Income Tax Appellate Tribunal - Kolkata
Qasar Healthcre Pvt. Ltd., Kolkata vs Department Of Income Tax on 30 April, 2013
आयकर अपीलीय अधीकरण, Ûयायपीठ - "C" कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH: KOLKATA
(सम¢)Before ौी एन. एस. सैनी, लेखा सदःय एवं/and ौी महावीर िसंह, Ûयायीक सदःय)
एन. एस.
[Before Shri N. S. Saini, AM & Shri Mahavir Singh, JM]
आयकर अपील संÉया / I.T.A No. 418/Kol/2012
िनधॉरण वषॅ/Assessment Year: 2008-09
Assistant Commissioner of Income-tax, Vs. Qasar Healthcare Pvt. Ltd.
Circle-10, Kolkata (PAN: AADCS7203F)
(अपीलाथȸ/Appellant) (ू×यथȸ/Respondent)
Date of hearing: 30.04.2013
Date of pronouncement: 03.05.2013
For the Appellant: Shri L. K. S. Dehiya, CIT(DR)
For the Respondent: Shri Sanjay Bhattacharya, FCA
आदे श/ORDER
Per Shri Mahavir Singh, JM:
This appeal by revenue is arising out of order of CIT(A)-XII, Kolkata in Appeal No. 346/XII/Cir-10/10-11 dated 15.12.2011. Assessment was framed by DCIT, Circle-10, Kolkata u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for Assessment Year 2008-09 vide his order dated 22.12.2010.
2. The only issue in this appeal of revenue is against the order of CIT(A) deleting the addition being difference in stock. For this, revenue has raised following ground:
"1. Whether, on the facts and in the circumstances of the case, Ld. CIT(A) is correct in deleting the addition on account of difference of Stock by accepting incomplete evidence and accepting inappropriate accounting practice adopted by the assessee."
3. We have heard rival submissions and gone through facts and circumstances of the case. Briefly stated facts are that the assessee is a wholly owned subsidiary of East India Pharmaceutical Works Ltd. and engaged in trading in medicines. During the FY 2007-08 relevant to AY 2008-09, assessee was engaged in the business of purchase and sale of three types of medicine viz., 'Hepnar', 'Kafbin' and 'Lozenges'. During the course of assessment proceedings, AO noted from Schedule-D i.e. Notes on Accounts that the assessee's opening and closing stock is as under:
"Details of purchase, sales and closing stock:
Item Opening Stock (a) Purchase Sale (b) Closing stock Unit Qty. Value(Rs.) Qty. Value(Rs.) Qty. Value(Rs.) Qty. Value(Rs.) Hepner 200ml 34100 1402827 21480 929415 49825 1635832 5755 249324 2 ITA No.418/K/2012 Qasar Healthcare Pvt. Ltd.
AY: 2008-09 Kafbin 100ml 24901 632147 43670 1258335 61082 1756696 7489 214104 Lozenges Jar-200 61544 8905724 - - 42196 4345058 19348 2793437 pcs.
10940698 - 2187750 - 7737586 - 3256568 The AO noted that the closing stock as on 31.03.2007 was declared by assessee at Rs.2,23,32,144/- as against the opening stock declared at the year as on 01.04.2007 at Rs.1,09,40,698/-. According to the assessee, there is a difference in opening stock as on 01.04.2007 and hence, the difference being Rs.1,13,91,446/- is unexplained income of the assessee and the same was added to the returned income of the assessee. But assessee also filed reconciliation before the AO stating that the purchase returns for the year 2007-08 have been valued at Rs.1,13,91,446/-. The explanation of the assessee was not accepted by AO.
Aggrieved, assessee preferred appeal before CIT(A), who after considering the submissions and reconciliation statements deleted the addition by observing as under:
"4. After careful consideration of the assessment order and written submission filed on 17.06.2011 it is noticed that assessee company is a trader of three types of items viz., 'Hepnar', 'Kafbin' and 'Lozenges' produced by East India Pharmaceuticals Ltd. The addition had been made because of difference in opening stock to the extent of Rs.1,13,91,446/- because of A.O. disbelieved the purchase returned for 'Hepnar' and 'Kafbin'. The assessee had produced the profit and loss account and balance sheet along with details of purchase returned for F.Y. 2007-08. In the paper book furnished to the extent of Rs.1,13,91,446/- and accordingly sundry creditors are also reduced by corresponding amount. These purchase returned are due to expiry of the validity period. The assessee had also debited rent of Rs.76,500/- in its P&L Account. Keeping in view this facts and circumstances the stock account is reconciled and addition is deleted. Therefore, ground nos. 2 and 3 are allowed."
4. Now before us assessee has filed copies of letter dated 21.09.2010 addressed to DCIT, Circle-10, enclosing reconciliation of closing and opening stock as on 31.03.2007 and 31.03.2008 respectively in term of quantity, which reads as under:
"Reconciliation of Quantity wise Stock Statement from 31.03.2007 to 31.03.2008 PARTICULARS Hepner Kafbin Lozenges (Jar) (200ml) (100ml) Closing stock as on 31.03.2007 206938 205049 61544 Add: Purchase from EIPW Ltd. 21480 43670 0 (01.04.2007 to 31.03.2008 Add: Sales Return (Taken back into 618 744 2746 Stock) (01.04.2007 to 31.03.2008) 229036 249463 64290 Less: Purchase Returned to EIPW 172838 180148 0 Ltd. (01.04.2007 to 31.03.2008) 56198 69315 64290 Less: Sales (Including free issue & 50443 61826 44942 damages & converted into sample) Closing stock as on 31.03.2008 5755 7489 19348 Further, the assessee has filed complete details of purchase return during the year 2007-08 and we have examined the same and found that the total purchase returned during the year was 3 ITA No.418/K/2012 Qasar Healthcare Pvt. Ltd.
AY: 2008-09 Rs.1,13,91,446/-. This fact was also pointed out before the AO and these documents were filed before the AO during the course of assessment proceedings and vide letter dated 27.09.2010 the assessee also explained the difference as under:
"1) The difference of closing stock as on 31.03.07 and Opening Stock 01.04.07 Kindly note that from the opening stock of financial year 2007-08 following goods were expired during the financial year and sent back to EIPWL.
Products Qty. Amount (Rs.)
Hepner 200ml. 172838 6831547.00
Kafbin 100ml. 180148 4559899.00
11391446.00
During the year purchase from EIPWL were Rs.2187750/- only, which was lower than the value of expired goods which were returned.
On receipt of Credit notes from EIPWL (list enclosed) we adjusted the amount with the opening stock, as adjustment with purchase would have been given a negative figure."
We find that this difference in opening and closing stock is due to the only fact that there are purchase returns which are reduced by the assessee. In our view, the AO has not properly considered the explanation of the assessee and not having considered the same, he reached to the conclusion being difference in opening and closing stock, which is merely an accounting entry. In view of the facts narrated above, we are of the view that the CIT(A) has rightly deleted the addition and we confirm the same. Appeal of revenue is dismissed.
5. In the result, appeal of revenue is dismissed.
6. Order pronounced in the open court on 03.05.2013 Sd/- Sd/-
एस.. सैनी, लेखा सदःय
एन.. एस
एन महावीर िसंह, Ûयायीक सदःय
(N. S. Saini) (Mahavir Singh)
Accountant Member Judicial Member
तारȣख)
तारȣख) Dated : 3rd May, 2013
(तारȣख
वǐरƵ िनǔज सिचव Jd.(Sr.P.S.)
4 ITA No.418/K/2012
Qasar Healthcare Pvt. Ltd.
AY: 2008-09
आदे श कȧ ूितिलǒप अमेǒषतः- Copy of the order forwarded to:
1. अपीलाथȸ/APPELLANT - ACIT, Circle-1, Kolkata.
2 ू×यथȸ/ Respondent - Qasar Healthcare Pvt. Ltd., 102, S. P. Mukherjee Road, Kolkata-26
3. आयकर किमशनर (अपील)/ The CIT(A), Kolkata
4. आयकर किमशनर/ CIT Kolkata
5. ǒवभािगय ूितनीधी / DR, Kolkata Benches, Kolkata स×याǒपत ूित/True Copy, आदे शानुसार/ By order, सहायक पंजीकार/Asstt. Registrar.