Bhavani Iron Industries Pvt.Ltd., Kolhapur v. Asstt.CIT,Cir-1, Kolhapur,

ITA 740/PUN/2008 | 2004-2005
Pronouncement Date: 19-01-2011 | Result: Allowed

Appeal Details

RSA Number 74024514 RSA 2008
Assessee PAN AABFB3799A
Bench Pune
Appeal Number ITA 740/PUN/2008
Duration Of Justice 2 year(s) 7 month(s) 22 day(s)
Appellant Bhavani Iron Industries Pvt.Ltd., Kolhapur
Respondent Asstt.CIT,Cir-1, Kolhapur,
Appeal Type Income Tax Appeal
Pronouncement Date 19-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 19-01-2011
Assessment Year 2004-2005
Appeal Filed On 28-05-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI I.C. SUDHIR AND SHRI D. KARUNAKARA RAO ITA NO. 740/PN/08 (ASSTT. YEAR 2004-05) BHAVANI IRON INDUSTRIES PRIVATE LIMITED 1325/1B E WARD SHIVAJI UDYAMNAGAR KOLHAPUR PAN NO. AABFB3799A .... APPELLANT VS. ACIT CIRCLE-1 KOLHAPUR . RESPONDENT APPELLANT BY : SHRI C.H. NANIWADEKAR RESPONDENT BY : SHRI HARESHWAR SHARMA ORDER PER D. KARUNAKARA RAO AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE CIT-I KOLHAPUR DATED 11/03/2008 FOR THE ASSESSMENT YEAR 200 4-05 AND THE GROUNDS RAISED ARE AS UNDER:- 1) THE HON. COMMISSIONER OF INCOME TAX HAS ERRED I N REVISING THE ORDER OF A.O WHICH WAS PASSED U/S 143(3). THE LEARN ED A.O MADE ALL THE ENTRIES REGARDING MATERIAL LOSS ASKED FOR THE EXPL ANATION AND ACCORDINGLY ORDER WAS PASSED. THE ORDER WAS NOT ERRONEOUS AND N O ERROR OF FACT OR LAW IS MADE. THE HON. COMMISSIONERS ORDER U/S. 263 IS NOT VALID SINCE THERE WAS NO ERROR IN ORIGINAL ORDER. ASSESSEE REQU ESTS TO TREAT THE ORDER U/S. 263 AS INVALID AND DELETE THE ADDITION. 2) THE HON. COMMISSIONER OF INCOME TAX HAS NOT ACC EPTED THE DECISION OF GABRIAL INDIA LTD. V/S. CIT 209 ITR 108 . 3) WITHOUT PREJUDICE TO ABOVE THE MATERIAL LOSS I N THE PRODUCTION IS A SUBJECTIVE MATTER AND IT CAN NOT BE DIVIDED ON THE BASIS OF AVERAGE OF EARLIER YEARS AVERAGE. FACTS & CIRCUMSTANCES AND RE ASON OF EACH YEAR ARE DIFFERENT. WHEN ALL RELEVANT RECORD IS AVAILABLE RE GARDING CONSUMPTION PRODUCTION THE ISSUE CANNOT BE DECIDED ON AVERAGE WHEN ALL FACTS WERE BOUGHT BEFORE LEARNED A.O THE ISSUE CANNOT BE TAKEN AGAIN U/S. 263. ITA NO. 740/PN/08 A.Y: 2004-05 PAGE 2 OF 3 RESTRICTING MATERIAL LOSS TO 5.5% FROM 7.67% IS UN WARRANTED ADDITION U/S. 263 & HENCE PLEASE BE DELETED. 2. AT THE VERY OUTSET LD. COUNSEL FOR THE ASSESSEE ST ATED THAT THE CIT INVOKED THE PROVISIONS OF SEC. 263 OF THE ACT. CIT I S OF THE VIEW THAT THE A.O ERRONEOUSLY COMPLETED THE SCRUTINY ASSESSMENT BY ACCEP TING THE MELTING LOSS AT 7.67%. CIT IS OF THE VIEW THAT THE 7.67% IS ON HIGH ER SIDE AS THE ASSESSEE CLAIMED FOR THE A.Y 2003-04 WAS ONLY 4.57%. CIT IN P ARA 7OF THE IMPUGNED ORDER HELD THAT HE HAS FAIRLY ESTIMATED THE MELTING LO SS AT 5.5% FOR THE YEAR UNDER CONSIDERATION RELEVANT PARA 7 IS AS UNDER:- 7. THE MELTING LOSS PERCENTAGE CLAIMED BY THE ASSE SSEE FOR THE A.Y 2001-02 2002-03 & 2003-04 IS 4.5% 6.23% & 4.57% R ESPECTIVELY. CONSIDERING THE SAME I FAIRLY ESTIMATE THE MELTIN G LOSS AT 5.5% FOR THE YEAR UNDER CONSIDERATION. AGGRIEVED WITH THE ABOVE ORDER OF THE COMMISSIONER THE ASSESSEE FILED PRESENT APPEAL. 3. DURING THE PROCEEDINGS BEFORE US LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ISSUE RELATING TO THE MELTING LOSS WAS SUBJECT M ATTER OF THE INVESTIGATION AND FORMATION OF AN OPINION DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. IN THIS REGARD LD. COUNSEL FILED A LETTER OF THE A.O TO THE A SSESSEE DATED 01-06-2006. FROM THE SAID LETTER LD. COUNSEL BROUGHT OUR ATTENTIO N THE QUESTION NO. 3 OF THE LETTER WHEREIN A REFERENCE WAS MADE TO YIELD RATIO RAW MATERIAL USED LOSS PERCENTAGE ETC. LD. COUNSEL FURTHER MENTIONED THAT TH E LETTER WAS DULY REPLIED TO BY THE ASSESSEE AND FILED AN ASSESSEES REPLY TO THE A.O WHICH CONTAINS DETAILED EXPLANATION FOR RESTRICTING OF THE MELTING LOSS TO 7.6 7% (PAGE 1 TO 4 OF THE PAPER BOOK). FURTHER LD. COUNSEL MENTIONED THAT 9% MELTIN G LOSS WAS ACCEPTED BY THE REVENUE FOR THE A.Y 2001-02. SUMMING OF THE ABOVE ARG UMENTS LD. COUNSEL STATED THAT THE ISSUE RELATING TO THE CORRECT PERCENTA GE OF MELTING LOSS IS ALWAYS A DEBATABLE ONE AND SUCH DEBATABLE ISSUES ARE OUTSID E THE SCOPE OF SEC. 263 OF THE ACT. FURTHER LD. COUNSEL STATED THAT ASSESSMENTS IF ANY ARE ALSO OUTSIDE THE SCOPE OF THE PROVISIONS OF SEC. 263 OF THE ACT. ASSE SSEE RELIED ON VARIOUS DECISIONS OF THE JURISDICTIONAL HIGH COURT TO ADVANC E HIS CASE. LD. DR FOR REVENUE MERELY RELIED ON THE ORDER OF THE CIT. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE FACT S OF THE CASE AND AVAILABLE MATERIAL BEFORE US. IT IS AN ADMITTED POSIT ION THAT THE ISSUE IN QUESTION ITA NO. 740/PN/08 A.Y: 2004-05 PAGE 3 OF 3 WAS ALREADY EXAMINED BY THE A.O DURING THE ASSESSMENT PROCEEDINGS. FINALLY VIDE THE ORDER DATED 30-08-2006 THE CORRESPONDENCE BETW EEN THE A.O AND THE ASSESSEE IS THE EVIDENCE IN THIS REGARD. AN OPINION WAS DEFINITELY ARRIVED BY THE A.O WHILE FINALIZING THE MELTING LOSS OF 7.67%. IT IS ALSO AN ADMITTED POSITION THAT CIT HAS NO MATERIAL TO SUBSTANTIATE HIS MELTING LOSS OF 5% AND WHICH IS ADMITTEDLY A CASE OF ASSESSMENTS. IT IS A SETTLED I SSUE THAT THE DEBATABLE ISSUES ARE OUTSIDE THE PROVISIONS OF SEC. 263 OF THE ACT. IT IS A FACT THAT A.O HAS TAKEN A POSSIBLE VIEW WHICH MAY BE DIFFERENT FROM THAT OF THE CIT. IN SUCH CIRCUMSTANCES INVOKING THE PROVISIONS OF SEC. 263 OF THE ACT IS NO T IN ACCORDANCE WITH THE SETTLED POSITION OF LAW ON THE ISSUE. THEREFORE WE A RE OF THE OPINION THAT CIT HAS ASSUMED JURISDICTION INVALIDLY SUBSEQUENTLY ORDE R OF THE CIT IS QUASHED AND THE ORDER OF THE A.O IS RESTORED. 5. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DAY OF JANUARY 2011. SD/- SD/- (I.C. SUDHIR) (D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 19 TH JANUARY 2011 R COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. ACIT CENTRAL CIRCLE-1 KOLHAPUR 3. CIT-I KOLHAPUR 4. D.R. ITAT A BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE