Khetiwadi Pvt. Ltd., Baroda V. The ACIT, Circle-1(2), Baroda

ITA 2343/AHD/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1159 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 19-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADIPKUMAR MAJUMDAR
• Keywords: Fair market value
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: S H RI ANIL CHATURVEDI , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER KHETIWADI PVT LTD, KHETIWADI CORNER, SHIYABAUG, VADODARA PAN: AABCK9229R (APPELLANT) VS ACIT, CIRCLE - 1(2), BARODA (RESPONDENT) REVENUE BY : S H RI PRADIP KUMAR MAJUMDAR , SR. D . R. ASSESSE E BY: NONE (WRITTEN SUBMISSION) DATE OF HEARING : 13 - 10 - 2 015 DATE OF PRONOUNCEMENT : 20 - 11 - 2 015 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2004 - 05 , AR ISES FROM ORDER OF THE CIT(A) - IV, BARODA DATED 02 - 09 - 2011 IN APPEAL NO. CAB / IV - 384 /09 - 10, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 2343 / A HD/20 14 A SSESSMENT YEAR 200 4 - 05 I.T.A NO. 2343 /AHD/20 14 A.Y. 2004 - 05 PAGE NO KHETIWADI PVT LTD VS. ACIT 2 2. THE ASSESSEE S SOLE SUBSTANTIVE GRIEVANCE CHALLENGES SE CTION 271(1) (C) PENALTY OF RS. 69,950/ - ARISING FROM NOTIONAL DISALLOWANCE U/S. 40A(2)(B) OF RS. 1,93,963/ - . CASE CALLED TWICE. NONE APPEARS AT ASSESSEE S BEHEST. IT HAS CHOSEN TO FILE WRITTEN SUBMISSION. WE TAKE ON RECORD THE SAME AND PROCEED TO DEAL WITH MERITS OF THE CASE. 3. THE ASSESSEE - COMPANY MANUFACTURES, SELLS, RESELLS, PURCHASES, IMPORTS, EXPORTS AND DEALS IN ALL SORTS OF FERTILIZERS, PESTICIDES AND CHEMICALS ETC. THE ASSESSING OFFICER IN THE COURSE OF SCRUTINY NOTICED TO HAVE PURCHASED G O ODS WORTH RS. 8,22,203/ - FROM A SSOCIATE CONCERN M/S, LAXMI ENTERPRISES. THIS ENTITY HAD SOLD GOODS WORTH RS. 7,20,727/ - TO OTHERS. ITS OVERALL GP RATIO WAS 41% AS AGAINST ASSESSEE S @ 7.115 ON SALE OF RS. 17,32,958/ - INCLUDING OPENING STOCK OF RS. 16,40,5 00/ - AND PURCHASE OF RS. 8,38,529/ - . THE ASSESSING OFFICER CONSIDERS TOTALITY OF THE FACT FOR ESTABLISHING THE FACT THAT M/S LAXMI ENTERPRISE HAD HIVED OF ASSESSEE S PROFITS BY INFL ATING ITS SALES. HE INVOKED SECTION 40A(2)(B) OF THE ACT FOR MAKING ADDIT ION OF RS. 1,93,963/ - IN ASSESSMENT ORDER DATED 30 - 08 - 2006. PENALTY PROCEEDINGS ALLEGING CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS OF INCOME ALSO STOOD INITIATED. THE CIT(A) AFFIRMED THE ABOVE STATED ADDITION. THE ASSESSEE DOES NOT SEEM TO HA VE FILED ANY FURTHER APPEAL. QUANTUM PROCEEDINGS ATTAINED FINALITY ACCORDINGLY. I.T.A NO. 2343 /AHD/20 14 A.Y. 2004 - 05 PAGE NO KHETIWADI PVT LTD VS. ACIT 3 4. WE COME TO THE IMPUGNED PENALTY PROCEEDI NGS NOW. THE ASSESSING O FFICER IN PENALTY ORDER DATED 28 - 03 - 2013 REFERRED TO CHRONOLOGY OF EVENTS IN QUANTUM PROCEEDINGS AND HELD THAT ASSESSEE S REPLY CONTESTING THE SAME WAS WITHOUT ANY ME RIT. HE INVOKED SECTION 271(1)(C) OF THE ACT AND IMPOSED THE IMPUGNED PENALTY AMOUNTING TO RS. 69,590/ - . THE SAME STAND CONFIRMED IN THE LOWER APPELLATE PROCEEDINGS. 5 . WE HAVE CONSIDERED RIVA L SUBMISSIONS AND PERUSED THE CASE FILE . RELEVANT FACTS NARRATED IN THE PRECEDING PARAG RAPHS ARE NOT REPEATED FOR THE SAKE OF BREVITY . A PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE ASSESSING OFFICER HAS COMPARED GROSS PROFITS OF THE ASSESSEE @ 7.11% AND ITS ASSOCIATE CONCERN @ 47.18% FOR INVOKING SECTION 40A(2)(B) ADDITION OF RS. 1,93,963/ - BY HOLDING THAT THE LATTER CONCERN HIVED ITS PROFITS. MARKET RATES OF THE GOODS IN QUESTION HAVE NOWHERE BEEN QUOTED . A PERUSAL OF THE STATUTORY PROVISION ITSEL F REVEALS THAT EXCESSIVE OR UNREASONABLE COMP ON ENT IN THE PRICE OF GOODS OR SERVICES IN QUESTION HAVING REGARD TO FAIR MARKET VALUE THEREOF HAS TO BE ESTABLISHED. NO SUCH COMPARISON IS FORTHCOMING FROM THE ASSESSMENT ORDER. WE HOLD IN THESE FACTS THAT T HE AUTHORITIES HAVE WRONGLY REJECTED ASSESSEE S EXPLANATION OPPOSING IMPOSITION OF PENALTY IN THE INSTANT CASE. THE PRESENT IS A CASE OF DEEMED ADDITION AS WELL. WE OBSERVE IN THESE THAT THE ASSESSEE HAS NEITHER CONCEALED NOR FURNISHED ANY INACCURATE PAR TICULAR OF INCOME. THE IMPUGNED PENALTY OF RS. 69,950/ - IMPOSED U/S. 271(1)(C) IS DELETED. I.T.A NO. 2343 /AHD/20 14 A.Y. 2004 - 05 PAGE NO KHETIWADI PVT LTD VS. ACIT 4 6. THIS ASSESSEE S APPEAL IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 20 - 11 - 2015 SD/ - SD/ - ( ANIL CHATURVEDI ) ( S. S. GODARA ) ACCOUNTAN T MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 20 /11 /2015 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,