The ACIT, Circle-1(1), Rajahmundry v. M/s India Fruits Ltd,

ITA 65/VIZ/2003 | 1999-2000
Pronouncement Date: 19-01-2010 | Result: Dismissed

Appeal Details

RSA Number 6525314 RSA 2003
Bench Visakhapatnam
Appeal Number ITA 65/VIZ/2003
Duration Of Justice 6 year(s) 10 month(s) 24 day(s)
Appellant The ACIT, Circle-1(1), Rajahmundry
Respondent M/s India Fruits Ltd,
Appeal Type Income Tax Appeal
Pronouncement Date 19-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 19-01-2010
Assessment Year 1999-2000
Appeal Filed On 25-02-2003
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO.65/VIZAG/2003 ASSESSMENT YEAR : 1999-2000 ACIT CIRCLE-1 RAJAHMUNDRY M/S. THE INDIA FRUITS LTD. KADIAM (APPELLANT) VS. (RESPONDENT) GIR NO.T-8 ITA NO.335/VIZAG/2006 ASSESSMENT YEAR : 1992-93 M/S. THE INDIA FRUITS LTD. KADIAM ACIT CIRCLE-1 RAJAHMUNDRY (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI SUBRATA SARKAR DR RESPONDENT BY: SHRI K. NEERAJA ADVOCATE ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER:- THESE APPEALS ARE PREFERRED BY THE ASSESSEE AS WEL L AS THE REVENUE AGAINST THE RESPECTIVE ORDER OF THE CIT(A). SINCE THESE APPEALS WERE HEARD TOGETHER WE DISPOSE THEM OFF THROUGH THIS CONSOLID ATED ORDER FOR THE SAKE OF CONVENIENCE. WE HOWEVER PREFER TO ADJUDICATE THE S AME ONE AFTER THE OTHER. ITA NO.65 OF 2005: 2. THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) ON VARIOUS GROUNDS BUT THEY ALL RELATE TO THE ESTIM ATION OF TOTAL INCOME OF THE ASSESSEE. DURING THE COURSE OF HEARING THE LD. CO UNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE FACT THAT DURING THE I MPUGNED ASSESSMENT YEAR THE ASSESSING OFFICER HAS ESTIMATED THE TOTAL INCOM E AT RS.1 94 61 396/- AGAINST THE DECLARED INCOME OF RS.70 85 670/- RESUL TING INTO AN ADDITION OF RS.1 23 75 726/- BEING 10% OF SALES NOT INCLUDED IN THE INCOME OF THE ASSESSEE EITHER IN SALES OR IN THE CLOSING STOCK IN SPITE OF THE FACT THAT IT HAD 2 SUPPLIED ZEBRA AND PANTHER ACSR CONDUCTORS TO M/S. ANDHRA PRADESH STATE ELECTRICITY BOARD DURING THE FINANCIAL YEAR 1998-99 . THE CONTRACT WITH THE SAID CORPORATION PROVIDES FOR THE PAYMENT OF 10% OF EX-WORKS PRICE OF THE SUPPLIES TO BE MADE AFTER ISSUE OF ACCEPTANCE CERTI FICATES AND ALSO SETTLEMENT OF OTHER ISSUES WHICH INCLUDE BUT ARE NOT LIMITED T O LIQUIDATED DAMAGES RECONCILIATION OF ANY PRICE ADJUSTMENT DUE TO APPLI CATION OF PRICE VARIATION FORMULA. THE SIMILAR ISSUE WAS ALSO RAISED IN THE IMMEDIATELY PRECEDING YEAR 1998-99 AND THE MATTER WENT UP TO THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 25.6.2002 HAD DECIDED THE ISSUE IN FAVO UR OF THE ASSESSEES BY HOLDING THAT THE INCOME UNDER DISPUTE DID NOT ACCRU E TO THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. FOLLOWING THE ORDER OF THE TRIBUNAL THE CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND DEL ETED THE ADDITIONS. SINCE THE ORDER OF THE TRIBUNAL HAS NOT BEEN REVERSED SO FAR IT HOLDS THE FIELD AND THE CIT(A) WAS JUSTIFIED IN ADJUDICATING THE ISSUE FOLLOWING THE ORDER OF THE TRIBUNAL. 3. THE LD. D.R. DID NOT DISPUTE THE FACTUAL ASPECT. 4. HAVING CAREFULLY EXAMINED THE ORDER OF THE CIT(A ) WE FIND THAT CIT(A) HAS EXAMINED THE ISSUE IN THE LIGHT OF THE ORDER OF THE TRIBUNAL FOR THE IMMEDIATELY PRECEDING YEAR IN WHICH IDENTICAL ISSUE WAS RAISED AND FOLLOWING THE SAME THE CIT(A) DELETED THE ADDITIONS. SINCE N O SPECIFIC INFIRMITY IS POINTED OUT IN THE ORDER OF THE CIT(A) WE CONFIRM HIS ORDER. ACCORDINGLY THE REVENUES APPEAL STANDS DISMISSED. ITA NO.335 OF 2006: 5. THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE PENALTY LEVIED BY THE A.O. U/S 271B OF THE I.T. ACT. THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE FACT THAT THE ACCOUNTS OF THE ASSESSEES COULD NOT BE AUDITED DUE TO THE SERIOUS DISPUTE AND DIFFERENCES AMONGST THE BOARD OF DIRECTORS DURING THE RELEVANT FINANCIAL YEAR. IN S UPPORT OF THESE CONTENTIONS THE ASSESSEE HAS FILED A COPY OF THE ORDER DATED 3 RD DECEMBER 1992 OF THE ANDHRA PRADESH HIGH COURT IN COMPANY PETITION THROU GH WHICH THE ANNUAL 3 GENERAL MEETING FOR THE YEAR ENDING 31.3.1992 WAS S TAYED TILL FURTHER ORDER. ON ACCOUNT OF DISPUTE IN THE MANAGEMENT THE ACCOUN TS WERE NOT TIMELY AUDITED AND COULD NOT BE FILED ALONG WITH THE RETUR N OF INCOME. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT THE RETURN OF INCOME WAS PREPARED ON THE BASIS OF THE ESTIMATED INCOME. SIN CE THE ASSESSEE HAD REASONABLE CAUSE FOR THE DELAY IN GETTING THE ACCOU NT AUDITED AND FILED ALONG WITH THE RETURN OF INCOME THE PENALTY U/S 271B SHO ULD NOT BE LEVIED. 6. THE LD. D.R. ON THE OTHER HAND HAS SUBMITTED THA T THE REQUIREMENT OF LAW IS TO GET THE ACCOUNT AUDITED IN TIME AND ALSO TO FILE ALONG WITH THE RETURN OF INCOME. IT HAS NO RELEVANCE FOR THE AGMS OF THE COMPANY IN WHICH AUDITED ACCOUNTS ARE TO BE ADOPTED. HE FURTHER CON TENDED THAT ASSESSEE HAS BEEN RUNNING HIS OWN BUSINESS BY MANAGING DAY TO DA Y AFFAIRS BUT HE COULD NOT GET THE ACCOUNTS AUDITED IN TIME. IT IS A WILL FUL NEGLECT IN WHICH PENALTY U/S 271B WAS RIGHTLY SLAPPED BY THE A.O. 7. HAVING GONE THROUGH THE ORDERS OF THE LOWER AUTH ORITIES IN THE LIGHT OF RIVAL CONTENTIONS AND WE FIND THAT UNDISPUTEDLY THE RE WAS DISPUTE IN THE MANAGEMENT DURING THE RELEVANT FINANCIAL YEAR IN WH ICH ACCOUNTS ARE REQUIRED TO BE AUDITED BY THE CHARTERED ACCOUNTANTS . IT IS ALSO OBVIOUS FROM THE RECORD THAT THERE WAS NO UNANIMITY IN THE BOARD OF DIRECTORS TO TAKE SOME DECISIONS FOR AUDITING THE ACCOUNTS BY THE AUDITORS OR FOR OTHER PURPOSES. THE MANAGEMENT OF THE ASSESSEE COMPANY WAS UNDER DI SPUTE AND THE MATTER HAS TRAVELED UPTO HIGH COURT AND THE AGM WAS STAYED IN THE HON'BLE HIGH COURT. 8. FROM A CAREFUL PERUSAL OF THESE DOCUMENTS IT EM ERGES THAT MANAGEMENT OF THE ASSESSEE COMPANY WAS UNDER DISPUT E AND FOR THIS REASON THE ASSESSEE MIGHT NOT HAVE GOT ITS ACCOUNT AUDITED BY THE CHARTERED ACCOUNTANTS. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO INVITED OUR ATTENTION TO THE RELEVANT PROVISIONS OF THE INCOME TAX AND TH E COMPANIES ACT ACCORDING TO WHICH THE AUDITED ACCOUNT WAS REQUIRED TO BE SIGNED BY THE DIRECTORS FOR ITS FILING ALONG WITH THE RETURN OF I NCOME BEFORE THE ASSESSING OFFICER. SINCE NO DIRECTOR WAS WILLING TO SIGN THE AUDITED REPORT IT COULD NOT 4 BE FILED IN TIME BEFORE THE A.O. TAKING IN VIEW TH E CONSPECTUS OF THE CASE WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS A REASONABLE CAUSE FOR NOT GETTING ITS ACCOUNT AUDITED AND FOR THIS DE FAULT PENALTY U/S 271B SHOULD NOT BE LEVIED. ACCORDINGLY WE SET ASIDE TH E ORDER OF THE CIT(A) AND DELETE THE PENALTY. 9. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED AND THAT OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 19.1.2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 19 TH JANUARY 2010 COPY TO 1 THE ACIT CIRCLE-1 RAJAHMUNDRY 2 M/S. THE INDIA FRUITS LIMITED KADIAM E.G. DIST. 3 THE CIT RAJAHMUNDRY 4 THE CIT(A) RAJAHMUNDRY 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM