M/s Sea Pearl Enterprises, Alappuzha v. DCIT, Alappuzha

ITA 924/COCH/2008 | 2004-2005
Pronouncement Date: 06-05-2010

Appeal Details

RSA Number 92421914 RSA 2008
Bench Cochin
Appeal Number ITA 924/COCH/2008
Duration Of Justice 1 year(s) 5 month(s) 29 day(s)
Appellant M/s Sea Pearl Enterprises, Alappuzha
Respondent DCIT, Alappuzha
Appeal Type Income Tax Appeal
Pronouncement Date 06-05-2010
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 06-05-2010
Date Of Final Hearing 29-04-2010
Next Hearing Date 29-04-2010
Assessment Year 2004-2005
Appeal Filed On 07-11-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE SHRI N.VIJAYAKUMARAN & SHRI SANJAY ARORA I.T.A.NO.924/COCH/2008 ASSESSMENT YEAR:2004-05 M/S. SEA PEARL ENTERPRISES ALAPPUZHA. PA NO.AAGFS 0303Q VS. THE DY. COMMISSIONER OF INCOME-TAX CIRICLE-1 ALAPPUZHA. (APPELLANT) ( RESPONDENT ) APPELLANT BY S MT. PARVATHY AMMAL CA RESPONDENT BY DR. BABU JOSEPH SR.DR O R D E R PER N.VIJAYAKUMARAN J.M: THIS IS AN APPEAL BY THE ASSESSEE WHICH IS A LOSS MAKING PARTNERSHIP FIRM. THE LOSS RETURNED BY THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR IS MORE THAN RS. 9 CRORES WHICH WAS INITIALLY ACCEPTED U/S.143(1) AND THEN IT WAS REOPENED. THE REASONS FOR REOPENING WERE TWO FOLD . THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE BY WAY OF TRANSPORTATION AND BURIAL OR DUMPING OF THE DECAYED AND CONTAMINATED MARINE PROD UCTS FROM GODOWN TO THE DUMPING GROUND AND IT SHOWED THA T THERE HAD BEEN NO MOVEMENT OF GOODS FROM GODOWN TO THE DUMPING GROUND. THERE IS NEITHER INSPECTION FEE CL AIMED IN ITA NO. 924/COCH/2008 2 THE RETURN NOR PURIFICATION CHARGES OF THE GODOWN A FTER CLEARING OF THE CONTAMINATED GOODS. THIS KIND OF SUSPICION ON THE PART OF THE ASSESSING OFFICER WHICH PROMPTED THE ASSESSING OFFICER FOR THE REASON RECORDED TO INITIA TE THE RE- ASSESSMENT PROCEEDINGS. IN THE COURSE OF REASSES SMENT ASSESSEE PRODUCED A CERTIFICATE OF HEALTH DATED 06- 08-2003 WHICH STATES THAT ON TESTING THE SAMPLES THE VIBRIO CHOLERA HAD BEEN POSITIVE. IT MAY BE A TECHNICAL TERM WH ICH MEANS THE MARINE PRODUCTS WERE NOT FIT FOR CONSUMPTION GO T DECADE AND CONTAMINATED IN THE GODOWN ITSELF. THE ASSESSI NG OFFICER THROWS THE BURDEN ON THE ASSESSEE TO PROVE THE FATE OF THIS STOCK AFTER IT WAS CERTIFIED TO BE CONTAMIN ATED. HOWEVER THE ASSESSEE TAKES THE SHELTER UNDER THE H EALTH CERTIFICATE AND CONTENDING THAT THEY HAVE BURIED NE ARBY A FARM WHICH RELATED TO THE PARTNERS. THE ASSESSIN G OFFICER DID NOT DISPUTE THE TOTAL CONTAMINATED MARINE PRODU CT IS 320 TONS. HIS DOUBT WOULD BE WHETHER IT CAN BE ACCOMM ODATED BY WAY OF TRANSPORT IN THE FARM OF 10 ACRES EXTENT. NO TRANSPORTATION CHARGES CLEARING CHANGES DUMPING G ROUND CHARGES ETC. CLAIMED. IT WAS THE EXPLANATION OF T HE ASSESSEE THAT SUCH EXPENDITURE HAS BEEN NOMINAL AS THE FARM IS NEARBY AND THE PARTNERS HAVE INCURRED THE EX0PENDITUREE AS IT IS HELPFUL FOR THE MANUERING TH E FARM. ITA NO. 924/COCH/2008 3 THE ASSESSING OFFICER HAD ANOTHER DOUBT THAT THERE IS NO SANCTION FOR THE MOVEMENT OF DECAYED AND CONTAMINAT ED MARINE PRODUCTS BY THE LOCAL AUTHORITY FOR DUMPING A HUGE QUANTITY OF MARINE PRODUCT IN THAT FARM. THE ASSE SSING OFFICER THROWS SUSPICION THAT THE ASSESSEE COULD NO T GIVE EXACT LOCATION WHERE THEY HAVE DUMPED THE HUGE QUAN TITY OF MARINE PRODUCTS. HOWEVER NO INSPECTION WAS MADE BY THE AUTHORITIES. FOR DESTROYING SUCH MARINE PRODUCT T HE ASSESSING OFFICER WAS OF THE VIEW THAT THERE SHOULD BE AN ORDER FROM THE COMPETENT AUTHORITY. FOR THE FOLLO WING REASONS THE ASSESSING OFFICER REJECTED THE ASSESSE ES OBJECTIONS: A) NO SANCTION LETTER HAS BEEN PRODUCED FROM THE COMPETENT AUTHORITY PERMITTING THE ASSESSEE TO DUMP HUGE QUANTITY OF MARINE PRODUCTS IN THE NEARBY FARM ; B) THERE ARE NO TRANSPORTATION AND CLEARING CHARGES IN RESPECT OF MOVEMENT OF MARINE PRODUCTS FROM THE GODOWN TO DUMPING GROUND; C) THERE ARE NO PURIFICATION CHARGES AFTER CLEARING OF F THE ALLEGED CONTAMINATED MARINE PRODUCTS; AND D) THE PARTNERS ACCOUNT ALSO DO NOT SHOW ANY EXPENDITU RE. FINALLY THE ASSESSING OFFICER NEGATIVED THE LOSS C LAIMED BY THE ASSESSEE AND NET LOSS WAS COMPUTED AT RS.1 11 3 7 324/- ITA NO. 924/COCH/2008 4 2. ON APPEAL TO THE CIT(APPEALS) THE REPRESENTATI VE OF THE ASSESSEE SUBMITTED THAT THE INSPECTING OFFICER LIVE STOCK AND MARINE PRODUCTS AFTER INSPECTING THE GOO DS HAD CERTIFIED THAT THE GOODS WERE UNFIT FOR HUMAN CONSU MPTION AND THIS ITSELF PROVES THAT THE GOODS WERE UN-SALEA BLE. IT WAS THE ARGUMENT OF THE ASSESSEE THAT SINCE THE FIR M WAS IN FINANCIAL STRINGENCY ELECTRICITY CONNECTION WAS DI SCONNECTED LEADING TO MELTING OF ICE IN THE COLD STORAGE AND C ONSEQUENT FURTHER DETERIORATION OF THE MARINE PRODUCTS. THE REFORE DECAYED AND CONTAMINATED 320 TONS OF MARINE PRODUCT S BURIED IN THE NEARBY FARM OF THE PARTNERS. HOWEVE R THE LD. CIT(APPEALS) DID NOT ACCEPT THE ARGUMENTS OF THE AS SESSEE AND UPHELD THE FINDINGS OF THE ASSESSING OFFICER. HENCE THE ASSESSEE IS ON SECOND APPEAL BEFORE THE TRIBUNA L. 3. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS WHICH WERE ADVANCED BEFORE THE LOWER AUTHORITIES. FURTHER IT IS SUBMITTED THAT MARIN E PRODUCTS WHICH WAS DECAYED AND CONTAMINATED HAS BEEN CERTIFIED BY THE HEALTH DEPARTMENT THAT IT IS UNFIT FOR HUMAN CONSUMPTION AND THEREFORE IT HAS TO BE REMOVED FROM THE GODOWN AS SOON AS POSSIBLE OTHERWISE THE OTHER MARI NE PRODUCTS WILL ALSO AFFECT AND THERE WAS EVERY CHANC E OF DECAYING THE OTHER MARINE PRODUCTS WHICH WERE IN TH E SAME ITA NO. 924/COCH/2008 5 GODOWN WHICH MADE THE ASSESSEE TO TRANSPORT THE SA ME IMMEDIATELY TO THE NEARBY FARM OF THE PARTNERS. T HIS HAS BEEN DONE TAKING INTO THE NECESSITY AND SAFETY OF T HE ASSESSEES BUSINESS ACTIVITIES. 4. ON THE OTHER HAND THE LD. JR. D.R. SUPPORTED TH E FINDINGS OF THE ASSESSING OFFICER AS WELL AS THE CI T(APPEALS) AND URGED US TO CONFIRM THE ORDER OF THE CIT(APPEAL S) AS IT IS PASSED ON APPRECIATION OF FACTS. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ASSESSEE FURNI SHED A CERTIFICATE FROM THE LIVE STOCK DEPARTMENT DATED 5- 8-2003 AND OTHER CERTIFICATES AS DEMANDED BY THE ASSESSING OFFICER ARE NOT AT ALL STATUTORILY REQUIRED TO PROVE THAT T HE MARINE PRODUCTS GOT DECAYED AND CONTAMINATED AND RESULTED IN A LOSS. IT IS THE BASIC LAW THAT A PERSON CANNOT BE COMPELLED TO DO A THING WHICH HE IS NOT EXPECTED TO DO UNDER THE LAW. IF AT ALL THE ASSESSING OFFICER HAS A REASONABLE BE LIEF THAT SUCH DECAYED AND CONTAMINATED MARINE PRODUCTS HAVIN G SALEABLE VALUE OR AT LEAST THE SCRAP VALUE AS IT I S A CASE OF RE-ASSESSMENT IT IS FOR THE ASSESSING OFFICER TO P ROVE THAT SUCH DECAYED AND CONTAMINATED MARINE PRODUCTS HAVE THE VALUE AND HE POSSESSED THE EVIDENCE TO SHOW THAT IT IS ITA NO. 924/COCH/2008 6 INCOME ESCAPED. THIS WAS NOT DONE BY THE ASSESSIN G OFFICER. THE INSPECTING OFFICER LIVE STOCK & MARI NE PRODUCTS VIDE CERTIFICATE DATED 5-8-2003 HAS SPECIFICALLY CE RTIFIED THAT THE MARINE PRODUCTS ARE NOT SUITABLE FOR HUMAN CONSUMPTION. THIS HAS NOT BEEN DISPUTED EITHER BY THE ASSESSING OFFICER OR BY THE CIT(APPEALS). IT IS THE SUBMISSION OF THE ASSESSEE THAT THE FAMILY MEMBERS OF THE PARTNERS ARE HAVING 10 ACRES OF FARM LAND WHICH IS NEARBY TO THE ASSESSEE COMPANY DETAILS OF LAND WITH SURVE Y NOS.ETC. HAVE BEEN FURNISHED TO THE AUTHORITIES TH E ASSESSEE IS IN ACUTE FINANCIAL STRINGENCY DELAY I N REMOVING THE DECAYED AND CONTAMINATED MARINE PRODUCTS WOULD AFFECT THE REMAINING MARINE PRODUCTS WHICH HAVE BEEN KEPT IN THE SAME PREMISES ASSESSEE HAS INCURRED NOMINAL TRANSPORTATION CHARGES AND IN TURN THE MARINE PRODU CTS ARE MANURE TO THE FARM WHICH LAND IS UTILIZED FOR CUL TIVATION. EVEN THOUGH THE ASSESSEE HAS NOT CLAIMED ANY EXPEND ITURE IN CONNECTION WITH THE DISPOSAL OF THE SAID MARINE PRODUCTS THE CERTIFICATE OF INSPECTING OFFICER LIVE STOCK & MARINE PRODUCTS CONCLUSIVELY PROVES THAT MARINE PRODUCTS W ERE NOT SUITABLE FOR HUMAN CONSUMPTION AND THE AUTHORITIES BELOW HAVE NOT BROUGHT IN ANY DOCUMENTARY EVIDENCE SO AS TO ESTABLISH THE ASSESSEE HAS EARNED ANY INCOME OUT OF THE SALE ITA NO. 924/COCH/2008 7 OF THESE DECAYED AND CONTAMINATED MARINE PRODUCTS. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTA NCES OF THE CASE PARTICULARLY THE ASSESSEE IS ENGAGED IN PROCES SING AND EXPORTING OF MARINE PRODUCTS AND SUPPORTED WITH THE CERTIFICATE DATE 5-8-2003 OF LIVE STOCK & MARINE PR ODUCTS DEPARTMENT WE SET ASIDE THE ORDERS OF THE LOWER AU THORITIES ON THIS ISSUE AND ALLOW THE CLAIM OF THE ASSESSEE. ANOTHER SALIENT FEATURE IS THAT EVEN THIS CLAIM OF LOSS IS ALLOWED THE ULTIMATE RESULT IS A LOSS ONLY. IN VIEW OF THE AB OVE THE ORDERS OF THE INCOME-TAX AUTHORITIES ARE QUASHED AN D THE APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. SD/- SD/- (SANJAY ARORA) (N.VIJAYKUMARAN) ACCOUNTANT MEMBER JUDICIAL M EMBER ERNAKULAM DATED THE 06 TH MAY 2010. PM. COPY FORWARDED TO: 1. M/S. SEA PEARL ENTERPRISES CHANDIROOR ALAPPUZHA. 2. THE DY. COMMISSIONER OF INCOME-TAX CIRICLE-1 ALA PPUZHA. 3. CIT(A)-IV KOCHI. 4. CIT KOTTAYAM./5. D.R. BY ORDER SD/- ASSISTANT REGISTRAR