9911796707
TMI Blog2018 (3) TMI 1650X X X X Extracts X X X X X X X X Extracts X X X X ..... "6. The first ground of appeal is against addition of Rs. 5,28,94,800/- u/s 69 of the IT Act holding on the basis of stock statement submitted by the appellant to the bank- that the assessee has suppressed the stock. 6.1 The appellant has submitted the following on the issue: "a) It is pertinent to note that the appellant was utilizing bank facilities by way of cash credit limit as well as term loan and accordingly it was required to submit stock statement on a monthly basis as per the requirement of the bank to its bankers. The appellant is engaged in manufacturing CI &. SGI Castings and accordingly it is required to purchase dies, moulds, chillers, etc. on a regular basis because of the fact that the said dies, moulds and chillers are having a shorter life, and therefore it had to constantly upgrade it/maintain it or purchase it. However, considering the fact that the classification of dies, moulds and chillers is to be taken as fixed assets and accordingly the company used to reflect the said dies, moulds, chillers, etc. as fixed assets which is Very well supported' by enclosed balance sheet and enclosures as at 31.03.2009 as enclosure-1 As these moulds, dies and ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stead of finished goods cost. Therefore, he had neither debited any expenditure nor increased the value of the material given for job work basis and to that extent there was a difference in the stock amount reflected in the balance sheet vis-a-vis the stock amount reflected in the bank statement. This being the factual difference and only because of nonavailability of adequate details with the Ld. AO, the above amount has been added while finalizing the assessment proceedings for the Assessment Year 2009-10. However, from the records enclosed herewith, it is evidently clear that no amount is required to be added and the entire addition made by the Ld. AO requires to be deleted." In response to the specific questions raised and details asked as discussed earlier in Para 5 of this order, the appellant filed the following further submissions: "Stock as per the bank statement and stock as per the balance sheet: Details of fixed assets and complete break-up of plant and machinery as at 31.03.2009 is enclosed as enclosure-1 (Page No. 1 to-8). It is pertinent to mention that dies and moulds are part of the fixed assets as at 31.03.2009. The amount reflected in the stock statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said difference is required to be deleted." 6.2 The AO has submitted the following in his report: "AO's comments: The plea of taken by the assessee is factually not correct. Though the value of raw material as per balance Sheet is equal to the stock statement furnished to the Bank, there exists a variation of valuation of WIP as submitted to the bank and as appearing in the Balance Sheet. The valuation of WIP as per Balance Sheet is shown at Rs. 18,95,53,803/- where as valuation submitted to Bank is shown at Rs. 24,24,48,603/-. Further, the contention of the assessee that the inventory submitted to the Bank also included the dies, moulds etc. which has been shown under the head fixed asset is not found to be acceptable. As per the statement placed before the Bank the rate of Chillers, Dies, Bottom Box etc. have been shown at Rs. 50 per piece, only which again is not believable, since, mould, dies used in such industry are quite costly. Further, such items can be considered to be spares and stores and not part of plant & machinery of the assessee. Further, in the absence of any detailed description of plant & machinery as reported in audit report it is also not verifiab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tities and rates have been given with reference to kilograms. The cost to the appellant averages around Rs. 50/- kg only. * On the explanation on value of stock sent for fob work; the appellant has submitted that the AO has not accepted the argument of the assessee only by stating that the assessee made an in vain effort to establish the correctness of the stock. However, the Ld. AO has not made any efforts to verify that the assessee had neither debited the expenditure of the job work charges to its profit and loss account and accordingly the WIP stock should have been valued at WIP price instead of finished goods price. 6.4 I have carefully considered the facts, the stock statement given to bank, the audited balance sheet, the explanations and submissions of the appellant and the remand report. As far as the issue of inclusion of dies, chillers, moulds, etc., in the work-in-progress in the stock statement given to the bank is concerned; the following pertinent observations are made: i) that dies, chillers, moulds, etc., valued at Rs. 4,82,94,800/- have been included in the WIP given to the bank. This is borne out from the very statement and its annexure, on the basis of whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the bank is also supported by the evidences of goods sent which were lying with these parties as on 31/3/2009, submitted by the assessee in the form of challans evidencing the goods sent and details of bills raised by them subsequently. All the evidences were also forwarded to the AO. No discrepancy has been found in the claim made by the appellant. The mistake claimed is not only a plausible explanation but is also supported by the evidences submitted by the assessee. The explanation is therefore accepted in this respect also." 4. We have heard learned CIT.D.R. vehemently reiterating Revenue's grievance in seeking to revive the impugned addition. We make it clear that the Revenue itself is fair enough in filing a paper book comprising of 49 pages including various notices as well as stock statement and three remand reports dated 01.02.2013, 07.03.2013 and 14.03.2013; respectively. Learned Departmental Representative failed to rebut the CIT(A)'s clinching findings extracted hereinabove that assessee had included the relevant items of Rs. 4,82,94,800/- given to the bank, they had already been shown in its books of accounts, the complete list of plant and machinery report alongwit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduced only a copy of receipt of Return of income filed by Indra enterprise. However the issue may kindly be decided on merits keeping in view the decision of Hon'ble Supreme court in the case of Lovely Exports." 7.2 I have gone through the facts of the case, the accounts of share application money and share allotment, other evidences and the report of the AO. The following pertinent observations are made on the issue: i) The only new share application -money, i.e. Rs. 79 lac during the has been received from Shri Vipulkumar Mahendrabhai Shah, Prop. Mahavir Enterprise. The total share application money in his name, including opening balance became Rs. 1,50,00,000/-. He has been allotted shares of the same sum. -The return of Shri Vipulkumar Mahendrabhai Shah, Prop, Mahavir Enterprise has been filed to prove the creditworthiness. There is total Rs. 1,90,80,000/- shown as share application money in his assets as per his accounts. He has certified that the amount advanced to the appellant is lying in share application money as shares were not received by him. Clearly, identity and the creditworthiness of the person who has-applied for shares and is claimed to have deposited a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correctly verifiable from the copy of account furnished by the assessee. Further, confirmation, copy of R/l in respect of Bleach Chem has also not been furnished. Under the circumstances, the assessee's plea that the loan stands explained is not acceptable. In respect of unexplained loan from m/s Jagdish j. Patel, no paper/documents has been furnished by the assessee to establish the genuineness's of the deposit. In view of the above, the contention of the assessee seems unacceptable and not sustainable in respect of loans obtained from these two persons." 8.3 I have gone through the facts of the case and the remand report. As far as the credit in the name of Sangita Shah is concerned, she is regularly filing return whose copy also has been submitted and is a director of-the appellant company. The AO in his remand report has also commented that the explanation in her regard seems acceptable. In these circumstances, the addition of Rs. 1,00,000/- based on credit in her name is directed to be deleted. As far as the addition of Rs. 5 lac for increase in credit in case of Bleachchem is concerned, confirmation with PAN has been filed. The copy of account shows that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer's action disallowing/adding amount of Rs. 60,62,940/- on account of interest payment as deleted the lower appellate proceedings with the following detailed discussions: "10. The next ground of Appeal is against disallowance of interest expenditure, holding that the loans taken for which interest has been paid, has been diverted to advances for non-business purposes. 10.1 The appellant has submitted the following on the issue: "Interest expenses: The AO has disallowed interest of Rs. 60,62,908/- considering that loans and advances of Rs. 5,05,24,213/- were given interest free and accordingly notional interest @ 12% p.a. amounting to Rs. 60,62,908/- was disallowed. In this connection, the appellant would like to submit the following: 1. Broad break-up of loans and advance and the nature of advances is given at Annexure-1. From the said breakup it is clearly seen that an amount of Rs. 22.34 lacs was given as CENVAT/Excise duty receivables which is nothing but deposit amount required to be kept with the Excise Department for clearance of goods which is indispensable for business purposes. 2. VAT/GST amount of Rs. 90.45 lacs is again lying with the governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receivable, advances for purchases, advances to employees etc. There- is no justification now remaining for holding that the interest was not for business purposes (except for disallowance required as per section 14A as discussed and decided earlier). The disallowance made is therefore directed to be deleted." 8. It has come on record that the amounts in question pertains to various Government tax/CENVAT/excise duty receivables, purchases advance, employees' advance etc. remaining unrebutted from the Revenue side. Learned CIT.D.R. is unable to pinpoint any specific item therein which could be held to be diversion of interest bearing funds for non business purposes. The CIT(A) has already given credit to Section 14A disallowance. We thus have no reason to interfere with the lower appellate authority's abovestated conclusion under challenge. The Revenue fails in its instant third substantive ground as well. 9. This leaves us with the last issue of commission expenditure disallowance of Rs. 14,96,951/- as deleted in the lower appellate proceedings reading as follows: "11. The sixth ground of appeal is against disallowance of commission . The appellant filed various evidences with ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
