The Income-tax Officer, Jalandhar V. M/s. Kent Malleable P.Ltd., Jalandhar

ITA 85/ASR/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2239 (ITAT-AMRITSAR)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 06-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R L CHHANALIA
• Section: 133A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 84 & 85 (ASR)/2013 ASSESSMENT YEARS: 2006-07 & 2007-08 PAN: AAACK6465E INCOME TAX OFFICER, M/S KENT MALLEABLE ( P) LTD. WARD-II(1), JALANDHAR FOCAL POINT, JALANDHAR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. R.L. CHHANALIA, D.R. RESPONDENT BY: NONE DATE OF HEARING: 28.05.2013 DATE OF PRONOUNCEMENT: 30.05.2013 ORDER PER BENCH 1) THESE TWO APPEALS HAVE BEEN FILED BY THE R EVENUE AGAINST THE COMMON ORDER DATED 23.11.2012 PASSED BY LEARNED CIT (APPEALS), JALANDHAR, FOR THE ASSESSMENT YEARS 2006-07 AND 200 7-08. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE IN I.T.A. NO. 84(ASR)/2 013 ARE AS UNDER: I. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT(A) HAS ERRED IN LAW IN DELETING THE PENALTY OF RS. 19,30,092/- IMPOSED BY THE A.O. II. THAT IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT (A) BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. III. THAT THE APPELLANT REQUESTS FOR LEAVE TO ADD OR AME ND OR ALTER THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DI SPOSED OF. 2 2) THE GROUNDS OF APPEAL TAKEN BY THE REVENUE IN I. T.A. NO. 85(ASR)/2013 ARE AS UNDER: I. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT(A) HAS ERRED IN LAW IN DELETING THE PENALTY OF RS. 5,38,537/- IMPOSED BY THE A.O. II. THAT IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT (A) BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. III. THAT THE APPELLANT REQUESTS FOR LEAVE TO ADD OR AME ND OR ALTER THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DI SPOSED OF. 3) NOTICE OF HEARING BY RPAD WAS ISSUED TO THE ASSE SSEE FOR 28.05.2013. IN SPITE OF THE SAME, NEITHER ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED TO PROSECUTE THE MATTER IN DISPUTE NOR FILED ANY APPLICATION FOR ADJOURNMENT. 4) KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF T HE PRESENT CASE, WE ARE OF THE VIEW THAT NO USEFUL PURPOSE WOU LD BE SERVED TO ISSUE NOTICE AGAIN AND AGAIN TO THE ASSESSEE THEREFORE, W E ARE DECIDING THE ISSUE IN DISPUTE EX PARTE AFTER HEARING LEARNED D.R. 5) FACTS IN A NUTSHELL ARE THAT, A SURVEY OPERATION UNDER SECTION 133A WAS CARRIED OUT ON 29.06.2006 AT THE BUSINESS PREMISES OF THE ASSESSEE. AFTER COMPLETING THE NECESSARY FORMALITIE S, THE ASSESSING OFFICER MADE THE ADDITIONS IN DISPUTE ON THE BASIS OF CERTAIN DOCUMENTS/DIARIES AS IMPOUNDED DURING THE COURSE OF SURVEY. IN THE 3 APPEAL FILED BY THE ASSESSEE, LEARNED CIT(A) HAS SU STAINED AN ADDITION OF RS. 57,34,084/- FOR THE ASSESSMENT YEAR 2006-07 AND RS. 15,99,342/- FOR THE ASSESSMENT YEAR 2007-08. CONSEQUENTLY, THE ASSE SSING OFFICER LEVIED PENALTY AT RS. 19,30,092/- FOR THE ASSESSMENT YEAR 2006-07 AND RS. 5,38,337/- IN ASSESSMENT YEAR 2007-08 RESPECTIVELY WHICH IS THE SUBJECT MATTER OF THESE APPEALS. BEFORE THE LEARNED FIRST A PPELLATE AUTHORITY, ASSESSEES COUNSEL FILED HIS WRITTEN SUBMISSION POI NTING OUT THAT THE I.T.A.T., AMRITSAR BENCH, AMRITSAR, IN I.T.A. NO. 4 98 & 499(ASR)/2010 PERTAINING TO ASSESSMENT YEARS 2006-07 & 2007-08, H AD DELETED THE QUANTUM ADDITION VIDE ITS ORDER DATED 24 TH AUGUST, 2012. HE HAS ALSO FILED A COPY OF AFORESAID ORDER PASSED BY THIS BENCH BEFO RE LEARNED CIT(A) AND HE REQUESTED THAT AS THE QUANTUM ADDITION HAS B EEN DELETED, THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE INCO ME-TAX ACT, 1961 MAY ALSO BE DELETED. 6) AFTER CONSIDERING THE ARGUMENT ADVANCED BY LEARN ED COUNSEL FOR THE ASSESSEE AND THE ORDER PASSED BY THIS BENCH ON 24.08.2012 IN I.T.A. NO. 498 & 499(ASR)/2010, LEARNED FIRST APPELLATE AU THORITY HAS DELETED THE PENALTY IN DISPUTE LEVIED FOR THE ASSESSMENT YE ARS IN DISPUTE VIDE A COMMON ORDER DATED 23.11.20012. 4 7) NOW, THE REVENUE HAS FILED THE PRESENT APPEALS A GAINST THE IMPUGNED ORDER DATED 23.11.2012 REQUESTING TO SET A SIDE THE IMPUGNED ORDER DATED 23.11.2012 AND RESTORE THE ORDER PASSED BY THE ASSESSING OFFICER. 8) AT THE TIME OF HEARING, LEARNED D.R. RELIED UPON THE ORDER PASSED BY THE ASSESSING OFFICER. 9) WE HAVE HEARD LEARNED D.R. AND PERUSED THE ORDER S PASSED BY THE REVENUE AUTHORITY ESPECIALLY THE IMPUGNED ORDER PASSED BY LEARNED FIRST APPELLATE AUTHORITY ALONG WITH THE ORDER DATE D 24.08.2012 PASSED BY THIS BENCH IN I.T.A. NO. 498 & 499 (ASR)/2010 PE RTAINING TO ASSESSMENT YEARS 2006-07 AND 2007-08 IN THE ASSESSE ES CASE, WHICH THE LEARNED FIRST APPELLATE AUTHORITY HAS REPRODUCED IN PARA 7 (PAGES 3 TO 7). FOR THE SAKE OF CONVENIENCE, THE RELEVANT PARAGRAPH S I.E. PARA NOS. 6 AND 7 (PAGES 3 TO 7) ARE REPRODUCED AS UNDER: 6. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E AND FOUND THAT HON'BLE I.T.A.T. IN THEIR ORDER AS REFERRED AB OVE HAS REVERSED THE ORDER OF LEARNED CIT(A) IN QUANTUM PROCEEDINGS ON ALL GROUNDS BY HOLDING AS UNDER: WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E FACTS OF THE CASE. THE ASSESSEE HAD SUBMITTED THE EXPLANA TION VIDE LETTER DATED 05.12.2008 THAT THE LABOUR PAYMENTS RE LATE TO THE CONSTRUCTION WORK OF SISTER CONCERN M/S KHANNA MALCAST AND HAVE NOTHING TO DO WITH MANUFACTURING ACTIVITIE S OF THE ASSESSEE COMPANY. THIS EXPLANATION IS EVIDENT FROM THE 5 LETTER OF THE ASSESSEE DATED 05.12.2008, AVAILABLE IN THE ASSESSMENT ORDER REPRODUCED HEREINABOVE. THE ASSESS EE HAD SUBMITTED THE SAID EXPLANATION BEFORE THE LEARNED C IT(A) AS WELL AS HAD FURTHER SUBMITTED THAT SUCH LABOUR PAYM ENTS HAD BEEN MADE OUT OF THE SOURCES OF MR. S.K. KHANNA & M RS. ANITA KHANNA AND THIS FACT IS EVIDENT FROM THE ORDE R OF THE LEARNED CIT(A) IN PARA 8.2. IT WAS ALSO SUBMITTED T HAT THE VALUATION HAD BEEN MADE BY THE DEPARTMENT OF THE SA ID FACTORY OF THE SISTER CONCERN AND NOT DIFFERENCE IN THE BOOKS VERSION AND THE VALUATION MADE BY THE DVO WAS FOUND IN THE DIARIES EVEN DURING THE COURSE OF SURVEY. THE REFER ENCE WAS MADE OF FOUR FURNACES WITH M/S KHANNA MALCAST AND WHEREAS THE ASSESSEE HAD THREE ANNEALING FURNACES O NLY. THIS FACT HAS ALSO NOT BEEN REBUTTED BY THE DEPARTM ENT. THE TRADE MARK KMK WAS MENTIONED IN THE SEIZED DIARIE S, WHICH WAS TRADE MARK OF M/S KHANNA MALCAST AND THIS ALSO GOES TO PROVE THE FACT THAT THE PAYMENTS ARE NOT RE LATED TO THE PRESENT ASSESSEE. WE ARE CONVINCES WITH THE ARG UMENTS MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE THE LEARNED CIT(A) AS WELL AS BEFORE US THAT THOUGH DIA RIES BELONGED TO THE ASSESSEE BUT AS PER NOTING IN THE D IARY, THERE ARE AT SOME PLACES, THE NOTING IN KGS, INCHES AND C ERTAIN MENTIONING OF PIECES AND ALSO CERTAIN NOTINGS OF DEDUCTIONS AGAINST ADVANCES MADE TO CERTAIN PERSONS AND IT IS ONLY ON THIS FIGURE, THE A.O. AS WELL AS LEARNED CIT(A) HAD COME TO THE CONCLUSION THAT THESE DIARIES BELONGED TO THE ASSESSEE. IT IS ALSO NOT DISPUTED THAT NONE OF THE AUTHORITIES BELOW HAVE POINTED OUT ANY MISTAKE IN ANY PURCHASE AND SALES OUTSIDE THE BOOKS OF ACCOUNT, WHICH ARE FULLY VOUCHED. NO DEFECT HAS BEEN POINTED OUT IN SUNDRY DEBTORS AN D CREDITORS. THE ASSESSEE IS MAINTAINING STATUTORY RE CORD WITH REGARD TO CENTRAL EXCISE AND NO DISCREPANCY HAD BEE N NOTICED BY THE EXCISE DEPARTMENT AND THERE IS NOTHI NG ADVERSE BROUGHT OUT BY ANY OF THE AUTHORITIES BELOW WITH REGARD TO THE CENTRAL EXCISE DUTY AS WELL AS VAT/CS T. NO EVIDENCE WITH REGARD TO INCURRING OF ANY EXPENSES O UTSIDE THE BOOKS OF ACCOUNT HAD BEEN BROUGHT ON RECORD AND APPROACH OF THE AUTHORITIES BELOW IN SPITE OF THE F ACT MENTIONING OF KG AND OTHER THINGS MENTIONED HEREI NABOVE 6 TO WORK OUT THE PRODUCTION AND SALES OUTSIDE THE BO OKS OF ACCOUNT IS TOTALLY PERVERSE OF THE PRESENT FACTS AN D CIRCUMSTANCES OF THE CASE. THERE IS NO DISPUTE TO T HE FACT AS ADMITTED BY THE LEARNED CIT(A) THAT THE ELECTRICITY EXPENSES ARE QUITE COMPARABLE WITH OTHER COMPARABLE CASES. B UT AT THE SAME TIME, THE LEARNED CIT(A) HAD GIVEN CONTRAD ICTORY FINDING BY SAYING THERE IS NO REASON RELATING TO CO NSUMPTION OF ELECTRICITY ALONE TO SCALE DOWN THE ESTIMATION O F PRODUCTION AND SALES. THE LEARNED CIT(A) GOES TO PO INT OUT CERTAIN OTHER ERRORS WITHOUT ANY BASIS AND ONLY ON THE BASIS OF SURMISES AND CONJECTURES. BOTH THE AUTHORITIES B ELOW HAVE IGNORED THE EXPLANATION GIVEN BY THE ASSESSEE THAT THE SAID LABOUR PAYMENTS BELONGED TO THE CONSTRUCTION WORK O F THE SISTER CONCERN M/S KHANNA MALCAST, WHERE SUCH PAYME NTS HAVE ALREADY BEEN CONSIDERED DURING THE ASSESSMENT PROCEEDINGS IS A MATTER OF RECORD. MOREOVER, ON THE BASIS OF EXPENSES WHICH ARE THE ACTUAL EXPENDITURE OF THE SI STER CONCERN M/S KHANNA MALCAST, NO ESTIMATE OF THE PROD UCTION OR SALE OUTSIDE THE BOOKS OF ACCOUNT CAN BE MADE IN THE PRESENT CASE IN THE ABSENCE OF ANY FINDING OR ANY E VIDENCE OF PURCHASES AND SALES OR PRODUCTION OUTSIDE THE BOOKS OF ACCOUNT. SUCH ESTIMATION BY THE A.O. AS WELL AS BY THE LEARNED CIT(A) IS BASED ON SURMISES AND CONJECTURES AND ADDITION WAS MADE BY THE A.O. CANNOT BE SUSTAINED. THE A.O. IS DIRECTED TO DELETE THE ADDITION AND ACCORDI NGLY, THE ORDER OF THE LEARNED CIT(A) IS REVERSED. THUS, ALL THE GROUNDS OF THE ASSESSEE ARE ALLOWED. NOW, WE TAKE UP APPEAL OF THE ASSESSEE IN I.T.A. NO . 499(ASR)/2010 FOR THE ASSESSMENT YEAR 2007-08. THE BRIEF FACTS OF THE CASE ARE IDENTICAL TO THE FACTS IN ASS ESSEES APPEAL IN I.T.A. NO. 498(ASR)/2010 FOR THE ASSESSME NT YEAR 2006-07, EXCEPT LABOUR PAYMENTS FOUND IN THE DIARY WERE TO THE TUNE OF RS. 3,03,792/- AND THE A.O. MADE THE AD DITION OF RS. 29,15,463/- AND THE LEARNED CIT(A) HAD SUSTAINE D THE ADDITION OF RS. 15,99,342/- BY ALLOWING A RELIEF OF RS. 13,16,120/-. SINCE THE FACTS IN THE PRESENT CASE ARE IDENTICAL T O THE FACTS IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEA R 2006-07 AND OUR DECISION IN ASSESSEE CASE FOR THE ASSESSME NT YEAR 7 2006-07 IN I.T.A. NO. 498(ASR)/2010 IS APPLICABLE I N THE PRESENT CASE AND ACCORDINGLY, THE ADDITIONS MADE BY THE A.O. ARE DIRECTED TO BE DELETED AND THE ORDER OF TH E LEARNED CIT(A) IS REVERSED. THUS, ALL THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. 10) THIS BENCH IN I.T.A. NOS. 498 & 499 (ASR)/2010 I N THE ASSESSEES OWN CASE, PERTAINING TO ASSESSMENT YEARS 2006-07 AND 2007- 08, DELETED THE ADDITION IN DISPUTE. HOWEVER, THE A SSESSING OFFICER HAS LEVIED THE PENALTY IN DISPUTE ON THE ADDITIONS WHIC H HAVE BEEN DELETED BY THIS BENCH. WE ARE OF THE VIEW THAT WHEN THE QUANTU M ADDITIONS HAVE BEEN DELETED THEN IT IS NOT POSSIBLE FOR THE ASSESS ING OFFICER TO LEVY THE PENALTY IN DISPUTE. LEARNED FIRST APPELLATE AUTHORI TY HAS RIGHTLY DELETED THE PENALTY IN DISPUTE BY PASSING A WELL REASONED O RDER, THEREFORE, NO INTERFERENCE IS CALLED FOR IN THE IMPUGNED ORDER. A CCORDINGLY, WE UPHOLD THE IMPUGNED ORDER DATED 23.11.2012 PASSED BY LEARN ED CIT(A), JALANDHAR, AND DISMISS THE APPEALS FILED BY THE REV ENUE. 11) IN THE RESULT, I.T.A. NOS. 84 & 85 (ASR)/2012 FIL ED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MAY, 2013 SD/./- SD/./- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER 8 DATED: 30 TH MAY , 2013 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S KENT MALLEABLE (P) LTD., FOCAL POINT, JALANDHAR. 2. INCOME TAX OFFICER, WARD-II(1), JALANDHAR 3. THE CIT(A), JALANDHAR 4. THE CIT, JALANDHAR 5. THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.