M/s. Jyot Overseas Pvt.Ltd.,, Ahmedabad v. The ACIT., Mehsana Circle,, Mehsana

CO 81/AHD/2008 | 2003-2004
Pronouncement Date: 16-07-2010 | Result: Dismissed

Appeal Details

RSA Number 8120523 RSA 2008
Assessee PAN AAACJ4894L
Bench Ahmedabad
Appeal Number CO 81/AHD/2008
Duration Of Justice 2 year(s) 3 month(s)
Appellant M/s. Jyot Overseas Pvt.Ltd.,, Ahmedabad
Respondent The ACIT., Mehsana Circle,, Mehsana
Appeal Type Cross Objection
Pronouncement Date 16-07-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 16-07-2010
Date Of Final Hearing 13-07-2010
Next Hearing Date 13-07-2010
Assessment Year 2003-2004
Appeal Filed On 15-04-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER AND SHRI D.C. AGRAWAL ACCOUNTANT MEMBER DATE OF HEARING : 13/07/2010 DRAFTED ON: 1 4/07/2010 ITA NO.605/AHD/2008 ASSESSMENT YEAR : 2003-04 THE ACIT MEHSANA CIRCLE MEHSANA VS. JYOT OVERSEAS PVT.LTD. 11 VIDHYANAGAR TWIN BUNGLOW NAGALPUR MEHSANA PAN/GIR NO. : AAACJ 4894 L (APPELLANT) .. (RESPONDENT) AND CO NO.81/AHD/2008 (ARISING OUT OF ITA NO.605/AHD/2008) JYOT OVERSEAS PVT.LTD. VS. ACIT MEHSANA CIRCLE MEHSANA MEHSAN A (CROSS OBJECTOR) .. (RESPONDEN T) ASSESSEE BY : SHRI N.C. AMIN REVENUE BY : SHRI K.M. MAHESH SR D.R. O R D E R PER SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE ARISING FRO M THE ORDER OF THE LEARNED CIT(APPEALS)-GANDHINAGAR DATED 05/11/2007 A ND THE RESPONDENT-ASSESSEE IS THE CROSS OBJECTOR. 2. THE ONLY GRIEVANCE OF THE REVENUE IS IN RESPECT OF THE DELETION OF CONCEALMENT PENALTY OF RS.2 40 572/- LEVIED BY INVO KING THE PROVISIONS OF SECTION 271(1)(C) OF THE I.T.ACT 1961. ITA NO.605/AHD/2008(BY REVENUE) & CO NO.81/AHD/2008 ACIT VS. JYOT OVERSEAS PVT.LTD. ASST.YEAR - 2003-04 - 2 - 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDI NG CONCEALMENT ORDER PASSED U/S.271(1)(C) OF THE I.T. ACT 1961 DATED 17 /07/2007 AND THE ASSESSMENT ORDER PASSED U/S. 143(3) OF THE I.T. ACT 1961 DATED 28/02/2006 WERE THAT THE ASSESSEE-COMPANY IS A COM MISSION AGENT AS WELL AS DERIVES INCOME FROM THE PRODUCT OF ISABGOL. THERE WERE TWO ADDITIONS WERE MADE ONE WAS IN RESPECT OF CLAIM OF DEDUCTION U/S.80IA OF THE I.T. ACT 1961 OF RS.10 18 475/-. THE OTHER AD DITION WHICH WAS CONSIDERED FOR THE PURPOSE OF LEVY OF THIS PENALTY WAS UNDER-VALUATION OF CLOSING STOCK BY RS.93 496/-. AS FAR AS THE QUESTI ON OF DISALLOWANCE U/S.80IA OF THE I.T. ACT 1961 WAS CONCERNED IT WA S HELD THAT THE INCOME GENERATED OUT OF THE SALE OF DEPB LICENCE WAS NOT T O BE TREATED AS PART OF THE PROFIT DERIVED FROM THE BUSINESS OF THE UNDERTA KING TO BE ELIGIBLE FOR THE DEDUCTION U/S.80IA OF THE I.T. ACT 1961. RE VENUES STAND WAS THAT FOR THE PURPOSE OF CALCULATION OF THE DEDUCTION U/ S.80IA OF THE I.T. ACT 1961 THE PROFIT ON SALE OF DEPB LICENCE SHOULD HAV E BEEN EXCLUDED. THE FIRST APPELLATE AUTHORITY HAS THEREFORE AFFIR MED THE VIEW OF THE ASSESSING OFFICER. 3. IN RESPECT OF THE OTHER ADDITION I.E. UNDER-VAL UATION OF CLOSING STOCK OF RS.93 496/- THE ASSESSEE HAS SHOWN THE CL OSING STOCK IN RESPECT OF RAW-MATERIALS WORK-IN-PROGRESS AND FINISHED GOO DS. IT WAS EXPLAINED THAT THE RAW-MATERIAL OF ISABGOL WAS TO BE VALUED AT PURCHASE PRICE. BECAUSE OF THE SAID REASON THE ASSESSING OFFICER WA S OF THE VIEW THAT THE ASSESSEE HAS NOT INCLUDED THE DIRECT COST RELATED TO THE PURCHASE OF THE RAW-MATERIAL FOR THE PURPOSE OF VALUATION OF THE C LOSING STOCK OF THE SAID ITA NO.605/AHD/2008(BY REVENUE) & CO NO.81/AHD/2008 ACIT VS. JYOT OVERSEAS PVT.LTD. ASST.YEAR - 2003-04 - 3 - MATERIAL. IN RESPONSE THE ASSESSEES CONTENTION WAS THAT THE VALUATION OF THE RAW-MATERIAL WAS CONSISTENTLY BEING MADE IN THE PAST IN THE SAME MANNER. HOWEVER THE ASSESSING OFFICER WAS NOT CO NVINCED AND ON ENQUIRY HE HAS FOUND THAT THE ASSESSEE HAD INCURRED TRANSPORTATION COST AT THE RATE OF RS.13/- PER QUINTAL. DUE TO THE SAID R EASON HE HAS HELD THAT THE CLOSING STOCK OF THE ISABGOL OF 7192 QUINTAL S HOULD BE LOADED WITH THE TRANSPORT COST OF RS.13/- PER QUINTAL. WITH TH E RESULT THE QUANTUM OF UNDER-VALUATION WAS COMPUTED AT RS.93 496/-. ON CA REFUL EXAMINATION OF THE PENALTY ORDER OUR ATTENTION HAS BEEN DRAWN BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SHRI N.C. AMIN THAT THOUGH AT THE START OF THE PENALTY ORDER THESE TWO ADDITIONS WERE REFERRED BY THE ASSESSING OFFICER HOWEVER WHILE ARRIVING AT THE C ONCLUSION ON LEVY OF THE PENALTY AT THE END OF THE SAID PENALTY ORDER T HERE WAS NO DISCUSSION IN RESPECT OF THE UNDER-VALUATION OF CLOSING STOCK AND THE PENALTY WAS IMPOSED PRIMARILY INVOKING THE EXPLANATION-1 TO SEC TION 271(1)(C) OF THE I.T.ACT 1961 IN RESPECT OF THE DISALLOWANCE OF DED UCTION U/S.80IA OF THE I.T. ACT 1961 PERTAINING TO THE DEPB LICENCE INCOM E. WHEN THE SAID LEVY OF PENALTY WAS CHALLENGED BEFORE THE FIRST APP ELLATE AUTHORITY AS FAR AS THE QUESTION OF VALUATION OF CLOSING STOCK WAS C ONCERNED IT WAS NOTICED BY THE LEARNED CIT(APPEALS) THAT THE SAID VALUE OF THE CLOSING STOCK WAS ALLOWED TO BE SET OFF IN THE NEXT ASSESSM ENT YEAR THEREFORE THE IMPUGNED ADDITION OF UNDER-VALUATION HAD NO TAX EFF ECT. IT HAS ALSO BEEN NOTICED BY THE LEARNED CIT(APPEALS) THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE-COMPANY WERE DULY AUDITED AND CERTIFIED BY A CHARTERED ACCOUNTANT. WITH THIS BRIEF BACKGROUND THE LEARN ED CIT(APPEALS) HAS ITA NO.605/AHD/2008(BY REVENUE) & CO NO.81/AHD/2008 ACIT VS. JYOT OVERSEAS PVT.LTD. ASST.YEAR - 2003-04 - 4 - DIRECTED TO DELETE THE PENALTY VIDE PARAGRAPH NOS.8 & 9; REPRODUCED BELOW:- 8. THE MATTER HAS BEEN GIVEN DUE CONSIDERATION AND I AM AFRAID THE PENALTY IN QUESTION CANNOT BE SUSTAINED. I AGREE WITH THE CONTENTION OF THE AUTHORISED REPRESENTATIVE THA T THE NON- DEDUCTION U/S.80IA WITH RESPECT TO DEPB LICENCE IS A MATTER OF DIFFERENCE OF OPINION. THERE IS NOTHING WHICH THE APPELLANT HAS CONCEALED FROM THE DEPARTMENT. THE CLAIM AND ITS W ORKING ON A PARTICULAR BASIS WAS BEFORE THE DEPARTMENT. DURIN G THE COURSE OF ASSESSMENT THE CLAIM WAS SCRUTINIZED AND NOT FOUND TO BE AS PER THE THINKING OF THE DEPARTMENT AND HENCE THE DISALL OWANCE WAS MADE. IN CONTEXT OF UNSETTLED JUDICIAL POSITION CLEARLY IT CANNOT BE A CASE OF PROVIDING INACCURATE PARTICULARS OF IN COME OR FOR COMPUTATION OF INCOME. 9. THE LEGAL POSITION ON THE ISSUE OF EXPLANATION- 1 TO SECTION 271(1)(C) AT PRESENT REQUIRES THE DEPARTMENT TO AT LEAST PRIMA- FACIE BRING OUT THAT THERE HAS BEEN ON ACT OF CONCE ALMENT OR HOLDING BACK OF INFORMATION OR PROVIDING INACCURATE PARTICULARS. ONCE THAT IS DONE THE BURDEN OF PROOF WILL SHIFT O N THE APPELLANT AND THE ASSESSING OFFICER DOES NOT HAVE TO PROVE TH E MENS-REA. IN THE INSTANT CASE AS DISCUSSED IN THE PRECEDING PAR A WE DO NOT HAVE SUCH A SITUATION EITHER IN THE CONTEXT OF CLAI M U/S.80IA OR FOR THE VALUATION OF STOCK. 4. WE HAVE HARD THE SUBMISSIONS OF BOTH THE SIDES. WE ARE OF THE VIEW THAT BOTH ON FACTUAL AS WELL AS ON LEGAL REASO NS THE PENALTY WAS NOT TO BE LEVIED CONSIDERING THE FACTS AND CIRCUMSTANC ES OF THE CASE THEREFORE WE UPHOLD THE CANCELLATION OF THE PENALT Y AS DONE BY THE LEARNED CIT(APPEALS). THE UNDISPUTED FACT IS THAT THE BOOKS OF ACCOUNTS WERE AUDITED BY THE CHARTERED ACCOUNTANT AND IN THOSE ITA NO.605/AHD/2008(BY REVENUE) & CO NO.81/AHD/2008 ACIT VS. JYOT OVERSEAS PVT.LTD. ASST.YEAR - 2003-04 - 5 - ACCOUNTS ALL THE RELEVANT MATERIAL FACT WAS INFORME D TO THE REVENUE DEPARTMENT. IT IS NOT THE CASE OF THE REVENUE THA T CERTAIN BOGUS OR WRONG INFORMATION WAS FOUND DETECTED IN THE SAID AU DITED BALANCE-SHEET. RATHER THE CONTENTION BEFORE US IS THAT THE ASSES SMENT WAS MADE ON THAT VERY BASIS ON WHICH THE INCOME WAS OFFERED AND LAT ER ON EVEN THE PENALTY WAS IMPOSED PERTAINING TO THOSE MATERIAL FA CTS WHICH WERE ALREADY EITHER INFORMED BY THE ASSESSEE BY FILING T HE RETURN OR DULY FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDI NGS TO THE ASSESSING OFFICER. THEREFORE THE VEHEMENT ARGUMENT IS THAT THE CORRECT PARTICULARS OF THE INCOME AND THE RELEVANT INFORMATION WERE VER Y MUCH IN THE KNOWLEDGE OF THE ASSESSING OFFICER. ONCE THE ASSES SEE HAS FURNISHED THE INCOME-TAX RETURN AND THROUGH WHICH ALL THE RELEVAN T MATERIAL FACTS WERE REVEALED TRULY AND CORRECTLY AS WELL AS SUPPORTED B Y THE AUDITED ACCOUNTS SO THERE WAS NO CONCEALMENT OF FACTS ON THE PART OF THE ASSESSEE. ON THE OTHER HAND THIS ARGUMENT OF THE ASSESSEE ALSO APPE ARS TO BE REASONABLE THAT THE IMPUGNED ADDITION WAS CONTENTIOUS IN NATU RE. IN THE PAST AS WELL THE ISSUE OF PROFIT ON DEPB LICENCE INCOME WAS A SU BJECT OF CONTROVERSY THEREFORE THE PRESENT CASE COULD NOT BE SAID TO BE A CASE OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS BECAUSE MERELY DUE TO A CHANGE IN THE DECISIONS OF THE HON' BLE COURTS THIS CLAIM REMAINED A SUBJECT OF CONTROVERSY. AT BEST IT CAN BE SAID TO BE A CHANGE OF OPINION HENCE OUGHT TO BE OUT OF THE CLUTCHES OF THE PENALTY PROVISIONS. ITA NO.605/AHD/2008(BY REVENUE) & CO NO.81/AHD/2008 ACIT VS. JYOT OVERSEAS PVT.LTD. ASST.YEAR - 2003-04 - 6 - 5. NEXT IS THE QUESTION OF ALLEGED UNDER-VALUATION OF THE STOCK AND THAT TOO WAS NOT WITHIN A CATEGORY OF EITHER FURNIS HING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. TH ROUGH AUDITED REPORT ALL THE DETAILS WERE FURNISHED AND THOSE VERY INFO RMATION WHICH WERE AVAILABLE TO THE ASSESSING OFFICER WERE TAKEN A DIF FERENT SHAPE AND THE ASSESSING OFFICER HAS HELD THAT IT WAS NOTHING BUT OVERHEADS TO BE ADDED FOR THE PURPOSE OF VALUATION OF STOCK. BUT IT WAS NOT THE CASE OF THE REVENUE THAT CERTAIN STOCK WAS FOUND PRESENT WHICH WAS NOT MADE THE PART AND PARCEL OF THE INVENTORY OF THE STOCK. IN OTHER WORDS THE INVENTORY AS MADE BY THE ASSESSEE WAS FOUND CORRECT AND THERE WAS NO INACCURACY AS FAR AS THE INVENTORY MADE BY THE ASSE SSEE WAS CONCERNED. THE QUESTION WAS ONLY IN RESPECT OF INCLUSION THE D IRECT COST IN THE VALUATION OF THE STOCK. HOWEVER THE ASSESSEE WAS ADVISED AND GOVERNED BY THE VALUATION OF A TECHNICAL PERSON I.E. CHARTE RED ACCOUNTANT THEREFORE EVEN THIS PART OF ALLEGED CONCEALMENT SH OULD NOT BE HELD A MALA FIDE OR DELIBERATE REASON FOR FURNISHING OF INACCUR ATE PARTICULARS OF INCOME; RATHER IN THE ALTERNATIVE IT CANNOT BE HEL D TO BE A DELIBERATE CONCEALMENT OF INCOME. THE DECISION OF HON'BLE SU PREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD. REP ORTED AS (2010) 322 ITR 158 (SC) CAN BE SAID TO BE DIRECTLY APPLICABLE ON THE FACTS OF THE CASE BECAUSE THE HON'BLE COURT HAS HELD THAT MERELY BY M AKING A CLAIM WHICH WAS LATER ON FOUND TO BE NOT SUSTAINABLE IN THE EYE S OF LAW ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. THERE IS ONE MORE DECISION OF THE RESPEC TED CO-ORDINATE BENCH G MUMBAI IN THE CASE OF YOGESH R.DESAI VS. ASST.CIT REPORTED ITA NO.605/AHD/2008(BY REVENUE) & CO NO.81/AHD/2008 ACIT VS. JYOT OVERSEAS PVT.LTD. ASST.YEAR - 2003-04 - 7 - AS (2010) 38 DTR (MUMBAI)(TRIB) 101 HAS ALSO BEEN C ITED BEFORE US IN RESPECT OF THE ARGUMENT THAT IF A TAX-PAYER HAS ACT ED UNDER BONA FIDE BELIEF ON THE ADVICE OF A CHARTERED ACCOUNTANT AND FURNISHED THE PARTICULARS ACCORDINGLY THEN SHOULD ALSO NOT BE P ENALIZED FOR CONCEALMENT OF INCOME. RELYING UPON THESE DECISIO NS AND CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE WE FIND NO F ORCE IN THE GROUND OF THE REVENUE. THEREFORE VIEW TAKEN BY THE LEARNED CIT (APPEALS) IS UPHELD. IN THE RESULT REVENUES APPEAL IS DISMISSED. ASSESSEES CROSS OBJECTION NO.81/AHD/2008 (ARISING OUT OF ITA NO.605/AHD/2008) 6. IN THE CROSS OBJECTION THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- (1) IT IS RESPECTFULLY PRAYED TO THE HON'BLE ITAT THAT THE QUANTUM APPEAL IS PENDING BEFORE ITAT AND AS SUCH THIS APPE AL BE DECIDED AFTER THE DECISION OF QUANTUM APPEAL. WITHOUT PREJUDICE (2) THAT THE LEARNED CIT(A) WAS JUSTIFIED IN DELET ING THE PENALTY OF RS.2 40 572/- U/S.271(1) (C) LEVIED BY THE LEARNED A.O. (3) THAT THE LEARNED CIT(A) HAD DECIDED THE APPEAL OF T HE CROSS- OBJECTOR HOLDING IT AS THE ISSUE OF DEDUCTION U/S.8 0IA IS A DEBATABLE AND MOREOVER RETROSPECTIVE AMENDMENT WAS MADE FOR DISALLOWANCE OF THE SAME AND THE MATTER IS PENDING BEFORE HIGHER FORUM AND CONSIDERING THE SAME THE APPEAL OF THE AP PELLANT BE DISMISSED. ITA NO.605/AHD/2008(BY REVENUE) & CO NO.81/AHD/2008 ACIT VS. JYOT OVERSEAS PVT.LTD. ASST.YEAR - 2003-04 - 8 - (4) THAT THE CLAIM OF DEDUCTION U/S.80IA WAS ALLOWED IN PAST AND THEREFO4RE ON FACTS PENALTY ORDER BE CANCELLED BY T HE LEARNED CIT(A) IS WHOLLY JUSTIFIED (5) THAT THE CLAIM REGARDING ALLEGED UNDER VALUATION OF STOCK IS PENDING BEFORE HONOURABLE ITAT IN QUANTUM APPEAL & THIS APPEAL OF THE DEPARTMENT BE DECIDED THEREAFTER WITH OUT PREJUDICE. (6) THAT THE FINDING IS GIVE3N BY LEARNED CIT(A) REGARD ING GRANTING OF SET-FF OF ALLEGED UNDER VALUATION OF CLOSING STO CK IN SUBSEQUENT YEAR & HENCE THERE IS NO CONCEALMENT OF INCOME. (7) ON FACTS & CIRCUMSTANCES OF THE CASE THE APPEAL OF THE DEPARTMENT BE DISMISSED. (8) YOUR CROSS-OBJECTOR CRAVES LEAVE TO ADD ALTER AND AMEND THE CROSS-OBJECTIONS TILL THE APPEAL IS FINALLY HEARD A ND DECIDED. 7. SINCE THE VIEW TAKEN BY THE LEARNED CIT(APPEAL S) HAS ALREADY BEEN AFFIRMED BY US IN THE FOREGOING PARAS WHILE DE CIDING THE APPEAL OF THE REVENUE-SUPRA WE THEREFORE DECLINE TO INTERF ERE WITH THE ORDER OF THE LEARNED CIT(APPEALS). WITH THE RESULT THE CROS S-OBJECTIONS HAVE BECOME REDUNDANT SO DISMISSED. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALSO DISMI SSED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 16/ 07 /2010. SD/- SD/- ( D.C. AGRAWAL) ( MUKUL KR. SH RAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 16 / 07 /2010 T.C. NAIR SR. PS ITA NO.605/AHD/2008(BY REVENUE) & CO NO.81/AHD/2008 ACIT VS. JYOT OVERSEAS PVT.LTD. ASST.YEAR - 2003-04 - 9 - COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-GANDHINAGAR 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD