Siddheshwar Sahakari Sakhar Karkhana Ltd., Aurangabad V. Assistant Commissioner of Income-tax,

ITA 172/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9085 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 14-03-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 08-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKAR A RAO, AM . / ITA NO.172/PUN/2016 / ASSESSMENT YEAR : 2011-12 SIDDESHWAR SAHAKARI SAHKAR KARKHANA LTD., MANIKNAGAR, TALUKA SILLOD, DIST. AURANGABAD PAN : AABAS5026I . /APPELLANT VS. ACIT, CIRCLE-1, AURANGABAD . / RESPONDENT / APPELLANT BY : SHRI PRAMOD SHINGTE / RESPONDENT BY : SHRI ACHAL SHARMA, ADDL.CIT / DATE OF HEARING : 14.03.2018 / DATE OF PRONOUNCEMENT: 26.03.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF C IT(A)-1, AURANGABAD, DATED 27-11-2015 FOR THE ASSESSMENT YEAR 2011-1 2. 2. GROUNDS RAISED BY THE ASSESSEE ARE EXTRACTED AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LOWER AUTHORITIES HAVE ERRED IN MAKING THE ADDITION OF RS.1,48,31,113/- ON ACCOUNT OF EXCISE DUTY ON CLOSING STOCK BY DISREGAR DING APPELLANTS CONTENTION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LOWER AUTHORITIES HAVE ERRED IN MAKING THE DISALLOW ANCE OF RS.31,43,714/- ON ACCOUNT OF DELAY IN PAYMENT OF PROVIDENT FUND AN D EMPLOYEES STATE INSURANCE CORPORATION CONTRIBUTION DUES RECOVERED F ROM EMPLOYEES SALARY BY DISREGARDING APPELLANTS CONTENTION IN THIS REGA RD. 2 3. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSESSEE IS A COOPERATIVE SOCIETY AND FILED THE RETURN OF INCOME ON 30-09-2011 DECLA RING TOTAL INCOME OF RS.11,78,665/-. AT THE END OF THE ASSESSMENT PROCEEDIN GS U/S.143(3) OF THE ACT, THE ASSESSED INCOME OF THE ASSESSEE IS DETERMIN ED AT RS.1,68,56,950/-. IN THE ASSESSMENT, AO MADE COUPLE OF ADD ITIONS RELATING TO ADDITION OF EXCISE DUTY OF RS.1,48,31,113/- TO THE CLOSING STOCK AND THE SECOND ADDITION IS WITH REFERENCE TO THE DISALLOWANCES MADE IN CONNECTION WITH THE PAYMENT OF EMPLOYEES CONTRIBUTION TO PROVIDENT F UND AND EMPLOYEES STATE INSURANCE CORPORATION (IN SHORT ESIC). 4. RELEVANT FACTS ON THESE ISSUES INCLUDE THAT THE ASSES SEE WHILE FILING THE RETURN OF INCOME ALONG WITH THE AUDIT REPORT. THE AU DITORS QUALIFIED, IN COLUMN 12(B) OF THE AUDIT REPORT QUANTIFIED THE EXCISE DUT Y OF CLOSING STOCK AMOUNTING TO RS.2,58,71,232/-. OUT OF THAT, RS.1,10,40,1 19/- WAS OFFERED TO TAX IN COMPUTING THE TOTAL INCOME LEAVING THE BA LANCE OF RS.1,48,31,113/-. AS PER THE DISCUSSION GIVEN IN PARA NO.4 O F THE ASSESSMENT ORDER, AO PROCEEDED TO ADD THE SAID SUM OF RS.1,48,31,113/-. ON THIS ISSUE, DURING THE FIRST APPELLATE PROCEEDINGS, ON C ONSIDERING THE SUBMISSION OF THE ASSESSEE, CIT(A) RELIED ON THE SAID STATEM ENT OF THE AUDITORS IN AUDIT REPORT AND PROCEEDED TO CONFIRM THE AD DITION OF RS.1,48,31,113/-. 5. REGARDING THE OTHER ADDITION OF RS.31,43,714/-, AO DISALL OWED THE SAID CLAIM STATING THAT THE SAID PAYMENTS WERE MADE BEYO ND THE PERMITTED DUE DATES SPECIFIED FOR PAYMENT OF EMPLOYEES CONTRIBUTIO N TO THE PROVIDENT FUND AND ESIC. THE DATES ARE PROVIDED IN THE TABULAR FO RM IN PARA NO.6 OF THE ASSESSMENT ORDER. THE DATE OF FILING THE RETURN OF INC OME AS ON 30-09- 2011 AND THE ACTUAL DATE OF PAYMENTS ARE MUCH PRIOR TO THE FILING OF RETURN OF INCOME. DESPITE THE SAME, CIT(A) CONFIRMED THE ADDITION MA DE BY THE AO RELYING ON THE JUDGMENT OF GUJARAT HIGH COURT IN THE CASE OF GUJARAT 3 STATE ROAD TRANSPORT CORPORATION 41 TAXMANN.COM 100. CIT(A) ALSO COMMENTED ON THE SAID JUDGMENT TOO. 6. AGGRIEVED WITH THE DECISION OF CIT(A) ON BOTH THE ISSUES, THE ASSES SEE IS IN APPEAL BEFORE US WITH THE GROUNDS EXTRACTED ABOVE. 7. REGARDING THE ISSUE OF EXCISE DUTY RAISED IN GROUND NO .1, LD. COUNSEL BROUGHT OUR ATTENTION TO JUDGMENT OF BOMBAY HI GH COURT IN THE CASE OF CIT VS. LOKNETE BALASAHEB DESAI S.S.K. LTD. 339 ITR 0288, JUDGMENT OF ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. SA NGAM STRUCTURALS LTD. 35 TAXMANN.COM 448 (ALLAHABAD) AND JUDGM ENT OF DELHI HIGH COURT IN THE CASE OF CIT VS. SVP INDUSTRIES LTD. 50 TAXMANN.COM 229 (DELHI) AND READ OUT THE CONCLUSIONS OF THE SAID JUDGMENTS. WHEN TH E ISSUE RELATING TO THE VERIFICATION OF FACTS AND THE APPLICABILITY OF TH E SAID DECISIONS WAS QUESTIONED, LD. COUNSEL FOR THE ASSESSEE SUBMITTED TH AT FOR THE LIMITED PURPOSE THE MATTER MAY BE REMITTED TO THE FILE OF AO. 8. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENU E AND THE DECISIONS CITED BEFORE US. ACCRUAL OF EXCISE DUTY ON THE STOCK AND THE POINT OF SUCH ACCRUAL IS THE ISSUE. ASSESSEE CLAIMS THAT T HE SAME DO NOT ACCRUE ON THE STOCK IN TRADE AS THE SAME HAS NOT LEFT THE GODOWN/PREMISES WHERE THE STOCK IN TRADE IS STORED. RELEVANT LEGAL PROPO SITIONS FROM THE JUDGMENTS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ARE EXTRACTED HERE AS UNDER FOR THE SAKE OF COMPLETENESS : CIT VS. LOKNETE BALASAHEB DESAI S.S.K. LTD. CONCLUSION : EXCIDE DUTY LIABILITY CRYSTALLISES ON THE DATE OF CLEARANCE OF EXCISABLE GOODS AND NOT ON THE DATE OF MANUFACTURE, AND THEREFORE, EXCISE LIABILITY WAS NOT INCURRED BY ASSESSEE IN RESPECT O F UNSOLD SUGAR LYING IN STOCK AND COULD NOT BE INCLUDED IN THE VALUE OF CLO SING STOCK OF SUGAR. CIT VS. SANGAM STRUCTURALS LTD. IF THE VALUE OF THE EXCISE DUTY HAS TO BE INCLUDED IN THE CLOSING STOCK THEN THE VALUE OF EXCISE DUTY HAS TO BE INCLUDED IN THE OPEN ING STOCK AND IN THAT EVENT THERE WOULD BE NO DIFFERENCE IN THE RESULT OF THE V ALUE OF THE OPENING AND CLOSING STOCK. 4 CIT VS. SVP INDUSTRIES LTD. THE HONBLE HIGH COURT HELD THAT EXCISE DUTY IS BEI NG PAYABLE AT THE TIME OF REMOVAL OF GOODS AND NOT AT THE TIME OF MANUFACTURE , DUTY WOULD BE PAYABLE ONLY AT THE TIME OF UNBONDING. THUS, THE HIGH COUR T CONFIRMED THE ORDER OF THE TRIBUNAL DELETING THE ADDITION. 9. FROM THE ABOVE PROPOSITIONS LAID DOWN BY THE VARIOUS H IGH COURTS, IT IS EVIDENT THAT THE POINT AT WHICH THE EXCISE DUTY IS LEVIE D IS ONLY WHEN THE GOODS ARE CLEARED FROM THE FACTORY PREMISES AND, THEREFOR E, LEVY OF EXCISE DUTY DOES NOT ARISE SO LONG AS THE FINISHED PRODUCTS ARE KEPT IN THE CLOSING STOCK. THEREFORE, WE FIND PRIMA-FACIE IT IS A CASE WHERE THE IMPUGNED CLOSING STOCK HAS NEVER LEFT THE FACTORY PREMISES. IN ANY CASE, IT IS A MATTER OF FACT THAT REQUIRES EXAMINATION OF ACCOUNTS BY THE AO. AS REQUESTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE ISSUE IS REMANDED T O THE FILE OF AO FOR EXAMINATION OF FACTS AND PASSING OF A SPEAKING ORDER. AO IS DIRECTED TO GIVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUND NO.1 IS ALLOWED FOR STATISTICAL PURPOSES. 10. REGARDING THE SECOND ISSUE OF ALLOWABILITY OF PAYMENTS TO EMPLOYEES CONTRIBUTION TO PF AND ESIC, IT IS UNDISPUTED FACT THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 30-09-2011 AND THE PAYMENTS T O THE SAID FUNDS WERE MADE BY THE ASSESSEE WELL BEFORE DUE DATE OF FILING TH E RETURN OF INCOME. CONSIDERING THE UNDISPUTED FACTS, WE ARE OF THE VIEW THAT THE DECISION OF CIT(A) IS REQUIRED TO BE REVERSED. THUS, GROUND NO.2 RAISED BY THE ASSESSEE IS ALLOWED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 26 TH DAY OF MARCH, 2018. SD/- SD/- (SUSHMA CHOWLA) (D.KARUNAKAR A RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; DATED : 26 TH MARCH, 2018. SATISH 5 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A)-1, AURANGABAD 4. / THE CIT-1, AURANGABAD 5. , , / DR A, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PRI VATE SECRETARY , / ITAT, PUNE