THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL), SURAT vs. M/S RATNAVEER STAINLESS PRODUCTS PVT. LTD.

This appeal under Section-260A of the Income Tax Act, 1961 [for short ‘The Act, 1961’] is at the instance of the revenue and is directed against the order passed by the Income Tax Appellate Tribunal, ‘D’ Bench, Ahmedabad, dated 11.03.2020 in the ITA No.1690/AHD/2015 for the A.Y.2008-09. 2. The Revenue has proposed the following questions of law for consideration of this Court. (1) Whether on the facts and in the circumstances of the case and in law, the Hon’ble Appellate Tribunal is justified in affirming the decision of CIT(A) deleting addition made on account of scrap sales without appreciating the fact that the assessee had failed to furnish necessary supporting evidences as called for by the Assessing Officer with respect to the manufacturing/production process to justify its claim? C/TAXAP/195/2022 ORDER DATED: 04/04/2022 (2) Whether on the facts and in the circumstances of the case and in law, the Hon’ble ITAT is justified in upholding decision of the ld. CIT(A) without appreciating the fact that the decision of the same was contrary to the facts on records? (3) Whether on the facts and in the circumstances of the case and in law, the order of the Hon’ble ITAT is perverse as the same was contrary to the facts of the case on record?

We have heard Mr. M.R. Bhatt, the learned senior counsel appearing for the revenue.

The findings of fact recorded by the Appellate Tribunal in its impugned order reads thus:- “8. With the assistance of the learned representatives, we have gone through the record carefully. Originally, the stand of the Assessing Officer was that for the month of February and March 2008 the assessee has not shown sale of scrap in the same ratio as was shown/ generated in the earlier months. The Assessing Officer has harboured a belief that since in the manufacturing activity of the assessee where scrap generation is a consequential effect, either its sales ought to be shown or it should be available in the closing stock. Hence, he assumed that the assessee must have sold the scrap out of books. He estimated the value of such scrap and made addition. Before the learned CIT(A) the assessee has demonstrated that it has established a melting unit at Waghodia which was taken on lease. The scrap was melted and converted into sheets. These sheets were used for manufacturing SS Washers. On an analysis of the material submitted by the assessee, learned CIT(A) has accepted the case of the assessee aria deleted the addition. The order of the learned CIT(A) was set aside by the Tribunal simply for the reason that these materials were not confronted with the Assessing Officer; hence, an opportunity was given to the Assessing Officer to comment on these materials and to record the findings. In this background, we have perused the assessment order dated 05.02.2014. A perusal of the assessment order would indicate that it is C/TAXAP/195/2022 ORDER DATED: 04/04/2022 running into 80 pages. In the first three pages, the Assessing Officer has narrated a brief history about how the addition was made, how the matter travelled upto the Tribunal in ITA No.3008/Ahd/2011 and how it came back to her. Thereafter, learned Assessing Officer has reproduced the material submitted by the assessee as Annexure-A, bills and vouchers, challans, lease deeds, accounting entries etc. To our mind, this is not the way to examine the details and pass an assessment order. From page Nos.5 to 78, the learned Assessing Officer has just reproduced the copies of the books of accounts of the assessee in the shape of challans, bills and vouchers, lease deed etc. There is no analysis and no investigation. Simply placing these documents as a part of the assessment order, the Assessing Officer again made the additions. When this assessment order went before the learned CIT(A) for re-appreciation, then learned First Appellate Authority has made an analysis of the details and observed that the Assessing Officer has not applied her mind while passing the assessment order. At the cost of repetition, we would like to again take note of the findings of the learned CIT(A) recorded in Paragraph No.4.4.3 which read as under: 4.4.3 An examination of these documents reveals that the AO had used such harsh language without bothering to examine the documents submitted by the appellant before her, the observation made by the CIT(A) in the Appellate order passed in relation to the original assessment proceedings and without examining different columns of annexure ‘A’, which she was bound to do as per the directions given by the ITAT. In fact, in the assessment order nothing has been stated as to what figures are managed in annexure ‘A’ and what is the basis of holding that this is nothing but figurative adjustment. The nature of annexure ‘A’ has been discussed in detail in the appellate order passed in relation to the original assessment order and has already been reproduced above.

Thereafter, learned First Appellate Authority has examined the stand of the assessee demonstrating how the scrap was taken from Manjusar Unit i.e. present unit to Waghodia Unit and how finished sheets were received back by the assessee. The learned CIT(A) also appreciated and highlighted as to how the learned Assessing Officer failed to C/TAXAP/195/2022 ORDER DATED: 04/04/2022 appreciate the excise challan submitted by the assessee. After considering the well reasoned findings of the learned CIT(A), we do not find any merit in this appeal. It is dismissed.”

Having regard to the aforesaid findings, none of the questions of law as proposed could be termed as substantial questions law.

In view of the aforesaid, this appeal fails and is hereby dismissed. (J. B. PARDIWALA, J) (NISHA M. THAKORE,J) A. B. VAGHELA