THE ITO, WARD - 1(2), Vijayawada V. M/s SriVenkateswara Steel Enterprises, Vijayawada

ITA 52/VIZ/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2019 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-01-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 01-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: I SARISH KUMAR
• Assessee Lawyers: R PRASAD
• Section: 142(1); 144

Judgement Text

ITA NO.52/VIZAG/2013 SRI VENKATESWARA STEEL ENTERPRISES, VIJAYAWADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.52/VIZAG/2013 ( / ASSESSMENT YEAR: 2008-09) ITO WARD - 1(2) VIJAYAWADA VS. SRI VENKATESWARA STEEL ENTERPRISES VIJAYAWADA [PAN: AAT FS6048M ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI I. SARISH KUMAR, DR / RESPONDENT BY : SHRI M.S.R. PRASAD, AR / DATE OF HEARING : 29.02.2016 / DATE OF PRONOUNCEMENT : 18.03.2016 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A) VIJAYAWADA DATED 29.11.2012 AND IT PERTAINS TO THE ASSESSMENT YEAR 2008-09. ITA NO.52/VIZAG/2013 SRI VENKATESWARA STEEL ENTERPRISES, VIJAYAWADA 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM WHICH IS ENGAGED IN THE BUSINESS OF TRADING IN IRON AND STEEL IN THE NAME AND STYLE OF SRI VENKATESWARA STEEL ENTERPRISE S, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 17.9.2008 DECLARING TOTAL INCOME OF ` 2,12,950/-. THE CASE HAS BEEN SELECTED FOR SCRUTI NY AS PER THE GUIDELINES ISSUED BY THE CBDT AND ACCORDINGLY, NOTICES U/S 143(2) AND 142(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT') WERE ISSUED. AS STATED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, THE ASSESSEE NOT COOPERATED FOR THE ASSESSME NT PROCEEDINGS BY FILING THE REQUIRED INFORMATION DESPITE GIVING ENOR MOUS OPPORTUNITIES OF HEARING. IN THE ABSENCE OF ANY DETAILS FROM THE AS SESSEE, THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT U/S 144 OF THE ACT, EX-PARTE BASED ON THE INFORMATION AVAILABLE ON RECORD. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE HAS SHOWN CREDITORS IN HIS BOOKS OF ACCOUNTS. THER EFORE, REQUESTED TO FURNISH THE CONFIRMATION LETTERS FROM THE CREDITORS . IN RESPONSE TO NOTICE, THE ASSESSEE HAS FILED CONFIRMATION LETTERS IN RESPECT OF 12 TRADE CREDITORS AND FOR THE REMAINING CREDITORS NO CONFIR MATION HAS BEEN FILED. IN THE ABSENCE OF CONFIRMATION LETTERS, THE ASSESSI NG OFFICER WAS OF THE OPINION THAT THE ASSESSEE HAS NOT PROVED THE GENUIN ENESS OF THE ITA NO.52/VIZAG/2013 SRI VENKATESWARA STEEL ENTERPRISES, VIJAYAWADA 3 TRANSACTIONS AND ALSO CREDITWORTHINESS OF THE CREDI TORS. THEREFORE, MADE ADDITIONS OF ` 1,02,50,870/-. 3. THE ASSESSING OFFICER NOTICED THAT THE GROSS PRO FIT DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IS QUITE LESS, WHEN COMPARED TO THE NATURE OF BUSINESS CARRIED OUT BY THE ASSESS EE. THEREFORE, REQUESTED TO FURNISH THE COMPLETE DETAILS TO SALES AND PURCHASE ALONG WITH OPENING AND CLOSING STOCK DETAILS WITH NECESSA RY BILLS & VOUCHERS IN SUPPORT OF THE TRADING RESULTS DECLARED IN THE RETU RN OF INCOME. THE ASSESSEE NEITHER FURNISHED THE BOOKS OF ACCOUNTS NO R APPEARED BEFORE THE ASSESSING OFFICER TO JUSTIFY HIS FINANCIAL RESU LTS. IN THE ABSENCE OF ANY SALES AND PURCHASE BILLS, THE ASSESSING OFFICER HAS ANALYSED THE FINANCIAL RESULTS BASED ON THE INFORMATION AVAILABL E IN THE RECORD AND NOTICED THAT FOR THE MONTH OF NOV07, JAN08, FEB0 8 & MAR08 THE SALE PRICE IS LESS THAN THE PURCHASE PRICE OF THE GOODS TRADED. THEREFORE, DIRECTED THE INSPECTOR OF INCOME TAX ATTACHED TO HI S OFFICE TO CAUSE ENQUIRIES WITH THE PERSONS FROM WHOM THE ASSESSEE H AS SOLD GOODS TO ENQUIRE ABOUT SELLING PRICE. THE INSPECTOR OF INCO ME TAX, AFTER CAUSING SUCH ENQUIRIES ISSUED A REPORT. BASED ON THAT REPO RT, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE AVERAGE SAL ES PRICES DECLARED BY THE ASSESSEE FOR THE RELEVANT PERIOD IS NOT GENUINE . THE ASSESSING ITA NO.52/VIZAG/2013 SRI VENKATESWARA STEEL ENTERPRISES, VIJAYAWADA 4 OFFICER FURTHER WAS OF THE OPINION THAT THE ASSESSE E HAS NOT DECLARED TRUE AND CORRECT FINANCIAL RESULTS TO AVOID PAYMENT OF TAXES AND HENCE QUANTIFIED THE SUPPRESSED TURNOVER OF ` 36,45,403/- AND MADE ADDITIONS. FURTHER, THE ASSESSING OFFICER HAS MADE SEPARATE AD DITIONS TOWARDS GROSS PROFIT OF ` 65,982/- ON SUCH SUPPRESSED TURNOVER BY APPLYING T HE GROSS PROFIT DECLARED BY THE ASSESSEE FOR THE RELEV ANT PERIOD. SIMILARLY, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED VARIOUS EXPENDITURES. THEREFORE, REQUESTED TO FURNISH THE BILLS & VOUCHERS IN SUPPORT OF EXPENDITURE CLAIMED IN THE PROFIT & LOSS ACCOUNT. SINCE, THE REQUIRED INFORMATION IS NOT FURNISHED BY THE ASSESS EE, THE ASSESSING OFFICER HAS DISALLOWED 30% OF EXPENDITURE AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE HAS FILED WRITTEN SUBMISSIONS. THE ASSESSEE FURTHER SUBMITTE D THAT INSPITE OF FURNISHING THE INFORMATION CALLED FOR DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS COMPLETED TH E ASSESSMENT U/S 144 OF THE ACT IGNORING THE EVIDENCES FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE FURTHER SUBMI TTED THAT IT HAS FILED CONFIRMATION LETTERS FROM THE TRADE CREDITORS ON VARIOUS DATES AS ITA NO.52/VIZAG/2013 SRI VENKATESWARA STEEL ENTERPRISES, VIJAYAWADA 5 AND WHEN REQUESTED BY THE ASSESSING OFFICER. HOWEV ER, THE ASSESSING OFFICER HAS NOT CONSIDERED THE CONFIRMATION LETTERS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. SIMILARLY, THE A SSESSEE FURTHER SUBMITTED THAT IN RESPECT OF ESTIMATION OF SUPPRESS ED SALES IS CONCERNED, THE ASSESSING OFFICER HAS ESTIMATED THE SUPPRESSED SALES FOR THE MONTH OF NOV07, JAN08, FEB08 & MAR08, BASED ON HIS OW N ANALYSIS OF THE FINANCIAL RESULTS WITHOUT ANY MATERIALS TO SHOW THA T THERE WAS A SUPPRESSION OF SALES. THE FINANCIAL RESULTS FOR TH E PERIOD SHOULD BE CONSIDERED IN TOTAL AND NOT FOR A PARTICULAR MONTH. THOUGH THERE IS A REDUCTION IN THE SALES PRICE WHEN COMPARED TO THE P URCHASE PRICE FOR THE MONTH, IT WAS HAPPENED BECAUSE OF SALES OF NON MOVI NG AND OBSOLETE ITEMS AND ALSO CUT LENGTHS. THEREFORE, THE SELLI NG PRICE OF THE PRODUCT NATURALLY WILL BE LESS WHEN COMPARED TO THE AVERAGE PURCHASE PRICE OF THE PRODUCT. FOR THIS REASON, THE ASSESSING OFFICE R CANNOT ESTIMATE THE SUPPRESSED SALES TURNOVER BASED ON THE SELLING PRIC E OF THE GOOD STOCK. AS REGARDS THE DISALLOWANCE OF EXPENDITURE, THE ASS ESSEE SUBMITTED THAT IT HAS FURNISHED BILLS & VOUCHERS IN RESPECT OF FRE IGHT CHARGES ALONG WITH LORRY FREIGHT RECEIPTS. IN RESPECT OF OTHER EXPEND ITURE LIKE SALARY, STATIONERY EXPENSES, ETC., IN FEW CASES THE EXPENDI TURE ARE SUPPORTED BY SELF MADE VOUCHERS, THEREFORE, THE ASSESSING OFFICE R WAS NOT CORRECT IN DISALLOWING SUCH EXPENDITURE. ITA NO.52/VIZAG/2013 SRI VENKATESWARA STEEL ENTERPRISES, VIJAYAWADA 6 5. THE CIT(A) DURING THE COURSE OF APPELLATE PROCEE DINGS, FORWARDED THE SUBMISSIONS MADE BY THE ASSESSEE TO THE ASSESSI NG OFFICER FOR HIS COMMENTS. THE ASSESSING OFFICER VIDE HIS REMAND RE PORT, SUBMITTED THAT THE ASSESSEE HAS FURNISHED CONFIRMATION LETTER FROM THE REMAINING SUNDRY CREDITORS. ON VERIFICATION OF SUCH SUNDRY C REDITORS, IT WAS NOTICED THAT IN THE CASE OF 9 SUNDRY CREDITORS, THE BALANCE WAS TALLIED WITH THE BOOKS OF ACCOUNTS OF THE ASSESSEE. IN THE REMAININ G TWO CASES, THERE WAS A DIFFERENCE OF CLOSING BALANCE WHICH WAS NOT E XPLAINED BY THE ASSESSEE. SIMILARLY, IN THE REMAINING THREE CASES, THE ASSESSEE HAS NOT FURNISHED ANY CONFIRMATION LETTERS EVEN IN THE REMA ND PROCEEDINGS, THEREFORE, THE ASSESSING OFFICER HAS SUBMITTED THAT WHEREVER DIFFERENCE IS THERE, THE DIFFERENCE SHOULD BE CONFIRMED AND AL SO WHEREVER CONFIRMATION HAS NOT BEEN FILED, SUCH CREDITS SHOUL D BE CONFIRMED. AS REGARDS THE ADDITION OF SUPPRESSED TURNOVER AND REL ATED GROSS PROFIT ADDITION IS CONCERNED, THE ASSESSING OFFICER REITER ATED THE FINDINGS MADE IN THE ASSESSMENT ORDER. SIMILARLY, WITH REGARD TO THE DISALLOWANCE OF 30% EXPENDITURE DEBITED TO PROFIT & LOSS ACCOUNT TH E ASSESSING OFFICER SUBMITTED THAT THE EXPENDITURE CLAIMED IS SUPPORTED BY SELF MADE VOUCHERS WHICH ARE NOT SUSCEPTIBLE FOR VERIFICATION AND IN VIEW OF THE ASSESSEES FAILURE TO PROVE THE GENUINENESS OF THE EXPENDITURE, THE DISALLOWANCE OF 30% MAY BE SUSTAINED. ITA NO.52/VIZAG/2013 SRI VENKATESWARA STEEL ENTERPRISES, VIJAYAWADA 7 6. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND REMAND REPORT ISSUED BY THE ASSESSING OFFICER, DELE TED THE ADDITIONS MADE TOWARDS SUNDRY CREDITORS. WHILE DOING SO, THE CIT(A) HELD THAT ADDITIONS CANNOT BE MADE SOLELY BASED ON THE FACT T HAT THE ASSESSEE HAS NOT FILED CONFIRMATION LETTERS. SIMILARLY, THE CIT (A) HAS RESTRICTED THE ADDITIONS MADE TOWARDS DISALLOWANCE OF 30% EXPENDIT URE TO ` 1 LAKH. WHILE DOING SO, THE CIT(A) HELD THAT THOUGH SOME OF THE EXPENDITURE ARE SUPPORTED BY SELF MADE VOUCHERS, THE RELEVANCE OF SUCH EXPENDITURE IN THE BUSINESS OF THE ASSESSEE CANNOT BE RULED OUT . THE CIT(A) FURTHER HELD THAT THE ASSESSING OFFICER CANNOT DISALLOW SAL ARY AND OTHER EXPENDITURE FOR WANT OF PROPER BILLS & VOUCHERS, AS THESE EXPENDITURES ALWAYS SUPPORTED BY SELF MADE VOUCHERS AND WHICH CA N BE VERIFIED FROM THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. SIMILARLY, THE CIT(A) DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER TOWARDS SUPPRESSED SALES AND RELATED GROSS PROFIT BY HOLDING THAT ADDI TIONS CANNOT BE MADE FOR THE PART OF THE PERIOD BASED ON THE FINANCIAL R ESULTS OF THE REMAINING PERIOD, BY HOLDING THAT THE SALE PRICE DECLARED BY THE ASSESSEE IS LESS THAN THE PURCHASE PRICE. THE CIT(A) FURTHER HELD T HAT IT IS OBVIOUS IN CERTAIN CASES THAT THE SALE PRICE MAY BE LESS THAN THE PURCHASE PRICE, BECAUSE OF VARIOUS REASONS IN THE BUSINESS. IN THE PRESENT CASE, THE ASSESSEE CONTENTION IS THAT IT HAS SOLD OBSOLETE AN D NON MOVING STOCK ITA NO.52/VIZAG/2013 SRI VENKATESWARA STEEL ENTERPRISES, VIJAYAWADA 8 AND ALSO CUT LENGTHS, THEREFORE, THE PRICE OF THESE PRODUCT IS ALWAYS LESS WHEN COMPARED TO THE PURCHASE PRICE. TO AVOID FURT HER LOSSES IN THE BUSINESS, HE SOLD GOODS AT PRICE WHICH IS LESS THAN THE PURCHASE PRICE. FOR THIS REASON, THE ASSESSING OFFICER CANNOT ESTIM ATE THE TURNOVER BASED ON THE PURCHASE PRICE. WITH THESE OBSERVATIO NS, HE DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITIONS. AGGRIEV ED BY THE CIT(A) ORDER, THE REVENUE IS IN APPEAL BEFORE US. 7. THE LD. D.R. SUBMITTED THAT THE CIT(A) FAILED TO CONSIDER THE FACTS MENTIONED BY THE ASSESSING OFFICER IN THE REMAND RE PORT IN RESPECT OF THE 5 CREDITORS, IN WHOSE CASES EITHER THERE IS NO CONFIRMATION FROM THE CREDITORS OR THERE IS A DIFFERENCE IN CLOSING BALAN CE SHOWN IN THE BOOKS OF THE CREDITORS. THE D.R. FURTHER SUBMITTED THAT THE CIT(A) OUGHT TO HAVE CONFIRMED THE ADDITION TO THE EXTENT OF ` 9,72,630/- IN RESPECT OF 5 CREDITORS, OUT OF THE ADDITIONS OF ` ` 1,02,50,870/-, AS THE CREDITS ARE NOT PROVED AS GENUINE WHICH IS EVIDENT FROM THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER. THE D.R. FURTHER SUBMIT TED THAT THE CIT(A) ERRED IN DELETING THE ADDITIONS OF ` 36,45,403/- AND ` 65,982/- TOWARDS SUPPRESSED TURNOVER AND RELATED GROSS PROFIT, AS TH E EXPLANATION SUBMITTED BY THE ASSESSEE THAT THE RATE DIFFERENCE IS DUE TO SALE OF CUT LENGTHS AND DEFECTIVE MATERIALS IS NOT SUPPORTED BY ANY EVIDENCES. THE ITA NO.52/VIZAG/2013 SRI VENKATESWARA STEEL ENTERPRISES, VIJAYAWADA 9 CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE SALES DURING THE MONTH OF NOV07 AND JAN08 TO MAR08 ARE BELOW THE PURCHASE PRICE AS PER THE ANALYSIS MADE BY THE ASSESSING OFFICER. TH E LD. D.R. FURTHER SUBMITTED THAT THE CIT(A) WITHOUT APPRECIATING THE FACTS PROPERLY RESTRICTED THE ADDITIONS TO ` 1 LAKH OUT OF THE 30% DISALLOWANCE MADE BY THE ASSESSING OFFICER. THE D.R. FURTHER ARGUED THA T EXCLUDING LORRY FREIGHT, THE CIT(A) SHOULD HAVE UPHOLD ADDITIONS MA DE BY THE ASSESSING OFFICER IN RESPECT OF OTHER EXPENDITURE, AS THESE E XPENDITURE ARE SUPPORTED BY SELF MADE VOUCHERS AND THE ASSESSEE EV EN DURING THE REMAND PROCEEDINGS NOT SUBSTANTIATED THE CLAIM OF E XPENDITURE WITH ANY MATERIAL EVIDENCES. 8. ON THE OTHER HAND, THE LD. A.R. OF THE ASSESSEE STRONGLY SUPPORTED THE ORDER OF THE CIT(A). 9. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE FIRST ISSUE CAME UP FOR OUR CONSIDERATION IS ADDITI ONS TOWARDS SUNDRY CREDITORS. THE ASSESSING OFFICER MADE ADDITIONS TO WARDS SUNDRY CREDITORS FOR THE REASON THAT THE ASSESSEE HAS NOT PROVED CREDITORS BY FILING CONFIRMATION LETTERS. THE ASSESSING OFFICER WAS OF THE OPINION THAT OUT OF THE TOTAL SUNDRY CREDITORS OF ` 1,02,50,870/- A SUM OF ` ITA NO.52/VIZAG/2013 SRI VENKATESWARA STEEL ENTERPRISES, VIJAYAWADA 10 9,72,630/- IN RESPECT OF 5 CREDITORS, THERE WAS NO CONFIRMATION FROM THE PARTIES OR THERE WAS A DIFFERENCE IN THE CLOSING BA LANCES CERTIFIED BY THE SUNDRY CREDITORS. IT WAS THE CONTENTION OF THE ASS ESSEE THAT IT HAS SUBMITTED CONFIRMATION LETTERS AND ALSO RECONCILED THE DIFFERENCE SHOWN IN THE DEBTORS BOOKS OF ACCOUNTS TO ITS BOOKS OF AC COUNTS. DURING THE COURSE OF HEARING, THE ASSESSEE HAS FILED A PAPER B OOK, WHEREIN SUBMITTED THE LEDGER ACCOUNT COPIES OF THE RESPECTI VE CREDITORS ALONG WITH CONFIRMATION LETTERS ISSUED BY THE PARTIES. O N PERUSAL OF THE CONFIRMATION LETTERS ISSUED BY THE ASSESSEE, WE FIN D THAT IN THE CASE OF TWO PARTIES, WHERE THERE WAS A DIFFERENCE IN CLOSIN G BALANCES, THE ASSESSEE HAS EXPLAINED THE DIFFERENCE IN CLOSING BA LANCE AND SUBMITTED THAT THE DIFFERENCE IN BALANCES IN SUNDRY CREDITORS IS NOT CLOSING BALANCE AND IT IS OPENING BALANCE DIFFERENCE. THEREFORE, T HE ASSESSING OFFICER CANNOT MAKE ADDITIONS TOWARDS OPENING BALANCE DIFFE RENCE DURING THE YEAR UNDER CONSIDERATION. WE FIND FORCE IN THE ARGU MENTS OF THE ASSESSEE FOR THE REASON THAT ON PERUSAL OF SUCH CON FIRMATION LETTERS AND ALSO RECONCILIATION FURNISHED BY THE ASSESSEE, WE N OTICED THAT THE CREDITORS HAVE BEEN EXPLAINED BEFORE THE ASSESSING OFFICER AND ALSO EXPLAINED THE REASONS WHY THE DIFFERENCE IS APPEARE D IN THE CREDITORS BALANCE. THE CIT(A) AFTER CONSIDERING THE SUBMISSI ONS MADE BY THE ASSESSEE RIGHTLY DELETED THE ADDITIONS. WE DO NOT S EE ANY ERROR OR ITA NO.52/VIZAG/2013 SRI VENKATESWARA STEEL ENTERPRISES, VIJAYAWADA 11 INFIRMITY IN THE ORDER PASSED BY THE CIT(A). HENCE WE INCLINED TO UPHOLD THE CIT(A) ORDER AND REJECT THE GROUND RAISED BY TH E REVENUE. 10. THE NEXT ISSUE ARISES FOR OUR CONSIDERATION IS ADDITIONS TOWARDS SUPPRESSED TURNOVER AND RELATED GROSS PROFIT. THE ASSESSING OFFICER HAS MADE ADDITIONS TOWARDS SUPPRESSED TURNOVER OF ` 36,45,403/- AND ALSO GROSS PROFIT ON SUCH SUPPRESSED TURNOVER. THE ASSE SSING OFFICER WAS OF THE OPINION THAT THE SALES DECLARED BY THE ASSESSEE FOR THE MONTH OF NOV07 & JAN TO MAR08 ARE LESS THAN THE PURCHASE P RICE OF THE PRODUCTS. THE ASSESSING OFFICER HAS MADE HIS OWN ANALYSIS AND AS PER HIS ANALYSIS, THE SELLING PRICE OF THE GOODS SOLD BY THE ASSESSEE IS LESS THAN THE PURCHASE PRICE IN THE RELEVANT PERIOD. ACCORDING T O THE ASSESSING OFFICER, THE ASSESSEE HAS NOT EXPLAINED THE REASONS FOR SELLING THE GOODS AT LOWER THAN THE PURCHASE PRICE. IT WAS THE CONTE NTION OF THE ASSESSEE THAT IT HAS SOLD THE OBSOLETE AND NON MOVING STOCK AND ALSO CUT LENGTHS OF STEEL PRODUCTS AND THE PRICES OF THESE PRODUCTS ARE ALWAYS LESS THAN THE PURCHASE PRICE. 11. WE HAVE GONE THROUGH THE SUBMISSIONS OF THE ASSE SSEE AND ORDER OF THE ASSESSING OFFICER. THE ASSESSING OFFICER MA DE ADDITIONS BY TAKING INTO ACCOUNT THE AVERAGE SALE PRICE WORKED OUT BY H IM AND THEN COMPARED TO SELLING PRICE OF PREVIOUS MONTH. ON VE RIFICATION OF THE ITA NO.52/VIZAG/2013 SRI VENKATESWARA STEEL ENTERPRISES, VIJAYAWADA 12 FINANCIAL RESULTS ARRIVED BY THE A.O., WE FIND THAT THE AO HAS COMPARED THE PURCHASES AND SALE PRICE OF THE ABOVE PERIOD AN D FIND OUT A DIFFERENCE IN SELLING PRICE. THE AO STATED THAT TH E AVERAGE SALES PRICE IS LESS THAN THE PURCHASE PRICE FOR THE ABOVE PERIOD. WE DO NOT SEE ANY MERITS IN THE FINDINGS OF THE AO FOR THE REASON THA T ADDITIONS CANNOT BE MADE BASED ON THE AVERAGE SELLING PRICE OF A PARTIC ULAR PERIOD AND APPLY IT TO THE REMAINING PERIOD BY STATING THAT THERE WA S A DIFFERENCE IN SELLING PRICE FOR THE PARTICULAR PERIOD. UNLESS, A .O. ANALYSE THE TOTAL FINANCIAL RESULTS OF THE PERIOD INCLUDING OPENING S TOCK, PURCHASES, SALES AND CLOSING STOCK, NO ADDITIONS CAN BE MADE ON THE BASIS OF A PART PERIOD BY TAKING THE AVERAGE SELLING PRICE. IN THE PRESENT CASE ON HAND, THE AO HAS NOT POINTED OUT ANY DEFECTS IN THE QUANT ITY OF PRODUCT SOLD BY THE ASSESSEE. THE AO IS MAINLY HARPING UPON THE SELLING PRICE OF THE PARTICULAR PERIOD BY STATING THAT THE SALE PRICE OF THE PRODUCT SOLD IS LESS THAN THE PURCHASE PRICE. IN THE PRESENT CASE ON HA ND, THE ASSESSEE IS IN THE BUSINESS OF TRADING IN STEEL AND IRON. THE IRO N AND STEEL PRICES ARE PRONE TO UPS AND DOWNS DEPENDING UPON THE DEMAND IN THE MARKET. THE SALE PRICE OF THE PRODUCT SOMETIMES MAY BE LESS THAN THE PURCHASE PRICE WHEN THE MARKET TREND IS GOING DOWN. THEREFO RE, BASED ON THE SELLING PRICE, THE AO CANNOT ESTIMATE THE SALES TUR NOVER FOR THE PART PERIOD BY TAKING INTO ACCOUNT THE REMAINING PERIOD SALES. THE CIT(A) ITA NO.52/VIZAG/2013 SRI VENKATESWARA STEEL ENTERPRISES, VIJAYAWADA 13 AFTER CONSIDERING THE EXPLANATIONS FURNISHED BY THE ASSESSEE, RIGHTLY DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER . WE DO NOT SEE ANY ERROR OR INFIRMITY IN THE ORDER PASSED BY THE CIT(A ) AND HENCE, WE INCLINED TO UPHOLD THE ORDER PASSED BY THE CIT(A) A ND REJECT THE GROUND RAISED BY THE REVENUE. 12. THE NEXT ISSUE ARISES FOR OUR CONSIDERATION IS ADHOC DISALLOWANCE ON 30% OF EXPENDITURE. THE AO HAS DISALLOWED 30% E XPENDITURE FOR THE REASON THAT THE ASSESSEE HAS NOT PRODUCED PROPE R BILLS & VOUCHERS IN SUPPORT OF THE EXPENDITURE DEBITED IN THE P&L AC COUNT. THE A.O. WAS OF THE OPINION THAT SOME OF THE EXPENDITURE WERE SU PPORTED BY SELF MADE VOUCHERS AND SOME ARE NOT SUPPORTED BY ANY BIL LS & VOUCHERS, THEREFORE, DISALLOWED 30% OF SUCH EXPENDITURE AND M ADE ADDITION OF RS.7,99,216/-. IT WAS THE CONTENTION OF THE ASSESS EE THAT IT HAS SUBMITTED BILLS & VOUCHERS IN RESPECT OF FREIGHT CH ARGES. THE OTHER EXPENDITURE SUCH AS SALARY & BONUS, TRAVELLING, COO LIE AND LABOUR AND OTHER GENERAL ADMINISTRATION EXPENSES ARE SMALL IN NATURE AND ARE SUPPORTED BY SELF MADE VOUCHERS. THE CIT(A) RESTRI CTED THE ADDITIONS TO RS.1 LAKH BY HOLDING THAT THOUGH THIS EXPENDITURE A RE SUPPORTED BY SELF MADE VOUCHERS, THE RELEVANCE OF SUCH EXPENDITURE CA NNOT BE RULED OUT IN THE BUSINESS OF THE ASSESEE. THE FACT REMAINS S AME EVEN BEFORE US. ITA NO.52/VIZAG/2013 SRI VENKATESWARA STEEL ENTERPRISES, VIJAYAWADA 14 THE REVENUE HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO SHOW THAT THE FINDINGS OF THE FACTS RECORDED BY THE CIT(A) IS INC ORRECT. THEREFORE, WE DO NOT SEE ANY REASONS TO INTERFERE WITH THE ORDER PASSED BY THE CIT(A). HENCE, WE INCLINED TO UPHOLD THE ORDER OF THE CIT(A ) AND REJECT THE GROUND RAISED BY THE REVENUE. 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 18 TH MAR16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 18.03.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ITO WARD-1(2), VIJAYAWADA 2. / THE RESPONDENT M/S. SRI VENKATESWARA STEEL ENT ERPRISES, PLOT NO.26, IRON COMPLEX, BHAVANIPURAM, VIJAYAWADA. 3. + / THE CIT, VIJAYWADA 4. + ( ) / THE CIT (A), VIJAYAWADA 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM