The Income-tax Officer, Amritsar. V. Cee Pee Embroideries, Amritsar.

CO 24/ASR/2012

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8395 (ITAT-AMRITSAR)
• Duration Of Justice: 8 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 09-04-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 09-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R L CHHANALIA
• Keywords: Rejection of books of accounts; Depreciation; Unabsorbed depreciation
• Section: 143(3); 133(6); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NOS.302 TO 304 (ASR)/2012 ASSESSMENT YEARS:2005-06, 2006-07 & 2007-08 PAN :AADFC2584Q M/S. CEE PEE EMBROIDERIES VS. INCOME TAX OFFICER, NEAR GANDA SINGH WALA, WARD V(1), AMRITSAR. MAJITHA ROAD, AMRITSAR. AMRITSAR. (APPELLANT) (RESPONDENT) I.T.A. NOS.306 TO 308 (ASR)/2012 ASSESSMENT YEARS:2005-06, 2006-07 & 2007-08 PAN :AADFC2584Q INCOME TAX OFFICER, VS. M/S. CEE PEE EMBROIDERIES, WARD V(1), AMRITSAR. NEAR GANDA SINGH WALA, MAJITHA ROAD, AMRITSAR. (APPELLANT) (RESPONDENT) C.O.NO.24(ASR)/2012 ARISING OUT OF I.T.A. NO.308 (ASR)/2012 ASSESSMENT YEAR: 2007-08 PAN :AADFC2584Q M/S. CEE PEE EMBROIDERIES VS. INCOME TAX OFFICER, NEAR GANDA SINGH WALA, WARD V(1), AMRITSAR. MAJITHA ROAD, AMRITSAR. AMRITSAR. (APPELLANT) (RESPONDENT) ITA NO.302 TO 304(ASR)/2012 ITA NO.306 TO 308(ASR)/2012 C.O.NO.24(ASR)/2012 2 APPELLANT BY:NONE RESPONDENT BY:SH.R.L. CHHANALIA, DR DATE OF HEARING: 04/04/2013 DATE OF PRONOUNCEMENT:09/04/2013 ORDER PER BENCH ; THESE THREE CROSS APPEALS OF THE ASSESSEE AND THE REVENUE ARISING FROM THE CONSOLIDATED ORDER OF THE CIT(A), AMRITSAR , DATED 10.05.2012 FOR THE ASSESSMENT YEARS 2005-06, 2006-07 & 2007-08. TH E ASSESSEE HAS ALSO FILED CROSS OBJECTION AGAINST REVENUES APPEAL FOR THE ASSESSMENT YEAR 2007-08. 2. IN I.T.A. NO. 302(ASR)/ 2012 FOR THE ASSESSMENT YEAR 2005-06, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1. THAT THE ORDER DATED 10.05.2012 PASSED BY CIT(AP PEALS), AMRITSAR AS WELL AS THAT OF I.T.O. WARD 5(1), AMRIT SAR DT. 05.09.2007 ARE ILLEGAL, AGAINST THE FACTS OF CASE AND UNTENABL E IN LAW. 2. THAT THE LEARNED ITO AS WELL AS CIT(APPEALS) HAV E, IN VIEW OF FACTS & CIRCUMSTANCES OF THE CASE, GROSSLY ERRED IN LAW & ON FACTS IN MAKING TRADING ADDITION OF RS. 534550/- BY APPLYING G.P. RATE OF 50% AGAINST DECLARED G.P. RATE OF 45.83%. 3. THAT WITHOUT POINTING OUT ANY SPECIFIC DEFECT IN BOOKS OF ACCOUNTS REGULARLY MAINTAINED AND DULY AUDITED U/S 44AB, THE ADDITION MADE & THAT TOO WITHOUT INVOKING PROVISIONS OF SECT ION 145(3) IS ILLEGAL & BAD IN LAW. ITA NO.302 TO 304(ASR)/2012 ITA NO.306 TO 308(ASR)/2012 C.O.NO.24(ASR)/2012 3 4. THAT THE LEARNED CIT(APPEALS) HAS ERRED IN NOT F OLLOWING THE BINDING DECISION OF HON'BLE I.T.A.T. , AMRITSAR BEN CH IN THE CASE OF SHREE GANPATI EMBROIDERIES (P) LTD. WHEREIN UNDER S IMILAR CIRCUMSTANCES, G.P. RATE OF EVEN 32% WAS HELD REASO NABLE. 5. THAT IT IS PRAYED THAT THE ORDER OF THE CIT(APP EALS), AMRITSAR AS WELL AS THAT OF INCOME TAX OFFICER MAY PLEASE BE Q UASHED BEING ILLEGAL & ADDITION OF RS. 534550/- MADE MAY PLEAS E BE DELETED IN THE INTEREST OF JUSTICE. 6. THAT ANY OTHER GROUND OF APPEAL AS MAY BE URGED AT THE TIME OF HEARING OF APPEAL. 3. IN I.T.A. NO. 303(ASR)/ 2012, FOR THE ASSESSMEN T YEAR 2006-07, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER DATED 10.05.2012 PASSED BY CIT(A PPEALS), AMRITSAR AS WELL AS THAT OF I.T.O. WARD 5(1), AMRIT SAR DT. 26.11.2008 ARE ILLEGAL, AGAINST THE FACTS OF CASE AND UNTENABL E IN LAW. 2. THAT THE LEARNED ITO AS WELL AS CIT(APPEALS) HAV E, IN VIEW OF FACTS & CIRCUMSTANCES OF THE CASE, GROSSLY ERRED IN LAW & ON FACTS IN MAKING TRADING ADDITION OF RS. 569415/- BY APPLYING G.P. RATE OF 50% AGAINST DECLARED G.P. RATE OF 46.19%. 3. THAT WITHOUT POINTING OUT ANY SPECIFIC DEFECT IN BOOKS OF ACCOUNTS REGULARLY MAINTAINED AND DULY AUDITED U/S 44AB, THE ADDITION MADE & THAT TOO WITHOUT INVOKING PROVISIONS OF SECT ION 145(3) IS ILLEGAL & BAD IN LAW. 4. THAT THE LEARNED CIT(APPEALS) HAS ERRED IN NOT F OLLOWING THE BINDING DECISION OF HON'BLE I.T.A.T. , AMRITSAR BEN CH IN THE CASE OF SHREE GANPATI EMBROIDERIES (P) LTD. WHEREIN UNDER S IMILAR CIRCUMSTANCES, G.P. RATE OF EVEN 32% WAS HELD REASO NABLE. ITA NO.302 TO 304(ASR)/2012 ITA NO.306 TO 308(ASR)/2012 C.O.NO.24(ASR)/2012 4 5. IT IS PRAYED THAT THE ORDER OF THE INCOME TAX OF FICER MAY PLEASE BE QUASHED BEING ILLEGAL & ADDITION OF RS. 569415/- MADE MAY PLEASE BE DELETED IN THE INTEREST OF JUSTICE. 6. THAT ANY OTHER GROUND OF APPEAL AS MAY BE URGED AT THE TIME OF HEARING OF APPEAL. 4. IN I.T.A. NO. 304(ASR)/ 2012, FOR THE ASSESSMEN T YEAR 2007-08, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER DATED 10.05.2012 PASSED BY CIT(A PPEALS), AMRITSAR AS WELL AS THAT OF I.T.O. WARD 5(1), AMRIT SAR DT. 14.12.2009 ARE ILLEGAL, AGAINST THE FACTS OF CASE AND UNTENABL E IN LAW. 2. THAT THE LEARNED ITO AS WELL AS CIT(APPEALS) HAV E, IN VIEW OF FACTS & CIRCUMSTANCES OF THE CASE, GROSSLY ERRED IN LAW & ON FACTS IN MAKING TRADING ADDITION OF RS. 1596894/- BY APPLYIN G G.P. RATE OF 50% AGAINST DECLARED G.P. RATE OF 42.90%. 3. THAT WITHOUT POINTING OUT ANY SPECIFIC DEFECT IN BOOKS OF ACCOUNTS REGULARLY MAINTAINED AND DULY AUDITED U/S 44AB, THE ADDITION MADE & THAT TOO WITHOUT INVOKING PROVISIONS OF SECT ION 145(3) IS ILLEGAL & BAD IN LAW. 4. THAT THE LEARNED CIT(APPEALS) HAS ERRED IN NOT F OLLOWING THE BINDING DECISION OF HON'BLE I.T.A.T. , AMRITSAR BEN CH IN THE CASE OF SHREE GANPATI EMBROIDERIES (P) LTD. WHEREIN UNDER S IMILAR CIRCUMSTANCES, G.P. RATE OF EVEN 32% WAS HELD REASO NABLE. 5. IT IS PRAYED THAT THE ORDER OF THE INCOME TAX OF FICER MAY PLEASE BE QUASHED BEING ILLEGAL & ADDITION OF RS.1596894/- MADE MAY PLEASE BE DELETED IN THE INTEREST OF JUSTICE. 6. THAT ANY OTHER GROUND OF APPEAL AS MAY BE URGED AT THE TIME OF HEARING OF APPEAL. ITA NO.302 TO 304(ASR)/2012 ITA NO.306 TO 308(ASR)/2012 C.O.NO.24(ASR)/2012 5 5. IN I.T.A. NO. 306(ASR)/ 2012, FOR THE ASSESSMEN T YEAR 2005-06, THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT(A) HAS ERRED IN DELETING THE AD-HOC ADDITIONS OF RS. 20,000/-, RS. 4,270/- & RS. 20,000/- (TOTAL RS. 44,270/-) MADE BY THE A.O. TREATING THE EXPENSES CLAIMED BY THE ASSESSEE IN EXCESSIVE ON ACCOUNT OF WAGES, CONSUMABLE STORES CLIPPING/MENDING RESPECTI VELY. 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 45 ,37,778/- MADE BY THE A.O. AND ALLOWED DEPRECIATION @ 50% ON MACHINER Y CLAIMED TO HAVE BEEN PURCHASED UNDER TUFS. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE USE OF WORDS PROCESSING AND GARMENT SECTOR ARE WIDE ENOUGH TO INCLUDE IN ITS AMBIT UTILIZATION OF MACHINERY IN ANY ACTIVITY IN TEXTILE INDUSTRY TO BE ELIGIBLE TO CLAIM DEPRECIATION. 3. THE ORDER OF THE LEARNED CIT(A) BE VACATED AND THAT THE A.O. BE RESTORED. 4. APPELLANT CRAVES LEAVE TO AMEND OR ADD ANY OR MORE GROUNDS OF APPEAL. 6. IN I.T.A. NO. 307(ASR)/ 2012, FOR THE ASSESSMEN T YEAR 2006-07, THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1 WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE ORDER OF THE LEARNED CIT(A) IS BAD IN LAW. 2 WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.31, 76,445/- MADE BY ITA NO.302 TO 304(ASR)/2012 ITA NO.306 TO 308(ASR)/2012 C.O.NO.24(ASR)/2012 6 THE A.O. AND ALLOWED DEPRECIATION @ 50% ON MACHINER Y CLAIMED TO HAVE BEEN PURCHASED UNDER TUFS. 3 WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE USE OF WORDS PROCESSING AND GARMENT SECTOR ARE WIDE ENOUGH TO INCLUDE IN ITS AMBIT UTILIZATION OF MACHINERY IN ANY ACTIVITY IN TEXTILE INDUSTRY TO B E ELIGIBLE TO CLAIM DEPRECIATION. 4. THE ORDER OF THE LEARNED CIT(A) BE VACATED AND T HAT THE A.O. BE RESTORED. 5. APPELLANT CRAVES LEAVE TO AMEND OR ADD ANY OR MORE GROUNDS OF APPEAL. 7. IN I.T.A. NO. 308(ASR)/ 2012, FOR THE ASSESSMEN T YEAR 2007-08, THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LEARNED CIT(A) IS BAD IN LAW. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.3, 71,089/- MADE BY THE A.O. AND ALLOWED DEPRECIATION @ 50% ON MACHINERY CLAIMED TO HAVE BEEN PURCHASED UNDER TUF S. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE USE OF WORDS PROCESSING AND GARMENT SECTOR ARE WIDE ENOUGH TO INCLUDE IN ITS AMBIT UTILIZATION OF MACHINERY IN ANY ACTIVITY IN TEXTI LE INDUSTRY TO BE ELIGIBLE TO CLAIM DEPRECIATION. 4. THE ORDER OF THE LEARNED CIT(A) BE VACATED AND THAT THE A.O. BE RESTORED. ITA NO.302 TO 304(ASR)/2012 ITA NO.306 TO 308(ASR)/2012 C.O.NO.24(ASR)/2012 7 5. APPELLANT CRAVES LEAVE TO AMEND OR ADD ANY OR MORE GROUNDS OF APPEAL. 8. IN C.O. NO.24(ASR)/2012 FOR THE ASSESSMENT YEAR 2007-08, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER DATED 10.05.2012 PASSED BY CIT(A PPEALS), AMRITSAR AS WELL AS THAT OF I.T.O. WARD 5(1), AMRIT SAR DT. 14.12.2009 ARE ILLEGAL, AGAINST THE FACTS OF CASE AND UNTENABL E IN LAW. 2. THAT THE LEARNED ITO AS WELL AS CIT(APPEALS) HAV E, IN VIEW OF FACTS & CIRCUMSTANCES OF THE CASE, GROSSLY ERRED IN LAW & ON FACTS IN MAKING TRADING ADDITION OF RS. 1596894/- BY APPLYIN G G.P. RATE OF 50% AGAINST DECLARED G.P. RATE OF 42.90%. 3. THAT WITHOUT POINTING OUT ANY SPECIFIC DEFECT IN BOOKS OF ACCOUNTS REGULARLY MAINTAINED AND DULY AUDITED U/S 44AB, THE ADDITION MADE & THAT TOO WITHOUT INVOKING PROVISIONS OF SECT ION 145(3) IS ILLEGAL & BAD IN LAW. 4. THAT THE LEARNED CIT(APPEALS) HAS ERRED IN NOT F OLLOWING THE BINDING DECISION OF HON'BLE I.T.A.T. , AMRITSAR BEN CH IN THE CASE OF SHREE GANPATI EMBROIDERIES (P) LTD. WHEREIN UNDER S IMILAR CIRCUMSTANCES, G.P. RATE OF EVEN 32% WAS HELD REASO NABLE. 5. IT IS PRAYED THAT THE ORDER OF THE INCOME TAX OF FICER MAY PLEASE BE QUASHED BEING ILLEGAL & ADDITION OF RS.1596894/- MADE MAY PLEASE BE DELETED IN THE INTEREST OF JUSTICE. 6. THAT ANY OTHER GROUND OF APPEAL AS MAY BE URGED AT THE TIME OF HEARING OF APPEAL. 9. FIRST OF ALL, WE TAKE UP APPEAL OF THE ASSESSEE IN ITA NO.304(ASR)/2012 FOR THE ASSESSMENT YEAR 2007-08. T HE ASSESSEE HAS DEPOSITED SHORT FEE OF RS.9500/-. THE DEFICIENCY LE TTER WAS ISSUED TO THE ITA NO.302 TO 304(ASR)/2012 ITA NO.306 TO 308(ASR)/2012 C.O.NO.24(ASR)/2012 8 ASSESSEE BUT THE ASSESSEE HAS NOT DEPOSITED THE SAM E. THOUGH THE ASSESSEE HAS FILED C.O. AGAINST REVENUES APPEAL AND THE GRO UNDS TAKEN IN THE PRESENT APPEAL ARE IDENTICAL IN THE SAID C.O. THEREFORE, IT APPEARS THAT THE ASSESSEE MAY NOT BE INTERESTED IN DEPOSITING SHORT FEE IN TH E PRESENT APPEAL. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND IN THE ABSENCE OF REQUISITE FEE HAVING BEEN DEPOSITED BY T HE ASSESSEE, THE APPEAL FILED BY THE ASSESSEE IS NOT ADMITTED. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IN ITA NO.304(ASR)/2012 IS DISMISSED. 10. NONE ATTENDED ON BEHALF OF THE ASSESSEE. BUT CO NSOLIDATED WRITTEN SUBMISSIONS FOR ALL THE ASSESSMENT YEARS WITH RE GARD TO THE APPEALS OF THE REVENUE AND ALSO WITH REGARD TO ASSESSEES APPEALS HAVE BEEN PLACED ON RECORD BY THE ASSESSEE, WHICH FOR THE SAKE OF CLARI TY ARE REPRODUCED AS UNDER: DEPARTMENT APPEAL- 2005-06 AY 1) THE FIRST ISSUE INVOLVED IS REGARDING DELETION OF A D-HOC ADDITION OF RS. 2,000/-, RS. 4,270/- & RS. 20,000/- (TOTAL RS. 44,270/-) MADE BY THE ASSESSING OFFICER TREATING THE EXPENSES CLAIMED BY THE ASSESSEE IN EXCESSIVE ON A CCOUNT OF WAGES, CONSUMABLE STORE & CLIPPING/MENDING RESPECTIVELY. IN THIS REGARD, SUBMISSION MADE BEFORE THE HON'BLE CIT(A) ARE REPRODUCED HERE UNDER: SIR, ALL THE EXPENSES CLAIMED ARE DULY VOUCHED, BO OKS OF ACCOUNT WITH BILL & VOUCHERS WERE PRODUCED DURING THE COURSE OF ASSESS MENT PROCEEDINGS AND AS SUCH DISALLOWANCE MADE WITHOUT POINTING OUT ANY INADMIS SIBLE OR UNVOUCHED EXPENSES IS ILLEGAL & UNJUSTIFIED. LEDGER COPIES OF THE ABO VE ACCOUNTS ARE ENCLOSED HEREWITH FOR READY REFERENCE. BILLS & VOUCHERS ARE ALSO BEING PRODUCED. IN RESPECT OF PAYMENTS TO WORKERS AGAINST WAGES & CLIPPING/ME NDING CHARGES, EACH & EVERY ITA NO.302 TO 304(ASR)/2012 ITA NO.306 TO 308(ASR)/2012 C.O.NO.24(ASR)/2012 9 PAYMENT IS VOUCHED AND COMPARABLE WITH EXPENSES CL AIMED WITH THAT OF PRECEDING YEAR. ASSTT. YEAR SALES & JOB WORK WAGES %AGE 2004-05 4980531/- 174765/- 3.51% 2005-06 12805309/- 416431/- 3.25% ASSTT. YEAR SALES & JOB WORK CLIPPING & MENDING %AGE 2004-05 4980531/- 158310/- 3.19% 2005-06 12805309/- 414914/- 3.24% EVEN THE AGGREGATE %AGE OF THE ABOVE PAYMENTS DURI NG THE YEAR IS LOWER AS COMPARED WITH LAST YEAR. REGARDING DISALLOWANCE OUT OF CONSUMABLE STORE, IT IS SUBMITTED THAT DETAILED FILED WAS EXCEEDING RS. 1000/- AND THIS AMOUNT OF RS. 42 70/- IS IN RESPECT OF PAYMENTS LESS THAN RS. 1000/-. BILLS AND VOUCHERS IN RESPEC T OF ALL THE EXPENSED ARE AVAILABLE WITH THE ASSESSEE WELL EVIDENT FROM THE LEDGE COPY OF ACCOUNT WHICH MENTIONS THE BILL NUMBER OF EACH & EVERY PAYMENT. UNDER THESE CIRCUMSTANCES, NO DISALLOWANCE IS CALLED FOR IN RESPECT OF ABOVE EXPENSES AND THEREFORE, IT IS REQUESTED THAT THE SAME MAY PLEASE BE DELETED. ABOVE ALL, IT IS POINTED OUT THAT THESE EXPENSES A RE PART OF DIRECT COST AND HAS BEARING ON GP RATE. SIR, AFTER CLAIMING THE ABOVE EXPENSES, THE GP DECLARED BY THE ASSESSEE AT 45.83% IS SUBSTANTIALLY HIGHER THAN GP RATE OF 32% UPHELD BY THE HON'BLE I.T.A.T., AMRITSAR BENCH WHICH SUPPORTS TH E FACT THAT THE EXPENSES CLAIMED ARE NEITHER EXCESSIVE NOR UNREASONABLE. FOR DETAILS OF EXPENSES- REFER PAGE S. NO. 51-53 & 54-57 SIR, IN VIEW OF ABOVE FACTS, THE HON'BLE CIT(A) WA S FULLY JUSTIFIED IN DELETING THE AFORESAID ADDITION. 2) THE SECOND ISSUE INVOLVED IS REGARDING ALLOWANCE OF DEPRECIATION @ 50% ON MACHINERY PURCHASES UNDER TUFS AGAINST 25% ALLOWED BY THE AO. ITA NO.302 TO 304(ASR)/2012 ITA NO.306 TO 308(ASR)/2012 C.O.NO.24(ASR)/2012 10 THIS ISSUE IS COVERED BY THE DECISION OF THE HON'B LE BENCH IN THE CASE OF THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-V, AM RITSAR VS. M/S S.S. EMBROIDERS, MAJITHA ROAD, AMRITSAR I.T.A. NO. 35 7 & 358 (ASR)/2010 AY 2005-06 & 2006-07 RESPECTIVELY. THE FACTS OF THIS CASE ARE SIMILAR TO THE CASE BEFORE THE HON'BLE BENCH. SIR, THIS DECISION WAS DELIVERED AFTER CONSIDERING ALL THE RELEVANT DECISIONS OF THE CO-ORDINATE BENCHES AND ALSO AFTER TAKING INTO CON SIDERATION THE DECISION OF HON'BLE SUPREME COURT AND THERE IS NO ADVERSE DECI SION ON THE ISSUE INVOLVED AND UNDER THESE CIRCUMSTANCES THE HON'BLE CIT (APPEALS ) AMRITSAR HAS RIGHTLY FOLLOWED THE BINDING DECISION OF HON'BLE AMRITSAR BENCH WHILE ALLOWING ASSESSEES CLAIM OF DEPRECIATION @ 50% ON MACHINER Y PURCHASES UNDER TUFS. DEPARTMENT APPEAL 2006-07 ASSESSMENT YEAR & 2007 -08 ASSESSMENT YEAR THE ONLY ISSUE INVOLVED IS ALLOWANCE OF DEPRECIATI ON @ 50% ON MACHINERY PURCHASES UNDER TUFS AGAINST ALLOWED BY THE AO. THIS ISSUE IS COVERED BY THE DECISION OF THIS HON' BLE BENCH IN THE CASE OF THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-V, AM RITSAR VS. M/S S.S. EMBROIDERS, MAJITHA ROAD, AMRITSAR I.T.A. NO. 35 7 & 358 (ASR)/2010 AY 2005-06 & 2006-07 RESPECTIVELY. THE FACTS OF THIS CASE ARE SIMILAR TO THE CASE BEFORE THE HON'BLE BENCH. ASSESSEES APPEAL 2005-06 AY, 2006-07 AY & 2007-0 8 AY. THE ONLY ISSUE INVOLVED IS TRADING ADDITIONS OF RS . 534550/-, RS. 569415/- & 1596894/- MADE BY THE A.O. BY APPLYING GP RATE OF 50% AS AGAINST DECLARED GP RATE OF 45.83%, 46.19% & 42.90% RESPECTIVELY. IN THIS REGARD, SUBMISSIONS MADE BEFORE THE HON'BL E CIT(A) ARE REPRODUCED HERE UNDER: RETURN OF TOTAL INCOME SHOWING TOTAL INCOME AT NIL WAS FILED ON 29.10.2005 WITH CLAIM OF UNABSORBED DEPRECIATION TO BE C/F AT RS. 9551818/-. THE ASSESSEE FIRM STARTED MANUFACTURING OF EMBROIDERED FABRICS W.E.F . 10.11.2003 I.E. DURING THE PREVISION YEAR RELEVANT TO 2004-05 A.Y. DURING THI S PREVISION YEAR RELEVANT TO 2004-5 A.Y., TOTAL SALE & JOB RECEIPTS WERE AT 498 0531/- WITH G.P. RATE OF 37.15%. DURING THE PREVIOUS YEAR RELEVANT TO 2005- 06 A.Y. , GROSS PROFIT RATE IS AT 45.83% ON SALE & JOB RECEIPTS OF RS. 12805309/-, A N INCREASE OF OVER 150% IN SALES AS WELL AS SUBSTANTIAL JUMP IN G.P. RATE. IN CREASE IN SALE TURNOVER DURING THE YEAR IS MAINLY DUE TO THE FACT THAT PREVIOUS YEAR RELEVANT TO 2004-05 A.Y. WAS OF FOUR MONTHS 20 DAYS WHEREAS PREVIOUS YEAR RELEVANT TO 2005-06 A.Y. IS OF FULL ITA NO.302 TO 304(ASR)/2012 ITA NO.306 TO 308(ASR)/2012 C.O.NO.24(ASR)/2012 11 TWELVE MONTHS. SALES TURNOVER AS WELL AS G.P. RAT E DURING THE PREVIOUS YEAR RELEVANT TO 2005-06 A.Y. IS PROGRESSIVE AS COMPARE D WITH THAT OF 2004-05 A.Y. DAY TO DAY BOOKS OF ACCOUNTS WITH BILLS & VOUCHERS ARE BEING MAINTAINED BY THE ASSESSEE FIRM AND BOOKS ARE AUDITED U/S 44AB. INFO RMATION DESIRED BY THE ASSESSING OFFICER AS PER QUESTIONNAIRE AS WELL AS DURING THE COURSE OF ASSESSMENT PROCEEDINGS WERE FILED. BOOKS OF ACCOUNTS WITH BIL LS & VOUCHERS WERE PRODUCED AS DESIRED BY THE ASSESSING OFFICER FROM TIME TO T IME. 1. SIR, THE ASSESSING OFFICER WAS NOT AT ALL JUSTIFIED IN APPLYING G.P. RATE OF 50% AGAINST G.P. RATE OF 45.83% DECLARED BY THE ASSESSE E WHILE FRAMING ASSESSMENT. DAY TO DAY BOOKS OF ACCOUNTS WITH BILLS & VOUCHERS ARE BEING MAINTAINED BY THE ASSESSEE FIRM AND BOOKS ARE AUDIT ED U/S 44AB. THE REASONS MENTIONED BY A.O. FOR APPLYING G.P. RATE OF 50% ARE AS UNDER: A. SALES OF THE ASSESSEE HAVE GONE UP ALMOST 1 1 / 2 TIMES WITHOUT COMMENSURATE INCREASE IN GROSS PROFIT RATE. B. THE ASSESSEE HAS NOT MAINTAINED SEPARATE DETAILS IN RESPECT OF SALE OF SELF EMBROIDERED CLOTH & JOB WORK RECEIPT AND EXPEN SES RELATING THERETO. C. SHORTAGE CLAIM OF 6119.80 MTS. OF CLOTH DURING EMBR OIDERY WORK. SIR, GROSS PROFIT RATE DURING THE YEAR IS 45.83% WH ICH IS SUBSTANTIALLY HIGHER THAN G.P. RATE OF 37.15% OF LAST YEAR. SEPARATE SALE REC ORD IN RESPECT OF SELF SALE AS WELL AS EMBROIDERY JOB WORK RECEIPTS HAVE BEEN KEPT WELL EVIDENT FROM THE AUDITED PROFIT & LOSS ACCOUNT AND STOCK TALLY FURNISHED IN TAX AUDIT REPORT. IT IS NOT POSSIBLE TO BIFURCATE THE EXPENSES AS MOST OF THE T IME EMBROIDERY ON SELF PURCHASED CLOTH AS WELL AS FABRICS RECEIVED FOR EMB ROIDERY JOB WORK IS UNDERTAKEN SIDE BY SIDE. THE EMBROIDERY THREAD USED, THE WORKE RS, THE POWER CONNECTION & OTHER DIRECT EXPENSES ARE COMMON AND ARE DULY VOUCH ED. SHORTAGE CLAIM WAS DULY EXPLAINED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS WELL EVIDENT FROM THE ASSESSMENT ORDER ITSELF. UNDER THESE CIRCUMSTANCES, THE A.O. WAS NOT AT ALL JUSTIFIED IN APPLYING G.P. RATE OF 50% AGAINST 45.8 3% DECLARED BY THE ASSESSEE PARTICULARLY IN THE LIGHT OF THE FACT THAT THE ASSE SSMENT HAS BEEN FRAMED U/S 143(3) WITHOUT REJECTING BOOKS OF ACCOUNTS MAINTAINED BY T HE ASSESSEE. NO COMPARABLE CASES WITH G.P. RATE OF 50% HAVE BEEN CONFRONTED TO THE ASSESSEE AND AS SUCH THE ASSESSMENT FRAMED IS ILLEGAL & BAD IN LAW. SIR, G.P . RATE VARIES FROM CASE TO CASE AND DEPENDS UPON MANY FACTORS. FOR READY REFERENCE G.P. RATE OF SOME COMPARABLE CASES ARE AS FOLLOW: I) 32.17% - M/S S.S. EMBROIDERS ASSESSMENT FRAMED BY ADDL. CIT RANCH-5, AMRITSAR OF 2005-06 A.Y. II) 28.65% - M/S SHIVA ART EMBROIDERS ASSESSMENT FRAM ED BY DCIT, CIRCLE-4, AMRITSAR OF 2007-08 A.Y. III) 28.99% - M/S SHIVA ART EMBROIDERS ASSESSMENT FRAM ED BY DCIT, CIRCLE-4, AMRITSAR OF 2008-09 A.Y. IV) 37.26% - M/S SHREE LAXMI NARAIN EMBROIDERY ASSE SSMENT FRAMED BY ACIT, CIRCLE-4, AMRITSAR OF 2008-9 A.Y. ITA NO.302 TO 304(ASR)/2012 ITA NO.306 TO 308(ASR)/2012 C.O.NO.24(ASR)/2012 12 IT MAY BE ADDED HERE THAT IN THE CASE OF M/S SHREE GANPATI EMBROIDERY (P) LTD. A CASE OF RANGE-5, AMRITSAR WHERE THE ASSESSING OFF ICER WHICH FRAMING ASSESSMENT IN RESPECT OF 2003-04 A.Y. HAS APPLIED G .P. RATE OF 35% AGAINST DECLARED G.P. RATE OF 24.95% WHICH WAS FINALLY ASSE SSED AT 32% BY HON'BLE I.T.A.T., AMRITSAR BENCH. ASSESSEE HAS TRIED TO GET THE COPY OF THE ORDER BUT IN VAIN AS THAT ORDER HAS NOT BEEN REPORTED AND AS SUC H IT IS REQUESTED THAT THE SAME MAY PLEASE BE VERIFIED FROM THE RECORD AVAILABLE WI TH YOUR OFFICE. HOWEVER, FOR REFERENCE SAKE, COPY OF ORDER PASSED BY HON'BLE PUN JAB & HARYANA HIGH COURT WHICH MENTIONS THE FIGURE OF G.P. RATE AS STATED AB OVE IN ENCLOSED HEREWITH. IN VIEWS OF ABOVE FACTS & CIRCUMSTANCES OF THE CASE , IT IS REQUESTED THAT ADDITION MADE BY THE A.O. ALLEGING LOW G.P. RATE BE DELETED AND G.P. RATE DECLARED BY THE ASSESSEE BE ACCEPTED. FURTHER, WITH REFERENCE TO REMAND REPORT DT. 30.04. 2012 OF INCOME TAX OFFICER, WARD 5(1), AMRITSAR, IT WAS SUBMITTED AS FOLLOW: SIR, G.P. RATE DURING THE YEAR IS AT 45.83% AS AGAI NST 37.15 % OF LAST YEAR. THE A.O. HAS STATED THAT G.P. RATE OF 2004-05 A.Y. IS N OT COMPARABLE WITH THAT OF 2005-06 A.Y. AS PERIOD OF OPERATION IN 2004-05 A .Y. WAS AROUND FOUR MONTHS (10/11/03 TO 31/03/2004) AND THAT OF CURRENT PREVIO US YEAR UNDER ASSESSMENT OF FULL TWELVE MONTHS. IN THIS CONNECTION, IT IS POINT ED OUT THAT GROSS PROFIT RATE IS THE GROSS PROFIT MARGIN WITH REFERENCE TO DIRECT COST A ND AS SUCH G.P. RATE HAS NO BEARING ON THE PERIOD OF OPERATION. HIGHER G.P. RAT E DURING THE YEAR AS COMPARED WITH THAT OF LAST YEAR REFLECTS LOWER PRODUCTION CO ST AS WELL AS HIGHER REALIZATION IN PERCENTAGE TERMS AND AS SUCH THE OBSERVATIONS OF TH E A.O. ARE NOT IN ACCORDANCE WITH THE ACCOUNTING PRINCIPLE. THE ASSESSEE HAS DONE EMBROIDERY WORK ON SELF CLOTH AND AS WELL AS ON CLOTH SUPPLIED BY THE CUSTOMERS ON JOB BASIS AND IT IS NO T PRACTICALLY POSSIBLE TO MAINTAIN SEPARATE EXPENSES OF SELF PRODUCTION & JOB PRODUCTION AS THE SAME THREAD, WORKERS, POWER CONNECTION & MACHINERY HAS BEEN USED FOR BOTH THE PURPOSES. SIR, TO KEEP SEPARATE CONSUMPTION RECORD AND THREAD, THE ASSESSEE FIRM HAS TO REPLACE THE THREAD CONES ON EACH & EVERY OCC ASION WHILE CARRYING OUT SELF & JOB PRODUCTION WHICH MEANS EXCESSIVE WASTAGE OF Y ARN, LOSS OF MAN HOURS IN REPLACING THE THREAD AND MOREOVER AS THE THREAD USE D IS OF DIFFERENT QUALITIES, VARIETIES & RATES, IT IS NOT PRACTICABLE TO DERIVE SEPARATELY THE COST OF SELF CONSUMPTION & CONSUMPTION FOR JOB WORK. SIMILAR IS THE POSITION WITH REFERENCE TO THE OTHER DIRECT EXPENSES. THE WASTAGE OF CLOTH PERTAINS ONLY TO SELF EMBROIDE RED FABRICS AND HAS NO BEARING ON JOB WORK PORTION. AS ALREADY SUBMITTED, WHILE EM BROIDERY 0.40 METERS OF CLOTH ON BOTH SIDES I.E. 0.80 METERS AGAINST EVERY 20 MET ERS OF CONSUMPTION , THIS UNEMBROIDERED CLOTH WHICH IS ROLLED IN THE MACHINE IS NOT USABLE AND IT IS THE ACTUAL WASTAGE AS THE SAME IS NOT SALEABLE. FURTHER , THERE IS WASTAGE OF FABRICS IN ITA NO.302 TO 304(ASR)/2012 ITA NO.306 TO 308(ASR)/2012 C.O.NO.24(ASR)/2012 13 JOINING PIECES OF DIFFERENT LENGTHS TO MAKE THAT OF STANDARD LENGTH OF 20 METRES AND WHILE DOING SO DEFECTIVE PORTIONS ARE ALSO REQU IRED TO BE REMOVED. THE WASTAGE ALSO OCCURRED DURING EMBROIDERY DUE TO MACH INERY BREAK DOWN, POWER FAILURE, DEFECTS IN YARN AND OTHER FACTORS. IT IS SUBMITTED THAT THE ASSESSEE HAS DECLARED G.P. RATE OF 45.83%. DAY TO DAY BOOKS OF ACCOUNTS HAVE BEEN MAINTAINED IN THE NORMA L COURSE OF BUSINESS WHICH ARE DULY AUDITED. THE G.P. RATE DECLARED BY THE ASS ESSEE IS SUBSTANTIALLY HIGHER THAN THE G.P. RATE OF 32% UPHELD BY THE HON'BLE I.T .A.T., AMRITSAR BENCH IN THE CASE OF M/S SHREE GANPATI EMBROIDERY (P) LTD. IT MA Y BE ADDED HERE THAT G.P. RATE OF 45.83% SHOWN BY THE ASSESSEE IS AFTER SHORT AGE CLAIM. SIR, IT IS POINTED OUT THAT THE LEARNED CIT(A) WAS NOT AT ALL JUSTIFIED IN UPHOLDING THE ABOVE ADDITION MADE BY THE ASSESSING OFFICER. G .P. RATE AS WELL AS SALES TURNOVER DURING THE YEAR UNDER ASSESSMENT ARE SUBST ANTIALLY HIGHER THAN THAT OF PREVIOUS YEAR AND WITHOUT POINTING OUT ANY SPECIFIC DEFECT IN BOOKS OF ACCOUNTS REGULARLY MAINTAINED & DULY AUDITED U/S 44AB, THE A DDITION MADE & THAT TOO WITHOUT INVOKING PROVISIONS OF SECTION 145 (3) IS I LLEGAL & BAD IN LAW. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, BOOKS OF ACCOUNTS WITH BILLS & VOUCHERS WERE PRODUCED & EXAMINED BY THE ASSESSING OFFICER AND NO SPECIFIC DEFECT IN BOOKS OF ACCOUNTS WAS POINTED OUT BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS NEITHER POINTED OUT THAT THE G.P. RATE IS LOW NOR HAS CONFRONTED THE ASSESSEE WITH ANY SIMILAR CASE WHERE G.P. RATE IS MORE THAN THE G.P. RATE DECLARED BY THE ASSESSEE. IN THIS CONNECT ION, COPY OF ORDER SHEET REQUISITIONED FROM THE DEPARTMENT IS ENCLOSED HEREW ITH FOR YOUR KIND PERUSAL. YOUR HONOUR WILL APPRECIATE THAT THE ASSESSING OFFI CER HAS ISSUED NOTICE U/S 133(6) TO VARIOUS PARTIES FOR CONFIRMATION OF ACCOU NT AND SPECIFICALLY CALLED FOR & EXAMINED BOOKS OF ACCOUNTS OF M/S SHANKAR PRINTING MILLS & M/S AGGARWAL AGENCIES AS EVIDENT FROM ORDER SHEET ENTRIES DT. 12 .07.2007, 27.08.2007 & 30.08.2007 AND NOTHING ADVERSE HAS COME TO HIS NOTI CE. FURTHER, DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE CIT(APPEALS) AMRITSAR, REFERENCE WAS INVITED TO SOME OF THE CASE S WHEREIN G.P. RATE OF 28.65% TO 37.26% WAS ACCEPTED BY VARIOUS ASSESSING OFFICER S AND IN HIS REMAND REPORT THE ASSESSING OFFICER HAS NOT POINTING OUT ANY CASE WHERE G.P. RATE IS MORE THAN THAT OF THE ASSESSEE. SIR, THE ISSUES MENTIONED BY THE ASSESSING OFFICER WHILE ENHANCING THE G.P. RATE STAND EXPLAINED IN WRITTEN SUBMISSIONS BEFORE THE H ON'BLE CIT(APPEALS). THE ASSESSING OFFICER AS WELL AS THE HON'BLE CIT(A) HAS FAILED TO APPRECIATE THE FACTS OF THE CASE IN ITS TRUE PERSPECTIVE. SIR, REFERENCE IS DRAWN TO THE DECISION OF I.T.A.T. , AMRITSAR BENCH IN THE CASE OF M/S SHREE GANPATI EMBROIDERS PVT. LTD. WHEREIN UNDE R SIMILAR CIRCUMSTANCES- IN ITA NO.302 TO 304(ASR)/2012 ITA NO.306 TO 308(ASR)/2012 C.O.NO.24(ASR)/2012 14 SAME TYPE OF TRADE G.P. RATE OF 32% WAS HELD TO B E REASONABLE BY THE HON'BLE BENCH AGAINST G.P. RATE OF 35% APPLIED BY THE ASSES SING OFFICER. FURTHER, IT IS POINTED OUT THAT THE ADDITION MADE I S ILLEGAL AS THE SAME HAS BEEN MADE WITHOUT INVOKING PROVISIONS OF SECTION 145(3). THE INCOME HAS BEEN COMPUTED AS PER PROFIT & LOSS ACCOUNT AS REFLECTED IN AUDITED BOOKS OF ACCOUNTS AND NO SPECIFIC DEFECT WAS NEITHER POINTED OUT NOR CONFRONTED TO THE ASSESSEE- REFER ORDER SHEET. SIR, REJECTED OF BOOKS OF ACCOUN TS IN ACCORDANCE WITH SECTION 145 IS AN ESSENTIAL STEP BEFORE ASSESSING OFFICER C AN RESORT TO NEXT STEP I.E. ESTIMATION OF INCOME. IN THIS CONTEST REFERENCE IS DRAWN TO THE FOLLOWING DECISIONS: A) I.T.A.T., CHANDIGARH BENCH B IN THE CASE OF IN TH E CASE OF AMAR NATH & SONS KURUKSHETRA I.T.ACT, 1961 NO. 227/CHD/2012. B) DELHI HIGH COURTS ORDER DATED 118/08/10 IN THE CAS E OF COMMISSIONER OF INCOME TAX VS. JACKSON HOUSE HOUSE I.T.A. NO. 103/2010. SIR, THE SUCCESSOR OFFICERS WHILE FRAMING ASSESSMEN T FOR 2006-07 & 2007-08 A.Y. BLINDLY FOLLOWED THE ORDER PASSED FOR 2005-06 A.Y. WITHOUT POINTING OUT ANY DISCREPANCY OR DEFECT IN BOOKS OF ACCOUNTS AND EVEN SPECIFIC REQUEST WAS MADE TO CONFRONT THE ASSESSEE WITH ANY SIMILAR CASE WHERE G .P. RATE HAS BEEN ASSESSED AT 50% BUT THE SAME WAS IGNORED BY THE ASSESSING OFFI CERS. FURTHER, DECISION OF HON'BLE I.T.A.T., AMRITSAR BENCH IN THE CASE OF M/S SHREE GANPATI EMBROIDERY PVT. LTD. WAS ALSO REFERRED & THE SAME WAS ALSO OVE RLOOKED BY THE ASSESSING OFFICERS IN SPITE OF THE FACT THAT THE SAME IS A BI NDING DECISION FOR THE ASSESSING OFFICERS. IN VIEW OF THE FACTS & CIRCUMSTANCES OF THE CASE AN D THE LEGAL ISSUES INVOLVED, IT IS POINTED OUT THAT THE ASSESSING OFFICER WAS NOT AT A LL JUSTIFIED IN ESTIMATING G.P. RATE AT 50% IN ALL THE THREE YEARS AS AGAINST DECLA RED G.P. RATE OF 45.83%, 46.19% & 42.90% RESPECTIVELY AND THEREFORE, IT IS REQUESTE D THAT THE ADDITIONS MADE MAY PLEASE BE DELETED. ASSESSEES CROSS-OBJECTIONS DT. 06/08/2012 FILED ON 09/08/2012 A.Y. 2007-08 THE ISSUES RAISED IN GROUNDS OF CROSS-OBJECTIONS ARE THE SAME AS RAISED IN ASSESSEES GROUNDS OF APPEAL - APPEAL BEARING NO . 304/ASR/2012 OF 2007-08 A.Y. THE WRITTEN SUBMISSIONS SUBMITTED ABOVE MAY PL EASE BE TAKEN AS ASSESSEES WRITTEN SUBMISSIONS IN RESPECT OF GROUNDS OF CROSS -OBJECTION AND IN VIEW OF THE FACTS & CIRCUMSTANCES OF THE CASE AND THE LEGAL ISS UES INVOLVED, IT IS POINTED OUT THAT THE ASSESSING OFFICER WAS NOT AT ALL JUSTIFIED IN ESTIMATING G.P. RATE AT 50% AS AGAINST DECLARED G.P. RATE OF 42.90% AND THEREFORE, IT IS REQUESTED THAT THE ADDITIONS MADE MAY PLEASE BE DELETED. ITA NO.302 TO 304(ASR)/2012 ITA NO.306 TO 308(ASR)/2012 C.O.NO.24(ASR)/2012 15 11. NOW, WE TAKE UP APPEAL OF THE REVENUE FOR THE A SSESSMENT YEAR 2005- 06 WHERE THE AO MADE AN ADDITION OF RS.20,000/- + R S.4,270/- + RS.20,000 TOTALING RS.44270/- TREATING THE EXPENSES CLAIMED B Y THE ASSESSEE IN EXCESSIVE ON ACCOUNT OF WAGES, CONSUMABLE STORE AND CLIPPING/MENDING CHARGES RESPECTIVELY. 12. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE VIDE PARA 10.3 OF HIS ORDER DELETED THE ADDITION SO MADE BY THE ASSESSING OFFICER. 13. THE LD. DR, RELIED UPON THE ORDER OF THE ASSESS ING OFFICER. 14. AFTER HEARING THE LD. DR AND WRITTEN SUBMISSION S OF THE ASSESSEE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN PARA 10.3 THAT THESE HEADS OF EXPENSES PERTAIN TO TRADING ACCOUNT AND SINCE TR ADING ADDITION HAS ALREADY BEEN MADE BY ADOPTION OF UNIFORM GP RATE OF 50%, TH EREFORE, NO SEPARATE DISALLOWANCE IS WARRANTED. ACCORDINGLY, GROUND NO.2 OF THE REVENUE FOR THE ASSESSMENT YEAR 2005-06 IS DISMISSED. 15. AS REGARDS DEPRECIATION CLAIMED @ 50% ON EMBROI DERY MACHINES PURCHASED UNDER TUFS AS AGAINST ALLOWED @ 25% FOR T HE ASSESSMENT YEAR 2005-06 AND @ 15% FOR THE ASSESSMENT YEARS 2006-07 & 2007-08, THE ISSUE IS IDENTICAL IN ALL THE YEARS. THE BRIEF FACTS ARE THAT THE ASSESSEE CLAIMED A ITA NO.302 TO 304(ASR)/2012 ITA NO.306 TO 308(ASR)/2012 C.O.NO.24(ASR)/2012 16 DEPRECIATION @ 50% ON EMBROIDERY MACHINERY PURCHASE D UNDER TUFS WHICH WAS ALLOWED @ 25% DURING ASSESSMENT YEAR 2005 -06 AND 15% DURING ASSESSMENT YEARS 2006-07 & 2007-08. 16. THE LD. CIT(A) VIDE PARA 10.2.1 OF HIS ORDER AL LOWED THE CLAIM OF THE ASSESSEE FOR THE REASONS MENTIONED IN THE ORDER. 17. THE LD. DR, RELIED UPON THE ORDER OF THE ASSESS ING OFFICER. 18. WE HAVE HEARD THE LD. DR AND PERUSED THE WRITTE N SUBMISSIONS PLACED ON RECORD BY THE ASSESSEE. WE FIND NO INFIRMITY IN THE FINDINGS OF THE LD. CIT(A) GIVEN IN PARA 10.2.1 WHERE THE LD. CIT(A) H AS FOLLOWED THE DECISION OF ITAT, AMRITSAR BENCH ON IDENTICAL ISSU E VIDE ITS ORDER DATED 23.4.2012 IN THE DEPARTMENTS APPEAL IN ITA NO.357 & 358(ASR)/2010, WHERE REVENUES APPEAL HAVE BEEN DISMISSED. ITAT ON THE SAID APPEALS HAVE HELD IN PARA 9 OF ITS ORDER THAT THE ASSESSEE IS E NTITLED FOR HIGHER DEPRECIATION UNDER TUFS. THEREFORE, FOLLOWING OUR OWN DECISION M ENTIONED HEREINABOVE ON IDENTICAL ISSUE, THE A.O. IS NOT JUSTIFIED IN RE STRICTING THE ASSESSEE FIRMS CLAIM OF DEPRECIATION ON EMBROIDERY MACHINERY PURCH ASED UNDER TUFS TO 15% OR 25%. ACCORDINGLY, ALL THE GROUNDS OF THE RE VENUE IN ALL THE THREE YEARS I.E. ASSESSMENT YEARS 2005-06, 06-07 & 07-08 ARE DISMISSED. ITA NO.302 TO 304(ASR)/2012 ITA NO.306 TO 308(ASR)/2012 C.O.NO.24(ASR)/2012 17 19. NOW, WE TAKE UP THE APPEALS OF THE ASSESSEE IN ALL THE THREE ASSESSMENT YEARS I.E. 2005-06, 2006-07 & 2007-08, W HERE THE A.O. HAS MADE TRADING ADDITIONS OF RS.5,34,550/-, RS.5,69,41 5/- AND RS.15,96,894/- BY APPLYING G.P. RATE OF 50% AS AGAINST DECLARED GP RATE OF 45.83%, 46.19% & 42.90% RESPECTIVELY. 20. THE LD. CIT(A) VIDE PARA 10.1 OF HIS ORDER CONF IRMED THE ACTION OF THE ASSESSING OFFICER. 21. THE LD. DR RELIED UPON THE ORDERS OF BOTH THE A UTHORITIES BELOW. 22. WE HAVE HEARD THE LD. DR AND PERUSED THE WRITTE N SUBMISSIONS PLACED ON RECORD BY THE ASSESSEE. WE FIND NO INFIRM ITY IN THE ORDER OF THE LD. CIT(A), WHICH IS WELL REASONED ORDER, WHERE IT WAS HELD THAT THE AO WAS QUITE JUSTIFIED IN APPLYING UNIFORM GP RATE OF 50% IN THE ASSESSEES PECULIAR LINE OF BUSINESS BY POINTING OUT GLARING SHORT-COMI NGS, DEFICIENCIES, DISCREPANCIES SUCH AS NON-AVAILABILITY OF SEPARATE RECORDS FOR ITS SELF- EMBROIDERED CLOTH AND JOB WORK DONE FOR OUTSIDE PAR TIES AND EXPENSES RELATED THERETO RESPECTIVELY, SHORTAGE CLAIMED DURI NG EMBROIDERY WORK BEING NOT SUPPORTED BY RELEVANT DOCUMENTARY EVIDENCE, ACC OUNTING FOR WASTAGE IS NOT FORTHCOMING ETC. THE APPELLANTS ATTEMPT OF CAR RYING OUT COMPARISON WITH THAT OF A.Y. 2004-05 TRADING RESULT IS REPORTE D TO BE UNTENABLE INASMUCH AS FOR A.Y. 2004-05 THE EMBROIDERY WORK WA S CARRIED OUT FOR 4 ITA NO.302 TO 304(ASR)/2012 ITA NO.306 TO 308(ASR)/2012 C.O.NO.24(ASR)/2012 18 MONTHS 20 DAYS ONLY. IT IS UNDISPUTED FACT THAT THE APPELLANT IS ITSELF DECLARING ITS G.P. RATE RANGING FROM 43% TO 46% I N ALL THE THREE ASSESSMENT YEARS 205-06 TO 2007-08, THE TRADING RESULTS ARE NO T PRONE TO OPEN VERIFICATION, THE HUGE SHORTAGE CLAIMED IN APPELLAN TS OWN EMBROIDERY PRODUCTION REMAINED NOT SATISFACTORILY EXPLAINED, N O YIELD HAS BEEN SHOWN FROM THE EXPECTED SALE OF SUCH WASTAGE, NO SEPARATE RECORD FOR JOB WORK EMBROIDERY WORK DONE FOR OTHER PARTIES AND THAT DON E FOR OWN BUSINESS PURPOSES NEITHER MAINTAINED NOR FORTHCOMING ON THE PLEA THAT IT BEING INTER- CONNECTED FACE OF PRODUCTION SIDE BY SIDE ON THE SA ME EMBROIDERY MACHINERY, SEPARATE ACCOUNTING THEREOF IS NOT FEASI BLE AND POSSIBLE TO BE MAINTAINED IN THIS LINE OF BUSINESS. THUS, THESE AR E ADMITTED FACTS THAT NEVERTHELESS SALE/JOB WORK REGISTERED ESCALATION YE AR AFTER YEAR, BUT THE G.P. RATE DECLARED ACCELERATED PROPORTIONATELY. ALSO FOL LOWING THE DECISION OF ITAT, AMRITSAR BENCH DT. 12.10.2007 IN I.T.A. NO. 34(ASR)/2007 FOR ASSTT. YEAR 2003-04 IN THE CITED CASE OF M/S SHREE GANPATI EMBROIDERY (P) LTD. WHEREIN A.O.S VIEW REGARDING APPLICATION OF G.P. O F 35% (UPHELD @ 32%) AFTER REJECTION OF BOOKS OF ACCOUNTS, BUT THAT APPE LLANTS APPEAL NO. 510 OF 2008 FILED BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT HAS BEEN DISMISSED ON THE GROUND THAT NO SUBSTANTIAL QUESTIO N OF LAW ARISES THEREFROM. SECONDLY, IT IS WELL APPROVED AND WELL SETTLED PRIN CIPLE OF LAW THAT DOCTRINE ITA NO.302 TO 304(ASR)/2012 ITA NO.306 TO 308(ASR)/2012 C.O.NO.24(ASR)/2012 19 OF RES JUDICATA IS NOT APPLICABLE TO INCOME TAX PRO CEEDINGS BECAUSE EACH ASSTT. YEAR IS A SEPARATELY LEGAL ENTITY. THIRDLY, THE APPELLANT FIRM IN THE PRESENT CASE HAS ITSELF HAS ITSELF BEEN DECLARING G .P. RATE RANGING BETWEEN 43% TO 46%. FURTHERMORE, IN VIEW OF THE FACT THAT T AKING INTO CONSIDERATION SPECIFIC DISCREPANCIES POINTED OUT TO THE APPELLANT HAVING BEEN REMAINED NOT SATISFACTORILY EXPLAINED WITH NECESSARY STATICS, DA TA CONTAINING RELEVANT FACTS & FIGURES ABOUT THE GENUINENESS OF SHORTAGE, ACCOUN TING FOR THE SALE PROCEEDS OF SUCH SHORTAGE, KEEPING SEPARATE ACCOUNT S FOR OWN PRODUCTION AND THAT IN RESPECT OF EMBROIDERY JOB WORK BEING DO NE FOR OUTSIDE PARTIES ON CONTRACT BASIS, APPLICATION OF SLIGHTLY ENHANCED UN IFORM RATE OF G.P. @ 50% CANNOT BY ANY YARDSTICKS BE RATED TO BE UNREASONABL E, IRRATIONAL OR EXORBITANT/ABNORMAL PROPOSAL ON THE PART OF THE A.O . ESPECIALLY WHEN NO SATISFACTORY EXPLANATION IS FORTHCOMING IN RESPECT OF SPECIFIC, GLARING SHORT- COMINGS, DEFICIENCIES AND DEFICIENCIES POINTED OUT TO THE APPELLANT BY THE A.O., BY VISUALIZING THE MATTER FROM THE PRINCIPLE OF PRE-PONDERANCE OF HUMAN PROBABILITIES AND THE IMPLIED INVOCATION OF P ROVISIONS OF SECTION 145(3) OF THE I.T. ACT, 1961. FURTHER, THERE WAS NO EXPLANATION AS TO WHAT PREVENTED IT FOR QUOTING IDENTICAL CASES DURING THE COURSE OF ASSTT. PROCEEDINGS AND ALSO BEFORE THE PRESENT A.O. DURING THE REMAND PROCEEDINGS AND IT SUPPORTS OF SUCH SO-CALLED COMPARISON BEING SOUGHT AT THIS JUNCTURE. ITA NO.302 TO 304(ASR)/2012 ITA NO.306 TO 308(ASR)/2012 C.O.NO.24(ASR)/2012 20 AFTER VIEWING THE MATTER FOR ALL ANGLES AND ALSO TA KING INTO CONSIDERATIONS ALL THE FACTS ON RECORD, THE DECISION OF A.O. WAS FOUND TO BE JUSTIFIED IN MAKING THE IMPUGNED TRADING ADDITION BY APPLYING TH E G.P. RATE OF 50% IN THIS LINE OF BUSINESS. TRADING ADDITIONS OF RS. 5,3 4,550/- FOR A.Y. 2005-06, RS. 5,69,415/- FOR A.Y. 2006-07 AND 15,96,894/- FOR ASSTT. YEAR 2007-08 RESPECTIVELY HAVE RIGHTLY BEEN CONFIRMED. ACCORDI NGLY, ALL THE GROUNDS OF THE ASSESSEE IN ALL THE THREE ASSESSMENT YEARS I.E . 2005-06, 2006-07 & 2007- 08 ARE DISMISSED. 23. IN THE RESULT, ALL THE APPEALS OF THE ASSESSE E IN ITA NOS. 302 TO 304(ASR)/2012, C.O. NO.24(ASR)/2012 OF THE ASSESSEE AND ALL THE APPEALS OF THE REVENUE IN ITA NOS. 306 TO 308(ASR)/2012 ARE DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9TH APRIL, 2013. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 9TH APRIL, 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. CEE PEE EMBROIDERIES, MAJITHA ROA D, AMRITSAR. 2. THE ITO V(1), AMRITSAR. 3. THE CIT(A), AMRITSAR. 4. THE CIT, AMRITSAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER ITA NO.302 TO 304(ASR)/2012 ITA NO.306 TO 308(ASR)/2012 C.O.NO.24(ASR)/2012 21 (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.