M/s. Atul Cattle Feed Industries, Anand V. The Income tax Officer,Ward-2, Anand

ITA 3275/AHD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57311 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-03-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 28-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P B DOSHI S

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , !', #$ # % BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ I.T.A. NO.3275/AHD/2011 ( ( ( ( ( / / / / ASSESSMENT YEAR : 2005-06) M/S.ATUL CATTLE FEED INDUSTRIES ANAND BORSAD ROAD JITODIA, TA.ANAND / VS. THE ITO WARD-(2) ANAND ) #$ ./*+ ./ PAN/GIR NO. : AAIFA 1883B ( ), / // / APPELLANT ) .. ( -.), / RESPONDENT ) ), / # / APPELLANT BY : SHRI P.B.DOSHI, ASSESSEES COUNSEL -.), 0 / # / RESPONDENT BY : SHRI BHUVNESH KULSHRESTHA, SR.D.R. 1 0 '$ / / / / DATE OF HEARING : 01/03/2012 23( 0 '$ / DATE OF PRONOUNCEMENT : 26/03/2012 #4 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WHI CH HAS EMANATED FROM THE ORDER OF THE CIT(A)-IV, BARODA DATED 28/11 /2011 PASSED FOR AY 2005-06. DELETION OF PENALTY LEVIED U/S.271(1) (C) OF RS.2,17,850/- HAS BEEN CHALLENGED BY THE ASSESSEE. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPOND ING ASSESSMENT ORDER PASSED U/S.143(3) OF THE IT ACT DATED 12.11.2007 AN D PENALTY ORDER ITA NO3275/AHD/ 2011. M/S.ATUL CATTLE FEED INDUSTRIES VS. ITO ASST.YEAR 2005-06 - 2 - PASSED U/S.271(1)(C) OF THE I.T.ACT DATED 17/08/201 0 WERE THAT THE ASSESSEE-FIRM IS IN THE BUSINESS OF MANUFACTURING O F CATTLE-FEED. IT WAS NOTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS T HAT NO QUANTITATIVE RECORD WAS MAINTAINED. THE ASSESSEE HAS CLAIMED A SHORTAGE OF 3,06,479KGS. OF FINISHED GOODS. THE MAIN INGREDIE NTS OF THE CATTLE-FEED STATED TO BE HALLER RICE BRAN, RICE BRAN CUTTING A ND GROUND-NUT WASTE CALCIUM AND MOLASSES. THE SAID SHORTAGE WAS CLAIM ED TO BE ON ACCOUNT OF LOSS OF WEIGHT IN HANDLING AND TRANSPORTATION. THE AO HAS NOT ACCEPTED THE SAID CLAIM AND COMPUTED THE DISALLOWAN CE OF SHORTAGE OF 2,25,509 KGS. @ 4.62 PER KG. AND THE VALUE OF THE S AME WAS WORKED OUT AT RS.10,41,852/-. BECAUSE OF THE SAID ADDITION, P ENALTY WAS INITIATED. WHEN THE MATTER CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, THE RATE WAS SUBSTITUTED TO RS.2.64 AND THEREUPON THE VALUE OF T HE SHORTAGE WAS RECOMPUTED AT RS.5,95,344/-. AGAINST THE SAID PART RELIEF, THE ASSESSEE WENT FURTHER IN APPEAL AND THE ITAT AHMEDABAD D B ENCH IN ITA NO.3941/AHD/2008 FOR A.Y. 2005-06, ORDER DATED 22 /01/2010, VIDE PARA-7 HAS AFFIRMED THE VIEW OF LD.CIT(A) IN THE FO LLOWING MANNER:- 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AS IS EVIDENT FROM THE IMPUGNED ORDER , THE ASSESSEE CLAIMED SHORTAGE OF 3,06,479KGS. IN PRODUCTION ON T HE GROUND OF RAW MATERIAL HAVING MOISTURE CONTENT AND LOSS IN HANDLING/TRANSPORTATION. HOWEVER, THE AO AFTER CO NSIDERING THE EXPLANATION OF THE ASSESSEE WORKED OUT SHORTAGE OF 2,25,509 KGS. THE LD. CIT(A) WHILE APPLYING ACTUAL COST OF PRODUC TION UPHELD THE ADDITION TO THE EXTENT OF RS.5,95,344/-, EVEN WHEN THE ASSESSEE DID NOT PLACE EITHER BEFORE THE AO OR THE LD.CIT(A) AN Y CORROBORATIVE DATA IN RESPECT OF SHORTAGE IN PRODUCTION. IN THES E CIRCUMSTANCES, THE ONLY ISSUE BEFORE THE LD.CIT(A) WAS THE VALUATI ON OF SHORTAGE AND ACCORDINGLY, THE ADDITION WAS WORKED OUT ON THE BASIS OF ITA NO3275/AHD/ 2011. M/S.ATUL CATTLE FEED INDUSTRIES VS. ITO ASST.YEAR 2005-06 - 3 - ACTUAL COST OF PRODUCTION. BEFORE US, THE LD.AR ON BEHALF OF THE ASSESSEE DID NOT PLACE ANY COMPARATIVE DATA, EITHER OF OTHER ASSESSEES OR IN THEIR OWN CASE IN THE PRECEDING YEA RS, WHICH COULD ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER. IN VIEW OF THE FACT THAT THE AO HAS ALREADY ALLOWED CLAIM OF SHORTAGE TO THE EXTENT OF 80970/- KGS WHILE THE LD.CIT(A) UPHELD HIS FINDINGS , WE DO NOT FIND ANY REASONS TO INTERFERE WITH THE CONCLUSIONS ARRIV ED AT BY THE LD.CIT(A). THEREFORE, GROUND NO.1 IN THE APPEAL IS DISMISSED. 3. WITH THIS FACTUAL BACKGROUND, WE HAVE HEARD BOTH THE SIDES. AS FAR AS THE EXPLANATION OF THE ASSESSEE IS CONCERNED IN RESPECT OF THE LOSS OF WEIGHT, THE ASSESSEE HAS MADE THE FOLLOWING SUBM ISSIONS; RELEVANT EXTRACT FROM THE WRITTEN SUBMISSIONS IS REPRODUCED: - REASON GIVEN BY THE ASSESSING OFFICER : (A) LOOKING TO THE DAY TO DAY CONSUMPTION OF MOLA SSES VIS--VIS RAW MATERIAL, THERE IS NO SCOPE FOR STORAGE OF RAW MATERIAL FOR DRYING. ASSESSEES EXPLANATION : THE ABOVE FINDING OF THE ASSESSING OFFICER IS NOT C ORRECT AT ALL. IT IS SEEN FROM THE QUANTITY OF OPENING STOCK OF RAW MATE RIAL AND CLOSING STOCK OF RAW MATERIAL, THAT AVERAGE STOCK O F RAW MATERIAL IS ABOUT 2,75,000 KGS. DURING THE YEAR. THAT MEANS TH E AVERAGE STOCK OF RAW MATERIAL IS FOR 30 DAYS CONSIDERING THE DAIL Y CONSUMPTION OF 9000 KGS. PER DAY. THE DETAILS ARE AS UNDER: OPENING STOCK OF RAW MATERIAL 321000 KGS. CLOSING STOCK OF RAW MATERIAL 229250 KGS. TOTAL . 550250 KGS . AVERAGE STOCK (550250 / 2) . 275125 KGS. AVERAGAE CONSUMPTION PER DAY 9000 KGS. (TOTAL CONSUMP. 2937884 / 315 DAYS) AVERAGE STOCK FOR NO.OF DAYS 30 DAYS ITA NO3275/AHD/ 2011. M/S.ATUL CATTLE FEED INDUSTRIES VS. ITO ASST.YEAR 2005-06 - 4 - THE ABOVE DATA SHOWS THAT THE ASSESSEE HAD STORAGE OF RAW MATERIAL FOR AT LEAST ONE MONTH. SO THE CLAIM OF T HE ASSESSING OFFICER THAT THERE IS NO SCOPE FOR STORAGE OF RAW M ATERIAL IS FACTUALLY INCORRECT. 3.1. IN RESPECT OF LOSS OF WEIGHT IN TRANSPORTATION THE ASSESSEES EXPLANATION IS AS UNDER:- REASON GIVEN BY THE ASSESSING OFFICER: (B) AS FAR AS THE LOSS OF WEIGHT DURING THE TRANSP ORTATION IS CONCERNED, THE TOTAL WEIGHT IS CONSIDERED ON THE BA SIS OF INWARD REGISTER. THEREFORE, QUESTION OF WEIGHT LOSS DURIN G TRANSPORTATION DOES NOT ARISE. ASSESSEES EXPLANATION: IT IS ALSO NOT CORRECT, BECAUSE THE RAW MATERIAL HA D BEEN WEIGHED AT THE PLACE OF SUPPLIER WHEN IT IS PURCHASED. THE PURCHASE BILLS OF RAW MATERIAL (HALLER RICE BRAN) CLEARLY SHOWS THAT THE MATERIAL HAD BEEN WEIGHED AT THE TIME OF LOADING AT THE PLAC E OF SUPPLIER. THE SAME QUANTITY HAD BEEN ENTERED IN THE INWARD RE GISTER. THE APPELLANT IS NOT WEIGHING AGAIN THE RAW MATERIAL A HIS FACTORY PREMISES. COPY OF PURCHASE BILLS ARE ENCLOSED. (PAGE NOS.12 -23) SO THE ASSESSING OFFICER HAD REJECTED THE ASSESSEE S CLAIM OF SHORTAGE ON THE BASIS OF THE ABOVE REASONS AND MADE ADDITION. IT IS MERE ASSUMPTIONS OF THE ASSESSING OFFICER WITHOU T FINDING OF FACTS. HE MADE ADDITION ON ESTIMATED BASIS. THE ASSESSEE HAD EXPLAINED THE REASONS FOR SHORTAGE WHICH ARE NOT CO NTRADICTED BY THE ASSESSING OFFICER WITH PARTICULAR FINDINGS. IN STEAD, HE HAD GIVEN VAGUE ASSUMPTION FOR REJECTING THE CLAIM OF T HE ASSESSEE. 4. FROM THE ABOVE DISCUSSION, IT IS EVIDENT THAT TH E ASSESSEE HAS OFFERED AN EXPLANATION WHICH WAS NOT FOUND TO BE A LTOGETHER FALSE. IN ITA NO3275/AHD/ 2011. M/S.ATUL CATTLE FEED INDUSTRIES VS. ITO ASST.YEAR 2005-06 - 5 - THIS REGARD, OUR ATTENTION HAS BEEN DRAWN ON EXPLAN ATION-1(A) OF SECTION 271(1)(C) OF I.T. ACT WHICH PRESCRIBES THAT WHERE I N RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF TOTAL INCOME OF ANY PERSON UNDER THIS ACT, SUCH PERSON FAILS TO OFFER ANY EXPLANATION OR OFFER S AN EXPLANATION WHICH IS FOUND BY THE AO TO BE FALSE, THEN THE AMOUNT ADD ED OR DISALLOWED IN COMPUTING THE TOTAL INCOME SHALL FOR THE PURPOSE OF LEVY OF CONCEALMENT PENALTY BE DEEMED TO HELD AS INCOME CONCEALED. HOW EVER, IN THIS CASE, THE ASSESSEE HAS IN FACT OFFERED AN EXPLANATION AND IN SUPPORT FURNISHED CERTAIN EVIDENCES. THOUGH THOSE EVIDENCES WERE NOT FOUND TO BE SATISFACTORY AND THE PART RELIEF WAS GRANTED. WE T HEREFORE HOLD THAT THE REASON OF DISBELIEF OF SHORTAGE REMAINED CONTENTIOU S. IT IS ALSO CLEAR THAT THE RATE APPLIED FOR THE PURPOSE OF VALUATION OF TH E SHORTAGE WAS ALSO UNDER DISPUTE. BECAUSE OF THE DIVERGENT VIEWS TAKE N BY THE REVENUE AUTHORITIES, WE ARE OF THE CONSIDERED VIEW THAT ME RELY A PLEA OF THE ASSESSEE WAS NOT ACCEPTED DO NOT IPSO FACTO GIVE RI SE TO LEVY OF CONCEALMENT PENALTY. FOR THIS LEGAL PROPOSITION, WE PLACE RELIANCE ON SHIV LAL TAK VS. CIT 251 ITR 373 (RAJ.). RESULT ANTLY, WE HEREBY DIRECT TO DELETE THE PENALTY. GROUND IS ALLOWED. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . SD/- SD/- ( ANIL CHATURVEDI ) ( MUKUL KR . SHRAWAT ) ACCOUNTANT MEMBER JUDI CIAL MEMBER AHMEDABAD; DATED 26/ 03 /2012 5'.., .../ T.C. NAIR, SR. PS ITA NO3275/AHD/ 2011. M/S.ATUL CATTLE FEED INDUSTRIES VS. ITO ASST.YEAR 2005-06 - 6 - #4 0 -6 7#6( #4 0 -6 7#6( #4 0 -6 7#6( #4 0 -6 7#6(/ COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. -.), / THE RESPONDENT. 3. 8 / CONCERNED CIT 4. 8() / THE CIT(A)-IV, BARODA 5. 6;< - , , / DR, ITAT, AHMEDABAD 6. <= >1 / GUARD FILE. #4 #4 #4 #4 / BY ORDER, .6 - //TRUE COPY// ? ?? ?/ // / * * * * ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION..1.3.12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 1.3.12 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.26.3.12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 26.3.12 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