DCIT, Kanpur V. M/s. Kapila Krishi Udyog Ltd., Kanpur

ITA 751/LKW/2010

• Counselvise Citation: 75123714 RSA 2010
• Duration Of Justice: 4 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-02-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 16-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARE BEING DISPOSED OF
• Keywords: Retraction; Documents seized
• Section: 143(3); 80IB

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.751/LKW/2010 ASSESSMENT YEAR:2005 - 06 DY.C.I.T. - 6, KANPUR. VS. M/S KAPILA KRISHI UDYOG LTD., 74/98, DHANKUTTI, KANPUR. PAN:AAACK5723D (APPELLANT) (RESPONDENT) ITA NO.746/LKW/2010 ASSESSMENT YEAR:2005 - 06 A.C.I.T. - 3, KANPUR. VS. M/S KAMDHENU CATTLE FEED, 91 - A, VIKAS NAGAR, KANPUR. PAN:AAGFK1405K (APPELLANT) (RESPONDENT) O R D E R PER A. K. GARODIA, A.M. BOTH THESE APPEALS ARE FILED BY THE REVENUE IN TWO INTER CONNECTED CASES FOR THE SAME ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2005 - 06 AND THESE APPEALS ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LEARNED CIT(A) - II, KANPUR BOTH DATED 01/10/2010. BOTH THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE. APPELLANT BY SHRI PUNEET KUMAR D. R. RESPONDENT BY NONE DATE OF HEARING 10/02/2015 DATE OF PRONOUNCEMENT 1 7 /03/2015 2 2. FIRST WE TAKE UP THE APPEAL OF THE REVENUE IN THE CASE OF KAPILA KRISHI UDYOG LTD. I.E. I.T.A. NO.751/LKW/2010. 3. GROUND NO. 1 IS AS UNDER: 1. THAT THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE EXCESS STOCK VALUATION OF RS.50,25,493/ - WITHOUT APPRECIATING THE FACTS OF THE CASE. 4. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. IT WAS NOTED BY THE BENCH THAT VARIOUS OPPORTUNITIES WERE PROVIDED TO THE REVENUE TO PRODUCE INVENTORIES OF STOCK PREPARED BY THE S URVEY TEAM DURING THE COURSE OF SURVEY AND THE STOCK SHOWN BY THE ASSESSEE AS PER ITS BOOKS OF ACCOUNT ON THAT DATE . SUCH DIRECTION WAS GIVEN BY THE BENCH FOR THE FIRST TIME ON 26/09/2014 AND THEREAFTER , ON SEVERAL OCCASIONS BUT SUCH EVIDENCES WERE NOT PR ODUCED BY THE DEPARTMENT AND THEREAFTER AGAIN ON 25/11/2014, SIMILAR DIRECTIONS WERE GIVEN TO THE REVENUE WITH LAST OPPORTUNITY AND THE DATE WAS FIXED FOR COMPLIANCE ON 16/12/2014. THE REQUIRED EVIDENCE WAS NOT PRODUCED ON 16/12/2014. AGAIN OPPORTUNITY W AS GIVEN TO THE REVENUE FOR PRODUCING THOSE EVIDENCES AND THE DATE WAS FIXED ON 15/01/2015. ON THIS DATE ALSO , SUCH EVIDENCES WERE NOT PRODUCED AND ONE FINAL LAST OPPORTUNITY WAS GIVEN TO THE REVENUE FOR MAKING COMPLIANCE AND THE DATE WAS FIXED ON 10/02/2 015 BUT ON THIS DATE ALSO , THE REVENUE DID NOT PRODUCE THIS EVIDENCE AND HENCE, THE APPEALS WERE HEARD IN THE ABSENCE OF THOSE EVIDENCES. 5 . NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE APPOINTED DATE OF HEARING . N EITHER ANYBODY APPEARED ON THE PRESENT DATE NOR ANY REQUEST WAS FILED FOR ADJOURNMENT AND THEREFORE, WE PROCEED TO DECIDE THE APPEALS EX - PARTE QUA THE ASSESSEE. 3 6 . WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED D.R. OF THE REVENUE, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THIS ISSUE WAS DECIDED BY CIT(A) AS PER PARA 9 & 10 OF HIS ORDER, WHICH ARE REP RODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 9. I HAVE GONE THROUGH THE ABOVE SUBMISSIONS AND THE VARIOUS CASE LAWS GIVEN BY THE APPELLANT. FROM THE FACTS STATED ABOVE IT IS ABUNDANTLY CLEAR THAT PHYSICAL REMOVAL FROM STACKS AND WEIGHMENT IN RESPECT OF APPROXIMATELY 1,00,000 BAGS OF AGRICULTURAL PRODUCTS WAS NOT POSSIBLE IN SUCH TIME FRAME. FURTHERMORE THE APPELLANT ON THE VERY NEXT DAY OF SURVEY HAD GIVEN AN AFFIDAVIT OF THE INCORRECT TAKING OF STOCKS BY THE DEPARTMENT AND RETRACTION AS TO THE SURRE NDER WHICH WAS DONE UNDER PRESSURE. THE AO HAS ALSO NOT COMMENTED UPON OR CONTROVERTED OR TRIED TO EXAMINE ALL THE ABOVE ARGUMENTS AND AFFIDAVITS WHICH WERE ALSO PLACED BEFORE HIM DURING THE ASSESSMENT PROCEEDINGS. IN FACT HE HAS NOT COMMENTED UPON THE JUS TIFICATION OF THE SAME AT ALL. THE APPELLANT HAS ALSO GIVEN EVIDENCE OF THE FACT THAT THE STOCK SHOWN BY THE DEPARTMENT WAS MORE THAN THE CAPACITIES OF GODOWN OF THE APPELLANT. THE APPELLANT HAS ALSO FILED COPIES OF ORDERS OF THE SALES TAX DEPARTMENT WHERE IN THE TRADING RESULTS OF THE APPELLANT FOR THE RELEVANT YEAR UNDER APPEAL HAVE BEEN ACCEPTED AS SUCH. AS SUCH THE ENTIRE STOCK HAS BEEN TAKEN ON ESTIMATION AND THUS CANNOT BE TAKEN AS AN EVIDENCE AGAINST THE APPELLANT AS HAS BEEN HELD IN COMMISSIONER OF I NCOME - TAX, DELHI - I, NEW DELHI V. BANSAL HIGH CARBONS (P.) LTD. 165 TAXMAN 0243 (DEL.) 10. IN VIEW OF THE ABOVE FACTS, ELABORATE EVIDENCE AND LEGAL LAPSES IN THE ISSUE INVOLVED WHICH ARE CONTRARY TO PROCEDURES OF TESTING THE EVIDENCE GIVEN BY APPELLANT, AN D THE FACTS OF ESTIMATED INVENTORY, WHICH IS DOUBTFUL IN ITS CALCULATION/ MEASUREMENT AND CORRECTION, AND SAME BEING RELIED UPON BY AO WITHOUT CONSIDERING THE FACTS AND DOCUMENTS OF EXPLANATION OF APPELLANT, THE ADDITION IN RESPECT OF ALLEGED EXCESS STOCKS IS DELETED. 4 6.1 FROM THE ABOVE PARAS FROM THE ORDER OF CIT(A), IT IS SEEN THAT A CLEAR FINDING HAS BEEN GIVEN BY CIT(A) THAT PHYSICAL REMOVAL FROM STACKS AND WEIGHMENT IN RESPECT OF APPROXIMATELY 1,00,000 BAGS OF AGRICULTURAL PRODUCTS WAS NOT POSSIBLE I N SUCH TIME FRAME. HE HAS FURTHER NOTED THAT THE ASSESSEE ON THE VERY NEXT DAY OF SURVEY HAD GIVEN AN AFFIDAVIT OF THE INCORRECT TAKING OF STOCKS BY THE DEPARTMENT AND RETRACTION AS TO THE SURRENDER WHICH WAS DONE UNDER PRESSURE. HE HAS ALSO NOTED THAT THE ASSESSING OFFICER HAS ALSO NOT COMMENTED UPON OR CONTROVERTED OR TRIED TO EXAMINE THE ARGUMENTS AND AFFIDAVITS WHICH WERE ALSO PLACED BEFORE HIM DURING THE ASSESSMENT PROCEEDINGS. WE HAVE SEEN THAT BEFORE US ALSO, IN SPITE OF PROVIDING SEVERAL OPPORTUNITIES, THE SURVEY FOLDER AND ASSESSMENT FOLDER WERE NOT PRODUCED BEFORE US BY LEARNED DR OF THE REVENUE . WITHOUT CARRYING OUT ACTUAL WEIGHMENT, HOW THE STOCK INVENTORY CAN BE PREPARED WHEN THE BAGS WERE NOT HAVING UNIFORM WEIGHT. CONSIDERING ALL THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE. ACCORDINGLY, THIS GROUND OF REVENUE IS REJECTED. 7. GROUND NO. 2 IS AS UNDER: 2. THAT THE LD. COMMISSIONER OF INCOME - TAX (A) HAS ERRED IN LAW AND ON FACTS IN ACCEPTING THE BOOKS RELIABLE, WITHOUT APPRECIATING THE FACT THAT THE DIFFERENCE IN STOCK WAS FOUND AT THE TIME OF SURVEY. 8. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. 9. WE HAVE CONSIDERED HIS SUBMISSIONS. WE FIND THAT THIS ISSUE WAS DECIDED BY CIT(A) AS PER PARA 14 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 14. I HAVE GONE THROUGH THE VARIOUS ARGUMENTS GIVEN BY THE APPELLANT. THE APPELLANT HAS SHOWN PROGRESSI VE TRADING RESULTS AND GROSS PROFIT RATE. FURTHER THE ASSESSMENT OF SALES TAX HAS 5 BEEN ALSO HELD ON RECORD. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC AMOUNT OF SALES NOT ACCOUNTED FOR OR PURCHASES NOT ACCOUNTED FOR. HE HAS ALSO NOT POINTED OUT ANY P U RCHASE OR SALES WHICH ARE SHAM. SOME MISTAKES ARE NOTED FOR RECORDING OF VOUCHERS ETC. BUT THE SAME BY NO STRETCH OF IMAGINATION SHALL LEAD TO THE REJECTION OF THE ENTIRE ACCOUNTS AS THERE HAVE BEEN NO MISTAKES POINTED OUT IN RESPECT OF THE BOOKS OF ACCOUNT M AINT AINED BY THE APPELLANT. AS N O SEPARATE ADDITION HAS BEEN MADE ON THIS SCORE , I UPHOLD TH AT NO ADDITION IS REQUIRED TO BE MADE. 9.1 FROM THE ABOVE PARA FROM THE ORDER OF CIT(A), IT IS SEEN THAT A CLEAR FINDING HAS BEEN GIVEN BY CIT(A) THAT MISTAKE POINTED OUT BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER REGARDING SOME MISTAKES NOTED FOR RECORDING OF VOUCHERS ETC. CANNOT LEAD TO THE REJECTION OF THE ENTIRE ACCOUNTS BECAUSE NO MISTAKE HAS BEEN POINTED OUT BY THE ASSESSING OFFICER IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. HE HAS ALSO GIVEN A FINDING THAT THE ASSESSEE HAS BROUGHT ON RECORD, THE ASSESSMENT ORDER IN SALES TAX P ROCEEDINGS AND THE ASSESSING OFFICER COULD NOT POINT OUT ANY SPECIFIC AMOUNT OF SALES NOT ACCOUNTED FOR OR PURCHASES NOT ACCOUNTED FOR. HE HAS ALSO GIVEN A FINDING THAT THE ASSESSING OFFICER COULD NOT POINT OUT ANY PURCHASE OR SALES WHICH IS SHAM. NONE OF THESE FINDINGS COULD BE CONTROVERTED BY LEARNED D.R. OF THE REVENUE AND WE ALSO FIND THAT IN THE PRESENT YEAR, THE ASSESSEE HAS REPORTED A GROSS PROFIT OF 12.84% AS AGAINST 12.62% IN ASSESSMENT YEAR 2004 - 05 AND 11.66% IN ASSESSMENT YEAR 2003 - 04. HENCE, I T IS SEEN THAT THE GROSS PROFIT RATE REPORTED BY THE ASSESSEE IS ALSO HIGHER THAN THE PRECEDING TWO YEARS. CONSIDERING ALL THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A) ON THIS ISSUE ALSO. THIS GR OUND IS ALSO REJECTED. 10. GROUND NO. 3 IS AS UNDER: 6 3. THAT THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION IN RESPECT OF NEGATIVE CASH FOUND WITHOUT V ERIFYING THE FACTS OF THE CASE. 11. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. 12. WE HAVE CONSIDERED HIS SUBMISSIONS. WE FIND THAT THIS ISSUE WAS DECIDED BY LEARNED CIT(A) AS PER PARA 18 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 18. I HAVE GON E THROUGH THE TRIAL BALANCE AND WRITTEN SUBMISSIONS GIVEN BY THE APPELLANT. THE APPELLANT HAD POINTED OUT SPECIFIC REASONS WHY THIS DOCUMENT IS INCORRECT AND CANNOT BE RELIED UPON. IT HAD GIVEN SUCH DETAILED EXPLANATIONS TO THE AO DURING THE COURSE OF ASSE SSMENT AND HAD REQUESTED THE AO TO GET THE SAME COMPARED WITH THE DOCUMENTS SEIZED DURING THE COURSE OF SURVEY. THE AO DID NOT POINT OUT ANY DEFECT IN THE OBJECTIONS GIVEN BY THE APPELLANT NOR DID HE COMMENT ON THE LETTER SUBMITTED BY A COMPUTER EXPERT ON 14.3.2005 (DATE OF SURVEY BEING 9.3.2005) THAT THE SOFTWARE PROGRAMME WAS CORRUPT AND INCORRECT. FURTHERMORE THE AO DID NOT ALSO RECONCILE ANY OF THE FIGURES IN THE ALLEGED TRIAL BALANCE WITH THE BOOKS. THE APPELLANT HAS POINTED OUT THAT THE SALES AS PER T HAT TRIAL WERE RS.6,34,57,711/ - ONLY WHEREAS THE SALES AS ON THAT DATE AS PER REGULAR BOOKS OF ACCOUNTS WERE RS.17,35,36,988/ - AND THE SALES AND PURCHASES HAVE BEEN DULY ACCEPTED BY THE AO FURTHER THE BALANCES OF BANK, PARTIES, FIXED ASSETS ETC. WERE DIFFE RENT IN THAT TRIAL BALANCE AND AS PER REGULAR BOOKS WHICH HAVE BEEN ACCEPTED BY THE AO. FROM THE FACTS PLACED IT IS CLEAR THAT THE TRIAL WAS INCORRECT AND THE AO COULD NOT, IN ISOLATION, AGREE TO ALL OTHER ENTRIES EXCEPT CASH IN HAND OF THE TRIAL. EITHER T HE DOCUMENT HAS TO BE ACCEPTED IN TOTAL OR REJECTED IN TOTAL. THE AO IS NOT AT A LIBERTY TO ACCEPT ALL OTHER FIGURES EXCEPT ONE WHICH HE HAS HELD AGAINST THE APPELLANT. IN VIEW OF THE ABOVE, THE ADDITION OF RS.19,57,359/ - IN RESPECT OF NEGATIVE CASH IS HER EBY DELETED. 12.1 FROM THE ABOVE PARA FROM THE ORDER OF CIT(A), WE FIND THAT THE BASIS OF THE DECISION OF CIT(A) IS THAT AS PER A LETTER SUBMITTED BY A COMPUTER 7 EXPERT ON 14.3.2005 AFTER THE DATE OF SURVEY ON 9.3.2005 , IT WAS STATED THAT THE SOFTWARE PROGRAM WAS CORRUPT AND INCORRECT. HE HAS ALSO NOTED THAT SALES AS PER THIS TRIAL BALANCE WERE RS.6,34,57,711/ - ONLY WHEREAS THE SALES AS ON THAT DATE AS PER REGULAR BOOKS OF ACCOUNTS WERE RS.17,35,36,988/ - . THIS GOES TO SHOW THAT THER E IS AMPLE FORCE IN THIS CONTENTION OF THE ASSESSEE THAT THE SOFTWARE PROGRAM WAS CORRUPT BECAUSE IF THE SOFTWARE PROGRAM WAS NOT CORRUPT THEN HOW THE SALES AS PER THIS TRIAL BALANCE CAN BE SO MUCH LOWER AS COMPARED TO SALES REPORTED BY THE ASSESSEE AS PER ITS BOOKS OF ACCOUNT. THESE FINDINGS OF CIT(A) COULD NOT BE CONTROVERTED BY LEARNED D.R. OF THE REVENUE AND CONSIDERING THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A) ON THIS ISSUE ALSO. GROUND NO . 3 IS ALSO REJECTED. 13. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 14. NOW WE TAKE UP THE APPEAL OF THE REVENUE IN THE CASE OF KAMDHENU CATTLE FEED, KANPUR I.E. I.T.A. NO.746/LKW/2010. 15. GROUND NOS. 1 TO 4 ARE INTER CONNECTED, WHICH READ AS UNDER: 1. THAT THE LEARNED CIT(A) KANPUR HAS ERRED IN LAW AND ON FACTS OF THE CASE IN ALLOWING THE DEDUCTION UNDER SECTION 80IB OF INCOME TAX ACT AMOUNTING TO RS.20,62,732/ - WITHOUT APPRECIATING THE FACT THAT THE PRODUCTION/MANUFACTURING OF CATTLE FEED TO M/S KAMDHENU CATTLE FEED AND M/S KAPILA KRISHI UDYOG LTD. (SISTER CONCERN OF THE ASSESSEE FIRM) WERE CARRIED OUT AT THE SAME PREMISES AND THE MANUFACTURING PROCESS OF THE ASSESSES FIRM AND ITS SISTER CONCERN WAS FOUND TO BE INTERMINGLED. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - I, KANPUR AS ERRED IN LAW AND ON FACTS IN ALLOWING THE APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THAT DURING THE COURSE OF SURVEY IT WAS REVEALED THAT PRODUCTION/MANUFACTURING OF CATTLE FEEDS BY THE ASSESSEE 8 FIRM AND ITS SISTER CONCERN WERE CARRIED ON AT THE SAME PREMISES AND BOTH THE CONCERNS WERE MANUFACTURING THE SAME BRAND NAMELY 'KAPILA'. THIS PROVES THAT THE ASSESSEE HAS COME INTO EXISTENCE BY THE SPLITTING UP OF AN EXISTING UNIT. THUS THE COND ITION LAID DOWN U/S SECTION 80IB(2)(I) IS NOT SATISFIED. 3. THAT THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS IN LAW AND ON FACTS AS LEARNED CIT(A) HAS IGNORED THE RATIO OF THE JUDGMENT PASSED BY THE HON'BLE SUPREME COURT IN THE CASE OF TEXTILE MACHINER Y LTD. VS. CIT [1977] 107 ITR 195 AND CIT VS. ORIENT PAPER MILLS LTD. [1989] 176 ITR 110. T HE RATIO OF THIS DECISION IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. 4. THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - I, KANPUR IS ERRONEOUS IN LAW AND ON FACTS AS HE HAS NOT RELIED UPON, THE FACTS REVEALED FROM THE STATEMENT OF SHRI ANIL KUMAR GUPTA, ADMINISTRATIVE OFFICER OF THE ASSESSEE FIRM AND ALSO BY IGNORING THE RATIO O F 'DECISION GI V EN IN THE FOLLOWING CASES: I ) NARAYAN BHAGWANTRAO GOSAVI BATAJIWALA VS. GOPAL AIT 1960 SC 100 II ) PRANAV CONSTRUCTION CO. VS. ACIT [I.T.A.T. MUM] 61 TTJ 145 16. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. HE ALSO SUBMITTED THAT AS PER CIT (A), THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL DECISION IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003 - 04 AND 2004 - 05 AND COPIES OF THESE TRIBUNAL DECISION ARE AVAILABLE FROM PAGES 38 TO 60 AND 61 TO 63 OF THE PAPER BOOK. 17. WE HAVE CONSIDERED HIS SUBMISSIONS. WE FIND T HAT THIS ISSUE WAS DECIDED BY CIT(A) AS PER PARA 5 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 5 . GROUNDS NO. 1 AND 2 RELATE TO ALLOWABILITY OF CLAIM OF THE APPELLANT IN RESPECT OF SECTION 80IB OF THE ACT. IN RESPECT 9 OF THE SAME THE ISSUE STANDS DECIDED BY ME IN MY ORDER NO.CIT(A) - I/291/ACIT - 3/KNP/08 - 09/191 FOR THE A.Y.2003 - 04 AND RELIEF IN RESPECT OF THE SAME HAS ALSO BEEN CONFIRMED BY THE HON'BLE ITAT IN THAT CASE VIDE THEIR ORDER NO. I. T.A.NO. 1 93/LUC/09, COPIES OF BOTH TH E ORDERS HAD BEEN PLACED ON RECORDS. FURTHERMORE, IT HAS BEEN BROUGHT TO MY NOTICE THAT SUBSEQUENT TO THE FILING OF THIS APPEAL THE DEDUCTION U/S.80IB HAS BEEN ALLOWED BY THE AO HIMSELF IN THE CASE OF THE APPELLANT FOR A.Y.2007 - 08. AS SUCH THIS GROUND IS H ELD IN FAVOUR OF THE APPELLANT AND THE AO IS DIRECTED TO GRANT HIM DEDUCTION U/S.801B FOR THE REASONS DISCUSSED IN EARLIER APPELLATE ORDERS. HENCE, GROUNDS NO. 1 AND 2 OF APPEAL ARE ALLOWED. 17.1 FROM THE ABOVE PARA FROM THE ORDER OF CIT(A), WE FIND THAT A CLEAR FINDING IS GIVEN BY HIM THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL ORDER IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003 - 04. IN THE PAPER BOOK, THE ASSESSEE HAS FURNISHED A COPY OF THE TRIBUNAL ORDER FOR ASSESSMENT YEAR 2003 - 04 AND 2004 - 05. LEARNED D.R. OF THE REVENUE COULD NOT SHOW US THAT THIS ISSUE IS NOT COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL DECISION IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003 - 04 AND 2004 - 05. HENCE, WE DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW IN THE PRESENT CASE. RESPECTFULLY FOLLOWING THIS TRIBUNAL DECISION, WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A). ACCORDINGLY, GROUND NO. 1 TO 4 ARE REJECTED. 18. GROUND NO. 5 IS AS UNDER: 5. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.17,24,487/ - MADE U/S 68 WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO PROVE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTIONS. 19. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. 10 20. WE HAVE CONSIDERED HIS SUBMISSIONS. WE FIND THAT THIS ISSUE WAS DECIDED BY CIT(A) AS PER PARA 9 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 9. FROM THE ABOVE, I T IS E VIDENT THAT THE FACTS OF THE CASE WERE NOT EXAMINED BY THE AO PROPERLY AND THE ORDER WAS MADE IN HASTE. THE APPELLANT HAS FILED THE ORDER IN RESPECT OF A.Y.2004 - 05 PASSED UNDER SECTION 147/143(3) BY THE AO STATING THAT ALL THE BALANCES OF PARTIES (STATED T O BE BOGUS BY THE AO IN THIS ASSESSMENT YEAR) WERE DULY VERIFIED AND FOUND TO BE CORRECT. THESE PROCEEDINGS WERE INITIATED AND COMPLETED AS PER THE DIRECTIONS OF AO GIVEN IN THE ASSESSMENT ORDER UNDER APPEAL. THUS, THE CONCLUSION OF THE AO REGARDING INCORR ECT CONFIRMATIONS FAILS ON THIS ACCOUNT ITSELF FURTHERMORE THE APPELLANT HAS POINTED OUT THAT THE AO TENDED TO MAKE ADDITIONS DUE TO THE FACT THAT HE WAS OF THE OPINION THAT THERE WAS A VARIATION IN THE REGULAR BOOKS OF THE APPELLANT AND THE IMPOUNDED REGI STERS. THE APPELLANT HAS CLEARLY SHOWN THAT EXCEPT FOR 2 PARTIES THERE IS NO SUCH VARIATION AS IS EVIDENT FORM PARA 19 OF THE ASSESSMENT ORDER THUS HERE AGAIN THE FACTS STATED BY THE AO ARE CONTRARY TO HIS REASONING. FURTHERMORE, I HAVE GONE THROUGH THE WR ITTEN SUBMISSIONS AND THE COPIES OF ORDERS OF EARLIER YEARS OF THE APPELLANT. THE TRADE PRACTICE AND NATURE OF BUSINESS OF THE APPELLANT REQUIRES RECEIPT OF ADVANCE FROM CUSTOMERS WHO ARE GENERALLY FROM VILLAGES. FURTHERMORE IN ALL THE EARLIER YEARS AND SU BSEQUENT YEARS THESE HAVE BEEN ACCEPTED U/S 143(3) BY THE ASSESSING OFFICERS AS GENUINE ADVANCES. DURING THE YEAR UNDER APPEAL ALSO THE AO HAS ACCEPTED THIS PRACTICE AND OUT OF TOTAL ADVANCE FROM CUSTOMERS AMOUNTING TO RS.55.37 LACS MADE AN ADDITION OF RS. 19.70 LACS BEING ADVANCE RECEIVED IN CASH AND HAS ACCEPTED AN AMOUNT OF RS.35.67 LACS AS ADVANCE FROM CUSTOMERS AS THE SAME WAS RECEIVED THROUGH CHEQUE/ DRAFTS. THIS ONLY CANNOT BE A GAUGING FACTOR FOR THE GENUINENESS OF ADVANCE. THE APPELLANT HAD SUBMITT ED ALL THE CONFIRMATIONS IN RESPECT OF THE SAME WHICH WERE NOT CROSS VERIFIED. FURTHERMORE, SALES AGAINST THESE ADVANCES MADE IN THE SUBSEQUENT YEARS HAVE BEEN ACCEPTED AS GENUINE IN A.Y.2006 - 07 WHEREIN THE SALES OF THE APPELLANT HAVE BEEN ACCEPTED AS SUCH . CONSIDERING ALL THE ABOVE FACTORS AND AS HELD IN THE CASE OF C.I.T. VS. PANCHAM DAS JAIN (2006) 156 TAXMAN 507 BY THE HON'BLE ALLAHABAD HIGH COURT THAT ONCE SALES AND PURCHASES 11 ARE ACCEPTED AS SUCH, THEN ADDITION IN RESPECT OF TRADE CREDITORS IS NOT JUST IFIED U/S 68. AS SUCH THE ADDITION MADE BY THE AO IN RESPECT OF ADVANCE FROM CUSTOMERS AMOUNTING TO RS.17,24,487/ - IS HEREBY DELETED. 20.1 FROM THE ABOVE PARA FROM THE ORDER OF CIT(A), WE FIND THAT IT IS NOTED BY CIT(A) THAT IN ALL THE EARLIER YEARS AND SUBSEQUENT YEARS, THE ADVANCE OF CUSTOMERS AS REPORTED BY THE ASSESSEE WERE ACCEPTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER FRAMED U/S 143(3) OF THE A CT. IN THE PRESENT YEAR ALSO, THE ASSESSING OFFICER HAS ACCEPTED THIS PRACTICE AND OUT OF TOTAL AMOUNT OF RS.55.37 LAC, HE HAS MADE ADDITION OF RS.19.70 LAC FOR WHICH ADVANCES WERE RECEIVED IN CASH BUT HE HAS ACCEPTED THE BALANCE AMOUNT OF RS.35.67 LAC FO R WHICH ADVANCES WERE RECEIVED THROUGH CHEQUE . IN OUR CONSIDERED OPINION, ONLY BECAUSE THE ADVANCES WERE RECEIVED IN CASH, IT CANNOT BE SAID THAT THE ADVANCES ARE NOT GENUINE. THE ASSESSEE HAS SUBMITTED ALL THE CONFIRMATIONS BUT THE ASSESSING OFFICER HAD NOT VERIFIED THE SAME. THIS IS ALSO NOTED BY HIM THAT THE SALES AGAINST THESE ADVANCES WERE MADE IN SUBSEQUENT YEARS AND THE SAME WAS ACCEPTED AS GENUINE. CONSIDERING THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A) ON THIS ISSUE ALSO. GROUND NO. 5 IS ALSO REJECTED. 21. GROUND NO. 6 IS AS UNDER: 6. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.50.25.492/ - ON ACCOUNT OF EXCESS STOCK WITHOUT APPRECIATING THE FACT THAT THE A.O. MADE THIS ADDITION ON ACCOUNT OF EXCESS STOCK FOUND DURING THE COURSE OF SURVEY AS PER PHYSICAL VERIFICATION AND ASSESSEE ALSO FAILED TO BIFURCATE THE STOCK POSITION RELATING TO BOTH THE UNITS. 22. BOTH THE SIDES AGREED THAT THIS ISSUE IS IDENTICAL TO GROUND NO. 1 IN THE CASE OF KAPILA KRISHI UDYOG LTD. AND THE SAME CAN BE DECIDED ON SIMILAR 12 LINE. IN THE CASE OF KAPILA KRISHI UDYOG LTD., THIS ISSUE WAS DECIDED BY US IN FAVOUR OF THE ASSESSEE AS PER PARA 6.1 ABOVE. ACCORDINGLY, IN THIS CASE ALSO, THIS GROUND IS DECIDED IN FAVOUR OF THE ASSESSEE. THIS GROUND IS ALSO REJECTED. 23. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 24. IN THE COMBINED RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 7 /03/2015 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR