9911796707
TMI Blog2019 (3) TMI 1597X X X X Extracts X X X X X X X X Extracts X X X X ..... During the year, the turnover of the assessee company was Rs. 433.97 crores as compared to Rs. 403 crores in the last assessment year. The export sales stood at Rs. 21.20 crores as compared to Rs. 121.69 crores in the last assessment year. During the year, the assessee company has issued additional share capital. 4.1. During the earlier assessment year 2008-2009, there was an addition on account of valuation of closing stock by taking the value of stock of raw material and finished goods as per FIFO method, as the Assessee was following A weighted average method and not valuation as per FIFO method. The addition on account of the above in the last assessment year was of Rs. 1,69,57,108/-. The assessee was asked to submit the details of the same. The assessee submitted that as per the FIFO method, the closing stock comes to Rs. 25,66,78,992/- whereas as per the closing stock adopted by the assessee was Rs. 25,90,64,357/-. Thus, as per FIFO method, the closing stock will be less by a figure of Rs. 23,85,365/-. The assessee stated that the credit of the closing stock of the earlier year should be given as the addition was made in the last assessment year. The assessing officer as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gard has been filed to show value of the stock at NIL, therefore, explanation of assessee was not accepted and assessing officer applied average rate of Rs. 725/- per metric ton against the total quantity of 1,00,010 metric ton and made addition of Rs. 7,25,07,250/- on account of under reporting of valuation of closing stock. The assessing officer, however, given benefit of addition made to the closing stock in earlier year as well as excess value declared by assessee at Rs. 1,93,42,473/- and made net addition to the closing stock at Rs. 5,31,64,777/- on account of under valuation of closing stock. 4.3. The assessing officer further noted that during the assessment year under appeal, assessee has sizable investment which yields exempt income to the assessee. The investments at the end of the year in shares stand at Rs. 19.06 crores. The same was the position of investments as on 1st April 2008. The assessee has incurred financial expenses on account of interest of Rs. 9,42,09,000/-. The assessing officer noted that the above investments will have its share of borrowing and non borrowings. The assessee does not maintain a separate bank account for the purpose of investments. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see challenged the addition of Rs. 13,01,09,000/- on account of estimation of income. 7. Learned Counsel for the Assessee referred to page 73 of the paper book, which is, reply filed before assessing officer along with complete details. PB 86 is also another reply supported by the documents. PB 92 is also reconciliation of AIR information with the books of account and to explain the money, which assessee has to receive. Learned Counsel for the Assessee submitted that the assessing officer did not reject the books of account of assessee, therefore, finding of Learned CIT(A) is incorrect and that no addition could be made on account of non verification of the debtors. He has submitted that assessee wanted to produce books of account before Learned CIT(A), but, on mere technical reasons that no application under Rule 46A have been filed, books of account have not been examined by the Learned CIT(A). Learned Counsel for the Assessee submitted that assessee is willing to produce the books of account before assessing officer for fresh examination. 8. On the other hand, the Learned D.R. relied upon the Orders of the authorities below and submitted that no books of account were produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessee has given undertaken before us to produce the books of account before assessing officer for fresh examination. The assessing officer in the assessment order has specifically noted that turnover of the assessee in the assessment year under appeal is higher as compared to earlier year, but, there is a substantial decrease in the export sales in assessment year under appeal, as against exports made in proceeding assessment year. These were the relevant factors which should have been considered by the assessing officer while applying higher profit rate against the assessee because the assessee claimed that there was a fall in export because the assessee's stock was not matching with the standards of the Foreign Buyers and that domestic sales have increased. Therefore, there would not have been any reason for the assessee to suppress the profit. Since the books of account have not been rejected by the assessing officer, therefore, there was no justification for him to apply higher profit rate. The entire history of the assessee has also not been considered in this regard and non-verification of the debtors by itself is no ground to apply higher profit rate because both situat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Representative, on the other hand, submitted that in the assessment year under appeal the dispute is not of FIFO method or weighted average method for valuation of the closing stock, but, the valuation of the closing stock taken at NIL of 1,00,010 quantity of metric tons, for which, no evidence have been furnished. 13. We have considered the rival submissions. It is not in dispute that there is a fall in export sales in assessment year under appeal substantially as compared to the preceding assessment year. The assessee rightly contended that in assessment year the export market of iron ore fines was in a bad shape. The assessee, therefore, rightly contended that Foreign buyers have insisted for best quality of iron ore fines and the stock of the assessee was not matching with the standards of the Foreign Buyers, therefore, the assessee could not sell the iron ore fines in domestic market and due to dust etc., the quantity of iron ore fine have deteriorated further. The explanation of assessee is supported by the fact that there is fall in export of iron ore fines in assessment year under appeal as compared to earlier years. However, the assessee did not produce books of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not proper, therefore, section 14A could not be invoked against the assessee. 16. On the other hand, Learned Departmental ReprITA.No.6601/Del./2014esentative relied upon orders of the authorities below. 17. We have considered the rival submissions. The assessing officer noted in the assessment order that assessee has made sizeable investments, which yields exempt income to assessee and the investment at the end of year in shares stands at Rs. 19.06 crores. The assessing officer also noted that same was the position of investment as on 1st April 2008. This would support the explanation of assessee that no new investment have been made in assessment year under appeal and same were old investments. It is not in dispute that assessee has own sufficient funds to make investment which were to the tune of Rs. 358.68 crores. Assessee also suo motu disallowed Rs. 3,33,397/- under section 14A of the Income Tax Act. The Honourable Punjab and Haryana High Court in the case of CIT vs., Winsome Textile Industries Ltd., 319 ITR 204 (P&H) observed that "Assessee did not make claim of expenses -14A do not apply - Own funds used to acquire shares and no expenses incurred, therefore, no addit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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