CIT vs. USHA AMPORHOUS METALS LTD

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ITA - 734 / 2010HC Delhi01 June 20101 pages
For Petitioner: SURUCHII AGGARWAL
AI SummaryDismissed

What did the High Court hold?

The Tribunal found that the assessee had obtained necessary sanctions, revalued obsolete raw material and finished goods based on recoverable market rates with board authorization, and disclosed all factual material. The auditors provided no adverse findings, and the explanation offered was cogent and supported by books of accounts.

What were the facts?

The Assessing Officer initiated penalty proceedings against the assessee under Section 271(1)(c) for not treating scrap as raw material and not providing an adequate explanation. The CIT(A) affirmed this order.

What were the issues?

Whether penalty under Section 271(1)(c) was leviable when the assessee provided a cogent explanation for revaluation of stock, supported by evidence and not rebutted by the Assessing Officer.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 260-A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF DELHI AT NEW DELHI . ITA 734/2010 . CIT ..... Appellant Through Ms.Suruchi Aggarwal, Adv. . versus . USHA AMPORHOUS METALS LTD ..... Respondent Through . CORAM: HON?BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE MADAN B. LOKUR . . . O R D E R 01.06.2010 . This is an appeal under Section 260-A of the Income Tax Act, 1961 (for brevity ?the Act?) assailing the order passed by the Income Tax Appellate Tribunal (for short ?the Tribunal?) in ITA No. 2879/Del/2008 pertaining to the Assessment Year 2004-2005. The Assessee was aggrieved by the order of assessment whereby the Assessing Officer had initiated a penalty proceeding under Section 271(1)(c) of the Act. On an appeal being preferred, CIT (A) affirmed the said order. The two grounds for initiation of the penalty proceeding were that the assessee had not treated scrap as raw material as it used to do on earlier years and that he had not offered adequate explanation for the same. ITA No. 734/2010 page 1 of 3 The Tribunal, as is discernible from the order impugned, had adverted to the facts in detail and thereafter expressed the view that the assessee had received the sanction from STPI and such sanction had also been sent to the Deputy Commissioner of Customs and Excise; that specific permission had been taken for the revaluation of the obsolete raw material and finished goods from the government; the valuation of the obsolete goods had been done on the basis of the recoverable market rates and the same had been authorized through the Board of Directors and reflected in the note to the accounts; that the auditors of the company have not given any adverse finding in respect of the said revaluation; the schedule to the balance sheet had been specifically identified, valued and certified by the management at the lower figure after the revaluation and the removal of the obsolete stock; that the assessee had disclosed all factual material for the purpose of its assessment in respect of revaluation of the said raw material as well as the finished goods; that the assessee had produced substantial evidence to substantiate its case in respect of the claim of write off after revaluation of the closing stock of raw material and finished goods; that explanation offered by the evidence was cogent and germane and the same had not been rebutted by the Assessing Officer; that the explanation offered by the . ITA No. 734/2010 page 2 of 3 assessee has not been treated to be unbelievable or incredulous and also has the support from the books of accounts and hence there was no justification for initiation of penalty proceeding. In our considered opinion, the Tribunal has adverted to all the facets and has recorded the findings against the Revenue. Ms. Suruchi Aggarwal, learned counsel for the Revenue has urged with immense vehemence that there is perversity of approach by the Tribunal but on a scrutiny of the order of the Tribunal and the analysis made, we do not perceive any perversity of approach. Hence, the appeal preferred by the Revenue, being devoid of merit, stands dismissed in limine. . . CHIEF JUSTICE . . . JUNE 01, 2010 MADAN B. LOKUR, J kapil . . . . . . . . . . . . ITA No. 734/2010 page 3 of 3 .

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