ACIT - 1(1)(1), MUMBAI V. BHARAT CONTAINERS (NAGPUR) PVT. LTD., MUMBAI

ITA 6192/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7823 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2012-2013
• Appeal Filed On: 20-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: K GOPAL WITH MS NEHA PARANJAPE
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH H, MU MBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 6192//MUM/2016 (ASSESSMENT YEAR-2012-13) ACIT 1(1)(1), 579, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-20. VS. M/S BHARAT CONTAINERS (NAGPUR) PVT. LTD. 1 ST , FLOOR, CECIL COURT, MAHAKAVI BHUSHAN MARG, MUMBAI-400001. PAN: AAACB0489M (REVENUE /APPELLANT) (RESPONDENT/ ASSESSEE) REVENUE BY : SHRI M.C. OMI NINGSHEN (DR) ASSESSEE BY : SHRI K. GOPAL WITH MS. NEHA PARANJAPE (AR) DATE OF HEARING : 04.07.2018 DATE OF PRONOUNCEMENT : 10.08.2018 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY REVENUE UNDER SECTION 253 OF THE INC OME-TAX ACT (THE ACT) IS DIRECTED AGAINST THE ORDER LD. CIT(A)-2, M UMBAI DATED 01.07.2016 FOR ASSESSMENT YEAR (AY) 2012-13, THE RE VENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.CIT(A) IS JUSTIFIED IN DELETING THE AMOUNT OF RS. 97,22,87 5/- AS UNACCOUNTED SCRAP SALE OF ALUMINUM, IN VIEW OF THE FACT THAT, THE ASSESSEE DI D NOT SUBMIT THE RECONCILIATION OF THE ALUMINUM CONSUMPTION BY WEIGHT ON MONTHLY BA SIS AND THE SCRAP GENERATED EVEN AFTER GRANTING SUFFICIENT NUMBER OF OPPORTUNIT IES. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.CIT(A) IS JUSTIFIED IN DELETING THE AMOUNT OF RS. 97,22,87 5/- AS UNACCOUNTED SCRAP SALE OF ITA NO. 6192 MUM 2016-MS BHARAT CONTAIN ERS (NAGPUR) PVT. LTD. 2 ALUMINUM, IN VIEW OF THE FACT THAT, THERE WAS VARIA TION IN % OF SCRAP GENERATED AS PER DETAILS FILED BY THE ASSESSEE @ 15% AND THE AUD IT REPORT @ 22%; WHICH WAS NOT DISCUSSED BY THE LD.CIT(A). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPA NY IS IN THE BUSINESS OF MANUFACTURING OF CONTAINERS, COLLAPSIBLE TUBES & BO TTLES, FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2012-13 ON 19.07.2012 DE CLARING INCOME AT RS. 2,95,813/-. THE RETURN OF INCOME WAS SELECTED F OR SCRUTINY; ACCORDINGLY, ASSESSMENT ORDER UNDER SECTION 143(3) DATED 09.02.2015 WAS PASSED. THE ASSESSING OFFICER WHILE PASSING THE ASS ESSMENT ORDER MADE THE ADDITION OF RS. 97,22,875/- BY TREATING THE SAL E OF ALUMINUM SCRAP AS UNACCOUNTED SALE. ON APPEAL BEFORE THE LD. CIT(A), THE ENTIRE ADDITION/ DISALLOWANCE WAS DELETED. THEREFORE, AGGRIEVED BY T HE ORDER OF LD. CIT(A), THE REVENUE HAS FILED THE PRESENT APPEAL BE FORE US. 3. WE HAVE HEARD THE SUBMISSION OF LD. DEPARTMENTAL RE PRESENTATIVE (DR) FOR THE REVENUE AND LD. AUTHORIZED REPRESENTATIVE ( AR) OF THE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE L D. DR FOR THE REVENUE SUPPORTED THE ORDER OF ASSESSING OFFICER. THE LD. D R FURTHER SUBMITS THAT DURING THE ASSESSMENT, THE ASSESSEE WAS ASKED TO RE CONCILE THE ALUMINUM CONSUMPTION MONTH TO MONTH. THE ASSESSEE FAILED TO FURNISH THE REQUISITE DETAILS. THE ASSESSING OFFICER ON THE BASIS OF ANNE XURE-5 OF FORM NO. 3CD (AUDIT REPORT) NOTED THAT THE TOTAL CONSUMPTION OF ALUMINUM IS 1023467 KG. AND THE SCRAP GENERATED IS 224880 KG. W HICH ALMOST 22%. THE ASSESSEE HAS SHOWN THE SCRAP OF 239331 KG. WORT H RS. 1,66,01,335/-, ITA NO. 6192 MUM 2016-MS BHARAT CONTAIN ERS (NAGPUR) PVT. LTD. 3 THUS, THERE IS A DIFFERENCE OF 15% AND 22%. THE ASS ESSING OFFICER ON THE BASIS OF RATE OF SCRAP AVAILABLE IN THE MARKET MADE THE DISALLOWANCE OF DIFFERENCE OF TWO FIGURE AND ADDED RS. 97,22,875/-. THE LD. CIT(A) DELETED THE ENTIRE ADDITION WITHOUT ANY SPEAKING OR DER. 4. ON THE OTHER HAND, THE AR OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). THE LD. AR OF THE ASSESSEE SUBMITS THAT QUA NTITY OF SCRAP IS NOT DISPUTED. THE ASSESSING OFFICER MADE THE ARBITRARY ADDITION ON THE BASIS OF SURMISE AND CONJECTURES. THE ASSESSING OFFICER M ADE THE ADDITION ON THE BASIS OF RATE OF FINISHED ALUMINUM UTENSILS IN THE MARKET. THE SCRAP GENERATED IN THE PROCESS OF MANUFACTURING PRODUCT B Y ASSESSEE IS NOT AN ITEM SALABLE AS SUCH, AS FINISHED PRODUCT ATE SOLD IN THE MARKET. HOWEVER, THE SCRAPE CAN BE SOLD ONLY AS PER THE DEMAND IN TH E MARKET. THE ASSESSEE SOLD ALUMINUM SCRAP OF 239311 KG. FOR AGGREGATE AMO UNT OF RS. 1,66,01,335/- FROM TIME TO TIME. HOWEVER, THE ASSES SING OFFICER ASSUMED SALE AT RS. 2,63,24,210/- BY TAKING INTO SELL IN RA TE OF 110 PER KG. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT DETAILS OF SCRAP SOLD DURING THE YEAR ARE AVAILABLE AT PAGE NO. 43 & 44 OF THE PAPER BOOK. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE NO TED THAT THE ASSESSING OFFICER ESTIMATED THE DISALLOWANCE ON HYPOTHECATION BASED AS PER THE RATE AVAILABLE ON WEBSITE ( HTTP://SCRAPNEWS.RECYCLEINME.COM/NEWSDETAILS- . ITA NO. 6192 MUM 2016-MS BHARAT CONTAIN ERS (NAGPUR) PVT. LTD. 4 THE ASSESSING OFFICER HAS ADOPTED THE RATE OF ALUMI NUM UTENSILS SCRAP AND MADE THE ADDITION BY APPLYING RATE OF RS. 110 P ER KG. ON TOTAL SCRAP OF 239311 KG. THE ASSESSEE HAS SHOWN THE SCRAP OF R S. 1,66,01,335/- THEREBY THE ASSESSING OFFICER MADE THE ADDITION OF RS. 97,22,875/-. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING IN LIGH TER WEIGHT COLORED CONTAINER AND THE ASSESSING OFFICER HAVE TAKEN HEAV IER GAUGE FOR COMPARING WASTAGE WHILE MAKING ASSESSMENT. THE COM PARISON MADE BY ASSESSING OFFICER ON THE BASIS OF DETAILS AVAILABLE ON WEBSITE IS UNJUSTIFIED. THE SCRAP VALUE OF COLLAPSIBLE TUBES A ND BOTTLES ARE A LIGHTER METAL. THEREFORE, THE ADDITION MADE BY ASSESSING OF FICER IS NOT JUSTIFIABLE. WE HAVE NOTED THAT THE ASSESSING OFFIC ER HAS NOT DISPUTED THE QUANTITY OF THE ALUMINUM SCRAP. THE ASSESSING OFFIC ER APPLIED THE RATE WITHOUT MAKING PROPER INVESTIGATION OR BRINGING COM PARABLE RATE OF SCRAP GENERATED IN THE BUSINESS OF ASSESSEE. WE HAVE FURT HER NOTED THAT BEFORE MAKING ADDITION, THE ASSESSING OFFICER HAS NOT GIVE N ANY OPPORTUNITY TO THE ASSESSEE TO REBUT THE VALUATION/RATE OF SCRAP A DOPTED BY ASSESSING OFFICER. IN OUR VIEW, THE LD. CIT(A) HAS DELETED TH E ADDITION BY APPRECIATING THE FACTS ON RECORD. NO CONTRARY FACT OR LAW IS BROUGHT TO OUR NOTICE BY LD. DR TO TAKE A CONTRARY VIEW. IN THE RE SULT, THE GROUND OF APPEAL RAISED BY REVENUE IS DISMISSED. ITA NO. 6192 MUM 2016-MS BHARAT CONTAIN ERS (NAGPUR) PVT. LTD. 5 6. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH AUGUST, 2018. SD/- SD/- (G.S. PANNU) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 10/08/2018 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/