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2013 (11) TMI 517
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....ding that the same was not disallowed by the ld. AO and therefore the Appellant cannot have any grievance against the assessment order. 3. The ld. CIT(A) ought to have appreciated the facts that the ld. AO has dealt with the issue with regard to claim of the Appellant to allow depreciation at Rs.86,01,248/-as given in the Tax Audit Report as against Rs.78,39,042/- shown in the Return of Income, however, the ld. AO has not allowed the differential amount of Rs.7,62,206/- as deduction while computing assessable income, and therefore, the Appellant can have grievances against such action of the ld. AO. 4. The action of ld. CIT(A) in not adjudicating the ground on merits in as much as law is patently bad, untenable and illegal in the eyes of law. 5. Both the lower authorities have failed to allow / grant legitimate deduction with regard to differential depreciation of Rs.7,62,206/-, which ought to have been allowed to the Appellant. 6. The ld. CIT(A) has erred in law and on the facts of the case in confirming the action of ld. AO in making huge addition of Rs. 10,39,75,306/-u/s 69B of the Act. 7. The ld. CI....
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....ked out expenditure amounting to Rs.1,93,150/-on reverse working mechanism i.e (Rs.3,863/2%) and disallowed the same u/s 40(a)(ia) of the Act for non-deposition of tax deducted at source. 3. The CIT(A) also sustained the disallowance made by the assessing officer after holding the assessee could not furnish the details of account in which excess provisions of TDS payable amounting to Rs.3,863/- was made. 4. Now the assessee is before us against the said action of the assessing officer. The ld. Counsel submitted that both the lower authorities have failed to appreciate that the Assessee had made excessive provisions by Rs.3,863/- on account of TDS payable on contractors payment, and it was not a case that the Assessee has failed to deduct tax at source or deducted tax at source but not deposited with the Government Treasury account, inasmuch as it was also not the case of AO that on certain expenditure, tax had not been deducted and / or paid. Ld. Counsel further drew our attention to pg. nos.17 to 21 @ 18 of P/B, para 6 and pg. nos.140 to 147 of P/Bregarding details of entire amount of expenditure of various expenditure including contract payment and deduction of tax at sourc....
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....rm No.3CD. During the course of the assessment proceedings, upon realization when the assessee claimed the differential depreciation, the assessing officer did not allow differential depreciation amounting to Rs.7,62,206/- after holding that the said fresh claim was not claimed in the revised return of income, and therefore, in view of Goetze India Ltd. 157 Taxman 1 (SC), it cannot be allowed. 8. The CIT(A) has not adjudicated this issue on the ground that since AO has not made addition of Rs.7,62,206/-, the assessee cannot be said to be aggrieved against the order of AO, and therefore, the same is not maintainable as per provisions of S.246A of the Act. 9. The ld. Counsel argued that the Assessee had already made a claim of depreciation in the return of income and it was only a matter of quantification of amount of depreciation, and therefore, it was not a fresh / new claim before AO. It was further argued that even if it is treated as a fresh / new claim, then also, the Supreme Court decision in the case of Goetze (supra) bars only AO to entertain any fresh / new claim without filing revised return of income.However the Appellate Authorities are not barred to allow the same....
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....1st March, 2009. The CIT(A) has further held that the Assessee could not prove any linkage of purchase of 2654 M.T. of steel vide bills dated 31/03/2009 with the inventory of stocks as on 31/03/2009 furnished to the Canara bank, and accordingly, CIT(A) has rejected the contention of the assessee that stock of 2645 M.T. for which bills were raised by SAIL on 31/03/2009 were included in the stock statement furnished to the Canara Bank. 14(i). The Ld. Counsel at the first place argued before us that the entire issue is covered by the Gujarat High Court decisions in the case of CIT vs. Meico Bonds Pvt. Ltd. bearing Tax Appeal No.2041 of 2010 (pg.nos.1-4 of P/B) and CIT vs. Arrow Exim Pvt. Ltd. 230 CTR 293 (Guj). The Ld. Counsel has further relied upon CIT vs. Veerdip Rollers (P) Ltd. - 323 ITR 341 (Guj.); CIT vs. Khan & Sirohi Rolling Mills - 200 CTR 595 (All.) and CIT vs. N. Swamy - 241 ITR 363 (Mad.). After placing reliance on these decisions, it was submitted that the Hon'ble Courts, after making following observations, has held that merely relying on statement given to a bank, addition cannot be made in the hands of the assessee and onus is on revenue to prove that the assessee ....
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...., placed on record a statement containing these three ratios from A.Y. 2006-07 to A.Y. 2012-13 to substantiate his argument. 14(vi). The Ld. Counsel further, drawing attention to the letter furnished on 05/12/2011 to the AO enclosed on pg. nos.17 to 22 of P/B, argued that the Assessee had submitted quantitative details (month wise) in respect of Raw Materials, Finished Goods and Semi-finished goods to prove that entire stock register was maintained and the stock recorded in the books of account was correct, which has not been controverted by the AO. 14(vii). Insofar as the contention of CIT(A) that the bank manager has inspected the assessee's godown on 25/04/2009 and verified the stock declared to the Bank, the Ld. Counsel has argued that the said inspection report was for the "Godown" and not for the physical verification of "stock" and even inspection of stock on 25/04/2009 can never be taken as physical verification of stock as at 31/03/2009. No one would be in a position to take physical verification of stock on 25/04/2009 for the stock lying on 31/03/2009. At page no. 217 of the paper book, the total value of goods shown 17.09 crore. Thereafter, margin @ 30% at Rs. 5.12....
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.... addition on the basis of inconsistency of earlier year not on merit e.g. the assessee inflates the stock for getting higher margin of credit. 16(i) We have at length heard both the sides. We agree with the arguments of the Ld. Counsel of the Assessee that the case of the Assessee is covered by the Gujarat High Court decisions in the case of Arrow Exim Pvt. Ltd.(supra) and Meico Bonds Pvt. Ltd.(supra). It is seen that Hon'ble the Gujarat High Court in the case of Arrow Exim Pvt. Ltd. (supra) has confirmed the order of ITAT and CIT(A) in deleting addition made u/s 69B of the Act under identical circumstances of the case after making observations that (a) the stock statement showing inflated quantity and value of stock was furnished to the banking authorities to avail more credit facilities; (b) the stocks were hypothecated and not pledged and (c) the books of accounts are not found to be defective or non-genuine by the AO. (d) The assessee explained the difference either on account of inflated valuation of stock or excess quantity shown to bank. We further find that Hon'ble the Gujarat High Court in the case of Meico Bonds Pvt. Ltd. (supra) has also confirmed the order of ITAT in....
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....p; (f) The books of accounts maintained by the assessee are accepted by the Central Excise and / or Sales Tax Department. Applying these tests to the facts of the present case, the following conclusions emerge: Applying test (a), we find that the stock details have been inflated purely on estimate basis in the statement furnished to bank to avail larger credit facilities.This aspect is duly supported by the fact that the Assessee had already borrowed an amount of Rs.11.03 Crores from Canara Bank as at 31/03/2009, and therefore, by making upward adjustment of 30% thereon for margin required to be maintained as per the loan agreement entered with the Bank, the value of stock was estimated and inflated to Rs.17.09 Croresso as to justify the amount already drawn from the Bank. Applying test (b), we further find that in the present case, stock is only hypothecated with the bank and not pledged. Unlike pledge, under hypothecation, the stock is not kept in lock and key of the bank. Therefore the submission of the assessee that the figure of closing stock was estimated and inflated with a view to meet the margin requirements of the bank can be accepted. Applying test (c), we al....
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....ts, stock registers, excise records, has accepted the books of accounts and other record maintained by the assessee to be true, correct and except few discrepancies in so far as inventory is concerned. We find that the period of audit covers 31st March, 2009. If the assessee has in fact purchased and stored such unaccounted stock allegedly shown to the bank, it is impossible not to leave a single trail more so when the assessee is a manufacturer and not a trader. It is not possible to acquire unaccounted stock, carry out manufacturing activities, consume energy, remove the finished stock and sale away the same in the market. We therefore find considerable force in the submission of the counsel for the assessee that the books of accounts are found to be genuine and recorded appropriately and no such kind of discrepancies were found to be noted in the Excise Audit Report which could remotely suggest that the Assessee has invested in unexplained stock which is not recorded in books of accounts. 16(iv). If the discrepancies of stock at 3119.037 & 441.647 MT valued Rs.10.39 crore accepted as suppressed stock than same is to be included in closing stock of A.Y. 09-10 & opening stock o....
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.... Percentage 0.69% 1.17% 1.23% 1.28% Stock-intrade 34717925 36842936 51938382 68641931 Turnover 304229927 395692659 506977341 610575238 Percentage 11.41% 9.31% 10.24% 11.24% Parameters After including addition of Rs.10.40 crs. AY 2009-10 AY 2010-11 AY 2011-12 AY 2012-13 Gross Profit 151301876 61967833 91443364 137825226 Turnover 610575238 890096455 1196543944 1475315486 Percentage 24.78% 6.96% 7.64% 9.34% Net Profit 111772611 13737397 17686422 17025992 Turnover 610575238 890096455 1196543944 1475315486 Percentage 18.31% 1.54% 1.48% 1.15% Stock-intrade 172616967 112963244 128033129 174150936 Turnover 610575238 890096455 1196543944 1475315486 Percentage 28.27% 12.69% 10.70% 11.80% 16(vii) Going through the financial ratios furnished by Ld. Counsel from A.Ys.2006-07 to 2012-13 it is seen that the Gross Profit ra....