SARLA M. SANGHVI, MUMBAI V. DCIT CEN CIR 38, MUMBAI

ITA 1230/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100897 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 02-09-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 23-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI N.K . BILLAIYA, ACCOUNTANT MEMBER AND RAM L AL NEGI, JUDICIAL MEMBER / I .T.A. NO. 4101/MUM/2013 ( / ASSESSMENT YEAR : 2004 - 05 SHREE ENTERPRISES, 232/34, 3 RD FLOOR, CHAMBER BHAVAN, KALBADEVI ROAD, MUMBAI - 400 002 / VS. THE DCIT 14(2), AAYAKAR BHAVAN, MUMBAI - 400 020 ./ ./ PAN/GIR NO. : AAAFS 5559C ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: NONE / RESPONDENT BY: SHRI NITIN WAGHMODE / DATE OF HEARING : 01 .0 9 .2015 / DATE OF PRONOUNCEMENT : 01 .0 9 .2015 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A) - 25 , MUMBAI DT. 1 9.3 .201 3 PERTAINING TO ASSESSMENT YEAR 200 4 - 0 5 . 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY MADE U/S. 271(1)(C) OF THE ACT. THE PREVIOUS HISTORY SHOW THAT INSPITE OF THE SERVICE OF THE NOTICE, THE ASSESSEE DID NOT ATTEND THE PROCEEDINGS NOR ANY AUTH ORISED ITA. NO. 4101/M/2013 2 REPRESENTATIVE ATTENDED, THEREFORE, WE HAVE DECIDED TO PROCEED EX - PARTE. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF MANUFACTURING EXPORTING AND DEALING OF FABRICS. THE RETURN FOR THE YEAR WAS SELECTED FOR SCR UTINY ASSESSMENT AND ASSESSMENT WAS MADE U/S. 143(3) OF THE ACT VIDE ORDER DATED 18.12.2006 WHEREIN DISALLOWANCES WERE MADE (A) ON ACCOUNT OF VALUATION OF CLOSING STOCK RS. 25,76,923/ - , (B) ON ACCOUNT OF SHORTAGE RS. 12,83,856/ - . PENALTY PROCEEDINGS WERE INITIATED IN RESPECT OF THESE DISALLOWANCES. ONCE AGAIN, THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF VALUATION OF OPENING AND CLOSING STOCK. THE ASSESSEE FILED THE NECESSARY DETAILS. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS GIVEN T HE SAME VALUATION OF CLOSING STOCK OF FINISHED GOODS WHICH WAS GIVEN IN THE AUDIT REPORT WITHOUT ANY QUANTITATIVE/QUALITATIVE DETAILS. THE ASSESSEE WAS ONCE AGAIN ASKED TO FURNISH EXACTLY VALUATION OF OPENING AND CLOSING STOCK OF FINISHED GOODS AND RAW M ATERIALS SEPARATELY. 3.1. THE ASSESSEE FURNISHED THE DETAILS OF VALUATION OF CLOSING STOCK OF FINISHED GOODS. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF SALES OF FENTS & RAGS. THE ASSESSEE WAS ALSO ASKED TO EXPLAIN WHY THIS BREAK - UP WAS NOT GIVE N IN THE AUDIT REPORT. THE ASSESSEE DID NOT FILE ANY PLAUSIBLE REPLY. THE AO FOUND THAT THE ASSESSEE IN ITS SUBMISSION HAS GIVEN THE DETAILS OF FINISHED GOODS OF 71824.310 MTRS WHEREAS AS PER THE TAX AUDIT REPORT, THE CLOSING STOCK OF FINISHED GOODS IS A T 147722.06 MTRS. ITA. NO. 4101/M/2013 3 3.2. FURTHER, THE AO FOUND THAT AS PER THE TAX AUDIT REPORT, THE ASSESSEE HAS CLAIMED SHORTAGE AT 7.39% ON THE TOTAL CONSUMPTION OF 626730.60 MTRS SHOWING YIELD OF PRODUCTION AT 571435.50 MTRS. ACCORDING TO THE AO, THE ACTUAL PERCENTA GE OF SHORTAGE COMES TO 8.82% WHEREAS THE ASSESSEE HAS CLAIMED 7.39%. THE AO WAS CONVINCED THAT THE ASSESSEE HAS SHOWN ABNORMAL SHORTAGE. THE AO ALLOWED THE CLAIM AT 3.82% AND ADDED BACK RS. 12,83,856 ON ACCOUNT OF EXCESS SHORTAGE. THE PENALTY PROCEEDIN GS HAVE BEEN LEVIED FOR THIS CLAIM OF EXCESS SHORTAGE ALSO. 3.3. IN THE PENAL PROCEEDINGS, THE ASSESSEE COULD NOT ADDUCE ANYTHING MORE THAN WHAT HAS BEEN PROVIDED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. THE AO WAS NOT CONVINCED AND LEVIED PENAL TY OF RS. 12,19,948/ - . 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) AND POINTED OUT THAT THE QUANTUM ADDITION ON ACCOUNT OF EXCESS SHORTAGE HAS BEEN DELETED BY THE TRIBUNAL. THE LD. CIT(A) ACCEPTED THIS CONTENTION AND CANCELLED THE LEVY OF PE NALTY ON ADDITION ON ACCOUNT OF EXCESS SHORTAGE OF RS. 12,83,856/ - . HOWEVER, IN RESPECT OF THE OTHER ADDITION ON ACCOUNT OF VALUATION OF CLOSING STOCK, THE LD. CIT(A) REFERRING TO THE FINDINGS OF THE TRIBUNAL IN QUANTUM APPEAL AT PARA - 5 ON PAGE - 3 & 4 OF H IS ORDER, WAS OF THE OPINION THAT HAD THE CASE NOT BE ING SELECTED FOR SCRUTINY , SUCH TYPE OF APPARENT CONCEALMENT OF INCOME COULD NOT HAVE BEEN UNEARTHED. AFTER REFERRING TO CERTAIN JUDICIAL DECISIONS OF THE HONBLE SUPREME COURT, THE LD. CIT(A) CONFIRME D THE LEVY OF PENALTY ON ACCOUNT OF VALUATION OF CLOSING STOCK. ITA. NO. 4101/M/2013 4 5. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. 6. AS MENTIONED ELSEWHERE, NONE APPEARED ON BEHALF OF THE ASSESSEE. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE AT LENGTH AND CAREF ULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. IN SO FAR AS THE ADDITION ON ACCOUNT OF EXCESS SHORTAGE IS CONCERNED, THE TRIBUNAL HAS DELETED THE SAID ADDITION, THEREFORE, TO THIS EXTENT, NO PENALTY IS LEVIABLE. HOWEVER, ON THE ADDITION ON ACCOUNT OF VALUATION OF CLOSING STOCK IS CONCERNED, WE FIND THAT EVEN IN THE QUANTUM APPEAL, THE TRIBUNAL HAS CATEGORICALLY DENIED TO ACCEPT THE ADDITIONAL EVIDENCE WH ICH WERE NOT RELEVANT IN THE CASE OF THE ASSESSEE. THE RELEVANT PORTION OF THE TRIBUNALS ORDER IS EXHIBITED AT PAGE - 3 & 4 OF CIT(A)S ORDER, BASED ON WHICH THE LD. CIT(A) HAS CONFIRMED THE PENALTY. WE, THEREFORE, DO NOT FIND ANY ERROR OR INFIRMITY IN THE FINDINGS OF THE LD. CIT(A). ORDER OF THE LD. CIT(A) IS CONFIRMED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST SEPTEMBER , 2015 ( RAM L AL NEGI ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 1 ST SEPTEMBER , 2015 . . ./ RJ , SR. PS ITA. NO. 4101/M/2013 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI