The DCIT, Circle-1,, Surat v. Balmukund Sizers Pvt.Ltd, Surat

ITA 3185/AHD/2009 | 2004-2005
Pronouncement Date: 30-03-2012 | Result: Dismissed

Appeal Details

RSA Number 318520514 RSA 2009
Assessee PAN AAACB9719L
Bench Ahmedabad
Appeal Number ITA 3185/AHD/2009
Duration Of Justice 2 year(s) 4 month(s) 3 day(s)
Appellant The DCIT, Circle-1,, Surat
Respondent Balmukund Sizers Pvt.Ltd, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Department
Order Result Dismissed
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 27-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD BEFORE SHRI A. K. GARODIA ACCOUNTANT MEMBER AND SHRI KUL BHARAT JUDICIAL MEMBER I.T.A. NO.3185 / AHD/2009 (ASSESSMENT YEAR 2004-05) DCIT CIRCLE 1 SURAT VS. M/S. BALMUKUND SIZERS PVT. LTD. BLOCK NO.111 MOTA BORASARA TA MANGROL SURAT PAN/GIR NO. : AAACB9719L (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI VINOD TANWANI SR. DR RESPONDENT BY: SHRI RASESH SHAH AR DATE OF HEARING: 07.03.2012 DATE OF PRONOUNCEMENT: 30.03.2012 O R D E R PER SHRI A. K. GARODIA AM:- THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDE R OF LD. CIT(A) I SURAT DATE 23.09.2009 FOR THE ASSESSMENT YEAR 2004- 05. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN RESTRICTING THE PENALTY LEV IED BY THE A.O. U/S 271(1)(C) OF THE ACT OF RS.13 26 932/- TO RS.7 27 302/-. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3) IT IS THEREFORE PRAYED THAT THE ORDER OF THE C IT(A) MAY BE SET ASIDE AND THAT OF A.O. MAY BE RESTORED TO THE A BOVE EXTENT. I.T.A.NO.3185 /AHD/2009 2 3. THE BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. IN THE PENALTY ORDER PASSED BY HIM U/S 271(1)(C) OF THE IN COME TAX ACT 1961 THAT AN ADDITION OF RS.36 98 764/- WAS MADE IN THE INCOME OF THE ASSESSEE WHICH INCLUDED AN ADDITION OF RS.14 25 828/- IN RES PECT OF OPENING STOCK OF FINISHED GOODS SOLD RS.5 59 707/- IN RESPECT OF OPENING STOCK OF CHEMICAL SOLD RS.3 50 753/- IN RESPECT OF CLAIM OF EXPENSES DISALLOWED AND RS.13 62 476/- IN RESPECT OF CLAIM OF DEPRECIAT ION DISALLOWED. REGARDING THE 1 ST TWO ITEMS I.E. REGARDING THE ADDITION OF RS.14 25 828/- AND RS.5 59 707/- PENALTY IMPOSED BY THE A.O. HAS BEEN CONFIRMED BY LD. CIT(A) AND THE ASSESSEE HAS NOT PREFERRED ANY A PPEAL AGAINST THIS PENALTY PARTLY CONFIRMED BY LD. CIT(A) AND HENCE W E CONFINE OUR DISCUSSION TO 3 RD AND 4 TH ITEMS FOR WHICH PENALTY HAS BEEN DELETED BY LD. CIT(A). REGARDING THE DISALLOWANCE OF RS.3 50 753/ - MADE BY THE A.O. OUT OF CLAIM OF EXPENSES IT IS NOTED BY LD. CIT(A) IN THE IMPUGNED ORDER THAT WHILE DECIDING THIS ISSUE IN QUANTUM APPEAL I T IS OBSERVED BY LD. CIT(A) THAT THE ASSESSEE HAS OBTAINED NEW MACHINERY BUT THE MACHINES COULD NOT BE RUN AND THEREFORE THERE WAS NO BUSIN ESS ACTIVITY DURING THE YEAR. HE ALSO OBSERVED THAT AT THE BEST ALL THE E XPENSES CAN BE TREATED AS PREOPERATIVE EXPENSES WHICH HAS TO BE CAPITALIZED. BUT IN NO CASE THE EXPENDITURE CAN BE ALLOWED AS BUSINESS EXPENDITURE AS NO BUSINESS ACTIVITY WAS CONDUCTED DURING THE YEAR. BEFORE LD. CIT(A) IN THE COURSE OF PENALTY PROCEEDINGS IT WAS SUBMITTED BY THE ASS ESSEE THAT AT LEAST ELECTRICITY EXPENSES HAS TO BE INCURRED AND ALLOWED . THE LD. CIT(A) HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE ON THI S BASIS THAT THE ASSESSEE HAD GIVEN EXPLANATION WHICH IS NOT BEING FOUND TO B E INCORRECT BY THE A.O. AND THEREFORE PENALTY IS NOT JUSTIFIED IN RE SPECT OF THIS AMOUNT. WITH REGARD TO 4 TH ITEM I.E. DISALLOWANCE OF DEPRECIATION OF RS.13 62 476/- I.T.A.NO.3185 /AHD/2009 3 IT WAS SUBMITTED BY THE ASSESSEE BEFORE LD. CIT(A ) IN THE COURSE OF PENALTY PROCEEDINGS THAT IT IS TECHNICAL DISALLOWAN CE AND AS PER VARIOUS JUDGEMENTS CITED BY HIM BEFORE LD. CIT(A) IT WAS C ONTENDED THAT NO PENALTY IS JUSTIFIED ON THIS ISSUE. LD. CIT(A) HAS DELETED THIS PENALTY ON THIS BASIS THAT IT IS A DEBATABLE ISSUE AND HENCE NO PENALTY IS JUSTIFIED AND NOW REVENUE IS IN APPEAL BEFORE US. 4. LD. D.R. SUPPORTED THE PENALTY ORDER WHEREAS TH E LD. A.R. OF THE ASSESSEE SPORTED THE ORDER OF LD. CIT(A). HE ALSO PLACED RELIANCE ON THE TRIBUNAL ORDER RENDERED IN THE CASE OF ANKUR PROTEI N INDUSTRIES LTD. VS DCIT IN I.T.A.NO. 1550 & 1551/AHD/2007 DATED 06.05. 2011. HE SUBMITTED A COPY OF THIS TRIBUNAL DECISION WHICH IS PLACED ON RECORD. HE ALSO PLACED RELIANCE ON THE JUDGMENT OF HONBLE PUN JAB & HARYANA HIGH COURT RENDERED IN THE CASE OF CIT VS NAHAR EXPORTS LTD. AS REPORTED IN 296 ITR 419. HE SUBMITTED THAT IN THE CASE OF ANKU R PROTEIN INDUSTRIES (SUPRA) IT WAS HELD BY THE TRIBUNAL BY FOLLOWING T HIS JUDGMENT OF HONBLE PUNJAB & HARYANA HIGH COURT RENDERED IN THE CASE OF NAHAR EXPORTS LTD. (SUPRA) THAT EVEN DISALLOWANCE OF DEP RECIATION IS NOT JUSTIFIED. HE SUBMITTED THAT IN VIEW OF THIS DECIS ION OF THE TRIBUNAL AT LEAST PENALTY FOR SUCH DISALLOWANCE OF DEPRECIATION SHOULD BE DELETED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT OUT OF THE TOTAL EXPENDITURE DISALLOWED BY THE A.O. OF RS.3 50 753/- A SUM OF RS.21 063/- WAS IN RESPECT OF COAL EXPENSE S AND A SUM OF RS.3 21 577/- WAS IN RESPECT OF ELECTRICITY POWER E XPENSES. THE EXPENSES UNDER THESE TWO HEADS WERE SUBSTANTIAL PORTION OF T HE TOTAL EXPENDITURE. IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE A.O. IN QU ANTUM PROCEEDINGS THAT THE ASSESSEE INTENDED TO RUN THE MACHINE BUT C OULD NOT RUN FOR SOME I.T.A.NO.3185 /AHD/2009 4 REASONS NOT UNDER THE CONTROL OF THE ASSESSEE BUT S O FAR ELECTRICITY POWER EXPENSES ARE CONCERNED THE SAME HAS TO BE ALLOWED BECAUSE MINIMUM BILL OF ELECTRICITY POWER HAS TO BE PAID EVEN IF TH ERE IS NO USE OF ELECTRICITY POWER. CONSIDERING THESE FACTS WE ARE SATISFIED T HAT NO PENALTY IS JUSTIFIED IN RESPECT OF THIS DISALLOWANCE OF EXPENS E OF RS.3 50 753/-. 6. REGARDING THE LAST ITEM I.E. DISALLOWANCE OF DEP RECIATION WE FIND THAT DEPRECIATION WAS DISALLOWED BY THE A.O. ON THI S BASIS THAT IN THE ABSENCE OF ANY OPENING STOCK AND PURCHASE OF YARN NO MANUFACTURING PROCESS COULD HAVE BEEN POSSIBLE BUT THIS ISSUE IS VERY MUCH DEBATABLE BECAUSE BY VARIOUS COURTS IT WAS HELD THAT DEPRECIA TION IS ALLOWABLE IF THE MACHINERY IN QUESTION WAS KEPT READY FOR USE ALTHOU GH COULD NOT BE USED. LD. CIT(A) ALSO DELETED THE PENALTY ON THIS DISALLO WANCE ON THIS BASIS THAT IT IS A DEBATABLE ISSUE. WE ARE SATISFIED ON THIS ASPECT THAT PENALTY IS NOT JUSTIFIED IN RESPECT OF THIS DISALLOWANCE OF DEPREC IATION BECAUSE THIS IS A DEBATABLE ISSUE. HENCE WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. 8. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR AHMEDABAD BY ORDER 6. THE GUARD FILE AR ITAT AHMEDABAD I.T.A.NO.3185 /AHD/2009 5 1. DATE OF DICTATION 28/3 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29/3.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 30/3 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.30/3 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30/3/12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .