Gomti Fibres Ltd., Surat V. The Income tax Officer,Ward-1(2), Surat

ITA 2899/AHD/2006

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57288 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-01-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 26-12-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S PARIDA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard
• Section: 50C; 234B

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH , , , , ! ! ! ! '# '# '# '# ' '' '. .. . . .. .%&' %&' %&' %&', , , , ( ! ( ! ( ! ( ! , ) ) ) ) BEFORE S/SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND A.K. GARODIA, ACCOUNTANT MEMBER) ITA NO.2898/AHD/2006 : [ASSTT.YEAR : 2003-2004] AND ITA NO. 3252/AHD/2008 : [ASSTT.YEAR : 2003-2004] GOMTI SILK MILLS LTD. 983, ADARSH NAGAR GUJARAT HOUSING BOARD SACHIN, SURAT 394 230. /VS. ITO, WARD-1(2) SURAT. ITA NO.2899/AHD/2006 : [ASSTT.YEAR : 2003-2004] AND ITA NO. 3251/AHD/2008 : [ASSTT.YEAR : 2003-2004] GOMTI FIBRES LTD. 238, GIDC INDUSTRIAL ESTATE SACHIN, SURAT 394 230. /VS. ITO, WARD-1(2) SURAT. ( (( (+, +, +, +, / APPELLANT) ( (( (-.+, -.+, -.+, -.+, / RESPONDENT) /0 1 2 / ASSESSEE BY : SHRI S.N. SOPARKAR 4! 1 2 / REVENUE BY : SHRI S.S. PARIDA, CIT-DR 56 1 0(/ DATE OF HEARING : 18 TH JANUARY, 2012 7&8 1 0(/ DATE OF PRONOUNCEMENT : 21.03.2012 / O R D E R PER A.K. GARODIA, ACCOUNTANT MEMBER: OUT OF BUNCH OF THESE FOUR APPEALS, TWO ARE QUANTUM APPEALS IN R ESPECT OF TWO DIFFERENT ASSESSES VIZ. GOMTI SILK MILLS LTD. FOR A.Y. 2003-2 004 AND GOMTI FIBRES LTD., FOR A.Y.2003-2004 AND REMAINING TWO APPEALS A RE AGAINST THE PENALTY ITA NO.2898/AHD/2006 & ITA NO. 3252/AHD/2008 ITA NO.2899/AHD/2006 & ITA NO. 3251/AHD/2008 -2- IMPOSED UNDER SECTION 271(1)(C) OF THE ACT FOR THE SAME ASSESSMENT YEARS IN RESPECT OF THE SAME ASSESSEES. ALL THESE APPEAL S WERE HEARD TOGETHER AND ARE DISPOSED OF BY WAY OF COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP THE QUANTUM APPEAL IN THE CASE OF GOMTI SILK MILLS LTD. (ITA NO.2898/AHD/2006 FOR A.Y.2003-2004). THE GROUND NOS.1 AND 2 READ AS UNDER: 1. THE LD.CIT(A) ERRED IN CONFIRMING ADDITION OF RS.7,68,38,132/- 2. THE LD.CIT(A) ERRED IN CONFIRMING ADDITION OF RS .1,12,457/- IN RESPECT OF PURCHASE MADE FROM M/S.SUNITA SILK MI LLS. 3. IT IS SUBMITTED BY THE LEARNED COUNSEL FOR THE A SSESSEES THAT PAGE NO.98 OF THE PAPER BOOK IS THE PROFIT & LOSS ACCOUN T FROM WHICH, IT CAN BE SEEN THAT ONLY RS.7,40,977/- WAS DEBITED TO P&L ACC OUNT ON ACCOUNT OF CONSUMPTION OF RAW-MATERIAL. HE HAS ALSO DRAWN OUR ATTENTION TO PAGE NO.100 OF THE PB, WHEREIN IT IS SEEN THAT AGAINST T HE PURCHASE OF RS.7,78,73,750/-, THERE WERE CLOSING STOCK OF RAW-M ATERIAL OF RS.7,71,32,773/- WHILE CONSUMPTION OF RAW-MATERIAL WAS ONLY RS.7,40,977/-. IT WAS SUBMITTED BY HIM THAT EVEN I F ANY ADDITION HAS TO BE MADE IN THE PRESENT CASE THAT CANNOT EXCEED THE AMO UNT DEBITED BY THE ASSESSEE TO THE P&L ACCOUNT. HE SUBMITTED THAT SIN CE THIS ASPECT WAS NOT CONSIDERED BY THE AUTHORITIES BELOW, THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE AO FOR FRESH DECISION. THE LEARNED DR, SUPPORTED THE ORDERS OF THE AO AND THE CIT(A). 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND GONE TH ROUGH THE ORDERS OF THE AUTHORITIES BELOW WE FIND THAT ALTHOUGH THE PURCHASES OF RAW- MATERIAL IS OF RS.7,78,73,750/-, ONLY RS.7,40,977/- HAS BEEN DEBITED TO THE P&L ACCOUNT ON ACCOUNT OF CONSUMPTION OF RAW-MATERI AL AND BALANCE ITA NO.2898/AHD/2006 & ITA NO. 3252/AHD/2008 ITA NO.2899/AHD/2006 & ITA NO. 3251/AHD/2008 -3- AMOUNT WAS CARRIED TO THE BALANCE SHEET AS CLOSING STOCK. IN CASE, THE ENTIRE PURCHASE IS FOUND TO BE BOGUS, THEN ALSO IN THE PRE SENT YEAR, THE ADDITION CANNOT EXCEED THE AMOUNT OF RS.7,40,977/- WHICH HAS BEEN DEBITED TO P&L IN THE PRESENT YEAR AND THE BALANCE CAN BE CONSIDER ED IN THAT YEAR IN WHICH THE ASSESSEE IS CLAIMING THE CONSUMPTION OF RAW-MAT ERIAL OUT OF OPENING STOCK IN THAT YEAR. SINCE THIS ASPECT WAS NOT EXAM INED BY THE AO, WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE AND RESTORE ENTIRE MATTER BACK TO THE AO FOR FRESH DECISION IN THE LIGHT OF T HE ABOVE DISCUSSIONS AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. GROUND NO.1 IS ALLOWED FOR STATISTICAL PURPOSE. 5. FOR GROUND NO.2 ALSO, WE FEEL THAT THE AO SHOULD DECIDE THE ISSUE AFRESH AND HENCE WE RESTORE THIS MATTER ALSO TO THE AO. THE GROUND NO.2 IS ALSO ALLOWED FOR STATISTICAL PURPOSE. 6. THE GROUND NO.3 OF THE ASSESSEES APPEAL READS A S UNDER: 3. THE LD.CIT(A) MISCONSTRUED THE RELEVANT PROVISI ONS OF THE ACT AND PARTICULARLY SECTION 50C IN CONFIRMING THE ADDI TION OF RS.12,98,438/- 7. IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THIS ISSUE SHOULD ALSO GO BACK TO THE FILE OF THE AO FOR FRESH DECISION AFTER REFERRING THE MATTER TO THE DVO. HE DREW OUR ATTEN TION TO PAGE NO.22 OF THE ASSESSMENT ORDER WHERE THE AO HAS NOTED THAT IT WAS THE REQUEST OF THE ASSESSEE TO COMPLY WITH SUB-SECTION (2) OF SECTION 50C, AS PER WHICH THE MATTER IS REQUIRED TO BE REFERRED TO THE DVO. THE LEARNED DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW. WE FIND THAT SINCE REQUEST WAS MADE BY THE ASSESSEE FOR REF ERRING THE MATTER TO THE ITA NO.2898/AHD/2006 & ITA NO. 3252/AHD/2008 ITA NO.2899/AHD/2006 & ITA NO. 3251/AHD/2008 -4- DVO, AS PER THE PROVISIONS OF SECTION 50C(2), THE A O SHOULD HAVE DONE SO, AND WE FEEL THAT THIS MATTER SHOULD ALSO GO BACK TO THE FILE OF THE AO FOR FRESH DECISION AFTER COMPLYING WITH PROVISIONS OF S ECTION 50C(2) AND HENCE, WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) ON THI S ISSUE ALSO AND RESTORE THIS MATTER BACK TO THE FILE OF AO FOR FRESH DECISI ON IN THE LIGHT OF OUR ABOVE DISCUSSION, AFTER PROVIDING ADEQUATE OPPORTUNITIES TO THE ASSESSEE. ACCORDINGLY, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSE. 9. IN THE RESULT, THIS APPEAL OF THE ASSESSEE STAND S ALLOWED FOR STATISTICAL PURPOSE. 10. NOW, WE TAKE UP QUANTUM APPEAL IN THE CASE OF G OMTI FIBRES LTD., IN ITA NO.2899/AHD/2006. THE GROUNDS BY THE ASSESSEE IN THIS CASE ARE AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND A S PER LAW, THE LD.CIT(A) ERRED IN CONFIRMING ADDITION OF RS.3, 43,06,559/-; 2. THE LD.CIT(A) ERRED IN CONFIRMING CHARGE OF INT EREST U/S.234A, 234B AND 24C OF THE ACT. 11. IT WAS SUBMITTED BY THE LEARNED AR THAT IN THIS CASE ALSO, P&L ACCOUNT OF THE ASSESSEE IS AVAILABLE AT PAGE NO.101 OF THE PB, AS PER WHICH, THE TOTAL CONSUMPTION OF RAW-MATERIAL DEBITED TO P& L ACCOUNT IS 18,17,202/-. HE ALSO DREW OUR ATTENTION TO PAGE NO .104 OF THE PB AND POINTED OUT THAT THE CLOSING STOCK OF GREY-CLOTH HA VE BEEN TAKEN IN THE PRESENT YEAR AT RS.3,69,46,036/- AS AGAINST THE OPE NING STOCK OF RS.18,57,060/-, AND HENCE, THE ENTIRE PURCHASE OF G REY CLOTH IS LYING IN THE CLOSING STOCK IN THE PRESENT YEAR. THEREFORE, IN T HIS CASE ALSO, THE MATTER SHOULD GO BACK TO THE FILE OF THE AO FOR CONSIDERIN G THIS ASPECT. THE LEARNED DR SUPPORTED THE ORDER OF THE AO. 12. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD AND ALSO GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW. WE FIND ITA NO.2898/AHD/2006 & ITA NO. 3252/AHD/2008 ITA NO.2899/AHD/2006 & ITA NO. 3251/AHD/2008 -5- THAT THE ADDITION WAS MADE BY THE AO IN RESPECT OF PURCHASES OF GREY-CLOTH. BUT SINCE THAT WAS NOT CONSUMED IN THE PRESENT YEAR , THIS ADDITION IS NOT CALLED FOR IN THE PRESENT YEAR IN EXCESS OF CONSUMP TION OF GREY CLOTH IN THE PRESENT YEAR. ON ACCOUNT OF EXCESS GREY CLOTH STOC K SHOWN IN THE PRESENT YEAR, THE ADDITION CAN BE MADE IN THAT YEAR IN WHIC H THE ASSESSEE IS CLAIMING CONSUMPTION OF THE SAME AND CLAIMING THE DEDUCTION ON THAT ACCOUNT. WE THEREFORE SET ASIDE THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR FRESH DEC ISION, AS PER ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITIES T O THE ASSESSEES. GROUND NO.2 IS CONSEQUENTIAL. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSE. 14. NOW, WE TAKE UP BOTH THE PENALTY APPEALS FILED BY THE ASSESSEE IN THE CASES OF THESE TWO ASSESSEES. 15. SINCE THE ADDITIONS IN BOTH THE CASES HAVE BEEN SET ASIDE AND RESTORED BACK TO THE FILE OF THE AO, PENALTY CANNOT SURVIVE. IF AT ALL ANY ADDITION IS MADE BY THE AO IN THE SET ASIDE PROCEEDINGS, THE AO IS AT LIBERTY TO INITIATE AND IMPOSE PENALTY AGAIN. BUT THE PRESENT PENALTY CANNOT SURVIVE AND THEREFORE, THE SAME ARE DELETED IN BOTH THE CASES. ACCORDINGLY, BOTH THE PENALTY APPEALS ARE ALLOWED. 16. IN THE COMBINED RESULT, BOTH THE QUANTUM APPEAL S OF THE ASSESSEES ARE ALLOWED FOR STATISTICAL PURPOSE AND BOTH THE PE NALTY APPEALS ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD./- SD./- ( /BHAVNESH SAINI) ! ! ! ! /JUDICIAL MEMBER ( ' '' '. .. . . .. .%&' %&' %&' %&' /A.K. GARODIA) ( ! ( ! ( ! ( ! /ACCOUNTANT MEMBER ITA NO.2898/AHD/2006 & ITA NO. 3252/AHD/2008 ITA NO.2899/AHD/2006 & ITA NO. 3251/AHD/2008 -6- ORDER PRONOUNCED: SD./- (KB) JM SD./-(AKG)AM C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD 1. DATE OF DICTATION : 06-03-2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER. : 13-03-2012 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S : 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT. : 21/3/2012 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER : 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S. : 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK. : 26/3/2012 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. : 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER. : 10. DATE OF DESPATCH OF THE ORDER :