M/s. Atul Cattle Feeds Industries, Anand v. The Income tax Officer,Ward-2,, Anand

ITA 3941/AHD/2008 | 2005-2006
Pronouncement Date: 22-01-2010 | Result: Dismissed

Appeal Details

RSA Number 394120514 RSA 2008
Assessee PAN AAIFA1883B
Bench Ahmedabad
Appeal Number ITA 3941/AHD/2008
Duration Of Justice 1 year(s) 1 month(s) 19 day(s)
Appellant M/s. Atul Cattle Feeds Industries, Anand
Respondent The Income tax Officer,Ward-2,, Anand
Appeal Type Income Tax Appeal
Pronouncement Date 22-01-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 22-01-2010
Date Of Final Hearing 19-01-2010
Next Hearing Date 19-01-2010
Assessment Year 2005-2006
Appeal Filed On 03-12-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI BHAVENESH SAINI JM & SHRI A.N. PAHUJA AM I.T.A. NO.3941/AHD/2008 (ASSESSMENT YEAR 2005-06) M/S ATUL CATTLE FEEDS INDUSTRIES VS ITO WARD-2 JITODIA TAL : ANAND ANAND [PAN : AAIFA1883B] (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PB DOSHI AR REVENUE BY : SHRI CK MISHRA DR O R D E R AN PAHUJA : THIS APPEAL BY THE ASSESSEE AGAINST AN ORDER DATE D 26-07-2008 OF THE LD. CIT(A)-IV BARODA RAISES THE FOLLOWING GRO UNDS : 1. THE INCOME TAX OFFICER AND LD. CIT(A)-IV BAROD A BOTH ERRED IN LAW IN MAKING ADDITION OF RS.5 95 344/- O N ACCOUNT OF SHORTAGE IN PRODUCTION. 2. THE ORDER OF THE LD. CIT(A)-IV IS ILLEGAL AGAINST NATURAL JUSTICE AND GOOD CONSCIENCE. 3. THE APPELLANT RESERVES RIGHT TO ADD AMEN D OR ALTER IN ONE OR MORE GROUNDS OF APPEAL . 2. AT THE OUTSET WE FIND THAT APPEAL IS BELATED BY 36 DAYS. IN HIS LETTER DATED 1.12.2008 THE PARTNER OF THE ASSESSEE FIRM MENTIO NED THAT THE DUE DATE OF FILING OF APPEAL WAS 27 TH OCTOBER 2008.HOWEVER THE ACCOUNTANT OF THE FIRM T O WHOM RELEVANT PAPERS WERE HANDED OVER FOR FILING THE APP EAL BY THE CA FORGOT TO HAVE SIGNATURES OF THE PARTNER AND THEREAFTER WHEN IT W AS BROUGHT TO HIS NOTICE APPEAL WAS FILED . AN AFFIDAVIT DATED 11.12.2008 OF THE AC COUNTANT WAS ALSO SUBMITTED. IN THE LIGHT OF THE AVERMENTS MADE IN THE AFFIDAVI T THE ASSESSEE PLEADED THAT THE DELAY IN FILING THE APPEAL MAY BE CONDONED. THE LEA RNED DR DID NOT OPPOSE THE AVERMENTS MADE IN THE AFFIDAVIT. 3. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO REASONS ADDUCED IN THE AFFIDAV IT. IN THIS CASE ITA NO.3941/AHD/2008 2 UNDISPUTEDLY THE APPEAL IS DELAYED BY 36 DAYS DUE TO MISTAKE OF THE ACCOUNTANT. THE ISSUE BEFORE US IS AS TO WHETHER OR NOT THERE WAS SUFFICIENT CAUSE FOR DELAY IN FILING THE APPEAL. IN THE CASE OF STATE OF WEST BENGAL VS. ADMINISTRATOR HOWRAH MUNICIPALITY AIR 1972 SC 749 THE HON'BLE SUPREME COURT WHILE CONSIDERING TH E SCOPE OF EXPRESSION 'SUFFICIENT CAUSE' FOR CONDONATION OF DE LAY HAVE HELD THAT THE SAID EXPRESSION SHOULD RECEIVE A LIBERAL CONSTR UCTION SO AS TO ADVANCE THE SUBSTANTIAL JUSTICE WHEN NO NEGLIGENCE OR INACTION OR WANT OF BONA FIDE IS IMPUTABLE TO THE PARTY. IN THE CASE OF VEDABAI ALIAS VAIJAYANTABAI BABULAO PATIL VS. SHANTARAM BAB URAO PATIL & ORS. IT WAS HELD BY THE HONBLE APEX COURT THAT WH ILE EXERCISING DISCRETION UNDER S. 5 OF THE LIMITATION ACT 1963 TO CONDONE DELAY FOR SUFFICIENT CAUSE IN NOT FILING THE APPEAL WITHI N THE PERIOD PRESCRIBED COURTS SHOULD ADOPT A PRAGMATIC APPROAC H. IN THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE OPINIO N THAT THE REASONS GIVEN IN THE AFFIDAVIT BY THE ACCOUNTANT REFLECT SUFFICIENT CAUSE FOR CONDONATION OF DELAY. IT HAS BEEN CONSIST ENTLY HELD BY THE HONBLE APEX COURT THAT IN THE MATTER OF CONDONATIO N OF DELAY A LIBERAL AND PRAGMATIC VIEW SHOULD BE TAKEN. THE REA SONS GIVEN BY THE ASSESSEE FOR THE DELAY APPEAR TO BE SUFFICIENT CAUSE AND ACCORDINGLY THE DELAY IS LIABLE TO BE CONDONED. TH E LAW OF LIMITATION IS ENSHRINED IN THE MAXIM INTEREST REIPUBLICAE UT S IT FINIS LITIUM (IT IS FOR THE GENERAL WELFARE THAT A PERIOD BE PUT TO LIT IGATION). RULES OF LIMITATION ARE NOT MEANT TO DESTROY THE RIGHTS OF T HE PARTIES RATHER THE IDEA IS THAT EVERY LEGAL REMEDY MUST BE KEPT AL IVE FOR A LEGISLATIVELY FIXED PERIOD OF TIME. IN THE CASE OF COLLECTOR LAND ACQUISITION V. MST. KATIJI REPORTED IN [1987] 167 ITR 471 HON'BLE SUPREME COURT HELD AS FOLLOWS: 'THE LEGISLATURE HAS CONFERRED THE POWER TO CONDONE DELAY BY ENACTING SECTION 5 OF THE LIMITATION ACT OF 1963 IN ORDER TO ENABLE TH E COURTS TO DO SUBSTANTIAL JUSTICE TO PARTIES BY DISPOSING OF MATTERS ON 'MERITS'. THE EXPRESSION 'SUFFICIENT CAUSE' ITA NO.3941/AHD/2008 3 EMPLOYED BY THE LEGISLATURE IS ADEQUATELY ELASTIC T O ENABLE THE COURTS TO APPLY THE LAW IN A MEANINGFUL MANNER WHICH SUBSERVES THE ENDS OF JUSTICE-THAT BEING THE LIFE-PURPOSE OF THE EXISTENCE OF THE INSTITUTIO N OF COURTS. IT IS COMMON KNOWLEDGE THAT THIS COURT HAS BEEN MAKING A JUSTIFI ABLY LIBERAL APPROACH IN MATTERS INSTITUTED IN THIS COURT. BUT THE MESSAGE D OES NOT APPEAR TO HAVE PERCOLATED DOWN TO ALL THE OTHER COURTS IN THE HIER ARCHY. AND SUCH A LIBERAL APPROACH IS ADOPTED ON PRINCIPLE AS IT IS REALIZED THAT: 1. ORDINARILY A LITIGANT DOES NOT STAND TO BENEFIT BY LODGING AN APPEAL LATE. 2. REFUSING TO CONDONE DELAY CAN RESULT IN A MERITO RIOUS MATTER BEING THROWN OUT AT THE VERY THRESHOLD AND CAUSE OF JUSTICE BEING DE FEATED. AS AGAINST THIS WHEN DELAY IS CONDONED THE HIGHEST THAT CAN HAPPEN IS T HAT A CAUSE WOULD BE DECIDED ON MERITS AFTER HEARING THE PARTIES. 3. 'EVERY DAY'S DELAY MUST BE EXPLAINED' DOES NOT M EAN THAT A PEDANTIC APPROACH SHOULD BE MADE. WHY NOT EVERY HOUR'S DELAY EVERY S ECOND'S DELAY? THE DOCTRINE MUST BE APPLIED IN A RATIONAL COMMONSENSE AND PRAG MATIC MANNER. 4. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERA TIONS ARE PITTED AGAINST EACH OTHER THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJUSTICE BEIN G DONE BECAUSE OF A NON- DELIBERATE DELAY. 5. THERE IS NO PRESUMPTION THAT DELAY IS OCCASIONED DELIBERATELY OR ON ACCOUNT OF CULPABLE NEGLIGENCE OR ON ACCOUNT OF MALA FIDES. A LITIGANT DOES NOT STAND TO BENEFIT BY RESORTING TO DELAY. IN FACT HE RUNS A S ERIOUS RISK. 6. IT MUST BE GRASPED THAT THE JUDICIARY IS RESPECT ED NOT ON ACCOUNT OF ITS POWER TO LEGALISE INJUSTICE ON TECHNICAL GROUNDS BUT BECAUSE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO.' 3.1 IN N. BALAKRISHNAN V. M. KRISHNAMURTHY REPO RTED IN [1998] 7 SCC 123 THE HONBLE APEX COURT EXPLAINED THE SCOPE OF LIMITATIO N AND CONDONATION OF DELAY OBSERVING AS UNDER (HEADNOTE): 'THE PRIMARY FUNCTION OF A COURT IS TO ADJUDICATE T HE DISPUTE BETWEEN THE PARTIES AND TO ADVANCE SUBSTANTIAL JUSTICE. THE TIME-LIMIT FIXED FOR APPROACHING THE COURT IN DIFFERENT SITUATIONS IS NOT BECAUSE ON THE EXPIR Y OF SUCH TIME A BAD CAUSE WOULD TRANSFORM INTO A GOOD CAUSE. RULES OF LIMITAT ION ARE NOT MEANT TO DESTROY THE RIGHTS OF PARTIES. THEY ARE MEANT TO SEE THAT P ARTIES DO NOT RESORT TO DILATORY TACTICS BUT SEEK THEIR REMEDY PROMPTLY. THE OBJECT OF PROVIDING A LEGAL REMEDY IS TO REPAIR THE DAMAGE CAUSED BY REASON OF LEGAL INJU RY. THE LAW OF LIMITATION FIXES ITA NO.3941/AHD/2008 4 A LIFESPAN FOR SUCH LEGAL REMEDY FOR THE REDRESS OF THE LEGAL INJURY SO SUFFERED. THE LAW OF LIMITATION IS THUS FOUNDED ON PUBLIC POL ICY.' 3.2 IN SHANKARRAO V. CHANDRASENKUNWAR REPORTE D IN [1987] SUPP SCC 338 THE HONBLE SUPREME COURT TOOK THE VIEW THAT THE CO URT SHOULD NOT ADOPT AN INJUSTICE-ORIENTED APPROACH IN REJECTING THE APPLIC ATION FOR CONDONATION OF DELAY. IN O.P. KATHPALIA V. LAKHMIR SINGH REPORTED IN AIR 1984 SC 1744 THE HON'BLE SUPREME COURT HELD THAT IF THE REFUSAL TO CONDONE T HE DELAY RESULTS IN GRAVE MISCARRIAGE OF JUSTICE IT WOULD BE A GROUND TO CON DONE THE DELAY. IN STATE OF HARYANA V. CHANDRA MANI REPORTED IN AIR 1996 SC 162 3 HON'BLE SUPREME COURT CONSIDERED A LARGE NUMBER OF ITS EARLIER JUDG MENTS INCLUDING BINOD BIHARI SINGH V. UNION OF INDIA REPORTED IN [1993] 1 SCC 57 2 SHAKAMBARI AND CO. V. UNION OF INDIA REPORTED IN [1993] SUPPL 1 SCC 487 WARLU V. GANGOTRIBAI REPORTED IN [1995] SUPPL 1 SCC 37 RAMLAL V. REWA COALFIELDS LTD. REPORTED IN AIR 1962 SC 361 CONCORD OF INDIA INSURANCE CO. LTD. V. SMT. NIRMALA DEVI [1979] 118 ITR 507 ; AIR 1979 SC 1666; [1979] 49 COMP CAS 463 MATA DI N V. A. NARAYANAN AIR 1970 SC 1953 AND HELD THAT EXPRESSION 'EACH DA Y'S DELAY MUST BE EXPLAINED' DOES NOT MEAN THAT A PEDANTIC APPROACH SHOULD BE MADE AND IT MUST BE APPLIED IN A RATIONAL COMMONSENSE PRAGMATIC MANN ER. 3.3. IN VIEW OF THE FOREGOING AND ESPECIALLY IN THE LIGHT OF OBSERVATIONS OF THE HONBLE APEX COURT IN O.P. KATHPALIA V. LAKHMIR SIN GH REPORTED IN AIR 1984 SC 1744 THAT IF THE REFUSAL TO CONDONE THE DELAY RES ULTS IN GRAVE MISCARRIAGE OF JUSTICE IT WOULD BE A GROUND TO CONDONE THE DELAY WE ARE OF THE OPINION THAT THE REASONS GIVEN BY THE ASSESSEE FOR THE DELAY IN FILI NG THE APPEAL REFLECT SUFFICIENT CAUSE AND ACCORDINGLY THE DELAY IS CONDONED. 4. NOW ADVERTING TO MERITS OF THE GROUND FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS.1 12 615/- FILED ON 20.10.2005 BY THE ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF CATTLE FEED AFTER BEING PROCESSED U/S 143(1) OF THE INCOME-TAX ACT 1961[HEREINAFTER REFERRED TO AS THE ACT] WAS TAKEN UP FOR SCRUTINY WITH TH E ISSUE OF NOTICE U/S 143(2) OF THE ITA NO.3941/AHD/2008 5 ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT THOUGH THE ASSESSEE WAS ENGAGE D IN MANUFACTURING ACTIVITIES NO QUANTITATIVE RECORDS IN RESPECT OF P RODUCTION WERE MAINTAINED. THIS WAS ALSO STATED IN THE AUDIT REPORT. THE DETAILS SUBMITTED BY THE ASSESSEE REVEALED A SHORTAGE OF 3 06 479 KGS IN FINISHED GO ODS. TO A QUERY BY THE AO THE ASSESSEE CLAIMED THAT MAIN INGREDIENTS OF THE C ATTLE FEED VIZ. HALLER RICE BRAN & RICE BRAN CUTTING HAVE MOISTURE CONTENT. TH ESE ALONG WITH GROUND NUT WASTE AND CALCIUM ARE MIXED WITH THE MOLASSES IN T HE RATIO OF 9:1. THE ASSESSEE ATTRIBUTED THE REASONS FOR THE SHORTAGE OF 3 06 479 KGS. TO THE RAW MATERIAL HAVING MOISTURE CONTENT WHICH EVAPORATES IF NOT USED IMMEDIATELY FOR PRODUCTION BESIDES LOSS OF WEIGHT IN HANDLING AND TRANSPORTATION. HOWEVER THE AO CONCLUDED THAT ALL THE ITEMS OF RAW MATERIAL US ED FOR MAKING THE CATTLE FEED PELLETS HAVE HIGH ABSORBING POWER AND THE ONLY LIQU ID USED AS SUBMITTED BY THE ASSESSEE WAS MOLASSES WHICH WAS ALSO IN FACT A SEM I LIQUID AND THAT THE DAY TO DAY CONSUMPTION OF MOLASSES VIS--VIS THE PRODUCTIO N DID NOT SUGGEST THAT THE ASSESSEE HAD STORED THE GOODS FOR A LONG TIME. ACC ORDINGLY THE AO COMPUTED SHORTAGE OF 2 25 509 KGS AFTER CONSIDERING THE SUBM ISSIONS OF THE ASSESSEE RESULTING IN ADDITION OF RS.10 41 852 CALCULATED R S.4.62 PER KG BEING THE VALUE OF SARDAR DAAN . 5. ON APPEAL THE ASSESSEE WHILE REITERATING THEIR SUBMISSIONS BEFORE THE AO CONTENDED THAT THE VALUATION OF SHORTAGE COULD NOT BE DONE AS PER VALUE OF SARDAR DAAN SINCE THE ASSESSEE DID NOT MANUFACTURE THE SAID ITEM. IT WAS POINTED OUT THAT ACTUAL COST OF PRODUCTION WORKED O UT TO RS. 2.64 PER KG. IN THE LIGHT OF THESE SUBMISSIONS THE LD. CIT(A) REDUCED THE ADDITION IN THE FOLLOWING TERMS: 4. I HAVE CONSIDERED THE SUBMISSIONS OF THE A.R. A ND THE ASSESSMENT ORDER. THE APPELLANT HAD CLAIMED A SHOR TAGE OF 3 06 479 KGS. THE ASSESSING OFFICER HAS BROUGHT TO TAX A SHORTAGE OF 2 25 509 KGS. THEREFORE IT IS OBVIOUS THAT THE ASSESSING OFFICER HAS ACCEPTED AND ALLOWED A CERTAIN AMOUNT OF SHORTA GE WHILE PRODUCING THE CATTLE FEED PELLETS. THE SHORTAGE OF 80 970 KGS. IS ITA NO.3941/AHD/2008 6 ALLOWED BY THE ASSESSING OFFICER IS FAIR ESPECIALL Y IN THE ABSENCE OF CORROBORATIVE DATA. THE ONLY ISSUE WHICH MERITS CO NSIDERATION IS THE VALUATION OF SHORTAGE. THE APPELLANT HAD PLACE D BEFORE ME BILLS AND COPY OF THE PURCHASE ACCOUNTS WHICH CLEARLY STA TES THAT THE APPELLANT IS ENGAGED IN THE TRADING OF SARDAR DAAN . NO SHORTAGE HAS BEEN FOUND IN THE TRADING SARDAR DAAN. THERE FORE VALUING THE SHORTAGE AT THE VALUE OF SARDAR DAAN IS NOT A CCEPTABLE. THE COST OF PRODUCTION PUT FORTH BY THE APPELLANT IS RS .2.64 PER KG. THEREFORE THE VALUE OF THE SHORTAGE SHOULD BE RS.5 95 344/- [I.E. 2 25 509 X 2.64]. THE ADDITION TO THIS EXTENT IS C ONFIRMED. IN THE RESULT THE APPELLANT GETS A RELIEF OF RS.4 46 508/ -. 6. THE ASSESSEE IS NOW IN APPEAL BEFORE US A GAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. AR ON BEHALF OF THE ASSESSE E WHILE REITERATING THEIR SUBMISSIONS BEFORE THE LOWER AUTHORITIES SUBMITTED THAT THE ASSESSEE DID NOT MAINTAIN ANY QUANTITATIVE RECORDS OF PRODUCTION. ON THE OTHER HAND THE LD. DR SUPPORTED THE FINDINGS OF THE AO. 7. WE HAVE HEARD BOTH THE PARTIES AND GONE TH ROUGH THE FACTS OF THE CASE. AS IS EVIDENT FROM THE IMPUGNED ORDER THE ASSESSEE C LAIMED SHORTAGE OF 3 06 479 KGS. IN PRODUCTION ON THE GROUND OF RAW MATERIAL H AVING MOISTURE CONTENT AND LOSS IN HANDLING/TRANSPORTATION. HOWEVER THE AO AF TER CONSIDERING THE EXPLANATION OF THE ASSESSEE WORKED OUT SHORTAGE OF 2 25 509 KGS . THE LD. CIT(A) WHILE APPLYING ACTUAL COST OF PRODUCTION UPHELD THE ADDITION TO THE EXTENT OF RS.5 95 344/- EVEN WHEN THE ASSESSEE DID NOT PLACE EITHER BEFORE THE AO OR THE LD. CIT(A) ANY CORROBORATIVE DATA IN RESPECT OF SHO RTAGE IN PRODUCTION . IN THESE CIRCUMSTANCES THE ONLY ISSUE BEFORE THE LD. CIT(A) WAS THE VALUATION OF SHORTAGE AND ACCORDINGLY THE ADDITION WAS WORKED OUT ON THE BASIS OF ACTUAL COST OF PRODUCTION. . BEFORE US THE LD. AR ON BEHALF OF THE ASSESSEE DI D NOT PLACE ANY COMPARATIVE DATA EITHER OF OTHER ASSESSES OR IN T HEIR OWN CASE IN THE PRECEDING YEARS WHICH COULD ENABLE US TO TAKE A DIFFERENT V IEW IN THE MATTER . IN VIEW OF THE FACT THAT THE AO HAS ALREADY ALLOWED CLAIM OF S HORTAGE TO THE EXTENT OF 80970/- KGS WHILE THE LD. CIT(A) UPHELD HIS FINDIN GS WE DO NOT FIND ANY REASONS TO INTERFERE WITH THE CONCLUSIONS ARRIVED AT BY THE LD. CIT(A). THEREFORE GROUND NO.1 IN THE APPEAL IS DISMISSED. ITA NO.3941/AHD/2008 7 8. GROUND NO. 2 BEING GENERAL IN NATURE NOR ANY SUBMISSIONS HAVING BEEN MADE BEFORE US ON THIS GROUND WHILE NO ADDITIONAL GROUND HAS BEEN RAISED IN TERMS OF RESIDUARY GROUND NO.3 BOTH THESE GROUNDS ARE DISMISSED. 9 IN THE RESULT APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 22ND DAY OF JA NUARY 2010. SD/- SD/- (BHAVNESH SAINI) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD DATED : 22ND JANUARY 2010 PK/- COPY TO: 1. THE ASSESSEE 2. ITO WARD-2 ANAND 3. CIT(A)-IV BARODA 4. CIT-II BARODA 5. DR D BENCH BY ORDER DEPUTY REGISTRAR ITAT AHMEDABAD