The ITO, Ward-4, Ahmedabad V. Royal Marwar Tobacco Product Pvt.Ltd., Gandhinagar

ITA 1357/AHD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9667 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-10-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 29-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHELLEY JINDALDR
• Assessee Lawyers: GAURAV NAHATA
• Keywords: Business income; Depreciation; Unabsorbed depreciation
• Section: 143(3); 54; 132; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI MUKUL SHRAWAT,JM & SHRI A N PAHUJA,AM ITA NO.1357/AHD/2010 (ASSESSMENT YEAR:-2004-05) INCOME-TAX OFFICER, WARD- 4, GANDHINAGAR V/S ROYAL MARWAR TOBACCO PRODUCT PVT. LTD.. PLOT NO. 901-A, SECTOR-28, ENGG. ZONE, GANDHINAGAR [PAN: AABCR 5770Q] [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI SHELLEY JINDAL,DR ASSESSEE BY:- SHRI GAURAV NAHATA, AR O R D E R A N PAHUJA: THIS APPEAL BY THE REVENUE AGAINST AN ORDER DATED 04- 02-2010 OF THE LD. CIT(APPEALS)-III, AHMEDABAD, RAI SES THE FOLLOWING GROUNDS:- 1 THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO RE-COMPUTE / RE-EXAMINE AN ORDER IN WHICH A SUPERIO R AUTHORITY ORDER HAS BEEN RECEIVED AND EFFECT OF THE SAME HAS ALREAD Y BEEN GIVEN. 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD . CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. 3 IT IS THEREFORE PRAYED THAT THE ORDER OF THE LEAR NED CIT(A) MAY BE SET ASIDE AND THAT OF THE AO BE RESTORED TO THE ABOVE E XTENT. 2 FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT A SEARCH U/S 132 OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERR ED TO AS THE ACT] WAS CONDUCTED IN THE PREMISES OF IN THE ROYAL GROU P OF CASES ON 17-10-2003.SUBSEQUENTLY, THE RETURN DECLARING LOSS OF RS.16,56,388/- FILED ON 01-11-2004 BY THE ASSESSEE, WAS TAKEN UP FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2 ) OF THE ACT ON 10- 12-2004 AND THE ASSESSMENT WAS COMPLETED ON AN INCO ME OF RS.1,13,74,939/- VIDE ORDER DATED 31.3.2006. INTER ALIA, BOOK RESULTS OF THE ASSESSEE WERE REJECTED AND PROFITS WERE ESTI MATED @ 20% OF ITA NO.1357/AHD/2010 2 THE TOTAL SALES OF THE GUTKHA. THE TOTAL NET PROFIT SO ESTIMATED WORKED OUT TO RS.81,85,747/-. BESIDES AN AMOUNT OF RS.37,60,003/- WAS ADDED ON ACCOUNT OF UNEXPLAINED MONEY ON PROTE CTIVE BASIS. ON APPEAL, THE LEARNED CIT(A) SUSTAINED THE ADDITIO N TO THE EXTENT OF RS.16 LAKHS,@ 50% OF THE NET PROFIT ON UNDERSTATED SALES OF RS. 32 LAKHS AND THE BALANCE ADDITION WAS DELETED. ACCORD INGLY, THE AO RECOMPUTED THE INCOME VIDE ORDER DATED 5.3.2007 AS UNDER:- THE TOTAL INCOME AS PER ORDER RS.1,13,74,939 U/S 143(3) DT. 31-3-2006 LESS: RELIEF GRANTED BY CIT(A) (1) NET PROFIT ON UNDERSTATED SALES RS.60,14,936 (2) UNEXPLAINED MONEY RS.37,60,003 RS. 97,74,939 REVISED TOTAL INCOME RS.16,00,000 2.1. LATER, THE ASSESSEE FILED AN APPLICATION U/S 1 54 OF THE ACT BEFORE THE AO CONTENDING THAT RETURNED LOSS OF RS.1 6,56,388/- SHOULD HAVE BEEN REDUCED WHILE GIVING EFFECT TO THE ORDER OF THE LEARNED CIT(A). HOWEVER, THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND REJECTED THE SAID APPLICATION VIDE HIS ORDER DATED 17-06-2009. 3. ON APPEAL, THE LEARNED CIT(A) DEALT WITH THE ISS UE AS UNDER:- 4 BEFORE ME, IT WAS SUBMITTED THAT THE APPELLANT H AD UNABSORBED DEPRECIATION OF RS.3,29,112/- OF AYS 2001-02 TO AY 2004-05 AND BUSINESS LOSS OF RS.5,16,138/- TO BE CARRIED FORWARD, FROM A Y 2001-02. THIS HAS NOT BEEN GIVEN SET OFF. MOREOVER, IN THE APPEAL EFFECT ORDER, THE AO SHOULD HAVE COMPUTED THE TOTAL INCOME IN THE FOLLOWING MAN NER: THE TOTAL INCOME AS PER ORDER RS.1137493 9 U/S 143(3) DT. 31-3-2006 LESS: RELIEF GRANTED BY CIT(A) (A) INCOME FROM BUSINESS AMOUNT ADDED RS.7614936+RETURNED LOSS RS.1656388/- 9271324 LESS: AMOUNT CONFIRMED BY CIT(A). 1600000 7671324 (B) UNEXPLAINED MONEY 3760003 11431327 ITA NO.1357/AHD/2010 3 REVISED INCOME - 56388 ========= 5 THE CONTENTIONS WERE CAREFULLY CONSIDERED. THE AO IS DIRECTED TO EXAMINE THE COMPUTATION, AS DETAILED BY THE ASSESSE E, ON MERITS AND ALSO TO CONSIDER THE SET OFF OF BROUGHT FORWARD DEPRECIA TION / BUSINESS LOSS IF ASCERTAINED / ASSESSED THEN. THE RELATED GROUNDS OF APPEAL ARE DISPOSED OF ACCORDINGLY. 6 THE APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LD. DR POINTE D OUT THAT RETURNED LOSS OF RS. 16,56,388/- COULD NOT BE CONSIDERED WHI LE GIVING EFFECT TO THE ORDER OF THE LD. CIT(A) AND THAT TOO U/S 154 OF THE ACT, THE BOOK RESULTS HAVING BEEN DISCARDED BY THE LD. CIT(A).TO A QUERY BY THE BENCH, THE LEARNED DR ADMITTED THAT NO SUCH DIRECTI ONS FOR ADJUSTMENT OF RETURNED LOSS WHILE GIVING EFFECT TO THE ORDER OF THE LEARNED CIT(A) IN QUANTUM APPEAL, HAVE BEEN ISSUED IN THE IMPUGNED ORDER. ON THE OTHER HAND, THE LEARNED AR O N BEHALF OF THE ASSESSEE SUPPORTED THE DIRECTIONS OF THE LEARNED CI T(A). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. SINCE THE LEARNED CIT(A) MERELY DIRECTED THE AO TO EXAMINE THE COMPUTATION, AS DETAILED BY THE ASSESSE E ON MERITS AND THEREAFTER, CONSIDER THE CLAIM FOR SET OFF OF BROU GHT FORWARD DEPRECIATION / BUSINESS LOSS , WE DO NOT FIND ANY INFIRMITY IN THESE DIRECTIONS OF THE LEARNED CIT(A). THEREFORE, GROUND NO.1 IN THE APPEAL OF THE REVENUE IS DISMISSED. 6. GROUND NOS.2 AND 3 BEING MERE PRAYER AND GENERAL IN NATURE, DO NOT REQUIRE ANY SEPARATE ADJUDICATION AND ARE, T HEREFORE, DISMISSED. ITA NO.1357/AHD/2010 4 7. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON8 -10-2010 SD/- SD/- (MUKUL SHRAWAT) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 8-10-2010 COPY OF THE ORDER FORWARDED TO: 1. ROYAL MARWAR TOBACCO PRODUCT PVT. LTD.. PLOT NO. 901-A, SECTOR-28, ENGG. ZONE, GANDHINAGAR 2. ITO, WARD-4, GANDHINAGAR 3. CIT CONCERNED 4. CIT(A)-III, AHMEDABAD 5. DR, BENCH-C, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD