M/s Siddhi Vegetable Oil Products, Hyderabad V. Income-Tax Officer, Ward-8(2), Hyderabad

ITA 1182/HYD/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0340 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 13-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Assessee Lawyers: A V RAGHURAM
• Keywords: Unexplained cash credit
• Section: 143(3); 68

Judgement Text

ITA NO.1182 OF 2014 SIDDHI VEGETABLE OIL PRODUCTS PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER & SMT.ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1182/HYD/2014 (ASSESSMENT YEAR: 2008-09) M/S SIDDHI VEGETABLE OIL PRODUCTS, 7-4-94 GAGANPAHAD, R.R.DIST PAN: AAPFS 7291 C VS. INCOME TAX OFFICER WARD 8(2) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI A.V. RAGHURAM FOR REVENUE : SHRI RAMAKRISHNA BANDI, DR DATE OF HEARING : 04/03/2015 DATE OF PRO NOUNCEMENT : 17 /04/2015 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE CIT (A) VIJAYAWADA DATED 28.03.2014 PA SSED FOR A.Y 2008-09 U/S 143(3) OF THE I.T. ACT, 1961. 2. BRIEFLY STATED, THE ASSESSEE IS ENGAGED IN THE B USINESS OF MANUFACTURING VEGETABLE OIL. FOR A.Y ASSESSEE FILED ITS RETURN OF INCOME ADMITTING RS.8,24,800. THE CASE OF THE ASSES SEE WAS TAKEN UP FOR SCRUTINY AND THE AO CALLED FOR BOOKS O F ACCOUNTS WHICH WERE PRODUCED BEFORE HIM. AO HAS CONSIDERED T WO ISSUES I.E. (I) UNSECURED LOANS AND (II) ADDITION TO THE A LLEGED LOW PROFITS. ITA NO.1182 OF 2014 SIDDHI VEGETABLE OIL PRODUCTS PAGE 2 OF 10 3. IN THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE FILED CONFIRMATION LETTERS CONTAINING NAMES, ADDRESSED AN D PAN NOS. IN RESPECT OF ALL THE UNSECURED CREDITORS AMOUNTING TO RS.73,95,015. HOWEVER, AO MADE AN ADDITION OF RS.7, 18,871 ON THE ALLEGED GROUND THAT ASSESSEE HAD NOT FURNISHED FULL POSTAL ADDRESS. ASSESSEE SUBMITTED THAT THE AMOUNT OF RS. 7,18,871 DOES NOT MATCH WITH ANY OF THE UNSECURED CREDITORS AND THESE CREDITS EXISTED FOR QUITE SOME TIME AND AT ANY RATE THEY ARE NOT RELATED TO THE A.Y UNDER CONSIDERATION. ASSESSEE PR ODUCED NAME, COMPLETE ADDRESS AND PAN NOS. CONTRARY TO WHAT HAS BEEN SAID IN THE ASSESSMENT ORDER. 4. FURTHER THE ASSESSEE SUBMITTED THAT THE OTHER AD DITIONS MADE BY THE AO IS TOWARDS LOW NET PROFIT. WHILE THE NET PROFIT FOR FINANCIAL YEAR 2007-08 IS 0.65%, AO COMPARED THE SA ME WITH FUTURE YEAR VIZ., FINANCIAL YEAR 2009-10 WHICH IS A T 1.31% AND CAME TO A WRONG CONCLUSION THAT THE NET PROFIT ADMI TTED BY THE ASSESSEE IS ON THE LOWER SIDE. ASSESSEE FURTHER SUB MITTED BEFORE THE AO THAT THE VERY COMPARISON OF THE NET PROFIT F OR THE A.Y 2008-09 WITH NET PROFIT OF A.Y 2010-11 IS WRONG AND UNTENABLE AND WOULD BE COMPARISON BETWEEN TWO UNCOMPARABLES. THAT APART, ASSESSEE POINTED VARIOUS FACTORS THAT WOULD HAVE RESULTED IN HIGHER NET PROFIT RATIO FOR A.Y 2010-11 AT 1.31% . HOWEVER, AO ESTIMATED THE DIFFERENCE IN NET PROFIT AT RS.49,03, 130 AND ADDED TO THE INCOME RETURNED BY THE ASSESSEE. 5. BEFORE THE CIT (A), DURING THE COURSE OF THE APP ELLATE PROCEEDINGS, ASSESSEE APPEARED AND FILED WRITTEN SU BMISSIONS ITA NO.1182 OF 2014 SIDDHI VEGETABLE OIL PRODUCTS PAGE 3 OF 10 AND THE FACTS OF THE CASE WERE DISCUSSED. THE WRITT EN SUBMISSIONS MADE BY THE ASSESSEE WERE FORWARDED TO THE AO FOR HIS COMMENTS. THE AO STATED IN HIS REMAND REPORT AS FOLLOWS: KIND REFERENCE IS INVITED TO THE' ABOVE WHEREIN A REMAND REPORT HAS BEEN CALLED FOR WITH REGARD TO THE ADDITION MAD E ON UNSECURED LOANS IN THE SUBJECT MENTIONED CASE. IN THIS REGARD , IT IS SUBMITTED THAT THE FILE IS NOT TRACEABLE IN THIS OFFICE. AS P ER THE INFORMATION AVAILABLE IN THIS OFFICE, THE FILE HAS BEEN TRANSFE RRED TO ITO, 3(1), HYDERABAD WHEREIN THE COMPANY M/S SEETHAL SIDDI VEGETABLE OIL PRODUCTS (P) LTD IS ALSO ASSESSED TO TAX. HOWEVER, NEITHER THE TRANSFER PROFORMA NOR THE LETTER INDICATING THAT TH E FILE HAS BEEN TRANSFERRED TO THAT WARD HAS BEEN TRACED OUT IN THI S OFFICE. ON VERIFICATION OF THE RELEVANT D&CR OF THE RELEVANT Y EAR, AN ENTRY IS MADE AGAINST THE DEMAND ENTRY THAT THE FILE HAS BEE N TRANSFERRED TO ITO, 3(1), HYDERABAD. WHEN CONTACTED THE ITO, WARD -3(1), HYDERABAD, HE IS ALSO UNABLE TO TRACE OUT THE FILE FROM OLD RECORDS AND INFORMED THAT NOTHING IS FOUND OUT WITH REGARD TO TRANSFER PROFORMA OR THE LETTER. HE FURTHER INFORMED THAT TH E COMPANY M/S. SEETHAL SIDDI VEGETABLE OIL PRODUCTS (P) LTD IS AT PRESENT ASSESSED WITH DCIT, CIRCLE 3(1), HYDERABAD. OUR EFFORTS TO T RACE OUT THE FILE WITH D(IT, CIRCLE 3(1) OFFICE ALSO DID NOT, YIELD A NY POSITIVE RESULTS. THEREFORE, WITH THE HELP OF THE ASSESSMENT ORDER AND FROM THE INFORMATION GATHERED AND WITH THE FILE CREATED, THE REMAND REPORT IS BEING SUBMITTED AS UNDER - DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THERE ARE UNSECURED LOANS TO THE TUNE OF RS. 73,95,015/- IN THE BALANCE SHEET OF THE ASSESSEE. THEREFORE, HE ISSUED A SHOW CAUSE NOTICE AS TO WHY THE SAID AMOUNT SHOULD NOT BE ADDE D TO THE INCOME AS THESE UNSECURED LOANS HAVE NOT BEEN SUBST ANTIATED. IN REPLY THE ASSESSEE SUBMITTED THE LIST OF UNSECURED LOANS ALONG WITH THE ADDRESSES OF THE PERSONS WITH THEIR PAN NOS. HE FURTHER SUBMITTED THE CONFIRMATIONS ISSUED BY RESPECTIVE PE RSONS. SINCE THE ASSESSEE COULD FURNISH, THE IDENTITY OF THE CRE DITOR AND PAN NO OF THE SAID CREDITOR ALSO, THE AO APPEARS TO BE ACC EPTED THE SAME IN RESPECT OF THE CREDITORS WHOSE PAN NOS HAVE BEEN SU PPLIED. HOWEVER, HE HAD MENTIONED THAT AS THE ASSESSEE HAS NOT FURNISHED FULL POSTAL ADDRESS EXCEPT GIVING THEIR NAMES IN TH E FOLLOWING CASES THE AMOUNT OF RS. 7,18,871/- OUT OF THE TOTAL AMOUNT OF RS. 73,95,015/- HAS BEEN ADDED AS UNEXPLAINED CREDITORS. HOWEVER, INADVERTENTLY, THE AO MISSED TO MENTION IN WHICH OF THE FOLLOWING ITA NO.1182 OF 2014 SIDDHI VEGETABLE OIL PRODUCTS PAGE 4 OF 10 CASES HE HAD OBSERVED DISCREPANCIES. FROM A PERUSAL OF THE LIST ENCLOSED AND THE CONFIRMATIONS FILED AND ON EXAMINA TION OF THE PAN NO.S IT IF OBSERVED THAT THE FOLLOWING CREDITS ARE NOT CORRECT AS THE RESPECTIVE PAN NOS. FURNISHED BY THE ASSESSE E ARE FOUND TO BE NOT CORRECT AS PER AST INFORMATION. 1. SUBHAS GUPTA AACP 62211 M RS.3,20,659 2. PARO FOOD PRODUCTS AADFP 5417 C RS.5,50,000 3. PARO PACKAGING IND. AACFT 4308 Q RS.1,50,000 4. JETENDER KEDIA -- RS.4,50,000 5. SIDDI AGARWAL --- RS. 5,358 TOTAL RS.14,76,017 SINCE THREE INGREDIENTS OF DISH CREDITS AS ENVISAGE D IN THE APEX COURTS DECISION IN THE CASE OF SRI VTJAYA KURNAR TALWAR REPORTED IN 330 ITR 1 WAS NOT FULFILLED, THE AO SHOULD HAVE MAD E ADDITION OF ALL THESE AMOUNTS. HOWEVER, AS MENTIONED EARLIER, H E HAD NOT MENTIONED THE NAMES OF THE UNSECURED LOANS WHICH WE RE ADDED AS PER HIS OPINION: THEREFORE, THE ASSESSMENT MAY BE E NHANCED PROVIDED THE ASSESSEE FAILED TO FILE THE INFORMATIO NS FROM THE ABOVE MENTIONED PERSONS. 6. THE REMAND REPORT OF THE AO WAS SENT TO THE ASSE SSEE FOR COMMENTS FOR WHICH THE ASSESSEE HAS GIVEN ITS REPLY AS UNDER: THE AO IN HIS REMAND REPORT HAS RECOMMENDED NOT ON LY FOR CONFIRMING THE ADDITIONS ALREADY MADE BUT HAS ALSO RECOMMENDED FOR ENHANCEMENT OF THE ASSESSMENT. THE APPELLANT ALREADY SUBMITTED THAT THE ASSESSMENT ORDER LACKS CLARITY ON THE ADDITION. THE AO HAS NOT PROVIDED DE TAILS FOR THE ADDITION OF RS.7,18,871 MADE BY HIM. EVEN THE PRESE NT AO IN HIS REMAND REPORT IS SILENT ABOUT THE SAME BUT STAT ES THAT THE THEN AO INADVERTENTLY HAS FAILED TO MAKE ADDITION O F RS.14,76,017 GIVING NAMES AND AMOUNTS OF FIVE PARTI ES. THE APPELLANT INVITE KIND ATTENTION TO THE SUBMISSI ONS THAT ARE ALREADY MADE. THE APPELLANT DREW ATTENTION TO THE S CHEDULE OF UNSECURED LOANS OF RS.73,95,015 AND SUBMITTED THAT ALL OF THEM ARE NOT LOANS TAKEN DURING THE RELEVANT PREVIOUS YE AR AND ONLY ITA NO.1182 OF 2014 SIDDHI VEGETABLE OIL PRODUCTS PAGE 5 OF 10 IN SOME ACCOUNTS THERE ARE FRESH CREDITS. COPY OF T HE FINANCIAL STATEMENTS WERE FILED AND ATTENTION WAS INVITED TO SCHEDULE D WHICH CONTAINS DETAILS OF UNSECURED LOANS FOR RS.73 ,95,015. THE HONOURABLE CIT(A) WOULD APPRECIATE THAT THE OPE NING BALANCE AS ON 1-4-2007 WAS RS.11065067 AND AS ON 31 -3-2008 IT IS RS.73,95,015. COMING TO THE NAMES REFERRED TO BY THE PRESENT AO THE FOLLOWING IS THE POSITION OF OPENING BALANCE AND AS AT 31-3-2008 : 31.3.2008 (RS.) 31.3.2007 (RS.) 1.SUBHASH GUPTA 3,20,659 2,99,167 2.PARO FOOD PRODUCTS 5,00,000 5,00,000 3.PARO FOOD PRODUCTS 50,000 50,000 4.PARO PACKAGING IND. 1,50,000 12,50,000 5.JITENDER KEDIA 4,50,000 4,50,000 6.SIDDI AGARWAL 4,50,000 5,358 THE APPELLANT SUBMIT THAT THE ABOVE INFORMATION AS AVAILABLE FROM SCHEDULE D CLEARLY DEMONSTRATE THAT EXCEPT IN THE CASE OF PART Y AT S.NO.L OF SRI SUBHAS GUPTA IN ALL OTHER FIVE PARTIE S 'CASES THERE WAS NO FRESH LOAN THIS YEAR. IN THE CASE OF SRI SUBHAS GUPTA ONLY AN AMOUNT OF RS.21,492 WAS RECEIVED DURING THE RELEVAN T PREVIOUS YEAR. WHEN THE APPELLANT IS SUBMITTING THAT THESE AMOUNTS WERE RECEIVED DURING 2006-07, IT IS NOT KNOWN AS TO HOW THE AO CO ULD SUGGEST FOR ENHANCEMENT MERELY ON THE FLIMSY GROUND THAT TH E PAN NUMBERS DOES NOT MATCH. HERE AGAIN THE APPELLANT SU BMIT THAT THE AO FAILED TO APPRECIATE THE FACT THAT THE AO HIMSEL F COULD GET THE PAN BY USING THE NAME. THE AO TRIED TO VERIFY THE O THER WAY ROUND OF USING PAN. UNFORTUNATELY THERE WAS TYPOGRA PHICAL ERROR IN THREE CASES AND MISTAKE IN TWO CASES. THE APPELL ANT IS FURNISHING DETAILS HERE UNDER: CORRECT PAN 1.SUBHASH GUPTA AACP 62211 M AACPG 7211 M 2.PARO FOOD PRODUCTS AADFP 5417 C AADFP 5416 C 3.PARO FOOD PRODUCTS -DO- -DO- 4.PARO PACKAGING IND. AACFT 4308 Q AABFP 0112 F ITA NO.1182 OF 2014 SIDDHI VEGETABLE OIL PRODUCTS PAGE 6 OF 10 5.JITENDER KEDIA --- ADOPK 8686 M WITHOUT PREJUDICE TO THE SUBMISSION THAT NO ADDITIO N SHOULD HAVE BEEN SUGGESTED BY THE AO SINCE THE EARLIER AO HAVIN G VERIFIED ALL THE DETAILS HAS NOT MADE ANY ADDITION MAY BE ON THE GROUND THAT NONE OF THESE CREDITS WERE TAKEN DURING THE PREVIOU S YEAR RELEVANT TO THIS ASSESSMENT YEAR, THE APPELLANT SUBMIT THAT THERE WAS MISTAKE IN THE STATEMENT OF UNSECURED LOANS PREPARE D AND ENCLOSED TO THE SUBMISSIONS TO THE AO WHEREIN THERE WAS ERRORS IN TYPING THE PAN, BASED ON WHICH THE PRESENT AO MADE OUT A CASE OF MISMATCH OF PAN. THE AO HAS NOT VERIFIED THE PAN WITH REFERENCE TO NAME. THE APPELLANT SUBMIT THAT THE AO OUGHT TO HAVE CONFINED HIMSELF TO THE ISSUE OF DETAILS FOR T HE AMOUNT OF RS.7,18,871 THAT WAS ADDED BY THE THEN AO IN THE AS SESSMENT THAT IS IN APPEAL. THE THEN AO HAS NOT PROVIDED ANY DETA ILS IN THE ASSESSMENT ORDER AS TO WHOM THIS AMOUNT RELATE TO S UBSTANTIATE THAT THERE IS NO DETAILS OF ADDRESSES. THE APPELLANT SUBMIT THAT THE ADDITION OF RS. 7,18, 871 IS NOT EXPLAINED BY THE PRESENT AO ALSO AND THEREFORE NEED TO BE DELETED AND THERE IS NO CASE FOR ENHANCEMENT SINCE ALL THE CREDITS THAT ARE REFERRED TO BY THE PRESENT AO WERE APPEARING IN THE EARLIER YEAR AND NOT IN THIS YEAR TO CONSIDE R FOR ADDITION. WITH REGARD TO THE OTHER GROUND OF ADDITION OF GP, AS SUBMITTED EARLIER THERE IS NO CASE TO MAKE ADDITION BASED ON A LATER YEAR RESULTS. IT COULD BE ONLY ON EARLIER YEA R RESULTS AND THEY COMPARE WELL. THEREFORE THE APPELLANT PRAY THAT THE APPEAL BE ALLOWED. 7. THE CIT (A) HELD AS UNDER: 5.4 I HAVE GONE THROUGH THE FACTS OF THE CASE, THE SUBMISSIONS MADE BY THE APPELLANT, THE OBSERVATION OF THE AO IN THE REMAND REPORT AND APPELLANTS REPLY T O THE REMAND REPORT. IN THE REMAND REPORT, THE AO AFTER D UE EXAMINATION OF THE PAN NOS. OF THE CREDITORS AND CONFIRMATION LETTERS PRODUCED BY THE APPELLANT, HAS SUGGESTED FOR ENHANCEMENT OF ADDITION MADE IN RESPE CT OF FIVE CREDITORS SINCE IN THESE CASES, THE NECESSA RY ITA NO.1182 OF 2014 SIDDHI VEGETABLE OIL PRODUCTS PAGE 7 OF 10 THREE INGREDIENTS TO PROVE THE CASH CREDITS AS GENU INE ARE NOT FULFILLED AS THE PAN NOS. FURNISHED BY THE ASSESSEE ARE FOUND TO BE NOT CORRECT AND DOES NOT M ATCH WITH THE NAMES OF THE CREDITORS AS PER ASSESSMENT INFORMATIN. THE APPELLANT IN ITS REPLY TO THE REMAN D REPORT HAS STATED THAT THERE WERE ERRORS IN TYPING THE PAN NOS. OF THE CREDITORS. HOWEVER, THE APPELLANT D ID NOT PRODUCE ANY CONFIRMATION LETTERS FROM CREDITORS WITH THEIR NAMES/ADDRESSED AND CORRECT PAN NOS. IN VIEW OF THIS, I AM IN AGREEMENT WITH THE FINDINGS MADE BY T HE AO IN HIS REMAND REPORT. ACCORDINGLY, THE ADDITION ON ACOUNT OF UNEXPLAINED CASH CREDITS IS ENHANCED FROM RS.7,18,871 TO RS.14,76,017/-. 6. THE NEXT ISSUE IS WITH REGARD TO ESTIMATION OF N ET PROFIT AT 1.30%. THE APPELLANT HAS ADMITTED A NET INCOME OF RS.14,44,347 AT 0.29% OF TURNOVER. HOWEVE R, THE NET PROFIT ADMITTED FOR A.Y 2010-11 IS 1.30%. O N COMPARISON WITH SIMILAR CASES AND ALSO IN VIEW OF T HE APPELLANTS TRADE RESULTS FOR A.Y 2010-11, THE AO F ELT THE PROFIT ADMITTED BY THE APPELLANT FOR THE YEAR U NDER QUESTION AS VERY LOW. ACCORDINGLY, HE ESTIMATED THE NET PROFIT AT 1.30% AND MADE AN ADDITION OF RS.49,03,13 0. ON THIS ISSUE THE APPELLANT HAS SUBMITTED THAT EDIB ILE OIL BUSINESS IS HIGHLY VOLATILE BUSINESS AND THE PR OFIT IN THE LATER YEARS IS DUE TO INTRODUCTION OF NEW CAPIT AL BY THE PARTNERS, REDUCTION IN INTEREST EXPENSES AND INVESTMENT IN PLANT AND MACHINERY WHICH RESULTED IN HIGHER PRODUCTION. I HAVE GONE THROUGH THE SUBMISSI ONS MADE BY THE APPELLANT AND FOUND NO FORCE IN THE ARGUMENT OF THE APPELLANT. AS OBSERVED BY THEAO, IF THERE IS INCREASE IN THE TURNOVER IN THE SUBSEQUENT YEAR, THE RATIO OF PROFIT WOULD DECREASE. WITH THE INTROD UCTION OF NEW PLANT AND MACHINERY, THE EXPENDITURE IN THE FOLLOWING YEAR MUST BE HIGH AND DUE TO THE DEPRECIA TION CLAIMED ON THE NEW MACHINERY, THE PROFIT WOULD REDU CE. HENCE, THE APPELLANTS ARGUMENT IS NOT CORRECT. FUR THER, EVEN THOUGH EDIBLE OIL BUSINESS IS A HIGHLY VOLATIL E BUSINESS, THE MARKET CONDITIONS PREVAILED IN A PARTICULAR YEAR ARE ONE AND SAME FOR ALL THE TRADER S AND HENCE THIS IS NOT A FACTOR WHICH DRASTICALLY REDUCE S THE APPELLANTS PROFIT WHEN COMPARED TO OTHERS. IN VIEW OF ITA NO.1182 OF 2014 SIDDHI VEGETABLE OIL PRODUCTS PAGE 8 OF 10 THIS I AM IN AGREEMENT WITH THE FINDINGS AO AND THE ADDITION MADE ON THIS COUNT IS SUSTAINED. 8. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE US, RAISING THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LD CIT (A) IS NOT ONLY ERRONEO US BOTH ON FACTS AND IN LAW BUT IS PERVERSE HAVING BEEN PAS SED WITHOUT APPLICATION OF MIND. 2. THE LD CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS.49,03,130 MADE DIFFERENCE IN NET PROFIT WITHOUT APPRECIATING THAT THE AO HAS NOT POINTED OUT ANY DE FECT IN THE BOOKS OF ACCOUNTS AND FURTHER THAT WHAT IS COMPARABLE IS GP AND NOT NET PROFIT WHEN THE EXPENDITURE IS NOT FOUND TO BE INFLATED. 3. THE LD CIT (A) ERRED IN CONFIRMING THE ADDITION U/S 68 OF RS.7,18,871 AND FURTHER ENHANCING THE ADDITION O F RS.14,76,017 THOUGH MAJOR PORTION OF THE UNSECURED LOANS ARE OPENING BALANCE AND APPEARING IN THE PREVIOUS YEAR, WITHOUT ADDRESSING SUBMISSIONS ON TH E SAME BY MERELY REFERRING TO THE REMAND REPORT OF TH E AO. 4. THE LD CIT (A) ERRED IN ENHANCING THE ADDITION W ITHOUT SPECIFIC NOTICE FOR ENHANCEMENT. 9. WE HEARD BOTH THE PARTIES AND PERUSED THE RECORD S. WE FIND FROM SCHEDULE D, IT IS CLEAR THAT EXCEPT IN TH E CASE OF PARTY AT S.NO.1, NAMELY SHRI SUBHASH GUPTA, IN THE CASE O F ALL OTHER PARTIES THERE WAS NO FRESH LOANS THIS YEAR. ASSESSE E HAS GIVEN AT PAGE 65 OF THE PAPER BOOK DETAILS OF UNSECURED LOAN S FOR A.Y 2007-08. THE OPENING BALANCE AS ON 31.03.2008 IS RS .73,95,001 WHICH CANNOT BE ADDED EXCEPT FOR SHRI SUBHASH GUPTA FOR AN AMOUNT OF RS.21,492. ITA NO.1182 OF 2014 SIDDHI VEGETABLE OIL PRODUCTS PAGE 9 OF 10 10. FURTHER ALL THE CONFIRMATION LETTERS FOR UNSECU RED LOANS HAVE BEEN PRODUCED BY THE ASSESSEE AT PAGE NOS.66 T O 106 OF THE PAPER BOOK. IN THESE CIRCUMSTANCES, WE SET ASIDE TH E ISSUE AND DIRECT THE AO TO VERIFY THE DETAILS AND PARTICULARS WITH RESPECT TO THE AMOUNT OF RS.7,18,871 WHICH WAS ADDED BY THE PR EDECESSOR AO. 11. WITH REGARD TO THE 2 ND ISSUE ON ADDITION OF RS.49,03,130 ON THE NET PROFIT, IT IS RELEVANT TO CONSIDER THE GP R ATIO OF THE THREE YEARS GIVEN BY THE ASSESSEE WHICH IS AS FOLLOWS: ASSESSMENT YEAR GROSS PROFIT NET PROFIT 2007 - 08 3.44% 0.48% 2008 - 09 3.89% 0.30% 2009 - 10 3.04% 0.65% 2010 - 11 2.90% 1.31% FROM THE ABOVE IT CAN BE OBSERVED THAT FOR A.Y 2008 -09, 3.89% HAS BEEN THE GROSS PROFIT RATIO IS BETTER. AS REGAR DS REDUCTION IN THE NET PROFIT, IT IS DUE TO VARIANCE IN THE P&L AC COUNT. 12. IN OUR OPINION THE BOOKS OF ACCOUNTS HAVE BEE N ACCEPTED AND ALSO SINCE NO OBJECTION WAS RAISED BY THE REVEN UE FOR INFLATION OF THE EXPENSES, THE REVENUE SHOULD HAVE MADE COMPARISON ON GROSS PROFIT AND NOT ON THE NET PROFI T. HENCE WE FIND MERIT IN THE GROUND RAISED BY THE ASSESSEE AND ALLOW THE SAME. ITA NO.1182 OF 2014 SIDDHI VEGETABLE OIL PRODUCTS PAGE 10 OF 10 13. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH APRIL, 2015. S D/ - S D/ - (P.M. JAGTAP) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 17 TH APRIL, 2015. VNODAN/SPS COPY TO: 1. SHRI K.VASANTKUMAR & A.V.RAGHURAM, ADVOCATES, 610 6 TH FLOOR, BABUKHAN ESTATE, BASHEERBAGH HYDERABAD 01. 2. INCOME TAX OFFICER WARD 8(2) HYDERABAD 3. THE CIT(A)VIJAYAWADA 4. THE CIT-II HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER