ACIT, Central Circle - XXX, Kolkata, Kolkata V. Ma Amba Sponge Iron (P) Ltd., Durgapur

ITA 1259/KOL/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 5446 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2010
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 23-07-2009
• Court: TRIBUNAL
• Department Lawyers: P C NAYAK
• Assessee Lawyers: A K TULSIYAN
• Keywords: Tax effect
• Section: 145

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH B, KOLKATA () BEFORE . . . . . . . . , ,, , SHRI B.R.MITTAL, JUDICIAL MEMBER. ! ! ! ! /AND . .. .'# '#'# '#. .. . , $% SHRI C.D. RAO, ACCOUNTANT MEMBER !& !& !& !& / ITA NO S.1259 /KOL/2009 & 1260/KOL/2009 '( )*/ ASSESSMENT YEARS : 2006-07 & 2007-08 (,- / APPELLANT ) A.C.I.T., CIRCLE-XXX, KOLKATA - ' - - VERSUS - . (/0,-/ RESPONDENT ) M/S.MA AMBA SPONGE IRON (P) LTD., KOLKATA (PAN: AADCM 6129 J) ,- 1 2 $/ FOR THE APPELLANT: SHRI P.C.NAYAK, SR.DR /0,- 1 2 $/ FOR THE RESPONDENT: SHRI A.K.TULSIYAN $3 / ORDER ( (( ( . . . . . . . . , ,, , ) PER SHRI B .R.MITTAL, JM THE DEPARTMENT HAS FILED THESE TWO APPEALS FOR A.YR S. 2006-07 AND 2007-08 AGAINST ORDERS OF THE LD. CIT(A) DATED 8 TH MAY, 2009 AND 11 TH MAY, 2009 RESPECTIVELY ON COMMON GROUNDS WHICH ARE AS UNDER :- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACTS REVEALED BY THE AO AND NON COOPERATION MADE BY THE ASSESSEE DURING THE COURSE OF ASSESSMEN T. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS RIGHT IN HOLDING THAT THE FACTS REVEALED BY THE AO WITH C OMPARISON TO THE SAME TYPE OF CASES WAS NOT APPLICABLE IN THIS CASE. 2 2. IT IS RELEVANT TO STATE THAT BOTH THE APPEALS OF THE DEPARTMENT WERE DISMISSED BY THE TRIBUNAL VIDE ORDER DATED 9 TH SEPTEMBER, 2009 ON THE GROUND THAT TAX EFFECT WAS BELOW RS.2 LAKHS. SUBSEQUENTLY THE SAID ORDER WAS R ECALLED IN MISCELLANEOUS APPLICATIONS NO.20 AND 31 FILED BY THE DEPARTMENT F OR A.YRS. 2006-07 AND 2007-08 RESPECTIVELY,. HENCE THE APPEALS HAVE COME UP FOR H EARING. 3. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND HAVE PERUSED ORDERS OF THE AUTHORITIES BELOW. 4. IN RESPECT OF THESE A.YRS. UNDER CONSIDERATION THE AO WHILE COMPLETING ASSESSMENTS ESTIMATED RATE OF PROFIT TO THE DISCLOS ED TURN OVER. IN THE FIRST APPEAL FOR BOTH A.YRS. THE LD. CIT(A) HAS STATED THAT THE AO W AS NOT JUSTIFIED TO APPLY RATE OF PROFIT FOR THE PURPOSE OF ESTIMATING INCOME WITHOUT REJECTING THE BOOKS OF ACCOUNT. THE LD. CIT(A) FOR BOTH A.YRS UNDER CONSIDERATION HAS D IRECTED THE AO TO ACCEPT THE BOOK RESULT. WE CONSIDER IT PRUDENT TO REPRODUCE 5.3. OF THE ORDER OF LD. CIT(A) FOR A.YR. 2006-07 WHICH READS AS UNDER :- 5.3. AS FAR AS THE ESTIMATE OF PROFIT BY APPLICATI ON OF NET PROFIT RATE OF 1.5% TO THE TURNOVER ON THE BASIS OF THE COMPARABLE CASE OF MSP SPONGE IRON LTD. WHERE THE RATE OF PROFIT IS 3% IS CONCERNED THE APP ELLANT IS JUSTIFIED IN ARGUING THAT THE FIRST STAGE IN THIS EXERCISE OF APPLYING T HE RATE OF PROFIT FOR THE PURPOSE OF ESTIMATING INCOME IS THE REJECTION OF THE AUDITE D BOOKS OF ACCOUNT. THERE IS NO MATERIAL FOR REJECTING THE BOOKS OF ACCOUNT. IF THE BOOKS OF ACCOUNT ARE NOT REJECTED, THE BOOK RESULTS HAVE TO BE ACCEPTED. THE RESULTING VARIATION IN THE RATES OF PROFIT IS THE INDEX OF THE EFFICIENCY OR O THERWISE OF THE BUSINESS MANAGEMENT DURING THE YEAR. UNDER THE CIRCUMSTANCES , THIS PART OF THE ACTION OF THE ASSESSING OFFICER ESTIMATING PROFIT AT 1.5% OF THE TURNOVER IS NOT JUSTIFIED. THE ASSESSING OFFICER IS DIRECTED TO ACCEPT THE BOO K RESULT. THE LD. CIT(A) FOR A.YR.2007-08 HAS FOLLOWED HIS OR DER FOR A.YR. 2006-07. 5. AT THE TIME OF HEARING THE LD. DR HAS RELIED ON ORDERS OF THE AO. HOWEVER, THE LD. AR SUBMITTED THAT SIMILAR ISSUE HAS ALREADY BEE N CONSIDERED BY DELHI BENCH ITAT IN THE CASE OF DHARAMPAL SATYAPAL VS DCIT 106 TAXMA N (MAGAZINE 236) AND THE TRIBUNAL HELD THAT WHEN THE AO HAD RECORDED NO FIND ING FOR REJECTION OF BOOK RESULT WITHIN THE MEANING OF SECTION 145 OF THE ACT, THE A DDITIONS BASED ON ASSUMPTION AND 3 PRESUMPTIONS AND NOT ON ANY CONCRETE MATERIAL DESER VE TO BE DELETED. THE LD. AR SUBMITTED THAT THERE IS NO QUESTION OF ESTIMATING I NCOME OF THE ASSESSEE. 5.1.. WE FIND MERIT IN THE CONTENTION OF THE LD. A R. THERE IS NO DISPUTE TO THE FACT THAT THE BOOK RESULTS HAVE NOT BEEN REJECTED BY THE AO WHILE APPLYING THE ESTIMATED RATE OF PROFIT TO THE DISCLOSED TURN OVER. HENCE WE DO NOT FIND ANY REASON TO INTERFERE WITH ORDERS OF THE LD. CIT(A). IN VIEW OF THE ABOVE WE UPHOLD THE ORDERS OF LD. CIT(A) FOR BOTH THE A.YRS. UNDER CONSIDERATION BY REJECTIN G GROUNDS OF APPEAL TAKEN BY THE DEPARTMENT. 6. IN THE RESULT BOTH THE APPEALS OF THE DEPARTMEN T ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 15.12.2010 SD/- SD/- . .. .'# '#'# '#. .. . , $% C.D. RAO, ACCOUNTANT MEMBER . . . . . . . . , B.R.MITTAL, JUDICIAL MEMBER. ( (( (#% #% #% #%) )) ) DATE: 15.12.2010. $3 1 /4 5$4)6- COPY OF THE ORDER FORWARDED TO: 1. M/S.MA AMBA SPONGE IRON (P) LTD., G.T.ROAD, BHIRING HEE MORE, DURGAPUR-713213. 2 THE A.C.I.TCENTRAL CIRCLE-XXX, KOLKATA 3. THE CIT, 4. THE CIT(A), 5. DR, KOLKATA BENCHES, KOLKATA 04 // TRUE COPY, $3';/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES R.G.(.P.S.) 4