DCIT, Sikar V. MANOJ KUMAR JOHARI, Sikar

ITA 479/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99383 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DHK
• Assessee Lawyers: G G MUNDRA
• Keywords: Rejection of books of accounts; Unexplained investment; Business income; Business expenditure
• Section: 40A(3); 133A; 69; 145; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO. 479/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 THE DCIT CIRCLE- SIKAR SIKAR CUKE VS. SHRI MANOJ KUMAR JOHARI PROP. M/S. THE ART PALACE RAMGAH, SHEKHAWATI, SIKAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ADWPJ 8870 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 383/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SHRI MANOJ KUMAR JOHARI PROP. M/S. THE ART PALACE RAMGAH, SHEKHAWATI, SIKAR CUKE VS. THE ACIT CIRCLE- SIKAR SIKAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ADWPJ 8870 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI G.G. MUNDRA, CA JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJ MEHRA, JCIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 7/10/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 16 /10/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM:- BOTH THESE APPEALS ARE THE CROSS APPEALS FILED AGAINST THE ORDER OF THE LD. CIT(A-III, JAIPUR DATED 13-02-2013 FOR TH E ASSESSMENT YEAR 2009- 10. RESPECTIVE GROUNDS ARE AS UNDER:- ITA NO. 479/JP/2013 ACIT ,CIRCLE- SIKAR VS. SHRI MANOJ KUMAR JOHARI. 2 ITA NO. 479/JP/2013 REVENUE (I) THE LD. CIT(A) HAS ERRED IN FACT AND IN LAW I N ALLOWING DEDUCTION U/S 10BA ALBEIT HOWEVER BY ADJUSTING IT F OR THE AMOUNT OF DEPB. (II) THE LD. CIT(A) HAS ERRED IN FACT AND IN LAW IN DIRECTING THAT THE DISALLOWANCE U/S 40(A)(IA), MADE FOR TDS NOT DEPOSITED BY DUE DATE, SHOULD BE RESTRICTED TO THE PAYMENT STILL REMAINING OUTSTANDING AT THE END OF T HE YEAR, AND THEREBY IN ACCEPTING THE ALTERNATIVE CLAIM OF T HE ASSESSEE. (III) THE LD. CIT(A) HAS ERRED IN RELYING UPON THE DECISION OF HON'BLE ITAT JAIPUR BENCH IN CASE OF M/S. JVVNL (2009) (25 DTR 79) QUOTED BY THE ASSESSEE EVEN WHEN THIS D ECISION WAS BASED ON DIFFERENT FACTS AND CIRCUMSTANCES OF A UNRELATED ASSESSEE. ITA NO. 383/JP/2013 ASSESSEE 1. THE LD. CIT (A) IS WRONG, UNJUST AND HAS ERRED IN LAW IN HOLDING THAT DUTY DRAW BACK AMOUNTING TO RS. 85,93,907/- RECEIVED BY ASSESSEE IS NOT ELIGIBLE FO R DEDUCTION U/S 10BA OF I. T. ACT, 1961. 2. THAT THE LD. CIT (A) IS WRONG AND HAS ERRED IN L AW IN CONFIRMING THE ACTION OF LD. A.O. OF INVOKING PROVI SIONS OF SECTION 145 (3) OF I. T. ACT, 1961 AND OF REJECTION OF BOOKS OF ACCOUNTS OF ASSESSEE AND FURTHER CONFIRMING THE APP LICATION OF G.P. RATE OF 17.20% ON DECLARED TURNOVER OF RS. 20,95,87,304/- AS AGAINST DECLARED G.P. RATE OF 12. 03% THEREBY CONFIRMING TRADING ADDITION OF RS. 1,08,46 ,091/-. 3. THAT THE LD. CIT (A) WHILE DECIDING THAT AS THE FOLLOWING AMOUNTS WERE PAID DURING THE FINANCIAL YEAR AND NOT PAYABLE AND SO PROVISIONS OF SECTION 40 (A) ( IA) ARE NOT ITA NO. 479/JP/2013 ACIT ,CIRCLE- SIKAR VS. SHRI MANOJ KUMAR JOHARI. 3 APPLICABLE IN CASE OF ASSESSEE BUT IS WRONG AND HAS ERRED IN LAW IN HOLDING: (A) THAT APPELLANT WAS LIABLE TO DEDUCT TDS ON TRAN SPORT CHARGES OF RS. 43,21,000/- DESPITE THAT THE ASSESS EE ONLY REIMBURSED THESE CHARGES TO HIS AGENT SACHIN CARGO MOVERS WHO ACTUALLY PAID TRANSPORT CHARGES TO TRANSPORTERS AND DEDUCTED DUE TDS THEREFROM. (B) PAYMENT TO JOB WORK CONTRACTORS FOR RS. 30,92, 718/- FROM WHOM DUE TDS WAS DEDUCTED FOR THE MONTH OF JAN UARY & FEBRUARY, 2009 DEPOSITED LATE BUT BEFORE DUE DATE OF FILING OF RETURN U/S 139 (1) ARE HIT BY PROVISIONS OF SECTION 40 (A) (IA) OF I. T. ACT, 1961. WITHOUT PREJUDICE TO GROUND NO. 3(B) ABOVE THE LD . CIT (A) IS WRONG IN NOT ACCEPTING THE CONTENTION OF ASSESSEE THAT THE DISALLOWANCE U/S 40 (A) (IA) IS ADDED TO T HE INCOME COMPUTED UNDER THE HEAD BUSINESS IS ENTITLED TO DED UCTION U/S 10BA ON BUSINESS INCOME SO COMPUTED. 4. THAT THE LD. CIT (A) HAS ERRED IN HOLDING THAT ADDITION OF RS. 15,372/- U/S 15,372/- U/S 40A(3) O F I. T. ACT, 1961 IS NOT ELIGIBLE FOR DEDUCTION U/S 10BA OF I. T . ACT, 1961. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) IS WRONG, UNJUST AND HAS ERRED IN LAW I N HOLDING THAT THERE WAS EXCESS STOCK OF RS. 30,96,058/- AS ON THE DATE OF SURVEY U/S 133A WHICH IS TO BE TREATED AS UNEXPL AINED INVESTMENT OF ASSESSEE U/S 69 OF THE ACT AND THEREB Y CONFIRMING ADDITION OF RS. 30,96,050/- IN INCOME O F ASSESSEE AS AGAINST ADDITION OF RS. 32,47159/- MADE BY A.O. AS PROFIT @ 17.20% ON ALLEGED SHORTAGE OF STOCK OF RS. 1,88, 78,833/- AS ON DATE OF SURVEY. 2.1 BRIEF FACTS OF THE CASE OF THE CASE ARE THAT TH E ASSESSEE IS A PROPRIETOR OF M/S. THE ART PALACE, AN INDUSTRIAL UN DERTAKING ENGAGED IN THE MANUFACTURING AND EXPORTING OF HANDMADE ARTICLE S USING WOOD AS MAIN RAW MATERIAL. SOME OF THE ADDITIONS ARE CLAIME D TO BE COVERED BY ITA NO. 479/JP/2013 ACIT ,CIRCLE- SIKAR VS. SHRI MANOJ KUMAR JOHARI. 4 EARLIER ITAT JUDGMENT. LD. AO MADE ABOVE ADDITIONS WHICH HAVE BEEN CONFIRMED BY LD. CIT(A). AGGRIEVED BOTH THE PARTIES ARE IN APPEAL. 3.1 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE HAS NOT PRESSED GROUND NOS. 1 AND 2. HENCE, THE SAME ARE DI SMISSED BEING NOT PRESSED. 4.1 APROPOS GROUND NO. 3 OF THE ASSESSEE AND GROUND NO. (II) AND (III) OF THE REVENUE ABOUT DISALLOWANCE U/S 40(A)(IA) ARE COMMON. 4.2 LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE ASSESSEE PAID NO TRANSPORT CHARGES. THE ASSESSEE APPOINTED AN AGENT M/S SACHIN CARGO MOVERS, B-56, MODEL TOWN, JAGATPURA ROAD, JAIPUR FO R SHIPPING THE GOODS FROM FACTORY SITE TO INLAND PORT FOR ONWARDS EXPORT OUT OF INDIA. THE AGENT REIMBURSES ALL EXPENSES MADE BY IT THEREI N AND RAISES A BILL THERE FOR WHICH ASSESSEE REIMBURSED. THE TOTAL CHAR GES PAID ARE RS. 1,23,24,384.26 WHICH ARE DEBITED IN P & L A/C A S C & F CHARGES. THE BREAKUP OF CHARGES ARE AS UNDER:- (I) THC ETC. CHARGES 42,56,773.49 (II) ICD/CFS INLAND HAULAGE CHARGES 21,81,974.23 (III) TRANSPORTATION & HANDLING CHARGES 43,21,000.0 0 (IV) FUMIGATION CHARGES 3,01,746.00 (V) GSP CHARGES 74,400.00 (VI) SACHIN CARGO AGENCY CHARGES 2,66,500.00 SERVICE TAX ON (VI) ABOVE 62,718.00 (VII) OTHER CHARGES 7,89,270.24 ITA NO. 479/JP/2013 ACIT ,CIRCLE- SIKAR VS. SHRI MANOJ KUMAR JOHARI. 5 (VIII)OCEAN FREIGHT 70,071.50 RS. 1,23,24,384.26 LD. AO PICKED UP TRANSPORT CHARGES OF RS. 43,21,00 0/- AND HELD THAT ASSESSEE HAS NOT DEDUCTED DUE TDS THERE FROM AND DI SALLOWED THE SAME U/S 40(A)(IA) OF I.T. ACT, 1961. IN THIS CONNECTION IT IS SUBMITTED THAT ASSESSEE HAS NOT DIRECTLY PAID THESE TRANSPORT CHAR GES BUT ARE REIMBURSED BY HIM TO SACHIN CARGO MOVERS. M/S SACHIN CARGO MOV ERS WHO HAS PAID THE TRANSPORT CHARGES AND DEDUCTED DUE TDS FROM TRA NSPORTERS AND DEPOSITED THE SAME IN ACCORDANCE WITH PROVISIONS OF I.T. ACT, 1961. THIS IS NEITHER DISPUTED IN EARLIER OR CURRENT YEAR. SIN CE THE AGENT WHO PAID THESE TRANSPORT CHARGES DEDUCTED DUE TAX THERE FROM , THE ASSESSEE IS THUS NOT LIABLE TO DEDUCT TDS FROM TRANSPORTATION CHARGE S. NECESSARY DETAILS OF THESE PAYMENT WITH EVIDENCE THAT M/S SACHIN CARG O MOVERS HAVING DEDUCTED AND PAID DUE TDS FROM TRANSPORTATION CHARG ES WAS FURNISHED. A CERTIFICATE FROM M/S SACHIN CARGO MOVERS TO THIS EF FECT IS ALSO ON RECORD. IN THESE FACTS OF THE CASE THE DISALLOWANCE MADE U/ S 40A(IA) BY . A.O. IN THE HANDS OF ASSESSEE IS UNJUSTIFIED AND BAD IN LAW . LD. CIT (A) UPHELD THE ACTION OF A.O. BY HOLDING THAT IN EFFECT, THE TRANSPORT CHARGES WERE PAID BY APPELLANT ON WHICH TDS WAS REQUIRED TO BE M ADE. IF AGENT PAID TDS ON BEHALF OF ASSESSEE IT WILL NOT EXONERATE ASS ESSEE FROM LIABILITY. IT ITA NO. 479/JP/2013 ACIT ,CIRCLE- SIKAR VS. SHRI MANOJ KUMAR JOHARI. 6 IS SUBMITTED THAT BOTH THE AUTHORITIES BELOW DID NO T APPRECIATE THAT TRANSPORTATION CHARGES WERE INCURRED BY AGENT ON BE HALF OF ASSESSEE AND RELATIONSHIP BETWEEN ASSESSEE AND AGENT IS PRINCIPA L AND AGENT AND IN SUCH CASE ASSESSEE IS NOT REQUIRED TO DEDUCT TAX AT SOURCE AND THERE CAN BE NO DISALLOWANCE U/S 40 (A) (IA). THE AGENT REIMBURS ED ONLY TRANSPORT CHARGES ACTUALLY PAID BY HIM AFTER DEDUCTING TDS AN D FOR HIS SERVICES CHARGED ASSESSEE ON WHICH SERVICE TAX WAS ALSO PAID . THE LD. AR OF THE ASSESSEE RELIED ON FOLLOWING DECISIONS. (I) CIT VS. HARBANS LAL MALHOTRA & SONS P. LTD. (2013)262 CTR 94 (CAL). (II) CIT VS. GUJRAT NARMADA VALLEY FERTILISERS CO. LTD. (2014)361 ITR 192 (GUJ). IT IS FURTHER CONTENDED THAT THE SAME ISSUE IS COVE RED IN FAVOUR OF THE ASSESSEE BY ITAT JAIPUR BENCH (ITA NO. 1111/JP/2011 DATED 21-11- 2014) IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEA R 2008-09 BY OBSERVING AS UNDER:- 10.6 WE HAVE HEARD THE RIVAL CONTENTIONS AND PER USED THE MATERIALS AVAILABLE ON RECORD. IN OUR CONSIDERED VI EW THE NATURE OF BETWEEN ASSESSEE & M/S. SACHIN CARGO MOVERS, C&F AG ENT, WAS FOR REIMBURSEMENT OF EXPENSES. BESIDES, THE TDS THE REON HAS BEEN DEDUCTED BY THE AGENT AS MENTIONED ABOVE. BY NOW, IT HAS BEEN SETTLED BY VARIOUS COURTS THAT REIMBURSEMENT OF EXP ENSES ARE NOT LIABLE FOR DEDUCTION U/S 40(A)(IA) OF THE ACT. IN A NY CASE THE AGENT HAS DEDUCTED THE TDS A FACT NOT DISPUTED BY REVENUE , IN THIS ITA NO. 479/JP/2013 ACIT ,CIRCLE- SIKAR VS. SHRI MANOJ KUMAR JOHARI. 7 EVENTUALITY ALSO THE CASE LAWS CITED BY THE LD. AR SUPPORTS THIS PROPOSITION. IN VIEW THEREOF, WE HOLD THAT THE EXPE NSES PAID TO M/S. SACHIN CARGO MOVERS, C&F AGENT, BEING FOR REIMBURSE MENT OF EXPENSES CANNOT BE DISALLOWED U/S 40(A)(IA) OF THE ACT. THUS GROUND NO. 3 OF THE ASSESSEE IS ALLOWED. 5.1 APROPOS GROUND NO. 4 OF THE ASSESSEE, IT IS CON TENDED THAT THE A.O. MADE DISALLOWANCE OF RS. 15,372/- U/S 40 A(3) BEING 20% OF RS. 76,860/- BEING PAYMENT EXCEEDING RS. 20,000/- WHICH IS IN AC CORDANCE WITH AMENDMENT MADE IN SECTION 40 A(3) BY FINANCE ACT, 2 008 W.E.F. 1-4-89 (I.E. FROM A.Y. 2009-10). HOWEVER, IT IS SUBMITT ED THAT THE AMOUNT DISALLOWED U/S 40A(3) WILL CORRESPONDINGLY INCREASE THE PROFITS AND GAINS OF ELIGIBLE BUSINESS AND SAME IS ALLOWABLE TO ASSES SEE WHILE COMPUTING DEDUCTION U/S 10BA. THE LD. CIT (A) HAS WRONGLY REJ ECTED THE CONTENTION OF ASSESSEE WITHOUT APPRECIATING LEGAL POSITION. IT IS PRAYED THAT IT MAY BE HELD THE PROFITS OF THE ELIGIBLE BUSINESS DEDUCTIBL E U/S 10BA. 6.1 APROPOS GROUND NO. 5 OF THE ASSESSEE, THE AO MA DE THE ADDITION OF RS. 32,47,159/- WHICH WAS CHALLENGED BEFORE THE LD. CIT(A) IN FIRST APPEAL. ON ASSESSEE'S SUBMISSION, A REMAND REPORT W AS CALLED FOR BY THE LD. CIT(A) WHICH IS AS UNDER:- (I) THE OPENING STOCK WAS WRONGLY ADOPTED WHILE PREPARING THE TRADING ACCOUNT AS ON DATE OF SURVEY. THE CORRECT OPENING STOCK AS ON 01.04.2008 WAS RS. 1,90,48,730/-. ITA NO. 479/JP/2013 ACIT ,CIRCLE- SIKAR VS. SHRI MANOJ KUMAR JOHARI. 8 (II) THERE WAS A DIFFERENCE OF RS. 37,41,134/- IN THE AMOUNT OF PURCHASES AS ADOPTED BY THE A.O. AND AS ADOPTED BY THE APPELLANT. BILLS TO THE EXTENT OF RS . 31,56,040/- ARE VERIFIABLE FROM THE IMPOUNDED MATER IAL AND CREDIT CAN BE GIVEN TO THAT EXTENT ONLY . (III) THERE WAS DIFFERENCE OF RS. 21,03,292/- IN T HE AMOUNT OF DIRECT EXPENSES AS ADOPTED BY THE A.O. AN D AS ADOPTED BY THE APPELLANT. THESE EXPENSES INCLUDED L ABOUR PAYMENTS OF RS. 15,17,915/- WHICH WERE NOT RECORDE D IN THE BOOKS OF ACCOUNTS BUT CLAIMED TO HAVE BEEN INCU RRED BY THE APPELLANT BEFORE THE DATE OF SURVEY. NO BILL/VO UCHERS WERE FOUND/IMPOUNDED IN SUPPORT OF SUCH PAYMENTS DU RING SURVEY. (IV) THERE WAS A DIFFERENCE OF RS. 4,09,79,894/- I N THE AMOUNT OF SALES ADOPTED BY THE A.O. AND THAT AD OPTED BY THE APPELLANT. THE SALE TO THE EXTENT OF RS. 4, 05,33,161/- IS VERIFIABLE FROM THE BILLS/PRODUCED AS THE SAME W ERE EXPORT SALES. HENCE, THE SAME SHOULD BE CONSIDERED FOR COMPUTING THE BOOK PROFIT AS ON DATE OF SURVEY. THE ASSESSEE ON THE ABOVE REPORT OF A.O. CLAIMED BE FORE LD. CIT (A) THAT IN WORKING OF TRADING A/C BY ASSESSEE AS ABOVE THE OPENING STOCK TAKEN IS CLOSING STOCK AS PER TRADING ACCOUNT AS ON 31-3-08 FILED ALONG WITH RETURN OF INCOME FOR A.Y. 2008-09 AND ACCEPTED IN ASSESSME NT. THE PURCHASE, SALES AND DIRECT EXPENSES UP TO 23-9-2008 ARE AS PE R BOOKS OF ACCOUNTS PRODUCED BEFORE A.O. IN ASSESSMENT PROCEEDINGS. THE SALES ARE MOSTLY EXPORTS SUPPORTED BY EXPORT INVOICES, SHIPPING BILL S AND ACCEPTED BY A.O. IN ASSESSMENT. THE PURCHASES AND DIRECT EXPENSES HA VE ALSO BEEN FOUND CORRECT BY A.O. IN ASSESSMENT BUT FOR APPLICATION O F SECTION 145(3) OF I. T. ITA NO. 479/JP/2013 ACIT ,CIRCLE- SIKAR VS. SHRI MANOJ KUMAR JOHARI. 9 ACT, 61. THUS THE WORKING OF ABOVE CLOSING STOCK AS PER BOOKS OF ACCOUNT IS CORRECT WORKING AS AGAINST INCORRECT WORKING BY LD. A.O, WHICH IS CLEAR FROM THE REMAND REPORT. IN THE AMOUNTS OF PURCHASES , SALES & DIRECT EXPENSES WERE GIVEN BY LD. A.O. THE DIFFERENCE IN P URCHASE ACCOUNT WAS BECAUSE OF TRANSFER OF AMOUNTS TO PURCHASES WHICH S TOOD DEBITED TO SUPPLIERS ACCOUNTS FOR BILLS OF PURCHASES PENDING APPROVAL OF GOODS AND/OR DEBIT NOTES RECEIVED WHICH WERE RECONCILED W HILE FINALIZING THE ACCOUNTS AT THE TIME OF THE AUDIT. THE DIFFERENCE I N DIRECT EXPENSES, THE LABOUR PAYMENTS AND JOB WORK PAYMENTS WERE ACCEPTED BY THE AO IN THE ASSESSMENT ORDER AND DISALLOWANCE U/S 40 (A) (IA) W AS MADE THERE FROM AND CERTAIN DIRECT EXPENSES ON ACCOUNT OF CARRIAGE INWARD, TRANSPORTATION CHARGES INWARD, LOADING-UNLOADING AND PACKING FORWA RDING, WERE NOT CONSIDERED BY A.O. IN HIS REMAND REPORT. THE DIFFER ENCE IN SALES, WAS ON ACCOUNT OF FOREIGN CURRENCY RATE DIFFERENCE WHICH W AS CORRECTED AT THE TIME OF AUDIT. THE ASSESSEE THEREAFTER ON THE BASIS OF THE REMAND REPORT PROVIDED RE CASTED TRADING ACCOUNT. THE LD. CIT (A ) THEREAFTER HELD THAT THERE WAS EXCESS STOCK OF RS. 30,96,058/- AS ON DAT E OF SURVEY WHICH IS TO BE TREATED AS UNEXPLAINED INVESTMENT OF ASSESSEE U/ S 69 OF THE ACT AND THEREBY CONFIRMED ADDITION OF RS. 30,96,050/- IN IN COME OF ASSESSEE AS AGAINST ADDITION OF RS. 32,47,159/- MADE BY LD. A. O. AS PROFIT @ 17.20% ITA NO. 479/JP/2013 ACIT ,CIRCLE- SIKAR VS. SHRI MANOJ KUMAR JOHARI. 10 ON ALLEGED SHORTAGE OF STOCK OF RS. 1,88,78,833/- AS ON DATE OF SURVEY. IT IS SUBMITTED THAT LD. CIT (A) HAS ERRED IN LAW IN W ORKING STOCK ON DATE OF SURVEY AS PER REMAND REPORT SENT BY A.O., WHILE THE WORKING OF ASSESSEE WAS AS PER BOOKS OF ACCOUNTS PRODUCED BEFORE LD. A. O. IN COURSE OF ASSESSMENT PROCEEDINGS WHEREIN DECLARED SALES AND P URCHASE WERE ACCEPTED. THE CLOSING STOCK WILL WORK OUT TO RS. 1 ,67,12,716/- IF G.P. RATE OF 17.2% IS TAKEN AS APPLIED BY A.O. IN ASSES SMENT AS AGAINST RS. 1,46,73,825/- BY TAKING G.P. RATE OF 15%. AS ALREAD Y SUBMITTED THAT THE VALUATION OF CLOSING STOCK FOUND ON DATE OF SURVEY HAS NOT BEEN PROPERLY DONE AND DIFFERENCE BEING SMALL AND NEGLIGIBLE THE STOCK FOUND IN COURSE SURVEY VALUED AT RS. 1,77,14,473/- WHILE AS PER BO OKS OF ACCOUNTS THE SAME WILL WORK OUT RS. 1,67,12,716/-. THUS THE ADD ITION OF RS. 30,96,050/- CONFIRMED BY LD. CIT ON ACCOUNT OF EXCE SS STOCK DUE TO DIFFERENCE OF VALUATION IS WRONG AND NOT SUSTAINABL E. WITHOUT PREJUDICE TO ABOVE, IT IS SUBMITTED THAT ADDITION ON ACCOUNT OF EXCESS STOCK FOR VALUATION DIFFERENCE IS TO BE ALLOWED TO THE ASSESS EE FIRM IN NEXT YEAR AS OPENING STOCK WHICH WILL REDUCE PROFITS OF NEXT YEA R. THE ASSESSMENT OF ASSESSEE FOR A.Y. 2010-11 HAS BEEN COMPLETED U/S 14 3 (3) WHEREIN OPENING STOCK WAS TAKEN BY ASSESSEE AS THAT WAS SHO WN BY HIM AS CLOSING STOCK IN THIS A.Y. 2009-10. THUS NO BENEFIT OF ENHA NCEMENT OF CLOSING ITA NO. 479/JP/2013 ACIT ,CIRCLE- SIKAR VS. SHRI MANOJ KUMAR JOHARI. 11 STOCK WAS CLAIMED OR ALLOWED IN A.Y. 2010-11. THIS EXERCISE IS ESSENTIALLY REVENUE NEUTRAL BETWEEN TWO YEARS AND/O R IN SUBSEQUENT YEARS. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. EXCEL INDUSTRIES LTD. (2013) 358 ITR 295 HAS HELD THAT ADDITION IN SUCH REVENUE NEUTRAL EXERCISE SHOULD NOT BE MADE BY DEPARTMENT. THUS ON BOTH THE COUNTS, THERE IS NO JUSTIFICATION TO MAKE ADDITION FOR DIFF ERENCE VALUATION OF STOCK AND LD. CIT (A) IS WRONG AND HAS ERRED IN LAW IN CO NFIRMING ADDITION OF RS. 30,96,050/- IN THE HANDS OF ASSESSEE AS UNEXPL AINED EXCESS STOCK FOUND IN COURSE OF SURVEY WHICH DESERVES TO BE DELE TED. 7.1 THE LD. DR IS HEARD 8.1 ADVERTING THE REVENUES APPEAL, GROUND NOS. 2 AND 3 HAVE ALREADY BEEN CONSIDERED ALONG WITH GROUND NO. 3 OF THE ASSESSEE. 9.1 APROPOS GROUND NO. 1 OF THE REVENUE, LD. COUNSE L FOR THE ASSESSEE CONTENDS THAT THE ISSUE IS COVERED WITH THE APPEAL ORDER PASSED BY ITAT, JAIPUR BENCH IN CASE OF ASSESSEE FOR A.YS. 2006-07, 2007-08 AND 2008-09 HOLDING THAT ASSESSEE IS ENTITLED TO DEDUCTION UNDE R SECTION 10BA FOR THIS YEAR ON NON DUTY DRAW BACK DEPB CLAIM AND LD. CIT ( A) HAS RIGHTLY ALLOWED THE SAME TO ASSESSEE. THERE IS NO INFIRMIT Y IN THE ORDER OF LD. CIT (A) WHICH DESERVES TO BE CONFIRMED AND THE GROUND R AISED BY DEPARTMENT HAS NO MERIT WHICH DESERVES TO BE DISMISSED. ITA NO. 479/JP/2013 ACIT ,CIRCLE- SIKAR VS. SHRI MANOJ KUMAR JOHARI. 12 9.2. RESPECTFULLY FOLLOWING THE ITAT ORDERS IN ASSE SSEES OWN CASE FOR A.YS. 2006-07, 07-08 & 08-09, WE UPHOLD THE ORDER O F LD. CIT (A) ON THIS ISSUE, REVENUES GROUND IS DISMISSED. 10.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. APROPOS ASSESSEE'S APPEAL GROU ND NOS. 1 AND 2 ARE DISMISSED BEING NOT PRESSED. 11.1 APROPOS GROUND NO. 3 (A) OF THE ASSESSEE, RESP ECTFULLY FOLLOWING OUR OWN JUDGEMENT DATED 21-11-2014 FOR THE ASSESSME NT YEAR 2008-09 IN ASSESSEE'S OWN CASE (SURPA), WE HOLD THAT IMPUGNED PAYMENT WAS NOT LIABLE FOR DEDUCTION OF TDS. CONSEQUENTLY, THE DISA LLOWANCE MADE U/S 40(A)(IA) IS DELETED. THUS GROUND NO. 3 OF THE ASSE SSEE IS ALLOWED. 11.2. ADVERTING TO GROUND NO. 3(B) ABOUT DELAY IN T DS PAYMENT ON JOB WORK, IT HAS NOT BEEN DISPUTED THAT THE REQUISITE T DS WAS PAID BY ASSESSEE BEFORE DUE DATE OF RETURN. IN VIEW THEREOF THIS CLA IM OF THE ASSESSEE IS ALLOWED. 12.1 APROPOS GROUND NO. 4 OF THE ASSESSEE FOR ALLOW ANCE OF RS. 15,372/- U/S 40A(3) OF THE ACT AMOUNTS TO DISALLOWA NCE OF BUSINESS EXPENSES WHICH WILL INCREASE THE ELIGIBLE PROFITS U /S 10BA OF THE ACT. IN VIEW THEREOF, THE ASSESSEE GROUND NO. 3 IS ALLOWED. ITA NO. 479/JP/2013 ACIT ,CIRCLE- SIKAR VS. SHRI MANOJ KUMAR JOHARI. 13 13.1 APROPOS GROUND NO. 5 OF THE ASSESSEE, WE FIND MERIT IN THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE THAT INCREASE IN VALUATION OF THE CLOSING STOCK IS TO BE ALLOWED IN NEXT YEAR AS INCREASE IN OPENING STOCK IN NEXT YEAR I.E. 2010-11. IT HAS NOT BEEN DI SPUTED THAT THE ASSESSEE HAS NOT CLAIMED ANY BENEFIT BY INCREASE IN VALUATIO N OF STOCK IN SUBSEQUENT YEAR. HENCE, THE ADDITION BECOMES REVENU E NEUTRAL. CONSEQUENTLY, RESPECTFULLY FOLLOWING THE DECISION O F HON'BLE SUPREME COURT IN THE CASE OF CIT VS. EXCEL INDUSTRIES LTD. (2013) 358 ITR 295, THE ADDITION BEING TAX NEUTRAL AND THE ASSESSEE HAVING NOT DERIVED ANY BENEFIT, THE ADDITION IS DELETED. 14.1 THUS THE ASSESSEE'S APPEAL IS PARTLY ALLOWED, GROUND NO. (II) AND (III) OF THE REVENUE ARE DISMISSED AS WE HAVE ALLOW ED ASSESSEE'S GROUND NO. 3. THE GROUND NO. (I) OF THE REVENUE IS SET ASI DE FOLLOWING THE JUDGEMENT OF HON'BLE APEX COURT IN THE CASE OF TOP MAN EXPORTS VS. CIT (SUPRA). 15.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED AND APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PU RPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 /10/2015 . SD/- SD/- FOE FLAG ;KNO VKJ-IH-RKSYKUH (VIKRAM SINGH YADAV) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER ITA NO. 479/JP/2013 ACIT ,CIRCLE- SIKAR VS. SHRI MANOJ KUMAR JOHARI. 14 TK;IQJ@ JAIPUR FNUKAD@ DATED:- 16 /10/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT /DCIT , CIRCLE, SIKAR 2. IZR;FKHZ@ THE RESPONDENT- SHRI MANOJ KUMAR JOHARI, SIKAR 3. VK;DJ VK;QDRVIHY ) @ CIT(A) 4. VK;DJ VK;QDR@ CIT 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.479/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR