Nimit Texo Fab.Pvt.Ltd., Surat V. The Income tax Officer, Ward-1(4), Surat

ITA 2727/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6485 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 20-06-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 01-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SOORYAWANSHI
• Assessee Lawyers: S N SOPARKAR
• Section: 143(3); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI T K SHARMA,JM & SHRI A N PAHUJA,AM ITA NO.2727/AHD/2009 (ASSESSMENT YEAR:-2004-05) M/S NIMIT TEXOFAB PVT. LTD., 4026, WORLD TRADE CENTRE, UDHNA DARWAJA, RING ROAD, SURAT V/S INCOME-TAX OFFICER, WARD- 1(4),AAYAKAR BHAVAN, SURAT PAN: AABCN 6215 C [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI S N SOPARKAR, AR REVENUE BY:- SHRI G S SOORYAWANSHI, DR O R D E R A N PAHUJA: THIS APPEAL BY ASSESSEE FILED ON 1.10.2009 AGAINST AN ORDER DATED 26-08-2009 OF THE LD. CIT(APPEALS)-I, S URAT FOR THE ASSESSMENT YEAR 2004-05, RAISES THE FOLLOWING GROUN DS:- [1] THE ID. CIT (A) HAS ERRED IN LAW AND ON FACTS IN CO NFIRMING PENALTY LEVIED U/S 271(1)(C) BY AO OF RS.5,22,010/- THAT IS WHOLLY UNSUSTAINABLE IN LAW AND ON FACTS AS IT IS LEVIED O N ADDITION MADE IN CLOSING STOCK ON ACCOUNT OF EXCISE DUTY U/S 145 A. BOTH THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THE FACT THAT THE APPELLANT HAS NEITHER FURNISHED INACCURATE PARTICULARS NOR CONCEA LED ANY INCOME AND HELD THAT PENALTY IS LEVIABLE, SIMPLY BECAUSE T HE APPELLANT INCLUDED EXCISE DUTY IN THE OPENING AS WELL CLOSING STOCK OF THE YEAR UNDER CONSIDERATION SINCE THIS WAS THE FIRST YEAR W HEN CENVET WAS APPLICABLE. THE PENALTY LEVIED BEING WITHOUT AN Y MERITS AND JUSTIFICATION REQUIRES TO BE QUASHED. [2] BOTH THE LOWER AUTHORITIES HAVE ERRED IN NOT AP PRECIATING THE FACT THAT THE HON'BLE HIGH COURT IN MAHAVIR ALUMINUM (29 7 ITR 77), THE HON'BLE BOMBAY HIGH COURT IN CYNNAMID AGRO LTD. (31 SOT 286) AS WELL THE HON'BLE MADHYA PRADESH HIGH COURT IN D H SCHELARON ELECTRODES (173 TAXMAN 188) HAVE HELD THAT ADJUSTME NT TO BOTH THE OPENING STOCK AS WELL AS THE CLOSING STOCK WAS IN C ONSONANCE WITH ACCOUNTING STANDARD AS-2 ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA, IN VIEW OF THE FACT THAT THE ISSUE BEING HIGHLY DEBATABLE AND THE APPELLANT ONLY HAVING FOLLOWED T HE ACCOUNTING STANDARDS WOULD NOT TANTAMOUNT TO CONCEALMENT OF PA RTICULARS OR FURNISHING INACCURATE PARTICULARS SO AS TO ATTRACT PENALTY U/S 271 (A) (C) OF THE ACT. 2 ITA NO.2727/AHD/2009 THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, ED IT, DELETE, MODIFY OR CHANGE ALL OR ANY OF THE GROUNDS OF APPEAL AT TH E TIME OF OR BEFORE THE HEARING OF THE APPEAL. 2 FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT THE RETURN DECLARING LOSS OF RS.34,82,927/- FILED ON 01-11-200 4 BY THE ASSESSEE, MANUFACTURING YARN, AFTER BEING PROCESSED ON 07-03-2005 U/S 143(1) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT], WAS TAKEN UP FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE ACT ON 01-08-2005.SUBSEQUENTLY, THE A SSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 26-12-2006, DETE RMINING LOSS OF RS.18,34,267/-,WITH THE FOLLOWING ADDITIONS:- (I) ADDITION ON ACCOUNT OF EXCISE DUTY U/S 145A RS. 14,55,081/- (II) ON ACCOUNT OF STAMP DUTY RS. 1,15,065/- (III) ON ACCOUNT OF LABOUR CHARGES RS. 78,51 7/- ------------------- RS.16,44,663/- 2.1 INTER ALIA, PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE ALSO INITIATED FOR FURNISHING INACCURATE PARTICULAR S OF INCOME. ON APPEAL, THE LEARNED CIT(A) UPHELD THE ADDITION OF R S.14,55,081/- ON ACCOUNT OF EXCISE DUTY U/S 145A OF THE ACT. AFTER T HE RECEIPT OF THE APPELLATE ORDER, IN RESPONSE TO A SHOW CAUSE NOTICE BEFORE LEVY OF PENALTY, THE ASSESSEE CONTENDED VIDE LETTER DATED 0 5-02-2009 THAT THEIR APPEAL BEING PENDING BEFORE THE ITAT, PENALTY PROCEEDINGS SHOULD BE KEPT IN ABEYANCE. HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND RELYING UPON THE D ECISION OF THE ITAT MUMBAI BENCH IN THE CASE OF WEST COST PAPER MI LLS LTD. VS. ACIT,286 ITR(AT)252 IMPOSED A PENALTY OF RS.5,22,01 0/- AT THE RATE OF 100% OF TAX SOUGHT TO BE EVADED ON THE AFORESAID INCOME OF RS.14,55,081/- ON THE GROUND THAT THE ASSESSEE CONC EALED THE PARTICULARS OF INCOME. 3 ITA NO.2727/AHD/2009 3. ON APPEAL, THE LEARNED CIT(A) UPHELD THE LEVY OF PENALTY IN THE FOLLOWING TERMS:- 2.3.1 I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND THE OBSERVATION OF THE A.O. THE FACTS ARE NOT DISPUTED IN THIS CASE. THE APPELLANT HAD NOT INCLUDED THE EXCISE DUTY IN THE C LOSING STOCK OF THE LAST YEAR. THIS WAS THE FIRST YEAR OF THE APPLICABILITY OF THE CENVAT AND THE ASSESSEE, THEREFORE, MADE ADJUSTMENT U/S 145A BY IN CLUDING EXCISE DUTY IN THE OPENING STOCK AS WELL AS CLOSING STOCK OF TH E CURRENT YEAR. AS PER THE ACCOUNTING PRINCIPLE AS WALL AS DECISION OF THE HON 'BLE ITAT, MUMBAI IN THE CASE OF WEST COST PAPER MILLS LTD. (SUPRA), THE OPENING STOCK OF THE CURRENT YEAR HAS TO BE NECESSARILY SAME AS CLOSING STOCK OF LAST YEAR. EVEN IF THERE ARE ADJUSTMENTS MADE IN THE CLOSING STOCK OF THE CURRENT YEAR, NO INTERFERENCE IS ALLOWED IN THE OPENING STOCK OF THE CURRENT YEAR AS IT HAS TO BE NECESSARILY SAME AS CLOSING STOCK OF THE LAST YE AR. THIS IS A BASIC ACCOUNTING PRINCIPLE. BY NOT SHOWING THE OPENING ST OCK AS SAME AS CLOSING STOCK OF LAST YEAR, THE ASSESSEE HAS DEFINITELY FUR NISHED INACCURATE PARTICULARS OF ITS INCOME WHEREBY THE TOTAL INCOME WAS REDUCED. AS PER THE LEGAL POSITION ON THE LEVY OF PENALTY, IT IS A SETT LED LAW THAT CONSCIOUS CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OR