M/s. D.C.Engineering Industries, Ahmedabad V. The Dy.CIT, Circle-11, Ahmedabad

MA 11/AHD/2016

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 6683 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-06-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 02-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER M/S. D.C. ENGINEERING INDUSTRIES, NEAR JAIN RAKSHABANDHAN, OPP. OLD EVEREST CINEMA, POTALIA TALAV, BAPUNAGAR, AHMEDABAD - 380024 PAN: (APPELLANT) VS TH E DCIT, CIRCLE - 11, AHMEDABAD (RESPONDENT) REVENUE BY : S H RI V.K. SINGH , SR. D . R. ASSESSEE BY: S H RI RAJESH SHAH , A.R. DATE OF HEARING : 18 - 05 - 2 018 DATE OF PRONOUNCEMENT : 05 - 06 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THE SUBMISSION OF THE ASSESSEE AS PER MISC. APPLICATION IS REPRODUCED AS UNDER : - L. THE ABOVE APPEAL WAS HEARD ON 29 - 04 - 2013 AND DISPOSED OFF ON 7 - 6 - 2013 BY 'C' BENCH OF THE HONOURABLE TRIBUNAL C ONSISTING OF HON'BLE SHRI G. C. GUPTA AND HON'BLE SHRI ANIL CHATURVEDI. DURING THE COURSE OF HEARING OF THE APPEAL, THE APPLICANT'S COUNSEL SHRI RAJESH C. SHAH APPRISED THE HONOURABLE MEMBERS OF THE NATURE OF PRODUCT MANUFACTURED BY THE APPELLANT AND ALSO THE FACT THAT THE BURNING LOSS IS INEVITABLE IN THE COURSE OF MANUFACTURING PROCESS. ATTENTION WAS ALSO DRAWN TO THE STATEMENT OF FACTS WHEREIN THE DETAILS OF ACTUAL BURNING LOSS AND G.P. PERCENTAGE OF VARIOUS YEARS INCLUDING THE YEAR UNDER APPEAL WHICH RE AD AS UNDER FINANCIAL TURNOVER (RS.) GROSS PROFIT BURNING LOSS M.A. NO. 11/AHD/2016 (ARISING OUT OF I T A NO . 1545 / A HD/20 10) A SSESSMENT YEAR 200 7 - 08 M.A. NO. 11/AHD/2016 (IN I.T.A NO. 1545 /AHD/20 10) A.Y. 2007 - 08 PAGE NO M/S. D.C. ENGINEERING INDUSTRIES VS. DCIT 2 YEAR ALLUMINIUM ZINC 2003 - 2004 37851207 13.92% 9.26 % 5.01% 2004 - 2005 49695929 15.67% 9.10 % 9.20% 2005 - 2006 51009901 15.70% 11.0% 7.71% 2006 - 2007 66727763 15.33% ASSESSED 8.75% U/S 143(3) 8.96 % THE WORKING OF BURNING LOSS IN CASE OF OWN PRODUCTION WAS GIVEN AT PAGE NO. 15 OF THE PAPER BOOK AS PER WHICH, ACTUAL BURNING LOSS WAS 8.96% IN C ASE OF ALUMINUM CASTINGS AND 8.75 IN CASE OF ZINC CASTINGS AND NOT 10% AS TAKEN BY THE A.O.. THE BURNING LOSS OF 10% TAKEN BY THE A.O. WAS IN RELATION TO THE WEIGHT OF THE FINAL PRODUCT AND NOT THE WEIGHT OF THE RAW MATERIALS CONSUMED. BURNING LOSS IS REQU IRED TO BE WORKED OUT ON THE BASIS OF THE RAW MATERIAL CONSUMPTION BECAUSE THE ADDITION WAS MADE ON THE BASIS OF THE MATERIAL CONSUMPTION. NONE OF THESE FACTUAL ASPECTS WERE DENIED OR CONTROVERTED BY THE LEARNED D.R..HAVING REGARD TO ALL THE ASPECTS, THE H ONOURABLE TRIBUNAL ALLOWED THE BURNING LOSS AT 8.75% AFTER MENTIONING IN PARA 7 AND 8 THAT THE APPELLANT HAD FURNISHED WORKING OF ACTUAL BURNING LOSS AT 8.96 % AND 8.75% . 2. THE APPELLANT HAS RECEIVED THE ORDER DT. 10 - 12 - 2013 GIVING EFFECT TO THE ORDER DT . 7 - 6 - 2013 OF THE HONOURABLE TRIBUNAL ON 24 - 12 - 2013 AND IMMEDIATELY ON RECEIPT OF THE SAME, THE APPELLANT HAD FILED A RECTIFICATION APPLICATION DT. 26 - 12 - 2013 BEFORE THE A.O. STATING THAT THE ADDITION REQUIRED TO BE RETAINED AS PER THE ORDER OF THE TRIBUNA L COMES TO RS. 63988 ONLY , BEING 0.21% OF ALUMINUM CONSUMPTION OF RS. 30470383 . HOWEVER, TILL DATE, NO SUCH RECTIFICATION HAS BEEN CARRIED OUT. ON PERSONAL INQUIRY AND FOLLOW UP, IT HAS BEEN TOLD THAT THE RELIEF HAS BEEN ALLOWED ON THE BASIS THAT BURNING LOSS WAS 10% AND NOT 8.96%/8.75% IN CASE OF ALUMINUM/ZINC CASTINGS. DURING THE COURSE OF THE HEARING OF THE APPEAL FOR THE A.Y. 2010 - 11, IT WAS SPECIFICALLY REQUESTED TO THE HONOURABLE MEMBERS TO CLARIFY THE ACTUAL BURNING LOSS SUFFERED BY THE APPELLANT A ND IT WAS AGREED , TOO, BY THE HONOURABLE MEMBERS BUT THROUGH OVERSIGHT, THE SAME HAS BEEN LEFT OUT IN THE APPELLATE ORDER DT. 30 - 11 - 2015 IN IT A NO. 04/AHD/2015 FOR WHICH ALSO A MISCELLANEOUS APPLICATION IS BEING FILED SEPARATELY. 3. THE APPEAL EFFECT ORD ER IS NOT BEING RECTIFIED ON THE GROUND THAT THE APPELLATE ORDERS DO NOT HOLD THAT THE ACTUAL BURNING LOSS WAS 8.96% AND 8.75% IN CASE OF ALLUMINUM AND ZINC CASTINGS RESPECTIVELY . THE APPELLANT FIRMLY BELIEVES THAT THE HONOURABLE TRIBUNAL HAS MENTIONED IN PARA 7 AND 8 OF ITS ORDER THAT AS PER THE WORKING OF BURNING LOSS, THE ACTUAL BURNING LOSS COMES TO 8.96% AND 8.75% IN CASE OF ALUMINUM AND ZINC CASTINGS RESPECTIVELY . THE APPELLANT, THEREFORE, HEREBY PRAYS THAT A CLARIFICATION IN THIS REGARD BE MADE BY PASSING AN APPROPRIATE ORDER ON THIS MISCELLANEOUS APPLICATION AND OBLIGE. IN THE HUMBLE SUBMISSION OF THE APPLICANT, A CLARIFICATION WITH REGARD TO THE ACTUAL BURNING LOSS WILL RESULT IN DUE JUSTICE TO THE APPLICANT WHICH CAN ONLY BE CURED BY A NECESSARY ORDER ON THIS APPLICATION , FOR WHICH ACT OF KINDNESS, THE APPLICANT SHALL FOREVER PRAY AND REMAIN GRATEFUL. 2. BEFORE US, THE LD. COUNSEL HAS CONTENDED THAT IT A T BENCH HAS NOT CLARIFIED THAT T H E ACTUAL BURNING LOSS WAS 8.96% AND 8.75% IN CASE OF ALUMINU M AN D ZI N K M.A. NO. 11/AHD/2016 (IN I.T.A NO. 1545 /AHD/20 10) A.Y. 2007 - 08 PAGE NO M/S. D.C. ENGINEERING INDUSTRIES VS. DCIT 3 CASTINGS RESPECTIVELY. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE HAS STA T ED THAT THERE IS A NO APPARENT MISTAKE AS PER RECORD. WE HAVE PERUSED THE FINDINGS OF THE CO - ORDINATE BENCH VIDE ITA NO. 1545/AHD/2010 DATED 07 - 06 - 2013 IN THE CASE OF THE ASSESSEE REPRODUCED AS UNDER : - 6.AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, THE LEARNED A.R. SUBMITTED IN VIEW OF THE NATURE OF PRODUCT MANUFACTURED BY THE ASSESSEE INVOLVING REJECTION AT DIFFEREN T STAGES OF PRODUCTION, IT IS NOT POSSIBLE TO MAINTAIN QUANTITATIVE RECORDS OF PRODUCTION OF CASTING ON DAY TO DAY BASIS. HOWEVER, THE ASSESSEE HAS MAINTAINED THE RECORDS OF RAW MATERIALS RECEIVED, MATERIAL ISSUED FOR CONSUMPTION, PRODUCTION, DISPATCH, SAL E OF FINISH GOODS AS PER THE EXCISE RULES. HE FURTHER SUBMITTED THAT THE OUTSIDE PARTIES WHO SEND THEIR GOODS FOR JOBS WORK ACCEPT THE BURNING LOSS OF APPROXIMATELY 10%. HE FURTHER SUBMITTED THAT THE BURNING LOSS OF APPROXIMATELY 10% HAS BEEN ACCEPTED B Y THE DEPARTMENT IN EARLIER ASSESSMENT YEARS. HE FURTHER SUBMITTED THAT FOR A.Y. 2006 - 07 THE GP AT 15.7%, BURNING LOSS OF 11% IN ALUMINUM AND 7.71% IN ZINC WAS ACCEPTED IN THE SCRUTINY ASSESSMENT U/S 143(3). HE FURTHER SUBMITTED THAT THE ESTIMATION OF BU RNING LOSS AT 5% BY THE ASSESSING OFFICER WAS WITHOUT ANY BASIS AND FURTHER ASSESSING OFFICER HAS NOT GIVEN ANY FINDING OR ANY EVIDENCE TO SHOW THAT THE ASSESSEE HAS ENCASHED THE SO - CALLED EXCESSIVE BURNING LOSS OUTSIDE THE BOOKS OF ACCOUNT. HE FURTHER SU BMITTED THAT THE BOOKS OF ACCOUNT ARE AUDITED AS PER THE PROVISIONS OF SECTION 44AB OF THE ACT AND THERE WAS NO ADVERSE COMMENT BY THE AUDITORS. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS NOT ALLEGED THAT THE BOOKS OF ACCOUNT ARE EITHER INCOMPLET E OR ARE INCORRECT AND HE HAS FURTHER ACCEPTED THE GP. THE LD. A.R. PLACED AT PAGE 15 OF THE PAPER BOOK THE WORKING OF ALUMINUM AND ZINC CONSUMPTION FOR THE YEAR AND POINTED OUT THE BURNING LOSS TO BE 8.96% IN CASE OF ALUMINUM AND 8.75% IN CASE OF ZINC.TH E LEARNED A.R. THUS SUBMITTED THAT THE ADDITION MADE BY THE ASSESSING OFFICER WAS UNJUSTIFIED AND THE SAME NEEDS TO BE DELETED. HE FURTHER SUBMITTED THAT IN THE CASE OF DIE CAST ENGINEER, ITS GROUP CONCERN, THE BURNING LOSS AT 11.01% WAS ACCEPTED BY THE H ON. TRIBUNAL WHILE DECIDING THE APPEAL IN ITA NO. 4732/AHD/2002 FOR A.Y. 1991 - 92. HE PLACED ON RECORD AT PAGE 29 TO 32 THE COPY OF THE AFORESAID ORDER. HE FURTHER PLACED RELIANCE ON THE DECISION IN THE CASE OF VIKRAM PLASTRIC 239 ITR 161. THE LEARNED D.R. ON THE OTHER HAND RELIED ON THE ORDER OF ASSESSING OFFICER AND CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT THE AUDITORS IN THE TAX AUDIT REPORT HAVE MADE A REMARK THAT THE ASSESSEE HAS MAI NTAINED QUANTITATIVE TALLY OF OPENING STOCK/CLOSING STOCK, PURCHASE OF ALUMINUM INGOTS AND SALE OF CASTING AFTER ALLOWING NORMAL BURNING LOSS OF APPROXIMATELY 10% BUT HAS NOT BEEN MAINTAINED DAY TO DAY RECORDS OF PRODUCTION. HE HAS FURTHER STATED THAT TH E ASSESSEE HAS MAINTAINED RECORDS IN RESPECT OF PRODUCTION AND SALES AS PER EXCISE RULES. ASSESSING OFFICER WAS OF THE VIEW IN THE ABSENCE OF EXISTENCE OF BATCH TO BATCH AND DAY TO DAY RECORD OF CONSUMPTION OF VARIOUS RAW MATERIAL AND PRODUCTION THE BURNI NG LOSS SHOULD BE 5%. THIS FINDING OF ASSESSING OFFICER IS NOT SUPPORTED BY ANY MATERIAL ON RECORDS. CIT(A) IN HIS ORDER HAS NOTED THAT FOR A.Y. 2006 - 07, THE BURNING LOSS AT 11% AND LOSS IN CASE OF ALUMINUM/ZINC AT 7.71% HAS BEEN ACCEPTED BY REVENUE WHIL E FRAMING THE ASSESSMENT UNDER 143(3). HE HAS ALSO NOTED THAT THE PERCENTAGE LOSS ALLOWED BY THE PARTIES FOR WHOM THE ASSESSEES M.A. NO. 11/AHD/2016 (IN I.T.A NO. 1545 /AHD/20 10) A.Y. 2007 - 08 PAGE NO M/S. D.C. ENGINEERING INDUSTRIES VS. DCIT 4 DOES THE JOB WORK COMES TO 8.443% ON NET WEIGHT OF CASTING DISCHARGED BY THEM AND 7.785% ON THE GROSS WEIGHT OF DISPATCHES MAD E TO SUCH PARTIES. HE HAS THUS RESTRICTED THE BURNING LOSS AT 7.75% OF THE GROSS WEIGHT OF THE DISPATCHES MADE BY THE ASSESSEE. BEFORE US THE LD. A.R. SUBMITTED THE WORKING OF LOSS IN CASE OF ZINC AND ALUMINUM TO BE 8.96% AND 8.75% RESPECTIVELY. THE ASS ESSEE HAS ALSO PLACED RELIANCE ON THE DECISION OF CO - ORDINATE BENCH OF TRIBUNAL IN THE CASE OF ITS SISTER CONCERN. WE FIND THAT THE FACTS OF THAT CASE ARE DISTINGUISHABLE IN VIEW OF THE FACT THAT THERE WAS HEAVY REJECTION ON ACCOUNT OF VARIOUS MACHINERY SP ARE PARTS BEING WORN OUT. CONSIDERING THE TOTALITY OF FACTS WE ARE OF VIEW THAT ENDS OF JUSTICE SHALL BE MET IF THE BURNING LOSS IS RESTRICTED TO 8.75% INSTEAD OF 7.75% AS DIRECTED BY CIT(A) WE THUS DIRECT ACCORDINGLY. IT IS VERY CLEAR FROM THE FINDIN GS OF THE CO - ORDINATE BENCH AS SUPRA THAT THEY HAVE CONSIDERED THE SUBMISSION OF THE AUTHORIZED REPRESENTATIVE THAT THE WORKING LOSS IN CASE OF THE ZINK AND ALUMINUM TO BE 8.96% AND 8.75 RESPECTIVELY. HOWEVER, AFTER CONSIDERING THE TOTALITY OF FACTS, THE BURNI NG LOSS WAS RESTRICTED TO 8.75% AS AGAINST 7.75% BURNING LOSS ALLOWED BY THE LD. CIT(A). THE ASSESSEE HAS MADE ASSUMPTION THAT BURNING LOSS S HOULD BE ALLOWED IN TWO CATEGORIES SEPARATELY. HOWEVER VIDE ABOVE DECISION THE CO - ORDINATE BENCH HAS RESTRICTED TH E TOTAL BURNING LOSS TO 8.75%. AFTER CONSIDERING THE ABOVE W E OBSERVE THAT IT IS PERTINENT TO MENTION THAT RECTIFICATION U /S. 254(2) OF THE ACT CAN BE EXERCISED ONLY WHEN THE MISTAKE WHICH IS SOUGHT TO BE RECTIFIED IS AN OBVIOUS PATENT MISTAKE, WHICH IS A PPARENT FROM THE RECORD AND NOT A MISTAKE WHICH IS REQUIRED TO BE ESTABLISHED BY ARGUMENT AND LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPTIONS. AFTER CONSIDERING THE FACTS AND FINDINGS OF THE CO - ORDINATE BENCH OF THE ITAT VIDE ITA 1545/AHD/2010 IN THE CASE OF THE ASSESSEE, WE DO NOT FIND ANY MERIT IN THE MISC. APPLICATION OF THE ASSESSEE. THEREFORE, THE MISC. APPLICATION OF THE ASSESSEE IS DISMISSED. 3. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY ASSESSEE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 05 - 06 - 201 8 SD/ - SD/ - ( MADHUMITA ROY ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 05 /06 /2018 M.A. NO. 11/AHD/2016 (IN I.T.A NO. 1545 /AHD/20 10) A.Y. 2007 - 08 PAGE NO M/S. D.C. ENGINEERING INDUSTRIES VS. DCIT 5 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,