ACIT, New Delhi v. M/s Frontline Associates, New Delhi

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B : NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NO.4473/DEL/2010 ASSESSMENT YEAR : 2006-07 ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 32 (1) NEW DELHI. VS. M/S FRONTLINE ASSOCIATES 12 ARD COMPLEX 1 ST FLOOR R.K. PURAM SECTOR 13 NEW DELHI. PAN : AAAFF6568J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ARUN KISHORE CA REVENUE BY : MS BANITA DEVI NAOREM SR. DR ORDER PER I.P. BANSAL JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIRECT ED AGAINST THE ORDER OF THE CIT (A) DATED 12 TH AUGUST 2010 FOR ASSESSMENT YEAR 2006- 07. GROUNDS OF APPEAL READ AS UNDER:- 1. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING THE ADDITIO N OF ` 9 50 000/- WHILE HOLDING THAT THE ASSESSEE WAS NOT SELLING THE OLD TYRES EVEN WHILE PURCHASING NEW TYRES WHEREAS THE FACTS POINTED OTHERWISE. 2. THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF ROAD TRANSPORTATION. THE ASSESSING OFFICER FOUND THAT THE ASSE SSEE HAD PURCHASED 950 TYRES DURING THE YEAR. ACCORDING TO TH E ASSESSING OFFICER THE SALE OF OLD REPLACED TYRES HAS NOT BEEN SH OWN BY THE ITA NO.4473/DEL/2010 2 ASSESSEE WHICH ACCORDING TO THE ASSESSING OFFICER COULD FET CH ESTIMATED SALE OF SCRAP @ 1000/- PER TYRE AND TAKING SU CH VALUE IN MIND HE ESTIMATED THE SALE VALUE OF THOSE 950 TYRES AT ` 9 50 000/- WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF RESALE OF USED TYRE. LEARNED CIT (A) HAS DELETED SUCH DISALLOWAN CE FOLLOWING THE ORDER OF THE CIT (A) IN ASSESSEES OWN CASE FOR ASSESSMENT YE AR 2005- 06. 3. DURING THE COURSE OF HEARING IT WAS BROUGHT TO OU R NOTICE THAT THE TRIBUNAL VIDE ITS ORDER DATED 15 TH JANUARY 2010 IN ITA NO.1772/DEL/2009 HAS UPHELD THE DELETION OF THE DISAL LOWANCE WHEREIN BY ADOPTING THE SAME METHOD THE ASSESSING OFFICER HAD AD DED A SUM OF ` 9 LAC TO THE INCOME OF THE ASSESSEE IN RESPECT OF 9 00 TYRES BY THE TAKING THE VALUE OF EACH TYRE AT ` 1000/-. THE TRI BUNAL DELETED THE ADDITION WITH THE FOLLOWING OBSERVATIONS:- 5. WITH REGARD TO DELETION OF RS.9 LAKHS WHICH WAS AD DED BY THE AO ON ACCOUNT OF SCRAP VALUE OF TYRES WE FOUND THA T AO HAS ESTIMATED THE VALUE OF OLD TYRES AND ADDED THE SAME IN TH E INCOME OF THE ASSESSEE. THERE IS NO MERIT IN THE AOS ACTION INSOFAR AS ASSESSEE WAS NOT SELLING THE OLD TYRES BUT TH E SAME WERE BEING REPLACED WITH THE NEW TYRES. WHEN THE TYRES USED WERE FOUND TO BE WORN OUT THEY WERE FIRST RETREATED AND CHARGES FOR THE SAME WERE CHARGED TO THE TYRE EXPENSES ACCOUNT AND WHEN THE TYRES WERE TOTALLY UNFIT FOR JOURNEY THEY WERE CUT INTO FOUR PIECES AND USED AS RUBBER PAD FOR SAFE CARRIAG E OF THE CONSIGNMENTS. NOTHING WAS BROUGHT ON RECORD BY THE AO FOR ALLEGING THAT ASSESSEE HAS SOLD THE SCRAP TYRES AT RS.1 000/- PER TYRE THEREBY ESTIMATING TOTAL PRICE OF THE SCRAP TYRES DUR ING THE YEAR AT RS.9 LAKHS. AFTER GIVING DETAILED FINDING AT P ARA 12 OF THE APPELLATE ORDER THE CIT(A) HAS DELETED THE ADDITION WH ICH HAS NOT BEEN CONTROVERTED BY THE LEARNED DR. SINCE NO MATER IAL MUCH LESS A COGENT MATERIAL WAS BROUGHT ON RECORD BY TH E AO FOR ESTIMATING THE SALE OF SCRAP TYRES OUT OF BOOKS THER E WAS NO MERIT IN THE ADDITION MADE BY THE AO. NO INTERFERENCE I S REQUIRED IN THE CIT(A)S ORDER. 4. IN THIS VIEW OF THE SITUATION AFTER HEARING BOTH THE PARTIES WE FIND NO MERIT IN THE DEPARTMENTAL APPEAL AND WE FIN D THAT THE ISSUE IS ITA NO.4473/DEL/2010 3 COVERED BY THE AFOREMENTIONED ORDER OF THE TRIBUNAL IN WHICH ONE OF US (JM) IS A PARTY. ACCORDINGLY THE DEPARTMENTAL APPE AL IS DISMISSED. 5. IN THE RESULT THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 18.02.20 11. SD/- SD/- [SHAMIM YAHYA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 18.02.2011. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES