M/s. Monarch Foundry P. Ltd.,, RAJKOT-GUJARAT v. The Deputy Commissioner of Income Tax, Circle-1,, RAJKOT-GUJARAT

ITA 629/RJT/2012 | 1997-1998
Pronouncement Date: 31-07-2013 | Result: Dismissed

Appeal Details

RSA Number 62924914 RSA 2012
Assessee PAN AABCM4344D
Bench Rajkot
Appeal Number ITA 629/RJT/2012
Duration Of Justice 7 month(s) 26 day(s)
Appellant M/s. Monarch Foundry P. Ltd.,, RAJKOT-GUJARAT
Respondent The Deputy Commissioner of Income Tax, Circle-1,, RAJKOT-GUJARAT
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2013
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 31-07-2013
Date Of Final Hearing 22-07-2013
Next Hearing Date 22-07-2013
Assessment Year 1997-1998
Appeal Filed On 05-12-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT BEFORE SHRI T K SHARMA JM AND SHRI D K SRIVASTAVA AM ITA NO. 629 /RJ T/201 2 ASSESSMENT YEAR : 1997 - 98 M/S MONARCH FOUNDRY P. LTD. RAJKOT - GONDAL HIGHWAY SURVEY NO.209 VERAVAL - SHAPAR PAN: AABCM 4 344 D V. DCIT CIRCLE - 1 RAJKOT DATE OF HEARING : 22 .0 7 .2013 DATE OF PRONOUNCEMENT : 31 .0 7 .2013 ASSESSEE BY : SHRI R M RINDANI CA REVENUE BY : SHRI AVINASH KUMAR DR ORDER D. K. SRIVASTAVA : THE APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST T HE ORDER PASSED BY THE CIT(A) - II RAJKOT ON 29.10.2012 ON THE FOLLOWING GROUNDS: - 1. THE LEARNED C.I.T. (APPEALS) - II RAJKOT ERRED IN UPHOLDING THE ADDITION OF 10 30 699/ - MADE BY THE A.O. U/S 69B RELYING ON THE STOCK STATEMENT FURNISHED TO T HE BANK. 2. THE LEARNED C.I.T. (APPEALS) - II RAJKOT ERRED IN NOT APPRECIATING THAT THE A.O. FAILED TO PROPERLY CONSIDER THE DIRECTIONS OF HONBLE TRIBUNAL. 2. THE ASSESSEE IS A P RIVATE L IMITED C OMPANY. IT FILED ITS RETURN OF INCOME ON 28.11.1997 RETURNI NG TOTAL LOSS AT RS.4 80 330/ - . THE ASSESSEE IS RUNNING A FOUNDRY FOR PRODUCING METAL CASTINGS . IN THE COURSE OF ORIGINAL ASSESSING PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD AVAILED CASH CREDIT FACILITY FROM STATE BANK OF SAURASHTRA. BY NOTICE ISSUED BY THE AO U/S 133(6) THE MANAGER OF THE STATE BANK OF SAURASHTRA WAS CALLED UPON TO FURNISH THE STATEMENT OF STOCK FURNISHED BY THE ASSESSEE TO THE BANK. THE STATEMENT OF CLOSING STOCK AS FURNISHED BY THE ASSESSEE TO THE BANK WAS FURNI SHED BY THE BANK MANAGER TO THE AO . ON ITS PERUSAL THE ASSESSING OFFICER NOTICED THAT CERTAIN ITEMS OF STOCK WHICH WERE DECLARED BY THE ASSESSEE TO THE BANK WERE NOT RECORDED IN THE BOOKS OF THE ASSESSEE. HE ALSO NOTICED THAT QUANTITIES OF CERTAIN ITEMS OF THE STOCK AS FURNISHED BY THE ASSESSEE TO THE BANK WERE SUBSTANTIALLY HIGHER THAN THOSE RECORDED IN THE BOOKS OF THE ASSESSEE. AFTER HEARING THE ASSESSEE THE ASSESSING OFFICER TREATED THE EXCESS STOCK SO DECLARED TO THE BANK AS UNEXPLAINED INVESTMENT OUTSIDE THE 2 629 - RJT - 2012 MONARCH FOUNDRY PVT LTD BOOKS AND ACCORDINGLY ADDED A SUM OF RS.10 30 699/ - . AGGRIEVED BY THE AFORESAID ADDITION THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD . CIT(A). BY HIS ORDER DATED 10.07.2003 THE LD CIT(A) DELETED THE ADDITION AGAINST WHICH THE REVEN UE FILED APPEAL BEFORE THIS TRIBUNAL. THE SAID ORDER PASSED BY THE LD . CIT(A) IN T HIS BEHALF WAS VACATED BY THIS TRIBUNAL AND THE MATTER WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE ISSUE AFRESH WITH THE FOLLOWING OBSERVATIONS: - 4. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES . LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT THE CIT(A) HIMSELF HAS RECORDED THE FINDING THAT THE ASSESSING OFFICER HAS NOT UNDERTAKEN ANY EXERCISE IN THE MATTER OF VERIFICATION OF STOCK REGISTER MAINTAINED BY THE ASSESSEE. THEREFORE HE HAS EXAMINED THE STOCK STATEMENT FURNISHED TO THE BANK AND ALSO THE STOCK AS PER BOOKS OF ACCOUNT SUCH AS RAW MATERIAL RECEIPT REGISTER CONSUMPTION REGISTER AND OTHER RECORDS MAINTAINED PERTAININ G TO STOCK AND WAS OF THE VIEW THAT THE STOCK DISCLOSED IN THE BOOKS OF ACCOUNTS CANNOT BE SAID TO BE UNRELIABLE AND THEREFORE HE DELETED THE ADDITION. THE LEARNED DR CONTENDED BEFORE US THAT BEFORE ARRIVING AT THE ABOVE FACTUAL CONCLUSION THE CIT(A) HAS NOT GIVEN ANY OPPORTUNITY TO THE ASSESSEE NOR CALLED FOR ANY REMAND REPORT. IT IS WELL SETTLED THAT APPELLATE PROCEEDINGS IS CONTINUOUS PROCESS OF ASSESSMENT. THE APPELLATE AUTHORITY HAS PLENARY POWERS IN DISPOSING THE APPEALS. THE SCOPE OF HIS POWER IS C O - TERMINUS WITH THAT OF THE ITO. HE CAN DO WHAT THE ITO CAN DO AND ALSO DIRECT HIM TO DO WHAT HE HAS FAILED TO DO. HOWEVER IN THE PRESENT CASE THE CIT(A) HAS EXAMINED THE STOCK ACCOUNTS AND BEFORE REACHING TO ANY CONCLUSION HE HAS NOT GIVEN ANY OPPORTUNIT Y TO THE ASSESSING OFFICER TO HAVE HIS SAY ON THE ISSUE. THEREFORE FOR THE INTEREST OF JUSTICE AND FAIR PLAY WE RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE ISSUE AFRESH AFTER CONSIDERING THE QUANTITATIVE DETAILS IN THE STOCK ACCOUNT WITH THAT OF THE STOCK STATEMENT FURNISHED TO THE BANK. 3. PURSUANT TO THE AFORESAID DIRECTIONS ISSUED BY THIS TRIBUNAL THE ASSESSING OFFICER HAS NOW PASSED A FRESH ORDER ON 06.11.2006 U/S 143(3) R.W.S. 254 OF THE INCOME - TAX ACT. THE IMPUGNED A D DITION HAS AGAIN BEEN MADE BY THE ASSESSING 3 629 - RJT - 2012 MONARCH FOUNDRY PVT LTD OFFICER. ON APPEAL THE LD CIT(A) HAS CONFIRMED THE IMPUGNED ADDITION. AGGRIEVED BY THE ORDER PASSED BY THE LD . CIT(A) THE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. 4. IN SUPPORT OF APPEAL IT WAS STATED BY THE ASSESSEE THAT BOOKS OF ACCOUNTS AS MAINTAINED BY THE ASSESSEE IN THE REGULAR COURSE OF ITS BUSINESS WERE DULY AUDITED U/S 44AB. HE ADMITTED THAT THERE WAS DIFFERENCE IN QUANTITIES IN STOCK AS SUBMITTED BY THE ASSESSEE TO THE BANK AND THOSE RECORDED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. HE HOWEVER ADDED THAT THE AFORESAID STOCK POSITION WAS SUBMITTED BY THE ASSESSEE TO THE BANK WITH A VIEW TO AVAIL CASH CREDIT FACILITY. IT WAS ALSO SUBMITTED THAT THE STOCK POSITION SUBMITTED TO THE BANK WAS IN R OU ND FIGURES WHICH ACCORDING TO HIM SUGGESTED THAT THE STOCK POSITION WAS GIVEN TO THE BANK ON ESTIMATE BASIS. HE ALSO RELIED UPON THE SUBMISSIONS EARLIER MADE BEFORE THE LD . CI T(A) WHICH HAVE BEEN REPRODUCED BY THE LD . CIT(A) IN PARAGRAPH 5 OF HIS APPELL ATE ORDER AND THEREFORE ARE NOT BEING REITERATED HERE FOR THE SAKE OF BREVITY . 5. IN REPLY THE LD . DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER PASSED BY THE LD CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONSIDERED THEIR SUBMISSIONS. T HE LD CIT(A) HAS DEALT WITH THE ISSUE IN PARAGRAPHS 6 AND 7 OF HIS APPELLATE ORDER WHICH READ AS UNDER: - 6.0 AS IN PARA - 4 OF THE ASSESSMENT ORDER AS THE A.O. HAS NOT GIVEN ANY DESCRIPTIVE FINDINGS WITH REGARD TO DISCREPANCIES IN QUANTITATIVE DETAILS TH EREFORE RELEVANT ASSESSMENT RECORD HAS BEEN CALLED FOR FROM THE A.O. WHICH WAS SUBMITTED VIDE LETTER DATED 23/7/2012. ON PERUSAL OF THE SAID ASSESSMENT RECORD AND THE SUBMISSIONS OF THE APPELLANT AT VARIOUS STAGES WITH REGARD TO QUANTITATIVE TALLY OF CLOSI NG STOCK IT IS FOUND THAT THERE WERE DISCREPANCIES NOT ONLY IN VALUE BUT QUANTITY OF CERTAIN ITEMS AS WELL. THIS OFFICE HAS UNDERTAKEN AN EXERCISE IN THIS REGARD AND THE DISCREPANCIES FOUND IN TH E STOCK STATEMENT SUBMITTED TO THE BANK STOCK STATEMENT ATT ACHED WITH THE AUDIT REPORT AND STOCK DETAILS SUBMITTED DURING THE COURSE OF ASSESSMENT 4 629 - RJT - 2012 MONARCH FOUNDRY PVT LTD PROCEEDINGS ARE TABULATED AND MADE PART OF THIS ORDER AS ANNEXURE - A (PAGS 1 TO 4). 7. AS ALL THE GROUNDS OF APPEAL ARE INTER - CONNECTED THE SAME ARE TAKEN UP TOGETHER. I HAVE CONSIDERED THE CONTENTION OF THE A.O. SUBMISSION OF THE APPELLANT AND THE ASSESSMENT RECORDS SUBMITTED BY THE A.O. VID LETTER DATED 23/7/12. FROM THESE DETAILS AS MENTIONED IN ANNEXURE - A ANNEXED TO HIS ORDER IT IS EVIDENT THAT FOLLOWING ITEMS H AVE QUANTITATIVE DIFFERENCE AS COMPARED TO THE STOCK STATEMENT SUBMITTED TO THE BANK AND ITEMS SHOWN IN THE RETURN OF INCOME: SR. NO. ITEM QUANTITY DIFFERENCE AMOUNT (RS.) 1 IVAREG 33 REVON 145 KG 13 775/ - 2 FERROW SILICA 250 KG 11 300/ - 3 FERROW MAGAN ICS 370 KG 12 670/ - 4 FEROW COP. (FERRO CROM) 210 KG 17 070/ - 5 COAL 1268 KG 39 760/ - 6 CASTING 80MM 1222 NOS. 1 56 416/ - 7 CASTING 95MM 834 NOS. 1 08 420/ - 8 CASTING 87.5 MM 749 NOS. 95 872/ - 9 CASTING 102MM 340 NOS. 48 960/ - 10 CASTING TATA 92 908 NOS. 72 640/ - 11 PIG IRON KANDI 23595 KG 1 73 760/ - 12 SCRAP 8767 KG 63 753/ - FURTHER FOLLOWING ITEMS HAVE BEEN SHOWN IN THE STOCK STATEMENT SUBMITTED TO THE BANK BUT THERE IS NO MENTION OF THESE ITEMS IN THE STATEMENT FILED ALONG WITH THE RETURN OF INCOME: - SR. NO. ITEM QUANTITY DIFFERENCE AMOUNT (RS.) 1 IVAJECT - 14 250 KG 23 437/ - 2 IVELAGEARG SG 250 KG 8 375/ - 3 IVAPLAST GW 1 300 KG 6 225/ - 4 IVAPLAST IW 3 300 KG 12 750/ - 5 IVAOCA RN SOF 250 KG 5 000/ - 6 TERATC - 60 250 KG 8 000/ - 7 INACOLIN 1 4B 300 KG 37 800/ - 8 CASTING EICHER 200 KG 41 600/ - 9 CASTING 85 MM 400 NOS. 46 000 / - 10 CASTING INTER 300 NOS. 25 500/ - 11 CASTING TATA 407 400 NOS. 28 800/ - THUS THERE IS DISCREPANCY IN THE QUANTITY OF EACH ITEM AS MENTIONED ABOVE. THEREFORE THE A.O. IS JUSTIFIED IN MAKING THE ADDITION ON ACCOUNT OF DIFFERENCE FOUND IN THE QUANTITY OF THE STOCK. 5 629 - RJT - 2012 MONARCH FOUNDRY PVT LTD 7. IT IS NOT IN DISPUTE THAT CERTAIN ITEMS OF THE STOCK DECLARED TO THE BANK WERE NOT FOUND RECORDED IN THE BOOKS OF THE ASSESSEE. IT IS ALSO NOT IN DI SPUTE THAT THE QUANTITIES OF CERTAIN ITEMS OF THE STOCK AS GIVEN TO THE BANK WERE SUBSTANTIALLY HIGHER THAN THOSE RECORDED IN THE BOOKS OF ACCOUNT. RELEVANT DETAILS IN THIS BEHALF ARE GIVEN IN PARAGRAPH 7 OF THE APPELLATE ORDER PASSED BY THE LD CIT(A). THE LD CIT(A) HAS DEALT WITH ALL THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE HIM. THERE IS NO SATISFACTORY EXPLANATION TO RECONCILE SUCH HUGE DISCREPANCY IN STOCK POSITION AS GIVEN TO THE BANK VIS - - VIS THE STOCK POSITION SHOWN IN THE BOOKS. THE DIFFERENCE IN STOCK IS NOT ON ACCOUNT OF VALUATION BUT ON ACCOUNT OF QUANTITIES IN STOCK. IT IS OBVIOUS THAT THE EXCESS QUANTITY OF STOCK AS SHOWN TO THE BANK WAS ACQUIRED BY THE ASSESSEE OUTSIDE THE BOOKS. THE ASSESSEE HAS NOT FURNISHED ANY SATISFACTORY EXPLANATION RE GARDING THE NATURE AND SOURCE OF INVESTMENT IN SUCH STOCK. THE LD. CIT(A) HAS RIGHTLY CONFIRMED THE ACTION OF THE AO IN TREATING THE INVESTMENT IN ACQUISITION OF SUCH STOCK AS UNEXPLAINED U/S 69B . WE ARE IN COMPLETE AGREEMENT WITH THE ORDER PASSED BY THE L D CIT(A) IN THIS BEHALF. HIS ORDER IS THEREFORE CONFIRMED. A PPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 31 . 0 7 . 201 3 SD/ - SD/ - (T. K. SHARMA) ( D. K. SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT: 31 .07 .2013 B T COPY OF ORDER FORWARDED TO: - 1 . APPELLANT M/S MONARCH FOUNDRY P. LTD. VERAVAL - SHAPAR 2 . RESPONDENT - DCIT CIRCLE - 1 RAJKOT 3 . CONCERNED CIT RAJKOT - 1 RAJKOT 4 . CIT(A) - II RAJKOT 5 . DR ITAT RAJKOT 6 . GUARD FILE. BY ORDER TRUE COPY PRIVATE SECRETARY ITAT RAJKOT