The ACIT, 1(2), Indore V. M/s Porwal Auto Components Ltd., Indore

ITA 291/IND/2011

• Counselvise Citation: 29122714 RSA 2011
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 1995-1996
• Appeal Filed On: 14-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: S N AGRAWAL AND
• Keywords: Additional evidence

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.291/IND/2011 A.Y.1995-96 ASSTT. COMMISSIONER OF INCOME TAX 1(2) INDORE ... APPELLANT VS M/S PORWAL AUTO COMPONENTS LTD. INDORE PAN AACBCP0411E ... RESPONDENT APPELLANT BY : SHRI ARUN DEWAN RESPONDENT BY : S/SHRI S.N. AGRAWAL AND PANKAJ MOGRA DATE OF HEARING : 10.2.2012 DATE OF PRONOUNCEMENT : 10.2.2012 2 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER DATED 15.7.2011 PASSED BY LEARNED COMMISSIONE R OF INCOME TAX (APPEALS), INDORE, ON THE FOLLOWING GROU NDS :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS :- 1. ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS.21,79,598/- MADE FOR NON INCLUDING THE STOCK IN THE ACCOUNTS FURNISHED DURING THE COURSE OF ASSESSM ENT PROCEEDINGS. 2. ERRED IN ADMITTING EVIDENCE IN SHAPE OF DETAILS OF NON- MODVAT ITEMS WITHOUT AFFORDING THE OPPORTUNITY TO A .O., WHEREAS INSPITE OF FULL OPPORTUNITY, THE SAME WAS N OT FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDIN G BEFORE THE A.O. 2. THE REVENUE HAS ALSO FILED AN APPLICATION FOR CO NDONATION OF DELAY OF FOUR DAYS ON THE GROUND THAT IN SPITE O F BEST EFFORTS OF THE DEPARTMENT TO TRACE THE RECORD FOR PREPARATI ON OF SECOND APPEAL, THE DELAY HAPPENED WHICH WAS ARGUED TO BE C ONDONED. 2.1 AFTER HEARING THE RIVAL SUBMISSIONS, WE FIND ME RIT IN THE SUBMISSION OF THE LEARNED SR. DR, THEREFORE, THE DE LAY IS CONDONED. 3 3. THE FIRST GROUND, RAISED BY THE REVENUE, PERTAIN S TO DELETING THE ADDITION OF RS.21,79,598/- ALLEGEDLY M ADE FOR NON- INCLUDING THE STOCK IN THE ACCOUNTS FURNISHED BEFOR E THE ASSESSING OFFICER. IN ITS SECOND GROUND, ADMISSION OF ADDITIONAL EVIDENCE IN THE SHAPE OF DETAILS OF NON-MODVAT ITEM S WITHOUT AFFORDING OPPORTUNITY TO THE ASSESSING OFFICER HAS BEEN CHALLENGED, THEREFORE, BOTH THESE GROUNDS CAN BE DI SPOSED OF JOINTLY. THE CRUX OF ARGUMENTS ON BEHALF OF THE RE VENUE IS IN SUPPORT TO THE ASSESSMENT ORDER BY FURTHER SUBMITTI NG THAT THE STOCK WAS NOT INCLUDED BY THE ASSESSEE IN ITS ACCOU NTS WHICH WAS FURNISHED BEFORE THE ASSESSING OFFICER AND THE ADDITIONAL EVIDENCE WAS ADMITTED BY THE LD. FIRST APPELLATE AU THORITY WITHOUT AFFORDING OPPORTUNITY TO THE ASSESSING OFFI CER. 3.1 ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT THE LEARNED ASSESSING OFFICER WRONGL Y MADE THE ADDITION ON THE BASIS OF STATEMENTS ONE GIVEN TO TH E BANK AND ANOTHER ONE THE STOCK AS PER EXCISE RECORDS. THE C ONSIDERATION OF PIG IRON AT 72.600 M. TONS, AS ON 6.2.1995, WAS CLAIMED TO BE NOT CORRECT BY CLAIMING THAT AT THE PARTICULAR D ATE, THE 4 QUANTITY WAS 42.600 MTS. THE CRUX OF ARGUMENT IS TH AT THE LEARNED ASSESSING OFFICER ONLY CONSIDERED THE STOCK WHICH WAS DECLARED FOR EXCISE PURPOSES ON WHICH MODVAT WAS CL AIMED WHEREAS THE NON- MODVAT GOODS WERE CLAIMED TO BE NO T TAKEN INTO ACCOUNT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON FILE. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A LIMITED COMPANY ENGAGED IN THE BUSINE SS OF MANUFACTURING OF PARTS/COMPONENTS FOR AUTOMOBILE CO MPANIES, DECLARED INCOME AT LOSS OF RS.31,87,469/- IN ITS RE TURN FILED ON 29 TH NOVEMBER, 1995. THE ASSESSING OFFICER, DURING ASSESSMENT PROCEEDINGS, NOTICED THAT THE ASSESSEE H AS DECLARED HIGHER STOCK TO THE BANK AS COMPARED TO TH E STOCK SHOWN IN THE STOCK REGISTER THEREBY HE MADE AN ADDI TION OF RS.21,79,598/-. ON APPEAL, LD. FIRST APPELLATE AUTH ORITY DELETED THE ADDITION WHICH IS UNDER CHALLENGED BEFORE THE T RIBUNAL ON BEHALF OF THE REVENUE. IN VIEW OF THESE FACTS, WE ARE SUMMARISING, HEREUNDER, THE ADDITION MADE BY THE LE ARNED ASSESSING OFFICER :- 5 S.NO. DATE PARTICULAR OF ITEM QUANTITY AS PER STOCK HYP TO BANK (M TON) QUANTITY AS PER STOCK OF BOOKS (M TON) DIFFERENCE (M TON) 1 06.02.1995 SCRAP 227.300 65.200 162.100 2 05.03. SCRAP 286.500 63.495 222.555 3 06.02.1995 PIG IRON 72.600 13.590 59.010 4 05.03.1995 PIG IRON 62.500 26.069 36.431 WE FIND THAT THE LEARNED ASSESSING OFFICER WRONGLY CONSIDERED THE QUANTITY OF PIG IRON AS ON 6.2.1995 AS 72.600 M TS MORE WHEREAS THE ASSESSEE SUBMITTED THE QUANTITY OF PIG IRON TO THE BANK AS 42.600 MTS ONLY AS IS EVIDENT FROM SERIAL N O. 29 OF THE STOCK STATEMENT SUBMITTED TO THE BANK. THE LEARNED ASSESSING OFFICER WHILE MAKING THE ASSESSMENT ADDED THE HIGHE R FIGURE OF THESE QUANTITIES AS INCOME OF THE ASSESSEE. THE CAL CULATION MADE BY HIM IS REPRODUCED HEREUNDER :- S.NO. DATE PARTICULAR OF ITEM DIFFERENCE IN QUANTITY(M TON) RATE (PER M TONS) AMOUNT (RS.) 1 06-02-1995 PIG IRON 59.010 8650 5,10,436 2 05.03.1995 SCRAP 222.555 7500 16,69,162 21,79,598 6 AS PER THE ASSESSING OFFICER THE QUANTITY IN RESPEC T OF FOLLOWING ITEMS DID NOT MATCH :- S.NO. PARTICULAR OF ITEM DATE QUANTITY AS PER STOCK STATEMENT WITH BANK QUANTITY AS PER REGULAR BOOKS OF ACCOUNT (IN M. TONS) TOTAL QUANTITY (IN M. TON MODVAT NON MODVAT 1 PIG IRON 06.02.95 42,600 (WRONGLY CONSIDERED AS 72,600) 13.595 29.005 42.600 2 SCRAP 05-03-95 286.500 63.945 222.555 286.500 THE FOLLOWING CHART WILL MAKE THE POSITION MORE CLE AR AS THE ASSESSEE DEPICTED THE STOCK STATEMENT WHICH WAS SUB MITTED TO THE BANK AND REFLECTED IN ITS BOOKS OF ACCOUNTS. I T IS SUMMARISED AS UNDER :- S.NO. PARTICULAR OF ITEMS DATE QUANTITY AS PER REGULAR BOOKS OF ACCOUNT (IN M. TONS) TOTAL QUANTITY (IN M. TON) MODVAT NON- MODVAT 1 PIG IRON 31.03.95 18.189 19.411 37.600 2 SCRAP 31.03.95 6.116 79.285 85.401 4.1 IF THE CONTENTION OF THE ASSESSING OFFICER IS A CCEPTED THEN THIS STOCK AS PER MODVAT EXCISE RECORD OF PIG IRON AND SCRAP , AS ON 31.3.1995 IS VERY LOW IN COMPARISON TO QUANTI TY OF PIG IRON 7 AND SCRAP CONSIDERED BY THE ASSESSEE FOR ITS VALUAT ION AS ON 31.3.1995 AS HAS BEEN REPRODUCED HEREINABOVE. THE LEARNED ASSESSING OFFICER WHILE CALCULATING THE DIFFERENCE IN QUANTITY CONSIDERED THE STOCK AS DECLARED UNDER THE EXCISE R ECORD ONLY ON WHICH MODVAT WAS CLAIMED BY THE ASSESSEE WHEREAS THE LEARNED ASSESSING OFFICER DID NOT TAKE INTO CONSIDE RATION THE NON-MODVAT GOODS AND IF THE QUANTITY OF NON-MODVAT GOODS IS CONSIDERED THEN NO DIFFERENCE REMAINS IN THE STOCK AS SUBMITTED TO THE BANK AND REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AS THE QUANTITY OF REGULAR BOOKS OF AC COUNT, THE MODVAT STOCK COMES TO 13.595 MT AND THE NON-MODVAT QUANTITY COMES TO 29.005 MT MEANING THEREBY THE TOT AL QUANTITY COMES TO 42.600 MT AND THERE REMAINS NO DI FFERENCE. WE HAVE PERUSED THE PAGES 6, 8, 10, 11, 12, 17 AND 16 OF THE PAPER BOOK. AS ON 31.3.1995 THE MODVAT GOODS ARE 18 .189 MT AS PER REGULAR BOOKS OF ACCOUNT AND NON-MODVAT GOOD S (PAGE 10) ARE 19.411 MTS THE TOTAL OF WHICH COMES TO 37.6 00 MTS. SO FAR AS THE SCRAP AS ON 5.3.1995 (PAGE 14) IS CONCER NED FOR MODVAT, THE QUANTITY AS PER BANK STATEMENT IS 286.5 00 MTS 8 AND QUANTITY AS PER REGULAR BOOKS OF ACCOUNT (MODVA T) IS 63.945 MTS (PAGE 17 OF THE PAPER BOOK) WHEREAS NON- MODVAT GOODS ARE 222.555 MTS (PAGE 16 OF THE PAPER BOOK) T HE TOTAL OF WHICH COMES TO 286.500 MTS MEANING THEREBY THERE RE MAINS NO DIFFERENCE. AS ON 31.3.1995 THE QUANTITY AS PER BANK STATEMENT IS 85.400 MTS (PAGE 6 OF THE PAPER BOOK) AND THE QUANTITY AS PER REGULAR BOOKS OF ACCOUNT FOR MODVAT IS 6.116 (PAGE 17 OF THE PAPER BOOK) WHEREAS THE NON-MODVAT STOCK IS 79.285 MTS (PAGE 16 OF THE PAPER BOOK), THE TOTAL C OMES TO 85.401 MTS MEANING THEREBY THERE REMAINS NO DIFFERE NCE. IN VIEW OF THESE FACTS, THE PRESUMPTION OF THE ASSESSI NG OFFICER THAT THERE WAS DIFFERENCE IN THE STOCK GIVEN TO THE BANK AND REFLECTED IN THE REGULAR BOOKS OF ACCOUNT IS WITHOU T ANY BASIS, CONSEQUENTLY, WE FIND MERIT IN THE SUBMISSIONS OF T HE ASSESSEE. 4.2 IF THIS ISSUE IS ANALYSED WITH THE HELP OF JUDI CIAL PRONOUNCEMENTS WHEREIN IT WAS HELD THAT ON MERE DIF FERENCE IN THE QUANTITY OF STOCK SUBMITTED TO THE BANK AND THE REGULAR BOOKS OF ACCOUNT MAY NOT BE THE SOLE GROUND FOR ADD ITION ESPECIALLY WHEN THE ASSESSEE SUBMITTED THE CORRECT STOCK TO 9 THE DEPARTMENT WHICH WAS ACCEPTED BY THE EXCISE AUT HORITIES. IN THE CASE OF CIT VS. VEER DEEP ROLLERS PRIVATE L IMITED; 323 ITR 341 (GUJ) THE HON'BLE HIGH COURT CONSIDERED THE FACTS AND LAID DOWN IDENTICAL RATIO. THE HON'BLE BOMBAY HIGH COURT IN CIT V. ACRO INDIA LIMITED (298 ITR 447) AND THE HON 'BLE MADRAS HIGH COURT IN CIT V. APCOM COMPUTERS PRIVATE LIMITED; 292 ITR 630 ON ALMOST IDENTICAL FACTS HELD THAT THE MERE DIFFERENCE IN QUANTITY OF STOCK, SUBMITTED TO THE B ANK, AND THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE IS NOT THE ONLY GROUND FOR MAKING THE ADDITION. WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION FROM THE ORDER OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF VEERDEEP ROLLERS PRIVATE LIMI TED (SUPRA) :- ADDITION WAS MADE U/S 69B OF THE INCOME- TAX ACT, 1961, ON ACCOUNT OF DIFFERENCE BETWEEN THE CLOSING STOCK FURNISHED IN A STATEMENT TO THE BANK FOR AVAILING OF CREDIT FACILITY AND THAT SHOWN IN THE BOOKS OF ACCOUNT FURNISHED BEFORE THE INCOME TAX AUTHORITIES. THE TRIBUNAL DELETED THE ADDITION ON THE GROUND THAT THE STATEMENT SUBMITTED BY THE ASSESSEE TO THE BANK WAS ON ESTIMATE BASIS AND THE VALUE OF THE STOCK WAS INFLATED TO AVAIL OF GREATER CREDIT FROM THE BANK AND THAT THERE WAS NO JUSTIFICATION FOR MAKING ANY ADDITION ON THE A LLEGATION OF INFLATED STOCK SHOWN TO BANK. 10 ON THESE FACTS, THE HON'BLE HIGH COURT HELD AS UNDE R :- DISMISSING THE APPEAL THAT THE TRIBUNAL HAD CONSIDERED WHETHER THE VALUE OF STOCK SHOWN IN THE BOOKS OF ACCOUNT WAS GENUINE OR NOT AND THERE WAS NO REASON TO HOLD THAT THE FINDING OF THE TRIBUNAL WAS PERVERSE . THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ACROS INDIA LIMITED; 298 447 WHEREIN THE INFLATED STOCK DECLARE D BEFORE THE BENCH FOR DIFFERENT PURPOSES WAS HELD TO BE NOT REJ ECTABLE ESPECIALLY WHEN THE BOOKS OF ACCOUNT FOR INCOME TAX PURPOSES WERE CORRECTLY MADE BY THE ASSESSEE. THE DECISION IN CIT VS. SUDARSHAN CHEMICAL INDUSTRIES LIMITED; 245 ITR 769 (BOM) PARA 2 AND HON'BLE MADRAS HIGH COURT IN CIT VS. N . SWAMI; 241 ITR 363 (PARA 3) LAID DOWN IDENTICAL RATIOS, TH EREFORE, FROM THIS ANGLE ALSO THE ASSESSEE IS HAVING A GOOD CASE IN ITS FAVOUR. EVEN OTHERWISE WE FURTHER FIND, AS IS EVID ENT FROM THE ASSESSMENT ORDER ITSELF, THAT THE ASSESSEE DECLARED LOSS OF RS.31,87,469/- IN ITS RETURN FILED ON 29.11.1995 AN D ULTIMATELY THE ASSESSING OFFICER FRAMED THE ASSESSMENT AT A NE T LOSS OF RS.10,07,421/-. IT IS NOT THE CASE THAT THERE WAS INCOME TO THE 11 ASSESSEE AND THE ASSESSEE WANTS TO REDUCE ITS TAX L IABILITY BY SHOWING INFLATED FIGURES, THEREFORE, FROM THIS ANGL E ALSO, THE STAND OF THE ASSESSING OFFICER IS NOT JUSTIFIED. IN VIEW OF THESE FACTS AND JUDICIAL PRONOUNCEMENTS , WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE LD . FIRST APPELLATE AUTHORITY AND CONFIRM THE SAME. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED . THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LEARNED REPRESENTATIVES FROM BOTH THE S IDES AT THE CONCLUSION OF HEARING ON 10.2.2012. SD SD (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10.2.2012 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-