Zee Shipping Services, V. The ACIT,

ITA 744/RJT/2005

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 2961 (ITAT-RAJKOT)
• Duration Of Justice: 5 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-12-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 06-06-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L MEENA
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI D.T. GARASIA (JM) I.T.A. NO.744/RJT/2005 (ASSESSMENT YEAR 2002-03) ZEE SHIPPING SERVICES VS ACIT, JAMNAGAR 101, PANCHVATI PETROL PUMP BEDI BUNDER ROAD JAMNAGAR PAN : AAAFZ1603Q (APPELLANT) (RESPONDENT) I.T.A. NO.1425/RJT/2005 (ASSESSMENT YEAR 2002-03) ITO, WD.2(1) VS ZEE SHIPPING SERVICES JAMNAGAR JAMNAGAR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIMAL DESAI REVENUE BY : SHRI SL MEENA O R D E R GARASIA : THESE ARE CROSS APPEALS AND ARE DIRECTED AGAINST THE ORDER OF CIT(A), JAMNAGAR DATED 04-05-2005 FOR THE ASSESSMENT YEAR 2 002-03. 2. THE ASSESSEE FIREM IS ENGAGED IN THE BUSINESS OF SUPPLYING DIESEL, FURNACE OIL, DRINKING WATER AND OTHER MATERIAL REQU IRED BY SHIPS. THUS, IT IS BASICALLY TRADING IN DIESEL AND FURNACE OIL AMONG O THER ITEMS REQUIRED BY SHIPS. A SURVEY ACTION U/S 133A WAS CARRIED OUT AT THE PREMI SES OF THE ASSESSEE ON 13- 09-2002. ON THE BASIS OF DETAILS FOUND IT WAS HELD THAT THE ASSESSEE SHOULD HAVE SOME QUANTITY OF CLOSING STOCK. HOWEVER, IT WAS FO UND THAT THE ASESSEE NEVER HAD SHOWN ANY CLOSING STOCK OF THE ITEMS TRADED IN ANY OF THE YEARS. THEREFORE, ON THE BASIS OF DETAILS OF PURCHASE AND SALES ADDIT IONS WERE MADE IN EARLIER YEARS, I.E. AYS 2000-01 AND 2001-02 AND THE QUANTIT Y OF CLOSING STOCK FOR ONE YEAR WAS TAKEN AS OPENING STOCK FOR NEXT YEAR TO AR RIVE AT THE AMOUNT OF ADDITION. ITA NO.744/RJT/2005 ITA NO. 1425/RJT/2005 2 FOR THE YEAR UNDER CONSIDERATION THE ASSESSMENT WAS FRAMED U/S 143(3) DETERMINING THE TOTAL INCOME AT RS.86,72,009. THE ASSESSING OFFICER REQUIRED HE ASSESSEE TO EXPLAIN THE QUANTITY OF DISCREPANCY ARR IVED AT AFTER CONSIDERING THE LAST YEARS ADDITION AS OPENING STOCK. THE ASSESSE E REPLIED THAT THERE WAS TRANSIT AND EVAPORATION LOSS OF VARIOUS ITEMS SUPPLIED TO T HE SHIPS. ABOUT THE DIESEL IT WAS SUBMITTED THAT SOME PART OF IT WAS CONSUMED IN THE OPERATION OF TUGS AND BARGES WHICH ARE USED IN TRANSPORTATION OF MATERIAL TO MID-SEA WHERE THE SHIPS ARE ANCHORED. THE EXPLANATION WAS BASICALLY ON THE SAME LINE AS WAS SUBMITTED FOR ASSESSMENT YEAR 2000-01 AND 2001-02. HOWEVER, THE ASSESSING OFFICER REJECTED THE EXPLANATION STATING THAT IT WAS GENERA L IN NATURE AND EARLIER YEARS ORDERS OF CIT(A) HAVE NOT BEEN ACCEPTED BY THE DEPA RTMENT AND AFTER TAKING INTO ACCOUNT CERTAIN CORRECTIONS, THE ASSESSING OFFICER ARRIVED AT THE FINAL POSITION AS UNDER WHICH RESULTED IN AN ADDITION OF RS.69,00,249 : QTY IN MT ITEM OPENING STOCK PURCHASE SALES CLOSING STOCK RATE PER MT VALUE OF CL STOCK DIESEL 398.81 4159.482 4160.370 133.502 22209 2964946 FURNACE OIL 134.39 1019.260 1056.990 361.080 10046 3627410 LDO 18.380 164.504 166.247 16.637 16228 269985 FRESH WATER 5702.00 45964.00 47358.30 430.70 88 37908 TOTAL 6900249 3. THE MATTER CARRIED TO CIT(A) AND CIT(A) HAS REDU CED THE ADDITION IN THE FOLLOWING MANNER: 4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E. IT IS FOUND THAT SIMILAR ISSUES INVOLVED IN THE APPEAL FO R AY 00-01 & 01- 02 HAVE BEEN DECIDED BY ME IN APPEAL ORDERS DTD 30/ 11/04 IN APPEAL NOS 135/04-05 & 136/04-05. IN VIEW OF THE D ISCUSSION MADE THEREIN 2% & 5% OF SALE QUANTITY IS TO BE REDU CED FROM EXCESS IN LDFO & FRESH WATER RESPECTIVELY. THEREFO RE THE EXCESS WILL BE ONLY 16.30 & 2972 MT RESPECTIVELY. THE DIS CREPANCY IN DIESEL IS NEGLIGIBLE & HENCE IGNORED. AS ABOUT SHO RTAGE IN FURNACE OIL NO PLAUSIBLE EXPLANATION HAS BEEN SUBMITTED. S INCE THE ITA NO.744/RJT/2005 ITA NO. 1425/RJT/2005 3 NEGATIVE FIGURE INDICATES SALE OF QUANTITY MORE THA N PURCHASE, THE VALUE OF WHOLE DIFFERENCE HAS TO BE ADDED. THE FIN AL POSITION OF THE QUANTUM OF ADDITION IS AS UNDER: ITEM DISCREPANCY RATE PER MT AMOUNT DIESEL -0.89 22209 0 FURNACE OIL - 37.73 10046 379035 LDO 16.30 16228 264516 FRESH WATER 2972 88 261536 TOTAL 905087 SINCE THE QUANTITY OF VARIOUS ITEMS WORKED OUT AS C LOSING STOCK IN LAST YEAR HAVE BEEN CONSIDERED IN THE WORKING IT IS BUT NATURAL THAT CREDIT FOR THE AMOUNT OF ADDITION MADE IN AY 01-02 SHOULD BE ALLOWED. IT IS FOUND THAT NO ADDITION WAS MADE FOR DIESEL. ADDITION IN FURNACE OIL WAS IN RESPECT OF SHORTAGE SO NO CRE DIT CAN BE GIVEN. FOR LDO & FRESH WATER ADDITION OF RS.291635 & RS.37 2444 WAS CONFIRMED IN APPEAL IN AY 01-02. THEREFORE OUT OF ADDITION OF RS.905087 A SUM OF RS.664079 (291635 + 372444) IS T O BE REDUCED. THE NET ADDITION WORKS OUT TO RS.241008. ACCORDINGLY ADDITION TO THE EXTENT OF RS.241008 IS CONFIRMED & BALANCE IS DELETED. 5. THE AMOUNT OF ADDITION IN FRESH WATER IS RS.2615 36 WHICH IS MORE THAN WHAT WAS ADDED IN THE ASSESSMENT ORDER (R S.37908) BECAUSE OF CALCULATION MISTAKE WHICH HAS BEEN ADMIT TED BY THE AR OF APPELLANT. THEREFORE AS PER APPEAL ORDER THERE I S ENHANCEMENT OF INCOME TO THAT EXTENT. THE ASSESSEE IS IN APPEAL AGAINST THE ENHANCEMENT O F ADDITION IN FRESH WATER WHEREAS THE REVENUE IS IN APPEAL AGAINST THE DELETI ON OF ADDITION IN RESPECT OF OTHER ADDITIONS. 4. DURING THE COURSE OF HEARING IT WAS POINTED OUT BY THE LD.AR THAT IN ITA NOS 1102/RJT/2004 & ITA NO.155/RJT/2005 FOR ASSESSM ENT YEAR 2000-01 ORDER DATED 30 TH MAY, 2005 & ITA NO.1101/RJT/04 AND ITA NO.156/RJT/ 05 ORDER DATED 14 TH JULY, 2005 FOR ASSESSMENT YEAR 2001-02 THE TRIBUNA L NOT ONLY UPHELD THE ORDER OF CIT(A) BUT THE ADDITION ENHANCED BY THE CI T(A) WAS ALSO DELETED. THE LD.AR HAS SUBMITTED A CHART ION THE PAPER BOOK, AS PER WHICH THE OPENING STOCK ITA NO.744/RJT/2005 ITA NO. 1425/RJT/2005 4 WAS NIL IN RESPECT OF DIESEL, FURNACE OIL, LDO AND FRESH WATER. THE LD.DR RELIED UPON THE ORDER OF ASSESSING OFFICER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND REC ORD PERUSED. WE FIND THAT THE ABOVE CITED ORDER OF THE TRIBUNAL WAS NOT IN HIS POSSESSION WHEN THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER, AND THEREFORE, FOLLOWING THE SUIT IN EARLIER YEARS HE MADE THE ADDITION. THE LD.DR S UBMITTED THAT HE HAS NO OBJECTION IF THE MATTER IS DECIDED AS PER THE DECIS ION OF ITAT FOR ASSESSMENT YEAR 2000-01 TO PASS FRESH ASSESSMENT ORDER IN LINE WITH ITATS ORDER. THEREFORE, LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE WE SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER BACK TO THE FILE OF T HE ASSESSING OFFICER TO DECIDE THE ISSUE OF OPENING AND CLOSING STOCK IN LINE WITH THE ORDERS OF THE TRIBUNAL FOR EARLIER ASSESSMENT YEARS 2000-01 AND 2001-02. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. 6. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE AND THE REVENUE ARE TREATED AS ALLOWED, FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON ____________ ____. (A.L. GEHLOT) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT : DECEMBER, 2010 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), JAMNAGAR 4. THE CIT, JAMNAGAR 5. THE DR (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT