The DCIT, Central Circle-2, Surat V. M/s. M. Kantilal Exports, Surat

ITA 968/AHD/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9737 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 13-09-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 14-03-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B S SANDHU
• Assessee Lawyers: A K PAREKH
• Keywords: Opportunity of being heard; Set aside
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND D. C. AGRAWAL , AM) ITA NO.968/AHD/2008 A.Y.: 2004-05 THE D. C. I. T., CENTRAL CIRCLE-2, ROOM NO.504, AAYAKAR BHAVAN, MAJURA GATE, SURAT VS M/S. M. KANTILAL EXPORTS, AMBICA NIWAS, MADAN NI CHAWL, VARACHHA ROAD, SURAT PA NO. AAAFM 4325L (APPELLANT) (RESPONDENT) ITA NO.966/AHD/2008 A.Y.: 2004-05 THE D. C. I. T., CENTRAL CIRCLE-2, ROOM NO.504, AAYAKAR BHAVAN, MAJURA GATE, SURAT VS M/S. ANJANA EXPORTS, OPP. J. K. CHAMBERS, KAHINOOR ROAD, VARACHHA ROAD, SURAT PA NO. AADFA 0943 R (APPELLANT) (RESPONDENT) APPELLANT BY SHRI B. S. SANDHU, DR RESPONDENT BY SHRI A. K. PAREKH, AR O R D E R PER BHAVNESH SAINI: THIS ORDER SHALL DISPOSE OF BOTH THE DEPARTMENTAL APPEALS IN WHICH THE GROUND OF APPEAL AND THE ISSUE IS COMMON. ITA NO.968 AND 966/AHD/2008 DCIT, CENT CIRCLE-2, SURAT VS M/S. M. KANTILAL EXPO RTS AND M/S. ANJANA EXPORTS 2 2. BOTH THE DEPARTMENTAL APPEALS ARE DIRECTED AGAIN ST DIFFERENT ORDERS OF THE LEARNED CIT(A)-II, AHMEDABAD DATED 0 9-01-2008 AND 10-01-2008 FOR ASSESSMENT YEAR 2004-05 ON THE FOLLO WING COMMON GROUND: 1 THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRE CTING TO RECOMPUTE THE DEDUCTION U/S. 80 HHC AFTER CONSIDERING THE EXPORT OF REJECTED DIAMONDS. 3. THE LEARNED CIT(A) ON THE ABOVE GROUND HAS PASS ED THE FOLLOWING ORDER WHICH IS COMMON IN BOTH THE APPEALS . HOWEVER, THE SAME IS REPRODUCED FROM ITA NO.968/AHD/2008 AS IS R ECORDED IN PARA 6 OF THE IMPUGNED ORDER: 6. THE APPELLANT HAS IN GROUND NO.4 CLAIMED THAT TH E A. O. HAS ERRED IN NOT GRANTING DEDUCTION U/S. 80 H HC (3) IN RESPECT OF SALE OF REJECTION. THE APPELLANT RELI ED UPON THE DECISION OF ITAT, AHMEDABAD WHEREIN ON SIMILAR ISSUE MATTER WAS DECIDED IN FAVOUR OF ASSESSEE IN T HE CASE OF M/S. PANKAJ DIAMONDS IN ITA NO.500/AHD/200 2. FOLLOWING THE SAID DECISION OF ITAT, AHMEDABAD, I D IRECT THE A. O. TO REWORK DEDUCTION U/S 80 HHC ON EXPORT OF REJECTIONS. 4. THE LEARNED DR RELIED UPON THE ORDER OF THE AO. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE REITERAT ED THE SUBMISSIONS MADE BEFORE THE LEARNED CIT(A). THE LE ARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE ASSESSEE F IRM EXPORTED DIAMONDS WHICH IS OF LOWER QUALITY AND SEMI PROCESS ED DIAMONDS TRADITIONALLY KNOWN AS REJECTED DIAMONDS IN THE DIA MOND INDUSTRIES. THE ASSESSEE HAS EXPORTED SEMI PROCESSED DIAMONDS A ND IS, THEREFORE, ELIGIBLE FOR DEDUCTION U/S 80 HHC OF THE IT ACT ON ITS ITA NO.968 AND 966/AHD/2008 DCIT, CENT CIRCLE-2, SURAT VS M/S. M. KANTILAL EXPO RTS AND M/S. ANJANA EXPORTS 3 TURNOVER BECAUSE REJECTED DIAMONDS ARE BYE-PRODUCTS OF THE ASSESSEE AND THE SAME ARE NOT SIMPLY ROUGH DIAMONDS . HE HAS SUBMITTED THAT THE ISSUE IS COVERED BY ORDER OF ITA T AHMEDABAD BENCH IN THE CASE OF M/S. PANKAJ DIAMONDS. COPY OF THE ORDER FILED ON RECORD. HE HAS SUBMITTED THAT REJECTIONS ARE SEM I PROCESSED DIAMONDS GENERATED DURING THE VARIOUS STAGES OF DIA MOND MANUFACTURING AND, THEREFORE, ARE CUT AND POLISHED DIAMONDS AND NOT TH E MINERAL OR ORES ON WHICH DEDUCTION U/S 80 HHC (3) OF THE IT ACT IS ELIGIBLE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIALS AVAILABLE ON RECORD. THE AO DISCUSSED THIS ISSUE IN THE ASSESSMENT ORDER AS COMPUTATION PART OF RETURN AND NOTED THAT THE ASSESSEE IS EXPORTER AND IS ELIGIBLE FOR DEDUCTION U/S 80 HHC O F THE IT ACT. IT WAS SEEN THAT EXPORTS SALES INCLUDES SALES OF REJECTED AND ROUGH DIAMONDS. IT IS FURTHER NOTED THAT ROUGH AS WELL AS REJECTED DIAMONDS ARE CONSIDERED AS ORES AND NOT ELIGIBLE FOR DEDUCTI ON U/S 80 HHC OF THE IT ACT. THIS AMOUNT SHOULD HAVE BEEN REDUCED FR OM THE EXPORT TURNOVER WHICH IS NOT DONE BY THE ASSESSEE. DURING THE COURSE OF DISCUSSION BEFORE THE AO ON 12-12-2004, THE ASSESSE ES REPRESENTATIVE HAS AGREED ON THIS POINT. THE AO, TH EREFORE, FOR THE PURPOSE OF CALCULATION OF ALLOWABLE DEDUCTION, EXPO RT TURNOVER WAS TAKEN AT THE LOWER AMOUNT AS AGAINST CLAIM OF THE A SSESSEE. THE ABOVE FACTS NOTED BY THE AO IN THE ASSESSMENT ORDER WOULD SHOW THAT THE ASSESSEE AGREED TO THE PROPOSED ADDITION M ADE BY THE AO. HOWEVER, THE ASSESSEE CHALLENGED THE FINDING OF THE AO BEFORE THE LEARNED CIT(A) AND STATED IN THE GROUND OF APPEAL T HAT THE AO HAS GRIEVOUSLY ERRED IN NOT ALLOWING DEDUCTION U/S 80 H HC OF THE IT ACT ON ITA NO.968 AND 966/AHD/2008 DCIT, CENT CIRCLE-2, SURAT VS M/S. M. KANTILAL EXPO RTS AND M/S. ANJANA EXPORTS 4 EXPORT OF REJECTED DIAMONDS DISAGREEING WITH VARIOU S DECISIONS OF ITAT. THE ASSESSEE HAS NOWHERE IN THE GROUNDS OF AP PEAL MENTIONED THE CORRECT FACTS THAT THE AUTHORIZED REP RESENTATIVE OF THE ASSESSEE AGREED TO THE PROPOSED ADDITION. SECTION 2 46A (1) OF THE IT ACT PROVIDE APPEALLABLE ORDERS BEFORE COMMISSIONER (APPEALS) AND FURTHER PROVIDES ANY ASSESSEE AGGRIEVED BY ANY OF THE FOLLOWING ORDERS (WHETHER MADE BEFORE OR AFTER THE APPOINTED DATE) MAY APPEAL TO THE COMMISSIONER (APPEALS) AGAINST . THEREAFTE R, IN THIS SECTION SEVERAL ORDERS ARE PROVIDED AGAINST WHICH APPEAL WI LL LIE BEFORE THE LEARNED CIT(A). CONSIDERING THE ABOVE PROVISIONS, I T IS CLEAR THAT AN APPEAL TO THE COMMISSIONER (APPEALS) COULD ONLY BE TAKEN AGAINST A PART OF THE ORDER AGAINST WHICH THE ASSESSEE CAN BE SAID TO BE FEELING AGGRIEVED. WHAT IS VOLUNTARILY ACCEPTED CANNOT GIVE RISE TO A GRIEVANCE WHICH CAN BE TAKEN FURTHER IN APPEAL. AN ORDER BASED ON AN AGREEMENT CANNOT GIVE RISE TO GRIEVANCE AND THE SAM E CANNOT BE AGITATED IN APPEAL. HONBLE BOMBAY HIGH COURT IN TH E CASE OF JIVATLAL PURTAPSHI VS CIT 65 ITR 261 HELD AS UNDER: HELD, THAT THE DEPARTMENT, HAVING AGREED TO DELETE THE AMOUNT FROM THE ASSESSMENT AND HAVING CONCEDED THE DELETION BEFORE THE APPELLATE ASSISTANT COMMISSIONE R CANNOT BE HELD TO BE AGGRIEVED BY THIS PART OF THE ORDER TO ENABLE IT TO FILE AN APPEAL TO THE TRIBUNAL; THE AP PEAL OF THE DEPARTMENT REGARDING THE DELETION OF THE AMOUNT WAS NEITHER COMPETENT NOR CAPABLE OF BEING ENTERTAINED BY THE TRIBUNAL. 5.1 HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF BANTA SINGH KARTAR SINGH VS CIT 125 ITR 239 CONSIDERING T HE ABOVE DECISION OF THE HONBLE BOMBAY HIGH COURT HELD AS U NDER: ITA NO.968 AND 966/AHD/2008 DCIT, CENT CIRCLE-2, SURAT VS M/S. M. KANTILAL EXPO RTS AND M/S. ANJANA EXPORTS 5 HELD, THAT IT WAS ON THE AGREEMENT OF THE ASSESSEE , WHICH AGREEMENT MENTIONED THE RATE AS WELL AS THE F IGURE, THAT PENALTY HAD BEEN LEVIED. THE ASSESSEE HAD NO R IGHT TO AGITATE THIS QUESTION IN APPEAL. THE TRIBUNAL WA S RIGHT IN LAW IN NOT GOING INTO THE QUESTION WHETHER THE P ENALTY WAS IN LAW THE MINIMUM PENALTY LEVIABLE UNDER S. 27 1 (1) ( C ) OF THE I. T. ACT, 1961. 6. CONSIDERING THE FACTS OF THE CASE NOTED BY THE A O IN THE ASSESSMENT ORDER, IT IS CLEAR THAT THE ASSESSEE AGR EED TO THE ADDITION WITH REGARD TO THE EXPORT OF REJECTED DIAMONDS. THE FINDINGS OF THE LEARNED CIT(A) ARE NOTED ABOVE IN WHICH THE LEARNED CIT(A) WITHOUT CONSIDERING THE FINDING OF FACT RECORDED BY THE AO ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE ORDER IN THE CASE OF M/S. PANKAJ DIAMONDS (SUPRA). IT WOULD SHOW THAT THE LEARNED CI T(A) WITHOUT CONSIDERING THE FINDINGS IN THE ASSESSMENT ORDER AN D WITHOUT GIVING OPPORTUNITY OF BEING HEARD TO THE AO ALLOWED THE AP PEAL OF THE ASSESSEE ON THIS ISSUE. WHETHER ANY ISSUE IS COVERE D BY THE ORDER OF THE TRIBUNAL IS TO BE SEEN IN THE LIGHT OF THE FACT S NOTED BY THE AO. HOWEVER, IN THIS CASE, THE LEARNED CIT(A) FAILED TO CONSIDER THAT THE ASSESSEE AGREED TO THE PROPOSED ADDITION BEFORE THE AO. THEREFORE, IT WOULD NOT GIVE RISE TO THE GROUND THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. THE LEARNED CIT(A) SHALL HAVE TO D ECIDE THE APPEAL OF THE ASSESSEE BASED UPON THE FACTS AVAILABLE ON R ECORD AND IN THE LIGHT OF HE SUBMISSIONS OF THE PARTIES. THE LEARNED CIT(A) HAS IN FACT IGNORED THE FINDINGS OF THE AO WITH REGARD TO THE A DDITION MADE ON AN AGREEMENT WITH THE ASSESSEE. SINCE, THIS ISSUE IS N OT ADDRESSED BY THE LEARNED CIT(A) IN THE APPELLATE ORDER AND THIS ISSUE IS CONCEALED AT THE APPELLATE STAGE BY THE ASSESSEE, THEREFORE, IT WOULD BE ITA NO.968 AND 966/AHD/2008 DCIT, CENT CIRCLE-2, SURAT VS M/S. M. KANTILAL EXPO RTS AND M/S. ANJANA EXPORTS 6 REASONABLE AND PROPER TO RESTORE THE ISSUE TO THE F ILE OF THE LEARNED CIT(A) FOR RECONSIDERATION, BECAUSE ONCE THE APPEAL OF THE ASSESSEE IS NOT MAINTAINABLE IN THE EYES OF LAW, THERE IS NO QUESTION OF CONSIDERING THE ISSUE TO BE COVERED IN FAVOUR OF TH E ASSESSEE BY THE ORDER OF THE TRIBUNAL. WE ACCORDINGLY, SET ASIDE BO TH THE ORDERS OF THE LEARNED CIT(A) IN BOTH THE CASES AND RESTORE THIS I SSUE TO THE FILE OF THE LEARNED CIT(A) WITH DIRECTION TO THE LEARNED CI T(A) TO RE-DECIDE THE ISSUE IN APPEAL IN THE LIGHT OF THE FINDINGS RE CORDED IN THE ASSESSMENT ORDER. THE LEARNED CIT(A) MAY ALSO TAKE INTO CONSIDERATION THE RECORD OF THE CASE AND SHALL GIV E REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS WELL AS THE AO. 7. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 17-09-2010 SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 17 -09-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD