M/s. SHREE ENTERPRISE, MUMBAI v. DCIT - 14(2), MUMBAI

ITA 7216/MUM/2007 | 2004-2005
Pronouncement Date: 29-03-2012 | Result: Partly Allowed

Appeal Details

RSA Number 721619914 RSA 2007
Assessee PAN AAAFS5559C
Bench Mumbai
Appeal Number ITA 7216/MUM/2007
Duration Of Justice 4 year(s) 3 month(s) 25 day(s)
Appellant M/s. SHREE ENTERPRISE, MUMBAI
Respondent DCIT - 14(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-03-2012
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted J
Tribunal Order Date 29-03-2012
Date Of Final Hearing 01-03-2012
Next Hearing Date 01-03-2012
Assessment Year 2004-2005
Appeal Filed On 04-12-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J MUMBAI BEFORE SHRI P.M. JAGTAP (AM) & SHRI S.S. GODARA (JM ) I.T.A. NO. 7216/MUM/2007 (A.Y. 2004-05) M/S. SHREE ENTERPRISES 409-413 TANTIA JOGANI INDL.PREMISES CO-OP.SOC. LTD. J.R. BORICHA MART LOWER PAREL MUMBAI-400 011. PAN: AAAFS5559C VS. DY.COMMR. OF INCOME-TAX-14(2) MUMBAI. APPELLANT RESPONDENT APPELLANT BY SHRI MAYUR KISNADWALA. RESPONDENT BY SHRI D .S. SUNDER SINGH. DATE OF HEARING 01-03-2012 DATE OF PRONOUNCEMENT 29-03-20112 O R D E R PER S.S. GODARA JM : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER OF LD. CIT(A) XIV MUMBAI DATED 1.10.2007. 2. A PERUSAL OF THE GROUNDS OF APPEAL MAKES IT CLEA R THAT THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION S OF RS.22 01 708 MADE BY THE A.O. ON ACCOUNT OF ALLEGED UNDERVALUATION OF CLOSING STOCK BY THE APPELLANT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION S OF RS.12 83 856 ON ACCOUNT OF ALLEGED EXCESSIVE SHORTAGE CLAIMED BY THE APPELLANT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITIONS OF THE A.O. HOLDING THAT THE INCOME ITA NO.7216/M/07 SHREE ENTERPRISES 2 PROVISION OF RS.30 18 058 BEING DEPB CREDITS RECEIVABLE IS NOT ELIGIBLE FOR DEDUCTION U/S.80HHC OF THE ACT. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW HAVING HELD THAT DEPB LICENSE RECEIVABLE HAVIN G NOT BEEN RECEIVED IS NOT INCOME ELIGIBLE FOR DEDUC TION U/S.80HHC OF THE ACT THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF THE A.O. INCLUDING SUCH PROVISION OF RS.30 18 058 IN THE INCOME OF THE APPELLANT. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE AO ERRED IN THE COMPUTATION OF DEDUCTION U/S.80HHC OF THE ACT. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE AO ERRED IN LEVYING INTEREST U/S.234B OF T HE ACT. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE AO ERRED IN LEVYING INTEREST U/S.234C OF T HE ACT. 8. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE A.O. ERRED IN INITIATING PENALTY PROCEEDIN GS U/S. 271(1)(C) OF THE ACT. IN ADDITION TO THE SAID GROUNDS IN THE INSTANT AP PEAL FILED ON 4-12-2007 THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUNDS 9 & 10. HAS SOUGHT ADMISSION THEREOF OF THE SAME. THE SAID GROUNDS ARE ALSO REPR ODUCED AS UNDER :- 9. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN NOT ADMITTING ADDITIONAL EVIDENCE IN THE FORM OF SAMPLE PAGES OF LOT BOOK FOR FINISHED GOODS OF GINI SILK MILLS LTD. 10. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED AO ERRED IN ASSESSING THE SALE PROCEEDS OF DEPB LICENCE INSTEAD OF THE PROFIT ON SALE THEREOF. THE APPELLANT CRAVES LEAVE TO ADD TO AMEND OR ALTE R THE FOREGOING GROUND OF APPEAL. WHILST HEARING OF THE INSTANT APPEAL THE LD. AR HA S MADE A VERY FAIR STATEMENT THAT THE OUTCOME OF GROUND NO. 4 DEPENDS ON GROUND NO. 3. SIMILARLY ITA NO.7216/M/07 SHREE ENTERPRISES 3 HE HAS NOT PRESSED GROUND NOS. 5 TO 8 AND 10. THE S AME ARE ACCORDINGLY DISMISSED. BEFORE WE DECIDE THE GROUNDS SPECIFICALLY IT IS NE CESSARY TO MENTION HERE THAT THE ASSESSEE HAS FILED AN APPLICATION UNDER RU LE 29 OF THE ITAT RULES 1963 ON 18-5-2010. SEEKING PERMISSION TO LEAD ADDITIONAL EVIDENCE BY WAY OF SOME DOCUMENTS. ALONG WITH THE SAID APPLICATION THE LD. AR HAS ALSO ATTACHED THE DOCUMENTS SOUGHT TO BE PLACED ON RECORD IN THE PAPE R BOOK PAGES 76 TO 98 ALONG WITH AN AFFIDAVIT OF THE PARTNER OF THE ASSESSEE FI RM. THEREFORE WE DEEM IT APPROPRIATE TO DECIDE THE APPLICATION FIRST. 3. IN SUPPORT OF THE APPLICATION THE LD. AR HAS SU BMITTED THAT BY WAY OF INSTANT APPLICATION UNDER RULE 29 OF THE ITAT RULES 1963 HE IS SEEKING RELIEF OF ADDITIONAL EVIDENCE. THE FACTS IN BRIEF OF THE INST ANT CASE LEADING TO FILING OF THE INSTANT APPLICATION ARE THAT THE APPLICANT WHO IS A FIRM ENGAGED IN EXPORT BUSINESS WISHES TO PRODUCE THE RECORD OF ITS OPENI NG & CLOSING STOCK FOR THE RELEVANT ASSESSMENT YEAR WHICH COULD NOT BE PRODUCE D EITHER BEFORE THE AO OR BEFORE THE LD. CIT(A). THE LD. AR HAS SUBMITTED THAT SINCE THE ASSESSEE F IRM HAD SHIFTED ITS OFFICE FROM MARINE LINES TO LOWER PAREL THEREFORE AT THE TIME WHEN ITS CASE WAS DECIDED BY THE LOWER AUTHORITIES THE STOCK REGISTE R IN SUPPORT OF THE PLEA OF APPROPRIATE VALUATION DEDUCED BY THE ASSESSEE COULD NOT BE SUBSTANTIATED. FURTHER CONTENDED THAT NOW SINCE THE SAID STOCK REC ORD/REGISTER HAS BEEN TRACED THEREFORE HE WISHES TO PRODUCE THE SAME BY WAY OF LEADING ADDITIONAL EVIDENCE. IN SUPPORT OF THE SAME HE HAS SUBMITTED THAT IF TH ESE DOCUMENTS WOULD HAVE BEEN PRODUCED BEFORE THE LD. LOWER AUTHORITIES OR I F THEY ARE ALLOWED TO BE PRODUCED NOW THE SAME WILL NEGATE THE ADDITION OF INCOME MADE BY THE AO ON ACCOUNT OF ALLEGED UNDER-VALUATION OF STOCK. ON THE OTHER HAND THE LD. DR APPEARING FOR THE DE PARTMENT HAS VEHEMENTLY ARGUED THAT THE ASSESSEE HAD GOT AMPLE O PPORTUNITIES TO LEAD THE SAID EVIDENCE BEFORE LOWER AUTHORITIES. ALSO STRESS ED THAT EVEN THE APPLICATION DOES NOT MENTION ANY DETAILS OF SHIFTING ETC. THERE FORE THE INSTANT APPLICATION IS NOTHING BUT MISUSE OF THE PROCESS OF LAW. HENCE IT MAY BE REJECTED. ITA NO.7216/M/07 SHREE ENTERPRISES 4 4. WE HAVE HEARD BOTH THE LD. REPRESENTATIVES SO FA R AS THE INSTANT APPLICATION IS CONCERNED. WE HAVE ALSO GONE THROUGH THE PROVISIONS ENSHRINED IN RULE 29 OF THE ITAT RULES 1963. A PERUSAL OF THE S AME MAKES IT CLEAR THAT CERTAINLY THE ITAT WHILE EXERCISING ITS JURISDICTIO N CAN ALLOW PRODUCTION OF ADDITIONAL EVIDENCE. HOWEVER THE SAME IS NOT ABSOL UTE. IT HAS BEEN PROVIDED IN THE SAME VERY PROVISION THAT A PARTY IN APPEAL CAN BE ALLOWED TO PRODUCE ADDITIONAL EVIDENCE IF EITHER THE TRIBUNAL REQUIRES IT FOR ANY EVIDENCE OR SUBSTANTIAL CAUSE. FURTHER IT CAN BE DONE IF THE I NCOME-TAX AUTHORITIES HAVE DECIDED THE CASE WITHOUT PROVIDING SUFFICIENT OPPOR TUNITY TO THE ASSESSEE IN THE APPEAL. HOWEVER IF IN THE INSTANT CASE WE FIND THAT THE A SSESSEE HAD FILED ITS RETURN OF INCOME ON 29-10-2004. THEREAFTER THE PRO CEEDINGS U/S.143(2) OF THE I.T. ACT 1961 (HEREINAFTER TO BE REFERRED AS THE ACT) COMMENCED WHICH ULTIMATELY LED TO ORDER DATED 18-12-2006 PASSED BY THE AO. THE ASSESSEE ALSO PREFERRED APPEAL BEFORE THE LD. CIT(A) ON 24-1-2007 . IT WAS DECIDED ON 1-10- 2007. THEREAFTER THE INSTANT APPEAL HAS BEEN FILED ON 4-12-2007. EVEN IN THE PRESENT APPEAL THE SAID APPLICATION HAS BEEN FILED ON 11-5-2011. THAT TOO WITHOUT PROPERLY EXPLAINING THE DELAY OCCURRED IN C OURSE OF INTERVENING PERIOD PARTICULARLY BETWEEN THE ASSESSMENT PROCEEDINGS FIN ALIZED ON 18-5-2006 TILL THE FILING OF THE APPLICATION ON 11-5-2011. IT IS ALSO EVIDENT THAT THE ENTIRE CASE OF THE ASS ESSEE REVOLVES AROUND THE QUESTION OF VALUATION OF THE STOCK. A PERUSAL OF T HE ORDERS PASSED BY THE LD. AUTHORITIES MAKES IT CRYSTAL CLEAR THAT THE ASSESSE E HAD FAILED TO PRODUCE THE SAME VERY STOCK REGISTER BEFORE THEM DESPITE AVAILI NG AMPLE OPPORTUNITIES. CONSEQUENTLY AT SUCH A BELATED STAGE WE CANNOT AL LOW THE ASSESSEE TO TAKE ADVANTAGE OF ITS OWN LAPSES AND NEGLIGENCE. IN OUR OPINION THE SAID APPLICATION IS NOTHING BUT MISUSE OF THE PROCESS OF LAW. THEREF ORE IT IS DISMISSED. 5. IT IS FURTHER NOT OUT OF PLACE TO MENTION HERE T HAT THE ASSESSEE-APPELLANT HAS ALSO FILED AN APPLICATION FOR ADMISSION OF ADDI TIONAL GROUNDS 9-10 REPRODUCED HEREINABOVE. TODAY THE LD. AR HAS PRESSED GROUND N O. 9 PARTICULARLY. THE SAME IS OPPOSED BY THE LD. DR. WE FIND THAT IN THE TOTAL ITY OF CIRCUMSTANCES GROUND NO. 9 OF THE INSTANT APPEAL IS REQUIRED TO BE ADMIT TED FOR APPROPRIATE ADJUDICATION OF THE MATTER THEREFORE ALONG WITH THE OTHER GROUN DS STATED ABOVE WE WOULD ITA NO.7216/M/07 SHREE ENTERPRISES 5 ALSO DECIDE GROUND NO. 9. FOR BREVITY SINCE THE IS SUE INVOLVED IN GROUND NOS. 1 & 9 IS COMMON THEREFORE BOTH THESE GROUNDS ARE BEIN G DECIDED TOGETHER. GROUND NOS.1 & 9: 6. IN THE INSTANT GROUNDS THE ISSUE INVOLVED IS OF ADDITION MADE BY THE AO TO THE TUNE OF RS.25 76 923/- ON ACCOUNT OF UNDER-VALU ATION OF CLOSING STOCK OF THE ASSESSEE. THE REASON AS IT EMANATES FROM PAPER BOOK OF THE CASE IS THAT THE ASSESSEE IS A FIRM ENGAGED IN MANUFACTURE AND EXPOR T OF FABRICS. IN THE RELEVANT ASSESSMENT YEAR THE ASSESSEE DEDUCED VALUATION OF ITS OPENING & CLOSING STOCK. THE AO ON 14-7-2006 ISSUED A QUESTIONNAIRE ASKING F OR DETAILS OF VALUATION OF OPENING & CLOSING STOCK. ON 10-8-2006 THE ASSESSEE S REPLY COMPRISED THE FOLLOWING DETAILS :- GREY MTRS AMOUNT OP. STOCK 35778.50 1602857.00 CL.STOCK 153611.450 6225872.00 FINISHED GOODS MTRS AMOUNT OP. STOCK 71824.010 3205190.00 CL. STOCK 147722.060 6366171.00 HOWEVER IN THE OPINION OF THE AO THE COMPLETE DET AILS OF THE SAID STOCK HAD NOT BEEN SUPPLIED. THEREAFTER THE ASSESSEE ON 28-11-20 06 FURTHER SUPPLIED THE DETAILS AS BELOW :- FINISHED STOCK FENTS & RAGS : 25100.000 X 15.00 = 376500. 00 FRESH : 46724.310 X 60.54 = 2828690.00 71824.310 3205190.00 BUT THE ASSESSEE DID NOT PROVIDE THE DETAILS OF FEN TS & RAGS. THE SAME WAS ALSO NOT MENTIONED IN THE TAX AUDIT REPORT. THE DOCUMENT ARY EVIDENCE IN SUPPORT THEREOF WAS ALSO LACKING. THEREFORE THE AO COMPUTE D THE AVERAGE COST OF ITA NO.7216/M/07 SHREE ENTERPRISES 6 PRODUCTION AS RS.8943094/- WHEREAS IT HAD BEEN COM PUTED AS RS.6 36 617/- BY THE ASSESSEE. IN APPEAL BEFORE THE LD. CIT(A) AN APPLICATION UN DER RULE 46A OF THE I.T. RULES FOR ADDITIONAL EVIDENCE WAS ALSO FILED IN SUP PORT OF THE CONTENTION THAT THE ASSESSEE/APPELLANT HAD NOT UNDER-VALUED THE STOCK. THE LD. CIT(A) DISMISSED THE APPLICATION IN PARA NO.4 OF THE ORDER ON THE GROUND THAT THE SAID EVIDENCE RELATED TO THE SISTER CONCERN (GINI SILK MILLS). THEREFORE IN THE OPINION OF THE LD. CIT(A) THE SAID EVIDENCE WAS NEITHER RELEVANT TO THE ISSUE IN QUESTION NOR FULLY CREDIBLE. SIMILARLY ON THE ISSUE OF UNDER-VALUATION OF STOCK THE LD. CIT(A) HELD THAT THE ASSESSEE COULD NOT PROVE SEPARATE STOCK OF FENTS & RAGS AS THE SAME HAD BEEN NOWHERE INCLUDED SPECIFICALLY BY THE AUDITORS IN TH E AUDIT REPORT. SO THE FINDING REGARDING UNDER-VALUATION OF THE STOCK WAS UPHELD B Y THE LD. CIT(A). BUT THE COST OF THE STOCK ESTIMATED BY THE LD. AO WAS MARGINALLY REDUCED FROM RS.60 PER METRE TO RS.58 PER METRE. HENCE BOTH THESE GROUNDS HAVE BEEN RAISED IN THE I NSTANT APPEAL BEFORE US. THE LD. AR OPENING HIS ARGUMENT SUBMITTED THAT TH E ISSUE OF UNDER- VALUATION OF THE STOCK HAS BEEN WRONGLY DECIDED BY THE AO AS WELL AS THE LD. CIT(A). HE REFERRED TO THE RECORD OF THE CASE AVAIL ABLE ON THE CASE FILE. DREW OUR ATTENTION TOWARDS PAGE NO. 35 OF THE PAPER BOOK TO PROVE THAT THE CA FIRM OF THE ASSESSEE-APPELLANT IN CLAUSE 5 OF THE SAME CLARIFI ED REGARDING MONTHLY STOCK STATEMENT THAT AT THE END OF THE YEAR THE STOCK OF FENTS & RAGS WORKED OUT AS LESS THAN 7% OF THE YEARS PRODUCTION. ALSO REFERRE D TO PAGES 30 TO 33 OF THE PAPER BOOK WHICH WERE PRESENT BEFORE THE ASSESSING OFFICER. ALSO PAGE NO. 27 (ACCOUNTS OF THE COMPANY) WHICH PROVED THAT THE ASS ESSEE-APPELLANT HAD NOT INDULGED IN UNDER-VALUATION OF THE STOCK. FURTHER R EFERRED TO AUDIT REPORT OF THE ASSESSEE AT PAGE 17 TO CONTEND THAT THE FENTS & RAG S IN QUESTION HAD BEEN INCLUDED IN THE FINISHED PRODUCTS I.E. PARA 28 (B) ANNEXURE G. SUBMITTED THAT THE FENTS & RAGS ARE LIKE SEPARATE ITEMS NOT TREATE D SEPARATELY IN THE ACCOUNT STATEMENT. BUT THEY ARE INCLUDED IN THE STOCK. FURTHER HE REFERRED TO THE EVIDENCE WHICH HAD BEE N SOUGHT TO BE PRODUCED BY WAY OF ADDITIONAL EVIDENCE BEFORE THE L D. CIT(A) I.E. LOT BOOKS OF FINISHED GOODS WHICH ARE ON PAGES 7 TO 11 OF THE PA PER BOOK. IN THE LIGHT OF THE ITA NO.7216/M/07 SHREE ENTERPRISES 7 SAME THE LD. AR CONTENDED THAT THE AUTHORITIES BEL OW HAVE COMMITTED MISTAKE OF FACTS AS WELL AS LAW TO THE EFFECT THAT THE APPR OPRIATELY VALUED STOCK OF THE ASSESSEE HAS BEEN TREATED AS UNDER-VALUED STOCK BY THE DEPARTMENT. THEREFORE HE PRAYED THAT THE IMPUGNED ORDER TO THIS EFFECT BE SET ASIDE. THE PRESENT GROUND MAY BE ACCEPTED. ON THE OTHER HAND THE LD. DR OPPOSING THE ARGUME NTS OF LD. AR SUBMITTED THAT AMPLE OPPORTUNITIES HAD BEEN GRANTED TO THE ASSESSEE TO PROVE ITS CASE REGARDING PROPER VALUATION OF THE STOCK. BUT T HE ASSESSEE CHOSE NOT TO PRESENT THE STOCK REGISTER BEFORE THE AO. THEREFORE HE PRAYED THAT THE IMPUGNED ORDER MAY BE UPHELD AND THE INSTANT GROUND BE REJEC TED. 7. WE HAVE HEARD BOTH THE LD.AR AS WELL AS THE LD. DR. THE PAPER BOOK OF THE CASE HAS ALSO BEEN DULY PERUSED. IT IS CRYSTAL CLEA R THAT THE ASSESSEE CHOSE NOT TO PRODUCE ITS STOCK REGISTER BEFORE THE AO. WE HAVE A LREADY REJECTED THE APPLICATION TO PRODUCE THE SAID REGISTER IN THE INS TANT APPEAL. MEANING THEREBY THAT WHEN THE CASE WAS DECIDED THE AO WAS NOT PROV IDED THE STOCK REGISTER. THEREFORE SO FAR AS THE ORDER OF AO IS CONCERNED WE DO NOT FIND ANY INFIRMITY IN THE SAME. REGARDING QUESTION OF REJECTION OF ASSESS EES APPLICATION UNDER RULE 46A OF THE I.T. RULES BEFORE LEARNED CIT(A) WE FIN D THAT WHEN THE ASSESSEE FAILED TO CONVINCE THE AO IN THE ABSENCE OF ANY STO CK REGISTER THEN HE CHOSE TO FILE THE APPLICATION FOR ADDITIONAL EVIDENCE. THAT TOO QUA RECORD OF THE SISTER CONCERN INSTEAD OF ITS OWN. IT WAS ONLY IN THE ABSE NCE OF ITS OWN STOCK DETAILS THE LOT BOOK OF THE SISTER CONCERN CARRIED NO WEIGH T THAT THE LD. CIT(A) HAS REJECTED THE SAID APPLICATION. WE HAVE SUBSTANTIALL Y PERUSED THE ENTIRE PAPER BOOK I.E. THE EVIDENCE INCLUSIVE OF THE ADDITIONAL EVIDENCE DOCUMENTS (LOT BOOKS OF THE SISTER CONCERN). HAVING CAREFULLY GONE THROU GH THE SAME WE ARE ALSO OF THE OPINION THAT EVEN IF THE SAME WOULD HAVE BEEN A LLOWED BY LEARNED CIT(A) IN THE ABSENCE OF ASSESSEES OWN STOCKS RECORD IT WOU LD NOT STAND PROVED BY THE ASSESSEE THAT IT DID NOT GET THE FABRICS PROCESSED FROM THE SISTER CONCERN. THEREFORE WE ARE OF THE OPINION THAT THE LD. CIT(A ) HAS RIGHTLY DISMISSED THE APPLICATION. BEFORE PROCEEDING FURTHER WE SEE THAT EVEN IN THE PAPER BOOK OF THE CASE THE ASSESSEE ITSELF HAS NOT SPECIFICALLY MADE A PRO VISION FOR SCRAP ITEMS I.E. FENTS ITA NO.7216/M/07 SHREE ENTERPRISES 8 & RAGS. SO IT IS ALMOST AN UPHILL TASK TO HOLD THA T THE FINISHED GOODS SHOWN IN THE RECORD OF THE ASSESSEE WOULD INCLUDE THE SAID SCRAP ITEMS. CONSEQUENTLY FINDING NO FORCE IN GROUNDS 1 & 9 OF THE INSTANT APPEAL WE REJECT THE SAME. GROUND NO.2: 8. IN THIS GROUND THE AO HAS MADE ADDITION IN THE ALLEGED SHORTAGE/SHRINKAGE CLAIMED BY THE ASSESSEE TO THE T UNE OF 8.82% OF THE PROCESSING REDUCED TO 3.82%. MEANING THEREBY THAT T HE CLAIM OF SHORTAGE/SHRINKAGE OF THE FABRICS PROCESSED CLAIM B Y THE ASSESSEE AT 8.82% HAS BEEN PARTLY ENTERTAINED TO THE EXTENT OF 3.82% THER EBY REJECTING 5% ON THE GROUND THAT THE SAID SHORTAGE IS ALSO NOT PROVED BY WAY OF ANY DOCUMENTARY OR OTHER EVIDENCE IN SUPPORT THEREOF. HOWEVER THE SA ME HAS ALSO BEEN UPHELD BY THE LD. CIT(A) ON THE GROUND OF NO EVIDENCE. FURTHE R THE LD. CIT(A) HAS HELD THAT 8.82% OF SHORTAGE/SHRINKAGE IS ALSO ABNORMALLY HIGH . RELIANCE IN THIS REGARD BY THE LD. CIT(A) HAS BEEN PLACED ON HIS OWN DECISION DATED 25-9-2007. 9. THE LD. AR ASSAILING THE ACTION OF THE LD. LOWE R AUTHORITIES HAS SUBMITTED THAT IT IS NOTHING BUT A ROUTINE MATTER WHEN A GREY FABRIC (RAW MATERIAL) IS PROCESSED TO A FABRIC (PROCESSED MATERIAL) THEN AB OUT 10% OF RAW MATERIAL IS CONSUMED BY SHRINKAGE/SHORTAGE. IN THIS REGARD HE HAS ALSO SUBMITTED THAT EVEN IN THE ASSESSMENT YEAR 2003-04 RELEVANT TO FINANCIA L YEAR 2002-03 AS WELL AS ASSESSMENT YEAR 2002-03 RELEVANT TO FINANCIAL YEAR 2001-02 THE DEPARTMENT HAS ALLOWED SHRINKAGE TO THE TUNE OF 9.28% AND 9.45% RE SPECTIVELY. AS PER THE LD. AR NECESSARY RECORD IS THERE IN PAGES 66-67 OF THE PAPER BOOK. HE HAS SUBMITTED THAT WHILE REJECTING THIS CLAIM THE DEPA RTMENT ITSELF HAS VIOLATED THE NORM OF CONSISTENCY. THEREFORE THE LD. AR PRAYED T HAT THE INSTANT GROUND BE ACCEPTED AND THE SHORTAGE/SHRINKAGE OF THE FABRIC M AY BE ACCEPTED @ 8.82% INSTEAD OF 3.82% ALLOWED BY THE LOWER AUTHORITIES. REPLYING TO THE ARGUMENTS THE LD. DR HAS OPPOSED THE CONTENTIONS OF THE LD. AR. SUBMITTED THAT THE LOWER AUTHORITIES HAVE A CCEPTED THE REASONABLE SHORTAGE/SHRINKAGE OF THE PROCESSED FABRIC TO THE T UNE OF 3.82%. THAT TOO IN ITA NO.7216/M/07 SHREE ENTERPRISES 9 THE ABSENCE OF ANY DOCUMENTARY EVIDENCE LOTWISE DE TAILS ETC. HENCE PRAYED FOR REJECTION OF THIS GROUND. 10. AFTER HEARING BOTH THE LD. REPRESENTATIVES AND PERUSING THE PAPER BOOK OF THE CASE WE ARE OF THE OPINION THAT THE CLAIM OF S HORTAGE/SHRINKAGE RAISED BY THE ASSESSEE IS LIABLE TO BE ACCEPTED. PARTICULARLY IN VIEW OF THE FACT THAT THE DEPARTMENT ITSELF HAS BEEN ACCEPTING THE SAME AS IS CLEAR FROM A PERUSAL OF PAGES 66-67 OF THE PAPER BOOK (DETAILS OF THIS CLAI M ENTERTAINED BY THE DEPARTMENT IN EARLIER YEARS). THE LD. AR HAS ALSO P LACED ON RECORD COPY OF THE ASSESSMENT ORDER DATED 22-3-2006 PERTAINING TO THE ASSESSMENT YEAR 2003-04. SUBMITTED THAT THE AO HAS ACCEPTED THE SHORTAGE OF 9.28%. TO THIS EXTENT WE ARE IN CONFORMITY WITH THE ARGUMENTS OF LD. AR. WE SEE NO REASON TO DISALLOW THE SHORTAGE/SHRINKAGE OF THE FABRIC IN QUESTION WHEN I T IS ACCEPTED FOR THE ASSESSMENT YEAR 2003-04 @ 9.28% ; BUT IN THE VERY NEXT YEAR IT IS DISALLOWED WHEN CLAIMED @ 8.82%. THE ASSESSMENT ORDER OF THE Y EAR 2003-04 DOES NOT GIVE ANY REASON TO ACCEPT THE SAID CLAIM IF READ WI TH PAGE 6 OF THE PAPER BOOK BEFORE US. BUT WHEN THE DEPARTMENT HAS ITSELF ACCEP TED THE SAME IN TOTO THEN WE ARE ALSO INCLINED TO FOLLOW THE RULE OF CONSISTE NCY IN THE ABSENCE OF ANY CHANGE IN CIRCUMSTANCES POINTED OUT BY THE DEPARTME NT. ACCORDINGLY WE ACCEPT THIS GROUND. TO THE EXTENT THAT NOW THE ASSESSEE- APPELLANT WOULD BE ENTITLED FOR SHRINKAGE/SHORTAGE CLAIMED @ 8.82% FOR THE ASSESSMENT YEAR IN HAND. GROUND NO.3: 11. THIS GROUND RAISED BY THE ASSESSEE PERTAINS TO THE ISSUE OF SEC.80HHC READ WITH SEC.28(IIIB)& 28(IIID). THE FACTS GIVING RISE TO THE INSTANT GROUND ARE THAT UNDISPUTEDLY THE ASSESSEE FIRM IS AN EXPORTER . ON ACCOUNT OF DEPB I.E. DUTY ENTITLEMENT PASS BOOK LICENCE INCENTIVE A PREMIUM OF RS.46 14 091/- WAS CREDITED IN THE PROFIT & LOSS ACCOUNT AS AN INCENTI VE. THEREFORE THE ASSESSEE CLAIMED DEDUCTION U/S.80HHC OF THE ACT. HOWEVER TH E AO HELD THAT THE ASSESSEE HAS ONLY MADE PROVISION IN THE ACCOUNTS IN THE ABSE NCE OF ANY REALIZATION. FURTHER RELIED ON LICENCE PREMIUM STOCK RECEIVABLE SHOWN AS RS.30 18 053/-. IN THE OPINION OF THE AO SINCE THE SAID AMOUNT HAD NO T BEEN RECEIVED AND THE ITA NO.7216/M/07 SHREE ENTERPRISES 10 APPROPRIATE AUTHORITY HAD NOT GRANTED DEPB CREDITS IN THE PASS BOOK THEREFORE THE SAID AMOUNT WAS NOT CONSIDERED FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S.80HHC. IN APPEAL PREFERRED BY THE ASSESSEE LD. CIT(A) H AS HELD THAT THE AMOUNT RECEIVABLE ON DEPB COULD NOT BE TERMED AS PROFIT ON TRANSFER OF DEPB RECEIPTS. THEREFORE NOT COVERED BY SEC. 28(III) OF THE ACT. IN SUPPORT OF THIS GROUND RAISED BEFORE US THE LD . AR HAS DRAWN OUR ATTENTION TO THE LATEST DECISION OF HONBLE SUPREME COURT IN TOPMAN EXPORTS VS. CIT (2012) 18 TAXMAN 120. RELEVANT EXTRACTS OF THE SAME AS CITED BY THE LEARNED AR AS UNDER :- 12. IT WILL BE CLEAR FROM THE AFORESAID PROVISIO N OF SECTION 28 THAT UNDER CLAUSE (IIIB) CASH ASSISTANCE (BY WHATEVER NAME CALLED) RECEIVED OR RECEIVABLE BY ANY PERSON AGAINST EXPORTS UNDER ANY SCHEME OF THE GOVERNMENT OF INDIA IS BY ITSELF INCOME CHARGEABLE TO INCOME TAX UNDER THE HEAD PROFITS AND GAINS OF BUS INESS OR PROFESSION. DEPB IS A KIND OF ASSISTANCE GIVEN BY THE GOVERNMENT OF INDIA TO AN EXPORTER TO PAY CUSTOMS D UTY ON ITS IMPORTS AND IT IS RECEIVABLE ONCE EXPORTS AR E MADE AND AN APPLICATION IS MADE BY THE EXPORTER FOR DEPB . WE HAVE THEREFORE NO DOUBT THAT DEPB IS CASH ASSIST ANCE RECEIVABLE BY A PERSON AGAINST EXPORTS UNDER THE SC HEME OF THE GOVERNMENT OF INDIA AND FALLS UNDER CLAUSE ( IIIB) OF SECTION 28 AND IS CHARGEABLE TO INCOME TAX UNDER TH E HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION EVEN BEFORE IT IS TRANSFERRED BY THE ASSESSEE. IN THE LIGHT OF THE ABOVE DECISION OF HONBLE SUPR EME COURT IT HAS BEEN PRAYED THAT THE INSTANT GROUND BE ACCEPTED. ON THE OTHER HAND THE LD. DR APPEARING FOR THE DE PARTMENT HAS SUBMITTED THAT THE LD. LOWER AUTHORITIES HAVE PASSED ORDERS S TRICTLY IN ACCORDANCE WITH LAW. THEREFORE THE SAME MAY BE UPHELD. ALTHOUGH TOOK AN ALTERNATIVE PLEA THAT IF IT IS DECIDED THAT THE CASE IS COVERED BY THE AFORESAID J UDGMENT OF HONBLE SUPREME COURT THE CASE MAY BE RESTORED TO THE ASSESSING OF FICER. 12. WE HAVE HEARD BOTH THE LEARNED REPRESENTATIVES QUA THIS GROUND VERY THOROUGHLY. IN OUR OPINION NO DOUBT HON'BLE SUPR EME COURT HAS SETTLED THE LAW IN THE CASE OF TOPMAN EXPORTS (SUPRA). BUT SO FAR A S FACTS IN HAND ARE CONCERNED ITA NO.7216/M/07 SHREE ENTERPRISES 11 COMPLETE RECORD OF THE ASSESSEE REGARDING ITS CLAIM U/S. 80HHC IS NOT FORTHCOMING. IN THESE CIRCUMSTANCES WE DEEM IT APP ROPRIATE THAT THE INSTANT GROUND BE REMITTED BACK TO THE ASSESSING OFFICER TO DECIDE IT AFRESH AFTER GIVING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE IN SUPPORT OF ITS CLAIM U/S. 80HHC AS TO WHETHER INCENTIVE IN HAND HAS BEEN RECE IVED OR RECEIVABLE ETC. IN THE LIGHT OF TOPMAN EXPORTS CASE LAW (SUPRA) ACCORDINGLY THE GROUND IN HAND IS REMITTED BACK TO THE ASSESSING OFFICER. 13. AS PER OUR FINDINGS HEREINABOVE GROUND NOS. 1 AND 9 OF THE INSTANT APPEAL ARE HEREBY REJECTED GROUND NO. 2 STANDS ACCEPTED A ND GROUND NO. 3 STANDS REMITTED TO THE ASSESSING OFFICER. 14. IN THE RESULT THE PRESENT APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED ON THE 29TH DAY OF MARCH 20 12. SD/- SD/- (P.M. JAGTAP) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL ME MBER MUMBAI: 29TH MARCH 2012. NG: COPY TO : 1. ASSESSEE. 2. DEPARTMENT. 3 CIT(A)-XIV MUMBAI. 4 CIT-14 MUMBAI. 5.DR J BENCH MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER ASST. REGISTRAR ITAT MUMBAI. ITA NO.7216/M/07 SHREE ENTERPRISES 12 DETAILS DATE INITIALS DESIGNATIO N 1. DRAFT DICTATED ON 02-03-2012 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 06 15 16 21-03- 2012 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/ AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER