DCIT, CIR-3(1), KOLKATA, Kolkata V. M/s Utkarsh Galva Ltd., Kolkata

ITA 389/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1624 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 09-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOULEAN HANGSHING
• Assessee Lawyers: A N KESHARI
• Keywords: Depreciation; Additional evidence; Tangible material; Corroborative evidences; Competent authority; Assessment record
• Section: 143(3); 6

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 389 / KOL / 2015 ASSESSMENT YEAR :2007-08 DCIT, CIRCLE-3(1), P-7, CHOWRINGHEE SQUARE, AAYAKAR BHWAN, 4 TH FLOOR, ROOM NO.19, KOLKATA-69 V/S . M/S UTKARSH GALVA LTD., 3-B, LAL BAZAR STREET (2 ND FLOOR), KOLKATA-001 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI GOULEAN HANG SHING, CIT-DR /BY RESPONDENT SHRI A.N. KESHARI, AR /DATE OF HEARING 25-07-2017 !' /DATE OF PRONOUNCEMENT 23-08-2017 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS ARISING OUT OF ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-I, KOLKATA DATED 31.12.2014. A SSESSMENT WAS FRAMED BY DCIT CIRCLE-3, KOLKATA U/S 143(3)/147/143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ER DATED 28.03.2013 FOR ASSESSMENT YEAR 2006-07. SHRI GOULEEAN HANG SHING, LD. DEPARTMENTAL REPRESEN TATIVE REPRESENTED ON BEHALF OF REVENUE AND SHRI A.N. KESHARI, LD. AUTHOR IZED REPRESENTATIVE APPEARED ON BEHALF OF ASSESSEE. 2. AT THE OUTSET, IT WAS NOTICED THAT THE APPEAL FI LED BY REVENUE IS DELAYED BY JUST 2 DAYS. THE CONDONATION PETITION HAS BEEN F ILED EXPLAINING THE REASONS FOR DELAY ALONG WITH SUPPORTING AFFIDAVIT. ON QUERY , FROM THE BENCH, LD. ITA NO.389/KOL/2015 A.Y. 2007-08 DCIT CIR-3(1), KOL. VS. M/S UTKARSH GALVA LTD. PAGE 2 COUNSEL FOR THE ASSESSEE HAS NOT OPPOSED THE CONDON ATION RATHER HE CONCEDED THAT DELAY CAN BE CONDONED. IN VIEW OF THE ABOVE REASONS GIVEN IN THE CONDONATION PETITION AND CONCESSION GIVEN BY LD . AR FOR THE ASSESSEE, WE CONDONE THE DELAY AND ADMIT THE APPEAL. 3. THE GROUNDS RAISED BY REVENUE PER ITS APPEAL ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW IN ALLOWING RELIEF TO THE ASSESSEE COM PANY ON ACCOUNT OF SUNDRY RECEIVABLES AMOUNTING TO RS.18945294 WITHOUT VERIFI CATION EVEN AT CIT(APPEALS) LEVEL. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW IN ALLOWING RELIEF TO THE ASSESSEE COMPANY O N ACCOUNT OF DIFFERENCE IN SUNDRY CREDITORS AND SALES AMOUNTING TO RS.15855736 /- ON THE BASIS OF FRESH EVIDENCE SUBMITTED DURING THE COURSE OF APPEAL. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW IN ALLOWING RELIEF TO THE ASSESSEE COMPANY O N ACCOUNT OF EXCESS DEPRECIATION AMOUNTING TO RS.25815777/- ON THE BASI S OF FRESH EVIDENCE SUBMITTED DURING THE COURSE OF APPEAL WITHOUT GIVIN G OPPORTUNITY TO ASSESSING OFFICER. 4. THE APPELLANT CRAVES LEAVE TO AMEND, MODIFY OR A LTER ANY GROUNDS OF APPEAL DURING THE COURSE OF HEARING OF THIS CASE. 4. FIRST ISSUE RAISED BY REVENUE IN GROUND NO.1 IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER FOR 1,89,45,294/- ON ACCOUNT OF SUNDRY RECEIVABLES. 5. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS A LIMI TED COMPANY AND ENGAGED IN THE MANUFACTURING BUSINESS OF GC AND GP SHEETS. THE ASSESSEE IN ITS BALANCE-SHEET HAS SHOWN OPENING RECEIVABLE FOR 1,66,55,226/- ONLY AND CLOSING RECEIVABLES AS ON 31.03.2007 FOR 3,56,10,520/- ONLY. THUS, THERE WAS AN INCREASE OF 1,89,45,294/- IN RECEIVABLE ACCOUNT IN THE YEAR UND ER CONSIDERATION. THE AO CALLED UPON THE ASSESSEE TO E XPLAIN THE RECEIVABLES SHOWN IN BALANCE-SHEET ALONG WITH SUPPORTING EVIDEN CE. 6. THE ASSESSEE IN RESPONSE TO THE QUERY OF AO SUBM ITTED THAT ALL THE AMOUNT SHOWN UNDER THE HEAD RECEIVABLE ARE ON ACC OUNT OF ADJUSTMENTS WITH THE GOVERNMENT DEPARTMENT SUCH AS EXCISE, W.B. VAT & SERVICE TAX ETC. THE ASSESSEE IN SUPPORT OF ITS CLAIM ALSO SUBMITTED THE EXCISE REGISTER. HOWEVER, THE AO DISBELIEVED THE EXCISE REGISTER ON THE GROUND THAT IT WAS NOT CERTIFIED BY THE COMPETENT AUTHORITY. THEREFORE, TH E AO HAS TREATED THE ITA NO.389/KOL/2015 A.Y. 2007-08 DCIT CIR-3(1), KOL. VS. M/S UTKARSH GALVA LTD. PAGE 3 INCREASED AMOUNT OF RECEIVABLE FOR 1,89,45,294/- AS INCOME AND ACCORDINGLY ADDED TO THE TOTAL INCOME OF ASSESSEE. 7. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE LD . CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE AMOUN T SHOWN UNDER THE HEAD RECEIVABLE IS DUE FROM VARIOUS TAX AUTHORITIES AN D DETAILS OF THE SAME STAND AS UNDER:- AT THE BEGINNING OF YEAR 01.04.06 AS AT THE YEAR- END 31.03.07 1 CENVAT CREDIT OF EXCISE ON CAPITAL GOODS (E BASIC) 1,40,61,414.40 2,11,91,919.00 2 -DO- (E. CESS) 2,81,628.10 4,23,838.08 3 S & H CESS - - 653.98 4 CENVAT CREDIT ON EXCISE ON RAW MATERIALS - - 83,98,361.10 5 E. CESS - - 1,66,198.88 6 S & H CESS - - 6,824.00 7 INPUT SERVICE TAX CREDIT RECOVERABLE 3,18,075.00 3,36,916.37 8 W.B. VAT CREDIT ON CAPITAL GOODS RECEIVABLE 19,74,108.42 49,81,047.56 9 OTHERS 10,000.00 DDS -- 82,817,00 TCS -- 21,944.00 1,66,65,226.00 3,56,10,510.00 THE ASSESSEE ALSO SUBMITTED THAT THE DETAILS OF VAT RECEIVABLE FROM THE GOVERNMENT DEPARTMENT WAS ALSO FILED BEFORE AO AT T HE TIME OF ASSESSMENT PROCEEDINGS BUT ALL SUCH DETAILS WERE IGNORED. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE DELETED THE ADDITION MADE B Y AO BY OBSERVING AS UNDER:- THE AO HOWEVER HAS NOT ACCEPTED THE APPELLANTS CLAI M ON EITHER WEST BENGAL VAT CREDIT OR THE CENVAT CREDIT OF EXCISE BA SED ON THE GROUNDS THAT THE EXCISE REGISTER WAS NOT ACCEPTABLE. HE HAS HOWE VER NEITHER VERIFIED THE AUTHENTICITY OF THE SAME INDEPENDENTLY FROM THE EXC ISE AUTHORITY NOR HE HAS BOTHER TO CONFIRM THE APPELLANTS CONTENTS FROM THE EXCISE AUTHORITIES BUT HAS SIMPLY REJECTED THE APPELLANTS SUBMISSIONS WHICH IS NEITHER CORRECT NOR PROPER. THEREFORE IN THE ABSENCE OF ANYTHING TO THE CONTRARY IT IS CLEAR THAT THE RECEIVABLE BEING DECLARED BY THE APPELLANT WERE IN FACT THE AMOUNTS HAD ITA NO.389/KOL/2015 A.Y. 2007-08 DCIT CIR-3(1), KOL. VS. M/S UTKARSH GALVA LTD. PAGE 4 SHOWN AS CREDIT OF EXCISE AND VAT AND UNDER NO CIRC UMSTANCE AND THE SAME BE CONSIDERED AS THE APPELLANTS INCOME. IT IS ALSO SEEN THAT THE SAME HAS BEEN EXPLAINED TO THE AO VIDE THE APPELLANTS LETTER DATED 19.03.2013 AND THE AO HAS NOT ACCEPTED THE SAME WITHOUT POINTING OUT A NY DISCREPANCY ACCORDINGLY IT IS HELD THAT THE AO WAS NOT JUSTIFIE D IN HOLDING THE DIFFERENCE IN RECEIVABLE AT THE BEGINNING OF THE YEAR AND AT THE END OF THE YEAR I.E. RS.1,89,45,294/- AS INCOME OF THE APPELLANT AND THE SAME IS DELETED. THE REVENUE, BEING AGGRIEVED IS IN APPEAL BEFORE US . 8. BEFORE US BOTH THE PARTIES RELIED ON THE ORDER O F AUTHORITIES BELOW AS FAVOURABLE TO THEM. 9. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, AO OBSERVED THAT THE AMOUNT RECEIVABLE SHOWN BY THE ASSESSEE IN THE BALANCE SHE ET HAS INCREASED BY 1,89,45,294/- IN COMPARISON TO OPENING BALANCE. THE AO SOUGHT CLARIFICATION FROM THE ASSESSEE FOR THE AMOUNT INCREASED IN THE R ECEIVABLE ACCOUNT DURING THE YEAR. THE ASSESSEE EXPLAINED THAT THE AMOUNT IN CREASED UNDER THE HEAD RECEIVABLE IS ON ACCOUNT OF AMOUNT DUE FROM VARIO US GOVERNMENT DEPARTMENTS. THE ASSESSEE ALSO PRODUCED THE EXCISE REGISTER IN SUPPORT OF ITS CLAIM. HOWEVER, THE AO DISREGARDED THE SAME ON THE GROUND THAT EXCISE REGISTER WAS NOT CERTIFIED BY THE COMPETENT AUTHORI TY. 9.1 HOWEVER, LD. CIT(A) DELETED THE ADDITION MADE B Y THE AO BY OBSERVING THAT AO SHOULD HAVE VERIFIED THE AMOUNT DUE FROM EX CISE DEPARTMENT AS CLAIMED BY ASSESSEE. LD. CIT(A) ALSO OBSERVED THE R EASONS FOR INCREASED IN THE RECEIVABLE AMOUNT ON ACCOUNT OF AMOUNT DUE FRO M EXCISE AND VAT DEPARTMENT. NOW, THE QUESTION BEFORE US ARISES FOR OUR ADJUDICATION SO AS TO WHETHER THE ADDITION MADE BY THE AO ON ACCOUNT OF I NCREASED AMOUNT OF RECEIVABLE REPRESENTS INCOME OF THE ASSESSEE IN THE AFORESAID FACTS AND CIRCUMSTANCES. IN THIS CONNECTION, WE FIND THAT THE AO HAS JUST ADDED THE AMOUNT INCREASED UNDER THE HEAD RECEIVABLE AS INC OME OF THE ASSESSEE WITHOUT BRINGING ANY SUBSTANCE. THE AO HAS TO BRING COGENT AND TANGIBLE MATERIAL FOR TREATING ANY TRANSACTION AS INCOME OF THE ASSESSEE. IN THE CASE BEFORE US THE AO HAS TREATED THE INCREASED AMOUNT U NDER THE HEAD ITA NO.389/KOL/2015 A.Y. 2007-08 DCIT CIR-3(1), KOL. VS. M/S UTKARSH GALVA LTD. PAGE 5 RECEIVABLE AS INCOME ON THE GROUND THAT EXCISE RE GISTER WAS NOT CERTIFIED BY THE COMPETENT AUTHORITY. IN OUR CONSIDERED VIEW, EV EN THE EXCISE REGISTER IS NOT CERTIFIED BY THE COMPETENT AUTHORITY, THE INCRE ASED AMOUNT UNDER THE HEAD RECEIVABLE CANNOT TANTAMOUNT AS INCOME OF THE ASSES SEE. UNDER NO CIRCUMSTANCES THE EXCISE RECEIVABLE FROM THE GOVERN MENT DEPARTMENT CAN BE TREATED AS INCOME OF THE ASSESSEE UNDER THE GIVEN F ACTS & CIRCUMSTANCES. FROM THE ORDER OF LD. CIT(A), IT WAS OBSERVED THAT THE AMOUNT UNDER RECEIVABLE ACCOUNT WAS INCREASED DURING THE YEAR ON ACCOUNT OF PURCHASE OF CAPITAL ITEMS. THUS, THE ASSESSEE HAS PURCHASED CAP ITAL ITEMS AND ON THESE ITEMS EXCISE & OTHER TAXES/ DUTIES HAS BEEN PAID WH ICH WAS RECORDED UNDER THE HEAD RECEIVABLE IN ORDER TO ADJUST THE SAME W ITH THE EXCISE AND VAT LIABILITY WHICH WILL FALL UPON THE ASSESSEE IN FUTU RE. THEREFORE, IN OUR CONSIDERED VIEW, THE ADDITION MADE BY THE AO WAS BA SED ON SURMISE AND CONJECTURE AND IT HAS NO LEG TO STAND. WE ALSO FIND THAT THE LD. DR HAS NOT BROUGHT ANYTHING CONTRARY TO THE FINDING OF LD. CIT (A). IN THE BACKGROUND OF THE ABOVE DISCUSSIONS AND PRECEDENT WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) AND ACCORDINGLY WE UPHOLD THE SAME. THIS GROUND OF REVENUES APPEAL IS DISMISSED. 10. NEXT ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY AO FOR 1,58,55,736/- WHICH WAS MADE ON ACCOUNT OF DIFFERENCE IN SUNDRY CREDITORS. 11. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT THERE WAS NIL OPENING BALANCE OF SUNDRY CREDITORS DURING THE FINANCIAL YEAR UNDER CONSIDERATION. BUT THE CLOSING BALANCE ON THE LAST DAY OF FINANCIAL YEAR FOR SUNDRY CREDITOR WAS SHOWN FOR 15,58,68,160/-. HOWEVER, THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT HAS SHOWN PURCHASE FOR THE YEAR UNDER CONSIDERATION FOR 14,10,12,424/- ONLY. IT WAS OBSERVED BY THE AO THE LIABILITY FOR SUNDRY CREDITOR IS EXCEEDING THE AMOUNT OF TOTAL PURCHASE SHOWN BY THE ASSESSEE BY 1,58,55,736/- ONLY. ACCORDINGLY, AO SOUGHT CLARIFIC ATION FROM THE ASSESSEE FOR EXCEEDING THE AMOUNT OF SUNDRY CREDITOR FROM TH E AMOUNT OF TOTAL PURCHASE ITA NO.389/KOL/2015 A.Y. 2007-08 DCIT CIR-3(1), KOL. VS. M/S UTKARSH GALVA LTD. PAGE 6 OF THE YEAR. IT WAS EXPLAINED BY THE ASSESSEE THAT THE AMOUNT OF LIABILITY INCURRED ON THE AFORESAID PURCHASE IN THE FORM OF V AT AND EXCISE DUTY WAS SHOWN UNDER THE HEAD CURRENT ASSET IN ITS BALANCE -SHEET. THEREFORE, THE AMOUNT OF PURCHASE WAS EXCEEDING THE AMOUNT OF SUND RY CREDITOR. 11.1 HOWEVER, AO DISREGARDED THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT IT FAILED TO SUBSTANTIATE ITS CLAIME BY PRODUC ING THE CORROBORATIVE EVIDENCE. ACCORDINGLY, AO TREATED THE AMOUNT OF SUNDRY CREDIT ORS IN EXCESS OF PURCHASE I.E. 1,58,55,736 (156868160 141012424) AS BOGUS AND TH EREFORE ADDED TO THE TOTAL INCOME OF ASSESSEE. 12. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE AMOUN T OF VAT LIABILITY INCURRED ON THE PURCHASE WAS NOT INCLUDED IN THE AMOUNT OF P URCHASE BUT THE SAME WAS SHOWN AS VAT RECEIVABLE ON THE ASSET SIDE OF TH E BALANCE-SHEET. AT THE SAME TIME, THE LIABILITY ON ACCOUNT OF PURCHASE AND VAT WAS SHOWN AS SUNDRY CREDITOR. THE ASSESSEE ALSO EXPLAINED BEFORE LD. CI T(A) BY SHOWING THE SCHEME OF ENTRY IN RELATION TO PURCHASE AS DETAILED UNDER:- 01.03.2007 PURCHASE A/C . . . .. DR. 4,78,500/ - W.B. VAT RECEIVABLE A/C DR. 19,14 0/- TO BENGAL INDIA GLOBAL PARTY A/ C 4,97,640/- FROM THE ABOVE, IT WAS EXPLAINED THAT THE PURCHASE WAS SHOWN WITHOUT INCLUDING THE VAT LIABILITY BUT THE VAT LIABILITY W AS VERY MUCH SHOWN IN THE ACCOUNT OF SUNDRY CREDITOR. THEREFORE THE DIFFERENC E WAS OBSERVED BY THE AO. THE ASSESSEE ALSO EXPLAINED THAT SIMILAR TYPE OF EN TRY WAS ACCOUNTED FOR IN THE BOOKS OF ACCOUNT IN RELATION TO PURCHASE OF RAW MATERIALS AND CAPITAL GOODS. LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF ASSESSEE DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER:- 6.2 THE SUBMISSIONS OF THE APPELLANT HAVE BEEN CONS IDERED. IT HAS BEEN EXPLAINED BY THE APPELLANT THAT THE WEST BENGAL VAT RECEIVABLE OF 4% WAS NOT INCLUDED IN THE PURCHASE ACCOUNT BUT INCLUDED IN TH E PARTY ACCOUNT THE APPELLANT ALSO SUBMITTED THAT THE VAT RECEIVABLE AC COUNT DURING THE YEAR WAS TO THE EXTENT OF RS.1,58,55,736/- SIMILARLY, EXCISE RECEIVABLE AT ON CAPITAL ITA NO.389/KOL/2015 A.Y. 2007-08 DCIT CIR-3(1), KOL. VS. M/S UTKARSH GALVA LTD. PAGE 7 GOODS HAD ALSO BEEN SHOWN SEPARATELY THEREFORE THE DIFFERENCE IN SUNDRY CREDITORS AND PURCHASER WAS DUE TO THE ABOVE I.E. V AT RECEIVABLE ACCOUNT CENVAT CREDIT OF EXCISE DUTY ON CAPITAL GOODS AND C ENVAT CREDIT OF EXCISE DUTY RECEIVABLE ON RAW MATERIAL. IT IS THEREFORE, C LEAR THAT THE ASSESSING OFFICER HAS NOT ACCEPTABLE THE ABOVE EXPLANATION HA S SIMPLY REJECTED THE SAME WITHOUT BRINGING ANY MATERIAL FACTS ON RECORD OR EVEN VERIFYING THE APPELLANTS CLAIM INDEPENDENTLY IF HE HAD THE SUSPEN SION THAT THE SAME WAS NOT CORRECT. SINCE, THE AO AS FAILED TO DO WITHER H IS OBSERVATIONS AGAINST THE APPELLANTS ON THIS ISSUE ARE FOUND TO BE WITHOUT AN Y BASIS ACCORDINGLY THE ADDITION BASED ON THE SAME IS HELD TO BE NOT JUSTIF IED AND IS DELETED. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 13. BEFORE US BOTH THE PARTIES RELIED ON THE ORDER OF AUTHORITIES BELOW AS FAVOURABLE TO THEM. 14. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, WE FIND THAT ASSESSEE HAS SHOWN NIL BALANCE OF SUNDRY CREDITORS AT THE BEGINN ING OF FINANCIAL YEAR WHEREAS THE BALANCE OF SUNDRY CREDITORS AT THE END OF FINANCIAL YEAR WAS SHOWN BY THE ASSESSEE FOR 15,68,68,100/- ONLY. AT THE SAME TIME, THE ASSESSEE HAS SHOWN TOTAL PURCHASE DURING THE FINANC IAL YEAR UNDER CONSIDERATION FOR 14,10,12,424/- ONLY. THUS, THE AO OBSERVED THAT THE BALANCE OF SUNDRY CREDITORS IS EXCEEDING THE AMOUNT OF TOTAL PURCHASE MADE BY THE ASSESSEE DURING THE YEAR. THE EXCESS AMOUNT OF SUNDRY CREDITORS WAS TREATED AS BOGUS AND ACCORDINGLY THE ADDITION WAS M ADE BY THE AO TO THE TOTAL INCOME OF ASSESSEE. 14.1 HOWEVER, LD. CIT(A) DELETED THE ADDITION MADE BY THE AO BY OBSERVING THAT EXCESS AMOUNT OF SUNDRY CREDITORS WAS ARISING ON ACCOUNT OF VAT AND EXCISE LIABILITY IN RELATION TO PURCHASE OF RAW MAT ERIALS AND CAPITAL GOODS. 14.2 NOW, THE ISSUE BEFORE US ARISES FOR OUR ADJUDI CATION SO AS TO WHETHER THE LIABILITY OF SUNDRY CREDITORS OVER AND ABOVE TH E TOTAL PURCHASE DURING THE YEAR REPRESENTS THE BOGUS LIABILITY AND THEREFORE T HE SAME IS LIABLE TO BE ADDED TO THE TOTAL INCOME OF ASSESSEE. IN THIS REGARD, WE FIND THAT ASSESSEE HAS EXPLAINED / JUSTIFIED THE DIFFERENCE BETWEEN THE AM OUNT OF SUNDRY CREDITORS AND TOTAL PURCHASES AT THE TIME OF ASSESSMENT AS DISCUS SED ABOVE. BUT THE SAME ITA NO.389/KOL/2015 A.Y. 2007-08 DCIT CIR-3(1), KOL. VS. M/S UTKARSH GALVA LTD. PAGE 8 WAS REJECTED BY THE AO ON THE BASIS OF NON SUBMISSI ON OF SUPPORTING EVIDENCE FOR SUNDRY CREDITORS. HOWEVER, FROM THE ABOVE, WE F IND THAT THE AO HAS NOT BROUGHT ANY DEFECT IN THE EXPLANATION OFFERED BY TH E ASSESSEE AT THE TIME OF ASSESSMENT PROCEEDINGS. 14.3 WE FIND THAT THE DIFFERENCE IN THE AMOUNT OF S UNDRY CREDITORS AND PURCHASED IS ARISEN ON ACCOUNT OF FOLLOWING:- A) W.B.V.A.T RECEIVABLE A/C B) CENVAT CREDIT OF EXCISE DUTY RECEIVABLE ON CAP ITAL GOODS. C) CENVAT CREDIT OF EXCISE DUTY RECEIVABLE ON RAW MATERIALS THUS, FROM THE ABOVE, WE OBSERVE THAT LIABILITY FOR SUNDRY CREDITORS WAS MORE THAN THE PURCHASES OF THE CURRENT YEAR DUE TO THE A DJUSTMENT OF VAT AND EXCISE LIABILITY ON THE PURCHASE OF RAW MATERIAL AN D CAPITAL GOODS. THE AO IN ITS ASSESSMENT PROCEEDINGS HAS DULY ACCEPTED THE AM OUNT OF PURCHASE FOR RAW MATERIAL AS WELL AS CAPITAL GOODS ON WHICH THE LIABILITY FOR VAT AND EXCISE WAS INCURRED. THUS, IT IS CLEAR THAT THE AO HAS DUL Y ACCEPTED THE AMOUNT OF PURCHASE OF RAW MATERIAL AS WELL AS CAPITAL GOODS A ND LIABILITY FOR VAT/ EXCISE ON SUCH PURCHASE IS INTRINSICALLY LINKED. THUS, IN OUR CONSIDERED VIEW, THE AO ERRED IN NOT ACCEPTING THE AMOUNT OF VAT / EXCISE L IABILITY THOUGH BOTH ARE INTRINSICALLY LINKED WITH THE AMOUNT OF PURCHASE. O NCE THE AO HAS ACCEPTED THE VAT / EXCISE LIABILITY ON THE AMOUNT OF PURCHAS E THEN THE LIABILITY ON ACCOUNT OF VAT / EXCISE SHOWN WITH SUNDRY CREDITOR CANNOT BE IGNORED. IN OUR CONSIDERED VIEW, THE AO CANNOT JUST SIMPLY COME TO A CONCLUSION BY DISALLOWING THE EXPLANATION OFFERED BY ASSESSEE WIT HOUT POINTING OUT ANY DEFECT THEREON. 14.4 THE REVENUE IN ITS GROUND OF APPEAL HAS RAISED THE OBJECTION THAT THE RELIEF HAS BEEN GRANTED BY LD. CIT(A) ON THE BASIS OF ADDITIONAL EVIDENCES WHICH WERE ACCEPTED IN CONTRAVENTION TO THE PROVISI ON OF RULE 46A OF THE INCOME TAX RULE, 1962. HOWEVER, LD. DR HAS NOT BROU GHT ANYTHING ON RECORD SUGGESTING THAT THE LD. CIT(A) HAS ACCEPTED ANY ADD ITIONAL EVIDENCE IN CONTRAVENTION TO THE PROVISION OF RULE 46A OF THE I T RULES, IN VIEW OF THE ITA NO.389/KOL/2015 A.Y. 2007-08 DCIT CIR-3(1), KOL. VS. M/S UTKARSH GALVA LTD. PAGE 9 ABOVE, WE DO NOT FIND ANY REASON TO INTERFERE IN TH E ORDER OF LD. CIT(A). HENCE, THIS GROUND OF REVENUES APPEAL IS DISMISSED . 15. LAST ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR 2,58,15,777/- ON THE BASIS OF FRESH EVIDENCE. 16. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HA S CLAIMED DEPRECIATION FOR 2,58,15,777/- IN ITS TAX AUDIT IN FORM 3CD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT THE DEPREC IATION SCHEDULE WHEREIN DEPRECIATION OF 2,58,15,777/- WAS CLAIMED, WAS NOT CERTIFIED BY THE TAX AUDITOR OR ANY AUTHORIZED SIGNATORY OF THE ASSE SSEE. THEREFORE, CLAIM OF ASSESSEE WITH REGARD TO DEPRECIATION OF 2,58,15,777/- WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 17. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE AMOUN T OF DEPRECIATION FOR 2,58,15,777/- WAS DULY CLAIMED IN ITS INCOME TAX RE TURN FILED THROUGH ELECTRONIC MODE AS WELL AS IN THE TAX AUDIT REPORT FILED IN FORM NO. 3CD.HOWEVER, SCHEDULE ATTACHED TO FORM NO. 3CD IN R ESPECT OF DEPRECIATION WAS OMITTED TO BE CERTIFIED BY THE TAX AUDITOR INAD VERTENTLY. HOWEVER, THE ENTIRE TAX AUDIT REPORT WAS DULY SIGNED BY THE TAX AUDITOR. MERELY NON-SIGNING OF SCHEDULE OF DEPRECIATION CANNOT BE THE REASON FO R NOT ALLOWING THE DEPRECIATION CLAIMED BY ASSESSEE. 17.1 THE NECESSARY DETAILS FOR THE PURCHASE OF FIXE D ASSET AND DEPRECIATION THEREON WAS DULY SUBMITTED IN THE ORIGINAL ASSESSME NT PROCEEDINGS AND THEREAFTER AO ALLOWED THE SAME VIDE ORDER DATED 14. 12.2009 U/S. 143(3) OF THE ACT. LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF ASSESSEE DELETED THE ADDITION MADE BY AO BY OBSERVING AS UNDER:- I HAVE ALSO GONE THROUGH THE ASSESSMENT RECORD AND IT IS SEEN THAT THE DETAILS OF THE ADDITION TO THE FIXED ASSETS MEN TIONING THE BILL NO & INVOICE NO ETC., HAD BEEN PROVIDED IN THE FORM OF COPIES OF ASSETS LEDGERS IN THE ORIGINAL ASSESSMENT AND THE AO HAD PLACED SAMPLE CO PIES OF THE BILL ON RECORD, THE AO HAS ALSO MENTIONED IN THE ORDER SHEE T OF THE FILE THAT THE DETAILS OF THE FIXED ASSETS HAD BEEN PRODUCED IN TH E COURSE OF ASSESSMENT ITA NO.389/KOL/2015 A.Y. 2007-08 DCIT CIR-3(1), KOL. VS. M/S UTKARSH GALVA LTD. PAGE 10 PROCEEDINGS. THEREFORE FOR THE AO TO RE-EXAMINE THE ISSUE AND DISALLOW THE ENTIRE CLAIM OF DEPRECIATION, MERELY ON THE GROUNDS THAT THE TAX AUDIT REPORT WAS DEFECTIVE CANNOT BE ACCEPTED, PARTICULARLY AND THE CLAIM WAS AS MADE IN E-RETURN AND VERIFIED IN ORIGINAL PROCEEDINGS. EVEN OTHERWISE DETAILED EXPLANATION REGARDING CLAIM OF DEPRECIATION IN WIP WAS ALSO SUBMITTED DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS DATED 20.11 .2012. IT IS THEREFORE CONSIDERING THE ALL OF THE ABOVE IT IS HELD THAT TH ERE WAS NO MATERIAL FACT WHICH COULD BE CONSIDERED AS THE BASIS FOR DISALLOWANCE O F SUCH CLAIM OF DEPRECIATION. ACCORDINGLY IT IS HELD THAT THE DISAL LOWANCE MADE BY THE AO OF THE CLAIM OF DEPRECIATION IN RE-ASSESSMENT PROCEEDI NGS WAS NOT JUSTIFIED, AS A RESULT THE CLAIM OF DEPRECIATION IS RESTORED AS ALL OWED BY THE AO IN THE ORIGINAL ASSESSMENT U/S. 143(3). THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 18. BEFORE US BOTH PARTIES RELIED ON THE ORDER OF A UTHORITIES BELOW AS FAVOURABLE TO THEM. 19. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ISSUE IN THE INST ANT CASE RELATES TO THE DISALLOWANCE MADE BY THE AO FOR THE AMOUNT OF DEPRE CIATION ON THE GROUND THAT THE SCHEDULE OF DEPRECIATION WAS NOT CERTIFIED BY THE TAX AUDITOR. IN THIS REGARD, WE FIND THAT THE AMOUNT OF DEPRECIATION AS DISCUSSED ABOVE WAS DULY CLAIMED BY ASSESSEE IN ITS RETURN OF INCOME FILED E LECTRONICALLY AND THE SAME AMOUNT OF DEPRECIATION WAS SHOWN IN THE TAX AUDIT R EPORT. THE RELEVANT DOCUMENT OF TAX AUDIT REPORT WAS VERY MUCH AVAILABL E BEFORE THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS. THE AO HAS NOT POIN TED OUT ANY DEFECT IN THE SCHEDULE OF DEPRECIATION. INDEED, THE SCHEDULE OF DEPRECIATION WAS NOT CERTIFIED BY THE TAX AUDITOR BUT SAME CANNOT BE BRU SHED ASIDE ON THE GROUND THAT IT IS NOT SIGNED. WE FURTHER FIND THAT LD. CIT (A) HAS GIVEN VERY CLEAR FINDING THAT THE ISSUE OF DEPRECIATION WAS DULY EXAMINED BY AO AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT AND N O DISALLOWANCE OF WHATSOEVER WAS MADE BY THE AO FOR THE AMOUNT OF DEP RECIATION CLAIMED BY THE ASSESSEE. THE REVENUE HAS RAISED THE ISSUE THAT THE DEPRECIATION HAS BEEN ALLOWED BY THE LD. CIT(A) AFTER ACCEPTING THE ADDITIONAL EVIDENCE IN CONTRAVENTION TO THE PROVISIONS OF RULE 46A OF IT R ULES. HOWEVER, LD. DR HAS NOT BROUGHT ANYTHING ON RECORD SUGGESTING THAT LD. CIT(A) HAS ADMITTED FRESH ITA NO.389/KOL/2015 A.Y. 2007-08 DCIT CIR-3(1), KOL. VS. M/S UTKARSH GALVA LTD. PAGE 11 EVIDENCE IN CONTRAVENTION TO THE PROVISION OF RULE 46A OF IT RULES. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY REASON TO INTERFERE I N THE ORDER OF LD. CIT(A). HENCE, THIS GROUND OF REVENUES APPEAL IS DISMISSED . 20. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 23 /08/2017 SD/- SD/- ($%&) ( %&) (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S (%)*- 23 / 08 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DCIT, CIRCLE-3(1), AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE 4 TH FLOOR, ROOM NO.19, KOLKATA-69 2. /RESPONDENT-M/S UTKARSH GALVA LTD., 3-B, LAL BAZAR STREET, 2 ND FLOOR, KOLKATA-01 3.)2)3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5.789$$3 , 3 , / DR, ITAT, KOLKATA 6.9;<=> / GUARD FILE. BY ORDER/ %, /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3 ,