M/s. Rajesh International, Solapur V. Asst. Comm. of Income-tax, Solapur

ITA 828/PUN/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62732 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 31-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S N DOSHI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI I.C. SUDHIR JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 828/PN/2010 : ASST. YEAR 2003-04 M/S RAJESH INTERNATIONAL ... APPELLANT 519 SAKHAR PETH, SOLAPUR PAN : NOT AVAILABLE VS. ASSISTANT COMMISSIONER OF INCOME TAX RESPONDENT CIRCLE-2, SOLAPUR APPELLANT BY : SHRI. S.N. DOSHI RESPONDENT BY : MS. NEERA MALHOTRA DATE OF HEARING : 16/02/2012 DATE OF PRONOUNCEMENT : 14-5-2012 ORDER PER I.C. SUDHIR, JM THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER ON THE FOLLOWING TWO GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(A) HAS ERRED IN SUSTAINING THE PENALTY OF RS.93960/- O VERLOOKING THE FACT THAT THE ADDITION IN RESPECT OF VALUATION OF S TOCK IS MADE ON THE BASIS OF ESTIMATION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE CIT(A) HAS ERRED IN SUSTAINING THE PENALTY IN RESPECT OF EXCESS PAYMENT OF DEDUCTION MADE U/S. 80 HHC OVERLOOKING THE CONTENTI ON THAT THE SAID DISALLOWANCE OF CLAIM CANNOT BE THE GROUND FOR LEVYING THE PENALTY. 2. THE RELEVANT FACTS ARE THAT THE ASSESSEE ENGAGE D IN THE BUSINESS OF TRADING AS WELL AS MANUFACTURING AND SALES OF TOWEL S IN THE INTERNATIONAL MARKET WAS FOUND DOING VALUATION OF CLOSING STOCK O N ESTIMATE BASIS AND NOT AS PER THE ACTUAL PURCHASE VALUES. THE ASSESSE E WAS ASKED BY THE A.O TO SUBMIT THE BASIS OF VALUATION OF CLOSING ST OCK AND THE DETAILS OF ITA . NO. 828//PN/2010 M/S. RAJESH INTERNATIONAL A.Y. 2003-04 PAGE OF 6 2 RELEVANT CALCULATION. IN RESPONSE, THE ASSESSEE SU BMITTED DETAILED WORKING OF CLOSING STOCK WHEREIN IT WORKED OUT CL OSING STOCK AT RS.59,00,121/- AS AGAINST RS.58,53,121/- SHOWN IN THE ORIGINAL RETURN OF INCOME, BY SHOWING VALUATION OF CLOSING STOCK IN EX CESS OF RS. 50000/-. ON VERIFICATION AND ON THE BASIS OF BOOKS OF ACCOUN T, BILLS ETC., THE A.O WORKED OUT THE CORRECT VALUATION OF EXCESS STOCK A T RS. 1,17,302/- AND AFTER DEDUCTING THE EXCESS VALUE OF CLOSING STOCK SHOWN BY THE ASSESSEE I.E. RS. 50,000/-, MADE ADDITION OF RS. 67,302/- T O THE TOTAL INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S. 271(1)(C ) FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALING TH E PARTICULARS OF INCOME WERE ALSO INITIATED BY THE A.O AND BEING NOT SATISF IED WITH THE EXPLANATION OF THE ASSESSEE IN THIS REGARD, HE HAS LEVIED THE P ENALTY. THE LD CIT(A) HAS UPHELD THE PENALTY MADE IN THIS REGARD. 3. IT WAS ALSO FOUND THAT WHILE CALCULATING THE DED UCTION U/S. 80 HHC, THE ASSESSEE HAD CLAIMED THE FREIGHT AND INSURANCE CHARGES OF RS. 17,56,689/- TO THE TRANSPORT OF GOODS BEYOND THE C USTOM STATION BUT THE SAME WERE NOT EXCLUDED FROM EXPORT TURNOVER AS PER EXPLANATION (B) OF SECTION 80 HHC. DURING THE ASSESSMENT PROCEEDINGS, IT WAS ACCEPTED BY THE ASSESSEE THAT RS. 13,78,924/- PAID TO CROWNCOM LTD. HAD BEEN RECEIVED AFTER 351 DAYS AND NOT WITHIN 180 DAYS. THE A.O. WORKED OUT THE CORRECT AMOUNT OF DEDUCTION U/S. 80 HHC AT RS.1 2,40,563/- INSTEAD OF RS.13,78,924/- CLAIMED BY THE ASSESSEE. THE DIFFER ENCE AMOUNT OF RS.1,38,361/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE A.O ALSO INITIATED PENALTY PROCEEDINGS FOR FURNISHING I NACCURATE PARTICULARS OF INCOME AND BEING NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE HAS LEVIED THE PENALTY. THE LD CIT(A) HAS UPHELD THE S AME. ITA . NO. 828//PN/2010 M/S. RAJESH INTERNATIONAL A.Y. 2003-04 PAGE OF 6 3 4. BEFORE THE TRIBUNAL, THE LD. A.R. HAS REITERATED THE EXPLANATION FURNISHED BEFORE THE AUTHORITIES BELOW TO ESTABLISH THE BONAFIDE OF THE ASSESSEE THAT THERE WAS NO CONCEALMENT OF PARTICUL ARS OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF ON THE PA RT OF THE ASSESSEE REGARDING THE ABOVE ADDITIONS. THE LD. A.R. SUBMI TTED THAT BASICALLY THE CLOSING STOCK HAS BEEN VALUED ON ESTIMATION BASIS O RIGINALLY AND WHILE FILING THE RETURN IN RESPONSE TO NOTICE U/S. 148, A SSESSEE ON HIS OWN HAD ESTIMATED THE VALUATION OF STOCK EXCESS BY RS. 50,0 00/- AGAIN ON AD HOC AND ESTIMATION BASIS. THE A.O THEN TEST CHECKED THE CALCULATIONS AND THE PURCHASE BILL AT RANDOM FURNISHED IN SUPPORT OF THE STOCK VALUATION AND HE FURTHER FOUND EVEN THE INCREASED VALUATION O F THE STOCK APPEARS TO BE NOT CORRECT. THE A.O ON THE BASIS OF HIS TEST CHECKING CAME TO THE CONCLUSION THAT STOCK VALUATION SHOULD HAVE BEEN IN CREASED BY RS. 1,17,302/- WHILE ASSESSEE HAD INCREASED IT BY RS. 5 0,000/- ONLY. THEREFORE, THE A.O MADE AN ADDITION OF RS. 67,302/- . 5. LIKEWISE, ON EXAMINATION OF DEDUCTION U/S. 80 HH C, THE A.O. NOTICED THE ABOVE DEFECTS AND REVISED THE CALCULAT ION OF CLAIM ALLOWABLE U/S. 80 HHC AND FOUND THAT THE ASSESSEE HAD CLAIMED EXCESS DEDUCTION BY RS.1,38,361/-. 6. REGARDING THE DIFFERENCE IN VALUATION OF STOCK, THE LD. A.R. SUBMITTED THAT ANY ADDITION MADE ON ESTIMATION BAS IS SHOULD NOT BE TAKEN AS GROUND TO HOLD THAT THERE IS A CONCEALMENT OF INCOME TO ATTRACT LEVY OF PENALTY. HE SUBMITTED FURTHER THAT MERELY BECAUSE THE CLAIM IS NOT SUSTAINABLE, THERE CANNOT BE LEVY OF PENALTY U/ S. 271(1)(C ) PARTICULARLY WHEN ALL THE RELEVANT MATERIAL WERE PLACED ON RECORD. THE LD. A.R. PLACED RELIANCE ON THE FOLLOWING DECISIONS : 1. CIT VS. IQBAL SINGH & CO. 180 TAXMAN 355 (P & H ) ITA . NO. 828//PN/2010 M/S. RAJESH INTERNATIONAL A.Y. 2003-04 PAGE OF 6 4 2. HARIGOPAL SINGH VS. CIT 258 ITR 85 ( P & H). 3. CIT VS. APSARA TAWKIES , 155 ITR 303 (MAD) 4. DILIP N. SHROFF , 291 ITR 519 (SC) 5. CIT VS. LAKHANI INDIA LTD. , 324 ITR 73 ( P&H). 6. MODEL FOOTWEAR PVT. LTD, HONBLE ITAT , 124 ITD 353 (DEL.) 7. CIT VS. INTERNATIONAL AUDIO VISUAL 288 ITR 570 (DEL). 8. CIT VS. NATH BROS. EXIM INTERNATIONAL , 288 ITR 670 (DEL). 7. THE LD. D.R., ON THE OTHER HAND, TRIED TO JUSTIF Y THE ORDERS OF THE AUTHORITIES BELOW. 8. CONSIDERING THE ABOVE SUBMISSION, WE FIND THAT T HE ASSESSEE HAS THOROUGHLY FAILED TO ESTABLISH ITS BONAFIDE ON ITS PART TOWARDS THE ABOVE ADDITION. SO FAR AS ADDITION OF RS. 67,302/- MADE BY THE A.O ON ACCOUNT OF DIFFERENCE IN THE VALUATION OF CLOSING STOCK IS CONCERNED, ADMITTEDLY, THE A.O HAD VALUED THE EXCESS OF CLOSING STOCK AT R S. 1,17,302/- ON THE BASIS OF MATERIAL AVAILABLE ON RECORD BEFORE HIM, H ENCE IT CANNOT BE SAID THAT IT WAS BASED UPON ESTIMATION. THE A.O HAS MAD E ADDITION OF RS. 67,302/- ON THIS ACCOUNT AFTER DEDUCTING THE EXCES S VALUE OF CLOSING STOCK SHOWN BY THE ASSESSEE AT RS. 50,000/- AGAINST RS. 1,17,302/-. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE AUTHORITIES BELOW HAVE RIGHTLY INFERRED THAT THERE WAS CONCEALMENT OF PARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS THEREO F ON THE PART OF ASSESSEE TOWARDS THE ADDITION OF RS. 67,302/- TO JU STIFY LEVY OF PENALTY U/S. 271(1)(C ) ON THIS AMOUNT. THE SAME IS UPHELD . THE GROUND NO. 1 IS ACCORDINGLY REJECTED. 9. SIMILARLY, WE DO NOT FIND INFIRMITY IN THE FIRST APPELLATE ORDER WHEREIN THE LD CIT(A) HAS UPHELD THE PENALTY LEVIED ON THE ADDITION OF RS.1,38,861/- MADE ON ACCOUNT OF EXCESS CLAIM OF D EDUCTION MADE U/S. ITA . NO. 828//PN/2010 M/S. RAJESH INTERNATIONAL A.Y. 2003-04 PAGE OF 6 5 80 HHC. IT IS AN ADMITTED FACT THAT THERE IS NO AM BIGUITY IN THE PROVISIONS LAID DOWN U/S. 80 HHC THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM DEDUCTION U/S. 80 HHC ON FREIGHT AND INSURANC E CHARGES TO THE TRANSPORT OF GOODS BEYOND THE CUSTOM STATION WHICH THE ASSESSEE WAS SUPPOSED TO EXCLUDE FROM EXPORT TURNOVER AS PER EXP LANATION (B) OF SEC. 80 HHC. IT WAS ALSO AN UNDISPUTED FACT THAT RS.13, 72,572/- WAS PAID TO CROWNCOM LTD. WAS RECEIVED AFTER 351 DAYS AND NOT W ITHIN 180 DAYS. THUS, THE ASSESSEE WAS SUPPOSED TO CLAIM DEDUCTION U/S. 80 HHC AT RS. 12,40,563/- INSTEAD OF RS.13,78,924/- CLAIMED BY IT . UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE AUTHORI TIES BELOW HAVE RIGHTLY INFERRED THAT THERE WAS CONCEALMENT OF PARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS THEREOF ON THE PA RT OF ASSESSEE TOWARDS RS.1,38,361/-. THUS THERE IS NO INFIRMITY IN THE F IRST APPELLATE ORDER IN THIS REGARD. THE SAME IS UPHELD. GROUND NO. 2 IS ACCORDINGLY REJECTED. 10. BEFORE PARTING WITH THE ORDER, WE MENTION OVER HERE THAT THE DECISIONS RELIED UPON BY THE LD. A.R. ARE NOT HELPF UL TO THE ASSESSEE UNDER THE DISTINGUISHABLE FACTS AND CIRCUMSTANCES O F THE PRESENT CASE AS IN THE PRESENT CASE BEFORE US, AS DISCUSSED ABOVE, THE ASSESSEE HAS THOROUGHLY FAILED TO ESTABLISH HIS BONAFIDE IN NOT DISCLOSING THE ABOVE INCOME WHICH HAVE BEEN ADDED BY THE AUTHORITIES BEL OW. IN BOTH THE ABOVE DISCUSSED ADDITIONS, THERE WAS NO SCOPE OF DE BATE AS TO WHETHER THE ADDITIONS MADE WERE JUSTIFIED OR NOT. 11. IN RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON . SD/- (D.KARUNAKARA RAO) ACCOUNTANT MEMBER SD/- (I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 14TH MAY , 2012 ITA . NO. 828//PN/2010 M/S. RAJESH INTERNATIONAL A.Y. 2003-04 PAGE OF 6 6 PRONOUNCED ON 14.05.2012 IN THE OPEN COURT. SD/- SD/- (R.K. PANDE) (I.C. SUDHIR) AM JM US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT IV, PUNE 4. THE CIT(A)- III, PUNE 4. THE D.R. B BENCH, PUNE 5. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE