Aslon Metallic Pvt.Ltd., Surat V. The Income tax Officer,Ward-1(1), Surat

ITA 199/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6455 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 08-06-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 21-01-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: D K PARIKH
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER DATE OF HEARING : 08/06/2011 DRAFTED ON: 09 /06/2011 ITA NO.199/AHD/2009 ASSESSMENT YEAR : 2004-05 M/S.ASLON METALIC PVT.LTD. 3/797, MUCHHALA STREET ZAMPA BAZAR SURAT VS. ITO WING-1(1) SURAT PAN/GIR NO. : AAECA 1433 C ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI D.K. PARIKH, A.R. RESPONDENT BY: SHRI B.L. YADAV, SR. D.R. O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WHICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-I, SURAT DATED 22/12/2009 AND THE ONLY GROUND OF THE ASSESSEE IS IN RESPECT OF CONFIRMATION OF PENALTY LEVIED U/S.271(1)(C) OF THE I.T.ACT, 1961 OF RS.2,97,123/-. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDIN G PENALTY ORDER PASSED U/S.271(1)(C) OF THE I.T. ACT, 1961 DATED 26 /03/2008 AND ASSESSMENT ORDER MADE U/S.143(3) OF THE ACT DATED 2 2/12/2006 FOR ASSESSMENT YEAR 2004-05 WERE THAT THE ASSESSEE-COMP ANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SELLING OF METALL IC YARN AND JARI. PENALTY PROCEEDINGS WERE INITIATED IN RESPECT OF FO LLOWING TWO ADDITIONS:- ITA NO . 199/AHD/2009 M/S.ASLON METALIC PVT.LTD. VS. ITO ASST.YEAR - 2004-05 - 2 - [I] SUPPRESSION OF VALUE OF CLOSING STOCK RS.2,97,123/- [II] UNDERVALUTION OF CLOSING STOCK RS.4,48 ,126/- 3. AT THE OUTSET, IT IS INFORMED THAT THE PENALTY L EVIED IN RESPECT OF UNDERVALUATION OF CLOSING STOCK OF RS.4,48,126/-; THE SAME WAS DELETED BY THE LEARNED CIT(APPEALS) VIDE PARAGRAPH NO.3.3 W ITH THE OBSERVATION THAT THE IMPUGNED VALUATION WAS ON ESTIMATE BASIS A ND, THEREFORE, THERE WAS NO ELEMENT OF CONCEALMENT FOUND BY THE REVENUE DEPARTMENT. ONCE THIS PORTION OF THE PENALTY HAS ALREADY BEEN DELETE D BY THE FIRST APPELLATE AUTHORITY, THEREFORE, NOT THE SUBJECT MATTER OF THE APPEAL BEFORE US. 3.1. PENALTY IN RESPECT OF SUPPRESSION OF VALUE OF CLOSING STOCK OF RS.2,97,123/- IT HAD THE FOLLOWING FOUR COMPONENTS :- (I) PURCHASE OF COAL OUTSIDE BOOKS OF ACCOUNT S OF RS.37,134/- (II) DIESEL OF RS.96,000/- (III) PACKING MATERIAL OF RS.1,34,889/- (IV) COAL OF RS.29,100/- 4. THE LEARNED CIT(APPEALS) HAS AFFIRMED THE LEVY O F PENALTY. HOWEVER, LEARNED AUTHORISED REPRESENTATIVE MR. D.K. PARIKH HAS INFORMED THAT IN THE QUANTUM APPEAL RESPECTED ITAT A BENCH AHMEDABAD IN ITA NO.1894/AHD/2007 FOR ASSESSMENT Y EAR 2004-05 TITLED AS ASLON METALLIC PVT.LTD. VS. ITO VIDE ORD ER DATED 04/06/2010 HAS DELETED THE ADDITION IN RESPECT OF DIESEL CLOSI NG STOCK OF RS.96,000/- AND ADDITION IN RESPECT OF PACKING MATERIAL OF RS.1 ,34,889/-. RELEVANT PARAGRAPH IS REPRODUCED BELOW:- ITA NO . 199/AHD/2009 M/S.ASLON METALIC PVT.LTD. VS. ITO ASST.YEAR - 2004-05 - 3 - 12. ADDITION IN RESPECT OF COAL PURCHASED ON 31-0 3-2004 FOR RS.29,100/- IS CALLED FOR AS IT IS NEITHER SHOWN IN THE CLOSING STOCK NOR SHOWN AS SOLD NOR CONSUMED. ADDITION IN RESPEC T OF DIESEL IS NOT CALLED FOR BECAUSE THE CONSUMPTION OF DIESEL IN THE CASE IS ABOUT 2000 LITERS PER DAY AND ASSESSEE IS PURCHASIN G DIESEL ON ALMOST EVERY ALTERNATE DAY. THERE WOULD BE SOME DI ESEL IN MACHINERIES AS ON THE OPENING DAY OF THE ACCOUNTING PERIOD AND SIMILARLY THERE WOULD BE SOME DIESEL LEFT T THE END OF THE CLOSING YEAR. IF BOTH ARE NOT SEPARATELY ACCOUNTED FOR THE N THEY WILL NEUTRALIZE THE EFFECT. ONLY CONSEQUENCE WOULD BE T HAT BOOKS OF THE ASSESSEE WOULD BE LIABLE FOR REJECTION. SIMILARLY, NO ADDITION IN RESPECT OF PACKAGING MATERIAL IS CALLED FOR AS THEY ARE INCLUDED IN THE SALE PRICE OF THE FINISHED GOODS EITHER IN THE CLOSING STOCK/OR CONSUMED IN SALES OF GOODS. IF SOME PACKAGING MATE RIAL PURCHASED IS NOT ACCOUNTED FOR IN THE CLOSING STOCK THEN THERE WOULD ALSO BE SOME PACKAGING MATERIAL NOT ACCOUNTED FOR IN THE OPENING STOCK. THE TWO WILL NEUTRALIZE EACH OTHER. THE ONLY EFFECT WOULD BE THAT PROFITS WOULD BE REQUIRED TO BE ESTIM ATED. 13. REGARDING PURCHASE OF COAL OUTSIDE THE BOOKS FO R RS.37,134, WE ARE OF THE VIEW THAT THE ADDITION IS CALLED FOR BECAUSE THE ASSESSING OFFICER HAD SPECIFIC INFORMATION THAT ASS ESSEE HAS PURCHASED 61.890 TON OF COAL. IN FACT THE ASSESSEE HAS BEEN PURCHASING COAL IN DIFFERENT QUANTITIES, THEREFORE ATTEMPT OF THE ASSESSEE TO MATCH 61.890 WITH 62.50 METRIC TONS CAN NOT BE ACCEPTED. THUS, PURCHASE OF THIS COAL REMAINED UNE XPLAINED AND ADDITION OF RS.37,134/- IS CALLED FOR. THUS, TOTAL ADDITION WHICH SURVIVES IS OF RS.37,134/- AND RS.29,100/-. THE OT HER TWO ADDITIONS ARE DELETED. 4.1. IN VIEW OF THIS, ONCE PART RELIEF HAS ALREADY BEEN GRANTED IN THE QUANTUM APPEAL BY THE RESPECTED CO-ORDINATE BENCH, THEREFORE, THERE IS NO QUESTION OF LEVY OF CONCEALMENT PENALTY IN RESPE CT OF THOSE ADDITIONS WHICH NOW STOOD DELETED BY THE TRIBUNAL. WE ORDER ACCORDINGLY AND DIRECT TO GIVE THE PROPER RELIEF ACCORDINGLY. ITA NO . 199/AHD/2009 M/S.ASLON METALIC PVT.LTD. VS. ITO ASST.YEAR - 2004-05 - 4 - 5. NOW WE ARE LEFT WITH THE TWO ITEMS; I.E. PURCHAS E OF COAL OUTSIDE THE BOOKS OF ACCOUNT OF RS.37,134/- AND COAL PURCHA SED ON 31/03/2004 ADDED TO THE CLOSING STOCK OF RS.29,100/-. SINCE T HESE TWO ADDITIONS HAVE BEEN AFFIRMED BY THE TRIBUNAL, THEREFORE, THE ARGUM ENT OF LEARNED AUTHORISED REPRESENTATIVE BEFORE US IS THAT THE ASS ESSEE HAS DEBITED FREIGHT VOUCHERS OF COAL BUT THE COAL WEIGHING 61.8 9 TONS WAS NOT SHOWN AS STOCK OR HAVING BEEN SOLD. WHEN THE MATTER WAS CARRIED BEFORE THE TRIBUNAL, IT WAS OBSERVED AS APPEARED IN THE PARAGR APHS REPRODUCED ABOVE, THAT THE PURCHASE OF COAL WAS FOUND OUTSIDE THE BOOKS OF ACCOUNT AND THE ADDITION WAS MADE ON ACCOUNT OF SOME SPECI FIC INFORMATION WITH THE ASSESSING OFFICER ABOUT THE PURCHASE OF 61.890 TONS OF COAL. THE EXPLANATION OF THE ASSESSEE THAT THE IMPUGNED COAL HAD MATCHED WITH SOME OTHER PURCHASES HAVE ALSO BEEN TURNED DOWN BY THE TRIBUNAL. THE SAID EXPLANATION ABOUT THE PURCHASE OF COAL REMAINE D UNEXPLAINED AND THE ADDITION WAS SUSTAINED. IN THIS REGARD, LEARN ED AUTHORISED REPRESENTATIVE HAS PLEADED THAT THERE SHOULD NOT BE ANY LEVY OF PENALTY PERTAINING TO AN ADDITION OF CLOSING STOCK BECAUSE THE SAME IS REVENUE NEUTRAL BEING CARRIED OVER TO THE NEXT YEAR AS AN O PENING STOCK. ON THE OTHER HAND, FROM THE SIDE OF THE REVENUE LEARNED DE PARTMENTAL REPRESENTATIVE MR. B.L.YADAV HAS PLEADED THAT IT WA S NOT SO BECAUSE IN THIS CASE THE COAL WAS NOT FOUND RECORDED IN THE BO OKS OF ACCOUNT AND THE ABSOLUTE POSSIBILITY WAS THAT THE COAL WAS SOLD OUT SIDE THE BOOKS. BY NOT RECORDING THE PURCHASE OF COAL, THE INTENTION OF TH E ASSESSEE WAS TO CONCEAL THE CORRESPONDING SALES. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE VIEW THAT ONCE THE TRIBUNA L HAS CONFIRMED THE ADDITION, PRIMARILY ON THE GROUND THAT THE IMPUGNE D ADDITION WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SOME SPECIFI C INFORMATION OF ITA NO . 199/AHD/2009 M/S.ASLON METALIC PVT.LTD. VS. ITO ASST.YEAR - 2004-05 - 5 - PURCHASE OF COAL WHICH WAS NOT FOUND RECORDED IN TH E BOOKS OF ACCOUNT, THEREFORE, IT WAS A FIT REASON FOR LEVY OF CONCEALM ENT PENALTY. MERELY BY DEBITING AN EXPENDITURE STATED TO BE FREIGHT EXPEND ITURE DID NOT MEAN THAT THE ASSESSEE HAD THE INTENTION OF TRULY RECORDING T HE PURCHASE OF COAL. RATHER, THIS FACT GOES AGAINST THE ASSESSEE BECAUSE THE EXPENDITURE WAS ESCALATED BUT THE PURCHASE WAS NOT ACCOUNTED FOR. THE DECISION OF CIT VS. SSP PVT.LTD. REPORTED AT (2008)172 TAXMANN 52 WAS ON DIFFERENT CONTEXT BECAUSE THE CLOSING STOCK WAS TAKEN AS THE OPENING STOCK IN THE SUBSEQUENT YEAR. THERE WERE CERTAIN FINDINGS ON FA CT OF THE TRIBUNAL WHICH ACCORDING TO THE HON'BLE HIGH COURT DID NOT A RISE ANY SUBSTANTIAL QUESTION OF LAW, THEREFORE, REVENUES APPEAL WAS DI SMISSED. WE MAY LIKE TO ADD THAT THE HON'BLE HIGH COURT HAS NOT ENT ERED INTO ANY LEGAL QUESTION INVOLVED AND PLAINLY HELD THAT NO SUBSTANT IAL QUESTION OF LAW WAS INVOLVED AND SINCE THE HON'BLE COURT HAS NOT L AID DOWN ANY LEGAL PROPOSITION WITH REGARD TO THE QUESTION OF CONCEALM ENT PENALTY WHETHER LEVIABLE AT ALL IN RESPECT OF AN ADDITION PERTAININ G TO THE CLOSING STOCK. WE HEREBY HOLD THAT THIS JUDGEMENT HAS INCORRECTLY BE EN CITED BY THE LEARNED AUTHORISED REPRESENTATIVE AND DO NOT SUPPOR T HIS ARGUMENTS. WE, THEREFORE, DIRECT TO IMPOSE THE PENALTY AS PER LAW IN RESPECT OF THE SAID ADDITION DISCUSSED ABOVE. 7. THERE IS ONE MORE ADDITION OF RS.29,100/- AND IN THIS REGARD WHILE CONFIRMING THE ADDITION THE OBSERVATION OF THE TRIB UNAL WAS THAT THE COAL WAS PURCHASED ON 31.3.2004 BUT THAT PURCHASES WERE NEITHER SHOWN IN THE CLOSING STOCK NOR SHOWN AS SOLD NOR CONSUMED. IN THIS REGARD, THE ARGUMENT OF THE LEARNED AUTHORISED REPRESENTATIVE W AS THE SAME THAT THE ADDITION PERTAINING TO CLOSING STOCK IS REVENUE NEUTRAL. BUT THE FACT ITA NO . 199/AHD/2009 M/S.ASLON METALIC PVT.LTD. VS. ITO ASST.YEAR - 2004-05 - 6 - IS THAT THE REVENUE HAS DETECTED THE PURCHASE OF CO AL WHICH WAS NOT FOUND RECORDED IN THE BOOKS OF ACCOUNT. IN FACT, I T WAS NOT AN ADDITION MERELY TO THE CLOSING STOCK BUT AS PER THE FINDING OF THE TRIBUNAL THOSE PURCHASES HAVE NOT BEEN SHOWN EITHER IN THE CLOSING STOCK OR CONSUMED OR SOLD. SINCE IT WAS A DETECTION OF UNRECORDED PU RCHASES, THEREFORE, ACCORDING TO US, A FIT CASE FOR LEVY OF PENALTY. WE HOLD ACCORDINGLY. IN THE LIGHT OF THE ABOVE DISCUSSION, PART RELIEF IS H EREBY GRANTED AND THE GROUND IS PARTLY ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 10/ 06 /2011. SD/- SD/- ( A.N. PAHUJA ) ( MU KUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD; DATED / /2011 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-I, SURAT 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD ITA NO . 199/AHD/2009 M/S.ASLON METALIC PVT.LTD. VS. ITO ASST.YEAR - 2004-05 - 7 - 1. DATE OF DICTATION..08/06/2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 09/06/2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S10/06/2011 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 10/06/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER