ACIT, Gwalior v. M/s Kaila Devi Rollar and flour Mills, Morena

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI R.K. GUPTA JUDICIAL MEMBER AND SHRI P.K. BANSAL ACCOUNTANT MEMBER ITA NO.614/AGR/2008 ASST. YEAR: 2004-05 ASSTT. C.I.T. CIRCLE-2 VS. M/S KAILADEVI ROL LAR & FLOUR GWALIOR. MILLS PVT. LTD. MORENA. (PAN : AABCK 9744 K) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K. MISHRA SR. D.R. RESPONDENT BY : SHRI NAVIN GARGH ADVOCATE ORDER PER R.K. GUPTA J.M.: THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORD ER OF THE CIT(A) RELATING TO A.Y. 2004-05. 2. THE DEPARTMENT IS OBJECTING IN DIRECTING THE A.O . TO COMPUTE THE BOOK PROFIT AS WORKED OUT BY THE ASSESSEE AS PER PROFIT & LOSS ACCOUNT AN D NOT TAKING INTO ACCOUNT THE STOCK STATEMENT ATTACHED WITH THE AUDIT REPORT AND HOLDING IT AS PR OJECTED AS STOCK POSITION. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS A COMPANY AND RUNNING A ROLLER FLOUR MILL AND MANUFACTURING AATTA MAIDA SUJI RA VA ETC. THE ASSESSEE IS AN INDUSTRIAL UNDERTAKING AND IS ENTITLED TO DEDUCTION UNDER SECT ION 80IB OF THE INCOME-TAX ACT 1961 (THE 2 ACT HEREINAFTER). DURING THE ASSESSMENT PROCEEDIN GS THE A.O. NOTICED THAT A COPY SHOWING STOCK STATEMENT IS ENCLOSED ALONG WITH AUDIT REPORT . AS PER THIS COPY SHOWING SALES OF STOCK THE STOCK WAS NOT TALLIED WITH THE BOOKS OF ACCOUNTS. THE ASSESSEE WAS REQUIRED TO EXPLAIN THE DISCREPANCY. IT WAS STATED THAT THIS COPY RELATES TO PROJECTED STOCK PREPARED FOR THE PURPOSE OF SUBMITTING BEFORE THE BANK TO AVAIL OVERDRAFT FACIL ITY. A CLARIFICATION FROM THE AUDITOR WAS ALSO FILED BY WHICH IT WAS ADMITTED AS DUE TO OVERSIGHT THIS COPY WAS ENCLOSED ALONG WITH AUDIT REPORT. HOWEVER THE A.O. WAS NOT SATISFIED. IN HIS VIEW THIS IS A COPY OF CLOSING STOCK PREPARED BY THE AUDITOR AND THE STOCK SHOWN IN THIS COPY NOT TALLIE D WITH THE BOOKS OF ACCOUNTS. ACCORDINGLY HE REJECTED THE BOOKS OF ACCOUNTS AND MADE HIS OWN EST IMATE OF PROFIT. THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). DETAILED WRITTEN SUBMISS IONS WERE FILED. THE CLARIFICATION SOUGHT FROM THE AUDITOR WAS ALSO FILED. IT WAS FURTHER EX PLAINED THAT THE A.O. HAS CASTE DOUBT ABOUT REWRITING OF THE REGISTER. IT WAS SUBMITTED THAT T HE A.O. HAS THOROUGHLY EXAMINED AND VERIFIED THE BOOKS OF ACCOUNTS AND STOCK REGISTER. OPENING STOCKS WERE TALLYING WITH THE PRECEDING YEARS CLOSING STOCK. THE PURCHASE SALE AND CLOSING STOC K WERE TALLYING WITH PROFIT OF STOCK AND BALANCE SHEET ON THE BASIS OF WHICH THE RETURN WAS PREPARED. IT WAS ALSO SUBMITTED THAT THE A.O. HIMSELF ACCEPTED THE FIGURES OF PURCHASES AND SALES AS SHOWN IN THE ACCOUNTS. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTI ON UNDER SECTION 80IB AND WHATEVER PROFITS ARE THERE THEY ARE EXEMPT IN VIEW OF THE FACT OF DEDUC TION UNDER SECTION 80IB. THEREFORE THERE IS NO MATERIAL WHICH SUGGESTS THAT THE ASSESSEE HAS MANIP ULATED THE STOCK. THE CIT(A) AFTER EXAMINING ALL DETAILS AND PERUSING THE MATERIAL ON RECORD FOUND THE EXPLANATION FILED ON BEHALF OF THE ASSESSEE IS CORRECT. THE LETTER FILED BY TH E AUDITOR GIVING CLARIFICATION IN RESPECT TO THE PROFIT ENCLOSED ALONG WITH THE AUDIT REPORT BY WHIC H IT WAS CLARIFIED THAT DUE TO MISTAKE THIS PAPER WAS ENCLOSED WHICH IS A PROJECTED PAPER FOR THE PUR POSE OF FILING TO THE BANK. ACCORDINGLY THE 3 A.O. WAS DIRECTED TO ACCEPT THE P&L ACCOUNT SHOWN B Y THE ASSESSEE. NOW THE DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL. 4. LD. D.R. HAS PLACED RELIANCE ON THE ORDER OF THE A.O. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE ORDER OF TH E CIT(A). CONTENTION AS HAS BEEN RAISED BEFORE THE CIT(A) WERE REITERATED. THE ATTENTION OF THE B ENCH WAS DRAWN ON RELEVANT EVIDENCES PLACED ON RECORD. RELIANCE WAS ALSO PLACED ON THE DECISIO N OF RAJASTHAN HIGH COURT IN 123 TAXMAN 322 COPY OF WHICH IS PLACED ON RECORD. 5. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD WE FIND THAT THE CIT(A) WAS JUSTIFIED IN ACCEPTING THE EXPLANATION O F THE ASSESSEE. THE PROJECTED COPY OF STOCK IS PLACED AT PAGE NO.76 OF THE PAPER BOOK. AT PAGE NO .9 OF THE PAPER BOOK A LETTER OF AUDITOR CLARIFYING THE MISTAKE IN RESPECT OF PROJECTED STOC K IS PLACED. IT HAS BEEN MENTIONED IN THIS LETTER THAT DUE TO MISTAKE PROJECTED STOCK STATEMENT WHI CH WAS PREPARED FOR THE BANK PURPOSE WERE ATTACHED TO THE AUDITED BALANCE SHEET BUT THERE WAS NO CONNECTION OF THOSE PAPERS WITH THE BALANCE SHEET. THIS CHART SHOWING QUANTITATIVE DET AILS FOR THE YEAR ENDING ON 31.03.2006 WERE PREPARED FOR THE BANK PROPOSAL ONLY AND THIS WAS NO T RELATED WITH THE AUDITED BALANCE SHEET FOR THE YEAR 2003-04. IT IS FURTHER SEEN THAT THE A. O. EXAMINED THE BOOKS OF ACCOUNTS AND PURCHASE AND SALE VOUCHERS THOROUGHLY AND NO DEFECT OF ANY K IND WAS FOUND. THE FIGURES AS PER BOOKS AND AS PER AUDITED REPORTS WERE TALLIED. AS STATED ABO VE THE PAPERS SHOWING PROJECTED STOCK STATEMENT WAS ENCLOSED ALONG WITH BALANCE SHEET INA DVERTENTLY. OTHERWISE THERE WAS NO DIFFERENCE IN STOCK AS PER AUDITED ACCOUNT AND AS P ER BOOKS OF ACCOUNTS. THEREFORE IN OUR CONSIDERED VIEW THE CIT(A) WAS JUSTIFIED IN ACCEPT ING THE EXPLANATION OF THE ASSESSEE AND 4 THEREAFTER DIRECTING THE A.O. TO COMPUTE THE INCOME AS PER PROFIT & LOSS ACCOUNT PREPARED BY THE ASSESSEE. ACCORDINGLY WE CONFIRM THE ORDER OF THE CIT(A) IN THIS RESPECT. 6. IN THE RESULT APPEAL OF THE DEPARTMENT IS DISMI SSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 24.05.2010) . SD/- SD/- (P.K. BANSAL) (R.K. GUPA) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE: AGRA DATE: 24 TH MAY 2010. PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR ITAT AGRA BENCH AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY