DHIMAN INDUSTRIES V. ASSTT. COMMISSIONER OF INCOME TAX

ITA/585/2008

AI Insights

The case involves Dhiman Industries appealing against the decision of the ITAT which upheld the Assessing Officer's revision of the gross profit rate from 19.44% to 21.95% on the assessee's net sales of Rs.2,35,62,536. The primary contention was the rejection of the trading results by the Assessing Officer, who applied Section 145 of the Income Tax Act, 1961, due to the assessee's failure to substantiate the consistency and correctness of the consumption of raw materials and stock. The ITAT's decision was challenged in the High Court, which found the ITAT's reasoning and the Assessing Officer's application of Section 145 to be correct and upheld the revised gross profit rate.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 766347 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 05-08-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: RANVIJAYSINGH
• Assessee Lawyers: SANDEEP GOYAL
• Keywords: Assessment; CIT(Appeals); Gross Profit Rate; Income Tax; ITAT
• Section: 145

Judgement Text

"209 IN THE HIGH COURT OF PUNJAB AND HARYANA Dhiman Industries The Asstt. Commissioner of Income Tax CORAM: HON’BLE MR. JUSTICE SANJEEV PRAKASH HON’BLE MR. JUSTIC Present Mr. Sandeep Goyal, Advocate for the appellant. Mr. SANJEEV PRAKASH SHARMA, J.(Oral) 1. The following questions of law admission of the appeal on 08.09.2009: “(i) Whether on the facts and in the circumstances of the case, the learned ITAT has erred in law in reversing the well order of the CIT (A) and that too without giving any basi without passing a speaking order on the issue involved? (ii) Whether on the facts and in the circumstances of the case, the learned ITAT has erred in law in upholding the order of Assessing Officer whereby trading results were rejected and provision (iii) Whether on the facts and in the circumstances of the case, the learned ITAT has erred in law in upholding the order of Assessing Officer whereby GP Rate of 21.95% was applied, without giving any basis or referring any c IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA Date of Decision: Dhiman Industries Vs. The Asstt. Commissioner of Income Tax HON’BLE MR. JUSTICE SANJEEV PRAKASH HON’BLE MR. JUSTICE SANJAY VASHIST Mr. Sandeep Goyal, Advocate for the appellant. Mr. Ranvijay Singh, Sr. Standing Counsel *** SANJEEV PRAKASH SHARMA, J.(Oral) The following questions of law admission of the appeal on 08.09.2009:- “(i) Whether on the facts and in the circumstances of the case, the learned ITAT has erred in law in reversing the well order of the CIT (A) and that too without giving any basi without passing a speaking order on the issue involved? (ii) Whether on the facts and in the circumstances of the case, the learned ITAT has erred in law in upholding the order of Assessing Officer whereby trading results were rejected and provisions of Section 145 were applied? (iii) Whether on the facts and in the circumstances of the case, the learned ITAT has erred in law in upholding the order of Assessing Officer whereby GP Rate of 21.95% was applied, without giving any basis or referring any c IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA-585-2008 (O&M) Date of Decision: 05.08.2024 …Appellant …Respondent HON’BLE MR. JUSTICE SANJEEV PRAKASH SHARMA SANJAY VASHISTH Mr. Sandeep Goyal, Advocate for the appellant. Sr. Standing Counsel for revenue. SANJEEV PRAKASH SHARMA, J.(Oral) The following questions of law were proposed at the time of “(i) Whether on the facts and in the circumstances of the case, the learned ITAT has erred in law in reversing the well-reasoned order of the CIT (A) and that too without giving any basis and without passing a speaking order on the issue involved? (ii) Whether on the facts and in the circumstances of the case, the learned ITAT has erred in law in upholding the order of Assessing Officer whereby trading results were rejected and s of Section 145 were applied? (iii) Whether on the facts and in the circumstances of the case, the learned ITAT has erred in law in upholding the order of Assessing Officer whereby GP Rate of 21.95% was applied, without giving any basis or referring any comparable case to were proposed at the time of “(i) Whether on the facts and in the circumstances of the case, reasoned s and (ii) Whether on the facts and in the circumstances of the case, the learned ITAT has erred in law in upholding the order of Assessing Officer whereby trading results were rejected and (iii) Whether on the facts and in the circumstances of the case, the learned ITAT has erred in law in upholding the order of Assessing Officer whereby GP Rate of 21.95% was applied, omparable case to RAJESH KUMAR 2024.08.07 11:08 I attest to the accuracy and authenticity of this order/judgment. Punjab & Haryana High Court, Chandigarh. ITA-585-2008 apply this rate and thus, sustaining addition made in total income of the assessee? 2. Learned counsel for the appellant does not press question No.1 and submits that question Court. 3. It is a case where the assessee had declared rate of 19.44% on the net sales of Rs.2,35,62,536/ has not agreed with the contentions basically on the ground that it would not be possible to have the same GP at the rate of 19.44%. Since the assessee failed to substantiate the basis of constant GP raw material and stock declared at the close of the Assessing Officer passed an order against the assessee on 30.03.2020, assessing the gross profit at the rate of 21.95%. It was observed that for conveyor machine, cost the assessee was Rs.44,000/ Assessing Officer and the GP was assessed @ 21.56% instead of 20% as worked out by the assessee. Similarly, for Rs.46,070/- but the same was worked out be 25.42% instead of 16% worked out by the assessee. Similarly, for Rope Sizer machine, the cost assessee was Rs.42,895/ Officer at Rs. out by the assessee. 21.95% and thus an addition of Rs.5,89,063/ [2] 2008 (O&M) apply this rate and thus, sustaining addition made in total income of the assessee? Learned counsel for the appellant does not press question No.1 that questions No.2 and 3 need to be examined jointly by this It is a case where the assessee had declared rate of 19.44% on the net sales of Rs.2,35,62,536/ has not agreed with the contentions basically on the ground that it would not to have a constant net sale for preceding three years resulting in the same GP at the rate of 19.44%. Since the assessee failed to substantiate the basis of constant GP, completeness and correctness of consumption of raw material and stock declared at the close of the Assessing Officer passed an order against the assessee on 30.03.2020, assessing the gross profit at the rate of 21.95%. It was observed that for conveyor machine, cost the assessee was Rs.44,000/- but the same was worked at Rs.43 Assessing Officer and the GP was assessed @ 21.56% instead of 20% as worked out by the assessee. Similarly, for Batch, the costs worked out by the assessee was but the same was worked out at be 25.42% instead of 16% worked out by the assessee. Similarly, for Rope Sizer machine, the cost assessee was Rs.42,895/-, but the same was worked out by the Rs.40,480/- and arrived GP @ 26.40% a out by the assessee. Hence, the total GP on average was worked out to 21.95% and thus an addition of Rs.5,89,063/- apply this rate and thus, sustaining addition made in total income Learned counsel for the appellant does not press question No.1 need to be examined jointly by this It is a case where the assessee had declared gross profit at the rate of 19.44% on the net sales of Rs.2,35,62,536/-. The Assessing Officer has not agreed with the contentions basically on the ground that it would not preceding three years resulting in the same GP at the rate of 19.44%. Since the assessee failed to substantiate completeness and correctness of consumption of raw material and stock declared at the close of year ending on 31.03.1997, the Assessing Officer passed an order against the assessee on 30.03.2020, assessing the gross profit at the rate of 21.95%. It was observed that for conveyor machine, costs worked out by ame was worked at Rs.43,140/- by the Assessing Officer and the GP was assessed @ 21.56% instead of 20% as worked out by the assessee was at Rs.43,850/- working out GP to be 25.42% instead of 16% worked out by the assessee. Similarly, for Rope Sizer machine, the costs worked out by the was worked out by the Assessing and arrived GP @ 26.40% as against 22% as worked Hence, the total GP on average was worked out to was made. apply this rate and thus, sustaining addition made in total income Learned counsel for the appellant does not press question No.1 need to be examined jointly by this profit at the . The Assessing Officer has not agreed with the contentions basically on the ground that it would not preceding three years resulting in the same GP at the rate of 19.44%. Since the assessee failed to substantiate completeness and correctness of consumption of year ending on 31.03.1997, the Assessing Officer passed an order against the assessee on 30.03.2020, worked out by by the Assessing Officer and the GP was assessed @ 21.56% instead of 20% as worked out by the assessee was working out GP to worked out by the Assessing worked Hence, the total GP on average was worked out to RAJESH KUMAR 2024.08.07 11:08 I attest to the accuracy and authenticity of this order/judgment. Punjab & Haryana High Court, Chandigarh. ITA-585-2008 4. The assessee carried out the order to CIT (Appeal overturned the order of the Assessing Office case in appeal taken up by the revenue and found the assessment done by the Assessing Officer by applying Section 145 of the Act, 1961, to be inconformity with law. the GP at 21.95% instead of 19.44% as declared by the assessee. 5. We find that addition made is after deliberating every aspect of the matter and in terms of Section 145 of the Act, 1961, which power can be exercised by the Assessing Officer. 6. Learned counsel for the appellant by relying the valuer submitted that the GP as arrived at by the Assessing Officer and upheld by the ITAT @ 21.95% is on much higher side. However, we are not impressed and do not find any reason to 7. Accordingly revenue and hold that there is no error caused in the order of the Assessing Officer as upheld by the ITAT. The appeal accordingly fails and is dismissed. 8. All pending misc. application(s) also stand disposed of. 05.08.2024 rajesh 1. Whether speaking/reasoned? 2. Whether reportable? [3] 2008 (O&M) The assessee carried out the order to CIT (Appeal overturned the order of the Assessing Officer but ITAT has re case in appeal taken up by the revenue and found the assessment done by the Assessing Officer by applying Section 145 of the Act, 1961, to be inconformity with law. It upheld the order of the Assessing Officer holding at 21.95% instead of 19.44% as declared by the assessee. We find that addition made is after deliberating every aspect of the matter and in terms of Section 145 of the Act, 1961, which power can be exercised by the Assessing Officer. Learned counsel for the appellant by relying the valuer submitted that the GP as arrived at by the Assessing Officer and upheld by the ITAT @ 21.95% is on much higher side. However, we are not impressed and do not find any reason to differ from the order passed. Accordingly, we answer question revenue and hold that there is no error caused in the order of the Assessing er as upheld by the ITAT. The appeal accordingly fails and is dismissed. All pending misc. application(s) also stand disposed of. (SANJEEV PRAKASH SHARMA) ( 1. Whether speaking/reasoned? 2. Whether reportable? The assessee carried out the order to CIT (Appeals), who r but ITAT has re-examined the case in appeal taken up by the revenue and found the assessment done by the Assessing Officer by applying Section 145 of the Act, 1961, to be It upheld the order of the Assessing Officer holding at 21.95% instead of 19.44% as declared by the assessee. We find that addition made is after deliberating upon each and every aspect of the matter and in terms of Section 145 of the Act, 1961, which power can be exercised by the Assessing Officer. Learned counsel for the appellant by relying upon the report of the valuer submitted that the GP as arrived at by the Assessing Officer and upheld by the ITAT @ 21.95% is on much higher side. However, we are not differ from the order passed. questions No.2 and 3 in favour of the revenue and hold that there is no error caused in the order of the Assessing er as upheld by the ITAT. The appeal accordingly fails and is dismissed. All pending misc. application(s) also stand disposed of. (SANJEEV PRAKASH SHARMA) JUDGE (SANJAY VASHISTH) JUDGE : Yes/No : Yes/No ), who examined the case in appeal taken up by the revenue and found the assessment done by the Assessing Officer by applying Section 145 of the Act, 1961, to be It upheld the order of the Assessing Officer holding on each and every aspect of the matter and in terms of Section 145 of the Act, 1961, on the report of the valuer submitted that the GP as arrived at by the Assessing Officer and upheld by the ITAT @ 21.95% is on much higher side. However, we are not No.2 and 3 in favour of the revenue and hold that there is no error caused in the order of the Assessing er as upheld by the ITAT. The appeal accordingly fails and is dismissed. RAJESH KUMAR 2024.08.07 11:08 I attest to the accuracy and authenticity of this order/judgment. Punjab & Haryana High Court, Chandigarh. "