The DCITNavsari Circle, Navsari V. M/s. Ravi Exports, Navsari

ITA 32/AHD/2009

• Counselvise Citation: 3220514 RSA 2009
• Duration Of Justice: 2 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-10-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 02-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR JAYANT JHAVERI
• Assessee Lawyers: M K PATEL

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD .., !'# $ $ $ $ %% % &, ' ( # BEFORE SHRI G.D.AGARWAL, VICE-PRESIDENT (AZ) AND SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER $./ I.T.A. NO.32/AHD/2009 ( * * * * / / / / ASSESSMENT YEAR : 2005-06) DY.CIT NAVSARI CIRCLE NAVSARI / VS. RAVI EXPORTS LTD. 25, WHILE HOUSE LOWER GROUND KALIYAWADI ROAD, NAVSARI '+ (, $./- $./ PAN/GIR NO. : AABCR 1201 J ( +. / // / APPELLANT ) .. ( /0+. / RESPONDENT ) +. 1 ( / APPELLANT BY : DR.JAYANT JHAVERI SR. D.R. /0+. 2 1 ( / RESPONDENT BY : SHRI M.K. PATEL % 3 2 &, / / / / DATE OF HEARING : 03/10/2011 45* 2 &, / DATE OF PRONOUNCEMENT : 14.10.11 (6 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE W HICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-VALSAD DATED 23/09/2008 PASSED FOR ASSESSMENT YEAR 2005-06. GROUND RAISED BY THE REVENUE IS REPRODUCED BELOW:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT(APPEALS) HAS DELETING THE PENALTY U/S.271(1)(C) OF THE ACT OF RS.3,96,604/- LEVIED BY THE ASSESSING OFFICER. ITA NO. 32/AHD/2009 DY.CIT VS. RAVI EXPORTS LTD. ASST.YEAR 2005-06 - 2 - 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING PENALTY ORDER PASSED U/S.271(1)(C) OF THE I.T. ACT, 1961 DATED 26 /06/2008 AND ASSESSMENT ORDER MADE U/S.143(3) OF THE ACT DATED 3 1/12/2007 WERE THAT THE ASSESSEE-COMPANY IS IN THE BUSINESS OF DYEING & PRINTING OF GREY FABRICS. AN ACTION U/S.133A OF THE ACT WAS CARRIED OUT ON 01/03/2005 RELEVANT FOR THE ASSESSMENT YEAR 2005-06. 3. AT THE OUTSET, IN THE ASSESSMENT ORDER, IT WAS N OTED THAT THE ASSESSEE HAD VOLUNTARILY ADMITTED EXCESS STOCK OF RS.2,01,01,65 0/ - WHICH WAS DISCLOSED AS AN ADDITIONAL INCOME . WE HAVE NOTED THAT TOTAL INCOME AS PER THE COMPUTATION OF INCOME OFFERED WAS RS.2,28,48,270/- AND THE ASSESSMENT WAS FINALIZED ON THE TOTAL ASSES SED INCOME OF RS.2,41,26,480/-. AS FAR AS THE ADDITION WHICH WAS CONSIDERED FOR LEVY OF CONCEALMENT PENALTY WAS CONCERNED, THE ASSESSING OF FICER HAS STATED THAT AN ADDITION OF RS.10,83,839/- WAS MADE ON ACCOUNT OF EXCESS SHORTAGE. AS PER THE ANNEXURE-D FORMING PART OF FORM NO.3 CD OF THE ACCOUNTS CERTAIN SHORTAGE IN RESPECT OF GREY CL OTH, COLOUR CHEMICALS, COAL AND YARN WAS DISCLOSED BY THE ASSESSEE. THE A LLEGATION OF THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS WAS THAT THE SHORTAGE SHOWN BY THE ASSESSEE WAS EXCESSIVE. THE ASSESSEE HAS GIVEN A REPLY THAT IN SOME OF THE MATERIAL CONSUMED THE SHO RTAGE HAS REDUCED FROM THE LAST YEAR. IT WAS SUBMITTED THAT THE SHOR TAGE IN COLOUR AND CHEMICALS HAD REDUCED IN COMPARISON TO THE LAST YEA R DUE TO BETTER HANDLING. IN RESPECT OF SOME OF THE MATERIAL CONSU MED THE CONSUMPTION HAD GONE UP. IN RESPECT OF CONSUMPTION OF COAL, TH E SAME HAD GONE UP DUE TO THE POOR QUALITY OF THE COAL. LIKEWISE, IN RESPECT OF SHORTAGE OF YARN AN EXPLANATION WAS OFFERED BUT THE SAME WAS DI SMISSED. IT WAS EXPLAINED THAT THE FABRIC HAD GONE THROUGH VARIOUS STAGES OF PROCESSING TO ITA NO. 32/AHD/2009 DY.CIT VS. RAVI EXPORTS LTD. ASST.YEAR 2005-06 - 3 - BE EXECUTED BY DIFFERENT MACHINERIES UNDER HIGH TEM PERATURE AND PRESSURE WHICH RESULTS INTO SHRINKAGE OF CLOTH VARY ING FROM 15% TO 20% DEPENDING UPON THE QUALITY OF THE FABRIC AND ALSO D EPENDING UPON THE DESIRED FINISHED PRODUCT. THEREFORE, THE SHRINKAGE IN THE CLOTH WAS STATED TO BE A CAUSE OF SHORTAGE. THE ASSESSING OFFICER H AS, THEREAFTER, QUOTED CERTAIN PERCENTAGE OF ACCEPTED STANDARDS OF SHORTA GE AND, IN HIS OPINION, THE PERCENTAGE OF SHORTAGE AS SHOWN BY THE ASSESSEE WAS EXCESSIVE. FOR EXAMPLE, IN RESPECT OF COLOUR, NORMAL RATE OF SHORT AGE WAS ALLEGED TO BE 3%, AS AGAINST THAT, ASSESSEE HAS DISCLOSED SHORTAG E AT 3.21%. LIKEWISE, IN RESPECT OF CHEMICALS, ALLEGED RATE OF SHORTAGE W AS 3.5%, HOWEVER, ASSESSEE HAS DISCLOSED 3.97%. IN IDENTICAL MANNER, IN RESPECT OF COAL, YARN AND GREY RESPECTIVELY, THE STANDARD NORMAL RAT E OF SHORTAGE PERCENTAGE WAS ALLEGED TO BE 1.50% FOR COAL, 1.50% FOR YARN AND 14.77% FOR GREY, HOWEVER ASSESSEE HAS DISCLOSED AT 1.75%, 1.71% AND 15.27% RESPECTIVELY. IN THE LIGHT OF THE SAID OBSERVATION S, AN EXCESSIVE SHORTAGE WAS CALCULATED AT RS.10,83,839/- WHICH WAS THE CAUS E OF LEVY OF PENALTY AND CONSEQUENCE THEREUPON A MINIMUM PENALTY OF RS.3 ,96,604/- WAS LEVIED. THE SAME WAS DELETED BY LEARNED CIT(APPEAL S). 4. ON THE DATE OF HEARING, LEARNED SR.DEPARTMENTAL REPRESENTATIVE DR.JAYANT JHAVERI APPEARED AND SUPPORTED THE ACTION OF THE ASSESSING OFFICER. LD.DR HAS ALSO PLACED ON RECORD AN INFORM ATION IN WRITING ABOUT THE SERVICE OF NOTICE OF HEARING ON THE ASSES SEE. WE HAVE NOTED IN THE PAST AS WELL, THE RESPONDENT-ASSESSEE DID NOT A PPEAR, HENCE, WE HAVE DECIDED TO PROCEED EX-PARTE QUA THE ASSESSEE, AFTER HEARING THE SUBMISSIONS OF LD.DR. 5. IN OUR CONSIDERED OPINION, THE LEARNED CIT(APPEA LS) WAS JUSTIFIED IN DELETING THE LEVIED PENALTY AFTER FOLLOWING FEW CASE LAWS, NAMELY:- ITA NO. 32/AHD/2009 DY.CIT VS. RAVI EXPORTS LTD. ASST.YEAR 2005-06 - 4 - SL.NO(S) DECISION IN THE CASE OF REPORTED IN 1. CIT VS. SURESH CHANDRA MITTAL (2001) 252 ITR 9 (SUPREME COURT) 2. CIT VS. SUBHASH TRADING CO. (1996) 221 ITR 110 (GUJ.) 3. NATIONAL TEXTILES VS. CIT (2001) 249 ITR 125 (GUJ.) 4. CIT VS. BARODA TIN WORKS (1996) 221 ITR 661 (GUJ.) 5. CIT VS. DHILLON RICE MILLS (2002) 256 ITR 447 (P&H) 6. MAULIK JASHUBHAI TRUST VS. ITO (1998) 60 TTJ (MUMBAI) 467 5.1. ONCE THE ADMITTED FACTUAL POSITION IS THAT THE ASSESSEE HAS DISCLOSED THE SHORTAGE IN RESPECT OF CERTAIN MATERI ALS CONSUMED AND THAT SHORTAGE WAS DULY RECORDED IN THE BOOKS OF ACCOUNT AND THAT BOOKS OF ACCOUNT HAVE THE DETAILS OF THE CLOSING STOCK OF TH E MATERIAL CONSUMED, THEN IT WAS NOT FAIR ON THE PART OF THE REVENUE DEP ARTMENT TO ALLEGE THAT THE FACTS OR RELEVANT MATERIAL IN RESPECT OF THE SA ID SHORTAGE WAS CONCEALED BY THE ASSESSEE. FACTS OF THE CASE HAVE ALSO REVEALED THAT THE ASSESSING OFFICER HAS SIMPLY COMPARED CERTAIN PERCE NTAGE OF SHORTAGE STATED TO BE AN ACCEPTED STANDARD OF PERCENTAGE AND THEN SUMMARIZED THAT PERCENTAGE OF SHORTAGE SHOWN BY THE ASSESSEE WAS RE LATIVELY HIGHER THAN THE SAID NORMAL STANDARD. BUT TOTALITY OF THE CIR CUMSTANCES HAVE CLEARLY DEMONSTRATED THAT THERE WAS NO INCRIMINATING MATERI AL IN THE POSSESSION OF THE REVENUE DEPARTMENT TO HOLD THAT THE SHORTAGE WAS DUE TO MISAPPROPRIATION OF THE MATERIAL CONSUMED. WE, THER EFORE, HOLD THAT LEARNED CIT(APPEALS) WAS JUSTIFIED IN CONCLUDING TH AT ASSESSING OFFICER HAD NOT MADE ANY ADVERSE COMMENT UPON VERIFICATION OF THE BOOKS OF ITA NO. 32/AHD/2009 DY.CIT VS. RAVI EXPORTS LTD. ASST.YEAR 2005-06 - 5 - ACCOUNT PRODUCED DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, THEREFORE, THE ADDITION WAS MERELY ON AN ESTIMATION, HENCE DEL ETED THE PENALTY. WE ARE ALSO OF THE SAME VIEW, HENCE, AFFIRM THE SAME A ND DISMISS THIS GROUND OF THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. SD/- SD/- ( G.D. AGARWAL ) ( MUKUL KR. SHRAWAT ) VICE PRESIDENT (AZ) JUDICIAL ME MBER AHMEDABAD; DATED 14/ 10 /2011 7.. , . ../ T.C. NAIR, SR. PS (6 2 /&8 (8*& (6 2 /&8 (8*& (6 2 /&8 (8*& (6 2 /&8 (8*&/ COPY OF THE ORDER FORWARDED TO : 1. +. / THE APPELLANT 2. /0+. / THE RESPONDENT. 3. $$ & %9 / CONCERNED CIT 4. %9() / THE CIT(A)-VALSAD 5. 8<= /& , , / DR, ITAT, AHMEDABAD 6. = >3 / GUARD FILE. (6 % (6 % (6 % (6 % / BY ORDER, 08& /& //TRUE COPY// ! !! !/ // / $ $ $ $ ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION.. 03/10/2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 03/10/2011 OTHER MEMBER 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 D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 14.10.11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 14.10.11 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