The DCIT, Circle-1(1), Vadodara V. M/s. Aditya Forge Limited, Vadodara

ITA 104/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8000 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 15-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B T THAKKAR
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE DCIT, CIRCLE - 1(1)(1), VADODARA - 390007 (APPELLANT /RESPONDENT ) VS M/S. ADITYA FORGE LTD. PLOT NO. 415, GIDC POR, BARODA, PIN: 39124 PAN: AABCA7948P (RESPONDENT /CROSS OBJECTOR ) REVENUE BY : S H RI PRASOON KABRA , SR. D . R. ASSESSEE BY: S H RI B.T. THAKKAR , A.R. DATE OF HEARING : 08 - 06 - 2 018 DATE OF PRONOUNCEMENT : 27 - 06 - 2 018 / ORDER P ER : AMARJIT S INGH, ACCOUNTANT MEMBER : - THIS REVENUE S APPEAL AND ASSESSEE S CROSS OBJECTION FOR A.Y. 2011 - 12 , AR ISE FROM ORDER OF THE CIT(A) - 1, VADODARA DATED 28 - 10 - 2015 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE R EVENUE HAS RAISED FOLLOWING GROUND OF APPEAL: - 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(APPEALS) ERRED IN BY DELETING ADDITION MADE BY ASSESSING OFFICER BY ESTIMATING THE GP RATIO OF THE CURRENT YEAR AFTER REJECTING TH E BOOKS OF ACCOUNT OF THE ASSESSEE WITHOUT APPRECIATING THE FINDINGS OF ASSESSING OFFICER THAT THE PARTY WISE SALE DETAILS SUBMITTED BY THE ASSESSEE, DID NOT MATCH WITH THE RELATED PARTY DETAILS AS MENTIONED IN THE TAX AUDIT REPORT AND LEDGER ACCOUNT FURNI SHED AS EXPLAINED IN ASSESSMENT ORDER.' 3. THE BRIEF FACT OF THE CASE IS THAT RETURN OF INCOME DECLARING INCOME OF RS. NIL WAS FILED ON 29 TH SEP, 2011. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER I T A NO . 104 & CO NO. 3 7 / A HD/20 16 A SSESSMENT YEAR 2011 - 12 I.T.A NO. 104 & CO NO. 37 /AHD/20 16 A.Y. 2011 - 12 PAGE NO DCIT VS. M/S. ADITYA FORGE LTD. 2 SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 28 TH SEP, 2012. ON SCRUTINY, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS SHOWN WRITTEN DOWN VALUE OF DI ES AND JIGS P U R CHASED FOR RS . 4 , 06 , 27 , 861/ - FROM M/S. DEV PROFILES AND NOT CLAIMED DEPRECIATION ON DIES AND JIGS . SHE HAD ALSO NOTICED THAT THE DIES AN D JIGS WERE NOT APPEARING IN THE FIXED ASSET ANNEXURE ATTACHED TO THE AUDIT REPORT. THE ASSESSING OFFICER OBSERVED THAT THE GROSS PROFIT WAS RS. 10.48% AS COMPARED TO GROSS PROFIT SHOWN BY THE ASSESSEE OF RS. 16.84% DURING THE ASSESSMENT YEAR 2010 - 11. THE ASSESSING OFFICER HAS ALSO NOTICED THAT PARTY WISE SALE DETAIL WAS NOT MATCHED WITH THE LEDGER A/C FURNISHED BY THE ASSESSEE . THEREAFTER, THE ASSESSING OFFICER H AS REJECTED TH E BOOKS OF ACCOUNTS OF THE ASSESSEE. T H E ASSESSEE WAS ASKED TO EXPLAIN THE FALL I N GP. THE ASSESSEE HA S RESP ONDED THAT THERE WAS INCREASE IN CONSUMPTION OF RAW MATERIAL STORE SPARES AND INCREASE OF LABOUR AND WAGS EXPENSES WHICH RESULTED IN FALL IN GP . REGARDING PURCHASE OF DI ES AND TOOL IT WAS STATED THAT THESE WERE PURCHASED IN THE LAST WEEK OF MARCH, 2010 AN D THE SAME COULD NOT BE PUT TO U S E AND THE SAME WAS INCLUDED IN THE FIXED ASSET WITHOUT CLAIMING ANY DEPRECIATION . THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND STATED THAT ASSESSEE COMPANY HAS SHOW N PROFIT IN ASSESSMENT YEAR 2010 - 11 AT 16.8% COMPARED TO GROSS PROFIT 10.49% SHOWN DURING THE YEAR UNDER CONSIDERATION, THEREFORE, SHE HAS ADOPTED GROSS PROFIT OF RS. 13.67% DURING THE YEAR UNDER CONSIDERATION AND MADE ADDITION OF RS. 1,28,82,084/ - . 4. AG GRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE BY STATING THAT ASSESSING OFFICER IS NOT CORRECT IN REJECTING BOOKS OF ACCOUNT AS THE ASSESSEE HAS FILED RECONCILIATION STATEMENT BEFORE THE ASSESSI NG OFFICER STATING THAT CENVAT/SALES TAX ETC. WERE CLEARLY REFLECTED IN THE LEDGER ACCOUNT BUT NOT SHOWN IN THE TAX AUDIT REPORT . HE HAS STATED THAT ASSESSING OFFICER HAS NOT POINTED OUT ANY DISCREPANCY IN THE RE CONCILIATION STATEMENT SUBMITTED BY THE AS SESSEE. THE ASSESSING OFFICER HAS NOT CONSIDERED THAT THE DIES AND JIGS WERE PURCHAS ED THE ASSESSMENT YEAR 2010 - I.T.A NO. 104 & CO NO. 37 /AHD/20 16 A.Y. 2011 - 12 PAGE NO DCIT VS. M/S. ADITYA FORGE LTD. 3 11 ON WHICH NO DEPRECIATION WAS CLAIMED. THEREFORE, IT CANNOT BE SAID THAT BOOKS OF ACCOUNT OF THE ASSESSEE WAS DEFECTIVE. FURTHER , REGARDING FALL IN GP, THE LD. CIT(A) HAS STATED THAT DURING THE YEA R UNDER CONSIDERATION THE CORRECT FIGURE OF GROSS PRO FIT SHOWN BY THE ASSESSEE WAS RS . 13.68% AS AGAINST 10 . 49% REPORTED BY THE ASSESSING OFFICER . 5. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE M ATERIAL CAREFULLY. WE FIND THAT ASSESSING OFFICER HAS REJECTED THE BOOKS OF ACCOUNT ON THE GROUND THAT THE PURCHASES OF DYES AND JIGS COULD NOT BE VERIFIED FROM THE BOOKS OF THE SELLER AND THE DISC R E PANCIES WERE NOTICED IN THE SALE DETAILS . THE ASSESSEE HAS REPORTED AS PER LEDGER ACCOUNT CENVAT & VAT WAS INCLUDED IN THE SALE DETAIL W H ERE AS THE PARTY W ISE DETAIL WAS SHOWING NET AMOUNT EXCLUDING THESE TAXES. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DISCREPANCY IN SUCH RECONCILIATION. THE DI ES AND JI GS WERE PURCHASES IN A.Y.2010 - 2011 AND NOT DURING THE YEAR UNDER CONSIDERATION. A FTER CONSIDERING THE FINDINGS OF LD. CIT(A) , IT IS CLEAR THAT ASSESSING OFFICER HAS FAILED TO POINT OUT ANY DEFECT IN RECONCILIATION FILED BY THE ASSESEE . FURTHER , WE HAVE CO NSIDERED THAT ACTUAL GROSS PROFIT DECLARED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS 13.68% AS AGAINST INCORRECT FIGURE ADOPTED BY THE ASSESSING OFFICER OF 10.49%. AFTER CONSIDERING ABOVE AND THE DETAILED FINDINGS OF THE LD.CIT(A) WE DO N OT FIND ANY INFIRMITY IN THE DECISION OF THE LD. CIT(A). ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. 6. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN THE CROSS OBJECTION: - 1. THE ASSESSMENT ORDER AND THE APPEAL BY DY.CIT CIRCLE 1 (1), VADODARA B EFORE THE INCOME TAX APPELLATE TRIBUNAL IS BAD IN LAW AND DESERVES TO BE QUASHED. 2. TO SET ASIDE THE APPEAL FILED BY DY.CIT CIRCLE 1(1)(1), BARODA. 3. TO SET ASIDE THE ADDITION OF RS.1,28,82,048/ - ON ACCOUNT OF LOWER PROFIT MADE BY THE APPELLANT. 4. T O RESTORE THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL) VADODARA. I.T.A NO. 104 & CO NO. 37 /AHD/20 16 A.Y. 2011 - 12 PAGE NO DCIT VS. M/S. ADITYA FORGE LTD. 4 7. SINCE THE GROUNDS OF APPEAL OF THE REVENUE ON THE SAME ISSUE HA S BEEN REJECTED IN THIS ORDER, ACCORDINGLY , THE CROSS OBJECTION OF THE ASS ESSEE HAS BECOME INFRUCTUOUS THEREFORE STAND DISMISSED. 8. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 27 - 06 - 201 8 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBE R ACCOUNTANT MEMBER AHMEDABAD : DATED 27 /06 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,