TMI Blog2010 (5) TMI 858X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Pratik Processors Pvt. Ltd. wherein Tribunal has held that there cannot be any work in- progress in a case where business of Dyeing and printing of cloth is done on job work basis. He referred to para from that order as under:- '' At the time of hearing both the Representatives agreed the similar issue arose in an appeal by the revenue in the case of Vipul Industries Pvt. Ltd. V/s ACIT[ 1996 (1) TMI 144 - ITAT AHMEDABAD-C] held that the assessee which is engaged in the business of dyeing and printing of cloth on job work basis and where the assessee had not shown any work-in-progress at the year end, the same was estimated to be 50% of the job receipt of the likely stock remaining in process. However was deleted by the learned CIT(A).deletion was confirmed by the Tribunal.'' Disallowance of 25% on purchase price - purchases from Min Chemicals - HELD THAT:- In our considered view there is no case for interference in the order of Ld. CIT(Appeals). In the case of first two purchases Ld. CIT(A) has given finding that goods have actually come but from other parties but bills are procured from first two parties. This finding is not controverted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts of the case are that the assessee is engaged in business of Dyeing Printing of Art Silk Cloth. Return of income declaring total Income at Rs. nil was filed. During the course of assessment proceedings, Assessing Officer noticed that assessee has not shown work-in-progress in the closing stock as on 31-03-2003. When asked, it was explained that it is consistently following a accounting method in which goods dispatched after considering job charges are accounted for. However, Assessing Officer was of the view that assessee had claimed all the expenses made during the year under consideration on un-dispatched gray cloth laying at different stages of processing, which should have been shown as work-in-progress as on 31-03- 2003. The Assessing Officer accordingly calculated work-in-progress at ₹ 6,34,217/-. The Ld. CIT(Appeals) deleted the addition on the ground that assessee is engaged in processing of material for outside parties and does not have stock of its own. Further, assessee is following the same method of accounting year-after-year. There is no justification in disturbing this method. 3. Against this Ld. AR submitted that similar issue had come before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neither any opening stock nor closing stock was ever shown by the appellant. As per the principles of accounting laid down by the ICAI, under the scope of Valuation of Inventories in item 1(sub-item(b) of AS-2 (revised) the work-in-progress arising in the ordinary course of business of service provider has been specifically scoped out of the said statement. Further, in the definitions provided under item 3 of the AS-2 Inventories have been defined as assets (a) held for sale in the ordinary course of business (b) in the process of production for such sale or (c) in the form of materials or supplies to be consumed in the production for sale or in the rendering of services. Since the appellant was not engaged in the business of sale of the processed cloth or in the production for sale of the processed cloth but was engaged in the business of rendering of services for processing of gray cloth for its customers, the principles laid down in AS-2 for the valuation of Inventories were not applicable in its case in accordance with item 1(b) thereof. However, the materials or supplies to be consumed in the production process or in the rendering of services would evidently fall in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly following the above order we dismiss the ground No.1 and 2 of the Revenue s appeal. 6. Ground No.3 and 4 of the Revenue s appeal and ground No.1 of assessee s CO relates to sustaining addition of ₹ 5,08,089/- on account of unproved purchased. 7. The facts of the case are that the assessee declared purchases of colour and chemicals from M/s.Pooja Dye Chem for ₹ 1,69,900/-, of ₹ 15,93,677/- from M/s.Abhi Dyes and of ₹ 5,08,095/- from M/s.Min Chemicals. During the course of assessment proceedings Assessing Officer found following facts in respect of purchases of ₹ 1,69,900/- from M/s.Pooja Dye Chem:- i) Shri Rohit P Panwala, ;proprietor of M/s. Pooja Dye Chem had not shown any trading activity in his return of Income-tax filed for A.Y. 2003- 04. ii) He had shown only commission Income-tax and interest Income-tax in his return of Income-tax. iii) The bank account BNo.CA9450 held by him in the name of Pooja Dye Chem in PNB, Lal Gate Branch, Surat was not shown in the balance sheet submitted along with the return of Income-tax filed for A.Y. 2003-04. iv) The Cheque payment of ₹ 1,69,9000/- made by the assessee was credited i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfactory. In respect of purchases from M/s.Pooja Dye Chem, assessee only submitted copies of bills and delivery challan and copy of bank statement in support of payment made to that party. In respect of purchases from Abhi Dyes assessee furnished bank statement showing payment to that party. In respect of purchases from M/s. Min Chemicals no confirmation was submitted except bank statement showing payment to that party. Considering that purchases from these three parties were not proved, the Assessing Officer treated these purchases as non-genuine and added the same to the total income of the assessee. 8. Ld. CIT(Appeals) observed in respect of first two parties that there are entries of goods received in the factory premises of the assessee. Therefore it cannot be said that goods were not purchased but certainly purchases from third party were not proved. He accordingly directed to apply a rate of 25% in case of purchase from M/s. Pooja Dye Chem and Abhi Dyes and thus sustained the addition of ₹ 4,40,900/- but confirmed the entire addition of ₹ 5,80,089/- in respect of purchases from Min Chemicals. 9. Against this Ld.SR-DR relied on the order of Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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