JITENDRA MADHANI,SHASTRI NAGAR JAIPUR V. ACIT CIRCLE 3 JAIPUR, NCRB STATUE CIRCLE JAIPUR

MA 38/JPR/2024

AI Insights

The case involves Shri Jitendra Madhani, who filed a Miscellaneous Application under section 254(2) of the Income Tax Act against an ex-parte order of the ITAT, Jaipur. The original dispute pertained to the assessment year 2005-06, where Madhani faced additions to his income due to alleged underreporting of stock loss from a fire incident and other disallowances. The ITAT had previously set aside the matter, directing the AO to reassess the case with specific instructions. However, the AO's subsequent assessment did not consider the assessee's submissions adequately, leading to the filing of the Miscellaneous Application. The Tribunal found merit in the assessee's arguments regarding the non-consideration of his submissions and the procedural lapses in the earlier hearings, thus recalling the ex-parte order and directing a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472765 (ITAT-JAIPUR)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 01-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Other Referred Cases: ITA No. 686/JP/2012, ITA No 3064/Ahd/2010, ITA No 2749/Ahd/2011, ITA No 4696/Del/2009, ITA No 273/Chandigarh/2011, ITA No 4272/Del/2011
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTAM SINGH CHOUDHARY
• Assessee Lawyers: DEEPAK SHARMA
• Keywords: Set aside; Opportunity of being heard; Principle of natural justice
• Section: 143(3); 142(1); 254(2); 271(1)(c); 68; 13; 20

Judgement Text

" vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM MA No. 38/JP/2024 (Arising out of vk;dj vihy la- ITA No. 275/JP/2024) fu/kZkj.k o\"kZ@Assessment Year : 2005-06 Shri Jitendra Madhani C-12, Ram Marg, Shastri Nagar Behnd TPS School, Jaipur cuke Vs. The ACIT, Circle-03, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABMPB 3812 F vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Deepak Sharma, CA jktLo dh vksj ls@ Revenue by : Shri Gautam Singh Choudhary, Addl. CIT a lquokbZ dh rkjh[k@ Date of Hearing : 18/02/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement : 01/ 04/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM The Present Miscellaneous Application has been filed by the assessee u/s 254 of the Act against the order of ITAT, Jaipur Benches, Jaipur in ITA No. 275/JP/2024 dated 02.07.2024 praying therein following reasons to suitably modify or recall of its order as under: MISCELLANEOUS APPLICATION U/S 254(2) R/W RULE 24 OF THE INCOME TAX APPELLATE TRIBUNAL RULES, 1963 IN RELATION TO AN EX-PARTE ORDER DATED 02/07/2024 PASSED BY THE MA No. 38/JP/2024 Jitendra Madhani vs.ACIT 2 HON'BLE TRIBUNAL, JAIPUR BENCH 'SMC' IN RESPECT OF ITA NO. 275/JP/2024, FOR THE ASSESSMENT YEAR 2005-06 MAY IT PLEASE YOUR HONOURS, 1. That the instant miscellaneous application under Rule 24 of the Income Tax Appellate Tribunal Rules, 1963 is being filed by the assessee applicant against an order of the Hon'ble Tribunal dated 02/07/2024, which order of the Hon'ble Tribunal was received by the appellant on 27/09/2024 whereby Hon'ble Tribunal has exparte disposed off the appeal filed by the assessee appellant which was registered as ITA NO. 275/JP/2024. A copy of the said order is being submitted herewith as Annexure 'A' to this miscellaneous application 2. That while disposing of the aforesaid appeal filed by the assessee, Hon'ble Tribunal in Para 2 & 3 of the order has observed as under \"2.1 During the course of hearing, the Bench noticed that none appeared on behalf of the assessee when the case was call out for hearing. Therefore, in the absence of assessee or his authorized representative, the application seeking adjournment was dismissed vide even dated 16-04-2024\" \"2.2 On the contrary, the Id. DR in the Court was ready for arguing the case. Therefore, the Bench decided to dispose off the appeal ex-parte based on the materials available on record\". 2.4 After hearing the Id. DR and perusing the materials available on record, the Bench noted that the assessee was ex-parte before the Id. CIT(A). From the records, the Bench also noticed that this is second round of litigation as the ITAT jaipur Coordinate Bench in the case of the assessee (ITA No. 686/JP/2012 dated 02-06-2016) restored the matter to the file of the AO for deciding the appeal of the assessee afresh. Consequently, the AO made the addition which was challenged before the Id. CIT(A) but the assessee had not filed any response or documents /written submission before the Id CIT(A). Hence, the Id. CIT(A) has dismissed the appeal of the assessee passing ex-parte order because of not filing of any controverting documents in his support. It is also noted that before the Bench, there was no afresh evidence/ documents by the assessee to substantiate his contentions or rebut the findings of the lower authorities. Therefore, in such MA No. 38/JP/2024 Jitendra Madhani vs.ACIT 3 circumstances, the Bench has no alternative except to confirm the order of the Id.CIT(A). Thus appeal of the assessee is dismissed.\" \" 3.0 In the result, the appeal filed by the assessee is dismissed with no orders as to costs. 3. It is most humbly submitted that the A/R has duly filed adjournment to the Hon'ble bench as the appearance of the A/R on the scheduled date of hearing i.e. 16/04/2024 was impossible on account of mainly due to pre occupation in conducting Statutory Bank Audit of Bank of Baroda Mangalore Branch (Karnataka). 4. It is most humbly submitted that the reason for non-appearance of the assessee on the date of hearing of the appeal was neither intentional nor deliberate but due to the reason as the A/R was pre occupied in Statutory Bank Branch Audit work Assignment. Therefore he could not attend the hearing personally. However an Adjournment application had been put before the Hon'ble Bench. 5. It is submitted that applicant has taken these steps to recall the aforesaid order of the Hon'ble ITAT dated 02/07/2024 which was received on 27/09/2024 by filing the instant miscellaneous application and therefore, from the facts and circumstances as stated above, by no stretch of imagination it can be presumed that the assessee is not interested in prosecuting the appeal seriously. 6. In view of the above, it is submitted that there has been a miscarriage of justice in disposing of the appeal ex-parte, as the assessee had been deprived of an opportunity of being heard and as such it is respectfully prayed that the in the interest of justice the ex- parte order dated 02/07/2024 may kindly be recalled and the appeal of the assessee may kindly be heard and decided on merits.” 2. Ld. AR of the assessee in addition to the prayer so made in the Miscellaneous Application vehemently submitted that the Co- ordinate Bench of ITAT, Jaipur Benches dismissed the appeal of the assessee on date of hearing even though an application for adjournment was placed well in time. The bench did not consider MA No. 38/JP/2024 Jitendra Madhani vs.ACIT 4 the adjournment application filed by Mr. Y. Chaturvedi and company and signed on behalf of the assessee on 15.04.2024 and the matter was heard on 16.04.2024 even though the assessee sought an adjournment. Therefore, in the case of the assessee the principle of natural justice has not been followed. Therefore, he prayed that the assessee right of being heard is violated and therefore, the appeal may be recalled to hear the assessee’s case on merits in the interest of justice. 3. On the other hand, ld. DR supported the order of ITAT, Jaipur (supra) praying that the assessee wants to get ITAT’s order reviewed in the grab of Misc. Application and the Co-ordinate Bench has rightly dismissed the appeal of the assessee. Ld. DR argued that in the earlier round the matter was set aside and the assessee did not represent their case before Ld. CIT(A) and therefore, the assessee may not be given the 2nd chance as prayed in the application and therefore, ld. DR relied upon the order of Tribunal. 4. Heard the parties and perused the records. The bench prima facie noticed that the case was fixed for hearing on 16.04.2024, the assessee has applied for adjournment on 15.04.2024 with a request to grant the assessee an adjournment of hearing as the ld. MA No. 38/JP/2024 Jitendra Madhani vs.ACIT 5 AR of the assessee was having unavoidable circumstances. It is important to note that lis between the parties has to be decided on merits so that nobody’s rights could be scuttled down without providing opportunity of being heard to the assessee. The bench also noted that the case of assessee was fixed for hearing on 16.04.2024 which being the first date of hearing the assessee well in time taken the adjournment which was not considered and matter was heard expate. Considering that aspect of the matter we hold that nobody’s right is scuttled down and that too without giving the assessee proper opportunity of being heard and therefore, considering that aspect of the matter, we recall the order dated 02.07.2024. 5. Now after recalling the order the case needs to be fixed for hearing afresh. But in the present case, since the assessee has already placed on record all the material so as to decide the issue on hand in ITA No. 275/JP/2024. Therefore, with consent of both the parties, the bench decided to proceed to consider the appeal of the assessee on its merits on the same day after recalling the order. 6. The assessee in this appeal has raised following grounds: - “1. The Id. CIT(A) has erred in law as well as on the facts of the case MA No. 38/JP/2024 Jitendra Madhani vs.ACIT 6 in confirming the trading addition of Rs 1762186/-. The provisions so invoked and confirmed by CIT(A), being contrary to the provisions of law and facts of the case may kindly be quashed and the consequent trading addition of Rs.1762186/-may kindly be deleted. Alternatively and without prejudice to above the Id. CIT(A) erred in law as well as on the facts of the case in confirming the trading addition of Rs. 1762186/-. The more important aspect of the case is that the gross loss as declared by the assessee amounting to Rs 28,69,575/- is only due to \"loss of stock due to fire\" amounting to Rs 37,10,029/- against which the claim received from insurance company amounting to Rs 17,77,329/-has duly been credited in profit and loss account. Therefore the net loss from fire comes out at Rs 10,92,246/- totaling to Rs 17,62,186/-has been added to the income of the assessee. Hence the addition so made and confirmed by the CIT(A) is contrary to the provisions of law and facts and hence the same may kindly be deleted in full. 2 The Id. CIT(A) further erred in law as well as on the facts of the case in confirming the addition of Rs. 30,666/- on account of disallowance of interest on advance interest free. The disallowances so made and confirmed by the CIT(A) is contrary to the provisions of law and facts and hence the same may kindly be deleted in full. 3 The Id.CIT(A) further has erred in law as well as on the facts of the case in confirming the addition of Rs.33800/- u/s 68 on account of cash credit as income from other source. The addition so made and confirmed by the CIT(A) is contrary to the provisions of law and facts and hence the same may kindly be deleted in full. 4. The ld. CIT(A) as well as Ld. AO had also incorporated the penalty proceedings to be initiated u/s 271(1)(c) separately for furnishing inaccurate particulars of income, which is not justified keeping in view the nature of additions. 5. The appellant prays your honors indulgence to add, amend or alter all or any of the grounds of the appeal on or before the date of hearing.” 7. The brief facts of the case are that the assessee filed the return of income declaring loss at Rs. 18,84,765/- on 29.10.2005. Order u/s 143(3) of the Income Tax Act was passed on 01.11.2007 MA No. 38/JP/2024 Jitendra Madhani vs.ACIT 7 assessing total loss at Rs. 79,039/-. During the course of assessment proceedings u/s 143(3) of the Income Tax Act, it was observed that the assessee had declared loss of Rs. 28,69,575/- on sales of Rs. 81,56,315/- as against the gross profit rate of 8.17% in the A.Y 2004-05. The assessee did not maintain proper quantitative details such as inventory of opening stock was not available, closing stock was shown at Nil. The assessee claimed that there was fire in his factory on 10.10.2004 and he suffered substantial loss of goods. The Insurance Company Bajaj Allianz Insurance Co. assessed the loss of stock at Rs. 20,30,353/-. Based on the insurance company's valuation and considering profit rate of 8.17% as per last year, net loss was calculated at Rs. 2,21,005/- against the declared loss of Rs. 28,69,575/-. While doing so ld. AO also noted that interest expense to the tune of Rs, 30,666/- was required to be disallowed on account of Interest free advances which were not related to the business activities. Ld. AO also made an addition of Rs. 1,10,300/- as section 68 of the Act as the assessee failed to provide confirmations to such extent of cash creditors. MA No. 38/JP/2024 Jitendra Madhani vs.ACIT 8 8. Aggrieved with that order, the assessee carried the matter before the Commissioner of Income Tax, Appeals. In first appeal, the Ld. CIT(A) upheld the additions made by the A.O. and dismissed the appeal of the assessee. In subsequent appeal to ITAT, the co-ordinate bench has set aside the matter to the file of the AO while holding so Tribunal vide its order dated 02.06.2016 in appeal ITA No. 686/JP/2012 has remanded the matters to the AO's file on following issue- • To decide the stock position before the incident of fire on 09.10.2004 in the light of the records of the Punjab & Sind Bank which whom the assessee was having OD limit with direction to the assessee to submit all the documents as may be required by the AO. • To decide matter of addition of Rs. 30,666/-on account of disallowance of interest on interest free advances with a direction to the assessee to produce all evidence/confirmation from the cash creditors. • To decide matter of addition of Rs. 1,10,300/- u/s 68 on account of non- furnishing of confirmations from the cash creditors. 9. As per directions contained in the order of the Tribunal, the assessee, vide notice u/s 142(1) of the Income Tax Act was asked to provide details. In response the assessee provided the details filed written submission. Ld. AO noted that the submissions of the assessee have been considered carefully. But stock valuation was taken as per the order u/s 143(3) for the following reasons:- MA No. 38/JP/2024 Jitendra Madhani vs.ACIT 9 • The bank valuation cum visit is not a very specific document; there was nothing as a visit report but only statement of stock as submitted by the assessee. • Proper details of stock were not maintained as per those statements. • Also, the bank in the first instance denied about the information and stock statement was given in the second instance. • On perusal of statements as submitted by the bank, it was neither clear nor proper even though there were instances of over writing Therefore, ld. AO taken a view that it was not a concrete statement but only as self-serving document. The earlier order was based upon a purely technical insurance report, in which analysis was done in detailed manner with bold specific remarks about the area and stock. How can such a detailed self-explanatory and elaborate document be challenged as against a generic statement of stock. Based on that observation in the set aside proceeding ld. AO did not accept the claim of the assessee and therefore, net loss was calculated at Rs 2,21,005/- as computed in order u/s 143(3) of the Income Tax Act. 10. On the issue of addition of Rs. 30,666/- on account of disallowance of interest-on-interest free advances, the assessee has not produced any evidences and therefore, addition was confirmed. 11. Further, on the issue of addition of Rs. 1,10,300/- u/s 68 of the Act the same was made on account of non-furnishing of MA No. 38/JP/2024 Jitendra Madhani vs.ACIT 10 confirmations from the cash creditors, it has been contended that out of loans addition of Rs. 1,11,300/- made u/s 68, amount of Rs. 76,500/- was taken during the year 2003. In support, the assessee has furnished details of unsecured loans as on 31.03.2003 wherein (i) Shri Sanant Chaterji Rs. 20,000/-, (ii) Shri Vinod Garg, Rs. 18,500/-, (iii) Shri Vinod Singhal, Rs. 20,000/- and (iv) Shri Gopal Lal, Rs. 18,000/- are appearing. Therefore, addition u/s 68 of the Act was restricted to Rs. 33,800/- [ Addition made in first round Rs. 1,10,300/- less Rs. 76,500/- for which evidence was placed on record]. Based on that observation in the set aside proceeding income was determined as under : Net Loss as per order u/s 143(3) of the Act dated 01.11.2007 (-) Rs. 79,039/- Less: Relief as per para 5 above (-) Rs. 76,500/- Total Assessed Income (-) Rs. 1,55,539/- 12. Aggrieved with that observation of the ld. AO, the assessee carried the matter before the Commissioner of Income Tax, Appeals. When the matter was listed for hearing before the ld. CIT(A), the assessee was given five opportunities to be heard but the since the assessee not submitted anything the view of the ld. MA No. 38/JP/2024 Jitendra Madhani vs.ACIT 11 AO was confirmed by the ld. CIT(A). The ld. AR of the assessee submitted that the assessee in the set aside proceeding made a detailed submission dated 06.11.2017 contending as under : “With reference to the above, we are submitting the desired information as given here-in-after: (1) The Ld AO had made the assessment on the report of insurance surveyor:- An insurance company never give actual claim. A person never receive full claim and it is general trend. If insurance company gives less claim than neither it is the default of the assessee not it can be said that the insurance company has given right claim. (2) Wrong calculation of closing stock and G.P. rate:- As already submitted before hon’ble CIT (Appeal) and hon’ble ITAT (As enclosed in Annexure ‘A’) There are six items in trading account: (1) Opening stock (2) Purchases (3) Direct Expenses (4) Sales (5) Closing Stock (6) Gross Profit The Ld A.O has never disputed in opening stock, purchases, direct expenses and sales. Please refer Recasted Trading Account at P.No.3 & 4 in submission before ITAT. From the perusal of record produced it is quite clear if took G.P.rate as pointed by Ld AO than closing stock would be Rs. 3495830 resulting net loss amounting Rs. 1619340/- On the other hand if we took closing stock as Rs. 2030353 (as pointed by Ld AO) than loss would be Rs. 1633025/- Therefore in both the cases either Net loss would be Rs. 1619340/- or Rs. 1633025/- However LD CIT (Appeal) has confirmed the action of AO and he has repeated the same as alleged by the AO. The LD CIT(Appeal) has not speak or uttered a single word on the calculation given by the assessee and confirmed the addition. (3) Report of Assessee’s Banker to insurance company:- A letter dated 17/04/2010 (As enclosed in Annexure B) mentioning therein the facts of assessee as demanded by insurance company from banker of assesseee. In the letter the banker had clearly mentioned that claim passed by you is very low where as the stock statement submitted by the party to the bank is quite higher and settle the claim on revised guidelines. (4) Addition of Rs. 111300/- cash credit u/s 68 of Income Tax Act: (a) Rs. 76500/- is opening balance coming from previous year:- MA No. 38/JP/2024 Jitendra Madhani vs.ACIT 12 As per provisions contained in Section 68 where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offer no explaination about the nature and source thereof or the explaination offered by him is not in the opinion of the assessing officer satisfactory the sum so credited may be charged to income tax as the income of the assessee of that previous year. The law is settled that u/s 68 the AO is supposed to deem a sum found credited during the preceding year, as income, in case the assessee fails to prove the nature and source of the sum so credited. Once the amount itself is not found credited in the year under consideration it need not be discussed even that such an amount can’t be a subject matter of any sort of investigation, inquiry u/s 68 or for any addition for that reason. On perusal of the record or balance sheet of earlier years and this year it is admitted facts, there were opening balance as on 01/04/2004. The amount of opening credit can never be added u/s 68 in the year under consideration which is a settled law. (b) For rest of the two amount of Rs. 34800/- (Rs.18500 of sh. Sunil Goyal and Rs. 16300/- of Smt Indira goyal) it is submitted that the ld. AO and CIT(A) both alleging that the assessee has not filed the confirmation of these persons. However as the assessee is saying that he has filed the confirmation to the AO vide letter to the AO dt. 18.09.2007. Therefore it is requested the entire addition so made or loss so reduced may kindly be deleted in full. ” 13. Further, to that on 22.12.2017 the assessee submitted further submission which reads as under: With reference to the above and discussions held during hearings in the matter of loss of stock in fire, it is hereby submitted that the claim passed by the Insurance Company can't be taken as base in making assessment. There are \"n\" number of cases, where-in, the insurance company never pass the whole claim by making and raising lot of if and buts. It is the business of the Insurance Company, where-in, premium is the only source of income and claims are major expenditure of their profit and loss account. To attain maximum profit and meet their foremost expense under major head i.e. attractive salaries and perquisites of the marketing & legal staff and maintenance of amazing office, the company focused only on collection of premium and in making rejection of claims. Therefore, this is not a new issue of not passing the whole claim by insurance companies loss of stock as claimed by the assessee in its books of account. There may be so many exclusions in insurance policy at the time of policy and may be at the time of claim, which may be reason of rejection of claim. Such rejections also can't be MA No. 38/JP/2024 Jitendra Madhani vs.ACIT 13 base in rejection of claim of loss of stock with Income Tax Department. It is also pertinent to note that no businessman is compelled or abide to have insurance of its property or stock in Income Tax Act. Therefore, the important aspect in such cases should have the actual loss of stock or property irrespective of passing of lesser claim by insurance company or no insurance. In the instant case, there are so many issues, which prove the existence of stock and its loss in fire, as summarized here-in-after:-. (A) Assessee's background The assessee is regular assessee under Income Tax Act, 1961 and filing of return of income tax regularly with audited financials along with tax audit report. The turnover and stock in the preceding years was also in the lines of the current year and nothing unusual evident from the following chart:- S.NO Financial Year Op Stock (RS) Turnover(RS) Stock(RS) GP Rate 1 2002-03 14,15,592/- 93,81,057/- 18,48,250/- 8.54% 2 2003-04 18,48,250/- 1,27,21,709/- 2,59,920/- 8.17% 3 2004- 05(uptill09-10- 04) 25,99,250/- 68,80,415/- 37,10,029/- 12.86% From the above table, the incremental trend of business in last years and maintenance of stock as on 31st March can't be disputed. The festival Diwali was on 12th November, and this is one of the main occasions of the assessee's business to have high demand. In this endeavor, the assessee has accumulated more inventories as compared to normally kept at the end of the year and as such, it has touched at Rs 37.10 lacs as on 09-10-2004 against Rs 26 lacs as exist during last day of March 2004. It is a matter of thinking that what shall be happened with the assessee's, whose business is affected by fire in first year? How they able to prove their business and existence of stock in absence of any history? (B) Credit facilities and banking The fact that (a) The assessee was sanctioned with credit facilities of Rs. 22.50 lacs from Punjab & Sind Bank, Station Road, Jaipur for its business and secured by hypothecation of stock including packing materials. (b) The additional credit facility of Rs 4 lacs in addition to sanctioned limit has also been allowed by the bank to meet increased business requirement of the assessee to purchases more stock in view of coming festive season. MA No. 38/JP/2024 Jitendra Madhani vs.ACIT 14 (c) The assessee has complied with the terms of sanction and was regular in furnishing its monthly stock statement to the bank and on the basis of stock, drawing power assessed by the bank and then only the bank was able to disburse the funds to the assessee. Drawing power is the limit up to which borrower can avail the working capital limit sanctioned. The updation of drawing power for working capital on monthly basis by the bank is an important credit monitoring exercise. This is again firmly support the assessee with its history of business. The above referred facts and figures have duly been re-confirmed by the bank in response of the notice being issued by your office and in the light of ITAT order, where-in, this aspect has to be confirmed. In view of the above, it is independently adequate evidence of establishing the inventories and its loss. (C) Incorrect Interpretation of the Ld. AO The Id AO while making assessment has prepared its trading account by taking stock of Rs. 20,30,353/- (instead of actual stock of Rs. 37,10,029/- ) and estimated gross loss of Rs. 8,39,222/-(refer Para 2 of the order) with a comment that in the event of no fire the gross loss would have this much. Here, the Ld. AO has failed to notice that in the event of no fire and taking actual stock of Rs 37,10,029/-, there would not have any loss but have good profit amounting to Rs. 8,40,454/-comes out at 10.3% of turnover and this shall be accepted. This is also a missing evidence of having existence of stock. The Ld. AO not only overlooked the given fact but also estimated sales without any basis at Rs 82 lacs against actual sales of Rs 81,56,315/- and rejected the trading account and estimated GP rate as was achieved in preceding previous year @ 8.17% resulting in to gross profit of Rs. 6,69,940/-. The addition is purely on the basis of surmises without looking into the actual facts and circumstances of the case and therefore should be deleted. (D) Surveyor Report Though, the above information and facts are sufficient to prove the loss of stock, however, the justification in respect of actual loss and surveyor part is also been explained for your reference. The surveyor has assessed loss of stock at Rs. 20.30 lacs, which has been taken into account by the Insurance Company. The assessments made by the surveyors are nothing but estimation. The report has been prepared by surveyor by proceeding to another plant of same type for taking stacking pattern and calculated the capacity of storage in cu. Ft and assessed loss of stock. The height of the god owns were taken 5' and 7' instead of actual height 10'. The actual total area occupied was appx 8500 cft instead of 5800 cft. As calculated in the surveyor report. The lay out plan of storage area is annexed herewith. On the basis of storage capacity and the pattern of stacking, the value of stock is much higher. It is also pertinent to note that the insurance company has made coverage of stock of Rs 35 lacs and also been collected premium accordingly. While making payment of claim, the storage capacity of god owns has restricted to the total value of stock at Rs 20 lacs by taking low height MA No. 38/JP/2024 Jitendra Madhani vs.ACIT 15 and making variation in the areas. The contradictory is apparent from the report itself. Further, the packing material amounting to Rs. 3.27 lacs was excluded in passing claim of stock, as it was not covered under the policy. Therefore, the existence of stock in accordance the method adopted by the insurance company as well by taking additional value of stock of packing material of Rs. 3.27 lacs not covered under the policy comes out at much higher. Furthermore, reliance may be placed in various case laws, where-in, it has accepted that the lesser claim passed by insurance surveyor against the actual loss, the actual loss should be allowed (a) ITA No 3064/Ahd/2010 & 2749/Ahd/2011 of GE India Industrial Pvt Ltd (extracts of the order annexed) (b) ITA No 4696/Del/2009 of Dinesh Jain (extracts of the order annexed) (c) ITA No 273/Chandigarh/2011 of Navkar International Pvt Ltd (extracts of the order annexed) (d) ITA No 4272/Del/2011 of Nirman Associates (extracts of the order annexed) In view of foregoing discussions, it is humble request to kindly delete the trading additions made of Rs. 6,69,640/- and allow the loss of stock not reimbursed by the Insurance company as well loss of stock of packing materials not covered in the policy.” 14. The ld. AR of the assessee submitted that neither the ld. AO nor the ld. CIT(A) has appreciated or discussed the contentions so raised in the written submission in the remand proceedings. As is evident the assessee has submitted that the creditor of 2003 cannot be added which was done in part. Thus, it is evident from the above stated facts the matter requires a fresh hearing and the ld. AO be directed to pass a speaking order after considering the material placed on record and when the receipt of the insurance company is taxed and the loss determined in that process is required to be allowed. MA No. 38/JP/2024 Jitendra Madhani vs.ACIT 16 15. Per contra, Ld. DR relied upon the order of lower authorities and submitted that the finding of lower authorities is on merits of the dispute and the assessee has not presented those facts properly and therefore, the additions needs to be sustained. 16. We have heard the rival contentions and perused the material placed on record. The bench noted that this is the second round of litigation, and the matter pertains to A. Y. 2005-06. As is evident from the record in the first round of litigation the bench set aside the matter with the following direction. • To decide the stock position before the incident of fire on 09.10.2004 in the light of the records of the Punjab & Sind Bank which whom the assessee was having OD limit with direction to the assessee to submit all the documents as may be required by the AO. • To decide matter of addition of Rs. 30,666/-on account of disallowance of interest on interest free advances with a direction to the assessee to produce all evidence/confirmation from the cash creditors. • To decide matter of addition of Rs. 1,10,300/- u/s 68 on account of non- furnishing of confirmations from the cash creditors. We note that the assessee submitted the required details vide letter dated 06.11.2017 and 22.12.2017 wherein all the details were placed on record but the ld AO for the reasons best known to him did not deal with the submission of the assessee. Since the assessee has represented these facts which was argued before us were not controverted by ld. DR and therefore, we direct the ld. AO MA No. 38/JP/2024 Jitendra Madhani vs.ACIT 17 to deal with the submission of the assessee and pass a speaking order in the matter in accordance with the law considering the direction given by the bench in the first round of litigation. In the result, Miscellaneous Application as well as appeal of the assessee is allowed for statistical purpose as indicated herein above. Order pronounced in the open Court on 01/04/2025 Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 01/04/2025 *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Shri Jitendra Madhani, Jaipur 2. izR;FkhZ@ The Respondent- ACIT, Circle-03, Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (MA No. 38/JP/2024) vkns'kkuqlkj@ By order lgk;d iathdkj@Asst. Registrar "