ITO 3(3)(2), MUMBAI V. SHREE VENKATESH STEEL LTD, MUMBAI

ITA 6473/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79511 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 17-07-2014
• Assessment Year: 1999-2000
• Appeal Filed On: 22-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRAKASH L PATHADE
• Assessee Lawyers: LALCHAND CHOUDHARY
• Keywords: Depreciation

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE S/SHRI H.L. KARWA, HONBLE PRESIDENT AND P.M . JAGTAP, AM .. , .. , ./ I.T.A. NO.6473 /MUM/2011 ( / ASSESSMENT YEAR : 1999-2000 INCOME TAX OFFICER 3(3)(2), ROOM NO. 602, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. / VS. M/S SHREE VENKATESH STEELS LTD., KIRAN VILLA, IIIRD FLOOR, 301, DR. DESHMUKH ROAD, MUMBAI 400 026. ./ PAN : AABCS 9241D6 ( ! / APPELLANT ) .. ( '#! / RESPONDENT ) A PPELLANT BY SHRI PRAKASH L. PATHADE R E SPONDENT BY : SHRI LALCHAND CHOUDHARY ' ( / DATE OF HEARING : 17-07-2014 ' ( / DATE OF PRONOUNCEMENT : 30-7-2014 [ / O R D E R PER P.M. JAGTAP, A.M . : .. , THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AG AINST THE ORDER OF LD. CIT(A) -7, MUMBAI DATED 30-06-2011 WHEREBY HE CANC ELLED THE PENALTY IMPOSED BY THE A.O. U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 TO EXTENT IT WAS IN RESPECT OF ADDITION MADE ON ACCOUNT OF DISAL LOWANCE OF PRIOR PERIOD EXPENSES AMOUNTING TO RS. 58,34,538/-. 2. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE THE ADDITION MADE TO THE TOTAL INCOME OF T HE ASSESSEE ON ACCOUNT OF ITA 6473/M/11 2 PRIOR PERIOD EXPENSES AMOUNTING TO RS. 58,34,538/-, IN RESPECT OF WHICH THE IMPUGNED PENALTY WAS IMPOSED, HAS ALREADY BEEN DELE TED BY THE TRIBUNAL VIDE ITS ORDER DATED 25-11-2011 WHILE ALLOWING THE CROSS OBJECTION FILED BY THE ASSESSEE ON THIS ISSUE. A COPY OF THE SAID ORDER I S PLACED ON RECORD BEFORE US AND PERUSAL OF THE SAME SHOWS THAT THE DISALLOWANCE MADE ON ACCOUNT OF PRIOR PERIOD EXPENSES AMOUNTING TO RS. 58,34,538/- HAS ALREADY BEEN DELETED BY THE TRIBUNAL FOR THE FOLLOWING REASONS GIVEN IN PARA 12 TO 14 OF ITS ORDER:- 12. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE RECORD. AS SUBMITTED THERE SEEMS TO BE SOME PUNCHING ERRORS AT THE TIME OF ENTERING THE FIGURES AND THESE WERE IDENTIFIED SUBS EQUENTLY DURING THE YEAR AND THE ASSESSEE PASSED NECESSARY DEBIT ENTRIE S IN THE BOOKS OF ACCOUNT. WHEN CLAIMS ARE NOT MADE ON OTHER PARTIES AND THE MISTAKES HAVE BEEN COMMITTED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT, WE ARE UNABLE TO UNDERSTAND THE STAND OF THE ASSESSING OFF ICER THAT THE ASSESSEE HAS NOT FURNISHED THIRD PARTY EVIDENCE WIT H REFERENCE TO THE CLAIM. HOW CAN THERE BE THIRD PARTY EVIDENCE WHEN T HE ASSESSEE ADMITTED THAT IT WAS ITS BOOKS OF ACCOUNT WHICH SHO WED THE AMOUNTS WRONGLY AND REALISING THE SAME THEY HAVE RECTIFIED. THE ORIGINAL AMOUNT ENTERED IN THE RESPECTIVE A.YS AND THE CORRECTIONS THAT WERE MADE WERE PLACED BEFORE THE ASSESSING OFFICER. NOT ONLY THAT THE EXPENDITURE CLAIMS WITH REFERENCE TO THE 5 PARTIES AND THE TRAN SPORT CLAIM OF M/S GOYAL TRANSPORT WERE ALSO NOT CORRECTLY ANALYZED BY THE ASSESSING OFFICER. WE ARE OF THE VIEW THAT THE ASSESSEE HAS D ISCHARGED ONUS OF ESTABLISHING THAT THE NECESSARY ENTRIES HAVE BEEN M ADE ON REALIZING MISTAKES AND CERTAIN CLAIMS WERE CRYSTALISED DURING THE YEAR EVEN THOUGH, THEY PERTAIN TO EARLIER YEARS. BEFORE US, T HOSE ASSESSMENT YEARS WERE ALSO OPEN FOR CONSIDERATION. THEREFORE, WITHOU T GOING TO THE LEGAL PROVISIONS, WE ARE OF THE OPINION THAT THE AMOUNTS COULD HAVE BEEN ALLOWED IN EITHER OF THE ASSESSMENT YEARS WHEN ALL THE ASSESSMENTS ARE OPEN BEFORE AUTHORITIES. BE THAT AS IT MAY, THE CLA IM IS AN ALLOWABLE CLAIM ON THE BASIS OF THE REASON THAT THE MISTAKES WERE IDENTIFIED DARING THE YEAR AND NECESSARY ENTRIES HAVE BEEN PAS SED IN THIS YEAR. 13. IN THE CASE OF NATIONAL ALUMINIUM CO. LTD( SUPR A), RELIED ON BY THE ASSESSEE, FACTS AND DECISION WAS AS UNDER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER FOUND THAT THE ASSESSEE COMPANY HAD SHOWN P RIOR PERIOD EXPENSES UNDER THE HEAD PRIOR PERIOD ADJUSTMENTS ON THE FOLLOWING ITEMS; OTHER MANUFACTURING EXPENSES, EMPL OYEES REMUNERATION AND BENEFITS, DEPRECIATION, INTEREST A ND FINANCE CHARGES, MISCELLANEOUS EXPENSES WRITTEN OFF THE ASS ESSEE SUO MOTU HAD ADDED BACK AN AMOUNT ON ACCOUNT OF DEPRECI ATION AND ITA 6473/M/11 3 ALSO CERTAIN AMOUNT ON ACCOUNT OF MISCELLANEOUS EXP ENSES. HOWEVER, IN ABSENCE OF ANY SATISFACTORY EXPLANATION BY THE ASSESSEE, THE ASSESSING OFFICER ALSO ADDED THE REMA INING ITEMS TO THE TOTAL INCOME. ON APPEAL, THE COMMISSIONER (A PPEALS) DISCUSSED AND DECIDED EACH AND EVERY ITEM INCLUDED IN THE PRIOR PERIOD ADJUSTMENTS AND HE DELETED THE ADDITION ON A CCOUNT OF EMPLOYEES REMUNERATION AND BENEFITS AND INTEREST A ND FINANCE CHARGES. HOWEVER, HE UPHELD THE ADDITION ON ACCOUNT OF OTHER MANUFACTURING EXPENSES. ON APPEAL: THE COMMISSIONER (APPEALS) HAD CONFIRMED AN ARRIOUN T UNDER OTHER MANUFACTURING EXPENSES. THE ASSESSEE HAD IS SUED 18,675 KG OF NITRIC ACID FOR CONSUMPTION DURING THE FINANC IAL YEAR 1992- 93. HOWEVER, BY MISTAKE, THE ISSUE VOUCHER WAS PREP ARED AT 1867.5 KG. SAID DIFFERENCE WAS FOUND OUT DURING THE INVENTORY VERIFICATION IN THE FINANCIAL YEAR 1993-94 AND THE AMOUNT SHORT CHARGED DURING THE FINANCIAL YEAR 1992-93 WAS DEBI TED TO THE PROFIT & LOSS ACCOUNT DURING THE FINANCIAL YEAR 199 3-94 AS PRIOR PERIOD EXPENSES. THIS WAS THE ONLY WAY IN WHICH THE ASSESSEE COULD RECTIFY THAT MISTAKE BY DEBITING THE PRIOR PE RIOD EXPENSES. ACCORDINGLY THE ASSESSING OFFICER WAS DIRECTED TO D ELETE THE ABOVE ADDITION. 14. SINCE FACTS ARE MORE OR LESS SIMILAR IN THIS CA SE, THE AMOUNTS ARE LIABLE TO BE V ALLOWED AS DEDUCTION AS ASSESSEE OFF ERED MORE INCOME IN EARLIER YEAR AND NOW RECTIFIED DURING THE YEAR. THE BALANCE AMOUNT HAD CRYSTALLIZED DURING THE YEAR. WE DIRECT THE ASSESSI NG OFFICER TO ALLOW THE AMOUNTS AS CLAIMED. HE HOWEVER CAN RECTIFY THE ORDE RS IF ABOVE AMOUNTS ARE CLAIMED AND ALLOWED IN ANY OTHER YEAR(S ). THE CROSS OBJECTION FILED BY THE ASSESSEE IS THEREFORE ALLOWE D. 3. AS A RESULT OF THE DELETION BY THE TRIBUNAL OF T HE CORRESPONDING ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF PRIOR PERIOD EXP ENSES IN THE QUANTUM PROCEEDINGS, THE VERY BASIS OF IMPOSITION OF THE IM PUGNED PENALTY U/S 271(1)(C) OF THE ACT NO MORE SURVIVES AND THE SAME THEREFORE IS LIABLE TO BE CANCELLED HAVING NO LEGS TO STAND. WE THEREFORE UP HOLD THE IMPUGNED ORDER OF THE LD. CIT(A) DELETING THE PENALTY IMPOSED BY THE A.O. U/S 271(1)(C) OF THE ACT IN RESPECT OF DISALLOWANCE OF PRIOR PERIOD EXPENSES AMOUNTING TO ES. 58,34,538/- AND DISMISS THIS APPEAL FILED BY THE RE VENUE. ITA 6473/M/11 4 4. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JULY, 2014. ' . / 0 30 -7-2014 ' SD/- SD/- (H.L. KARWA) (P.M. JAGTAP ) /PRESIDENT ACCOUNTANT MEMBER MUMBAI ; 0 DATED 30=7=2014 [ .B../ RK , SR. PS ' #%& '& / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT. 3. C () / THE CIT(A) 16,, MUMBAI 4. C / CIT 8, MUMBAI 5. F 'BBH , ( H , / DR, ITAT, MUMBAI E BENCH 6. / GUARD FILE. / BY ORDER, #F 'B //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI -