The ACIT, Central Circle-1(3), Ahmedabad V. Salasar Laminates Pvt.Ltd., Ahmedabad

ITSSA 2/AHD/2012

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0660 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 30 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 09-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L MEENA
• Assessee Lawyers: VIJAY RANJAN
• Keywords: Unexplained investment; Business income; Deemed to accrue or arise in india
• Section: 132

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ./ IT(SS)A NO.2/AHD/2012 WITH CO NO.68/AHD/2012 / ASSESSMENT YEAR: 2009-2010 ACIT, CENT.CIR.1(3) AHMEDABAD. VS SALASAR LAMINATES P. LTD. (FORMERLY KNOWN AS MILLENNIUM LAMINATES P. LTD.) 306, 3D FLOOR, ISCON MALL STAR BAZAR, BLDG., JODHPUR CHAR RASTA AHMEDABAD. PAN : AACCM 7891 E ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI S.L.MEENA, CIT-DR ASSESSEE(S) BY : SHRI VIJAY RANJAN, AR / DATE OF HEARING : 06/05/2015 / DATE OF PRONOUNCEMENT: 08/05/2015 $%/ O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AND CO FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE CIT(A)-III, AHMEDABAD DATED 24.10.2011 2. THE SOLE GROUND OF APPEAL TAKEN BY THE REVENUE I S THAT THE CIT(A) ERRED IN DIRECTING THE AO TO DELETE THE ADDI TION OF RS.23,38,317/- MADE ON ACCOUNT OF STOCK DISCREPANCY. 3. IN THE CROSS OBJECTION, THE GROUND TAKEN BY THE ASSESSEE IS THAT THE CIT(A) SHOULD HAVE UPHOLD THE PLEA OF THE ASSES SEE THAT THE ALLEGED DISCREPANCIES AND DIFFERENCE IN THE STOCK HAD BEEN REASONABLY EXPLAINED BY THE ASSESSEE, AND HENCE NO ADDITION WAS WARRANTE D IN RESPECT OF ANY OF THEM EVEN ON MERITS. IT(SS)A NO.02/AHD/2012 WITH CO 2 4. BRIEF FACTS OF THE CASE ARE THAT THE DURING THE COURSE OF SEARCH, UNDER SECTION 132 OF THE ACT, THE DIFFERENCE IN THE PHYSICAL STOCK AT THE FACTORY PREMISES AND STOCK AS PER BOOKS OF ACCOUNTS WAS FOUND. THE AO MADE ADDITION OF RS.23,38,317/- AS UNDER: PARTICULARS AS PER ASSESSING OFFICER AMOUNT (RS.) VALUE OF RAW MATERIAL STOCK FOUND IN LESSER IN SEARCH AND ADDED AS DEEMED SALES PROCEEDS 5,93,121 EXCESS STOCK OF RAW MATERIAL TREATED AS UNEXPLAINED INVESTMENT 1,79,741 VALUE OF FINISHED GOODS FOUND IN LESSER IN SEARCH AND ADDED AS DEEMED SALES PROCEEDS 50,908 EXCESS STOCK OF FINISHED GOODS TREATED AS UNEXPLAINED INVESTMENT 1,85,559 QUANTITY ISSUED AS SAMPLE AND TREATED AS DEEMED INCOME 5,28,872 ADDITION FOR LESSER PRODUCTION ON COMPARISON OF YIELD OF A.Y.2008-09 TOTAL 23,38,317/- 5. THE CIT(A) OBSERVED THAT FIRST TWO ADDITIONS OF RS.5,93,121/- AND RS.1,79,741/- WERE MADE ON ACCOUNT OF EXCESS AND SH ORTAGE OF RAW- MATERIAL AND THE NEXT TWO ADDITIONS OF RS.50,908/- AND RS.1,85,559/- WAS MADE ON ACCOUNT OF EXCESS AND SHORTAGE OF FINIS HED GOODS. FURTHER, THE ADDITION OF RS.5,28,872/- WAS MADE BY THE AO AFTER TAKING THE MARKET RATE OF THE QUANTITY OF THE FINISHED GOO DS ISSUED BY THE ASSESSEE FOR SAMPLES AND THE ADDITION OF RS.8,00,11 6/- WAS MADE BY THE AO ON THE BASIS OF THE YIELD. THE AO COMPARED THE YIELD OF ASSTT.YEAR 2008-09 WITH THE YIELD OF 125 DAYS OF TH E CURRENT ASSESSMENT AND MADE THE ADDITION OF RS.8,00,116/-. THE CIT(A) HELD THAT AS REGARDS THE ADDITION ON ACCOUNT OF SHORTAGE AND EXCESS OF RAW MATERIAL, IT WAS SUBMITTED BY THE ASSESSEE THAT IN FACT THE VALUE OF 5,93,121/- REPRESENTED THE EXCESS STOCK OF RAW-MATE RIAL AS AGAINST THE SHORTAGE CONSIDERED BY THE AO. WITH REGARD TO THE VALUE OF RS.1,79,741/- OF THE RAW MATERIAL, CONSIDERED BY TH E AO AS EXCESS IT(SS)A NO.02/AHD/2012 WITH CO 3 STOCK, WHEREAS, IN FACT IT WAS SHORTAGE. FURTHER, IN ASSESSMENT ORDER, THE AO HAS WRONGLY TAKEN THE VALUE OF STOCK OF RS.5 0,908/- AS THE SHORTAGE, WHEREAS, IN FACT THIS WAS EXCESS STOCK FO UND. FURTHER, THE FIGURE OF RS.1,85,550/- WAS WRONGLY TAKEN BY THE AO AS EXCESS STOCK OF FINISHED GOODS AS AGAINST SHORTAGE. IT WAS SUBMIT TED THAT BILL DATED 6.10.2008 FOR RS.1,06,602/- WAS PRODUCED BEFORE THE CIT(A) IN RESPECT OF THE SAMPLES. THUS, IN RESPECT OF THE SAME QUAN TITY OF THE STOCK, THE ASSESSEE HAS ACCOUNTED FOR THE SAMPLES VIDE BILL DA TED 6.10.2008 AT RS.1,06,602/- BY CREDITING THE PURCHASE ACCOUNT AND DEBITING THE SALES ACCOUNT. THEREFORE, IT WAS CONTENDED THAT THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS.5,28,872/-. IT WAS ALSO SUBMITTED THAT THE AO HAS WRONGLY COMPARED THE YIELD OF PREVIOUS YEAR I.E. A.Y.2008-09 WITH THE YIELD OF 15 DAYS OF THE CURRENT YEAR AND M ADE ADDITION ON ACCOUNT OF SUPPRESSION OF STOCK OF RS.8,00,116/-. IT WAS SUBMITTED THAT IN FACT THE YIELD FOR ASSTT.YEAR 2008-09 WAS S HOWN BY THE ASSESSEE AT 34.85% AS AGAINST THE YIELD OF CURRENT ASSESSMEN T YEAR OF 34.34%. THUS, THERE WAS NO SUPPRESSION OF YIELD. THE CONS UMPTION OF RAW MATERIAL VARIES FROM FINISHED PRODUCT TO FINISHED P RODUCT, DEPENDING UPON THE WIDTH OF THE PRODUCE, AND THEREFORE, THE A O WAS NOT JUSTIFIED IN COMPARING THE YIELD OF THE PREVIOUS ASSTT.YEAR 2 008-09 WITH THE YIELD OF 15 DAYS OF THE CURRENT ASSESSMENT YEAR. 6. IN THE ALTERNATIVE, IT WAS SUBMITTED BY THE ASSE SSEE THAT THE ASSESSEE HAS DECLARED ADDITIONAL INCOME OF RS.35 LA KHS IN THE RETURN OF INCOME AS OTHER BUSINESS INCOME. IN THE NOTES TO T HE RETURN OF INCOME THE ASSESSEE HAS MENTIONED AS UNDER: WHILE FILING THE RETURN OF INCOME FOR CURRENT ASSESSMENT YEAR (I.E. 2009-2010) THE ASSESSEE COMPA NY HAS OFFERED AN ADDITIONAL BUSINESS INCOME OF RS.35 LACS IN RETURN OF INCOME AND PAID TAX ON SUCH INCOME. THE SAID OFFERING OF INCOME IS TO COVER UP THE ROUGH NOTINGS AND JOTTINGS ETC. WHICH THE ASSESSEE GROUP MAY NOT BE A BLE TO EXPLAIN TO THE FULLEST SATISFACTION OF THE DEPARTME NT AND ALSO TO COVER UP ANY DISCREPANCY/IRREGULARITIES FOU ND IT(SS)A NO.02/AHD/2012 WITH CO 4 DURING THE COURSE OF SEARCH AND IN ORDER TO AVOID L ONG DRAWN LITIGATIONS ARISING THERE FROM AND TO BUY PEA CE. 7. THE CIT(A) OBSERVED THAT EVEN IF THERE WAS SOME DISCREPANCY ON ACCOUNT OF STOCK, THE SAME IS COVERED BY THE DISCLO SURE OF RS.35 LAKHS AS THE ASSESSEE HAS NOT CLAIMED ANY BENEFIT OF THIS DISCLOSURE IN THE RETURN OF INCOME. THEREFORE, THE CIT(A) HELD THAT IN HIS VIEW, SINCE TOTAL ADDITION OF RS.23,38,317/- WAS LESS THAN THE ADDITIONAL INCOME OF RS.35 LAKHS DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME, AND THE ASSESSEE HAS NOT TAKEN ANY CREDIT OF THE ADDITIONAL INCOME OF RS.35 LAKHS, THE ADDITION MADE TO THE EXTENT OF RS.35 LAK HS GETS EXPLAINED BY DISCLOSURE OF RS.35 LAKHS, AND DELETED THE ADDITION MADE BY THE AO OF RS.23,38,317/-. 8. BEFORE US, THE DR SUPPORTED THE ORDER OF THE AO, WHEREAS, THE AR SUPPORTED THE ORDER OF THE CIT(A). 9. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON REC ORD. IN THE INSTANT CASE, THE AO MADE ADDITION OF RS.23,38,317/-, THE D ETAILS OF WHICH ARE AS FOLLOWS: PARTICULARS AS PER ASSESSING OFFICER AMOUNT (RS.) VALUE OF RAW MATERIAL STOCK FOUND IN LESSER IN SEARCH AND ADDED AS DEEMED SALES PROCEEDS 5,93,121 EXCESS STOCK OF RAW MATERIAL TREATED AS UNEXPLAINED INVESTMENT 1,79,741 VALUE OF FINISHED GOODS FOUND IN LESSER IN SEARCH AND ADDED AS DEEMED SALES PROCEEDS 50,908 EXCESS STOCK OF FINISHED GOODS TREATED AS UNEXPLAINED INVESTMENT 1,85,559 QUANTITY ISSUED AS SAMPLE AND TREATED AS DEEMED INCOME 5,28,872 ADDITION FOR LESSER PRODUCTION ON COMPARISON OF YIELD OF A.Y.2008-09 TOTAL 23,38,317/- IT(SS)A NO.02/AHD/2012 WITH CO 5 10. ON APPEAL, THE CIT(A) DELETED THE ADDITION ON T HE GROUND THAT THE ASSESSEE HAD MADE DISCLOSURE OF RS.35 LAKHS FOR ADD ITIONAL INCOME, AND THAT THE ASSESSEE HAS NOT TAKEN CREDIT FOR THE SAME . THEREFORE, THE CIT(A) DELETED THE ADDITION MADE BY THE AO OF RS.23 ,38,317/- ON THE GROUND THAT IT WAS COVERED BY DISCLOSURE OF ADDITIO NAL INCOME OF RS.35 LAKHS MADE BY THE ASSESSEE. 11. THE DR COULD NOT CITE ANY REASON AS TO WHY THE DISCREPANCY OF RS.23,38,317/- FOUND BY THE AO ON ASSESSMENT COULD NOT BE COVERED BY THE ADDITIONAL INCOME OF RS.35 LAKHS, WHICH WAS ALR EADY OFFERED BY THE ASSESSEE FOR TAXATION IN THE RETURN OF INCOME. WE FIND FROM THE COPY OF COMPUTATION OF INCOME FILED WITH THE RETURN OF INCO ME, COPY OF WHICH IS PLACED ON RECORD, THAT THE ASSESSEE HAS SEPARATELY OFFERED FOR TAX RS.35 LAKHS AS INCOME APART FROM THE INCOME COMPUTE D AS PER ITS BOOKS OF ACCOUNTS. IN THE ABSENCE OF ANY MATERIAL TO SHO W THAT ANY DISCREPANCY OF MORE THAN RS.35 LAKHS WAS FOUND IN T HE BOOKS OF ACCOUNTS OF THE ASSESSEE, DURING THE COURSE OF ASSE SSMENT, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE CIT(A), WHICH IS HEREBY CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 12. IN THE CROSS OBJECTION, THE GRIEVANCE OF THE AS SESSEE IS THAT THE CIT(A) SHOULD HAVE ACCEPTED THE CONTENTION OF THE A SSESSEE THAT THE ALLEGED DISCREPANCIES AND DIFFERENCE IN THE STOCK H AD BEEN REASONABLY EXPLAINED BY THE ASSESSEE, AND HENCE NO ADDITION WA S WARRANTED IN RESPECT OF ANY OF THEM EVEN ON MERITS. 13. AT THE TIME OF HEARING, THE AR OF THE ASSESSEE MADE NO SUBMISSION ON THE GROUND OF CROSS OBJECTION FILED B Y THE ASSESSEE, THEREFORE, THE SAME IS DISMISSED FOR WANT OF PROSEC UTION. IT(SS)A NO.02/AHD/2012 WITH CO 6 14. IN THE RESULT, THE APPEAL OF THE REVENUE AS WEL L AS CROSS OBJECTION OF THE ASSESSEE, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 8 TH MAY, 2015 AT AHMEDABAD. SD/- SD/- (S.S. GODARA) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 08/05/2015