Madhusudan Organics Ltd., Kolkata V. ITO, WD-11(3), KOLKATA, Kolkata

ITA 328/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1670 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 02-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTTACHERJEE
• Assessee Lawyers: B K PODDAR
• Keywords: Corroborative evidences
• Section: 143(3)

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 328 / KOL / 2016 ASSESSMENT YEAR :2010-11 MADHUSUDAN ORGANICS LTD., 5,GOPAL DOCTOR LANE, KOLKATA-23 [ PAN NO.AABCM 9003 F ] V/S . INCOME TAX OFFICER, WARD-11(3), AAYAKAR BHWAN, KOLKATA- 700001 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI B.K. PODDAR, FCA /BY RESPONDENT SHRI ARINDAM BHATTTACHERJEE, ADDL. CIT-DR /DATE OF HEARING 03-01-2018 /DATE OF PRONOUNCEMENT 09-02-2018 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-4, KOLKATA DAT ED 27.01.2016. ASSESSMENT WAS FRAMED BY ITO WARD-11(3), KOLKATA U/ S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) VIDE HIS ORDER DATED 10.03.2013 FOR ASSESSMENT YEAR 2010-11. SHRI B.K. PODDAR, LD. AUTHORIZED REPRESENTATIVE APP EARED ON BEHALF OF ASSESSEE AND SHRI ARINDAM BHATTACHERJEE, LD. DEPART MENTAL REPRESENTATIVE APPEARED ON BEHALF OF REVENUE. ITA NO.328/KOL/2016 A.Y. 2010-11 MADHUSUDAN ORGANICS LTD. VS. ITO WD-11( 3) KOL. PAGE 2 2. SOLE ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF ASSESSING OFFICER BY SUSTAI NING THE ADDITION OF 3,04,280/- ON ACCOUNT OF SUPPRESSION OF CLOSING ST OCK. 3. BRIEFLY, THE FACTS ARE THAT ASSESSEE IN THE PRES ENT CASE IS A LIMITED COMPANY AND ENGAGED IN THE MANUFACTURING BUSINESS O F INDUSTRIAL OIL AND PETROLEUM JELLY. THE ASSESSEE IN ITS BALANCE-SHEET HAS SHOWN CLOSING STOCK OF 70872 LITRES ONLY BUT ASSESSING OFFICER OBSERVED TH E QUANTITY OF CLOSING STOCK SHOULD HAVE BEEN AT 79955 LITRES AS PER THE EXCISE RETURN. THUS A DIFFERENCE IN THE QUANTITY OF CLOSING STOCK WAS OBSERVED BY AO FO R 9083 LITRES. THE AO DETERMINED THE VALUE OF SUPPRESSED CLOSING S TOCK AT 33.50 PER LETRES AGGREGATING TO 304280/- ONLY. ON BEING CONFRONTED, ASSESSEE SUBMIT TED THAT IT HAS RECEIVED 9083 LITRES OF STOCK FROM M/S BALME R LAWRIE & CO. FOR SOME JOB WORK. THE IMPUGNED STOCK WAS EXCISABLE ITEMS, THERE FORE IT WAS ENTERED INTO EXCISE RECORD AND NO ENTRY WAS MADE IN THE BOOKS OF ACCOUNT OF ASSESSEE AS THE ASSESSEE HAS NOT INCURRED ANY COST. THEREFORE, NO CLOSING STOCK WAS SHOWN IN ITS BOOKS OF ACCOUNT. HOWEVER, AO, DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THE EXPLANATION FURNISHED BY ASSESSEE IS NOT BASED ON SUPPORTING ANY DOCUMENTARY EVIDENCE. THERE FORE, AO DISREGARDED THE CONTENTION OF ASSESSEE AND ADDED SUM OF 3,04,280/- TO THE TOTAL INCOME OF ASSESSEE ON ACCOUNT OF SUPPRESSED CLOSING STOCK. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE IMPUG NED DIFFERENCE OF CLOSING STOCK HAS BEEN CARRIED OVER FROM THE FINANCIAL YEAR ENDED 31.03.2008. THEREFORE, NO ADDITION ON ACCOUNT OF SUPPRESSED OF CLOSING STOCK CAN BE MADE IN THE YEAR UNDER CONSIDERATION. THE STOCK WAS RECEIVED FROM M/S BALMER LAWRIE & CO. IN THE YEAR 2008 TO CARRY OUT SOME PROCESSING ACTIVITIES. BUT DUE TO SO ME PROBLEM THE PROCESSING WAS NOT CARRIED OUT AND THE STOCK WAS NEVER RETURNE D BACK TO M/S BALMER LAWRIE & CO. AS THE STOCK WAS EXCISABLE ITEM, THERE FORE THE SAME WAS ENTERED INTO EXCISE RECORDS BUT NO ENTRY WAS MADE I N THE BOOKS OF ACCOUNT OF ASSESSEE AS NO COST WAS INCURRED WITH REGARD TO SUC H STOCK. THE ASSESSEE IN ITA NO.328/KOL/2016 A.Y. 2010-11 MADHUSUDAN ORGANICS LTD. VS. ITO WD-11( 3) KOL. PAGE 3 SUPPORT OF ITS CLAIM ALSO FILED A CONFIRMATION FROM M/S BALMER LAWRIE & CO. HOWEVER, LD. CIT(A) DISREGARDED THE CONTENTION OF A SSESSEE AND CONFIRMED THE ORDER OF AO BY OBSERVING AS UNDER:- 10.2 I HAVE CONSIDERED THE SUBMISSION OF THE APPEL LANTS AR ON THE ISSUE AT HAND IN THE BACKDROP OF THE ASSESSMENT ORD ER. I FIND FROM THE ASSESSMENT ORDER THAT THE AO HAS POINTED OUT SPECIF IC DEFECT IN THE QUANTITY OF CLOSING STOCK OF 70872 LITERS WHEN COMP ARED TO THE CLOSING STOCK OF 79,955 LITERS OF CLOSING STOCK AS PER THE EXCISE RECORD MAINTAINED BY THE APPELLANT. NEITHER BEFORE THE AO NOT BEFORE ME HAS THE APPELLANT EXPLAINED THIS DISCREPANCY. IT IS CON TENDED BY THE AR OF THE APPELLANT THAT THIS DISCREPANCY IS CARRIED FORW ARD FROM FINANCIAL YEAR ENDED 2008 AND THEREFORE NO ADDITION CAN BE MADE DU RING THIS YEAR. HOWEVER, THE AR HAS FAILED TO SUBSTANTIATE HIS CLAI M WITH SUPPORTING EVIDENCES. THUS I AM UNABLE TO ACCEPT THE CONTENTIO NS OF THE AR OF THE APPELLANT. THIS GROUND OF APPEAL IS DISMISSED. THE ASSESSEE BEING AGGRIEVED BY THIS ORDER OF LD. C IT(A) HAS COME UP AN APPEAL BEFORE US. 5. LD. AR FOR THE ASSESSEE BEFORE US FILED PAPER BO OK WHICH IS RUNNING PAGES FROM 1 TO 54 AND DREW OUR ATTENTION ON CONFIR MATION FILED BY M/S BALMER LAWRIE & CO WHICH IS PLACED ON PAGE 1 OF THE PAPER BOOK. THE LD. AR FURTHER SUBMITTED THAT THE STOCK STATEMENTS BEGINNING FROM 31.03.2008 TO 31.03.2012 WERE DULY FURNISHED BEFORE THE AO DURING THE ASSESS MENT PROCEEDINGS AND IT WAS ALSO DEMONSTRATED THAT THE DIFFERENCE IN STOCK HAS ARISEN FROM THE EARLIER ASSESSMENT YEAR. THE COPY OF STOCK STATEMENT IS PLA CED ON PAGE 3 OF THE PAPER BOOK. LD. AR ALSO PLACED THE EXCISE RECORD WH ERE THE DETAILS OF THE QUANTITY OF THE CLOSING STOCK WERE SHOWN WHICH IS P LACED ON PAGE 4 OF PAPER BOOK. ON THE OTHER HAND, LD. DR VEHEMENTLY RELIED ON THE ORDER OF AUTHORITIES BELOW AND LEFT THE ISSUE TO THE DISCRETION OF THE BENCH. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, ADDITION WAS MADE BY AO ON ACCOUNT OF DIFFERENCE IN THE CLOSING STOCK BETWEEN AUDITED FINANCIAL STATEMENTS AND EXCISE RECORDS. IT WAS CLAIMED BY AS SESSEE THAT NO COST HAS ITA NO.328/KOL/2016 A.Y. 2010-11 MADHUSUDAN ORGANICS LTD. VS. ITO WD-11( 3) KOL. PAGE 4 BEEN INCURRED ON SUCH CLOSING STOCK, THEREFORE, NO CLOSING STOCK FOR SUCH QUANTITY WAS SHOWN IN THE FINANCIAL STATEMENTS. 6.1 WE FIND THAT ALL THE NECESSARY DETAILS WERE DUL Y FILED BY ASSESSEE AS STATED ABOVE BUT NONE OF THE AUTHORITIES BELOW HAS POINTED OUT ANY DEFECT IN THE SUBMISSION OF ASSESSEE. WE ALSO FIND THAT THE D ETAILS OF THE ADDITION OF M/S BALMER LAWRIE & CO WAS VERY MUCH AVAILABLE WITH THE AO BUT AO HAS NOT CROSS-VERIFIED WE ALSO FIND THAT THE IMPUGNED DIFFERENCE IN CLOSIN G STOCK DOES NOT PERTAIN TO THE YEAR UNDER CONSIDERATION. IF AT ALL IT IS REQUI RED TO BE BROUGHT TO TAX THEN IT NEEDS TO BE ADDED IN THE YEAR TO WHICH IT PERTAINS. IN THIS VIEW OF THE MATTER, WE REVERSE THE ORDER OF LOWER AUTHORITIES AND DIREC T THE AO TO DELETE THE SAME. HENCE, THIS GROUND OF ASSESSEES APPEAL IS AL LOWED. 7. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 09 /02/2018 SD/- SD/- ( $ &) ( &) (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S (- 09 / 02 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-MADHUSUDAN ORGANICS LTD., 5 GOPAL DOCTOR LANE, KOLKATA-23 2. /RESPONDENT-INCOME TAX OFFICER, WARD-11(3), AAYKAR BHAWAN, KOLKATA-001 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 $$3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3,