LOTUS LABORATORIES P.LTD, MUMBAI V. ITO 9(2)(2), MUMBAI

ITA 5108/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3800 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 09-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S S KHANDELWAL
• Keywords: Bad and doubtful debts

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI .. , , , BEFORE, SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO.5108/MUM/2013 ASSESSMENT YEAR: 2007-08 LOTUS LABORATORIES PVT. LTD. 102, A.S. DIAS BUILDING, 268/272, DR. CAVASJI HORMUSJI STREET, MUMBAI-400002 / VS. ITO-9(2)(2), AAYAKAR BHAVAN, M.K.MARG, MUMBAI-400020 ( !'#$ /ASSESSEE) ( % / REVENUE) PAN. NO. AAACL0708R !'#$ / ASSESSEE BY SHRI S.S. KHANDELWAL % / REVENUE BY SHRI AARSI PRASAD & %'($) / DATE OF HEARING : 10/02/2016 ($) / DATE OF ORDER: 24/02/2016 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER D ATED 02/04/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. ITA NO.5108/MUM/2013 LOTUS LABORATORIES PVT. LTD. 2 THE ONLY GROUND RAISED IN THIS APPEAL PERTAINS TO C ONFIRMING THE LEVY OF PENALTY OF RS.8,29,912/-, U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. DURING HEARING OF THIS APPEAL, THE CRUX OF ARGU MENT ADVANCED BY SHRI S.S. KHANDELWAL, LD. COUNSEL FOR T HE ASSESSEE, IS THAT FOLLOWING THREE ADDITIONS WERE MA DE BY THE LD. ASSESSING OFFICER: AMOUNT ON ACCOUNT OF REMARKS RS.19,44,270/- DIFFERENCE IN OPENING STOCK SINCE SALES RETURN WAS INCLUDED IN THE OPENING STOCK ALLOWED BY TRIBUNAL RS.2,93,595 WRITING OF OFF OBSOLETE STOCKS CONFIRM ED RS.2,27,709/- BAD DEBT WRITTEN OFF SENT BACK TO ASSESSING OFFICER BY THE TRIBUNAL TOTAL-24,65,574 BEFORE US, THE STAND OF THE ASSESSEE IS THAT SO FAR AS THE AMOUNT OF RS.19,44,270/- IS CONCERNED, IT WAS ALLOW ED BY THE TRIBUNAL, WHEREAS, THE AMOUNT OF RS.2,27,709/- WAS SENT BACK TO THE ASSESSING OFFICER BUT THE SAME WAS CONF IRMED AS THE ASSESSEE DID NOT APPEAR BEFORE THE ASSESSING OF FICER. IT WAS CONTENDED THAT THE AMOUNT FROM SALES TAX AND EX CISE DEPARTMENT WERE WRITTEN OFF AS THE SAME COULD NOT B E RECOVERED. THE LD. COUNSEL PLACED RELIANCE UPON THE DECISION FROM HONBLE APEX COURT IN CIT VS RELIANCE PETRO PR ODUCTS LTD. 322 ITR 158 (SC) TO THE EFFECT THAT MERE MAKIN G A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, ITSELF DOES NOT AM OUNT TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS ITA NO.5108/MUM/2013 LOTUS LABORATORIES PVT. LTD. 3 OF INCOME. ON THE OTHER HAND, THE LD. DR, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT IN THE APPEAL OF THE ASSESSEE ON QUANTUM ADDITION (ITA NO.626/MUM/2011), VIDE ORDER DATED 04/09/2012, SO F AR AS, THE ADDITION OF RS.19,44,270/-, MADE BY THE ASSESSI NG OFFICER AND CONFIRMED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), ON ACCOUNT OF OPENING STOCK, IS CONCERNE D, THE TRIBUNAL CONSIDERING THE TOTALITY OF FACTS, THE ADD ITION WAS DELETED. THE RELEVANT PORTION OF THE SAME IS REPROD UCED HEREUNDER FOR READY REFERENCE:- 2. THE ISSUE RAISED IN GROUND NO. 1 RELATES TO THE A DDITION OF RS. 19,44,270/- MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF OPENING STOCK. 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WHICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF PHARMA PRODU CTS. DURING THE YEAR UNDER CONSIDERATION, NO MANUFACTURING ACTIVITY WAS CARRIED OUT BY THE ASSESSEE. HOWEVER, EXPORTS WERE STATED TO HAVE BEEN MADE OF THE PRODUCTS MANUFACTURED IN THE EARLIER YEAR. IN THE P&L ACCOUNT, THE ASSESSEE HAD DECLARED SUCH SALES AS WELL AS SALE OF DEPB AGGREGAT ING TO RS. 22.88 LACS AND AFTER CLAIMING VARIOUS EXPENSES TOTALING TO RS. 31.67 LACS, THE NET LOSS OF RS. 8.79 LACS WAS DECLARED IN THE RETURN OF INCOM E FILED FOR THE YEAR UNDER CONSIDERATION ON 23-10-2007. DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THE A.O. FOUND THAT THE ASSESSEE HAS SHOWN OPENING STOCK OF FINISHED GOODS OF RS. 19,44,270/- BUT THERE WAS NO SUCH CLOSING STOC K SHOWN IN THE IMMEDIATELY PRECEDING YEAR. IN THIS REGARD, THE EXPL ANATION OFFERED BY THE ASSESSEE WAS THAT GOODS WORTH RS. 19,44,270/- WERE SO LD IN THE IMMEDIATELY PRECEDING YEAR TO PROTECH BIOSYSTEMS P. LTD. FOR FUR THER EXPORT BUT SINCE THE EXPORT ORDER WAS CANCELLED BY THE PROTECH BIOSYSTE MS P. LTD., THE EXPORTS COULD NOT TOOK PLACE. IT WAS SUBMITTED THAT THE GOODS SOLD TO PROTECH BIOSYSTEMS P. LTD. THUS WERE RETURNED BACK DU RING THE YEAR UNDER CONSIDERATION ON IST APRIL, 2006 AND THE SAME WERE SUPPLIED TO ANOTHER ITA NO.5108/MUM/2013 LOTUS LABORATORIES PVT. LTD. 4 CONCERN M/S POLYGON FOR EXPORT ON 18-4-2006. IT WAS CONTENDED THAT THE GOODS RETURNED BY PROTECH BIOSYSTEMS P. LTD. WERE TR EATED AS OPENING STOCK BY THE ASSESSEE OF THE YEAR UNDER CONSIDERATION AND T HE SALE THEREON WAS ALSO DULY DECLARED AS INCOME. THE A.O., HOWEVER, FOUN D THAT THE NEW ORDER FOR EXPORT OF GOODS WAS PLACED BY POLYGON ON 6-3-20 06. ACCORDING TO HIM, IT WAS BEYOND IMAGINATION THAT THE SAID ORDER WAS ACCEPT ED BY THE ASSESSEE WHEN IT WAS NOT EVEN AWARE OF THE REJECTION OF GOODS. HE ALSO WAS NOT CONVINCED WITH THE TREATMENT GIVEN BY THE ASSESSEE TO THE REJECTED GOODS AS OPENING STOCK WITHOUT ROUTING THE SAME THROUGH THE P&L A CCOUNT. IN THIS REGARD, THE EXPLANATION OFFERED BY THE ASSESSEE THAT T HE REJECTED GOODS HAVING BEEN RECEIVED AFTER THE END OF THE IMMEDIATELY PRECEDING YEAR, THE SAME WERE STRAIGHT-AWAY TAKEN IN THE OPENING STOCK W AS NOT FOUND ACCEPTABLE BY THE A.O. HE HELD THAT THE ASSESSEE WAS AW ARE OF THE REJECTION OF GOODS BY PROTECH BIOSYSTEMS P. LTD. IN THE EARLIER YEAR ITSELF AND THE SAME SHOULD HAVE BEEN ROUTED THROUGH THE P&L ACCOUNT OF THAT YEAR, WHICH WAS THE RIGHT COURSE. ACCORDINGLY, HE DID NOT ACCEPT T HE OPENING STOCK OF RS. 19,44,270/- SHOWN BY THE ASSESSEE AND MADE AN ADDITIO N TO THAT EXTENT TO THE TOTAL INCOME OF THE ASSESSEE. 4. THE ADDITION OF RS. 19,44,270/- MADE BY THE A.O. B Y REJECTING ITS CLAIM OF OPENING STOCK WAS CHALLENGED BY THE ASSESSEE IN AN AP PEAL FILED BEFORE THE LD. CIT(A) AND THE SUBMISSIONS MADE BEFORE THE A.O. ON THIS ISSUE WERE REITERATED ON BEHALF OF THE ASSESSEE BEFORE THE LD. CI T(A). IT WAS FURTHER CONTENDED ON BEHALF OF THE ASSESSEE THAT EVEN IF THE G OODS RETURNED HAD BEEN TAKEN INTO P&L ACCOUNT OF EARLIER YEAR, THE EFF ECT ON PROFIT WOULD HAVE BEEN THE SAME, BUT THE A.O. FAILED TO APPRECIATE THIS POSITION. THE LD. CIT(A) DID NOT FIND MERIT IN THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE AND CONFIRMED THE ADDITION MADE BY THE A.O. ON THIS ISSUE OBSERVING THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO ESTABLISH THAT THE GOODS SUPPLIED TO PROTECH BIOSYSTEMS P. LTD. WERE ACTUALLY RETURNED BY THE SAID PARTY OR RECEIVED BY THE ASSESSEE. HE HELD THAT THERE WAS NO MAT ERIAL TO ESTABLISH THE RETURN OF SUCH GOODS TO THE ASSESSEE AND SUPPLY OF T HE SAME TO ANOTHER PARTY DURING THE YEAR UNDER CONSIDERATION. 5. THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATT ENTION TO THE P&L ACCOUNT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION PLAC ED AT PAGE 1 OF HIS PAPER BOOK TO POINT OUT THAT THE GOODS WORTH RS. 19,44 ,270/- SUPPLIED BY THE ASSESSEE TO PROTECH BIOSYSTEMS P. LTD. FOR EXPORT PURPOSE IN THE EARLIER YEARS WERE DULY DECLARED BY THE ASSESSEE IN THE P&L A CCOUNT FOR THAT YEAR. HE SUBMITTED THAT AFTER THE SAID SALE, THE ASSESSEE WA S LEFT WITH NO CLOSING STOCK OF FINISHED GOODS IN A.Y. 2006-07 AND THE GOODS WERE SUPPLIED IN THE YEAR UNDER CONSIDERATION TO M/S POLYGON ONLY FROM T HE GOODS RETURNED BY ITA NO.5108/MUM/2013 LOTUS LABORATORIES PVT. LTD. 5 PROTECH BIOSYSTEMS P. LTD. WHICH WERE SUPPLIED IN THE E ARLIER YEAR. HE SUBMITTED THAT SINCE THE SAID GOODS WERE RETURNED B ACK ON 1-4-2007, THE ASSESSEE INCLUDED THE RETURNED GOODS AS THE OPENING S TOCK. HE CONTENDED THAT HAD THE ASSESSEE ACCOUNTED FOR THE SALES RETURNE D IN THE EARLIER YEAR AND INCLUDED THE SAME IN THE CLOSING STOCK AS SUGGEST ED BY THE A.O., THE EFFECT WOULD HAVE BEEN THE SAME AS WAS ACHIEVED BY THE ASSESSEE BY INCLUDING THE SAME DIRECTLY IN THE OPENING STOCK. AS REGARDS THE SUPPLY OF GOODS TO PROTECH BIOSYSTEMS P. LTD. IN THE EARLIER YE AR, THE RETURN OF GOODS SO SUPPLIED BY THE SAID PARTY AND FURTHER SUPPLY OF T HE GOODS SO RETURNED TO M/S POLYGON, THE LD. COUNSEL FOR THE ASSESSEE SUBMITT ED THAT SUFFICIENT EVIDENCE WAS PRODUCED BY THE ASSESSEE BEFORE THE A.O. AS WELL AS THE LD. CIT(A) TO ESTABLISH THESE FACTS. HE TOOK US THROUGH THE COPIES OF THE RELEVANT DOCUMENTS PLACED IN HIS PAPER BOOK AND POINTED OUT T HAT THE BILL RAISED BY THE ASSESSEE ON PROTECH BIOSYSTEMS P. LTD. ON 27-2-2 006 (COPY PLACED AT PAGE 3 OF THE PAPER BOOK) WAS SUFFICIENT TO SHOWS T HAT 102330 BOXES OF LORPILS TABLETS WERE SUPPLIED BY THE ASSESSEE FOR RS . 19,44,270/- DURING THE EARLIER YEAR. HE ALSO INVITED OUR ATTENTION TO COPY OF THE LEDGER ACCOUNT OF THE SAID PARTY TO SHOW THAT THE SAID SALE MADE ON 27-2 -2006 WAS DULY ACCOUNTED FOR BY THE ASSESSEE IN ITS BOOKS OF ACCOU NT. HE ALSO INVITED OUR ATTENTION TO THE COPY OF LETTER WRITTEN BY PROTECH BI OSYSTEMS P. LTD. TO THE SUPDT. OF CENTRAL EXCISE, PUNE DIVISION, PUNE (COPY PLACED AT PAGE 7 OF THE PAPER BOOK) TO POINT OUT THAT A REQUEST WAS MADE BY THE SAID PARTY TO THE EXCISE DEPARTMENT TO PERMIT THEM TO TAKE BACK THE CO NTAINER LYING AT JNPT PORT AS A RESULT OF CANCELLATION OF THE ORDER BY THE PURCHASER. HE SUBMITTED THAT THE SAID PERMISSION WAS GRANTED BY THE SUPDT. OF CENTRAL EXCISE ON 27- 3-2006 AS PER THE COPY OF LETTER PLACED AT PAGE 9 OF THE PAPER BOOK AND SINCE THE ASSESSEE HAD MEANWHILE RECEIVED ANOTHER ORDER FOR SUPPLY OF THE SAME GOODS FROM M/S POLYGON, THE GOODS RETURNED WERE EXPORTED BY THE ASSESSEE AT THE INSTANCE OF M/S POLYGON AS IS EVIDEN T FROM THE COPIES OF CORRESPONDING BILLS PLACED AT PAGE 15 & 18 OF THE PA PER BOOK. HE CONTENDED THAT THERE WAS THUS SUFFICIENT EVIDENCE BROUGHT ON RECO RD BY THE ASSESSEE TO SHOW THAT THE EXPORT OF GOODS WAS MADE DURING THE YEAR UNDER CONSIDERATION FROM THE GOODS RETURNED BY ANOTHER PA RTY WHICH WERE SUPPLIED IN THE IMMEDIATELY PRECEDING YEAR AND THERE WAS NO REASON FOR THE AUTHORITIES BELOW TO REJECT THE CLAIM OF THE ASSESSEE OF THE GOODS RETURNED MERELY BECAUSE THE SAID RETURNED GOODS WERE DIRECTLY INCLUDED BY THE ASSESSEE IN THE OPENING STOCK WITHOUT ROUTING THE SAM E THROUGH P&L ACCOUNT. HE CONTENDED THAT THE FINAL EFFECT OF THE TRA NSACTIONS, WHETHER ROUTED THROUGH P&L ACCOUNT OR DIRECTLY INCLUDED IN THE OPENING STOCK, WAS THE SAME AND THE ADDITION ON THIS ISSUE THUS IS NOT S USTAINABLE. ITA NO.5108/MUM/2013 LOTUS LABORATORIES PVT. LTD. 6 6. THE LD. D.R. STRONGLY RELIED ON THE ORDERS OF THE A UTHORITIES BELOW IN SUPPORT OF THE REVENUES CASE ON THIS ISSUE. HE SUBMIT TED THAT THE ACCOUNTING TREATMENT GIVEN BY THE ASSESSEE TO THE RET URNED GOODS AS OPENING STOCK WAS NOT CORRECT AND THERE WAS ALSO NO EVIDENCE TO ESTABLISH THAT THE GOODS RETURNED WERE EXPORTED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS EXPLAINED BY THE LD . COUNSEL FOR THE ASSESSEE, 102330 BOXES OF LORPILS TABLETS WERE SUPP LIED BY THE ASSESSEE TO PROTECH BIOSYSTEMS P. LTD. UNDER INVOICE DATED 27-2- 2006 (COPY PLACED AT PAGE 3 OF THE PAPER BOOK) FOR RS. 19,44,270/- FOR THE PURPOSE OF EXPORT AND THE SAID SALE WAS DULY ACCOUNTED FOR BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT AS IS EVIDENT FROM THE COPY OF P&L ACCOUNT PLACED AT PAGE 1 OF ASSESSEES PAPER BOOK. THE EXPORT ORDER RECEIVED BY M/S PROTECH BIOSYSTEMS P. LTD., HOWEVER, WAS CANCELLED BY THE CONCERNED BUYER AND CON SEQUENTLY A REQUEST WAS MADE BY PROTECH BIOSYSTEMS P. LTD. TO THE EXCISE DEPTT. TO ALLOW THEM TO TAKE BACK THE CONTAINER LYING AT JNPT PORT VIDE L ETTER DATED 17-3-2006 (COPY PLACED AT PAGE 7 OF THE ASSESSEES PAPER BOOK) . THE SAID REQUEST WAS ACCEPTED BY THE EXCISE DEPTT. VIDE LETTER DATED 27-3 -2006 (COPY PLACED AT PAGE 9 OF ASSESSEES PAPER BOOK) AND THEREAFTER THE GOODS RETURNED BY PROTECH BIOSYSTEMS P. LTD. WERE EXPORTED BY THE ASSES SEE AS PER THE ORDER OF POLYGON DURING THE YEAR UNDER CONSIDERATION (COPIES OF INVOICES ARE PLACED AT PAGE 15 & 18 OF THE ASSESSEES PAPER BOOK). THE SA ID EXPORT WAS ALSO SUPPORTED BY THE COPIES OF BILLS AND OTHER DOCUMENTS, THE COPIES OF WHICH ARE PLACED ON RECORD IN THE PAPER BOOK FILED BY THE A SSESSEE. HAVING REGARD TO ALL THESE DOCUMENTS PLACED ON RECORD BY THE ASSESS EE, WE FIND THAT THE INITIAL SALE OF GOODS MADE BY THE ASSESSEE IN THE EAR LIER YEAR, THE RETURN OF GOODS SO SOLD AND FRESH EXPORT OF THE GOODS SO RETURN ED IN THE YEAR UNDER CONSIDERATION WAS DULY SUPPORTED BY DOCUMENTARY EVI DENCE AND THERE WAS NO JUSTIFIABLE REASON TO DOUBT OR DISPUTE THE RETUR N OF GOODS SO SOLD BY THE ASSESSEE MERELY BECAUSE THE SAID GOODS WERE DIRECTLY ENTERED BY THE ASSESSEE IN THE OPENING STOCK OF THE YEAR UNDER CONS IDERATION INSTEAD OF ROUTING THE SAME THROUGH P&L ACCOUNT OF THE EARLIER YE AR. AS RIGHTLY CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE, THE EFF ECT OF BOTH THESE TREATMENTS WOULD HAVE BEEN THE SAME AND WHEN THE EXPORT OF GOODS MADE BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION WAS D ULY DECLARED BY IT AS INCOME AND THE SAID EXPORT WAS POSSIBLE ONLY OUT OF RETURNED GOODS WHICH WERE SUPPLIED IN THE EARLIER YEAR IN THE ABSENCE OF A NY STOCK OF FINISHED GOODS AVAILABLE WITH THE ASSESSEE, WE ARE OF THE VIE W THAT THE CLAIM OF THE ASSESSEE OF THE RETURNED GOODS INCLUDED IN THE OPEN ING STOCK SHOULD BE ACCEPTED. IN THAT VIEW OF THE MATTER, WE DELETE THE A DDITION MADE BY THE ITA NO.5108/MUM/2013 LOTUS LABORATORIES PVT. LTD. 7 A.O. AND CONFIRMED BY THE LD. CIT(A) ON THIS ISSUE AN D ALLOW GROUND NO. 1 OF ASSESSEES APPEAL. 2.2. IT IS NOTED THAT THE LD. ASSESSING OFFICER LE VIED PENALTY ON ACCOUNT OF DIFFERENCE OF STOCK OF RS.19, 44,270/-, WRITING OFF OF THE OBSOLETE STOCK OF RS.2,93,595/- AND BAD DEBTS WRITTEN OFF TO THE EXTENT OF RS.2,27,709/-, T OTALING RS.24,65,574/-. SINCE, THE TRIBUNAL HAS DELETED TH E ADDITION OF RS.19,44,270/-, THEREFORE, ON THIS ADDITION, PEN ALTY WILL NOT SURVIVE. 2.3. SO FAR AS, WRITING OFF OF OBSOLETE STOCK OF RS.2,93,595/- IS CONCERNED, THE ADDITION WAS AFFIRM ED BY THE TRIBUNAL. THE RELEVANT PORTION FROM THE ORDER OF TH E TRIBUNAL IS REPRODUCED HEREUNDER FOR READY REFERENCE:- 8. THE ISSUE RAISED IN GROUND NO. 2 RELATES TO THE ADDITION OF RS. 2,93,595/- MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) BY DISALLOWING THE ASSESSEES CLAIM FOR WRITE OFF OF OPENING STOCK. 9. THE OPENING STOCK OF RS. 2,93,595/- REPRESENTING PACKING MATERIAL SUCH AS ALUMINUM FOIL, CORRUGATED BOXES AS WELL AS OBSOL ETE RAW MATERIAL WAS WRITTEN OFF BY THE ASSESSEE. THE CLAIM OF THE ASSESSEE OF HAVING WRITTEN OFF THE STOCK AS OBSOLETE RAW MATERIAL, PACKING MATERIAL ETC. WAS NOT ACCEPTED BY THE A.O. IN THE ABSENCE OF ANY DOCUMENTARY EVIDENC E FILED BY THE ASSESSEE. HE ALSO OBSERVED THAT THE SAME MIGHT HAVE BE EN DISPOSED OF BY THE ASSESSEE WITHOUT ACCOUNTING FOR THE PROCEEDS REAL IZED. ACCORDINGLY THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF OP ENING STOCK WRITTEN OFF WAS DISALLOWED BY THE A.O. ON APPEAL, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE A.O. ON THIS ISSUE FOR THE SA ME REASONS AS GIVEN BY THE A.O. ITA NO.5108/MUM/2013 LOTUS LABORATORIES PVT. LTD. 8 10. THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTE NTION TO THE SCHEDULE -9 OF THE BALANCE SHEET PLACED AT PAGE 2 OF THE ASSESSEE S PAPER BOOK TO POINT OUT THAT THE CLOSING STOCK OF RS. 2,93,595/- WAS AVA ILABLE WITH THE ASSESSEE AS ON 31-3-2006. HE CONTENDED THAT THE SAID STOCK COM PRISING OF STOCK OF OLD PACKING MATERIAL AS WELL AS RAW MATERIAL WHICH HAD BECOME OBSOLETE AFTER EXPIRY OF SHORT LIFE WAS WRITTEN OFF BY THE AS SESSEE DURING THE YEAR UNDER CONSIDERATION AS THE BUSINESS WAS ALREADY CLOS ED AND THE SAME SHOULD BE ALLOWED AS DEDUCTION AS RIGHTLY CLAIMED BY THE ASSESSEE. 11. THE LD. D.R., ON THE OTHER HAND, SUBMITTED THAT NO E VIDENCE WHATSOEVER HAS BEEN PRODUCED BY THE ASSESSEE EITHER BEFORE THE AUT HORITIES BELOW OR BEFORE THE TRIBUNAL IN SUPPORT OF ITS CLAIM OF HAVING WRITTEN OFF OF THE STOCK OF PACKING MATERIAL AND RAW MATERIAL AND IN THE ABS ENCE OF THE SAME, THE CLAIM OF THE ASSESSEE ON THIS ISSUE CANNOT BE ALLOWED . 12. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE MATERIAL AVAILABLE ON RECORD, WE FIND NO JUSTIFIABLE REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE LD. CIT(A) CONFIRMING THE DISAL LOWANCE MADE BY THE A.O. ON ACCOUNT OF ASSESSEES CLAIM OF HAVING WRITTE N OFF OF THE OPENING STOCK OF PACKING MATERIAL AND RAW MATERIAL IN THE AB SENCE OF ANY DOCUMENTARY EVIDENCE TO SUPPORT AND SUBSTANTIATE THE SAME. GROUND NO. 2 OF ASSESSEES APPEAL IS ACCORDINGLY DISMISSED. 2.4. IT IS NOTED THAT THE STAND OF THE ASSESSEE WA S THAT AS PER SCHEDULE-9 OF THE BALANCE SHEET, IT WAS POIN TED OUT THAT CLOSING STOCK OF RS.2,93,595/- WAS AVAILABLE WITH T HE ASSESSEE AS ON 31/03/2006, WHICH WAS COMPRISING OF STOCK OF OLD PACKING MATERIAL AS WELL AS RAW MATERIAL WHICH HAD BECOME OBSOLETE AND THE SAME WAS WRITTEN OFF BY THE ASSESS EE. IT IS NOT THE CASE THAT THE ASSESSEE HIDES SOMETHING AS THE B USINESS OF THE ASSESSEE HAD ALREADY BEEN CLOSED. WE NOTE THAT UNDER THE FACTS AVAILABLE ON RECORD, IT WAS A GOOD CASE ON Q UANTUM ADDITION BUT NOT FOR LEVY PENALTY AS NEITHER THERE IS ITA NO.5108/MUM/2013 LOTUS LABORATORIES PVT. LTD. 9 CONCEALMENT NOR INACCURATE PARTICULARS OF SUCH INCO ME WERE FURNISHED BY THE ASSESSEE. EVEN OTHERWISE, IF A WRO NG CLAIM IS MADE BY THE ASSESSEE IN ITSELF, IT DOES NOT TANTAMO UNT TO CONCEALING OF INCOME OR FURNISHING OF INACCURATE PA RTICULARS. THE ASSESSEE GETS SUPPORT FROM THE DECISION OF HON BLE APEX COURT IN RELIANCE PETRO PRODUCTS, 322 ITR 158 (SC), THEREFORE, WE DELETE THE PENALTY ON THE ISSUE OF CL OSING STOCK OF RS.2,93,595/-. 2.5. SO FAR AS, LEVY OF PENALTY ON THE ISSUE OF BA D DEBT WRITTEN OFF AMOUNTING TO RS.2,27,709/- IS CONCERNED , WE FIND THAT THE TRIBUNAL VIDE AFORESAID ORDER DATED 04/09/ 2013 AFTER CONSIDERING THE TOTALITY OF FACTS THAT THE ASSESSEE FAILED TO SATISFACTORILY ESTABLISH THAT THE CONDITIONS STIPUL ATED IN SECTION 36(2) OF THE ACT WERE SATISFIED, IN ORDER TO CLAIM THE DEDUCTION ON ACCOUNT OF BAD DEBT WRITTEN OFF. THE MATTER WAS REMANDED BY THE TRIBUNAL TO THE FILE OF THE ASSESSING OFFICE R TO CONSIDER THE PLEA OF THE ASSESSEE. SINCE, THE ADDITION IN QU ESTION DOES NOT SURVIVE, NO PENALTY WOULD SURVIVE AND THE IMPUG NED ACTION OF THE ASSESSING OFFICER IS HEREBY SET-ASIDE. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.5108/MUM/2013 LOTUS LABORATORIES PVT. LTD. 10 THIS ORDER WAS PRONOUNCED IN THE OPEN ON 24/02/201 6. SD/- SD/- ( G.S. PANNU ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER & ' MUMBAI; + DATED : 24/02/2016 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. , -. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. 11 & 2$ ( , ) / THE CIT, MUMBAI. 4. 11 & 2$ / CIT(A)- , MUMBAI 5. 4%5/$! , 1, ),!6 , & ' / DR, ITAT, MUMBAI 6. 7'8' / GUARD FILE. / BY ORDER, 04$/$ //TRUE COPY// / (DY./ASSTT. REGISTRAR) , & ' / ITAT, MUMBAI