M/s. Star Rays, Surat V. The Addl.CIT., Circle-5, Surat

ITA 3367/AHD/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6852 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 10-10-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R N VEPARI
• Keywords: Rejection of books of accounts
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD (BEFORE HON'BLE SHRI G.D.AGRAWAL, V.P. & HONBL E SHRI T.K. SHARMA, J.M. ) I.T.A. NO. 3367/AHD./2008 ASSESSMENT YEAR : 2006-2007 M/S. STAR RAYS, SURAT -VS- THE ADDL. C.I.T., SURAT (PAN : AACFB 4707D) (APPELLANT) (RESPONDE NT) APPELLANT BY : SHRI R.N.VEPARI, A .R. RESPONDENT BY : SHRI K. MADHUSUDAN, SR.D.R O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 11.08.2008 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-III, S URAT FOR THE ASSESSMENT YEAR 2006- 2007. 2. VARIOUS GROUNDS RAISED IN THIS APPEAL BY THE ASS ESSEE CAN BE SUMMARIZED AS UNDER: THAT THE CIT(A) ERRED IN I) CONFIRMING THE REJECTION OF BOOKS OF ACCOUNTS A ND ADDITION MADE BY THE ASSESSING OFFICER OF RS.16,77,704/-, AFTER REJ ECTING THE BOOKS OF ACCOUNTS; II) SUSTAINING THE DISALLOWANCE OF 10% OF TELEPHO NE, TRAVELLING AND OFFICE EXPENSES; III) CONFIRMING DISALLOWANCE OUT OF STAFF WELFARE EXPENSES AMOUNTING TO RS.10,000/- IV) CONFIRMING THE LEVY OF INTEREST UNDER SECTION 234B & 234C OF THE I.T. ACT, 1961. 3. BRIEF FACTS RELATING TO CONTROVERSY INVOLVED IN GROUND NO.1 IS THAT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS AND MADE ADDITION OF RS.16,77,704/- IN CLOSING STOCK. 2 ITA NO. 3367-AHD-2008 4. ON APPEAL, IN THE IMPUGNED ORDER, THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS), FOLLOWING THE DECISION OF ITAT, AHMED ABAD B BENCH IN THE CASE OF M/S. BALAR EXPORTS VS- DCIT IN ITA NO.3010/A/2010, UPHE LD THE ADDITION ON THIS ACCOUNT. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRI BUNAL. 5. AT THE TIME OF HEARING BEFORE US, SHRI R.N.VEPAR I, APPEARING ON BEHALF OF THE ASSESSEE, ARGUED AT LENGTH THAT NO ADDITION ON ACCO UNT OF DIFFERENCE IN CLOSING STOCK IS CALLED FOR. ALTERNATIVELY, HE PLEADED THAT THE ASSESSING O FFICER BE DIRECTED TO ADOPT THE CLOSING STOCK OF THIS YEAR AS OPENING STOCK OF THE NEXT YEA R AND THEREBY, THAT BENEFIT OF ADDITION MADE IN CLOSING STOCK BE ALLOWED IN THE NEXT YEAR. 6. ON THE OTHER HAND, SHRI K. MADHUSUDAN, SR.D.R., APPEARING ON BEHALF OF THE REVENUE, HAS VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED C OMMISSIONER OF INCOME TAX(APPEALS). WITH REGARD TO ALTERNATE PLEA, THE LD. D.R. FAIRLY ADMITTED THAT HE HAS NO OBJECTION. 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS ENUMERATED A NUMBER OF FACTORS FOR NOT ADMITTIN G THE METHOD OF VALUATION. THE ADDITION MADE TO THE CLOSING STOCK AMOUNTING TO RS. 16,77,70 4/-, LOOKING TO THE FACTS ENUMERATED IN THE ASSESSMENT ORDER, IS FAIR AND REASONABLE AND LE ARNED COMMISSIONER OF INCOME TAX(APPEALS) IS FULLY JUSTIFIED IN UPHOLDING THE SA ME. HOWEVER, WE FIND CONSIDERABLE FORCE IN THE ALTERNATE PLEA OF THE ASSESSEE AND DIRECT TH E ASSESSING OFFICER TO ADOPT THE FIGURE OF CLOSING STOCK OF THIS YEAR AS OPENING STOCK OF THE LAST YEAR AND ALLOW THE CONSEQUENTIAL RELIEF IN THIS REGARD TO THE ASSESSEE IN THE ASSESSMENT YE AR 2007-08. 8. GROUND NOS. 3 AND 4 WERE NOT PRESSED BY THE LD. COUNSEL OF THE ASSESSEE, AT THE TIME OF HEARING. THEREFORE, THESE GROUNDS ARE DISMISSED AS NOT BEING PRESSED FOR. 9. THE RELIEF CLAIMED IN GROUND NO.5, I.E. LEVY OF INTEREST UNDER SECTION 234B AND 234C, THE ASSESSING OFFICER IS DIRECTED TO ALLOW CONSEQUE NTIAL RELIEF TO THE ASSESSEE. 3 ITA NO. 3367-AHD-2008 10. IN THE RESULT, FOR STATISTICAL PURPOSES, THE AP PEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 20.04. 2011. SD/- SD/- (G.D.AGRAWAL) (T.K. SHARMA) VICE PRESIDENT JUDICIAL MEMBER DATED : 20/04/2011 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE 2) THE DEPARTMENT. 3) CIT(A.) CONCERNED, 4) CIT CONCERNED, 5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGIST RAR, ITAT, AHMEDABAD TALUKDAR/SR.P.S.