2013 (12) TMI 655 - AT - Income Tax

Calculation of value of stock Addition on account of labour charges - Held that - When both expense and income elements are included in the manufacturing account the balance in manufacturing account cannot be further reduced The valuation of closing stock comes to Rs.8,33,413 Decided against Revenue. Addition on account of Bogus & Inflated Transportation Charges Held that - the assessee submitted a copy of ledger account of Shri A.N.Banerjee in the books of M/s. Mahesh Road Carriers showing the balance as on 30.11.2005 and as on 31.3.2006 in respect of transport charges received from the assessee A copy of the ledger account of M/s. Mahesh Road Carriers in the books of the assessee along with the copy of the bills were also filed before the CIT(A) which shows the transport charges to the extent of Rs.20,88,053 If Revenue is of the opinion that expenses are bogus then the onus is on Revnue to prove the fact Decided against Revenue. Addition on account of Bogus/Ingenuine Sundry Creditors Out of Rs.12,80,618/- only a sum of Rs.3,20,709/- was receivable by M/s. Mahesh Road Carriers from the assessee - Held that - M/s Mahesh Road Carriers directly received sum of Rs. 9,52,553/- from the client of assessee in Nepal The assessee has not accounted such payment in his books Decided against Revenue.

Summary

Issues:
1. Valuation of Stock
2. Deletion of Transportation Charges
3. Deletion of Sundry Creditors Addition

Valuation of Stock:
The appeal was filed by the Revenue challenging the valuation of stock by the Ld. CIT(A) for the assessment year 2006-2007. The AO calculated the closing stock value at Rs.14,78,334/-, while the assessee showed it as Rs.8,16,648/-. The CIT(A) reduced the valuation to Rs.8,33,413/- after considering various arguments and evidence. The Tribunal found no fault with the CIT(A)'s decision, as the Revenue failed to provide any evidence to dispute the valuation. Therefore, the Tribunal confirmed the CIT(A)'s order and dismissed the Revenue's appeal on this ground.

Deletion of Transportation Charges:
The Revenue disputed the deletion of transportation charges amounting to Rs.17,92,764/-. The AO disallowed this amount based on discrepancies in transport charges claimed by the assessee. However, the CIT(A) found no discrepancies after examining the ledger accounts and bills provided by the assessee. The Tribunal noted that the Revenue failed to present any evidence to challenge the CIT(A)'s findings. Consequently, the Tribunal upheld the CIT(A)'s decision and dismissed the Revenue's appeal regarding the transportation charges.

Deletion of Sundry Creditors Addition:
The AO added Rs.9,59,909/- on account of sundry creditors based on discrepancies in amounts payable and receivable from M/s. Mahesh Road Carriers. The CIT(A, after reviewing the submissions and evidence, deleted this addition as the assessee's contentions were found to be correct. The Tribunal observed that the Revenue could not prove any inaccuracies in the CIT(A)'s findings. Therefore, the Tribunal confirmed the CIT(A)'s decision to delete the addition of Rs.9,59,909/-. As a result, the appeal filed by the Revenue was dismissed in its entirety.