M/s Shreyans Prints Pvt. Ltd., Surat V. The Dy.CIT.,Cent.Circle-2, Surat

CO 57/AHD/2013

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1133 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 07-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 29-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 22-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRADIPKUMAR MAJUMDAR
• Assessee Lawyers: SN SOPARKARAR
• Keywords: Rejection of books of accounts; Search and seizure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI S. S. GODARA, JUDICIAL MEMBER ./ ././ ./ ITA NO. 288/AHD/2013 AND CO NOS. 56/AHD/2013 / ASSESSMENT YEAR: 2010-11 DCIT CENTRAL CIRCLE-2, SURAT V/S. M/S. SHREYANS TEXTILE LTD, ADARSH TEXTILES MARKET-2, RING ROAD, SURAT PAN : AADCS 3941 E ./ ././ ./ ITA NO. 289/AHD/2013 AND CO NOS. 57/AHD/2013 / ASSESSMENT YEAR: 2010-11 DCIT CENTRAL CIRCLE-2, SURAT V/S. M/S. SHREYANS PRINTS PVT LTD, A-4068, RAGHUKUL TEXTILE MARKET, RING ROAD, SURAT PAN : AADCS 3285 R / // / (APPELLANT) !' !' !' !' / // / (RESPONDENT / CROSS-OBJECTOR) REVENUE BY : SHRI PRADIPKUMAR MAJUMDAR, SR DR ASSESSEE(S) BY : SHRI S.N. SOPARKAR, AR #$ % &'/ // / DATE OF HEARING : 29/07/2015 () % &' / // / DATE OF PRONOUNCEMENT: 07/08/2015 *+ *+ *+ *+/ // / O R D E R PER G.D. AGRAWAL, VICE PRESIDENT: THESE TWO APPEALS FILED BY THE REVENUE AND THE CROS S-OBJECTIONS THEREOF FILED BY DIFFERENT ASSESSEES ARE DIRECTED A GAINST TWO SEPARATE ORDERS OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) -II, AHMEDABAD, BOTH DATED 20.11.2012 PASSED IN ASSESSMENT YEAR 2010-11. IN BOTH THESE APPEALS AND CROSS-OBJECTIONS, COMMON ISSUES HAVE BEEN RAISE D AND THEREFORE, BOTH ITA NOS. 288 & 289/AHD/2013 CO 56 & 57/AHD/2013 (AYS 2010-11) DCIT VS. SHREYANS TEXTILES LTD DCIT VS. SHREYANS PRINTS PVT LTD 2 THESE APPEALS AS WELL AS CROSS-OBJECTIONS ARE DISPO SED OF TOGETHER FOR THE SAKE OF CONVENIENCE. 2. FACTS IN BOTH THE CASES ARE MORE OR LESS SIMILAR ; THEREFORE, WE SHALL DISCUSS HEREIN DETAIL THE FACTS RELATING TO M/S. SH REYANS PRINTS PVT LTD. THE ASSESSEE DERIVES INCOME FROM PRODUCTION OF ARTIFICI AL SILK CLOTH ON JOB-WORK BASIS. THERE WAS A SEARCH AND SEIZURE OPERATION IN THIS GROUP OF CASES ON 11.03.2010. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED RETURN OF INCOME ON 21.09.2010 DISCLOSING TOTAL INCOME OF RS. 23,27,070/-. THE ASSESSING OFFICER NOTICED VARIOUS DISCREPANCIES AND IRREGULARITIES AND CONSIDERING THE SAME, HE REJECTED THE BOOKS OF ACCO UNTS AND APPLIED NET PROFIT RATE WHICH RESULTED IN THE ADDITION OF RS.61 ,17,401/-. ON APPEAL, THE CIT(A) NOTICED THAT DURING THE ACCOUNTING YEAR RELE VANT TO ASSESSMENT YEAR UNDER CONSIDERATION THE TURNOVER OF THE ASSESSEE HA S REDUCED SUBSTANTIALLY, WHILE THE ADMINISTRATIVE EXPENSES ARE MORE OR LESS FIXED/SEMI-VARIABLE; THEREFORE, HE WAS OF THE OPINION THAT, AFTER THE RE JECTION OF THE BOOKS OF ACCOUNTS, THE PROPER BASIS WOULD BE THE APPLICATION OF GROSS PROFIT RATE RATHER THAN NET PROFIT RATE. HE, THEREFORE, UPHELD THE REJECTION OF BOOKS OF ACCOUNTS AND APPLIED GROSS PROFIT RATE OF 35.43% AS DISCLOSED BY THE ASSESSEE IN THE IMMEDIATELY PRECEDING YEAR. ACCORDINGLY, HE SUSTAINED THE ADDITION OF RS.27,56,621/- AS AGAINST RS.61,17,401/- MADE BY THE ASSESSING OFFICER. THE REVENUE, AGGRIEVED WITH THE RELIEF ALLOWED TO T HE ASSESSEE, IS IN APPEAL BEFORE US; WHILE THE ASSESSEE, AGGRIEVED WITH THE A DDITION SUSTAINED, IS IN CROSS-OBJECTION. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. AFTER CONSIDERING THE FACTS OF THE CASE AND ARGUMENTS OF BOTH THE SIDES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). SO FAR AS THE ASSESSEES CROSS-OBJECTION IS CONCERNED IN WHICH TH E ASSESSEE HAS CHALLENGED ITA NOS. 288 & 289/AHD/2013 CO 56 & 57/AHD/2013 (AYS 2010-11) DCIT VS. SHREYANS TEXTILES LTD DCIT VS. SHREYANS PRINTS PVT LTD 3 THE REJECTION OF BOOKS OF ACCOUNTS, IT HAS NO MERIT BECAUSE THE ASSESSING OFFICER HAS POINTED OUT SEVERAL DEFECTS IN THE BOOK S OF ACCOUNTS. THE LD. COUNSEL FOR THE ASSESSEE, THOUGH CHALLENGED THE REJ ECTION OF BOOKS OF ACCOUNTS, BUT COULD NOT GIVE ANY SATISFACTORY EXPLA NATION WITH REGARD TO VARIOUS DISCREPANCIES POINTED OUT BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THEREFORE, WE UPHOLD THE ORDER O F THE CIT(A) WHEREIN HE UPHELD THE REJECTION OF BOOKS OF ACCOUNTS. 4. NOW, WE COME TO THE APPLICATION OF GROSS PROFIT RATE BY THE CIT(A) INSTEAD OF NET PROFIT RATE APPLIED BY THE ASSESSING OFFICER. ADMITTEDLY, THE TURNOVER OF THE ASSESSEE HAS REDUCED FROM RS.5.45 C RORES TO RS.3.24 CRORES. IT WAS EXPLAINED BY THE LD. COUNSEL THAT MOST OF THE ADMINISTRATIVE EXPENSES ARE FIXED OR SEMI-VARIABLE. WE FIND THAT AT PAGE NO .14-15 OF THE CIT(A)S ORDER, HE HAS GIVEN LIST OF SUCH ADMINISTRATIVE EXP ENSES AND HE RECORDED THAT THOUGH THE OVERALL ADMINISTRATIVE EXPENSES HAS REDUCED FROM RS.12,30,862/- TO RS.11,44,610/-, BUT DUE TO LESS T URNOVER IN PERCENTAGE TERM, IT HAS INCREASED FROM 2.26% IN THE LAST YEAR TO 3.5 3% IN THIS YEAR. CONSIDERING THESE FACTS, HE CAME TO THE CONCLUSION THAT APPLICATION OF GROSS PROFIT RATE WOULD BE BETTER. WE AGREE THAT UNDER T HE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, THE COMPARISON OF THIS Y EAR GROSS PROFIT WITH THE IMMEDIATELY PRECEDING YEAR IS BETTER COMPARISON RAT HER THAN THE COMPARISON OF NET PROFIT RATE OF BOTH THE YEARS. T HE CIT(A) APPLIED THE GROSS PROFIT RATE OF IMMEDIATELY PRECEDING YEAR AND ACCORDINGLY SUSTAINED THE ADDITION PARTLY. AFTER CONSIDERING THE ARGUMEN TS OF BOTH THE SIDES, WE ENTIRELY AGREE WITH THE CIT(A) THAT CONSIDERING THE FACTS OF THE CASE THE APPLICATION OF GROSS PROFIT RATE OF IMMEDIATELY PRE CEDING YEAR WAS QUITE FAIR AND JUSTIFIED METHOD OF ESTIMATING THE GROSS PROFIT OF THE ASSESSEE. WE, ITA NOS. 288 & 289/AHD/2013 CO 56 & 57/AHD/2013 (AYS 2010-11) DCIT VS. SHREYANS TEXTILES LTD DCIT VS. SHREYANS PRINTS PVT LTD 4 THEREFORE, UPHOLD THE ORDER OF THE CIT(A) IN ITS EN TIRETY AND REJECT THE REVENUES APPEAL AS WELL AS ASSESSEES CROSS-OBJECT ION. 5. THE FACTS ARE IDENTICAL IN THE CASE OF M/S. SH REYANS TEXTILE LTD. IN THE SAID CASE ALSO THERE WAS A SEARCH AT THE ASSESSEES PREMISES ON 11.03.2010. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT S BY POINTING OUT SEVERAL DEFECTS IN THE BOOKS OF ACCOUNTS. THE ASSESSING OF FICER APPLIED NET PROFIT RATE AND THE CIT(A) UPHELD THE REJECTION OF BOOKS OF ACC OUNTS BUT APPLIED GROSS PROFIT RATE. THERE IS ONLY ONE VARIATION THAT IN T HIS CASE SINCE THE GROSS PROFIT DISCLOSED BY THE ASSESSEE FOR THE YEAR UNDER CONSID ERATION WAS ALMOST EQUAL TO THE GROSS PROFIT RATE OF THE IMMEDIATELY PRECEDI NG YEAR; I.E., FOR THE YEAR UNDER APPEAL, THE GROSS PROFIT DISCLOSED BY THE ASS ESSEE WAS 10.15% WHILE IN THE IMMEDIATELY PRECEDING YEAR IT WAS 10.40%. CONS IDERING THE NEGLIGIBLE VARIATION IN THE GROSS PROFIT RATE, THE CIT(A) ARRI VED AT THE CONCLUSION THAT NO ADDITION IN THE GROSS PROFIT IS REQUIRED AND HE DEL ETED THE ENTIRE ADDITION OF RS. 36,61,682/- MADE BY THE ASSESSING OFFICER. AFT ER CONSIDERING THE FACTS OF THE CASE AND ARGUMENTS OF BOTH THE SIDES, WE ENTIRE LY AGREE WITH THE FINDING OF THE CIT(A) AND ACCORDINGLY REJECT THE REVENUES APPEAL AS WELL AS ASSESSEES CROSS-OBJECTION. 6. IN THE RESULT, BOTH THE REVENUES APPEALS AND BO TH THE ASSESSEES CROSS- OBJECTIONS ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 7 TH AUGUST, 2015 AT AHMEDABAD. SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (G.D. AGRAWAL) VICE-PRESIDENT AHMEDABAD; DATED 07/08/2015 BIJU T., PS ITA NOS. 288 & 289/AHD/2013 CO 56 & 57/AHD/2013 (AYS 2010-11) DCIT VS. SHREYANS TEXTILES LTD DCIT VS. SHREYANS PRINTS PVT LTD 5 *+ % !&, -*,& *+ % !&, -*,& *+ % !&, -*,& *+ % !&, -*,&/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. & #. / CONCERNED CIT 4. #. ( ) / THE CIT(A) 5. ,12 !& , , / DR, ITAT, AHMEDABAD 6. 2 4$ / GUARD FILE . *+# *+# *+# *+# / BY ORDER, TRUE COPY 5 55 5/ // / 6 6 6 6 ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD