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2010 (12) TMI 501 - AT - Income TaxAddition -job work charges received - In this view of the matter, the CIT(A) concluded that there was no merit in the contention of the assessee that the power and fuel consumption has been understated to the extent of damaged rice bran purchased on behalf of M/s. Balaji Agro Tech, which was used by the assessee itself as fuel. The CIT(A) further noticed that as per the agreement which the assessee had with M/s. Balaji Agro Tech, all the raw material was to be supplied to the assessee by the manufacturer itself, viz. M/s. Balaji Agro Tech and consequently, he concluded that the Assessing Officer was justified in rejecting the explanation of the assessee and making the impugned addition. We are in agreement with the reasoning given by the lower authorities for rejecting the explanation of the assessee. Merely based on the letter of M/s. Balaji Agro Tech dated 14.12.2006, one cannot accept the contentions and explanations of the assessee, when facts of the case like fuel consumption charges, etc. speak otherwise. Penalty - Not filing the tax audit report as required under S.44AB - merely based on the addition made in the assessment, or because the explanation of the assessee was not convincing and hence acceptable, it cannot be said that the assessee was not justified in nursing the impression that its turnover was below Rs.40 lakhs and the provisions of S.44AB are not attracted in its case - in the absence of any material brought on record by the Revenue to say that the impression of the assessee that its turnover was below Rs.40 lakhs was not bona fide, there is no justification for the levy of penalty under S.271B of the Act - Decided in favour of assessee.
Issues involved:
1. Quantum appeal against addition of job work charges. 2. Penalty appeal against imposition of penalty under S.271B for not filing tax audit report. Quantum Appeal - Addition of Job Work Charges: The appellant contested the addition of Rs.39,06,672 by the Assessing Officer for job work charges received, which was based on the difference between declared and actual job work charges. The appellant explained discrepancies due to machinery breakdown and rice bran spoilage, resulting in fuel usage and understated power and fuel charges. The CIT(A) upheld the addition, emphasizing no significant change in raw material consumption and the agreement terms with the client. The tribunal agreed with the lower authorities, citing lack of merit in the appellant's contentions. Relying on case laws, the tribunal dismissed the appeal, stating the appellant's explanations were insufficient to justify the addition. Penalty Appeal - Imposition of Penalty under S.271B: The appellant challenged the penalty of Rs.28,431 imposed under S.271B for not filing a tax audit report. The appellant argued that its turnover was below the threshold for S.44AB applicability, supported by a confirmation letter from the client. Despite the addition in the quantum appeal, the tribunal acknowledged the appellant's genuine belief regarding turnover and non-applicability of S.44AB provisions. Finding the Revenue's case lacking evidence to prove otherwise, the tribunal canceled the penalty, allowing the appellant's grounds in the penalty appeal. In conclusion, the tribunal dismissed the quantum appeal (ITA No.456/Hyd/2009) while allowing the penalty appeal (ITA No.457/Hyd/2009), emphasizing the appellant's genuine belief regarding turnover and lack of justification for the penalty imposition under S.271B.
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