The ACIT, 3 (1), v. Shri Josephina Verghese,

ITA 305/IND/2008 | misc
Pronouncement Date: 15-04-2010 | Result: Dismissed

Appeal Details

RSA Number 30522714 RSA 2008
Bench Indore
Appeal Number ITA 305/IND/2008
Duration Of Justice 1 year(s) 9 month(s) 8 day(s)
Appellant The ACIT, 3 (1),
Respondent Shri Josephina Verghese,
Appeal Type Income Tax Appeal
Pronouncement Date 15-04-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 15-04-2010
Date Of Final Hearing 12-04-2010
Next Hearing Date 12-04-2010
Assessment Year misc
Appeal Filed On 07-07-2008
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER 1. ITA NO.304/IND/08 2. ITA NO. 305/IND/08 A.YS. 2005-06 ASSTT. COMMISSIONER OF INCOME TAX 3(1) BHOPAL APPELLANT VS 1. SHRI O.P. VERGHESE BHOPAL 2. SMT. JOSEPHINE VERGHESE BHOPAL RESPONDENTS APPELLANT BY : SMT. APARNA KARAN SR. DR RESPONDENTS BY : SHRI S.S. DESHPANDE CA O R D E R PER JOGINDER SINGH JM THESE APPEALS ARE BY DIFFERENT ASSESSEES AGAINST DI FFERENT ORDERS OF THE LEARNED CIT(A) DATED 10 TH APRIL 2008 ON IDENTICAL GROUNDS WHICH ARE AS UNDER :- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN 2 1. DELETING THE ADDITION MADE ON ACCOUNT OF LOW NET PROFIT DISCLOSED BY THE ASSESSEE WHEREIN NET PROFIT WAS ES TIMATED BY THE AO BY INVOKING THE PROVISIONS OF SECTION 145(3) EVEN THOUGH THE ADDITION WAS MADE BECAUSE THE ASSESSEE FAILED T O PRODUCE QUANTITATIVE DETAILS IN RESPECT OF NON BHEL SALES. 2. DELETING THE ADDITION MADE BY THE AO DISALLOWING THE LOSS ON ACCOUNT OF CALCULATION AND WASTAGE AND ALLOWING ONL Y 2% OUT OF TOTAL LOSS OF 9% CLAIMED BY THE ASSESSEE PARTICULAR LY WHEN THE ASSESSEE COULD NOT PRODUCE ANY DOCUMENTARY EVIDENCE DURING ASSESSMENT. 2. DURING HEARING WE HAVE HEARD SMT. APARNA KARAN SR. DR AND SHRI S.S. DESHPANDE CA LD. COUNSEL FOR THE ASSESS EE. ON THE ISSUE OF NON BHEL SALES IT WAS CLAIMED BY THE LEARNED SR. D R THAT NECESSARY DETAILS WERE NOT FURNISHED BY THE ASSESSEE THEREFO RE THIS GROUND MAY BE REMANDED BACK TO THE FILE OF THE ASSESSING OFFIC ER. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE THOUGH DEFE NDED THE IMPUGNED ORDER BUT CLAIMED THAT THE ASSESSEE IS IN A POSITIO N EVEN NOW TO SUBSTANTIATE THEIR CLAIM. 3. ON PERUSAL OF RECORD AND AFTER HEARING THE RIVAL SUBMISSIONS THE BRIEF FACTS ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF WOODEN PACKING MATERIAL U NDER THE NAME BHOPAL TIMBERS. THE ASSESSEE PURCHASES RAW MATERIAL OF WOODEN PLANKS 3 WHICH IS CUT INTO DIFFERENT SIZES OUT OF WHICH DIFF ERENT TYPES OF PACKING MATERIAL LIKE RAFTERS WOODEN BOXES WOODEN CRATES PLATES ETC. ARE MANUFACTURED. DURING ASSESSMENT PROCEEDINGS THE ASS ESSEE WAS ASKED TO FURNISH DETAILS OF TOTAL PURCHASES AND SALES. TH ERE IS A FINDING THAT THE ASSESSEE TOOK THE STAND THAT QUANTITYWISE DETAILS O F NON BHEL SALE IS NOT POSSIBLE. HOWEVER THE QUANTITATIVE DETAILS OF SALES AND PURCHASES WERE FURNISHED IN CUBIC METER. THE ASSESSEE PURCHA SED ONE 1 981.1331 CU. METERS OF WOOD THE DETAILS OF WHICH WERE SUBMITTED DURING ASSESSMENT PROCEEDINGS. THIS FACT IS EVEN EV IDENT FROM THE ASSESSMENT ORDER ALSO. THE ASSESSING OFFICER HAS AL SO NOT DISPUTED THE QUANTITY OF PURCHASES. ON PERUSAL OF FACTS AND THE REASONING MENTIONED IN THE IMPUGNED ORDER WE ARE SATISFIED THAT THE AS SESSEE FURNISHED THE NECESSARY DETAILS THERE IS A UNCONTROVERTED FINDIN G IN THE IMPUGNED ORDER THAT THE QUANTITATIVE DETAILS OF ALL PURCHAS ES OF WOOD AND SALE STO BHEL ARE AVAILABLE WITH THE APPELLANT AND HAVE BEEN FILED. EVEN OTHERWISE THERE IS A FURTHER FINDING THAT THE QUAN TITATIVE DETAILS OF NON BHEL SALES ARE MERELY 6% OF THE TOTAL SALES THEREF ORE IT CAN BE SAID THAT FOR DIFFERENCE IN THE COMPUTATION AND THE DIFF ERENT BASIS OF CALCULATION CLEARLY BOUND TO BRING DIFFERENT RESULT S. EVEN OTHERWISE NO BASIS HAS BEEN GIVEN BY THE ASSESSING OFFICER IN CO MING TO A PARTICULAR CONCLUSION/RATIO WHICH MAY NOT BE THE JUSTIFIED BAS IS IN REJECTING THE BOOKS OF ACCOUNTS BY INVOKING THE PROVISIONS OF SEC TION 145(3) OF THE 4 ACT. THEREFORE THERE IS NO INFIRMITY IN THE IMPUGN ED ORDER CONSEQUENTLY THIS GROUND OF THE REVENUE IS DISMISSED. 4. THE NEXT GROUND PERTAINS TO DISALLOWING LOSS ON ACCOUNT OF CALCULATION AND WASTAGE AND ALLOWING ONLY 2% OUT OF TOTAL LOSS OF 9% CLAIMED BY THE ASSESSEE. THE STAND OF THE DEPARTME NT IS THAT A WELL REASONED ASSESSMENT ORDER HAS BEEN FRAMED. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE DEFENDED THE IMPUGNED ORDER. 5. IF THE TOTALITY OF FACTS AND THE ARGUMENTS ADVAN CED BY THE RESPECTIVE COUNSELS IS ANALYSED IT IS A FACT THAT WHILE CUTTING THE WOOD IN DIFFERENT SIZES AS PER THE REQUIREMENT OF THE CUST OMERS AND ALSO WHILE SMOOTHENING THE WOOD THE WASTAGE IS BOUND TO HAPPE N. AGAINST THE CLAIMED LOSS OF 9% BY THE ASSESSEE THE ASSESSING O FFICER ONLY APPLIED THE RATE OF 2% WITHOUT ANY REASONED FINDING. THE PR ODUCTION WASTAGE COMPRISES OF AMONG OTHERS THE FOLLOWING ALSO :- (A) AT TIMES THE RAFTERS SUFFER CRACKS ARE WARPED HAVE SUBSTANTIAL BARK. SUCH PIECES ARE REJECTED. (B) THE RAFTERS COME IN STANDARD SIZES. THEY HAVE T O BE CUT AS PER THE REQUIREMENTS OF THE DRAWINGS GIVEN BY THE B UYER. THE ENDS ALSO HAVE TO BE CUT. THE CUT ENDS COMPRISE WAS TAGE. THE RAFTERS PURCHASED ARE CUT BY THE BAND SAW WH ICH LEAVES CUT MARKS ON THE WOOD. THESE CUT MARKS HAVE TO BE 5 REMOVED BY SHAVING WITH THE HELP OF PLANER. THE SH AVINGS ALSO COMPRISE PRODUCTION WASTE. (D) MANY A TIME ON THE BASIS OF REQUIREMENTS SPEC IFIC SIZES MAY NOT BE IN STOCK. FOR EXAMPLE IF THE REQUIREMEN T IS FOR A LENGTH OF 8 FT. A LENGTH OF 10 FT IS CUT AND A 2 FT IS WASTED S IT CANNOT BE USED FOR ANY INDUSTRIAL PACKING. SUCH WAS TAGE ALSO COMPRISES PRODUCTION WASTAGE. THE FINDING OF THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) IS AS UNDER :- I HAVE CAREFULLY CONSIDERED THE EXPLANATIONS AND T HE SUBMISSIONS OF THE LD. AR AND ALSO GONE THROUGH THE ORDER OF TH E AO. AS REGARDS THE CALCULATION LOSS OF 3% I AM OF THE CON SIDERED OPINION THAT THIS IS AN ABSOLUTE AND REAL LOSS SUFFERED BY THE APPELLANT IN TERMS OF QUANTITY. I AGREE WITH THE CONTENTION OF T HE LD. AR THAT IT IS NOT POSSIBLE BY ANY STRETCH OF IMAGINATION IT WOUL D ONLY ADD TO THE COSTS AND THE SAVINGS WOULD HAVE NO COMMERCIAL VALU E. IT WOULD IN ANY CASE BE SCRAP. I THEREFORE FIND NO FORCE IN THE CONCLUSION OF THE AO IN NOT ACCEPTING THE EXPLANATION OF THE APPELLAN T. THEREFORE THE ADDITION ON THE BASIS OF THIS REASON IS UNCALLE D FOR AND THE SAME HAS TO BE DELETED AND AS SUCH THIS GROUND IS A LLOWED. 6 IF THE AFORESAID FINDING FACTS BEFORE US AND THE A RGUMENTS ADVANCED BY THE LEARNED RESPECTIVE COUNSELS ARE ANALYSED THERE IS NO DISPUTE THAT WHILE CUTTING THE WOOD IN DIFFERENT SIZES AND ALSO AT THE TIME OF MANUFACTURING THE QUANTITY OF THE WOOD IS BOUND TO DECREASE. IT ALSO DEPENDS UPON THE SIZE REQUIREMENT OF THE CLIENT W HILE SMOOTHENING THE WOOD AND SOMETIMES TRANSPORTATION LOSS ALSO. THE W ASTAGE SOMETIMES (LIKE BURADA) IS HAVING NO COMMERCIAL VALUE AND SOM ETIMES THE ASSESSEE IS SUPPOSED TO PAY FOR LIFTING OF THE SAME FROM THE SAW MILL. EVEN OTHERWISE THE ASSESSEE FURNISHED THE NECESSAR Y DETAILS STARTING FROM ASSESSMENT STAGE ITSELF. CONSEQUENTLY THERE I S NO INFIRMITY IN THE FINDINGS OF THE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). IT IS AFFIRMED. THIS WILL ALSO COVER ITA NO. 305/IND/08. FINALLY BOTH THESE APPEALS OF THE REVENUE ARE DIS MISSED. ORDER PRONOUNCED IN OPEN COURT ON 15 TH APRIL 2010. SD SD (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER APRIL 15 TH 2010 COPY TO: APPELLANT RESPONDENT CIT CIT(A) DR G UARD FILE *DBN/