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2016 (2) TMI 123
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....inished goods i.e cement to the tune of Rs. 33,895 as on 31.3.2008 in its balance sheet. The Learned AO during the course of assessment proceedings found that the assessee had renewed its insurance policies for stocks and plant and machinery having sum assured to the tune of Rs. 1,50,00,000/- and Rs. 2,64,00,000/- respectively. The Learned AO felt that the stock declared to the insurance company on 28.3.2008 represents stock of cement alone and compared the sum assured value of Rs. 1,50,00,000/- with stock of cement declared in the balance sheet and proceeded to make an addition of Rs. 1,49,66,105/- ( 1,50,00,000 - 33,895). It was explained that the insurance policy was taken by the bank directly to protect the working capital facilities given by the bank to the assessee. The Learned AO stated that the bank people generally evaluate the stock of a customer before sending any proposal to the insurance company for taking insurance of the stocks and other assets. The Learned AO inferred that the assessee has falsified its statements submitted to the bank and held that the value of stock shown in the insurance policy of Rs. 1,50,00,000/- has been submitted by the assessee to the bank a....
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....uring includes both raw materials and finished goods. We are not in a position to accept to the argument of the Learned DR that this letter dated 24.12.2010 represents additional evidence and in such a case, the revenue should have raised a specific ground for violation of Rule 46A of the IT Rules. The Learned CIT(A) also found that if the Learned AO had doubts regarding the assessee's statements submitted to the bank , then nothing prevented him from making direct enquiries and finding out what are the details of finished goods as on 28.3.2008. The Learned CIT(A) further found that the Learned AO had written a letter to the bank which was not replied to before the passing of the order. In that event, enquiries could have been conducted through an Inspector or summons to the bank manager could have been issued. The Learned CIT(A) reproduced relevant phrases of the Assessment Order from page 11 wherein the Learned AO has mentioned 'Information collected u/s 133(6) from bank shows debtor on 31.3.2008 for Rs. 4,28,18,000/-'. It, therefore, appears that information had been collected by the Learned AO from the bank. From the copy of the stock statements and debtors statements submitted....
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.... the AO on the assessment records. 3.2. The Learned DR vehemently supported the order of the Learned AO. In response to this, the Learned AR relied on the order of the Learned CIT(A). 3.3. We have heard the rival submissions and we find that the assessee had merely paid penal interest for not fulfilling a stipulated condition in the loan agreement which is only compensatory in nature. The banks in such a case are entitled to charge extra rate of interest which would be reimbursed to the borrower (assessee) as and when the stipulated conditions are fulfilled. We hold that the assessee had not committed any offence prohibited by any law and hence does not come under the ambit of Explanation to section 37 of the Act. Accordingly, we find no infirmity in the order of the Learned CIT(A) in this regard and hence the ground no. 2 raised by the revenue is dismissed. 4. The next issue to be decided in this appeal is as to whether the subsidy received from Government of West Bengal amounting to Rs. 27,76,460/- towards incentive on Building and Pollution Control Devices could be treated as revenue receipt in the facts and circumstances of the case. 4.1. The brief facts of this issue is t....
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....ndia, Muri Branch, P.O. Muri, Jharkhand directing the bank to credit the subsidy of Rs. 27,76,460/- to the account of M/s Pronto Commercial Pvt Ltd , whose account is maintained with the same bank branch. This itself goes to prove that the subsidy was received only as an incentive on Building and Pollution Control Devices supplied by M/s Pronto Commercial Pvt Ltd and it was not meant for working capital purposes or for running the cement manufacturing unit. This subsidy of Rs . 27,76,460/- has gone to reduce the capital cost of the assessee which is in line with Explanation 10 to section 43(1) of the Act which states that "where as portion of the cost of an asset acquired by the assessee has been met directly or indirectly by the Central Government or a State Government or any authority established under any law or by any other person, in the form of a subsidy or grant or reimbursement (by whatever name called) , then, so much of the cost as is relatable to such subsidy or grant or reimbursement shall not be included in the actual cost of the asset to the assessee." We find that the Learned CIT(A) had rightly appreciated the facts and the documents available on record and had rig....
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....onciliation and rectification entries passed pursuant to statutory audit. Accordingly the difference of Rs. 1,71,508/- arose. He further argued that there is no provision in the Act to bring to tax the difference of Rs. 1,71,508/- and prayed for deletion of the same. 5.3. We have heard the rival submissions. We find that the stock statements and debtors balances were submitted to the bank based on unaudited figures in order to review the situation of availability of drawing power in cash credit facility availed from the bank by the assessee. We agree to the fact that the debtors balances are bound to undergo changes pursuant to the statutory audit conducted and the list of balances of debtors are not disputed by the revenue. If there is any doubt, the Learned AO could have obtained direct information from the concerned debtors u/s 133(6) or any other means provided in the Act. We hold that there is no scope for making this addition of Rs. 1,71,508/- in the facts of the case and hence we find no infirmity in the order of the Learned CITA in this regard. Accordingly, the ground no. 4 raised by the revenue is dismissed. 6. The next ground to be decided in this appeal is as to whethe....
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....alance sheets and their bank statements were filed before the Learned AO and it is incorrect on the part of the Learned AO to state that bank statements have not been filed by assessee. He argued that the net worth of M/s Rashman Finvest Pvt Ltd and M/s Vairavi Electricals Pvt. Ltd for the year ending 31.3.2008 is much more than amounts advanced by them as share application money in assessee company and hence creditworthiness of the share applicants is proved beyond doubt. He accordingly prayed that the three ingredients namely identity of creditor, genuineness of transaction and creditworthiness of creditors are proved beyond doubt and hence there is no need to treat the share application money as unexplained. 6.3. We have heard the rival submissions and perused the materials available on record. We find from the paper book of the assessee that the entire details of the share applicants comprising of their addresses, their balance sheets and the relevant page of their bank statements are available on records. We find from the said bank statements of share applicants, the immediate source of credit appears to be some cheque realizations and not cash deposits. We also find from the....
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....or manufacture of cement) were made from the said supplier M/s Shakti Trading Company by the assessee and payments thereon are made by account payee cheques to the supplier. He argued that the entire ledger account of the supplier was furnished together with the name and address of the supplier before the Learned AO. He argued that the Learned AO had not recorded any adverse finding with regard to the account payee cheque payment made to the concerned supplier that it is not meant for this supplier payment. In other words, he argued that the payment to supplier has been accepted as genuine by the Learned AO. He further argued that the proprietor of the said concern had expired and pursuant to his death, the concern is closed and that is the reason why the notice u/s 133(6) of the Act could not be served by the Learned AO. In these circumstances, he prayed for confirmation of the order of the Learned CIT(A). 7.3. We have heard the rival submissions and perused the materials available on record. We find from the paper book that the entire ledger account of the supplier was provided before the Learned AO. We find that M/s Shakti Trading Company (supplier) is registered under sales ta....