Sodium Metal Pvt.Ltd., Baroda v. The ACIT.,Circle-4,, Baroda

ITA 2263/AHD/2011 | 2004-2005
Pronouncement Date: 30-04-2015 | Result: Allowed

Appeal Details

RSA Number 226320514 RSA 2011
Assessee PAN AACCS5499J
Bench Ahmedabad
Appeal Number ITA 2263/AHD/2011
Duration Of Justice 3 year(s) 7 month(s) 23 day(s)
Appellant Sodium Metal Pvt.Ltd., Baroda
Respondent The ACIT.,Circle-4,, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2015
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 30-04-2015
Date Of Final Hearing 26-03-2015
Next Hearing Date 26-03-2015
Assessment Year 2004-2005
Appeal Filed On 07-09-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD .. BEFORE SHRI N.S. SAINI ACCOUNTANT MEMBER AND SHRI KUL BHARAT JUDICIAL MEMBER ./ I.T.A. NO.2263/AHD/2011 ( / ASSESSMENT YEAR : 2004-05) SODIUM METAL PRIVATE LIMITED 21 GIDC ESTATE NANDESARI BARODA (GUJ.) 391 340 / VS. THE ACIT CIRCLE-4 BARODA ./ ./ PAN/GIR NO. : AACCS 5499 J ( # / APPELLANT ) .. ( $% # / RESPONDENT ) #& / APPELLANT BY : SHRI S.N.SOPARKAR AR $% #'& / RESPONDENT BY : SHRI NIMESH YADAV SR.DR ()'* / DATE OF HEARING 26/03/2015 + -.'* / DATE OF PRONOUNCEMENT 30/04/2015 / O R D E R PER SHRI KUL BHARAT JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-III BARODA (CIT(A) IN SHORT) DATED 11/07/2011 PERTAINING TO ASSESSMENT Y EAR (AY) 2004-05. THE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- (1) THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS I N CONFIRMING THE LEVY PENALTY U/S.271(1)(C) OF THE ACT IN THE SUM OF RS.16 79 452/- ITA NO.2263/AHD /2011 SODIUM METAL PRIVATE LIMITED VS. ACIT ASST.YEAR 2004-05 - 2 - WHICH IS WHOLLY UNSUSTAINABLE IN LAW AND ON FACTS A ND AS SUCH THE APPELLANT COULD 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 18.11.2006 THEREBY THE ASSESSING OFFICER (AO IN SHORT) DISALLO WED THE CLAIM OF BAD DEBTS AMOUNTING TO RS.46 81 402/- AND ALSO MADE DISALLOWANCE ON THE BASIS OF UNDERVALUATION OF CLOS ING STOCK OF RS.13 33 754/- AND THE AO INITIATED THE PENALTY PRO CEEDINGS U/S.271(1)(C) OF THE ACT. SUBSEQUENTLY THE AO LEVIED A PENALTY OF RS.16 79 452/- ON THE ADDITION OF RS.46 81 402/-. AGAINST THIS THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A) WHO AFTER CONSIDERING THE SUB MISSIONS DISMISSED THE APPEAL. 3. GROUND NOS.1 & 2 ARE INTER-CONNECTED AND THEREF ORE THE SAME ARE DECIDED TOGETHER. THE LD.SR.COUNSEL FOR THE ASSESS EE SUBMITTED THAT ADMITTEDLY THE ASSESSEE HAD MADE A CLAIM OF BAD DEB T WHICH WAS DISALLOWED BY THE AO. HE SUBMITTED THAT THE ISSUE OF BAD DEBTS IS NOW COVERED BY THE JUDGEMENT OF HONBLE APEX COURT REND ERED IN THE CASE OF TRF LTD. VS. CIT REPORTED AT (2010) 323 ITR 397 (SC ). HE FURTHER SUBMITTED THAT MERELY A CLAIM HAS BEEN REJECTED WOU LD NOT ATTRACT THE PENALTY PROCEEDINGS. IN SUPPORT THIS CONTENTION HE RELIED ON THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CAS E OF CIT VS. ITA NO.2263/AHD /2011 SODIUM METAL PRIVATE LIMITED VS. ACIT ASST.YEAR 2004-05 - 3 - RELIANCE PETROPRODUCTS PVT.LTD. REPORTED AT (2010) 322 ITR 158 (SC). HE FURTHER SUBMITTED THAT THE UNDISPUTED FACTS REMA INS THAT THE AO HAD MADE DISALLOWANCE OF BAD DEBT ON THE BASIS THAT THE ADVANCE OF RS.46 81 202/- WAS NOT TAKEN INTO ACCOUNT WHILE COM PUTING THE INCOME OF ANY PREVIOUS YEAR. HE SUBMITTED THAT IT IS NOT THE CASE WHERE THE AO DOUBTED THE BAD DEBT. THE LD.COUNSEL FOR THE ASSES SEE ALSO PLACED RELIANCE ON THE DECISION OF THE COORDINATE BENCH (I TAT B BENCH AHMEDABAD) RENDERED IN THE CASE OF M/S.LUTHRA DYEIN G & PRINTING MILLS VS. DCIT IN ITA NO.2114/AHD/2011 FOR AY 2005-06 DA TED 13/03/2015. 3.1. THE LD.SR.DR SUPPORTED THE ORDERS OF THE AUTHO RITIES BELOW AND SUBMITTED THAT THERE IS NO ILLEGALITY IN THE ORDER PASSED BY THE LD.CIT(A) IN SUSTAINING THE PENALTY. HE SUBMITTED THAT THE AS SESSEE HAS NOT CHALLENGED THE DISALLOWANCE IN FURTHER APPEAL. THI S FACT GOES TO SHOW THAT THE CLAIM OF THE ASSESSEE IS NOT ALLOWABLE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE AO MADE DISALLOWANCE OF THE BAD DE BT ON THE BASIS THAT THE ADVANCE OF RS.46 81 202/- GIVEN TO NEW PHARM IN DUSTRIES PVT.LTD. WRITTEN OFF DURING THE YEAR UNDER CONSIDERATION WAS NOT TAKEN INTO ACCOUNT IN COMPUTING THE INCOME OF THE ASSESSEE OF ANY PREVIOUS YEAR. THE AO WAS OF THE VIEW THAT SINCE THE AMOUNT HAD NO T BEEN TAKEN INTO ITA NO.2263/AHD /2011 SODIUM METAL PRIVATE LIMITED VS. ACIT ASST.YEAR 2004-05 - 4 - ACCOUNT BY THE ASSESSEE IN ANY OF THE EARLIER YEARS THE ASSESSEE COULD NOT WRITE OFF IT AS BAD DEBT. HOWEVER THE CONTENTION OF THE ASSESSEE IS THAT THE ORDER PASSED BY THE LD.CIT(A) IS WITHOUT APPREC IATING THE FACTS OF THE CASE THAT THE PENALTY U/S.271(1)(C) WAS IMPOSED WIT H REGARD TO FURNISHING OF INACCURATE PARTICULARS OF INCOME QUA CLAIM OF BA D DEBT WRITTEN OFF WHICH IS A DEBATABLE ISSUE. IT WAS CONTENDED BEFO RE THE AO THAT NO PENALTY CAN BE IMPOSED SINCE THE ISSUE IS DEBATABLE AND THE ISSUE IS ALSO A LEGAL ONE I.E. WHETHER THE SAME IS ALLOWABLE U/S.36 OF THE ACT OR U/S.37 OF THE ACT. THE LD.COUNSEL FOR THE ASSESSEE HAS PLAC ED RELIANCE ON THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF C IT VS. RELIANCE PETROPRODUCTS PVT.LTD. REPORTED AT (2010) 322 ITR 1 58 (SC) WHEREIN THE HONBLE APEX COURT HAS HELD AS UNDER:- 9. WE ARE NOT CONCERNED IN THE PRESENT CASE WITH THE MENS REA. HOWEVER WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE AS A MATTER OF FACT THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS . IN WEBSTER'S DICTIONARY THE WORD 'INACCURATE' HAS BEEN DEFINED AS : 'NOT ACCURATE NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT COPY OR TRAN SCRIPT.' WE HAVE ALREADY SEEN THE MEANING OF THE WORD 'PARTI CULARS' IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN WHICH ARE NOT ACCURATE NOT EXACT OR CORRECT NOT ACCORDING TO TRUTH OR ERR ONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE THERE IS NO F INDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND T O BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER S. 271(1)(C) OF THE A CT. A MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSE LF WILL NOT AMOUNT TO ITA NO.2263/AHD /2011 SODIUM METAL PRIVATE LIMITED VS. ACIT ASST.YEAR 2004-05 - 5 - FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. 4.1. IN THE INSTANT CASE THE ASSESSEE HAD MADE CLA IM OF BAD DEBT WHICH IN THE OPINION OF THE AO WAS NOT ALLOWABLE AS THE A SSESSEE HAS NOT TAKEN INTO ACCOUNT THE SUM IN COMPUTING THE INCOME OF THE ASSESSEE IN PREVIOUS YEAR. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD D ISCLOSED ALL MATERIAL PARTICULAR RELATED TO BAD DEBT. WE FIND FORCE IN T HE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE THAT IN THE CASE IN HAN D THE ASSESSEE HAD DISCLOSED ALL MATERIALS PARTICULARLY THE CLAIM REGA RDING ALLOWABILITY OF BAD DEBT WAS REJECTED BY THE AO AND THIS SHOULD NOT BE ONLY GROUND FOR IMPOSITION OF PENALTY IN THE LIGHT OF THE JUDGEMENT OF THE HONBLE SUPREME COURT RENDERED IN THE CASE OF CIT VS. RELIA NCE PETROPRODUCTS PVT.LTD.(SUPRA). THEREFORE WE ARE OF THE CONSIDERE D VIEW THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE PENAL TY UNDER THE PECULIAR FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. WE R ESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN TH E CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD.(SUPRA) SET ASIDE T HE ORDER OF THE LD.CIT(A) AND DIRECT THE AO TO DELETE PENALTY. THU S GROUND NOS.1 & 2 OF ASSESSEES APPEAL ARE ALLOWED. 5. GROUND NO.3 IS GENERAL IN NATURE WHICH REQUIRE N O INDEPENDENT ADJUDICATION. ITA NO.2263/AHD /2011 SODIUM METAL PRIVATE LIMITED VS. ACIT ASST.YEAR 2004-05 - 6 - 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON THURSDAY THE 30 TH DAY OF APRIL 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30/04/2015 2*.. (.../ T.C. NAIR SR. PS !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $% # / THE RESPONDENT. 3. 345 6 / CONCERNED CIT 4. 6 ( ) / THE CIT(A)-III BARODA 5. 7(8$45 *45. 3 / DR ITAT AHMEDABAD 6. 8:;<) / GUARD FILE. ! / BY ORDER %7$ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) / ITAT AHMEDABAD 1. DATE OF DICTATION .. 74.15 (DICTATION-PAD 9+PA GES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..15.4.15 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.30.4.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.4.15 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