Pooja Paper Craft, Ahmedabad V. The Dy.CIT.,Circle-10, Ahmedabad

ITA 683/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1007 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 21-07-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 03-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI S.K. YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NO: 683/AHD/2011 (ASSESSMENT YEAR: 2007-08) M/S. POOJA PAPER CRAFT 15, SWASTIK AVENUE, SWASTIK SOCIETY, NAVRANGPURA, AHMEDABAD V/S DY. COMMISSIONER OF INCOME TAX CIRCLE-10, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AADFP5875B APPELLANT BY : SHRI S. N. SOPARKAR, AR RESPONDENT BY : SHRI JAMES KURIAN, SR. D.R. ( )/ ORDER DATE OF HEARING : 21-07-2016 DATE OF PRONOUNCEMENT : 22 -07-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-XVI, AHMEDABAD DATED 10.01.2011 PERTAINING T O A.Y. 2007-08. 2. THE ASSESSEE HAS RAISED TWO SUBSTANTIVE GROUNDS OF APPEAL. ITA NO. 683/ AHD/2011 . A.Y. 2007-0 8 2 3. GROUND NO. 1 RELATES TO THE DISALLOWANCE OF PROCESS ING CHARGES OF RS. 21,27,405/- OUT OF TOTAL PROCESSING CHARGES OF RS. 27,32,355/-. 4. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESSE E POINTED OUT THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THE TRIBUNAL IN A SSESSEES OWN CASE IN A.Y. 2004-05 VIDE AN ITA NO. 2144/AHD/2008. IT I S THE SAY OF THE LD. COUNSEL THAT THE TRIBUNAL HAS DELETED THE IMPUGNED DISALLOWANCES MADE ON THIS ACCOUNT. 5. PER CONTRA, THE LD. D.R. COULD NOT BRING ANY DISTIN GUISHING DECISION IN FAVOUR OF THE REVENUE. 6. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FAC TS IN ISSUES. WE HAVE ALSO CAREFULLY PERUSED THE ORDER OF THE CO-ORD INATE BENCH AND WE FIND THAT THE CO-ORDINATE BENCH HAD THE OCCASION TO CONSIDER, INTERALIA, THE FOLLOWING GROUND FOR ADJUDICATION. 1. THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS BY DEL ETING THE ADDITION ON ACCOUNT OF DISALLOWANCE OF PROCESSING CHARGES OF RS . 5,73,477/- OUT OF PROCESSING CHARGES CLAIMED RS. 11,73,477/- PAID TO SHRI SHIVCHARAN SHARMA. 7. AND HELD AS UNDER:- 3.2 AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATER IAL ON RECORD, WE FIND THAT ASSESSING OFFICER HAS HELD THAT TOTAL PAYMENT OF RS .6 LACS HAS BEEN MADE TO SHRI SHIVCHARAN SHARMA WHILE ASSESSEE HAS CLAIMED THAT A BOVE PAYMENT WAS ONLY FOR BOX PACKING, LOADING AND UNLOADING ONLY AND REST OF THE PAYMENT WAS FOR PREPARATION OF GUM. ON PERUSAL OF THE STATEMENT OF SHRI SHIVCHARAN SHARMA, IT IS EVIDENT THAT HE HAS BEEN PAID AMOUNT OF RS.6.5 LACS FOR WORK OF BOX PACKING, LOADING AND UNLOADING I.E. THREE ACTIVITIES. HE HAS NOT MENTIONED THAT THIS PAYMENT INCLUDES PAYMENT TOWARDS PREPARATION OF GUM EVEN THE STATEMENT OF SHRI ITA NO. 683/ AHD/2011 . A.Y. 2007-0 8 3 NITINBHAI, PARTNER RELIED UPON BY ASSESSING OFFICER REPRODUCED ON PAGE-7 OF ASSESSMENT ORDER REVEALS THAT HE HAS CLAIMED THAT T HEY HAVE DEBITED IN THE BOOKS WHATEVER WAS PAID TO SHRI SHIVCHARAN SHARMA. SO, TH E ABOVE STATEMENTS MAKE IT EVIDENTLY CLEAR THAT PAYMENT FOR PREPARATION OF GUM WAS MADE IN ADDITION TO PAYMENT MADE FOR BOX PACKING, LOADING AND UNLOADING . THE STAND OF ASSESSEE IS SUPPORTED BY THE FACT THAT PROCESS OF PREPARATIO N OF GUM WAS A VITAL INGREDIENT IN THE MANUFACTURING OF PAPER TUBES AS VARIOUS PAPE RS ARE STUCK TOGETHER BY GUM OF SPECIFIC VISCOSITY TO FORM THE 16 LAYER THICK PA PER TUBE WHICH IS USED IN THE SPINDLES AND CONSISTENCY OF GUM IS ESSENT IAL REQUIREMENT IN KEEPING THE TUBE INTACT. ASSESSEE GAVE THE DETAILED PROCESS O F GUM MAKING AND BILLS FOR PURCHASE OF GUM. ASSESSEE'S PRODUCTS CANNOT BE MANUFACTURED WITHOUT PREPARATION OF GUM. ASSESSING OFFICER HAS BROUGHT NOTHING ON RECORD .TO SUGGEST THAT ANY OTHER- PERSON WAS PAI D FOR PREPARATION OF GUM SO AS TO NEGATE THE VERSION OF ASSESSEE TO ESTABLISH TH AT SHRI SHIVCHARAN SHARMA WAS NOT PAID FOR PREPARATION OF GUM. MOREO VER, ASSESSEE ALSO FILED AFFIDAVIT OF SHRI SHIVCHARAN SHARMA, WHEREIN IT HAS BEEN DEPOSED THAT TOTAL AMOUNT OF RS. 11,73,477/- WAS PAID TO HIM AND HE HAS FILED CO RRESPONDING RETURN OF INCOME ACCORDINGLY. THE CONTENTS OF AFFIDAVIT FILED ON B EHALF OF SHRI SHIVCHARAN SHARMA COULD NOT BE REJECTED WITHOUT CONFRONTING THE CONTE NTS OF DEPOSITION TO THE DEPONENT. MOREOVER, STAND OF ASSESSEE HAS B EEN THAT PAYMENTS WERE MADE BY CHEQUES AND TDS WAS DEDUCTED THEREON A ND PAYMENTS WERE MADE SUBSEQUENT TO RAISING OF BILLS BY SHRI SHIVCHARAN SHARMA. UNDER THESE FACTS AND CIRCUMSTANCES, ASSESSING OFFICER WAS NOT JUST IFIED IN NEGATING THE CLAIM OF ASSESSEE. ONCE A CERTAIN CLAIM HAS BEEN ACCEPTED ADVERSE TO THE INTEREST OF ASSESSEE, SAME CAN BE RETRACTED BY WAY OF DEPOSITIO N IN AFFIDAVIT AND ASSESSING OFFICER OUGHT TO ALIA SUBMITTED THAT CIT(A) WAS NOT JUSTIFIED IN DELETING ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF PROCESSING CHARG ES OF RS. 5,73,477/- PAID TO SHRI SHIVCHARAN SHARMA. LEARNED DEPARTMENTAL REPRES ENTATIVE SUBMITTED THAT SHRI SHIVCHARAN SHARMA HAS CATEGORICALLY STATED TO HAVE RECEIVED RS. 6 TO 6.5 LACS FROM ASSESSEE. SO, ORDER OF LD. CIT(A) SHOULD BE SET ASIDE AND THAT OF ITA NO. 683/ AHD/2011 . A.Y. 2007-0 8 4 ASSESSING OFFICER BE RESTORED. ON OTHER HAND, LEARN ED AUTHORIZED REPRESENTATIVE SUPPORTED THE ORDER OF CIT(A) ON ISSUE. 8. RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO-ORDINATE BENCH, WE SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE DISALLOWANCE OF RS. 21,27,405/-. GROUND NO. 1 IS AC CORDINGLY ALLOWED. 9. GROUND NO. 2 RELATES TO THE ADDITION ON ACC OUNT OF UNACCOUNTED STOCK AT RS. 18,00,164/-. 10. THE FACTS RELATING TO THIS GROUND SHOW THAT A SURVE Y ACTION U/S. 133A OF THE ACT WAS CARRIED OUT AT THE BUSINESS PRE MISES OF THE ASSESSEE ON 11.10.2006. 11. DURING THE COURSE OF SURVEY, STOCK WAS PHYSICALLY V ERIFIED AND THE SAME WAS COMPARED WITH THE EXCISE RECORDS. THE SURVEY PARTY FOUND THE DISCREPANCY TO THE TUNE OF RS. 18,00,164/ -. 12. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND STRONGLY CONTENDED THAT THE IMPUGNED DIFFERENCE IN PHYSICAL STOCK AND THE BOOK STOCK IS ONLY TO THE TUNE OF RS. 1,13,395/-. NECESS ARY DETAILS WERE FILED BUT COULD NOT FIND ANY FAVOUR FROM THE FIRST APPELL ATE AUTHORITY. THE ADDITIONS MADE BY THE A.O. WERE CONFIRMED. 13. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE, ONCE A GAIN, FILED THE DETAILS OF STOCK AS ON THE DATE OF SURVEY STATING THAT THE DIFFERENCE IS ONLY OF RS. 1,13,395/-. IT IS THE SAY OF THE LD. CO UNSEL THAT THE SAME STATEMENT WAS ALSO BROUGHT TO THE NOTICE OF THE A.O . VIDE REPLY DATED 17.12.2009 DURING THE COURSE OF THE ASSESSMENT PROC EEDINGS ITSELF AND THE SAME IS EXHIBITED AT PAGE 4 OF THE PAPER BOOK. THE LD. COUNSEL ITA NO. 683/ AHD/2011 . A.Y. 2007-0 8 5 CONCLUDED BY SAYING THAT THE ACTUAL DIFFERENCE AS E XPLAINED CAN ONLY BE ADDED. 14. PER CONTRA, THE LD. D.R. COULD NOT CONTROVERT THE F ACTS POINTED OUT BY THE LD. COUNSEL. 15. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORI TIES BELOW AND WITH THE ASSISTANCE OF THE LD. COUNSEL, WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE RELATED DOCUMENTARY EVIDENCES BROUGHT ON RECORD AND REFERRED TO DURING THE COURSE OF THE PROCEEDING S. WE FIND THAT THE DETAILS OF STOCK POSITION WAS EXPLAINED BY THE ASSE SSEE AND WHICH IS AS UNDER:- SR. NO. ITEM PHYSICAL BOOK STOCK CORRECT BOOK DIFFERENCE RATE AMOUNT STOCK AS MENTIONED STOCK AS BY DEPT. PER EXCISE 1 PAPER TUBE (75 & 125) 209576 171340 202078 7498 2 PAPER TUBE 110 1872 10114 870 1002 3 PAPER TUBE 125X149.9 0 0 781 -781 4 PAPER TUBE 75X89X150 0 0 1675 -1675 211448 181454 205404 6044 13 78572 78572 5 KRAFT PAPER 130075 112894 132202 -2127 21.64 -46 028.3 46028.3 6 PARCHMENT PAPER 13601 10198 14030 -429 198 -84942 84942 7 DEXTRIN 4800 4350 4650 150 28.42 4263 4263 ITA NO. 683/ AHD/2011 . A.Y. 2007-0 8 6 8 ADHESIVE 768 0 0 768 23.85 18316.8 18317 9 CORRUGATED BOX 7850 7285 7285 565 23 12995 12995 10 LDO 2000 2200 2600 -600 30 -18000 18000 -113395 263117.3 16. A PERUSAL OF THE AFORE-STATED STATEMENT CLEARLY SHO WS THAT THE DIFFERENCE IS OF ONLY RS. 1,13,395/-. WE ALSO FIND THAT THIS STATEMENT WAS BROUGHT TO THE NOTICE OF THE A.O. DURING THE CO URSE OF THE ASSESSMENT PROCEEDINGS ITSELF ALONG WITH THE RELATE D BILLS. 17. IN OUR CONSIDERED OPINION, IF AT ALL, THE ADDITION HAS TO BE MADE FOR UNACCOUNTED STOCK, IT SHOULD BE RS. 1,13,395/- ONLY. WE, ACCORDINGLY DIRECT THE A.O. TO RESTRICT THE ADDITIO N ON ACCOUNT OF ALLEGED UNACCOUNTED STOCK TO RS. 1,13,395/-. GROUND NO. 2 IS PARTLY ALLOWED. 18. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 22 - 07 - 2 016. SD/- SD/- (S. K. YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. ITA NO. 683/ AHD/2011 . A.Y. 2007-0 8 7 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD