ITO v. Navjivan Synthetics - Taxpublishers.in

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The Tax PublishersI. T. A. No. 226/Ahd/2009 & C. O. No. 35/Ahd/2009 2013 TaxPub(DT) 0264 (Ahd-Trib) : (2013) 142 ITD 0096 : (2013) 151 TTJ 0041 : (2012) 020 ITR (Trib) 0712 INCOME TAX ACT, 1961 --Valuation of closing stock--Addition made without considering opening work-in-progress Addition--Assessee was engaged in the business of dying, finishing and printing work of art silk grey fabrics. Assessing officer on the basis of verification of books of account had observed that assessee had not shown closing work-in-progress and the fabrics under process did carry part of expenses incurred on account of colour, chemical, wages, etc. which formed part of closing work-in-progress, therefore, he worked out valuation of closing stock of work-in-progress and added to the income of assessee. Assessing officer however, rejected the claim of assessee for setting off opening work-in-progress on the ground that assessee had never shown work-in-progress in the past year or in the subsequent years. *Held:* Was not justified, as section 145A begins with a non-obstante clause and to give effect to section 145A, if there is a change in closing stock, there must necessarily be a corresponding adjustment made in opening stock. Moreso, whenever any adjustment is made in the valuation of stock this will affect both opening as well as closing stock. Income Tax Act, 1961, Section 145A INCOME TAX ACT, 1961 --Income from undisclosed sources--Addition under section 69C Unexplained expenditure on purchases--assessing officer made addition to the income of assessee on account of bogus purchases as there was a difference in the total purchases found in the account of M/s Agarwal Enterprises from the confirmation of account and the ledger of M/s Agarwal Enterprises submitted by assessee before him. Assessing officer also noticed from confirmation of accounts that M/s Agarwal Enterprises had allowed a discount to the assessee. *Held:* Was not justified, as Commissioner (Appeals) had recorded that the material produced in the form of copies of bill were recorded into the books of assessee but were not recorded into the accounts of M/s Agarwal Enterprises and assessee had submitted the copies of delivering challans and weighing slips. Therefore, assessee had shown all the purchase bills while M/s Agarwal Enterprises had not shown all the purchase bills and cash sales. Moreso, Commissioner (Appeals) had also found that M/s Agarwal Enterprises had not recorded the correct transaction in its books of account and, therefore, the contention of assessee was acceptable that in normal practice, nobody would give such a huge rebate. Income Tax Act, 1961, Section 69C INCOME TAX ACT, 1961 --Tax deduction at source--Under section 194C Payment to transporter exceeding specified limit--assessing officer made disallowance under section 40(a)(ia) as the TDS was not deducted under section 194C from the payments made to transporters. Assessee contended that no payment in excess of prescribed limit was made and there was no contract between the assessee and transporters. *Held:* Not rightly so, as from the reading of the provision of section 194C it was evident that tax is deductible if the payment is made for carrying out a work in pursuance of a contract and since the aggregate amount paid exceed the prescribed limit under section 194C(5), therefore, this contention of assessee was not acceptable. Even though the transporter was assigned by GMDC but the payment to such transporter was made by assessee on execution of work and therefore, assessee was liable to deduct TDS as under section 194C(1) any person responsible for paying any sum to any resident is liable to deduct TDS. Income Tax Act, 1961, Section 194C SUBSCRIBE FOR FULL CONTENT

The Tax PublishersI. T. A. No. 226/Ahd/2009 & C. O. No. 35/Ahd/2009
2013 TaxPub(DT) 0264 (Ahd-Trib) : (2013) 142 ITD 0096 : (2013) 151 TTJ 0041 : (2012) 020 ITR (Trib) 0712

INCOME TAX ACT, 1961

--Valuation of closing stock--Addition made without considering opening work-in-progress Addition--Assessee was engaged in the business of dying, finishing and printing work of art silk grey fabrics. Assessing officer on the basis of verification of books of account had observed that assessee had not shown closing work-in-progress and the fabrics under process did carry part of expenses incurred on account of colour, chemical, wages, etc. which formed part of closing work-in-progress, therefore, he worked out valuation of closing stock of work-in-progress and added to the income of assessee. Assessing officer however, rejected the claim of assessee for setting off opening work-in-progress on the ground that assessee had never shown work-in-progress in the past year or in the subsequent years. Held: Was not justified, as section 145A begins with a non-obstante clause and to give effect to section 145A, if there is a change in closing stock, there must necessarily be a corresponding adjustment made in opening stock. Moreso, whenever any adjustment is made in the valuation of stock this will affect both opening as well as closing stock.

Income Tax Act, 1961, Section 145A

INCOME TAX ACT, 1961

--Income from undisclosed sources--Addition under section 69C Unexplained expenditure on purchases--assessing officer made addition to the income of assessee on account of bogus purchases as there was a difference in the total purchases found in the account of M/s Agarwal Enterprises from the confirmation of account and the ledger of M/s Agarwal Enterprises submitted by assessee before him. Assessing officer also noticed from confirmation of accounts that M/s Agarwal Enterprises had allowed a discount to the assessee. Held: Was not justified, as Commissioner (Appeals) had recorded that the material produced in the form of copies of bill were recorded into the books of assessee but were not recorded into the accounts of M/s Agarwal Enterprises and assessee had submitted the copies of delivering challans and weighing slips. Therefore, assessee had shown all the purchase bills while M/s Agarwal Enterprises had not shown all the purchase bills and cash sales. Moreso, Commissioner (Appeals) had also found that M/s Agarwal Enterprises had not recorded the correct transaction in its books of account and, therefore, the contention of assessee was acceptable that in normal practice, nobody would give such a huge rebate.

Income Tax Act, 1961, Section 69C

INCOME TAX ACT, 1961

--Tax deduction at source--Under section 194C Payment to transporter exceeding specified limit--assessing officer made disallowance under section 40(a)(ia) as the TDS was not deducted under section 194C from the payments made to transporters. Assessee contended that no payment in excess of prescribed limit was made and there was no contract between the assessee and transporters. Held: Not rightly so, as from the reading of the provision of section 194C it was evident that tax is deductible if the payment is made for carrying out a work in pursuance of a contract and since the aggregate amount paid exceed the prescribed limit under section 194C(5), therefore, this contention of assessee was not acceptable. Even though the transporter was assigned by GMDC but the payment to such transporter was made by assessee on execution of work and therefore, assessee was liable to deduct TDS as under section 194C(1) any person responsible for paying any sum to any resident is liable to deduct TDS.

Income Tax Act, 1961, Section 194C