AUTOMATIC ENGINEERING WORKS, MUMBAI V. JCIT 24 (1), MUMBAI

ITA 5074/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0654 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 04-09-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AKHTAR H ANSARILD
• Assessee Lawyers: V C SHAHLD
• Section: 143(3)

Judgement Text

1 ITA NO.5074/MUM/2018 AUTOMATIC ENGINEERING WORKS ASSESSMENT YEAR 2013-14 - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.5074/MUM/2018 ( / ASSESSMENT YEAR:2013-14 ) AUTOMATIC ENGINEERING WORKS E/22-23 AND F-23, NAND DHAM INDUSTRIAL ESTATE, MAROL MAROSHI ROAD ANDHERI(E), MUMBAI-400 059. / VS. J CIT - 24 (1) 6 TH FLOOR, PIRAMAL CHAMBERS LALBAUG, PAREL MUMBAI-400 012. !'#$ ./ ./PAN/GIR NO. AAAFA 2018 E ( '# /APPELLANT ) : ( $%'# / RESPONDENT ) REVENUE BY : SHRI AKHTAR H. ANSARI-LD.DR ASSESSEE BY : SHRI V.C. SHAH-LD. AR / DATE OF HEARING : 17/09/2019 / DATE OF PRONOUNCEMENT : 17/09/2019 / O R D E R PER BENCH: - 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2013-14 CONTEST THE ORDER OF LD. COMMISSI ONER OF INCOME-TAX (APPEALS)-36, MUMBAI, [IN SHORT REFERRED TO AS CIT( A)], APPEAL NO. CIT(A)- 2 ITA NO.5074/MUM/2018 AUTOMATIC ENGINEERING WORKS ASSESSMENT YEAR 2013-14 36/IT-453/JCIT-24(1)/2015-16 D ATED 05/04/2018 ON FOLLOWING GROUNDS OF APPEAL: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTA INING THE ADDITION TO TOTAL INCOME AT RS.4,29,387/- WHICH HAS BEEN DONE BY NOT CONSIDE RING THE FACTS, CIRCUMSTANCES AND EVIDENCE PUT ON RECORD AND BY NOT CONSIDERING THE F ACT THAT THE APPELLANT'S EXPLANATION WAS ACCEPTED IN PRIOR YEAR BY THE EXCISE DEPARTMENT AND BY IGNORING THE TYPICAL FACTS ABOUT THE SCRAP GENERATED, QUALITY AND THE SAME IS DONE BY COMPARING THE INCOMPARABLE CIRCUMSTANCES OF OTHER TRADERS NOT DEA LING IN SIMILAR SCRAP GENERATED AND SOLD BY YOUR APPELLANT. 2. FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE B EING RESIDENT FIRM STATED TO BE ENGAGED IN MANUFACTURING OF MOTOR VEHI CLE PARTS WAS ASSESSED U/S 143(3) OF INCOME TAX ACT, 1961 ON 21/0 1/2016 WHEREIN THE ASSESSEE WAS SADDLED WITH ADDITIONS OF RS.16.67 LAC S ON ACCOUNT OF UNACCOUNTED SCRAP SALES. THE PERUSAL OF PROFIT & LO SS ACCOUNT REVEALED THAT THE ASSESSEE REFLECTED SCARP SALES OF RS.4.60 LACS WHICH INCLUDED SCRAP SALE OF RS.3.78 LACS STATED TO BE GENERATED D URING MANUFACTURING PROCESS. THE PERUSAL OF QUANTITATIVE DETAILS REVEAL ED THAT THE ASSESSEE GENERATED SCRAP OF 107667 KG WHICH WAS SOLD AT AN A VERAGE RATE OF RS.3.51 PER KG. THE MARKET INQUIRIES REVEALED THAT SCRAP GENERATED BY OTHER UNITS WAS BEING SOLD AT AN AVERAGE PRICE OF R S.22.50 PER KG. THE ASSESSEE DEFENDED THE SAME BY SUBMITTING THAT THE S CRAP GENERATED DURING MANUFACTURING PROCESS WAS NOT PURE AND CLEAN SCRAP BUT CONTAMINATED WITH FOREIGN ITEMS AND WOULD NOT HAVE READY MARKET AND T HEREFORE, WOULD NOT FETCH FAIR MARKET PRICE OF PURE AND CLEAN SCRAP. HO WEVER, LD. AO OPINED THAT THE SCRAP GENERATED IN ANY MANUFACTURING PROCE SS WOULD BE CONTAMINATED. FINALLY, THE PRICE OF THE SCRAP WAS E STIMATED AT RS.19/- PER 3 ITA NO.5074/MUM/2018 AUTOMATIC ENGINEERING WORKS ASSESSMENT YEAR 2013-14 KG AND THE DIFFERENTIAL AMOUNT OF RS.16.67 LACS WAS ADDED TO THE INCOME OF THE ASSESSEE. 3. THE LEARNED FIRST APPELLATE AUTHORITY, INTER-ALIA, AFTER CONSIDERING THE PRICE RANGE AND MARGINS ETC. MADE THE ESTIMATION @R S.7.50 PER KG. STILL AGGRIEVED, THE ASSESSEE IS UNDER APPEAL BEFORE US. 4. WE HAVE HEARD AND CONSIDERED THE RIVAL SUBMISSIO NS. 4. UPON DUE CONSIDERATION, WE FIND THAT ADDITIONS H AVE BEEN MADE AS WELL SUSTAINED ON MERE ESTIMATIONS WITHOUT THERE BE ING ANY COGENT SUPPORTIVE MATERIAL. THE LD. AO HAS OPINED THAT THE SCRAP WOULD FETCH MORE MARKET VALUE WITHOUT CONSIDERING THE FACT THAT THE SCRAP MAY BE OF VARIED NATURE KEEPING IN VIEW THE NATURE OF MANUFACTURING PROCESS. NEVERTHELESS, TO PUT AN END TO LITIGATION, WE DIRECT THE LOWER AU THORITIES TO VALUE THE SCRAP AT RS.5/- PER KG AND RESTRICT THE ADDITION TO THE D IFFERENTIAL AMOUNT I.E. RS.1,60,219/- (107667X5=RS.538335/- - RS.378116/-). THE BALANCE ADDITION STANDS DELETED. 5. THE APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH SEPTEMBER, 2019. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 17/09/2019 SR.PS:-JAISY VARGHESE 4 ITA NO.5074/MUM/2018 AUTOMATIC ENGINEERING WORKS ASSESSMENT YEAR 2013-14 () *) / COPY OF THE ORDER FORWARDED TO : 1. '# / THE APPELLANT 2. $%'# / THE RESPONDENT 3. , ( ) / THE CIT(A) 4. , / CIT CONCERNED 5. -. $'/ , / , / DR, ITAT, MUMBAI 6. .012 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.