Ita/302/2013 Of Shakuntla Thukral v. Commissioner Of Income Tax

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No.302 of 2013Date of decision: February 06, 2014 Smt.Shakuntla Thukral Vs, .....- Appel Commissioner of Income Tax, Aayakar Bhawan, Rishi Nagar,Ludhiana, Punjab.| ....mesponden CORAM: HON’?BLE MR. JUSTICEK AJAY KUMAR MITTHON BLE MS. JUSTICE ANITA CHAUDHRY Present:Mr. Rajiv Sharma, Advocate forMr. S.K.Mukhi, Advocate for the appellant. Ajay Kumar Mittal,J, 1.This appeal has been preferred by the assessee under Section|260A of the Income Tax Act, 1961 (in short, “‘the Act’) against the ordedated 15.3.2013, Annexure A.3, passed by the Income Tax AppellateTribunal, Bench '‘'B' Chandigarh (in short, “the Tribunal”) in ITANo.380/CHD/2010, claiming following substantial questions of law:- “'1) Whether the ITAT 1s justified in confirming the additioof|TL28,/3,640/- on account of difference of closing stock inthe books and as per statement given to the Bankers therebeing plausible explanation and by completely ignoring theaccounting principles that closing stock of one year 1s opening stock of following year and there being no taxeffect, any addition on this count is futile in view ofjudgment of Hon'ble Punjab and Haryana High Court in thecase of.CIT vy. Fazilka Cooperative Sugar Mills Limited255 ITR 411 (P&H)? 11) Whether the ITAT is justified in confirming the additionof|-5,20,889/- on account of alleged unaccountedfabrication work which was duly accounted for insubsequent month/year on account of normal acceptedaccounting principles and business practice which 1s againstthe well settled law” 111) Whether the order of ITAT confirming the order ofauthorities below deserves to be set aside being devoid ofmerits, against well settled law and in view of perversity infact finding? ? A few facts relevant for the decision of the controversy, involved, as narrated in the appeal, may be noticed. The assessee is aresident of Ludhiana. She is engaged in the business of manufacture,purchase and sale of cloth and fabrication. She filed return of incomedeclaring income atan2,80,161/- for the assessment year 2005-06 on31.10.2005. The return was selected for scrutiny. Upon notice, the assesseeappeared and submitted the relevant documents. The Assessing Officerraised objections regarding closing stock, unaccounted fabrication work and depreciation claimed by the assessee as under:- 1) Difference of stockL28, /3,640/11) Unaccounted fabricationL5,20,889/-work111) Depreciation on machinery41,45,214/- On 4.7.2007, the assessee submitted complete details of stocks supported by ? A few facts relevant for the decision of the controversy, involved, as narrated in the appeal, may be noticed. The assessee is aresident of Ludhiana. She is engaged in the business of manufacture,purchase and sale of cloth and fabrication. She filed return of incomedeclaring income atan2,80,161/- for the assessment year 2005-06 on31.10.2005. The return was selected for scrutiny. Upon notice, the assesseeappeared and submitted the relevant documents. The Assessing Officerraised objections regarding closing stock, unaccounted fabrication work and depreciation claimed by the assessee as under:- 1) Difference of stockL28, /3,640/11) Unaccounted fabricationL5,20,889/-work111) Depreciation on machinery41,45,214/- On 4.7.2007, the assessee submitted complete details of stocks supported by ITA No.302 of 2013.4relevant documents. It was further explained by the assessee that she hadapplied for machinery term loan from the bank for importing computerized“Flat knitting bed knitting machine” from Taiwan. The said loan could notbe sanctioned by the bank due to technical reasons and the machinery forwhich order was placed on 30.1.2005 reached India on 18.2.2005. Theappellant explained to the Bank officials that in case the loan was notdisbursed, she shall be lable for demurrage charges as per norms of portauthorities. The Bank officials however agreed to release the payment fromcash credit limit account if the same was provided at inflated amount. Tomeet the need of the time, the inflated stock statement was given taking intoconsideration the stock lying at the factory premises of the assessee as wellas of the fabricators and the assessee also increased the hypothecatedquantity to get the payment of the machinery purchased. During theassessment proceedings, the assessee filed reply dated 29.11.2007explaining the objections raised by the Assessing Officer. After examiningthe documents on record, the Assessing Officer passed assessment orderdated 27.12.2007, Annexure A.1 under Section 143(3) of the Act and madeadditions. Aggrieved by the order, the assessee filed appeal before theCommissioner of Income Tax (Appeals) |[CIT(A)]. Vide order dated24.2.2010, Annexure A.2, the CIT(A) partly allowed the appeal whileupholding the additions made by the Assessing Officer. Still not satisfied,the assessee filed appeal before the Tribunal. Vide order dated 15.3.2013,Annexure A.3, the Tribunal partly allowed the appeal while upholding thefindings recorded by the CIT(A) on first two issues whereas the issuepertaining to depreciation was remanded to the Assessing Officer as the ITA No.302 of 2013. assessee made prayer for placing on record certain bills regarding purchaseof machinery by way of additional evidence. Hence the present appeal bythe assessee. 3]We have heard learned counsel for the appellant and perused the record. 4 The Tribunal vide order dated 15.3.2013, Annexure A.3,impugned herein while affirming the findings recorded by the AssessingOfficer and the CIT(A) held as under:- “8. The ground No.2 raised by the assessee relates toconfirming the addition of=a28,/3,640/- by CIT(A) underthe head 'Difference of stock' as shown in the books andShown in the bank statement without any base and reasonthereof. 9. We have carefully perused the rival submissions, facts ofthe case and relevant records and case laws relied upon bythe assessee. The Assessing Officer made addition of |428,/3,640/- as unexplained closing stock, on examinationand analysis of various details of closing and opening stock,for the relevant assessment year. The learned CIT(A) upheldthe findings of the Assessing Officer. the record. 4 The Tribunal vide order dated 15.3.2013, Annexure A.3,impugned herein while affirming the findings recorded by the AssessingOfficer and the CIT(A) held as under:- “8. The ground No.2 raised by the assessee relates toconfirming the addition of=a28,/3,640/- by CIT(A) underthe head 'Difference of stock' as shown in the books andShown in the bank statement without any base and reasonthereof. 9. We have carefully perused the rival submissions, facts ofthe case and relevant records and case laws relied upon bythe assessee. The Assessing Officer made addition of |428,/3,640/- as unexplained closing stock, on examinationand analysis of various details of closing and opening stock,for the relevant assessment year. The learned CIT(A) upheldthe findings of the Assessing Officer. 10. The bare perusal of the order of CIT(A) reveals that aspeaking and well reasoned order has been passed by himafter affording a reasonable and due opportunity of hearingto the appellant. Further, the submission of the appellantwas forwarded to the Assessing Officer and necessaryopportunity was afforded both to the Assessing Officer andthe appellant, in the matter. The CIT(A) has discussed theissue in detail and appreciated the ratio of various decisionscited and relied by the parties. In view of the detailed andwell reasoned order passed by the learned CIT(A), we donot find any ground to interfere with his findings and the same are upheld. 11. The appellant vide ground No.3 of the appeal raised theissue of confirmation of addition by CIT(A) of=5,20,889/-(487,385 + 30,000 + 4,03,505/-) under the head‘Unaccounted Fabrication Work' without any base andreasons thereof. 12. The Assessing Officer made addition of Lv5,20,889/-under the head ‘Unaccounted Fabrication work' onexamination and analysis of facts of the case. The learnedCIT(A) discussed the issue in a detail and upheld thefindings of the Assessing Officer, 13. The Assessing Officer made the above addition beingfabrication charge receivable by the assessee but notaccounted for in the regular books of account. TheAssessing Officer on examination of the bills issued by theassessee, for fabrication of the work done on job work basis,for different parties and correlating the same with thechallans of goods and bills issued for fabrication charges,made the addition. The Assessing Officer found that theassessee had not accounted for the fabrication charges for allthe work done by the assessee, for other parties and bypointing out certain discrepancies made, an addition of=5,20,889/-. A bare perusal of the order of CIT(A) revealsthat a speaking and well reasoned order has been passed bythe learned CIT(A), after affording a reasonable and dueopportunity of hearing to the appellant and the AssessingOfficer as the submissions of the appellant were forwardedto the Assessing Officer, and to provide opportunity in thematter. The CIT(A) after detailed discussions passed a wellreasoned order. In view of this, we do not find any ground,to interfere with his findings and hence the same are upheld.14. The ground No.4 relates to confirmation of addition of41,45,214/- by the CIT(A), on account of depreciationclaimed on machinery under TUFF. 15. In respect of this ground, the assessee has filedapplication for admission of additional evidence under Rule29 of the ITAT Rules and produced bills for the purchase ofmachinery under TUFF. The appellant has cited various caselaws. Having regard to the bills filed by the assessee whichwere not produced before the lower authorities, we deem itfit to admit the additional evidence with a view to advancethe cause of justice. As the said bills were not producedbefore the Assessing Officer and CIT(A), consequently, inthe interest of justice, we restore this issue to the file of theAssessing Officer for making necessary enquiry in thematter and fresh adjudication of the matter as per law afteraffording reasonable and due opportunity of being heard tothe appellant.” 15. In respect of this ground, the assessee has filedapplication for admission of additional evidence under Rule29 of the ITAT Rules and produced bills for the purchase ofmachinery under TUFF. The appellant has cited various caselaws. Having regard to the bills filed by the assessee whichwere not produced before the lower authorities, we deem itfit to admit the additional evidence with a view to advancethe cause of justice. As the said bills were not producedbefore the Assessing Officer and CIT(A), consequently, inthe interest of justice, we restore this issue to the file of theAssessing Officer for making necessary enquiry in thematter and fresh adjudication of the matter as per law afteraffording reasonable and due opportunity of being heard tothe appellant.” 5.The Assessing Officer and the CIT(A) had discussed thematerial on record in detail and had come to the conclusion that there wasdifference of stock amountingto |=a28,/3,6040/- as per books of account othe assessee and as shown in the inflated stock statement given to the Bank,The Tribunal affirmed the aforesaid findings. Similarly, the addition madeby the Assessing Officer of v5,20,889/- due to unaccounted fabricationwork was affirmed by CIT(A) and the Tribunal. Learned counsel for theappellant has not been able to point out any illegality or perversity in thefindings recorded by the Tribunal while affirming the findings recorded bythe Assessing Officer and the CIT(A). 6]No substantial question of law arises in this appeal,Consequently, the same is hereby dismissed. (Ajay Kumar Mittal)Judge February 06, 2014 <4 < (Anita Chaudhry)Judge