M/s. D C Engineering Industries, Ahmedabad V. The Dy.CIT.,Circle- 5(3), Ahmedabad

ITA 4/AHD/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94770 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 20-10-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 01-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S L CHANDEL
• Assessee Lawyers: R C SHAH
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ ITA NO. 04/AHD/2015 / ASSESSMENT YEAR: 2010-11 M/S D C ENGINEERING INDUSTRIES, NR JAIN RAKSHA BANDAN, BAPUNAGAR, AHMEDABAD PAN : AAAFD 6319 F VS. DCIT, CIRCLE-11, AHMEDABAD / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI R.C. SHAH, AR REVENUE BY : SHRI S.L. CHANDEL, SR. DR. / DATE OF HEARING : 20/10/2015 / DATE OF PRONOUNCEMENT: 30/11/2015 / O R D E R PER KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XVI, A HMEDABAD DATED 31.10.2014 PERTAINING TO ASSESSMENT YEAR 2010 -11. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF AP PEAL:- 1. THAT THE C.I.T.(APPEALS) ERRED IN ALLOWING THE B URNING LOSS TO THE EXTENT OF 8.75% ONLY AS AGAINST THE ACTUAL BURNING LOSS OF 9.18% IN THE CASE OF ALUMINUM CASTINGS WITHOUT GIVING ANY FINDIN G THAT THE SO CALLED EXCESS BURNING LOSS WAS ENCASHED BY THE APPE LLANT AND ALSO IGNORING THE FACT THE IN THE ACCT. YR. 2005-06, BUR NING LOSS OF 11.0% WAS ALLOWED IN THE SCRUTINY ASSESSMENT U/S 143(3) OF THE I. T. ACT AS WELL AS THE FACT' THAT G.P. DURING THE YEAR WAS THE SECOND HIGHEST AT 18.08%. IT IS SUBMITTED THAT IN VIEW OF THE FACTS M ENTIONED IN THE ITA NO. 04/AHD/2015 M/S. DC ENGINEERING INDUSTRIES VS. DCIT AY 2010-11 2 STATEMENT OF FACTS FILED BEFORE THE LEARNED CIT(A), THE ACTUAL BURNING LOSS BE ALLOWED AND THAT THE ADDITION RETAINED ON T HIS GROUND BE DELETED. 2.THAT THE CIT(A) ERRED IN ALLOWING THE BURNING LOSS TO THE EXTENT OF 8.75% ONLY THOUGH THE A.O. HAS NOT INVOKED THE PROV ISIONS OF SECTION 145(3) OF THE ACT AND THE SALES TURNOVER AS WELL AS THE G.P. DURING THE YEAR HAVE BEEN ACCEPTED. IT IS , THEREFORE, SUBMITT ED THAT NO ADDITION CAN BE MADE ON THE GROUND OF SO CALLED EXCESSIVE BURNIN G LOSS AND, THEREFORE, THE CONSEQUENTIAL ADDITION BE DELETED. 3. THAT THE CIT(A) FURTHER ERRED IN DISALLOWING INT EREST OF RS. 9882 PAID TO THE EXCISE DEPARTMENT BY TREATING THE SAME AS A PENALTY. IT IS SUBMITTED THAT THE EXCISE AUDIT REPORT ITSELF PROVE D THAT THE SAME WAS IN THE NATURE OF INTEREST AND NOT PENALTY. IT IS , THEREFORE, SUBMITTED THAT THE DISALLOWANCE OF RS.9882 BE DELETED. 3. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) WAS FRAMED VIDE ORDER DATED 22.03.2013. WHILE FRAMING THE ASSE SSMENT, THE ASSESSING OFFICER FOUND THE BURNING/MELTING LOSS CL AIMED BY THE ASSESSEE @ 10% AS UNREASONABLE. HE ALLOWED THE BURN ING/MELTING LOSS @ 5% ONLY AND ACCORDINGLY, MADE DISALLOWANCE OF RS. 8,81,530/-. FURTHER, THE ASSESSING OFFICER MADE ADDITION ON ACC OUNT OF INTEREST PAID TO EXCISE DEPARTMENT OF RS.9,882/-. AGAINST T HE AFORESAID DISALLOWANCE, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE P ARTLY ALLOWED THE APPEAL. WHILE PARTLY ALLOWING THE APPEAL, THE LD. CIT(A) SUSTAINED THE ADDITION TO THE EXTENT OF 1.25% OF THE LOSS AND ALS O CONFIRMED THE ADDITION OF RS.9,882/-. 4. APROPOS TO GROUND NOS.1 & 2, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JUSTIF IED IN MAKING THE ITA NO. 04/AHD/2015 M/S. DC ENGINEERING INDUSTRIES VS. DCIT AY 2010-11 3 DISALLOWANCE OF CLAIM OF BURNING LOSS. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS NOT DOUBTED THE BOOKS OF ACCO UNTS. THE BOOKS OF ACCOUNTS HAVE NOT BEEN REJECTED U/S 145(3) OF THE A CT. IT WAS CONTENDED THAT IN ASSESSEES OWN CASE FOR ASSESSMEN T YEAR 2006-07 THE ASSESSING OFFICER HAD ACCEPTED THE BURNING LOSS OF 11% AND 7.71% IN ALUMINUM CASTING IN THE SCRUTINY ASSESSMENT. 5. ON THE CONTRARY, LD. SENIOR DEPARTMENTAL REPRESE NTATIVE SUPPORTED THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THERE IS NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US. THE LD. CIT(A) HAS RESTRICTED TH E BURNING LOSS AT 8.75%, AFTER FOLLOWING THE DECISION OF CO-ORDINATE BENCH IN ASSESSEES OWN CASE IN ITA NO.1545/AHD/2010 FOR ASSESSMENT YEA R 2007-08, WHEREIN THE TRIBUNAL HAS DECIDED THE ISSUE BY OBSER VING AS UNDER:- 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT THE AUDITORS IN THE TAX AUDIT REPORT HAVE MADE A REMARK THAT THE ASSESSEE HAS MAI NTAINED QUANTITATIVE TALLY OF OPENING STOCK/CLOSING STOCK, PURCHASE OF ALUMINUM INGOTS AND SALE OF CASTING AFTER ALLOWING NORMAL BURNING LOSS OF APPROXIMATELY 10% BUT HAS NOT BEEN MAINTAIN ED DAY TO DAY RECORDS OF PRODUCTION. HE HAS FURTHER STATED THAT T HE ASSESSEE HAS MAINTAINED RECORDS IN RESPECT OF PRODUCTION AND SAL ES AS PER EXCISE RULES. ASSESSING OFFICER WAS OF THE VIEW IN THE ABS ENCE OF EXISTENCE OF BATCH TO BATCH AND DAY TO DAY RECORD OF CONSUMPTION OF VARIOUS RAW MATERIAL AND PRODUCTION THE BURNING LOSS SHOULD BE 5%. THIS FINDING OF ASSESSING OFFICER IS NOT SUPPORTED BY ANY MATERIAL ON RECORDS. CIT(A) IN HIS ORDER HAS NOTED THAT FOR A.Y. 2006-07, THE B URNING LOSS AT 11% AND LOSS IN CASE OF ALUMINUM/ZINC AT 7.71% HAS BEEN ACCEPTED BY REVENUE WHILE FRAMING THE ASSESSMENT UNDER 143(3). H E HAS ALSO NOTED THAT THE PERCENTAGE LOSS ALLOWED BY THE PARTIES FOR WHOM THE ASSESSEES DOES THE JOB WORK COMES TO 8.443% ON NET WEIGHT OF CASTING DISCHARGED ITA NO. 04/AHD/2015 M/S. DC ENGINEERING INDUSTRIES VS. DCIT AY 2010-11 4 BY THEM AND 7.785% ON THE GROSS WEIGHT OF DISPATCHE S MADE TO SUCH PARTIES. HE HAS THUS RESTRICTED THE BURNING LOSS AT 7.75% OF THE GROSS WEIGHT OF THE DISPATCHES MADE BY THE ASSESSEE. BEFO RE US THE LD. A.R. SUBMITTED THE WORKING OF LOSS IN CASE OF ZINC AND A LUMINUM TO BE 8.96% AND 8.75% RESPECTIVELY. THE ASSESSEE HAS ALSO PLACED RELIANCE ON THE DECISION OF COORDINATE BENCH OF TRIBUNAL IN THE CASE OF ITS SISTER CONCERN. WE FIND THAT THE FACTS OF THAT CASE ARE DI STINGUISHABLE IN VIEW OF THE FACT THAT THERE WAS HEAVY REJECTION ON ACCOU NT OF VARIOUS MACHINERY SPARE PARTS BEING WORN OUT. CONSIDERING T HE TOTALITY OF FACTS WE ARE OF VIEW THAT ENDS OF JUSTICE SHALL BE MET IF THE BURNING LOSS IS RESTRICTED TO 8.75% INSTEAD OF 7.75% AS DIRECTED BY CIT(A) WE THUS DIRECT ACCORDINGLY. 7. THE LD. COUNSEL FOR THE ASSESSEE HAS NOT POINTED OUT ANY CHANGE IN THE FACTS AND CIRCUMSTANCES; THEREFORE, WE DO NO T SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN THIS REGARD AND THE SAME IS HEREBY UPHELD. ACCORDINGLY, THE ASSESSEES GROUND NOS. 1 & 2 ARE REJECTED. 8. APROPOS TO GROUND NO.3, IT IS SUBMITTED BY THE L D. COUNSEL FOR THE ASSESSEE THAT THE ASSESSING OFFICER MADE ADDITI ON OF RS.9,882/- ON ACCOUNT OF WRONG AVAILMENT OF CENVAT CREDIT. THE L D. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT WAS NOT THE PENALTY AS IF EVIDENT FROM THE AUDIT REPORT ITSELF. ON THE CONTRARY, LD. SENI OR DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE LD. CIT(A ). 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT THE AMOUNT WAS NOT PAID BY WAY OF PENALTY BUT THE SAME WAS IN THE NATURE OF INTEREST. THIS CONTENTION OF THE LD. COUN SEL FOR THE ASSESSEE HAS NOT BEEN CONTROVERTED BY THE REVENUE BY PLACING ANY MATERIAL ON ITA NO. 04/AHD/2015 M/S. DC ENGINEERING INDUSTRIES VS. DCIT AY 2010-11 5 RECORD. THEREFORE, WE HEREBY DIRECT THE ASSESSING OFFICER TO DELETE THIS DISALLOWANCE OF RS.9,882/-. ACCORDINGLY, THIS GRO UND OF THE ASSESSEE IS ALLOWED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 30 TH NOVEMBER, 2015 AT AHMEDABAD. SD/- SD/- (G.D. AGRAWAL) VICE-PRESIDENT (KUL BHARAT) JUDICIAL MEMBER AHMEDABAD; DATED 30/11/2015 BIJU T., PS !'#$#%! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. '# $ / CONCERNED CIT 4. $ ( ) / THE CIT(A) 5. '() # , # , ' / D R, ITAT, AHMEDABAD 6. ). / / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD