KAMDENU STEELS,MUZAFFARNAGAR vs. ITO, MUZAFFARNAGAR

The facts narrated by the revenue authorities are not disputed by both the parties, therefore, the same are not repeated here for the sake of convenience.

Ld. Counsel for the Assessee has stated that the AO has wrongly observed that the assessee has admited that the godown was never used in the past for storing the steel goods traded by him. This observation of the AO is totally wrong and incorrect. During the course of assessment proceedings stock registers of earlier years were produced before him to establish that the godown was used for the storage of traded goods alongwith the copies of the stock registers of earlier years and the copies of the respective labour/loading and unloading account. Therefore, he requested that the addition of Rs. 1.20 lacs may be allowed.

Ld. DR opposed the request of the Ld. Counsel of the Assessee and relied upon the orders of the Authorities below.

I have heard both the parties on the issue in dispute and perused the relevant records, especially the orders passed by the revenue authorities. I find that Assessing Officer has disallowed the claim by stating that the assessee had claimed expenses of Rs. 1,20,000/- relating to godown rent at Muzaffarnagar and payments were made by cheques. The assessee itself admitted that godown was shown only to get registration under UP Commercial Tax Act, 1957 at Muzaffarngar and in submission dated 1.2.2013 and admittedly was never used for trading activities, because trading activities carried on from Ghaziabad. It was also observed by the AO that assessee obtained loan facilities from Muzaffarnagar Bank by showing said godown. However, Ld. CIT(A) in his finding has held that the fact on record is that the assessee has not been establish that payment of rent of godown was wholly and exclusively incurred towards business purpose. No details and evidences have been furnished to establish the business nexus of godown rent paid at Rs. 1,20,000/-. From the above, thus it is clear that there is a contradiction in the observation made by the AO as well as in the finding of the Ld. CIT(A). I am of the considered view that in the Written Submissions before the Ld. CIT(A), assessee has stated that during the course of assessment proceedings stock registers of earlier years were produced before him to establish that the godown was used for the storage of traded goods. Copies of the stock registers of earlier yeasr alongwith copies of the respective Labour/Loading & Unloading were produced before the Revenue authorities. In view of this, finding of the Revenue Authorities are contradictory, therefore, in the interest of justice, without commenting upon the merits of the case, the issue in dispute requires to be thoroughly examined at the level of the AO with the directions to decide the issue in dispute afresh, under the law, after giving adequate opportunity of being heard to the assessee, especially after examining all the documentary evidences filed by the assessee. I hold and direct accordingly.

In the result, the appeal filed by the assessee stands allowed for statistical purposes. Order pronounced in the Open Court on 29/10/2015.