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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH
Before: SHRI PRADIP KUMAR KEDIA & SHRI MAHAVIR PRASAD
PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. This appeal filed by the Assessee is directed against the order of the Ld. CIT(A)-II, Baroda dated 24.09.2014 pertaining to A.Y. 2010-11 and following grounds have been taken:
ITA No. 3178/Ahd/2014 2 . A.Y. 2010-11 1. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of Income-tax (Appeals) has erred in confirming the disallowance of loss made by assessing officer of Rs. 14,10,000/-. 2. It is prayed that above disallowance made by Assessing Officer and confirmed by Commissioner of Income-tax (Appeals) may please be deleted. 3. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.
The facts of the case are that the assessee is engaged in the business of transportation and man power supply in name of Padam Enterprise. The Return of income was filed on 25.09.2010 declaring total income of Rs.85,220/-. The assessment u/s. 143(3) was finalized on 21.03.2013 determining total income of Rs.37,45,220/- after making addition/disallowance of Rs. 14,10,000/- on account of loss disallowed and Rs. 22,50,000/- on account of unexplained cash credit totaling to Rs. 36,60,000/-.
Against the said addition, assessee preferred first statutory appeal before the ld. CIT(A) who partly allowed the appeal of the assessee.
Now assessee has come before us.
We have gone through the relevant record and impugned order. In this case, assessee is engaged in the business of transportation and man power supply and her husband used to look after business on her behalf but unfortunately he died on 14.09.2009. During the course of assessment proceedings, that appellant has purchased 6000 MT of raw salt at the rate of Rs. 610 per ton on 09.04.2009 from only one party namely Suresh Management Pvt. Ltd. from Jamnagar. And appellant had paid total amount of Rs. 36,60,000/- vide cheque
ITA No. 3178/Ahd/2014 3 . A.Y. 2010-11 no. 2240046 dated 07.10.2009. In response to notice issued u/s. 133(6), the seller vide its reply dated 07.10.2009 confirmed the said transaction. Further, on perusal of the profit and loss account of M/s. Kandla Logistics, it was observed that appellant had shown cash sales of 22,50,000/- in his cash book on 04.10.2009. and it was further gathered that the appellant had sold the said salt to 7 parties located at different places in the course of 3 days from 4 to 6th September, 2009 at the same rate of Rs. 375 per ton. Thereafter, appellant was asked as to why the loss of Rs. 14,10,000/- resulting from trading of raw salt should not be disallowed in absence of details such as stock register, name and address of godown where the salt was stored, the name and address of the parties to whom sale is made and also the mode of delivery accompanied with supporting documents.
In reply, appellant stated that as per the practice in vogue the stock of salt is kept at the plot of the manufacturer only by earmarking separate stake. The salt being hygroscopic material by nature, absorbs the humidity from the atmosphere and a solid strata on upper layer of the heap is formed which in turn protects the salt from damage during monsoon. Since the salt is stored in an open space as per the prevailing practice of trade, there is no need of hiring a godown. This practice is also adopted to save the double handling and transportation cost of his law cost commodity. However, the ld. A.O. was not agree with the contention of the appellant and disallowed the loss of Rs. 14,10,000/-.
After seeing the nature of commodity plea of the assessee seems to be satisfactory because salt is formed from the backwater of the sea. Over and above, husband of the appellant is also passed away who used to look after
ITA No. 3178/Ahd/2014 4 . A.Y. 2010-11 business affair on her behalf. After seeing the nature of business, it is quite convincing that appellant has suffered a genuine loss. Therefore, we are inclined to allow the appeal of the assessee.
In the result, appeal filed by the Assessee is allowed.
Order pronounced in Open Court on 30- 04- 2019
Sd/- Sd/- (PRADIP KUMAR KEDIA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad: Dated 30/04/2019 Rajesh Copy of the Order forwarded to:- 1. The Appellant. 2. The Respondent. 3. The CIT (Appeals) – 4. The CIT concerned. 5. The DR., ITAT, Ahmedabad. 6. Guard File. By ORDER
Deputy/Asstt.Registrar ITAT,Ahmedabad