ITO,Ward-53(4), Kolkata, Kolkata V. Sri Santi Prasad Dutta, Kolkata

ITA 1129/KOL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3153 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2013
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 03-08-2012
• Court: TRIBUNAL
• Department Lawyers: D K SONOWAL SRDR
• Assessee Lawyers: MANOJ KATARUKA
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.1129/KOL/2012 ASSESSMENT YEAR:2008-09 INCOME TAX OFFICER, WARD-53(4), AAYAKAR BHAVAN DAKSHIN, 2, GARIAHAT ROAD, (SOUTH), KOLKATA 700 068 / V/S . SHRI SANTI PRASAD DUTTA 5, SANTOSH ROY ROAD, BARISHA, KOLKATA 700 008 [ PAN NO.AGEPD 8482 H ] /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI D.K. SONOWAL, SR-DR /BY RESPONDENT SHRI MANOJ KATARUKA, AR /DATE OF HEARING 12-06-2013 /DATE OF PRONOUNCEMENT 11-07-2013 /O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY REVENUE IS ARISING OUT ORDER OF COM MISSIONER OF INCOME-TAX (APPEALS)-XXXIII, KOLKATA (CIT(A) FOR SHORT) IN A PPEAL NO.206/CIT(A)- XXXIII/ITO WD.-53(4), KOL./10-11 DATED 28-05-2012. ASSESSMENT WAS FRAMED BY ITO, WARD NO. 53(4) KOLKATA U/S. 143(3) OF THE INCO ME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED31-12 -2010 FOR ASSESSMENT YEAR (AY) 2008-09. ITA NO.1129/KOL/2012 A.Y.2008-09 ITO WD-53(4) KOL V. SH. SANTI P. DUTTA PAGE 2 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY ASSESSING OFFICER (AO) ON ACCO UNT OF DISCREPANCY IN SALES. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.1:- 1.THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), KOLKATA HAS ERRED IN DELETING THE ADDITION ON THE GROUND THAT THE APP ELLANT MAINTAINS COMPLETE DETAILS OF SALES HAVING NO DISCREPANCY THEREIN AND THAT THERE IS NO MAT4ERIAL TO SUGGEST THAT THE APPELLANT HAD CHARGED ANY AMOUNT OVER AND ABOVE THE SALES SHOWN IN THE BOOKS. 3. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. THE ASSESSING OFFICER (A O) ON EXAMINATION OF EXCISE RECORDS FOUND THAT TOTAL SALES MADE AT RS.2, 74,98,342/-. ACCORDING TO AO, THE EXCISE LEVIED AT RS.45,24,853/- AND VAT AT RS.3 4,34,912/-. ACCORDING TO HIM, ASSESSEE HAS NOT INCLUDED THIS TWO ITEMS IN TH E SALES AND THEREFORE, HE ADDED BOTH THE ITEMS IN THE SALES AND TREATED THE D IFFERENCE IN SALES CREDITED TO TRADING ACCOUNT AT RS.2,74,98,342/- AND RS.3,09,14, 26/- AS COMPUTED BY HIM AND ADDED RS.45,43,891/- TO THE RETURNED OF INCOME OF T HE ASSESSEE. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETE D THE ADDITION BY OBSERVING IN PARA-3.2 OF HIS ORDER, WHICH READS AS UNDER:- 3.2 I HAVE CAREFULLY CONSIDERED FACTS OF THE CASE. THE ASSESSING OFFICER HAS MADE THE ADDITION ON THE BASIS OF SALES WORKED OUT BY ADDING THE ASSESSABLE VALUE OF GOODS WITH EXCISE DUTY AND VAT. THUS, HE HAS PROCEEDED FROM A PREMISE, THAT THE ASSESSABLE VALUE OF GOODS REPRESENTS THE BASIC SALE PRICE. HOW EVER, THAT IS NOT THE CASE, SINCE THE ASSESSABLE VALUE OF GOODS IS NOT SAME AS THE SALE P RICE. AS PER CENTRAL EXCISE ACT, 1944, EXCISE DUTY IS TO BE CHARGED AT THE SPECIFIED PERCENTAGE OF ASSESSABLE VALUE , WHICH IS THE VALUE OF MANUFACTURE GOODS WORKED OUT SPECIFICALLY FOR THIS PURPOSE SECTION 4 OF CENTRAL EXCISE ACT, 1944 PROVIDES THAT THE ASSESSABLE VALUE SHALL, IN A CASE WHERE THE GOODS ARE SOLD BY THE ASSESSEE, FOR DELIVERY AT THE TIME AND PLACE OF THE REMOVAL, THE ASSESSEE AND THE BUYER OF THE GOOD S ARE NOT RELATED AND THE PRICE IS THE SOLE CONSIDERATION FOR THE SALE, THAT BE THE TR ANSACTION VALUE AND IN OTHER CASES THE ASSESSABLE VALUE IS ARRIVED AT ON THE BASIS OF PRES CRIBED RULES FOR VALUATION, I.E., CENTRAL EXCISE VALUATION RULES, 2000. FURTHER, SECT ION 4A PROVIDES THAT IN RELATION TO THOSE GOODS WHICH ARE COVERED UNDER THE STANDARD OF WEIGHTS AND MEASURES ACT, 1976 OR ANY OTHER SIMILAR LAW FOR THE PURPOSE OF DE CLARING THE RETAIL SALE PRICE ON THE PACKAGE THEREOF, AND WHICH HAVE BEEN NOTIFIED, EXCI SE DUTY IS TO BE CHARGED BASED ON THE MAXIMUM RETAIL PRICE AND IN ORDER TO ARRIVE AT THE ASSESSABLE VALUE OF SUCH GOODS, THE CENTRAL GOVERNMENT CAN PERMIT REASONABLE DEDUCT IONS, CALLED ABATEMENT FROM RETAIL SALES PRICE AFTER TAKING INTO ACCOUNT DUTY, SALES TAX AND OTH ER TAXES PAYABLE ON THE GOODS INTO CONSIDERATIONS. IT MAY BE NOTED THAT THE PRODUCT MANUFACTURED BY THE APPELLANT, I.E., TELEVISION, IS ALSO COVERED BY THE PROVISIONS OF SECTION 4A, EXCEPT I CERTAIN CASES WHEREIN SPECIFIC DUTIES HAVE BEEN PRE SCRIBED. IN OTHER WORDS, THE ITA NO.1129/KOL/2012 A.Y.2008-09 ITO WD-53(4) KOL V. SH. SANTI P. DUTTA PAGE 3 ASSESSABLE VALUE IN RESPECT OF MAJOR PORTION OF THE PRODUCTION OF THE APPELLANT IS DETERMINED BY THE RETAIL SALE PRICE, AFTER ALLOWING ABATEMENT AT THE PRESCRIBED PERCENTAGE AND NOT ON THE BASIS OF SALE PRICE OF GO ODS. IT MAY BE MENTIONED HERE, THAT AS A MANUFACTURER, THE APPELLANT SELLS THE GOODS TO THE DISTRIBUTER / WHOLE-SELLER / DEALER AT THE MANUFACTURERS PRICE, WHICH IS NATURA LLY DIFFERENT FROM THE RETAIL PRICE AND MOREOVER THE MARGIN BETWEEN THE TWO PRICES MAY ALSO NOT CORRESPOND TO THE ABATEMENT PERCENTAGE PRESCRIBED FOR COMPUTING THE A SSESSABLE VALUE. THEREFORE, THE ASSESSABLE VALUE IS OBVIOUSLY NOT SAME AS THE BASIC PRICE CHARGED BY THE APPELLANT. MOREOVER, EXCISE DUTY HAS ALSO CHARGED IN RESPECT O F ASSESSABLE VALUE (WORKED OUT IN ACCORDANCE WITH VALUATION RULES) OF FREE OF CHARGE ITEMS FOR WARRANTY SERVICE SUCH AS REMOTE HANDSETS MANUFACTURED BY THE APPELLANT, E VEN THOUGH THEY ARE GIVEN FREE OF CHARGE AND NOT SOLD AT CONSIDERATION. THUS, IT IS C LEAR THAT THE ACTUAL SALE PRICE OF GOODS CHARGED BY THE APPELLANT, WHICH INCIDENTALLY IS DETERMINED AFTER CONSIDERING A NUMBER OF FACTORS INCLUDING THE MARKET CONDITIONS I S NOT FIXED AT THE ASSESSABLE VALUE OF GOODS DETERMINED FOR PURPOSE OF EXCISE. THE ENTI RE ADDITION IS BASED ON THE MIS- CONCEPTION THAT BASIC SALE PRICE IS SAME AS ASSESSA BLE VALUE FOR THE PURPOSE OF LEVY OF EXCISE. THE SALES RECORDED BY THE APPELLANT IN THE BOOKS OF ACCOUNT ARE SUPPORTED BY INVOICES AND MATCH WITH THE ENTRIES IN VAT RETURN. THE APPELLANT MAINTAINS COMPLETE DETAILS OF SALES, IN TERMS OF QUANTITY, AS WELL AS AMOUNT AND NO DISCREPANCY HAS BEEN FOUND THEREIN. THERE IS NO MATERIAL TO SUGGEST THAT THE APPELLANT HAD CHARGED ANY AMOUNT OVER AND ABOVE THE SALES SHOWN IN THE BOOKS. CONSIDERING THIS, THE ADDITION OF RS.45,24,853/- IS NOT SUSTAINABLE AND ACCORDINGLY DELETED . AGGRIEVED, NOW REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSE E HAS FOLLOWED INCLUSIVE METHOD OF EXCISE DUTY AND VAT FOR BOTH PURCHASES AS WELL AS SALES AS PER THE BOOKS OF ACCOUNT. THE AO DURING THE COURSE OF ASSE SSMENT PROCEEDINGS NOTICED THAT HE HAS DEBITED EXCISE DUTY OF RS.45,24,853/- A ND VAT OF RS.34,34,912/- IN THE P&L ACCOUNT BUT DESPITE THIS FACT, HE WAS OF TH E OPINION THAT THE EXCISE DUTY WAS NOT CREDITED IN THE P&L ACCOUNT NOR WAS INCLUDE D IN THE SALES. THIS OPINION OF THE AO IS WITHOUT ANY BASIS. WE FIND FR OM THE EXCISE RETURN WHEREIN SALES RECORDED AT RS.2,74,98,342/-, WHICH IS INCLUS IVE OF EXCISE DUTY. THE TOTAL SALES REFLECTED IN THE RETURN OF INCOME WAS INCLUSI VE OF THE EXCISE DUTY AND VAT AS UNDER: SALES RS.23080293/- EXCISE DUTY RS. 4399011/- TOTAL RS. 27479304/- ITA NO.1129/KOL/2012 A.Y.2008-09 ITO WD-53(4) KOL V. SH. SANTI P. DUTTA PAGE 4 VAT RS. 3434911/- TOTAL SALES AS PER P&L ACCOUNT RS.30914216/- IN VIEW OF THE ABOVE FACTUAL POSITION, THERE BEING NO DIFFERENCE IN THE SALES AS PER BOOKS OF ACCOUNT AND THE EXCISE RETURN WHICH IS INCLUSIVE OF EXCISE DUTY AND VAT, THE CIT(A) HAS RIGHTLY DELETED THE ADDITION MA DE BY AO. WE CONFIRM THE SAME. 5. THE APPEAL OF REVENUE IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 11.07.201 3 SD/- SD/- ( N.S.SAINI) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER KOLKATA, PRONOUNCED BY *DKP SD/- (PRAMOD KUMAR) SD/- (MAHAVIR SINGH) !'# - 11/07/2013 A.M. J.M. %%& %%& %%& %%& '& '& '& '& / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. ''%( ) / CONCERNED CIT 4. ) - / CIT (A) 5. &*+ %%%( , %( / DR, ITAT, KOLKATA 6. +,- ./ / GUARD FILE. BY ORD ER/ , 0/2 '3 %(,