Vijay Timber Industries Pvt. Ltd., RAJKOT-GUJARAT V. The Additional Commissioner of Income Tax, Gandhidham Range, GANDHIDHAM

ITA 431/RJT/2012

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6940 (ITAT-RAJKOT)
• Duration Of Justice: 7 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 06-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NAMITA KHURANA
• Keywords: Non-deduction of tax; TDS
• Section: 143(3); 40(a)(ia); 195

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT RAJKOT BENCH BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER . ITA NO. 431/RJT/2016 / ASSTT. YEAR: 2005-06 VIJAY TIMBER INDUSTRIES PVT. LTD. KLAPESH S. DOSHI & CO. CHARTERED ACCOUNTANTS 411, COSMO COMPLEX MAHILA COLLEGE CIRCLE, RAJKOT 360001 VS. ADDL. CIT GANDHIDHAM RANGE, GADHIDHAM ./ ./PAN/GIR NO. : AAA CV7 089 B / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI KALPESH DOSHI, AR REVENUE BY : M/S. NAMITA KHURANA, SR. DR ! /DATE OF HEARING : 16/07/2019 '# ! /DATE OF PRONOUNCEMENT: 30/07/2019 $% / O R D E R PER AMARJIT SINGH - AM : THE APPEAL FILED BY THE ASSESSEE FOR A.Y. 2005-06, ARISE FROM ORDER OF THE CIT(A)-XX, AHMEDABAD DATED 04.04.2012, IN PROCEEDING S UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. THE FACT IN BRIEF THAT RETURN OF INCOME DECLARING INCOME OF RS. 10,23,800/- WAS FILED ON 21.10.2006. THE CASE WAS SUBJECT TO S CRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDING THE AO HAS NOTICED THAT ASSES SEE HAS FAILED TO DEDUCT TAX AT SOURCE AND ALSO DEFAULTED IN DEPOSITING THE TDS IN TIME AS PRESCRIBED IN THE INCOME TAX ACT. THEREFORE, THE AO HAS MADE DISALLOW ANCE OF RS. 2,03,991/- U/S. 40(A)(IA) OF THE ACT. ITA NO. 431/RJT/2012 A.Y. 2005-06 2 3. THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). LD. CIT(A) HAS RESTRICTED THE ADDITION TO THE EXTENT OF RS. 17,587/- ON WHICH THE TAX WAS NOT DEDUCTED AND OTHER ADDITION WAS DELETED AS THE TDS AMOUNT DEDUCT ED WAS DEPOSITED BEFORE THE DUE DATE OF FILING THE INCOME TAX RETURN IN ACCORDA NCE WITH AMENDMENT MADE BY THE FINANCE ACT, 2008. THE OTHER ADDITION OF RS. 1, 16,571/- WAS MADE FOR NOT DEDUCTING AS PER SEC. 195 OF THE ACT ON PAYMENT OF INTEREST INCOME TO THE NON- RESIDENT. 4. THE THIRD ADDITION WAS MADE BY THE AO WAS TO THE AMOUNT OF RS. 94,52,468/- ON ACCOUNT OF UNDER VALUATION OF STOCK. DURING ASSESSMENT THE AO HAS NOTICED THAT ASSESSEE HAS SHOWN CLOSING STOCK AT RS . 10,42,26,955/-, HOWEVER, THE AO HAS COMPUTED THE VALUATION OF STOCK ON BASIS OF VALUATION OF MATERIAL AS PER FIFO METHOD TO THE AMOUNT OF RS. 10,51,79,423/-. T HE ASSESSEE COULD NOT EXPLAIN THE VARIATION IN THE VALUATION OF STOCK THEREFORE, DIFFERENCE OF STOCK OF RS. 9,52,468/- WAS ADDED TO THE TOTAL INCOME OF THE ASS ESSEE. 5. THE ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A ). LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE ON THE GROUND THAT ASSESSEE COULD NOT CONTROVERT THE FINDING OF THE AO AND DIRECTED THE A O FOR ADOPTING THE REVISED CLOSING STOCK AS OPENING STOCK OF SUCCEEDING YEAR. WE HAVE HEARD RIVAL CONTENTION AND PERUSED THE MAT ERIAL ON RECORD. REGARDING FIRST GROUND OF APPEAL PERTAINING TO DISA LLOWANCE OF RS. 17,587/- ON ACCOUNT OF NON-DEDUCTION OF TAX, IT IS NOTICED THAT THE LD. CIT(A) HAS DELETED ALL THE ADDITION WHEREIN THE ASSESSEE HAS FURNISHED EVI DENCE OF DEPOSITING THE AMOUNT OF TDS COLLECTED BEFORE THE DUE DATE OF FILING OF IN COME TAX RETURN, HOWEVER, IN RESPECT OF INTEREST AMOUNT OF PAYMENT OF RS. 17,587 /- THE ASSESSEE HAS NOT MADE ANY DEDUCTION OF TAX, THEREFORE, THE LD. CIT(A) HAS RESTRICTED THE DISALLOWANCE TO THE EXTENT OF RS. 17,587/- ONLY. ITA NO. 431/RJT/2012 A.Y. 2005-06 3 6. DURING THE COURSE OF APPELLATE PROCEEDING BEFORE US THE ASSESSEE COULD NOT SUBSTANTIATE WITH SUPPORTING DOCUMENT OF ANY COMPLI ANCE TO THE TDS PROVISION IN RESPECT OF THE PAYMENT OF RS. 17,587/-. THEREFORE, WE DO NOT FIND ANY SUBSTANCE IN THIS GROUND OF APPEAL OF THE ASSESSEE. THE SAME IS DISMISSED. REGARDING OTHER DISALLOWANCE OF RS. 1,16,571/- THE LD. COUNSEL HAS BROUGHT TO OUR NOTICE THAT ASSESSEE HAS DULY DEDUCTED TDS AS PAYMENT OF INTEREST AND CONTENDED THAT AO HAS WRONGLY DISALLOWED THE CLAIM OF THE ASSESSEE. WE RESTORE THIS ISSUE TO THE FILE OF THE AO FOR DECIDING AFRES H AFTER VERIFICATION OF THE SUPPORTING MATERIAL TO BE PRODUCED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM THAT TDS WAS DULY DEDUCTED ON THE PAYMENT OF INTEREST OF RS. 1,16,571/-. THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STA TISTICAL PURPOSE. 7. THE THIRD GROUND OF APPEAL OF THE ASSESSEE IS PER TAINED TO ADDITION OF RS. 9,52,468/- ON ACCOUNT OF UNDER VALUATION OF STOCK. DURING THE COURSE OF ASSESSMENT THE AO HAS COMPUTE D THE VALUE OF CLOSING STOCK ON THE BASIS OF MATERIAL ON RECORD ACCORDING TO FIFO METHOD ADOPTED BY THE ASSESSEE AND NOTICED THAT THERE WAS UNDER VALUATION OF STOCK TO THE EXTENT OF RS. 9,52,648/- AND SAME WAS ADDED TO THE TOTAL INCOME O F THE ASSESSEE. 8. THE LD. CIT(A) HAS SUSTAINED THE ADDITION AS ASSES SEE HAS FAILED TO CONTROVERT THE FINDING OF THE AO AND MADE A REQUEST FOR ADOPTING THE CLOSING STOCK OF THE YEAR UNDER CONSIDERATION AS OPENING OF THE S UCCEEDING YEAR. DURING THE APPELLATE PROCEEDING BEFORE US THE ASSE SSEE COULD NOT CONTROVERT THE FINDING OF THE AO WITH ANY RELEVANT SUPPORTING MATERIAL. IN THE LIGHT OF ABOVE FACTS AND AFTER TAKING INTO CONSIDERATION THE MATER IAL ON RECORD WE DO NOT FIND ANY ERROR IN THE DECISION OF THE CIT(A). HOWEVER, THE AO IS DIRECTED TO ADOPT THE CLOSING STOCK COMPUTED BY HIM FOR THE YEAR UNDER CO NSIDERATION AS OPENING STOCK OF THE SUCCEEDING YEAR. THEREFORE, THE ALTERNATIVE PLEA OF THE ASSESSEE TO CONSIDER ITA NO. 431/RJT/2012 A.Y. 2005-06 4 THE CLOSING STOCK AS OPENING STOCK HAS BEEN ALLOWED . THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. [ORDER PRONOUNCED IN THE COURT ON 30-07-2019.] SD/- SD/- ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD; DATED 30/07/2019 TANMAY / COPY OF ORDER FORWARDED TO:- $% / BY ORDER & / ' (DY./ASSTT.REGISTRAR) !( , ')$*$ / ITAT, RAJKOT 1. DATE OF DICTATION : 25-07-2019 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER. : 25-07-2019 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S : 30-07-2019 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT. : 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEM BER : 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S. : 31 -07-2019 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK. : 31-07-2019 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. : 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER. : 10. DATE OF DESPATCH OF THE ORDER : 1. / THE APPELLANT 2. + / THE RESPONDENT. 3. *( , / CONCERNED CIT 4. , ( ) / THE CIT(A) 5. -./ ( , !( / DR, ITAT, 6. /01 / GUARD FILE.