ITO,Ward-3(4), Kolkata, Kolkata V. M/s B.K.Iron & Steel (P) Ltd., Kolkata

ITA 944/KOL/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4634 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 28-07-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 18-06-2012
• Court: TRIBUNAL
• Department Lawyers: S M DAS
• Assessee Lawyers: P K HIMATSINGHKA
• Keywords: Bad and doubtful debts; Corroborative evidences
• Section: 142(1)

Judgement Text

1 ITA NO.944/KOL/2012 B.K.IRON & STEEL (P) LTD., AY 2006-07 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI M. BALAGANESH, AM & SHRI K. NARASIMHA CHARY, JM] I.T.A NO. 944/KOL/2012 ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER, WD-3(4), KOLKATA. VS. M/S. B. K. IRON & STEEL (P) LTD., (PAN: AABCB1412H) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 28.07.2016 DATE OF PRONOUNCEMENT: 24.08.2016 FOR THE APPELLANT: SHRI S. M. DAS, JCIT, SR. D R FOR THE RESPONDENT: SHRI P. K. HIMATSINGHKA, A R ORDER PER SHRI K. NARASIMHA CHARY, JM: THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-I, KOLKATA VIDE APPEAL NO. 348/CIT(A)-1/WD-3(4)/08-09 DATED 02.03.2 012. ASSESSMENT WAS FRAMED BY ITO, WARD-3(4), KOLKATA U/S. 143(3)(II) OF THE I NCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2006-07 VIDE HIS O RDER DATED 30.12.2008. 2. BRIEF FACTS OF THE CASE ARE THAT ON 28.11.2006 THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR AY 2006-07 DECLARING TOTAL INC OME OF RS.3,39,310/-, AND PROCESS U/S. 143(1) OF THE ACT WAS COMPLETE BY 11.1 0.2007, BUT SUBSEQUENTLY THE CASE WAS TAKEN UP FOR SCRUTINY THROUGH CASS, AS SUCH, NO TICES U/S. 143(2) AND 142(1) OF THE ACT WERE ISSUED. FOLLOWING THE PROCEDURE UNDER THE ACT, THE AO PASSED AN ORDER U/S. 143(3)(II) OF THE ACT MAKING CERTAIN ADDITIONS RELATING TO DISALLOWANCE U/S. 40(A)(IA) OF THE ACT IS UNDISCLOSED PRODUCTION AND UNDER VALUATION OF CLOSING STOCK AND ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS .56,37,770/-. AGGRIEVED BY THE SAID ORDER, THE ASSESSEE CARRIED THE MATTER IN APPE AL TO THE LD. CIT(A) , WHO IN TURN, BY WAY OF THE IMPOUND ORDER DELETED THE ADDITIONS M ADE BY THE AO. 3. CHALLENGING THE SAID ORDER OF THE LD. CIT(A) THE REVENUE CAME IN APPEAL ON THE FOLLOWING GROUNDS: 2 ITA NO.944/KOL/2012 B.K.IRON & STEEL (P) LTD., AY 2006-07 1. THAT THE LD. CIT(A) GROSSLY ERRED IN ALLOWING ASSESSEE'S APPEAL WHILE DELETING THE ADDITIONS MADE BY THE A.O. ON ACCOUNT OF THE FOLLOW ING GROUND WITH THE AMOUNT DELETED- ADDED UNDER THE HEAD DESCRIPTED AS AMOUNT DELETED (I) ADDITION U/S 40(A)(IA) RS. 7,56,359/- (FOR NON DEDUCTION OF TDS ON PAYMENT MADE AS CONTRACTORY WAGES AND SECURITY GUARDS) (II) UNDISCLOSED PRODUCTION RS.38,16,700/- (III) DISALLOWANCE OF BAD DEBT WRITTEN OFF RS. 2,44, 810/- TOTAL AMOUNT OF RS.48,17,869/- 2. THE LD. CIT(A) GROSSLY ERRED IN NOT REALIZING TH E FACT THAT THE PAYMENT MADE AS 'CONTRACTORY WAGES' MENTIONED IN SCHEDULE-21 OF THE AUDIT REPORT CLAIMED AS AN EXPENSE IN THE P/L A/C CANNOT BE A TYPOGRAPHICAL MI STAKE'. A WHOLE NEW WORD AS 'CONTRACTORY' CANNOT BE PUT BY MISTAKE BY A PROFICI ENT AUDIT TEAM AND MOREOVER THE ISSUE IS NOT SUBSEQUENTLY PROVED & VERIFIED CONCLUS IVELY IN THE APPEAL PROCEEDINGS. 3. THE LD. CIT(A) ERRED IN NOT REALIZING THE FACT T HAT THE SUPPORTING EVIDENCES SUCH AS THE WAGE REGISTER, E.P.F. & ESI REGISTERS A RE ALL STATUTORY RECORDS. WHICH WERE MUST AND SUPPOSED TO BE WITH THE ASSESSEE AND THERE FORE COULD EASILY BE PRODUCED BEFORE THE A.O. IN COURSE OF THE ASSESSMENT PROCEED INGS FOR NECESSARY VERIFICATION. WHEREAS, THE ASSESSEE FAILED TO PRODUCE THE SAME IN COURSE OF THE ASSESSMENT PROCEEDINGS. THE LD. CIT(A) THEREFORE GROSSLY ERRED IN ACCEPTING THE FRESH EVIDENCES ADMITTED BY HIM IN VIOLATION OF RULE 46A OF THE INC OME TAX RULE, 1962. 4. THE LD. CIT(A) ERRED IN NOT CONSIDERING THE COMM ENTS MADE IN THE REMAND REPORT IN RESPECT OF THE ADDITION MADE 1 (I) ABOVE AND ALSO NOT DIRECTING THIS OFFICE TO VERIFY FURTHER, BUT ASKING FOR A REVISED REMAND REP ORT ON OTHER GROUNDS OF ADDITION. WHEREAS, CONSIDERED AN 'AFTER THOUGHT' ACT OF THE A SSESSEE IN RESPECT OF THE ADDITION MENTIONED AT SI.NO. 1 (I) ABOVE. 5.THE LD. CIT(A) ERRED IN NOT CONSIDERING AND DISCU SSING THE COMMENTS MADE IN THE REMAND REPORT DT. 16.01.2012 OF THE A.O. IN CONSEQUENT TO THE ORIGINAL REMAND REPORT DT.24.8.20 11 IN RESPECT OF THE EXCESSIVE GE NERATION OF SCRAP INSTEAD OF THE FINISHED PRODUCT BUT DELETED THE ADDITION OF RS.38, 16,700/-. 6. THE LD. CIT(A) ERRED IN !LOT DISCUSSING THE POIN T OF THE QUANTITY OF CI SCRAP GENERATION OF AS HIGH AS AT 665.291 M.T. OUT OF 792 .122 M.T. AS WAS REPORTED BY THE ASSESSEE BEFORE HIM IN COURSE OF THE APPEAL PROCEED INGS. ON THE FACTS & CIRCUMSTANCES OF THE ISSUE IN RESPECT OF GROUND OF APPEAL NO.3, T HE ORDER OF LD. C[T(A) IS PERVERSE, HENCE SAME MAY BE SET ASIDE OR THE ORDER OF THE A.O . BE RESTORED. 7. THE LD. CIT(A) GROSSLY ERRED IN DELETING THE ADD ITION MADE AS 'DISALLOWANCE OF BAD DEBT WRITTEN OFF OF RS.2,44,810/- WHILE NOT CONSIDERING THE FACT THAT ASSESSEE DID NOT CLARIFY AND NOT SUBMITTED ANY DOCUMENTS WHATSOE VER IN COURSE OF THE ASSESSMENT PROCEEDINGS. WHEREAS, ADMITTED THE FRESH EXPLANATIO N AND DOCUMENTS AS SUBMITTED BY THE ASSESSEE IN COURSE OF THE APPEAL PROCEEDINGS IN VIOLATION OF RULE 46A OF THE INCOME TAX RULE, 1962. 8. THE LD. CIT(A) HAS ERRED ON THE FACTS & CIRCUMST ANCES OF THE CASE IN NOT REALIZING THE FACT THAT NO CONFIRMATION AND NO CROS S VERIFICATION COULD BE MADE IN RESPECT OF ALL THE DEBTORS CONCERNED BUT DELETED TH E ADDITION AS 'DISALLOWANCE OF BAD DEBT WRITTEN OFF OF RS.2,44,810/- MADE BY THE A.O. ON DUE OPPORTUNITIES EXTENDED TO THE ASSESSEE. 9. ON THE FACTS & CIRCUMSTANCES OF THE CASE, THE OR DER OF LD. CIT(A) IS PERVERSE, HENCE SAME MAY BE SET ASIDE OR THE ORDER OF A.O BE RESTORED. 3 ITA NO.944/KOL/2012 B.K.IRON & STEEL (P) LTD., AY 2006-07 4. IT IS THE ARGUMENT OF THE LD. DR THAT THE LD. CI T(A) DID NOT REALIZE THE FACT THAT SCHEDULE 21 OF THE AUDIT REPORT THE EXPENSES U NDER CONTRACTORY WAGES WAS CLAIMED AND IT IS NOT OPEN FOR THE ASSESSEE TO CONT END IT TO BE A TYPOGRAPHICAL MISTAKE BECAUSE NO PROFESSIONAL AUDIT TEAM WOULD COMMIT SUC H TYPOGRAPHICAL MISTAKE BY PREFIXING A NEW UNRELATED CONTRACTORY BEFORE THE WORD WAGES. ACCORDING TO LD. DR, THE ASSESSEE COULD HAVE PRODUCED THE STATUTORY REGISTERS BEFORE THE AO TO PROVE HIS FACT BUT HE DID NOT DO SO. FURTHER, ACCORDING TO LD. DR, THE CIT(A) DID NOT DISCUSS THE COMMENTS MADE BY THE AO IN THE REMAND R EPORT DATED 16.12.2002 IN RESPECT OF EXCESSIVE GENERATION OF THE SCRAP INSTEA D OF THE FINISHED PRODUCT BUT DELETED THE ADDITION OF RS.38,16,700/- ON A WRONG P REMISE. LASTLY, IT IS ARGUED BY THE LD. DR THAT THE LD. CIT(A) GROSSLY ERRED IN DELETIN G THE SUM OF RS.2,44,810/-, THE ADDITION MADE BY THE AO TOWARDS DISALLOWANCE OF BAD DEBTS WRITTEN OFF BY NOT CONSIDERING THE FACT THAT ASSESSEE DID NOT CLARIFY NOR DID SUBMIT ANY DOCUMENTS WHATSOEVER IN SUPPORT OF THEIR CONTENTIONS. FOR TH ESE REASONS, HE PRAYED BEFORE THE BENCH TO ALLOW THE REVENUES APPEAL BY RESTORING TH E ORDER OF THE AO. 5. ON THE OTHER HAND, IT IS THE ARGUMENT OF THE LD. AR THAT IT IS PURELY BY MISTAKE, IN THE PLACE OF WAGES THE WORDS CONTRACTO RY WAGES WERE MENTIONED AND, AS A MATTER OF FACT, HAD THE AO EXPRESSED ANY DOUBT ON THIS ASPECT THE ASSESSEE SHOULD HAVE PRODUCED BEFORE HIM THE MONTH WISE WAGE REGIST ERS OF THE WORKERS, AS SUCH, ON THIS SCORE THE FINDING OF THE AO IS EX PARTE AND AD DITION OF RS.5,98,404/- TOWARDS WAGES AND RS.3,49,195/- TOWARDS THE SECURITY GUARD EXPENSES ARE NOT SUSTAINABLE. IT IS FURTHER ARGUED BY THE LD. AR THAT THE MONTH WISE RA W MATERIAL CONSUMPTION ALONG WITH PRODUCTION OF FINISHED GOODS WAS NOT CONSIDERE D BY THE AO IN ITS ENTIRETY AND ERRONEOUSLY CALCULATED THE CONSUMPTION AT 77.73% WH EREAS, AS A MATTER OF FACT, THE PERCENTAGE OF FINISHED PRODUCTS WITH REFERENCE TO T HE RAW MATERIAL WAS 94.22% AND THE ERROR HAD CREPT IN BECAUSE THE AO DID NOT CONSI DER THE BY-PRODUCTS AND THE SCRAP GENERATION. LASTLY, IN RESPECT OF BAD DEBTS, LD. AR SUBMITTED THAT THESE AMOUNTS ARE IN THE NATURE OF CLAIMS, REBATES AND DISCOUNTS FULL Y TAKEN INTO ACCOUNT AND REFLECTED IN THE STATEMENT OF ACCOUNTS, AS SUCH, A SUM OF RS.2,4 4,810/- WAS WRONGLY DISALLOWED BY THE AO FOR AN EXPENSES BUT ADDED BACK TO THE INC OME OF THE ASSESSEE. FOR THESE REASONS, LD. AR PRAYED TO DISMISS THE APPEAL OF THE REVENUE. 4 ITA NO.944/KOL/2012 B.K.IRON & STEEL (P) LTD., AY 2006-07 6. A PERUSAL OF RECORD SHOWS THAT THE AO DISALLOWED A SUM OF RS.5,98,404/- AS EXPENSES CLAIMED TOWARDS WAGES AND A SUM OF RS.3,49 ,495/- AS EXPENSES CLAIMED TOWARDS SECURITY GUARD CHARGES AND OUT OF THESE AMO UNTS, IN APPEAL, THE LD.CIT(A) DELETED THE SUM OF RS.5,98,404/- TOWARDS WAGES AND RS.1,56,025/- CLAIMED TOWARDS SECURITY GUARD EXPENSES. HOWEVER, LD. CIT(A) CONFI RMED THE ADDITION OF RS.1,99,240/-. THIS ASPECT COVERS GROUND NOS. 1(I) TO 4. 7. THE NEXT ADDITION MADE BY AO RELEVANT FOR THE PU RPOSE OF THE APPEAL IS IN RESPECT OF UNDISCLOSED PRODUCTION TO THE TUNE OF RS .38,16,700/-, WHICH THE LD. CIT(A) DELETED AND THIS FORMS THE SUBJECT MATTER OF GROUND NOS. 5 AND 6. 8. THE LAST ADDITION IS IN RESPECT OF BAD DEBTS TO THE TUNE OF RS.2,44,810/-, WHICH IS ALSO DELETED BY THE LD. CIT(A) AND THIS IS COVER ED BY GROUND NOS. 7 AND 8. 9. BASING ON THE ARGUMENTS OF EITHER SIDE THE ISSUE S THAT ARISES FOR OUR CONSIDERATION IS (I) WHETHER THE LD. CIT(A) IS JUSTIFIED IN DELETIN G THE SUMS OF RS.5,98,404/- AND RS.1,56,025/- DISALLOWED BY AO U/ S. 40(A)(IA) OF THE ACT? (II) WHETHER THE LD. CIT(A) IS JUSTIFIED IN DELETIN G THE SUM OF RS.38,16,700/- ADDED BY THE AO TOWARDS UNDISCLOSED PRODUCTION? (IV) WHETHER THE LD. CIT(A) JUSTIFIED IN DELETING A SUM OF RS.2,44,810/- ADDED BACK BY THE AO BY DISALLOWING THE CLAIM OF BA D DEBTS? 10. ISSUE NO. (I) : THIS ISSUE RELATES TO GROUND NOS. 1(I) TO (III) AND GROUND NOS. 2 TO 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH T HE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY PERUSED THE ORDERS OF THE LO WER AUTHORITIES. AT SCHEDULE 21 OF THE AUDIT BALANCE SHEET AT PAGE 22 OF THE PAPER BOOK, F IGURES OF RS.5,98,404/- AND RS.3,49,195/- ARE MENTIONED AS EXPENDITURE TOWARDS CONTRACTOR WA GES AND SECURITY GUARD EXPENSES. THERE IS A WAGE STATEMENT AT PAGE 28 AND 29 OF THE PAPER BOOK. WE HAVE GONE THROUGH THE SAID STATEMENT AND FOUND THAT THERE IS NO SINGLE PA YMENT EXCEEDING RS.20,000/- OR ANY ANNUAL PAYMENT IN RESPECT OF ANY WORKER EXCEEDING R S.50,000/-. ALSO WE HAVE GONE THROUGH THE PAYMENTS MADE TO PERFECT SECURITY SERVI CES & PLACEMENTS CONTAINED AT PAGE NOS. 90 AND 91 OF THE PAPER BOOK. IT CLEARLY SHOWS THAT THE TDS WAS DEDUCTED AND 5 ITA NO.944/KOL/2012 B.K.IRON & STEEL (P) LTD., AY 2006-07 DEPOSITED. THIS FACT IS RECORDED BY THE LD. CIT(A) VIDE PARA 4 PAGE 4 OF HIS ORDER WHERE HE OBSERVED THAT ON CONSIDERATION OF THE REMAND REPORT , WRITTEN SUBMISSIONS WITH REFERENCE TO THE MONTHLY WAGE REGISTERS MAINTAINED BY THE ASSESS EE, RS.5,98,404/- IS IN RESPECT OF THE PAYMENT MADE TO THE WORKERS AND IT IS ONLY A WRONG MENTIONING AS CONTRACTOR WAGES. THE LD. CIT(A) OBSERVED THAT THE WORKERS WERE SUBJECTED TO EPF AND ESI ALSO. THE LD. CIT(A) FURTHER OBSERVED THAT RS.1,56,025/- WAS MADE TO PER FECT SECURITY SERVICES AFTER DEDUCTING TDS, AS SUCH, SUCH AMOUNT IS ALSO DELETABLE. ON TH IS PREMISES, LD. CIT(A) DELETED THESE TWO ADDITIONS, WHILE CONFIRMING THE SUM OF RS.1,91, 240/- WHICH AMOUNT WAS SUBJECT TO TDS BUT TDS WAS NOT DEDUCTED. THIS FINDING OF LD. CIT( A) IS BASED ON THE REMAND REPORT SUBMITTED BY THE AO AFTER MAKING REFERENCE TO THE E PF AND ESI AND WAGE REGISTERS. THE FINDING OF THE LD. CIT(A) IS BASED ON VERIFICATION OF RECORD, AND IT DOES NOT WARRANT ANY INTERFERENCE. HENCE, WE CONFIRM THE SAME AND DISMI SS THIS GROUND OF APPEAL OF REVENUE. 11. ISSUE NO. (II): THIS ISSUE RELATES TO GROUND NOS. 5, 6 AND 7. VIDE PAGE NO. 3 PARAGRAPH C, THE AO DREW A CHART R ELATING TO CONSUMPTION OF RAW MATERIAL PRODUCTION AND PERCENTAGE OF PRODUCTION. HE FOUND THAT THE CONSUMPTION OF RAW MATERIAL AND PRODUCTION VARIED BETWEEN 65.87% AND 8 6.87%. HE CONCLUDED THAT THE AVERAGE PERCENTAGE OF PRODUCTION WITH REFERENCE TO CONSUMPTION OF RAW MATERIAL IS 77.73%. THEN THE AO PROCEEDED TO COMPARE THIS AVERAGE WITH THE MONTHLY AVERAGE OF PRODUCTION WITH REFERENCE TO CONSUMPTION TO IDENTIFY THE MONT HS IN RESPECT OF WHICH PRODUCTION IS BELOW AVERAGE AND BY ADOPTING THIS METHOD, HE CONCL UDED THAT 157.05 MTS IS THE UNDISCLOSED PRODUCTION. AT THE OUTSET, WE WISH TO RECORD THAT THIS PROCEDU RE ADOPTED BY THE AO IS INCORRECT. THE VERY WORD AVERAGE OF CERTAIN FIGURES INDICATE S THAT THERE ARE SOME FIGURES WHICH ARE BELOW AND THERE ARE SOME FIGURES WHICH ARE ABOVE SU CH AVERAGE. ALL SUCH FIGURES PUT TOGETHER ACCOUNT FOR THAT AVERAGE. IT IS THE AGGREG ATE OF ALL THE FIGURES THAT CONTRIBUTES TO ARRIVE AT THE AVERAGE. IT IS UNFAIR TO LEAVE THE F IGURES ABOVE THE AVERAGE AND TAKE ONLY SUCH FIGURES WHICH ARE BELOW AVERAGE FOR THE PURPOSE OF CALCULATING THE LOSS OF PRODUCTION. THE AO SHOULD HAVE REALISED THAT THE FIGURES ABOVE AVER AGE ACCOUNT FOR THE FIGURES BELOW AVERAGE. 6 ITA NO.944/KOL/2012 B.K.IRON & STEEL (P) LTD., AY 2006-07 WE HAVE GONE THROUGH THE CHART PREPARED BY THE LD. CIT(A) AT PAGE 6 OF HIS ORDER SHOWING THE FIGURES RELATING TO CONSUMPTION OF RAW MATERIAL, WASTAGE/MELTING LOSS, GROSS PRODUCTION, SCRAP GENERATED, CHUAN GENERATED , NET FINISHED GOODS PRODUCTION AND FINAL MELTING LOSS. THIS CHART CLEARLY SHOWS THAT THE TO TAL CONSUMPTION OF RAW MATERIAL IS 4505.022 MTS, WASTAGE/MELTING LOSS IS 260.470 MTS, GROSS PRODUCTION IS 4244.552 MTS, SCRAP GENERATED IS 665.291 MTS, CHAUN GENERATED IS 153.692 MTS, NET FINISHED GOODS PRODUCTION IS 3425.569 MTS AND THE FINAL MELTING LO SS IS 5.78%. IT IS, THEREFORE, EVIDENT FROM THE ABOVE THAT THE AO HAS NOT CONSIDERED THE G ENERATION OF BY-PRODUCTS AND THE SCRAP, BEFORE CONCLUDING ON THE FIGURES RELATING TO UNDISC LOSED PRODUCTION. IN ALL FAIRNESS, THE AO SHOULD HAVE TAKEN INTO ACCOUNT THESE FIGURES ALSO. LD. CIT(A) IN HIS ORDER VIDE PARA 8 OBSERVED THAT HE CONSIDERED THE REMAND REPORT DATED 17.01.2012 AND ALSO THE COUNTER COMMENTS ON THIS ASPECT BEFORE REACHING ANY CONCLUS ION. HE STATED IN HIS ORDER THAT THE AO, HAVING EXAMINED THE PAPER BOOK AND THE MONTH WISE Q UANTITY DETAILS AND THE RAW MATERIAL, ACCEPTED THE FACT OF SCRAP GENERATION OF 665.291 MT S IN THE MANUFACTURING PROCESS. UNDER THESE CIRCUMSTANCES, LD. CIT(A) RECORDED THE FINDIN G THAT ADDITION OF RS.38,16,700/- ON ACCOUNT OF UNDISCLOSED PRODUCTION IS UNREASONABLE, AND ACCORDINGLY DELETED THE SAME. SINCE THIS FINDING OF LD. CIT(A) IS FIRMLY BASED ON THE F ACTS AND FIGURES AND ALSO ON THE REMAND REPORT OF THE AO WHEREIN THE GENERATION OF SCRAP WA S ACCEPTED, WE FIND NO REASON TO INTERFERE IN THE SAME. ACCORDINGLY, THE SAME IS CO NFIRMED AND THE GROUND OF APPEAL OF REVENUE IS DISMISSED. 12. ISSUE NO. (III) THIS ISSUE RELATES TO GROUND NO. 8. SO FAR AS THE DISALLOWANCE OF BAD DEBT IS CONCERNE D, IT HAS COME ON RECORD THAT THIS AMOUNT IS RELATING TO THREE FIRMS. THOSE ARE SONY ISPAT LTD., SHYAM FORGING PVT. LTD. AND JAY AAR STEEL. THE LD. CIT(A) CONSIDERED THE FACT THAT THERE WAS SHORT PAYMENT OF MONEY FROM SONY ISPAT LTD., DEDUCTION OF SOME AMOUNT AGAI NST SHORT SUPPLY OF GOODS TO SHYAM FORGING PVT. LTD. AND WITHHOLDING OF A SUM OF RS.2, 81,595/- AGAINST THE INFERIOR QUALITY OF SUPPLY OF CI MOULD TO JAY AAR STEEL. LD. CIT(A) FU RTHER OBSERVED THAT THESE AMOUNTS REPRESENT THE CLAIMS, REBATE AND DISALLOWANCE AND H AVE BEEN CREDITED TO SALES AGAINST FY ENDED ON 31.03.2006, AS SUCH, THE PROVISIONS OF SEC TION 36(1)(VII) OF THE ACT HAVE BEEN FULLY COMPLIED WITH. HAVING CONSIDERED ALL THESE THINGS LD. CIT(A) RECORDED THE FINDING THAT THE DISALLOWANCE HAS BEEN MADE MERELY ON ASSUMPTIONS AN D SURMISES AS THE INCOME HAS BEEN DULY CREDITED TO P&L ACCOUNT FOR THE YEAR ENDED 31. 03.2006 RELEVANT TO AY 2006-07 AND 7 ITA NO.944/KOL/2012 B.K.IRON & STEEL (P) LTD., AY 2006-07 DOES NOT REPRESENT ANY OPENING BALANCE WHICH HAVE B EEN WRITTEN OFF DURING THE YEAR. AGAIN, WE FIND OURSELVES IN AGREEMENT WITH THE LD. CIT(A) AND SEE NO GROUND TO DIFFER WITH HIM. HENCE, THIS GROUND OF APPEAL OF REVENUE IS ALSO DIS MISSED. 13. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.08.2016 SD/- SD/- (M. BALAGANESH) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED : 24TH AUGUST, 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT ITO, WD-3(4), KOLKATA. 2 RESPONDENT M/S. B. K. IRON & STEEL (P) LTD., 60/1, CHOWRINGHEE ROAD, FLAT NO. 31, 2 ND FLOOR, ALEXANDER COURT, KOLKATA-700 020. . 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .