A.C.I.T., CC-3(2), Kolkata, Kolkata V. Shantinath Detergents Pvt. Ltd., Kolkata

ITSSA 27/KOL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2349 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-03-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 29-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHOK KUMAR TULSYAN
• Keywords: Question of law; Tangible material; Right to appeal; Capital receipt; Capital Gains; CHAPTER XIVB
• Section: 143(3); 153A; 115JB; 195; 143(2); 139(1); 54EC; 13; 153C; 12

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L.SAINI, ACCOUNTANT MEMBER IT (SS) A NO. 27 TO 32 / KOL / 20 19 ASSESSMENT YEARS :2009-10 TO 2013-14 & 2015-16 ACIT, CENTRAL CIRCLE- 3(2), AAYAKAR BHAWAN POORVA, 110, SHANTIPALLY,5 TH FLOOR, KOLKATA-107 V/S . SHANTINATH DETERGENTS PVT. LTD., METER TOWERS, 1, HO-CHI-MINH SARANI, KOLKATA-700 071 [ PAN NO.AADCS 4720 M ] /APPELLANT .. / RESPONDENT /BY ASSESSEE SHRI ASHOK KUMAR TULSYAN, FCA # /BY REVENUE SHRI VIJAY SHANKAR, CIT-DR /DATE OF HEARING 24-02-2020 /DATE OF PRONOUNCEMENT 20-03-2020 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THESE SIX REVENUES APPEAL(S) FOR ASSESSMENT YEAR(S ) 2009-10 TO 2013-14 & 2015-16, ARISE AGAINST THE COMMISSIONER O F INCOME TAX (APPEALS)- 21 KOLKATAS COMMON ORDER DATED 29.03.2019 PASSED I N CASE NO.S362, 363, 364, 365, 10622 & 367/CC-3(2)/CIT(A)-21/KOL/2016-17 , 2017-18, 2016-17 ( ASSESSMENT YEAR-WISE ) INVOLVING PROCEEDINGS U/S 153A R.W.S.143(3) IN FORMER FIVE CASES AND U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT IN THE LAST ONE; RESPECTIVELY. IT(SS)A NO.27-32/KOL/2019 A.Y.S 09-10 TO 13-14 & 15-16 ACIT,CC-3(2) KOL. VS. SHANTINATH DETERGENTS PVT. LTD. PAGE 2 HEARD BOTH THE PARTIES. CASE RECORD(S) PERUSED. IT EMERGES AT THE OUTSET THAT ALL THESE REVENUES APPEAL(S) INVOLVE A LMOST IDENTICAL SUBSTANTIVE GROUNDS. THE SAME ARE THEREFORE TAKEN U P TOGETHER FOR DISPOSAL FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE REVENUES FIRST IDENTICAL GRIEVANCE IN IT(SS )A NO.27, 28 30 & 31/KOL/2019 FOR ASSESSMENT YEAR(S) 2009-10 TO 2013- 14 SEEKS TO REVIVE THE ASSESSING OFFICERS ACTION DISALLOWING ASSESSEES P F & ESI CONTRIBUTION(S) OF 2,35,959/-, 4,76,320/-, 10,03,680/- & 8,56,788/- ( ASSESSMENT YEAR- WISE ); RESPECTIVELY FOR THE SOLE REASON THAT THE SAME H AD BEEN CREDITED BEYOND THE DUE DATE STIPULATED IN THE CORRESPONDING ACTS. LEARNED CIT-DR FAILS TO DISPUTE THE CLINCHING FACT THAT THE ASSESS EE HAD VERY WELL CREDITED THE IMPUGNED SUM(S) BEFORE THE DUE DATE OF FILING RETUR N U/S 139(1) OF THE ACT. THAT BEING THE CASE, HON'BLE JURISDICTIONAL HIGH CO URTS DECISION IN COMMISSIONER OF INCOME TAX VS. M/S VIJAY SHREE LTD. ITA NO. 245 OF 2011, GA NO. 2607 OF 2011 SQUARELY COVERS THE ISSUE IN AS SESSEES FAVOUR. THE REVENUES INSTANT FORMER SUBSTANTIVE GROUND FAILS T HEREFORE. 3. NEXT COMES REVENUES IDENTICAL SUBSTANTIVE GRIEV ANCE IN ALL THESE SIX CASES SEEKING TO REVERSE THE CIT(A)A ACTION TREATI NG THE ASSESSEES SALES TAX INCENTIVE OF 3,61,60,316/-, 4,33,03,650/-, 4,96,59,046/-, 6,81,12,811/-, 9,90,29,788/- & 13,29,71,754/- ( ASSESSMENT YEAR-WISE ); RESPECTIVELY AS CAPITAL THAN A REVENUE RECEIPT AND ALSO NOT LIABLE TO BE INCLUDED FOR SEC. 115JB MAT COMPUTATION AS WELL. THE CIT(A)S DETAILED DISC USSION QUA THE INSTANT COMMON ISSUE READS AS UNDER:- 6.0 ADDITIONAL GROUND 1: EXCLUSION OF SALES TAX INCENTI VE FROM WEST BENGAL STATE GOVERNMENT IN COMPUTING TAXABLE INCOME UNDER NORMAL PROVISIONS OF THE ACT . IT(SS)A NO.27-32/KOL/2019 A.Y.S 09-10 TO 13-14 & 15-16 ACIT,CC-3(2) KOL. VS. SHANTINATH DETERGENTS PVT. LTD. PAGE 3 6.1 THE APPELLANT IS A PRIVATE LIMITED COMPANY ENGA GED IN THE BUSINESS OF MANUFACTURING OF DETERGENT POWDER AND CAKE. DURING THE ASSESSMENT YEAR 2009-10 APPELLANT COMPANY RECEIVED SALES TAX INCENTIVE OF I NR.3,61,60,316/- FROM WEST BENGAL STATE GOVERNMENT UNDER THE WEST BENGAL INDUS TRIAL PROMOTION (ASSISTANCE TO INDUSTRIAL UNITS) SCHEME - 1994 [IN SHORT WBIPS - 1994 ] PUBLISHED ON 27-05-1994 VIDE RESOLUTION NO. 1460 F.T. KOLKATA. THE INCENTIV E RECEIVED BY THE APPELLANT IS REFLECTED IN THE CREDIT THE PROFIT AND LOSS ACCOUNT UNDER THE HEAD OTHER INCOME. THE ASSESSEE-COMPANY HAS ALSO CONSIDERED THE SAID INCEN TIVE IN COMPUTING ITS TAXABLE INCOME. HOWEVER, DURING THE COURSE OF APPELLATE PRO CEEDING THE APPELLATE COMPANY HAS FILED ADDITIONAL GROUNDS OF APPEAL SEEKING EXCL USION OF ABOVE INCENTIVE IN TAXABLE INCOME. 6.2 IN SUPPORT OF ITS CONTENTION FOR ADMISSION OF S AID ADDITIONAL GROUND THE LD. AR SUBMITTED THAT THE SAID ADDITIONAL GROUND IS PURE L EGAL IN NATURE AND DOES NOT REQUIRE EXAMINATION OF ANY NEW FACTS. FURTHER, THE LD. AR P LACED RELIANCE ON THE DECISION OF THE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. -VS.- CIT (1998) 229 ITR 383 (SC) WHERE IT WAS HELD THAT WHEN A TRIBUNAL IS ONLY REQ UIRED TO CONSIDER A QUESTION OF LAW ARISING FROM THE FACTS, WHICH ARE ON RECORDS, THERE IS NO REASON WHY SUCH QUESTION SHOULD NOT BE ALLOWED TO BE RAISED WH EN IT IS NECESSARY TO CONSIDER THAT QUESTION IN ORDER TO CORRECTLY ASSESS THE TAX LIABILITY OF THE ASSESSEE. APART FROM THE ABOVE, THE APPELLANT HAS ALSO RELIED ON THE JUD GEMENT OF THE APEX COURT IN THE CASE OF JUTE CORPORATION OF INDIA LTD. -VS.- CIT (1991) 187 ITR 688 (SC) WHERE IT IS HELD THAT THE APPELLATE COMMISSIONER HAS PLENARY POWER IN DISPOSING OFF AN APPEAL. IT WAS ALSO HELD THAT THERE IS NO REASON AS TO WHY THE COMMISSIONER CANNOT MODIFY THE ASSESSMENT ORDER OR ADMIT AN ADDITIONAL GROUND EVEN IF NOT RAISED BEFORE THE ITO. 6.3 ON MERIT OF THE CLAIM, THE AR OF THE APPELLANT COMPANY SUBMITTED THAT THE RATIONALE BEHIND GRANTING THE ABOVE INCENTIVE IS TO ENCOURAGE PROVIDE FINANCIAL ASSISTANCE TO THE INDUSTRIES IN WEST BENGAL TO UNDE RTAKE EXPANSION AND MODERNISATION AND THEREFORE SAME IS FOR CAPITAL PUR POSE AND HENCE NOT CHARGEABLE TO TAX. IN SUPPORT OF ITS CLAIM THE LD. AR PLACED RELI ANCE UPON THE DECISION OF THE HON'BLEBLE CALCUTTA HIGH COURT IN THE CASE OF CIT -VS.- RASOI LIMITED (2011) 335 ITR 438 (CAL)(HC) WHERE THE HON'BLE COURT HAD ANALYSED THE IDENTICAL SCHEME AS ONE IN THE CASE OF APPELLANT AND AFTER ANALYSING TH E SCHEME HELD THAT THE SUBSIDY PROVIDED BY THE GOVERNMENT UNDER INDUSTRIAL PROMOTI ON SCHEME OF 1994 IS FOR CAPITAL PURPOSE AND HENCE, SHOULD BE TREATED AS CAPITAL REC EIPT AND NOT CHARGEABLE TO TAX. THE AR ALSO CITED ANOTHER DECISION OF THE JURISDICT IONAL HC RENDERED IN THE CASE OF MANMOHAN KEDIA -VS.- ITO (2014) [2014-LL-0829-36] WHEREIN ALSO THE COURT HAS ALLOWED THE CLAIM OF THE ASSESSEE AFTER FOLLOWING T HE DECISION OF THE DIVISION BENCH IN THE CASE OF RASOI LIMITED (SUPRA) 6.4 THE APPELLANT ALSO PLACED RELIANCE ON THE FOLLO WING JUDICIAL PRONOUNCEMENTS IN SUPPORT OF HIS CLAIM WHICH ARE CITED AS UNDER: SAHNEY STEEL AND PRESS WORKS LTD. [1977] 228 ITR 25 3 (SC) CIT VS. PONNI SUGARS AND CHEMICALS LTD. [2008] 3 06 ITR 392 (SC) 6.5 FINDINGS OF CIT(APPEALS) 6.5.1 BEFORE PROCEEDING TO DECIDE THE CLAIM LODGED BY THE APPELLANT ON MERITS, IT IS IMPERATIVE TO EXAMINE WHETHER THE SAID GROUNDS RAIS ED BY THE APPELLANT IS MAINTAINABLE AND VALID OR NOT. AT THE OUTSET, IT MU ST BE NOTED THAT ON THE DATE OF SEARCH THE ASSESSMENT PROCEEDINGS FOR CAPTIONED ASS ESSMENT YEAR HAS BEEN COMPLETED. IN OTHER WORDS, NO PROCEEDING WAS PENDIN G AT ON THE SAID DATE. IT IS ONLY DURING THE COURSE OF APPELLATE PROCEEDING THE APPEL LANT FILED ADDITIONAL GROUNDS OF IT(SS)A NO.27-32/KOL/2019 A.Y.S 09-10 TO 13-14 & 15-16 ACIT,CC-3(2) KOL. VS. SHANTINATH DETERGENTS PVT. LTD. PAGE 4 APPEAL ON EXCLUSION OF SALES TAX INCENTIVE BOTH UND ER NORMAL AS WELL AS MAT PROVISION OF THE ACT. ON RECEIPT OF MEMORANDUM OF A DDITIONAL GROUNDS, I HAD FORWARDED THE SAME TO THE AO FOR HIS VIEWS/FEEDBACK AND SUBMISSION AND ALLOWED HIM SUFFICIENT TIME. HOWEVER, THE AO DID NOT SUBMI T ANY RESPONSE. THEREFORE, I AM PROCEEDING TO DECIDE THE ADMISSIBILITY OF ADDITIONA L GROUND FILED BY THE APPELLANT ON THE BASIS OF SUBMISSION OF THE APPELLANT AND JUDICI AL PRONOUNCEMENTS AVAILABLE ON THIS VERY SUBJECT. THE VERY ISSUE AS TO WHETHER AN APPELLATE AUTHORITY AND MORE PARTICULARLY COMMISSIONER(APPEALS) ADMIT AN ADDITIO NAL GROUND OR NOT CAME BEFORE CONSIDERATION BEFORE THE SUPREME COURT NOT ONCE BUT TWICE IN THE CASE OF JUTE CORPORATION OF INDIA -VS.- CIT (1 991) 187 ITR 688 (SC) AND NATIONAL THERMAL POWER CO. LIMITED -VS.- CIT (1998) 229 ITR 383 (SC) WHEREIN THE HON' BLE COURT HAS HELD THAT THE COMMISSIONER(APPEALS) CAN ADMIT A N ADDITIONAL GROUND RAISED BY THE ASSESSEE EVEN THOUGH THE SAME HAS NOT BEEN RAIS ED BEFORE THE AO. THE APEX COURT IN NATIONAL THERMAL POWER CO LTD. (SUPRA) WHI LE DECIDING THE POWER OF THE APPELLATE AUTHORITIES [TRIBUNAL IN THIS CASE] IN AD MITTING ADDITIONAL GROUNDS HAS HELD AS UNDER: 'IF, AS A RESULT OF JUDICIAL DECISION GIVEN WHILE T HE APPEAL IS PENDING BEFORE THE TRIBUNAL, IT IS FOUND THAT A NON TAXABLE ITEM IS TA XED OR A PERMISSIBLE DEDUCTION IS DENIED, THERE IS NO REASON WHY THE ASSESSEE SHOU LD BE PREVENTED FROM RAISING THE QUESTION BEFORE THE TRIBUNAL FOR THE FI RST TIME, SO LONG AS RELEVANT FACTS ARE ON RECORD IN RESPECT OF THAT ITEM. THERE IS NO REASON TO RESTRICT THE POWER OF THE TRIBUNAL UNDER SECTION 254 ONLY TO DEC IDE THE GROUNDS WHICH ARISES FROM THE ORDER OF THE CIT(A). BOTH THE ASSES SEE AS WELL AS DEPARTMENT HAVE A RIGHT TO FILE AN APPEAL/CROSS OBJECTIONS BEF ORE THE TRIBUNAL. TRIBUNAL SHOULD NOT BE PREVENTED FROM CONSIDERING QUESTION O F LAW ARISING IN ASSESSMENT PROCEEDING ALTHOUGH NOT RAISED EARLIER.' 6.5.2 SIMILARLY THE JURISDICTIONAL HIGH COURT IN TH E CASE OF MAYANK PODDAR (HUF) - VS.- CWT (2004) 262 ITR 633 (CAL) WHILE DECIDING THE IDENTICAL ISSUE UNDER THE WEALTH TAX ACT HAS OBSERVED THAT IF IN LAW THE ASSE SSEE WAS NOT LIABLE TO BE ASSESSED ON A CAPITAL GAINS ARISING ON TRANSFER OF AGRICULTURAL LAND THEN THE ASSESSEE CLAIM FOR ITS NON ASSESSABILITY CANNOT BE DENIED ME RELY BECAUSE IN THE RETURN FILED THE ASSESSEE HAD MISTAKENLY OFFER TO PAY TAX ON SUCH IN COME. FROM THE ABOVE DECISIONS OF THE APEX COURT AND JURISDICTIONAL HC, IT APPEARS THAT THE RATIO LAID DOWN IN THE ABOVE DECISIONS HAVE DECIDED THE MATTER ONCE FOR AL L. FURTHER THE ONLY POINT WHICH NEEDS TO BE KEPT IN MIND IS THAT THE CLAIM LODGED V IDE THE ADDITIONAL GROUND MUST BE LEGAL IN NATURE. THE CLAIM OF EXCLUSION OF SALES TA X INCENTIVE TREATING THE SAME AS CAPITAL RECEIPT BOTH UNDER NORMAL AS WELL AS MAT PR OVISION IS PURELY LEGAL IN NATURE AND DOES NOT REQUIRE ANY FURTHER ENQUIRY ON FACTS. 6.5.3 DURING THE COURSE OF HEARING THE LD. AR HAD C ITED SEVERAL CASES LAWS OF THE TRIBUNALS WHEREIN THE CLAIM OF EXCLUSION OF SUBSIDY IN THE NATURE OF SALES TAX REFUND OR EXEMPTION HAS BEEN LODGED EITHER BEFORE THE CIT( APPEALS) OR BEFORE THE ITAT ITSELF AND THE SAME HAS BEEN ADMITTED. SOME OF THOS E CASES ARE CITED AS UNDER: - DC IT -VS.- SANGHI INDUSTRIES LTD. (2018) [ITA NO 2 281/HYD./2017] DATED 20-04-2018 [SUBSIDY CLAIM BEFORE CIT(APPEALS)] - MALANA POWER CO. LIMITED -VS.- JCIT ( 2018) [ITA NO .3100/DEL./2015 ] DATED 27-04-2018 [CLAIM REGARDING CARBON CREDIT TO BE TREATED AS CAPITAL RECEIPT BEFORE THE TRIBUNAL] IT(SS)A NO.27-32/KOL/2019 A.Y.S 09-10 TO 13-14 & 15-16 ACIT,CC-3(2) KOL. VS. SHANTINATH DETERGENTS PVT. LTD. PAGE 5 - DCIT -VS.- INDIAN -OIL PETRONAS PRIVATE LIMITED (20 18) [ITA NO. 157/KOL./2017 ] DATED 31-05-2018 [SALES TAX EXEMPTION TO BE TREAT ED AS CAPITAL RECEIPT RAISED BEFORE CIT(APPEALS) - ULTRATECH CEMENT LIMITED -VS.- ADDL. CIT (2014) [IT A NO. 7502/MUM./2010 ] DATED 28-02-2014 [[CLAIM REGARDING CARBON CREDIT TO BE TREATED AS CAPITAL RECEIPT BEFORE THE TRIBUNAL] 6.5.4 IN VIEW OF THE ABOVE DISCUSSION, AND AUTHORIT ATIVE DECISION OF SC IN THE CASE OF JUTE CORPORATION (SUPRA) & NATIONAL THERMAL POWER CO. LTD . (SUPRA) , IT IS SETTLED POSITION THAT ADDITIONAL GROUND CAN BE ADMITTED BY THE APPELLATE AUTHORITIES PROVIDED THE SAID GROUND IS PURELY LEGAL IN NATURE AND DOES NOT REQUIRE VERIFICATION OF ANY NEW FACTS. THEREFORE, ON THIS ASPECT THE ADDITIONAL GRO UND FILED BY THE APPELLANT IS ACCEPTED. 6.5.5 HOWEVER, IN THE PRESENT CASE THERE IS A NEW D IMENSION TO THE SAID ISSUE. AS MENTIONED IN ABOVE PARA'S THE CAPTIONED APPEAL HAS BEEN PREFERRED BY THE APPELLANT AGAINST THE ORDER PASSED U/S 153A OF THE ACT I.E. A SSESSMENT PASSED IN THE CASE OF SEARCH AND AT THE SAME TIME PROCEEDING FOR THE CAP TIONED ASSESSMENT YEAR HAS ALREADY BEEN COMPLETED. THEREFORE, THE PERTINENT QU ESTION WHICH ARISES IS AS TO WHETHER APPELLANT CAN FILE ADDITIONAL GROUND IN THE CASE OF SEARCH ASSESSMENT AS THE SAID PROCEEDING LIKE 147 PROCEEDING IS FOR THE BENE FIT OF THE DEPARTMENT. HOW THE APPELLANT CAN USE IT FOR ITS OWN BENEFIT? THE AR OF THE APPELLANT WHAT ASKED TO SUBMIT ITS REPLY TO THIS SPECIFIC POINT AND ALSO AS TO WHY THE SAID ADDITIONAL GROUND SHOULD NOT BE REJECTED IN VIEW OF DECISION OF SE IN THE CASE O F CIT -VS.- SUN ENGINEERING WORKS (P) LTD. (1992) 198 ITR 297 (SC) . 6.5.6 THE AR OF THE APPELLANT SUBMITTED THAT THERE IS SIGNIFICANT DIFFERENCE BETWEEN THE PROVISION OF REASSESSMENT AS CONTAINED IN SECTI ON 147 OF THE ACT AND ASSESSMENT PURSUANT TO SEARCH AS CONTAINED IN SECTION 153A OF THE ACT. WHILE REASSESSMENT U/S 147 LIMITS THE SCOPE OF THE PROCEEDING TO ONLY THOS E INCOMES WHICH ESCAPED ASSESSMENT AS AGAINST SECTION 153A WHICH EMPOWERS T HE AO TO ASSESSEE OR REASSESS TOTAL INCOME OF THE ASSESSEE. THE AR FURTH ER SUBMITTED THAT SECTION 153A REQUIRES THE AO TO MAKES ASSESSMENT AFRESH AND COMP UTE ' TOTAL INCOME ' IN RESPECT OF EACH OF THE RELEVANT SIX ASSESSMENT YEARS. THERE IS NO SPECIFIC RESTRICTION ON THE JURISDICTION OF THE AO IN NOT INCLUDING ANY NEW INC OME TO SUCH TOTAL INCOME PURSUANT TO SEARCH WHICH WAS NOT ADDED DURING THE ORIGINAL A SSESSMENT, IN THE LIKE MANNER, THERE IS NO RESTRICTION ON THE ASSESSEE TO CLAIM AN Y DEDUCTION WHICH WAS NOT EARLIER CLAIMED IN THE EARLIER PROCEEDING. AS REGARDS THE S C DECISION IN THE CASE OF SUN ENGINEERING (SUPRA) THE AR SUBMITTED THAT IN THE SAID CASE THE HON'BLE SUPREME COURT WAS CONSIDERING THE PROVISIONS OF S.147 AND I T WAS HELD THAT ONCE AN ASSESSMENT IS VALIDLY REOPENED IT IS NOT OPEN TO AN ASSESSEE TO SEEK A REVIEW OF CONCLUDED ITEMS UNCONNECTED WITH THE ESCAPEMENT OF INCOME. HERE IT IS PERTINENT TO NOTE THAT THE CONDITIONS FOR TAKING ACTION UNDER S. 147 VIS-A-VIS UNDER S. 153A ARE ALTOGETHER DIFFERENT. EVEN THOUGH ASSESSMENT UNDER S.147 IS MADE R/W S. 143(3), BUT THE INITIATION OF ASSESSMENT OR REASSESSMENT UNDER S.147 ORIGINATES FROM THE BELIEF OF THE AO, ON THE BASIS OF SOME TANGIBLE MATERIAL, THA T INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. AFTER FORMING SUCH BELIEF, THE AO IS CALLED UPON TO RECORD REASONS FOR THE REOPENING OF THE ASSESSMENT BEFORE ISSUING MANDATORY NOTICE UNDER S.148. IF THE FOUNDATION OF REASSESSMENT, BEING THE REASONS ABOUT THE ESCAPEMENT OF SOME INCOME DOES NOT EXIST, THEN IT IS IMPERMISSIBL E TO GO AHEAD WITH THE ASSESSMENT UNDER S.147. IT IS SINE QUA NON THAT SOM E ESCAPED INCOME MUST BE BROUGHT TO CHARGE IN ORDER TO MAKE A FRESH ASSESSME NT UNDER S.147. ON THE CONTRORV.UHE SEARCH ACTION ITSELF MANDATES ON THE A O TO PASS ORDERS UNDER S.153A COMPUTING ' TOTAL INCOME ' FOR ALL THE RELEVANT SIX ASSESSMENT YEARS, IRRESP ECTIVE OF THE IT(SS)A NO.27-32/KOL/2019 A.Y.S 09-10 TO 13-14 & 15-16 ACIT,CC-3(2) KOL. VS. SHANTINATH DETERGENTS PVT. LTD. PAGE 6 FACT WHETHER SOME CONCEALED INCOME HAS SURFACED AS A RESULT OF SEARCH OR NOT. IT IS THUS APPARENT THAT THE AMBIT OF ASSESSMENT UNDER S. 147 CANNOT BE IMPORTED INTO THE SCOPE OF S.153A. THE LD. AR ALSO CITED THE DECISION OF THE BOMBAY HIGH COURT DELIVERED IN THE CASE OF CIT -VS.- B. G. SHIRKE CONSTRUCTION TECHNOLOGY PVT. LTD. [1392 OF 2014] [BOM ] AND SUBMITTED THAT THE HON'BLE COURT IN SAID CASE WHILE DECIDING THE ADMISSIBILITY OF ADDITIONAL GROUND IN CASE OF SEARCH ASSESSMENT U/S 153A OF THE ACT HAS CONSIDERED THE DECISION OF THE SC IN THE CASE OF SUN ENGINEERING (SUPRA) AND UPHELD THE ORDER OF THE ITAT IN ALLOWING THE A DDITIONAL GROUND FILED BY THE ASSESSEE. FURTHER, THE LD. AR H AS ALSO PLACED RELIANCE ON THE FOLLOWING DECISIONS: - UNIVERSAL MEDICARE PVT. LTD. -VS. - DCIT [2967 TO 2971 /MUM/2016] - DCIT -VS.- EVERSMILE CONSTRUCTION CO. PRIVATE LIM ITED [2011] 143 TTJ 322 (MUM.) - KNR CONSTRUCTION PRIVATE LIMITED -VS.- DCIT [2015 ] (ITA NO. 946-948 OF HYD 2015) -SPLENDOR LAND BASE LIMITED -VS.- ACIT [2018] [IT A NO. 2064/DEL./2016] 6.5.7 I HAVE CONSIDERED THE SUBMISSION OF THE APPEL LANT AND ALSO GONE THROUGH THE CASE LAWS RELIED IN SUPPORT OF ITS CONTENTION. THE PROVISION OF SECTION 153A HAS BEEN BROUGHT ON THE STATUTE BOOK FROM 2003 IN PLACE OF B LOCK ASSESSMENT PROVISION CONTAINED IN CHAPTER XIVB. THE MAJOR DIFFERENCE BET WEEN THE ABOVE TWO SCHEME OF SEARCH ASSESSMENT IS THAT WHILE IN CASE OF BLOCK AS SESSMENT U/S 158BA THE AO WAS EMPOWERED TO TAX ONLY 'UNDISCLOSED INCOME ' AND IN CASE OF PRESENT PROVISION OF SECTION 153A THE AO IS REQUIRED TO ASSESS OR REASSE SS ' TOTAL INCOME' . THIS CONTRAST DIFFERENCE EXPLAINS THAT THE PRESENT SCHEME OF ASSE SSMENT AS CONTAINED IN SECTION 153A IS WIDE IN ITS SCOPE AND EMPOWERS AO TO ADD AN Y OTHER INCOME OR MAKE ANY DISALLOWANCE WHICH WAS NOT MADE IN THE ORIGINAL ASS ESSMENT ORDER. I FOUND FORCE IN THE CONTENTION OF THE LD. AR THAT THERE IS NOTHING IN THE PRESENT PROVISION WHICH RESTRICTS EITHER AO OR THE ASSESSEE TO MAKE ANY NEW ADDITION OR LODGER ANY CLAIM IN THE CAPTIONED PROCEEDING. I HAVE GONE THROUGH THE D ECISION OF THE MUMBAI ITAT IN THE CASE OF EVERSMILE CONSTRUCTION CO. PVT. LTD (SU PRA) AND FOUND THAT THE SAID DECISION EXACTLY DEALS WITH THE SITUATION WHICH IS IDENTICAL WITH THE PRESENT CASE. PARA 10 OF THE SAID DECISION IS VERY MUCH RELEVANT AND S AME IS REPRODUCED AS UNDER: ' 10 . IF ANY DEDUCTION IS CLAIMED BY THE ASSESSEE IN TH E PROCEEDINGS UNDER S. 153A THAT CANNOT BE REJECTED SIMPLY ON THE GROUND T HAT IT WAS NOT CLAIMED IN THE ORIGINAL ASSESSMENT OR WAS DISALLOWED. THE STAR TING POINT OF ASSESSMENT IS THE AMOUNT OF INCOME DECLARED IN THE RETURN OF I NCOME, WHICH IS FURTHER ENHANCED WITH THE ADDITIONS. WE ARE UNABLE TO APPRE CIATE THE QUALITATIVE DIFFERENCE BETWEEN THE TWO SITUATIONS VIZ., THE FIR ST IN WHICH THE ASSESSEE FILES RETURN IN RESPONSE TO NOTICE UNDER S. 153A DISCLOSI NG LOWER INCOME THAN THE ONE ORIGINALLY ASSESSED UNDER S. 143(3) AND THE SEC OND SITUATION IN WHICH THE INCOME IS DISCLOSED AT THE INCREASED LEVEL, THAT IS , AFTER CONSIDERING THE ADDITIONS SO MADE IN THE ASSESSMENT PROCEEDINGS ABO UT THE DEDUCTIBILITY OF THE AMOUNT(S) WHICH WAS / WERE NOT ALLOWED EARLIER. PROBABLY THE SECOND COURSE IS ADOPTED SO AS TO PREEMPT ANY MOVE ON THE PART OF THE REVENUE TO IMPOSE CONCEALMENT PENALTY, IF THE ADDITION IS SUST AINED IN THE ASSESSMENT UNDER S.153A. IN OUR CONSIDERED OPINION WHEN THE AO HAS TO COMPUTE THE TOTAL INCOME OF THE ASSESSEE ON THE BASIS OF RETURN FILED AFTER CONSIDERING THE SUBMISSIONS MADE DURING THE COURSE OF HEARING BEFOR E HIM, THERE CANNOT BE ANY SCOPE FOR ARGUING THAT THE ASSESSEE HAS BEEN RE NDERED POWERLESS TO EVEN LODGE A CLAIM IN RESPECT OF WHICH DEDUCTION WA S NOT ALLOWED EARLIER. HERE IT IS IMPORTANT TO NOTE THAT THE TOTAL INCOME IS NOT REDUCED SIMPLY ON THE IT(SS)A NO.27-32/KOL/2019 A.Y.S 09-10 TO 13-14 & 15-16 ACIT,CC-3(2) KOL. VS. SHANTINATH DETERGENTS PVT. LTD. PAGE 7 BASIS OF MAKING A CLAIM. THE AO IS FULLY EMPOWERED TO CONSIDER THE QUESTION OF DEDUCTIBILITY AS PER THE PROVISIONS OF THE ACT. IF AFTER GOING THROUGH SUCH CLAIM, HE FEELS THAT ADDITION IS CALLED FOR, HE WIL L OBVIOUSLY MAKE ADDITION AND VICE VERSA' I ALSO GONE THROUGH THE OTHER DECISIONS RELIED UPON BY THE LD. AR OF THE APPELLANT. IN ALL THE DECISION THE, HON'BLE COURT OR TRIBUNAL HAS ADMITTED THE ASSESSEE CONTENTION AND ALLOWED THE ADDITIONAL GROUND OF THE ASSESSEE. THE DECISION OF UNIVERSAL MEDICARE PVT. LTD. (SUPRA) IS THE LATEST DECISION ON THE CAPTIONED MATTER PAS SED IN DECEMBER 2018 WHEREIN ALSO THE ITAT HAD ADMITTED TH E ADDITIONAL GROUND OF THE ASSESSEE IN RESPECT OF SALES TAX SUBSIDY. IN VIEW O F THE AFORESAID DISCUSSION, ADDITIONAL GROUND FILED BY THE APPELLANT IS PURELY LEGAL IN NATURE AND HENCE SAME IS ADMITTED FOR ADJUDICATION ON MERIT. IT WOULD BE PERTINENT HERE TO MENTION THAT IN A NUM BER OF CASES HIGH COURTS HAVE HELD THAT IN PROCEEDINGS U/S.153A ONLY THOSE ADDITI ONS CAN BE MADE WHICH ARE LINKED TO INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH. THEREFORE, THE SEARCH ASSESSMENTS MADE U/S.153A / 153C ONLY ADDITIONS WHI CH CAN BE MADE ARE ONES WHICH ARE LINKED TO INCRIMINATING MATERIAL FOUND DU RING THE COURSE OF SEARCH. AS A LOGICAL EXTENSION IT CAN BE ARGUED THAT NO RELIEF C AN BE GRANTED TO THE ASSESSEE UNLESS IT IS LINKED TO SOME INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH. THEREFORE, THERE IS CONTRADICTION IN THE JUDGMENTS OF HON'BLE COURTS. ON THE ONE HAND IT IS BEING HELD THAT NO ADDITION CAN BE MADE IN AS SESSMENTS MADE U/S 153A WITHOUT REFERENCE TO INCRIMINATING MATERIALS FOUND DURING S EARCH, ON THE OTHER HAND THE JUDGEMENTS CITED ABOVE STATE THAT ONCE A NOTICE U/S .153A IS ISSUED, ENTIRE FIELD IS OPEN AND THE ASSESSEE CAN MAKE ANY CLAIM WHICH HAS NOT BEEN MADE IN THE ORIGINAL RETURN. BEING BOUND BY THE JUDGEMENTS CITED ABOVE T HE ASSESSEE'S CLAIM IS BEING ADMITTED. ON A LITERAL INTERPRETATION, THE VIEW HEL D BY BOMBAY HIGH COURT IN B.G. SHIRKE [SUPRA] & MUMBAI ITAT IN THE CASE OF M/S. EVER SMILE CONSTRUCTION [SUPRA] SEEMS TO BE MORE LOGICAL. ALTHOUGH IT RUNS TOTALLY CONTRARY THE DECISIONS RENDERED BY COURTS IN VARIOUS CASES WHEN IT COMES T O MAKING ADDITION IN CASES WHERE SEARCH HAS TAKEN PLACE. BE THAT AS IT MAY, I HOPE THAT IN FUTURE THIS CONFLICTING VIEW WOULD BE RECONCILED BY HIGHER JUDICIARY. MEANW HILE, IN VIEW OF THE DECISION CITED BY THE ASSESSEE, THE ADDITIONAL GROUNDS REGARDING S ALES TAX SUBSIDY BEING IN REVENUE NATURE ARE ADMITTED. 6.5.8 THE APPELLANT RECEIVED SALES TAX INCENTIVE OF 3,61,60,316/- FROM WEST BENGAL STATE GOVERNMENT UNDER THE WEST BENGAL INDUSTRIAL P ROMOTION (ASSISTANCE TO INDUSTRIAL UNITS) SCHEME - 1994 [IN SHORT WBIPS - 1994 ] PUBLISHED ON 27-05-1994 VIDE RESOLUTION NO. 1460 F.T. KOLKATA. THE ABOVE IN CENTIVE WAS GRANTED BY WAY OF REFUND OF SALES TAX PAID ON SALE OF GOODS MANUFACTU RED IN THE STATE OF WEST BENGAL. THE APPELLANT CREDITED THE SAID INCENTIVE UNDER THE HEAD ' OTHER INCOME ' IN THE PROFIT AND LOSS ACCOUNT. BY FILLING ADDITIONAL GROUND, THE APPELLANT SEEKS TO EXCLUDE SAID INCENTIVE IN COMPUTING TAXABLE INCOME TREATING THE SAME AS CAPITAL RECEIPT. I HAVE GONE THROUGH THE SCHEME UNDER WHICH THE SAID INCENT IVE HAS BEEN GRANTED TO THE APPELLANT. ON PERUSAL OF THE PREAMBLE OF THE SAID S CHEME IT IS EVIDENT THAT THE INCENTIVE HAS BEEN GRANTED IN THE FORM OF FINANCIAL ASSISTANCE FOR MODERNIZATION AND EXPANSION OF THE INDUSTRIAL UNIT MANUFACTURING GOOD S IN THE STATE OF WEST BENGAL. THE SOLE OBJECTIVE OF THE SCHEME IS PROMOTION OF INDUST RIES IN THE STATE. THE NOMENCLATURE OF THE SCHEME ALSO INDICATES THE SAID OBJECTIVE. THE AR OF THE APPELLANT RIGHTLY SUBMITTED THAT FOR DETERMINING TH E NATURE OF THE INCENTIVE RELIANCE HAS TO BE PLACED UPON THE AUTHORITATIVE DECISION OF THE SC IN THE CASE OF SAHNEY STEEL AND PRESS WORKS LTD. [1997] 228 ITR 253 (SC) & CIT -VS.- PONNI SUGARS AND CHEMICALS LTD. [2008] 306 ITR 392 (SC) WHEREIN THE HON'BLE COURT HAS LAID DOWN THE 'PURPOSE TEST' AS SOLE CRITERION FOR TAXAB ILITY OF INCENTIVES GRANTED BY CENTRAL IT(SS)A NO.27-32/KOL/2019 A.Y.S 09-10 TO 13-14 & 15-16 ACIT,CC-3(2) KOL. VS. SHANTINATH DETERGENTS PVT. LTD. PAGE 8 OR STATE GOVERNMENT UNDER THE VARIOUS POLICIES. IN TERMS OF SAID PRINCIPLE, IF THE OBJECT OF THE SUBSIDY SCHEME WAS TO ENABLE THE ASSE SSEE TO RUN THE BUSINESS MORE PROFITABLY THE RECEIPT IS ON REVENUE ACCOUNT. ON TH E OTHER HAND, IF THE OBJECT OF THE ASSISTANCE UNDER THE SUBSIDY SCHEME WAS TO ENABLE T HE ASSESSEE TO SET UP A NEW UNIT OR TO EXPAND THE EXISTING UNIT THE RECEIPT OF THE SUBSIDY , WAS ON CAPITAL ACCOUNT. THEREFORE, THE COURT PROCEEDED, IT IS THE OBJECT FO R WHICH THE SUBSIDY/ASSISTANCE IS GIVEN WHICH DETERMINES THE NATURE OF THE INCENTIVE SUBSIDY. THE FORM OF THE MECHANISM THROUGH WHICH THE SUBSIDY IS GIVEN IS IRR ELEVANT. SINCE, IN THE APPELLANT CASE THE OBJECTIVE OF GRANTING INCENTIVE AS EMANATI NG FROM THE PREAMBLE OF THE SCHEME IS TO PROMOTE INDUSTRIES IN THE STATE AND TO PROVIDE FINANCIAL ASSISTANCE FOR MODERNISATION AND EXPANSION OF CAPACITIES, THEREFOR E, THE SAID INCENTIVE IS GRANTED FOR CAPITAL PURPOSE AND CONSEQUENTLY CAPITAL RECEIP T IN NATURE. 6.5.9 THE ABOVE VIEW SUPPORTED BY THE DECISION OF T HE JURISDICTIONAL HIGH COURT DELIVERED IN THE CASE OF CIT -VS.- RASOI LIMITED (2011) 335 ITR 438 (CAL) WHERE THE HON'BLE COURT HAS HELD THAT THAT INCENTIVE PROVIDED BY THE GOVERNMENT UNDER INDUSTRIAL PROMOTION SCHEME FAR CAPITAL PURPOSE AND HENCE, SHOULD BE TREATED AS CAPITAL RECEIPT AND NOT CHARGEABLE TO TAX. IN THE A BOVE CASE INCENTIVE WAS GRANTED UNDER THE WEST BENGAL INCENTIVE INDUSTRIAL PROMOTIO N (ASSISTANCE TO INDUSTRIAL UNITS) SCHEME -1994. AS RIGHTLY SUBMITTED BY THE AR OF THE APPELLANT THAT THE ABOVE SCHEME IS THE EARLIER VERSION OF THE PRESENT SCHEME FLOATED BY THE GOVERNMENT OF WEST BENGAL IN 2010 UNDER WHICH THE APPELLANT RECEI VED THE INCENTIVE. THE ABOVE FACT IS CLEARLY EVIDENT FROM THE CIRCULAR NO.2 DATE D 29-04-2010 ISSUED BY THE DIRECTORATE OF COMMERCIAL TAX, WEST BENGAL. FURTHER A COMPARATIVE STUDY OF THE PREAMBLE AND OBJECTIVE OF BOTH THE SCHEME ALSO SUGG EST THE SAME VIEW. IN THE CASE OF RASOI LIMITED (SUPRA) THE HON'BLE IN THE CASE OF SAHENY STEEL AND PRESS WORKS LTD. (SUPRA) & PONNI SUGARS AND CHEMICALS LTD. (SUPRA) AND HELD AS UNDER:- 'IN THE AFORESAID CASE, IT WAS HELD THAT IF THE OBJ ECT OF THE SUBSIDY SCHEME WAS TO ENABLE THE ASSESSEE TO RUN THE BUSINESS MORE PROFITABLY THE RECEIPT IS ON REVENUE ACCOUNT. ON THE OTHER HAND, IF THE OBJEC T OF THE ASSISTANCE UNDER THE SUBSIDY SCHEME WAS TO ENABLE THE ASSESSEE TO SE T UP D NEW UNIT OR TO EXPAND THE EXISTING UNIT THE RECEIPT OF THE SUBSIDY WAS ON CAPITAL ACCOUNT. THEREFORE, THE COURT PROCEEDED, IT IS THE OBJECT FO R WHICH THE SUBSIDY/ ASSISTANCE IS GIVEN WHICH DETERMINES THE NATURE OF THE INCENTIVE SUBSIDY. THE FORM OF THE MECHANISM THROUGH WHICH THE SUBSIDY IS GIVEN IS IRRELEVANT. IN THE CASE BEFORE US, THE OBJECT OF THE SUBSIDY IS FOR EX PANSION OF THEIR CAPACITIES, MODERNIZATION, AND IMPROVING THEIR MARKETING CAPABI LITIES AND THUS, THOSE ARE FOR ASSISTANCE ON CAPITAL ACCOUNT. SIMILARLY, MEREL Y BECAUSE THE AMOUNT OF SUBSIDY WAS EQUIVALENT TO 90 PER CENT OF THE SALES TAX PAID BY THE BENEFICIARY DOES NOT IMPLY THAT THE SAME WAS IN THE FORM OF REF UND OF SALES TAX PAID. AS POINTED OUT BY THE SUPREME COURT IN THE CASE OF SENAIRAM DOONGARMALLV. CIT REPORTED IN [1961] 42 ITR 392 (SC) ; AIR 1961 SC 1579, IT IS THE QUALITY OF THE PAYMENT THAT IS DECISIVE OF THE CHARACTER OF THE PAYMENT AND NOT THE METHOD OF THE PAYMENT OR ITS MEASURE, AND MAKES IT FALL WITHIN CAPITAL AND REVENUE. THUS, IN THE CASE BEFORE US, THE AMOUNT PA ID AS SUBSIDY WAS REALLY CAPITAL IN NATURE.' THE ABOVE DECISION OF THE HON'BLE COURT WAS AGAIN F OLLOWED BY THE DIVISION BENCH OF THE HIGH COURT IN THE CASE OF MANMOHAN KEDIA -VS.- ITO (2014) [2014-LL-0829.-36 ] WHEREIN WHILE ADJUDICATING THE IDENTICAL QUESTION U NDER THE IDENTICAL SCHEME THE HON'BLE HIGH COURT.HOS RELIED UPON THE DECISION OF RASOI LIMITED (SUPRA) AND HELD THAT INCENTIVE RECEIVED BY THE APPELLANT IS CAPITAL RECEIPT IN NATURE. IT(SS)A NO.27-32/KOL/2019 A.Y.S 09-10 TO 13-14 & 15-16 ACIT,CC-3(2) KOL. VS. SHANTINATH DETERGENTS PVT. LTD. PAGE 9 IN VIEW OF THE AFORESAID DISCUSSION, I AM OF THE VI EW THAT SALES TAX INCENTIVE GRANTED TO THE APPELLANT IS CAPITAL RECEIPT IN NATURE AND T HEREFORE NOT CHARGEABLE TO TAX. THEREFORE, THIS ADDITIONAL GROUND IS DECIDED IN FAV OR OF THE APPELLANT. 7.0 ADDITIONAL GROUND 2: EXCLUSION OF SALES TAX REFUND FROM WEST BENGAL STATE GOVERNMENT IN COMPUTING BOOK PROFIT UNDER MAT PROVISION (U/S 115JB ) 7.1 THE ASSESSEE ALSO SEEK EXCLUSION OF SALES TAX I NCENTIVE UNDER MAT PROVISIONS AS SPECIFIED U/S 115JB OF THE ACT. THE APPELLANT IN IT S SUBMISSION STATED THAT SUCH INCENTIVE (CAPITAL RECEIPTS) WHICH IS GRANTED FOR E XPANSION AND GROWTH OF INDUSTRIES DOES NOT CONTAIN ANY PROFIT ELEMENT AND HENCE IT IS NOT AN INCOME U/S 2(24) OF THE ACT. IN THIS REGARD RELIANCE WAS PLACED BY THE ASSE SSEE ON THE JUDGEMENT OF SUPREME COURT IN CASE OF [ PADMARAIE R. KADAMBANDE -VS.- CIT (1992) 195 ITR 877 (SC) ] WHERE IT WAS HELD THAT PURE CAPITAL RECEIPTS ARE NOT 'INCOME' WITHIN THE MEANING OF SECTION 2(24) OF THE ACT & HENCE ARE NOT AT ALL ' CHARGEABLE ' UNDER THE I. T. ACT. AN IDENTICAL VIEW WAS TAKEN BY MUMBAI ITAT IN SHIVALIK VENTURE (P) LIMITED -VS.- DCIT (ITA NO. 2008/MUM/2012). THE ASSESSEE FURTHER CITED THAT JUDGEMENT OF JAIPUR TRIBUNAL IN ACIT -VS.- SHREE CEMENT LTD. (2014) 31 ITR 513(JAIPUR) WHERE IT WAS HELD THAT SALES TAX INCENTIVE NEEDS TO BE EXCLUDED IN COMPUTING BOOK PROFIT U/S 115JB SINCE THE SAME IS IN THE NATURE OF A CAPITAL RECEIPT NOT LIABLE TO TAX. 7.2 APART FROM THE ABOVE, A SUPPLEMENTARY SUBMISSI ON WAS ALSO SUBMITTED BY THE ASSESSEE ON 19-03-2019 ON THE AFORESAID MENTIONED I SSUE. IN HIS SUPPLEMENTARY SUBMISSION, THE ASSESSEE RELIED ON MANY JUDICIAL PR ONOUNCEMENTS WHERE IT WAS HELD THAT SUBSIDY SHALL BE TREATED AS CAPITAL RECEIPT AN D EXCLUDED FROM COMPUTING BOOK PROFIT UNDER THE MAT PROVISIONS. DURING THE COURSE OF HEARING, A QUESTION AROSE THAT WHEN THERE ARE TWO CONFLICTING HIGH COURT JUDGEMENT S, THEN WHICH VIEW SHALL BE ACCEPTED. IN RESPECT OF THE AFORESAID MATTER, THE A SSESSEE CITED THE LANDMARK JUDGEMENT WHICH WAS ADDRESSED BEFORE DELHI IT AT IN CASE OF TEI INTERNATIONAL PVT LTD -VS.- DCIT [(2000) 69 TTJ 650 (DEL)] WHERE IT W AS DECIDED THAT WHEN THERE ARE TWO CONFLICTING HIGH COURT JUDGEMENTS, THE ONE WHIC H FAVOURS THE ASSESSEE SHALL BE ACCEPTED. 7.3 FINDINGS OF CIT(APPEALS ) 7.3.1 VIDE THE 2ND ADDITIONAL GROUND THE APPELLANT SEEKS TO EXCLUDE THE ABOVE INCENTIVE IN COMPUTING BOOK PROFIT U/S 115JB WHILE COMPUTING MAT LIABILITY UNDER THE PROVISIONS OF THE ACT. IN THIS REGARD IT IS NOTEW ORTHY THAT THE APPELLANT HAS CREDITED THE SAID INCENTIVE IN ITS PROFIT AND LOSS ACCOUNT A ND NOW CLAIMING EXCLUSION IN COMPUTING BOOK PROFIT U/S 115JB OF THE ACT TREATING IT AS CAPITAL RECEIPT. IN SUPPORT OF ITS CLAIM THE APPELLANT HAD PLACED RELIANCE ON THE SERIES OF DECISIONS DELIVERED BY THE TRIBUNALS THROUGHOUT THE COUNTRY AND CITED HEREIN B ELOW: - ACIT -VS.- SHREE CEMENT LTD. (2014) 31 ITR 513(JA IPUR) CONFIRMED BY RAJASTHAN HIGH COURT IN 2017 IN APPEAL NO. 27 OF 2 012. -KRISHI RASAYAN EXPORTS PVT. LTD. VS. ACIT (ITA N O. 883/KOI/2014) - DCIT -VS.- BINANI INDUSTRIES LTD. [ITA NO. 144 /KOL/2013] - ACIT -VS.- L.H. SUGAR FACTORY LTD. [ITA NO. 417 &418/LKW/2013] - ACIT -VS.- AJANTA MANUFACTURING LIMITED [ITA 17 3, 174 & 308/RJT/2017] - ACIT -VS.- GENUS ELECTROTECH LTD. (2016) 161 IT D 644 (LTAT)(AHD) - CIT -VS.- HARINAGAR SUGAR MILLS LTD. (ITA NO. 1 132 OF 2014) - SICPA INDIA LIMITED -VS.- DCIT [ITA NO. 585 OF 2012] -DCIT -VS.- SANGHI INDUSTRIES LIMITED [ITA NO. 10 01 /HYD/2017] - MALNA POWER CO LTD. -VS.- JCIT [ITA NO. 2281/DEL. /2013] -DCIT -VS.- DEEGEE ORCHADS PVT. LIMITED [ITA NO. 4613/MUM/2016] IT(SS)A NO.27-32/KOL/2019 A.Y.S 09-10 TO 13-14 & 15-16 ACIT,CC-3(2) KOL. VS. SHANTINATH DETERGENTS PVT. LTD. PAGE 10 7.3.2 THE COMMON THREAD IN ALL THE DECISIONS OF THE ITAT IS THAT CAPITAL RECEIPT IS NOT IN THE NATURE OF INCOME AND THEREFORE SHOULD BE EXC LUDED IN COMPUTING BOOK PROFIT. I HAVE GONE THROUGH THE ABOVE DECISIONS AND NOTED THA T THE HON'BLE TRIBUNALS HAD GIVEN THE ABOVE DECISIONS POST CONSIDERING THE DECI SION OF THE SC IN THE CASE OF APOLLO TYRES -VS.- CIT (2002) 255 ITR 273 (SC) . DURING THE COURSE OF HEARING THE AR OF THE APPELLANT WAS ASKED AS TO WHY THE DECISIO N OF KARNATAKA HIGH COURT DELIVERED IN THE CASE OF M/S B & B INFRATECH LTD -VS.- INCOME TAX OFFICER WA RD 12(1) [ ITA NO 172/2016 ] SHOULD BE APPLIED WHERE THE HON' BLE COURT HAS RE LIED UPON THE DECISION OF SC IN THE CASE OF APOLLO TYRES (SUP RA) AND HELD THAT INCOME IN THE NATURE OF WAIVER OF PRINCIPLE AND INTEREST BY FINAN CIAL INSTITUTIONS CREDITED TO PROFIT AND LOSS ACCOUNT SHOULD NOT BE EXCLUDED WHILE COMPUTING BOOK PROFIT U/S 115J8 OF THE ACT. THE AR OF THE APPELLANT SUBMITTED A DETAILED S UPPLEMENTARY SUBMISSION ON THIS VERY ASPECT ON THE NEXT DATE OF HEARING. THE BROAD CONTENTIONS OF THE APPELLANT ARE SUMMARIZED AS UNDER: 1. THE DECISION OF KARNATAKA HC IN CASE OF B & B INFRATECH (SUPRA) IS ON THE WAIVER OF INTEREST AND PRINCIPLE ELEMENT OF LOAN AN D NOT ON INCENTIVE/SUBSIDY WHICH IS ALTOGETHER DIFFERENT IN NATURE AS THE SAID RECEIPT IS CAPITAL RECEIPT IN NATURE HAVING NO ELEMENT OF PROFIT OR INCOME EMBEDD ED IN IT. 2. THE DECISION OF RAJASTHAN HC IN THE CASE OF SHRE E CEMENT (SUPRA) IS DIRECTLY ON SUBSIDY AND THEREFORE SAME SHOULD BE FO LLOWED. 3. THE MADRAS HC IN THE CASE OF CIT -VS.-M/S METAL & CHROMIUM PLATER (P) LTD [2017] 76 TAXMANN.COM 229 (MADRAS) HAD THE OCCASION TO CONSIDER THE ALLOWABILITY OF DEDUCTION U/S 54EC IN COMPUTING BOO K PROFIT U/S 115JB OF THE ACT. THE HIGH COURT CONSIDERED THE ENTIRE PROVISION S ALONG WITH THE DECISIONS IN CASE OF APOLLO TYRES LTD (SUPRA) UPHELD THE CONTENTION OF THE ASSESSEE THAT IN. VIEW OF SEC 115JB(5) OF THE ACT, THE APPEL LANT IS ELIGIBLE TO CLAIM THE ABOVE EXEMPTION IN COMPUTING BOOK PROFIT U/S 115JB OF THE ACT. FURTHER, THE DECISION OF THE HON'BLE COURT HAS ATTAINED FINALITY AS THE SLP FILED BY THE DEPARTMENT HAS BEEN REJECTED BY THE SC. 4. THE KARNATAKA HC IN CASE OF B & B INFRATECH (SUPRA) HAD NOT CONSIDERED THE PROVISION OF SEC. 115JB(5) OF THE ACT WHICH THE MADRAS HC HAS CONSIDERED IN THE CASE OF METAL CHROMIUM (SUPRA). 5. LASTLY, IN CASE OF CONFLICTING VIEWS OF THE HIGH COURT AND NONE OF THEM FROM JURISDICTIONAL HC THAN ONE IN FAVOR OF THE APPELLAN T SHOULD BE FOLLOWED. 7.3.3 I HAVE CONSIDERED THE ABOVE SUBMISSION OF THE APPELLANT AND ALSO GONE THROUGH THE ALL THE DECISIONS CITED AND RELIED UPON BY THE LD. AR. IN MY HUMBLE UNDERSTANDING OF THE PROVISION OF SEC. 115JB OF THE ACT, ONCE ANY ITEM IS CREDITED OR DEBITED TO PROFIT & LOSS ACCOUNT THAN THE SAME CANN OT BE EXCLUDED OR INCLUDED IN COMPUTING BOOK PROFIT. THERE ARE EXCEPTIONS UNDER W HICH ADJUSTMENT MAY BE MADE IN COMPUTING BOOK PROFIT AND THESE EXCEPTIONS ARE PROV IDED IN THE EXPLANATION 1 TO SEC. 115JB OF THE ACT. THE DECISION OF THE KARNATAK A HIGH COURT IN THE CASE OF B&B INFRATECH (SUPRA) IS ON THE VERY SAID PRINCIPLE ONLY, THE DIFFERENTI ATION OF CAPITAL RECEIPT OR REVENUE RECEIPT IS RELEVANT UNDER NORMAL PROVISIONS OF THE ACT ONLY AND THE SAID CONCEPT IS ALIEN TO THE BOOK PROFIT PROVISION U/S 11SJB OF THE ACT WHICH IS A SEPARATE AND DISTINCT CODE IN ITSELF. THIS IS ALSO A FACT THAT DIVERGENT VIEW EXISTS ON THE VERY ISSUE WHERE RAJASTHAN HC AND MADRAS HC HAS TAKEN A DIAGONALLY OPPOSITE VIEW ON THIS ISSUE IN THE ABOVE CITED DECISIONS. FU RTHER, THE DECISIONS OF THE TRIBUNALS AND SPECIALLY KOLKATA TRIBUNAL HAD CONSISTENTLY DEC IDED THE ISSUE IN FAVOR OF THE IT(SS)A NO.27-32/KOL/2019 A.Y.S 09-10 TO 13-14 & 15-16 ACIT,CC-3(2) KOL. VS. SHANTINATH DETERGENTS PVT. LTD. PAGE 11 ASSESSEE AND UPHELD THE VIEW OF EXCLUSION OF SUBSID Y INCENTIVE IN COMPUTING BOOK PROFIT U/S 115JB OF THE ACT ON THE ISSUE EXCLUDING SALES TAX SUBSIDY IN COMPUTING BOOK PROFIT U/S.115JB ONE VIEW COULD BE THAT HON'BL E SUPREME COURT IN THE CASE OF APPOLO TYRE VS. CIT 255 ITR 273 (SC) , THE SUPREME COURT HAS HELD THAT NO ITEM OTHER THAN THAT MENTIONED IN EXPLANATION ONE CAN BE MADE IN COMPUTING THE BOOK PROFIT U/S.115JB. HOWEVER, IN VIEW OF THE FACT THAT THE DECISIONS OF VARIOUS HIGH COURTS CITED ABOVE HAVE CONSIDERED THE DECISION OF HON'BLE SUPREME COURT AND THEREAFTER HELD THAT THE ASSESSEE WOULD BE ENTITLED TO EXCLUDE SALES TAX SUBSIDY IN COMPUTATION OF BOOK PROFIT U/S.115JB. IN VIEW OF TH E ABOVE DISCUSSION AND FOLLOWING WELL DEFINED PRINCIPLE OF JUDICIAL DISCIPLINE AND H IERARCHY, I HAVE NO OTHER OPTION BUT TO FOLLOW THE DECISIONS WHICH ARE FAVORABLE TO THE ASS ESSEE. 7.3.4 THEREFORE, RESPECTFULLY FOLLOWING THE JUDICIA L DISCIPLINE AS LAID DOWN IN ABOVE DECISION OF THE ITAT AND FOLLOWING THE DECISION OF MADRAS HC IN THE CASE OF METAL CHROMIUM (SUPRA) AND RAJASTHAN HC IN THE CASE OF SHREE CEMENT (SUPR A), INCENTIVE IN THE FORM OF SALES TAX INCENTIVE SHALL BE EXCLUDED IN COMPUTING BOOK PROFIT U/S 115JB OF THE ACT. THEREFORE, THIS ADDITIONAL GR OUND IS ALSO DECIDED IN FAVOUR OF THE APPELLANT. 4. LEARNED CIT-DR REFERRED TO THE RELEVANT FACTS I NVOLVE IN THE INSTANT LIS . HE SUBMITS FIRST OF ALL THAT DEPARTMENT HAD CARRIED OUT THE IMPUGNED SEARCH ON 17/12/12/2014 AT ASSESSEES PREMISES CULMINATING IN INITIATION OF SEC. 153A PROCEEDINGS. HE CONTENDS THAT ONLY THE LAST ASSESSM ENT YEAR ASSESSMENT IN AY 2015-16 HEREIN INVOLVES SEC. 143(3) ASSESSMENT P ROCEEDINGS WHEREAS ASSESSMENTS IN THE FORMER FIVE ASSESSMENT YEAR(S) A RE U/S 153A R.W.S. 143(3) OF THE ACT. MR. VIJAY SHANKAR, EMPHASIZES IN THE LI GHT OF FOREGOING FACTUAL POSITION THAT THE LAW IS VERY MUCH SETTLED NOW THAT A SEARCH ASSESSMENT INITIATED U/S 153A OR 153C; AS THE CASE MAY BE, PER TAINS ONLY TO THE INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE C OURSE OF SEARCH ONLY THAN A SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT. IT IS TH EREFORE HIGHLIGHTED THAT THE ASSESSEES ORIGINAL FORMER FIVE CORRESPONDING COMPU TATION(S) HAD INDEED RECORDED THE IMPUGNED SALES TAX INCENTIVES SUM(S) AS A REVENUE ITEM AND NOT CAPITAL. AND ALSO THAT THE ASSESSING OFFICERS CORR ESPONDING FIVE ASSESSMENT(S) FRAMED U/S 153A R.W.S. SEC. 143(3) OF THE ACT NOWHERE DEALT WITH THE INSTANT ISSUE SINCE NOT EMANATING FROM THE INCRIMINATING MATERIAL. 5. LEARNED CIT-DR CONTINUES CHALLENGES CORRECTNESS OF THE CIT(A)S FOREGOING ACTION THAT HE HAS ERRED IN LAW AND ON FA CTS WHILST ENTERTAINING THE ASSESSEES ADDITIONAL GROUND ON THESE TWIN ASPECTS OF NATURE OF SUBSIDY AS IT(SS)A NO.27-32/KOL/2019 A.Y.S 09-10 TO 13-14 & 15-16 ACIT,CC-3(2) KOL. VS. SHANTINATH DETERGENTS PVT. LTD. PAGE 12 WELL AS SEC. 115JB COMPUTATION SINCE NOT EMANATING FROM THE INCRIMINATING MATERIAL FOUND / SEIZED DURING THE COURSE OF SEARCH . IT IS ACCORDINGLY SUBMITTED THAT THE SAME BE REVERSED AND ON BOTH ASPECTS AND T HE IMPUGNED SALES TAX INCENTIVE SUBSIDY BE DIRECTED TO BE TREATED AS REVE NUE RECEIPT IN ALL THESE ASSESSMENT YEAR(S) GOING BY THE ASSESSEES ORIGINAL COMPUTATION ONLY. 6. LEARNED AUTHORIZED REPRESENTATIVE STRONGLY SUPPO RTED THE CIT(A)S ACTION UNDER CHALLENGE GRANTING RELIEF TO THE ASSES SEE ON THE FOREGOING TWIN ASPECTS I.E. BOTH ON THE NATURE OF SALES TAX SUBSID Y AS WELL AS FOR THE PURPOSE OF COMPUTING SEC. 115JB BOOK PROFITS IN LIGHT OF TH E ABOVE EXTRACTED DISCUSSION. 7. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL CONTENTIONS. IT IS CRYSTAL CLEAR FROM THE CIT(A)S ABOVE EXTRACTED DET AILED DISCUSSION AND THE RELEVANT FACTS EMERGING FROM THE CASE FILE(S) THAT THE ASSESSEE HAD RAISED BOTH THESE ISSUE(S) IN THE COURSE OF LOWER APPELLAT E PROCEEDINGS. WE FURTHER FIND THAT CONTRARY TO THE REVENUES CASE THAT ONLY THE LAST ASSESSMENT YEAR INVOLVED SEC. 143(3) PROCEEDINGS, SCRUTINY ASSESSME NT(S) FOR AYS 2012-13 AND 2013-14 WERE ALSO PENDING AS ON THE DATE OF SEA RCH I.E. 17/18.12.2014 SINCE THE ASSESSING OFFICER HAD ISSUED THE CORRESPO NDING SEC. 143(2) NOTICE(S) ON 24.12.2014 AND 08.09.2014; RESPECTIVEL Y. THE REVENUES CASE THAT THE FORMER FIVE ASSESSMENT YEAR(S) UPTO ASSESS MENT YEAR 2013-14 INVOLVED UNABATED ASSESSMENT 153A(1)(B) IS NOT FACT UAL CORRECT THEREFORE SINCE ONLY AYS 2009-10 TO 2011-12 CONTAIN ABATED PR OCEEDINGS. THAT BEING THE CASE, WE ARE OF THE OPINION THAT IT TECHNICAL A RGUMENT CHALLENGING CORRECTNESS OF THE CIT(A)S ACTION TO HAVE ERRED IN ADMITTING THE ASSESSEES ADDITIONAL GROUND TO THIS EFFECT CARRIES NO MERIT I N ASSESSMENT YEARS IN AYS 2012-13, 2013-14 AND 2015-16 SINCE INVOLVED ABATED ASSESSMENT(S) FOR ASSESSING NOT ONLY THE INCOME UNDER NORMAL PROVISI ONS BUT ALSO THAT EMANATING FROM THE ALLEGED INCRIMINATING MATERIAL F OUND / SEIZED DURING THE COURSE OF SEARCH. IT(SS)A NO.27-32/KOL/2019 A.Y.S 09-10 TO 13-14 & 15-16 ACIT,CC-3(2) KOL. VS. SHANTINATH DETERGENTS PVT. LTD. PAGE 13 8. COMING TO THE FORMER THREE ASSESSMENT YEAR(S) (2 009-10, 2010-11 AND 2011-12) AS WELL, WE SEE NO SUBSTANCE IN REVENUES ABOVE STATED TECHNICAL ARGUMENT SINCE THE CIT(A)S DETAILED DISCUSSION NOT ONLY TAKES NOTE OF VARIOUS JUDICIAL PRECEDENTS (SUPRA) BUT ALSO THE CORRESPOND ING EXPRESSION USED IN THE STATUTE I.E. TOTAL INCOME U/S. 153A(1)(B) OF THE ACT THIS TRIBUNALS FOLLOW ING CO-ORDINATE BENCHES HAVE ALREADY ADJUDICATED THE VE RY ISSUE IN ASSESSEES FAVOUR:- I) DORF KETAL CHEMICALS (I) PVT. LTD. VS. DCIT ITA NO.3736.MUM/2012 II) M/S NARENDRA VEGETABLE PRODUCTS PVT. LTD. VS. A CIT ITA NO. 118/NAG/2013 III) FAISAL ABBAS VS. DCIT ITA NO.S 3485/HYD/2015 & 946/HYD/2015 IV) A SNNIVASA RAMA RAJU VS. DCIT ITA NO. 975/HYD/2 015 V) ACIT VS. N.N. DEVADOSS ITA NO.1219/MAD/2012 ALL THESE CO-ORDINATE BENCHES ARE OF THE VIEW THAT NOTHING COMES IN THE WAY OF THE CONCERNED ASSESSEE IN SEEKING ORIGINAL CLAIM OF DEDUCTION IN PROCEEDINGS INVOLVING SEARCH ASSESSMENT U/S. 153A AS WELL. WE T HUS EXPRESS OUR CONCURRENCE WITH THE CIT(A)S IMPUGNED ACTION ENTER TAINING THE ASSESSEES FOREGOING ADDITIONAL GROUND SEEKING TO TREAT ITS SA LES TAX INCENTIVE SUBSIDY AS CAPITAL AND NOT REVENUE RECEIPT WHICH HAD BEEN ERRO NEOUSLY RECORDED UNDER THE LATTER HEAD IN THE COMPUTATION OF INCOME. WE MA KE IT CLEAR THAT PURPOSE OF AN ASSESSMENT FRAMED UNDER THE PROVISION OF THE ACT IS TO DETERMINE THE CORRECT TAXABLE INCOME THAN THAT BASED ON ESTOPPLE ONLY SINCE THE INCOME TAX ACT DOES NOT INVOLVE ADVERSARIAL PROCEEDINGS AS PER (1972) 83 ITR 453 (SC) CAGIT VS. V.W. NARAYEN, S.N. SWARNNAMAL VS. CED (19 73) 88 ITR 366 (MAD) & STATE OF TAMIL NADU VS ARULMURYA & CO (1982) 51 S TC 381 (MAD)(FB). 9. NEXT COMES YET ANOTHER SIGNIFICANT ASPECT ON MER IT AS TO WHETHER THE IMPUGNED SALES TAX INCENTIVE SUBSIDY SUM(S) RECEIVE D UNDER NOTIFICATION NO. 1460 DATED 27.05.1994 ISSUED BY THE WEST BENGAL IND USTRIAL PROMOTION (ASSISTANCE TO INDUSTRIAL UNITS) SCHEME ARE IN THE NATURE OF A CAPITAL OR REVENUE SUBSIDY. WE FIND THIS LATTER ISSUE TO BE NO MORE RES INTEGRA SINCE THE IT(SS)A NO.27-32/KOL/2019 A.Y.S 09-10 TO 13-14 & 15-16 ACIT,CC-3(2) KOL. VS. SHANTINATH DETERGENTS PVT. LTD. PAGE 14 CIT(A) HAS TAKEN NOTE OF VARIOUS JUDICIAL PRECEDENT S; INCLUDING THAT OF HON'BLE JURISDICTIONAL HIGH COURT, THAT THIS SUBSIDY GIVES RISE TO CAPITAL RECEIPT ONLY. WE ADOPT THE VERY REASONING MUTATIS MUTANDIS AND UPHOLD THE CIT(A)S FINDINGS UNDER CHALLENGE GRANTING RELIEF TO ASSESSEE. 10. COMING TO THE LATTER SEC. 115JB MAT COMPUTATION ASPECT (SUPRA), LEARNED CIT-DR FAILS TO DISPUTE THAT ONCE THE IMPUG NED SUBSIDY SCHEME HAS BEEN HELD AS CAPITAL AND NOT A REVENUE ITEM, THE SA ME DOES NOT FORM PART OF IMPUGNED MAT COMPUTATION AS WELL GOING BY THE JUDIC IAL PRECEDENTS TAKEN NOTE OF IN THE LOWER APPELLATE DISCUSSION. WE QUOTE IN COMMISSIONER OF INCOME TAX VS. K.Y. PILLIAH & SONS (1967) 63 ITR 411 (SC) THAT WHEN THIS TRIBUNAL EXPRESSES ITS CONCURRENCE WITH THE LOWER A UTHORITIES CONCLUSION IN ENTIRETY, IT MAY NOT TAKE RECOURSE TO A DETAILED RE ASONING ON ITS OWN. WE THUS UPHOLD THE CIT(A)S LOWER APPELLATE FINDINGS ON ALL THESE THREE ASPECTS RAISED AT REVENUES BEHEST. ITS FIRST FOUR APPEAL(S) IT(SS )A NO. 27 TO 30/KOL/2019 RAISING THE FOREGOING TWO ISSUE(S) ONLY FAIL THEREF ORE. 11. THE REVENUES THIRD SUBSTANTIVE GRIEVANCE IN IT (SS)A NO. 31/KOL/2019 IN ASSESSMENT YEAR 2013-14 IS THAT THE CIT(A) HAS E RRED IN LAW AND ON FACTS IN DELETING EXCESSIVE INTEREST PAYMENT DISALLOWANCE OF 1,43,020/- MADE BY THE ASSESSING OFFICE U/S 40A(2)(B) OF THE ACT. WE FIND THAT THE ASSESSEE HAD PAID THE INTEREST SUM(S) @ 12% AND 11% IN CASE OF RELATE D AND UNRELATED PARTIES; RESPECTIVELY. LD CIT-DR FAILS TO DISPUTE THAT THERE IS NO DISCUSSION AT ALL IN THE ASSESSMENT ORDER INDICATING ANY COMPARISON OF MARKE T RATE OF INTEREST VIS-A- VIS ASSESSEES INTEREST @ 12% FORMING SUBJECT-MATTE R OF THE IMPUGNED DISALLOWANCE. WE THUS AFFIRM THE CIT(A)S FINDINGS UNDER CHALLENGE FOR THIS PRECISE REASON ONLY. THIS REVENUES APPEAL IT(SS)A NO. 31/KOL/2019 IS REJECTED THEREFORE. 12. LASTLY COMES THE REVENUES SIXTH APPEAL IT(SS)A NO. 32/KOL/2019 FOR ASSESSMENT YEAR 2015-16 RAISING THIRD SUBSTANTIVE G RIEVANCE SEEKING TO REVIVE IT(SS)A NO.27-32/KOL/2019 A.Y.S 09-10 TO 13-14 & 15-16 ACIT,CC-3(2) KOL. VS. SHANTINATH DETERGENTS PVT. LTD. PAGE 15 ADDITION ON ACCOUNT OF STOCK DISCREPANCY MADE IN TH E COURSE OF ASSESSMENT. THE CIT(A)S DETAILED DISCUSSION TO THIS EFFECT REA DS AS UNDER:- 27.0 GROUND NO.1: WRONG ADDITION OF RS.2,48,781 ON ACCOU NT OF STOCK DISCREPANCY 27.1 THE DEPARTMENTAL HAD CONDUCTED A SURVEY OPERA TION AT THE PREMISES OF THE ASSESSEE. AT GRAHAM LANE, KAMARHATI, KOLKATA-700058 , ON 17-12-2014 AND 18-12- 2014. DURING THE OPERATION IT WAS OBSERVED THAT THE STOCK OF THE ASSESSEE WAS INVENTORISED BY THE INVESTIGATION WING. THE APPELLA NT WAS ASKED TO PROVIDE A RECONCILIATION STATEMENT SHOWING THE MANNER IN WHIC H THE ITEMS OF STOCK HELD B THE APPELLANT WAS CATEGORISED. THE LD. AO DID NOT ACCEP T THE METHOD FOLLOWED BY THE APPELLANT IN CATEGORIZING THE ITEMS OF ITS STOCK, L EADING TO A DISCREPANCY. THE LD. AO THEN ON AD-HOC BASIS, ADDED BACK THE DISCREPANCIES, WHERE THE DISCREPANCIES WERE MORE THAN 500 UNIT, TO THE TOTAL INCOME OF THE APPE LLANT. THE CALCULATION FOLLOWED BY THE LD. AO IS GIVEN BELOW: FINISHED GOODS SL.NO. DIFFERENCE RATE AMOUNT 1 2 3 4 5 6 7 FG SAFED CHAMPION 3 KG (24 KG) FG SAFED CHAMPION 5 KG (24 KG) PACKING MATERIAL PP SAFED 2 KG ROLL SAFED 13 GM ROLL SAFED CHAMPION 120 GM RAW MATERIAL RM AOS RM DOLAMITE TOTAL 6960 5500 230490 1700 3500 65000 75324 4920 4800 222672 1169.132 3378.645 64888 73424 -2040 - 700 -7818 -530.868 -121.355 -122 -1900 37.51 37.32 1.98 172 180 102 .32 -76520 -26124 -15480 -91309 -21844 -11424 -6080 -248781 27.02 THE APPELLANT SUBMITTED THAT THE LD. AO WITHO UT GIVING ANY REASONABLE EXPLANATION HAS CONSIDERED THE METHOD OF CATEGORIZA TION OF STOCK AS INCORRECT. THE LD. AO, ON AD-HOC BASIS HAS RE-CATEGORISED THE ITEM S PRESENT IN THE INVENTORY AND ADDED A SUM OF RS.2,48,781 TO THE TOTAL INCOME, U/S 69B, FOR UNDISCLOSED INVESTMENT IN STOCK. 27.3 FINDINGS OF CIT(APPEALS) 27.3.1 I HAVE PERUSED THE ORDER OF THE AO AND THE A PPELLANT AND BASED ON IT I HAVE COME TO THE CONCLUSION THAT METHOD FOLLOWED BY THE APPELLANT IS REASONABLE. THE LD. AO WITHOUT GIVING ANY JUSTIFICATION OR REASONING HA S REJECTED THE METHOD FOLLOWED BY THE APPELLANT AND HAS SUBSTITUTED THE SAME WITH ITS OWN METHOD OF COMPUTATION ON AD-HOC BASIS, WITHOUT GIVING ANY REASONABLE EXPLANA TION / JUSTIFICATION. THEREFORE, THE AOS ACTION IN REJECTING THE METHOD IN CURRENT YEAR IS NOT JUSTIFIED. IN VIEW OF THE AFORESAID I AM DELETING THE DISALLOWANCE MADE THE A O AND ALLOWED THIS GROUND IN FAVOUR OF THE ASSESSEE. IT(SS)A NO.27-32/KOL/2019 A.Y.S 09-10 TO 13-14 & 15-16 ACIT,CC-3(2) KOL. VS. SHANTINATH DETERGENTS PVT. LTD. PAGE 16 13. LEARNED CIT-DR FAILS TO DISPUTE THAT THE INSTAN T ISSUE INVOLVES AN AD HOC ADDITIONS ONLY ARISING FROM RE-CATEGORISATION OF T HE ASSESSEES INVENTORIZED ITEMS THAN ANY SUBSTANTIVE DISCREPANCY . THAT BEING THE CASE, WE HOLD THAT CIT(A) HAS RIGHTLY GRANTED RELIEF TO THE ASSESSEE SINCE FINDING NO DISCREPANCY IN STOCK IN PRINCIPLE. WE THUS AFFIRM C IT(A)S ABOVE FINDINGS UNDER CHALLENGE DELETING THE IMPUGNED ADDITION. THE REVEN UES SIXTH APPEAL IT(SS)A NO.32/KOL/2019 ALSO FAILS. 14. THESE SIX REVENUES APPEAL(S) IT(SS)A NO. 27 TO 32/KOL/2019 ARE DISMISSED. ( A COPY OF THE INSTANT COMMON ORDER BE PLACED IN THE RESPECTIVE CASE FILES ). ORDER PRONOUNCED IN THE OPEN COURT 20/ 03/2020 SD/- SD/ - ( #) (+ #) (DR.A.L.SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S ,- 20 / 03 /20 20 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-SHANTINATH DETERGENTS PVT. LTD., METRO TO WERS, 1, HO-CHI-MINH SARANI, KOLKATA-71 2. # /REVENUE-ACIT, CC-3(2), AAYAKAR BHAAN, POORVA, 110, SHANTIPALLY, 5 TH FLOOR, KOLKATA-107 3. 6 7 / CONCERNED CIT KOLKATA 4. 7- / CIT (A) KOLKATA 5. : ++6, 6, / DR, ITAT, KOLKATA 6. ? / GUARD FILE. BY ORDER/ , /TRUE COPY/ 6,