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2015 (7) TMI 944 - AT - Income TaxAddition on confiscation of stocks of scrap Rail and scrap Cast Iron by the District Authorities against the dues of KESCO - Held that:- CIT (A) decided the issue against the assessee by holding that there is no dispute regarding the value of confiscated stock of ₹ 50,92,490/- for which only possession has changed but the right remains with the assessee only. Before us also, same argument is made without establishing that entire stock of 832.809 M.T. was auctioned for ₹ 2.03 lacs because on page 24 of the paper book, no quantity is mentioned and hence it is very much possible that this sale proceeds of ₹ 2.03 Lacs is for sale of only a small part of 832.809 M.T. and the remaining part is still unsold or was sold by the assessee prior to seizure. Moreover, this amount of ₹ 2.03 Lacs is said to have been adjusted against outstanding demand of KESCO of ₹ 71,21,300/-. If this demand of KESCO of ₹ 71,21,300/- or any part thereof is already accounted for in books, then the payment to KESCO is to reduce sundry creditor only and in that situation, sale proceeds of stock has to be considered as income only and the balance has to be considered as stock in absence of any evidence that entire stock was sold for ₹ 2.03 Lacs. If this demand of KESCO is other than liability as per books than also the assessee has to establish that deduction is allowable for the same but the assessee has not even explained the nature of the liability said to be payable to KESCO. Hence, we do not find any reason to interfere in the order of learned CIT (A) on this issue. - Decided against assessee. Addition on the basis of profit on sale outside books of excess stock shown in the stock statement ubmitted to the bank by the assessee - CIT(A) deleted the addition - Held that:- The present issue is covered in favour of the assessee by the judgment of Hon’ble Jurisdictional High Court rendered in the case of CIT vs. Khan & Sirohi Steel Rolling Mills (Supra). Learned CIT (A) has decided this issue by following this judgment and learned DR could not point out any difference in facts. Hence, we decline to interfere in the order of learned CIT (A) on this issue. - Decided against revenue, Unexplained investment made in the purchase of unrecorded stock - CIT(A) deleted the addition - Held that:- CIT (A) has given a categorical finding that purchase shown in the stock statement submitted to bank almost tallies with value reflected in books of accounts. He has also given this finding that books of accounts are not rejected and no other adverse circumstantial evidence is brought on record by the A.O. After making these observations, he has decided this issue by following this judgment of Hon’ble Jurisdictional High Court rendered in the case of CIT vs. Khan & Sirohi Steel Rolling Mills (2005 (1) TMI 680 - ALLAHABAD HIGH COURT). Learned DR of the revenue could not controvert these categorical findings of CIT (A) and he could not show as to how this judgment of Hon’ble Jurisdictional High Court rendered in the case of CIT vs. Khan & Sirohi Steel Rolling Mills (Supra) is not applicable. Hence, we decline to interfere in the order of learned CIT (A) on this issue also - Decided against revenue. Disallowance out of depreciation on plant & machinery which as per the assessing officer were not put in to use during the period under reference - CIT(A) deleted the addition - Held that:- none of the judgments followed by learned CIT (A) is applicable in the present case. Moreover, this is admitted position of facts that the industrial unit was not working and although it is claimed that some machines were used in course of trading but no evidence is brought on record in support of this contention. No evidence is brought on record in support of this contention also that the machines were kept ready for use. This also is not the case of the assessee that the operation of industrial unit has restarted even till now i.e. in the year 2015. Considering all these facts, we hold that the order of learned CIT (A) on this issue is not sustainable and therefore, we reverse the same and restore that of the A.O. - Decided in favour of revenue. Addition u/s 43B on account of penal interest charged by the bank and interest payable to bank - CIT(A) delted addition - Held that:- Disallowance was made by the A.O. on account of interest payable on cash credit account and on account of penal interest charged by the bank. Learned CIT (A) has given a categorical finding that in the relevant year, section 43B did not cover interest on cash credit account. He has also given a finding that the penal interest was for contravention of contractual obligation between borrower and lender and not for infraction of any law. Learned DR of the revenue could not controvert any of these findings of CIT (A). Hence, we find no reason to interfere in the order of CIT (A) on this issue. - Decided against revenue. Validity of assessment order u/s 143(3) - Held that:- Learned CIT (A) held that since the notice u/s 143 (2) was not validly served on the assessee within prescribed time, the assessment is void and he annulled the same. We find no infirmity in the order of CIT (A) in the facts of the present case and therefore, we decline to interfere in his order. See Anil Kumar Goel vs. ITO [2007 (2) TMI 260 - ITAT LUCKNOW-A ] - Decided against revenue.
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