ACIT,Cir.I, Nashik v. Trambak rubber industries ltd., Nashik

ITA 649/PUN/2007 | 2004-2005
Pronouncement Date: 30-11-2011 | Result: Dismissed

Appeal Details

RSA Number 64924514 RSA 2007
Assessee PAN AABCT0453C
Bench Pune
Appeal Number ITA 649/PUN/2007
Duration Of Justice 4 year(s) 6 month(s) 20 day(s)
Appellant ACIT,Cir.I, Nashik
Respondent Trambak rubber industries ltd., Nashik
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 30-11-2011
Date Of Final Hearing 08-11-2011
Next Hearing Date 08-11-2011
Assessment Year 2004-2005
Appeal Filed On 10-05-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NO. 649/PN/07 (ASSTT. YEAR 2004-05) ASSTT. COMMISSIONER OF INCOME-TAX .. APPELLANT CIR.1 NASHIK VS. TRAMBAK RUBBER INDUSTRIES LTD. .. RESPONDENT MARUTI TAGOR NAGAR NASHIK-PUNE ROAD NASHIK PAN AABCT0453C AND CROSS OBJ. NO 07/PN/09 (IN ITA N0 649/PN/07 AY 2004-05) TRAMBAK RUBBER INDUSTRIES LTD. .. CROSS OBJECTOR NASHIK VS. ASSTT. COMMISSIONER OF INCOME-TAX .. RESPONDENT CIR.1 NASHIK ASSESSEE BY : SMT DEEPA KHARE DEPARTMENT BY : SMT NEERU MALHOTRA DATE OF HEARING : 08.11.2011 DATE OF PRONOUNCEMEN T : 3011.2011 ORDER PER G S PANNU AM: THE APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY T HE ASSESSEE ARISE OUT OF THE ORDER OF THE COMMISSIONER OF INCOME-T AX (APPEALS)-I NASHIK 2 DATED 12.3.2007 WHICH IN TURN HAS ARSIEN FROM THE OR DER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3)(3) OF THE INCOME-TA X ACT 1961 ( IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2004-05. 2. THE FIRST ISSUE RAISED BY THE REVENUE IN ITS APPEAL RELATES TO THE RELIEF GRANTED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON ACCOUNT OF TRAVEL EXPENSES AMOUNTING TO RS 7 63 882/- WHEREAS THE ASSESSEE IN ITS CROSS OBJECTION HAS TAKEN A GROUND AGAINST THE SUSTENANCE OF PAR T DISALLOWANCE OF RS 2 54 300/- OUT OF THE TRAVEL EXPENSES. THE FACTS IN BR IEF ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AUTOM OTIVE TUBES AND FLAPS ON JOB WORK BASIS. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE COMPANY HAD INCUR RED EXPENDITURE ON FOREIGN TRAVEL BY THE FOLLOWING DIRECTORS/EMPLOYEE S: I) SHRI A K BAJORIA - DIRECTOR II) MRS RACHANA BAJORIA EMPLOYEE AND ALSO WIFE OF DIRECTOR A K BAJORIA III) SHRI H S BAJORIA DIRECTOR IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE FOR EIGN TRAVEL WAS FOR BUSINESS PURPOSE SUCH AS REQUIREMENT OF MACHINERY OF PA RTICULAR TYPE WHICH WOULD INCREASE THE PRODUCTION CARRIED OUT BY THE ASSESSEE COMPANY AND THAT THE NEW MACHINERY FOR EXPANDING PRODUCTION TO FULFIL PRO POSED REQUIREMENTS AS PER ENQUIRIES MADE BY VARIOUS PARTIES MARKET SURVEY TO VERI FY THE POSSIBILITY OF EXPORT OF THE PRODUCT MANUFACTURED BY THE COMPANY M ARKET SURVEY FOR IMPORTING RAW MATERIAL OF GOOD QUALITY AT CHEAPER RATES. IT WA S FURTHER EXPLAINED THAT SUBSEQUENTLY IN LATER YEAR I.E. FINANCIAL YEARS 2004-05 AND 2005-06 MACHINERY WAS PURCHASED FROM INDIAN SUPPLIERS AS ON COMPARISON WITH FOREIGN SUPPLIERS IT WAS NOTICED THAT IT WILL BE MORE PROFITABLE FOR THE A PPELLANT COMPANY TO PURCHASE MACHINERY FROM INDIAN MANUFACTURERS. THE ASSESSEE FILED WR ITTEN SUBMISSIONS DATED 27.11.2006 AND 23.11.2006 ENCLOSING CERTAIN EVID ENCES IN SUPPORT OF ITS CLAIM THAT THE FOREIGN TRAVEL WAS FOR BUSINESS PURPOSES. THE ASSESSING OFFICER 3 WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. ACCORDING TO THE ASSESSING OFFICER IN SUBSEQUENT YEARS MACHINERY WAS PURCHASED IN INDIA AND NOT FROM OUTSIDE COUNTRY AND MAJOR EXPENDITURE WAS INCU RRED FOR PURCHASES IN DUTY FREE SHOPS AND OTHER INTERNATIONAL MALLS WHICH W AS EXPENDITURE OF PERSONAL NATURE DEBITED IN THE BOOKS OF THE ASSESSEE COMPANY. TRA VEL EXPENSE OF WIFE OF DIRECTOR MRS RACHANA BAJORIA WAS EXPENDITURE OF PERSONAL NATURE. SINCE NO EVIDENCE OF ANY SORT WAS FURNISHED BY THE ASSESSEE TO PROV E ANY BUSINESS ACTIVITY DONE ABROAD BY ITS DIRECTORS AND THE MAJOR CUS TOMER OF ASSESSEE WAS CEAT INDIA LTD IN THE OPINION OF THE ASSESSING OFFICER THE EXPENDITURE INCURRED BY THE ASSESSEE ON FOREIGN TRAVEL WAS NOT FOR ANY BUSINESS PURPOSES AND IT WAS IN THE NATURE OF PERSONAL EXPENSES. HE ACCORDINGLY DISALL OWED FOREIGN TRAVEL EXPENSES OF RS 10 17 192/- AGAINST WHICH THE ASSESSEE WENT IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS). 3. THE COMMISSIONER OF INCOME-TAX (APPEALS) AFTER CONSI DERING THE DETAILED SUBMISSIONS OF THE ASSESSEE SUSTAINED A DISALLOWANCE OF RS 2 54 300/- THEREBY GIVING A RELIEF OF RS 7 62 882/- TO THE ASSESSEE. THE FI NDINGS OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AS CONTAINED IN PA RA 5.4 OF THE IMPUGNED ORDER ARE AS FOLLOWS: 5.4 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER OF THE AO THE WRITTEN SUBMISSION OF THE APPELLANT AND OTHER RELEVANT RECORD. AFTER C ONSIDERING THE SAME I AM OF THE CONSIDERED VIEW THAT THE BUSINESS PURPOSE OF THE F OREIGN TRAVEL IS REASONABLY PROVED BY THE APPELLANT. THE CONTENTION OF THE AO THAT THE FO REIGN TRAVEL EXPENDITURE WAS OF CAPITAL NATURE AS THE SAME WAS ADMITTEDLY INCURRED FOR ACQU IRING CAPITAL ASSET IS NOT CORRECT AS THE EXPENDITURE WAS INCURRED FOR OTHER PURPOSES ALS O AND FURTHER IN VIEW OF THE DECISION OF THE HONBLE MUMBAI HIGH COURT IN THE CASE OF BRA LCO METAL INDUSTRIES P LTD. V. CIT 206 ITR 477 IN WHICH IT HAS BEEN HELD THAT THE EXP RESSION FOR THE PURPOSE OF BUSINESS IS WIDER IN SCOPE THAN THE EXPRESSION FOR THE PURPOSE OF EARNING PROFITS THE EXPRESSION WHOLLY & EXCLUSIVELY DOES NOT MEAN NECESSARILY. IT HAS BEEN FURTHER HELD BY THE HONBLE COURT THAT IT WAS NOT THE REVENUES CASE THAT THE E XPENDITURE WAS THE PERSONAL EXPENSE OF THE ASSESSEE. THE ASSESSEES BUSINESS WAS A RUNN ING BUSINESS AND IT WAS IN CONNECTION WITH SUCH RUNNING BUSINESS THAT SOME PLA NT & MACHINERY WERE INTENDED TO BE PURCHASED. IT HAS BEEN HELD THAT IF THE VISIT WAS E ITHER TO TAKE A DECISION WHETHER IT WAS SUITABLE FOR THE BUSINESS OR NOT OR FOR ANY OTHER S UCH PURPOSE IT WOULD NOT CONVERT THE EXPENDITURE INCURRED INTO AN EXPENDITURE OF CAPITAL NATURE. THE FACTS OF THE CASE ARE SIMILAR TO THE FACTS OF THE CASE OF THE APPELLANT. HENCE EXPENDITURE HAS TO BE TREATED AS REVENUE EXPENDITURE WHICH MAY INCLUDE SOME EXPENDI TURE OF PERSONAL NATURE. HOWEVER THE CONTENTION OF THE AO THAT TRAVEL EXPE NSES OF DIRECTORS WIFE IS OF PERSONAL NATURE IS PARTLY CORRECT. THE WIFE OF DIRE CTOR IS A GRADUATE AND ALSO EXECUTIVE OFFICER OF THE APPELLANT COMPANY SINCE LAST 10 YEAR S. THE ANOTHER CONTENTION OF THE AO THAT MAJOR EXPENDITURE WAS INCURRED FOR PURCHASES I N DUTY FREE SHOPS IS EXPENDITURE OF PERSONAL NATURE IS PARTLY CORRECT AS SUCH PURCHASE S WERE INCURRED TO THE EXTENT OF RS 1 80 206/-. IT WAS CLAIMED ON BEHALF OF THE APPELLA NT THAT THESE PURCHASES WERE FOR 4 BUSINESS ASSOCIATES I.E. EMPLOYEES CUSTOMERS AND S UPPLIERS HOWEVER NO EVIDENCE IN SUPPORT OF THIS CLAIM WAS FILED. CONSIDERING ALL THE FACTS OF THE CASE IN TOTALITY I AM OF THE CONSIDERED VIEW THAT THE DISALLOWANCE OF FOREIGN TTRAVEL EXPENDITURE TO THE EXTENT OF 25% OF THE TOTAL EXPENDITURE INCURRED (BEING NOT FOR BUSINESS PURPOS E) SHALL MEET THE ENDS OF JUSTICE. THE DISALLOWANCE SHALL BE RESTRICTED TO RS 2 54 300/-. THE APPELLANT GETS RELIEF OF RS 7 62 882/-. BEING AGGRIEVED WITH THE MAJOR RELIEF OF RS 7 62 882 /- GRANTED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) REVENUE IS IN APP EAL WHILE AGAINST THE SUSTENANCE OF RS 2 54 300/- ASSESSEE IS IN CROSS OBJECTION BEF ORE US. 4. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATI VE HAS PRIMARILY RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER AS CONTAINE D IN THE ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE. IN THIS RE GARD IT IS CONTENDED THAT BEFORE THE ASSESSING OFFICER THERE WAS NO MATERIAL TO EST ABLISH ANY NEXUS BETWEEN THE FOREIGN TRAVEL EXPENDITURE AND THE BUSIN ESS OF THE ASSESSEE AND THEREFORE THE DISALLOWANCE HAS BEEN RIGHTLY MADE BY THE ASSESSING OFFICER. WITH REGARD TO THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IT IS CONTENDED THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) FAILED TO APPRECIATE THAT THE ASSESSEE WAS ONLY MANUFACTURING RUBBER TUBES FOR A SINGLE CUSTOMER IN INDIA AND THAT ITS ACTIVITIES DID NOT JUSTIFY INCURRENCE OF ANY FOR EIGN TRAVEL BY ITS DIRECTOR AND MORE PARTICULARLY BY THE WIFE OF THE DIRECTOR. IN THI S MANNER THE STAND OF THE ASSESSING OFFICER IS SOUGHT TO BE DEFENDED. 5. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE A SSESSEE HAS CONTENDED THAT THE ASSESSING OFFICER WAS WRONG IN DISALLOWING THE EX PENDITURE AND THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS JUSTIFIED IN OB SERVING THAT THE BUSINESS PURPOSE OF THE FOREIGN TRAVEL HAS BEEN REASONAB LY PROVED BY THE ASSESSEE. IT WAS THEREFORE CONTENDED THAT ONCE THE ASSESSEE IS ABLE TO ESTABLISH REASONABLY THE BUSINESS PURPOSE OF THE FOREIGN TRAVEL N O PART DISALLOWANCE IS WARRANTED AND THEREFORE THE COMMISSIONER OF INCOME-T AX (APPEALS) SHOULD HAVE DELETED THE ENTIRE ADDITION INSTEAD OF ALLOWING A PART RELIEF. IN THIS MANNER THE LEARNED COUNSEL FOR THE ASSESSEE HAS ASSAILED THE GRO UND RAISED BY THE REVENUE AND HAS SUPPORTED THE CROSS OBJECTION FILED BY THE ASSESSEE. 5 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. THE POINT IN DISPUTE RELATES TO AN EXPENDITURE OF RS 10 17 192/- CLAIMED B Y THE ASSESSEE AS FOREIGN TRAVEL EXPENSES WHICH WAS A SUBJECT-MATTER OF DISALLOWAN CE BY THE ASSESSING OFFICER PRIMARILY ON THE GROUND THAT THERE WAS NO EV IDENCE FURNISHED BY THE ASSESSEE TO INDICATE ANY BUSINESS ACTIVITY DONE ABROAD BY TH E DIRECTORS. THE EXPLANATION OF THE ASSESSEE WAS THAT THE FOREIGN TRAVEL WAS UNDERTAKEN TO CARRY OUT SURVEY OF MACHINERY FOR REPLACEMENT OF EXISTING MACHINERIES EXPANSION OF BUSINESS SURVEY OF MARKET FOR LIKELY CUSTOMERS SURVEY OF MARKET FOR RAW MATERIAL ETC. THE ASSESSEE FURTHER EXPLAINED THAT THE KNOWLEDGE ACQUIRED IN FOREIGN TRAVEL FOR THE PURPOSES OF PURCHASING MACHINERY AND EXPANSION OF BUSINESS WAS UTILIZED IN THE SUBSEQUENT YEAR THOUGH ADD ITIONAL MACHINERY WAS PURCHASED WITHIN THE COUNTRY. SO HOWEVER IT WAS BROU GHT TO THE NOTICE OF THE COMMISSIONER OF INCOME-TAX (APPEALS) THAT IN THE SUBSE QUENT YEARS THE ASSESSEE COMPANY HAD IMPORTED RAW MATERIAL AND THE EXPAN SION OF BUSINESS WAS NECESSITATED SINCE ORDERS OF A SINGLE CUSTOMERS WAS DECLIN ING AND INDEED IN THE SUBSEQUENT YEARS IT HAS CARRIED OUT MANUFACTURING ACTIVITIES FOR OTHER CUSTOMERS ALSO. ALL THIS NECESSITATED FOREIGN TRAVEL WITH THE OBJECTIVE OF LOOKING AT VARIOUS OPTIONS OF EXPANDING BUSINESS ETC. IN THIS CON NECTION WE FIND THAT PAGES 59 TO 68 OF THE PAPER BOOK CONTAIN EVIDENCES SHOW ING IMPORT OF RAW MATERIAL IN SUBSEQUENT YEARS BY THE ASSESSEE AND SUCH MATE RIAL WAS VERY MUCH BEFORE THE LOWER AUTHORITIES. THE EXPLANATION OF THE ASSESSEE HAS BEEN IN PRINCIPLE ACCEPTED BY THE COMMISSIONER OF INCOME-TAX (APP EALS) ON THE BASIS OF MATERIAL ON RECORD. THE COMMISSIONER OF INCOME-TAX (APP EALS) IN PARA 5.4 OBSERVED THAT THE BUSINESS PURPOSE OF THE FOREIGN TRAVE L HAS BEEN REASONABLY PROVED BY THE ASSESSEE. IN OUR CONSIDERED OPINION THE AF ORESAID OBSERVATIONS OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ARE BASED ON M ATERIAL ON RECORD WHICH IS NEITHER IRRELEVANT AND NOR LACKING IN BONA FI DES. THEREFORE WE ARE INCLINED TO AFFIRM THE STAND OF THE COMMISSIONER OF IN COME-TAX (APPEALS) TO THE EFFECT THAT THE ASSESSEE HAS SUCCESSFULLY PROVED THE BUSINESS NEXUS WITH THE 6 FOREIGN TRAVEL. HOWEVER THE ENTIRE EXPENDITURE HAS N OT BEEN ALLOWED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) FOR THE REASON THA T A PORTION OF THE EXPENDITURE IS STATED TO HAVE BEEN INCURRED ON PURCHASE S IN DUTY FREE SHOPS WHICH AS PER THE COMMISSIONER OF INCOME-TAX (APPEALS) CONTAINED AN ELEMENT OF NON BUSINESS PURPOSE. THE APPROACH OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS COUNT CANNOT BE FAULTED AND IS BASED O N A FAIR ASSESSMENT OF THE FACTUAL MATRIX. THEREFORE THE DISALLOWANCE RETAI NED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) TO THE EXTENT OF RS 2 54 300/- OU T OF THE TOTAL DISALLOWANCE OF RS 10 17 182/- IN OUR VIEW IS FAIR AND PROPER. I N THIS VIEW OF THE MATTER WE AFFIRM THE ORDER OF THE COMMISSIONER OF INCOME-TAX (A PPEALS) AND ACCORDINGLY THE FIRST GROUND RAISED BY THE REVENUE AND THE CROSS OB JECTION OF THE ASSESSEE DISMISSED. 7. THE NEXT GROUND OF APPEAL TAKEN BY THE REVENUE IN ITS APPEAL RELATES TO THE ADDITION OF RS 3 20 527/- MADE UNDER SECTION 145A OF THE ACT BEING VALUE OF EXCISE DUTY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS T HE ASSESSING OFFICER NOTICED THAT UNAVAILED MODVAT OF THE ASSESSEE C OMPANY AS AT 31.3.2004 WAS RS 3 20 527/- AND THE SAME WAS INCLUDED BY THE COMPA NY IN CLOSING STOCK. THE ASSESSING OFFICER ACCORDINGLY MADE ADDITION OF RS 3 20 527/- BY APPLYING THE PROVISIONS OF SECTION 145A OF THE ACT. IN APPEAL TH E ASSESSEE FILED WRITTEN SUBMISSIONS WHICH WERE DULY CONSIDERED BY THE COMMISSIONER OF INCOME-TAX (APPEALS). THE COMMISSIONER OF INCOME-TAX (APPEALS) ACCORD INGLY DELETED THE IMPUGNED ADDITION OF RS 3 20 527/- BY HOLDING AS UNDE R: I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER O F THE AO THE WRITTEN SUBMISSION OF THE APPELLANT AND OTHER RELEVANT RECORD. IT IS NOTI CED THAT THE CONTENTION RAISED BY THE APPELLANT IS CORRECT AS THE DETAILS OF CLOSING STOC K OF FINISHED GOODS FILED WITH THE AO INCLUDES EXCISE DUTY OF RS 3 20 527/- AND THEREFORE ADDITION OF THE AO ON THE ISSUE IS APPARENTLY INCORRECT. SECONDLY THE CONTENTION OF TH E APPELLANT ABOUT UNAVAILED MODVAT CREDIT OF RS 38 758/- THAT IF THE SAME IS TO BE AD D TO CLOSING STOCK OF RAW MATERIAL (I.E. UNUTILISED PURCHASES OF RAW MATERIAL) THE SAME IS TO BE ADDED TO PURCHASES ALSO AND HENCE PROFIT OF THE BUSINESS SHALL NOT CHANGE APPEA RS TO BE REASONABLE AND HENCE ACCEPTABLE. THE UNAVAILED CREDIT TO THE EXTENT OF R S 38 758/- HAS BEEN EXCLUDED FROM PURCHASES AS WELL AS CLOSING STOCK. IF THIS AMOUNT IS INCLUDED IN PURCHASES AS WELL AS CLOSING STOCK THERE WILL BE NO TAX EFFECT. THE ADDI TION OF RS 3 20 527/- IS DELETED. THE AO IS DIRECTED ACCORDINGLY. BEING AGGRIEVED REVENUE IS IN APPEAL BEFORE US. 7 8. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATIV E ASSAILED THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THE GROUND THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS NOT JUSTIFIED IN DELETING T HE ADDITION OF RS 3 20 527/- MADE UNDER SECTION 145A OF THE ACT IGNORING THE FACT TH AT THE ASSESSEE FAILED TO INCLUDE THE SAID MODVAT CREDIT IN THE VALUE OF THE CLO SING STOCK. IT WAS FURTHER CONTENDED THAT PROVISIONS OF SECTION 145A SPECIFICALLY PRO VIDE THAT THE UNUTILIZED MODVAT CREDIT SHALL FORM A PART AND PARCEL OF STOCK THERE BY LIABLE TO BE INCLUDED IN THE VALUE OF CLOSING STOCK. IT WAS THEREFORE CONTENDED THA T THE ASSESSING OFFICER WAS RIGHT IN MAKING THE DISALLOWANCE. 9. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE A SSESSEE HAS CONTENDED THAT THE ASSESSING OFFICER WAS WRONG IN MAKING THE IMPUGNE D DISALLOWANCE AND THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS JUSTIFIED IN DELETING THE ADDITION MADE UNDER SECTION 145A OF THE ACT. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME-T AX (APPEALS) ON THIS ASPECT. THE FINDING OF THE COMMISSIONER OF INCOME-TAX (APPEA LS) IS A FACTUAL FINDING AND WE DO NOT FIND ANYTHING HAVING BROUGHT ON RECOR D BY THE DEPARTMENT TO PERSUADE US TO TAKE A DIFFERENT VIEW FROM THAT OF TH E COMMISSIONER OF INCOME-TAX (APPEALS). IN THIS VIEW OF THE MATTER WE AFFIRM THE DECISION OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS SCORE. THE REVENUE FAI LS ON THIS GROUND. 11. THE NEXT GROUND RAISED BY THE REVENUE RELATES TO THE ADDITION OF RS 17 01 452/- MADE ON ACCOUNT OF SUPPRESSED RECEIPTS. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSING OFFICER NOTICED THAT THE ASSE SSEE HAD SHOWN RECEIPTS AS PER TDS CERTIFICATE OF RS 12 84 59 201/- WHEREAS THE SALES DECLARED WERE TO THE TUNE OF RS 12 67 57 749/- THUS THERE WAS A DIFFERENCE OF RS 17 01 452/-. THE ASSESSEE EXPLAINED THAT THE DIFFEREN CE WAS ON ACCOUNT OF DEBIT NOTES OF RS 13 55 754/- AND PROCESSING CHARGES OF RS 3 45 698/-. THE 8 ASSESSING OFFICER ASSESSED THE DIFFERENCE AS SUPPRESSED RECEIPT S AS EVIDENCE OF THE DEBIT NOTE AND JUSTIFICATION OF PROCESSING CHARGE S WAS NOT FILED. FURTHER THE MANUFACTURING HAS BEEN DONE UNDER THE SUPERVISION AND STRINGENT QUALITY CONTROL OF CEAT (I) LTD AND THEREFORE AS PER THE ASSESSING OFFI CER THERE WAS NO SCOPE FOR THE DEBIT NOTES AS CLAIMED BY THE ASSESSEE. IN APPE AL THE COMMISSIONER OF INCOME-TAX (APPEALS) DELETED THE IMPUGNED ADDITION OF RS 17 01 452/- FOR THE FOLLOWING REASONS: I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER THE SUBMISSION OF THE APPELLANT AND OTHER RELEVANT RECORDS. THE APPELLANT RECONCILED TH E GROSS CONTRACT RECEIPTS AS PER TDS CERTIFICATES AND AS DISCLOSED IN PROFIT & LOSS ACCO UNT. THE APPELLANT PRODUCED DEBIT NOTES SUBMITTED TO BY CEAT INDIA LTD. THE DEBIT NOTES TO THE EXTENT OF RS 9 33 800/- ARE TOWARDS PRICE DIFFERENCE AND BALANCE DEBIT NOTES FO R PRODUCTION LOSS ARE RS 4 21 955/-. THE AO DID NOT NOTICE THE FACT THAT THE PROCESSING CHARGES OF RS 3 45 698/- ARE SHOWN AS INCOME IN AUDITED PROFIT & LOSS ACCOUNT. THE AO INADVERTENTLY ASSUMED THAT THE PROCESSING CHARGES WERE CLAIMED AS EXPENDITURE AND HENCE CLAIMED THAT JUSTIFICATION OF PROCESSING CHARGES HAS NOT BEEN FILED. IN VIEW OF T HE ABOVE FACTS THE CONTENTIONS RAISED BY THE APPELLANT ARE ACCEPTED. THE ADDITION TOWARDS ALLEGED SUPPRESSED SALES OF RS 17 01 452/- IS THEREFORE DELETED. NOT BEING SATISFIED THE REVENUE IS IN APPEAL BEFORE US. 12. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATI VE HAS ASSAILED THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ONLY ON A LIMITED PLEA BY POINTING OUT THAT THE ADDITION HAS BEEN DELETED BY R ELYING ON A FRESH EVIDENCE IN THE FORM OF DEBIT NOTES WHICH WAS NOT PRODUCED BEFORE THE ASSESSING OFFICER AT THE TIME OF THE ASSESSMENT PROCEEDINGS. 13. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE RESPONDENT-ASSESSEE HAS DEFENDED THE DELETION OF ADDITION MADE BY THE COMMI SSIONER OF INCOME-TAX (APPEALS) BY POINTING OUT THAT ON FACTS THERE WAS NO JUSTIFICATION FOR THE IMPUGNED ADDITION INASMUCH AS THE ASSESSEE HAD EXPLAINE D BEFORE THE ASSESSING OFFICER AND RECONCILED THE DIFFERENCE OF RECEIPTS A S PER THE TDS CERTIFICATE AND THE AMOUNT OF SALES DECLARED IN THE PRO FIT & LOSS ACCOUNT AND IT WAS NOT CALLED UP TO PRODUCE ANY FURTHER EVIDENCE IN SU PPORT AT THE TIME OF THE ASSESSMENT PROCEEDINGS. 14. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. ON THIS ASPECT THE ADDITION HAS BEEN MADE PRIMARILY FOR THE REASON THAT RECEIPTS AS PER THE TDS 9 CERTIFICATE WERE OF RS 12 84 59 201/- WHEREAS SALES DECLAR ED IN THE PROFIT & LOSS ACCOUNT WERE TO THE TUNE OF RS 12 67 57 749/- THEREBY SHOWING A DIFFERENCE OF RS 17 01 452/- WHICH HAS BEEN ADDED AS UNEXPLAINED IN COME ON ACCOUNT OF SUPPRESSED SALES BY THE ASSESSING OFFICER. BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) TH E EXPLANATION RENDERED BY THE ASSESSEE WAS TO THE EFFECT THAT THE DIFFERENCE WA S ON ACCOUNT OF PROCESSING CHARGES OF RS 3 45 698/- AND DEBIT NOTES OF RS 1 3 55 754/- ISSUED BY ITS CUSTOMER M/S CEAT INDIA LTD. THE ASSESSING OFFICER DID NOT ACCEPT THIS EXPLANATION ON THE GROUND THAT THE EVIDENCE BY WAY O F DEBIT NOTE WAS NOT FILED AND JUSTIFICATION OF PROCESSING CHARGES WAS ALSO NOT FILED. BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) ASSESSEE EXPLAINED T HAT PROCESSING CHARGES OF RS 3 45 698/- WAS DEPICTED AS AN INCOME IN THE PROFIT & LOSS ACCOUNT ITSELF AND IN SO FAR AS THE DEBIT NOTES ARE CONCERNED I T WAS POINTED OUT THAT DURING THE ASSESSMENT PROCEEDINGS ASSESSEE COULD NOT FORESEE THAT THE ASSESSING OFFICER WOULD DISBELIEVE ITS AUDITED ACCOUNTS WHICH ACCOMPANIED ITS EXPLANATION ON THE IMPUGNED ISSUE. IN OUR VIEW THE C OMMISSIONER OF INCOME-TAX (APPEALS) HAS RECORDED FACTUAL FINDINGS IN PARA 7.4 OF THE IMPUGNED ORDER WHICH WE HAVE EXTRACTED ABOVE AND THE SAME ARE BORNE OUT O F THE MATERIAL ON RECORD. NO DOUBT THE DEBIT NOTES TO THE EXTENT OF 9 33 800/- TOWARDS PRICE DIFFERENCE AND THE BALANCE DEBIT NOTES FOR PRODUCTION LOSS OF RS 4 21 9 55/- TOTALING TO RS 13 55 754/- WERE NOT BEFORE THE ASSESSING OFFICER AND T HE SAME WERE PRODUCED BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) AND HA VE BEEN RELIED UPON BY THE COMMISSIONER OF INCOME-TAX (APPEALS). HOWEVER THIS INFIRMITY WOULD NOT DISTRACT FROM THE FACT THAT NO ADDITION IS MERITED ON T HIS SCORE ESPECIALLY WHEN RECONCILIATION OF THE TWO FIGURES WAS VERY MUCH BEFORE T HE ASSESSING OFFICER WITH NECESSARY EXPLANATION THEREOF AND THAT THE ASSESSEE HAS JU STIFIABLE REASONS FOR NOT HAVING BEEN PRODUCED THE DEBIT NOTES BEFORE THE A SSESSING OFFICER. THEREFORE UNDER THESE CIRCUMSTANCES WE FIND NO ERROR I N THE APPROACH OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IN RELYING ON SUCH M ATERIAL AND DELETING 10 THE IMPUGNED ADDITION. THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IS HEREBY AFFIRMED ON THIS COUNT. 15. IN THE RESULT THE APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 30 TH THIS DAY OF NOVEMBER 2011. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G.S. PANNU) JUDICIAL MEMBER ACC OUNTANT MEMBER PUNE: 30 TH NOVEMBER 2011 B COPY TO:- 1) APPELLANT 2) RESPONDENT 3) THE CIT (A) I NASHIK 4) THE CIT I NASHIK 5) THE D R A BENCH PUNE 6) GUARD FILE BY ORDER TRUE COPY SR. PS I.T.A.T. PUNE