M/s. Gravure Packaging Products, Dist. Bharuch V. The ACIT., Bharuch Circle, Bharuch

ITA 48/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6782 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 03-05-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 05-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G D BALVA
• Section: 271(1)(c); 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH (BEFORE S/SHRI T.K. SHARMA, JUDICIAL MEMBER AND A.N. PAHUJA, ACCOUNTANT MEMBER) ITA NO.48/AHD/2009 [ASSTT. YEAR : 2002-2003] M/S.GRAVURE PACKAGING PRODUCTS PLOT NO.4740, GIDC ESTATE ANKLESHWAR DIST: BHARUCH. PAN : AACFG 6973 L VS. ACIT, BHARUCH CIRCLE BHARUCH. (APPELLANT) (RESPONDENT) ASSESSEE BY : MS.URVASHI SHODHAN REVENUE BY : SHRI G.D.BALVA O R D E R PER T.K. SHARMA, JUDICIAL MEMBER : THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INC OME TAX(APPEALS)- VI, BARODA DATED 03.10.2008 ARISING OUT OF THE ORDE R OF THE ASSESSING OFFICER PASSED UNDER SECTION 271(1)(C) OF THE INCOM E TAX ACT, 1961. 2. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT(A) AGAINST CONFIRMATION OF PENALTY IMPOSED UNDER SECTI ON 271(1)(C) OF THE ACT IN RESPECT OF ADDITION OF RS.3,325,199/- (STOCK DISCREPANCY OF RS.14,52,841/- MINUS RS.11,07,642/-) FOR THE ASSESS MENT YEAR 2002-2003. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING PACKAGING MATERIAL. ON 2 0-2-2002 SURVEY WAS CONDUCTED UNDER SECTION 133A OF THE IT ACT AT THE B USINESS PREMISES OF THE ASSESSEE WHEREIN THE EXCESS STOCK OF RS.11,07,6 42/- WAS FOUND. IN REPLY TO QUESTION NO.13, DURING THE COURSE OF SURVE Y, THE ASSESSEE ACCEPTED THE SAME AND AGREED TO PAY TAX ON SUCH EXC ESS STOCK. THE AO ITA NO.48/AHD/2009 -2- FRAMED ASSESSMENT UNDER SECTION 143(3) ON 15-3-2005 WHEREIN THE AO MADE ADDITION OF RS.12,78,747/- IN RESPECT OF EXCES S STOCK FOUND AT THE TIME OF SURVEY. 4. ON APPEAL, THE LEARNED CIT(A) ENHANCED THIS ADDI TION BY RS.14,52,841/-. SUBSEQUENTLY, THE AO LEVIED PENALT Y UNDER SECTION 271(1)(C) IN RESPECT OF ADDITION OF EXCESS STOCK FO UND AT THE TIME OF SURVEY WHICH WAS VALUED BY THE LEARNED CIT(A) AT RS .14,52,841/-. AGAINST THIS PENALTY ORDER, AN APPEAL WAS FILED AND IN THE IMPUGNED ORDER, THE LEARNED RESTRICTED THIS PENALTY TO RS.3,25,199/ -. 5. IN QUANTUM APPEAL, THE LEARNED CIT(A) VALUED THI S EXCESS STOCK AT RS.14,52,841/-. SUBSEQUENTLY, PENALTY UNDER SECTIO N 271(1)(C) WAS LEVIED ON THIS EXCESS STOCK AMOUNTING TO RS.14,52,8 41/- (VALUED BY THE LEARNED CIT(A) IN QUANTUM APPEAL). THE LEARNED CIT (A) IN THE IMPUGNED ORDER DELETED THE PENALTY ON EXCESS STOCK AMOUNTING TO RS.11,07,642/- AT THE TIME OF SURVEY AND CONFIRMED PENALTY ONLY IN RE SPECT OF DIFFERENCE IN VALUATION OF THIS STOCK BY THE AO AND THE LEARNED C IT(A) AMOUNTING TO RS.3,25,199/-. THE LEARNED COUNSEL FOR THE ASSESSE E CONTENDED THAT IT IS WELL SETTLED LAW THAT IN RESPECT OF DIFFERENCE IN V ALUATION OF STOCK, PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIABLE THEREFORE P ENALTY ON RS.3,25,199/- (ADDITION MADE ON ACCOUNT OF DIFFERENCE IN VALUATIO N) BE CANCELLED. 6. ON THE OTHER HAND, THE LEARNED DR OF THE REVENUE SUPPORTED THE ORDER OF THE LEARNED CIT(A). THE LEARNED DR POINTE D OUT THAT IT WAS DUTY OF THE ASSESSEE TO DECLARE CORRECT VALUE OF THE EXC ESS STOCK FOUND AT THE TIME OF SURVEY IN THE RETURN OF INCOME. IN THE RET URN OF INCOME, THE ASSESSEE HAS DECLARED EXCESS STOCK ONLY TO THE EXTE NT OF RS.11,07,642/- WHEREAS THIS VALUE ACCORDING TO THE ASSESSEES OWN ASSESSMENT BEFORE THE ITA NO.48/AHD/2009 -3- AO AND THE LEARNED CIT(A) IS RS.14,52,841/-. IN TH ESE CIRCUMSTANCES, EVEN ON ESTIMATED ADDITION PENALTY OF RS.3,25,199/- UNDER SECTION 271(1)(C) IS LEVIABLE. 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. IT IS PERTINENT TO NOTE THAT THE AO EVEN LEVIED PENALTY IN RESPECT OF EXCESS STOCK FOUND AT THE TIME OF SURVEY AMOUNTING TO RS.11,07,642/-. THIS HAS BEEN DELETED BY THE LEARNED IN THE IMPUGNED AND THE REVENUE IS NOT APPEALED AGAINST IT AND CANCELLATION OF PENALTY IN RESPECT OF SUCH ADDITION. HOWEVER, THE ASSESSEE WHO IS AGGRIEVED WITH THE CONFIRMATION OF THE PENALTY ON R S.3,25,199/- (DIFFERENCE IN STOCK) IS IN APPEAL BEFORE US. FROM THE PERUSAL OF THE RELEVANT PORTION OF THE ORDERS OF THE AO AND THE LE ARNED CIT(A), IT IS CLEAR THAT THE ADDITION OF RS.3,25,199/- ON WHICH T HE LEARNED CIT(A) CONFIRMED THE PENALTY LEVIED UNDER SECTION 271(1)(C ) IS ON ACCOUNT OF DIFFERENCE IN VALUATION OF EXCESS STOCK FOUND DURIN G THE SURVEY. IT IS WELL SETTLED LAW THAT ON DIFFERENCE IN VALUATION, PENALT Y UNDER SECTION 271(1)(C) IS NOT LEVIABLE. WE THEREFORE CANCEL THE PENALTY ON RS.3,25,199/- CONFIRMED BY THE LEARNED CIT(A) IN TH E IMPUGNED ORDER. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON 3 RD MAY, 2011 SD/- SD/- (A.N. PAHUJA) ACCOUNTANT MEMBER (T.K. SHARMA) JUDICIAL MEMBER PLACE : AHMEDABAD DATE : 03-05-2011 C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT ITA NO.48/AHD/2009 -4- 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD 1. DATE OF DICTATION : 03-05-2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER. : 05-05-2011 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 DICTATING MEMBER FOR PRONOUNCEMENT. : 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER : 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S. : 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK. : 06-05-2011 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. : 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER. : 10. DATE OF DESPATCH OF THE ORDER :