No.- ITA No. 1602/Ahd/2013

Shri Rajpal Yadav, JM and Shri Manish Borad, AM.

For The Appellant : Shri James Kurien, Sr.DR
For The Respondent : Shri Aseem Thakker, AR

ORDER

This appeal of Revenue for Asst. Year 2009-10 and the Cross Objection of the assessee are directed against the order of ld. CIT(A)- XI, Ahmedabad, dated 31.03.2013 vide order No.CIT(A)-XI/374/ACITCir. 5/11-12, arising out of the order u/s 143(3) of the IT Act, 1961 (in short the Act) framed on 22.12.2011 by ACIT, Circle-5, Ahmedabad.

2. Briefly stated facts of the case as culled out from the records are that assessee is a limited company engaged in the business of manufacturing of vitrified tiles. Return of income for Asst. Year 2009-10 was filed on 22/09/2009 declaring total income of Rs. 1,32,75,260/- and book profit of Rs. 4,82,76,833/-. Tax was paid as per MAT on the profits u/s 115JB of the Act. Case was selected for scrutiny assessment and notice u/s 143(2) of the Act was issued on 28.10.2011 and duly served on the assessee. Necessary details as called for were duly supplied by the assessee along with audited financial statements, Tax Audit Report and enclosures. The assessment was completed assessing the income at Rs. 1,78,79,354/- after making additions of 46,04,094/- on account of following :-

3. Aggrieved, assessee went in appeal before ld. CIT(A) and partly succeeded.

4. Now Revenue has filed the appeal and the assessee has filed the Cross Objection before the Tribunal.

5. First we take up Revenue’s appeal wherein following grounds have been raised:-
i) The CIT(A) has erred in law and on facts in deleting the addition of Rs. 31,84,930/- made by the A.O. U/S.145A of the Income tax Act.

ii) The CIT(A) has erred in law and on facts in deleting the addition of Rs. 9,278/- on account of late payment of employees contribution to the Provident Fund. . . .

iii) The CIT(A) has erred in law and on facts in allowing the additional deduction claimed u/s.80lB of Rs. 11,22,920/- of ; the vAssessee which was rejected by the A.O. in the assessment order.

iv) On the facts and circumstances of the case, the Ld. Commissioner of Income tax (A) ought to have upheld the order of the Assessing Officer.

v) It is, therefore, prayed that the order of the Ld. Commissioner of Income tax (A) may be set-aside and that of the Assessing Officer be restored. .

Ground No.1 reads as under :-

i) The CIT(A) has erred in law and on facts in deleting the addition of Rs. 31,84,930/- made by the A.O. U/S.145A of the Income tax Act.

6. As regards ground No.1- During the course of assessment proceedings it was observed by ld. Assessing Officer that assessee is valuing closing stock after excluding the tax, duty and cess etc. and thus violating the provisions of section 145A of the Act which mandates that for the purpose of valuation of closing stock, all taxes paid or incurred to bring the goods to the place of location are to be included which the assessee has admittedly not done. It was submitted by assessee before ld. Assessing Officer that assessee is purchasing goods from within the State and outside the State and manufacturing goods.VAT credit is claimed on goods purchased from within the State and in some other categories of goods CST has been paid. On account of these reasons it is not possible to bifurcate each and every item because they are jointly manufactured the goods. It is also contended that system of valuing the stock excluding tax has been consistently adopted and there will be no negative effect on the revenue as the opening stock is also valued net of tax. Ld. Assessing Officer was not convinced with the submissions and after adding the duties and taxes paid on the items in the closing stock addition of Rs. 31,84,930/- was made and closing stock was valued at Rs. 243,413,742/- as against closing stock of Rs. 240,228,812/- shown by the assessee.

7. In the appeal before first appellate authority the impugned addition was deleted.

8. Before the Tribunal, ld. Departmental Representative (DR) submitted that assessee should have adhered to the provisions of section 145A of the Act including the taxes, cess, duties on the goods forming part of closing stock and, therefore, ld. Assessing Officer has rightly made the addition.

9. On the other hand, ld. Authorised Representative (AR) supporting the order of ld. CIT(A) submitted that the assessee company purchased goods both from within the State and outside the State and all the stocks of raw materials, packing materials, stores and consumables as on 31.3.2009 are not VAT credit stocks. Further categorical details of the VAT credit and non-VAT credits inputs consumption values in the stock of finished goods and semi finished goods is infeaible to determine. It was further submitted that the valuation has been done under the compliance of Accounting Standards prescribed by the Institute of Chartered Accounts of India which are to be followed for preparing financial statement as per the Companies Act. Stocks are valued excluding tax and duties. However, in any case it would not have any impact on the total income of the assessee company as all VAT credit purchases are debited to purchases exclusive of taxes and opening stocks have also been valued excluding taxes.

10. Ld. AR further submitted that assessee company was enjoying the benefit of excise notification and therefore, since it was paying excise at a concessional rate it was not entitled to take any benefit of CENVAT credit. It was only on account of this reason that CENVAT was not included in the valuation of stock. Further sample purchases invoices were furnished before ld. Assessing Officer in support of the contention that CENVAT was not included in the purchases of materials. The ld. Assessing Officer had also directly verified the fact with various suppliers by issuance of letters u/s 133(6) of the Act. Reliance was placed on the decision of the Co-ordinate Bench in the case of ACIT(OSD) Circle-5, Ahmedabad vs. Puneet Industries Pvt. Ltd. in ITA No.1443/Ahd/2012 for Asst. Year 2006-07 dated 10.06.2016 and another decision of the Co-ordinate Bench in the case of ACIT, Circle-1, Surat vs. M/s Kirant Industries Pvt. Ltd. in ITA No.1450/Ahd/2012 & CO No.135/Ahd/2012 for Asst. Year 2005-06 vide order dated 4/9/2015.

11. We have heard the rival contentions and perused the material on record and gone through the decisions relied on by the ld. AR. Through this ground Revenue is aggrieved with the order of ld. CIT(A) deleting the addition of Rs. 31,84,930/- made by ld. Assessing Officer u/s 145A of the Act for not valuing the closing stock inclusive of taxes. We observe that assessee is in the business of manufacturing of vitrified tiles. In the process of manufacturing assessee purchases goods from within the State and outside the State due to which VAT credit is available for VAT paid goods purchased from within the State and Central Sales Tax is paid from outside State goods which are included in the purchases itself. Assessee is also covered under the Excise Act and was enjoying concessional rate of excise duty to be leviable on the goods manufactured. Closing stocks of the assessee constitutes raw material, packing material, consumable stores purchased from within and outside the State, semi finished and finished goods. All these categories of closing stock out of which some are inclusive of taxes and some are exclusive of taxes and, therefore, assessee is consistently following the system of valuing the opening and closing stocks exclusive of taxes. Further assessee is applying the Accounting Standards framed by the Institute of Chartered Accountants of India which are required to be followed for preparing financial statements as per the Companies Act. It is not disputed that as per the provisions of section 145A of the Act opening and closing stocks should be inclusive of taxes but due to the type of business and variety of stocks, assessee is unable to do so. However, it is a fact that there is no negative impact on the revenue as both the opening and closing stocks are valued exclusive of taxes and, therefore, closing stock for the year under appeal which is excluding of taxes will become opening stock for next year.

11.1 We further observe that Hon. Jurisdictional High Court in the case of Voltamp Transformers Ltd. vs. CIT (2008) 217 CTR 254 has held that Assessing Officer has got very limited powers to change valuation of closing stock which is part of accounting policy. He cannot change method of accounting regularly followed by the assessee without valid reasons. We further observe that Hon. Apex Court in the case of Chainrup Sampatram (1953) 24 ITR 481 (SC) has held that “profits does not arise out of valuation of closing stock and situs of its arising or accruing where the valuation is made and valuation of unsold stock is necessary part of the process of determining trading results but it can in no sense be regarded as source of such profit.”

11.2 We also observe that during the course of assessment proceedings as well as appellate proceedings it was submitted by assessee that it was paying excise duty on concessional rate and was not taking any benefit of CENVAT which itself is a plausible explanation which remains uncontroverted. Since CENVAT is not available to the assessee then the enhancing the value of semi finished and finished goods in the closing are not warranted.

11.3 We further observe that ld. CIT(A) deleted the impugned addition by observing as follows :-

4.2 I have carefully considered rival contentions. It is seen that a similar issue has been decided by me in favour of the appellant in appeal No.CIT(A)-XI/421/ACIT.Cir-5/10-11 A.Y.2008-09 dated 24.4.2012. For the sake of ready reference the concluding para of this order is reproduced as under ;-

'7.2 / have carefully considered the rival submissions. I have also perused various case laws relied upon by the appellant. Taking the entirety of facts and position of few in view, I am inclined to agree with the submissions of Ld. A.fr for the following reasons:-

(a) The A.O. has not commented on the accounting policies followed by the appellant. The policy of valuation of closing stock is consistently followed by the appellant in the previous years as well as in the succeeding years. The Hon'ble Gujarat High Court in the case of Voltamp Transformers Ltd. v/s. CIT (2008) reported on 217 CTR 254 has held that A.O. has got very limited powers to change valuation of closing stock which is part of accounting policy. The A. O. cannot change method of accounting regularly followed by the assessee without valid reasons. -

(b) Hon'ble Supreme Court in the case of Chainrup Sampatram (1953) reported on 24 ITR 481 has clearly held that profits does not arise out of valuation of closing stock and situs of its arising or accruing where the valuation is made and valuation of unsold stock is necessary part of the process of determining trading results but it can in no sense be regarded as source of such profit.

(c) It is clearly held in the case of CIT v/s. Ahmedabad New Cotton Mills reported at 4 ITC 245 that when the opening and closing stock of business are both undervalued, if the method of alteration of both valuation is not adopted, it is perfectly plain that profits which is brought forward is not real one. In such cases, the real profits of a particular year cannot be ascertained by merely raising value of closing stock, not taking into consideration the similar valuation of opening stock. As per the ratio of this case, enhancing the value of closing stock without giving corresponding effect to the valuation of opening stock is not proper. (d) The appellant during the assessment proceedings as well as \ appellate proceedings submitted that it was paying excise duty at a . concessional rate and accordingly it was not entitled to take benefit of CENVAT credit This is d plausible explanation given by the appellant which remain uncontroverted. In my considered view, since CENVAT benefit is not available to the appellant, accordingly the value of raw material, semi finished goods and finished goods on account of CENVAT in the closing stock is not warranted.

(e) The appellant has also submitted during the appellate: proceedings as well as assessment proceedings that purchase of: primary raw material like China clay is directly procured from mines and the major stores and packing items are purchased from SSI units. These entities are exempt from excise duty. In support of this contention the appellant has furnished copies of purchase bills wherein excise duty has not been charged. Since the appellant is not required to pay excise duty on primary raw materials and major stores and packing items, accordingly, there is justification for making assumption that excise duty was paid on raw material and stores and packing material and making a corresponding enhancement in the valuation of raw material and stores and packing items in the closing stock is not tenable.

In view of the above facts, I am not convinced about the maintainability of addition of Rs. 41,97,900/- in valuation of closing stock. The A. O. is directed to delete addition of Rs. 41,97,900/-. This ground of appeal is allowed."

4.3 The facts in the instant assessment year also remain the same. Accordingly, following the ratio of above mentioned order I am inclined to agree with the contentions of the Ld. A.R. In view of above, addition of Rs. 31.84.930/- is ordered to be deleted. This ground of appeal is allowed.

11.4 We further observe that similar issue came up before the Coordinate Bench in the case of ACIT vs. Puneet Industries Pvt. Ltd. (supra) wherein the Co-ordinate wherein Co-ordinate Bench followed the judgment of Hon. Supreme Court in the case of CIT vs. Indo Nippon Chemicals Co. Ltd. (2003) 261 ITR 275 (SC) and the Bench dismissed the appeal of Revenue by observing as under :-

3. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The issue in the present case is with respect to inclusion of unutilized CENVAT credit to the closing stock. We find that Id.CIT(A) while deleting the addition has given a finding that the assessee was following exclusive method of accounting and the CENVAT was not debited or credited to the Profit & Loss account and the aforesaid method has been consistently followed by the assessee in earlier and succeeding years. We further find that the Hon'ble Apex Court in the case of CIT vs. Indo Nippon Chemicals Co.Ltd. reported at (2003) 261 ITR 275 (SC) observed that unavailed MODVAT credit cannot be construed as income and there is no liability to pay tax on such unavailed MODVAT credit. Further, before us, Revenue has not brought any contrary binding decision in its support. In view of the aforesaid facts, we do not see any reason to interfere with the order of the Id.CIT(A). Thus, the ground of Revenue is dismissed.

12. Respectfully following the decision of Co-ordinate Bench and in the totality of facts and circumstances of the caseand our discussion in the preceding paragraph, we are of the view that no addition of Rs. 31,84,930/- was called for u/s 145A of the Act by ld. Assessing Officer and we, therefore, find no reason to interfere with the order of ld. CIT(A). We uphold the same. This ground of Revenue is dismissed.

13. Ground No.2 reads as under :-

ii) The CIT(A) has erred in law and on facts in deleting the addition of Rs. 9,278/- on account of late payment of employees contribution to the Provident Fund.

14. At the outset ld. DR submitted that the issue raised in this ground is squarely covered in favour of Revenue by the judgment of Hon. Jurisdictional High Court in the case of CIT vs. Gujarat State Road Transport Corporation (GSRTC) 366 ITR 170 (Guj) wherein held that the employees contribution to PF if paid beyond due date it should be disallowed as the assessee was not entitled to its deduction against the income referred in section 28 of the Act.

15. Ld. AR could not controvert the submissions made by ld. DR.

16. We have heard the rival contentions and perused the material placed before us. The issue raised in this ground by Revenue against ld. CIT(A)’s order deleting the addition of Rs. 9,728/- on account of late payment of employees contribution to the PF is now well settled in favour of Revenue by the judgment of Hon. Gujarat High Court in the caseof CIT vs. GSRTC (supra) wherein it has been held that if the amount of contribution fo PF is deposited after the due date then assessee will not be entitled to deduction against the income. Accordingly, this ground of the Revenue is allowed.

17. Ground no.3 of Revenue reads as under :-

iii) The CIT(A) has erred in law and on facts in allowing the additional deduction claimed u/s.80lB of Rs. 11,22,920/- of ; the Assessee which was rejected by the A.O. in the assessment order.

18. Brief facts relating to this ground are that the assessee which is undisputedly eligible for claiming deduction u/s 80IB of the Act and it claimed Rs. 54,36,002/- in the return of income. However, this deduction was revised to 65,58,922/- during the course of assessment proceedings along with revised computation of deduction supported by certificate of Chartered Accountant. Ld. Assessing Officer denied the additional deduction by following the judgment of Hon. Supreme Court in the case of M/s Goetze India Ltd.157 Taxman 1 (SC) by observing that assessee was not entitled to additional deduction as assessee has not filed a revised return of income. Against the order of ld. Assessing Officer, assessee raised ground before ld. CIT(A) which was allowed by ld. CIT(A).

19. Aggrieved, Revenue is now in appeal before the Tribunal.

20. Ld. DR supported the order of Assessing Officer.

21. On the other hand, ld. AR submitted that there is no dispute that the assessee is entitled to deduction u/s 80IB of the Act Rs. 54,36,002/- claimed by the assessee. There is no new claim rather the claim made u/s 80IB was revised and a correct claim of deduction u/s 80IB in accordance with the provisions of the Act was made. It is significant to mention that ld. Assessing Officer has not disputed with respect to the entitlement of deduction of assessee u/s 80IB of the Act and in this context the reliance placed by ld. Assessing Officer on the judgment of Hon. Supreme Court in the case of M/s Goetze India Ltd. (supra) is misplaced because in the present case of assessee no new claim for deduction u/s 80IB has been made and ld. Assessing Officer should not have taken undue mistake on the part of assessee in taking legitimately entitled claim. Ld. AR further submitted that the Hon. Supreme Court in numerous decisions including Ramlal and Ors. Vs. Rewa Coalfields Ltd., AIR 1962 SC 361, The State of West Bengal vs. The Administrator, Howrah Municipality and Ors., AIR 1972 SC 749 and Babumal Raichand Oswal vs. Laxmibai R. Torte, AIR 1975 SC, 1297 stated that the State authorities should not raise technical pleas if the citizens have a lawful right and the lawful right is being denied to them merely on technical grounds. The State authorities cannot adopt the attitude which private litigants might adopt.

22. We have heard the rival contentions and perused the material placed before us. Through this ground Revenue has challenged the ld. CIT(A)’s order allowing addition deduction claimed u/s 80IB of the Act at Rs. 11,22,920/-. We observe that assessee is eligible to claim deduction u/s 80IB of the Act. In the return of income Rs. 54,36,002/- was claimed as deduction u/s 80IB of the Act which was revised to Rs. 65,58,922/- during the course of assessment proceedings duly supported by necessary calculation and report of Chartered Account. Ld. Assessing Officer denied the additional deduction by taking a view that assessee should have revised the return which has not been done so. We further observe that ld. Assessing Officer has not objected to the revised quantum of deduction claimed by assessee at Rs. 65.58,922/- which as per assessee was the correct and legitimate amount as per the provisions of section 80IB of the Act. Ld. Assessing Officer has merely disallowed the claim for not filing revised return of income. It is an established proposition of law that the correct income of the assessee has to be assessed by the Assessing Officer and if there is a rightful claim then the same should be allowed to the assessee. More particularly in this caseof assessee claimed a deduction u/s 80IB of the Act in the return of income so there is no new claim made during the course of assessment proceedings but it is just a correct claim which has been put forward with due supporting before ld. Assessing Officer and the same should have been allowed to the assessee.

22.1 We observe that ld. CIT(A) has allowed assessee’s claim of additional deduction of Rs. 11,22,920/- in a right perspective by observing as follows :-

10.3 I have carefully considered the rival contentions. It is seen that in the original return the appellant has claimed deduction u/s,80IB of Rs. 54,36,002/-. This deduction was revised to Rs. 65,58,922/- during the assessment proceedings. The appellant has filed the report of Chartered Accountant as required by the provisions of sec.80IB along with its application dated 22.8.2009 for revising the claim of deduction u7s.80IB. The A.O. had not accepted the revised claim of deduction u7s.80IB in view the ratio of Goetz India Ltd. 157 Taxman 1 (SC). The above facts make it very clear that the revised claim of deduction u7s.80IB was rejected on technical grounds. The facts available on record clearly indicate that the appellant has made claim for deduction u7s.80IB in the original return and it was revised during the assessment proceedings. Since the appellant has not made a fresh claim of deduction u/s.80IB during the assessment proceedings, accordingly, I am of the considered opinion that ratio of Goetz India Ltd. (supra) will not be applicable. Secondly, the Hon'ble Supreme Court in Goetz India Ltd. (supra) had curtailed the powers of the Assessing Authority, however, powers of Appellate Authorities were no\ curtailed, in view of above, I am of the considered opinion that the ratio of Goetz India Ltd. (supra) is not applicable in this case. It is also an established proposition of law that the A.O. should assess the correct taxable income in the assessment order. In case, the appellant has not made a right claim of deduction u/s.80IB in the original return, the A.O. is duty bound to revise the same in the assessment proceedings. In this regard the appellant has rightly placed reliance on S.R. Koshti vs. CIT 276 ITR 165 (Guj.). In view of above, I am of the considered opinion that the ratio of Goetz India Ltd. (Supra) will fist be attracted in this case and accordingly, the A.O. is directed to accept the revised deduction claimed u/s.80IB of Rs. 65,58,922/-. This ground of appeal is allowed.

23. We are therefore, of the view that ld. CIT(A) has rightly allowed the revised claim of assessee u/s 80IB of the Act at Rs. 65,58,922/-. We therefore, find no reason to interfere with the order of ld. CIT(A). We uphold the same. This ground of Revenue is dismissed.

24. Other grounds are of general nature, which need no adjudication.

25. Now we take up assessee’s Cross Objection bearing No.216/Ahd/2013 wherein following grounds have been raised :-

1. The learned Commissioner of Income Tax (Appeals) has erred in confirming the disallowance of preliminary expenses of Rs. 1,13,068/- made by the Assessing Officer wrongly treating the same as Capital expenditures which has been claimed by the Respondent u/s.35D of the I.T.Act,1961.

2. The learned Commissioner of Income Tax (Appeals) has erred in confirming the addition of Rs. 1,48,310/- made by the Assessing Officer u/s.41(l) of the I.T. Act, 1961 on account of outstanding Creditors in the name of Option Engineering.

3. The learned Commissioner of Income Tax (Appeals) has erred in confirming the disallowance made by the Assessing Officer of Rs. 44,220/- u/s.43B of the I. T. Act, 1961 for the alleged unpaid Professional tax till the due date of filing of the re turn of income.

4. The learned Commissioner of Income Tax (Appeals) has erred in confirming the disallowance of Rs. 25,457/- out of addition of Rs. 7,63,060/- made by the Assessing Officer u/s.43B of the I. T. Act, 1961 for the unpaid Sales Tax liability.

5. The learned Commissioner of Income Tax (Appeals) has erred in confirming the addition of Rs. 3,41,228/ - made by the Assessing Officer for the alleged un-reconciled Credit differences.

The Respondent craves leave to add, alter, amend or modify any of the grounds of Cross Objections on or before the date of hearing.

26. At the outset ld. counsel for the assessee requested for not pressing ground nos. 1 to 4. We accept the request and dismiss these grounds as not pressed.

27. Ground no.5 reads as under :-

1. The learned Commissioner of Income Tax (Appeals) has erred in confirming the addition of Rs. 3,41,228/ - made by the Assessing Officer for the alleged un-reconciled Credit differences.

28. Assessee has raised this ground against the order of ld. CIT(A) confirming addition of Rs. 3,41,228/- made by ld. Assessing Officer for the alleged un-reconciled credit differences.

29. Brief facts relating to this ground are that during the course of assessment proceedings balance of outstanding of certain parties were reconciled with the balances in the books of assessee and in the case of 7 parties, the total difference was Rs. 3,41,228/- which was primarily due to the fact that the assessee has issued credit notes for outstanding which did not find place in the account of the other party and, therefore, Rs. 3,41,228/- was added to the income of assessee.

30. Appeal against this addition before ld. CIT(A) could not bring any relief as it was dismissed by ld. CIT(A) observing as follows :-

9.2 I have carefully considered the rival contention?,. It is seen that the appellant during the year under consideration had allegedly issued credit notes to 7 parties, details of which is recorded on page no.11 of the assessment order. The expenses pertaining to these credit notes has been claimed by the appellant in the P & L A/c. However, the independent enquiries conducted by the A.O. revealed that all the 7 parties had not accounted for these credit notes. During the appellate proceedings the appellant contended that credit notes have been issued and the same has been accounted for in the books of accounts. The books of accounts are duly audited and the auditors had not made any adverse observation. Taking entirety of facts in view, I am not inclined to agree with the contentions of Ld. A.R. The facts available on record clearly indicate that all the parties to whom credit notes were issued has not accounted for these credit notes. The only logical inference that can be derived from this fact is that the appellant has issued these credit notes for his internal use and the parties from whom purchases were made has not taken cognizance of these credit notes. Since the alleged credit notes has not been acknowledged by the suppliers and the appellant has failed to controvert these findings, accordingly, I am not inclined to agree with the contentions of Ld. A.R. In view of above, the addition of Rs. 3,41,228/- being un-reconciled credit difference is confirmed. This ground of appeal is dismissed.

31. Aggrieved, assessee is now in the Cross Objection before us. Ld. counsel submitted that books of assessee are audited u/s 44AB of the Act and ld. Assessing Officer has not rejected the books of account nor has rejected the Tax Audit Report. The difference in the balance sheet with the alleged 7 parties was only on account of credit notes issued by the assessee and such notes are not found in the accounts of the opposite party the assessee cannot be faulted for the same. Further no enquiry has been made with respect to these parties for not recording credit notes. There is no allegation by the Revenue that assessee has understated the sales, overstated the purchases or inflated the expenditure, as the same are fully supported by bills and vouchers which have been duly verified by the ld. Assessing Officer. Therefore, ld. Assessing Officer is in gross error in making the impugned addition of Rs. 3,41,228/-.

32. On the other hand, ld. DR followed the orders of both the lower authorities.

33. We have heard the rival contentions, perused record. Assessee has raised the cross objection against the order of ld. CIT(A) for confirming the addition of Rs. 3,41,228/- for alleged unreconciled credit differences of Rs. 3,41,228/-. We find that the difference of Rs. 3,41,228/- arose in respect of following 7 parties :-

We further observe that ld. counsel for the assessee has contended that these alleged differences were only due to credit notes issued by the assessee. He should not have accounted for in the alleged books of 7 parties. It is a fact that assessee is subjected to audit u/s 44AB of the Act declaring of total income of Rs. 1,32,75,260/- and book profit of Rs. 4,82,76,833/-. Books of accounts have not been rejected by the Assessing Officer and deduction u/s 80IB has also been accepted by him. Assessee is registered under the Excise as well as VAT and statutorily required to file monthly/quarterly statement and all these facts are not disputed. Issuing of credit notes is a normal business activity and arose on account of defective material, change of rates etc. and is a ongoing process. Even from going through the amount of difference which in the case of Panchratna Marbles is Rs. 1309/-, Granito Marketing Rs. 9999/-, Gayatri Trading Co.85965/- and others shows that the difference are only account of minor changes in the bills issued earlier. There is a fair possibility that in the case of some parties credit notes are issued and at the close of the year they may not have been accounted for in the other parties but may have taken in the following months or following year as and when the assessee and other party sits together to reconcile the accounts. These alleged parties are having regular transactions with the assessee round the year and the alleged differences seems to be genuine, in the overall perspective of assessee’s business model. It is also a fact that no enquiries were made with the impugned seven parties for the alleged non-entering of credit notes in their respective books of account and merely their confirmations account was taken as a basis.

33.1 We are, therefore, of the view that in the given facts and circumstances wherein regular books of accounts are maintained and the same are not rejected alleged difference is only on account of credit notes issued which have not been cross verified with the impugned parties and the genuineness of transactions recorded by the assessee, no addition was called for by the ld. Assessing Officer. We therefore, set aside the order of ld. CIT(A) and delete the addition of Rs. 3,41,228/-.

34. Ground no.6 is of general nature, which needs no adjudication.

35. In the result, appeal of Revenue and the Cross Objection of the assessee both are partly allowed.