ELCON DRUGS & FORMULATIONS LTD., Jaipur V. ITO, Jaipur

ITA 157/JPR/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5233 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 28-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DHK
• Assessee Lawyers: RAJIV SOGANI
• Keywords: Additional evidence; Corroborative evidences; Bonafide mistake
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH HKKXPAN] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF;D LN L; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 157/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 M/S ELCON DRUGS & FORMULATIONS LTD., D-68, AMBA BARI, JAIPUR CUKE VS. ITO, WARD-4(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACE 7948 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJIV SOGANI & SHRI ROHAN SOGANI (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 22/06/2016 MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 02/08/2016 VKNS'K@ ORDER PER: LALIET KUMAR, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 10/12/2013 PASSED BY THE LD CIT(A)-1, JAIPUR FOR TH E A.Y. 2006-07, WHEREBY THE ASSESSEE HAS TAKEN THE SO L E GROUND, WHICH IS REPRODUCED AS UNDER:- 1 IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD ASSESSING OFFICER IN IMPOSING PENALTY U/S 271(1) (C) OF THE INCOME TAX ACT, 1961 AMOUNTING TO RS. ITA 157/JP/2014_ M/S ELCON DRUGS & FORMULATIONS LTD. VS ITO 2 3,13,425/-. THE ACTION OF THE LD CIT(A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE PENALT Y OF RS. 3,13,425/- IMPOSED U/S 271(1)(C). 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN ON 30/11/2006 DECLARING TOTAL INCOME AT RS. NIL. THE CA SE WAS SELECTED FOR SCRUTINY ASSESSMENT AND THE NOTICES WERE ISSUED UNDE R SECTION 143 (2) OF THE ACT ALONG WITH THE QUESTIONNAIRE .THEREAFTER T HE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON 30/12/2008 AT A TOTAL INCOME OF RS. 33,15,660/-. IN THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER, THE ORDER SH EET DATED 29 TH OF DECEMBER 2008 WAS REPRODUCED WHICH IS AS UNDER: ORDER SHEET ENTRY DATED 29/12/2008:- SHRI SURESH GUPTA CA & AR, SHRI UMA SHANKAR, RAW MATERIAL STORE KEEPER AND SHRI PRADEEP SINGH PANWAR, FINISHED GOODS IN-CHARGE ATTENDED. DETAILS OF CANCE LLED BATCHES, RAW MATERIAL CONSUMED FILED. RAW MATERIAL REGISTER, BATCH MANUFACTURING REGISTER AND FINISHED GOODS REGISTER PRODUCED WHICH EXAMINED. COPIES OF BATCH MANUFACTURING REGISTER, RG-1, REGISTER FROM P AAM PHARMACEUTICALS ALSO OBTAINED. ON VERIFICATION IT IS FOUND THAT 10 BATCHES FROM EC6022 TO EC6031 FOR IBUCOMB TABLETS FOR MANUFACTUR E OF TOTAL 55 LACS TABLETS WERE PREPARED. RAW MATERIAL LIKE ITA 157/JP/2014_ M/S ELCON DRUGS & FORMULATIONS LTD. VS ITO 3 PARACETAMOL 1624.980 KGS. AND IBUPROFEN-IP 2000 KGS. WERE ISSUED ON 10-3-2006 FOR ALL THE TEN BATCHE S. IN THE RG-1 (A/C PAAM) ON PAGE 09, 4201 BOXES HAVE BEEN SHOWN ON 21.3.2006 AND 1801 BOXES ON 23.3.06. TOTAL BOXES 6002 OF 200 TABLETS EACH (10X20) HAVE BE EN SHOWN. THUS ONLY 12,00,400 TABLETS HAVE BEEN MANUFACTURES AS AGAINST RAW MATERIAL ISSUED FOR MANUFACTURE OF 55 LACS TABLETS. THUS APPARENTLY 43 L ACS TABLETS HAVE NOT BEEN SHOWN IN FINISHED GOODS THOUG H THE SAME HAVE BEEN MANUFACTURED. THE LD. A/R AND HIS ASSISTANTS HAVE BEEN ASKED TO EXPLAIN THIS SHORTAGE IN FINISHED GOODS. IT IS STATED BY THE A/R AND OTHER TWO AUTHORIZED PERSONS (THE STORE KEEPER OF RAW MATERIAL AND THE IN - CHARGE OF F.G.) THAT THE ABOVE TEN BATCHES OF IBUCO MB WERE MANUFACTURED FOR M/S PAAM BIOTECH PVT. LTD., WHICH IS A SISTER CONCERN OF M/S OM TRADERS. REGARDIN G NON REFLECTING THE BALANCE 43 LACS TABLETS, IT IS E XPLAINED BY THEM THAT OUT OF ABOVE 10 BATCHES, ONE BATCH EC6031 OF 5 LACS TABLETS IS FULLY CANCELLED BECAUSE OF HARDNESS. REGARDING REMAINING 38 LACS TABLETS IT IS STATED THAT THE SAME MAY IN WIP OR MAY HAVE BEEN CARRIED FORWARD TO NEXT YEAR FOR WHICH RECORDS OF NEXT YEAR WILL BE LOOKED INTO. CASE DISCUSSED.( EMPHASIS SUPPLIED BY THE BENCH ) ITA 157/JP/2014_ M/S ELCON DRUGS & FORMULATIONS LTD. VS ITO 4 THEREAFTER THE LD ASSESSING OFFICER COMPLETED THE AS SESSMENT AND ASSESSMENT ORDER WAS PASSED BY ASSESSING THE TOTAL INCOME OF RS. 33,15,660/- IN THE INCOME OF THE ASSESSEE. THE LD ASSESSING OFFICER HAS RECORDED HIS SATISFACTI ON FOR IMPOSITION OF PENALTY FOR CONCEALING PARTICULARS OF INCOME AND FU RNISHING INACCURATE PARTICULARS OF INCOME IN THE ASSESSMENT ORDER IN TH E FOLLOWING MANNER AFTER CONSIDERING ALL THE FACTS AND MATERIAL ON RE CORD, THE SUBMISSIONS MADE BY THE LD. A/R, I HOLD THAT DURING THE YEAR THE ASSESSEE THE ASSESSEE HAS MADE SALES OF RS. 298 .08 LACS (@ 75% MATERIAL CONSUMPTION RATIO) BUT IN THE BOOKS OF ACCOUNTS SALE OF RS. 193.68 LACS ONLY HAVE BEEN SHO WN. THE DIFFERENCE BEING RS. 104.40 LACS IS HELD TO BE UNRE CORDED SALE MADE BY THE ASSESSEE DURING THE PERIOD RELEVANT TO A.Y. 2006-07. SINCE THE MATERIAL COST AND OTHER EXPENSE HAVE ALREADY BEEN RECORDED IN THE BOOKS OF A/C, THE UNRE CORDED SALES OF RS. 1,04,00,000/- IS ADDED TO THE TOTAL IN COME OF ASSESSEE. PENALTY PROCEEDINGS U/S 271(1)(C) FOR CONCEALING T HE TRUE PARTICULARS OF INCOME ARE ALSO INITIATED ON THIS IS SUE. 4. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD CIT(A), WHO V IDE ORDER DATED 01/9/2010 HAS HELD AS UNDER:- ITA 157/JP/2014_ M/S ELCON DRUGS & FORMULATIONS LTD. VS ITO 5 I HAVE CONSIDERED FACTS OF THE CASE AND ARGUMENTS TAKEN BY SH. SOGANI QUITE CAREFULLY. I HAVE ALSO CONSIDER ED THE REPORT GIVEN BY THE ASSESSING OFFICER. IT IS SEEN T HAT THE ENTIRE BASIS TO WORK OUT THE UNACCOUNTED SALE WAS HIG HER MATERIAL CONSUMPTION IN PERCENTAGE OF SALES TERMS I N THE PRESENT A.Y. AT 115.42% AS AGAINST SUCH CONSUMPTION RATIO OF 81.5% IN A.Y.2005-06 AND 69.97% IN A.Y.200 4- 05. THE AO HAS CONSIDERED THE AVERAGE CONSUMPTION OF A.Y. 2004-05 AND 2005-06 AS CONSUMPTION RATIO APPLICABLE FOR THE PRESENT A.Y. ALSO AND ON THAT BA SIS HE HAS ESTIMATED THE TURNOVER OF THE PRESENT YEAR. ON THE BASIS OF SUCH ESTIMATED TURNOVER WHEN COMPARED WITH DECLARED TURNOVER OF RS. 193.68 LACS IN THE BOOKS O F ACCOUNTS THE AO HAS TREATED THE DIFFERENTIAL AMOUNT OF RS. 104.40 LACS AS UNRECORDED SALES. TO COME TO THIS CONCLUSION THE ASSESSING OFFICER HAS MADE THE DIFFE RENCE IN OPENING AND CLOSING BALANCE IN THE ACCOUNT OF OM TRADERS AS SHOWN BY THE APPELLANT VIS-A-VIS AS SHOWN B Y M/S OM TRADERS, IT IS CLEAR THAT NO PROPER OPPORTUNI TIES WERE GIVEN TO EXPLAIN AND RECONCILE THE ACCOUNT WITH OM TRADERS AND DURING THE COURSE OF APPELLATE PROCEEDIN GS SUCH RECONCILIATION HAS BEEN FURNISHED WHICH WAS ALSO SENT TO THE ASSESSING OFFICER FOR EXAMINATION AND T O SEND HIS REPORT AFTER GIVING PROPER OPPORTUNITY TO OM TRA DERS. HOWEVER, THE ASSESSING OFFICER COULD NOT RECONCILE T HE ACCOUNTS ON THE GROUND THAT THERE WAS NO COMPLIANCE TO THE SUMMONS ISSUED BY M/S OM TRADER AND SUMMONS ITA 157/JP/2014_ M/S ELCON DRUGS & FORMULATIONS LTD. VS ITO 6 SENT TO M/S PAAM BIOTECH PVT.LTD. RETURNED UNSERVED . WHEN THERE IS DIFFERENCE IN THE BOOKS OF ACCOUNTS T HEN THE ASSESSING OFFICER SHOULD HAVE EXERCISED HIS POWE RS TO ENFORCE THE PRESENCE OF M/S OM TRADERS AND THE PRESE NT WHEREABOUTS OF M/S PAAM BIOTECH PVT.LTD. COULD HAVE BEEN ASCERTAINED FROM THEM. IT IS A FACT THAT THE SUMMONS SENT ON THE ADDRESS OF OM TRADER WERE SERVED. WITH THIS BACKGROUND WHEN THE RECONCILIATION GIVEN B Y SH. SOGANI OF THE ACCOUNT BALANCE OF M/S OM TRADERS AS SHOWN IN THE BOOKS OF ACCOUNTS AND AS SHOWN IN THE BOOKS OF OM TRADER WHICH IS SUPPORTED WITH SUPPORTING EVIDENCES AS GIVEN IN PAPER BOOK IN MY CONSIDERED V IEW BROADLY THE DIFFERENCE IS RECONCILED. THE ASSESSING OFFICER COULD NOT GIVE A SINGLE EVIDENCE THAT APPELLANT COM PANY WAS ENGAGED IN UNACCOUNTED SALES. THE DIFFERENCE OF 3 8 TABLETS HAS BEEN ADMITTED AS A MISTAKE BY SH.SOGANI IN SUBMISSION AND AS PER BATCH WISE INFORMATION IT HAS TO BE SHOWN AS WORK IN PROGRESS WHICH HAS NOT BEEN SHOWN AND THEREFORE, THE CLOSING STOCK AND TOTAL INCOME O F THE APPELLANT IS TO BE INCREASED BY THE AFORESAID WORK I N PROGRESS OF RS.9,31,150/- IF THE AFORESAID CLOSING STOCK OF WORK IN PROGRESS AT RS.9,31,150/- IS CONSIDERED AS P ART OF GROSS PROFIT FOR THE YEAR THEN GP FOR THE YEAR IS ALMOST EQUAL TO GP SHOWN IN PRECEDING A.Y. AND EVEN IF ON ACCOUNT OF CERTAIN DEFECTS IF THE BOOKS OF ACCOUNTS ARE REJECTED THEN BECAUSE OF SUCH INCREASED GP OF THE C URRENT YEAR NO TRADING ADDITION IS SUSTAINABLE. AS FAR AS HIGHER ITA 157/JP/2014_ M/S ELCON DRUGS & FORMULATIONS LTD. VS ITO 7 CONSUMPTION OF RAW MATERIAL AS COMPARED TO PRECEDING A.Y. IS CONCERNED, FIRST OF ALL THE WORK IN PROGRESS OF RS.9,31,150/- HAS NOT BEEN CONSIDERED BY AO AND AFTER CONSIDERING THE SAME THE INSIGNIFICANT DIFFERENCE IS BOUND TO BE BECAUSE OF CANCELLATION OF BATCHES IF THE MANUFACTURED GOODS IS NOT IN ACCORDANCE WITH STANDARD AND PREFIXED QUALITY STANDARDS. UNDER THESE CIRCUMSTANCES IN MY CONSIDERED VIEW THE ADDITION OF RS.9,31,150/- IS SUSTAINED AND SINCE THE AO HAS MADE SUCH ADDITION OF RS.104 LACS THEREFORE, ON THIS ACCOUNT THE APPELLANT GETS RELIEF OF RS.94,68,850/-. 5. THE ASSESSEE AND THE DEPARTMENT BOTH AGGRIEVED BY THE ORDER PASSED BY THE LD CIT(A), PREFERRED APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL BY COMPOSITE ORDER DATED 20/4/2011 HAS HELD AS UNDER:- 2.6 THE LD DR DURING THE COURSE OF PROCEEDING BEFOR E US FILED THE COPY OF LETTER DATED 23/12/10 GIVEN BY M/ S PAAM BIOTECH (P) LTD. AND M/S OM TRADERS. SUCH LETTERS HAVE BEEN FILED BY THESE PARTIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSMENT PROCEEDINGS OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09. HOWEVER, THE REVENUE HAS NOT MADE REQUEST FOR ADMISSION FOR SUCH ADDITIONAL EVIDENCES. THE A.O. IN HIS LETTER HAS NOTICED THAT CASH ENTRIES SHOWN BY THE ASSESSEE IN ITA 157/JP/2014_ M/S ELCON DRUGS & FORMULATIONS LTD. VS ITO 8 THE ASSESSMENT YEAR 2008-09 AGAINST M/S PAAM BIOTECH (P) LTD. AND M/S OM TRADERS ARE FICTITIOUS. HOWEVER, THE LETTERS OF M/S PAAM BIOTECH (P) LTD. AND M/S OM TRADERS ARE NOT RELEVANT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE DIFFERENCE IN OPENING ENTRY WILL BE NOT HAVING ANY RELEVANCE BECAUSE SUCH DIFFERENCE WILL BE ON ACCOUNT OF DISCREPANCIES IN THE EARLIER YEARS. IF THE OPENING DISCREPANCIES IN THE CASE OF M/S OM TRADERS IS REDUCED FROM CLOSING DIFFERENCE THEN THE DISCREPANCIES DURING THE YEAR WILL BE TO THE EXTENT OF RS. 85,189. THUS THE DIFFERENCE OF RS. 85,189/- IS ON ACCOUNT OF OPENING DISCREPANCY TO THE EXTENT OF RS. 5,78,410/- AND THE DISCREPANCY OF RS. 6,67,559/- AT THE END OF THE YEAR. THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THAT 38 LACS TABLETS HAVE BEEN SOLD IN T HE FIRST WEEK OF SUBSEQUENT YEAR AND THESE TABLETS INADVERTENTLY WERE NOT SHOWN IN THE WORK IN PROGRESS. THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE REASONS FOR INCREASE IN MATERIAL CONSUMPTION RATIO. WE, THEREFORE, FEEL THAT THE WORK IN PROGRESS IN RESPECT OF 38 LACS TABLETS HAS BEEN RIGHTLY UPHELD BY THE LD CIT(A). THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE DISCREPANCY OF RS. 85,189/- IN THE ACCOUNT OF M/S OM TRADERS WHICH IS RELEVANT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND THEREFORE, TO THAT EXTENT, THE ADDITION IS REQUIRED TO BE MADE . ITA 157/JP/2014_ M/S ELCON DRUGS & FORMULATIONS LTD. VS ITO 9 THUS WE HOLD THAT THE ADDITION WHICH WAS REQUIRED TO BE MADE WILL BE RS. 10,16,339/-. 6. THE LD ASSESSING OFFICER, INITIATED THE PROCEEDIN GS FOR IMPOSITION OF PENALTY OF RS. 3,13,425/-, ON THE ADDITION OF R S. 9,31,150/- SUSTAINED BY THE LD CIT(A) ON ACCOUNT OF GIVING REASONS THAT N ON-DISCLOSURE OF WORK IN PROGRESS. BEFORE THE LD ASSESSING OFFICER IN PENALTY PROCEEDINGS, THE LD AR OF THE ASSESSEE HAS SUBMITTED AS UNDER:- 1. IN THE ASSESSMENT PROCEEDINGS, THE ID. AO HAD OBSERVED CERTAIN DEFECTS IN THE MANUFACTURING RECORDS. BASED ON HIS OBSERVATIONS, THE ID. ASSESSI NG OFFICER PROCEEDED TO ADD A SUM OF RS. 104 LAC AS UNRECORDED SALES. IN THE APPELLATE PROCEEDINGS IT WA S SUBMITTED THAT MANUFACTURING OF PHARMACEUTICALS IS HIGHLY REGULATED UNDER THE DRUG AND COSMETICS ACT, 1940 AS WELL AS UNDER THE EXCISE LAW. ELABORATE MANUFACTURING RECORDS ARE MAINTAINED BY THE COMPANY. THE CIT (A) HAVING CONVINCED, FOUND NO BASIS FOR THE ID. AO TO MAKE THE SAID ADDITION OF RS.104 LACS AS UNRECORDED SALES. 2. THE APPELLANT COMPANY, MADE SUBMISSION BEFORE TH E HONBLE CIT(A) THAT WIP AMOUNTING TO RS.9,31,150/-, BY MISTAKE COULD NOT BE SHOWN AND REMAINED TO BE INCLUDED IN INVENTORY. THEREFORE, AFTER DELETING THE ENTIRE ADDITION OF RS.104 LACS, HE CONFIRMED AN ITA 157/JP/2014_ M/S ELCON DRUGS & FORMULATIONS LTD. VS ITO 10 ADDITION OF RS.9,31,500/- BEING VALUE OF WORK IN PROGRESS. 3. WHILE CONFIRMING THE ADDITIONS OF RS.9,31,150/-, THE ID. CIT(A) OBSERVED THAT THE ID. AO COULD NOT GIVE A SINGLE EVIDENCE THAT THE APPELLANT COMPANY WAS ENGAGED IN UNRECORDED SALES. THE HONBLE CIT(A) ALSO STATED THAT IF THE ADDITION FOR WIP IS CONSIDERED A S PART OF GROSS PROFIT FOR THE YEAR, THEN THE GP RATE IS ALMOST EQUAL TO THE GP RATE SHOWN IN THE PRECEDING YEAR. ACCORDINGLY, EVEN IF BOOKS OF ACCOUNTS HAD CERTAIN DEFECTS AND BOOKS OF ACCOUNTS ARE NOT REJECTED, NO TRADING ADDITION IS SUSTAINABLE. 4. THE ID. AO IMPOSED THE PENALTY GIVING THE REASON THAT NON-DISCLOSURE OF WIP AND ADMITTING THE SAID ERROR LATER ON IN APPELLATE PROCEEDING, AMOUNT TO FILING OF INACCURATE PARTICULARS OF INCOME. ON THE BASIS OF THE ABOVE, IT WAS CONTENDED BY THE L D AR BEFORE THE LD CIT(A) AND BEFORE US THAT BASIS FOR INITIATION OF PE NALTY, HAS SINCE BEEN CHANGED BY THE LD CIT(A) AFTER PASSING THE ORDER BY THE LD ASSESSING OFFICER IN THE QUANTUM PROCEEDINGS. THEREFORE, THE L D ASSESSING OFFICER COULD NOT HAVE INITIATED THE QUANTUM PROCEEDINGS ON THE BASIS OF THE SAME SATISFACTION RECORDED BY HIM WHILE PASSING THE ASSESSMENT ORDER. ITA 157/JP/2014_ M/S ELCON DRUGS & FORMULATIONS LTD. VS ITO 11 IT WAS SUBMITTED THAT THE SATISFACTION RECORDED BY T HE LD ASSESSING OFFICER WAS ON ACCOUNT OF UNRECORDED SALES OF PRODUC TS WHEREAS THE LD CIT(A) WHILE CONFIRMING THE ADDITION OF RS. 9,31,500 /- ON THE BASIS OF ADMISSION OF THE ASSESSEE AR THAT THERE WERE MISTAK E IN DISCLOSURE OF THE WORK IN PROGRESS TO THE TUNE OF RS. 9,31,150/-. THEREFORE, THE LD CIT(A) HAS ONLY CONFIRMED THE ADDITION OF RS. 9,31,5 00/- AND DELETED THE ADDITION OF RS. 104 LACS AS UNRECORDED SALES ITSELF . ON THE BASIS OF ABOVE, IT WAS SUBMITTED THAT THERE IS COMPLETE CHANG E OF SATISFACTION AND BASIS OF IMPOSITION OF PENALTY, THEREFORE, THE LD ASSESSING OFFICER CANNOT IMPOSE THE PENALTY ON THE BASIS OF THE EARLI ER SATISFACTION RECORDED BY HIM IN THE ASSESSMENT ORDER. 7. THE LD AR OF THE ASSESSEE HAS CONTENDED THAT IN V IEW OF THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF PR ICE WATERHOUSE COOPERS P. LTD. (2012) 348 ITR 306 (SC), THE MISTAKE ADMITTED BY THR AR AND COMMITTED BY THE ASSESSEE WAS AN INADVERTENT AND BONAFIDE MISTAKE AND IT IS NOT POSSIBLE FOR THE ASSESSEE TO GET CONTROL OF ALL THE WORK IN PROGRESS AND NON-DISCLOSURE OF THE WORK IN PR OGRESS DURING THE ASSESSMENT PROCEEDINGS OR PRIOR THERETO, WAS A GENUI NE MISTAKE AND THEREFORE, THE PRINCIPLE LAID DOWN IN THE JUDGMENT O F PRICE WATERHOUSE COOPERS P. LTD. (SUPRA) IS REQUIRED TO BE UPHELD. TH E LD AR FOR ANOTHER ITA 157/JP/2014_ M/S ELCON DRUGS & FORMULATIONS LTD. VS ITO 12 LIMB OF ARGUMENT RELIED UPON THE JUDGMENT OF HONBL E ALLAHABAD HIGH COURT IN THE CASE OF SHADIRAM BALMUKUND (1972) 84 I TR 183 (ALL), DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF ANANDA BAZAR PATRIKA PVT. LTD. (1979) 1 TAXMAN 445 (CAL) AND HON BLE DELHI HIGH COURT DECISION IN THE CASE OF FORTUNE TECHNOCOMPS (P ) LTD. IN ITA NO. 313/2016. IT WAS SUBMITTED BY THE LD AR THAT IN ALL THE THREE JUDGMENTS REFERRED HEREINABOVE, ONCE THE BASIS FOR IMPOSITION OF PENALTY PROCEEDINGS WAS ORDERED OR MODIFIED BY THE FIRST APP ELLATE AUTHORITY, THE ASSESSING OFFICER HAS NO JURISDICTION THEREAFTER TO PROCEED ON THE BASIS OF FINDING OF THE FIRST APPELLATE AUTHORITY OR IN ANO THER WORDS IF IN THE QUANTUM PROCEEDINGS THE ORDER OF THE AO WAS ALTERED BY THE CIT(A) SIGNIFICANTLY THEN THE VERY BASIS OF INITIATION OF PENALTY WAS RENDERED NON-EXISTENT ON THE BASIS OF UNMODIFIED GROUND IS N OT SUSTAINABLE. 8. ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT THE ORDER PASSED BY THE LD ASSESSING OFFICER AND THE LD CIT(A) IN PEN ALTY PROCEEDINGS IS IN ACCORDANCE WITH LAW AND THE ORDER PASSED BY THE LD AS SESSING OFFICER IS IN ACCORDANCE WITH THE PRINCIPLE LAID DOWN BY THE HON 'BLE SUPREME COURT IN NUMBER OF JUDGMENTS BUT HE PARTICULARLY RELIED U PON THE VARIOUS JUDGMENTS OF THE HON'BLE COURT TO CANVAS HIS ARGUME NT THAT THE IMPOSITION OF PENALTY, WAS IN ACCORDANCE WITH LAW. HE FURTHER SUBMITTED ITA 157/JP/2014_ M/S ELCON DRUGS & FORMULATIONS LTD. VS ITO 13 THAT THE JUDGMENT RELIED UPON BY THE LD AR ARE CLEA RLY DISTINGUISHABLE ON FACTS AND IN LAW AND THEREFORE DO NOT HELP THE ASSES SEE. 9. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. FIRST WE WILL DEAL WITH THE ARGUMENT OF THE LD ASSESSING OFFICER THAT WITH THE M ODIFICATION OF AO ORDER BY CIT (A) , THE BASIS FOR ADDITION HAS BEEN SIGNIFICANTLY ALTERED OR NOT ,IN TERMS OF JUDGMENT OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SHADIRAM BALMUKUND (SUPRA), IN OUR VIEW, ALL JUDGME NTS ARE REFERRED IN THE LAST JUDGMENT OF HONBLE DELHI HIGH COURT DECI SION IN THE CASE OF FORTUNE TECHNOCOMPS (P) LTD. (SUPRA) WHEREIN THE HON' BLE HIGH COURT HAS HELD AS UNDER:- '...ONCE THE ASSESSMENT ORDER OF THE AO IN THE QUAN TUM PROCEEDINGS WAS ALTERED BY THE CIT(A) IN A SIGNIFICANT WAY, THE VERY BASIS OF INITIATION OF THE PENALTY PROCEEDINGS WAS RENDERED NON-EXISTENT. THE AO COULD NOT HAVE THEREAFTER CONTINUED THE PENALTY PROCEEDINGS O N THE BASIS OF THE SAME NOTICE. ALSO, THE COURT CONCURS WITH THE CIT (A) AND THE ITAT THAT ONCE THE FINDING OF THE AO ON BOGUS PU RCHASES WAS SET ASIDE, IT COULD NOT BE SAID THAT THERE WAS AN Y CONCEALMENT OF FACTS OR FURNISHING OF INACCURATE PA RTICULARS BY THE ASSESSEE THAT WARRANTED THE IMPOSITION OF PENALT Y UNDER SECTION 271 (1) (C) OF THE ACT..../( BOLD SUPPLIE D BY US ) ITA 157/JP/2014_ M/S ELCON DRUGS & FORMULATIONS LTD. VS ITO 14 IN OUR VIEW, FACTS OF THE CASE ARE REQUIRED TO BE AN ALYSIED ON THE PREMISES AS TO WHETHER THERE IS A SIGNIFICANT ALTE RATION MADE ON THE VERY BASIS OF THE INITIATION OF PENALTY BY THE LD C IT(A) IN THE QUANTUM PROCEEDINGS OR NOT ?. 10. IF LOOK INTO THE ORDER PASSED BY THE LD CIT(A) REFERRED HEREINABOVE, IT IS CLEAR THAT THE LD CIT(A) HAS SUST AINED THE ADDITION OF RS. 9,31,150/- AND FURTHER MENTIONED SINCE THE ASSESSING OFFICER MADE ADDITION OF RS. 104 LACS, THEREFORE, ON THIS ACCOUNT, THE APPELLANT GETS RELIEF OF RS. 96,68,850/-, THEREFORE, AS PER THE RE CORD, THERE IS NO SIGNIFICANT ALTERATION OF THE VERY BASIS OF INITIAT ION OF PENALTY PROCEEDINGS, WHICH COULD HAVE REFERRED THE INITIATIO N OF PENALTY AS NON- EXISTENT , RATHER THE CIT HAS ONLY GRANTED RELIEF FO R REMAINING AMOUNT . THE WHOLE BASIS OF ADDITIONS MADE BY THE ASSESSING O FFICER HAS NOT BEEN SUBSTITUTED BY ALL TOGETHER DIFFERENT BASIS . IN OU R VIEW ADDITION OF RS. 96,68,850/- WAS PART OF RS. 104 LACS ADDITION MADE BY THE AO. THEREFORE THERE IS NO SIGNIFICANT ALTERATION ON THE BASIS OF ADDITION MADE BY THE AO. THEREFORE, IN OUR VIEW, THE BASIS OF SATISFACTION OF AO CONTINUES TO EXIST DESPITE REDUCTION IN QUANTUM BY THE LD CIT(A) AND IT HAS NOT ERODED. ITA 157/JP/2014_ M/S ELCON DRUGS & FORMULATIONS LTD. VS ITO 15 11. THE ANOTHER GROUND TAKEN BY THE LD AR THAT THERE WAS A BONAFIDE MISTAKE AND THEREFORE, IN TERMS OF PARAGRAPH NO. 19 OF THE JUDGMENT IN THE CASE OF PRICE WATERHOUSE COOPERS P. LTD. (SUPRA ), THE ASSESSEE IS ENTITLED TO BE TREATED AT PAR WITH THE ASSESSEE IN T HAT MATTER. WE MAY RECORD THAT IN THE QUANTUM PROCEEDINGS BEFORE THE L D ASSESSING OFFICER, THE ASSESSEE WAS NOT SURE ABOUT ITS STAND AS IS DISC ERNABLE FROM THE ORDERSHEET DATED 29/12/2008 WHERE AT PAGE 35 OF THE PAPER BOOK(SUPRA). THE ORDER SHEET CLEARLY RECORDS THAT TH E ASSESSEE, HAS NOT MADE A CATEGORICAL ASSERTIONS BEFORE THE LD ASSESSI NG OFFICER ABOUT THE STATEMENT OF FACT ABOUT THE WORK IN PROGRESS OF 38 L ACS TABLETS. AS ON THAT DATE I.E. ON 29/12/2008, THERE WAS AN ELEMENT O F DOUBT IN THE MIND OF ASSESSEE BEFORE THE LD ASSESSING OFFICER AND THE REFORE AT BOTH THE ACCOUNTS WITH RESPECT OF PRODUCTION STAGE OR AT THE STAGE OF CARRY FORWARD TO THE NEXT YEAR, THE ASSESSEE HAS SUBMITTED MAY. THIS CLEARLY SHOWS THE MIND OF THE ASSESSEE. MOREOVER, IN THE QUA NTUM PROCEEDINGS BEFORE THE LD CIT(A), THE LD AR HAS ADMITTED THE MIS TAKE AND HAS SUBMITTED THAT AS PER BATCH WISE INFORMATION IT HAS TO BE SHOWN AS WORK IN PROGRESS, WHICH HAS NOT BEEN SHOWN. THEREFORE, STAN DS OF THE ASSESSEE BEFORE THE LD ASSESSING OFFICER AND BEFORE THE LD CIT(A) WERE CONTRARY TO EACH OTHER. THUS IN OUR VIEW, THE ASSESSE E HAS FURNISHED ITA 157/JP/2014_ M/S ELCON DRUGS & FORMULATIONS LTD. VS ITO 16 INACCURATE PARTICULARS OF INCOME AS THE ASSESSEE HA S SUPPRESSED THE PRODUCTION OF 38 LACS TABLETS, WHICH HAS BEEN UPHELD BY THE LD CIT(A). 12. IN OUR VIEW, THE ASSESSEE HAS NOT DISCLOSED THE CORRECT INFORMATION AND HAS FILED INACCURATE PARTICULARS OF INCOME, THEREFORE, THE ASSESSEE HAS CONCEALED THE INCOME OF RS. 9,31,150/- BY NOT DISCLOSING/SHOWING THE WORK IN PROGRESS. BEFORE US, T HE ASSESSEE HAS NOT SHOWN ANY RECORD WHEREBY THE OPENING STOCK OF THE AS SESSMENT YEAR HAS BEEN CORRECTED BY ADDING THE WORK IN PROGRESS IN THE SUBSEQUENT YEAR. IN VIEW THEREOF ALSO WE HAVE NO HESITATION TO U PHOLD THE ORDER PASSED BY THE LD CIT(A). ACCORDINGLY, ORDER PASSED B Y THE LD CIT(A) IS CONFIRMED AND THE APPEAL OF THE ASSESSEE IS DISMISS ED. 13. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/08/2016 SD/- SD/- HKKXPAN YFYR DQEKJ (BHAGCHAND) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 02 ND AUGUST, 2016 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S ELCON DRUGS & FORMULATIONS LTD., JAIPUR. ITA 157/JP/2014_ M/S ELCON DRUGS & FORMULATIONS LTD. VS ITO 17 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD-4(2), JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 157/JP/2014) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR