Asstt. Cit vs Leela Associates
2002 Latest Caselaw 2054 Del

ORDER

Phool Singh, J.M.

This appeal, preferred by the revenue, is directed against Commissioner (Appeals)'s order dated 29-7-1997, relating to assessment year 1994-95. Following grounds have been raised in this appeal :

"1. On the facts and in the circumstances of the case, learned Dy. Commissioner (Appeals)-II, N. Delhi, has erred in deleting the addition of Rs. 37,000 made by the assessing officer on account of unexplained investment in purchase of ball-bearings.

2. On the facts and in the circumstances of the case, the learned Dy. Commissioner (Appeals) has erred in admitting evidence in contravention of the provisions of rules 46A of Income Tax Rules. "

2. During assessment proceedings the assessing officer noted that there was a search in which ball-bearings of various sizes and 186 in number were detected. The assessed was asked to produce the vouchers of ball-bearing during search but assessed vide letter dated 24-2-1997, informed that ball-bearing lying at the premises were old one and their value was Nil. These were consumable stores and lost it utility being lying in the stock for last so many years and were nothing but scrap. The assessing officer was not satisfied as he noted.;hat some of the ballbearings were of foreign made and even ball-bearings were found to be old and unserviceable. He deputed his Inspector who reported the value at Rs. 37,000 and addition of this was made in the income of the assessed. The assessed came in appeal before the Commissioner (Appeals) and it was submitted that assessed-firm came into existence with effect from 1-4-1993, and prior to it the same business was proprietary concern of Mr. Suresh Jain. Ball-bearings were having short span and were of revenue nature, the cost of the same being debited to repair and maintenance account. As the ball-bearings were old and lying for so many years, these were treated as scrap. It was also stated that in the just preceding year the machine repair account showed expenses of Rs. 27,032 towards purchase of ball-bearings and that was utilized. The assessing officer had neither brought on record any material to substantiate the fact that assessed made purchases of ball-bearings during the year under consideration nor given any reason to disbelieve the details filed by the assessed. All these facts were considered by the Commissioner (Appeals) who found the same believable and he deleted the addition. Aggrieved, the revenue is in appeal before the Tribunal.

2. During assessment proceedings the assessing officer noted that there was a search in which ball-bearings of various sizes and 186 in number were detected. The assessed was asked to produce the vouchers of ball-bearing during search but assessed vide letter dated 24-2-1997, informed that ball-bearing lying at the premises were old one and their value was Nil. These were consumable stores and lost it utility being lying in the stock for last so many years and were nothing but scrap. The assessing officer was not satisfied as he noted.;hat some of the ballbearings were of foreign made and even ball-bearings were found to be old and unserviceable. He deputed his Inspector who reported the value at Rs. 37,000 and addition of this was made in the income of the assessed. The assessed came in appeal before the Commissioner (Appeals) and it was submitted that assessed-firm came into existence with effect from 1-4-1993, and prior to it the same business was proprietary concern of Mr. Suresh Jain. Ball-bearings were having short span and were of revenue nature, the cost of the same being debited to repair and maintenance account. As the ball-bearings were old and lying for so many years, these were treated as scrap. It was also stated that in the just preceding year the machine repair account showed expenses of Rs. 27,032 towards purchase of ball-bearings and that was utilized. The assessing officer had neither brought on record any material to substantiate the fact that assessed made purchases of ball-bearings during the year under consideration nor given any reason to disbelieve the details filed by the assessed. All these facts were considered by the Commissioner (Appeals) who found the same believable and he deleted the addition. Aggrieved, the revenue is in appeal before the Tribunal.

3. Learned Departmental Representative placed reliance on the order of assessing officer. Learned counsel for the assessed reiterated the same submissions as were taken before the assessing officer and also filed written submissions filed before the Commissioner (Appeals) as well as copy of letter dated 24-2-1997, submitted before the assessing officer along with machine repair account showing expenses of Rs. 27,032 in the year under consideration. It was submitted that ball-bearings were of little value that is why no valuation was made thereof. After considering all the facts I am of the view that Commissioner (Appeals) was justified in deleting the addition. No interference is called for in the order of Commissioner (Appeals).

3. Learned Departmental Representative placed reliance on the order of assessing officer. Learned counsel for the assessed reiterated the same submissions as were taken before the assessing officer and also filed written submissions filed before the Commissioner (Appeals) as well as copy of letter dated 24-2-1997, submitted before the assessing officer along with machine repair account showing expenses of Rs. 27,032 in the year under consideration. It was submitted that ball-bearings were of little value that is why no valuation was made thereof. After considering all the facts I am of the view that Commissioner (Appeals) was justified in deleting the addition. No interference is called for in the order of Commissioner (Appeals).

4. The result is that revenue's appeal stands dismissed.

4. The result is that revenue's appeal stands dismissed.