CIT vs. VINTRON INFORMATICS LTD

IN THE HIGH COURT OF DELHI AT NEW DELHI . . . ITA 283/2012 . . . CIT ..... Appellant . Through Ms. Suruchi Aggarwal, sr. standing counsel . . . versus . . . VINTRON INFORMATICS LTD ..... Respondent . Through . . . CORAM: . HON'BLE MR. JUSTICE SANJIV KHANNA . HON'BLE MR. JUSTICE R.V.EASWAR . . . O R D E R . 27.04.2012 . . . This appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961 (?Act?, for short) impugns order dated 18.11.2011 passed by the Income Tax Appellate Tribunal (?Tribunal?, for short) in the case of Vintron Informatics Ltd. The appeal relates to assessment year 2004-05. . Ld. counsel for the appellant has relied upon the assessment order and submits that the GP rate in the present year was minus -110.14% as against GP rate of -7.43% and 4.19% for the assessment years 2003-04 and 2002-03, respectively. She further submits that the assessee had justified the fall in GP rate on the ground that they had sold stock in nature of dead stock worth `28,353,361/- for just `2,235,320/- resulting in a loss of `25,11,118,041/-. The assessee was asked to furnish copy of the bills/vouchers of the said stock. These were not been submitted and accordingly, the Assessing Officer was justified in making the additions. . The findings given by the CIT(Appeals) and Tribunal is that the Assessing Officer had asked for the aforesaid vouchers/purchase bills vide notice fixing the hearing on 18.11.2006, which was a Saturday. Since it was a holiday, the assessee had appeared on Monday i.e. 20.11.2006 but no hearing was held. The Assessing Officer did not issue . a fresh notice fixing the hearing and had passed the assessment order on 4.12.2006. The CIT(Appeals) and the Tribunal have observed that the same Assessing Officer had passed assessment orders for the assessment years 2002-03 and 2007-08. Further, in the said years the stock purchased as well as old dead stock was verified. Similarly, for the assessment year 2003-04, the dead stock was verified. We may note that the assessee is engaged in the business of manufacture and sale of computers and computer parts. These become obsolete fast and have a short shelf life. Keeping in view the factual matrix of the case, the appellate authorities have deleted the said addition as the Assessing Officer had not conducted any enquiries on the transactions under which the dead stock was sold. The details of the dead stock was made available to the Assessing Officer. The assessee was able to justify and show that the dead stock which was sold in the year in question, had been carried forward from earlier years. . The findings recorded by the Tribunal read as under:- . ?6. We have heard both the parties and gone through the material available on record. There is no dispute about the fact that opening stock as on 1/04/2003 was at `23,012,10,096/- which included dead stock of `9,16,37,307/-. The assessee sold dead stock worth `2,83,53,361/- for `32,35,320/-. The AO has not disputed the sale of dead stock. Therefore, out of the loss of `4,18,82,251/- this is loss suffered on account of sale of dead stock. The AO while rejecting the claim of loss suffered by the assessee had not found any defect in the valuation of closing stock. He has not brought any material on record to prove that the los incurred by the assessee was not justified. In AY 2003-04 the AO completed assessment under section 143(3) accepting loss of `10,16,99,250/-. Therefore, the dead stock included in the closing stock which became part of the opening stock for the year under consideration was accepted by the AO as correct. As regards the contention of the AO that the assessee had not appeared on 18/11/2006, we find that the assessee while giving reply to penalty proceedings initiated under section 271(1)(c) vide his letter dated 23rd January, 2007 has clarified the issue by pointing out that 18th November, 2006 was a holiday [Saturday]. We also find that the assessee had suffered loss year after year and had filed petition before BIFR, which has also been disposed of by them. The assessee had also filed copy of sale bills enclosing the list of items sold, which resulted in loss. From these facts, in our considered opinion, the ld. CIT (A) has rightly come to the conclusion that the trading results of the assessee could not be rejected without bringing any specific defects in the details furnished by the assessee. Accordingly, we do not find any infirmity in the order passed by the ld. CIT (A) deleting the addition. . xxxx xxxx xxxxx . 8. We have heard both the parties and gone through the material available on record. From the assessment order as well as the order of the ld. CIT (Appeals) we find that the AO had disallowed `25 lakhs on ad- hoc basis without pointing out a particular expenditure, which was not genuine or the details whereof were not available or was not supported by . proper vouchers. Therefore, in our considered opinion, ad-hoc disallowance without pointing out particular expenses cannot be made. Accordingly, we do not find any infirmity in the order passed by the ld. CIT (Appeals) deleting the addition of `25 lakhs.? . . . The order passed by the tribunal and the findings recorded are factual. The reasoning given in the order is not perverse. There is no merit in the appeal and the same is dismissed. . . . SANJIV KHANNA, J . . . . . . . R.V.EASWAR, J . APRIL 27, 2012 . vld . . . . . $ 6 . . .