MENSREA IN RESPECT OF THE SAME IS NO MORE REQUIRED TO BE PROVED BY THE A.O. THIS POSITION HAS BEEN SETTLED IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS & OTHERS (306 -ITR-277) READ WITH DECISION IN TIRE CASE OF RAJASTHAN SPINNING MILLS ( 224-CTR-L) AS WELL AS THE INTERPRETATION OF THESE DECISIONS BY THE HON'BLE IT AT, MUMBAI 'A' BENCH IN THE CASE OF VIP INDUSTRIES LTD., ITA NO.4525 & 4 383/MUM/06 FOR AY 2000-01, VIDE ITS ORDER DATED 20-03-2009. 2.3.2 IN VIEW OF THE ABOVE, IT IS VERY CLEAR THAT BY CHANGING THE OPENING STOCK OF THE CURRENT YEAR FROM THE CLOSING STOCK OF LAST YEAR THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME AND HENCE LEVY OF PENALTY IS CONFIRMED AND THE GROUNDS OF APPEAL ARE DISMISSED. 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LEARNED CIT(A). AT THE OUTSET, THE LEARNED AR ON BEHALF OF THE ASSESSEE WHILE INVITING OUR ATTENTION TO AN ORDER DATED 13-01-2011 OF THE TRIBUNAL IN THE ASSESSEES OWN CA SE IN ITA NO.3566/AHD/2007 IN QUANTUM APPEAL, CONTENDED THAT THE ADDITION HAVING BEEN RESTORED TO THE FILE OF THE AO, THE PEN ALTY DOES NOT SURVIVE AT THIS STAGE. THE LEARNED DR DID NOT OPPO SE THESE SUBMISSION ON BEHALF OF THE ASSESSEE. 4 ITA NO.2727/AHD/2009 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT THE TRIBUNAL VIDE ORDER DATE D 13-01-2011 IN ITA NO.3566/AHD/2007 WHILE ADJUDICATING THE ISSUE O F ADDITION OF RS.14,55,081/-, UPHELD BY THE LEARNED CIT(A), CONCL UDED AS UNDER:- 3 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE ISSUE IS NOW COVERED PARTIALLY IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBU NAL IN THE CASE OF M/S VIPOR CHEMICALS P. LTD. VS. ADDL. CIT, CIRCLE 4(2), BARODA IN ITA NO.4142/AHD/2008 PRONOUNCED ON 30/07/2010 AS UNDER: - '6. THE THIRD GROUND RELATES TO VALUATION OF CLOSIN G STOCK UNDER SECTION 145A AND RESULTANT ADDITION OF RS.1,86,469/ - ON ACCOUNT OF EXCISE DUTY COMPONENT OF THE CLOSING STOCK. THE ISS UE IS NOW COVERED BY THE DECISIONS OF HON. BOMBAY HIGH COURT IN CIT VS. MAHALAXMI GLASS WORKS (P) LTD. (2009) 318 ITR 116 ( BOM), CIT VS. MAHAVIR ALLUMINIUM LTD. (2008) 297 ITR 77 (DEL) ACC ORDING TO WHICH ELEMENT OF EXCISE DUTY RELATING TO STOCK HAS TO BE CONSIDERED WHILE VALUING OPENING STOCK AS WELL AS CLOSING STOCK. IN THE PRESENT CASE THE AO HAS ONLY CONSIDERED THE EFFECT OF EXCISE DUT Y COMPONENT IN THE CLOSING STOCK WHICH IS NOT PROPER. HE SHOULD AL SO CONSIDER THE EFFECT OF EXCISE DUTY IN OPENING STOCK AS WELL AND WORK OUT THE RESULTANT ADDITION. THE VALUATION OF CLOSING STOCK THIS YEAR DONE AFTER INCLUDING DUTY COMPONENT WOULD OBVIOUSLY BE O PENING STOCK FOR SUBSEQUENT YEAR AS CONTENDED BY THE ID. AR. ACC ORDINGLY WE RESTORE THIS ISSUE TO THE FILE OF AO TO CALCULATE T HE RESULTANT ADDITION AFTER ADJUSTING BOTH OPENING AS WELL AS CLOSING STO CK WITH THE EXCISE DUTY COMPONENT. THIS GROUND OF ASSESSEE'S APPEAL IS ALLOWED BUT FOR STATISTICAL PURPOSES. ' 4. IN A RECENT JUDGMENT IN THE CASE OF ACIT VS. BOD AL CHEMICAL LTD. (AMALGAMATED WITH MILESTONE ORGANICS LTD.) IN ITA N O.L757/AHD/2010 ASST. YEAR 2000-01 PRONOUNCED ON 16.12.2010 THE DEC ISION HAS BEEN TAKEN AS UNDER:- '8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE DECI SION OF HON. GUJARAT HIGH COURT IN ACIT VS. NARMADA CHEMATUR PET ROCHEMICALS LTD.(SUPRA) IS APPLICABLE ONLY FOR AND UPTO ASST. Y EAR 1998-99 AS THAT JUDGMENT WAS GIVEN IN RESPECT OF THE FACTS OF THE C ASE FOR ASST. YEAR 1997-98. AFTER THE AMENDMENT BY THE FINANCE AC T (NO.2) 1998 WITH EFFECT FROM 1ST APRIL, 1999, ABOVE AUTHORITY C ANNOT BE MADE APPLICABLE. EVEN HON. GUJARAT HIGH COURT HAS OBSERV ED THAT FOR ASST. YEAR 1997-98 PROVISIONS OF SECTION 145A COULD NOT BE INVOKED MEANING THEREBY THAT POSITION WOULD BE DIFFERENT W. E.F. 1.4.1999 5 ITA NO.2727/AHD/2009 AFTER THE INTRODUCTION OF SECTION 145A. SECTION 145 A READS AS UNDER:- 'SEC.145A -METHOD OF ACCOUNTING IN CERTAIN CASES - NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTION 145 T HE VALUATION OF PURCHASE AND SALE OF GOODS AND INVENTORY FOR THE PU RPOSES OF DETERMINING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND G AINS OF BUSINESS OR PROFESSION' SHALL BE (A) IN ACCORDANCE WITH THE METHOD OF ACCOUNTING REG ULARLY EMPLOYED BY THE ASSESSEE; AND (B) FURTHER ADJUSTED TO INCLUDE THE AMOUNT OF ANY T AX, DUTY, CESS OR FEE (BY WHATEVER NAME CALLED) ACTUALLY PAID OR INCURRED BY THE ASSESSEE TO BRING THE GOODS TO THE PLACE OF ITS LOC ATION AND CONDITION AS ON THE DATE OF VALUATION EXPLANATION -FOR THE PURPOSES OF THIS SECTION, ANY TAX, DUTY, CESS OR FEE (BY WHATEVER NAME CALLED) UNDER ANY LAW FOR THE TIM E BEING IN FORCE, SHALL INCLUDE ALL SUCH PAYMENT NOTWITHSTANDING ANY RIGHT ARISING AS A CONSEQUENCE TO SUCH PAYMENT'. A BARE READING OF ABOVE PROVISION SHOWS THAT VALUAT ION OF PURCHASES AND SALES OF GOODS AS WELL AS INVENTORY W ILL NOT ONLY BE IN ACCORDANCE WITH THE ACCOUNTING REGULARLY FOLLOWED B Y THE ASSESSEE BUT ALSO WILL FURTHER BE ADJUSTED BY THE A MOUNT OF ANY TAX, DUTY, CESS OR FEES ACTUALLY PAID BY THE ASSESSEE TO BRING THE GOODS TO THE PLACE OF ITS LOCATION. THEREFORE, EXCISE DUL Y ACTUALLY PAID OR INCURRED BY THE ASSESSEE IN RESPECT OF OPENING STOC K, PURCHASE, SALE OR CLOSING STOCK WOULD BE CONSIDERED FOR COMPU TING PROFITS AND GAINS OF THE BUSINESS OF THE ASSESSEE. THE DECISION OF HON. GUJARAT HIGH COURT IN ACIT VS. NARMADA CHEMATUR PETROCHEMIC ALS LTD. (SUPRA) DOES NOT REALLY COME INTO CONFLICT WITH THE ABOVE PROVISION AS EXCISE DUTY WHICH IS NOT ACTUALLY PAID WILL NOT FORM, PART OF VALUATION OF CLOSING STOCK AS PER SECTION 145A AND ALSO IN ACCORDANCE WITH THE DECISION OF HON. GUJARAT HIGH C OURT IN THE ABOVE CASE WHICH ONLY SAYS THAT EXCISE DUTY WOULD B E PAYABLE ONLY ON THE REMOVAL OF GOODS FROM THE WAREHOUSE. TH US WHERE EXCISE DUTY IS NOT PAID AS THE GOODS ARE NOT REMOVE D FROM THE WARE HOUSE QUESTION OF INCLUSION OF ANY EXCISE DUTY PAYABLE ON FINISHED GOODS WOULD NOT ARISE, UNLESS ASSESSEE HAS ACTUALLY PAID OR INCURRED SUCH EXCISE DUTY DURING THE COURSE OF PURC HASE OR MANUFACTURING. THE EXCISE DUTY WHICH IS NOT ACTUALL Y PAID OR INCURRED CANNOT BE INCLUDED EITHER BECAUSE OF THE J UDGMENT OF HON. GUJARAT HIGH COURT IN ACIT VS. NARMADA CHEMATU R PETROCHEMICALS LTD. (SUPRA) CASE OR BECAUSE OF PROV ISIONS OF SECTION 145A. IN OTHER WORDS, THE PROFIT UNDER THE HEAD 'BU SINESS OR PROFESSION' HAS TO BE COMPUTED BY INCLUSION PRINCIP LE I.E. BY INCLUDING ELEMENT OF EXCISE DUTY CESS OR FEES ACTUA LLY PAID OR 6 ITA NO.2727/AHD/2009 INCURRED BY THE ASSESSEE IN RELATION TO THE ITEMS I N OPENING STOCK, PURCHASE, SALE OR CLOSING STOCK WHERE ASSESSEE IS A DOPTING A METHOD OF ACCOUNTING OPENING STOCK PURCHASE, SALES AND CLOSING STOCK BY EXCLUSION PRINCIPLE THEN SUCH EXCLUSION PR INCIPLE WILL NO LONGER BE ACCEPTABLE AFTER INSERTION OF SECTION 145 A AND FOR THE PURPOSES OF DETERMINING PROFITS UNDER THE HEAD 'BUS INESS OR PROFESSION' ASSESSEE HAS TO NECESSARILY ADOPT INCLU SION PRINCIPLE. FOR ASST. YEAR PRIOR TO 1.4.1999 WHEN PROVISIONS OF SEC TION 145A WERE NOT IN FORCE ASSESSEE WAS FREE TO ADOPT EITHER INCLUSIO N METHOD OR EXCLUSION METHOD FOR ACCOUNTING THE FOUR INGREDIENT S OF TRADING/MANUFACTURING ACCOUNT I.E. OPENING STOCK, P URCHASE, SALES AND CLOSING STOCK AND WHERE ASSESSEE ADOPTED EXCLUS ION METHOD THEN AO COULD NOT VALUE THE INVENTORY ALONE BY INCL UDING EXCISE DUTY ELEMENT IF GOODS ARE NOT REMOVED FROM THE WARE HOUSE. BUT NOW FOR ASST. YEAR SUBSEQUENT TO ASST. YEAR 1999-00 ASSESSEE MAY ADOPT ANY METHOD FOR HIS ACCOUNT BOOKS BUT FOR THE PURPOSE OF COMPUTING PROFIT UNDER THE HEAD 'BUSINESS OR PROFES SION' HE HAS TO SHOW SUCH COMPUTATION THROUGH INCLUSION PRINCIPLE I N VIEW OF THE PROVISIONS OF SECTION 145A WITH THE RULER THAT ONLY EXCISE DUTY, CESS OR FEES ACTUALLY PAID OR INCURRED WILL HAVE TO BE A CCOUNTED FOR ADJUSTMENT. SINCE ASSESSEE HAS NOT FOLLOWED INCLUSI ON PRINCIPLE IN THE PRESENT CASE FOR COMPUTING PROFITS UNDER THE HE AD 'BUSINESS' WE RESTORE THE MATTER TO THE AO TO GIVE OPPORTUNITY TO THE ASSESSEE TO COMPUTE SUCH PROFITS BY INCLUSION PRINCIPLES AND DI FFERENCE, IF ANY, HAS TO BE TREATED AS PROFIT OF THE ASSESSEE PROVIDE D IT IS ON POSITIVE SIDE. IF BY INCLUSION PRINCIPLE PROFITS TEND TO BE REDUCED THEN NO VARIATION IN THE PROFIT COMPUTED BY THE ASSESSEE IS CALLED FOR AS ASSESSEE IS NOT IN APPEAL BEFORE US. AS A RESULT, A PPEAL OF THE REVENUE IS ALLOWED BUT FOR STATISTICAL PURPOSES. ' THUS FOLLOWING THE INCLUSION PRINCIPLES, THE AO WIL L CALCULATE THE NET EFFECT IN THE COMPUTATION OF PROFIT AFTER INCLUSION OF EXC ISE DUTY ELEMENTS IN ALL THE FOUR INGREDIENTS OF TRADING ACCOUNT I.E., OPENING S TOCK, PURCHASE, CLOSING STOCK AND SALES. WITH THE ABOVE OBSERVATION WE REST ORE THE MATTER TO THE FILE OF AO. THE APPEAL OF THE ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES. 5.1 THUS, THE ISSUE OF ADDITION OF RS. 14,55, 081/- HAS BEEN RESTORED TO THE FILE OF THE AO. HONBLE SUPREME CO URT IN THE CASE OF K.C.BUILDERS VS. ACIT,265 ITR 562(SC) HELD THAT ORD INARILY, PENALTY CANNOT STAND IF THE ASSESSMENT ITSELF IS SET ASIDE. WHERE AN ORDER OF ASSESSMENT OR REASSESSMENT ON THE BASIS OF WHICH PE NALTY HAS BEEN LEVIED ON THE ASSESSEE, HAS ITSELF BEEN FINALLY SET ASIDE OR CANCELLED BY THE TRIBUNAL OR OTHERWISE, THE PENALTY CANNOT ST AND BY ITSELF AND THE SAME IS LIABLE TO BE CANCELLED. HONBLE DELHI H IGH COURT IN THE 7 ITA NO.2727/AHD/2009 CASE OF CIT VS. R.DALMIA,(1992)107 TAXATION 107, HE LD THAT NO PENALTY SURVIVES AFTER DELETION OF ADDITIONS, FORMI NG THE BASIS FOR THE LEVY OF PENALTY. SIMILAR VIEW WAS TAKEN IN ADDL. C OMMISSIONER OF INCOME-TAX V. BADRI KASHI PRASAD (1993] 200 ITR 206 (ALL) AND PRABHAT OIL TRADERS V. INCOME-TAX OFFICER (NO. 3) ( 1996) 218 ITR (A.T.) 39 (ITAT, AHMEDABAD),CITY DRY FISH COMPANY V . COMMISSIONER OF INCOME-TAX (1999) 238 ITR 63 (A.P.) , CIT VS. MOHD. BUX SOKAT ALI (2004) 265 ITR 326 (RAJ)AND ACI T VS. VIP INDUSTRIES (2009) 122 TTJ 289 (MUM). 5.2 SINCE THE VERY BASIS UPON WHICH THE PENALTY HAS BEEN IMPOSED IN RELATION TO THE AMOUNT OF RS. 14,55,081/-, DOES NOT EXIST IN VIEW OF THE AFORESAID ORDER DATED 13-01-2011 OF THE ITAT IN QUANTUM APPEAL IN ITA NO. 3566/AHD/2007, WE ARE OF THE OPI NION THAT PENALTY LEVIED IN RELATION TO THE ADDITION UPHELD BY THE L D. CIT(A) DOES NOT SURVIVE AT THIS STAGE AND THE IMPUGNED ORDER IS , THEREFORE, SET ASIDE TO THAT EXTENT. HOWEVER, THE AO IS FREE TO IN ITIATE THE PENALTY PROCEEDINGS IN ACCORDANCE WITH LAW WHILE COMPLETING THE ASSESSMENT IN PURSUANCE TO THE AFORESAID DIRECTIONS OF THE ITAT IN QUANTUM APPEAL. 6. N O ADDITIONAL GROUND HAS BEEN RAISED BEFORE IS IN TE RMS OF RESIDUARY GROUND NO.2 IN THE APPEAL, THEREFORE, THI S GROUND IS DISMISSED. 7. IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT TODAY ON 20 -06-201 1 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 20-06-2011 COPY OF THE ORDER FORWARDED TO: 8 ITA NO.2727/AHD/2009 1. M/S NIMIT TEXOFAB PVT. LTD., 4026, WORLD TRADE C ENTRE, UDHNA DARWAJA, RING ROAD, SURAT 2. THE ITO, WARD-1(4), SURAT 3. CIT CONCERNED 4. CIT(A)-I, SURAT 5. DR, ITAT, AHMEDABAD BENCH-C, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD