SUVIDHA COLD STORAGE, MUMBAI V. ITO 21(3)(2), MUMBAI

ITA 1783/MUM/2010

• Counselvise Citation: 178319914 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2001-2002
• Appeal Filed On: 08-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VISHWAS V MEHENDALE
• Keywords: Difference of opinion
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NOS. 1783&1784/MUM/2010 (ASSESSMENT YEAR: 2001-02) M/S. SUVIDHA COLD STORAGE INCOME TAX OFFICER - 21(3 )(2) C/O. GANESH MILK AGENCY PRATYAKSHA KAR BHAVAN SHOP NO. 78, S.G. BARVE MARG VS. BANDRA KURLA COMPLEX, BANDRA (E) KURLA (E), MUMBAI 400024 MUMBAI 400050 PAN - AAQFS 3193 Q APPELLANT RESPONDENT APPELLANT BY: SHRI VISHWAS V. MEHENDALE RESPONDENT BY: SHRI R.K. GUPTA O R D E R PER B. RAMAKOTAIAH, A.M. THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE COMMON ORDER OF THE CIT(A)-XXXII, MUMBAI DATED 16.12.2009 CONFIRMIN G THE PENALTY LEVIED BY THE A.O. UNDER SECTION 271(1)(C) FOR THE ASSESSM ENT YEARS 2001-02 AND 2002-03. 2. THE BRIEF FACTS ARE THAT THE ASSESSEE IS IN THE BUS INESS OF SELLING PROCESSING MILK. A SURVEY WAS CARRIED OUT AT THE PR EMISES OF THE ASSESSEE ON 20.02.2002. DURING THE COURSE OF SURVEY, STATEMENT OF SHRI M.P. THOPTE, PARTNER OF THE FIRM WAS RECORDED. THE ASSESSMENT UN DER SECTION 143(3) FOR AY 2001-02 WAS COMPLETED BY MAKING ADDITIONS OF ` 13,02,201/- TOWARDS ESTIMATED PROCESSES GAIN, DISALLOWANCE OF ` 5,44,320/- OUT OF PACKING AND PROCESSING CHARGES AND FURTHER DISALLOWANCE OF ` 3,23,061/- OF TRANSPORTATION CHARGES. FOR A.Y. 2002-03 AO COMPLET ED ASSESSMENT MAKING ADDITIONS OF ` 6,40,703/- TOWARDS INCREASE IN QUANTITY OF MILK, ` 28,984/- TOWARDS TRANSPORTATION AND ` 6,83,854/- FOR PACKING AND PROCESSING CHARGES. THESE ADDITIONS WERE MADE ON THE BASIS OF THE STATE MENTS OF SHRI M.P. THOPTE RECORDED AT THE TIME OF SURVEY. IN APPEAL TH E CIT(A) CONFIRMED THE ITA NOS. 1783&1784/MUM/2010 M/S. SUVIDHA COLD STORAGE 2 ADDITIONS BUT REDUCED THE DISALLOWANCE ON TRANSPORT ATION CHARGES TO ` 1,22,366/-. AGGRIEVED ASSESSEE WENT IN APPEAL BEFOR E THE ITAT. IN THE MEANTIME, ON CONFIRMATION OF THE ADDITIONS BY THE C IT(A) THE A.O. INITIATED PENALTY PROCEEDINGS AND LEVIED PENALTY OF ` 5,12,427/- FOR A.Y. 2001-02 AND ` 3,94,870/- FOR A.Y. 2002-03. MEANWHILE, IN THE QUAN TUM APPEAL THE ITAT HAS GIVEN PARTIAL RELIEF TO THE ASSESSEE ON THREE I SSUES FOR BOTH THE ASSESSMENT YEARS. IN APPEAL, THE CIT(A) HAS DIRECTE D THAT A.O. TO RECOMPUTE THE INCOME ON THE BASIS OF THE ITAT ORDER AND REVIS E THE PENALTY ACCORDINGLY. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECO RD. 4. THE FACTS INDICATE THAT THE A.O. RESORTED TO ESTIM ATION OF INCOME ON THE BASIS OF THE STATEMENT MADE BY SHRI M.P. THO PTE. AS AGAINST THE ADDITION OF ` 5,44,320 AND ` 6,83,854 THE ITAT SUSTAINED ONLY ` 2 LAKHS AND ` 2.5 LAKHS ON ESTIMATION BASIS. LIKE WISE ON PROCESS GAIN THE ADDITIONS WERE REDUCED TO ` 3 LAKHS AND ` 3.9 LAKHS BY THE ITAT. THE DISALLOWANCE ON TRANSPORT CHARGES MADE BY THE A.O. WAS AT 15% OF TH E CLAIM ON ESTIMATE BASIS. MOREOVER THE ASSESSEE SUBMITTED THAT THEY AR E OUTSOURCING THE PROCESS AND SO INCREASE IN MILK PRODUCTION DOES NOT ARISE. CERTAIN ADDITIONS MADE BY THE A.O. ON EXCESS PRODUCTION OF MILK WAS D ELETED BY THE CIT(A) IN QUANTUM APPEALS. EVENTHOUGH THE BASIS FOR ALL THE A DDITIONS IS THE STATEMENT MADE BY THE PARTNER, THERE IS NO EVIDENCE OBTAINED IN THE COURSE OF SURVEY REGARDING ANY EXCESS MILK BEING PRODUCED. IN ALL THE CASES WHERE ESTIMATION IS INVOLVED IT IS AN ALREADY ACCEPTED PR OPOSITION OF LAW THAT PENALTY PROCEEDING ARE NOT ATTRACTED. REFERENCE CAN BE MADE TO THE DECISION OF THE HON'BLE ALLAHABD HIGH COURT IN CIT VS. RAJ B ANS SINGH 276 ITR 351 AND HARIGOPAL SINGH VS. CIT 258 ITR 85. ACCORDINGLY , EVEN THOUGH THE ITAT HAS PARTIALLY CONFIRMED THE ADDITIONS MADE BY THE A .O. ON THE BASIS OF ESTIMATION, PENALTY UNDER SECTION 271(1)(C) IS NOT WARRANTED IN THIS CASE. SUSTAINING PART OF ADDITION DOES NOT INDICATE CONCE ALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. THERE IS ONLY A DIFFERENCE OF OPINION IN ITA NOS. 1783&1784/MUM/2010 M/S. SUVIDHA COLD STORAGE 3 ALLOWING VARIOUS CLAIMS ON PRODUCTION/YIELD AND EXP ENDITURE. IN OUR VIEW THIS DOES NOT WARRANT ANY PENALTY UNDER SECTION 271 (1)(C). THIS VIEW ALSO GETS SUPPORT FROM THE DECISION OF THE HON'BLE SUPRE ME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS P. LTD 222 ITR 158 WHEREIN IT WAS HELD THAT A MERE DISALLOWANCE OF CLAIMS DOES NOT ATTRACT ANY PENALT Y UNDER SECTION 271(1)(C). ACCORDINGLY ASSESSEES GROUNDS IN BOTH THE YEARS AR E ALLOWED. PENALTIES LEVIED IN BOTH THE YEARS ARE HEREBY CANCELLED. 5. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH APRIL 2011. SD/- SD/- (N.V. VASUDEVAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 27 TH APRIL 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XXXII, MUMBAI 4. THE CIT XX1, MUMBAI CITY 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.