Devshree Syntex Pvt.Ltd.,, Bharuch v. The ACIT.,Circle-, Bharuch

ITA 4597/AHD/2007 | 2003-2004
Pronouncement Date: 09-09-2011 | Result: Partly Allowed

Appeal Details

RSA Number 459720514 RSA 2007
Assessee PAN AAACD6508K
Bench Ahmedabad
Appeal Number ITA 4597/AHD/2007
Duration Of Justice 3 year(s) 8 month(s) 8 day(s)
Appellant Devshree Syntex Pvt.Ltd.,, Bharuch
Respondent The ACIT.,Circle-, Bharuch
Appeal Type Income Tax Appeal
Pronouncement Date 09-09-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 09-09-2011
Date Of Final Hearing 18-08-2011
Next Hearing Date 18-08-2011
Assessment Year 2003-2004
Appeal Filed On 31-12-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD .. ..!' # BEFORE SHRI D.K. TYAGI HONBLE JUDICIAL MEMBER AND SHRI A.K.GARODIA HONBLE ACCOUNTANT MEMBER . / ITA NO.4597/AHD/ 2007 & . / ITA NO.182/AHD/2008 $ % &% $ % &% $ % &% $ % &% / // / ASSESSMENT YEAR:- 2003-04 DATE OF HEARING:19.8.11 DRAFTED:2478.11 M/S. DEVSHREE SYNTEX PVT. LTD. 2/1 PHASE-I GIDC BHARUCH PAN NO.AAACD6508K DCIT BHARUCH CIRCLE BHARUCH V/S. V/S. ASST. COMMISSIONER OF INCOME-TAX CIRCLE BHARUCH M/S. DEVSHREE SYNTEX P. LTD. 2/1 PHASE-I GIDC BHARUCH ()/ (APPELLANT) .. *()/ (RESPONDENT) () / APPELLANT BY SHRI MAHESH KUMAR SR-DR *() + / RESPONDENT BY SHRI SUNIL H TALATI AR -$. + /# / DATE OF HEARING 18-08-2011 0!& + /# / DATE OF PRONOUNCEMENT 09 /09/2011 1 1 1 1 /O R D E R # # # # PER A.K. GARODIA ACCOUNTANT MEMBER:- THESE ARE CROSS-APPEALS FILED BY THE ASSESSEE AND REVENUE AND THESE ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF I NCOME-TAX (APPEALS)- VI BARODA DATED 25-10-2007 FOR ASSESSMENT YEAR 200 3-04. ITA NO.4597/AHD/2007 & 182/AHD/08 A .Y.03-04 M/S DEVSHREE SYNTEX P. LTD. V. ACIT CIR-BHARUCH PAGE 2 2. SINCE THE ISSUE INVOLVED IN THESE TWO APPEALS AR E CONNECTED BOTH THE APPEALS WERE HEARD TOGETHER AND HAVE BEEN DISPOSED OFF BY WAY OF COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. THE FACTS WITH REGARD TO ISSUE INVOLVING GROSS P ROFIT (GP FOR SHORT) ADDITION ARE NOTED BY THE LD. CIT(APPEALS) IN PARA- 3 AND 3.1 OF HIS ORDER WHICH ARE REPRODUCED BELOW:- 3. IN THIS CASE THE RETURN OF INCOME WAS FILED ON 01.12.2003 DECLARING TOTAL LOSS OF RS.49 77 798/- AND THE SAME WAS PROCE SSED U/S.143(1) OF THE ACT. A SURVEY U/S.133A WAS CONDUCTED AT THE BUS INESS PREMISES OF THE ASSESSEE ON 2.1.2003 AND IT WAS REVEALED THAT B OOKS OF ACCOUNTS HAD NOT BEEN MAINTAINED PROPERLY AND WERE INCOMPLET E AS STATED BY SHRI MAHESH SHARMA DIRECTOR OF THE APPELLANT COMPA NY VIDE Q.NO.14 TO 17 OF THE STATEMENT. FURTHER DURING THE COURSE OF SUR VEY FOLLOWING DIFFERENCE IN PHYSICAL STOCK AND STOCK AS PER BOOKS WERE OBSERVED. DESCRIPTION AS PER BOOK AS PER INVENTORY DIFFERENCE KGS. RS. KGS. RS. KGS RS. RM (FIBRE YARN) 18382.4 31368 955885 2195760 88570 9140 4429500 621520 +70188 - 2228 +3473615 - 1574240 WASTE 6620 19860 - - 56250 - - + 36390 WIP 36849 2284644 22535 1251570 - 14314 -1033074 5456149 6358840 3.1 VIDE QUESTION NO.21 & 22 OF THE STATEMENT SHRI MAHESH SHARMA DIRECTOR ACCEPTED THE ABOVE DISCREPANCY AND ASSURED TO CLARIFY THE SAME ON 6.1.2003. HOWEVER DURING THE COURSE OF ASS ESSMENT PROCEEDINGS THE DISCREPANCIES WERE NOT EXPLAINED. O N THE OTHER HAND IT WAS SUBMITTED THAT DUE TO FIRE AT THE BUSINESS PREM ISES ON 14.4.2003 THE RELEVANT RECORDS HAD BEEN DESTROYED. A COPY OF THE FIR DATED 15.4.2003 WAS ALSO FILED DURING THE ASSESSMENT PROC EEDINGS. FURTHER IN THE AUDIT REPORT ENCLOSED WITH THE RETURN THE AUDIT OR HAS MENTIONED THAT NO COMMENTS CAN BE MADE ON BOOK RESULTS ASS THE REL EVANT PAPERS HAVE BEEN DESTROYED IN FIRE. BASED ON SURVEY FINDIN GS AND THE EXPLANATIONS DURING THE COURSE OF ASSESSMENT PROCEE DINGS THE TOTAL INCOME WAS ASSESSED AT RS.11 82 770/- AS AGAINST TH E NET LOSS OF RS.49 77 798/-. 4. IN ADDITION TO THIS ONE MORE ADDITION WAS MADE BY ASSESSING OFFICER OF RS.3 96 837/- BEING THE DIFFERENCE BETWEEN THE PHYS ICAL STOCK FOUND DURING THE COURSE OF SURVEY AND STOCK AS PER BOOKS ON THAT DATE AND THE THIRD ADDITION WAS MADE BY ASSESSING OFFICER OF RS.77 35 990/- ON ACCOUNT OF ITA NO.4597/AHD/2007 & 182/AHD/08 A .Y.03-04 M/S DEVSHREE SYNTEX P. LTD. V. ACIT CIR-BHARUCH PAGE 3 VARIATION IN THE STOCK AS PER STOCK STATEMENT GIVEN TO THE BANK AND AS PER THE CLOSING STOCK SHOWN IN THE BALANCE-SHEET AS ON 31-0 3-2003. WHILE MAKING THE THIRD ADDITION OF RS.77 35 990/- THE AO HAS ALLOWE D TELESCOPING REGARDING THE ADDITION MADE BY HIM ON ACCOUNT OF DIFFERENCE IN TH E STOCK FOUND AT THE TIME OF SURVEY AND BOOKS STOCK ON THE DATE OF SURVEY OF RS. 34 73 615/- WHICH IS INCLUDED IN THE TOTAL ADDITION MADE OF RS.39 68 371 /- ON THAT ACCOUNT. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD . CIT(APPEALS). LD. CIT(APPEALS) HAS GRANTED RELIEF TO THE ASSESSEE WIT H REGARD TO PART DELETION OUT OF THIRD ADDITION MADE BY AO OF RS.77 35 990/-. WITH REGARD TO THIS ADDITION IT WAS HELD BY LD. CIT(APPEALS) THAT ASSE SSEE DESERVES RELIEF OF RS.59 26 190/- AND HE CONFIRMED ONLY PART ADDITION OF RS.18 09 800/- OUT OF TOTAL ADDITION MADE BY AO ON THIS ACCOUNT OF RS.77 35 990/-. NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US REGARDING C ONFIRMING OF FIRST TWO ADDITIONS AND PARTLY CONFIRMING THE THIRD ADDITION WHEREAS THE REVENUE IS IN APPEAL BEFORE US WITH REGARD TO PART RELIEF ALLOWED BY LD. CIT(APPEALS) OF RS.59 26 190/- OUT OF TOTAL ADDITION OF RS.77 35 99 0/- MADE BY AO BEING THE DIFFERENCE IN STOCK AS PER BOOKS AND AS PER STOCK S TATEMENT FURNISHED TO THE BANK. 5. IT WAS SUBMITTED BY LD. AR OF THE ASSESSEE THAT ASSESSEE HAS LOST HIS BOOKS OF ACCOUNT BEING FULLY DESTROYED IN THE FIRE AND HENCE THE ASSESSEE IS NOT IN A POSITION TO FURNISH THE BOOKS OF ACCOUNT A ND OTHER RELEVANT RECORDS. IT WAS THE SUBMISSION OF LD. AR OF THE ASSESSEE THAT A O HAS ESTIMATED THE GP FOR THE PRESENT YEAR ON THE BASIS OF AVERAGE GP OF LAST TWO YEARS. IT IS SUBMITTED THAT AVERAGE GP OF LAST TWO YEARS IS NOTE D BY AO ON PAGE NO.3 OF ASSESSMENT ORDER BEING 18.75% IN AY 2001-02 AND 16. 40% IN AY 2002-03. IT WAS SUBMITTED THAT SINCE THERE IS DECLINING TREND I N THE GP IN THE PRESENT YEAR THE GP SHOULD NOT BE ESTIMATED FOR MORE THAN 15%. BECAUSE GP OF AY 2002-03 WAS LESS BY 1.35% AS COMPARED TO GP OF AY 2 001-02 AND HENCE IN THE PRESENT YEAR THE GP SHOULD ALSO BE FURTHER LES S BY 1.14% AS COMPARED TO GP OF AY 2002-03 AND HENCE GP OF PRESENT YEAR SHOU LD BE ESTIMATED AS 15%. IT IS SUBMITTED THAT AS PER THE BOOKS OF THE A SSESSEE THE GP REPORTED BY ITA NO.4597/AHD/2007 & 182/AHD/08 A .Y.03-04 M/S DEVSHREE SYNTEX P. LTD. V. ACIT CIR-BHARUCH PAGE 4 ASSESSEE IS MINUS (-9.96%) AND HENCE EVEN BY ADOP TING 15% GP THERE WILL BE AN ADDITION OF 25% OF TURNOVER. 6. REGARDING SECOND ISSUE REGARDING ADDITION MADE B Y ASSESSING OFFICER IN RESPECT OF ALLEGED DIFFERENCE BETWEEN PHYSICAL S TOCK FOUND DURING THE SURVEY AND STOCK AS PER BOOKS ON THE DATE OF SURVEY IT WAS SUBMITTED THAT IF TELESCOPING IS ALLOWED WITH REGARD TO GP ADDITION NO FURTHER ADDITION IS CALLED FOR WITH RESPECT TO ALLEGED DIFFERENCE BETWEEN PHYS ICAL STOCK FOUND DURING THE SURVEY AND STOCK AS PER BOOKS ON THE DATE OF SURVEY . IT WAS ALSO SUBMITTED THAT OTHERWISE ALSO THERE ARE CERTAIN GLARING MIST AKE IN THE STOCK INVENTORY PREPARED BY SURVEY TEAM AND HENCE SUCH ADDITION IS OTHERWISE ALSO NOT JUSTIFIED. REGARDING THIRD ADDITION IN RESPECT OF A LLEGED DIFFERENCE BETWEEN STOCK AS PER STOCK STATEMENT FURNISHED BY ASSESSEE TO THE BANK AND THE CLOSING STOCK FIGURE AS PER THE BALANCE-SHEET IT W AS SUBMITTED THAT SUCH STOCK STATEMENT WAS GIVEN TO THE BANK IN RESPECT OF HYPOT HECATION OF STOCK AND NOT IN RESPECT OF PLEDGING OF CLOSING STOCK AND HENCE NO ADDITION IS CALLED FOR WITH REGARD TO SUCH A DIFFERENCE IN THE STOCK FIGURE AS PER BALANCE-SHEET AND AS PER STOCK STATEMENT GIVEN TO THE BANK. IT WAS ALSO SUBM ITTED THAT EVEN OTHERWISE FOR THIS ADDITION ALSO TELESCOPING SHOULD BE ALLOW ED IN RESPECT OF GP ADDITION TO BE MADE. IT WAS ALSO SUBMITTED THAT WITH REGARD TO BOTH THESE ADDITIONS IN RESPECT OF ALLEGED DIFFERENCE IN THE STOCK FIGURE A S PER PHYSICAL STOCK FOUND IN THE COURSE OF SURVEY AND BOOK STOCK ON THE DATE OF SURVEY AND ALSO IN RESPECT OF ALLEGED DIFFERENCE IN THE STOCK VALUE AS PER BAL ANCE-SHEET AND AS PER STOCK STATEMENT GIVEN TO THE BANK THE ASSESSING OFFICER HAS MADE ADDITION WITH REGARD TO EXCESS STOCK FOUND AND WITH REGARD TO SHO RT STOCK FOUND ALSO THE AO HAS MADE ADDITION FOR GP ON ACCOUNT OF DEFICIENC Y IN STOCK FOUND. IT WAS SUBMITTED THAT DEFICIENCY IN STOCK WAS ON THIS ACCO UNT THAT THE PERSON SUBMITTING STOCK STATEMENT TO THE BANK COULD NOT AP PRECIATE THE DIFFERENCE BETWEEN RAW MATERIALS AND WORK-IN-PROGRESS AND HENC E NO ADDITION IS CALLED FOR ON ACCOUNT OF DEFICIT OF STOCK AND THE TOTAL NE T EXCESS STOCK FOUND SHOULD BE CONSIDERED ONLY. ITA NO.4597/AHD/2007 & 182/AHD/08 A .Y.03-04 M/S DEVSHREE SYNTEX P. LTD. V. ACIT CIR-BHARUCH PAGE 5 7. AS AGAINST THIS LD. DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. IT WAS HIS SUBMISSION THAT DEFICIENCY IN STO CK FOUND CANNOT BE OFF SET WITH EXCESS STOCK FOUND BECAUSE DEFICIENCY IN STOCK FOUND IS WITH REGARD TO WORK-IN-PROGRESS AND FINISHED GOODS WHEREAS EXCESS STOCK FOUND WAS OF RAW MATERIAL. REGARDING CLAIM OF TELESCOPING IT WAS SU BMITTED BY HIM THAT FOR GP ADDITION NO TELESCOPING CAN BE ALLOWED BECAUSE SEP ARATE ADDITION HAS BEEN MADE FOR THE INVESTMENT OF UNACCOUNTED MONEY IN PUR CHASE OF STOCK. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. FIRST WE DECIDE THE ISSUE REGARDING GP ADDITION. THE ASSESSING OFFICER HAS NOTED ON PAGE NO.3 OF THE ASSESSMENT ORDER THAT IN THE PRESENT YEAR T HE ASSESSEE HAS REPORTED MINUS GP OF 9.96% WHEREAS THE GP REPORTED IN THE IM MEDIATE PRECEDING YEAR I.E AY 2002-03 16.40% AND IN AY 2001-02 WAS 18.75%. IN THE PRESENT YEAR HE HAS ESTIMATED THE AVERAGE OF THE LAST TWO YEARS GP. CONSIDERING THE FACTS OF THE PRESENT CASE IN OUR CONSIDERED OPINION ADO PTING THE GP RATE OF LAST YEAR I.E. 16.40% WILL MEET THE ENDS OF JUSTICE IN S TEAD OF AVERAGE GP OF LAST TWO YEARS. HENCE WE DIRECT THE ASSESSING OFFICER T HAT IN STEAD OF GP RATE OF 17.58% ADOPTED BY HIM GP RATE OF 16.40% BEING GP O F LAST YEAR BE ADOPTED IN THE PRESENT YEAR ALSO BEING GP RATE OF IMMEDIATE PRECEDING YEAR. WE DIRECT ASSESSING OFFICER ACCORDINGLY. 9. REGARDING SECOND ADDITION BEING THE ADDITION MAD E BY ASSESSING OFFICER OF RS.39 68 371/- BEING DIFFERENCE BETWEEN PHYSICAL STOCK FOUND DURING THE SURVEY AND STOCK AS PER BOOKS CALCULATED BY SUR VEY TEAM WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE DESERVES THE B ENEFIT OF TELESCOPING OUT OF GP ADDITION CONFIRMED BY US. WE HAVE DIRECTED TH E ASSESSING OFFICER TO ADOPT GP RATE OF 16.4% AS AGAINST MINUS GP REPORTED BY ASSESSEE OF 9.96%. HENCE WE HAVE CONFIRMED THE GP ADDITION TO THE EXT ENT OF 26.36%. THE GROSS RECEIPTS OF THE ASSESSEE OF THE PRESENT YEAR BEING SALES/JOB WORK HAS BEEN REPORTED AT RS.2 96 49 932/-. HENCE THE ADDITION C ONFIRMED BY US COMES TO RS.78 15 722/- BEING 26.36% RS.2 96 49 392/-. THE D ATE OF SURVEY IS ON 02- ITA NO.4597/AHD/2007 & 182/AHD/08 A .Y.03-04 M/S DEVSHREE SYNTEX P. LTD. V. ACIT CIR-BHARUCH PAGE 6 01-2003. HENCE THE PERIOD OF 9 MONTHS HAVE ALREADY BEEN EXPIRED AT THE TIME OF SURVEY AND IF WE CALCULATE PRO RATA GP ADDITION GP ADDITION CONFIRMED BY US FOR THE FIRST NINE MONTHS I.E. UP TO 31-12-2002 COMES TO RS.58 61 791/- BEING 75% OF TOTAL GP ADDITION CONFIRMED BY US OF RS.78 15 722/-. SINCE THE TOTAL ADDITION MADE BY ASSESSING OFFICER ON THIS AC COUNT IS OF RS.39 68 371/- ONLY WE ARE OF THE CONSIDERED OPINION THAT NO SUCH SEPARATE ADDITION IS CALLED FOR AFTER ALLOWING THE BENEFIT OF TELESCOPING TO TH E ASSESSEE. REGARDING THIS ARGUMENT OF THE REVENUE THAT THE BENEFIT OF TELESCO PING IS NOT ALLOWABLE IN THE PRESENT CASE WE FEEL THAT THIS ARGUMENT IS WITHOUT ANY MERIT. FOR THE PURPOSE OF MAKING THIS ADDITION THE AO HAS MADE THE CALCUL ATION ON THE BASIS OF BOOK STOCK AND AS PER STOCK FOUND ON THE DATE OF SURVEY. EXTRA INCOME ON ACCOUNT OF ADDITION CONFIRMED BY US BY INCREASING GP RATE I S FOUND ON THE DATE OF SURVEY BY WAY OF EXTRA STOCK AND HENCE NO SEPARATE ADDITION IS CALLED FOR ON THIS ACCOUNT BECAUSE NOTHING HAS BEEN BROUGHT ON RE CORD TO SHOW THAT EXTRA GP ADDITION CONFIRMED BY US HAS BEEN INVESTED BY AS SESSEE SOMEWHERE ELSE AND HENCE THE SAME WAS NOT AVAILABLE WITH THE ASSE SSEE FOR INVESTMENT IN EXTRA STOCK. HENCE WE DELETE THIS ADDITION OF RS.3 9 68 371/-. 10. NOW WE DECIDE THE ISSUE REGARDING THIRD ADDITIO N OF RS.77 35 990/- ON ACCOUNT OF DIFFERENCE IN CLOSING STOCK AS PER BALAN CE-SHEET AND AS PER STOCK STATEMENT SUBMITTED TO BANK. THE POSITION OF EXCES S STOCK AND SHORT STOCK AS PER STOCK STATEMENT SUBMITTED TO BANK AS COMPARED T O STOCK SHOWN IN BALANCE SHEET IS NOTED BY THE A.O. IN A CHART ON PAGE 5 OF THE ASSESSMENT ORDER WHICH IS REPRODUCED BELOW:- PARTICULARS AS PER BOOKS AS ON 31.3.2003 (RS.) AS PER STOCK STATEMENT SUBMITTED TO BANK (RS.) EXCESS/DEFICIT (RS.) RAW MATERIAL (SYNTHETIC FIBER) 556055 6863130 6327075 FINISHED GOODS 594000 950400 356400 WORK IN PROCESS 6281160 1240600 (-)5040560 GOODS UNDER ILC -- 3640500 3640500 ITA NO.4597/AHD/2007 & 182/AHD/08 A .Y.03-04 M/S DEVSHREE SYNTEX P. LTD. V. ACIT CIR-BHARUCH PAGE 7 11. THE A.O. MADE ADDITION OF RS.39 96 400/- BEING EXCESS STOCK OF FINISHED GOODS AND GOODS UNDER LC AS PER STOCK STAT EMENT. FOR EXCESS STOCK OF RAW MATERIAL OF RS.63 27 075/- THE A.O. ALLOWED CREDIT FOR SIMILAR ADDITION MADE BY HIM ON ACCOUNT OF EXCESS STOCK FOUND IN THE COURSE OF SEARCH OF RS.34 73 615/- & MADE NET ADDITION OF RS.28 53 460/ -. FOR DEFICIT IN STOCK OF W.I.P. AS PER STOCK STATEMENT OF RS.50 40 500/- TH E A.O. MADE ADDITION OF RS.8 86 130/- BEING GP OF DEFICIT. IN THIS MANNER HE MADE TOTAL ADDITION OF RS.77 35 990/-. PART OF THIS ADDITION WAS DELETED BY LD. CIT(A). NOW BEFORE US IT IS THE CLAIM OF THE LD. A.R. OF THE ASSESSEE THAT NO ADDITION IS CALLED FOR ON THIS ACCOUNT. FIRST REASON GIVEN BY HIM IS THAT FOR STOCK STATEMENT GIVEN TO BANK AGAINST HYPOTHECATION OF STOCK NO ADDITION IS CALLED FOR AND THERE ARE SEVERAL JUDGMENTS TO THIS EFFECT. 12. THE SECOND REASON GIVEN BY HIM IS THIS THAT THE EXCESS STOCK FOUND AS PER STOCK STATEMENT GIVEN TO THE BANK AND SHORT STO CK FOUND AS PER STOCK STATEMENT GIVEN TO THE BANK SHOULD BE NETTED AND ON LY NET EXCESS STOCK IS REQUIRED TO BE EXPLAINED. IN SUPPORT OF THIS CONTE NTION IT WAS SUBMITTED THAT THE ACCOUNTANT WHO SUBMITTED THE STOCK STATEMENT TO THE BANK COULD NOT PROPERLY DIFFERENTIATE BETWEEN THE STOCK OF RAW MAT ERIAL AND STOCK OF WIP AND BY MISTAKE IN THE STOCK STATEMENT GIVEN TO THE BANK SOME OF THE STOCK OF WIP WAS INCLUDED BY HIM IN THE STOCK OF RAW MATERIAL AN D THIS ANOMALY IS ON THIS ACCOUNT AND THEREFORE THE DEFICIT IN STOCK OF WIP SHOULD BE ADJUSTED AGAINST EXCESS STOCK FOUND OF RAW MATERIAL AND IF THIS IS D ONE THE NET EXCESS STOCK AS PER STOCK STATEMENT GIVEN TO THE BANK AND AS PER BA LANCE SHEET OF THE ASSESSEE IS ONLY OF RS.52 83 415/-. WE FIND FORCE IN THIS CONTENTION OF LD. A.R. OF THE ASSESSEE THAT NET EXCESS STOCK SHOULD O NLY BE CONSIDERED BECAUSE WE FEEL THAT IT IS VERY MUCH POSSIBLE THAT WHEN STOCK STATEMENT IS GIVEN TO THE BANK IMMEDIATELY AFTER MONTH END THER E MAY BE SOME MISTAKES OF CONSIDERING STOCK OF WIP AS STOCK OF RAW MATERIA LS. ONCE WE ACCEPT THIS CONTENTION OF THE LD. A.R. NO SEPARATE ADDITION ON THIS ACCOUNT IS CALLED FOR BECAUSE WE HAVE ALREADY CONFIRMED THE GP ADDITION O F RS.78 15 722/- AND HENCE THE NET EXCESS STOCK FOUND AS PER STOCK STAT EMENT GIVEN TO THE BANK AS COMPARED TO THE STOCK SHOWN IN THE BALANCE SHEET IS ONLY RS.52 83 415/- ITA NO.4597/AHD/2007 & 182/AHD/08 A .Y.03-04 M/S DEVSHREE SYNTEX P. LTD. V. ACIT CIR-BHARUCH PAGE 8 WHICH IS LESS THAN THE GP ADDITION CONFIRMED BY US AND HENCE NO SEPARATE ADDITION ON THIS ACCOUNT IS CALLED FOR. THERE IS FORCE IN THIS CONTENTION OF THE LD. A.R. ALSO THAT MERELY ON THE BASIS OF STOCK STA TEMENT SUBMITTED TO THE BANK IN RESPECT OF HYPOTHECATION OF STOCK NO ADDIT ION IS CALLED FOR AND THERE ARE SEVERAL JUDGMENTS TO THIS EFFECT. IT IS NOT T HE CASE OF THE A.O. THAT THE STOCK IN THE PRESENT CASE WAS PLEDGED BY THE ASSESS EE TO THE BANK. THE A.O. HAS NOTED AT PARA 8.4 OF THE ASSESSMENT ORDER THAT THE STOCK WAS SHOWN TO THE BANK FOR AVAILING CC FACILITY OF RS.90 54 130/-. T HIS SHOWS THAT THE STOCK STATEMENT WAS GIVEN TO THE BANK FOR HYPOTHECATION O F STOCK AND NOT FOR PLEDGING OF STOCK. IN THIS VIEW OF THE MATER ALSO NO ADDITION IS CALLED FOR. IN VIEW OF THE ABOVE DISCUSSION AND IN VIEW OF THE TOT ALITY OF THE FACTS IN THE PRESENT CASE WE FEEL THAT NO SEPARATE ADDITION IS CALLED FOR ON ACCOUNT OF DIFFERENCE IN STOCK AS PER STOCK STATEMENT SUBMITTE D TO THE BANK FOR HYPOTHECATION OF STOCK AS COMPARED TO STOCK SHOWN B Y THE ASSESSEE IN THE BALANCE SHEET. WE THEREFORE DELETE THE ENTIRE AD DITION ON THIS ACCOUNT. 13. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED WHEREAS THE APPEAL OF THE REVENUE IS DISMISSED. 2 1 + 0!& '$ 3 09 / 09 /2011 ! #- 7 + . 8 14. THIS ORDER PRONOUNCED IN OPEN COURT ON 09/ 08/ 2011 . SD./- SD./- (D.K.TYAGI) (A.K. GARODIA) ( ) ( # ) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) '$ 3- 09.09.2011 8 DKP*/SP 1 1 1 1 + ++ + */: */: */: */: ;:&/ ;:&/ ;:&/ ;:&/ / COPY OF ORDER FORWARDED TO:- 1. () / APPELLANT 2. *() / RESPONDENT 3. / -= / CONCERNED CIT 4. -=- / CIT (A) 5. :@ */$ / DR ITAT AHMEDABAD 6. % B2 / GUARD FILE. BY ORDER/ 1 C/ D 8