Morvi Vegetables Products Ltd., RAJKOT-GUJARAT V. The Assistant Commr. Income Tax,Circle-5, RAJKOT-GUJARAT

ITA 70/RJT/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9038 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 29-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR SR DR
• Assessee Lawyers: DM RINDANI

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] JKTDKSV U;K;IHB] JKTDKSVA VK;DJ VIHYH; VF/KDJ.K] JKTDKSV U;K;IHB] JKTDKSVA VK;DJ VIHYH; VF/KDJ.K] JKTDKSV U;K;IHB] JKTDKSVA VK;DJ VIHYH; VF/KDJ.K] JKTDKSV U;K;IHB] JKTDKSVA IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AHMEDABAD] EKUHK CKSJM EKUHK CKSJM EKUHK CKSJM EKUHK CKSJM BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI, MANISH BORAD, ACCOUNTANT MEMBER I.T.A. NO.70/RJT/2016 ( / ASSESSMENT YEAR : 2006-07) MORVI VEGETABLES PRODUCTS LTD. VEGETABLE ROAD, MORBI VS. ACIT CIRCLE-5, RAJKOT. ! PAN/GIR NO. : AABCM 4867 H ( ' / APPELLANT ) .. ( #' RESPONDENT ) '$ APPELLANT BY : SHRI D.M. RINDANI, AR #'%$ / RESPONDENT BY : SHRI AVINASH KUMAR, SR. DR & '(%)* / DATE OF HEARING 17/05/2017 +,-.%)* / DATE OF PRONOUNCEMENT 26/05/2017 / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-3, RAJKOT, DATE D 12/01/2016 FOR THE ASSESSMENT YEAR (AY) 2006-07. ASSESSEE HAS TAKE N THE FOLLOWING GROUNDS OF APPEALS: I. THAT THE HONBLE CIT(A)-3, RAJKOT HAS GRIEVOUSLY ER RED IN CONFIRMING THE PENALTY OF RS.8,56,300/- LEVIED BY T HE AO ON THE ITA NO.70/RJT/2 016 MORVI VEGETABLES PRODUCTS LTD. VS.ACIT ASST.YEAR 2006-07 - 2 - PREMISE THAT THE APPELLANT HAS CONCEALED ITS INCOME AND FURNISHED INACCURATE PARTICULARS. II. THAT THE LEARNED CIT(A)-3, RAJKOT HAS GRIEVOUSLY ER RED IN NOT APPRECIATING THE TRUE INPUT OF THE SUBMISSIONS MADE BY THE APPELLANT. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- THE APPELLANT IS A CLOSELY HELD PUBLIC LIMITED COMP ANY ENTERED IN THE BUSINESS OF MANUFACTURING OF EDIBLE OIL AND ALL IED PRODUCTS IS REGULARLY BEING ASSESSED TO TAX AT RAJKOT. 3. IN THE CASE OF APPELLANT, SURVEY PROCEEDING U/S 133(A) WERE CARRIED OUT AND DURING THE COURSE OF WHICH INVENTORIES OF R AW MATERIAL AND FINISHED PRODUCTS WERE TAKEN AND THE A.O. WORKED OU T A TOTAL DIFFERENCE OF RS.83,98,469/- BETWEEN THE INVENTORIES THAT WERE PHYSICALLY FOUND AND THOSE RECORDED IN THE BOOKS OF ACCOUNTS. THE A.O. A CCORDINGLY ADDED RS.83,98,469/- IN THE ORDER PASSED U/S 143(3). 4. THE APPELLANT CHALLENGED THE SAID ORDER BEFORE T HE HONORABLE FIRST APPELLATE AUTHORITY AND THE HONORABLE CIT(A)-1, RAJ KOT AFTER CALLING FOR THE REMAND REPORT GRANT A SUBSTANTIAL RELIEF TO THE APPELLANT. THE HONORABLE FIRST APPELLATE AUTHORITY, HOWEVER SUSTAI NED CERTAIN ADDITIONS RELATING TO EXCESS PHYSICAL INVENTORIES AS COMPARED TO BOOK STOCK ITA NO.70/RJT/2 016 MORVI VEGETABLES PRODUCTS LTD. VS.ACIT ASST.YEAR 2006-07 - 3 - ADDITION AMOUNTING TO RS.20,32,357/- & SHORTAGES IN PHYSICAL INVENTORIES AS COMPARED TO BOOK STOCK OF RS.5,11,520/-. THE CIT (A)-1 RAJKOT, HOWEVER DIRECTED THAT FOLLOWING THE ORDER OF HONORA BLE SUPREME COURT IN THE CASE OF VKJ BUILDERS VS. CIT (318 ITR 304) T HAT THE EXCESS INVENTORIES OF RS. 20,32,357/- BE ALLOWED AS OPENIN G STOCK FOR SUBSEQUENT A.Y. 2007-08. LEARNED A.O. INITIATED PEN ALTY PROCEEDING U/S 271(1) (C) OF THE ACT WITH REGARD TO THE ADDITION O F RS. 20,32,357/- AND RS. 5,11,520/- SO SUSTAINED BY THE HONORABLE FIRST APPELLATE AUTHORITY. 5. DURING THE COURSE OF THE PENALTY PROCEEDING, THE APPELLANT FILED DETAILED SUBMISSION CONTENDING IN THE MAIN THAT WHILST THE SURVEY WAS GOING ON, THE MANUFACTURING P LANT OF THE SURVEYOR WAS IN OPERATION AND THERE WAS A CONST ANT MOVEMENT OF BOTH RAW MATERIAL AND FINISHED PRODUCTS AND SINCE THE ACCOUNTING RECORDS OF THE APPELLANT ARE M AINTAINED MANUALLY, ALL THE STOCK MOVEMENTS ARE ENTERED INTO THE BOOKS ON THE FOLLOWING DAY. HENCE CERTAIN DIFFERENC ES ARE BOUND TO BE OBSERVED SINCE THE PHYSICAL INVENTORIES WERE BEING GENERATED ON A CONTINUOUS BASIS, WHILST THE B OOK STOCK THAT WAS BEING COMPARED, PERTAINED TO THE PREVIOUS DAY. THAT THERE WERE SEVERAL PRODUCTS WHICH WERE IDENTIC AL IN NATURE FOR WHICH THE NET IMPACT SHOULD BE CONSIDERE D AS ITA NO.70/RJT/2 016 MORVI VEGETABLES PRODUCTS LTD. VS.ACIT ASST.YEAR 2006-07 - 4 - THERE WAS EVERY POSSIBILITY THAT DURING THE COURSE OF PHYSICAL VERIFICATION THERE COULD BE MISTAKE IN IDENTIFICATI ON. FURTHER THAT CONSIDERING THAT THE APPELLANT'S TURNO VER IS MORE THAN 100 CRORES, CERTAIN IMMATERIAL DIFFERENCES SHO ULD BE TREATED AS BEING COMMERCIAL IN NATURE AND IGNORED. 6. THE A.O. DID NOT ACCEPT THE SUBMISSIONS OF T HE APPELLANT AND HAS CONTENDED THAT THE APPELLANT HAS FURNISHED INACCURA TE PARTICULARS OF INCOME AND CONCEALED ITS INCOME. HE HAS ACCORDINGLY LEVIED A PENALTY OF RS. 8,56,300/-. 7. THE FINDINGS OF THE LEARNED A.O. ARE UNJUSTI FIED IN LAW AND CONTRARY TO FACTS AND THE APPELLANT BEING AGGRIEVED HAS PREF ERRED THIS APPEAL. 8. ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFOR E THE LEARNED CIT(A). LEARNED CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE . 9. NOW APPEAL IS BEFORE US. A PRINTED NOTICE SERVED BY THE DEPARTMENT IN WHICH BOTH THE ALLEGATION HAVE BEEN P UT I.E. FOR FURNISHED THE INACCURATE PARTICULARS OF INCOME AND HAS CONCEA LED THE PARTICULARS OF INCOME WITH AN INTENTION TO EVADE TAX. THIS FACT AL SO HAS BEEN REPRODUCED IN THE PENALTY ORDER BY THE AUTHORITY BELOW. AS IT HAS BEEN HELD IN SEVERAL JUDGMENTS/ORDERS THAT ALLEGATION HAS TO BE SPECIFIC . IT HAS BEEN MENTIONED ITA NO.70/RJT/2 016 MORVI VEGETABLES PRODUCTS LTD. VS.ACIT ASST.YEAR 2006-07 - 5 - THAT ASSESSEE HAS CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 10. IN VIEW OF THE ABOVE, WE DELETE THE PENALTY. TH EREFORE, APPEAL FILED BY THE ASSESSEE IS ALLOWED. 11. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 26/05/2017 SD/- SD/- EKUHK CKSJM EKUHK CKSJM EKUHK CKSJM EKUHK CKSJM EGKOHJ EGKOHJ EGKOHJ EGKOHJ IZLKN IZLKN IZLKN IZLKN YS[KK LNL; U;KF;D LNL; YS[KK LNL; U ;KF;D LNL; YS[KK LNL; U ;KF;D LNL; YS[KK LNL; U ;KF;D LNL; ( MANISH BORAD ) (MAHAVIR PRASA D) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 26/05/2017 PRITI YADAV, SR.PS COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #' / THE RESPONDENT. 3. 012) & 3) / CONCERNED CIT 4. & 3) 45 / THE CIT(A)-3, RAJKOT. 5. 678 )'12 *12. 0 / DR, ITAT, AHMEDABAD 6. 89:( GUARD FILE. / BY ORDER, #6) ) //TRUE COPY// / !'# ( DY./ASSTT.REGISTRAR) #$ %, / ITAT, AHMEDABAD TRUE COPY