ACIT, Central Circle - XXV, Kolkata, Kolkata V. Sri Baidyanath Glass Works (P) Ltd., Kolkata

ITA 730/KOL/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6525 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2014
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 12-05-2011
• Court: TRIBUNAL
• Department Lawyers: APURBA KR DASJCIT
• Keywords: Unexplained expenditure; Additional evidence
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , KOLKATA [BEFORE HONBLE SRI SHAMIM YAHYA, AM & HONBLE SR I GEORGE MATHAN, JM] ITA NO.730/KOL/2011 ASSESSMENT YEAR : 2004-05 ( APPELLANT ) (RESPONDENT) A.C.I.T., CENTRAL CIRCLE-XXV, -VS- SRI BAIDYANATH GLASS WORKS(P)LTD. KOLKATA KOLKATA (PAN:AACES 3811 N) FOR THE APPELLANT SHRI APURBA KR.DAS,JCIT SR.DR FOR THE RESPONDENT SHRI RAJEEVA KUMAR, ADVOCATE DATE OF HEARING : 03.06.2014 DATE OF PRONOUNCEMENT : 03. 06.2014. ORDER PER SHRI SHAMIM YAHYA, AM THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T ORDER OF LD. C.I.T.(A)- CENTRAL-I, KOLKATA DATED 25.02.2011 FOR ASSESSMENT YEAR 2004-05. 2. THE GROUNDS OF APPEAL RAISED BY REVENUE READ AS UNDER :- 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.9,57,972/- MAD E ON ACCOUNT OF UNDERVALUATION OF THE PRODUCTION VIS--VIS RAW MATERIALS CONSUMED COMPARE D TO EARLIER YEAR WITHOUT PROPER APPRECIATION OF THE FACT THAT ASSESSEE ITSELF IN A LETTER DT.22/9/2010 SUBMITTED THAT BOOKS OF ACCOUNTS AND RELEVANT DOCUMENTS CAN NOT BE PRODU CED AND CONCLUSIONS MAY BE ARRIVED AT BY COMPARISON WITH EARLIER AND AND LATER YEARS BOOK RESULTS AND ASSESSMENTS MADE. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN RESTRICTING THE ADDITION OF RS.45,19,921/- MADE ON ACCOUNT OF UNDERSTATEMENT OF MANUFACTURING EXPENSES VIS--VIS RAW MATERIALS CONS UMED COMPARED TO LAST YEAR TO RS.5,00,000/- ONLY WITHOUT PROPER APPRECIATION OF T HE FACT THAT ASSESSEE ITSELF IN A LETTER DT 22/9/2010 SUBMITTED THAT BOOKS OF ACCOUNTS AND R ELEVANT DOCUMENTS CAN NOT BE PRODUCED AND CONCLUSIONS MAY BE ARRIVED AT BY COMPA RISON WITH EARLIER AND LATER YEARS BOOK RESULTS AND ASSESSMENTS MADE. 3. THAT THE DEPARTMENT CRAVES LEAVE TO ADD, MODIFY OR ALTER ANY OF THE GROUND(S) OF APPEAL AND/OR ADDUCE ADDITIONAL EVIDENCE AT THE TIM E OF HEARING OF THE CASE. ITA.NO.730/KOL/2011 SRI BAIDYANATH GLASS WORKS (P)LTD. A.YR.2004-05 2 3. IN THIS CASE THE ASSESSMENT WAS FRAMED U/S 144 OF THE I.T.ACT. IN SPITE OF SEVERAL NOTICES THE ASSESSEE HAS FAILED TO COOPERAT E BEFORE THE AO. THE ASSESSEE DID NOT PROVIDE DETAILS AS REQUIRED BY THE AO DESPITE S EVERAL OPPORTUNITIES. IN THE ASSESSMENT BY REFERRING TO THE FIGURES OF PRODUCTIO N AND CONSUMPTION OF RAW MATERIALS THE AO CAME TO THE CONCLUSION THAT THE ASSESSEE HAD UNDER VALUED ITS PRODUCTION BY RS.9,57,672/-. FURTHER THE AO COMPUTED THE UNDISCLO SED AND UNEXPLAINED EXPENDITURE AT RS.45,19,921/- IN THE MANUFACTURING OF OTHER EXP ENSES. IN THE SELLING AND OTHER EXPENSES HE ADDED RS.1,26,346/-. AGAINST THIS THE A SSESSEE CAME IN APPEAL BEFORE LD. CIT(A). UPON ASSESSEES APPEAL THE LD. CIT(A) REFER RED TO THE RATIOS WHICH APPEARED OUT OF ORDER OF ASSESSEES PRECEDING YEARS THOUGH N O BOOKS OF ACCOUNT WERE PRODUCED BEFORE AO OR LD. CIT(A). THE LD.CIT(A) OBSERVED THA T THE BOOKS OF ACCOUNT OF ASSESEE WAS AUDITED AND NO DISCREPANCY HAD BEEN POINTED OUT BY THE AUDITORS. HENCE THE LD. CIT(A) DELETED THE ADDITION OF RS.9,57,672/- ON ACC OUNT OF UNDER VALUATION OF PRODUCTION. APPLYING SIMILAR ANALOGY THE LD. CIT(A) ALSO DELETED ADDITION OF RS.45,19,921/- AND RESTRICTED THE SAME TO RS.5,00,0 00/-. AGAINST THIS THE REVENUE CAME IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE LD.COUNSEL AND PERUSED TH E RECORDS. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE BOOKS OF ACCOUNT AR E NOT AVAILABLE. HE ALSO CONFIRMED THAT THE SAME WAS NOT PRODUCED BEFORE THE AUTHORITI ES BELOW. HE SUBMITTED THAT THE COMPANY WAS A SICK COMPANY. THE FACTORY WAS CLOSED DOWN. THE MANAGEMENT HAS TO DUMP THE BOOKS OF ACCOUNTS FOR THE LAST MANY YEARS. HE FURTHER CLAIMED THAT IT HAS BEEN FOUND THAT MOST OF THE BOOKS OF ACCOUNTS WERE DESTROYED BY INSECTS AND THE SAME ARE NOT IN A CONDITION TO PRODUCE BEFORE THE DEPART MENT. HOWEVER, THE LD.COUNSEL CLAIMED THAT THE LD. CIT(A) HAS PASSED A REASONABLE ORDER AND THE SAME SHOULD BE SUSTAINED. 5. WE HAVE CAREFULLY CONSIDERED THE ISSUES. WE FIND THAT ADMITTEDLY THE BOOKS OF ACCOUNTS WERE LOST IN THIS CASE. THE ASSESSEE HAS F AILED TO PRODUCE ANY EXPLANATION BEFORE THE AO. THIS COMPELLED THE AO TO MAKE ASSESS MENT U/S 144 OF THE I.T.ACT. THE LD. CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE BY RE FERRING TO THE VARIOUS RATIOS ITA.NO.730/KOL/2011 SRI BAIDYANATH GLASS WORKS (P)LTD. A.YR.2004-05 3 EMERGING OUT OF THE PRECEDING YEARS ACCOUNTS OF THE ASSESSEE. WE FIND THAT THIS LINE OF ACTION BY THE LD. CIT(A) HAS BEEN MADE WITHOUT CALL ING UPON THE AO TO OFFER HIS COMMENTS IN THIS REGARD. IN OUR CONSIDERED OPINION, IN SUCH CIRCUMSTANCES THE ISSUES IN THIS CASE NEED TO BE REMITTED TO THE FILE OF AO. THE AO IS DIRECTED TO CONSIDER THE ISSUE AFRESH KEEPING IN LINE WITH THE SUBMISSIONS B EFORE THE LD. CIT(A) AND THE REASONING ADOPTED BY THE LD. CIT(A). BOTH THE COUNS EL FAIRLY AGREED TO THE PROPOSITION. THE MATTER STANDS REMITTED TO THE FILE OF AO 6. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 03.06.2014. SD/- SD/- [ GEORGE MATHAN ] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 03.06.2014. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1. SRI BAIDYANATH GLASS WORKS (P)LTD., 1/1, MERIDITH S TREET, 4 TH FLOOR, KOLKATA-72. 2 A.C.I.T., CENTRAL CIRCLE-XXV, KOLKATA 3 . CIT(A)-CENTRAL-I, KOLKATA 4. CIT - KOLKATA. 5. CIT-DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES