M/s Om Soaps & Detergents Pvt. Ltd., Parwanoo v. DCIT, CC-II, Chandigarh

ITA 1490/CHANDI/2018 | 2016-2017
Pronouncement Date: 21-11-2019 | Result: Partly Allowed

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Appeal Details

RSA Number 149021514 RSA 2018
Assessee PAN AAACO5232D
Bench Chandigarh
Appeal Number ITA 1490/CHANDI/2018
Duration Of Justice 11 month(s) 21 day(s)
Appellant M/s Om Soaps & Detergents Pvt. Ltd., Parwanoo
Respondent DCIT, CC-II, Chandigarh
Appeal Type Income Tax Appeal
Pronouncement Date 21-11-2019
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 21-11-2019
Date Of Final Hearing 26-08-2019
Next Hearing Date 26-08-2019
Last Hearing Date 26-08-2019
First Hearing Date 30-04-2019
Assessment Year 2016-2017
Appeal Filed On 30-11-2018
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH B CHANDIGARH . . BEFORE SHRI N.K. SAINI VICE PRESIDENT & SHRI SANJAY GARG JUDICIAL MEMBER ./ ITA NO. 1490/CHD/2018 / ASSESSMENT YEAR : 2016-17 M/S OM SOAPS & DETERGENTS PVT. LTD. PLOT NO. 28 SECTOR-1 PARWANOO (H.P.) VS. ! DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-II CHANDIGARH ' # ./ PAN NO: AAACO5232D '$/ APPELLANT &' '$ / RESPONDENT ()*+ /ASSESSEE BY : SHRI RAJIV DATTA CA *+ / REVENUE BY : SHRI KRISHAN KUMAR CIT DR -*) .# /DATE OF HEARING : 26.08.2019 /0 *) .# / DATE OF PRONOUNCEMENT : 21.11.2019 / ORDER PER SANJAY GARG JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 14.09.2018 OF THE COMMISSIONER OF INCO ME TAX (APPEALS)- 3 GURGAON [HEREINAFTER REFERRED TO AS CIT(A)]. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE ORDER OF THE LD. CIT(A) IS AGAINST THE FACTS OF THE CASE AND IS BAD IN LAW. ITA NO. 1490-CHD-2018 M/S OM SOAPS & DETERGENTS PVT. LTD. PLOT NO. 28 SE CTOR-1 PARWANOO (H.P.) 2 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.18 049/- OUT OF ELECTRICITY & WATER EXPENSES. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN HOLDING THAT THERE WAS SHORT ST OCK OF RS.17 54 534/- AND FURTHER ERRED IN CONFIRMING THE ADDITION OF RS.1 40 362/- BEING GROSS PROFIT ON THE ALLEGED SHO RT STOCK FOUND DURING THE COURSE OF SEARCH. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL BEFORE THE SAME IS FINALLY HE ARD & DISPOSED OFF. 3. THE ASSESSEE HAS ALSO TAKEN THE FOLLOWING ADDITI ONAL GROUND OF APPEAL: THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. C.I.T.(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD. A.O. IN MAKING AN ADDITION OF RS.1 40 362/- TO THE G.P. WHI CH WAS MADE WITHOUT REJECTING THE BOOKS OF ACCOUNTS. 4. GROUND NOS. 1 & 4 ARE GENERAL IN NATURE HENCE T HEY DO NOT REQUIRE ANY SPECIFIC ADJUDICATION. GROUND NO. 2 THE ASSESSEE THROUGH THIS GROUND HAS AGITATED OF D ISALLOWANCE OF RS.18 049/- OUT OF ELECTRICITY AND WATER EXPENSES. THE ASSESSING OFFICER OBSERVED THAT THE DIRECTOR OF THE ASSESSEE COMPANY HAS BEEN RESIDING IN ITA NO. 1490-CHD-2018 M/S OM SOAPS & DETERGENTS PVT. LTD. PLOT NO. 28 SE CTOR-1 PARWANOO (H.P.) 3 THE SAME PREMISES I.E. ON THE FIRST FLOOR OF THE ASSESSEE-COMPANYS BUILDING HE THEREFORE MADE THE DISALLOWANCE OF RS. 18 049/- OUT OF ELECTRICITY AND WATER EXPENSES ON ACCOUNT OF PERSON AL USE OF THE ABOVE AMENITIES BY THE DIRECTOR OF THE ASSESSEE-COMPANY. THE LD. CIT(A) HAS CONFIRMED THE DISALLOWANCE SO MADE BY THE AO. 5. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSING OFFICER WRONGLY ASSUMED THAT THE ASSESSEE HAS USED THE WATER AND ELECTRICITY RESOURCES FOR WHICH THE COMPANY HAS PAID. THAT IN FACT THERE IS A SEPARATE ELECTRICITY CONNECTION IN THE N AME OF THE DIRECTOR WHICH IS USED AT HIS RESIDENCE. THE BILL PAID ON TH IS ACCOUNT HAS BEEN DULY DEBITED IN HIS ACCOUNT WHICH CAN ALSO BE VERI FIED FROM HIS PERSONAL ASSESSMENT. WE FIND THAT THE CIT(A) WITHOUT CONSIDE RING THE ABOVE SUBMISSIONS OF THE ASSESSEE HAS UPHELD THE DISALLOW ANCE MADE BY THE AO ON THIS ISSUE. THIS ISSUE REQUIRES TO BE FACTUAL LY VERIFIED BY THE ASSESSING OFFICER. WE THEREFORE RESTORE THIS ISSU E TO THE FILE OF THE ASSESSING OFFICER TO VERIFY IF A SEPARATE ELECTRIC CONNECTION IS INSTALLED IN RESIDENTIAL ACCOMMODATION OF THE DIRECTOR AND IF THE CONTENTION IS FOUND TO BE CORRECT THEN NO DISALLOWANCE WILL BE AT TRACTED ON THIS ISSUE. GROUND NO. 3 AND ADDITIONAL GROUND OF APPEAL SO FAR AS THE ADDITIONAL GROUND THAT THE ADDITION M ADE BY THE ASSESSING OFFICER ON ACCOUNT OF ESTIMATION OF G.P. IS NOT VAL ID WITHOUT REJECTING OF ITA NO. 1490-CHD-2018 M/S OM SOAPS & DETERGENTS PVT. LTD. PLOT NO. 28 SE CTOR-1 PARWANOO (H.P.) 4 THE BOOKS OF ACCOUNT IS CONCERNED WE DO NOT FIND A NY FORCE IN THE ABOVE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE IN T HIS CASE. THE G.P. RATE HAS NOT BEEN ESTIMATED OR APPLIED ON THE ENTIRE TUR N OVER RATHER THE G.P. HAS BEEN ESTIMATED BY THE ASSESSING OFFICER ONLY IN RESPECT OF STOCK FOUND SHORT DURING THE COURSE OF SEARCH ACTION AT T HE PREMISES OF THE ASSESSEE. EVEN THE ASSESSING OFFICER HAS APPLIED T HE G.P. RATE OF 8% AS HAS BEEN ITSELF SHOWN BY THE ASSESSE ON THE SALES M ADE AS PER THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESSING OFFICER H AS NOT DOUBTED OF THE SALES BOOKED BY THE ASSESSEE IN THE BOOKS OF ACCOUN T NOR DID HE RAISE ANY DOUBT ABOUT THE PURCHASES MADE BY THE ASSESSEE. IT IS ONLY ON THE STOCK WHICH WAS FOUND SHORT REGARDING WHICH ASSESSI NG OFFICER CONCLUDED THAT THE ASSESSEE HAS BOOKED SALES AGAINS T THAT/STOCK AND ACCORDINGLY THE ASSESSING OFFICER ESTIMATED G.P. RA TE ON THE SALES DONE BY THE ASSESSEE IN RESPECT OF THE STOCK FOUND SHORT . IN OUR VIEW THERE IS NO MERIT IN THE ADDITIONAL GROUND THE SAME IS ACCO RDINGLY DECIDED AGAINST THE ASSESSEE. 6. SO FAR AS THE ISSUE ON MERITS IS CONCERNED THE ASSESSING OFFICER AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE COMPUTED THE SHORT STOCK AT RS.17 54 534/- APPLIED THE G.P. RATE AT T HE RATE OF 8% AND THEREBY MADE THE IMPUGNED ADDITION OF RS.1 40 362/- . HOWEVER THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE PARA 6.2 OF THE IMPUGNED ORDER OF THE CIT(A) TO POINTED OUT THAT I N FACT SEARCH PARTY ITA NO. 1490-CHD-2018 M/S OM SOAPS & DETERGENTS PVT. LTD. PLOT NO. 28 SE CTOR-1 PARWANOO (H.P.) 5 FIRSTLY CONFRONTED THE EMPLOYEES OF THE ASSESSEE RE GARDING EXCESS STOCK HOWEVER LATER ON THE ASSESSING OFFICER AFTER CONSID ERING THE DETAILS ON RECORD INCLUDING THE TRADING ACCOUNT OF THE ASSESSE E CONCLUDED THAT IN FACT THERE WAS SHORTAGE OF STOCK. THE PLEA OF THE COUNSEL FOR THE ASSESSEE HAS BEEN THAT SINCE THE EMPLOYEES OF THE ASSESSEE WERE CONFRONTED WITH EXCESS STOCK HENCE THEY DID NOT POI NT TOWARDS THE SCRAP AND WASTAGE WHICH WAS ALSO BE TAKEN NOTE OF WHILE C ALCULATING THE STOCK OF THE ASSESSEE. FURTHER THAT THE STOCK LYING NEAR THE MACHINE SHOPS WERE ALSO NOT PROPERLY ASCERTAINED. IT HAS BEEN THEREFO RE CONTENDED THAT THERE WERE DISCREPANCIES IN STOCK TAKING BY THE SEA RCH PARTY. THAT EVEN DESPITE DEFECTIVE STOCK TAKING THE SHORTAGE COULD NOT BE MORE THAN RS.10 LACS. 7. WE HAVE CONSIDERED THIS SUBMISSION OF THE LD. CO UNSEL FOR THE ASSESSEE. SINCE THE EMPLOYEES OF THE ASSESSEE WERE CONFRONTED WITH EXCESS STOCK UNDER THE CIRCUMSTANCES IT IS POSSIB LE THAT THEY MIGHT HAVE SKIPPED/NOT BROUGHT THE ATTENTION OF THE SEARC H PARTY TOWARDS THE SCRAP AND WASTAGE WHICH MIGHT HAVE PROMPTED THE SEA RCH PARTY TO MAKE FURTHER ADDITION. THE SUBMISSION OF THE ASSESSEE HA S BEEN THAT THERE WAS DISCREPANCY IN STOCK TAKING HOWEVER EXCEPT THE AB OVE SUBMISSION OF NOT TAKING INTO CONSIDERATION THE SCRAP AND WASTAGE AND SOME STOCK LYING NEAR MACHINE SHOPS NO DEFECT OTHERWISE HAS BEEN POINTED OUT BY THE ASSESSE IN STOCK TAKING BY THE SEARCH PARTY. TH E PLEA OF THE ASSESSEE ITA NO. 1490-CHD-2018 M/S OM SOAPS & DETERGENTS PVT. LTD. PLOT NO. 28 SE CTOR-1 PARWANOO (H.P.) 6 HAS BEEN THAT EVEN OTHERWISE THE SHORTAGE COULD NOT BE MORE THAN RS.10 LACS. CONSIDERING THE ABOVE SUBMISSIONS OF THE ASSE SSEE GIVING BENEFIT TO THE ASSESSEE OF HIS CLAIM OF SCRAP AND WASTAGE A ND ALSO TAKING INTO CONSIDERATION THE PLEA OF THE ASSESSEE THAT THE STO CK LYING NEAR THE MACHINE SHOPS WAS NOT PROPERLY ASCERTAINED THE ASS ESSEE IS GIVEN BENEFIT OF RS.754534/-. SHORT STOCK IS THEREFORE ESTIMATED AT RS. 10 LACS. THE G.P. RATE AT THE RATE OF 8% ON THE ABOVE SAID AMOUNT WILL COME OUT AT RS.80 000/-. THE ADDITION TO THAT EXTENT TO THE ISSUE IS CONFIRMED. 8. IN VIEW OF THE ABOVE FINDINGS THE APPEAL OF THE ASSESSE IS TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.11.2019. SD/- SD/- ( . . / N.K. SAINI) ( ! / SANJAY GARG) '#$ / VICE PRESIDENT %& / JUDICIAL MEMBER DATED : 21.11.2019 R.K.. 1*&)2343) / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. &' '$ / THE RESPONDENT 3. 5) / CIT 4. 5) ( )/ THE CIT(A) 5. 36 &)7 . 7 89:; / DR ITAT CHANDIGARH 6. :< - / GUARD FILE 1 / BY ORDER = / ASSISTANT REGISTRAR