DCIT, CIRCLE-1(1)(1), SURAT V. DIVYA FASHIONS PVT. LTD, SURAT

ITA 129/SRT/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1653 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-07-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 17-06-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gross profit estimation; Unexplained cash credit; Rejection of books of accounts; Unexplained investment; Business income; Revenue expenditure; Capital expenditure; Set aside
• Section: 68; 145; 43B; 143(3); 195; 251; 139(1); 73; 13; 145(3); 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./ITA No.129/SRT/2020 Assessment Year: (2012-13) (Virtual Court Hearing) The DCIT, Circle-1(1)(1), Surat. Vs. Divya Fashions Pvt. Ltd., Sy. No.1, Plot No.2, Opp. Sub-station, B/h. Rathi Palace, Umarwada, Surat. èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AADCD1661L (Revenue)/(Assessee) (Assessee)/(Respondent) Cross Objection No.12/SRT/2020 Assessment Year: (2012-13) (Virtual Court Hearing) Divya Fashions Pvt. Ltd., Sy. No.1, Plot No.2, Opp. Sub-station, B/h. Rathi Palace, Umarwada, Surat. Vs. The DCIT, Circle-1(1)(1), Surat. èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AADCD1661L (Assessee) (Respondent) Assessee by Shri Mehul Shah, CA Respondent by Shri H. P. Meena, ld. CIT(DR) Date of Hearing 05/07/2022 Date of Pronouncement 23/09/2022 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the Revenue and Cross Objection filed by the assessee, pertaining to Assessment Year (AY) 2012-13, are directed against the common order passed by the Learned Commissioner of Income Tax (Appeals)-3, Surat [in short “the ld. CIT(A)”] in Appeal No. CIT(A)-3/10942/2015-16, dated 04.02.2020, which in turn arise out of an assessment order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 30.03.2015. Page | 2 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited 2. First, we shall take Revenue`s appeal in ITA No. 129/SRT/2020. The Grounds of appeal raised by the Revenue are as follows: “1. Whether on the facts and the circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the addition of Rs.3,51,57,284/- made on account of estimation of gross profit after rejecting the books of accounts u/s 145(3) of the Act when in fact, the assessee has not maintained stock register as well as assessee was unable to explain various discrepancies pointed out by the A.O during the assessment proceedings? 2. Whether on the facts and circumstances of the case and in law, the ld. CIT(A) is justified in deleting the addition of Rs.26,94,870/- made by the A.O on account of under valuation of excess stock found during the course of survey at shop premises of the assessee @ Rs.32.44 per meter as adopted by the assessee in the audited books of account, on being found that the valuation adopted by the survey team on excess stock was at lower rate of Rs.28.30 per meter, which was based on unaudited accounts? 3. Whether on the facts and circumstances of the case and in law, the ld. CIT(A) is justified in deleting the addition of Rs.24,63,328/- made by the A.O on account of under valuation of chemical stock found at the premises of the assessee by applying the FIFO method as against the average weighted method adopted by the assessee, ignoring that assessee has not maintained any stock register, in which case, it is ought to have adopted FIFO method for the valuation of closing stock? 4. Whether on the facts and circumstances of the case and in law, the ld. CIT(A) is justified in deleting the addition of Rs.22,05,138/- made on account of unaccounted purchase ignoring the fact that the assessee has failed to explain the same before the AO and also failed to produce any evidences regarding the purchase returns, which according to the assessee was the reason for stock discrepancy? 5. Whether on the facts and circumstances of the case and in law, the CIT(A), Surat is justified in deleting the addition of Rs.8,88,000/- made by the AO on account of unexplained cash credit, without appreciating the facts that the assessee has failed to prove the genuineness and creditworthiness of the unsecured loan received by the assessee as required under the provisions of sec. 68 of the IT Act. 6. The assessee craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal. 7. It is therefore, prayed that the order of the Ld. CIT(A) may be set aside and that of assessing officer may be restored to the above extent.” 3. Ground no.1 raised by Revenue relates to deletion of addition of Rs.3,51,57,284/- made by the Assessing Officer on account of estimation of gross profit after rejecting books of accounts under section 145(3) of the Act. 4. Succinct facts are that during the assessment proceedings, the assessing officer noted that assessee has furnished Gross Profit (in brief G.P.), working of Page | 3 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited current year and preceding year which shows G.P. ratio at 22.41% in the current year, as against 23.52% in the preceding year. However, in clause 32 of audit report, Form 3CD, pertaining to accounting ratio's, the assessee has shown G.P. @ 17.14% only on turnover of Rs.69,90,06,565/-which was inclusive of income of Rs.2,29,04,948/-. Therefore, assessing officer noted that at different time, that assessee is adopting different ways of computing its G.P. Thus, it is clear that assessee has not maintained proper method. Therefore, assessing officer observed that no reliance can be placed on the assessee's book of accounts. It was further noted that the assessee has not included the wages and salaries of Rs.7,01,76,245/- in the working of G.P. which would have resulted in further drastic fall in G.P margins in the year. In respect of fall in G.P. margin the assessee has stated that during the year under consideration the assessee had carried out manufacturing activity for the whole year, whereas in the preceding year the same was carried out for two months only and requested to accept the G.P margin shown. Therefore, the assessing officer has issued show cause letter dated 10.03.2015 to the assessee. 5. In response, the assessee submitted before the assessing officer written submissions and explained the reasons to fall in gross profit ratio. The reply of the assessee is reproduced in assessment order in para no.15 at page no.14 of the assessment order. The assessee has stated before AO that in the preceding year, the nature of business activity was predominantly of trading and manufacturing activity which were started only at the fag end of the year. It was further stated that manufacturing activity would require more manpower and consequently higher labour cost whereas in trading business lesser manpower was required and lower manpower cost. The assessee therefore, concluded that if employee cost was considered in G.P. ratio then it would result in incomparable/incompatible result, which is the case in the G.P. working shown in the show cause letter. It is therefore stated that the assessee has not considered the employee cost in its G.P. working. It is an accepted fact that G.P. margins in manufacturing activities are always higher than the G.P. margins in trading activities. The higher G.P. margins earned on manufacturing activities are after considering the higher employee cost involved. Page | 4 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited 6. However, assessing officer rejected the contention of the assessee and held that there are various flaws in the books of accounts maintained by the assessee, therefore Assessing Officer rejected book result u/s 145(3) of the Income Tax Act. The G.P. ratio of the assessee after inclusion of wages comes to 11.66% in the year as against 16.86% in the preceding year which shows a G.P. fall of 5.2 % in the year. Adopting the same margin of G.P. shown in the preceding year i.e. 16.86%, the Assessing Officer added further G.P. of 5.2% which worked out to Rs.3,51,57,284/-. 7. Aggrieved by the order of the Assessing Officer, the assesse carried the matter in appeal before the ld. CIT(A) who has deleted the addition made by the Assessing Officer. Aggrieved by the order of the ld. CIT(A), the Revenue is in appeal before us. 8. Learned Departmental Representative (ld. DR) for the Revenue, pleaded that AO has noticed that assessee has shown G.P. for the year under consideration was 22.41% against 23.52% of the preceding year. It is further noted that, the assessee has included the wages and salaries of Rs.7,01,76,245/- in the working of G.P. If it includes in both years, then the G.P for the year under consideration should be 11.16% against 16.86% of the preceding year. Accordingly, as per AO, there was fall in G.P. of 5.20%. It was also noticed by AO that, assessee was adopting different ways of computing its G.P. therefore, it is clear that assessee has not maintained books of accounts properly, hence the books of accounts of the assessee are unreliable and the book result cannot be accepted. Therefore, AO has rejected the book result of the assessee u/s 145(3) of the Act due to the reasons mentioned above and made addition on account of fall in GP rate, Therefore, ld DR contended that addition made by the assessing officer may be upheld. 9. On the other hand, Shri Mehul Shah, Learned Counsel for the assessee, argued that there is no defect in the books of accounts maintained by the assessee and in fact the discrepancy in the books of account, if any, till the date of survey is taken care of by the disclosure of income of Rs.2,02,13,906/- by assessee, which Page | 5 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited were incorporated in the books of accounts and the AO has also not pointed out any valid defects in books of accounts. Various decisions in respect of rejection of books of accounts u/s 145(3) of the Act were produced by the assessee before the Appellate authority in support of its contention. After going through the assessee`s submission, the Ld. CIT(A) has observed that while doing scrutiny in the case of assessee for the assessment year 2014-15, the G.P of 11.82 % was accepted. If the G.P is re-worked by the AO after adding the disclosure the same comes to 14.23% which is quiet reasonable. The ld Counsel also pointed out that assessee is following the same method of accounting and books of assessee were accepted in subsequent assessment year AY 2014-15. Hence, in view of these facts, the Ld. CIT(A) has deleted the addition made on account of low G.P. therefore his order may be upheld. 10. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We note that ground No.1 raised by the Revenue pertains to rejection of books u/s 145(3) of the Act and estimation of gross profit of Rs.3,51,57,284/-. The ld CIT(A) observed that Assessing Officer has rejected the books of accounts u/s 145(3) and made addition of Rs.3,51,57,284/- being 5.2% of turnover of Rs.67,61,01,617/- considering the difference between GP of 11.66% for the current AY as compared to 16.86% of previous year. Both the GPs of AY 2011-12 and AY 2012-13 are re-worked by the Assessing Officer as per his table at para 14 of the Assessment order although the assessee has shown GP at 17.14% as per tax audit report. The assessee argued before ld CIT(A) that there is no defect in the books of account and in fact the discrepancy in the books of account, if any till the date of survey is taken care by the disclosure income of Rs.2,02,13,906/- which were incorporated in the books and the Assessing Officer has not pointed out any valid defects in books of accounts and hence the books of accounts cannot be rejected u/s 145(3) and as a corollary, once it is held that books cannot be rejected, GP cannot be estimated. The assessee also pointed out that assessee-company is Page | 6 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited following the same method of accounting and books of assessee were accepted in subsequent assessment year AY 2014-15 and the GP considered by the Assessing Officer was 11.82% in the said year. On perusal of assessment order, the ld CIT(A) noted that Assessing Officer has rejected the books of accounts majorly for the reason of low gross profit compared to last year and disproportionate expenses compared to last year. 11. The ld CIT(A) observed that findings of the assessing officer is wrong, in as much as, his comparison of the current AY 2012-13 with previous AY 2011-12 is concerned. The ld CIT(A) noticed the following defects in the findings of the Assessing Officer, which is given below: i. The turnover in the current year has increased from Rs.22,27,67,170/- to Rs.67,61,01,617/-, which is about 300% more than previous year. ii. This is the first full year of manufacturing activities as the plant was commissioned in November 2010 of last year. iii. In preceding year, a major fire broke out so it can be said to be an abnormal year and not fit as comparable. The Ld CIT(A) noted that Assessing Officer in the show cause notice has stated that "the job work receipts have increased by more than 30 times from 16,14,100/- in the preceding year to 5,15,38,821/- which shows that assessee has claimed disproportionate expenses during the year. But increase in job work receipts cannot prove any claim of disproportionate expenses. This observation of Assessing Officer rather proves the contention of the assessee that this is the first full year of job work manufacturing and hence comparison of GP of last year is not valid. Therefore, ld CIT(A) held that business situations can never be so static so as allow such arithmetical precision in GP computation, hence the books of accounts cannot be rejected u/s 145(3) on such technicalities alone. The Assessing Officer has also stated in the show cause notice that the stock register is not maintained along with other technical defects and the assessee in its reply has given categorical rebuttal to each of the points. The assessee has relied on the decision of CIT vs Poonam Rani, [2010] 5 taxmann.com 76 (Delhi HC), wherein it was held that: Page | 7 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited "if the rate of gross profit declared by the assessee in a particular period is lower as compared to the gross profit declared by him in the preceding year, that may alert the Assessing Officer and serve as a warning to him, to look into the accounts more carefully and to look for some material which could lead to the conclusion that the accounts maintained by the assessee were not correct. But, a low rate of gross profit, in the absence of any material pointing towards falsehood of the accounts books, cannot by itself be a ground to reject the account books under Section 145(3) of the Act." 12. The assessee, during the appellate proceedings, has relied on the Judgement of CIT v/s. Symphony Comfort System Ltd. (2013) 216 Taxman 225 (Guj) (Mag) wherein it was held that: "AO noticed that there was fall in gross profit rate declared by assessee as compared to previous year and made addition on account of low gross profit rate to assessee's income. However no specific defect in maintenance of books of account by assessee had been pointed by A.O. The Assessing Officer was not justified in rejecting book result and enhancing gross profit rate" 13. The ld CIT(A) also relied on the following decisions on the issue under consideration. (1) CIT vs. Indu Nissan Oxo Chemical Industries Ltd [2014] 45 taxmann.com 478 (Gujarat) wherein it was held that: "Section 145 of the Income-Tax Act, 1961 -Method of accounting - Estimation of profit (Gross profit rate) - Assessing Officer considered evidence on record and held that accounts did not reflect correct picture -He, therefore, made estimations and added sum of Rs.1.55 crores to total income of assessee after rejecting book results - Commissioner (Appeals), however, took into account various factors and held that this was not a case of low yield and addition was wrongly made - Tribunal observed that assessee had maintained proper records of production and consumption in accordance with excise regulations - He noted that during search at assessee’s premises minor difference in stock was observed which was due to various explainable factors - He further held that Assessing Officer had not brought any material on record to dispute correctness of books of account and further no evidence had been brought on record to substantiate allegation of unrecorded sales - He thus by a well-reasoned order, deleted addition - Whether Commissioner (Appeals) and Tribunal were correct in holding that there was no case for making addition on basis of gross profit rate - Held, yes [Para 4] [In favour of assessee]." (2) PCIT vs. Purshottam B. Pitroda [2017] 82 taxmann.com 18 (Gujarat) wherein it was held that: “ Section 145 of the Income-tax Act, 1961 - Method of accounting (Estimation of income/Gross profit rate) - Assessment year 2007-08 - During relevant year assessee declared Gross profit at 48.39 per cent - Assessing Officer after rejecting books of account, estimated Gross profit at 53.32 per cent by considering only Page | 8 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited overall Gross Profit Ratio declared in earlier years for same project - Assessing Officer had not properly appreciated whether or not expenditure might have increased and/or might be for some or other reason profit might have decreased - Tribunal found that for year under consideration income of assessee had increased - Tribunal held that there was justification in decrease in gross profit and, Assessing Officer was not justified in estimating Gross Profit ratio at 53.32 per cent - Whether order of Tribunal was justified - Held, yes [Para 4] [In favour of assessee]" (3) Jaytick Intermediates (P.) Ltd vs. ACIT [2016] 73 taxmann.com 195 (Gujarat) wherein it was held that: "Section 145 of the Income-tax Act, 1961 - Method of accounting - Rejection of accounts (Stock Register) - Whether non-maintaining of day-to-day stock register is not a ground to reject books of account - Held, yes -Whether further change of method of accounting on account of MODVAT could not be a reason to reject books of account particularly when there was nothing to hold that change in accounting method of MODVAT was not a mala fide act on assessee's part -Held, yes [Paras 8 and 10] [In favour of assessee]." (4) Mayank kumar Natwarlal Soni vs. ACIT [2019] 111 taxmann.com 6 (Ahmedabad - Trib.) wherein it was held that: “Section 145 of the Income-tax Act, 1961 - Method of accounting (Estimation of income) - Assessment year 2011-12 -Assessee was carrying on business of dealing in precious metals and ornaments - A survey was carried out in case of assessee in course of which certain diaries indicating unaccounted sales were impounded - Thereupon, assessee filed his return offering additional income to tax on account of stock difference of gold, diamond and silver - In course of assessment, Assessing Officer made addition on basis of estimated gross profit on sales - It was noted that Assessing Officer had rejected assessee's books of account without giving any specific details and cogent material which was in violation of principles of natural justice - It was also noted that there was decline of only 1.04 per cent in rate of gross profit in relevant year for which assessee had given detailed explanation but Assessing Officer did not consider same - Whether in aforesaid circumstances, there were no legally sustainable reasons to disturb GP rate shown by assessee and, thus, impugned addition was to be deleted - Held, yes [Paras 5 and 8] [In favour of assessee]." (5) ITO vs. Sai International [2013] 31 taxmann.com 346 (Delhi - Trib.) wherein it was held that: "Section 145 of the Income-tax Act, 1961 - Method of accounting - Estimation of income [GP Rate] - Assessment year 2007-08 - Assessee was manufacturing and supplying footwears to retailers - It had shown gross profit ratio at 18.49 per cent and net profit ratio at 0.71 per cent - Assessing Officer held that such gross profit ratio and net profit ratio were very low and determined income by adopting net profit ratio of 5 per cent on net sales - Whether when Assessing Officer could not Page | 9 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited point out any defect in details filed by assessee, addition made on account of low gross profit ratio could be sustained - Held, no [Para 13] [In favour of assessee.]" 14. Based on these facts and applicable case law on facts, the ld CIT(A) noted that assessee's books of accounts have been rejected solely on the basis of low profit rate without pointing out any specific defect in the assessee's books of account which is contrary to the legal and settled principles of law as enumerated in Section 145(3). The ld CIT(A) held that there is no violation of any prescribed accounting standard and further the books of accounts cannot be termed as incomplete or incorrect as per the judicial precedents above. Specifically, in the decision of Co- ordinate Ahmedabad Bench in case of Mayankkumar Natwarlal Soni vs. ACIT [2019] 111 taxmann.com 6 (Ahmedabad - Trib.) also, there was survey operations wherein certain incriminating material were impounded and declaration was made. However after incorporating the disclosure income, there were no further defects in the books of accounts and the Honourable Tribunal has held that books of accounts cannot be rejected and GP cannot be estimated in such case. Therefore, ld CIT(A) by following the above case laws, held that action of the Assessing Officer in rejection of books of accounts u/s 145(3) is bad in law and hence addition made by assessing officer was deleted by ld CIT(A). 15. The ld CIT(A) has also discussed the issue on merit. The Ld CIT(A) observed that even on merits of reasonableness of gross profit, the right course of action shall be to compare the current year GP to subsequent years because this is the first year of manufacturing. The assessee has also contended that the disclosure income of Rs.2,02,13,905/- shall take care of pre-survey GP and the GP in the post survey period is already high and hence no adverse view was called for. The assessee has relied on the following decisions also: (1) ACIT vs. Shahlon Silk Mils Pvt. Ltd.[IT(SS)A No.62/AHD/2013] dated 27.11.2013 wherein the Tribunal held that: "No specific error in the order of the learned CTT(A) could be pointed out by the learned DR. The Revenue in the statement of facts quoted above in this order, pointed out that in pre-search period \ the GP ratio comes to 5.88% and in the case of post-search period the GP ratio comes to 13.24% as compared to the GP ratio of 13.82% for the full year pertaining to last year. The learned CIT(A) observed that low GP ratio during pre-search period is covered by the disclosure of 2.10 crores Page | 10 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited made during the course of search and in spite of slight decline in the GP rate in the post search period compared to the last year, the CIT(A) found that proportionate increase in the cost of raw material was more than the proportionate increase in the sale price, and therefore, slight decline was justified. In the absence of any material being brought on record before us, to controvert the above findings of the learned CIT(A), we do not find any good reason to interfere with the order of the learned CIT(A). Therefore, this ground of the appeal of the Revenue is dismissed." (2) Ashok Kumar B. Modi Vs. ACIT [I.T.A. No.1060/Ahd/2008] where in it was held that: "All the deficiency regarding non-maintenance of stock register and deficiency in sale price etc. are taken care of by the disclosure in the course of survey because the impact of profit by applying GP rate is much less than the disclosure made by the assessee. We, therefore, hold that for the pre survey period book results of the assessee should be accepted." 16. During the appellate proceedings, the assessee has submitted the Chart of GP of subsequent years, which is reproduced below: A.Y. Turnover(in Rs.) Gross Profit(in Rs.) Gross Profit (in%) 2013-14 71,36,50,928/- 9,02,97,102/- 12.65% 2014-15 98,88,88,659/- 11,68,57,794/- 11.82% With help of the above chart, during the appellate proceedings, the assessee has argued that the case of A.Y 2014-15 was subjected to scrutiny wherein the GP of 11.82% was accepted. Hence, ld CIT(A) noted that there is force in the arguments of the assessee that there is no fall in the GP of the post survey period. The assessee has shown overall GP of 17.14% as per tax audit report during the year under consideration and even otherwise, if the GP re-worked by the Assessing Officer is considered after adding the disclosure income which is business income in nature, the same comes to Rs.9,90,89,538/-(Rs.7,88,75,632/- + Rs. 2,02,13,906/- ) and the GP ratio shall be Rs. 14.23% and the same is reasonable and in lines with average GP of succeeding years. Hence, ld CIT(A) considering these facts deleted the addition of Rs.3,51,57,284/- on account of low gross profit. We do not find any error in the above conclusion reached by ld CIT(A), hence we concur with findings of ld CIT(A) and dismiss the ground raised by the Revenue. Page | 11 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited 17. Ground No.2 raised by the Revenue relates to deletion of addition of Rs.26,94,870/- made by the Assessing Officer on account of under valuation of excess stock found during the course of survey. 18. Brief facts qua the issue are that during the course of assessment proceeding, assessing officer observed that at factory premises the value of the stock per metre was calculated @ 32.44 whereas the same was calculated @ 28.30 at shop premises. The excess stock found at shop premises only was Rs.6,51,768/- and hence the same was calculated @ 32.44 instead of 28.30, therefore addition of Rs.26,94,870/- was made by the assessing officer. 19. On appeal, ld CIT(A) deleted the addition, therefore the Revenue is in appeal before us. 20. Learned DR for the Revenue has primarily reiterated the stand taken by the assessing officer and stated that addition made by the assessing officer may be confirmed. 21. On the other hand, ld Counsel for the assessee stated that during the course of survey, the survey team themselves have arrived at total valuation of Rs.2,90,34,466/- and after reducing the stock as per books amounting to Rs.1,05,85,981/- and the difference in the finished stock comes to Rs.1,84,48,484/- The assessee's line of argument is that the valuation of Rs.2,90,34,466/- is arrived at by the survey team which comprises of around 14 different varieties of finished stock each valuing at different rate and then added the quantity of second sarees to arrive at the value of Rs.2,90,34,466/-. Hence there is no difference, therefore ld CIT(A) has rightly deleted the addition. 22. We have heard both the parties. We note that ld CIT(A) has examined the assessee`s paper book and on perusal of paper Book Pg. No 15-41, the ld CIT(A) observed that survey team has made a detailed working of valuation quality wise which was confronted to the assessee and on the basis of such efforts by the survey team, the declaration of Rs.2,02,13,906/- could be made. The Assessing Officer cannot be expected to brush aside the valuation done by survey team to enhance the Page | 12 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited valuation without pointing out any defect in the valuation done by survey team. Therefore, ld CIT(A) held that there is force in the argument of the assessee that the issue of valuation is revenue neutral in as much the value of closing stock on the date of survey becomes the opening stock of the post survey period and the same is captured either in Sales with profit margin or in closing stock at same value and hence there is no effect on the profit and loss account per se. Therefore, based on this factual position, ld CIT(A) deleted the addition. That being so, we decline to interfere in the order of ld CIT(A) and dismiss the ground raised by the Revenue. 23. Ground no.3 raised by the Revenue relates to deletion of addition of Rs.24,63,328/- made by AO on account of under valuation of chemical stock. 24. Brief facts qua the issue are that assessee has adopted weighted average method for valuation of closing stock whereas according to assessing officer if assessee had adopted FIFO method, then his closing stock would be Rs.24,63,328/- instead of Rs.21,09,150/-. On the basis of the said findings, the assessing officer made addition of Rs.3,54,178/- to the total income of the assessee being difference of Rs.24,63,328/- and Rs.21,09,150/- on account of undervaluation of closing stock of colour chemical. However, while framing the table of additions, the assessing officer by mistake has added Rs.24,63,328/- to the total returned income of the assessee. 25. On appeal, the ld. CIT(A), deleted the addition made by the Assessing Officer. Aggrieved, the Revenue is in appeal before us. 26. Learned DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. However, on the other hand, ld Counsel for the assessee, defended the order passed by ld CIT(A). 27. We have heard both the parties. We note that ld Counsel has contended before us that assessee has been following the method for valuation of inventory consistently over years and the AO has not pointed out any defect in WAM Page | 13 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited followed by the assessee and also not given any reason as to why FIFO method for valuation shall give a more apt value of inventory. The assessee has relied on the judgement of M/s Rasiklal & Sons in ITA No. 1974/Mum/2010 dated 13.01.2012. The ld CIT(A) noted that as per AS-2 issued by ICAI on Valuation of closing stock, WAM (Weighted average method) is also a recognized method for valuation of closing stock. The AO cannot dictate the assessee to follow a particular method of valuation of closing stock without citing any cogent reason to do so. The assessee is consistently following the method of valuation in subsequent years also and the closing stock of colour and chemicals shall become the opening stock of the next year and hence there is no incentive for the assessee to choose a particular method. Hence, based on this factual position, ld CIT(A) deleted the addition of Rs.3,54,178/-. We note that ld CIT(A) has passed a reasoned and speaking order therefore we do not find any infirmity in the conclusion reached by him, hence we confirm the findings of ld CIT(A) and dismiss the ground raised by the Revenue. 28. Grounds no.4 raised by the Revenue relates to deletion of addition of Rs.22,05,138/- made by AO on account of unaccounted purchase. 29. Brief facts qua the issue are that during the assessment proceedings, the assessing officer observed that the figure of 1,66,59,433.25 mtr @ 18.81/- per meters of grey valued at Rs.31,34,32,347/- is gross purchase quantity and on comparison with the figure of 1,65,42,201 mtr @ 18.81/- per metres valued at Rs.31,11,58,800/- as per audit report, therefore the difference of 1,17,232.25 mtr @ 18.81/- valued at Rs.22,05,138/- was added by the assessing officer in the income of the assessee. 30. On appeal, the ld. CIT(A) deleted the addition made by the Assessing Officer, therefore Revenue is in appeal before us. Learned DR for the Revenue submitted that on perusal of the month wise purchase details submitted by the assessee and the details mentioned in audit report, it was noted by AO that, assessee has shown total purchase of 1,66,59,433.25 meters of grey valued at Rs.31,34,32,347/- @ 18.81 per meter whereas in the audit report, assessee has Page | 14 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited shown total purchase of 1,65,42,201 mts. No explanation was offered for the discrepancy found of 1,17,232.25 Meters. Hence, the difference noticed in meters was calculated by the AO at the same rate of 18.81 per meter and added to the income of the assessee. i.e. (1,17,232.25 x 18.81 = Rs. 22,05,138/- ), as unaccounted purchase of the assessee. Therefore, order of the assessing officer may be upheld. 31. On the other hand, ld Counsel contended that the figure of 1,66,59,433.25 mtr @ 18.81/- per metres of grey valued at Rs.31,34,32,347/- is gross purchase quantity and on comparison with the figure of. 1,65,42,201 mtr @ 18.81/- per metres valued at Rs.31,11,58,800/- as per audit report, the difference of 1,17,232.25 mtr @ 18.81/- valued at Rs.22,05,138/- as alleged by the AO is actually the quantity of Purchase return. Therefore, purchase return is not income of the assessee, hence ld CIT(A) has rightly deleted the addition. 32. We have heard both the parties. The ld CIT(A) observed that the clause 28 read with Annexure G of Form 3CD of the Tax audit report, it is true that format of Form 3CD does not have any separate column for mentioning purchase returns in clause 28. Therefore, naturally the tax auditor has to show the purchases net of returns so as to tally the quantity of closing stock in the said annexure. Considering the Purchases shown in at clause 28 of Form 3CD of 1,65,42,201 is net of purchase returns and after considering the gross purchase of 1,66,59,433.25 and purchase return of 1,17,232.75 as per Purchase register, the same is tallied and hence, ld CIT(A) observed that there is no mismatch as worked out by the Assessing Officer. The AO has also not given any other evidence which proves that assessee has made any unaccounted purchases. Therefore, ld CIT(A) deleted the addition. Based on the factual position stated above, we confirm the findings of ld CIT(A) and dismiss the ground raised by the Revenue. 33. Ground no.4 raised by the Revenue relates to deletion of addition of Rs.8,88,000/- made by the Assessing Officer on account of unexplained cash credit. 34. Succinct facts are that assessee had received unsecured loan through account payee cheque. However, assessing officer observed that assessee has not proved the Page | 15 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited creditworthiness and genuineness of the transaction, therefore AO made addition of Rs.8,88,000/-. 34. On appeal, the ld. CIT(A) deleted the addition made by the Assessing Officer, therefore Revenue is in appeal before us. Learned DR for the Revenue submitted during the year under consideration, as found from assessment order out of unsecured loan of Rs.64,50,000/- received from six parties, unsecured loan amounting to Rs.8,88,000/- was found to be not genuine. On verification of the banks statement of lenders, it was found that before issuing every cheque to the assessee, there would be some immediate cash deposits. The assessee has failed to establish the nature of these cash deposits before the AO. Hence, AO has observed that, assessee has not justified with the provisions prescribed in section 68 of the Act. Therefore, Creditworthiness and genuineness of these transactions remains unexplained. Hence, the amount of loan of Rs.8,88,000/- received from six parties were disallowed and added to the income of the assessee u/s 68 of the Act as the same was found as unexplained. Therefore, the findings of the assessing officer may be upheld. 35. On the other hand, ld Counsel for the assessee submitted that all the parties are assessed to tax and the assessee has also submitted account confirmation, contra confirmation, bank statement, balance sheet and the copy of the return of income with the computation of income of parties. Further the supporting documents filed during assessment proceedings are given below: Name of parties Addition of loan (Rs.) Documents Submitted during Assessment Proceedings Whether Repayment made? Sapna Beria 2,00,000/- Acknowledgement, Balance Sheet Account Confirmation Bank Statement Confirmation Yes Rajkumar Beria 2,00,000/- Acknowledgement Balance Sheet Account Confirmation Bank Statement Confirmation Yes Golden Silk Mills 1,18,000/- Acknowledgement Account Confirmation Bank Statement Yes Jagdamba Silk Mills 1,70,000/- Acknowledgement Account Confirmation Bank Statement Yes Kohinoor Silk Mills 1,00,000/- Acknowledgement Account Confirmation Bank Statement Yes Raghukul Textiles 1,00,000/- Acknowledgement Account Confirmation Bank Statement Yes TOTAL 8,88,000/- Page | 16 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited Therefore, based on these facts, ld Counsel contended that ld CIT(A) has rightly deleted the addition. 36. We have heard both the parties. The ld CIT(A) noted that although there are cash deposits before giving loan, the account confirmation shows that lenders have owned up the cash deposit and they are already assessed to tax and their returns are accepted u/s 143(1). Further, ld CIT(A) noted that AO has not conducted any independent inquiry which can prove that the amount taken as loan represents any unaccounted income of the assessee. The assessee had filed all details during the assessment proceedings. Further, ld CIT(A) observed that that all the loans taken during the year has been repaid in subsequent years. The assessee has relied on various judgements including CIT vs Ayachi Chandrashekhar Narsangji [42 taxmann.com 251 (Guj)] wherein it was held that: "Where the Department had accepted repayment of loan in subsequent year, no addition was to be made in current year on account of cash credit." Therefore, we note that AO has considered the unsecured loans from all the lenders as cash credit based on wrong appreciation of facts and law, hence ld CIT(A) has rightly deleted the addition of Rs.8,88,000/-. We confirm the findings of ld CIT(A) and dismiss the ground raised by the Revenue. 37. In the result, appeal filed by the Revenue in ITA No.129/SRT/2020, is dismissed. 38. Now, we shall take Cross Objection filed by the assessee (in Co. No. 12/SRT/2020), wherein the grounds of appeal raised by the assessee are as follows: “1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of Assessing Officer by sustaining the addition of Rs. 13,14,158/- being alleged unaccounted investment in finished stock. 2. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of Assessing Officer by sustaining the addition of Rs. 2,85,174/- being alleged unexplained capital expenditure. 3. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of Assessing Officer by sustaining the addition of Rs. 48,855/- being alleged late payment of PF and ESIC. Page | 17 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited 4. It is therefore prayed that addition made by the assessing officer and confirmed by CIT(A) may please be deleted or the matter may please be set aside to the file of CIT(A). 5. Assessee craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 39. At the outset, Learned Counsel informs the Bench that assessee does not wish to press ground no. 1 of his Cross Objection, therefore we dismiss the ground no. 1 raised by the assessee, as not pressed. 40. Ground no.2 raised by assessee in Cross Objection relates to addition of Rs.2,85,174/- being alleged unexplained capital expenditure. 41. Succinct facts are that assessee has incurred Rs.2,85,174/- for repair and maintenance of building and claimed deduction of such expense considering it to be of revenue nature. However, Assessing Officer was of opinion that such expenditure should be capitalized. The assessee filed reply before the assessing officer stating that expenditure of Rs.2,85,174/- is revenue in nature, as the same is very petty as compared to the value of overall factory building. However, assessing officer rejected the contention of the assessee and treated the expenditure of Rs.2,85,174/-, as capital expenditure. 42. On appeal, the ld. CIT(A) confirmed the action of the Assessing Officer. Aggrieved, the assessee is in appeal before us. 43. Learned Counsel for the assessee submitted that assessee has incurred very small-small expenses for repairs and maintenance totaling to Rs.2,85,174/-, hence these expenses should be treated as Revenue expenditure. To support his arguments, ld. Counsel took us through paper book page no.229 of assessee`s paper book wherein various vouchers and bills relating to bajri, cement and ratty etc. are attached, therefore Ld. Counsel has stated that Rs.2,85,174/- relates to repairs and renovation expenditure, hence it should not be treated capital expenses. Page | 18 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited 44. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 45. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee. We note that assessee submitted various vouchers and bills relating to bajri, retti and cement expenses and we note that these expenses are incurred by the assessee for the purpose of current repairs and maintenance, hence such expenditure does not fall in the domain of capital expenditure, therefore we direct the Assessing Officer to treat Rs.2,85,174/- as revenue expenditure. 46. In the result, ground no.2 raised by the assessee, in Cross Objection, is allowed. 47. Ground no.3 raised by the assessee in Cross Objection relates to disallowance of addition of Rs.48,855/- on account of late payment of PF and ESIC. 48. We have heard both the parties. The ld. Counsel for the assessee fairly agreed that issue is squarely covered by the judgment of the Co-ordinate Bench in the case of Rekha R. Shukla (in ITA Nos. 147 & 234/SRT/2021), wherein the Tribunal has remitted the issue back to the file of the ld. CIT(A), observing as follows: “12. Therefore, as per the above, judgment of the Hon'ble jurisdictional High Court in the case of Gujarat State Road Transport Corporation (GSRTC), the claim of the assessee is not allowable. 13. We note that Hon`ble Jurisdictional High Court of Gujarat in the case of Salasar Laminates Ltd. Vs. Dy. CIT (Tax Appeal No. 1186 of 2018), has granted liberty to the assessee that if the Supreme Court reverse the judgment in the case of GSRTC, it would be open for the assessee to revive the appeal. The findings of the Hon`ble Court is reproduced below: “This Appeal is filed by the assessee to challenge the judgment of the Income Tax Appellate Tribunal, Ahmedabad {“Tribunal” for short} dated 22nd March 2018. The issue pertains to Assessment Year 2013-14 and the sole question raised by the assessee in this appeal concerns deductibility of a sum of Rs. 20,34,916/= which was the employees’ contribution towards Provident Fund, ESI, etc. It appears that the assessee did deposit such amount of contribution towards PF & ESIC accounts, however, missed the deadline prescribed in the statutes for such purpose. On account of this, the Revenue did not permit deduction of such sum from the income of the assessee. Such disallowance thereupon became the subject matter of appeal Page | 19 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited before the Tribunal. The Tribunal dismissed the ground, relying upon the judgment of this Court in the case of Commissioner of Income-tax vs. Gujarat State Road Transport Corporation Limited, reported in 366 ITR 170 [Gujarat]. Counsel for the assessee did not dispute that the issue on hands is squarely covered by this Court in the case of CIT v. GSRTC [Supra]. He, however, submitted that the appeal is pending against the judgment of the High Court before the Supreme Court and SLP has been granted. The amount involved is not very large and it would be extremely expensive for the assessee to carry this in appeal before the Supreme Court. He, therefore, suggested that the benefit of this judgment of the Supreme Court may be made available to the assessee; as and when rendered and in case, the judgment of the High Court is reversed. Two clear ways are possible to enable the assesseeassessee to get benefit of the judgment of the Supreme Court, in case the High Court judgment is reversed. One is to dismiss this appeal and allow the assessee to approach the Supreme Court; like some other assesses would have. The other way is to make some arrangement under which without filing the appeal, the assessee would also be able to claim the benefit of the judgment. Looking to the smallness of the disputed amount, we adopt the latter option by providing as under : This appeal at this stage is dismissed. However, if the Supreme Court reverses the judgment in the case of CIT vs. GSRTC [Supra], it would be open for the assessee to revive this appeal by filing an application for such purpose within three months from the date of the judgment.” 14. Since against the order of the Hon'ble Gujarat High Court in the case of Gujarat State Road Transport Corporation(supra), the Special Leave Petition (SLP) filed before the Hon`ble Supreme Court is pending, hence following the judgment of Hon`ble Jurisdictional High Court of Gujarat in the case of Salasar Laminates Ltd (supra) all these appeals is restored to the file of the ld CIT(A) with the direction to adjudicate the issue as per the outcome of the decision of the Hon`ble Supreme Court. 15. We also note that on identical facts, similar issues have been remitted back to the file of the ld. CIT(A) by the Co-ordinate Bench of ITAT Surat, in the case of Puja Chemicals in ITA No.161 & 162/SRT/2021. The findings of the Tribunal is as follows: “5.We have heard both the parties and perused the material available on record. We note that the issue involved in these four appeals are covered against the assessee, as the assessee has not deposited Employees Provident Fund (EPF) with the prescribed authority within stipulated time, therefore as per the judgment of the Hon'ble Gujarat High Court in the case of Gujarat State Road Transport Company (supra), the issue had already been decided by the Hon'ble Court against the assessee. However, we note that jurisdiction ITAT, Ahmedabad in the case of M/s Unicorn Remedies Pvt. Ltd. in ITA Nos. 3058/AHD/2014 for AY.2011-12 and 2599/AHD/2016 for AY.2012-13, order dated 30.01.2019 wherein the similar issue has been remitted back to the file of the Ld. CIT(A) to decide the matter after taking into account the outcome of the judgment of the Hon'ble Supreme Court. The findings of the Tribunal are reproduced below: Page | 20 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited “14. This issue is already against the assessee for late deposit of Employees Provident Fund with the authority by the judgment of Hon'ble Gujarat High Court in the matter of GSRTC 366 ITR 170 wherein it is held: "Section 43B, read with section 36(1)(va) of the Income-tax Act, 1961 - Business disallowance - Certain deductions to be allowed on actual payment (Employees contribution) - Whether where an employer has not credited sum received by it as employees' contribution to employees' account in relevant fund on or before due date as prescribed in Explanation to section 36(1)(va), assessee shall not be entitled to deduction of such amount though he deposits same before due date prescribed under section 43B. i.e., prior to filing of return under section 139(1) -Held, yes - Assessee State transport corporation collected a sum being provident fund contribution from its employees - However, it had deposited lesser sum in provident fund account -Assessing Officer disallowed same under section 43B - However, Commissioner (Appeals) deleted disallowance on ground that employees contribution was deposited before filing return - Whether since assessee had not deposited said contribution in respective fund account on date as prescribed in Explanation to section 36(1)(va), disallowance made by Assessing Officer was just and proper - Held, yes [Para 8] [In favour of revenue] 15. In the meanwhile, it is noticed that on this issue appeal is pending before the Hon'ble Supreme Court and recently Hon'ble Gujarat High Court in Tax Appeal No. 1186 of 2018 has held that two clear ways are possible to enable the assessee- assessee to get benefit of the judgment of the Supreme Court, in case the High Court Judgment is reversed by the Hon'ble Supreme Court and relevant part of the said order of the High Court is reproduced: "This Appeal is filed by the assessee to challenge the judgment of the Income Tax Appellate Tribunal, Ahmedabad {"Tribunal" for short} dated 22nd March 2018. The issue pertains to Assessment Year 2013-14 and the sole question raised by the assessee in this appeal concerns deductibility of a sum of Rs.20,34,916/- which was the employees' contribution towards Provident Fund, ESI, etc. It appears that the assessee did deposit such amount of contribution towards PF & ESIC accounts, however, missed the deadline prescribed in the statutes for such purpose. On account of this, the Revenue C/TAXAP/1186/2018 ORDER did not permit deduction of such sum from the income of the assessee. Such disallowance thereupon became the subject matter of appeal before the Tribunal. The Tribunal dismissed the ground, relying upon the judgment of this Court in the case of Commissioner of Income-tax vs. Gujarat State Road Transport Corporation Limited, reported in 366ITR 170 [Gujarat]. Counsel for the assessee did not dispute that the issue on hands is squarely covered by this Court in the case of CIT v. GSRTC [Supra]. He, however, submitted that the appeal is pending against the judgment of the High Court before the Supreme Court and SLP has been granted. The amount involved is not very large and it would be extremely expensive for the assessee to carry this in appeal before the Supreme Court. He, therefore, suggested that the benefit of this judgment of the Supreme Court may be made available to the assessee; as and when rendered and in case, the judgment of the High Court is reversed. Two clear ways are possible to enable the assessee- assessee to get benefit of the judgment of the Supreme Court, in case Page | 21 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited the High Court judgment is reversed. One is to dismiss this C/TAXAP/1186/2018 ORDER appeal and allow the assessee to approach the Supreme Court; like some other assesses would have. The other way is to make some arrangement under which without filing the appeal, the assessee would also be able to claim the benefit of the judgment. Looking to the smallness of the disputed amount, we adopt the latter option by providing as under: This appeal at this stage is dismissed. However, if the Supreme Court reverses the judgment in the case of CIT vs. GSRTC [Supra], it would be open for the assessee to revive this appeal by filing an application for such purpose within three months from the date of the judgment. Appeal stands disposed of accordingly." 16. At the outset, ld. A.R. requested that in view of the order passed by the Hon'ble Gujarat High Court as aforesaid therefore this matter may be restored to the file of the ld.CIT(A). 17. In view of the above and order passed by the Hon'ble Gujarat High Court, we set aside the matter to the file of the ld.CIT(A) to decide the matter after taking into account order of the Supreme Court as and when will be passed by the Hon'ble Supreme Court. Accordingly will decide the matter.” 18. We note that Learned Counsel has argued a lot, stating that disallowance of employees PF and ESI is highly debatable issue which cannot be a subject matter of section 143(1)(a) of the Act, nevertheless, we have to follow the judgment of the Hon'ble jurisdictional High Court, in the case of Gujarat State Road Transport Corporation, which is a direct judgment on the issue of employees PF and ESI. 19. We note that Hon`ble Bombay High Court in the case of Thana Electricity Supply Ltd. 206 ITR 0727, held that the decisions of the High Court are binding on the subordinate Courts and authorities or Tribunals under its superintendence throughout the territories in relation to which it exercises jurisdiction. The detailed findings of the Hon`ble Court is reproduced below: “20. From the foregoing discussion, the following propositions emerge : (a) The law declared by the Supreme Court being binding on all Courts in India, the decisions of the Supreme Court are binding on all Courts, except, however, the Supreme Court itself which is free to review the same and depart from its earlier opinion if the situation so warrants. What is binding is, of course, the ratio of the decision and not every expression found therein. (b) The decisions of the High Court are binding on the subordinate Courts and authorities or Tribunals under its superintendence throughout the territories in relation to which it exercises jurisdiction. It does not extent beyond its territorial jurisdiction. (c) The position in regard to binding nature of the decisions of a High Court on different Benches of the same Court, may be summed up as follows : Page | 22 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited (i) A Single Judge of a High Court is bound by the decision of another Single Judge or a Division Bench of the same High Court. It would be judicial impropriety to ignore that decision. Judicial comity demands that a binding decision to which his attention had been drawn should neither be ignored nor overlooked. If he does not find himself in agreement with the same, the proper procedure is to refer the binding decision and direct the papers to be placed before the Chief Justice to enable him to constitute a larger Bench to examine the question [see Food Corporation of India vs. Yadav Engineer & Contractor AIR 1982 SC 1302]. (ii) A Division Bench of a High Court should follow the decision of another Division Bench of equal strength or a Full Bench of the same High Court. If one Division Bench differs with another Division Bench of the same High Court, it should refer the case to a larger Bench. Where there are conflicting decisions of Courts of co-ordinate jurisdiction, the later decision is to be preferred if reached after full consideration of the earlier decisions. (d) The decision of one High Court is neither binding precedent for another High Court nor for Courts or Tribunals outside its own territorial jurisdiction. It is well settled that the decision of a High Court will have the force of binding precedent only in the State or territories in which the Court has jurisdiction. In other States or outside the territorial jurisdiction of that High Court it may, at best, have only a persuasive effect. By no amount of stretching of the doctrine of stare dicisis judgments of one High Court can be given the status of a binding precedent so far as other High Courts or Courts or Tribunals within their territorial jurisdiction are concerned. Any such attempt will go counter to the very doctrine of stare decisis and also the various decisions of the Supreme Court which have interpreted the scope and ambit thereof. The fact that there is only one decision of any one High Court on a particular point or that a number of different High Courts have taken identical views in that regard is not at all relevant for that purpose. Whatever may be conclusion, the decisions cannot have the force of binding precedent on other High Courts or on any subordinate Courts or Tribunals within their jurisdiction. That status is reserved only for the decisions of the Supreme Court which are binding on all Courts in the country by virtue of Art. 141 of the Constitution.” 18. It is abundantly clear from the judgment of the Hon`ble Bombay High Court in the case of Thana Electricity Supply Ltd (Supra), that decisions of the High Court are binding on the subordinate Courts and authorities or Tribunals under its superintendence throughout the territories in relation to which it exercises jurisdiction. Hence, decision of the Hon`ble Jurisdictional High Court of Gujarat in the case of Gujarat State Road Transport Corporation(supra), is binding on us. 19. In the case of Union of India v. Raghubir Singh (1989) 178 ITR 548 (SC), the Hon`ble Supreme Court held that the doctrine of binding precedent has merit of promoting certainty and consistency in judicial decisions. As per the doctrine of precedent, all lower Courts, Tribunals and authorities exercising judicial or quasi- judicial functions are bound by the decisions of the High Court within whose territorial jurisdiction these Courts, Tribunals & authorities functions. In the case Page | 23 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited of State of Orissa & Ors. v, M.D. Illyos, [2006] 1 SCC 275 the Hon`ble Supreme Court held that a decision is a precedent on its own facts and that for a judgment to be a precedent it must contain the three basic postulates: (i)A finding of material facts, direct and inferential. An inferential finding of fact is the inference which the Judge draws from the direct or perceptible facts; (ii) statements of the principles of law applicable to the legal problems disclosed by the facts; and (iii) judgment based on the individual effect of the above. In the case of CIT v. Sun Engineering Works P. Ltd. [1992] 198 ITR 297 (SC), the Hon`ble Supreme Court held that it is neither desirable nor permissible to pick out a word or a sentence from the judgment, divorced from the context of the question under consideration and treat it to be the complete "law". The judgment must be read as a whole and observations from the judgment have to be considered in the light of the questions which were before the court. 20. From the above it is vivid that we have to follow the judgment of the Hon`ble Jurisdictional High Court of Gujarat in the case of Gujarat State Road Transport Corporation(supra).The mere fact, that further appeal (SLP) has been filed, before the Hon`ble Supreme Court against the judgment of Hon`ble Gujarat High Court, in no way, means that Gujarat High Court`s decision under consideration is not operational and effective. Unless and until the decision of Gujarat High Court is reversed by Hon`ble Supreme Court, the same has to be given due effect. Thus, judicial discipline demands that order of the Hon`ble Gujarat High Court should be followed by the Surat Income Tax Appellate Tribunal. 21. We have already noted that against the order of the Hon'ble Gujarat High Court, in the case of Gujarat State Road Transport Corporation (supra), the SLP has been filed by the assessee, which has not been adjudicated yet therefore we are of the view that the issue may be remitted back to the file of the Ld. CIT(A) to decide the matter after taking into account the judgment of the Hon'ble Supreme Court as and when will be passed by the Hon'ble Supreme Court. Therefore these appeals at this stage are dismissed. However, if the Supreme Court reverses the judgment in the case of the Hon`ble Gujarat High Court in the case of CIT vs. GSRTC [Supra], it would be open for the assessees to revive these appeals by filing an application for such purpose within three months from the date of the judgment. 22. In the result, all appeals filed by the assessee, are allowed for statistical purposes.” 49. We have both the parties and noted that against the order of the Hon'ble Gujarat High Court, in the case of Gujarat State Road Transport Corporation (supra), the SLP has been filed by the assessee, which has not been adjudicated yet therefore we are of the view that the issue may be remitted back to the file of the Ld. CIT(A) to decide the matter after taking into account the judgment of the Hon'ble Supreme Court as and when will be passed by the Hon'ble Supreme Court. Therefore, this appeal at this stage is dismissed. However, if the Supreme Court Page | 24 ITA.129/SRT/2020 & CO.12/SRT/2020/AY.2012-13 Divya Fashions Private Limited reverses the judgment in the case of the Hon`ble Gujarat High Court in the case of CIT vs. GSRTC [Supra], it would be open for the assessees to revive this appeal by filing an application for such purpose within three months from the date of the judgment. 50. In the combined result, appeal filed by the Revenue (in ITA No.129/SRT/2020) is dismissed, whereas Cross Objection filed by the Assessee (in Co. No.12/SRT/2020) is partly allowed for statistical purposes. Registry is directed to place one copy of this order in all appeals folder / case file(s). Order is pronounced in the open court on 23/09/2022 by placing the result on the Notice Board as per Rule 34(5) of the Income Tax (Appellate Tribunal) Rule 1963. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 23/09/2022 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat