Ashok Tobacco Processing, Jalgaon vs Assessee

M/s Ashok Tobacco Processing, Dhulia Road, Amalner, Dist. Jalgaon. PAN : AAEFA0277H .... Appellant

Vs.

Income Tax Officer, Ward 2(2), Jalgaon. .... Respondent

Assessee by : Mr. Abhay Avchat Department by : Mr. Santosh Kumar Date of hearing : 04-02-2015 Date of pronouncement : 18-03-2015

ORDER

PER G. S. PANNU, AM

The captioned appeal by the assessee is directed against the order of

the Commissioner of Income Tax (Appeals)-II, Nashik dated 31.12.2012

which, in turn, has arisen from an order dated 06.12.2010 passed by the

Assessing Officer u/s 143(3) of the Income-tax Act, 1961 (in short "the Act")

pertaining to the assessment year 2008-09.

2. In this appeal, assessee has raised the following Grounds of Appeal :-

"1. The Learned Income Tax Officer, Ward 2(2), Jalgaon has erred in making aggregate additions and disallowances of Rs.4,32,186/- and the CIT(A) has erred in confirming partly the same.

2. The Learned Income Tax Officer, Ward 2(2), Jalgaon has erred in increasing the production on the basis of consumption of electricity amounting to Rs.4,32,186/- and the CIT(A) has erred in confirming partly the same.

3. The Learned Income Tax Officer, Ward 2(2), Jalgaon has erred in increasing the production on the basis of payment of wages amounting to Rs.3,10,317/- and the CIT(A) has erred in confirming partly the same.

4. Provision of section 40(a)(ia) of the Income Tax Act, 1961 are not applicable for expenses when income of the assessee having been determined by resorting to estimation also when there was no oral or written 2 ITA No.664/PN/2013

contract with the assessee and the transporter. Learned Income Tax Officer, Ward 2(2), Jalgaon has erred in making disallowance aggregating Rs.2,72,900/-, and the CIT(A) has erred in confirming the same.

5. The Learned Income Tax Officer, Ward 2(2), Jalgaon has erred in disallowing an amount of Rs.29,534/- debited on account of Chuna manufacturing account, and the CIT(A) has erred in confirming partly the same.

6. The Learned Income Tax Officer, Ward 2(2), Jalgaon has erred in disallowing an amount of Rs.2,26,979/- debited on account of Mall Expenses, and the CIT(A) has erred in confirming partly the same.

7. The Learned Income Tax Officer, Ward 2(2), Jalgaon has also erred in disallowing an amount of Rs.87,837/- debited on account of Ganghat and Karkhana Majuri, and the CIT(A) has erred in confirming the partly same.

8. An amount of Rs.26,755/- relating to machinery expenses has being disallowed by the Income Tax Officer, Ward 2(2), Jalgaon, and the CIT(A) has erred in confirming partly the same.

9. The Learned Income Tax Officer, Ward 2(2), Jalgaon has erred in disallowing Rs.22,020/- on account of machinery puneli majuri, and the CIT(A) has erred in confirming partly the same.

10. The Learned Income Tax Officer, Ward 2(2), Jalgaon has erroneously increased the creditors amounting to Rs.4,36,682/-, and the CIT(A) has erred in confirming partly the same.

11. The assessee prays that in view of the fact that proper bills are maintained by the assessee and the disallowance supporting to improper bills and vouchers be deleted, and the CIT(A) has erred in confirming partly the same.

12. The assessment made under provisions of the Income-tax Act, 1961 by the learned Assessing Officer, Jalgaon is in violation of the said provision and is bad in law, and the CIT(A) has erred in confirming the same.

13. The assessment order is not keeping with the provisions of law and need to be cancelled."

3. At the time of hearing, the Ld. Representative for the assessee

submitted that other than the Ground of Appeal No.10 relating to the

difference in creditors amounting to Rs.4,36,682/-, all other Grounds of Appeal

are not being pressed since on such issues, the assessee had agreed for the

additions before the Assessing Officer and/or CIT(A). In this manner, the rival

counsels were heard only with respect to the disallowance made by the

Assessing Officer of Rs.4,36,682/- on account of difference in the creditor's

balances. In this context, brief facts are that the assessee is a partnership firm

which is engaged in the manufacturing Chewing Tobacco and Chuna. During

the assessment proceedings, Assessing Officer noted that as per the details of 3 ITA No.664/PN/2013

creditors filed by the assessee and the information collected from the creditors

differences were noted. Such differences in the balances appearing in the

name of the parties in the assessee's books vis-à-vis the balance appearing in

the books of the creditors have been tabulated by the Assessing Officer in

para 9 of the assessment order, which total to Rs.4,36,682/-. The Assessing

Officer has noted that assessee could not reconcile the differences and

therefore the sum of Rs.4,36,682/- was added to the total income of the

assessee. Before the CIT(A), assessee was required to provide statements of

account of such creditors from assessment years 2005-06 to 2009-10 as

appearing in its books of account. The CIT(A) has noted that assessee did not

produce the details but agreed for an addition of Rs.64,320/- with respect to

the five creditors, where balances were outstanding for 4 to 5 years, as per the

details contained in para 13 of the impugned order. In para 13, the CIT(A) has

tabulated cases where balance as per the creditor was 'Nil' whereas assessee

was showing certain credit balances and such differences came to

Rs.2,27,356/-. He therefore held that addition of Rs.2,27,356/- only was

justified instead of Rs.4,36,682/- made by the Assessing Officer. As a

consequence, assessee was allowed a relief of Rs.2,09,326/- and the balance

of Rs.2,27,356/- was sustained.

4. Before us, the Ld. Representative for the assessee conceded that in so

far as the Rs.64,320/- out of the addition of Rs.2,27,356/- is concerned, the

same is not disputed as it was agreed before the CIT(A). For the balance of

the amount, the Ld. Representative submitted that the addition has been

sustained without affording the assessee an opportunity to reconcile the

difference. It was asserted that before the lower authorities also, assessee

had pointed out that the differences were reconcilable and in this context he

referred to the account statements of certain parties placed in the Paper Book.

The Ld. Representative submitted that if the matter is restored back to the file 4 ITA No.664/PN/2013

of the Assessing Officer, assessee would be able to substantiate its position

that upon reconciliation of the respective creditors the impugned differences

do not exist so as to justify an addition.

5. The Ld. Departmental Representative appearing for the Revenue has

not seriously opposed assessee's plea for the matter to be remanded back to

the file of the Assessing Officer in order to reconcile the balances with the

impugned creditors.

6. Having considered the rival stands, we find that the Assessing Officer

has made the addition on the basis of his discussion in para 9 of the

assessment order. It is noted by the Assessing Officer that the differences in

the balances standing in the name of creditors was noted on the basis of

"information collected". So however, there is no illustration as to what was the

information that was collected and it is also not emerging from record as to

whether any such information was confronted to the assessee. At the time of

hearing, the Ld. Representative for the assessee has asserted that the

differences noted by the lower authorities with respect to the balances in the

account of the creditors were reconcilable; in support, reference has been

made to the statements placed in the Paper Book. In our considered opinion,

it would meet the ends of justice, if the matter is remanded back to the file of

the Assessing Officer and the assessee be allowed an opportunity to reconcile

the differences with respect to the creditors corresponding to the addition of

Rs.1,63,036/-, i.e. (Rs.2,27,356/- minus Rs.64,320/-) sustained by the CIT(A)

other than the amount admitted by the assessee. Needless to say, the

assessee shall be allowed a reasonable opportunity to put-forth its claim

before the Assessing Officer, who shall consider the same and thereafter pass

an appropriate order on this limited aspect as per law. Thus, on Ground of

Appeal No.10, assessee partly succeeds for statistical purposes. 5 ITA No.664/PN/2013

7. In the result, the appeal of the assessee is partly allowed, as above.

Order pronounced on 18 th March, 2015.

Sd/- Sd/- (SUSHMA CHOWLA) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER

Pune, Dated: 18 th March, 2015. Sujeet

Copy of the order is forwarded to: - 1) The Assessee; 2) The Department; 3) The CIT(A)-II, Nashik; 4) The CIT-II, Nashik; 5) The DR "B" Bench, I.T.A.T., Pune; 6) Guard File. By Order //True Copy// Assistant Registrar I.T.A.T., Pune