1
                                                                    ITA 1386/Del/2013

            IN THE INCOME TAX APPELLATE TRIBUNAL
                  DELHI BENCH "G" NEW DELHI
          BEFORE SHRI G.D. AGRAWAL : VICE PRESIDENT
                             AND
           SHRI GEORGE GEORGE K.: JUDICIAL MEMBER


                      ITA no. 1386/Del/2013
                      Asstt. Yr: 2009-10
Shamli Papers Mills                Vs. ACIT, Circle-1,
Subhash Chowk, Shamli                   Muzaffarnagar (UP).
PAN: AAECS 3641 L

( Appellant )                                        (Respondent)

                Appellant by     :      Shri Sampath Krishna Adv.
                Respondent by    :      Shri B.R.R. Kumar Sr. DR

                     Date of hearing    :       04/03/2015.
                     Date of order      :       10/03/2015.

                           ORDER


PER G.D. AGRAWAL, V.P.:



      This appeal, by the assessee, is directed against CIT(A)'s order dated
02-11-2012, relating to A.Y. 2009-10.

2.    Ground no. 1 of the assessee's appeal reads as under:

      "1. That on the facts and circumstances of the case, the Ld.
      Commissioner of Income Tax (Appeals) has erred in sustaining
      an addition of Rs. 7,16,517/- on account of opening stock of
      imported waste p0aper.
                                            2
                                                                        ITA 1386/Del/2013

3.      At the time of hearing before us, it is stated by the ld. counsel that the
stock of     imported waste paper ("IWP" in short) of Rs. 7,16,517/- was
disclosed in the balance-sheet as on 31-3-2003. Similar balance of the IWP
was shown in the balance-sheet as on 31-3-2004, 31-3-2006, 31-3-2007 and
31-3-2008. During the accounting year relevant to assessment year under
consideration it was found that IWP was not usable for the manufacturing of
paper, for which it was purchased. Therefore, IWP was utilized as fuel for
generation of power. He submitted that the AO has alleged that the paper
must have been sold out of books. However, the AO has not pointed out any
corroborative evidence in support of such allegation. He also pointed out
that the carried forward depreciation of more than Rs. 7 crores was available
to the assessee and even after the set off of Rs. 1.33 crores during the year
under consideration the carried forward depreciation available for set off in
the subsequent year is about Rs. 6.50 crore. Thus, there would be no
question of any motive for suppressing the valuation of closing stock.







4.      The Ld. DR, on the other hand, relied on the orders of authorities
below and stated that no evidence is brought on record by the assessee that
the IWP had become unusable for the manufacturing of paper. Similarly, no
evidence is produced by the assessee for burning of IWP of Rs. 7,16,517/- as
fuel.


5.      We have carefully considered the arguments of both the sides and
perused the material placed before us. The assessee had purchased IWP
during FY 2002-03. Thus, during the relevant financial year it had already
become old by six years. Therefore, without any documentary evidence, in
                                          3
                                                                      ITA 1386/Del/2013

our opinion, passage of seven years is good enough to accept the assessee's
contention that the IWP had become unfit for the manufacturing of paper. It
is not in dispute that the assessee is also in the business of manufacture of
power and coal, paddy husk & baggasse are being utilized as a fuel. If the
assessee has some stock of waste paper which cannot be utilized for the
purpose for which it was purchased, then if the assessee has utilized the
same as fuel, his action is bona fide and should not have been doubted
without any basis. The AO presumed that IWP must have been sold outside
the books but there is no iota of evidence for arriving at such conclusion.
We, therefore, find no justification to sustain the addition of Rs. 7,16,517/-.
The same is deleted.


6.    Ground no. 2 of the assessee's appeal reads as under:

      "2. That on the facts and circumstances of the case, the Ld.
      Commissioner of Income Tax (Appeals) has erred in sustaining
      disallowance of Rs. 75,000/-."



7.    We have heard both the parties and perused the material placed
before us. During the course of assessment proceedings the AO found that
the assessee had debited various expenses in the P&L A/c which could not
be verified for want of complete bills and vouchers. The AO, therefore,
made a lump sum disallowance of Rs. 1,50,000/- on estimate basis.

8.    On appeal, the CIT(A) sustained the disallowance at Rs. 75,000/-.

9.    At the time of hearing before us, the ld. counsel for the assessee
neither produced any detail of the expenses nor pointed out as to how the
                                               4
                                                                      ITA 1386/Del/2013

order of the CIT(A) was not justified. In the absence of proper details of the
expenses and the explanation, we do not find any justification to interfere
with the order of the CIT(A). The same is sustained. Ground no. 2 of the
assessee is rejected.






10.        In the result, assessee's appeal is partly allowed.

           Order pronounced in open court on 10/03/2015.


      Sd/-                                                      Sd/-
( GEORGE GEORGE K. )                                      ( G.D. AGRAWAL)
JUDICIAL MEMBER                                           VICE PRESIDENT
Dated: 10/03/2015.
*MP*
Copy of order to:

      1.   Assessee
      2.   AO
      3.   CIT
      4.   CIT(A)
      5.   DR, ITAT, New Delhi.