Sarovar Spintex Pvt.Ltd., Surat V. The ACIT.,Circle-4, Surat

ITA 2923/AHD/2011

• Counselvise Citation: 292320514 RSA 2011
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-04-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 25-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: RASESH SHAH
• Keywords: Depreciation
• Section: 143(3); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI D K TYAGI - JM AND SHRI A MOHAN ALANKAMONY - AM ITA NO.2923/AHD/2011 (ASSESSMENT YEAR:-2002-03) M/S SAROVAR SPINTEX PVT. LTD. 1, PLOT B-52, ROAD NO.3, UDHYOG NAGAR, UDHNA, SURAT V/S THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-4, SURAT PAN: AADCS 3936 G [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI RASESH SHAH, AR REVENUE BY:- SHRI B L YADAV, SR. DR DATE OF HEARING:- 19-04-2012 DATE OF PRONOUNCEMENT:- 19-04-2012 O R D E R PER D K TYAGI (JM) :- THIS APPEAL FILED BY ASSESSEE IS DIRECTED AGAINST ORDER DATED 30-09-2011 PASSED BY L EARNED COMMISSIONER OF INCOME-TAX (APPEALS)-I, [HEREINAFTE R REFERRED TO AS THE LEARNED CIT(A)] SURAT FOR ASSESSMENT YEAR (AY) 2002- 03. THE ONLY GROUND RAISED BY THE ASSESSEE IN THIS APPEAL RELATES TO CONFIRMATION OF AO IN LEVYING PENALTY OF RS.5,25 ,000/- U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. 2 THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN O F INCOME WAS FILED BY THE ASSESSEE ON 11-11-2002 DECLARING TOTAL INCOME OF RS.34,39,518/-. SUBSEQUENTLY, THE SCRUTINY ASSESSME NT U/S 143(3) WAS PASSED ON 28-12-2004, DETERMINING THE INCOME OF THE 2 2 ASSESSEE AT RS.68,98,269/-. DURING THE COURSE OF S CRUTINY ASSESSMENT, FOLLOWING ADDITIONS WERE MADE BY THE AO :- [1] DISALLOWANCE OF DEPRECIATION RS. 3,96,892/- [2] FURTHER ESTIMATE OF NET INCOME RS.30,00,000/- DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS FOUND THAT THE ASSESSEE HAS RECEIVED THE SUBSIDY OF RS.12,69,8 50/- FROM THE GOVERNMENT, ON THE CAPITAL INVESTMENT, WHICH REQUIR ED TO BE DEDUCTED FROM THE ACTUAL COST OF THE ASSETS, AS PER THE PROVISIONS OF EXPLANATION 10 TO SECTION 43(1) OF THE ACT. AS T HE ASSESSEE COULD NOT SATISFACTORILY EXPLAIN THE LAPSE, THE DEP RECIATION OF RS.3,96,892/- WAS DISALLOWED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, VARIOU S DEFECTS WERE NOTED BY THE AO IN RESPECT OF FALL IN GP OF 1. 20% AS COMPARED TO LAST YEAR; NO CO-RELATION BETWEEN ELECT RICITY CONSUMPTION AND PRODUCTION; NO CLOSING STOCK OF FIN ISHED GOODS OR WIP HAS BEEN SHOWN, CLAIM OF LABOUR PAYMENT TO S HRI RAJNIKANT KALARIYA FOUND TO BE FALSE. AS THE ASSESS EE COULD NOT SATISFACTORILY EXPLAIN THE DEFECTS, THE BOOK RESULT S WERE REJECTED AND THE AO THEREFORE, ESTIMATED THE ADDITIONAL INCO ME OF RS.30,00,000/-. ON APPEAL, THE LEARNED CIT(A) RESTR ICTED THE ADDITION TO RS.15,00,000/-. ON THE BASIS OF ABOVE FACTS, THE AO INITIATED PENAL TY PROCEEDINGS. THE ASSESSEE SUBMITTED THAT THE PENALT Y PROCEEDINGS MAY BE DROPPED. HOWEVER, THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND PROCEEDED TO LEVY THE IMPUGNED PENALTY OF RS.5,25,000/- U/S 271(1)(C) OF THE ACT. 3 3 3 AGGRIEVED BY THIS ORDER OF THE AO, THE ASSESSEE F ILED AN APPEAL BEFORE THE LEARNED CIT(A) AND ARGUED THE MAT TER AT LENGTH. THE ASSESSEE ALSO FILED WRITTEN SUBMISSIONS BEFORE THE LEARNED CIT(A). HOWEVER, THE LEARNED CIT(A) CONFIRMED THE P ENALTY WITH THE FOLLOWING OBSERVATIONS:- THE ARGUMENTS OF BOTH THE SIDES HAVE BEEN APPRECI ATED. THERE IS CONSIDERABLE FORCE IN THE ARGUMENTS OF THE AO. RELY ING ON AOS ARGUMENTS, PENALTY IS CONFIRMED. 4 FURTHER AGGRIEVED, THE ASSESSEE IS NOW IN APPEAL BEFORE US. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE PLACING RELIANCE ON THE SUBMISSIONS MADE BEFORE THE LEARNED CIT(A) FURTHER SUBMITTED THAT THE LEARNED CIT(A) WA S NOT JUSTIFIED IN CONFIRMING THE PENALTY. SINCE THE WRIT TEN SUBMISSIONS FILED BY THE ASSESSEE BEFORE THE LEARNED CIT(A) HAV E NOT BEEN CONSIDERED, HE SUBMITTED THAT THE MATTER MAY KINDLY BE RESTORED TO THE FILE OF THE LEARNED CIT(A) FOR FRESH ADJUDIC ATION. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDER OF THE AO. 5 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS. WE FIND THAT THE ASSESSEE HAS FILED THE WRITTEN SUBMIS SIONS BEFORE THE LEARNED CIT(A) DATED 20-09-2011 WHICH HAVE ALSO BEE N REPRODUCED BY HIM IN HIS ORDER. THE LEARNED CIT(A) HAS REPRODUCED THE PENALTY ORDER OF AO. HOWEVER, WHILE DISMISSING THE APPEAL OF THE ASSESSEE, HE HAS NOT GIVEN ANY RE ASON WHATSOEVER FOR AGREEING WITH THE VIEW OF THE AO, WH ICH IS NOT PROPER AND SUSTAINABLE IN LAW. WE ARE, THEREFORE, O F THE VIEW THAT THE MATTER BE RESTORED BACK TO THE FILE OF LEARNED CIT(A) TO 4 4 DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE A ND AFTER TAKING INTO CONSIDERATION THE WRITTEN SUBMISSIONS MADE BEF ORE HIM BY THE ASSESSEE, BY PASSING A SPEAKING ORDER. WE ORDER ACCORDINGLY. 6 IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTI CAL PURPOSE. ORDER PRONOUNCED IN THE COURT TODAY ON 19-04-2012 SD/- SD/- (A MOHAN ALANKAMONY) ACCOUNTANT MEMBER (D K TYAGI) JUDICIAL MEMBER DATE : 19-04-2012 COPY OF THE ORDER FORWARDED TO: 1. M/S SAROVAR SPINTEX PVT. LTD. 1, PLOT B-52, ROAD NO.3, UDHYOG NAGAR, UDHNA, SURAT 2. THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-4, SURAT 3. CIT CONCERNED 4. CIT(A)-I, SURAT 5. DR, ITAT, AHMEDABAD BENCH-D, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD