Smt Priya Prakash, Kollam V. DCIT, Kollam

ITA 241/COCH/2007

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4472 (ITAT-COCHIN)
• Duration Of Justice: 4 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-07-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 23-03-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 143(3)

Judgement Text

ITA NO. 241/COCH/2007 (FOR A.Y. 2003- 04) 1 IN THE INCOME TAX APPELLAT E TRIBUNAL COCHIN BEN CH, COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN, JM AND SANJAY AR ORA, AM I.T.A. NO. 241/COCH/2007 ASSESSMENT YEAR:2003-04 SMT. PRIYA PRAKASH, PROP. PRATYUSH EXPORTS, KOCHUPILAMOODU, KOLLAM. [PAN:ABIPP 5470E] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOLLAM. (ASSESSEE -APPELLANT) (REVENUE -RESPONDENT) ASSESSEE BY SHRI T.V. HARIHARAN, CA-AR REVENUE BY MS. VIJAYAPRABHA, DR O R D E R PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE ARISING OUT OF T HE ORDER BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, KOCHI (CIT(A) FOR SHORT) DATED 15.1.2007, AND THE ASSESSMENT YEAR (A.Y.) UNDER REFERENCE IS 2003-04. 2. THE APPEAL RAISES A SINGLE ISSUE, I.E., QUA THE ADDITION FOR ` 2825205/- MADE BY THE ASSESSING OFFICER (AO) VIDE ASSESSMENT U/S. 143(3) OF THE INCOME-TAX ACT, 1961 ('THE ACT' HEREINAFTER) DATED 17.3.2006, SINCE SUSTAINED BY THE FIRST APPELLATE AUTHORITY, BY ASSUMING THE SALE RATE OF CASHEW KERNELS, IN THE MA NUFACTURE AND EXPORT OF WHICH THE ASSESSEE IS ENGAGED, SOLD TO ITS SISTER CONCERNS DU RING THE RELEVANT YEAR (AT 470867.440 KGS. IN 36184 TINS), AT ` 171 PER KG., AS AGAINST THE AVERAGE SALE RATE OF ` 165 PER KG. THIS WAS AS THE CLOSING STOCK THEREOF (AS AT THE YEAR-EN D) STOOD ADMITTEDLY VALUED BY THE ASSESSEE AT COST, AND IT FAILED TO FURNISH ANY SATI SFACTORY REASON FOR THE SALE TO ITS SISTER CONCERNS, BEING EXPORTERS, ENTITLED TO BENEFIT U/S. 80HHC, AT BELOW COST. THE AO WAS THUS OF THE VIEW THAT THERE WAS NO REASON FOR THE S ALES BEING MADE AT BELOW COST, AND THE ITA NO. 241/COCH/2007 (FOR A.Y. 2003- 04) 2 ASSESSEE, THUS, INCURRING A LOSS TO THAT EXTENT, WH ICH IS THUS ONLY AT THE COST OF CORRESPONDING PROFIT IN THE HANDS OF THE SISTER CON CERNS. 3. IN APPEAL, THE ASSESSEE ARGUED ITS CASE WITH REF ERENCE TO THE PRODUCT MIX OBTAINING IN THE SALES BY IT TO ITS SISTER CONCERNS, I.E., CO NSISTING OF GRADES WITH A HIGHER PROPORTION OF INFERIOR QUALITY ONES, I.E., THAN THAT OBTAINING IN THE CLOSING STOCK. SURELY, THE LOWER GRADE KERNELS WOULD COST AND ALSO CARRY A LOWER SAL E VALUE. AS SUCH, THE COMPARISON AS MADE, IT WAS URGED, IS NOT VALID, AND THERE HAS BEE N NO INCURRING OF LOSS AS INFERRED. THE SAME DID NOT FIND FAVOUR WITH THE LD. CIT(A) AS THE ASSESSEE HAD NOT VALUED THE CLOSING STOCK OF CASHEW KERNELS, WHICH WAS ON THE BASIS OF COST OF PRODUCTION, GRADE-WISE. ITS CLAIM, THUS, WAS UNSUBSTANTIATED. ALSO, SHE HAD NOT FURNISHED THE GRADE-WISE DETAILS OF THE CASHEW KERNELS SOLD TO THE SISTER CONCERNS TO THE A SSESSING OFFICER. THE NON-SATISFACTORY EXPLANATION FURNISHED, IT WAS OBSERVED BY HIM, COUL D DEFINITELY BE INFERRED AS A SUPPRESSION OF INCOME, AND AS A DEVICE FOR TAX AVOI DANCE, SO THAT HE CONFIRMED THE ADDITION, RELYING ON THE DECISION IN THE CASE OF PATEL CHEMICAL WORKS VS. CIT , 265 ITR 273 (GUJ.). AGGRIEVED, THE ASSESSEE IS IN APPEAL. 4. BEFORE US, THE ASSESSEES PRINCIPAL CONTENTION W AS WITH REGARD TO ITS CASE HAVING BEEN NOT PROPERLY APPRECIATED BY THE REVENUE AUTHOR ITIES. FURTHER, THE TRIBUNAL (COCHIN BENCH) HAS IN THE CASE OF T.C. USHA VS. DY. CIT, CENTRAL CIRCLE, KOLLAM (IN ITA NO. 559/COCH/2007 DATED 18/3/2011 FOR AY 2004-05 / COPY ON RECORD), ON THE SAME SET OF FACTS AND CIRCUMSTANCES, RESTORED THE MATTER BACK T O THE FILE OF THE FIRST APPELLATE AUTHORITY, WITH DIRECTIONS. A LIKE TREATMENT, IT W AS URGED, IN THE PRESENT CASE, WOULD BE IN ORDER. THE LD. DR, ON THE OTHER HAND, WOULD SUBMIT THAT T HE MATTER STOOD RESTORED BACK IN THE CASE OF T.C. USHA (SUPRA) FOR LACK OF PROPER OPPORTUNITY, WHILE NONE EXISTS IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. THE ASSESSE E HAD BEEN AFFORDED SUFFICIENT OPPORTUNITY BY BOTH THE AUTHORITIES, AND HAD FAILED TO EVIDENCE ITS CLAIM/S. ACCORDINGLY, THE IMPUGNED ORDER MERITS BEING CONFIRMED, BEING DU LY SUPPORTED BY CASE LAW. ITA NO. 241/COCH/2007 (FOR A.Y. 2003- 04) 3 5. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. WITHOUT DOUBT, THE FACTS AND CIRCUMSTANCES OF THE CASE, QUA THE ISSUE INVOLVED, ARE ESSENTIALLY THE SAME, I.E. , AS IN THE CASE OF T.C. USHA (SUPRA). THE ONLY DIFFERENCE THAT WE OBSERVE IS THA T WHILE THE `DIFFERENCE OBTAINING, AND FOR WHICH THE ADDITION STANDS MADE AND SUSTAINED, IN THE SAID CASE IS AT ` 30 PER KG., IN THE INSTANT CASE IT IS AT ` 6 PER KG. THIS WOULD, HOWEVER, ONLY IMPACT THE QUANTUM, AND NOT THE NATURE OF THE ADDIT ION MADE . THE MATTER STANDS DISCUSSED AT LENGTH BY THIS BENCH OF THE TRIBUNAL IN THE CASE OF T.C. USHA (SUPRA), FINDING THE PROPOSITION OF LAW AS UPHELD IN THE CASE OF PATEL CHEMICAL WORKS VS. CIT (SUPRA) AS APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, I.E., WHERE THE ASSESSEE IS UNABLE TO EXPLAIN THE DIFFERENCE. THE MATTER WAS HOWEVER REST ORED BACK TO THE FILE OF THE FIRST APPELLATE AUTHORITY; THE ISSUE BEING FACTUALLY INDE TERMINATE IN SOME RESPECTS, AND NOT FOR LACK OF OPPORTUNITY, AS MADE OUT BY THE LD. DR. APA RT FROM THE SIMILARITY IN FACTS, AS WELL AS IN THE CASE OF THE APPELLANT-ASSESSEES, IN THE T WO CASES, WE FIND THAT THE GRADE-WISE DETAILS OF SALES, AND WHICH FORM AN INTEGRAL PART O F THE ASSESSEES EXPLANATION, FURNISHED BEFORE THE LD. CIT(A), HAVE NOT TAKEN COGNIZANCE OF BY HIM. THE FURTHER QUESTION THAT ARISES IS QUA THE BASIS ON WHICH THE ASSESSEE HAS WORKED OUT THE COST, I.E., FOR VALUING THE CLOSING STOCK, IF NOT ON A GRADE-WISE BASIS; IT FAI LING TO FURNISH THE GRADE-WISE DETAILS THEREOF? THE COST OF PURCHASE BEING ON ACTUALS, IT IS ONLY THE CONVERSION COST THAT HAS TO BE ESTIMATED, ON SOME DEFINITE BASIS, TO ARRIVE AT THE COST OF PRODUCTION FOR EACH GRADE. UNDER THE CIRCUMSTANCES, WE ONLY CONSIDER IT FIT AN D PROPER TO, LIKEWISE, RESTORE THIS MATTER BACK TO THE FILE OF THE LD. CIT(A) WITH LIKE DIRECTIONS, FURTHER DIRECTING THE ASSESSEE TO MAKE AVAILABLE A COPY OF THE SAID ORDER THERETO FOR THE PURPOSE. SO, HOWEVER, WE MAY CLARIFY THAT THOUGH THE REVENUES STAND IS THE SAME FOR BOTH THE CASES, IT SHALL IN ADJUDICATING THE INSTANT CASE, NOT BE BOUND BY ITS DECISION IN THE CASE OF T.C. USHA (SUPRA), AND SHALL DECIDE THE SAME ON ITS OWN MERIT S; THE MATTER BEING PURELY FACTUAL, SO THAT IT MAY WELL BE THAT THE DIFFERENCE STANDS EXPL AINED WHICH IS TO BE PRIMARILY ON THE BASIS OF MATERIALS AND EVIDENCE/S FURNISHED - IN ON E CASE, AND NOT IN THE OTHER, WITH THE DIFFERENCE, AS AFORE-NOTED, OBTAINING IN THE PRESEN T CASE BEING AT 1/5 TH OF THAT IN THE SAID CASE, EVEN AS THE COST AS WELL AS THE SALE RATE/S I NVOLVED WE OBSERVE TO FALL IN THE SAME RANGE. BOTH THE ASSESSEE AND THE AO SHALL BE AFFORD ED PROPER OPPORTUNITY OF BEING HEARD, ITA NO. 241/COCH/2007 (FOR A.Y. 2003- 04) 4 AND WHERE THE MATERIALS BEING RELIED UPON ARE THOSE THAT HAVE NOT ADDUCED BEFORE THE AO EARLIER, A FURTHER OPPORTUNITY TO HIM TO EXAMINE TH E SAME, BY THE LD. CIT(A). WE DECIDE ACCORDINGLY. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 25TH JULY, 2011 GJ COPY TO: 1. SMT. PRIYA PRAKASH, PROP., PRATYUSH EXPORTS, KOC HUPILAMOODU, KOLLAM 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL C IRCLE, KOLLAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, KOCH I. 4. THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .