Sterling Enterprise, JAMNAGAR V. The Additional Commissioner of Income Tax, Range-1, JAMNAGAR

ITA 536/RJT/2012

• Counselvise Citation: [2012] 120 COUNSELVISE.COM (IT) 0134 (ITAT-RAJKOT)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-12-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 24-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: DM RINDANI
• Section: 133A; 69

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. BEFORE SHRI T. K. SHARMA, JM AND SHRI B.R.JAIN, AM ITA NO. 536/RJT/2012 / ASSESSMENT YEAR 2006-07 STERLING ENTERPRISE, 408/ 4 GIDC, STU, JAMNAGAR PAN: AAPFS9896K ( / APPELLANT) VS. ASSTT.COMMISSIONER OF INCOME TAX, RANGE-1, PANDIT NEHRU MARG, JAMNAGAR. / RESPONDENT / ASSESSEE BY SHRI. D.M.RINDANI # / REVENUE BY SHRI AVINASH KUMAR & / DATE OF HEARING 5.12.2012 & / DATE OF PRONOUNCEMENT 7.12.2012 / / / / ORDER & && &. .. . . . . . , , , , # # # # / T. K. SHARMA, J. M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 8.8.2012 OF CIT(A)-JAM NAGAR CONFIRMING THE PENALTY OF RS.1,49,860/- IMPOSED BY THE AO U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2006 -07. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A FIRM ENG AGED IN THE MANUFACTURING AND EXPORTING OF BRASS AND OTHER ELECTRI CAL PRODUCTS. FOR THE ASSESSMENT YEAR UNDER APPEAL, IT HAD FILED RETURN ON 11.12.2006 DECLARING TOTAL INCOME AT RS.1,51,36,050/-. THE ASSESSEE IS A 100% EXPORT ORIENTED UNIT. A SURVEY UNDER SECTION 133A OF T HE ACT WAS CARRIED OUT AT THE ASSESSEES BUSINESS PREMISES ON 10.11.2005, WHE REIN EXCESS STOCK OF RAW MATERIAL AS WELL AS FINISHED PRODUCT WEIGHIN G 7.111 MT WAS ITA NO. 536/RJT/2012 2 FOUND. THE AO VALUED THE SAME AT RS.8,90,431/-. AND MADE THE ADDITION U/S 69 OF THE ACT FOR THE DETAILED REASONS GIVEN IN PA RAGRAPH OF THE ASSESSMENT ORDER. IN ADDITION TO THIS, THE AO ALSO INITI ATED PENALTY PROCEEDINGS U/S 271(1)( C ) OF THE ACT. 3. ON APPEAL, THE LD. CIT(A), JAMNAGAR VIDE ORDER D ATED 28.4.2010 CONFIRMED THE ADDITION OF RS.8,90,431/- U/S 69 OF THE ACT. ON FURTHER APPEAL, THE TRIBUNAL, VIDE ORDER DATED 27.9.2010 R ESTRICTED THE ADDITION ON ACCOUNT OF EXCESS STOCK TO RS.4,45,216/-. SUBSEQUENTLY, VID E ORDER DATED 27.5.2011, THE AO ON THE ADDITION TO THE EXTENT OF RS.4,45,216/- CONFIRMED BY THE TRIBUNAL LEVIED THE PENALTY U/S 271(1)( C ) OF THE ACT AMOUNTING TO RS.1,49,860/-. 4. AGAINST THE PENALTY ORDER, THE ASSESSEE PREFERRED APP EAL. BEFORE THE LD. CIT(A) MADE THE VARIOUS SUBMISSIONS WHICH INTER ALIA INCLUDED THAT THE DIFFERENCE IN WEIGHT IS INCLUSIVE OF WEIGHT OF T AGARA, BORRY ETC AND IF THE WEIGHT OF THESE TAGARA, BORRY ETC IS REDUCED FROM THE WEIGHT OF MATERIAL THERE IS NO DIFFERENCE. IT WAS FURTHER SUBM ITTED THAT THERE IS NO FINDING THAT BEFORE THE SURVEY TEAM THE ASSESSEE HAS ACCEP TED THE EXCESS STOCK. TO SUM UP, THE CONTENTION OF THE ASSESSEE WAS THAT D IFFERENCE IN WEIGHT OF MATERIAL WAS DUE TO MISTAKE IN MEASUREMENT A ND INCLUSION OF WEIGHT OF TAGARA AND BORRY ETC, THEREFORE, ON THE A DDITION TO THE EXTENT OF RS.4,45,216/- PENALTY U/S 271(1)( C ) IS NOT LEVIABLE. AFTER CONSIDERING THE AFORESAID SUBMISSIONS, IN THE IMPUGNED ORDER THE LD. CITA) CONFIRMED THE PENALTY OF RS.1,49,860/- ON THE GROUND THAT THE EXPLANATION OF THE ASSESSEE IS FALSE AND IS NOT JUSTIFIED BECAUSE THE TRIB UNAL HAS CONFIRMED ITA NO. 536/RJT/2012 3 THE ADDITION TO THE EXTENT OF RS.4,45,216/-. AGGR IEVED WITH THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TR IBUNAL. 5. AT THE TIME OF HEARING BEFORE US SHRI D.M.RINDA NI, LD. COUNSEL APPEARED FOR THE ASSESSEE AND POINTED OUT THAT ASSESSEE H AS FILED THE WRITTEN DECLARING TOTAL INCOME OF RS.1,51,36,050/-. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS NOT MADE ANY INVESTMENT IN THE STOCK OUTSIDE THE BOOKS OF ACCOUNT WHICH IS NOT RECORDED IN THE B OOKS OF ACCOUNT. DURING THE COURSE OF SURVEY NO EVIDENCE IS FOUN D WHICH INDICATES THAT THE ASSESSEE IS MAKING PURCHASES OR SALES OUTSID E THE BOOKS OF ACCOUNT. THE DIFFERENCE IS ONLY 2% ON ACCOUNT OF TAGARA AND BORRY. TE LD COUNSEL FOR THE ASSESSEE FURTHER SUBMITTE D THAT IN FACT THERE WAS NO EXCESS STOCK AS IT EVIDENT FROM THE FACT THAT BEFORE THE SURVEY TEAM THE ASSESSEE NEVER ACCEPTED ANY EXCESS STOCK NOR THE ASSESSEE HAD MADE ANY INVESTMENT IN THE STOCK OUTSIDE THE BOOKS OF ACCOUNT. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE EXPLANATION OF THE ASSESSEE IS BONAFIDE WHICH IS ALSO PROVED BY THE DECISION OF THE TRIBUNAL IN RESTRICTING THE ADDITION TO RS.4,45,216/- WHICH HAS BEEN ACCEPTED BY THE ASSESSEE ON ACCOUNT OF SMALLNESS OF THE TAX. TO SUM UP, TH E LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT ON THIS ADDITION TH E PENALTY U/S 271(1) ( C ) IS NOT LEVIABLE. AS AGAINST THIS THE LD. DR POINTE D OUT THAT THE AO LEVIED THE PENALTY ONLY ON RS.4,45,216/- WHICH IS CONFI RMED BY THE TRIBUNAL, THEREFORE, THE PENALTY BE UPHELD. 6. WE HAVE HEARD BOTH THE SIDES. WE HAVE GONE THROUG H THE ORDERS OF THE AUTHORITIES BELOW AND THE ORDER OF THE TRIB UNAL. IT IS PERTINENT TO NOTE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AND IN THE ITA NO. 536/RJT/2012 4 QUANTUM APPEAL PROCEEDINGS, THE ASSESSEE TOOK THE STAND THAT EXCESS STOCK WAS ON ACCOUNT OF TAGARA AND BORRY ETC. THIS EXPLANA TION OF THE ASSESSEE WAS NOT TOTALLY FALSE WHICH EVIDENT FROM THE FACT THAT THE TRIBUNAL VIDE ORDER DATED 28.4.2010 HAS REDUCED THE ADDITION TO RS.4,45,216/-. THIS AMOUNT CLEARLY INDICATES THAT HE EXPLANATION FURNISHED BY THE ASSESSEE IS BONAFIDE, THEREFORE, THE PENALTY UND ER SECTION 271(1) ( C ) IS NOT LEVIABLE. IN THIS VIEW OF THE MATTER, WE ACCEPT THE CONTENTION OF THE ASSESSEE AND DELETE THE PENALTY OF RS.1,49,860/- L EVIED BY THE AO AND CONFIRMED BY THE LD. CIT(A) U/S 271(1)( C ) OF THE ACT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE DAT E MENTIONED HEREINABOVE. SD SD ( B.R.JAIN) (T. K. SHARMA) # / ACCOUNTANT MEMBER # /JUDICIAL MEMBER -/ ORDER DATE 7.12.2012. /RAJKOT SRL / / / / 0/ 0/ 0/ 0/ / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT-, 2. / RESPONDENT- 3. 5 / CONCERNED CIT. 4. 5- / CIT (A). 5. / , , / DR, ITAT, RAJKOT 6. / GUARD FILE. TRUE COPY / BY ORDER , SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, RAJKOT.