Dev Cot Industries, Mehsana V. The Income tax officer, Patan Ward-4, Mehsana

ITA 138/AHD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94781 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 16-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADIP KR MAJUMDAR
• Keywords: Unexplained expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: S H RI ANIL CHATURVEDI , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER DEV COT INDUSTRIES, SURVEY NO . 3/1/B, THOL ROAD, AT; KADI, DIST.: MEHSANA PAN: AAFFD0464N (APPELLANT) VS INCOME TAX OFFICER, PATAN, WARD - 4, MEHSANA (RESPONDENT) REVENUE BY : S H RI PRADIP KR. MAJUMDAR , SR. D . R. ASSESSEE BY: S H RI PRITESH SHAH , A.R. DATE OF HEARING : 14 - 10 - 2 015 DATE OF PRONOUNCEMENT : 30 - 11 - 2 015 / ORDER P ER : S. S. GODARA , JUDICIAL MEMB ER : - THIS ASSESSEE S APPEAL FOR A.Y. 2009 - 10 , AR ISES FROM ORDER OF THE CIT(A) - III, AHMEDABAD DATED 24 - 10 - 2013 IN APPEAL NO. CIT(A) - III/343 / PATAN WARD - 4, MEHSANA/13 - 14 , IN PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961; IN SHORT THE AC T . I T A NO . 138 / A HD/20 14 A SSESSMENT YEAR 200 9 - 10 I.T.A N O. 138 /AHD/20 2014 A.Y. 2009 - 10 PAGE NO DEV COT INDUSTRIES VS. ITO 2 2. THE ASSESSEE S SOLE SUBSTANTIVE G ROUND CHALLENGES SECTION 271(1)(C) PENALTY OF RS. 90,385/ - IMPOSED BY THE ASSESSING OFFICER IN ORDER DATED 25 - 06 - 2012 AS AFFIRMED IN THE LOWER APPELLATE PROCEEDINGS. FACTS OF THE CASE ARE IN A NARROW COMPASS. THE ASSESSEE - FIRM IS IN COTTON GINNING BUSINESS. THE ASSESSING OFFICER TOOK UP SCRUTINY IN ITS CASE. HE CAME ACROSS ITS OPENING STOCK OF SHANKAR KAPAS BEING VALUED @ RS. 31.71 PER KG WHEREAS THE RELEVANT BILLS INDICATED THE SAME AS RS. 31.25 PER KG RESULTIN G IN ALLEGED OVER VALUATION OF OPENING STOCK @ RS. 0.46 PER KG. THE ASSESSING OFFICER RE - COM P UTED VALUE OF ASSESSEE S OPENING STOCK RESULTING IN ADDITION OF RS. 2,34,600/ - . THE OTHER ADDITION TO BE SEEN FROM ASSESSMENT ORDER DATED 21 - 12 - 2011 APPEARS TO B E THAT OF UNEXPLAINED EXPENDITURE OF RS. 57,906/ - IN THE NATURE OF LABOUR EXPENSES. THE ASSESSING OFFICER CAME ACROSS TIMBER PURCHASE OF RS. 27,677/ - AND RS. 88,136/ - TOTALING TO RS. 1,15,813/ - . THERE WAS NO LABOUR EXPENDITURE D EBITED IN BOOK S . THE ASSES SING OFFICER ADDED 50% OF ITS VALUE HEREINABOVE AS UNEXPLAINED EXPENDITURE AFTER REJECTING ASSESSEE S EXPENDITURE THAT THE TIMBER IN QUESTION WAS PURCHASED FOR USE IN ROLLER GIN ETC. FOR PACKING AND THE SAME STOOD DEBITED IN BUILDING MATERIAL ACCOUNT. HE OBSERVED THAT THERE WAS NO EVIDENCE FORTHCOMING FROM THE CASE FILE IN THIS REGARD. ALL THIS RESULTED IN INITIATION IN IMPUGNED PENALTY PROCEEDINGS. THE ASSESSEE DOES NOT SEEM TO HAVE PREFERRED ANY APPEAL AGAINST THESE TWO ADDITIONS . QUANTUM PROCEEDINGS ACCORDINGLY ATTAINED FINALITY. I.T.A N O. 138 /AHD/20 2014 A.Y. 2009 - 10 PAGE NO DEV COT INDUSTRIES VS. ITO 3 3. WE COME TO PENALTY PROCEEDINGS NOW. THE ASSESSING OFFICER TREATED BOTH THE ABOVE STATED ADDITIONS AS THAT OF CONCEALMENT A N D FURNISHIN G OF INACCURATE PARTICULARS OF INCOME AND IMPOSED THE IMPUGNED MINIMUM PENALTY OF R S. 90,385/ - AS UPHELD IN THE LOWER APPELLATE ORDER. 4. WE HAVE HEARD BOTH THE PARTIES. CASE FILE PERUSED. RELEVANT FACTS NARRATED IN PRECEDING PARAGRAPHS ARE NOT REPEATED FOR THE SAKE OF BREVITY. THE IMPUGNED PENALTY ARISES FROM THE TWO ABOVE STATED ADDITIONS FLOWING FROM RATE DIFFERENCE IN VALUATION OF CLOSING STOCK AND LABOUR EXPENDITU RE ADDITION (SUPRA). NEEDLESS TO SAY, THE FORMER ONE IS ONLY A CALC ULATION ERROR @ RS. 0.46 PER KG OF COTTON STOCK ( SUPRA) WHICH COULD NOT DETECT ONLY ON THE BASIS O F MATERIAL AVAILABLE IN THE CASE FILE. THE LATTER ONE PERTAINING TO LABOUR EXPENDITURE IS FOUND TO HAVE BEEN MADE ON ESTIMATION ONLY @ 15% OF THE TIMBER PURCHASED (SUPRA). WE OBSERVE IN TH ESE FACTS AND CIRCUMSTANCES THAT NEITHER OF THEM CAN BE SAID TO BE AN ACT OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHI N THE MEANING OF SECTION 271(1)(C) . WE FURTHER QUOTE HON BLE APEX COURT DECISION IN CASE OF CIT VS. RELIANCE PETRO PRODUCT 322 ITR 158 HOLDING THAT EACH AND EVERY ADDITION MADE IN THE COURSE OF ASSESSMENT NECESSARILY RESULT IN IMPOSITION OF PENALTY UNDER THE RELEVANT STATUTORY PROVISION IN SUPPORT FOR DELETING THE PENALTY UNDER CHALLENGE. THE SOLE SUBSTANTIVE GROUND RAISED IN THIS APPEAL SUCCEEDS. I.T.A N O. 138 /AHD/20 2014 A.Y. 2009 - 10 PAGE NO DEV COT INDUSTRIES VS. ITO 4 5. THIS ASSESSEE S APPEAL IS A LLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 30 - 11 - 2015 SD/ - SD/ - ( ANIL CHATURVEDI ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 30 /11 /2015 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,