Shree Matangi Woven Sack P. Ltd., Ahmedabad V. The Income Tax Officer, Ward-8(3), Ahmedabad

ITA 997/AHD/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6214 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 07-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Depreciation; Additional evidence
• Section: 144; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI AMARJIT SINGH , ACCOUNTANT MEMBER ITA NOS. 931 & 997/AHD/2014 (ASSESSMENT YEAR : 2010-11) ITO, WD.8(3), AHMEDABAD APPELLANT VS. SHREE MATANGI WOVEN SACK PVT. LTD., 28-GUJARAT SOC., B/H. SUVIDHA SHOPPING CENTRE, PALDI, AHMEDABAD - 380007 RESPONDENT/CROS S APPELLANT & ITA NO. 3387/AHD/2015 (ASSESSMENT YEAR : 2010-11) SHREE MATANGI WOVEN SACK PVT. LTD., 28-GUJARAT SOC., B/H. SUVIDHA SHOPPING CENTRE, PALDI, AHMEDABAD - 380007 APPELLANT VS. INCOME TAX OFFICER, WARD-4(1)(3), AHMEDABAD RESPONDENT PAN: AAMCS5782Q /BY REVENUE : SHRI MUDIT NAGPAL, SR. D.R. /BY ASSESSEE : ARTI SHAH, A.R. /DATE OF HEARING : 31.01.2018 /DATE OF PRONOUNCEMENT : 31.01.2018 ORDER ITA NOS. 931 & 997/AHD/14, & 3387/AHD/2015 (SHREE MATANGI WOVEN SACK PVT. LTD.) A.Y. 2010-11 - 2 - PER S. S. GODARA, JUDICIAL MEMBER THIS BATCH OF THREE APPEALS PERTAINS TO ASSESSMENT YEAR 2010-11. THE REVENUE AND ASSESSEE HAVE FILED THEIR QUANTUM CROSS APPEALS ITA NOS. 931 & 997/AHD/2014 AGAINST THE CIT(A)-XIV, AHMEDABADS OR DER DATED 27.01.2014 IN CASE NO. CIT(A)-XIV/WD-8(3)/318/2012-13, PARTLY REV ERSING ASSESSING OFFICERS ACTION ESTIMATING NP ADDITION FROM RS.59,31,200/- ( @20% OF THE TOTAL TURNOVER RS.2,96,56,102/-) TO THE EXTENT OF RS.1,48,280/- AS WELL AS MAKING ENHANCEMENT OF DEPRECIATION DISALLOWANCE OF RS.9,74,802/- (IN LATT ERS APPEAL ONLY); RESPECTIVELY, IN PROCEEDINGS U/S. 144 OF THE INCOME TAX ACT, 1961; I N SHORT THE ACT. THIS FOLLOWS ASSESSEES PENALTY APPEAL ITA NO.3387/AHD/2015 ARIS ING AGAINST THE CIT(A)-8, AHMEDABADS ORDER DATED 06.10.2015 IN CASE NO. CIT( A)-8/199/14-15, CHALLENGING CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION L EVYING PENALTY OF RS.7,39,630/- IN PROCEEDINGS U/S. 271(1)(C) OF THE ACT. 2. WE ADVERT TO FORMER TWO QUANTUM APPEALS. BOTH P ARTIES CORRESPONDING FIRST SUBSTANTIVE GROUND SEEKS TO CHALLENGE THE CIT(A)S ORDER RESTRICTING NP ADDITION IN QUESTION OF RS.59,31,200/- TO RS.1,48,280/- ONLY MA DE AFTER REJECTION OF BOOKS OF ACCOUNTS U/S.145(3) OF THE ACT. THE REVENUES OBVI OUS GRIEVANCE SEEKS TO RESTORE THE ENTIRE ADDITION AMOUNT AS AGAINST THE ASSESSEE S PLEA THAT THE CIT(A) OUGHT NOT TO HAVE UPHELD THE ABOVE BOOK REJECTION THEREBY MAK ING THE REMAINING ADDITION IN QUESTION. 3. THIS ASSESSEE MANUFACTURES BAGS, FABRICS ROLLS A ND TAPS FROM HDPE AND PP GRANULES. THE ASSESSING OFFICER NOTICED DURING SCR UTINY THAT IT HAD NOT SHOWN THE RELEVANT AMOUNT OF WORK-IN-PROGRESS SINCE THE RELEV ANT FIGURES IN P&L ACCOUNT WERE IN THE NATURE OF FINISHED PRODUCTS. THIS FOLL OWED A DETAILED SCRUTINY PROCESS. THE ASSESSEE SOUGHT TO HIGHLIGHT THE FACT THAT IT H AD BEEN APPLYING WITH RELEVANT CENTRAL EXCISE RULES. IT FURTHER ASSERTED THAT THE RE WAS NO WASTAGE IN INITIAL MONTHS OF MANUFACTURING. WE FIND FROM ASSESSMENT ORDER DA TED 25.02.2013 THAT ALL THIS MULTIPLE PLEADINGS FAILED TO IMPRESS UPON THE ASSES SING OFFICER. HE INTER ALIA OBSERVED THAT ASSESSEES RG-23 REGISTERS WERE EXAMI NED AFTERWARDS BY THE CENTRAL ITA NOS. 931 & 997/AHD/14, & 3387/AHD/2015 (SHREE MATANGI WOVEN SACK PVT. LTD.) A.Y. 2010-11 - 3 - EXCISE DEPARTMENT, ITS CONSUMPTION PATTERN DEMONSTR ATED BOTH OVER AND UNDER CONSUMPTION IN INITIAL MONTHS FROM NOVEMBER 2009 TO JANUARY 210 WAS NIL WHEREAS LATTER MONTHS REVEALED THE SAID RATE BE 12. 9% AND 15.31% TO SHOW LESS PRODUCTION, IT HAD CONSUMED 1400KGS OF HDPE GRANULE S ON 31.03.2010 WITHOUT ANY WORK-IN-PROGRESS AND THERE WAS SUFFICIENT MATER IAL INDICATING BOTH OVER PRODUCTION AS WELL AS UNDER PRODUCTION; RESPECTIVEL Y. ALL THIS MADE HIM TO REJECT ASSESSEES BOOKS AND TO ADD NP IN QUESTION @ 20% OF THE TURNOVER OF RS.2,96,56,102/-; COMING TO RS.59,31,200/- IN ASSES SMENT ORDER DATED 25.02.2013. 4. THE ASSESSEE PREFERRED APPEAL. IT CHOSE TO FILE ADDITIONAL EVIDENCE DURING LOWER APPELLATE PROCEEDINGS. THE CIT(A) SOUGHT A R EMAND REPORT. THE ASSESSING OFFICER SUBMITTED CONSUMPTION ON 04.12.2013. THE C IT(A) THEREAFTER RESTRICTS THE IMPUGNED ADDITION OF RS.59,31,200/- TO RS.1,48,220/ - ONLY, AS UNDER: 5. I HAVE PERUSED THE FACTS OF THE CASE AS ENUMERA TED BY A.O. AND AS SUBMITTED BY APPELLANT. I HAVE PERUSED THE CASE LAW S RELIED ON BY A.O. AS WELL AS APPELLANT. AFTER CAREFUL CONSIDERATION OF FACTS, SU BMISSION AND CONTENTION OF BOTH A.O. AS WELL AS OF APPELLANT, GROUND WISE ADJUDICAT ION IS AS FOLLOWS: 5.1 THE FIRST & FOREMOST REQUIREMENT IS ADJUDICATIO N ABOUT ADMISSION OF ADDITIONAL EVIDENCES. THE APPELLANT CONTENDED THAT DESPITE VARIOUS ATTENDANCE AND SUBMISSION, THE APPELLANT FAILED TO RESPOND TO FINA L SHOW CAUSE NOTICE DT 08.02.13. TO BE REPLIED BY 18.02.13 AND RECEIVED BY APPELLANT ON 12.02.13. THE IMPUGNED ORDER WAS PASSED BY A.O ON 25.02.13 AND THEREFO RE THE APPELLANT WAS NOT PROVIDED SUFFICIENT OPPORTUNITIES TO SUBMIT THE DETAILS & EXPLANATION IN RESPECT OF SHOW CAUSE NOTICE DT. 03.02.13. CONSIDERING THE REA SON AND FACT THAT THIS BEING FIRST YEAR OF MANUFACTURING, THE APPELLANT SUBMITTE D AUDITED ACCOUNTS (P & L A/C AND BALANCE SHEET) WITH TAX AUDIT REPORT AND PRODUC ED CENTRAL EXCISE REGISTER RG- 23 & RG-1, ! AM INCLINED WITH THE APPELLANT THAT HE WAS NOT PROVIDED SUFFICIENT OPPORTUNITIES FOR SUBMISSION AND DETAILS. THE A,O. IN THE REMAND REPORT (PARA 3) OBJECTED FOR ADMISSION OF ADDITIONAL EVIDENCES CONS IDERING THE OPPORTUNITIES PROVIDED IN ASSTT. PROCEEDINGS AS WELL AS AUDIT REP ORT/AUDITED ACCOUNTS FILED BUT, IT IS ADMITTED BY HIM THAT PAGE NO. 66 TO 71 RELATED TO STATEMENT OF MANUFACTURING WERE NEW EVIDENCES. CONSIDERING THE REASONABLE CAUS E OF INSUFFICIENT OPPORTUNITY FOR FINAL SHOW CAUSE AND THESE EVIDENCES GOING TO R OOTS OF THE ISSUE, THE SAME ARE ADMITTED FOR ADJUDICATION OF APPEAL. IT IS IMPORTAN T TO NOTE HERE THAT SUCH MANUFACTURING STATEMENT / PRODUCTION STATEMENT / SA LE STATEMENTS ARE PREPARED ON THE BASIS OF CENTRAL EXCISE REGISTER STATUTORY REQU IRED TO BE MAINTAINED FOR RAW MATERIAL, CONSUMPTION, PRODUCTION, SALE AND CLOSING STOCK. THESE RECORDS (EXCISE RECORD) WERE DULY SUBJECTED TO AUDIT BY CENTRAL EXC ISE DEPARTMENT AND REFLECT DAY TO DAY PURCHASE, CONSUMPTION, PRODUCTION AND SALE. THESE PAGES NO. 66 TO 71 ARE APPENDED WITH THIS ORDER AS ANNEXURE - A AS READY R EFERENCE. ITA NOS. 931 & 997/AHD/14, & 3387/AHD/2015 (SHREE MATANGI WOVEN SACK PVT. LTD.) A.Y. 2010-11 - 4 - 5.2 ALL THE GROUNDS OF APPELLANT'S ARE INTERLINKED AND AGAINST THE REJECTION OF BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT AS WELL AS AGAINST THE ESTIMATION OF NET PROFIT AT 20% ON TOTAL TURNOVER FOR MAKING ADDITION OF RS.59,31,200/-. THE A.O. IN THE IMPUGNED ASSTT.ORDER AS PER ANNEXUR E 'A' OF SHOW CAUSE NOTICE DATED 08.02.2013 (DISCUSSED AT PARA 4(A)(C) ABOVE) COMPUTED OVER / UNDER PRODUCTION AT CL. 17. ON THE BASIS OF THESE DATA AS PER ANN. 'B' OF THIS SHOW CASUE, THE A.O. COMPUTED THE SUPPRESSION OF BAGS MANUFACTU RED. THE A.O. ON THIS ANALYSIS ALSO WORKED OUT THE DISCREPANCY OF WASTAGE GENERATED. I AM INCLINED 'WITH THE CONTENTION OF APPELLANT THA T A.O. MADE THIS ENTIRE ANALYSIS ON THE PRESUMPTION THAT - '1 KGS OF RAW MATERIAL WILL PRODUCE 1 KG OF TAP AN D 1000 NOS. OF BAGS' WHICH IS NOT CORRECT ON ACTUAL BASTE. THE APPELLANT DURING A PPEAL AND REMAND PROCEEDINGS SUBMITTED THE EVIDENCES IN THE NATURE OF PURCHASE O RDERS, COPIES OF INVOICES TO REFLECT THAT IT HAS MANUFACTURED DIFFERENT DIFFEREN T SIZED BAGS, REQUIRING DIFFERENT DIFFERENT SIZE TAPES AND HAVING DIFFERENT DIFFERENT WEIGHT. IF ALL THESE ACTUAL FIGURES ARE CONSIDERED THEN AS PER SIMILAR ANNEXURE PREPARE D (ANNEXURE 'A' OF THIS ORDER) THERE IS NO SUCH DISCREPANCY. NOW CONSIDERING VARIOUS DEFECTS / DISCREPANCIES POI NTED OUT BY A.O. AND ITS REPLY BY APPELLANT HAS TO BE CONSIDERED AS FOLLOWS: (A) THE A.O. DISBELIEVED THAT MAINTENANCE OF CENTRA L EXCISE REGISTERS RG 23 DOES .NOT HAVE ANY EVIDENTIARY VALUE AS FAR A S CONSUMPTION & PRODUCTION IS CONCERNED. I AM NOT INCLINED WITH S UCH CONTENTION AS CENTRAL EXCISE REGISTER RG 23 IS A STATUTORY .RE GISTER WHICH RECORDS DAY TO DAY PURCHASE, CONSUMPTION, PRODUCTIO N & DISPATCH. THE APPELLANT, SUBMITTED AUDIT REPORT OF SUCH REGIS TER, HENCE THE FACTS & FIGURES IN THIS REGISTER CANNOT BE DISBELIE VED. (B) IN REFERENCE TO OVER CONSUMPTION UNDER CONS UMPTION AS PER CL. 17 OF ANNEXURE 'A1 MARKED OUT BY A.O., THIS CL. 17 IS ON INCORRECT BASIS- OF PRESUMPTION THAT 1 KG. OF RAW MATERIAL WILL GIVE PRODUCTION OF 1 KG OF TAPE AND 1000 NOS. OF BAGS. THE APPELLANT WIT H CREDIBLE EVIDENCES SUBSTANTIATED THAT A.O'S THIS PRESUMPTION AND ANALYSIS 1 IS NOT CORRECT AND BASED ON EVIDENCES, (C) IN REFERENCE IO ABNORMAL WASTAGE AT 12.98% AND 15.51% JN INS MONTH OF FEB. 2010 AND MARCH 2010 IN COMPARISON TO NO SUCH WASTAGE IN NOV. 2010 TO JAN. 2010, THE APPELLANT SU BMITTED THAT BEING THIS IS FIRST YEAR OF PRODUCTION INITIALLY TH E RECORDING OF WASTAGE IS NOT PROPERLY TAKEN BUT SINCE THE RAW MAT ERIAL & FINISHED GOODS ARE EXCISABLE GOODS, THE WASTAGE IS DULY RECO RDED IN RG-23 & RG-1 REGISTER. IT IS THEREFORE, THE A.O. HAS SOM E FORCE THAT PROPER AUTHENTICITY TO PRODUCTION CANNOT BE ACCEPTE D. (D) IN REFERENCE TO NO WORK IN PROGRESS REFLEC TED BY APPELLANT THOUGH ON 31.03.10 THE APPELLANT CONSUMED 1400 KGS. OF PP GRA NULES AND 460 KGS OF HOPE GRANULES, THE APPELLANT'S RG-23 AND RG- 1 REFLECT THE CLOSING STOCK OF RAW MATERIAL, SEMI FINISHED GOODS IN THE FORM OF PP TAPE AT 1624 KGS AND FINISHED GOODS. THE APPELLANT VIDE PAGE 71 (AS PER ANNEXURE 'A' OF THIS ORDER) SUBMITTED VALUATION OF CLOSING STOCK AT RS.39,13,819/-. THE APPELLANT'S AUDITED BALANCE SHEET REFLECT SUCH INVENTORY AT SCHEDULE 6. THE AUDITED PROFIT & LOSS ACCOUNT AT SCHEDULE 12 TAKEN INTO CONSIDERATION VALUE OF FINIS HED GOODS STOCK AT RS.7,59,061/- AND SEMI FINISHED GOODS AT RS.1,02 ,312/- I.E. RS. ITA NOS. 931 & 997/AHD/14, & 3387/AHD/2015 (SHREE MATANGI WOVEN SACK PVT. LTD.) A.Y. 2010-11 - 5 - 8,61,373/-. IN RESPECT OF CL, STOCK OF RAW MATERIAL OF RS.30,52,448/- THE SAME WAS REDUCED IN SCHEDULE 13 TO ARRIVE AT TH E RAW MATERIAL CONSUMED AT RS. 2,09,67,260/- AS DEBITED & CLAIM ED IN PROFIT & LOSS ACCOUNT. IT IS THEREFORE THE WORK IN PROGRESS IN THE FORM OF PP TAPE ABOUT 1624 KG WERE DULY INCLUDED IN VALUATION OF DOSING STOCK. (E) THE A.O. AT PARA 4 OF IMPUGNED ASSTT. ORDER ON THE BASIS OF ANALYSIS AS PER ANNEXURE 'A' & 'B' OF SHOW CAUSE NOTICE AS DIS CUSSED -IN IMPUGNED ORDER ESTIMATED NET INCOME AT R S. 59,31,200/- BEING 20% OF TURNOVER OF RS. 2,96,56,102/-. THE APPELLANT SUBMITTED THAT THERE IS NO BASIS OR COMPARABLE FOR SUCH ESTIMATION. I AM ALSO INCLINED WITH THE CONTENTION OF APPELLANT THAT THOUGH AS PER LEGAL PROPOSITION, IN ESTIMATION, IN THE BEST J UDGMENT ASSTT. THERE MAY BE SOME GUESS WORK BUT SUCH ESTIMATION SHOULD B E REASONABLE AND BASED ON LOGIC /SCIENTIFIC DATA, WHICH A.O. FAI LED TO DO. THE APPELLANT SUBMITTED DETAILS OF GROSS PROFIT AS WELL AS NET PROFIT FOR A.Y. 10-11 TO A.Y. 13-14 VIDE SUBMISSION DT. 30.12. 13 (RECEIVED ON 03.01.12). THESE DETAILS CLEARLY REFLECT THAT WITH THE INCREASING TURNOVER, THE GROSS PROFIT RANGES BETWEEN 14.5% TO 18.$% WHILE THE NET PROFIT VARIES BETWEEN 0.2% TO 0.86%. THE APPELL ANT'S RESULT'S FOR A.Y. 11-12 TO 13-14 WERE ACCEPTED BY THE DEPARTMEN T. IT IS THEREFORE CONSIDERING THE FIRST YEAR OF PRODUC TION, NO MAJOR DISCREPANCIES, THE ESTIMATION OF NET PROFIT CANNOT BE MORE THAN 0.86%. THE A.O. IN THE REMAND REPORT RAISED THE ISSUE OF N ON SPECIFIC MAINTENANCE OF QUANTITY RECORD, TAX AUDITORS REMARK S AT CL. 28(A) & 28(B) IN FORM 3CD, INCORRECT CLAIM OF DEPRECIATION OF PLA NT & MACHINERY AND ONE BILL OF FREIGHT MISSING. THE APPELLANT FAILED I N REJOINDER TO RECONCILE THE DISCREPANCY OF NON MAINTENANCE OF SPECIFIC CONSUMPT ION REGISTER ON DAILY BASIS AND ACCEPTED THAT IN INITIAL MONTHS THE RECOR DING OF PRODUCTION AND WASTAGE IS NOT PROPER. IN VIEW OF THESE FINDING, TH E REJECTION OF BOOKS OF ACCOUNTS BY A.O. U/S 145(3) OF THE ACT IS UPHELD/, HOWEVER, THE ESTIMATION OF NET PROFIT @ 20% IS NEITHER REASONABLE NOR BASED ON ANY COMPARABLE. IT IS THEREFORE APPELLANT'S OWN RESULTS FOR THREE YEAR S CAN BE TAKEN AS REASONABLE AND COMPARABLE BASE. THE AVERAGE NET PRO FIT IS AROUND 0.5% OF TOTAL SALE TURNOVER. ON THIS BASIS THE ESTIMATION OF NET PROFIT COMES TO RS.1,48,280/- (0.5% OF 2,96,56,102/-). IT IS THERE FORE THE ADDITION IS RESTRICTED TO THIS EXTENT AND UPHELD. THE A.O. IS DIRECTED TO DELETE THE BALANCE ADDITION OF RS.57,82,920/- (5931200 14828 0). THE APPELLANT GETS PART RELIEF. THESE GROUNDS ARE THEREFORE TREA TED AS PARTLY ALLOWED. 5. WE HAVE HEARD RIVAL CONTENTIONS. LEARNED DEPART MENTAL REPRESENTATIVE VEHEMENTLY CONTENDS THAT THE CIT(A) HAS ERRED IN LA W AS WELL AS FACTS IN DELETING MAJOR PART OF THE IMPUGNED ADDITION. HE HOWEVER FA ILS TO DISPUTE THAT THE ASSESSEES AVERAGE NP IN SUCCEEDING ASSESSMENT YEAR S RANGES AROUND 0.5%. THIS HAS MADE THE LEARNED CIT(A) TO ADOPT THE VERY NP RA TE IN THE IMPUGNED ASSESSMENT ITA NOS. 931 & 997/AHD/14, & 3387/AHD/2015 (SHREE MATANGI WOVEN SACK PVT. LTD.) A.Y. 2010-11 - 6 - YEAR AS WELL. ALL OTHER LOWER APPELLATE FINDINGS I N CLAUSES A, B, D, E EXTRACTED HEREINABOVE HAVE GONE UNREBUTTED FROM REVENUES SID E THAT THE CLOSING STOCK WAS IN ORDER, FORM RG-23 HAD BEEN PROPERLY MAINTAINED A S WELL AS THE ABOVE AVERAGE PROFIT. WE THEREFORE SEE NO REASON TO INTERFERE WI TH LEARNED CIT(A)S FINDINGS RESTRICTING THE IMPUGNED NP RATE FROM 20% TO 0.5%. WE MAKE IT CLEAR WHILST HOLDING SO THAT THE ASSESSING OFFICER HAD ADDED THE NP COMPONENT ONLY IN PROCEEDINGS WHICH HAS BEEN REDUCED TO THE ABOVE UNI FORM RATE OF 0.5%. THE REVENUES SOLE SUBSTANTIVE GROUND AND ITS APPEAL IT A NO.931/AHD/2014 FAIL. 6. WE NOW ADVERT TO ASSESSEES GRIEVANCE THAT BOTH THE LOWER AUTHORITIES HAVE WRONGLY REJECTED ITS BOOKS WHILST ESTIMATING ITS NP @ 20% AND 0.5% IN ASSESSMENT AND LOWER APPELLATE PROCEEDINGS (SUPRA). IT HAS CO ME ON RECORD THAT THE ASSESSEES AUDIT REPORT FORM NO.3CD ITSELF MADE IT CLEAR THAT THE RELEVANT DETAILS OF RAW MATERIAL QUANTITIES, FINISHED PRODUCTS AND BI-PRODU CTS WERE NOT AVAILABLE FOR VERIFICATION. THAT BEING THE CASE, WE SEE NO SUBST ANCE IN ITS INSTANT GROUND SEEKING TO REVIVE ITS BOOK RESULT WHICH BEING SUBJECT TO 0. 5% NP RATE ADDITION IN LOWER APPELLATE PROCEEDINGS. THE ASSESSEES FORMER SUBST ANTIVE GROUND IS ACCORDINGLY DECLINED. 7. LEARNED AUTHORIZED REPRESENTATIVE NOW TAKES US T O CIT(A)S ORDER IN PARA 5.3 ENHANCING ASSESSEES INCOME TO THE EXTENT OF RS .9,74,802/- ON THE GROUND THAT SINCE IT HAD STARTED PRODUCTION FROM THE PLANT AND MACHINERY ONLY IN THE MONTH OF NOVEMBER 2010, ITS DEPRECIATION CLAIM @ 15% WAS ADM ISSIBLE ONLY TO THE EXTENT OF 7.5% RESULTING IN CONSEQUENTIAL ENHANCEMENT. LEARN ED COUNSEL REFERS TO SECTION 251(1)(A) OF THE ACT TO PLEAD THAT THE CIT(A) DID N OT ISSUE ANY SUCH SHOW CAUSE BEFORE ENHANCING ITS INCOME. LEARNED COUNSEL THERE AFTER SUBMITS THAT THE ASSESSEE HAD COMMENCED ITS TRIAL PRODUCTION VERY WELL BEFORE NOVEMBER MONTH 2010 SO AS TO BE ENTITLED FOR CONSEQUENTIAL DEPRECIATION AND P LANT AND MACHINERY INSTALLED BEFORE SEPTEMBER 2009 @ 15%. WE ASKED THE ASSESSEE TO PRODUCE THE RELEVANT EVIDENCE OF THE ABOVE TRIAL PRODUCTION BEFORE NOVEM BER 2010. LEARNED COUNSEL EXPRESSED HER INABILITY IN FILING SUCH DETAILS. SH E HOWEVER CONTENTED THAT THE ITA NOS. 931 & 997/AHD/14, & 3387/AHD/2015 (SHREE MATANGI WOVEN SACK PVT. LTD.) A.Y. 2010-11 - 7 - ASSESSEES ELECTRICITY CONSUMPTION HAS SEEN AN INCR EASE DURING THE CORRESPONDING MONTHS WHICH FORMS A SUFFICIENT REASON TO CONCLUDE THAT IT HAD IN FACT STARTED TRIAL PRODUCTION AT THE TIME OF INSTALLATION. WE FIND NO SUBSTANCE IN THE INSTANT PLEA IN ABSENCE OF RELEVANT TRIAL PRODUCTION DETAILS. THAT BEING THE CASE, THE ASSESSEES TECHNICAL PLEA OF VIOLATION OF PRINCIPLES OF NATURA L JUSTICE, DURING LOWER APPELLATE PROCEEDINGS IS FOUND TO BE MERE TECHNICAL IN NATURE LACKING OUR CONCURRENCE. WE ACCORDINGLY AFFIRM THE CIT(A)S FINDINGS QUA THIS L ATTER ISSUE AS WELL. THE ASSESEES QUANTUM CROSS APPEAL ITA NO.997/AHD/2014 IS ALSO REJECTED. 8. THIS LEAVES US WITH ASSESSEES PENALTY APPEAL IT A NO.3382/AHD/2015. BOTH THE LOWER AUTHORITIES HAVE LEVIED THE IMPUGNED PENA LTY OF RS.7,39,630/ QUA THE ABOVE QUANTUM ISSUES ON NP ESTIMATION AND DEPRECIAT ION DISALLOWANCE. IT HAS COME ON RECORD THAT THE ASSESSEE HAD PLACED SUFFICIENT M ATERIAL ON RECORD QUA RAW MATERIAL CONSUMPTION LEADING TO FINISHED GOODS PROD UCTION AS WELL AS DEPRECIATION DEALT WITH IN PRECEDING PARAGRAPHS. THE CIT(A) HAS ALREADY ACCEPTED THE SAME IN PRINCIPLE TO RESTRICT THE FORMER ADDITION TO THE EX TENT OF 0.5% INSTEAD OF 20% MADE IN ASSESSMENT PROCEEDINGS. SIMILAR IS THE CASE WIT H LATTER DEPRECIATION ISSUE WHEREIN THE ASSESSEE REFERRED TO SOME INDIRECT EVID ENCES PINPOINTING INCREASE IN ELECTRICITY CONSUMPTION IN SUPPORT OF ITS PLEA THAT IT HAD ALREADY COMMENCED TRIAL PRODUCTION IMMEDIATELY AFTER INSTALLATION OF PLANT AND MACHINERY IN QUESTION. BOTH THE LOWER AUTHORITIES ARE OF THE VIEW THAT THE ABOV E TWIN QUANTUM ADDITION INSTANCES INVOLVE BOTH THE CONCEALMENT AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. LEARNED AUTHORITIES BELOW HAVE NOT APPRECI ATED ASSESSEES ABOVE SUBSTANTIVE EVIDENCE AS WELL AS HONBLE APEX COURT S LANDMARK DECISION IN CIT VS. RELIANCE PETROPRODUCTS (P) LTD. 322 ITR 158 (SC) TH AT QUANTUM AND PENALTY PROCEEDINGS ARE SEPARATE WHEREIN EACH AND EVERY DIS ALLOWANCE/ADDITION MADE IN THE COURSE OF FORMER DOES NOT IPSO FACTO ATTRACT LATTER PENALTY PROVISION. WE KEEP IN MIND THE SAID FINE DISTINCTION BETWEEN QUANTUM AND PENALTY PROCEEDINGS TO CONCLUDE THAT THE ASSESSEES ACT AND CONDUCT IN FIL ING ALL NECESSARY PARTICULARS OF RAW MATERIAL CONSUMPTION AS WELL AS DEPRECIATION DO NOT ATTRACT EITHER OF THE TWO LIMBS OF CONCEALMENT AS WELL AS FURNISHING INACCURA TE PARTICULARS OF INCOME ITA NOS. 931 & 997/AHD/14, & 3387/AHD/2015 (SHREE MATANGI WOVEN SACK PVT. LTD.) A.Y. 2010-11 - 8 - ENSHRINED U/S. 271(1)(C) OF THE ACT. WE THEREFORE DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED PENALTY OF RS.7,39,630/-. ASSE SSEES PENALTY APPEAL ITA NO.3387/AH/D2015 IS ACCEPTED. 9. WE QUOTE OUR ABOVE DETAILED DISCUSSION TO DISMIS S THE REVENUES AND ASSESSEES QUANTUM APPEALS ITA NOS. 931 & 997/AHD/2 014 AND ALLOW LATTERS PENALTY APPEAL ITA NO. 3387/AHD/2015. ORDERED ACCO RDINGLY. [PRONOUNCED IN THE OPEN COURT ON THIS THE 31 ST DAY OF JANUARY, 2018.] SD/- SD/- ( AMARJIT SINGH ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 31/01/2018 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0