M/s. Induction Equipments Pvt.Ltd, Pune V. Income-tax Officer, Pune

ITA 964/PUN/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 3031 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 18-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Assessee Lawyers: ABHAY A SHASTRI

Judgement Text

SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . , BEFORE SHRI D. KARUNAKARA RAO, AM . / ITA NO.964/PUN/2017 / ASSESSMENT YEAR : 2010-11 M/S. INDUCTION EQUIPMENTS PVT. LTD., T-117, MIDC, BHOSARI INDUSTRIAL AREA, PUNE 411 026 PAN : AAACI3884K . /APPELLANT VS. ITO, WARD-9(2), PUNE . / RESPONDENT / APPELLANT BY : SHRI ABHAY A. SHASTRI / RESPONDENT BY : SHRI PANKAJ GARG / DATE OF HEARING : 17.05.2018 / DATE OF PRONOUNCEMENT: 25.05.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS IS THE APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A)-9, PUNE, DATED 20-06-2016 FOR THE ASSESSMENT YEAR 2010 -11. 2. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE BROU GHT TO MY NOTICE THAT THERE WAS DELAY OF 280 DAYS IN FILING OF THE APPEAL . LD. COUNSEL FOR THE ASSESSEE REFERRED TO THE AFFIDAVIT FILED BY THE ASS ESSEE DATED 17-03-2017 AND SUBMITTED THAT THE DELAY IS DUE TO CHANGING OF THE CONSULTANT OF THE COMPANY AND GETTING THE REQUIRED INFORMATION REGARDING THE APPEAL. AFTER CONSIDERING THE SAME AND ON FINDING THAT THERE WAS REASONABLE C AUSE FOR DELAY IN FILING THE APPEAL, I AM OF THE VIEW THAT THE DELAY NEEDS TO B E CONDONED. THEREFORE, I ADMIT THE APPEAL OF THE ASSESSEE FOR ADJUDICATION. ITA NO.964/PUN/2017 M/S. INDUCTION EQUIPMENTS PVT. LTD., 2 3. THE SOLITARY GROUND RAISED BY THE ASSESSEE READS AS UNDER : 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE CIT HAS GROSSLY ERRED IN HOLDING THAT, ADDITION ON ACCOUNT OF INVEN TORY SHORTAGE ON PHYSICAL VERIFICATION OF STATUTORY AUDITOR IS NOT D EDUCTIBLE AND SHOULD BE ADDED BACK TO THE RETURNED INCOME. 4. BRIEFLY STATED, RELEVANT FACTS OF THE CASE INCLU DE THAT THE ASSESSEE IS A COMPANY AND IS ENGAGED IN THE BUSINESS OF MANUFACTU RING OF INDUCTION HEATING EQUIPMENTS AND AFTER SALES SUPPORT SERVICES. ASSES SEE FILED THE RETURN OF INCOME ON 04-10-2010 DECLARING TOTAL INCOME OF RS.1 4,97,210/-. DURING THE YEAR UNDER CONSIDERATION, IT WAS NOTICED BY THE AO THAT ASSESSEE REFLECTED THE GROSS RECEIPTS OF RS.11,09,58,359/-. ASSESSEE DECL ARED GROSS PROFIT AT 45% ON THE SAID GROSS RECEIPTS WHICH WORKS OUT TO RS.5,01, 01,981/- AND NET PROFIT AT 3.91% WHICH WORKS OUT TO RS.43,39,906/-. ON PERUSI NG THE PROFIT AND LOSS ACCOUNT, THE AO NOTICED DISCREPANCY IN THE CLAIMS R ELATING TO THE STOCK ACCOUNT AMOUNTING TO RS.7,52,973/-. REJECTING THE EXPLANAT ION GIVEN BY THE ASSESSEE, THE AO MADE ADDITION OF RS.7,52,973/-. FURTHER, TH E AO MADE ANOTHER ADDITION OF RS.91,466/- TREATING THE SAME AS THE PRIOR PERIO D ONE. AO ALSO MADE LUMPSUM ADDITION OF RS.3,00,000/- ON ACCOUNT OF DI SCREPANCIES IN THE MISCELLANEOUS EXPENSES ACCOUNT DEBITED BY THE ASSES SEE TO THE PROFIT AND LOSS ACCOUNT. AO OPINED THAT THE SAID MISCELLANEOUS EXP ENSES ARE NOT FULLY SUPPORTED BY PROPER BILLS AND HENCE, NOT VERIFIABLE . EVENTUALLY, THE AO MADE TOTAL ADDITION OF RS.11,44,439/- ON ALL THESE ACCOU NTS TO THE TOTAL INCOME IN THE ASSESSMENT. 5. IN THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) U PHELD THE ACTION OF THE AO IN MAKING ADDITION OF RS.7,52,973/- ON ACCOUNT O F INVENTORY WRITTEN OFF BY HOLDING AS UNDER : 5.3 I HAVE CONSIDERED CAREFULLY THE FACTS OF THE C ASE AND SUBMISSIONS OF THE APPELLANT ON THE ISSUE. IT IS SEEN FROM THE FACTS OF THE CASE AS DISCUSSED IN PARA 4 OF THE ASSESSMENT ORDER THAT TH E APPELLANTS PURCHASES DURING THE YEAR IS INCLUSIVE OF RS.7,52,9 73/- BEING CLAIMED AS ITA NO.964/PUN/2017 M/S. INDUCTION EQUIPMENTS PVT. LTD., 3 INVENTORY WRITTEN OFF ON ACCOUNT OF DISCREPANCIES F OUND ON PHYSICAL VERIFICATION. IN RESPECT OF THIS, THE APPELLANT HA S SUBMITTED COPY OF PURCHASE BILLS WHICH PERTAINS TO THE YEAR 2007-08. I SUPPORT THE STAND TAKEN BY THE AO THAT THE SAID PURCHASES WOULD HAVE BEEN ACCOUNTED FOR IN THE RELEVANT YEAR AS NO CONTRARY EVIDENCE HAS BE EN PRODUCED BY THE APPELLANT. BESIDES, NO EVIDENCE THAT SUCH INVENTOR IES WERE CONSUMED DURING THE PROCESS OF MANUFACTURING BUT WHICH WERE NOT TAKEN INTO CONSIDERATION HAS BEEN PRODUCED. AS REGARD THE CAS E LAWS RELIED UPON BY THE APPELLANT ARE CONCERNED, FACTS OF THE INSTAN T CASE ARE DIFFERENT FROM THOSE CASES. IN CASE OF M/S. EXXON MOBILE LUB RICANT PVT. LTD. THE DISCREPANCY ON ACCOUNT OF PHYSICAL VERIFICATION WAS A TRADING LOSS AND IN THE CASE OF KERSONS MANUFACTURING IT WAS DISCREPANC IES IN RESPECT FIXED ASSET. THUS, CONSIDERING THE TOTALITY OF THE FACTS , THE ADDITION MADE BY THE AO IS UPHELD AND APPEAL ON THIS GROUND IS DISMI SSED. 6. WITH REGARD TO LUMPSUM ADDITION OF RS.3,00,000/- MADE BY THE AO, THE CIT(A) DISMISSED THE SAID GROUND AS THE LD. AR FOR THE ASSESSEE DID NOT PRESS THE SAID GROUND BEFORE HIM. THERE IS NO DISCUSSION WITH REGARD TO THE ADDITION ON ACCOUNT PHYSICAL VERIFICATION. 7. AGGRIEVED WITH THE ORDER OF CIT(A) THE ASSESSEE FILED THE PRESENT APPEAL CHALLENGING THE ADDITION ON ACCOUNT OF INVENTORY WR ITTEN OFF WITH THE SOLITARY GROUND EXTRACTED ABOVE. 8. BEFORE ME, AT THE OUTSET, LD. COUNSEL FOR THE AS SESSEE MENTIONED THAT THE ISSUE RELATING TO STOCK DISCREPANCY/WRITE OFF N EEDS TO REVISIT TO THE FILE OF CIT(A) FOR FRESH ADJUDICATION IN CONNECTION WITH TH E PURCHASES AMOUNTING TO RS.7,52,973/- MADE IN THE YESTER YEARS. THERE IS HUGE AMOUNT OF CONFUSION IN THE MIND OF THE ASSESSEE WITH REGARD TO THIS ENTRY IN THE STOCK REGISTER. EARLIER CHARTERED ACCOUNTANT WHO RECORDED THE BOOKS OF ACCO UNT, IS STATED TO HAVE LEFT CERTAIN INCORRECT NOTE IN THE FINANCIAL STATEMENTS AND ADDED CONFUSION TO THE WHOLE CLAIM QUA THE CLOSING STOCK ACCOUNT. IN THIS REGARD, ASSESSEE FILED THE FOLLOWING WRITTEN SUBMISSION REQUESTING TO RESTORE THE ISSUE TO THE FILE OF AO. FOR THE SAKE OF COMPLETENESS, I PROCEED TO EXTRACT THE SAID SUBMISSION AS UNDER: IN FACT AS PER THE CERTIFICATE OF CA AND THE STOCK STATEMENT (BOTH ENCLOSED), IT CAN BE SEEN THAT THE SAID ENTRY WAS INCLUDED ONLY O NCE IN PURCHASE ACCOUNT IN ITA NO.964/PUN/2017 M/S. INDUCTION EQUIPMENTS PVT. LTD., 4 F.Y. 2007-08 AND THOUGH THE STOCK OF RAW MATERIAL IN QUESTION IS MENTIONED AS RS.85,19,906/- IS INCLUSIVE OF THE UNTRACEABLE STOC K. SO IT IS CLEARLY INDICATES THAT LOSS WAS NEVER CLAIMED IN A.Y. 2010-11. IN VIEW OF THE ABOVE WE KINDLY REQUEST YOU TO RESTO RE THE CASE TO CIT(A) FOR EXAMINING THE PROOF THAT SHOWING THAT NO LOSS WAS E XAMINED. 9. AFTER HEARING BOTH THE PARTIES AND ON PERUSING T HE WRITTEN SUBMISSION FILED BY THE LD. COUNSEL FOR THE ASSESSEE, I AM OF THE OPINION THAT THE SOLITARY ISSUE RAISED BEFORE ME BE REMANDED TO THE FILE OF C IT(A) FOR EXAMINATION OF THE CORRECT FACTS LEADING TO THE DISCREPANCY IN THE INV ENTORY. THEREFORE, IN THE INTEREST OF ADMINISTRATION OF JUSTICE, I RESTORE TH E ISSUE TO THE FILE OF CIT(A) FOR FRESH ADJUDICATION AND PASSING OF A SPEAKING ORDER. ASSESSEE IS ALSO DIRECTED TO FILE NECESSARY DOCUMENTS BEFORE THE CIT(A). ACC ORDINGLY, THE SOLITARY GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSES. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 25 TH DAY OF MAY, 2018. SD/- (D.KARUNAKARA RAO) / ACCOUNTANT MEMBER / PUNE; DATED : 25 TH MAY, 2018. SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 9 , PUNE 4. / THE CIT - 9 , PUNE 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PRI VATE SECRETARY , / ITAT, PUNE