TMI Blog2019 (12) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... ing partywise details of job work and other relevant materials on the issue, the assessee again filed the replies as well as details. We find that as per the assessment proceeding sheet, the AO has clearly stated that requisite details were filed by the assessee except against Query Nos. 9,25 26. The AO has then again asked the assessee to produce the relevant details regarding query Nos. 9,25, 26. The first query of the AO was about the details of excise duty paid on scrap and sale of scrap as per books of accounts. The second query was regarding furnishing the details of increase in purchase costs and decrease in the sale price. The second query was not related to scrap sale. As regards the first query, the details were produced by the assessee and the AO thereafter has not raised any further query and nothing is appearing in the proceeding sheet. However, the AO finally made the addition of the differential amount which assessee has claimed that the scrap remained with the job workers. When the assessee has produced all the relevant documentary evidence in support of the claim and also filed an application under Rule 46A of Income Tax Rules with the CIT(A) then rejecting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO u/s 14A is sustained to the extent of ₹ 1,07,094/-. - ITA No. 612/JP/2019 - - - Dated:- 17-12-2019 - Shri Vijay Pal Rao, JM Shri Vikram Singh Yadav, AM For the Assessee : Shri Vijay Goyal, CA For the Revenue : Smt. Runi Paul, JCIT- DR ORDER PER VIJAY PAL RAO, JM This appeal by the assessee is directed against the order of ld. CIT(A), Ajmer dated 11-03-2019 for the Assessment Year 2013-14. The assessee has raised the following grounds. 1. On the facts and in the circumstances of the case and in law the ld. CIT(A) erred in not admitting the additional evidences submitted by the assessee without considering the circumstances for filing the same and also the evidence in support of such circumstances. 2. That the order of the ld. CIT(A) confirming the addition made by the AO is arbitrary, whimsical, capricious preserve and against the law and facts of the case. The order of the ld. CIT(A) in this regard deserves to be set aside and addition made by the AO deserves to be deleted. 3. On the facts and in the circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k for outside parties. The scrap generated during the job work on the material received from outside parties is also remained with the assessee and the assessee has shown the income from sale of such scrap. Similarly, the scrap generated by the job workers while doing assessee's job remains with them and they also account for the same in their books of account. This practice is consistent for the last many years. The assessee has also referred to the decision of this Tribunal for the Assessment Year 2009-10 wherein identical issue was considered and decided in favour of the assessee. The AO was not impressed with the explanation of the assessee and made an addition of differential amount of ₹ 1,66,18,640/- on account of undisclosed sale of scrap. 2.3 The assessee challenged the action of the AO before the ld. CIT(A) and contended that the assessee has filed the relevant materials and supporting documents to show that scrap generated by the job workers remained with job workers and was never received back by the assessee as it is a consistent practice in this filed. The assessee has also filed an application for admission of additional e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld.AR of the assessee submitted that the ld. CIT(A) has acted in arbitrary manner while rejecting the application for additional evidence under Rule 46A of Income Tax Rules. The ld.AR has pointed that since there was a change of ld. CIT(A) and the case was transferred from ld. CIT(A)-2, Jaipur to ld. CIT(A), Ajmer. Therefore, despite the AO was asked to submit the remand report, the ld. CIT(A), Ajmer rejected the application. The ld.AR of the assessee thus contended that even otherwise the issue is covered by the decision of this Tribunal dated 26-06-2015 in assessee's own case for the Assessment Year 2009-10 in ITA No. 758/JP/2012 (ACIT vs M/s Agrasen Engineering Industries Ltd.) which has been upheld by the Hon'ble Rajasthan High Court vide judgement dated 12-10-2017 in DBIT No. 193/2015 (Pr.CIT, Jaipur-II,Jaipur vs Agrasen Industries Ltd., Jaipur ). The ld.AR of the assessee further contended that when all the relevant records were produced before the AO as well as before the ld. CIT(A) showing the fact that scrap generated during the job work carried out by the job workers remained with them and was not received back by the assessee. Therefore, entries were mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.5 On the other hand, the ld. DR submitted that despite the specific query raised by the AO and directing the assessee to produce the list of job workers for verification, the assessee has not produced the requisite details in support of the claim that the job workers had shown sales of scrap in their books of accounts. The ld. DR further contended that the assessee had produced the audit report from one concern namely M/s. Alankar Automotive Pvt. Ltd. but there are other group concerns namely M/s. Aadhar Enterprises, Automotive Technologies and M/s. Scion Exports Pvt. Ltd. for which the assessee has not produced the audit report to show that they have shown the sale of scrap. Thus the assessee has failed to produce the supporting evidence to establish that the job workers have sold the scrap and shown the same in their books of accounts. The ld. DR relied on the orders of the authorities below and submitted that when the AO has called for the specific information/ details in order to verify the fact that job workers have sold the scrap and shown the same in their books of accounts then the failure on the part of the assessee to produce said supporting evidence clearly led t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee paid duty on the same while it is not sales of assessee, therefore, not accounted for in books of accounts. For the excise purpose in RG-1, the assessee is crediting the scrap remain with job worker as duty debited against scrap remained with job workers . The copy of RG-1 is enclosed herewith at Page No. 3 to 5 for your kind verification. Therefore, the assessee has clearly explained that certain scrap shown in the RG-1 remained with the job workers. We find the explanation of the assessee is consistent about the entries of scrap in the RG-1 that the Excise Duty is required to be paid on such scrap as per law whether it is sold by the assessee or sold by the job workers. The Excise Duty is leviable because of the reasons that the assessee is a manufacturer of the goods and not the job workers. On further show cause notice issued by the AO regarding partywise details of job work and other relevant materials on the issue, the assessee again filed the replies as well as details. We find that as per the assessment proceeding sheet, the AO has clearly stated that requisite details were filed by the assessee except against Query Nos. 9,25 26. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that they are retaining the scrap generated during job work done by them. The said of order of the Tribunal (supra) for the Assessment Year 2009-10 has been confirmed by the Hon'ble Jurisdictional High Court vide judgement dated 12-10-2017 (DBIT No.193/2015 in the case of Pr.CIT,Jaipur vs M/s. Agrasen Industries) and therefore, to the extent of finding that the job workers are showing sale of scrap in their books of accounts is now attained the finality. As regards the other job workers, the assessee has produced their confirmations as well as affidavits wherein they have accepted the retention of the scrap generated during the course of job work and sale of the scrap by them and not by the assessee. Thus it is an arrangement between the parties regarding the job work wherein the job work charges also include the scrap generated during the job work. Further the AO has not disputed the fact that the assessee itself has generated the scrap in the job work done for outside parties and also shown the sale of scrap in the books of accounts. Once this practice of retaining the scrap by the job workers is accepted in case of the assessee then the scrap generated by the job workers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndirect administrative expenditure. The assessee challenged the said action of the AO before the ld. CIT(A) but could not succeed. 3.3 Before us, the ld.AR of the assessee stated that the assessee has not incurred any expenditure for earning exempt income as assessee was having its own interest free funds for investment in shares. He has pointed out that during the year under consideration the investment in shares has been reduced from ₹ 3,70,58,802/- to ₹ 1,10,78,725/-. Therefore, there is no use of borrowed funds for making investment during the year under consideration. Further, as per cash flow statement, the assessee is having more than sufficient funds. Even the assessee's profit during the year as well as in earlier year is much more than investment made in the shares. Thus the ld.AR of the assessee pointed out that there is no expenditure which can be attributable for making investment or earning exempt income. He has referred to the details of fund flow and pointed out that the assessee was having more than sufficient funds. 3.4 On the other hand, the ld. DR has submitted that the assessee has not given bifurcation of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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