M/s. Jigisha Corporation, Surat v. The Income tax Officer,Ward-5(3),, Surat

ITA 707/AHD/2008 | 2004-2005
Pronouncement Date: 10-12-2010 | Result: Partly Allowed

Appeal Details

RSA Number 70720514 RSA 2008
Bench Ahmedabad
Appeal Number ITA 707/AHD/2008
Duration Of Justice 2 year(s) 9 month(s) 14 day(s)
Appellant M/s. Jigisha Corporation, Surat
Respondent The Income tax Officer,Ward-5(3),, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 10-12-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 10-12-2010
Date Of Final Hearing 01-12-2010
Next Hearing Date 01-12-2010
Assessment Year 2004-2005
Appeal Filed On 25-02-2008
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI MAHAVIR SINGH JM AND D.C.AGRAWAL AM M/S JIGISHA CORPORATION 101 SUPER YARN MARKET ZAMPA BAZAR SURAT. VS. INCOME-TAX OFFICER WARD 5(3) SURAT. (APPELLANT) .. (RESPONDENT) INCOME-TAX OFFICER WARD 5(3) SURAT. VS. M/S JIGISHA CORPORATION 101 SUPER YARN MARKET ZAMPA BAZAR SURAT. (APPELLANT) .. (RESPONDENT) AND M/S JIGISHA CORPORATION 101 SUPER YARN MARKET ZAMPA BAZAR SURAT. VS. INCOME-TAX OFFICER WARD 5(3) SURAT. (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI RAJESH SHAH AR REVENUE BY:- SHRI K. MADHUSUDAN SR.DR ITA NO.707/AHD/2008 ASST. YEAR :2004-05 ITA NO.782/AHD/2008 ASST. YEAR :2004-05 ITA NO.3757/AHD/2008 ASST. YEAR :2005-06 ITA NOS.707 782 & 3757/AHD/2008 ASST. YEAR 2004-05 & 2005-06 2 O R D E R PER BENCH THESE ARE THREE APPEALS TWO FILED BY THE ASSESSEE FOR ASST. YEARS 2004-05 & 2005-06 AND ONE FILED BY THE REVENUE FOR ASST. YEAR 2004-05 BEING THE CROSS APPEAL. ASST. YEAR 2004-05 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- (1) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME-TAX (AP PEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN MAKING DISALLOWANCE OF RS 14 73 981/- OUT OF DEPRECIATION CLAIMED BY ASSESSEE ON PLANT AND MACHINERY UNDER TUF SCHEME. (2) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME-TAX (AP PEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN MAKING ADDITION OF RS. 22 09 984/- U/S. 69C AS UNEXPLAINED EXPENSES. (3) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME-TAX (AP PEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN MAKING ADDITION OF RS. 1 884/- AS ALLEGED DIFFERENCE IN CO NTRA ACCOUNT WITH NOVA PETROCHEMICALS LTD (4) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME-TAX (AP PEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN MAKING ADDITION OF RS. 43 139/- BEING 1/5 TH OF TOTAL TELEPHONE EXPENSES AND VEHICLE EXPENSES. (5) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME-TAX (AP PEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN MAKING ADDITION OF RS. 9.717/- BEING 1/5 TH OF TOTAL OFFICE EXPENSES. ITA NOS.707 782 & 3757/AHD/2008 ASST. YEAR 2004-05 & 2005-06 3 ASST. YEAR 2004-05 WHEREAS THE REVENUE HAS RAISED THE FOLLOWING GROUND S IN ITS APPEAL :- (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF CASE AND I N LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUN T OF UNVERIFIABLE PURCHASES OF RS.2 66 663/- MADE BY THE A.O. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS .5 99 898/- ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK U/S 145 A OF THE ACT MADE BY THE AO. ASSESSEES APPEAL 3. THE FIRST ISSUE IN ASSESSEES APPEAL IS REGARDIN G DISALLOWANCE OF RS.14 73 981/- OUT OF DEPRECIATION CLAIMED BY THE A SSESSEE. THE FACTS OF THE CASE ARE THAT ASSESSEE COMPANY IS ENGAGED IN TH E BUSINESS OF TRADING IN YARN OF MODIPON ON COMMISSION BASIS. IT IS ALSO SELLING TEXTURISED YARN AND CRIMPED YARN. THE ASSESSEE CLAIMED DEPRECIATION @ 65% ON MACHINERY AND PLANT WHICH ARE USED FOR LESS THAN 18 0 DAYS. ACCORDING TO THE AO HIGHER RATE OF DEPRECIATION AS CLAIMED BY TH E ASSESSEE CANNOT BE GRANTED AS THE PLANT AND MACHINERY WERE NOT USED IN WEAVING PROCESSING AND GARMENTS SECTOR OF TEXTILE INDUSTRY. THESE MACH INERIES WERE PURCHASED UNDER TUFS ON OR AFTER 1.4.2001 BUT BEFOR E 1.4.2004. FURTHER ACCORDING TO THE AO THE ACTIVITIES OF THE ASSESSEE DID NOT RELATE TO PROCESSING OF THREAD TO BE USED IN WEAVING SECTOR. IN OTHER WORDS PLANT AND MACHINERY UTILIZED BY THE ASSESSEE WAS BEFORE T HE STAGE OF WEAVING. THE LD. CIT(A) ALSO CONFIRMED THE ORDERS OF THE AO HOLDING THAT PROCESSING OF YARN IS NOT COVERED UNDER TUF SCHEME AND THEREFORE WHATEVER PROCESSING THE ASSESSEE IS DOING WOULD NOT BE CALLED WEAVING.. 4. BEFORE US THE LD. AR SUBMITTED THAT ASSESSEE IS NOW COVERED BY VARIOUS DECISIONS OF THE TRIBUNAL. WHEREIN IT IS H ELD THAT PROCESSING IS ITA NOS.707 782 & 3757/AHD/2008 ASST. YEAR 2004-05 & 2005-06 4 ALSO PART OF WEAVING AND THEREFORE IT IS COVERED UNDER TUF SCHEME. IN FOLLOWING JUDGMENTS THE ISSUE HAS BEEN DECIDED IN F AVOUR OF THE ASSESSEE:- (I) FAIRDEAL FILAMENTS LTD. VS. DCIT IN ITA NO.870/AHD/ 2007 (II) MAVIN TEXTURISERS (P) LTD. VS. DCIT IN ITA NO.2296/AHD/2008 (III) AGARWAL RAYONS (P) LTD. VS. ITO ITA NO.318 6/AHD/2007 AND (IV) GIRDHAR FIBERS (P) LTD. VS. DCIT IN ITA NO. 1582/AHD/2008. IN PARTICULAR HE REFERRED TO A DECISION IN THE CASE OF AGARWAL RAYONS (P) LTD. (SUPRA) WHEREIN THE ISSUE HAS BEEN DISCUSSED I N DETAIL AS UNDER :- 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORDS. IN OUR CONSIDERED VIEW THE FACTS OF THE PR ESENT CASE AND FACTS IN THE CASES REFERRED TO BY THE LD. A. R. PARTICULARLY IN THE CASE OF NANGALIA SYNTHETICS PVT LTD. ARE SIMILAR. IN THAT CASE THE TRIBUNAL HAS OBSERVED AS UNDER:- '7. AFTER HEARING THE LD. REPRESENTATIVES OF BOTH T HE PARTIES WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR O F THE ASSESSES AND AGAINST THE REVENUE BY THE DECISION OF IT AT AHMEDA BAD D BENCH IN THE CASE OF BIPINCHANDRA MOHANLAL GAJJAR VS. LTO WD-6(1) SURAT IN ITA NO.3128/AHD/2008 DATED 18-02-2009 RELA TING TO A.Y. 2005-06. THE ISSUE RAISED BY THE ASSESSEE IN THIS A PPEAL IS SIMILAR TO THAT OF THE CASE OF BIPINCHANDRA MOHANLAL GAJJAR (SUPRA) WE HOLD THAT SINCE ADMITTEDLY THE TWISTING MACHINE WA S USED BY WEAVING SECTOR OF TEXTILE INDUSTRY DEPRECIATION ON THE SAID MACHINERY @ 50% SHOULD BE ALLOWED. WE ACCORDINGLY ALLOW THE GROUND OF APPEAL.' 8. THE LD. D.R. HAS SOUGHT TO DISTINGUISH THE AUTH ORITIES REFERRED TO BY THE LD. A.R. ON THE GROUND THAT THERE WAS A N EXUS OF BACKWARD AND FORWARD AGES OF THE ACTIVITIES. THERE WAS COMPOSITE ACTIVITIES IN THESE CASES AREAS IN THE CASE OF THE PRESENT ASSESSEE IT IS ONLY MANUFACTURING OF YARN F\O WEAVING CARRIED O UT. HOWEVER DISTINCTION SOUGHT TO BE MADE BY THE LD. IS ARTIF ICIAL AND DOES NOT CONFIRM TO THE LANGUAGE USED IN THE RULES. IN : TE XTURISING AND TWISTING ACTIVITIES ARE PART OF PROCESSING. IT IS I NCORRECT ON PART OF THE A.O TO HOLD THAT LANGUAGE USED IN THE RULE CON FINE PROCESSING ITA NOS.707 782 & 3757/AHD/2008 ASST. YEAR 2004-05 & 2005-06 5 OF CLOTH ONLY AND NOT TEXTURISING AND TWISTING OF T HE YARN. THE LANGUAGE USED IN RULE -6 OF BLOCK 3 OF APPENDIX -1 OF DEPRECIATION TABLE READS AS UNDER :- 'MACHINERY AND PLANT USED IN WEAVING PROCESSING AN D GARMENT SECTOR OF TEXTILE INDUSTRY WHICH IS PURCHASED UNDER TUFS.... . FROM THIS IT CANNOT BE READ THAT WEAVING AND PROCESSING IS PROVIDED BY CLO TH SO AS TO INFER THAT IT IS ONLY WEAVING AND PROCESSING OF CLOTH WHOSE MACHINER IES ARE ENTITLED FOR HIGHER DEPRECIATION. THE WORDS USED ARE WEAVING PR OCESSING AND GARMENTS SECTOR OF TEXTILE INDUSTRY.' 9. IN OTHER WORDS WEAVING PROCESSING AND GARMENTS SECTOR ARE PART OF TEXTILE INDUSTRIES WHICH IS A LARGER GROUP. IN THIS TEXTILE INDUSTRY THE WEAVING PROCESSING AND GARMENT SECTOR ARE COVERED IN RESPECT OF WHOSE MACHINERIES THE HIGH RATE OF D EPRECIATION IS PROVIDED. THUS THE WORD PROCESSING WOULD INCLUDE TE XTURISING AND TWISTING OF YARN WHICH IS FINALLY USED IN TEXTILE I NDUSTRY. THUS RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TR IBUNAL WE ALLOW THE CLAIM OF THE ASSESSEE. 8. THE LD. DR ON THE OTHER HAND SUPPORTED THE ORDE RS OF AUTHORITIES BELOW. 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND VARI OUS JUDGMENTS OF THE TRIBUNAL ON THIS ISSUE WE HOLD THAT WEAVING P ROCESSING OF THE GARMENTS SECTOR IS COVERED IN RULE-6 OF BLOCK-6 OF APPENDIX-1 OF DEPRECIATION TABLE AND THEREFORE THE WORD PROCES SING WILL INCLUDE TEXTURISING AND TWISTING OF YARN WHICH IS FINALLY U SED IN TEXTILE INDUSTRY. FOLLOWING THE ABOVE ORDER WE ALLOW THIS GROUND OF THE ASSESSEE. THIS GROUND OF ASSESSEE IS ACCORDINGLY ALLOWED. 10. GROUND NO.2 RELATES TO ADDITION OF RS.22 09 984 /- U/S 69C AS UNEXPLAINED EXPENDITURE. THE FACTS RELATING TO THIS ISSUE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUND THAT ASSESSEE HAD MADE PURCHASES FROM RELIANCE INDUSTRIES. ON EXAMINA TION OF THE COPY OF ACCOUNTS OBTAINED FROM M/S RELIANCE INDUSTRIES IT WAS NOTICED THAT PAYMENT TOTALING TO RS.22 05 984/- WAS NOT REFLECTE D IN THE BANK ACCOUNT ITA NOS.707 782 & 3757/AHD/2008 ASST. YEAR 2004-05 & 2005-06 6 OF THE ASSESSEE. IN OTHER WORDS THESE PAYMENTS WER E RECEIVED BY M/S RELIANCE INDUSTRIES WHEREAS THEY WERE NOT FOUND REC ORDED IN THE BANK ACCOUNT OR IN THE BOOKS OF THE ASSESSEE COMPANY. ON FURTHER ENQUIRY IT WAS EXPLAINED TO THE AO THAT PAYMENTS WERE MADE BY THE ACCOUNT PAYEE CHEQUES BY M/S SANJEEV TEXTILES A SISTER CONCERN O F THE ASSESSEE BUT PAYMENTS WERE FINALLY DRAWN FROM THE BOOKS OF THE A SSESSEE ON LATER DATES. THUS PAYMENT TO RELIANCE INDUSTRIES WAS MADE THROUGH SANJEEV TEXTILE ON EARLIER DATES WHEREAS ENTRIES FOR PAYMEN TS WERE MADE IN THE BOOKS ON LATER DATES. THE DETAILS OF THE PAYMENTS T O M/S RELIANCE INDUSTRIES WERE AS UNDER :- SL. NO. CHEQUE NO. NAME OF THE BANK FROM CHEQUES WERE ISSUES DATE OF DEPOSIT IN SUPPLIERS BANK ACCOUNT AMOUNT 1. 184993 KARUR VYSYA BANK LTD. 02.04.2003 3 55 017 /- 2. 185298 -DO- 28.6.2003 3 38 683/- 3. 1853232 -DO- 09.07.2003 4 13 778/- 4. 185573 -DO- 28.08.2003 10 98 506/- 22 05 984/- THE ASSESSEE REQUIRED THE AO TO ADOPT THE PEAK WHIC H WAS WORKED BY HIM AT RS.14 37 190/- BUT THE AO MADE THE ADDITION OF ENTIRE SUM. THE LD. CIT(A) CONFIRMED THE ADDITION ON THE GROUND THAT AS SESSEE HAS NOT PRODUCED THE SAID PARTIES FOR VERIFICATION. THE ASS ESSEE HAS NOT DEBITED ANY FINANCIAL CHARGES IN THE BOOKS FOR OBTAINING AC COMMODATION ENTRIES FROM SANJEEV TEXTILE THEREFORE BENEFIT OF PEAK CA NNOT BE GIVEN. 11. BEFORE US THE LD. AR SUBMITTED THAT SANJEEV TE XTILE IS THE SISTER CONCERN OF THE ASSESSEE WHICH PURCHASED THE GOODS F ROM RELIANCE INDUSTRIES BUT LATER THEY WERE TRANSFERRED TO ASSES SEE COMPANY AS IT REQUIRED THEM. THE PAYMENTS WERE THEREFORE MADE O N LATER DATE. HOWEVER FOR RELIANCE INDUSTRIES ASSESSEE COMPANY H AD REPRESENTED AND ITA NOS.707 782 & 3757/AHD/2008 ASST. YEAR 2004-05 & 2005-06 7 THEREFORE THE SALES AMOUNTS WERE DEBITED IN THE AC COUNT OF ASSESSEE COMPANY. IN ANY CASE LD. AR SUBMITTED THAT ASSESSEE HAS SHOWN OUTGOING OF MONEY AGAINST THESE PURCHASES IN THE BOOKS OF AC COUNTS AND THEREFORE BENEFIT OF PEAK SHOULD BE GIVEN. 12. THE LD. DR ON THE OTHER HAND SUBMITTED THAT ENT IRE PAYMENTS HAVE BEEN MADE BY CHEQUES AND THROUGH BANKING CHANNELS A ND THERE IS NO EVIDENCE THAT ANY MONEY HAS COME BACK TO THE ASSESS EE. THEREFORE BENEFIT OF TELESCOPING EFFECT CANNOT BE GIVEN. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE ISSUE REQUIRES T O BE RECONSIDERED BY THE AO. IT IS BECAUSE THE DETAILS AS TO WHEN PAYMEN TS WERE SHOWN BY THE ASSESSEE IN ITS BOOKS AND TO WHOM SUCH PAYMENTS HAV E GONE AND WHETHER THERE WAS ANY CASH TRANSACTION INVOLVED WHICH COULD SHOW THAT MONEY HAS COME BACK TO THE ASSESSEE ARE NOT ON RECORD. IT IS NECESSARY TO GIVE A FINDING AFTER CARRYING OUT ENQUIRIES AS TO WHETHE R CASH HAD COME BACK TO THE ASSESSEE AGAINST THE PAYMENTS SHOWN BY IT IN IT S BOOKS OF ACCOUNTS IN RESPECT OF THESE FOUR PURCHASES AND FURTHER WHETHE R SUCH RECEIPT OF CASH WAS PRIOR TO FURTHER PAYMENT MADE TO RELIANCE INDUS TRIES BY SANJEEV TEXTILES. IF CASH TRANSACTION IS PROVED THEN BENEFI T OF TELESCOPING EFFECT SHOULD BE GIVEN. IF MONEY HAS GONE TO SANJEEV TEXTI LES FROM THE ACCOUNT OF THE ASSESSEE STILL THEN BENEFIT OF TELESCOPING S HOULD BE GIVEN. IT IS BECAUSE AFTER RECEIPT OF MONEY FROM THE ASSESSEE FU RTHER PAYMENTS COULD BE MADE BY SANJEEV TEXTILES TO RELIANCE INDUSTRIES. WITH THE ABOVE OBSERVATIONS WE RESTORE THE MATTER TO THE FILE OF AO FOR ENQUIRING AND DECIDING THE ISSUE AFRESH. THIS ISSUE OF ASSESSEE I S ALLOWED BUT FOR STATISTICAL PURPOSES. ITA NOS.707 782 & 3757/AHD/2008 ASST. YEAR 2004-05 & 2005-06 8 14. GROUND NOS.3 4 & 5 RELATE TO MISCELLANEOUS DISA LLOWANCES OUT OF VARIOUS EXPENSES AND ADDITION IN RESPECT OF CONTRA ENTRIES. WE HAVE EXAMINED THE ORDERS OF THE AUTHORITIES BELOW AND WE FIND THAT DISALLOWANCES ARE PROPER AND AMOUNT OF DISALLOWANCE IS ALSO REASONABLE. ACCORDINGLY NO INTERFERENCE IS CALLED FOR. THESE G ROUNDS OF ASSESSEE FAIL. 15. AS A RESULT APPEAL FILED BY THE ASSESSEE IS PA RTLY ALLOWED AND PARTLY ALLOWED FOR STATISTICAL PURPOSES. REVENUES APPEAL 16. THE FIRST GROUND RELATES TO ADDITION OF RS.2 66 663/- MADE OUT OF UNVERIFIABLE PURCHASES. DURING THE COURSE OF ASSESS MENT PROCEEDINGS THE AO REQUIRED THE ASSESSEE TO FURNISH THE DETAILS OF PURCHASES MADE DURING THE YEAR IN RESPECT OF ALL PARTIES FROM WHOM PURCHA SES ABOVE RS.1 LAKH HAVE BEEN MADE. THE ASSESSEE HOWEVER COULD NOT FI LE CONFIRMATION OF SUCH PURCHASES FROM M/S GLOBE PETRO CHEMICALS. THE SAID PARTY WAS ALSO NOT PRODUCED BEFORE THE AO EVEN ON ASKING. THE AO C ARRIED OUT THE ENQUIRIES AT THE ADDRESS GIVEN BY THE ASSESSEE AND IT WAS FOUND THAT SAID PREMISES BELONGED TO M/S ADARSH TEXTILES AND THEY A RE DOING BUSINESS THERE SINCE LONG AND THEY DO NOT HAVE ANY KNOWLEDGE ABOUT M/S GLOBE PETRO CHEMICALS. THE AO REQUIRED THE ASSESSEE TO PR ODUCE NECESSARY DOCUMENTARY EVIDENCE TO PROVE THE GENUINENESS OF PU RCHASES. THE ASSESSEE SUBMITTED THE COPIES OF DELIVERY CHALLANS BILLS AND GATE PASSES AND SHOWED THAT PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES. BUT THE AO DID NOT ACCEPT THE ABOVE EXPLANATION ON THE GROU ND THAT BILLS WERE NOT PROPERLY SIGNED AND THERE WAS NO MENTION OF DETAILS OF TRANSPORTATION. THE TOTAL PURCHASES MADE FROM THAT PARTY M/S GLOBE PET RO CHEMICALS WAS OF RS.10 66 663/-. THE AO RELYING ON THE DECISION OF T HE TRIBUNAL IN THE CASE OF M/S VIJAY PROTEINS LTD. VS. ACIT (1996) 58 ITD 428 (AHD) AND ITA NOS.707 782 & 3757/AHD/2008 ASST. YEAR 2004-05 & 2005-06 9 DISALLOWED 25% OF THE PURCHASES RESULTING INTO AN A DDITION OF RS.2 66 663/-. THE LD. CIT(A) DELETED THE ADDITION ON THE GROUND THAT SUPPLIERS OF SUCH ITEMS DID NOT HAVE PERMANENT ADDR ESS AND MOST OF THE BUSINESS IS CONDUCTED TELEPHONICALLY OR THROUGH AN AGENT. ONCE PAYMENTS ARE MADE THROUGH ACCOUNT PAYEE CHEQUES THE IDENTIT Y OF THE SAID PARTY STANDS ESTABLISHED. 17. THE LD. DR SUBMITTED THAT ONCE THE PARTIES FROM WHOM PURCHASES ARE MADE ARE NOT AVAILABLE AT THE ADDRESSES GIVEN THEN DISALLOWANCE IS REQUIRED TO BE MADE. HE REFERRED TO THE DECISION OF THIS TRIBUNAL IN ACIT CEN.CIR.1(4) VS. M/S MARDIA COPPER EXTRUSION (P) LT D. IN ITA NO.4097/AHD/1995 ASST. YEAR 1992-93 & M/S MARDIA CO PPER EXTRUSION (P) LTD. VS. ACIT CEN.CIR.1(4) IN ITA NO.4290/AHD/ 1995 ASST. YEAR 1992-93 PRONOUNCED ON 30.10.2009 WHEREIN IT WAS HE LD AS UNDER :- 30. WE HAVE CAREFULLY CONSIDERED THE FACTS AND THE RIVAL SUBMISSIONS. WE ARE UNABLE TO AGREE WITH THE CIT(A) THAT THE PURCHA SE OF BRASS TUBES FROM SHREYAS METACHEM TO THE EXTENT OF 45 609 KGS. AND S TATED TO HAVE BEEN TRANSPORTED THROUGH MAHAKALI ROADLINES IS GENUINE. THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT IN THE LIGHT OF OTHER RECORDS MAINTAINED BY THE ASSESSEE THE DISALLOWANCE BASED MERELY ON THE D ISCREPANCY IN THE TRANSPORTATION CHALLANS AND THE STATEMENT OF THE PA RTNER OF MAHAKALI ROADLINES IS NOT JUSTIFIED CANNOT BE GIVEN EFFECT TO BECAUSE WE CAN SEE NO REASON TO DISCARD THE STATEMENT OF THE PARTNER OF THE MAHAKAL I ROADLLINES WHICH HAS WITHSTOOD THE CROSS-EXAMINATION BY THE ASSESSEE AS ALSO THE UNUSUAL FEATURES IN THE DELIVERY CHALLANS. THE TRANSPORTATION RECORDS ARE UNDENIABLY CRUCIAL AND THE MERE FACT THAT THE OTHER RECORDS MAINTAINED BY THE ASSESSEE ARE NOT DEFECTIVE DOES NOT MEAN THAT THEY HAVE TO BE BELIEVED. IT MU ST BE REMEMBERED THAT THE TRANSPORTER IS A THIRD PARTY AND EXCEPT A LOOSE STA TEMENT MADE BY THE ASSESSEE BEFORE THE CIT(A) THAT HE MIGHT HAVE BEEN INIMICALL Y DISPOSED TOWARDS THE ASSESSEE SINCE HIS SERVICES WERE DISCONTINUED THER E IS NOTHING TO DISCREDIT THE VERSION OF N.H. MALI THE PARTNER OF MAHAKALI ROADL INES. NOT ONLY HAS HE DENIED THAT HE TRANSPORTED THE GOODS FROM BOMBAY TO KHADI IN HIS TRUCKS BUT HE HAS REITERATED THE SAME IN THE COURSE OF THE CRO SS EXAMINATION AND HAS FURTHER STATED THAT HE ISSUED BILLS BY ACCEPTING A SMALL AMOUNT OF RS.20 IN CASH FROM THE ASSESSEE FOR EACH BILL. HE ALSO STATED TH AT SINCE HE DID RECEIVE SOME OTHER TRANSPORT JOBS FROM THE ASSESSEE HE WAS WILLI NG TO ISSUE THE BOGUS BILLS BY ACCEPTING A SMALL CASH PAYMENT. WE ARE UNABLE TO S AY THAT HIS STATEMENT WAS ITA NOS.707 782 & 3757/AHD/2008 ASST. YEAR 2004-05 & 2005-06 10 MOTIVATED AGAINST THE ASSESSEE AND THERE IS NO EVI DENCE ON RECORD TO SHOW THAT HE BORE ANY ILL-WILL TOWARDS THE ASSESSEE. THE MAN NER IN WHICH THE PURCHASES WERE ALLEGEDLY PUT THROUGH ALSO RAISES SERIOUS QUES TIONS AS TO THEIR GENUINENESS. WE ARE ASKED TO BELIEVE THAT SHREYAS METACHEM FIRST PURCHASED THE GOODS FROM THE SISTER CONCERNS OF THE ASSESSEE AND THEN SOLD T HEM TO THE ASSESSEE IN ORDER TO FACILITATE THE ASSESSEE TO ENJOY CREDIT FOR 90 DAYS . IT IS NOT KNOWN WHY THE ASSESSEE CANNOT ENJOY THE SAME CREDIT FACILITY FROM THE SISTER CONCERNS THEMSELVES DIRECTLY AND SHOULD ADOPT SUCH A DEVIOUS COURSE. THE CHEQUES ISSUED BY THE ASSESSEE TO SHREYAS METACHEM HAVE BEE N USED BY THAT COMPANY TO PAY FOR THE PURCHASES IT ALLEGEDLY MADE FROM THE SISTER CONCERNS OF THE ASSESSEE. THE AMOUNTS HAVE THUS FOUND THEIR WAY TO THE ASSESSEES SISTER CONCERNS AND THUS REMAINED IN THE CONTROL OF THE GR OUP. IN THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT CITED SUPRA THERE WAS NO EVIDENCE TO SHOW THAT BOGUS VOUCHERS HAVE BEEN GIVEN TO THE ASSESSEE OR T HAT ANY PART OF THE PAYMENTS MADE BY THE ASSESSEE BY CHEQUE CAME BACK T O THE ASSESSEE IN ANY FORM. IN THE PRESENT CASE HOWEVER MAHAKALI ROADLI NES ADMITTED BOTH IN THE COURSE OF THE STATEMENT AS WELL AS DURING THE CROSS -EXAMINATION BY THE ASSESSEE THAT HE HAD ISSUED BOGUS LORRY RECEIPTS FOR CASH PA YMENT OF AS LITTLE AS RS.20/- PER RECEIPT. IN THE CITED JUDGMENT THE SELLERS HAD GIVEN STATEMENTS BEFORE THE SALES TAX AUTHORITIES THAT THEY WERE IN THE BUSINES S OF ISSUING BOGUS VOUCHERS BUT AS FOUND BY THE TRIBUNAL TO WHICH REFERENCE HAS BEEN MADE BY THE HONBLE HIGH COURT AT PAGE 251 OF THE REPORT EVEN THE TWO STATEMENTS DO NOT IMPLICATE THE TRANSACTIONS WITH THE ASSESSEE IN ANY WAY. TH IS IS A CRUCIAL DISTINCTION BETWEEN THE FACTS OF THE PRESENT CASE AND THE FACTS BEFORE THE HONBLE HIGH COURT. FURTHER IN THE CITED CASE THERE WAS NO E VIDENCE TO SHOW THAT THE FUNDS GIVEN BY THE ASSESSEE TO THE SELLERS CAME BACK IN A NY FORM. IN THE PRESENT CASE HOWEVER BY REASON OF THE CIRCUITOUS NATURE OF THE TRANSACTIONS WE HAVE ALREADY SEEN THAT THE PAYMENTS MADE BY THE ASSESSEE REACHED ITS SISTER CONCERNS AND THUS IN SUBSTANCE AND EFFECT REMAINED WITHIN THE RE ACH AND CONTROL OF THE ASSESSEE. BECAUSE OF THESE VITAL DISTINGUISHING F EATURES THE JUDGMENT IS NOT OF ANY HELP TO THE ASSESSEE BEFORE US. 31. IT WAS THEN CONTENDED ON BEHALF OF THE ASSESSEE THAT THE SALES HAVE NOT BEEN DOUBTED AND THEY WOULD NOT HAVE BEEN POSSIBLE BUT FOR THE PURCHASES FROM SHREYAS METACHEM. THE SALES HAVE BEEN ADMITTED BY THE ASSESSEE AND THERE IS NO REASON WHY THAT SHOULD BE IGNORED. IT IS THE A SSESSEE WHICH HAS MADE THE CLAIM THAT IT HAD PURCHASED 45 609 KGS. OF BRASS TU BES FROM SHREYAS METACHEM PVT. LTD. AND IT IS ELEMENTARY THAT IT IS FOR THE A SSESSEE TO SHOW THAT THE SAME IS GENUINE. IF IT FAILS TO DO SO AND DISCHARGE ITS BU RDEN IT IS OPEN TO THE REVENUE AUTHORITIES TO DISALLOW THE PURCHASES IRRESPECTIVE OF ANY OTHER CONSIDERATION INCLUDING THE FACT THAT THERE COULD NOT HAVE BEEN C ORRESPONDING SALES WITHOUT THOSE PURCHASES. IF THE PURCHASES HAVE BEEN FOUND TO BE NON-GENUINE WE THINK THAT THE ASSESSEE CANNOT TAKE ADVANTAGE OF THE SAME TO SAY THAT THE CORRESPONDING SALES SHOULD BE IGNORED OR TO CONTEND THAT THE SALES WOULD NOT HAVE BEEN POSSIBLE WITHOUT THE PURCHASES. THE GEN UINENESS OF THE PURCHASES ITA NOS.707 782 & 3757/AHD/2008 ASST. YEAR 2004-05 & 2005-06 11 HAS TO BE INDEPENDENTLY PROVED AND NOT MERELY INFER ENTIALLY. WE ARE THEREFORE NOT INCLINED TO AGREE WITH THE CONTENTION OF THE LE ARNED COUNSEL FOR THE ASSESSEE. 32. IT ONLY REMAINS FOR US TO CONSIDER THE RATHER UNUSUAL OBSERVATION IF WE MAY SAY SO WITH RESPECT OF THE CIT(A) THAT IF IT I S FOUND THAT MAHAKALI ROADLINES HAVE NOT TRANSPORTED THE GOODS THEN THEY MIGHT HAVE BEEN TRANSPORTED BY SOME OTHER TRANSPORTER AND THE ONLY THING WHICH THE AO CAN DO IS TO DISALLOW THE TRANSPORT CHARGES BUT NOT THE PU RCHASES. WE ARE TOTALLY UNABLE TO UNDERSTAND OR APPRECIATE THE LOGIC OF THE OBSERVATION. IF THE CLAIM OF TRANSPORTATION OF THE GOODS IS FOUND TO BE BOGUS OR NOT GENUINE THE LOGICAL RESULT WOULD NOT ONLY BE THAT THE TRANSPORTATION CH ARGES SHOULD BE DISALLOWED BUT SINCE THE FACT THAT THE GOODS WERE TRANSPORTED ITSELF STANDS DISPROVED OR UNPROVED THE PURCHASES ALSO STAND UNPROVED. IT IS NOT PROPER FOR THE CIT(A) TO GIVE THE BENEFIT OF DOUBT TO THE ASSESSEE BY OBSER VING THAT THE GOODS MIGHT HAVE BEEN TRANSPORTED BY SOME OTHER TRANSPORTER. E VEN THE ASSESSEE HAS NO CASE THAT THE GOODS WERE TRANSPORTED BY SOME OTHER TRANS PORTER. THE CIT(A) IN OUR OPINION WAS NOT JUSTIFIED AT ALL IN MAKING THE AFOR ESAID OBSERVATION AND ALSO IN MAKING IT PART OF HIS REASONING FOR DELETING THE DI SALLOWANCE. ON THIS BASIS HE SUBMITTED THAT AO WAS JUSTIFIED IN MAKING THE ADDITION. 18. THE LD. AR ON THE OTHER HAND SUBMITTED THAT THE DECISION OF THE TRIBUNAL IN VIJAY PROTEINS CASE WOULD NOT BE APPLI CABLE BECAUSE IN THAT CASE PURCHASES ARE MADE IN CASH AND THERE WAS NO EV IDENCE OF PURCHASE AS SUCH BUT IN THE PRESENT CASE THERE ARE PROPER PURCH ASE BILLS DELIVERY CHALLANS AND PAYMENT IS MADE THROUGH ACCOUNT PAYEE CHEQUES. IF PURCHASE WAS NOT GENUINE AO SHOULD HAVE DISALLOWED THE ENTIRE AMOUNT OF PURCHASES. ONCE HE ACCEPTED THAT 3/4 TH OF PURCHASES ARE GENUINE THEN THERE IS NO REASON TO HOLD THAT 1/4 TH OF THE PURCHASES ARE NOT GENUINE. EITHER ENTIRE PURCHASE IS GENUINE OR ENTIRE PURCHAS E IS BOGUS. HE FURTHER SUBMITTED THAT AO HAS NOT REJECTED THE BOOKS OF ACC OUNTS AND THEREFORE SUCH ADDITION OUT OF PURCHASES COULD NOT BE MADE. 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THERE IS NO CASE FOR INTERFERENCE IN THE ORDER OF LD. CIT(A). THE REASONS ARE THAT THE RATIO OF THE DECISION IN VIJAY PROTEINS CASE WOULD NOT BE APPLICABLE TO THE FACTS OF THE PRESENT CASE ITA NOS.707 782 & 3757/AHD/2008 ASST. YEAR 2004-05 & 2005-06 12 BECAUSE IT IS UNDISPUTED IN THIS CASE THAT PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUES. IN THIS REGARD WE REFER TO T HE DECISION OF THE TRIBUNAL IN ITA NO.558/AHD/2008 ASST. YEAR 2003-04 IN THE CASE OF SHRI MOHMED AKHTAR ABDULLAHCHAKKIWALA VS. ACIT AND OTHER S PRONOUNCED ON 29.10.10 WHEREIN THE RATIO OF THE DECISION OF TH E TRIBUNAL IN VIJAY PROTEINS LTD. (SUPRA) WAS DISTINGUISHED AS UNDER :- FURTHER THE DECISION OF THE TRIBUNAL IN VIJAY PROT EINS (SUPRA) SHOULD HAVE BEEN CONSIDERED IN PROPER PERSPECTIVE. IT SHOU LD NOT BE APPLIED IN A ROUTINE MANNER. ONLY IN THOSE CASES WHERE PAYMENTS FOR PURCHASES ARE MADE IN CASH AND PURCHASERS ARE NOT TRACEABLE THEN CERTAIN PERCENTAGE OF SUCH PURCHASES CAN BE DISALLOWED. HOWEVER WHERE PA YMENTS ARE MADE BY ACCOUNT PAYEE CHEQUES THEN THE DECISION IN VIJAY PROTEINS (SUPRA) MAY NOT BE APPLICABLE. FURTHER IN AN ANOTHER JUDGMENT OF THE TRIBUNAL IN I TA NOS.4097 & 4098/AHD/2007 ASST. YEAR 2003-04 IN THE CASE OF ACI T CIR.6 SURAT VS. M/S S. NILESHKUMAR & CO. PRONOUNCED ON 19.11.10 TH E DECISION IN THE CASE OF VIJAY PROTEINS LTD. (SUPRA) HAS BEEN DISTIN GUISHED AS UNDER :- 9. WE AGREE WITH THE LD. AR THAT FOR INVOKING THE DECISION OF THE TRIBUNAL IN VIJAY PROTEINS LTD. VS. ACIT (SUPRA) IT IS NECESSARY TO SHOW THAT PURCHASES ARE MADE BY THE ASSESSEE IN CASH AND THE CONCERNED SELLERS ARE NOT TRACEABLE. FOR THE SAKE OF CONVENIE NCE WE REPRODUCE THE RELEVANT PARA FROM THE DECISION IN THE CASE OF VIJA Y PROTEINS LTD. VS. ACIT (SUPRA) AS UNDER :- 19.3 IT IS WELL KNOWN THAT IF PURCHASES ARE MADE F ROM OPEN MARKET WITHOUT INSISTING FOR THE GENUINE BILLS THE SUPPLIERS MAY BE WILLING TO SELL THOSE PRODUCTS AT A MUCH LOWER RATE AS COMPARED TO THE RATE WHICH THEY MAY C HARGE IN CASE THE DEALER HAS TO GIVE A GENUINE SALE INVOICE IN RESPECT OF THAT SALE AND SUPPLY THE GOODS. THERE MAY BE VARIOUS FACTORS DUE TO WHICH THERE IS BOUND TO BE A SUBSTANTIAL DIFFERENCE BETWEEN THE PURCHASE PRICE OF UNACCOUNTED MATERIAL AND RATE OF PURCHASE OF ACCOUNTED FOR GOODS. THERE MAY BE A SAVING ON ACCOUNT OF SALES TAX AND O THER TAXES AND DUTIES WHICH MAY BE LEVIABLE IN RESPECT OF MANUFACTURE OR SALE OF GO ODS IN QUESTION. THE SUPPLIERS OR THE MANUFACTURERS MAKE A SUBSTANTIAL SAVING IN THE INCOME TAX IN RESPECT OF INCOME FROM SALE OF UNACCOUNTED GOODS PRODUCED AND SOLD BY THEM. THIS MAY ALSO BE ONE OF THE FACTORS DUE TO WHICH THE SELLER MAY BE WILLING TO CHARGE LOWER RATES FOR UNACCOUNTED GOODS AS COMPARED TO ACCOUNTED FOR GOOD S. KEEPING ALL THESE FACTORS IN MIND AND ALSO KEEPING IN VIEW THE DECISION OF THE I TAT IN THE CASE OF SANJAY OIL CAKE ITA NOS.707 782 & 3757/AHD/2008 ASST. YEAR 2004-05 & 2005-06 13 INDUSTRIES (SUPRA) WE HOLD THAT 25% OF THE PURCHASE PRICE ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS THROUGH SUCH FICTITIOUS INVOICES IN THE NAME OF 33 BOGUS PARTIES SHOULD BE DISALLOWED OUT OF THE AMOUNT OF PURCHASES SHOWN TO HAVE BEEN MADE FROM THOSE 33 BOGUS SUPPLIERS. SINCE PAYMENTS IN THE PRESENT CASE ARE MADE BY ACCO UNT PAYEE CHEQUES AND THE THREE PARTIES ARE IDENTIFIABLE THE RATIO OF THE DECISION IN VIJAY PROTEINS WILL NOT BE APPLICABLE. THE ONLY INFERENCE FROM ENTIRE SET OF FACTS CAN BE FOUND THAT ACCOUNTS OF THE ASSESSEE ARE NOT RELIABLE AND THEREFORE PROVISIONS OF SECTION 145(3) CAN BE INVOKED. 20. EVEN NON-AVAILABILITY OF SELLER IS NOT SACROSAN CT IDEA TO HOLD THAT PURCHASES ARE BOGUS. ASSESSMENT PROCEEDINGS ARE UND ERTAKEN AFTER A YEAR OR TWO OF THE TRANSACTION AND NO ASSESSEE CAN TAKE GUARANTEE THAT SELLER WOULD BE AVAILABLE AT THE GIVEN ADDRESS. ONCE PAYME NTS ARE MADE THROUGH ACCOUNT PAYEE CHEQUES IT WAS REQUIRED TO ENQUIRE IN TO AS TO WHOM THE PAYMENTS HAD FINALLY GONE WHO IS IN CONTROL OF THA T BANK ACCOUNT WHETHER MONEY WAS WITHDRAWN IMMEDIATELY AND WHETHER ASSESSEE WAS THE BENEFICIARY OF SUCH WITHDRAWAL; WHAT ARE THE GO ODS ASSESSEE HAS PURCHASED WHETHER THEY ARE REQUIRED IN THE BUSINES S OF THE ASSESSEE AND IF YES TO WHAT EXTENT AND WHETHER SUCH PURCHASES ARE SUPERFLUOUS IN THE SENSE THAT EITHER THEY COULD NOT BE REQUIRED IN THE BUSINESS OR THEY ARE HIGHLY INFLATED. FURTHER IF THE PARTY IS NOT TRACEA BLE AND OWNERSHIP OF BANK ACCOUNT IS HIGHLY SUSPICIOUS AND CAN BE TRACED TO T HE ASSESSEE THEN UNDER SUCH CIRCUMSTANCES ENTIRE PURCHASES NEEDED TO BE DI SALLOWED. PURCHASES FROM ONE PARTY IN ONE INSTALMENT CANNOT BE PARTLY G ENUINE OR PARTLY BOGUS. EVEN OTHERWISE FOR HOLDING THAT IT COULD BE PARTLY GENUINE AND PARTLY BOGUS LOT OF MATERIAL IS REQUIRED TO BE PLA CED ON RECORD SO AS TO SHOW THE INFLATION OF PURCHASES AND RECEIPT OF MONE Y BACK BY THE ASSESSEE IN ONE FORM OR THE OTHER. IN ANY CASE IT COULD HAVE BEEN A REASONABLE CASE TO DISALLOW ENTIRE PURCHASES IF PARTY IS NOT REALLY TRACEABLE AND BANK ACCOUNT TO WHICH PAYMENT FROM THE ASSESSEE HAS GONE IS DIRECTLY OR ITA NOS.707 782 & 3757/AHD/2008 ASST. YEAR 2004-05 & 2005-06 14 INDIRECTLY RELATED TO THE ASSESSEE. WITHOUT THERE B EING ANY MATERIAL TO THIS EFFECT AND FURTHER AO HAVING NOT REJECTED THE BOOKS NO ADDITION COULD BE MADE BY THE AO. ACCORDINGLY WE DECLINE TO INTERFER E AND REJECT THIS GROUND OF REVENUE. 21. THE NEXT GROUND IS REGARDING DELETION OF ADDITI ON OF RS.5 99 898/- ON ACCOUNT OF UNDERVALUATION OF CLOSING STOCK. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUND THAT ASSESSEE H AS NOT ADJUSTED ANY TAX DUTY OR CESS ACTUALLY PAID WHILE VALUING THE CLOSING STOCK. HE ACCORDINGLY WORKED OUT SUCH DUTY INCLUDING EXCISE D UTY AT RS.5 99 898/- AND ADDED THE SAME BY INVOKING THE PROVISIONS OF SE CTION 145A. THE LD. CIT(A) DELETED THE ADDITION BY HOLDING THAT EXCISE DUTY OR OTHER DUTY LEVIABLE ON STOCK BOTH BY INCLUDING IN OPENING AS W ELL AS CLOSING STOCK AND DIFFERENCE IF ANY SHOULD ONLY BE CONSIDERED F OR ADJUSTING THE TRADING RESULTS. SINCE THE ASSESSEE HAS FOLLOWED ACCOUNTING STANDARD -2 BY FOLLOWING EXCLUSION METHOD NO ADDITION WAS CALLED F OR. FURTHER IF SUCH ADJUSTMENT OF EXCISE DUTY AND OTHER DUTIES ARE DONE IN OPENING STOCK PURCHASES AS WELL AS IN CLOSING STOCK THEN REVENUE EFFECT WOULD BE NIL. 22. AGAINST THIS THE LD. DR SUBMITTED THAT SECTION 145A WOULD BE APPLICABLE ONLY IN RESPECT OF ADJUSTMENT OF STOCKS AND NOT IN RESPECT OF PURCHASES OR SALES WHICH ARE ALREADY TAKEN CARE OF IN THE TRADING ACCOUNT. IN ANY CASE AO HAS NOT DONE ANY WORKING BY INCLUSIO N METHOD WHICH IS REQUIREMENT OF SECTION 145A. THE MATTER REQUIRES RE CONSIDERATION. 23. ON THE OTHER HAND THE LD. AR SUBMITTED THAT RE VENUE EFFECT IS NIL THEREFORE NO INTERFERENCE IS CALLED FOR IN THE ORD ER OF LD. CIT(A). 24. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL PLACED ON RECORD. IN OUR CONSIDERED VIEW THE ARGUME NTS OF THE DEPARTMENT ITA NOS.707 782 & 3757/AHD/2008 ASST. YEAR 2004-05 & 2005-06 15 THAT EFFECT OF EXCISE DUTY OR OTHER DUTY HAS TO BE SEEN IN RESPECT OF OPENING STOCK AND CLOSING STOCK IS ACCEPTABLE. IN A NY CASE THE EFFECT OF INCLUSION OF EXCISE DUTY HAS NOT BEEN CONSIDERED BY THE AO AND THEREFORE WE RESTORE THE MATTER TO HIS FILE FOR WO RKING OUT THE EFFECT OF INCLUSION OF EXCISE DUTY IN ALL THE ELEMENTS OF TRA DING ACCOUNT WITH THE RIDER THAT THERE SHOULD NOT BE ANY DOUBLE INCLUSION IN ANY SALE AND PURCHASES. ONCE DONE BY THE ASSESSEE AND AGAIN TO B E DONE BY INCLUSION METHOD. THEREFORE THIS IS ISSUE IS RESTORED TO THE FILE OF AO FOR DECIDING AFRESH. THIS GROUND OF REVENUE IS ALLOWED FOR STATI STICAL PURPOSES. AS A RESULT APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.3757/AHD/2008 ASST. YEAR 2005-06 (ASSESSEES APPEAL) 25. THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE A SSESSEE IN THIS APPEAL:- (1) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF AO IN MAKING DISALLOWANCE OF RS.12 43 670/- ON ACCO UNT OF EXCESS DEPRECIATION ON PLANT AND MACHINERY UNDER TU F SCHEME. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT THE LD. CIT(A) HAS ERRED IN CONFIRM ING THE ACTION OF AO IN MAKING DISALLOWANCE OF RS.20 884/- BEING 1 0% OF VARIOUS EXPENSES VIZ. TELEPHONE EXPENSES VEHICLE E XPENSES AND DEPRECIATION ON VEHICLE. 26. SO FAR AS GROUND NO.1 OF THIS APPEAL IS CONCERN ED WE HAVE DECIDED AN IDENTICAL ISSUE (GROUND NO.1) IN ASSESSEES APPE AL FOR ASST. YEAR 2004- 05 BEING IN FAVOUR OF THE ASSESSEE. THUS FOLLOWING THE ABOVE DECISION WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. THI S GROUND OF ASSESSEE IS ALLOWED. ITA NOS.707 782 & 3757/AHD/2008 ASST. YEAR 2004-05 & 2005-06 16 27. GROUND NO.2 RELATES TO CONFIRMATION OF DISALLOW ANCE OF RS.20 884/- BEING 10% OF VARIOUS EXPENSES VIZ. TELEPHONE EXPENS ES VEHICLE EXPENSES AND DEPRECIATION ON VEHICLE. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GONE THROUGH THE MATERIAL ON RECORD. WE ARE OF THE VIEW THAT 10% DISALLOWANCE ON THE ABOVE ITEMS IS REASONABLE AND NO INTERFERENCE IS CALLED FOR IN THE ORDER OF LD. CIT(A). ACCORDINGLY WE CONFIRMED THE SAME. THIS GROUND OF ASSESSEE FAILS. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 28. IN THE RESULT APPEAL IN ITA NO.707/AHD/2008 FI LED BY THE ASSESSEE IS PARTLY ALLOWED AND PARTLY ALLOWED FOR STATISTICA L PURPOSES APPEAL IN ITA NO.3757/AHD/2008 FILED BY THE ASSESSEE IS PARTLY AL LOWED AND THE APPEAL IN ITA NO.782/AHD/2008 FILED BY THE REVENUE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN OPEN COURT ON 10.12.10. SD/- SD/- (MAHAVIR SINGH) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT ME MBER AHMEDABAD DATED : 10.12.10. MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD ITA NOS.707 782 & 3757/AHD/2008 ASST. YEAR 2004-05 & 2005-06 17 1.DATE OF DICTATION 1/12/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING /12/2010 MEMBER .OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..