The ITO, Ward-3(3), Ahmedabad V. Shri Pradip G.Zaveri, Ahmedabad

ITA 1171/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1210 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 14-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 26-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Section: 131

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.1171 AND 1172/AHD/2013 WITH CO NO.161 AND 162/AHD/2013 / ASSTT. YEAR: 2005-2006 AND 2006-2007 ITO, WARD - 3(3) AMBAWADI AHMEDABAD. VS SHRI PRADIP G. ZAVERI PROP. ALL STEEL TRADERS 2313, MAHALAXMI POLE AHMEDABAD. PAN : AAAPZ 7365 H ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI SANJAY KUMAR, SR.DR ASSESSEE BY : SHRI S.N. DIVETIA, AR / DATE OF HEARING : 14/06/2016 / DATE OF PRONOUNCEMENT: 04/07/2016 $%/ O R D E R PRESENT TWO APPEALS ARE DIRECTED AT THE INSTANCE OF THE REVENUE AGAINST SEPARATE ORDERS OF EVEN DATED I.E. 15.3.2013 PASSED BY THE LD.CIT(A)-6, AHMEDABAD FOR THE ASSTT.YEARS 2005-06 AND 2006-07. ON RECEIPT OF NOTICE ON THE APPEALS OF THE REVENUE , THE ASSESSEE HAS FILED CROSS OBJECTION NO.161 AND 162/AHD/2013 FOR THE ASS TT.YEARS 2005-06 AND 2006- 07 RESPECTIVELY. 2. SOLITARY GRIEVANCE OF THE REVENUE IS THAT THE LD .CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.33.5 LAKHS AND RS.33.66 LAKHS IN THE ASSTT.YEARS 2005-06 AND 2006-07 RESPECTIVELY. ITA NO.1171 AND 1172/AHD/2013 WITH COS. 2 3. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, I HAVE GONE THROUGH THE RECORD CAREFULLY. IT EMERGES OUT THAT THE ASSESSEE IS RUN NING A PROPRIETORSHIP CONCERN VIZ. ALL STEEL TRADERS WHERE HE IS ENGAGED IN TRADING OF STEEL. THE LD.AO HAS OBSERVED THAT STATEMENT OF THE ASSESSEE WAS RECORDE D UNDER SECTION 131(1) OF THE INCOME TAX ON 19.1.2007. THE ASSESSEE HAS ADMITTED PURCHASES MADE BY HIM FROM M/S.MINAXI ENTERPRISE, BHAGYODAY ENTERPRISES AND BH AVNA TRADING CO. ETC. WERE NOT GENUINE. IN OTHER WORDS, IN RESPECT OF PURCHAS ES OF STEEL ITEMS FROM THESE ENTITIES, THE ASSESSEE HAS PURCHASED FROM SOME OTHE R PERSONS. HE ONLY TOOK BILLS FROM THESE CONCERNS. THE LD.AO DISALLOWED THE PURC HASES MADE BY THE ASSESSEE IN BOTH THE YEARS. ON APPEAL, THE LD.CIT(A) HAS DEL ETED THE ADDITION BY OBSERVING AS UNDER: 4.5 I HAVE CONSIDERED THE FACTS OF THE MATTER. THE ADDITION WAS MADE SOLELY ON THE STATEMENT OF THE APPELLANT U/S 131 (3) WHICH WA S REPRODUCED IN THE ASSESSMENT ORDER. AS CONTENDED BY THE LD.A.R., A.O PICKED UP PART OF THE STATEMENT TO CONCLUDE THAT THE PURCHASES WERE INFLA TED. THE BOOKS OF ACCOUNTS OF THE APPELLANT WERE DULY AUDITED U/S 44AB. THE TU RNOVER OF THE APPELLANT DURING THE YEAR IS OVER TO 2.8 CRORES. AS SEEN FROM THE STATEMENT APPELLANT HAD STATED THAT THE PURCHASES UNDER CONSIDERATION WERE MADE IN CASH WITH A VIEW TO SAVE SALES TAX AND THEREBY INCREASE THE PROFIT M ARGIN. THE SALE BILLS WERE OBTAINED FROM DIFFERENT PARTIES. IN THE CIRCUMSTANC ES IT CANNOT BE STATED THAT PURCHASES WERE BOGUS, AS THERE COULD NOT BE SALES W ITHOUT CORRESPONDING PURCHASES. A.O HAS NOT MADE OUT ANY CASES TO SAY TH AT THE G.P ADMITTED WAS UNREASONABLE. KEEPING IN VIEW THESE FACTS, I CONSID ER IT REASONABLE TO RESTRICT THE ADDITION TO RS. 1 LAC SINCE APPELLANT HIMSELF A DMITTED THAT THE ENTIRE EXERCISE WAS DONE WITH A VIEW TO GET BETTER PROFIT. BALANCE ADDITION IS DELETED. THESE GROUNDS OF APPEAL ARE PARTLY ALLOWED. 4. IDENTICAL FINDING HAS BEEN RECORDED IN THE ASSTT .YEAR 2006-07. AFTER GOING THROUGH THE ORDER OF THE LD.CIT(A), I DO NOT FIND A NY REASONS TO INTERFERE IN IT. SIMPLE REASON FOR THIS IS THAT THE LD.AO HAS NOT DI SPUTED THE SALES MADE BY THE ASSESSEE. THE LD.AO DID NOT FIND ANY DEFECT IN THE QUANTITATIVE DETAILS OF PURCHASES AND SALES MAINTAINED BY THE ASSESSEE. THE SALES CA N ONLY BE ACHIEVED THROUGH PURCHASES. THUS, THE ONLY DISPUTE IS THAT THE ASSE SSEE HAS PURCHASED THE STEEL ITEMS FROM A BUT OBTAINED THE BILLS FROM OTHERS. IN TH IS EFFORT, THE ASSESSEE HAS AVOIDED PAYMENT OF SALES-TAX AND EXCISE DUTY, WHICH HAS RES ULTED LITTLE HIGHER PROFIT MARGIN TO THE ASSESSEE. THE LD.CIT(A) WHILE CONSIDERING T HIS ASPECT CONFIRMED THE ADDITION ITA NO.1171 AND 1172/AHD/2013 WITH COS. 3 OF RS.1 LAKH IN EACH ASSESSMENT YEAR. TO MY MIND T HIS ADDITION OF RS.1 LAKH CAN TAKE CARE OF THE EXTRA PROFIT EARNED BY THE ASSESSE E BY AVOIDANCE OF PAYMENT OF SALES-TAX OR EXCISE DUTY. THEREFORE, I DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF THE LD.CIT(A). IT IS CONFIRMED. 5. AS FAR AS THE COS. ARE CONCERNED, THE ASSESSEE H AS CHALLENGED THE ADDITION OF RS.1 LAKH RETAINED BY THE LD.CIT(A). AS DISCUSSED ABOVE, I AM OF THE VIEW THAT THE LD.CIT(A) HAS RIGHTLY RETAINED THE ADDITION OF RS.1 LAKH IN EACH ASSESSMENT YEAR, BECAUSE THIS IS THE AMOUNT WHICH CAN FAIRLY BE ESTI MATED AS EARNED BY THE ASSESSEE BY AVOIDANCE OF PAYMENT OF SALES TAX OR EXCISE DUTY . IN OTHER WORDS, BY TAKING THE BILLS FROM DIFFERENT CONCERNS AND MAKING THE PURCHA SES FROM DIFFERENT CONCERNS, THE ASSESSEE HAD EARNED THIS MUCH EXTRA PROFIT. THEREF ORE, CROSS OBJECTIONS ARE ALSO DISMISSED. 6. IN THE RESULT, APPEALS OF THE REVENUE AND BOTH T HE CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 4 TH JULY, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 04/07/2016