA TEST CHECK, IN INVOICE NO.1 70 DTD. 4/8/2006, THE REAL WEIGHT IS 1470 KG @ RS.590/- PER KG. AMOUNTING TO RS.38,67,300/-. ON THE INVOICE ITSELF, THE NET WEIGHT IS 2700 KG. AND REAL WEIGHT IS 1470 KG. AND THE SAME AMOUNT APP EARS IN THE STOCK REGISTER. 4.3. IN OPSAMIDE, ON TEST CHECK, IN INVOICE NO.ARE/ R- 149/2006-07 DTD. 21/08/2006, THE REAL WEIGHT IS 448 3 KG. @ RS.330.90 PER KG., TOTAL AMOUNTING TO RS.14,83,425/ -, THE REAL WEIGHT IS 4483 KG. AND NET WEIGHT IS 4800 KG. ON T HE STOCK REGISTER, REAL WEIGHT IS WRITTEN AS 4483 KG. SIMILA R IS THE CASE OF MABS. THEREFORE, THE APPELLANTS SUBMISSION IS ACC EPTABLE. THE SUBMISSION OF THE APPELLANT SUPPORTED BY THE EVIDEN CES AND ENTRIES IN THE REGISTERS AND SALES INVOICES CANNOT BE REJEC TED AND IGNORED MERELY ON THE GROUND THAT THE SAME WERE NOT SUBMITT ED AT THE TIME OF SURVEY. THEREFORE, THE ADDITION IN RESPECT OF E XCESS STOCK OF FINISHED PRODUCT IN THE CASE OF MABS RS.1,27,500/-, OPSAMIDE ITA NO.915/AHD/2010(BY REVENUE) AND ITA NO.2830/AHD/2012 (BY ASSESSEE ) ACIT VS. M/S.SARNA CHEMICALS P.LTD. AY 2007-08 & ITA NO.916/AHD/2010(BY REVENUE) AND ITA NO.2832/AHD/2012 (BY ASSESSEE ) ACIT VS. SUPREET CHEMICALS P.LTD. AY 2007-08 - 16 - RS.68,200/-, NAPSA RS.6,32,100/- AND NASA RS.3,78,6 00/-, IS NOT JUSTIFIED AND IT IS DELETED AND THE APPELLANT IS AL LOWED RELIEF OF RS.12,06,400/-. 4.4. HOWEVER, IN RESPECT OF CLPPD, THERE IS NO MENT ION OF SUCH NATURE IN THE SALES INVOICE INDICATING THE DIFFEREN CE IN REAL WEIGHT AND NET WEIGHT AND ONLY ONE WEIGHT IS WRITTEN. HEN CE, THE APPELLANTS EXPLANATION IN RESPECT OF THIS PRODUCT OF CLPPD, IS NOT VERIFIABLE FROM THE RECORDS. THEREFORE, THE EXPLAN ATION FOR THIS IS REJECTED AND THE ADDITION IS CONFIRMED TO THE EXTEN T OF RS.8,08,200/-. 4.5. THE APPELLANTS SUBMISSION IN RESPECT OF EXCES S STOCK OF RAW MATERIAL THAT THESE ARE IN THE FORM OF LIQUID AND T HE EXACT MEASUREMENT IS NOT POSSIBLE AS THEY ARE LYING IN TH E TANKS IS ACCEPTABLE. THE EXPLANATION THAT THEY ARE LIQUID A ND EXACT MEASUREMENT IS NOT POSSIBLE, WAS ACCEPTED BY THE AS SESSING OFFICER IN RESPECT OF OLEUM AND DIESEL WHEREIN THE DEFICIT STOCK WAS FOUND BUT THE APPELLANTS EXPLANATION FOR MINOR DIF FERENCE IN STOCK DUE TO BEING LIQUID WAS ACCEPTED. ACCORDINGLY, THE APPELLANT IS ALLOWED RELIEF FOR RS.2,73,811/-. 8.1. THE ABOVE FINDING ON FACT OF THE LD.CIT(A) HAS NOT BEEN CONTROVERTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. MOREOVER, THE ASSESSEE HAD GIVEN EXPLANATION VIDE L ETTER DATED 15/10/2018 TO THE AO WITH REGARD TO DISCREPANCIES I N INVENTORY OF STOCK. THIS EXPLANATION WAS NOT TAKEN INTO ACCOUNT BY THE AO. THEREFORE, WE ITA NO.915/AHD/2010(BY REVENUE) AND ITA NO.2830/AHD/2012 (BY ASSESSEE ) ACIT VS. M/S.SARNA CHEMICALS P.LTD. AY 2007-08 & ITA NO.916/AHD/2010(BY REVENUE) AND ITA NO.2832/AHD/2012 (BY ASSESSEE ) ACIT VS. SUPREET CHEMICALS P.LTD. AY 2007-08 - 17 - DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER O F THE LD.CIT(A), SAME IS HEREBY UPHELD. AS A RESULT, REVENUES APPEAL IS D ISMISSED. 9. FINALLY, WE TAKE UP THE ASSESSEES APPEAL IN ITA NO.2832/AHD/2012 FOR AY 2007-08. THE ONLY EFFECTIV E GROUND IN THIS APPEAL IS AGAINST CONFIRMATION OF PENALTY U/S.271(1 )(C) OF THE ACT OF RS.6,95,550/-. 9.1. BRIEF FACTS OF THE CASE ARE THAT THE AO WHILE FRAMING THE ASSESSMENT, INITIATED PENALTY PROCEEDING IN RESPECT OF THE ADDITION MADE ON ACCOUNT OF DISCREPANCIES INTO STOCK. SUBSEQUEN TLY, THE AO LEVIED PENALTY VIDE ORDER DATED 28/03/2011 ON THE ADDITION S SUSTAINED BY THE LD.CIT(A). THE ASSESSEE BEING AGGRIEVED BY THE ORD ER, PREFERRED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS DISMISSED THE APPEAL. NOW, THE ASSESSEE IS IN FUR THER APPEAL BEFORE THIS TRIBUNAL. 10. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN INITIATING THE PENALTY PROCEE DINGS AND LEVYIG THE PENALTY. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PENALTY HAS BEEN LEVIED ON THE AMOUNT OF ADDITION SUSTAINED BY THE LD.CIT(A) IN RESPECT OF DISCREPANCIES INTO STOCK. THE LD.COUNSE L FOR THE ASSESSEE ITA NO.915/AHD/2010(BY REVENUE) AND ITA NO.2830/AHD/2012 (BY ASSESSEE ) ACIT VS. M/S.SARNA CHEMICALS P.LTD. AY 2007-08 & ITA NO.916/AHD/2010(BY REVENUE) AND ITA NO.2832/AHD/2012 (BY ASSESSEE ) ACIT VS. SUPREET CHEMICALS P.LTD. AY 2007-08 - 18 - REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE LD.CIT(A). THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE BOOK S OF ACCOUNT OF THE ASSESSEE ARE DULY AUDITED. THE ACCOUNTS ARE SUBJEC TED TO THE INSPECTION OF THE CENTRAL EXCISE. THE ASSESSEE IS MAINTAINING ST ATUTORY EXCISE RECORDS. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ASSESSEE HAD GIVEN EXPLANATION WHI CH IS RECORDED BY THE LD.CIT(A) IN PARA-2.2 OF HIS ORDER IS AS UNDER:- 2.2. THE LEARNED AR APPEARING ON BEHALF OF APPELLA NT HAS FURTHER FILED FOLLOWING WRITTEN SUBMISSION DATED 29 TH MARCH-2012:- 3. WE ENCLOSE HEREWITH XEROX COPY OF STATEMENT OF DISCREPANCIES IN INVENTORY FOUND DURING THE COURSE OF SURVEY UNDER S ECTION 133A OF THE INCOME TAX ACT, 1961 AT THE FACTORY PREMISES OF SUP REET CHEMICALS PRIVATE LIMITED. THE MAJOR TWO ITEMS FOR WHICH AD DITIONS TO TOTAL INCOME IS CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), ARE BEING HIGHLIGHTED FOR YOUR READY REF ERENCE. 4. IN RESPECT OF EXCESS STOCK OF CLPPD OF RS.8,08,2 00/-, EXCESS QUANTITY DETERMINED BY THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX IS 1,796 KGS. (AS PER PHYSICAL VERIFICATION 3996 KGS. (-) AS PER STOCK REGISTER 2000 KGS). IN RESPECT OF THIS ITEM, WE ENC LOSE HEREWITH THE COPY OF DAILY STOCK ACCOUNT (RG 1) (STATUTORY EXCISE REC ORDS). AS CAN BE SEEN DURING THE SEARCH PROCEEDINGS QUANTITY AS PER EXCISE RECORDS THAT IS IT SAY, ONLY QUANTITY AS PER RG1 IS ENCLOSED. QU ANTITY OF CLPPD UNDER PROCESS, THAT IS TO SAY, ONLY QUANTITY OF 1,7 96 KGS WHICH WAS NOT ITA NO.915/AHD/2010(BY REVENUE) AND ITA NO.2830/AHD/2012 (BY ASSESSEE ) ACIT VS. M/S.SARNA CHEMICALS P.LTD. AY 2007-08 & ITA NO.916/AHD/2010(BY REVENUE) AND ITA NO.2832/AHD/2012 (BY ASSESSEE ) ACIT VS. SUPREET CHEMICALS P.LTD. AY 2007-08 - 19 - IN THE BSR FINISHED GOODS GODOWN BUT IN THE PROCESS IS IGNORED. THIS CAN BE SUBSTANTIATED BY THE FACT THAT QUANTITY OF 1 200 KGS IS ENTERED IN RG1 ON 25.01.2007 AND QUANTITY OF 700 KGS IS ENTERE D ON 29.01.2007. THE ABOVE EXPLANATION WAS NOT ACCEPTED DURING THE C OURSE OF ASSESSMENT AND APPELLATE PROCEEDINGS. 5. IN RESPECT OF DEFICIT IN STOCK OF MASMA, WE WOUL D LIKE TO INFORM YOU THAT THE QUANTITY OF 10,000 KGS ARE AS PER STOCK RE GISTER WHICH IS ANNEXURE-B (STATUTORY EXCISE RECORDS FOR RETURNED G OODS) AND WHICH REPRESENTS RE-IMPORT OF EXPORTED GOODS ON 02.01.200 7. COPY OF ABSTRACT OF ANNEXURE B ENCLOSED. OUT OF THE ABOVE 4,400 KGS WAS SENT TO SARNA CHEMICALS PRIVATE LIMITED FOR PURIFICATION VIDE JOB WORK CHALLAN NO. JW/677 DATED 22.1.2007 (COPY ENCLOSED). THE SAID MA TERIAL IS ALSO SHOWN IN THE STATEMENT OF INVENTORY FOUND AT THE CO URSE OF SURVEY PROCEEDINGS UNDER SECTION 133A OF THE INCOME TAX AC T, 1961 AT FACTORY PREMISES OF SARNA CHEMICALS PRIVATE LIMITED. COPY O F WHICH IS ENCLOSED. REMAINING QUANTITY WAS IN THE PLANT OF SU PREET CHEMICALS PRIVATE LIMITED FOR PURIFICATION. AS CAN BE SEEN FR OM THE ABOVE MENTIONED ANNEURE B, THE ENTIRE QUANTITY OF 10,000 KGS IS RE-EXPORTED TO THE CUSTOMER.' 11.1 UNDISPUTEDLY, THE AO HAD MADE ADDITION ON WHI CH PENALTY IS SUSTAINED BY ESTIMATING THE GROSS PROFIT @ 17.54%. UNDER THE IDENTICAL FACTS IN ITA NO.2830/AHD/2012(SUPRA), WE HAVE DIREC TED THE AO TO DELETE THE PENALTY. FOR THE SAME REASONING IN THE PRESENT APPEAL ALSO, WE HEREBY DELETE THE PENALTY. THUS, THIS GROUND OF ASSESSEES APPEAL IS ALLOWED. ITA NO.915/AHD/2010(BY REVENUE) AND ITA NO.2830/AHD/2012 (BY ASSESSEE ) ACIT VS. M/S.SARNA CHEMICALS P.LTD. AY 2007-08 & ITA NO.916/AHD/2010(BY REVENUE) AND ITA NO.2832/AHD/2012 (BY ASSESSEE ) ACIT VS. SUPREET CHEMICALS P.LTD. AY 2007-08 - 20 - 12. WE SUMMARIZE THE RESULT AS UNDER: (I) REVENUES APPEAL IN ITA NO.915/AHD/2010 IS DI SMISSED. (II) ASSESSEES APPEAL IN ITA NO.2830/AHD/2012 IS ALLOWED. (III) REVENUES APPEAL IN ITA NO.916/AHD/2010 IS D ISMISSED. (IV) ASSESSEES APPEAL IN ITA NO.2832/AHD/2012 IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON THURSDAY, THE 15 TH DAY OF OCTOBER, 2015 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( MANISH BORAD ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 15/ 10 /2015 '..,.../ T.C. NAIR, SR. PS !' #'$ / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0012 3 / CONCERNED CIT 4. 3 ( *+ ) / THE CIT(A)-II, AHMEDABAD 5. 45.12 , *+*12! , * / DR, ITAT, AHMEDABAD 6. 589 / GUARD FILE. / BY ORDER, /4+. //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD
