The DCIT, Circle-1,, Surat v. M/s. Ganesh Laxmi Processors (P) Ltd.,, Surat

ITA 3056/AHD/2009 | 2004-2005
Pronouncement Date: 30-03-2012 | Result: Partly Allowed

Appeal Details

RSA Number 305620514 RSA 2009
Assessee PAN AAACG8817A
Bench Ahmedabad
Appeal Number ITA 3056/AHD/2009
Duration Of Justice 2 year(s) 4 month(s) 16 day(s)
Appellant The DCIT, Circle-1,, Surat
Respondent M/s. Ganesh Laxmi Processors (P) Ltd.,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 30-03-2012
Date Of Final Hearing 07-03-2012
Next Hearing Date 07-03-2012
Assessment Year 2004-2005
Appeal Filed On 13-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI A.K.GARODIA ACCOUNTANT MEMBER AND SHRI KUL BHARAT JUDICIAL MEMBER ITA NO.3056/AHD/2009 ASSESSMENT YEAR:2004-05 DY. COMMISSIONER OF INCOME-TAX CIURCLE-1 ROOM NO.108 AAYAKAR BHAVAN MAJURA GATE SURAT V/S . M/S GANESH LAXMI PROCESSORS PVT. LTD. 176-P/B/H AJANTA CINEMA KADODARA CHAR RASTA SURAT PAN NO.AAACG8817A (APPELLANT) .. (RESPONDENT) /BY APPELLANT SHRI VNOD TANWANI SR-DR /BY RESPONDENT WRITTEN SUBMISSION /DATE OF HEARING 07-03-2012 /DATE OF PRONOUNCEMENT 30-03-2012 O R D E R PER KUL BHARAT JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE OR DER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-I SURAT IN APPEAL NO. CAS-I/8 1/09-10 DATED 14-09-2009 FOR THE ASSESSMENT YEAR 2004-05. 2. IN THIS CASE ASSESSMENT WAS FINALIZED U/S. 143(3 ) OF THE INCOME-TAX ACT 1961 FOLLOWING ADDITIONS TO THE TOTAL INCOME OF THE ASSE SSEE:- I) CLOSING STOCK OF WIP RS.3 01 570 II) DISALLOWANCE OF EXCESS DEPRECIATION RS.5 47 570 III) EXPENDITURE OF CAPITAL NATURE RS. 10 950 IV) DISALLOWANCE OF PENALTY EXPENSES RS. 75 000 ITA NO.3056/AHD/2009 A.Y. 2004-05 DCIT CIR-1 SRT V. M/S GANESH LAXMI PROCESSORS P. LTD. PAGE 2 THE PENALTY PROCEEDINGS WERE INITIATED SEPARATELY A ND PENALTY LEVIED ON CLOSING STOCK OF WIP IN EXCESS DEPRECIATION OF TUF SCHEME A ND PARWANA PENALTY EXPENSES THE ASSESSEE FEELING AGGRIEVED BY THIS ORDER APPRO ACHED BEFORE LD. CIT(A) WHO PARTIALLY GAVE RELIEF TO THE ASSESSEE TH EREBY DELETING PENALTY LEVIED IN RESPECT OF CLOSING STOCK OF WIP OF RS.3 01 570/- AN D DEPRECIATION OF TUF SCHEME OF RS.5 47 570/-. 4. THE REVENUE FEELING AGGRIEVED BY THIS ORDER OF L D. CIT(A) REVENUE FILED PRESENT APPEAL BEFORE US RAISING THE FOLLOWING GRO UNDS OF APPEAL:- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY LEVIED U/S . 271(1)(C) OF THE ACT OF RS.3 35 464 ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME IN RESPECT OF ADDITION MADE BY AO ON ACCOUNT OF CLOS ING STOCK OF WORK IN PROGRESS AND DISALLOWANCE OF EXCESS CLAIM OF DEPR ECIATION. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 5. AT THE TIME OF HEARING LD. SR-DR SUBMITTED THAT THE IMPUGNED ORDER OF LD. CIT(A) IS ERRONEOUS IN VIEW OF THE FACT THAT JUDGM ENT AS RELIED BY LD. CIT(A) IS DISTINGUISHABLE IN THE FACTS OF THE PRESENT CASE. I T IS CONTENDED THAT IN THE JUDGMENT RELIED UPON BY LD. CIT(A) THE ASSESSEE HAD FILED A REVISED RETURN SUCH IS NOT THE CASE HERE. 6. NONE APPEARED ON BEHALF OF THE ASSESSEE HOWEVER WRITTEN SUBMISSIONS ARE ON RECORD. 7. WE HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD . IT IS TRANSPIRED FROM THE RECORDS THAT LD. CIT(A) HAS RELIED UPON THE JUDGMEN T PASSED BY HONBLE JURISDICTIONAL HIGH COURT IN THE MATTER OF CIT V. J.H. PARABIA (TRANSPORT) P. LTD. (2006) 284 ITR 361 (GUJ). WE HAVE PERUSED THE JUDGM ENT AS RELIED BY THE LD. CIT(A) IN THE MATTER OF J.H. PARABIA (TRANSPORT) P LTD. (SUPRA) THE RELEVANT CONTENTS ARE REPRODUCED AS UNDER:- 7. AS CAN BE SEEN FROM THE QUESTION RAISED AND REF ERRED THE ENTIRE SUBMISSION OF THE REVENUE AND THE BASIS OF LEVY OF PENALTY GETS SUMMARIZED IN THE FRAME OF THE QUESTION. HOWEVER IN THE LIGHT OF THE FACTS FOUND BY THE ITA NO.3056/AHD/2009 A.Y. 2004-05 DCIT CIR-1 SRT V. M/S GANESH LAXMI PROCESSORS P. LTD. PAGE 3 TRIBUNAL AND IN THE ABSENCE OF ANY EVIDENCE TO SHO W THAT SUCH FINDINGS ARE INCORRECT IN ANY MANNER WHATSOEVER IT IS NOT POSSI BLE TO ACCEPT THE CONTENTION RAISED ON BEHALF OF THE APPLICANT REVENUE. IT IS NO T POSSIBLE TO STATE THAT THE METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE WAS SU CH THAT IT DID NOT REFLECT THE POSITION CORRECTLY CONSIDERING THE FACT THAT FO R THREE YEARS THE SAME HAD BEEN ACCEPTED BY THE DEPARTMENT. ONCE THIS WAS THE POSITION THE BONA FIDES OF THE ASSESSEE COULD NOT BE DOUBTED AND THE TRIBU NAL WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE WAS ENTITLED TO HOLD A BO NA FIDE BELIEF THAT THE UNCERTIFIED WORK-IN-PROGRESS AS NOT LIABLE TO BE TR EATED AS A TAXABLE ITEM SO AS TO BE VISITED WITH PENALTY FOR CONCEALMENT THEREOF. THE FINDINGS OF LD. CIT(A) IS REPRODUCE BELOW FOR T HE SAKE OF CLARITY:- 4.1 I HAVE CONSIDERED THE SUBMISSION MADE BY THE A PPELLANT AND THE OBSERVATION OF THE A.O. I AGREE WITH THE APPELLANT THAT THE DISALLOWANCE UNDER TUF SCHEME CAN BE A BONA FIDE MISTAKE AS THE MACHIN ERY WERE QUALIFIED FOR THE PURPOSE OF HIGHER DEPRECIATION. IT IS ONLY IN Q UESTION THAT THE ASSESSEE HAD PURCHASED THIS MACHINERY WITHOUT TAKING LOAN AND T HEREFORE THE ASSESSEE WAS UNDER BONA FIDE BELIEF THAT THE MACHINERY IS EL IGIBLE FOR SOME HIGHER DEPRECIATION. THE DISALLOWANCE WAS MADE ON TECHNICA L GROUND AND IT CANNOT BE STATED THAT IT HAS FURNISHED INACCURATE PARTICUL ARS OF INCOME. HENCE PENALTY IN RESPECT OF DISALLOWANCE ON DEPRECIATION IS DELETED. WITH RESPECT TO ADDITION ON ACCOUNT OF CLOSING STOCK OF WORK-IN-PR OGRESS THE ADDITION HAS BEEN MADE ON ESTIMATE BASIS AND HENCE NO PENALTY CA N BE MADE IN VIEW OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN T HE CASE OF J.H. PARABIA (TRANSPORT) P. LTD. (284-ITR-361). WITH RESPECT TO THE DISALLOWANCE OF PENALTY AND OCTROI EXPENSES IT IS CLEAR THAT THE OCTROI EX PENDITURE IS NOTHING BUT CAPITAL EXPENDITURE AND AS THE OCTROI CHARGES WERE FOR PALIO CAR. PENALTY EXPENSES ARE ALSO NOT ALLOWABLE. HENCE THE ASSESSE E HAS FURNISHED INACCURATE PARTICULARS AND PENALTY LEVIED IN RESPEC T OF BOTH THESE ADDITIONS ARE CONFIRMED. ADMITTEDLY IN THE PRESENT CASE ALSO THE ASSESSEE H AS BEEN ADOPTING SAME ACCOUNTING METHOD AS IN THE EARLIER YEARS. LD. DR H AS RELIED UPON THE JUDGMENT PASSED BY HONBLE DELHI HIGH COURT IN THE MATTER OF CIT V. ESCORTS FINANCE LTD. (2010) 188 TAXMAN 87 (DEL) AND IN THE MATTER OF CIT V. ZOOM COMMUNICATION (P) LTD. (2010) 191 TAXMAN 179 (DEL). WE FIND THAT THE FACT S IN THE JUDGMENTS AS RELIED BY LD. DR ARE DIFFERENT FROM THE FACTS OF THE PRESE NT CASE AND THE RATIO LAID IN THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE MATTER OF J.H. PARABIA (TRANSPORT) P LTD. (SUPRA) APPLIES ON THE FACTS OF THE PRESENT CASE. AS REGARDS THE EXCESS CLAIM OF DEPRECIATION UNDER TUF SCHEME LD. C IT(A) HAS ARRIVED AT CONCLUSION THAT THE LAPSE IS BONA FIDE ON ACCOUNT O F THE FACT THAT THE ISSUE IS TECHNICAL. WE DO NOT AGREE WITH VIEW EXPRESSED BY L D. CIT(A) AS THE ASSESSEE BEING A COMPANY IS ASSISTED BY THE PROFESSIONALS AND MORE PARTICULARLY IT IS SETTLED ITA NO.3056/AHD/2009 A.Y. 2004-05 DCIT CIR-1 SRT V. M/S GANESH LAXMI PROCESSORS P. LTD. PAGE 4 PRINCIPLE OF LAW THAT IGNORANCE OF LAW IS NOT A PLA USIBLE EXPLANATION. THEREFORE WE REVERSE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND C ONFIRM THE PENALTY LEVIED ON DISALLOWANCE OF EXCESS DEPRECIATION CLAIMED UNDER T UF SCHEME. 8. IN THE RESULT REVENUES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (A.K.GARODIA) (KUL BHARAT) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD *DKP - 30/03/2012 '() * + + + + --. --. --. --. /. /. /. /. / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. )-1 + +2 / CONCERNED CIT 4. + +2- / CIT (A) 5. .56 ---1 + -1 '() / DR ITAT AHMEDABAD 6. 69: ;< / GUARD FILE. BY ORDER/ + /TRUE COPY/ =/ ' > + -1 '() *