DCIT, Circle - 10, Kolkata, Kolkata V. Riga Sugar Co. Ltd., Kolkata

ITA 1248/KOL/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7539 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2000-2001
• Appeal Filed On: 26-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D R SINDHAL
• Assessee Lawyers: MANOJ KATARUKA
• Keywords: Rectification of order; Audit objection
• Section: 143(3); 154; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , ! . '# . ) [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE SHR I C. D. RAO, AM] $ $ $ $ / I.T.A NO. 1248/KOL/2011 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR : 2000-01 DEPUTY COMMISSIONER OF INCOME-TAX VS. RIGA SUGAR CO. LTD. CIRCLE-10, KOLKATA. (PAN:AABCR 3554 J) (*+ /APPELLANT ) (,-*+/ RESPONDENT ) DATE OF HEARING: 09.01.2012 DATE OF PRONOUNCEMENT: 09.01.2012 FOR THE APPELLANT: SHRI D. R. SINDHAL FOR THE RESPONDENT: SHRI MANOJ KATARUKA . / ORDER PER MAHAVIR SINGH, JM ( , , , , ) THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-XII, KOLKATA IN APPEAL NO.135/XII/CIR-10/07-08 DATED 04.07.2011. ASSESSMEN T WAS FRAMED BY DCIT, CIRCLE-10, KOLKATA U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HE REINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2000-01 VIDE HIS ORDER DATED 31.07. 2002. SUBSEQUENTLY, THE AO PASSED RECTIFICATION ORDER U/S. 154 OF THE ACT VIDE ORDER DATED 21.03.2007, WHICH IS UNDER DISPUTE. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE ADDITION OF UNDER-STATEMENT OF CLOSING STOCK MADE B Y ASSESSING OFFICER IN CONTRAVENTION OF SECTION 145A OF THE ACT I.E. THE EXCISE DUTY ELEMEN T NOT INCLUDED WHILE VALUING THE CLOSING STOCK. FOR THIS, REVENUE HAS ALSO RAISED THE ISSUE THAT THE CIT(A) HAS ERRED IN HOLDING THE RECTIFICATION PROCEEDINGS U/S.154 OF THE ACT AS BAD IN LAW. FOR THIS, REVENUE HAS RAISED FOLLOWING TWO GROUNDS: 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ORDER U/S. 154 WAS BAD IN LAW. 2. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,48,74,000/- ON ACCOUNT OF UNDERVAL UATION OF CLOSING STOCK IN CONTRAVENTION OF SECTION 145A. 2 ITA 1248/K/2011 RIGA SUGAR CO. LTD.. A.Y 2000-01 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE FILED ITS RETURN OF INCOM E ON 30.11.2000, WHICH WAS ASSESSED U/S. 143(3) OF THE ACT VIDE ORDER DATED 31.07.2002 AT A LOSS OF RS.4,48,58,496/-. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED NOTICE U/S. 154 OF THE ACT , ON THE BASIS OF AUDIT OBJECTION FOR RECTIFYING THE MISTAKE THAT THE EXCISE DUTY WAS NOT INCLUDED W HILE VALUING CLOSING STOCK NOR IT WAS DEBITED TO P&L ACCOUNT HAVING NO IMPACT ON THE P&L ACCOUNT OF THE COMPANY. ACCORDINGLY, ASSESSING OFFICER RECTIFIED THE MISTAKE BY RESORTIN G TO THE PROVISION OF SECTION 154 OF THE ACT TO INCLUDE THE AMOUNT OF EXCISE DUTY PAYABLE AT RS.148 .74 LACS IN THE CLOSING STOCK OF THE ASSESSEE. THE CIT(A) DELETED THE ADDITION ON MERITS AS WELL A S ON ASSUMPTION OF JURISDICTION U/S. 154 OF THE ACT BY GIVING FOLLOWING FINDING IN PARA4 AND 5 AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT. THE ADDITION OF RS.14874000/- ON ACCOUNT OF EXCISE DUTY BY THE A.O. WAS BY SOLELY RELYING UPON THE DECISION IN BRITISH PAINTS AND ADDED THE EXCISE DUT Y TO THE CLOSING STOCK. THE APPELLANT CONTENTED THAT IT HAS NEITHER PAID NOR INCURRED THE EXCISE DUTY AND THAT IT HAS NOT DEBITED THE EXCISE DUTY. IT WAS FURTHER CONTENDED THAT IF T HE METHOD OF VALUATION OF CLOSING STOCK IS REVISED TO ADD EXCISE DUTY THE ONE HAS TO VALUE THE OPENING STOCK IN THE SAME LINE. THE OTHER ARGUMENT OF THE APPELLANT IS THAT THE EXCISE DUTY I S NEITHER PAID NOR INCURRED NOR DEBITED SUCH EXCISE DUTY. ACCORDING TO THE APPELLANT, PAYME NT OF EXCISE DUTY ARISES ON REMOVAL OF FINISHED GOODS FORM THE FACTORY PREMISES. THE LEARN ED AR ALSO BOUGHT TO MY NOTICE THAT THE HONBLE TRIBUNAL KOLKATA BENCH IN THE APPELLANTS WO N CASE ON IDENTICAL ISSUE ALLOWED THE APPEAL OF THE APPELLANT FOR THE ASSESSMENT YEAR 200 2-03 AND 2003-04 IN ITA NOS. 2253/KOL./2005 & C.0.NO.220/KOL/2005 AND ITA NOS. 1 244/KOT/2006 AND 1448/KOL/2006). I HAVE PERUSED THE ORDER. 5. IN VIEW OF THE ABOVE AND RESPECTFULLY FOLLOWING THE DECISION OF THE ITAT IN THE APPELLANTS WON CASE THE ADDITION OF RS.29112682/- ON ACCOUNT OF EXCISE DUTY IS DELETED. THE LEARNED A/R HAS ALSO VEHEMENTLY ARGUED THAT THE PROVISIONS OF SECTION 154 IS NOT APPLICABLE AS THERE IS NO PATENT OR APPARENT MISTAK E. I AM CONVINCED WITH THE ARGUMENTS OF THE A.R. ADHERENCE TO THE PROVISIONS OF SECTION 154 CAN ONLY BE TAKEN WHERE THERE IS A MISTAKE APPARENT FROM RECORDS. THE ADDITION MADE BY THE ASSESSING OFFICER U/S 154 FOR RS. 14874000/- ON ACCOUNT OF EXCISE DUTY BY TREATING TH E SAME TO BE A MISTAKE APPARENT FORM RECORDS IS INCORRECT. THE ACCOUNTS OF THE APPELLANT HAVE BEEN AUDITED AND THE AUDITOR HAS MADE NOTES IN THE ACCOUNTS THAT THERE IS NO IMPACT ON THE PROFIT AND LOSS ACCOUNT. THERE IS CASE LAWS OF THE HIGHEST AUTHORITY WHICH ADJUDICATE S THE ISSUES THAT WHERE THERE IS CHARGE IN THE VALUATION OF CLOSING STOCK SIMULTANEOUSLY THE O PENING STOCK SHOULD ALSO BE REVALUED. FURTHER THE APEX BODY HAS ALSO HELD THAT IN CASE WH ERE THERE IS NO IMPACT IN THE PROFIT AND LOSS ACCOUNT THERE IS NO NEED FOR CHANGING THE VALU ATION. CONSIDERING ALL THESE FACTORS THERE CANNOT BE PATENT MISTAKE AND THE ISSUE WAS A MATTER OF DEBATE AND THEREFORE OUTSIDE THE PURVIEW OF SECTION 154. 4. WE FIND THAT THE ISSUE OF INCLUSION OF EXCISE DU TY IS A HIGHLY DEBATABLE ISSUE AND EVEN THE FACT IS NOT KNOWN WHETHER THE OPENING STOCK HAS BEEN GIVEN SAME EFFECT OR NOT, THE CLOSING STOCK CANNOT BE GIVEN EFFECT BY INCLUDING THE EXCIS E DUTY WHILE ACTING U/S. 154 OF THE ACT. THIS IS NOT SUBJECT MATTER OF RECTIFICATION, REASON BEIN G THAT THERE IS NO MISTAKE APPARENT FROM RECORD, WHICH CAN BE RECTIFIED IN SUCH CASES. IN SUCH CASE S, THERE IS A LONG DRAWN DEBATE AND NEW 3 ITA 1248/K/2011 RIGA SUGAR CO. LTD.. A.Y 2000-01 EVIDENCES ARE REQUIRED FOR ADJUSTING THE CLOSING ST OCK QUA THE PAYMENT OF EXCISE DUTY. IN VIEW OF THE ABOVE, WE HAVE NO HESITATION IN UPHOLDING TH E ORDER OF CIT(A) AND THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 5. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 6. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- . '# '#'# '# . ! , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( #! #! #! #!) )) ) DATED : 9TH JANUARY, 2012 /0 %12 3 JD.(SR.P.S.) . 4 ,5 6 5'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT DCIT, CIRCLE-10, KOLKATA. . 2 ,-*+ / RESPONDENT, RIGA SUGAR CO. LTD., 14, N. S. ROAD, KOLKATA-700 001.. 3 . .% ( )/ THE CIT(A), KOLKATA 4. .% / CIT, KOLKATA 5 . >? ,% / DR, KOLKATA BENCHES, KOLKATA -5 ,/ TRUE COPY, .%@/ BY ORDER, 2 /ASSTT. REGISTRAR .