The ACIT, Circle-3, JAMNAGAR V. M/s. Shreeji Exim, JAMNAGAR

ITA 471/RJT/2011

• Counselvise Citation: [2012] 120 COUNSELVISE.COM (IT) 0210 (ITAT-RAJKOT)
• Duration Of Justice: 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-07-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 09-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: J C RANPURA

Judgement Text

: : IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT . .. . . . . . , , , , . .. . . . . . , , , , $ $ $ $ BEFORE SHRI T. K. SHARMA, JM AND SHRI D. K . SRIVASTAVA, AM ITA NO.471/RJT/2011 / ASSESSMENT YEAR 2003-04 ACIT, CIRCLE 3 V.. M/S SHREEJI EXIM JAMNAGAR GRAIN MARKET, JAMNAGAR PAN: AAQFS3778M DATE OF HEARING : 18.7.2012 DATE OF PRONOUNCEMENT : 14.9.2012 REVENUE BY: SHRI AVINASH KUMAR ASSESSEE BY: SHR I J.C.RANPURA. / // / ORDER . .. . . . . . /D. K. SRIVASTAVA: THE APPEAL FILED BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 24.2.2009, ON THE FOLLOWING GROUNDS: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FA CTS IN CANCELLING THE PENALTY LEVIED U/S 271(1)(C ) OF THE INCOME TAX ACT, 1961 AT RS.5,33,090/- 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S IN HOLDING THAT THE EXPLANATION OF THE ASSESSEE ARE DISBELIEVED BUT NOT DISPROVED AND AS SUCH, NO PENALTY COULD BE LEVIED U/S 271(1)( C ) OF THE I NCOME TAX ACT, 1961. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. 4 IT IS THEREFORE, PRAYED THAT THE ORDER OF THE CIT (A); BE SET ASIDE AND THAT OF THE AO BE RESTORED. 5. THAT THE REVENUE CRAVES LEAVE TO ADD, AMEND, ALT ER OR WITHDRAW ANY GROUNDS OF APPEAL. 2. THE ASSESSEE IS A FIRM. IT IS ENGAGED IN THE BU SINESS OF EXPORT AND GENERAL MERCHANDISE. RETURN OF INCOME WAS FILED ON 31.11.20 03 RETURNING TOTAL INCOME AT RS.11,07,301/- AFTER CLAIMING LOSS ON CHILLY TRADIN G AMOUNTING TO RS.28,75,577/- WHICH WAS DISALLOWED BY THE AO. IT IS WITH REFERE NCE TO THE DISALLOWANCE OF THE 2 ITA NO.252/RJT/2011 SAID LOSS THAT THE AO INITIATED PROCEEDINGS FOR LEV Y OF PENALTY U/S 271(1)(C). THE ACTION OF THE AO IN DISALLOWING THE SAID LOSS WAS C HALLENGED FIRSTLY BEFORE THE CIT(A) AND THEREAFTER BEFORE THIS TRIBUNAL. BY ITS ORDER D ATED 26.8.2010 IN ITA NO.160/RJT/2009 (AY-2003-04) IN THE ASSESSEES APPE AL, THIS TRIBUNAL ACCEPTED THE CLAIM OF LOSS TO THE EXTENT OF 50% WITH THE RESULT THAT THE REMAINING 50% OF SAID LOSS STOOD DISALLOWED. IT IS STATED BY THE CIT(A) THAT T HE DEPARTMENT HAS NOT ACCEPTED THE SAID ORDER OF THE TRIBUNAL AND THEREFORE APPRO ACHED THE HONBLE HIGH COURT U/S 260A. THE IMPUGNED PENALTY HAS BEEN LEVIED BY THE A O U/S 271(1)( C) WITH REFERENCE TO THE AMOUNT OF LOSS DISALLOWED BY THE AO U/S 271(1) (C) AND CONFIRMED BY THE LD. CIT(A). THE LD. CIT(A), ON APPEAL AGAINS T THE ORDER PASSED BY THE AO IMPOSING THE IMPUGNED PENALTY, HAS CANCELLED THE IM PUGNED PENALTY FOR THE DETAILED REASONS GIVEN BY HIM IN PARAGRAPH 6 OF HI S APPELLATE ORDER. 3. IN SUPPORT OF APPEAL, THE LD. DR RELIED UPON THE ORDER OF THE PENALTY PASSED BY THE AO. 4. IN REPLY, THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE RELIED UPON THE ORDER OF THE CIT(A) CANCELLING THE IMPUGNED PENALT Y. 5. WE HAVE HEARD BOTH THE PARTIES, CAREFULLY CONSID ERED THEIR SUBMISSIONS AND ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. THE AO HAS DISALLOWED THE LOSS ON SALE OF CHILLI TRADING ON THE GROUND THAT THE TRANS ACTIONS RELATING TO SALE OF CHILLY WERE SHAM AND SPECULATIVE IN NATURE. THE LOSS DISALLOWED BY THE AO WAS REDUCED TO THE EXTENT OF 50% BY THIS TRIBUNAL. THE ASSESSEE IS AN EXPORTER AND ITS ACCOUNTS ARE DULY AUDITED. ALL THE FACTS RELATING TO SALE OF CHI LLY AND LOSS ON SALE OF CHILI WERE DISCLOSED BY THE ASSESSEE TO THE DEPARTMENT. IT IS A DIFFERENT MATTER THAT THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM FOR LOSS ON SALE OF CHILLI. THE ACTION OF THE AO IN DISALLOWING THE ENTIRE LOSS HAS NOT BEEN CONF IRMED BY THIS TRIBUNAL IN AS MUCH AS THE DISALLOWANCE OF LOSS ON SALE OF CHILLI HAS B EEN RESTRICTED TO THE EXTENT OF 50%. IN OTHER WORDS, 50% OF LOSS ON SALE OF CHILI H AS BEEN CONSIDERED BY THIS TRIBUNAL TO BE GENUINE. IN OUR VIEW, THE MERE DISAL LOWANCE OF LOSS TO THE EXTENT OF 50% BY ITSELF IS NOT SUFFICIENT FOR LEVY OF PENALTY . ON THE FACTS OF THE CASE, THE CIT(A) HAS RIGHTLY CANCELLED THE IMPUGNED PENALTY. HIS ORD ER ON THIS BEHALF IS THEREFORE, 3 ITA NO.252/RJT/2011 CONFIRMED. THE APPEAL OF THE DEPARTMENT IS DISMISSE D. APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ) + 14.09.2012 ) ORDER PRONOUNCED IN OPEN COURT ON 14.09.2012 SD SD ( .. / T. K. SHARMA) ( .. / D. K. SRIVASTAVA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER +/ DATE 14-09-2012. /RAJKOT. SRL/- ) )) ) ./ ./ ./ ./ 0/ 0/ 0/ 0/ / COPY OF ORDER FORWARDED TO:- 1. 3 / APPELLANT-. 2. .53 / RESPONDENT-. 3. 9 / CONCERNED CIT 4. 9- / CIT (A). 5. / ., , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER , TRUE COPY SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, RAJKOT