The ACIT, Circle-4, Ahmedabad V. Gopinath Chem-Tech Ltd., Ahmedabad

ITA 2451/AHD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6502 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-05-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 04-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S A BOHRA
• Keywords: Capital asset; Revenue expenditure

Judgement Text

ITA.NO.2451/AHD/2 010 . ASSESSMENT YEAR 2 004-05. 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH,AHM EDABAD. ( BEFORE SHRI D.K. TYAGI AND SHRI A. K. GARODIA) I.T .A. NO. 2451/AHD/2010 (ASSESSMENT YEAR: 2004 -2005) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-4, NAVJIVAN TRUST BUILDING, OFF.ASHRAMROAD, AHMEDABAD. (APPELLANT) VS. GOPINATH CHEM TECH LTD., 704, 7 TH FLOOR,ATMA HOUSE, ASHRAM ROAD, AHMEDABAD. (RESPONDENT) PAN: AAACG 3945 M APPELLANT BY : SHRI S.A. BOHRA, JCIT RESPONDENT BY : SHRI SUNIL TALATI. ( (( ( )/ )/)/ )/ ORDER PER: SHRI A.K. GARODIA , A.M. THIS IS A REVENUES APPEAL DIRECTED AGAINST THE ORDER OF LD. C.I.T.(A)-XX, AHMEDABAD DATED 3-5-2010 FOR ASSESSMENT Y EAR 2004- 05. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER:- 1. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN CANCELING THE PENALTY OF RS. 3,92,885/- LEVIED BY THE U/S. 271( 1)(C) OF THE ACT. 2. THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT T HAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME BY CLAIMING THE LOSS ON CAPITAL ASSETS SUCH BUILDINGS, PLANT AN D MACHINERY DUE TO FIRE AS REVENUE EXPENDITURE THOUGH T HE SAID CLAIM WAS PATENTLY INACCURATE. ITA.NO.2451/AHD/2 010 . ASSESSMENT YEAR 2 004-05. 2 3. THE LD. CIT (A) HAS FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME IN RESPECT OF THE ADDITION OF RS.1,64,779/- MADE ON ACCOUNT OF DIFFERENCE IN STOCK FOUND DURING THE COURSE OF SURVEY. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD . CIT (A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. LD. D.R. OF THE REVENUE SUPPORTED THE PENALTY ORD ER PASSED BY THE ASSESSING OFFICER WHEREAS THE LD. A.R. OF THE ASSESSEE SU PPORTED THE ORDER OF THE LD. C.I.T. (A). IT IS ALSO SUBMITTED BY HIM THAT IT HAS BEEN NOTED BY THE TRIBUNAL IN PARAGRAPH 9 OF THE TR IBUNAL ORDER IN QUANTUM PROCEEDINGS AS PER ORDER ITA NO.3212/AHD/2008 D ATED 21- 4-2011 THAT IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE T RIBUNAL THAT THE MINOR DIFFERENCES WHICH REMAIN ARE INEVITABLE BECAU SE OF THE NATURE OF THE PRODUCTS AND ON ACCOUNT OF MANUAL ERRORS O F CHARGING/WEIGHING/MIXING/DRYING OF FINISHED PRODUCTS. IT IS SUBMITTED THAT UNDER THIS FACTUAL POSITION, ALTHOUGH PART ADDIT ION HAS BEEN SUSTAINED BY THE TRIBUNAL BUT PENALTY ON SUCH ADDITION IS NOT JUSTIFIED. RELIANCE HAS BEEN PLACED ON THE TRIBUNAL DECISION RENDE RED IN THE CASE OF SHIVAM ART PROCESSORS (P) LTD. VS. ACIT AS REPORTED I N (2001) 115 TAXMAN 320 (AHD)(MAG.). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUT HORITIES BELOW AND THE JUDGMENT CITED BY THE LD. A.R. OF THE ASSESSEE. WE FIND THAT AN ADDITION OF RS. 15,96,807/- WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF STOCK DISCREPANCIES IN THE FORM OF EXCESS STOCK OF SOME OF THE ITEMS TO THE EXTENT OF RS.15,96,807/- AND GROSS PRO FIT @ 8.18% OF DEFICIT IN STOCK OF RS.13,33,519/- I.E.RS.1,09,081/- TOTAL RS.17,05,888/-. OUT OF SUCH ADDITION OF RS. 17,05,888/- , LD. CIT (A) ITA.NO.2451/AHD/2 010 . ASSESSMENT YEAR 2 004-05. 3 HAS CONFIRMED THE ADDITION OF ONLY RS. 1,64,779/- AND THIS ORDER OF THE LD. CIT(A) HAD BEEN UPHELD BY THE TRIBUNAL. IT WAS E XPLAINED BY THE ASSESSEE BEFORE THE LD. CIT (A) AND ALSO BEFORE THE TRIB UNAL IN QUANTUM PROCEEDINGS THAT THE ASSESSEE HAS BEEN ABLE TO EXP LAIN ALL THE DIFFERENCE IN STOCK QUANTITY AND SOME MINOR DIFFER ENCE REMAIN UNEXPLAINED BUT SUCH DIFFERENCE ARE INEVITABLE BECAUSE OF THE NATURE OF THE PRODUCT AND ON ACCOUNT OF MANUAL ERRORS OF CHARGING./WEIGHING/MIXING/DRYING OF FINISHED PRODUCT. THE ADDITION HAS BEEN UPHELD BY THE LD. CIT (A) AND BY THE TRIBUNAL TO THE EXTENT OF MINOR DIFFERENCE WHICH COULD NOT BE PROPERLY EXPLAINED BY THE ASSESSEE BUT FOR THE PURPOSE OF IMPOSING PENALTY ON ACCOUNT OF SUCH ADDITION, IT HAS TO BE EXAMINED AS TO WHETHER THIS IS A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICU LARS OF INCOME OR NOT. WE ARE OF THE CONSIDERED OPINION THAT IN THE FACTS OF THE PRESENT CASE, IT IS NOT A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME, BECAUSE VARIOUS DIFFERENCES WERE FOUND BY THE SURVEY TEAM IN THE QUANT ITY OF STOCK OF VARIOUS ITEMS AND THE ASSESSEE HAD BEEN ABLE TO EXPLAIN M OST OF THE DIFFERENCE AND ONLY SOME SMALL DIFFERENCE COULD NOT BE R ECONCILED BY THE ASSESSEE AND THE REASON FOR THE FAILURE OF THE ASSESSEE IN THIS REGARD HAS BEEN EXPLAINED THAT MINOR DIFFERENCES ARE I NEVITABLE BECAUSE OF THE NATURE OF THE PRODUCTS AND ON ACCOUNT OF M ANUAL ERRORS OF CHARGING/WEIGHING/MIXING/DRYING OF FINISHED PRODU CTS. UNDER THESE FACTS, IN OUR CONSIDERED OPINION, PENALTY IS NOT JUSTIFI ED. THE TRIBUNAL DECISION RENDERED IN THE CASE OF SHIVAM ART PROCESSORS (P) LTD., (SUPRA) RELIED ON BY THE LD. A.R. OF THE ASSESSEE ALSO H ELPS THE CASE OF THE ASSESSEE. IN THAT CASE ALSO, PENALTY WAS LEVIED ON ACCOUN T OF SHORTAGES NOTICED DURING SURVEY OF CERTAIN STOCK ENTRY AN D ADDITION MADE ON SUCH ACCOUNT WAS ACCEPTED BY THE ASSESSEE. PENALTY IN THAT ITA.NO.2451/AHD/2 010 . ASSESSMENT YEAR 2 004-05. 4 CASE WAS DELETED BY THE TRIBUNAL ON THIS BASIS THAT EXPL ANATION OF THE ASSESSEE FOR SAID SHORTAGES WAS QUITE PLAUSIBLE AND ITS BON A FIDES COULD NOT BE DISPROVED AND THEREFORE, PENALTY WAS NOT WARRANTED. IN THE PRESENT CASE ALSO, THE EXPLANATION OF THE ASSESSEE IS PL AUSIBLE AND ITS BONA FIDES COULD NOT BE DISPROVED AND HENCE BY RESPECT FULLY FOLLOWING THIS TRIBUNAL DECISION, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD. C.I.T. (A) AS PER WHICH PENAL TY HAS BEEN DELETED BY HIM. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 27 05 - 2011. SD/- SD/- (D.K. TYAGI) (A. K. GARODIA) JUDICIAL MEMBER. AC COUNTANT MEMBER. AHMEDABAD. DATED: 27 - 05- 2011. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-XX, AHMEDABAD. 4. THE CIT CONCERNED. 5. THE DR.,ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. ITA.NO.2451/AHD/2 010 . ASSESSMENT YEAR 2 004-05. 5 1.DATE OF DICTATION 6 - 5 -2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 9 / 5 / 2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 13 - 5 -2011. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 27 - 5 -2011 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 27 - 5 -2011 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2 7 - 5 -2011. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..