The ACIT,Vapi Circle, Vapi V. M/s. J.K. Brothers, Vapi

ITA 118/AHD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67663 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 12-08-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 11-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JUNGID

Judgement Text

, , , , C, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + ) ' )* + ) ' )* + ) ' )* + ) ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.118/AHD/2013 [ASSTT.YEAR : 2009-2010] ACIT, VAPI CIRCLE VAPI. /VS. J.K. BROTHERS, PARTH PLAZA, 1 ST FLOOR, NFF M-1, KOPARLI ROAD, VAPI. PAN : AABFJ 9807 F ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) + 1 2 )/ REVENUE BY : SHRI J.P. JUNGID, SR.DR 4& 1 2 )/ ASSESSEE BY : SHRI HARDIK VORA 5 1 &(*/ DATE OF HEARING : 12 TH AUGUST, 2013 678 1 &(*/ DATE OF PRONOUNCEMENT : 5.9.2013 )9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT : THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YEAR 2009-2010, IS DIREC TED AGAINST THE ORDER OF THE CIT(A), VALSAD, DATED 26.10.2012. 2. THE GROUND NO.1 OF THE APPEAL OF THE REVENUE IS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN ALLOWING THE ITA NO.118/AHD/2013 -2- DISALLOWANCE OF RS.11,46,042/- MADE BY THE AO ON AC COUNT OF INTEREST PAID ON DELAYED PAYMENT OF SERVICE TAX WHICH IS PENAL IN NATURE AND NOT RELATED TO BUSINESS ACTIVIT IES. 3. THE LEARNED DR HAS RELIED ON THE ORDER OF THE AO . THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE I N THIS GROUND OF THE APPEAL IS COVERED IN ITS FAVOUR WITH THE DECISI ON OF THE HONBLE SUPREME COURT IN THE CASE OF LACHMANDAS MAT HURADAS VS. CIT, 254 ITR 0799 WHEREIN HELD THAT INTEREST ON ARREARS OF SALES TAX OR ON THE OUTSTANDING BALANCE OF SALES TA X IS NOT PENAL IN NATURE AND IS COMPENSATORY IN NATURE, AND IS AN ALL OWABLE DEDUCTION IN COMPUTING THE PROFITS OF BUSINESS. WE HAVE CONSIDERED RIVAL SUBMISSIONS. WE FIND THAT THE RAT IO OF THIS DECISION OF THE HONBLE SUPREME COURT WAS FOLLOWED BY THE LEARNED CIT(A) WHILE DECIDING THE ISSUE IN FAVOUR O F THE ASSESSEE. THERE BEING NO MISTAKE IN THE ORDER OF THE CIT(A), HIS ORDER ON THIS ISSUE IS CONFIRMED AND THE GROUND NO.1 OF THE REVENUE IS DISMISSED. 4. THE GROUND NO.2 OF THE APPEAL OF THE REVENUE IS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN RESTRICTING THE ADDITION AT RS.7,42,300/- ESTIMATING THE PROFIT @ 11% OF RS.67,.47,876/- (DIFFERENCE OF RECEIPT AS WORKED OU T BY THE CIT(A) ON THE BASIS OF SUBMISSION MADE BY THE ASSES SEE) AGAINST THE ACTUAL ADDITION MADE BY THE AO AT RS.87,39,0512/-. 5. THE LEARNED DR RELIED ON THE ORDER OF THE AO. T HE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE I N THIS GROUND OF ITA NO.118/AHD/2013 -3- THE APPEAL OF THE REVENUE IS COVERED IN FAVOUR OF T HE ASSESSEE WITH THE DECISION OF THE ITAT, AHMEDABAD BENCH IN C HHOTUBHAI R. PATEL VS. ITO, IN ITA NO.705/AHD/2012 DATED 9.8. 2012 WHEREIN IN IDENTICAL FACTS, THE ISSUE WAS DECIDED I N FAVOUR OF THE ASSESSEE. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS CAREFULLY A ND HAS PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FI ND THAT THE CIT(A) HAS RECORDED A FINDING THAT THE ASSESSEE HAS UNDERSTATED THE SALES TO THE EXTENT OF RS.67,47,876/- WITH RESP ECT TO TWO PARTIES VIZ. MALHOTRA RUBBER LTD. AND NARENDRA PLAS TIC P. LTD. HE HAS FURTHER RECORDED THAT THE ENTIRE AMOUNT OF S ALES COULD NOT BE TAKEN AS PROFIT COMPONENTS IN THE HANDS OF THE A SSESSEE. HE HAS ESTIMATED REASONABLE AMOUNT OF PROFIT BY APPLYI NG A FLAT RATE OF 11% FROM THE UNDERSTATED AMOUNT OF SALES, AND HA S RECORDED THE BASIS FOR APPLYING THE PROFIT RATE OF 11% TO TH E UNDERSTATED SALE OF THE ASSESSEE. THE ASSESSEE HAS DECLARED A PROFIT OF 10.82% ON ITS RECORDED SALES, AND THEREFORE IN THE ABSENCE OF ANY MATERIAL TO TAKE A DIFFERENT VIEW, WE HOLD THAT THE ORDER OF THE CIT(A) IN ESTIMATING THE PROFIT RATE AT 11% IS REASONABLE IN THE FACTS OF THE CASE. ACCORDINGLY, THE ORDER OF THE CIT(A) ON THIS ISSUE IS ALSO CONFIRMED AND THE GROUND NO.2 OF THE REVENUE IS DIS MISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT ITA NO.118/AHD/2013 -4- )* + )* + )* + )* + /ACCOUNTANT MEMBER C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD