M/s. PRAVIN PHARMA, MUMBAI v. ITO Wd. - 23(3)(1), MUMBAI

ITA 4909/MUM/2006 | 2001-2002
Pronouncement Date: 21-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 490919914 RSA 2006
Assessee PAN AADEP6446K
Bench Mumbai
Appeal Number ITA 4909/MUM/2006
Duration Of Justice 3 year(s) 4 month(s) 8 day(s)
Appellant M/s. PRAVIN PHARMA, MUMBAI
Respondent ITO Wd. - 23(3)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 21-01-2010
Date Of Final Hearing 14-01-2010
Next Hearing Date 14-01-2010
Assessment Year 2001-2002
Appeal Filed On 12-09-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI BEFORE SHRI. R.K. GUPTA (J.M.) AND SHRI. B. RAMAKOT AIAH (A.M.) ITA NO.4909/MUM/2006 ASSESSMENT YEAR : 2001-2002 M/S. PRAVIN PHARMA 244/245 GOVIND UDYOG BHAVAN MUMBAI 400 080. PAN : AADEP6446K VS. INCOME TAX OFFICER 3(2)(4) RM. NO.673 AAYAKAR BHAVAN M.K. MARG MUMBAI 400 020. (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI. H.M. SUKHJA. RESPONDENT BY : SHRI. VIRENDRA OJHA. O R D E R PER R.K. GUPTA J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST CON FIRMING THE PENALTY OF RS.85 260/- LEVIED BY ASSESSING OFFICER U/S.271 (1)(C) RELATING TO ASSESSMENT YEAR 2001-2002. 2. THE ASSESSEE FIRM WAS ENGAGED IN MANUFACTURING B USINESS OF PHARMACEUTICAL PRODUCTS. IT HAD FILED ITS RETURN OF INCOME SHOWING A TOTAL INCOME OF RS.73 580/- AND THE ASSESSMENT WAS COMPLE TED U/S.143(3) OF THE I.T. ACT ON 25.03.2004 AT RS.1 98 490/- PENALTY PROCEEDINGS U/S.271(1)(C) WERE ALSO INITIATED BY ASSESSING OFFICER WHILE COMP LETING ASSESSMENT. THE ADDITION OF RS.1 03 136/- WAS MADE ON ACCOUNT OF DI SCREPANCY BETWEEN CLOSING STOCK OF THE PRECEDING YEAR AND THE OPENING STOCK OF THE YEAR UNDER CONSIDERATION. AS ASSESSEE COULD NOT EXPLAIN THE DISCREPANCY; THEREFORE THE ADDITION OF THIS AMOUNT WAS MADE BY THE ASSESSI NG OFFICER WHILE COMPLETING ASSESSMENT. THE ASSESSING OFFICER NOTI CED THAT OPENING STOCK OF THE YEAR HAS BEEN SHOWN AT RS.36 25 863/- WHEREAS C LOSING STOCK FOR THE IMMEDIATELY PRECEDING YEAR WAS SHOWN AT RS.35 23 72 7/-. THE ASSESSEE ITA NO.4909/MUM/2006 A.Y.: 2001-2002 2 WAS REQUIRED TO EXPLAIN THE DIFFERENCE; HOWEVER TH E SAME COULD NOT BE EXPLAINED AND THEREFORE THE ADDITION WAS MADE. 2.1 FURTHER ADDITION OF RS.4 647/- WAS MADE ON ACC OUNT OF INCENTIVE AND CREDITS NOTES SHOWN BY THE ASSESSEE AND ON THIS AMO UNT ALSO THE PENALTY PROCEEDINGS WERE INITIATED. FURTHER THE DIFFERENC E OF RS.968/- ON ACCOUNT OF NOT TAKING INTO CONSIDERATION CREDIT NOTE ISSUE D BY A.K. ASSOCIATES WAS ALSO MADE ON THIS AMOUNT. THE PENALTY PROCEEDING S WERE ALSO INITIATED. THEREAFTER PENALTY NOTICE WAS ISSUED AND ASSESSEE WAS REQUIRED TO FILE THE EXPLANATION IN RESPECT OF ADDITION OF RS.1 03 136/- AND OTHER ADDITIONS MADE. 2.2 IT WAS SUBMITTED THAT DUE TO CLERICAL MISTAKE THE DISCREPANCY COULD NOT BE EXPLAINED. REGARDING OTHER ITEMS OF ADDITI ON ALSO IT WAS SUBMITTED THAT DUE TO MISTAKE OF THE ACCOUNTANT THE CREDIT N OTE COULD NOT BE TAKEN INTO CONSIDERATION WHILE FILING THE RETURN OF INCOM E; HOWEVER THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF T HE ASSESSEE. ACCORDINGLY HE HELD THAT ASSESSEE HAS FILED INACCURATE PARTICUL AR FOR CONCEALMENT OF INCOME. ACCORDINGLY HE HELD THAT PROVISIONS OF S ECTION 271(1)(C) ARE ATTRACTED ON THE FACT OF THE PRESENT CASE AND @200 % THE PENALTY OF THE TAX EVADED BY ASSESSING OFFICER WHICH COMES TO RS.85 26 0/- WAS LEVIED. THE ASSESSEE PREFERRED APPEAL BEFORE LEARNED CIT(A) WHO ALSO CONFIRMED THE LEVY OF PENALTY AND DISMISSED THE APPEAL OF THE ASSESSEE . 3 THE CONTENTION OF THE ASSESSEE THAT THE MATERIAL SUPPLIED BY ONE OF THE PARTY WAS NOT IN ORDER; THEREFORE THE SAME WAS RETURNED. HOWEVER INADVERTENTLY THE STOCK WAS NOT REDUCED. THEREFO RE THERE WAS A DIFFERENCE IN OPENING AND CLOSING STOCK. COPY OF THE ACCOUN T IN THE BOOKS OF THE OTHER PARTY ALONG WITH COPY OF CONFIRMATORY LETTER WAS ALSO FILED. THE CIT(A) BY OBSERVING THAT AT DIFFERENT LEVEL DIFFE RENT STAND HAS BEEN TAKEN; THEREFORE THE EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTABLE. ACCORDINGLY THE APPEAL OF THE ASSESSEE WAS DISMISSED. NOW ASSESSEE IS IN APPEAL HEAR BEFORE THE TRIBUNAL. ON BEHALF OF THE ASSESSEE WRIT TEN SUBMISSIONS WERE ITA NO.4909/MUM/2006 A.Y.: 2001-2002 3 FILED. ON THE OTHER HAND THE LEARNED D.R. STRONGL Y PLACED RELIANCE ON THE CIT (A). PART OF THE ORDER OF THE CIT (A) WAS READ ALSO. 4. AFTER CONSIDERING THE WRITTEN SUBMISSION FILED O N BEHALF OF THE ASSESSEE AND ORDER OF THE AUTHORITIES BELOW WE FIN D THAT THE ASSESSEE DESERVES TO SUCCEED IN PART IN THIS APPEAL. WE NOTE D THAT IN RESPECT TO DIFFERENCE OF RS.1 03 136/- THE EXPLANATION WAS FI LED BEFORE THE ASSESSING OFFICER THAT DUE TO CLERICAL MISTAKE THIS DISCREPAN CY OCCURRED. HOWEVER BEFORE CIT (A) DETAILED EXPLANATION WAS FILED. IT WAS EXPLAINED THAT CERTAIN STOCK WHICH WAS PURCHASED IN MARCH 2000 WAS NOT UP TO THE MARK AND THE SAME WAS RETURNED TO THE PARTY. THE SUPPLIER HAS REPLACED THE POOR QUALITY MATERIAL IN THE MONTH OF APRIL 2000. THE SUPPLI ER HAD NOT CANCELLED THE EARLIER BILL AND HE HAD ISSUED A FRESH BILL ON REPL ACEMENT. THE ASSESSEE HAS REVERSED THE MATERIAL RETURNED AND ON RECEIPT OF MA TERIAL IN APRIL 2000 THE ACCOUNTANT HAD WRONGLY DEBITED TO OPENING STOCK INS TEAD OF PURCHASE ACCOUNT OF THE CURRENT YEAR. IT WAS FURTHER EXPLAI NED THAT THERE ARE NO TWO DIFFERENT EXPLANATIONS AS IT WAS PURELY A CLERICAL MISTAKE. THE ASSESSEE FOLLOWS NET CONSUMED VALUE WHICH IS REFLECTED IN TH E P & L A/C AND TO REFLECT CLOSING BALANCE AS STOCK-IN-TRADE TO BALANCE SHEET. AS EXPLAINED EARLIER DURING F.Y. 1999-2000 CERTAIN MATERIAL PURCHASED WA S OF A POOR QUALITY AND SAME WAS RETURN TO THE SUPPLIER AS A RESULT OF THIS THE NET CONSUMPTION WAS DEBITED TO P & L A/C. SINCE THE MATERIAL WAS RETU RNED TO SUPPLIER THE STOCK AMOUNTING TO RS.1 03 136/- WAS NOT IN EXISTENT AS ON 31.03.2000 AND THEREFORE THE STOCK WAS VALUED AT RS.35 23 727/-. AS THE MATERIAL WAS REPLACED BY SUPPLIER IN THE MONTH OF APRIL 2000 T HE SUPPLIER DID NOT ISSUE A CREDIT NOTE ON RECEIPT OF MATERIAL NOR HAD ISSUED AFRESH BILL ON REPLACEMENT. SO DUE TO OVER RIGHT THE ACCOUNTANT HAD DEBITED RS.1 03 136/- TO THE OPENING STOCK INSTEAD OF DEBIT ED TO PURCHASE A/C. ACCORDINGLY IT IS EXPLAINED THAT THIS WAS THE REAS ON FOR DISCREPANCY HOWEVER THERE IS NO EFFECT ON NET PROFIT. 4.1 AFTER GOING THROUGH THE EXPLANATION IT IS SEEN THAT THE EXPLANATION FILED BY THE ASSESSEE WAS NOT FOUND FALSE OR INCORR ECT. THE LEARNED CIT (A) ITA NO.4909/MUM/2006 A.Y.: 2001-2002 4 INSTEAD OF EXAMINING THE FACTUAL ASPECT THAT EXPLAN ATION OF THE ASSESSEE IS BONAFIDE OR NOT HOLD THAT EXPLANATION OF THE ASSESS EE IS AN AFTERTHOUGHT. COPY OF THE ACCOUNT IN THE LEDGER OF THE PARTY WHO SUPPLIED THE MATERIAL WAS FILED ALONG WITH THE LETTER BEFORE CIT (A) HOW EVER THE SAME NOT TAKEN INTO CONSIDERATION FOR THE REASON THAT NO SUCH DETA IL WAS FILED BEFORE THE ASSESSING OFFICER. AS BEFORE THE ASSESSING OF FICER SIMPLY IT WAS STATED THAT DUE TO CLERICAL MISTAKE THIS DISCREPANCY OCCUR RED. IN OUR CONSIDERED VIEW THE EXPLANATION FILED ON BEHALF OF THE ASSESS EE IS BONAFIDE AND THEREFORE WE ARE OF THE VIEW THAT PENALTY ON THIS AMOUNT OF ADDITION IS NOT LEVIABLE; THEREFORE WE CANCEL THE LEVY OF PENALTY ON THE AMOUNT OF ADDITION OF RS.1 03 136/-. 5 IN RESPECT OF OTHER TWO ADDITIONS NO EXPLANATION HAS BEEN FILED BY THE ASSESSEE; THEREFORE ON THE REASONS GIVEN BY LEARNE D CIT (A) THE PENALTY ON OTHER TWO ADDITIONS IS CONTINUED. HOWEVER THE A SSESSING OFFICER IS DIRECTED TO LEVY THE PENALTY @100% TO THE TAX INSTE AD OF 200% LEVIED IN HIS PENALTY ORDER. WE ORDER ACCORDINGLY. 6 IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCED ON THIS DAY OF 21 ST JANUARY 2010. SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER SD/- (R.K. GUPTA) JUDICIAL MEMBER MUMBAI DATED 21 ST JANUARY 2010. JANHAVI COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- MUMBAI 4. COMMISSIONER OF INCOME TAX CITY- MUMBAI 5. DEPARTMENTAL REPRESENTATIVE BENCH A MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR ITAT MUMBAI ITA NO.4909/MUM/2006 A.Y.: 2001-2002 5 DATE INITIALS 1. DRAFT DICTATED ON 15-01-10 PS 2. DRAFT PLACED BEFORE AUTHOR 20-01-10 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM/JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/J M 5. APPROVED DRAFT COMES TO THE SR. PS PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER