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TMI Blog2015 (7) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... ore CIT (A) and noted by him on page 11 of his order. He also drawn our attention to page 24 of the paper book and pointed out that as per letter dated 07.10.2002 of District Authorities appearing on this page, the stock confiscated was sold for Rs. 2.03 Lacs and it was adjusted against demand of KESCO of Rs. 71,21,300/-. He also drawn our attention to pages 7 and 8 of the assessment order and submitted that the A.O. has also noted these facts. The bench made a query about panchnama for the seizure by KESCO to find out the quantity of stock seized but the same could not be furnished. Learned DR of the revenue supported the orders of the authorities below. 4. We have considered the rival submissions. We find that as per the A.O., there was opening stock of raw materials as per item no. 28A of the Tax Audit Report of Rail (Form 31) 344.374 MT and Cast Iron (Form 31) 488.435 MT total 832.809 MT. He has also reproduced the note given by the auditors which reads as under:- " As explained to us, this stock has been seized by KESCO there are no record for that purpose available so unable to make comment thereon." Hence, it is seen that even the auditors were not satisfied about this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of profit on sale outside books of excess stock shown in the stock statement submitted to the bank by the assessee as on 31.03.2002 and no such excess stock shown in the stock statement submitted to the bank by the assessee as on 30.04.2002. 8. Learned DR of the revenue supported the assessment order and learned AR of the assessee supported the order of CIT (A). He also placed reliance on the judgment of Hon'ble Jurisdictional High Court rendered in the case of CIT vs. Khan & Sirohi Steel Rolling Mills, 152 Taxman 224 (All.). 9. We have considered the rival submissions. We find that the present issue is covered in favour of the assessee by the judgment of Hon'ble Jurisdictional High Court rendered in the case of CIT vs. Khan & Sirohi Steel Rolling Mills (Supra). Learned CIT (A) has decided this issue by following this judgment and learned DR could not point out any difference in facts. Hence, we decline to interfere in the order of learned CIT (A) on this issue. These grounds are rejected. 10. Ground No. 4 to 5 are also inter connected as per which, the revenue is aggrieved for deletion of the addition of Rs. 24,39,059/- made by the A.O. on account of alleged unexplained inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aluminium Co. Ltd., 187 Taxman 111 and CIT vs. Panacea Bitech Pvt. Ltd., 324 ITR 311. 16. First we examine the applicability of these judgments. The first judgment is the judgment of Hon'ble Allahabad High Court in the case of CIT vs. Swaroop Vegetable Products India Ltd. (Supra). In this case, there was a categorical finding of the tribunal that the unit was kept ready for use and despite all efforts to restore, it remained under suspension. In the present case, the assessee has started trading business and although we are in the year 2015, the learned AR of the assessee could not show that the manufacturing activity has restarted. Nothing is brought on record to establish this also that the plant & machinery were kept ready for use. Mere submission that it were kept ready for use is not sufficient. Because of these differences in facts, this judgment is not applicable. 17. The second judgment is the tribunal decision rendered in the case of Ashok Pan Products (P) Ltd. vs. ACIT (Supra). In this case, there was a categorical finding of the tribunal that the machine was kept ready for use and only this machine was not used although the plant was working. Hence, it is seen that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deletion of the addition of Rs. 20,22,852/- made by the A.O. u/s 43B on account of penal interest charged by the bank and interest payable to bank. 22. Learned DR of the revenue supported the assessment order. Learned AR of the assessee supported the order of CIT (A). 23. We have considered the rival submissions. We find that disallowance of Rs. 19,16,159/- was made by the A.O. on account of interest payable on cash credit account and of Rs. 106,693/- on account of penal interest charged by the bank. Learned CIT (A) has given a categorical finding that in the relevant year, section 43B did not cover interest on cash credit account. He has also given a finding that the penal interest was for contravention of contractual obligation between borrower and lender and not for infraction of any law. Learned DR of the revenue could not controvert any of these findings of CIT (A). Hence, we find no reason to interfere in the order of CIT (A) on this issue. This ground is rejected. 24. In the result, this appeal of the revenue is partly allowed. 25. Now, we take up the revenue's appeal for A.Y. 2005 - 06 in ITA No. 720/LKW/2013. 26. The grounds raised by the revenue are as under:- "1. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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