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2015 (11) TMI 178 - ITAT AHMEDABAD

2015 (11) TMI 178 - ITAT AHMEDABAD - TMI - Addition on excess stock of material found at the business premises of the assessee during the course of survey - CIT(A) deleted the addition - Held that:- The first evidence submitted by the assessee is a registration certificate in Form RC of the Central Excise Department and the second evidence submitted by the assessee is details of movement of inventory at the location viz. ‘Vipan’.

Vide challan no.1761 dated 8.9.2006, Colourtex Industri .....

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so been placed on record. The ld.CIT(A) has considered all these materials, and thereafter deleted the addition.

AO has not applied his mind on any of the evidences or any of the explanation given by the assessee. The ld.AO has not even noted the explanation submitted by the assessee. The assessment order is just a cut-and-paste from other assessment orders. We can observe so, because, we have seen more than twenty assessment orders of this group while hearing all these appeals. Stand .....

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AJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER For The Revenue : Shri D.C. Mishra, Sr.DR For The Assessee : Shri Sanjay Kapadia ORDER PER BENCH: Revenue is in appeal before us against the order of the ld.CIT(A)- II, Ahmedabad dated 17.6.2009 for the Asstt.Year 2007-08. 2. On receipt of notice in the Revenue s appeal, the assessee has filed cross-objection bearing no.CO No.237/Ahd/2009. 3. The Revenue has taken seven grounds of appeal, which are not in consonance with Rule .....

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ection 132 of the Income Tax Act was carried out at the Colourtex Group of Surat and its associated concern. The business premises of the assessee was covered under survey action under section 133A of the Income Tax Act, along with search carried out at other premises. This action was taken on 26.7.2006. The assessee has filed its return of income on 31.10.2007 declaring total income at NIL. The ld.AO has passed the assessment order under section 143(3) of the Income Tax Act. He made addition of .....

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ntary disclosure made by Shri Jayantilal Jariwala. According to the AO, as per the books of accounts, stock was 10,98,64,989 whereas on physical verification, the actual stock found was 14,83,37,195 and the surplus stock having value at ₹ 3,84,72,206/-. The ld.AO has made the following discussion while adding this amount to the total income of the assessee. Addition in respect of Excess Stock: As regards to excess stock of colours and chemicals, it has been claimed that: (i) The material r .....

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ducting the water content. (iii) Part of the stock has been accumulated at the factory premises for job-work and such stock belongs to other parties and hence these have not been entered in the books of the assessee company. The contentions of the assessee have been considered. However, these arguments are not acceptable on account of the following factors: (i) No such fact was brought to the notice of the survey team during the period of survey. (ii) Further, the assessee has failed to establis .....

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to be added u/section 69 of the I.T. Act, 1961 as unexplained investment for which no satisfactory source has been explained. Section 69 of the Income Tax Act, 1961 provides that: "...the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is-not, in the opinion of the [Assessing] Officer, satis .....

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assessee company has made investments in stock of raw materials and finished products which have not been recorded in the books of accounts viz. the stock register etc. The assessee has failed to furnish any reasonable explanation about the discrepancy. In sum of the circumstances, the explanations furnished by the assessee are not satisfactory. Hence, all the three conditions for application of section 69 of the I. T. Act are satisfied in the instant case. In this case, the excess stock of mate .....

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n on lease by M/s.Colourtex Pvt. Ltd. w.e.f. 10.7-2006. The job work stock of ₹ 2,91,96,630/- pertains to M/s.Colourtex Pvt. Ltd. Similarly, survey team had worked out the excess stock of ₹ 92,75,576/- at Unit No.3, which was also with M/s.Colourtex Pvt. Ltd. The assessee has pointed out the evidence collected during the course of survey and submitted during the assessment proceedings. The ld.First Appellate Authority was satisfied with the explanation of the assessee and deleted the .....

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n the books of accounts the assessee has shown income from job charges only which is accepted by the AO himself. Hence, assessee was not having any stock of his own and all the stock belonged to M/s. Colourtex Industries Pvt. Ltd. Hence no addition is called for in the hands of the assessee. Further, even the assessee. has shown the excise register maintained at the premises of M/s. Colourtex Industries Pvt. Ltd. at Survey No. 80, Pandesara and also excise register maintained at the present prem .....

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remand report and in the remand report nothing adverse or contradictory reported by the AO. Even the excise records shown before me confirms the same. Therefore, the additions is not justified and is deleted. …… …… …… 11. I have considered the facts and submissions I agree with the appellant's view.-I have already in para. No. 6 above that this premises of the assessee was given on lease M/s. Colourtex Industries Pvt. Ltd.w.e.f. 10-7-2006 i.e. prior .....

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be taken for applying the rate. The appellant filed the copies of various purchase bills which confirmed this practice that in the bills first gross weight iswritten and then purity percentage is written and then by multiplying the purity percentage net weight is written on which the rate is applied. Therefore, applying the rate to gross weight will give the erroneous valuation. Even at the time of survey, this was explained by Mr. Rajendra Prasad in reply to question No. 11. The same explanati .....

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ex Industries P Ltd. also. Hence, the addition made is deleted. 6. The ld.DR relied upon the order of the AO. On the other hand, the counsel for the assessee took us through the paper book, which is running into 230 pages and relied upon the order of the ld.CIT(A). 7. We have duly considered rival contentions and gone through the record carefully. In order to explain the stock position found at the premises, the assessee has filed written submissions before the CIT(A) and produced evidences. Cop .....

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entire manufacturing facility on the date of survey belongs to Colourtex Annexure-2 Complete details of movement of inventory at the location namely Vipan of the appellant Annexure-3 Contra confirming challan register of Colurtex Industries Pvt. Ltd. evidencing receipt of material for manufacturing process at the premises of the appellant (i.e. the branch of Colourtex Industries Pvt. Ltd.) along with sample copies of some of the challans. Annexure-4 Copy of the audited annual accounts of the app .....

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of your honour. Annexure-6 Noting of survey team at the premises of the appellant during the course of survey proceedings itself that the amount of ₹ 291.96 lacs of inventory is lying there on a job work basis as per question No.11 raised to Shri Rajendra Prasad Patel, Officer of the company. 95-117 Annexure-7 Copy of the stock statement submitted to the Bank by Colourtex Industries Pvt. Ltd., which includes the stock lying at the location of the appellant, for justifying the ownership of .....

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conditions specified below, that M/s.COLOURTEX INDUSTRIES PRIVATE LIMITED, A REGISTERED COMPANY (Registrant and its constitutions) is registered of MANUFACTURING OF EXCISABLE GOODS (type of business) at COLOURTEX INDUSTRIES PRIVATE LIMITED, 69 to 73, 73/A, GIDC, PANDESARA, PANDESARA IE, SURAT, GUJARAT, 394221 (address of the business premises) on the basis of the application received in this office on 07/07/2006 (date of receipt) Registration Number is : AABCP6359BXM003 (w.e.f. 8.00 am on 10/07 .....

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cake (Semi Finished) having quantity of 1,244 having value of ₹ 1,61,720/-. The challan was cleared on 17.7.2006. There are number of other entries whose bills were prepared on 7.7.2006 and it was cleared on 13.7.2006 etc. Object of referring these documents is for the reason to demonstrate that this premises was being actually used by Colourtex Industries Pvt. Ltd. before the survey carried at the premises. The copy of lease-deed has also been placed on record. The ld.CIT(A) has considere .....

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