M/s. Luthra Dyeing & Printing Mills, Surat v. The DY.CIT., Circle-1,, Surat

ITA 2934/AHD/2009 | 2004-2005
Pronouncement Date: 11-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 293420514 RSA 2009
Assessee PAN AAACK4038Q
Bench Ahmedabad
Appeal Number ITA 2934/AHD/2009
Duration Of Justice 2 year(s) 14 day(s)
Appellant M/s. Luthra Dyeing & Printing Mills, Surat
Respondent The DY.CIT., Circle-1,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 11-11-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 11-11-2011
Date Of Final Hearing 09-11-2011
Next Hearing Date 09-11-2011
Assessment Year 2004-2005
Appeal Filed On 28-10-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE SHRI BHAVNESH SAINI JM AND A. MOHAN ALANKA MONY AM) ITA NO.2934/AHD/2009 A. Y.: 2004-05 LUTHRA DYEING & PRINTING MILLS PROP. LUTHRA CHEM TEX INDUSTRIES PVT. 252/2 GIDC PANDESARA SURAT VS THE D. C. I. T. CIRCLE1 SURAT PA NO. AAACK 4038 Q (APPELLANT) (RESPONDENT) ITA NO.2952/AHD/2009 A.Y.: 2004-05 THE D. C. I. T. CIRCLE1 ROOM NO.108 AAYAKAR BHAVAN MAJURA GATE SURAT VS LUTHRA DYEING & PRINTING MILLS PROP. LUTHRA CHEM TEX INDUSTRIES PVT. 252/2 GIDC PANDESARA SURAT PA NO. AAACK 4038 Q (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI S. N. SOPARKAR AND SHRI D.K.PARIKH AR DEPARTMENT BY SHRI SAMIR TEKRIWAL SR. DR DATE OF HEARING: 09-11-2011 DATE OF PRONOUNCEMENT: 11-11-2011 O R D E R PER BHAVNESH SAINI: BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-I SURAT DA TED 26 TH AUGUST 2009 FOR ASSESSMENT YEAR 2004-05 CHALLENGING THE L EVY AND DELETION OF PENALTY U/S 271 (1) ( C ) OF THE IT ACT. ITA NO.2934 AND 2952/AHD/2009 LUTHAR DYEING & PRINTING MILLS 2 2. BRIEFLY THE FACTS OF THE CASE ARE THAT IN THE P ENALTY ORDER THE AO STATED THAT THE ASSESSMENT WAS COMPLETED U/S 143 (3) OF THE IT ACT ON 26-12-2006 BY MAKING ADDITIONS OF RS.48 65 4 61/- ON ACCOUNT OF FALL IN GROSS PROFIT AND RS.3 33 726/- ON ACCOUN T OF CLOSING STOCK OUT OF WORK IN PROGRESS. THE AO STATED THAT THE PENALT Y PROCEEDING WAS INITIATED IN RESPECT OF BOTH THE ADDITIONS AND THE LEARNED CIT(A) HAS CONFIRMED THESE ADDITIONS VIDE APPELLATE ORDER DATE D 14-08-2007. SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE FOR LE VY OF PENALTY. EXPLANATION OF THE ASSESSEE WAS CALLED FOR. THE AO VIDE SEPARATE ORDER LEVIED PENALTY OF RS.18 65 208/- ON THE ENTIR E ADDITION OF RS.51 99 187/-. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT ADDITION ON ACCOUNT OF GROSS PROFIT WAS MADE ON EST IMATE BASIS FOR FALL IN GROSS PROFIT AND AS SUCH IT WOULD NOT AMOUN T TO CONCEALMENT OR FILING OF INACCURATE PARTICULARS. THE ASSESSEE RELI ED UPON THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE C ASE OF HARIGOPAL SINGH VS CIT 258 ITR 85 AND CIT VS DHILLON RICE MI LLS 256 ITR 447. WITH REGARD TO THE ADDITION TO CLOSING STOCK T HE ASSESSEE MADE SUBMISSION THAT THE AO HAS NOT APPRECIATED THE FACT S OF THE CASE THEREFORE PENALTY SHOULD NOT BE IMPOSED. IT WAS AL SO SUBMITTED THAT ADDITION ON ACCOUNT OF WORK IN PROGRESS IS MADE TO THE CLOSING STOCK WHICH WAS ON ACCOUNT OF DIFFERENCE OF OPINION ON ES TIMATE BASIS AND AS SUCH PENALTY IS NOT LEVIABLE. THE LEARNED CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE WITH REGARD TO PENALTY O N GROSS PROFIT ADDITION AND HELD THAT THERE IS NOTHING ON RECORD T O SUGGEST THAT ESTIMATED ADDITION ON ACCOUNT OF GROSS PROFIT WOULD MAKE OUT A CASE OF FURNISHING OF INACCURATE PARTICULARS OR CONCEALM ENT OF INCOME. PENALTY IN RESPECT OF GROSS PROFIT ADDITION WAS DEL ETED. HOWEVER WITH ITA NO.2934 AND 2952/AHD/2009 LUTHAR DYEING & PRINTING MILLS 3 REGARD TO WORK IN PROGRESS ADDITION PENALTY WAS CO NFIRMED. THE ASSESSEE IS IN APPEAL FOR CONFIRMATION OF PENALTY O N ACCOUNT OF ADDITION MADE IN WORK IN PROGRESS AND THE REVENUE I S IN APPEAL FOR DELETION OF PENALTY ON ACCOUNT OF GROSS PROFIT ADDI TION. 3. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTS ET SUBMITTED THAT THE QUANTUM ADDITIONS WERE CHALLENGED BEFORE T HE TRIBUNAL AND BOTH THE CROSS APPEALS OF THE REVENUE AND THE ASSES SEE FOR ASSESSMENT YEAR UNDER APPEAL I.E. 2004-05 HAVE BEEN SUBJECT MATTER IN APPEAL IN ITA NOS.3875 AND 3880/AHD/2007. BOTH T HE APPEALS WERE DECIDED VIDE ORDER DATED 29-04-2011. COPY OF T HE SAME IS PLACED ON RECORD. HE HAS SUBMITTED THAT IN THE SAME ORDER THE ADDITION ON ACCOUNT OF WORK IN PROGRESS WAS CONFIRM ED IN THE PRECEDING ASSESSMENT YEAR 2003-04 AND IT WOULD RESU LT IN ENHANCEMENT OF THE VALUATION OF THE OPENING STOCK I N THE ASSESSMENT YEAR IN APPEAL I.E. 2004-05. HE HAS SUBMITTED THAT IN ASSESSMENT YEAR 2003-04 ADDITION OF RS.46 85 104/- WAS MADE ON ACCOUNT OF UNDER VALUATION OF WORK IN PROGRESS AND AS SUCH THE BALANCE ADDITION WOULD REMAIN IN THE ASSESSMENT YEAR UNDER APPEAL AF TER GIVING ADJUSTMENT TO THE PROFIT AND THE OPENING STOCK IN A SUM OF RS.1 80 357/-. THEREFORE ESTIMATED ADDITION ON GRO SS PROFIT WOULD NOT ATTRACT PENALTY. HE HAS RELIED UPON THE ORDER OF IT AT AHMEDABAD BENCH IN THE CASE OF SUDESH KHANNA VS ACIT 98 TTJ 106. COPY OF THE ORDER IS PLACED ON RECORD IN WHICH IT WAS HELD THAT ADDITION CONFIRMED BY THE TRIBUNAL ON ACCOUNT OF FALL IN GRO SS PROFIT IT CANNOT BE SAID THAT THE ASSESSEE CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS. NO PENALTY WAS RE QUIRED TO BE ITA NO.2934 AND 2952/AHD/2009 LUTHAR DYEING & PRINTING MILLS 4 IMPOSED U/S 271 (1) (C) OF THE IT ACT. HE HAS FURTH ER SUBMITTED THAT FOR WORK IN PROGRESS ADDITION HAS BEEN DELETED BY THE TRIBUNAL IN PARA 15 OF THE ORDER DATED 29-04-2011. 4. ON THE OTHER HAND THE LEARNED DR RELIED UPON TH E ORDER OF THE AO AND SUBMITTED THAT PENALTY WAS RIGHTLY IMPOSED I N THE MATTER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE FINDINGS OF THE AUTHORITIES BELOW. THE QUANTUM APPE ALS OF THE ASSESSEE AND THE REVENUE FOR ASSESSMENT YEAR 2004-0 5 HAVE BEEN DECIDED BY THE TRIBUNAL VIDE ORDER DATED 29-04-2011 (SUPRA) IN WHICH IN PARA 14 AND 15 THE TRIBUNAL HELD AS UNDER: 14. ON CONSIDERATION OF THE SUBMISSIONS OF THE PART IES WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). WITH REGARD TO THE DEPARTMEN TAL APPEAL THE LEARNED CIT(A) NOTED THAT NO FULL CREDI T OF CLOSING STOCK OF WORK IN PROGRESS FOR THE PRECEDING ASSESSMENT YEAR 2003-04 HAS BEEN GIVEN OUT OF RS.46 85 104/- FOR WHICH ADDITION IS NOW CONFIRMED IN ASSESSMENT YEAR 2003-04. IT WAS SUBMITTED BEFORE TH E LEARNED CIT(A) THAT SUCH BENEFIT SHALL HAVE TO BE G IVEN IN THE SUBSEQUENT YEAR. THE LEARNED CIT(A) ACCEPTED TH E CONTENTION OF THE ASSESSEE AND ALLOWED THE APPEAL O F THE ASSESSEE. IT WOULD THEREFORE SHOW THAT ONCE THE A DDITION ON ACCOUNT OF WORK IN PROGRESS IS MADE IN ASSESSMEN T YEAR 2003-04 IT WOULD ENHANCE THE VALUATION OF THE OPENING STOCK IN THE NEXT YEAR I.E. ASSESSMENT YEAR 2004- 05. THE AUTHORITIES BELOW SHALL HAVE TO GIVE EFFECT TO THE SAME. THEREFORE THERE IS NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) IN GIVING RELIEF TO THE ASSESSEE. TH E DEPARTMENTAL APPEAL IS ACCORDINGLY DISMISSED. 15. IN SO FAR AS THE APPEAL OF THE ASSESSEE IS CONCERNED WE FIND THAT FACTS ARE SAME AS IS CONSID ERED ITA NO.2934 AND 2952/AHD/2009 LUTHAR DYEING & PRINTING MILLS 5 IN ASSESSMENT YEAR 2003-04. THERE IS A FALL IN GROS S PROFIT RATE IN THE ASSESSMENT YEAR UNDER APPEAL ALSO AND T HE ADDITION ON ACCOUNT OF WORK IN PROGRESS IS ALSO MAD E. THE LEARNED CIT(A) FOLLOWING THE ORDER FOR ASSESSMENT Y EAR 2003-04 DISMISSED THE APPEAL OF THE ASSESSEE. SINCE THE ISSUES ARE SAME AS IS CONSIDERED IN ASSESSMENT YEAR 2003-04 BY FOLLOWING THE SAME DECISIONS FOR THE SA ME YEAR WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) IN REJECTING THE BOOK RESULTS AND CO NFIRM BOTH THE ADDITIONS. HOWEVER IN THIS ASSESSMENT YEA R ADDITION ON ACCOUNT OF GROSS PROFIT IS HIGHER AS CO MPARED TO WORK IN PROGRESS; THEREFORE NO SEPARATE ADDITIO N ON ACCOUNT OF WORK IN PROGRESS SHALL BE MADE BECAUSE T HE GROSS PROFIT ADDITION WOULD TAKE CARE OF THE SAME. IN PRINCIPLE SEPARATE ADDITION OF RS.3 33 726/- IS DE LETED. IT WOULD MEAN THAT ADDITION ON ACCOUNT OF GROSS PROFIT OF RS.48 65 461/- IS CONFIRMED. IN THE RESULT DEPARTM ENTAL APPEAL IS DISMISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 6. IN THE SAME ORDER THE TRIBUNAL DECIDED THE APPEA LS FOR ASSESSMENT YEAR 2003-04 AND CONFIRMED THE ADDITION ON ACCOUNT OF WORK IN PROGRESS IN A SUM OF RS.46 85 104/-. THE FI NDINGS IN ASSESSMENT YEAR 2004-05 AS REPRODUCED ABOVE WOULD S HOW THAT THE ADDITION MADE IN THE ASSESSMENT YEAR 2003-04 WOULD ENHANCE THE VALUATION OF OPENING STOCK IN THE NEXT YEAR I.E. AS SESSMENT YEAR UNDER APPEAL I.E. 2004-05. IN ASSESSMENT YEAR 2003- 04 THE ADDITION ON ACCOUNT OF UNDER VALUATION OF WORK IN PROGRESS I S MADE IN A SUM OF RS.46 85 104/- AND IF THE SAME AMOUNT IS ADDED TO T HE OPENING STOCK THE GROSS PROFIT ADDITION WOULD BE REDUCED TO RS.1 80 357/- IN THE ASSESSMENT YEAR UNDER APPEAL I.E. 2004-05. THUS ON LY ESTIMATED ADDITION IS LEFT FOR LEVY OF PENALTY AGAINST THE AS SESSEE. IT IS WELL SETTLED LAW THAT ADDITION ON ACCOUNT OF ESTIMATED I NCOME FOR FALL IN ITA NO.2934 AND 2952/AHD/2009 LUTHAR DYEING & PRINTING MILLS 6 GROSS PROFIT RATE WOULD NOT ATTRACT LEVY OF PENALTY . THE DECISION CITED OF THE HONBLE PUNJAB & HARYANA HIGH COURT REFERRED TO ABOVE SQUARELY APPLY TO THE CASE OF THE ASSESSEE. THEREFO RE THE LEARNED CIT(A) WAS JUSTIFIED IN CANCELING THE PENALTY ON AC COUNT OF GROSS PROFIT ADDITION. IN THE QUANTUM ORDER DATED 29-04-2 011 SEPARATE ADDITION OF WORK IN PROGRESS IN A SUM OF RS.3 33 72 6/- HAS BEEN DELETED. THEREFORE NO PENALTY COULD BE IMPOSED AGA INST THE ASSESSEE. CONSIDERING THE ABOVE DISCUSSIONS WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) IN LEVYING PENALTY ON THE ADD ITION OF WORK IN PROGRESS. HOWEVER THE ORDER OF THE LEARNED CIT(A) IS CONFIRMED FOR CANCELING THE PENALTY ON ACCOUNT OF GROSS PROFIT AD DITION. 7. IN THE RESULT THE DEPARTMENTAL APPEAL IS DISMIS SED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER 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 D Y. REGISTRAR ITAT AHMEDABAD