M/s. Suryanarayan Silk Mills Pvt.Ltd., Surat V. The ACIT., Circle-9, Surat

ITA 1051/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6320 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 17-05-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 24-03-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: H P MEENA SRDR
• Assessee Lawyers: P M JAGASHETH
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AT SURAT CAMP, AHMEDABAD BEFORE SHRI T.K. SHARMA, JUDICIAL MEMBER, AND SHRI D. C. AGRAWAL, ACCOUNTANT MEMBER ITA NO.1051/AHD/2008 ASSESSMENT YEAR: 2004-05 DATE OF HEARING:24.5.10 DRAFTED:25.5.10 SSURYANARAYAN SILK MILLS, GANDHI COLONY, A.K. ROAD, SURAT PAN NO.AAQFS4159J V/S . ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-9, SURAT (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI P.M. JAGASHETH, AR RESPONDENT BY:- SHRI H.P. MEENA, SR-DR O R D E R PER D.C.AGRAWAL, ACCOUNTANT MEMBER:- THIS IS AN APPEAL FILED BY ASSESSEE RAISING FOLLOW ING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN M AKING ADDITION OF LUMP SUM RS.10,00,000/- OF COLOUR & CHEMICALS EXPENSES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF THE INCOME TAX (APPEALS) HAS ERRED CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN D ISALLOWING INTEREST OF PARTNERS CAPITAL OF RS.3,55,988/-. 2. LD. AR DID NOT PRESS GROUND NO.2 , HENCE, IT IS REJECTED AS NOT PRESSED. 3. GROUND NO.1 RELATES TO ADDITION OF RS.10 LAKH OU T OF COLOUR & CHEMICALS EXPENSES. ITA NO.1051/AHD/2008 A.Y. 2004-05 SURYANARAYAN SILK MILLS V. ACIT CIR-9, SRT PAGE 2 4. THE FACTS OF THE CASE ARE THAT ASSESSEE DECLARED GROSS PROFIT OF RS.68,52,928/- @ 11.35% ON TOTAL TURNOVER OF RS.6,0 3,52,721/-. AS AGAINST THIS LAST YEAR GP RATE WAS 9.69% ON TOTAL TURNOVER OF RS .6,15,15,472/-. THE ASSESSING OFFICER PRODUCED FOLLOWING CHART FOR COMP ARISON:- YEAR TURNOVER GROSS PROFIT G.P. MARGIN 2004-05 6,03,,52,721 68,,52,928 11.35% 2003-04 6,15,15,472 59,59,818 9.69% 2002-03 3,84,11,673 (-) 27,24,677 - 7.09% THOUGH, ASSESSEE HAS SHOWN A GP RATE OF 11.3% BUT I N THE AUDITED ACCOUNTS GP RATE WAS @ 8.60% TURNOVER BEING THE SAME. WHEN ASS ESSEE WAS ASKED TO RECONCILE HE GAVE FOLLOWING WORKING FOR TWO YEARS A S UNDER:- A.Y. TOTAL SALES G.P. G.P. % 2004-05 6,03,52,721 51,84,869 8.59% 2003-04 6,15,15,472 39,52,596 6.43% THE ASSESSING OFFICER NOTICED THAT ASSESSEE IS GETT ING JOB WORK DONE FROM SEVERAL PARTIES. IT IS ALSO CONSUMING COLOUR AND C HEMICAL. TOTAL CONSUMPTION OF COLOUR AND CHEMICALS WAS AT RS.1,31,39,595/- WHEREA S IN THE IMMEDIATELY PRECEDING YEAR, THE CONSUMPTION WAS AT RS.85,89,851 /-. TOTAL TURNOVER ON THE OTHER HAND HAD DECREASED. THE AO REQUIRED THE ASSES SEE TO GIVE DETAILS OF THE PARTIES FROM WHOM COLOUR AND CHEMICALS WERE PROCURE D. HE SENT NOTICED U/S.133(6) OF THE ACT ON 12 PARTIES AS UNDER:- SL. NO. NAME OF THE PARTY REMARKS 1. SUN SILK THOUGH THE LETTER WAS SENT ON THE GIVEN ADDRESS, THE SAME WAS RETURNED UN- SERVED WITH THE REMARKS LEFT/NOT KNOWN 2. UTSAV SILK MILLS P. LTD. THOUGH THE LETTER WAS SENT ON THE GIVEN ADDRESS, THE SAME WAS RETURNED UN- SERVED WITH THE REMARKS LEFT/NOT KNOWN ITA NO.1051/AHD/2008 A.Y. 2004-05 SURYANARAYAN SILK MILLS V. ACIT CIR-9, SRT PAGE 3 3. DEVANG FABRICS THOUGH THE LETTER WAS SENT ON THE GIVEN ADDRESS, THE SAME WAS RETURNED UN- SERVED WITH THE REMARKS LEFT/NOT KNOWN 4. YESH ENTERPRISES THOUGH THE LETTER WAS SENT ON T HE GIVEN ADDRESS, THE SAME WAS RETURNED UN- SERVED WITH THE REMARKS LEFT/NOT KNOWN 5. Y.Z.TRADERS THOUGH THE LETTER WAS SENT ON THE GI VEN ADDRESS, THE SAME WAS RETURNED UN- SERVED WITH THE REMARKS LEFT/NOT KNOWN 6. HEENA CHEMICALS THOUGH THE LETTER WAS SENT ON TH E GIVEN ADDRESS, THE SAME WAS RETURNED UN- SERVED WITH THE REMARKS LEFT/NOT KNOWN 7. TAPAN ENTERPRISES THOUGH THE LETTER WAS SENT ON THE GIVEN ADDRESS, THE SAME WAS RETURNED UN- SERVED WITH THE REMARKS LEFT/NOT KNOWN 8. EMBEE CORPORATION THOUGH THE LETTER WAS SENT ON THE GIVEN ADDRESS, THE SAME WAS RETURNED UN- SERVED WITH THE REMARKS LEFT/NOT KNOWN 9. REMIK TRADING CO. P. LTD. THOUGH THE LETTER WAS SENT ON THE GIVEN ADDRESS, THE SAME WAS RETURNED UN- SERVED WITH THE REMARKS LEFT/NOT KNOWN 10. SHRI LAXMI TEXTILES TILL DATE NO RESPONSE HAS BEEN RECEIVED, THOUGH THE LETTER WAS SENT ON THE GIVEN ADDRESS 11. UMELITE SALES CORPN. TILL DATE NO RESPONSE HAS BEEN RECEIVED, THOUGH THE LETTER WAS SENT ON THE GIVEN ADDRESS. 12. AMISHA ENTERPRISES P. LTD. TILL DATE NO RESPONSE HAS BEEN RECEIVED, THOUGH THE LETTER WAS SENT ON THE GIVEN ADDRESS. ACCORDING TO ASSESSING OFFICER THE CONSUMPTION OF C OLOUR AND CHEMICALS HAS INCREASED FROM 12.7% OF THE TURNOVER TO 21.5% OF TH E TURNOVER. NO SATISFACTORY EXPLANATION HAS BEEN FURNISHED AND HENCE HE DISALLO WED A SUM OF RS.10 LAKH BY ESTIMATE. 5. LD. CIT(APPEALS) CONFIRMED THE SAME BY FINDING T HAT ASSESSEE IS NOT CO- OPERATING. ITA NO.1051/AHD/2008 A.Y. 2004-05 SURYANARAYAN SILK MILLS V. ACIT CIR-9, SRT PAGE 4 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIALS ON RECORD. LD. AR ON THE OTHER HAND SUBM ITTED THAT ABOVE ADDITION IS EXCESSIVE WHERE LD. SR-DR RELIED ON THE ORDER OF LD . CIT(APPEALS). 7. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUM STANCES OF THE CASE WE CONFIRM THE ADDITION OF RS.5 LAKH. IT MEANS THAT A SSESSEE GETS RELIEF OF RS.5 LAKH. AS A RESULT, THIS ISSUE OF ASSESSEES APPEAL IS PARTLY ALLOWED. 8. IN THE RESULT, APPEAL FILED BY ASSESSEE IS PARTLY A LLOWED. ORDER PRONOUNCED IN OPEN COURT ON 28/05/2010 SD/- SD/- (T.K.SHARMA) (D.C.AGRAWAL) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, DATED : 28/05/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-V, SURAT 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD