M/s M Adinarayana & Co, Guntur, Hyderabad V. The ACIT, Circle-1(1), Guntur

ITA 448/VIZ/2006

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7256 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-12-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 06-11-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T L PETER
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM. BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI B.R.BASKARAN, ACCOUNTANT MEMBER. I.T.A. NO. 448/VIZAG/2006 ASSESSMENT YEAR : 2003 - 04 M ADINARAYANA & CO , ACIT, CIRCLE - 1(1) , GUNTUR. VS. GUNTUR. PAN : AADFM5309B APPELLANT. RESPONDENT. ASSESSEE BY : SHRI GVN HARI, CA RESPONDENT BY : SHRI TL PETER, CIT - DR O R D E R PER SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) MAINLY ON 2 GROUNDS, WHICH ARE AS UNDER : 1 . THE LD CIT(A) ERRED IN CON FIRMING THE ACTION OF THE AO IN DISALLOWING TH E CLAIM FOR DEDUCTION U/S 80HHC OF RS.14,77,330/ - AS PROFIT TRANSFER OF DEPB. 2 . THE LD CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN ADDING RS.5,90,200/ - ON ACCOUNT OF UNDER VALUATION OF THE CLOSING STOCK OF REJECTED TOBACCO LEAVES. 2. WITH RE GARD TO THE GROUND NO.1, THE LD COUNSEL FOR THE ASSESSEE CANDIDLY ADMITTED THAT THIS GROUND IS COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF THE MUMBAI HIGH COURT IN THE CASE OF CIT VS KALPATARU COLOURS & CHEMICALS IN ITA NO.2887 OF 2009 DATED 28/29 JUNE , 2010. THE FACTUAL ASPECT WAS NOT DISPUTED BY THE REVENUE. WE ACCORDINGLY DISMISS THIS GROUND OF THE ASSESSEE 2 BEING COVERED BY THE JUDGMENT OF THE MUMBAI HIGH COURT AGAINST ASSESSEE IN THE CASE OF CIT VS. KALPATARU COLOURS & CHEMICALS ( SUPRA). 3. W IT H REGARD TO GROUND NO.2 , THE LD COUNSEL FOR THE ASSESSEE CONTENDED THAT IN THE EARLIER YEAR SOME OF THE TOBACCO LEAVES WERE DAMAGED AND DETERIORATED AND VALUED AT LESSER RATE WHILE COMPUTING THE CLOSING STOCK. IN THE IMPUGNED ASSESSMENT YEAR THE SAID LEA VES WERE BADLY DAMAGED AND THEY WERE THROWN OUT , THEREFORE THEIR VALUE WAS TAKEN AT NIL AND CLOSING STOCK WAS ACCORDINGLY REDUCED. THESE FACTS WERE NOT ACCEPTED BY THE AO AS NO EVIDENCE WAS FILED BEFORE HIM. 4. BEFORE THE CIT(A), THE ASSESSEE DID NOT APPEAR AND THE CIT(A) HAS CONFIRM ED THE ADDITION BY PASSING AN EX - PARTE ORDER. NOW THE ASSESSEE IS RAISING THIS PLEA OF THROWING OUT THE TOBACCO LEAVES WHICH WERE BADLY DAMAGED OVER A PASSAGE OF TIME BUT NO DIRECT EVIDENCE IS AVAILABLE ON RECORD. THE LD COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE AO FOR VERIFICATION OF THESE FACTS. LD DR STRONGLY OPPOSED THIS CONTENTION WITH THE SUBMISSION THAT BEFORE THE CIT(A), THE ASSESSEE NEITHER APPEARED NOR RA ISED T HIS PLEA THEREFORE , HE CANNOT BE ALLOWED TO RAISE THIS NEW PLEA BEFORE THE TRIBUNAL. THE LD DR FURTHER CONTENDED THAT THE ASSESSEE SHOULD NOT BE ALLOWED TO MIS - USE THE PROCESS OF LAW TO FILL UP THE GAP S AT THE SECOND APPELLATE STAGE. IF THE ASSESSE E CLAIM IS ALLOWED, A WRONG MESSAGE WOULD BE GIVEN TO THE PUBLIC AT LARGE FOR NON - COMPLIANCE AND FOR NON APPEARANCE BEFORE THE CIT(A). 5. HAVING HEARD THE RIVAL SUBMISSION AND FROM PERUSAL OF THE RECORD, WE FIND THAT THE ASSESSEE COULD NOT FILE THE RE LEVANT EVIDENCE IN SUPPORT OF HIS CLAIM BEFORE THE AO. BEFORE THE CIT(A), THE ASSESSEE DID NOT APPEAR DESPITE OPPORTUNITY GRANTED TO HIM. NOW AT THE SECOND APPELLATE STAGE, THE ASSESSEE RAISED ALTOGETHER A NEW PLEA WHICH REQUIRED P ROPER VERIFICATION OF T HE FACTS. W E ARE ALSO CONSCIOUS ABOUT OUR JURISDICTION AND RIGHTS. IN ORDER TO DO JUSTICE, WE ARE 3 OF THE VIEW THAT THE CLAIM OF THE ASSESSEE SHOULD BE EXAMINED BY THE AO BUT SIDE BY SIDE WE DO NOT WANT TO GIVE A WRONG SIGNAL TO ENCOURAGE DISOBEDIENCE TO THE LOWER AUTHORITIES. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO FOR ADJUDICATION ON THIS ISSUE SUBJECT TO PAYMENT OF COST OF RS.5,000/ - TO BE DEPOSITED IN THE ACCOUNT IN WHICH TRIBUNAL FEES ARE BEING DE POSITED. ACCORDINGLY THIS APPEAL STANDS DISPOSED OF. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE STAND ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED ACCORDINGLY IN THE COURT ON 24.1.2011. SD/ - SD/ - (B.R. BASKARAN) (SUNI L KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VISAKHAPATNAM, DATED: 2 4 TH JANUARY, 2011 *MSB/UDC COPY OF ORDER IS FORWARDED TO : 1. SHRI S RAMA RAO, ADVOCATE, FLAT NO.103, H NO.3 - 6 - 542/4, HIMAYATNAGAR, ST NO.7, HYDERABAD 500 029. 2. ACIT, C IRCLE - 1(1), GUNTUR . 3. CIT, GUNTUR . 4. CIT(A), GUNTUR . 5. DR, ITAT, VISAKHAPATNAM. 6. GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM.