M/s. Autobat Batteries Ltd., Nadiad V. The ACIT, Kheda Circle, Nadiad

ITA 1437/AHD/2014

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7600 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 28-01-2020
• Assessment Year: 2001-2002
• Appeal Filed On: 12-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Assessee Lawyers: MANISH J SHAH IN ITA NO AHD
• Keywords: Set aside
• Section: 271(1)(c); 143(3); 2

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SMT. MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NOS. 1437/AHD/2014 & 2351/AHD/2016 ( ASSESSMENT YEAR : 2001-02) M/S. AUTOBAT BATTERIES LTD. AUTOBAT HOUSE, NR. S. T. STAND, NADIAD / VS. ASST. COMMISSIONER OF INCOME TAX KHEDA CIRCLE, NADIAD ./ ./ PAN/GIR NO. : AABCA5922D ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MANISH J. SHAH (IN ITA NO. 1437/AHD/14) & SHRI S. N. DIVATIA WITH SHRI MEHUL TALERA (IN ITA NO. 2351/ AHD/2016) , A.RS. / RESPONDENT BY : SHRI L. P. JAIN, SR. D.R. DATE OF HEARING 28/01/2020 !'# / DATE OF PRONOUNCEMENT 29/01/2020 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED QUANTUM AND PENALTY APPEALS HAVE BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE C OMMISSIONER OF INCOME TAX (APPEALS)-IV, BARODA (CIT(A) IN SHORT), DATED 28.02.2014 ARISING IN THE ASSESSMENT ORDER DATED 16.01.2004 AND ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, VADODARA DATED 05.07.201 6 ARISING IN THE PENALTY ORDER DATED 27.03.2015 PASSED BY THE ASSESS ING OFFICER (AO) ITA NO. 1437/AHD/14 & 2351/AHD/16 [M/S. AUTOBAT BATTERIES LTD. VS. ACIT] A.Y. 2001-02 - 2 - UNDER S. 143(3) & 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT) RESPECTIVELY; CONCERNING A.Y. 2001-02. 2. THE CAPTIONED APPEAL IN ITA NO. 1437/AHD/2014 IN RELATION TO AY 2001-02 CONCERNS APPEAL OF THE ASSESSEE AGAINST THE QUANTUM ADDITION MADE BY THE REVENUE AUTHORITIES. THE APPEAL OF THE ASSESSEE IN ITA NO. 2357/AHD/2016 CONCERNS CONSEQUENTIAL PENALTY UNDER S.271(1)(C) OF THE ACT ON THE QUANTUM ADDITIONS SO MADE. HENCE, BOTH THE APPEALS WERE HEARD TOGETHER AND DISPOSED OF BY THE COMMON ORDER. 3. WE SHALL FIRST TAKE UP QUANTUM APPEAL OF THE ASS ESSEE IN ITA NO. 1437/AHD/2014 FOR ADJUDICATION OF QUANTUM DISPUTE. 4. AS PER THE GROUNDS OF APPEAL, THE ASSESSEE HAS C HALLENGED THE ACTION OF THE CIT(A) IN ENDORSING THE ESTIMATION OF GROSS PROFIT (GP) @ 15% ADOPTED BY AO WHILE CALCULATING THE VALUE OF ST OCK. 5. IN THE INSTANT CASE, THE ASSESSEE FILED THE RETU RN OF INCOME DECLARING TOTAL INCOME AT RS.4,61,960/-. THE ASSES SMENT WAS CARRIED OUT UNDER S.143(3) OF THE ACT WHEREIN CERTAIN ADDITIONS TO THE EXTENT OF RS.30,61,426/- UNDER S.69 OF THE ACT WHICH REPRESEN TS DISCREPANCY IN STOCK. THE AO ADOPTED THE GP RATE FOR IMMEDIATE PR ECEDING FY 1999- 2000 (AY 2000-01) AND APPLIED 15% AS ESTIMATED GP R ATE FOR THE PURPOSE OF ASCERTAINMENT OF AFORESAID AMOUNT OF UNA CCOUNTED INVESTMENT. THE CIT(A) IN THE FIRST APPEAL REFERRE D TO A TABULATED STATEMENT AT PAGE NO.6 OF ITS ORDER ANALYZING THE G ROSS PROFITS FOR FIVE FINANCIAL YEARS (FROM FY 1996-97 TO 2000-01) AND FO UND THE ESTIMATION ADOPTED BY THE AO TO BE IN SYNC WITH THE GP DECLARE D BY THE ASSESSE IN THE PAST. THE CIT(A) ACCORDINGLY DECLINED TO INTER FERE WITH THE ORDER OF THE AO IN THIS REGARD AND DISMISSED THE APPEAL OF T HE ASSESSEE. 6. FURTHER AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE POI NTED OUT THAT THE INSTANT CASE CONCERNS ONLY AN ESTIMATED ADDITION ON ACCOUNT OF ITA NO. 1437/AHD/14 & 2351/AHD/16 [M/S. AUTOBAT BATTERIES LTD. VS. ACIT] A.Y. 2001-02 - 3 - DISCREPANCY IN THE STOCK WHICH ITSELF IS CHALLENGEA BLE IN MANY WAYS. HOWEVER, HE INSISTED THAT THE RATE ADOPTED FOR THE PURPOSES OF ESTIMATION BY THE AO IS EXCESSIVE IN THE CIRCUMSTANCES NARRATE D BEFORE THE CIT(A) AND THEREFORE REASONABLE RELIEF, AT LEAST, SHOULD B E GRANTED FOR THE PURPOSE OF QUANTUM ADDITIONS. 7. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDER OF THE CIT(A) AND SUBMITTED THAT THE GROSS PROFIT RATE HAS BEEN ADOPTED ON A FACTUALLY SOUND BASIS IN TUNE WITH THE WORKING AVAI LABLE AS TABULATED BY THE CIT(A) FOR LAST FIVE YEARS. THE LEARNED DR ACC ORDINGLY SUBMITTED THAT NO INTERFERENCE WITH THE ORDER OF THE CIT(A) I S THUS CALLED FOR. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE APPELLATE ORDER AS WELL AS THE ORDER OF THE AO. THE AO ADOPTED THE GP OF THE PRECEDING FY FOR THE PURPOSE OF ESTIMATIO N OF UNDISCLOSED INCOME. THE CIT(A) HAS ALSO RELATED THE GP RATE WI TH THE LAST FIVE FINANCIAL YEARS. THE GP RATE @15% APPEARS TO BE IN CONSONANCE WITH THE LAST FIVE FINANCIAL YEARS. THEREFORE, THE BASIS OF ESTIMATION CANNOT BE FAULTED. WE DO NOT SEE ANY ERROR IN THE ORDER OF TH E CIT(A) AND THUS DECLINE TO INTERFERE WITH THE ESTIMATED ADDITIONS. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO. 1437/AHD/2014 IS DISMISSED. 10. WE SHALL NOW TURN TO THE PENALTY UNDER S.271(1) (C) OF THE ACT AMOUNTING TO RS.8,95,530/- FLOWING FROM THE AFORESA ID QUANTUM ADDITION. 11. WE SEE CONSIDERABLE MERIT IN THE PLEA RAISED ON BEHALF OF THE ASSESSEE THAT PENALTY UNDER S.271(1)(C) OF THE ACT OUGHT NOT TO HAVE BEEN IMPOSED ON THE ASSESSEE ON SUCH ESTIMATED ADDITIONS IN THE LIGHT OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS. VALIMKBHAI H. PATEL 280 ITR 487 (GUJ). WHILE AO MAY BE JUSTIFIED IN MAKING ESTIMATED DISALLOWANCE IN QUANTUM PROCEEDING S, SUCH DISALLOWANCE/ADDITIONS THAT TOO ON ESTIMATED BASIS, COULD NOT ITA NO. 1437/AHD/14 & 2351/AHD/16 [M/S. AUTOBAT BATTERIES LTD. VS. ACIT] A.Y. 2001-02 - 4 - AUTOMATICALLY FALL WITHIN MISCHIEF OF SECTION 271(1 )(C) OF THE ACT. WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND D IRECT THE AO TO DELETE THE PENALTY OF RS.8,95,530/- IMPOSED UNDER S.271(1) (C) OF THE ACT ON SUCH ESTIMATED ADDITION. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO . 2351/AHD/2016 IS ALLOWED. 13. IN THE COMBINED RESULT, QUANTUM APPEAL OF THE A SSESSEE IN ITA NO. 1437/AHD/2014 IS DISMISSED WHEREAS PENALTY APPEAL I N ITA NO. 2351/AHD/2016 IS ALLOWED. SD/- SD/- (MADHUMITA ROY) (PRADIP KUMAR K EDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 29/01/2020 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 29/01/2 020