Solanki Marbles (P) Ltd., RAJSAMAND V. DCIT, UDAIPUR

ITA 70/JODH/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7961 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-11-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 07-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Assessee Lawyers: SHYAM SINGHVI
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 70/JU/2011 ASSESSMENT YEAR: 2006-07 SOLANKI MARBLES [P] LTD VS. DY. C.I.T N.H. 8, BADARDA CENTRAL CIRCLE - 2 RAJSAMAND UDAIPUR PAN NO. AACS 1833 Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SHYAM SINGHVI DEPARTMENT BY : SHRI G.R. KOKANI DATE OF HEARING : 16.11.2012 DATE OF PRONOUNCEMENT : 14.12.2012 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 200 6- 07 IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), JAIPUR DATED 16.12.2010. 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF MARB LE. A SURVEY U/S 133A OF THE INCOME-TAX ACT, 1961 [HEREIN AFTER REFERRED TO AS 'THE ACT', FOR SHORT] WAS CONDUCTED IN THE BUSINESS PREMISES. STOCK OF MARBLE SLABS, MARBLE T ILES AND MARBLE BLOCKS WAS INVENTORISED AFTER PHYSICAL VERIF ICATION ON THE DATE OF SURVEY I.E. 23.1.2006. A DIFFERENCE OF RS. 27,24,253/- WAS NOTICED IN THE STOCK. AS PER BOOKS , THE STOCK WAS RS. 43,71,325/- AND AS PER INVENTORY, IT WAS AT RS. 70,95,578/-. THE ASSESSEE ATTRIBUTED THIS DIFF ERENCE TO INCORRECT CALCULATION OF PHYSICAL STOCK, IN AS MUCH AS, THE STOCK OF MARBLE SLABS WAS ACTUALLY STATED TO BE 25166.4 CFT AS AGAINST 30044 CFT AND THAT OF MARBLE TILES IT WAS STATED TO BE 46644.67 CFT AS AGAINST 3694.46 CFT, TAKEN BY SURVEY TEAM. IT WAS EXPLAINED THAT 66 BLO CKS OF SLAB OUT OF 251 BLOCKS WERE NOT MARKETABLE AS THEIR HEIGHT WAS BELOW 2.75 FT AND AS SUCH, NOT SAWABLE. THE AD OPTION OF RATES OF STOCK TAKEN AT RS. 150 PER CFT FOR SLAB S AND RS. 140 PER CFT OF TILES, WERE STATED TO BE AS PER SALE S RATE, WHEREAS THE ASSESSEE HAS BEEN VALUING ITS STOCK REG ULARLY 3 ON THE BASIS OF COST OR NET REALIZABLE VALUE WHICHE VER IS LESS. IT WAS SATED THAT AVERAGE SALE VALUE OF MARB LE SLABS FROM 1.4.2005 UPTO 23.1.2006 [DATE OF SURVEY] CAME TO RS. 139.64/CFT AND AFTER DEDUCTING GROSS PROFIT @ 19.41 % [BEING AVERAGE RATE OF LAST THREE YEARS] THE COST P RICE OF MARBLE SLABS COMES TO RS. 112.52 PER CFT. IN THE S AME MANNER, IT CAME TO RS. 82.60/CFT IN CASE OF TILES. AFTER APPLYING THIS RATE OF COST PRICE OF RS. 112.52 AND RS. 82.60/- PER CFT TO CORRECT PHYSICAL STOCK OF MARBLE SLABS AND TILES, THE VALUE OF PHYSICAL STOCK OF MARBLE SL ABS AND TILES FOUND COME TO RS. 3215374/- [RS. 112.52 X 25166.4CFT FOR SLABS COME TO RS. 28,31,724/- AND RS . 82.60/- X 4644.67 CFT FOR TILES COMES TO RS. 383650 /-] THE VALUE OF 185 MARBLE BLOCKS [AFTER DEDUCTING 66 BLOC KS OF NO VALUE @ 8254/- AS TAKEN BY SURVEY TEAM COME TO R S. 1526990/-. THUS, THE AGGREGATE VALUE OF CORRECTED PHYSICAL STOCK OF MARBLE SLABS, TILES AND BLOCKS CO MES TO RS. 4742364/- VALUE OF CORRECTED PHYSICAL STOCK OF MARBLE SLAB, STILES AND BLOCKS COMES TO RS. 47,42,364/- [R S. 28,31,724 + 3,83,650 + 15,26,990] AND A AGAINST THI S STOCK 4 AS PER BOOKS WAS RS. 4371325/- LEAVING EXCESS STOCK OF RS. 371039 WHICH CAN BE TREATED AS MINOR DIFFERENCE LOO KING TO THE VOLUME OF BUSINESS AS SUBMITTED. 3. THE A.O. PARTLY ACCEPTED THE ABOVE CONTENTION OF THE ASSESSEE. HE HAS NOT ACCEPTED THE CONTENTION OF TH E ASSESSEE MADE REGARDING 66 MARBLE BLOCKS. FINALLY HE HAS ARRIVED AT THE FIRE OF EXCESS STOCK AT RS. 9,15,803 /- [52887128 437325], WHICH HE HAS CONSIDERED AS NOT SATISFACTORILY EXPLAINED. 4. THE LD. CIT(A) HAS GIVEN CREDIT OF 66 BLOCKS BY TREATING AS LUFFARS, AND HE HAS GIVEN 50% RELIEF IN THEIR VALUE BY DELETING A SUM OF RS. 2,72,382/- AND HAS SUSTAINED BALANCE AMOUNT OF RS. 6,43,421/- [RS. 9,15,803/- RS. 2,72,382/-]. THE ASSESSEE IS FURTHE R AGGRIEVED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE RELEVANT MATERIAL ON RECORD. BOTH 5 THE PARTIES HAVE TAKEN THEIR EARLIER STAND BEFORE U S. IT WAS FOUND FOR A FACT THAT THE INVENTORY WAS TAKEN I N THE PRESENCE OF SHRI DALCHAND PAMEECHA, A WASH-BOY-CUM- WATCHMAN. CERTAIN ARITHMETICAL MISTAKES WERE EVEN NOTICED BY THE A.O. IN THE INVENTORY TAKEN BY SURVE Y TEAM. IT IS ALSO NOTICED THAT THE ASSESSEE PURCHASES MARB LE BLOCKS AND CONVERTS THEM INTO SLABS TILES AND SELLS THEM. CERTAIN BIG PIECES OF MARBLE ARE GENERATED WHILE SA WING HE BLOCKS ON THE DRESSING MACHINE. THESE ARE CALLE D A LUFFARS/CRACKS/FICKA PIECES IN THIS LINE OF TRADE. THE NORMAL HEIGHT OF SUCH LUFFARS IS LESS THAN 2.5 WHI CH CANNOT BE SAWN AT GANG-SAW. THE LD. CIT(A) HAS ALS O ADMITTED THIS FACTS. BUT HE HAS VALUED THESE LUFFA RS AT HALF THE RATES OF BLOCKS. ACCORDINGLY TO THE LD. CO UNSEL FOR THE ASSESSEE, THIS IS NOT A CORRECT FINDING IN AS M UCH AS THE MAIN BUSINESS OF THE ASSESSEE IS SAWING AND MAK ING OF BLOCKS AND TILES. WE HAVE ALSO CONSIDERED THIS ASP ECT. BUT IN OUR VIEW, THE ESTIMATION AND PIECE OF THESE LUFFARS BY THE LD. CIT(A) IS SIMPLY ADHOC. SINCE THE ASSES SEE IS ALSO TRADING IN BLOCKS/TILES, IT CANNOT BE ACCEPTED THAT 6 THESE LUFFARS WILL NOT FETCH ANY PRICE AS THESE ARE NOT MARKETABLE. THEREFORE, WE CANNOT GIVE ANY VALUE TO THESE LUFFARS, SO FAR AS THE VALUATION OF STOCK IS CONCER NED. IN CASE THESE LUFFARS ARE FOUND TO FETCH ANY PRICE, LA TER ON, THAT INCOME CAN BE CONSIDERED IN THAT PARTICULAR YE AR. BUT THESE LUFFARS DO NOT HAVE ANY COST, IT IS DIFFICULT TO VALUE THEM IN STOCK. THEREFORE, WE ORDER TO DELETE THE E NTIRE VALUE OF 66 LUFFARS/BLOCKS AND GIVE FURTHER RELIEF TO THE ASSESSEE. AS THE INVENTORY WAS NOT PREPARED IN THE PRESENCE OF ANY AUTHORIZED PERSON OR THE DIRECTORS OF THE COMPANY, THERE ARE CHANCES OF INCORRECT CALCULATION OF STOCK ON PHYSICAL VERIFICATION. SO, THERE CAN BE SO ME DISCREPANCIES. THE TRADING RESULT OF THE ASSESSEE D URING THE YEAR IS BETTER. THEREFORE, WE ORDER TO DELETE THE ENTIRE ADDITION SO MADE AND ALLOW GROUND NO. 1 AND 2 OF THIS APPEAL. 7 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 14 TH DECEMBER, 2012. SD/- SD/- (R.C. SHARMA) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 14 TH DECEMBER, 2012 VL/- COPY TO: THE APPELLANT THE RESPONDENT THE CIT BY ORDER THE CIT(A) THE DR ASSISTANT REGISTRAR ITAT, JODHPUR