Hirakud Industrial Works Ltd, Sambalpur V. ACIT, Sambalpur

ITA 454/CTK/2010

• Counselvise Citation: 45422114 RSA 2010
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 02-08-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 24-12-2010
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHARJEE
• Assessee Lawyers: S S PODDARNIRANJAN KEDIAARS
• Keywords: Reopening of assessment; Set aside
• Section: 147

Judgement Text

IN THE INCME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 454 & 455 /CTK/2010 AND ITA NO.336/CTK/2011 (ASSESSMENT YEAR S 2000 - 01, 2005 - 06 AND 2006 - 07) HIRAKUD INDUSTRIAL WORKS LTD., AT /P./O.HIRAKUD, DIST.SAMBALPUR PAN : AABCH 0418 D VERSUS ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(1), SAMBALPUR. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI S.S.PODDAR/NIRANJAN KEDIA,ARS FOR THE RESPONDENT SHRI A.BHATTACHARJEE, DR DATE OF HEARIN G : 02.08.2011 DATE OF PRONOUNCEMENT : 12.08.2011 ORDER PER BENCH : ALL THESE APPEALS ARE FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDERS OF THE COMMISSIONER OF INCOME - TAX (APPEALS) FOR THE AYS 2000 - 01, 2005 - 06 AND 2006 - 07 IN CASE OF T HE ASSESSEE. 2. THE ISSUES RAISED BY THE ASSESSEE IN ALL THESE APPEALS ARE STATED HERE UNDER APPEAL - WISE. ITA NO.454/CTK/2010 (A.Y. 2000 - 01) 1. THAT THE ASSESSMENT ORDER U/S.143(3)/147 PASSED BY THE LEARNED ASSESSING OFFICER AS WELL AS THE APPELLATE ORDE R PASSED BY THE LEARNED CIT(APPEALS), CUTTACK IS UNJUSTIFIED, ARBITRARY, EXCESSIVE, CONTRARY TO EVIDENCES AND BAD IN LAW. 2. THAT THE LEARNED ASSESSING OFFICER AS WELL AS CIT(APPEALS) HAS NOT PROVIDED SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS C ASE WITH ALL EVIDENCES. 3. THAT THE ISSUE OF NOTICE U/S. 147 ITSELF IS ILLEGAL AND BAD IN LAW. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE AUTHORITIES BELOW HAS ERRED IN MAKING/UPHOLDING ADDITION OF RS. 6,90,096/ - TOWARDS INTEREST ON INCO ME TAX REFUND ON THE GROUND THAT THE SAME IS NOT INCLUDED WITH THE TOTAL INCOME / LOSS RETURNED FOR THE YEAR. 5. THAT THE LEARNED AUTHORITIES BELOW WOULD HAVE PROVIDED SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO PRODUCE/EXPLAIN ITS CASE WITH PROPER EVIDENCES . ITA NO.454 & 45 5 /CTK/2010 AND ITA NO.336/CTK/2011 2 6. THAT THE AUTHORITIES BELOW WOULD NOT HAVE ISSUED THE NOTICE U/S. 147 AND WOULD NOT HAVE MADE THE AFORESAID ADDITION/DISALLOWANCE. 7. THAT THE AUTHORITIES BELOW WOULD HAVE ACCEPTED THE RETURNED INCOME. ITA NO.455/CTK/2010 (A.Y. 2005 - 06) 1. THAT THE ASSESSMENT ORDER U/S.143(3) PASSED BY THE LEARNED ASSESSING OFFICER AS WELL AS THE APPELLATE ORDER PASSED BY THE LEARNED CIT(APPEALS), CUTTACK TO THE EXTENT PREJUDICIAL TO THE ASSESSEE IS UNJUSTIFIED, ARBITRARY, EXCESSIVE, CONTRARY TO EVIDENCES AND BAD IN LAW. 2. THAT THE LEARNED ASSESSING OFFICER AS WELL AS CIT(APPEALS) HAS NOT PROVIDED SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE WITH ALL EVIDENCES. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE AUTHORITIES BELOW HAS ERRED IN MAKIN G/UPHOLDING FOLLOWING ADDITIONS IDISALLOWANCES: 4. THAT THE LEARNED AUTHORITIES BELOW WOULD HAVE PROVIDED SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO PRODUCE/EXPLAIN ITS CASE WITH PROPER EVIDENCES. 5. THAT THE AUTHORITIES BELOW WOULD NOT HAVE MADE THE AFORESAID ADDITION/DISALLOWANCE. 6. T HAT THE AUTHORITIES BELOW WOULD HAVE ACCEPTED THE RETURNED INCOME. ITA NO.336/CTK/2006 - 07 (A.Y. 2006 - 07) 1. THAT THE ASSESSMENT ORDER U/S.143(3) PASSED BY THE LEARNED ASSESSING OFFICER AS WELL AS THE APPELLATE ORDER PASSED BY THE LEARNED CIT(APPEALS), CUTTACK TO THE EXTENT PREJUDICIAL TO THE ASSESSEE IS UNJUSTIFIED, ARBITRARY, EXCESSIVE, CONTRARY TO EVIDENCES AND BAD IN LAW. 2. THAT THE LEARNED ASSESSING OFFICER AS WELL AS CIT(APPEALS) HAS NOT PROVIDED SUFFICI ENT OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE WITH ALL EVIDENCES. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE AUTHORITIES BELOW HAS ERRED IN MAKIN G/UPHOLDING FOLLOWING ADDITIONS IDISALLOWANCES: ITA NO.454 & 45 5 /CTK/2010 AND ITA NO.336/CTK/2011 3 4. THAT THE LEARNED AUTHORITIES BELOW WOULD HAVE PROVIDED SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO PRODUCE/EXPLAIN ITS CASE WITH PROPER EVIDENCES. 5. THAT THE AUTHORITIES BELOW WOULD NOT HAVE MADE THE AFORESAID ADDITION/DISALLOWANCE. 6. T HAT THE AUTHORITIES BELOW WOULD HAVE ACCEPTED T HE RETURNED INCOME. 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED BY THE ASSESSEE AND THEIR LEGAL IMPLICATIONS. 4. DURING THE COURSE OF HEARING, THE LEARNED AR OF THE ASSESSEE HAS REITERATED WHAT WAS ALL STATED BEFORE THE LOWER AUTHORITIES A PART FROM CONTENDING THAT BOTH THE LOWER AUTHORITIES BELOW HAVE NOT AT ALL ADJUDICATED PROPERTY THE ISSUE RAISED BEFORE THEM REGARDING THE SERVICE OF NOTICE ISSUED U/S.147 APART FROM ISSUES ON MERIT. FOR THE ASSESSMENT YEAR 2000 - 01, THE ASSESSEE HAS RAISE D THE SOLE ISSUE OF REOPENING THE ASSESSMENT U/S.147, WHEREAS IN OTHER APPEALS, THE ASSESSEE HAS RAISED THE SOLITARY ISSUE FOR THE ASSESSMENT YEARS 2005 - 06 AND 2006 - 07 IS AS REGARDS TO ADDITION MADE ON ACCOUNT OF VALUATION OF CLOSING STOCK. THE OBJECTION O F THE DEPARTMENT IS THAT WHILE VALUING THE CLOSING STOCK THE ASSESSEE HAD NOT ADDED THE EXCISE DUTY ON THE UNCLEARED STOCK. ON THIS, THE ASSESSEE HAS SUBMITTED BEFORE THE LOWER AUTHORITIES THAT IT IS CONSISTENTLY FOLLOWING THE METHOD OF CHARGING EXCISE DUT Y PAID BY THE ASSESSEE ON THE PRODUCTS THAT WERE SOLD ONLY TO THE P & L ACCOUNT. HENCE, WHENEVER THE EXCISE DUTY WAS PAID I.E., DEBITED TO THE EXCISE ACCOUNT AND THAT IS QUOTED WHENEVER STOCK IS CLEARED PROPORTIONATELY AND THAT PROPORTIONATE AMOUNTS IS ONL Y TO BE CHARGED TO THE P & L ACCOUNT. REMAINING BALANCE EXCISE DUTY THAT WAS ATTRIBUTABLE TO THE STOCK AVAILABLE WITH THE ASSESSEE AS STOOD TO THE EXCISE DUTY ACCOUNT AND SHOWN AS ASSET. THEREFORE, IF THE EXCISE DUTY IS ADDED AS PER THE VIEW TAKEN BY THE ITA NO.454 & 45 5 /CTK/2010 AND ITA NO.336/CTK/2011 4 D EPARTMENTAL AUTHORITIES WHILE VALUING THE CLOSING STOCK ITSELF THE CORRESPONDING DUTY IN THE EXCISE DUTY ACCOUNT HAS TO BE DEBITED TO THE P & L ACCOUNT AS THESE TWO ENTRIES WILL COMPENSATE EACH OTHER THEY WOULD NOT HAVE AFFECT THE RESULTANT PROFIT COMPREHE N DED BY THE ASSESSEE. CONSEQUENTLY THERE WILL BE NO TAX AFFECT. BUT THIS ASPECT OF THE CASE WAS NOT PROPERLY APPRECIATED BY THE LOWER AUTHORITIES AND HENCE, TO THAT EXTENT THE ORDERS OF THE LOWER AUTHORITIES ARE UNJUST AND UNSUSTAINABLE UNDER LAW. ACCORDIN GLY, HE SOUGHT FOR ALLOWING THE APPEALS OF THE ASSESSEE BY SETTING ASIDE THAT PORTION OF THE ORDER OF THE LOWER AUTHORITIES. FOR THE ASSESSMENT YEAR 20006 - 07 SIMILAR IS THE ISSUE AS IN THE ASSESSMENT YEAR 2005 - 06. THEREFORE, THE LEARNED AR OF THE ASSESSEE PLEADED FOR ALLOWING THE APPEALS OF THE ASSESSEE BY SETTING ASIDE THE ORDERS OF THE LOWER AUTHORITIES. 5. CONTRARY TO THIS, THE LEARNED DR HAS VEHEMENTLY ARGUED CONTENDING INTER ALIA THAT THE CLAIMS MADE BY THE ASSESSEE HAVE NOT BEEN SUBSTANTIATED BEFORE T HE DEPARTMENTAL AUTHORITIES AS THE ASSESSEE HIMSELF STATED THAT THE DEFECT POINTED OUT BY THE DEPARTMENT IS CORRECT. THEREFORE, THE ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES ARE VERY MUCH RIGHT AND ARE TO BE UPHELD BY DISMISSING THE APPEALS OF THE ASS ESSEE. 6. ON CAREFUL ANALYSIS OF THE ORDERS OF THE DEPARTMENTAL AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND THE LAW APPLICABLE THERETO, IT IS FOUND THAT FOR THE ASSESSMENT YEAR 2000 - 01 THE ISSUE BEING REOPENING OF ASSESSMENT U /S.147. ON PERUSAL OF THE ORDERS OF THE DEPARTMENTAL AUTHORITIES IT IS FOUND THAT THERE IS NO PLAUSIBLE CAUSE SHOWN BY THE ASSESSEE FOR OBJECTING THE REOPENING OF THE ASSESSMENT MADE BY THE ASSESSING OFFICER U/S.147. FOR THE DETAILED REASONS GIVEN BY THE DEPARTMENTAL AUTHORITIES IN THEIR RESPECTIVE ORDERS, THE ASSESSEES CONTENTION FOR OBJECTING THE REOPENING OF THE ASSESSMENT U/S.147 ARE NOT ITA NO.454 & 45 5 /CTK/2010 AND ITA NO.336/CTK/2011 5 SUSTAINABLE FOR LEGAL SCRUTINY AND HENCE, WE ARE OF THE CONSIDERED VIEW THAT THE REOPENING THE ASSESSMENT FOR THE A SSESSMENT YEAR 20 00 - 01 BY INVOKING THE PROVISIONS OF SECTION 147 BY THE DEPARTMENTAL AUTHORITIES IS JUSTIFIED UNDER LAW AND HENCE, WE UPHOLD THE ORDER OF THE LEARNED CIT(A) AND DISMISS THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2000 - 01 HAVING FOUND THE GROUNDS RAISED BY THE ASSESSEE AS DEVOID OF MERIT. 7. NOW ADVERTING TO THE ONLY ISSUE RAISED, WHICH IS COMMON FOR THE ASSESSMENT YEAR 2005 - 06 AND 2006 - 07 , IN REGARD TO ADDITION ON ACCOUNT OF VALUATION OF CLOSING STOCK, IT IS FOUND THAT THE DEPARTMENT HAS OBJECTED FOR THE PRACTICE OF THE ASSESSEE IN NOT INCLUDING THE CENTRAL EXCISE DUTY IN THE CLOSING STOCK VALUATION AT THE END OF THE YEARS. THE ASSESSEES CONTENTION IS THAT IT HAS CONSISTENTLY FOLLOWING THE METHOD OF DEBITING THE EXCISE DUTY ACCOUNT OF THE AMOUNTS PAID AS EXCISE DUTY AND TAKEN THE SAID AMOUNT WHE NE VER THE STOCKS ARE SOLD BY THE ASSESSEE LEAVING THE BALANCE OF THE EXCISE DUTY REMAINED IN THE ACCOUNT OF THE STOCK OF THE ITEMS REMAINED UNSOLD AT THE END OF THE YEAR. THEREFORE, THE ASSESSEE HAS PLEADED BEFORE THE DEPARTMENT THAT IF THE ASSESSEE IS INSISTED TO ADD THE EXCISE DUTY TO THE CLOSING STOCK ALSO, THE ASSESSEE HAS TO DEBIT THE CORRESPONDING DEBIT TO EXCISE DUTY TO THE P & L ACCOUNT IN WHICH CASE BOTH THESE ENTRIES WILL COMPENSATE EAC H OTHER LEAVING NO AFFECT TO THE ULTIMATE PROFIT ARRIVED AT BY THE ASSESSEE FOR TAXATION PURPOSES. THIS EXPLANATION BEING FORCEFUL BUT NOT RELISHED BY THE DEPARTMENT AND THEY HAVE INCLINED TO PASS THE IMPUGNED ORDER, WHICH IS NOT PROPER. THEREFORE, IN THE SE FACTS AND CIRCUMSTANCES OF THE CASE, WHICH ARE UNDISPUTED BY THE DEPARTMENT, WE ARE OF THE CONSIDERED VIEW THAT THE STAND TAKEN BY THE ASSESSEE IS CORRECT AND HENCE, THE ACTION OF THE DEPARTMENTAL AUTHORITIES IS FOUND TO BE UNJUSTIFIED AND UNSUSTAINABLE FOR LEGAL SCRUTINY. THEREFORE, WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED ITA NO.454 & 45 5 /CTK/2010 AND ITA NO.336/CTK/2011 6 CIT(A) IN THIS REGARD AND ALLOW THE APPEALS OF THE ASSESSEE FOR THE AYS 2005 - 06 AND 2006 - 07. 8. IN THE RESULT, ITA NO.454/CTK/2010 FOR THE ASSESSMENT YEAR 2000 - 01 IS DISMISSED. ITA NOS.455/CTK/2010 AND 336/CTK/2011 FOR THE ASSESSMENT YEAR 2005 - 06 AND 2006 - 07 RESPECTIVELY ARE ALLOWED. S DD/ - S D/ - (K.K.GUPTA) ACCOUNTANT MEMBER ( K.S.S.PRASAD RAO) JUDICIAL MEMBER DATE: 12.08.2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: HIRAKUD INDUSTRIAL WORKS LTD., AT/P./O.HIRAKUD, DIST.SAMBALPUR 2. THE RESPONDENT: ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(1), SAMBALPUR. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.