M/s. Diamond Textiles Mills Pvt. Ltd., Ahmedabad V. ITO, Ward-1(1)(4), Ahmedabad

ITA 1189/AHD/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5512 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 16-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SHYAM PRASAD
• Assessee Lawyers: A C BRAHMAKSHATRIYA
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (CONDUCTED THROUGH VIRTUAL COURT) BEFORE: SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI AMARJIT SINGH, ACCOUNTANT MEM BER M/S. DIAMOND TEXTILE MILLS PVT. LTD. 210, NIKOL ROAD, OPP. THAKKARBAPANAGAR, NIKOL, AHMEDABAD-382350 PAN: AAACD3997L (APPELLANT) VS THE ITO, WARD-1(1)(4), AHMEDABAD (RESPONDENT) REVENUE BY: DR. SHYAM PRASAD, SR. D.R. ASSESSEE BY: SHRI A.C. BRAHMAKSHATR IYA , A.R. DATE OF HEARING : 02-09-2021 DATE OF PRONOUNCEMENT : 17-09-202 1 /ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- THIS ASSESSEES APPEAL FOR A.Y. 2013-14, ARISES FRO M ORDER OF THE CIT(A)-1, AHMEDABAD DATED 27-05-2019, IN PROCEEDIN GS UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961; IN SHORT TH E ACT. ITA NO. 1189/AHD/2019 ASSESSMENT YEAR 2013-14 I.T.A NO. 1189/AHD/2019 A.Y. 2013-14 PAGE NO M/S. DIAMOND TEXTILE MILLS PVT. LTD. VS. ITO 2 2. THE SOLITARY GROUND OF APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) IN SUSTAINING THE PENALTY LEVIE D U/S. 271(1)(C) OF THE ACT OF RS. 1,38,687/- 3. THE FACT IN BRIEF IS THAT ASSESSMENT U/S. 14 3(3) OF THE ACT WAS FINALIZED ON 7 TH MARCH, 2016. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS CLAIMED PROCESS LOSS OF R S. 45,17,186/-. ON QUERY, THE ASSESSEE EXPLAINED THAT IT IS ENGAGED IN THE BU SINESS OF PROCESSING OF FABRICS FROM GREY CLOTH TO FINISHED FABRICS. IT IS EXPLAINED THAT SHRINKAGE OF FABRICS TAKES PLACE AT THE TIME OF PROCESSING DEPEN DING ON THE PROCESS PARAMETERS AND ANY SHORTAGE, SHRINKAGE, WASTAGE IN THE TOTAL FABRIC QUANTITY HAS TO BE COMPENSATED TO THE CUSTOMER. THE ASSESSE E HAS FURTHER STATED THAT IN LOCAL SALES, SHORTAGE AND VALUE LOSS WAS BORNE B Y THE PARTY BUT IN CASE OF SALES TO EXPORTERS, THE SAME WAS BORNE BY ASSESSEE. ON PERUSAL OF THE DETAILS FURNISHED BY THE ASSESSEE, THE ASSESSING OF FICER OBSERVED THAT MOST OF THE BILLS WERE PERTAINED TO LOCAL SALES, THEREF ORE, THE CLAIM OF ASSESSEE FOR PROCESS LOSS OF RS. 45,17,186/- WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE TH E LD. CIT(A). THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE REI TERATING THE FACTS STATED BY THE ASSESSING OFFICER. THE LD. COUNSEL CONTENDE D THAT MERELY IF THE CLAIM OF EXPENSES OF THE ASSESSEE WHICH WAS NOT ACC EPTABLE TO REVENUE THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY U/S. 271(1) (C) OF THE ACT. THE LD. COUNSEL HAS PLACED RELIANCE ON THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT OF GUJARAT HIGH COURT IN THE CASE OF JAYESH J . SHAN VS. CIT-III (2017) I.T.A NO. 1189/AHD/2019 A.Y. 2013-14 PAGE NO M/S. DIAMOND TEXTILE MILLS PVT. LTD. VS. ITO 3 TAXMANN.COM 133 (GUJ) AND DECISION OF HONBLE SUPRE ME COURT IN THE CASE OF CIT, AHD VS. RELIANCE PETRO PRODUCTS P. LTD. (20 10) 189 TAXMAN 322 (SC)., ON THE OTHER HAND, THE LD. DEPARTMENTAL REP RESENTATIVE HAS SUPPORTED THE ORDER OF LOWER AUTHORITIES. 5. HEARD BOTH THE SIDES AND PERUSED THE MATERIA L ON RECORD. THE ASSESSING OFFICER HAS LEVIED PENALTY OF RS. 1,38,687/- U/S. 2 71(1)(C) OF THE ACT FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME IN R ESPECT OF PROCESS LOSS OF RS. 4,48,825/-. WITHOUT REITERATING THE FACTS AS R EFERRED ABOVE IN THIS ORDER, THE ASSESSEE HAS SUBMITTED THAT WASTAGE WAS BORNE B Y THE ASSESSEE IN CASE OF EXPORT SALE AND IN CASE OF LOCAL SALE IT WAS BORNE BY THE PARTIES. IN THE ASSESSMENT MADE U/S. 143(3), THE ASSESSING OFFICER HAS MADE DISALLOWANCE OF PROCESSED LOSS TO THE AMOUNT OF RS. 45,17,186/-. HOWEVER, THE LD. CIT(A) AFTER REDUCING THE SALE MADE FROM WASTAGE PRODUCT I .E. CHINDRI, FANDRAGES FOR RS. 40,68,361/- RESTRICTED THE DISALLOWANCE TO THE EXTENT OF RS. 4,48,825/-. THE ASSESSING OFFICER HAS MAINLY LEVIED PENALTY U/S . 271(1)(C) OF THE ACT ON THE BASIS OF UNEXPLAINED PROCESS LOSS CLAIMED BY TH E ASSESSEE OF RS. 4,48,825/-. WE HAVE GONE THROUGH THE JUDICIAL PRON OUNCEMENT REFERRED BY THE LD. COUNSEL IN THE CASE OF CIT, AHD VS. RELIA NCE PETRO PRODUCTS P. LTD. (2010) 189 TAXMAN 322 (SC) SUPRA WHEREIN IT IS HELD THAT MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM IN THE RETURN OF INCOME CANNOT AMOUNT TO INACCURATE PARTICULARS OF INCOME. IN THE LIGHT OF THE ABOVE FACTS AND FI NDINGS, WE CONSIDER THAT ONLY ON THE BASIS OF NOT ACCEPTING THE CLAIM MADE B Y THE ASSESSEE, THE LEVY OF PENALTY U/S. 271(1)(C) IS NOT APPROPRIATE. ACCO RDINGLY, THE ASSESSING I.T.A NO. 1189/AHD/2019 A.Y. 2013-14 PAGE NO M/S. DIAMOND TEXTILE MILLS PVT. LTD. VS. ITO 4 OFFICER IS DIRECTED TO DELETE THE PENALTY. THEREF ORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17-09-2021 SD/- SD/- (RAJPAL YADAV) (AMARJIT SINGH) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD : DATED 17/09/2021 / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,