THE ACIT, 2(1), v. M/S SUDARSHAN INDUSTRIES PRO.,

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C. SHARMA ACCOUNTANT MEMBER ITA NO.756/IND/2005 A.Y. 2001-02 ACIT CIRCLE-2(1) UJJAIN APPELLANT VS M/S. SUDARSHAN INDUSTRIES PROP. SHRIRAM PATIDAR MAULANA TEH. BARNAGAR PAN ACHPP 2548 P RESPONDENT AND CO NO.158/IND/2005 (ARISING OUT OF ITA NO.756/IND/2005) A.Y. 2001-02 M/S. SUDARSHAN INDUSTRIES PROP. SHRIRAM PATIDAR MAULANA TEH. BARNAGAR PAN ACHPP 2548 P APPELLANT VS ACIT CIRCLE-2(1) UJJAIN RESPONDENT DEPARTMENT BY : SH. PRADEEP KUMAR MITRA SR. DR ASSESSEE BY : SH. P.N. DIXIT ADVOCATE 2 O R D E R PER JOGINDER SINGH JUDICIAL MEMBER THE APPEAL BY THE REVENUE AND THE CROSS-OBJECTION B Y THE ASSESSEE ARE AGAINST THE ORDER OF THE LEARNED CIT(A )-UJJAIN DATED 22.7.2005. THE REVENUE HAS RAISED THE FOLLOWING GRO UNDS: 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN DELETING THE ADDITION OF RS.1 04 000/- MADE ON ACCOUNT OF EXCESS STOCK OF THRESHER JALI. 2. THE LD. CIT(A) FURTHER ERRED IN ALLOWING RELIEF OF RS.6 77 354/- BEING THE ADDITION MADE ON ACCOUNT OF THE AGGREGATE VALUE OF DEBTORS OF THE HUF. 3. THE LD. CIT(A) FURTHER ERRED IN ALLOWING DEPRECIATION CLAIM OF RS.70 000/- ON JEEP. 4. THE LD. CIT(A) FURTHER ERRED IN ALLOWING EXPENDITURE OF RS.87 194/- ON ACCOUNT OF INTEREST LIABILITY ON LOAN TAKEN FOR TRUCK AND JEEP. 5. THE LD. CIT(A) FURTHER ERRED IN ALLOWING RS.69 190/- ON ACCOUNT OF BAD DEBTS WRITTEN OFF. 2. DURING HEARING OF THIS APPEAL WE HAVE HEARD SHR I PRADEEP KUMAR MITRA LD. SR. DR AND SHRI P.N. DIXIT LD. CO UNSEL FOR THE ASSESSEE. THE CRUX OF THE ARGUMENTS BY LD. SR. DR ON GROUND N O.2 TO 5 IS IN SUPPORT TO THE ASSESSMENT ORDER WHEREAS FOR GROUND NO.1 OUR ATTENTION WAS INVITED TO THE FINDING CONTAINED IN ASSESSMENT ORDER AT PAGE 2 PARA 3 2. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSES SEE DEFENDED THE IMPUGNED ORDER AND DID NOT PRESS THE CROSS-OBJECTIO N. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON RE CORD. AS FAR AS THE CROSS-OBJECTION NO.158/IND/2005 IS CONCERNED AS THE SAME WAS NOT PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE THEREF ORE IT IS DISMISSED AS NOT PRESSED. FOR GROUND NUMBER 1 IN THE APPEAL OF THE REVENUE THE ADDITION OF RS.1 04 000/- MADE ON ACCOUNT OF EXCESS STOCK OF TH RESHER JALI HAS BEEN CHALLENGED. THE BRIEF FACTS ARE THAT THE ASSES SEE IS MAINLY ENGAGED IN THE BUSINESS OF MANUFACTURING OF AGRICUL TURAL EQUIPMENTS I.E. THRESHER ETC. AND SALE THEREOF BESIDES INCOME FROM PLYING TRUCK. A SURVEY WAS CARRIED OUT ON 13.9.2000 AT THE BUSINESS PREMISES OF THE ASSESSEE WHEREIN ON THE BASIS OF PHYSICAL INVENTORY OF STOCK CERTAIN DISCREPANCIES WERE NOTICED AGAINST WHICH THE ASSESS EE DISCLOSED ADDITIONAL INCOME OF RS.19 LACS BESIDES AN AMOUNT O F RS.14 LACS DECLARED ON THE BASIS OF DETAILS NOTED IN THE LOOSE PAPERS (ANNEXURE A6). THE ASSESSEE FILED ITS RETURN OF INCOME ALONG WITH AUDITED FINAL ACCOUNTS DECLARING INCOME AT RS.9 54 490/-. DURING ASSESSMENT PROCEEDINGS THE ASSESSEE FILED A CHART WITH A REQU EST TO REDUCE THE STOCK VALUATION BY RS.1 92 240/-. HOWEVER THE ADDI TION OF RS.1 08 800/- WAS MADE BY THE ASSESSING OFFICER WITHOUT CONSIDERI NG THE EXPLANATION 4 OF THE ASSESSEE THAT THE VALUATION OF THE THRESHER JALI TO THE TUNE OF RS.1 08 800/- HAS BEEN TAKEN IN THE STOCK VALUATION CHART PREPARED BY THE SURVEY PARTY. ADMITTEDLY THRESHER JALI IS AN I NTEGRAL PART OF THE THRESHER ITSELF AND NO SEPARATE CHARGE IS TAKEN FRO M THE CUSTOMERS ON THE SALE OF THE THRESHER. THE COSTS OF JALIES ARE I NCLUDED IN THE COST OF THE THRESHER TO FACILITATE THE FARMERS WHILE THRESH ING DIFFERENT CROPS. ADMITTEDLY ONE JALI REMAINS FITTED WITH THE THRESH ER AT THE TIME OF THE SALE AND REST ARE GIVEN TO THE CUSTOMERS WITHOUT PA YMENT OF EXTRA MONEY THEREFORE 272 JALIES ARE PART OF 68 THRESHE RS LEAVING 71 IN BALANCE VALUE OF WHICH WAS SURRENDERED BY THE ASSE SSEE AT RS.28 400/- MEANING THEREBY THE MARKET PRICE OF 272 JALIES WAS VALUED @ RS. 400 PER JALI WHICH RESULTED INTO DOUBLE ADDITION OF RS. 1 08 800/-. IN VIEW OF THESE FACTS WE HAVE NOT NOTICED ANY INFIRMITY IN T HE IMPUGNED ORDER THEREFORE THERE IS NO MERIT IN THE GROUND OF THE R EVENUE CONSEQUENTLY DISMISSED. 4. AS FAR AS GROUND NOS. 2 TO 5 ALLOWING RELIEF OF RS. 6 77 354/- ON ACCOUNT OF AGGREGATE VALUE OF DEBTORS OF HUF AL LOWING DEPRECIATION CLAIM OF RS. 70 000/- ON JEEP EXPENDITURE OF RS. 8 7 194/- ON ACCOUNT OF INTEREST LIABILITY ON LOANS TAKEN FOR TRUCK AND JEE P AND ALLOWING RS.69 190/- ON ACCOUNT OF BAD DEBTS WRITTEN OFF. T HE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ASSESSMEN T ORDER WHEREAS THE LD. COUNSEL FOR THE ASSESSEE DEFENDED THE IMPUG NED ORDER. 5 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. BRIEF FACTS ARE THAT THE SURVEY U/S 133A O F THE ACT WAS CARRIED OUT ON 13 TH SEPTEMBER 2000 AT THE MIDDLE OF THE PREVIOUS YEAR 2000-01 AND EXCESS STOCK WORTH RS. 19 LACS WAS RECORDED AS ALLEGEDLY FOUND. UNACCOUNTED DEBTORS OF RS. 14 LACS WERE ALLEGEDLY N OTICED CONSEQUENTLY THE TOTAL AMOUNT OF RS. 33 LACS WAS S URRENDERED AS UNDISCLOSED INCOME. STILL NOT SATISFIED WITH THE S URRENDER OF THIS AMOUNT THE ADDITIONS OF RS.6 77 354/- RS. 70 000/- RS. 8 7 194/- AND RS.69 190/- (AS DISCUSSED SUPRA) WERE MADE WHICH W ERE DELETED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND AR E UNDER CHALLENGE BEFORE THIS TRIBUNAL BY THE REVENUE. I 6. IT IS SEEN THAT IN THE IMPUGNED ORDER THE LEARNE D COMMISSIONER OF INCOME TAX (APPEALS) HAS MENTIONED THE SUBMISSIONS OF THE ASSESSEE REPORT OF THE ASSESSING OFFICER DA TED 1.3.2005 AND THE EVIDENCE FILED BY THE ASSESSEE IN THE FORM OF AFFID AVITS ETC. REGARDING THE ADDITION OF NON-ACCEPTANCE OF AGRICULTURISTS C REDITS OF HUF OF RS.6 77 354/-. THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) EXAMINED THE FACTS ALONG WITH THE REMAND REPORT OF THE LEARNED ASSESSING OFFICER WHEREIN IT WAS CONTENDED BY THE LEARNED ASSESSING OFFICER THAT THE AFFIDAVITS SHOULD NOT BE ADMITTED. THE ORIGINAL STATEMENT RECORDED DURING SURVEY WAS ALSO EXAMINED BY THE LEA RNED 6 COMMISSIONER OF INCOME TAX (APPEALS) AND AFTER SURV EY FOR THE ASSESSMENT YEAR 2000-01 THE RETURN OF HUF DECLARING AGRICULTURAL INCOME BESIDES INTEREST INCOME FILED ON 31.7.2001 W AS ACCEPTED BY THE DEPARTMENT. IN VIEW OF THESE UNCONTROVERTED FACTS IT WAS CONCLUDED IN THE IMPUGNED ORDER THAT THE BONAFIDES OF THE APPELL ANT WERE ESTABLISHED FROM THE FACTS AND THE ADDITIONAL INCOME WAS SURREN DERED DURING SURVEY THEREFORE THE ASSESSEE CANNOT BE DENIED THE BENE FIT WHICH IS DUE TO HIM MERELY FOR WANT OF CONFIRMATION. SINCE THE CON FIRMATION WAS FILED BY THE ASSESSEE IN THE FORM OF AFFIDAVITS THEREFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) RIGHTLY DELETE D THE ADDITION. 7. AS FAR AS ALLOWING THE DEPRECIATION CLAIM OF RS .70 000/- ON JEEP IS CONCERNED THE CONCLUSION OF THE LEARNED AS SESSING OFFICER WAS THAT THERE WAS INCREASE OF CLAIM OF DEPRECIATION I N COMPARISON TO LAST YEAR. THE DECIDING FACTOR FOR CLAIMING DEPRECIATI ON ON ANY ASSET IS WHETHER SUCH ASSET WAS IN EXISTENCE AND PUT TO USE FOR THE PURPOSES OF BUSINESS OR NOT. ONCE IT IS ESTABLISHED THAT THE J EEP WAS USED FOR BUSINESS PURPOSES WHICH WAS PURCHASED ON 1.4.2000 I.E. PRIOR TO CONDUCT OF SURVEY THUS THE LD. FIRST APPELLATE AUT HORITY RIGHTLY DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 8. FOR THE DISALLOWANCE OF INTEREST OF RS.87 194/- WE ARE OF THE VIEW THAT WHEN THE LEARNED ASSESSING OFFICER HAS AC CEPTED THE PURCHASE OF BOTH THE VEHICLES WHICH WERE USED FOR BUSINESS PURPOSES 7 THEREFORE THERE IS NO QUESTION OF MAKING THE DISAL LOWANCE OUT OF THE EXPENDITURE CONSEQUENTLY IT WAS RIGHTLY DELETED B Y THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 9. AS FAR AS ALLOWING WRITTEN OFF OF RS.69 190/- AS BAD DEBT WE ARE OF THE VIEW THAT IF THE LEARNED ASSESSING OFFIC ER WAS NOT SURE ABOUT THE IMPUGNED AMOUNT NOTHING PREVENTED HIM TO MAKE THE NECESSARY INQUIRY WHICH WAS NOT DONE BY HIM. ONCE AN AMOUNT IS TREATED AS BAD DEBT AND IS WRITTEN OFF THE SAME HAS TO BE ALLOWED AS DEDUCTION CONSEQUENTLY THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) IS VERY MUCH RIGHT IN COMING TO A PARTICULAR CONCLUSIO N. FINALLY THE APPEAL OF THE REVENUE IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED AS NOT PRESS ED ORDER PRONOUNCED IN OPEN COURT ON 2.2.2011. (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 .2.2011 COPY TO: APPELLANT RESPONDENT CIT CIT(A) DR G UARD FILE !VYAS!