M/s. Bindal Silk Mills Pvt.Ltd.,, Surat v. The ACIT.,Cent.Circle-4,, Surat

ITA 507/AHD/2011 | 2007-2008
Pronouncement Date: 27-11-2014 | Result: Dismissed

Appeal Details

RSA Number 50720514 RSA 2011
Assessee PAN AAACB9519Q
Bench Ahmedabad
Appeal Number ITA 507/AHD/2011
Duration Of Justice 3 year(s) 9 month(s) 6 day(s)
Appellant M/s. Bindal Silk Mills Pvt.Ltd.,, Surat
Respondent The ACIT.,Cent.Circle-4,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 27-11-2014
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 27-11-2014
Date Of Final Hearing 11-11-2014
Next Hearing Date 11-11-2014
Assessment Year 2007-2008
Appeal Filed On 21-02-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI N. S. SAINI ACCOUNTANT MEMBER. ITA. NO. 710/AHD/2011 (ASSESSMENT YEAR:2007-08) THE DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE 4 SURAT. APPELLANT VS. M/S. BINDAL SILK MILLS PVT. LTD. 270 BINDAL HOUSE KADODARA ROAD SURAT. RESPONDENT & I. T.A. NO. 507/AHD/2011 (ASSESSMENT YEAR: 2007-08) M/S. BINDAL SILK MILLS PVT. LTD. 270 BINDAL HOUSE KADODARA ROAD SURAT. APPELLAN T VS. ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE 4 SURAT. RE SPONDENT I.T.A. NOS. 710 & 507/AHD/2011 FOR A.Y. 07-08 (DCIT VS. M/S. BINDAL SILK MILLS PVT. LTD.) PAGE 2 PAN: AAACB9519Q / BY REVENUE :SHRI B. KULSHRESTHA SR. D.R. / BY ASSESSEE : SHRI SAMIR SHAH A.R. /DATE OF HEARING :11.11.2014 !'# /DATE OF PRONOUNCEMENT : 27.11.2014 ORDER PER SHAILENDRA KUMAR YADAV J.M: THESE CROSS APPEALS ARE ARISING OUT FORM THE ORDER OF CIT(A)-II AHMEDABAD DATED 21.12.2010 FOR THE ASSE SSMENT YEAR 2007-08. SO THEY ARE BEING DISPOSED OF BY WA Y OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ITA NO. 710/AHD/2011 REVENUE HAS FILED THE A PPEAL ON THE FOLLOWING GROUNDS: I) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND I N LAW THE LD CIT(A) ERRED IN LAW AND IN FACTS IN RESTRICT ING THE ADDITION TO RS.9 50 151/- MADE ON ACCOUNT OF CLOSIN G STOCK OF WIP AGAINST THE TOTAL ADDITION OF RS.13 56 0397/- WITHOUT APPRECIATING THE FACTS RELI ED UPON BY THE ASSESSING OFFICER FOR MAKING THE ADDITI ON. II) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND I N LAW THE LD CIT(A) ERRED IN LAW AND IN FACTS IN RESTRICT ING THE ADDITION AT RS.9 50 151/- MADE ON ACCOUNT OF CLOSIN G STOCK OF WIP HOLDING THAT THE ASSESSING OFFICER H AS TO TAKE THE NUMBER OF WORKING DAYS AT 312 DAYS INSTEAD I.T.A. NOS. 710 & 507/AHD/2011 FOR A.Y. 07-08 (DCIT VS. M/S. BINDAL SILK MILLS PVT. LTD.) PAGE 3 OF 365 DAYS FOR THE WORKING OF CLOSING WIP IGNORING THAT THE ASSESSING OFFICER HAS TAKEN THE NUMBER OF DAYS AT 312 DAYS ONLY. III) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW THE LD CIT(A) ERRED IN LAW AND IN FACTS IN RESTRICT ING THE ADDITION TO RS.9 50 151/- MADE ON ACCOUNT OF CLOSIN G STOCK OF WIP HOLDING THAT ASSESSING OFFICER HAS TO TAKE 41% OF COST OF PRODUCTION INSTEAD OF 50% AS ADOPTE D BY THE ASSESSING OFFICER FOR THE WORKING OF WIP IGNORING THAT THE ASSESSEE HAD FAILED TO PRODUCE AN Y MATERIAL EVIDENCE TO SUPPORT ITS CLAIM EITHER DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS OR BEFORE THE LD CIT(A). IV) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND I N LAW THE LD CIT(A) ERRED IN LAW AND IN FACTS IN DELETING THE ADDITION OF RS.5 00 000/- MADE ON ACCOUNT OF DEFICI T IN CASH WHICH WAS UNEXPLAINED WITHOUT APPRECIATING THE FACTS ON RECORD. V) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW THE LD CIT(A) ERRED IN LAW AND IN FACTS IN DELETING THE ADDITION OF RS.5 00 000/- MADE ON ACCOUNT OF DEFICI T IN CASH WHICH WAS UNEXPLAINED HOLDING THAT THE VOUCHERS FOR4-5 DAYS WERE PENDING TO BE RECORDED IN THE CASH BOOK AND ALSO ONE VOUCHER WAS PERTAINING T O THE TRANSFER OF CASH OF RS.5 00 000/- FROM THE FACT ORY TO THE HEAD OFFICE IGNORING THAT NO SUCH EXPLANATI ON WAS OFFERED BY THE ASSESSEE DURING THE COURSE OF SEARCH NOR ANY PROOF OF RECEIPT OF CASH OF RS.5 00 000/-WAS FOUND AT THE HEAD OFFICE DURING TH E COURSE OF SEARCH. 2.1 IN I.T.A. NO. 507/AHD/2011 ASSESSEE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS: 1. THAT ON FACTS AND MERITS OF THE CASE THE LEAR NED CIT (A) HAS ERRED IN SUSTAINING ADDITION OF RS. 9 50 15 1/- OUT OF THE TOTAL ADDITION OF RS. 13 56 097/- AS MAD E BY THE LEARNED AO TOWARDS CLOSING STOCK OF WIP; IN-SPI TE OF THE FACT BEING SUBMITTED BEFORE THE LEARNED AO T HAT AS A MATTER OF CONSISTENT PRACTICE THE APPELLANT COMPANY HAD INCLUDED VALUE OF CLOSING STOCK OF WORK - I.T.A. NOS. 710 & 507/AHD/2011 FOR A.Y. 07-08 (DCIT VS. M/S. BINDAL SILK MILLS PVT. LTD.) PAGE 4 IN-PROGRESS TO THE EXTENT OF MATERIAL WITHIN THE CL OSING STOCK OF MATERIAL. 2. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE THE ADDITION ON ACCOUNT OF CLOSING STOCK OF WIP SHOULD BE DELETED SINCE THE DEPARTMENT HAS ACCEPTED THE METHO D OF VALUATION OF CLOSING STOCK OF WIP OF INCLUDING T HE SOME WITHIN THE VALUE OF CLOSING STOCK OF MATERIAL DURING THE COURSE OF ASSESSMENT FOR A.Y. 2004-05 TO A.Y. 2006-07 AND A.Y. 2008-09. 3. FIRST ISSUE IS WITH REGARD TO ADDITION MADE ON A CCOUNT OF CLOSING STOCK OF WORK IN PROGRESS. ASSESSEE IS A P RIVATE LIMITED COMPANY ENGAGED IN BUSINESS OF PROCESSING OF MAN MA DE FABRICS ON JOB WORK BASIS. ASSESSING OFFICER MADE ADDITION OF RS.13 56 097/- ON ACCOUNT OF CLOSING STOCK ON WORK IN PROGRESS. ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS NOT SHOWN ANY CLOSING STOCK FOR WORK-IN-PROGRESS WHEREA S DURING THE COURSE OF SURVEY U/S. 133A ON 26/07/2006 THE A SSESSEE ADMITTED THAT THERE REMAINS CLOSING STOCK FOR WORK IN PROGRESS ON ANY PARTICULAR DATE. ASSESSEE WAS ASKED TO GIVE THE WORKING OF CLOSING STOCK OF WORK IN PROGRESS AT THE END OF THE YEAR. FOR THIS THE ASSESSEE GAVE THE WORKING OF RS.9 50 151/ - AND PRAYED THAT THE BENEFIT OF OPENING STOCK SHOULD ALS O BE GIVEN. ASSESSING OFFICER REJECTED THE SUBMISSION AS WELL A S WORKING AND CALCULATED THE VALUE OF CLOSING STOCK OF WORK I N PROGRESS AT RS.13 56 097/-. THE ASSESSEES CLAIM OF OPENING ST OCK WAS REJECTED ON THE GROUND THAT OPENING STOCK HAS TO BE CONSIDERED ONLY WHEN IT HAS BEEN OFFERED FOR TAXATION IN EARLI ER YEAR AS CLOSING STOCK OF THAT YEAR. ACCORDINGLY THE ADDIT ION OF RS.13 56 097/- WAS MADE. I.T.A. NOS. 710 & 507/AHD/2011 FOR A.Y. 07-08 (DCIT VS. M/S. BINDAL SILK MILLS PVT. LTD.) PAGE 5 3.1. MATTER WAS CARRIED BEFORE FIRST APPELLATE AUTH ORITY WHEREIN IT WAS SUBMITTED ON BEHALF OF ASSESSEE THAT ASSESSEE HAS CALCULATED THE VALUE AT RS.13 56 097/- BY CONSI DERING THE PRODUCTION FOR 365 DAYS WHEREAS THE ACTUAL WORKING DAYS FOR PRODUCTION IS 312 DAYS AND ALSO TAKING 50% OF COST OF PRODUCTION AS AGAINST 41% NORMAL. HENCE IT SHOULD BE TAKEN AT RS.9 50 151/- AND ALSO NO ADDITION IS CALLED FOR AS IN THE EARLIER YEAR CLOSING STOCK WAS SHOWN HENCE BENEFIT OF OPENING STOCK SHOULD BE GIVEN. CIT(A) HAVING CONSIDERED TH E SUBMISSION ON BEHALF OF ASSESSEE OBSERVED THAT ASSE SSING OFFICER WAS JUSTIFIED IN MAKING ADDITION FOR CLOSIN G STOCK OF WORK IN PROGRESS AS THERE WOULD ALWAYS BE CLOSING S TOCK FOR WORK IN PROGRESS BUT HAS NOT SHOWN CLOSING STOCK IN BOOKS. FURTHER THE BENEFIT OF OPENING STOCK WAS NOT ALLOW ABLE AS IT WAS NOT SHOWN IN THE BOOKS AND NOT VERIFIABLE. HOW EVER THE WORKING OF THE CLOSING STOCK FOR WORK IN PROGRESS A T RS.13 56 097/- MADE BY ASSESSING OFFICER WAS NOT FO UND CORRECT AS WORKING HAS TO BE CONSIDERED ONLY FOR 31 2 DAYS AS DONE BY ASSESSEE AND 41% OF COST OF PRODUCTION AS D ONE BY THE ASSESSEE. ACCORDINGLY ADDITION WAS RESTRICTED TO RS.9 50 151/- AND ASSESSEE WAS ALLOWED RELIEF OF RS . 4 05 946/-. REVENUE IS AGAINST RELIEF GRANTED TO T HE ASSESSEE WHILE ASSESSEE IS AGAINST SUSTAINING THE ADDITION O N THIS GROUND BEFORE US. 3.2 AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MATER IAL ON RECORD WE FIND THAT ASSESSEE HAS CALCULATED VALUE OF WORK IN I.T.A. NOS. 710 & 507/AHD/2011 FOR A.Y. 07-08 (DCIT VS. M/S. BINDAL SILK MILLS PVT. LTD.) PAGE 6 PROGRESS AT RS.13 56 097/- BY CONSIDERING THE PRODU CTION FOR 365 DAYS WHEREAS ACCORDING TO ASSESSING OFFICER ACTUA L WORKING DAYS IS 312 DAYS AND ALSO TAKING 50% COST OF PRODUC TION AS AGAINST 41% IN NORMAL. WE FIND THAT ASSESSING OFFI CER WAS JUSTIFIED IN MAKING ADDITION FOR CLOSING STOCK OF W ORK IN PROGRESS AS THERE WOULD ALWAYS BE CLOSING STOCK FOR WORK IN PROGRESS BUT NOT SHOWN CLOSING STOCK IN BOOKS. THE BENEFIT OF O PENING STOCK WAS NOT ALLOWABLE AS IT WAS NOT SHOWN IN BOOKS AND NOT VERIFIABLE. CLOSING STOCK FOR WORK IN PROGRESS AT RS.13 56 097/- MADE BY ASSESSING OFFICER WAS NOT FOUND CORRECT AS WORKING HAS TO BE CONSIDERED ONLY FOR 312 DAYS AS SHOWN BY ASSE SSEE AND 41% OF COST PRODUCTION HAS SHOWN BY ASSESSEE. IN F ACTS AND CIRCUMSTANCES CIT(A) WAS JUSTIFIED IN RESTRICTING THE ADDITION TO RS.9 50 151/-. SAME IS UPHELD. THIS TAKE CARE OF ISSUE RAISED IN ASSESSEES AS WELL AS REVENUES APPEAL ON THIS ISSU E. 4. NEXT GROUND OF APPEAL IS AGAINST ADDITION OF RS. 5 00 000/- AS UNEXPLAINED INVESTMENT FOR DEFICIT IN CASH BALAN CE. DURING COURSE OF SURVEY PROCEEDINGS CASH OF RS.4 89 500/- WAS FOUND WHEREAS AS PER BOOKS CASH BALANCE WAS RS.15 17 002 /- THEREFORE ASSESSING OFFICER HAS MADE THE ADDITION OF RS.5 00 000/- FOR UNEXPLAINED INVESTMENT FOR DEFICI T IN THE CASH BALANCE. 4.1. IN FIRST APPELLATE PROCEEDING IT WAS STAND OF THE ASSESSEE THAT SOME OF THE EXPENSE VOUCHERS FOR AROUND 4-5 DA YS WERE PENDING TO BE RECORDED IN CASH BOOK AND ALSO ONE VO UCHER WAS I.T.A. NOS. 710 & 507/AHD/2011 FOR A.Y. 07-08 (DCIT VS. M/S. BINDAL SILK MILLS PVT. LTD.) PAGE 7 PERTAINING TO TRANSFER OF CASH OF RS.5 00 000/- FRO M FACTORY TO THE HEAD OFFICE. DURING ASSESSMENT PROCEEDINGS ALS O UPDATED CASH BOOK WAS PRODUCED RECONCILING THE CASH BALANCE BUT ASSESSING OFFICER HAS REJECTED THE EXPLANATION WITH OUT ANY BASIS. CONSIDERING THE SUBMISSIONS ON BEHALF OF AS SESSEE CIT(A) OBSERVED THAT AS THERE WAS NO EXCESS CASH BA LANCE FOUND THERE WAS NO JUSTIFICATION FOR ADDITION FOR UNEXPLAINED INVESTMENT. FURTHER THE ASSESSEE EXPLAINED THE DI SCREPANCIES IN THE CASH BALANCE FOUND HENCE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION. SAME HAS BEEN OPPOSE D BEFORE US ON BEHALF OF REVENUE INTER ALIA STATED THAT CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.5 00 000/- MADE ON ACCOUNT OF DEFICIT IN CASH WHICH WAS UNEXPLAINED H OLDING THAT VOUCHERS FOR 4-5 DAYS WERE PENDING TO BE RECORDED IN CASH BOOK AND ALSO ONE VOUCHER WAS PERTAINING TO THE TRA NSFER OF CASH OF RS.5 00 000/- FROM FACTORY TO THE HEAD OFFI CE IGNORING THAT NO SUCH EXPLANATION WAS OFFERED BY ASSESSEE DU RING THE COURSE OF SEARCH NOR ANY PROOF OF RECEIPT OF CASH O F RS.5 00 000/- WAS FOUND AT THE HEAD OFFICE DURING T HE COURSE OF SEARCH. ACCORDINGLY ORDER OF THE CIT(A) ON THE ISSUE BE SET ASIDE AND THAT OF A.O. BE RESTORED BACK. ON OTHER HAND LD. A.R. SUPPORTED THE ORDER OF CIT(A) ON THE ISSUE. 4.2 AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MATER IAL ON RECORD WE ARE NOT INCLINED TO INTERFERE WITH THE O RDER OF CIT(A) WHO HAS RIGHTLY DELETED THE ADDITION OF RS.5 00 000 /- ON ACCOUNT OF DEFICIT IN CASH HOLDING THAT VOUCHERS FOR 4-5 DAYS WERE I.T.A. NOS. 710 & 507/AHD/2011 FOR A.Y. 07-08 (DCIT VS. M/S. BINDAL SILK MILLS PVT. LTD.) PAGE 8 PENDING TO BE RECORDED IN CASH BOOK AND ALSO ONE VO UCHER WAS PERTAINING TO THE TRANSFER OF CASH OF RS.5 00 000/- FROM FACTORY TO THE HEAD OFFICE. THIS REASONED FINDING OF CIT(A ) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 5. IN RESULT REVENUES APPEAL AS WELL AS ASSESSEE S APPEALS ARE DISMISSED AS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS THE 27 TH DAY OF NOVEMBER 2014. SD/- SD/- (N. S. SAINI) (SHAILENDR A KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMB ER TRUE COPY S.K.SINHA $ $ $ $ &' &' &' &' ('# ('# ('# ('# / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. -- . / CONCERNED CIT 4. .- / CIT (A) 5. '23 & / DR ITAT AHMEDABAD 6. 367 89 / GUARD FILE. BY ORDER / $ :/ - <