M/s Pee Tee Agencies, Calicut V. ITO, Calicut

CO 1/COCH/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7143 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-04-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-11-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 04-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Assessee Lawyers: K A RAJENDRAN

Judgement Text

1 ITA NO 664/COCH/2010 CO NO.01/COCH/2011 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKARA N(AM) I.T.A NO. 664/COCH/2010 (ASSESSMENT YEAR 2005-06) ITO, WD.1(3) VS M/S PEE TEE AGENCIES KOZHIKODE CHEROOTY ROAD, CALICUT PAN : AAHFP6636Q (APPELLANT) (RESPONDENT) C.O. NO.01/COCH/2011 (ARISING OUT OF I.T.A NO. 664/COCH/2010) (ASSESSMENT YEAR 2005-06) M/S PEE TEE AGENCIES VS ITO, WD.1(3) CHEROOTY ROAD, CALICUT KOZHIKODE (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SMT. VIJAYAPRABHA ASSESSEE BY : SHRI K.A. RAJENDRAN DATE OF HEARING : 03-04-2012 DATE OF PRONOUNCEMENT : 19-04-2012 O R D E R PER N.R.S. GANESAN (JM) BEING AGGRIEVED BY THE ORDER OF COMMISSIONER OF IN COME-TAX(A)-I, KOCHI DATED 29-09-2010 FOR THE ASSESSMENT YEAR 2005-06 THE R EVENUE HAS FILED THE PRESENT APPEAL BEFORE THIS TRIBUNAL. THE ASSESSEE FILED THE CROSS OBJECTION AGAINST THE VERY SAME ORDER OF THE COMMISSIONER OF INCOME-TAX(A). THEREFORE, 2 ITA NO 664/COCH/2010 CO NO.01/COCH/2011 WE HEARD THE APPEAL OF THE REVENUE AND THE CROSS OB JECTION OF THE ASSESSEE TOGETHER AND ARE DISPOSING OF THE SAME BY THIS COMM ON ORDER. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IN THE A PPEAL IS WITH REGARD TO THE ADDITION MADE BY THE ASSESSING OFFICER WITH REGARD TO STOCK. THE ASSESSING OFFICER FOUND THAT THERE WAS VARIATION IN THE STOCK FOR THE MONTH OF APRIL, MAY AND JUNE, 2004 TO THE EXTENT OF RS. 33,66,444. AFTER CONSIDE RING THE EXPLANATION OF THE ASSESSEE THAT THE GR SHEETS PURCHASED INTER-STATE WAS SUBJECTED TO 4% SALES-TAX WHEREAS THE SAME GOODS PURCHASED LOCALLY WAS NON TA XABLE GOODS; HOWEVER, BOTH THE MATERIALS WERE OF SAME QUALITY WITH SAME P RICE TAG AND THAT IT IS VERY DIFFICULT TO STOCK THESE TWO MATERIALS SEPARATELY, THEY WERE STOCKED TOGETHER, THE ASSESSING OFFICER HELD THAT NO ONE WOULD PAY 4% TAX WHILE PURCHASING NON TAXABLE GOODS. THE ASSESSING OFFICER HAS ALSO REJECTED THE EXPLANATION OF THE ASSESSEE THAT 4% SALES-TAX WAS WRONGLY CREDITED ON THE NON TA XABLE STOCK. CONSIDERING THE EXPLANATION OF THE ASSESSEE, THE ASSESSING OFFICER MADE ADDITION OF RS.33,66,444 ON ACCOUNT OF DIFFERENCE IN STOCK. HOWEVER, ON APPE AL BY THE ASSESSEE, THE COMMISSIONER OF INCOME-TAX(A) FOUND THAT THE ASSESSI NG OFFICER HAS NOT TAKEN INTO CONSIDERATION THE FREIGHT AND UNLOADING CHARGE S TO THE EXTENT OF RS.10,97,246. THUS, THE COMMISSIONER OF INCOME-TAX( A) CONFIRMED THE ADDITION TO THE EXTENT OF RS.22,69,198. 3. THE CONTENTION OF SMT. VIJAYAPRABHA, THE LD.DR I S THAT FREIGHT AND UNLOADING CHARGES IN RESPECT OF TOTAL PURCHASE OF T AXABLE ITEMS IS RS.1,17,24,783 FOR THE MONTH OF APRIL, MAY, JUNE, 2004. THE FREIG HT AND UNLOADING CHARGES IS RS.10,97,246 WHICH WORKS OUT TO 9.36%. THEREFORE, I N RESPECT OF THE PURCHASES MADE IN THE MONTH OF APRIL, MAY, AND JUNE, 2004 THE PROPORTIONATE FREIGHT AND UNLOADING CHARGES @ 9.36% COMES TO RS.2,24,475 ON T HE TOTAL CLOSING STOCK OF RS. 3 ITA NO 664/COCH/2010 CO NO.01/COCH/2011 23,98,240. THEREFORE, THE COMMISSIONER OF INCOME-TA X(A) IS NOT CORRECT IN DELETING THE ADDITION TO THE EXTENT OF RS.10,97,246 . 4. ON THE CONTRARY, SHRI K.A. RAJENDRAN, THE LD.REPR ESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS N OT VALUED THE CLOSING STOCK CORRECTLY. THE ASSESSING OFFICER TOTALLY IGNORED T HE EXPENSES INCURRED BY THE ASSESSEE TO BRING THE GOODS TO SALEABLE CONDITION. THEREFORE, ACCORDING TO THE LD.REPRESENTATIVE, THE COMMISSIONER OF INCOME-TAX(A) HAS RIGHTLY TAKEN INTO CONSIDERATION THE FREIGHT AND UNLOADING CHARGES WHI LE COMPUTING THE VALUE OF THE STOCK. 5. AFTER CONSIDERING THE CONTENTIONS OF THE LD.DR A ND THE LD.REPRESENTATIVE FOR THE ASSEESSEE, WE NOTICE THAT IT HAS TO BE ASCE RTAINED WHETHER THE FREIGHT CHARGES AND UNLOADING CHARGES ARE INCLUDED IN THE V ALUATION OF STOCK BY THE ASSESSING OFFICER OR NOT. THE COMMISSIONER OF INCO ME-TAX(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ONLY ON THE GROUND TH AT THE FREIGHT AND UNLOADING CHARGES WERE NOT TAKEN INTO CONSIDERATION BY THE ASS ESSING OFFICER WHILE VALUING THE STOCK. THE CONTENTION OF THE LD.DR IS THAT THE TOTAL EXPENDITURE ON FREIGHT AND UNLOADING CHARGES ARE 9.36% AND THE PROPORTIONA TE EXPENDITURE FOR THE MONTHS OF APRIL, MAY AND JUNE, 2004 COMES TO RS.2,2 4,475. SINCE THE MATTER NEEDS VERIFICATION AS TO WHETHER THE FREIGHT AND UN LOADING CHARGES ARE INCLUDED IN THE VALUATION OF CLOSING STOCK, THIS TRIBUNAL IS OF THE OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS TO RECONSIDER THE ISSUE IN THE LIGHT OF THE OBJECTION RAISED BY THE LD.DR THAT THE PROPORTIONATE FREIGHT AND UNLOADING CHARGES COMES T O ONLY RS.2,24,475. ACCORDINGLY THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ENTIRE ISSUE OF VALUATION OF CLOSING STOCK IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. 4 ITA NO 664/COCH/2010 CO NO.01/COCH/2011 THE ASSESSING OFFICER SHALL RECONSIDER THE ISSUE AF RESH IN THE LIGHT OF THE CONTENTION RAISED BY THE ASSESSEE AND THE LD.DR AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OP PORTUNITY OF HEARING TO THE ASSESSEE. 6. THE CROSS OBJECTION IS ONLY TO SUPPORT THE ORDER OF THE CIT(A). THEREFORE, IT BECOMES INFRUCTUOUS. ACCORDINGLY, THE SAME IS DISM ISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSE AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF APRIL, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 19 TH APRIL, 2012 PK/- COPY TO: 1. ITO, WD.1(3), KOZHIKODE 2. M/S PEE TEE AGENCIES, CHEROOTY ROAD, CALICUT 3. COMMISSIONER OF INCOME-TAX(A)-I, CALICUT 4. C.I.T., KOZHIKODE 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH