The DCIT, Circle-1, Surat V. M/s. Ferrario (India) Pvt.Ltd., Surat

ITA 2494/AHD/2009

• Counselvise Citation: 249420514 RSA 2009
• Duration Of Justice: 2 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-10-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 28-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMIR TEKRIWAL
• Assessee Lawyers: WRITTEN SUBMISSION

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, AHMEDABAD BEFORE SHRI T.K. SHARMA, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO. 2494/ AHD/2009 (ASSESSMENT YEAR 2004-05) DCIT, CIRCLE 1, SURAT VS. M/S. FERRARIO INDIA LTD., HIRALAL COLONY, A.K. ROAD, SURAT PAN/GIR NO. : AAAFF4574C (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI SAMIR TEKRIWAL, SR. DR RESPONDENT BY: WRITTEN SUBMISSION DATE OF HEARING: 24.10.2011 DATE OF PRONOUNCEMENT: 16.11.2011 O R D E R PER SHRI A. K. GARODIA, AM:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) I, SURAT DATED 30.06.2009 FOR HE ASSESSMENT YEAR 2004-05. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A)-I, SURAT HAS ERRED IN DELETING THE P ENALTY U/S 271(1)(C) OF THE ACT LEVIED BY THE A.O. OF RS.19,28 ,878/-. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3) IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE C IT(A) MAY BE SET SIDE AND THAT OF THE A.O. MAY BE RESTORED TO TH E ABOVE EXTENT. 3. ON THE APPOINTED DATE OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE ALTHOUGH NOTICE OF HEARING WAS DULY SERVED ON THE ASSESSEE AS I.T.A.NO.2494 /AHD/2009 2 PER THE ACKNOWLEDGEMENT AVAILABLE ON RECORD AND HEN CE, AFTER CONSIDERING THE WRITTEN SUBMISSIONS FILED BY THE AS SESSEE AND AFTER HEARING THE LD. D.R. OF THE REVENUE, WE PROCEED TO DECIDE THIS APPEAL OF THE REVENUE. 4. LD. D.R. OF THE REVENUE SUPPORTED THE PENALTY OR DER AND PLACED RELIANCE ON THE FOLLOWING JUDGMENTS OF HONBLE GUJA RAT HIGH COURT: (A) A M SHAN & C. VS CIT 238 ITR 415 (B) 211 ITR 206 5. IN THE WRITTEN SUBMISSION FILED BY THE ASSESSEE, IT HAS BEEN SUBMITTED BY THE ASSESSEE THAT AGAINST ONE ADDITION OF RS.4,80,422/- MADE BY THE A.O. ON ACCOUNT OF ESTIMATION OF W.I.P., ALT HOUGH THE SAME WAS CONFIRMED BY THE LD. CIT(A) IN QUANTUM PROCEEDINGS BUT THE TRIBUNAL HAS SCALED DOWN THE SAME TO 50% IN THE QUANTUM ORDE R, COPY OF WHICH HAS BEEN SUBMITTED ALONG WITH WRITTEN SUBMISSION IN I.T.A.NO. 3597 & 3861/AHD/2007 DATED 17.02.2009. REGARDING THE 2 ND ADDITION OF RS.48,95,492/-, MADE BY THE A.O. BEING G.P. ADDITIO N @ 7.21%, IT WAS SUBMITTED THAT THIS ADDITION WAS ALSO CONFIRMED BY CIT(A) BUT THE TRIBUNAL HAS SCALED DOWN THE SAME TO THE EXTENT OF 2% AND THE BALANCE ADDITION @ 5.21% WAS DELETED BY THE TRIBUNAL. REG ARDING THE 3 RD ADDITION IT WAS SUBMITTED THAT THIS ADDITION OF RS. 6 LACS WAS MADE BY THE A.O. BY ALLEGING EXCESSIVE RENT PAYMENT TO THE PART IES COVERED U/S 40A(2)(B) BUT THIS ADDITION WAS DELETED BY LD. CIT( A) AND THE TRIBUNAL ALSO AND HENCE, ON ACCOUNT OF THIS ADDITION, NO PEN ALTY IS JUSTIFIED. IT IS THE SUBMISSION OF THE ASSESSEE IN THE WRITTEN SUBMI SSION THAT IN THE FACTS OF THE PRESENT CASE, THE LD. CIT(A) HAS RIGHTLY DEL ETED THE PENALTY AND HENCE, THE ORDER OF LD. CIT(A) SHOULD BE CONFIRMED. RELIANCE HAS BEEN PLACED ON THE JUDGMENT OF HONBLE GUJARAT HIGH COUR T RENDERED IN THE I.T.A.NO.2494 /AHD/2009 3 CASE OF CIT VS J. H. PARABIA (TRANSPORT) P. LTD. AS REPORTED IN 284 ITR 361(GUJ.). RELIANCE WAS ALSO PLACED ON THE TRIBUNA L DECISION IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003-04 IN I.T.A.NO. 1308/AHD/2007 DATED 17.02.2009, COPY OF WHICH IS AL SO AVAILABLE ALONG WITH THE WRITTEN SUBMISSION, AS PER WHICH TRIBUNAL HAS DELETED THE PENALTY IN THAT YEAR BY FOLLOWING THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS J.H. PARABIA (TRANSPORT) P. LTD. (SUPRA). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGMENTS CITED BY BOTH THE SIDES. WE FIND THAT TH E PENALTY HAS BEEN DELETED BY LD. CIT(A) AS PER PARA 3.3 OF HIS ORDER WHICH IS REPRODUCED BELOW: I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPE LLANT AND THE OBSERVATION OF THE A.O. IN THE QUANTUM APPEAL, THE CIT(A) STATED THAT THE G.P. WAS BASED ON ESTIMATION. THIS ADDITI ON WAS FURTHER REDUCED BY THE HONBLE ITAT VIDE ITS ORDER DATED 17 .02.2009 IN I.T.A.NO. 3597/AHD/2007 FOR THE ASSESSMENT YEAR 200 4-05. WITH RESPECT TO WORK-IN-PROGRESS ADDITION ALSO, THE ADDI TION IS ON ESTIMATE BASIS AND, THEREFORE, FOLLOWING THE DECISI ON OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF J. H. PARABIA (TR ANSPORT) P. LTD. (SUPRA) PENALTY IS DELETED ON BOTH THE ISSUES. 7. FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A), WE FIND THAT HE HAS FOLLOWED THE JUDGMENT OF HONBLE GUJARAT HIGH C OURT IN THE CASE OF J. H. PARABIA (TRANSPORT) P. LTD. (SUPRA) AND IN AS SESSMENT YEAR 2003-04 ALSO THE TRIBUNAL HAS DELETED PENALTY IN THE CASE O F THIS VERY ASSESSEE BY FOLLOWING THIS JUDGMENT OF HONBLE GUJARAT HIGH COU RT. NOW, WE FIRST EXAMINE THE APPLICABILITY OF THE TWO JUDGMENTS CITE D BY THE LD. D.R. OF THE REVENUE. FIRST JUDGMENT IS THE JUDGMENT OF HON BLE GUJARAT HIGH COURT IN THE CASE OF A M SHAN & CO. VS CIT (SUPRA). WE FIND THAT THIS JUDGMENT IS NOT APPLICABLE IN THE PRESENT CASE BECA USE THE FACTS ARE I.T.A.NO.2494 /AHD/2009 4 DIFFERENT. IN THAT CASE, IT WAS FOUND THAT FOR THE ASSESSMENT YEAR 1970-71, FROM THE SCRUTINY OF THE STOCK BOOK, IT WAS CLEAR T HAT THERE WAS CERTAIN DISCREPANCY. IT IS ALSO NOTED IN THAT CASE FOR THA T YEAR THAT THERE WAS INFLATION OF PURCHASES AND ALTHOUGH THE PURCHASES W ERE INFLATED BUT THOSE ITEMS WERE NOT SHOWN IN THE STOCK BOOK OR IN SALE. IN THE PRESENT CASE, THE FACTS ARE DIFFERENT BECAUSE IN THE PRESENT CASE, AD DITION ON ACCOUNT OF W.I.P. STOCK AND G.P. ADDITION BOTH WERE MADE AND C ONFIRMED ON ESTIMATE BASIS ONLY. IN THE CASE OF A M SHAH & CO. (SUPRA) FOR THE ASSESSMENT YEAR 1971-72, IT WAS NOTED THAT EXPLANATION TO SECT ION 271(1)(C) WAS ATTRACTED AND THE ASSESSEE WAS REQUIRED TO DISCHARG E THE BURDEN OF PROVING THAT THE CONCEALMENT OR INACCURATE PARTICULARS OF I NCOME DID NOT ARISE FROM ANY FRAUD OR ANY GROSS OR WILLFUL NEGLECT ON I TS PART AND THIS BURDEN WAS NOT DISCHARGED BY THE ASSESSEE. IN THE PRESEN T CASE, SINCE THE ADDITIONS ARE MADE ON ESTIMATE BASIS, THE EXPLANATI ON TO SECTION 271(1)(C) IS NOT ATTRACTED AND HENCE THIS JUDGMENT OF HONBLE GUJARAT HIGH COURT IS OF NO HELP TO THE REVENUE IN THE PRES ENT CASE IN THE FACTS OF THE PRESENT CASE. 8. THE 2 ND DECISION CITED BY THE LD. D.R. IS STATED TO BE A J UDGMENT OF HONBLE GUJARAT HIGH COURT BUT THE CITATION GIVEN BY THE LD. A.R. FOR THE 2 ND JUDGMENT IS NOT CORRECT BECAUSE CITATION GIVEN IS 211 ITR 206 BUT THERE IS NO JUDGMENT AVAILABLE AS PER THIS CITATION . 9. IN THE LIGHT OF THE FACTS OF THE PRESENT CASE, W E FIND THAT OUT OF THREE ADDITIONS MADE BY THE A.O., ONE ADDITION HAS BEEN D ELETED BY LD. CIT(A) AND ALSO BY THE TRIBUNAL AND FOR REMAINING TWO ADDITIONS ALSO, WE FIND THAT BOTH THESE ADDITIONS WERE ON ESTIMATE BAS IS AND WERE SUBSTANTIALLY REDUCED BY THE TRIBUNAL TO THE EXTENT OF 50% WITH REGARD TO ADDITION OF RS.4,80,422/- ON ACCOUNT OF ESTIMATION OF W.I.P. STOCK AND TO I.T.A.NO.2494 /AHD/2009 5 THE EXTENT OF 2% AS AGAINST 7.21% WITH REGARD TO G. P. ADDITION AND HENCE, BOTH THESE ADDITIONS SUSTAINED BY THE TRIBUNAL ARE ON ESTIMATE BASIS AND IN OUR CONSIDERED OPINION, IT CANNOT BE SAID THAT FOR SUCH AN ESTIMATED ADDITION, THERE IS CONCEALMENT OF INCOME AND PENALT Y IS LIVABLE U/S 271(1)(C) OF THE ACT. UNDER THESE FACTS, WE DECLIN E TO INTERFERE IN THE ORDER OF LD. CIT(A). 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. 11. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (T. K. SHARMA) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; SP ORDER PRONOUNCED IN THE OPEN COURT ON 16/11/2011 SD./- SD./- (A. K. GARODIA) (D. K. TYAGI) AM JM COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 9/11 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 11/11 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 11/11 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 16/11 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.16/11 I.T.A.NO.2494 /AHD/2009 6 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 16/11/2011 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. ..