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Income Tax Appellate Tribunal, “C” BENCH: KOLKATA
Per Shri A.T.Varkey, JM The appeal filed by the revenue is against the order of Ld. CIT(A)-1, Kolkata dated 30.06.2014 for AY 2007-08.
The sole issue involved in this appeal of revenue is against the order of Ld. CIT(A) in deleting the addition of Rs.79,00,418/- and Rs.2,01,17,791/-. For which, the revenue has raised following four grounds:
“1. That on the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in deleting the addition of Rs. 79,00,418/- made by the AO treating the same as income of the assessee from undisclosed source. 2. That, on the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in deleting the addition of Rs. 2,01,17,791/- made by the AO on account of undisclosed income u/s. 69C. 3. That, on the facts and in the circumstances of the case, while deleting both the additions the Ld. CIT(A) has erred in accepting the explanation of the assessee without making any reconciliation of the facts with respect to the quantitative details of closing stock for the year under consideration. 4. That, on the facts and in the circumstances of the case, while deleting both the additions the Ld. CIT(A) has erred in accepting the explanation of the assessee without consideration of the remand reports of the AO.”
2 ITA No.1864/Kol/2014 Kajaria Yarns & Twines Ltd., AY- 2007-08 3. Briefly stated facts of the case are that the assessee company filed its original return on 29.10.2007 declaring NIL total income. Assessment on the said return was completed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) after examining the books produced and other details placed before the A.O. However, assessment was set aside by Ld. CIT-I, Kol, by an order u/s 263 of the Act dt.15.03.12 on the ground that proper enquiries were not conducted to ascertain the facts in the course of assessment proceedings. Subsequently, assessment was completed u/s 263/143(3) of the Act on 31.03.2013 determining a total income of Rs.2,80,18,209/- after adjustment of unabsorbed depreciation and inter alia making two additions amounting to Rs.79,00,418/- & Rs.2,01,17,791/-. The amount of Rs.79,00,418/- was added by the AO on the ground that 1435MT of raw jute was acquired / purchased by the assessee from undisclosed sources of income. The amount of Rs.2,01,17,791/- was added by AO similarly on the ground that 1435 MT of raw jute was acquired / purchased by the assessee from the undisclosed source of income which was required to be treated as deemed income of the assessee for the relevant financial year under sec. 69C of the Act. Aggrieved, assessee preferred an appeal before the Ld. CIT(A), who held that both these additions were not justified and the same were deleted. Aggrieved, revenue is before us.
We have heard rival submissions and gone through the facts and circumstances of the case. We note that the entire confusion in this case happened because in the financials submitted by the assessee to the AO, that is in the Schedule 10 of audited accounts of FY 2006-07 i.e. AY 2007-08 the sale of trading raw jute has been shown at a quantity of 1435 MT at a value of Rs.2,01,17,791/-. However the raw jute which was sold by the assessee was only 413 MT and the value of it was Rs.79,00,418/-. The assessee also sold raw jute (cutting) of 1022 MT at a value of Rs.1,22,16,363/- thus totaling 1435 MT at a cost of Rs.2,01,17,791/-. Because of this inadvertent error of showing the domestic trading sale of raw jute when it should have been shown as sale of trading raw jute and cutting which mistake has made the Ld. CIT interfere by invoking his section 263 jurisdiction and ordered the AO to pass reassessment order in which the AO has treated the amount of Rs.79,00,418/- which was the value of raw jute sale of 413 MT as the undisclosed income and the amount of Rs.2,01,17,791/- was deemed to be income of the assessee u/s. 69C of the Act. We note that the error which happened in Schedule 10 of audited accounts was acknowledged by the auditor which we note is placed at page 37 of the paper book. We
3 ITA No.1864/Kol/2014 Kajaria Yarns & Twines Ltd., AY- 2007-08 take note from the P&L Account at the end of 31st March, 2007 which is placed at page 55 of the paper book that in the expenditure though the amount of Rs.79,00,418/- is shown we note from page 59 schedule 10 which is the sales wherein the domestic sales of trading (raw jute/cutting) is shown as Rs.2,01,17,791/-. A perusal of the page 60 of the paper book wherein the Schedule 13 which is the raw material consumed raw jute, we note that sales figure of Rs.79,00,418/- has been reduced. We note that the domestic sale of trading (raw jute/cutting) of Rs.2,01,17,791/- includes Rs.79,00,418/-. Page no. 97 of the paper book reveals quantitative details of principal items of raw materials and finished products wherein the raw materials sales during the previous year of raw jute is shown as 413 MT. We also note that the sale of 1435 MT includes raw jute of 413 MT and cutting of 1022 MT and that sales of it has been made to two concerns Murlidhar Ratanlal Exports and Hastings Jute Mills at a value of Rs.2,01,17,791/-. The Ld. CIT (A) has made a clear finding that the assessee had two different types of sale i.e. raw jute and cutting at different rates. We note that the Ld. CIT (A) has correctly held that the AO erred in adding the value of 413 MT of sale of raw jute amounting to Rs.79,00,418/- to the income of the assessee and also the action of the AO was erroneous for adding the entire sale of raw jute and cutting of 1435 MT at Rs. 2,01,17,791/-. Therefore, in the facts and circumstances of the case discussed above, we do not find any infirmity in the order of the Ld. CIT (A) and, therefore, we confirm the order of the Ld. CIT (A) and dismiss this appeal of the revenue. 5. In the result, appeal of revenue is dismissed. Order is pronounced in the open court on 11.05.2018 Sd/- Sd/- (M. Balaganesh) (Aby. T. Varkey) Accountant Member Judicial Member Dated : 11th May, 2018 Jd.(Sr.P.S.) Copy of the order forwarded to: 1. Appellant – DCIT, Circle-1, Kolkata. 2 Respondent – M/s. Kajaria Yarns & Twines Ltd., 15B, Hemanta Basu Sarani, Kolkata-700 001. 3. The CIT(A) Kolkata.
CIT Kolkata. 5. DR, ITAT, Kolkata. /True Copy, By order, Sr. Pvt. Secretary