The ITO, Ward-1(2), Surat V. Gautam Jewels Pvt.Ltd., Surat

ITA 2259/AHD/2011

• Counselvise Citation: 225920514 RSA 2011
• Duration Of Justice: 4 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 07-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: GYAN PIPARA
• Section: 10AA

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ ITA NO. 2259/AHD/2011 / ASSESSMENT YEAR: 2007-08 INCOME-TAX OFFICER, WARD-1(2), SURAT VS. M/S. GAUTAM JEWELS PVT LTD PLOT NO.254A, SURAT SEZ, DIAMOND PARK ROAD NO.4, GIDC, SACHIN, SURAT PAN : AACCG 0153 F / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI DINESH SINGH, SR DR ASSESSEE(S) BY : SHRI GYAN PIPARA, AR / DATE OF HEARING : 14/09/2015 / DATE OF PRONOUNCEMENT: 29/09/2015 / O R D E R PER G.D. AGRAWAL, VICE PRESIDENT: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-I, SUR AT DATED 30.06.2011 FOR ASSESSMENT YEAR 2007-08. 2. THE ONLY GROUND RAISED IN THIS APPEAL BY THE REV ENUE IS AGAINST THE CANCELLATION OF PENALTY OF RS.5,95,538/- WHICH WAS LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C). 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. WE FIND THAT THE ASSESSING OFFICER MADE THE ADDITION OF RS.17,58,279/- FOR VALUE OF GOLD RECEIVED BY THE AS SESSEE AS WASTAGE WHICH THE ASSESSEE FAILED TO DISCLOSE IN THE CLOSIN G STOCK. HOWEVER, THE ITA NO. 2259/AHD/2011 ITO VS. GAUTAM JEWELS PVT LTD AY 2007-08 2 ASSESSED TOTAL INCOME WAS NOT EFFECTED ON ACCOUNT O F ABOVE ADDITION BECAUSE THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S 10AA AT 100% OF THE TOTAL INCOME. THE ASSESSING OFFICER LEVIED PENA LTY U/S 271(1)(C) FOR THE CONCEALMENT OF INCOME OF RS.17,58,279/-. ON AP PEAL, THE CIT(A) CANCELLED THE PENALTY WITH THE FOLLOWING FINDING:- ARGUMENTS OF APPELLANT AS WELL AS AO HAVE BEEN CON SIDERED. THE APPELLANT HAS MADE OUT A GOOD CASE AGAINST IMPOSITI ON OF PENALTY U/S 271(1)(C). APPELLANT HAS CONTENDED THAT SINCE ITS IN COME IS NOT TAXABLE, THERE IS NO NEED TO CONCEAL. AT BEST, IT IS A BONA -FIDE ERROR. IN ANY CASE, ADDITION TO VALUE OF CLOSING STOCK THIS YEAR WILL B E ALLOWED AS OPENING STOCK IN SUBSEQUENT YEAR. THUS, ADDITION TO CLOSIN G STOCK IS REVENUE NEUTRAL. SUCH ADDITIONS DO NOT HAVE REAL TAX IMPLI CATION BECAUSE SET OFF IS ALLOWED IN NEXT YEAR. THUS, SUCH ADDITION IS AC TUALLY NOT WITHIN THE PURVIEW OF SECTION 271(1)(C). ACCORDINGLY, PENALTY I S NOT SUSTAINED. 4. AFTER CONSIDERING THE FACTS OF THE CASE AND ARGU MENTS OF BOTH THE SIDES, WE DO NOT FIND ANY INFIRMITY IN THE ABOVE OR DER OF THE CIT(A). ADMITTEDLY, THE ASSESSEE HAS UTILIZED THE GOLD OF 1 7,585.389 GMS FOR PRODUCTION OF GOLD JEWELLERIES, OUT OF WHICH THE JE WELLERY RECEIVED WAS 15,038.194 GMS AND BALANCE 2547.195 GMS WAS WASTAGE . ALL THESE FACTS WERE DULY DISCLOSED BY THE ASSESSEE IN ITS BALANCE- SHEET. HOWEVER, OUT OF THESE WASTAGE, THE ASSESSEE RECOVERED SOME GOLD AND WHICH WAS VALUED AT RS.17,58,279/-. THIS RECOVERY OF GOLD WA S DULY DISCLOSED IN THE ACCOUNTS OF FINANCIAL YEAR 2008-09 AND ALSO IN THE AUDITED BALANCE- SHEET FOR THE SAID YEAR. AS PER ASSESSING OFFICER, THE ASSESSEE OUGHT TO HAVE INCLUDED THE SUM OF RS.17,58,279/- AS THE VALU E OF CLOSING STOCK IN THE YEAR UNDER CONSIDERATION. FOR THE FAILURE O F ASSESSEE TO DISCLOSE THE VALUE OF THE CLOSING STOCK, THE ASSESSING OFFIC ER LEVIED THE PENALTY U/S 271(1)(C). THE CIT(A) CANCELLED THE PENALTY ON THE GROUND THAT THE MISTAKE OF THE ASSESSEE WAS A BONA FIDE ERROR. WE ENTIRELY AGREE WITH ITA NO. 2259/AHD/2011 ITO VS. GAUTAM JEWELS PVT LTD AY 2007-08 3 THE FINDINGS OF THE CIT(A) BECAUSE THE ASSESSEE IS ENTITLED TO 100% EXEMPTION U/S 10AA. THEREFORE, ON ACCOUNT OF THE A DDITION MADE BY THE ASSESSING OFFICER, THE EXEMPTION U/S 10AA HAS I NCREASED AND FINALLY THE ASSESSED INCOME REMAINS NIL. MOREOVER, THE FACT OF THE RECOVERY OF THE GOLD OUT OF WASTAGE WAS DULY DISCLO SED BY THE ASSESSEE IN ITS ACCOUNTS FOR FINANCIAL YEAR 2008-09 AND WHIC H WAS PRIOR TO ANY DETECTION BY THE ASSESSING OFFICER. IN VIEW OF ABO VE, WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 29 TH SEPTEMBER, 2015 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER (G.D. AGRAWAL) VICE-PRESIDENT AHMEDABAD; DATED 29/09/2015 BIJU T., PS !'#$#%! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. '# $ / CONCERNED CIT 4. $ ( ) / THE CIT(A) 5. '() # , # , ' / D R, ITAT, AHMEDABAD 6. ). / / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD