TMI Blog2012 (7) TMI 753X X X X Extracts X X X X X X X X Extracts X X X X ..... cheques - matter remaded to the file of the assessing officer Deduction under S. 80-IB of the Act - Held that:- Assessee failed to make claims u/s. 80IB in the earlier assessment years - assessee has not furnished all the relevant particulars of the relevant year for claiming deduction u/s. 80IB of the IT Act - relief under S.80IB of the Act has not been claimed in the return - there was no valid reason given by assessee for not making such a claim in earlier years, there was no infirmity in order of Commissioner (Appeals) - ground of the assessee rejected Interest under S.234B of the Act – Held that:- Provisions of S.234B of the Act come into play only if there was a liability under S.208 of the Act – in favor of assessee - IT Appeal No. 937 (Hyd.) of 2010 - - - Dated:- 17-2-2012 - Chandra Poojari, Smt. Asha Vijayaraghavan, JJ. V. Raghavendra Rao for the Appellant. Y.V.S.T. Sai for the Respondent. ORDER Smt. Asha Vijayaraghavan, Judicial Member This appeal by the assessee is directed against the order of the CIT(A)-III, Hyderabad dated 12.12.2007 for the assessment year 2005-06. 2. Facts of the case in brief leading to the filing of the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age 41 of the paper-book, wherein it has been stated that the said partner has received an amount of Rs. 3,40,000 from his father, Shri Ashok Gadodia, for the purpose of investment in the business of the assessee-firm. He also took us through the relevant pages of the paper-book, to establish the creditworthiness of the father of Shri Piyush Gadodia. He also submitted placing reliance on the decision of the Supreme Court in the case of CIT v. Orissa Corpn. (P.) Ltd. [1986] 159 ITR 78/25 Taxman 80F that the CIT(A) was not justified in expecting the assessee to prove the sources of the funds to the creditors, viz. partners in the instant case, since the onus of the assessee stands discharged if the source of the funds to the firm is established by the assessee. According to the learned counsel, the onus of proving the source of source does not lie on the assessee. Learned counsel further submitted that the first two partners, viz. Shri Rajiv Garg and Shri Ajay Garg retired from the firm, and their balances were settled by way of cheque payments, after arriving at the balances due after taking into account the credits in their capital accounts. Placing reliance on the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gadodia, it is claimed that he received a gift of Rs. 3,40,000 from his father for the purpose of making investment in the firm. The statement of Shri Piyush Gadodia, which also contains the brief details of his father clearly establishes that he is not a man of straw. Copy of the pan card and other details of Shri Ashok Gadodia, father of Shri Piyush Gadodia are also furnished in the paper-book. While the partners of the assessee firm, have explained sources for the investments made by them, the department is insisting on proving the sources for the sources, which is not permissible in law. Considering totality of facts and circumstances of the case, and in the absence of any material to the contrary brought on record by the Revenue, we find no justification for the additions under S.68 of the Act, made by the assessing officer in the present case. We accordingly delete the same, allowing the grounds of the assessee on this issue. 8. The next effective grievance of the assessee in this appeal relates to an addition of Rs. 10,75,000 made by the assessing officer on account of credits in the account of Ms. Priyanka Gadodia, sister of the partner, Shri Piyush Gadodia . 9. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions has not been established. 11. We have considered the rival submissions and perused the orders of the lower authorities. We have also gone through the written submissions of the assessee on this issue. Considering totality of facts and circumstances of the case and in view of the assertion of the assessee before us that substantial portion of the amount of Rs. 10,75,000 has been received by the assessee from Ms. Priyanka Gadodia by way of cheques, we set aside the order of the CIT(A) and restore the matter to the file of the assessing officer, with a direction to verify the position with reference to the entries in the bank account of Ms. Priyanka, and re-decide afresh the issue with regard to credit-worthiness of the creditor and also the genuineness of the transactions, in accordance with law and after giving due opportunity of hearing to the assessee. 12. The next issue involved in this appeal relates to addition sustained by the CIT(A), in relation to the consumption of gum. 13. Facts in brief relating to this issue are that the assessing officer during the course of assessment proceedings, noticed that consumption of gums shown by the assessee during the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir comments, besides the submissions of the assessee in relation to the submissions of the assessing officer and the JCIT, sustained the addition made by the assessing officer only to the extent of Rs.4,67,586, with the following observations- "6.7. I have carefully considered the facts of the case, the submissions of the appellant, the remand report of the AO, and the comments of the JCIT and further submissions of the appellant. As per the submission of the appellant, during the current previous year, it has mostly purchased powder gum for manufacture. While admitting that the appellant has not maintained any quantitative details in respect of manufacture of different sizes of boxes and consumption of gum, it has been submitted that it is difficult to compare the consumption of different types of gum for producing different types of boxes. It has merely contended that such addition made by the AO towards consumption of gums, after comparing the turnover figures during different asst. years, is not justified. But, it has not been explained as to how the AO was not correct in giving a positive finding that the appellant had made excess consumption, in excess of the consumption s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the turnover and the value of gum are not proportionate, since the corrugated boxes are of three varieties and gum consumed differs from one variety to another. The price of gum is only one of the inputs. In the circumstances, therefore, he submitted that a detailed analysis has been submitted, vide pages 55 and 56 of the paper-book filed before us, which has been discussed by the CIT(A) at para 6.5 of his order, and it was requested on that basis for restricting the estimate to Rs. 2,02,122 and to add Rs. 1,79,126 after giving a credit for Rs.32,141. However, the CIT(A) sustained an addition of Rs. 4,67,586, stating that admittedly quantitative details are not maintained as per audit report. He submitted that the figures of closing stock were shown high and that actually gum was consumed out of 22,996 kgs. This was supported on several grounds. The purchase of gum is always made as and when needed only and that huge quality of gum is never carried in stock. It is actually impossible to stock 23 tons of gum in the factory area of 5500 sq. ft. However, it is submitted, the CIT(A) rejected the plea by pointing out to the audit report, and it was held that gum was purchased outside t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtent of Rs. 72,572. Still aggrieved, assessee is in second appeal before us on this aspect. 20. Learned counsel for the assessee submitted that it is neither correct nor fair to disturb the closing stock figure without correspondingly disturbing the opening stock figure also. He placed reliance on the decision of the Hon'ble Delhi Court in the case of K.G. Khosla Co. P Ltd. v. CIT [1975] 99 ITR 574 in support of this proposition. He further submitted that as the closing stock figure becomes the opening stock in the following year, the assessee has no advantage in taking a lower figure. More so, since succeeding year, the assessment was made under S.143(1), and consequently, the assessee was left with double assessment in respect of the difference in the closing stock, viz. in the current year and also in the succeeding year. 21. We find that the CIT(A) has omitted to give finding on the issue. We are of the opinion that where the closing stock is enhanced, the valuation of opening stock must be on the same basis. The Delhi High Court in the case of K.G. Khosla Company (P.) Ltd. ( supra ). "In the case of K.G. Khosla Company P Ltd., the Court held that there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsel for the assessee submitted that if all the relevant particulars are available on the record, the statutorily eligible deduction should be granted. He also placed reliance on the circular of the CBDT being Circular No.14(XSL-35) of 1955 dated 11.4.1955, whereby it was clarified that officers of the department must not take advantage of the ignorance of an assessee as to his rights, and the assessees should be granted the reliefs under the IT Act to which they are eligible. He submitted taking us through pages 50 to 52 of the paper-book that all the particulars relevant for the purpose of granting relief under S.80-IB are part of the record, and since the assessee is engaged in the manufacture of corrugated boxes from the new materials using new machinery and the manufacture is in a backward area and the business of the assessee was commenced before 1.4.2002, assessee is entitled for relief under S. 80-IB(2) of the Act, and as such, the CIT(A) was not justified in rejecting the claim of the assessee either on the technical ground of admissibility of the additional ground or on merits. 24. The Learned Departmental Representative on the other hand, strongly supporting th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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