D.C.I.T Cir - 3,Asansol, Asansol V. M/s Swasata Cement Ltd, Purulia

ITA 407/KOL/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1995 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 28-02-2013
• Court: TRIBUNAL
• Department Lawyers: N O N E
• Assessee Lawyers: S K TULSIYAN; R N RAM
• Keywords: Unexplained cash credit
• Section: 143(3); 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI M. BALAGANES H, AM] I.T.A NO. 407/KOL/2013 ASSESSMENT YEAR: 2008-09 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. SWASA TA CEMENT LTD. CIRCLE-3, ASANSOL (PAN: AAICS5911M) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 03.12.2015 DATE OF PRONOUNCEMENT: 03.12.2015 FOR THE APPELLANT: N O N E FOR THE RESPONDENT: S/SHRI S.K.TULSIYAN & R. N. RAM, ADVOCATES ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-DURGAPUR IN APPEAL NO. 292/CIT(A)/ASL/ACIT/CIR-3/ASL/2010-11 DATED 17.12.2 012. ASSESSMENT WAS FRAMED BY DCIT, CIRCLE-3, ASANSOL U/S. 143(3) OF THE INCOM E-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2008-09 VIDE ITS ORDER DATE D 30.12.2010. 2. WE HAVE HEARD THIS MATTER EX PARTE. NONE IS PR ESENT FOR AND ON BEHALF OF THE REVENUE. REVENUE HAS FILED A PETITION FOR ADJOURNME NT ASKING FOR ADJOURNMENT IN TEN MATTERS. THE REASON GIVEN BY REVENUE IN ITS PETITI ON DATED 02.12.2015 READS AS UNDER: IT MAY KINDLY BE NOTED THAT THE FOLLOWING CASES H AVE BEEN FIXED FOR HEARING ON 03.12.2015 BEFORE THE HONBLE A BENCH OF THE INCO ME TAX APPELLATE TRIBUNAL AND THE UNDERSIGNED HAS BEEN NOMINATED AS THE DEPARTMENTAL REPRESENTATIVE FOR THE CASES. HOWEVER, THE UNDERSIGNED IS NOT IN A POSITION TO RE PRESENT THE CASES BEFORE THE HONBLE TRIBUNAL FOR SOME UNFORCED REASON. THEREFORE, IT IS REQUESTED THAT A SUITABLE ADJOURNM ENT MAY KINDLY BE ALLOWED IN THE INSTANT CASES. WE FIND THAT THE REVENUE IS SEEKING ADJOURNMENT ON FRIVOLOUS GROUND AND THIS IS A REGULAR FEATURE. HENCE, WITHOUT GIVING ADJOURNMENT AND AS THE APPEAL IS PENDING SINCE 2013, WE PROCEEDED TO DECIDE IT EX PARTE. 3. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) DELETING THE ADDITION OF SUPPRESSION OF STOCK OF RAW MATERIAL. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.1: 1. THAT, THE LD. CIT(A), ASANSOL HAS ERRED IN LAW AND ON FACTS BY ALLOWING THE RELIEF OF RS.1,03,14,975/- DISALLOWED BY THE ASSESSING OFFICE R ON ACCOUNT OF SUPPRESSION OF STOCK OF RAW MATERIALS. 2 ITA NO. 407/KOL/2013 SWASATA CEMENT LTD. AY 2008-09 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE COMPA NY IS ENGAGED IN THE MANUFACTURING OF CEMENT. DURING THE COURSE OF EXAMINATION OF P&L ACCOUNT THE AO NOTED THAT THE ASSESSEE COMPANY HAS DEBITED A SUM OF RS.1,79,884/- UNDER THE HEAD INSURANCE CHARGES. ACCORDING TO AO, THE ASSESSEE COMPANY HAS INSURED T HE FOLLOWING ASSETS, WHICH WERE COMPARED WITH THE SCHEDULE OF ASSETS AND INVENTORIS ED AS DISCLOSED BY THE ASSESSEE AS ON 31.03.2008 AND FOLLOWING DIFFERENCES HAVE BEEN NOT ED: SL. NO. HEAD VALUE AS PER INSURANCE PROPOSAL VALUE AS PER BALANCE SHEET ON 31.03.2008 DIFFERENCE 1. 2. 3. BUILDING BOUNDARY WALL SHED RS. 20,00,000/- RS. 45,00,000/- RS.1,00,00,000/- RS.97,14,518/- + RS.43,94,089/- RS.23,91,393/- 4. 5. PLANT & MACHINERY MILL+TUNNEL+SILO RS.5.00,00,000/- RS.1,50,00,000/- RS.6,80,77,763/- 6. RAW MATERIAL RS.2,29,55,000/- RS.1,26,40,025/- R S.1,03,14,975/- 7. FINISHED PRODUCT RS. 35,00,000/- RS. 35,04, 294/- TOTAL RS.10,79,55,000/- R S.9,83,30,689/- THE PERIOD OF INSURANCE IS FROM MID NIGHT OF 22.09. 2007 TO MID NIGHT OF 21.09.2008. THE AO REQUIRED THE ASSESSEE TO FURNISH THE STOCK POSIT ION MONTH WISE AND THE SAME WAS SUBMITTED BY THE ASSESSEE. ACCORDING TO AO, THERE WAS A DIFFERENCE IN VALUE OF RAW MATERIAL AND QUANTITY OF FINISHED STOCKS BEING TAKE N AS ON THE DATE OF INSURANCE I.E. 22.09.2007 (DETAILS GIVEN TO INSURANCE COMPANY) AT RS. 2,29,55,000/- VIS--VIS STOCK AS ON 31.03.2008 I.E. AT RS. 1,26,40,025/- (THE ACTUAL STOCK). ACCORDING TO AO, THE ASSESSEE COULD NOT EXPLAIN THE DIFFERENCE OR COULD NOT RECON CILE THE STOCK OF RAW MATERIAL HE MADE ADDITION. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEF ORE CIT(A) , WHO DELETED THE ADDITION. AGGRIEVED, NOW REVENUE IS IN APPEAL BEFORE TRIBUNAL . 5. WE HAVE HEARD LD. COUNSEL FOR THE ASSESSEE AND G ONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE VALUE FOR INSURANCE PROPOSAL FOR RAW MATERIAL INSURED AS ON 22.09.2007 WAS AT RS.2,29,55,000/- WH EREAS THE VALUE SHOWN (THE ACTUAL STOCK VALUE) IN THE BALANCE SHEET AS ON 31.03.2008 WAS AT RS.1,26,40,025/-. THE AO HAS ADDED THIS DIFFERENCE BEING EXCESS STOCK AT RS.1,03 ,14,975/- BUT WE FIND THAT THE AO HAS JUST GONE THROUGH THE PROPOSAL OF INSURANCE WHEREBY THE ASSESSEE FOR THE ENTIRE YEAR HAS INSURED THE RAW MATERIAL AND CLOSING STOCK OF FINIS HED GOODS. THE AO HAS TAKEN THE INVENTORY AS ON 22.09.2007 AND THE CLOSING STOCK AS ON 31.03.2008 AND DIFFERENTIAL WAS ADDED. WE ARE UNABLE TO UNDERSTAND HOW A PROPOSAL OF INSURANCE CAN BE THE SUBJECT MATTER OF ADDITION AND THAT ALSO WITHOUT ANY BASIS. THE ASSESSEE HAS PRODUCED COMPLETE 3 ITA NO. 407/KOL/2013 SWASATA CEMENT LTD. AY 2008-09 BOOKS OF ACCOUNT, STOCK REGISTER, BILLS AND VOUCHER S REGARDING PURCHASE AND SALE AND IN THE ABSENCE OF ANY COMPARISON OR TAKING OUT THE FI GURES I.E. STOCK TALLY THE AO WITHOUT APPLYING HIS MIND TO THE GIVEN FACTS HE HAS ADDED S IMPLY ON THE BASIS OF INSURANCE VALUE I.E. MERELY A PROPOSAL. IN THIS CASE, THERE IS NO ALLEGATION THAT THE AO HAS VERIFIED FROM THE INSURER WHETHER THE INSURANCE HAS CERTIFIED THE STOCK AS ON 31.03.2008 THAT THE STOCK IS TO THE TUNE OF RS.2,29,55,000/- AND IN THE ABSENCE OF THE SAME, THE MERE PROPOSAL OF INSURANCE CANNOT BE THE SUBJECT MATTER OF ADDITION. ACCORDINGLY, WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION AND WE CONFIRM THE SAME. THIS GROUND OF APPEAL OF REVENUE IS DISMISSED. 6. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT OF RS. 9 LACS BEING UNSECURED LOANS. FOR THIS, REVENUE HAS RAISED FOLL OWING GROUND NO.2: 2. THAT, THE LD. CIT(A) ASANSOL HAS ERRED IN LAW AND ON FACTS BY ALLOWING THE RELIEF OF RS.9,00,000/-, DISALLOWED BY THE ASSESSING OFFICER ON ACCOUNT OF UNSECURED LOAN AS UNEXPLAINED CASH CREDIT. 7. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDIN GS NOTICED THAT THE ASSESSEE HAS OBTAINED FOLLOWING FRESH LOANS DURING THE YEAR UNDE R CONSIDERATION: NAME AMOUNT IN RS. ANIL & KALYANI RAKSHIT RS. 1,00,000/- DEVASHANKAR GHOSH RS. 1,00,000/- S.R. CHOWDHURI RS. 7,00,000/- RS. 9,00,000/- THE AO IN ABSENCE OF ANY REPLY FROM THE ASSESSEE IN RESPECT TO IDENTITY, GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF THESE PARTIES, HE MADE ADDITION OF THIS AMOUNT OF RS. 9,00,000/- BEING UNEXPLAINED UNSECURED LOAN U/S. 68 OF THE ACT. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED THE ADD ITION OF UNSECURED LOANS BY OBSERVING THAT ONE OF THE UNSECURED LOANS IS FROM T HE MANAGING DIRECTOR OF THE ASSESSEE COMPANY I.E. SHRI S. R. CHOWDHURI AMOUNTING TO RS. 7 LACS. ACCORDING TO CIT(A), THE MANAGING DIRECTOR SHRI S. R. CHOWDHURI APPEARED BEF ORE THE AO AND HE FILED CONFIRMATION REGARDING THIS UNSECURED LOAN AND IT WAS EXPLAINED BEFORE THE AO THAT THIS IS A RUNNING ACCOUNT BETWEEN THE COMPANY AND THE MA NAGING DIRECTOR. BUT THE AO HAS NOT GIVEN ANY ADVERSE FINDING DESPITE THE FACT THAT THE COMPLETE LEDGER ACCOUNT OF THE MANAGING DIRECTOR SHRI S. R. CHOWDHURI IN THE BOOKS OF THE ASSESSEE COMPANY WAS FILED. 4 ITA NO. 407/KOL/2013 SWASATA CEMENT LTD. AY 2008-09 ACCORDINGLY, THE CIT(A) ACCEPTED THE CREDITWORTHINE SS OF SHRI S. R. CHOWDHURY AND DELETED THE ADDITION OF UNSECURED LOAN. IN RESPECT TO OTHER TWO CREDITORS NAMELY, SHRI ANIL AND KALYANI RAKSHIT OF RS. 1,00,000/- AND DEVA SHANKAR GHOSH OF RS. 1,00,000/-, THE AO SENT NOTICE U/S. 133(6) OF THE ACT BUT ONLY SRI DEVASHANKAR GHOSH HAS COMPLIED WITH THE NOTICE U/S. 133(6) OF THE ACT AND CONFIRMED THI S LOAN. THE CIT(A) DELETED THE LOAN GIVEN BY SHRI DEVASHANKAR GHOSH AND S. R. CHOWDHURY BUT CONFIRMED THE ADDITION OF ANIL AND KALYANI RAKSHIT OF RS. 1,00,000/-. WE FIN D THAT THE CIT(A) HAS SUSTAINED THE ADDITION OF UNSECURED LOAN OF RS. 1 LAC BUT DELETED THE ADDITION OF UNSECURED LOAN IN RESPECT TO S. R. CHOWDHURY THE MANAGING DIRECTOR WH OSE IDENTITY AND CREDITWORTHINESS HAS BEEN PROVED BY FILING THE DOCUMENTARY EVIDENCE WHICH WERE NOT NEGATED BY THE AO. EVEN SHRI DEVASHANKAR GHOSH, HE ADMITTED AND CONFIR MED THIS LOAN. WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND HENCE, THE SAM E IS CONFIRMED. THIS GROUND OF REVENUES APPEAL IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. 9. ORDER IS PRONOUNCED IN THE OPEN COURT. SD/- SD/- (M. BALAGANESH) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 3 RD DECEMBER, 2015 JD. SR. P.S COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT DCIT, CIRCLE-3, ASANSOL 2 RESPONDENT M/S. SWASATA CEMENT LTD., TAX CONSULTA NCY BUILDING, 1 ST FLOOR, MISSION ROAD, RAGHUNATHPUR, PURULIA-723133 3 . THE CIT(A), DURGAPUR 4. 5. CIT DURGAPUR DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .