The DCIT, Central Circle-1(1),, Ahmedabad v. Milestone Organics Ltd.,, Baroda

ITA 1858/AHD/2014 | 2002-2003
Pronouncement Date: 29-11-2017 | Result: Dismissed

Appeal Details

RSA Number 185820514 RSA 2014
Assessee PAN AABCM4265H
Bench Ahmedabad
Appeal Number ITA 1858/AHD/2014
Duration Of Justice 3 year(s) 5 month(s) 9 day(s)
Appellant The DCIT, Central Circle-1(1),, Ahmedabad
Respondent Milestone Organics Ltd.,, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2017
Appeal Filed By Department
Tags 1858-ahd-2014
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 29-11-2017
Assessment Year 2002-2003
Appeal Filed On 19-06-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD .. BEFORE SHRI S.S. GODARA JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA ACCOUNTANT MEMBER ./ I.T.A. NO.1858/AHD/2014 ( / ASSESSMENT YEAR : 2002-03) THE DCIT CENTRAL CIRCLE-1(1) AHMEDABAD / VS. MILESTONE ORGANICS LTD. PLOT NO.106/107 POST EKALBARA TAL.PADRA DIST.BARODA 391 440 $ ./ ./ PAN/GIR NO. : AABCM 4265 H ( $' / APPELLANT ) .. ( ($' / RESPONDENT ) $') / APPELLANT BY : SHRI V.K. SINGH SR.DR ($'*) / RESPONDENT BY : -NONE- + *- / DATE OF HEARING 10/11/2017 ./0*- / DATE OF PRONOUNCEMENT 29 / 11 /2017 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL FILED AT THE INSTANCE OF THE REVENUE IS AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS )-III BARODA [CIT(A) IN SHORT] DATED 05/03/2014 IN THE MATTER OF ASSESSMENT ORDER UNDER S.143(3) OF THE INCOME TAX ACT 1961 (HEREINA FTER REFERRED TO AS 'THE ACT') DATED 17/03/2005 RELEVANT TO ASSESSMENT YEAR (AY) 2002-03. ITA NO.1858/AHD /2014 MILESTONE ORGANICS LTD. VS. DCIT ASST.YEAR 2002-03 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE AS UNDER:- 1) THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING ADDITION OF RS.49 20 892/- MADE ON ACCOUNT OF EXCIS E DUTY NOT INCLUDING IN CLOSING STOCK. 2) THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING ADDITION OF RS.2 52 755/- OUT OF TOTAL ADDITION OF RS.5 05 509/- MADE ON ACCOUNT OF DISALLOWANCE OF LOADING & UNLOAD ING CHARGES. 3. FIRST GROUND CONCERNS ADDITION OF RS.49 20 892/ -MADE BY THE ASSESSING OFFICER (AO) ON ACCOUNT OF EXCISE DUTY NO T INCLUDED IN CLOSING STOCK. FACTS CONCERNING THE AFORESAID ISSUE ARE TH AT IN THE COURSE OF THE SCRUTINY ASSESSMENT FOR THE AY 2002-03 THE AO INTER ALIA OBSERVED THAT THE ASSESSEE HAS OMITTED TO INCLUDE EXCISE DUTY COM PONENT ON FINISHED GOODS IN TERMS OF S.145A OF THE ACT WHILE DETERMINI NG THE VALUE OF CLOSING STOCK AS ON 31/03/2002. IT WAS THUS ALLEG ED BY THE AO THAT THE ASSESSEE-COMPANY HAS NOT INCLUDED THE EXCISE DUTY C OMPONENT OF RS.49 20 892/- FOR THE PURPOSE OF VALUATION OF CLOS ING STOCK OF FINISHED GOODS. IT WAS ACCORDINGLY CONCLUDED THAT THE TAXAB LE INCOME OF THE ASSESSEE-COMPANY HAS BEEN UNDER REPORTED TO THE EXT ENT OF AFORESAID AMOUNT OWING TO UNDERVALUATION OF CLOSING STOCK. T HE ASSESSED INCOME WAS ACCORDINGLY INCREASED BY THE AFORESAID AMOUNT. ITA NO.1858/AHD /2014 MILESTONE ORGANICS LTD. VS. DCIT ASST.YEAR 2002-03 - 3 - 4. IN THE FIRST APPEAL THE CIT(A) DECIDED THE ISSU E IN FAVOUR OF ASSESSEE AND DELETED THE ADDITION SO MADE BY THE AO . THE RELEVANT PARA OF THE ORDER OF THE CIT(A) READ AS UNDER:- 4.3. I HAVE CONSIDERED THE FACTS OF THE CASE AND S UBMISSIONS MADE BY THE AR OF THE APPELLANT. IT HAS BEEN HELD IN THE DE CISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF NARMADA CHEMATUR PETROCHEM LTD THAT UNDER EXCISE LAW AN ASSESSEE INCURS LIABILITY TO PAY EXCISE DUTY ONLY ON BOTH EVENTS TAKING PLACE NAMELY MANUFACTU RING OF EXCISABLE GOODS AND REMOVAL OF EXCISE GOODS AND FOR THE PURP OSE OF IT ACT POSITION IN LAW IS NOT DIFFERENT. FOLLOWING THIS DE CISION THE ADDITION FOR EXCISE ON GOODS WAS FOUND UNTENABLE BY THE JURISDIC TIONAL ITAT AHMEDABAD IN ITS DECISION IN THE CASE OF NITROCHEM INDIA PVT. LTD. IN ITA NO. 86 TO 91/AND/2009 DATED 08/07/2011. SIMILAR DECISION HAS BEEN GIVEN BY ITAT AHMEDABAD IN THE CASE OF SHRI PANKAJ AMBALAL SHAH (SUPRA). HENCE THE AO'S STATEMENT THAT THE EXCISE D UTY IS LEVIABLE AT THE TIME OF MANUFACTURING OF GOODS AS PER EXCISE LAW IS NOT CORRECT. ACCORDINGLY THE ADDITION MADE BY THE AO IS DIRECTE D TO BE DELETED AND THIS GROUND OF APPEAL IS ALLOWED. 5. AGGRIEVED THE REVENUE CHALLENGED THE AFORESAID ACTION OF THE CIT(A) GRANTING RELIEF TOWARDS ADDITIONS MADE UNDER S.145A OF THE ACT. 6. NONE APPEARED ON BEHALF OF ASSESSEE. THE MATTER IS ACCORDINGLY PROCEEDED EX-PARTE . 7. THE LD.DR RELIED UPON THE ORDER OF THE AO. 8. WE FIND THAT THE EXCLUSION OF EXCISE DUTY ON FIN ISHED GOODS WAS EXAMINED BY THE CIT(A) IN LIGHT OF THE DECISION OF THE HONBLE GUJARAT ITA NO.1858/AHD /2014 MILESTONE ORGANICS LTD. VS. DCIT ASST.YEAR 2002-03 - 4 - HIGH COURT IN THE CASE OF NARMADA CHEMATUR PETROCHE M LTD. AND DECISION OF THE COORDINATE BENCH OF TRIBUNAL. THE REVENUE HAS FAILED TO BROUGHT ON RECORD ANY TANGIBLE GROUND FOR NOT FOLLO WING THE VIEW TAKEN BY THE COORDINATE BENCH IN THE LIGHT OF THE DECISIO N OF THE HONBLE GUJARAT HIGH COURT. IN THE CIRCUMSTANCES WE DECLI NE TO INTERFERE WITH THE ORDER OF THE CIT(A). 9. GROUND NO.1 OF REVENUES APPEAL IS DISMISSED. 10. GROUND NO.2 CONCERNS ADDITION OF RS.2 52 755/- MADE ON ACCOUNT OF LOADING AND UNLOADING CHARGES. THE CIT(A) HAS D EALT WITH THE AFORESAID ISSUE AS REPRODUCED HEREUNDER: 8.0. THE FIFTH GROUND OF APPEAL IS AS FOLLOWS: 'THE LD. AO HAS ERRED IN LAW AND IN FACTS IN DISALL OWING AN AMOUNT OF RS.5 05 509/- ON ACCOUNT OF LOADING AND UNLOADING C HARGES. THE DISALLOWANCE OF RS.5 05 509/- BEING CONTRARY TO FAC TS AND LAW IS PRAYED TO BE ALLOWED. 8.1 THE AO HAS STATED IN HIS ORDER AS FOILOWS:- 8. LOADING AND UNLOADING RS.5 05 509/-:- UNDER THE HEAD LABOUR CHARGES THE ASSESSEE HAS CLA IMED AN EXPENSE OF RS.5 05 509/- ON ACCOUNT OF LOAN AND UNLOADING CHAR GES FROM SEPTEMBER 2001 TO MARCH 2002 THE EXPENSE WAS FOU ND TO BE INCURRED IN CASH AND PAID TO THE PARTY M/S MARWADI LOADING UNLOADING AND SHIFTING CONTRACTOR AT & PO MANGER/I TAL-BHOPALGA NJ DIST> JODHPUR (RAJASTHAN). THE LETTER U/S 133(6) OF THE ACT ISSUE D TO THIS PARTY ON THE GIVEN ADDRESS WAS RETURNED UN-SERVED WITH REMARK O F THE POSTAL ITA NO.1858/AHD /2014 MILESTONE ORGANICS LTD. VS. DCIT ASST.YEAR 2002-03 - 5 - AUTHORITY THAT NO SUCH PERSON/FIRM FOUND. THIS FACT WAS INTIMATED TO THE ASSESSES AND VIDE THIS OFFICE LETTER DTD. 11.02.200 5 AND NOTICE U/S 142(1) DTD. 28.03.2005 THE ASSESSEE COMPANY WAS REQUESTED TO SHOW CAUSE AS TO WHY THE CLAIM SHOULD NOT BE DISALLOWED BUT TILL THE DATE OF ORDER NO REPLY/CLARIFICATION WAS RECEIVED FROM THE ASSESSEE COMPANY. THE COPY OF CASH VOUCHER AND DEBIT NOTE SUBMITTED DURING THE CO URSE OF ASSESSMENT PROCEEDINGS SHOWS THAT THE CASH WAS PAID TO ONE SR. JAMLARAM MARWADI WHO HAPPENS TO BE LABOUR CONTRACTOR TO WHOM THE ASSESSEE HAS ALSO PAID LABOUR LOADING AND UNLOADING CHARGES TO CLAIM AN ALLOWABLE EXPENSE US/ 37(1) OF THE ACT ONUS LIES O N THE ASSESSEE COMPANY TO PROVE JUSTIFY AND SUBSTANTIATE THE CLAIM A THE FACTS ARE KNOWN ONLY TO IT. HERE THE ASSESSEE COMPANY HAS FA ILED TO SUBSTANTIATE AND JUSTIFY ITS CLAIM OF EXPENSE OF RS.5 05 509/- O N ACCOUNT OF LOAN AND UNLOADING CHARGES. HENCE THE SAME IS DISALLOWED AN D ACCORDINGLY AN ADDITION OF RS.5 05 509/- IS MADE TO THE INCOME COM PUTED BY THE ASSESSEE COMPANY. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT IS ALSO INITIATED ON THE ISSUE.' 8.2 DURING THE COURSE OF APPELLATE PROCEEDINGS THE AR OF THE APPELLANT HAS MADE THE FOLLOWING SUBMISSIONS:- 4. 'DISALLOWANCE OUT OF LOADING & UNLOADING EXPENSE OF RS.5 05 509/- DURING THE YEAR UNDER CONSIDERATION THE APPELLANT HAS CLAIMED LABOUR CHARGES OF RS.7 72 497/- OUT OF WHICH AN AMOUNT OF RS.5 05 509/- ON ACCOUNT OF LOADING AND UNLOADING AND SHIFTING CHARG ES IS PAID TO SHRI JAMPARAM MARWADI RESIDENT OF VILLAGE MANGER/A TAL BHOPALGUNJ DIST. JODHPUR FOR THE MONTH OF APRIL-2001 TO MARCH 2002. COPY OF LEDGER ACCOUNT OF LABOUR CHARGES PAID DURING THE YE AR UNDER CONSIDERATION IS ENCLOSED AT PAGE NO. 46 - 48 OF TH E PAPER BOOK. SHRI JAMPARAM MARWADI IS A LABOUR CONTRACTOR FOR LO ADING AND UNLOADING AND SHIFTING OF GOODS AT THE FACTORY PREM ISES OF THE APPELLANT FROM SEVERAL YEARS AND IN THE PAST SUCH EXPENSES HA VE BEEN CLAIMED BY THE APPELLANT AND ACCEPTED BY THE DEPARTMENT. THE ID. A.O. HAS DISALLOWED THE AMOUNTS PAID ON THE GROUND THAT THE PAYMENTS TO MR. JAMPARAM MARWADI IS MADE IN CASH. ITA NO.1858/AHD /2014 MILESTONE ORGANICS LTD. VS. DCIT ASST.YEAR 2002-03 - 6 - THE APPELLANT SUBMITS TO YOUR HONOUR THAT MR. JAMPA RAM MARWADI HAS ENGAGED VARIOUS LABOURERS AS PER THE REQUIREMENTS O F THE APPELLANT COMPANY AND THE PAYMENTS TO THEM IS MADE BY CASH TH ROUGH THE CONTRACTOR MR. JAMPARAM MARWADI. THE EVIDENCE OF PA YMENT VOUCHERS TO THE VARIOUS LABOURERS AND THE PAYMENT TO MR. JAM PARAM MARWADI IS ENCLOSED AT PAGE NO. 49 -51 OF THE PAPER BOOK. THE ID. A.O. HAS DISALLOWED THE PAYMENTS AS HE FOUN D THAT THE ENQUIRIES MADE U/S. 133(6) WERE UNRESPONDED. IT IS RESPECTFULLY SUBMITTED THAT THE ID. A.O. FAIL ED TO APPRECIATE THE FACT THAT MR. JAMPARAM MARWADI IS A SMALL CONTRACTOR AND AS ALREADY EXPLAINED ABOVE DUE TO BAD FINANCIAL HEALTH OF THE COMPANY THE WORK WAS SUSPENDED AND THEREFORE THE CONTRACTOR MUST H AVE OBVIOUSLY MOVED AWAY TO SOME OTHER PLACE. THE ID. A.O. OUGHT TO HAVE CONSIDERED THE FACT THAT THE APPELLANT HAS MADE PAYMENT OF LABOUR CHARGES TO MR. JAMPARAM MARW ADI AFTER DEDUCTING THE TAX AT SOURCE WHICH IS DEPOSITED IN C ENTRAL GOVERNMENT ACCOUNT. THE COPY OF PAN CARD AND T.D.S. CERTIFICAT E ISSUED IN FORM NO. 16A IS ENCLOSED AT PAGE NO. 52 -64 OF THE PAPER BOOK. THE APPELLANT SUBMITS TO YOUR HONOUR THAT DURING TH E YEAR THE APPELLANT COMPANY HAS ACHIEVED A TURNOVER OF RS. 11.18 CRORES AGAINST WHICH THE AMOUNT OF LOADING AND UNLOADING CHARGES PAID IS REA SONABLE. MOREOVER NO SUCH EXPENDITURE WAS DISALLOWED IN THE PAST AND THEREFORE THERE IS NO REASON FOR THE ID. A.O. TO D OUBT THE SAME. CONSIDERING THE ABOVE SUBMISSION AND FACTS OF THE A PPELLANT'S CASE THE EXPENSE AS CLAIMED MAY KINDLY BE DIRECTED TO BE ALL OWED' 8.3. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSION MADE BY THE AR OF THE APPELLANT. THE LETTER SENT BY THE AO TO MR. JAM PARAM MARWADI HAD BEEN RETURNED BACK BY THE POSTAL DEPARTMENT AS THIS PERS ON WAS NOT FOUND ON THE ITA NO.1858/AHD /2014 MILESTONE ORGANICS LTD. VS. DCIT ASST.YEAR 2002-03 - 7 - GIVEN ADDRESS. THE APPELLANT HAD ALSO NOT PROVIDED ANY NEW ADDRESS OF THIS PERSON. AT THE SAME TIME THE APPELLANT HAD MADE ID S ON THE PAYMENTS MADE TO THIS PERSON AND DEPOSITED THE SAME IN THE CENTRAL G OVERNMENT ACCOUNT. IT HAS ALSO PROVIDED THE COPY OF THE PAN CARD AND IDS CERT IFICATE ISSUED IN FORM NO. 16A TO THIS PERSON. BUT THE FACT REMAINS THAT THE P AYMENTS HAVE BEEN MADE IN CASH AND WHEREABOUTS OF THIS PERSON TO WHOM PAYMENT S WERE MADE IS NOT AVAILABLE. HENCE THE EXPENSES ARE NOT FULLY VERIFI ABLE. BUT THE APPELLANT'S MUST HAVE INCURRED SOME EXPENSES ON ACCOUNT OF LOADING A ND UNLOADING CHARGES. HENCE TO MEET THE END OF JUSTICE THE AO IS DIRECT ED TO RESTRICT SUCH DISALLOWANCE TO 50% OF THE AMOUNT PAID TO MR. JAMPA RAM MARWADI. THE APPELLANT GETS PART RELIEF ACCORDINGLY. 11. THE LD.DR RELIED UPON THE ORDER OF THE AO BUT F AILED TO CONTROVERT THE FINDINGS OF THE CIT(A). IN THE ABSENCE OF AN Y PERVERSITY POINTED OUT WE DO NOT SEE ANY REASON TO INTERFERE WITH TH E ORDER OF THE CIT(A). 12. GROUND NO.2 OF REVENUES APPEAL IS THEREFORE DI SMISSED. 13. IN THE RESULT REVENUES APPEAL STANDS DISMISSE D. THIS ORDER PRONOUNCED IN OPEN COURT ON 29 / 11 /2017 SD/- SD/- (..) ( ) ( S.S. GODARA ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 29/ 11 /2017 4..+ .+../ T.C. NAIR SR. PS ITA NO.1858/AHD /2014 MILESTONE ORGANICS LTD. VS. DCIT ASST.YEAR 2002-03 - 8 - !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. $' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 567- 8- / CONCERNED CIT 4. 8- ( ) / THE CIT(A)-III BARODA 5. 9:-+67 670 5 / DR ITAT AHMEDABAD 6. < / GUARD FILE. / BY ORDER (9-- //TRUE COPY// / ( DY./ASSTT.REGISTRAR) / ITAT AHMEDABAD 1. DATE OF DICTATION ..29.11.17(DICTATION-PAD 6-PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29.11.17 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.30.11.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.11.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER