TaxTMI 
TaxTMI 
2016 (5) TMI 524
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....tained by the appellant, which even stands physically verified by the management at the year end. Hence, the impugned addition of Rs. 15,56,197/- needs to be deleted as being absolutely erroneous. 2. The appellant craves leave to add, amend, alter, substitute, modify in any or all the above grounds of appeal, if necessary, on the basis of submissions to be made at the time of personal hearing. 2. Briefly stated facts as culled out from the assessment records that assessee is a private limited company engaged in the business of dyeing and printing of cloth on job work basis. It filed its e-return of income on 23.09.2009 declaring total income at Rs. 3,33,69,066/- which was revised on 28.11.2009 showing total income at Rs. 3,34,76,405/-. The case was selected for scrutiny assessment and notice 143(2) of the Act was issued on 24.8.2010 and duly served upon the assessee. During the course of assessment proceedings ld. Assessing Officer observed that assessee company has shown total turnover of Rs. 68.99 crores and GP at 13.99 crores and GP rate increased to 20.28% as against GP rate of 19.13% in the immediately preceding year. Ld. Assessing Officer observed that assessee ha....
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.... is consistently following accounting principles relating to valuation of work in progress, as per Accounting Standard -1 of disclosure of accounting policy and physical inventory was also taken and closing work in progress was calculated as per software developed for determining the same and so working in progress cannot be brushed aside by way of estimating work in progress. Ld. AR also referred and relied on the decision of co-ordinate bench in the case of Krishna Art Silk Cloth P. Ltd. vs. DCIT, Cir-1, Surat in ITA No.1264/Ahd/2010 for Asst. Year 2007-08 dated 16.7.2010 and in the case of Bhagwati Syntex (P) Ltd. vs. ITO in ITA No.3249/Ahd/2009 for Asst. Year 2006-07 dated 27.5.2011. 6. On the other hand, ld. DR supported the orders of lower authorities. 7. We have heard rival contentions and perused the material on record. The assessee is in appeal against the order of ld. CIT(A) sustaining addition of Rs. 15,56,197/- made by Assessing Officer alleging under valuation of closing stock of working in progress without appreciating that the said addition has been made by the Assessing Officer purely on estimate basis even when party-wise work in progress has been given as pe....
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....edings u/s 271(1)(c ) of the I.T. Act are being initiated for furnishing inaccurate particulars and concealment of income. On the other hand, assessee apart from submitting quantitative and financial data during the course of assessment proceedings has also furnished synopsis showing details of job work done during the financial year 2008-09 as below :- Image No. 1 8. Looking to the above observation of the Assessing Officer and the synopsis of the data of the assessee we find that ld. Assessing Officer has resorted to a completely new methodology of estimating the manufacturing process of the assessee company on his own formula and process cycle and estimating closing work in progress at Rs. 46,13,851/-. We are unable to understand that in the given circumstances where the assessee company is having huge turnover of Rs. 68.99 crores with improved GP and all quantitative details were furnished then how the Assessing Officer can resort to his own estimation without pointing out any single defect in the records, regularly maintained by the assessee. It is well known fact that a certain type of business cannot be run on the same bench mark formula or process cycle and there o....
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....engaged in any manufacturing activities of its own. The cloth processed by the appellant thus belong to its customers is processed by the appellant and. after processing the same in accordance with the customers requirement, it is returned. In the above facts of the case the question of showing any work in progress in the books of account of the appellant in respect of the cloth belonging to its customers did not arise as such cloth was required to be shown in the closing stock of the concerned customers. On the basis of the completion of work on the customers cloth, the appellant is entitled to receive its work charges. No interim payments or advances payments are received by the appellant from its customers during the pendency of the job work. The receipts from the job work are being accounted for by the appellant on completed contract method as per AS-9. The closing stock of materials used for processing of cloth, i.e. colour, chemicals etc. have been duly accounted for by the appellant in accordance with AS-9 In regard to the value addition made by the appellant on the customer's cloth, which may have been at different intermediate stages of processing as on 31.3.2003, neit....
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.... the changed method adopted by the Assessing Officer were applied for valuation of the opening as well as the closing stock. 14 For reasons discussed above m details, m my opinion there was no basis or justification in making the any estimated addition on account of work-in progress is this case. The addition of Rs. 12.56.970/- made by the AO in respect of estimated work in progress is therefore deleted. This ground of appeal is allowed " Thus deletion was confirmed by the Tribunal. Therefore in, the present case also following the decision of the Tribunal confirm the order of the CIT(A), the addition on account of estimated value of work-in-progress is required to be deleted." 4. Ld Sr. DR on the other hand submitted that if assesses has spent money which has been debited in the profit & loss account and to the extent the assessee does not get receipt from the principle, work-in-progress should be estimated. 5. After considering the rival submissions of the parties, we are of the view that issue is now covered in favour of the assessee by the decision of Tribunal in the case of Pratik Processors Pvt. Ltd. (supra) pronounced on 15.01.2010. Respec....