Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, BANGALORE BENCH ‘SMC’, BANGALORE
Before: SHRI A.K.GARODIA, ACCOUNANT MEMBER
O R D E R PER A. K. GARODIA, A.M.:
This appeal is filed by the assessee. This is directed against the order of learned CIT (A), Gulbarga dated 01.02.2016 for A. Y. 2007 – 08.
As per Ground No. 2 & 3, the grievance of the assessee is about addition of Rs. 676,606/- being alleged profit on consignment sales. In A.Y. 2003 – 04 as against the claim of the assessee that the said consignment stock was sold in Financial Year 2005 – 06. As per Ground No. 4 & 5, the grievance of the assessee is about addition of Rs. 111,563/- on account of action of the assessee in converting Sooji bags containing 90 kgs. into 50 kgs. Bags. As per Ground No. 6 & 7, the grievance of the assessee is about addition of Rs. 411,400/- by invoking section 41 (1) of I T Act.
Learned AR of the assessee submitted that the Profit & Loss Account for the F. Y. ended on 31.03.2007 is available on page 1 of the paper book and as per the same, there is sale shown of Rs. 50,57,445/- on account of Consignment Sales. He further submitted that actual sale amount was considered in an earlier year i.e. F. Y. 2005 – 06 as sale but kept in stock account because the Statement of sale of Consignment stock was not received before 31.03.2006. A query was raised by the bench as to whether there is any evidence available on record to establish this contention but in reply, it was submitted that no such evidence is readily available.
Regarding second issue, he submitted that stock details of 90 kgs.
Bags and 50 kgs. bags are available on pages 9 to 28 of the paper book and it can be seen that 10 and 115 bags of 90 kgs. Suji were converted into 18 and 207 bags of 50 kgs. and added in the stock of 50 kgs. bags and therefore, no addition is justified on this account.
Regarding the third issue, he submitted that on page 7 of the paper book is the details of Reserve & Surplus ant it includes Central Subsidy of Rs. 411,400/- and this is not a liability, Section 41 (1) is not applicable.
Learned DR of the revenue supported the orders of the authorities below.
I have considered rival submissions. Regarding the first issue, I find that in the P & L account, against the opening stock of Consignment Stock of Rs. 50,57,445/-, the assessee has shown consignment sale of exactly same amount and no evidence is furnished before me or the lower authorities that in F. Y. 2005 – 06, the stock shown is at sale price. Hence, on this issue, I find no reason to interfere in the order of CIT (A).
Regarding the second issue, I find force in the submissions of the learned AR of the assessee that as per the stock details of Suji of 90 kgs.
Bags and 50 kgs. bags, the quantity reduced from 90 kgs stock is added in 50 kgs stock but I feel that for verification of full facts, the matter should go back to the A.O. hence, on this issue, I set aside the order of CIT (A) and restore the matter back to the A.O. for a fresh decision with the direction that the assessee should furnish full quantitative details of Wheat consumed, production of Maida, Suji and Bran etc along with its sale and closing stock and if the assessee is able to reconcile the quantity after accounting for the process gain / loss than no addition on this account is called for. Needless to say, the A.O. should afford reasonable opportunity of being heard to the assessee.
About the third issue, I find that the subsidy amount is shown under the heading Reserve & Surplus and hence, section 41 (1) is not applicable.
This addition is deleted.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on the date mentioned on the caption page.