DCIT, Ambala Cantt. V. M/s Godawari Spherocast Ltd., Ambala City

ITA 1379/CHANDI/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63904 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 31-10-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 03-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Keywords: Gross profit estimation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI H.L. KARWA, VP AND SHRI T.R. SOOD, AM ITA NO. 1379/CHD/2010 ASSESSMENT YEAR: 2006-07 D.C.I.T. AMBALA CANTT V. M/S GODAWARI SPHEROCAST LTD. 77, MODEL TOWN AMBALA CITY AABCG 2779 A (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI N.K. SAINI RESPONDENT BY: SHRI ROHIT GOEL DATE OF HEARING: 27.08.201 2 DATE OF PRONOUNCEMENT: 31.08.2012 ORDER PER T.R. SOOD, A.M IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOWIN G GROUNDS:- 1 ON THE BASIS OF THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITIO N OF RS. 5,04,000/- MADE OUT OF SALARY PAID TO THE DIRECTORS IGNORING THE FA CT THAT THE DIRECTORS ARE PART TIME DIRECTORS AND COULD NOT DEVOTE FULL TIME WITH THE ASSESSEE COMPANY AS THEY ARE ALSO DIRECTORS WITH THE ASSESSE ES SISTER CONCERN FROM WHERE ALSO THEY ARE DRAWING SALARY AMOUNTING T O RS. 8,40,000/- PER ANNUM. 2 ON THE BASIS OF THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITIO N OF RS. 8,50,000/- OUT OF ADDITION OF RS. 16,20,385/- MADE ON ACCOUNT OF LOW GP RATE IGNORING THE FACT THAT THE ASSESSEE HIMSELF HAS DECLARED GP RATE OF 15.7% DURING THE COURSE OF SURVEY FOR THE PRE SURVEY PERIOD AND 14.6 3% FOR THE WHOLE YEAR. 3 ON THE BASIS OF THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITIO N OF RS. 7,83,725/- MADE ON ACCOUNT OF STOCK DEFICIT IGNORING THE FACT THAT TH E DIFFERENCE HAS BEEN CALCULATED AFTER CONSIDERING THE SUBMISSIONS MADE B Y THE ASSESSEE AS WELL AS REDUCING THE DIFFERENCE BY RS. 8,50,000/- S URRENDERED BY THE ASSESSEE DURING THE COURSE OF SURVEY ON ACCOUNT OF STOCK DIFFERENCE AND ANY OTHER DISCREPANCY. 2. ORIGINALLY THIS APPEAL OF THE REVENUE CAME UP FO R HEARING ALONG WITH ASSESSEES APPEAL IN ITA NO. 1265/CHD/2010 WHICH WA S DISPOSED OFF BY THE TRIBUNAL VIDE CONSOLIDATED ORDER DATED 31.10.2011. THROUGH THAT ORDER APPEAL OF THE REVENUE WAS DISMISSED IN LIMINE BECAUSE THER E WERE DEFECTS IN THIS APPEAL BUT SUCH DEFECTS WERE NOT REMOVED DESPITE VA RIOUS OPPORTUNITIES. LATER 2 ON THE REVENUE REMOVED THE DEFECTS AND MOVED AN MIS C. APPLICATION AND REVENUES APPEAL WAS RECALLED BY THE TRIBUNAL. THR OUGH THE ORDER DATED 24.8.2012 IN MISC. APPLICATIONS NO. 59 & 60/CHD/201 2 THE ORDER IN REVENUES APPEAL IN ITA NO. 1379/CHD/2010 WAS RECALLED. IN V IEW OF THIS REVENUES APPEAL WAS FIXED FOR HEARING ON 27.8.2012. 3. GROUND NO. 1 DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFI CER NOTICED THAT THE ASSESSEE HAD CLAIMED SALARY AMOUNT ING TO RS. 23,10,000/- PAID TO THREE DIRECTORS NAMELY S/SHRI SUSHIL KUMAR, ROHIT KUMAR AND RAJIV GUPTA. ON ENQUIRY IT WAS SUBMITTED THAT SALARY HAS BEEN PAID @ RS. 7,70,000 PA TO EACH OF THE DIRECTOR WHO WERE HIGHLY QUALIFIE D AND THE TURN OVER OF THE COMPANY HAS INCREASED BY RS. 52 LAKHS. HOWEVER, T HE ASSESSING OFFICER OBSERVED THAT ALL THE THREE DIRECTORS WERE RECEIVIN G SALARY FROM ANOTHER COMPANY KNOWN AS GODAWARI TRADING CO. @ RS. 8,40,00 0/- PA. HE ALSO OBSERVED THAT QUALIFICATION OF THE DIRECTORS WAS NO T VERY HIGH THAT SUCH A HIGH SALARY DESPITE THE EXPERIENCE IS NOT JUSTIFIED WHER EIN ONE OF THE DIRECTORS HOLD A B. COM DEGREE AND THE OTHER TWO ARE BACHELORS IN EN GINEERING AND THUS PAYMENTS OF SALARY WAS EXCESSIVE. HE WAS OF THE OP INION THAT SALARY TO THE EXTENT OF RS. 50,000/- PM PER DIRECTOR WAS JUSTIFIE D AND ACCORDINGLY A SUM OF RS. 14,000/- PM PER DIRECTOR AMOUNTING TO RS. 5,04, 000/- WAS DISALLOWED. 4. ON APPEAL BEFORE THE LD. CIT(A), IT WAS SUBMITTE D THAT SHRI SUSHIL KUMAR IS A M. TECH AND HAVING EXPERIENCE OF 35 YEARS IN C ASTING INDUSTRY. HE IS PIONEER IN ESTABLISHING A NEW TECHNOLOGY KNOWN AS NO BAKE PLANT. THIS TECHNOLOGY WAS NOT AVAILABLE WITH THE COMPANY EARLI ER. HE HAS FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 17,08,956/- IN CLUDING SALARY OF RS. 7,70,000/-. THUS EFFECTIVE RATE OF TAXATION IN THE CASE COMES TO 33.66%. SIMILARLY SHRI ROHIT GUPTA IS A B. TECH AND IS HAVI NG AN EXPERIENCE OF 30 YEARS IN CASTING INDUSTRY AND HE HAS DISCLOSED A TOTAL IN COME OF RS. 17,36,007/- AND HIS EFFECTIVE RATE OF TAXATION IN THE CASE COME TO 33.66%. SHRI RAJIV GUPTA, IS A QUALIFIED AND IS HAVING AN EXPERIENCE OF 25 YEARS I N CASTING INDUSTRY AND IS 3 PIONEER IN MARKETING, HANDLING FINANCIALS AND HR. HE HAS SHOWN TOTAL INCOME OF RS. 16,98,162/- AND HIS EFFECTIVE RATE OF TAXATI ON WAS 33.66%. IT WAS FURTHER SUBMITTED THAT DISALLOWANCE U/S 40A(2)(A) WAS NOT P OSSIBLE WHEN NO ATTEMPT WAS MADE TO EVADE THE TAXES IN THIS REGARD. RELIAN CE WAS PLACE ON THE DECISION OF HON'BLE BOMBAY HIGH COURT IN CASE OF CI T V. INDO SAUDI SERVICES (TRAVEL) P. LTD (2009) 310 ITR 306 AND ANOTHER DECI SION OF HON'BLE CALCUTTA HIGH COURT INCASE OF CALCUTTA ART STUDIO P. LTD V C IT, 118 ITR 752 (CAL) RELIANCE WAS PLACED ON SEVERAL OTHER JUDGMENTS. 5. THE LD. CIT(A) AGREED WITH THE SUBMISSIONS AND ALLOWED THE RELIEF. 6. BEFORE US, THE LD. DR FOR THE REVENUE STRONGLY S UPPORTED THE ORDER OF ASSESSING OFFICER AND SUBMITTED THAT THE DIRECTORS WERE WORKING ONLY ON PART TIME BASIS BECAUSE THEY WERE DIRECTORS IN OTHER COM PANY FROM WHERE THEY WERE GETTING SALARY PAYMENTS AND THEREFORE, THE ASSESSI NG OFFICER WAS JUSTIFIED IN DISALLOWING PART OF THE SALARY. 7. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSES SEE REITERATED THE SUBMISSIONS MADE BEFORE THE FIRST APPELLATE AUTHOR ITY AND SUBMITTED THAT THE DIRECTORS WERE HIGHLY QUALIFIED AND MORE OVER THERE WAS NO ATTEMPT TO SAVE TAXATION BECAUSE THE COMPANY AND THE DIRECTORS WERE PAYING TAX AT THE RATE OF 33.66%. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY AN D FIND FORCE IN THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE. IT IS WRONG ON THE PART OF THE ASSESSING OFFICER TO SAY THAT THE DIRECTORS ARE NOT SUFFICIENTLY QUALIFIED WHEN SHRI SUSHIL KUMAR GUPTA IS A M. TECH DEGREE HOLDER, SHRI ROHIT GUPTA IS B. TECH DEGREE HOLDER AND SHRI RAJIV GUPTA IS B. COM D EGREE HOLDER. ALL THESE DIRECTORS HAVE MORE THAN 25 YEARS OF EXPERIENCE AN D SHRI SUSHIL KUMAR IS A PIONEER IN ESTABLISHING THIS NEW TECHNOLOGY KNOWN A S NO BAKE PLANT . THE DIRECTORS HAVE PAID TAXES @ 33.66% WHICH IS SAME AS THE TAX OF THE COMPANY AND THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE WAS TRYING TO SAVE TAXES BY 4 DIVERTING THE INCOME. THEREFORE, WE ARE OF THE VIE W THAT THE LD. CIT(A) HAS CORRECTLY DELETED THE ADDITION. 9. GROUNDS NO. 2 & 3 AFTER HEARING BOTH THE PARTIES WE FIND THAT IN T HIS CASE A SURVEY WAS CONDUCTED AND DURING SURVEY A SUM OF RS. 30.00 LAKHS CONSISTING OF RS. 21,50,000/- ON ACCOUNT OF UNDIS CLOSED CASH OF RS. 8,50,000/- ON ACCOUNT OF STOCK DIFFERENCE AND DISCREPANCY WAS MADE DURING SURVEY. DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICEDTHAT DURING SURVEY THE ASSESSEE HAS SHOWN GP RATE OF 15.7% WHER EAS IN THE RETURN FILED GP RATE WAS 14.63%. IN RESPONSE IT WAS SUBMITTED T HAT COSTS HAVE GONE UP PARTICULARLY BECAUSE OF INCREASE IN POWER EXPENSE B Y 0.15% AND INCREASE IN CONSUMABLE ALSO WENT UP BY 1.62%. THE ASSESSING OF FICER DID NOT ACCEPT THIS CONTENTION. HE OBSERVED THAT THE ASSESSEE HAD ITSEL F SHOWN GP RATE OF 15.7% DURING SURVEY ON 23.2.2007 THEN HOW CAN PROFIT GO D OWN BY 1.1% IN ONE MONTH OF THE YEAR. SINCE THE DISCREPANCIES WERE FOUND DU RING SURVEY A SURRENDER WAS MADE, THEREFORE, THE SPECIFIC DEFECTS IN THE ACCOUNTS STAND PROVED. THEREFORE, BOOKS WERE REJECTED U/S 145(3) AND GP R ATE OF 15.7% WAS APPLIED LEADING TO AN ADDITION OF RS. 16,20,385/- . FURTHE R IT WAS NOTICED THAT STOCK AS PER ACTUAL VERIFICATION WORKED OUT TO RS. 99,39,400 /- WHEREAS STOCK AS PER BOOKS WAS FOUND TO BE RS. 1,52,65,372/- THEREFORE, SHOWING A DEFICIT OF RS. 53,25,972/-. ON A QUERY IT WAS SUBMITTED THAT STOC K WAS NOT CORRECTLY WORKED OUT ON THE DATE OF SURVEY BECAUSE THE SAME DID NOT INCLUDE EXCISE DUTY IN SALE AS WELL AS THE EXPENSES PAYABLE. THIS WAS FOUND TO BE CORRECT. HOWEVER, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD APP LIED GP RATE AT 14.5% AND CALCULATED STOCK AT RS. 88,31,693/-. IF THE RATE O F GROSS PROFIT WAS TAKEN AT 15.7% THEN STOCK AS PER BOOKS WOULD COME TO RS. 1,0 3,19,918/-. IT WAS ALSO STATED THAT SURVEY TEAM HAD TAKEN MARKET PRICE WHIL E VALUING THE S TOCK THEREFORE, GP RATE WAS BEING REDUCED. THIS CONTEN TION WAS ALSO FOUND TO BE CORRECT. THEREFORE, AFTER REDUCING THE GP RATE OF 15.7% VALUE OF THE STOCK WAS FOUND TO BE RS. 86,86,193/-. THEREFORE, TOTAL DEFICIT WAS WORKED OUT AT 5 16,33,725/-. SINCE THE ASSESSEE HAD ALREADY DECLAR ED A SUM OF RS. 8,50,000/- ON ACCOUNT OF DIFFERENCE IN STOCK NET ADDITION WAS CALCULATED AT RS. 7,83,725/-. HOWEVER, NO SEPARATE ADDITION WAS MADE ON ACCOUNT O F PROFIT BECAUSE AFTER APPLICATION OF GP RATE THE ASSESSING OFFICER HAD AL READY ADDED A SUM OF RS. 16,20,385/-. 10. ON APPEAL BEFORE THE LD. CIT(A) THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER WERE REITERATED AND IT WAS CONTEN DED THAT IN THE ASSESSMENT ORDER FOR A.Y 2006-07 THE ASSESSING OFFICER HAD ALR EADY ACCEPTED FALL IN GROSS PROFIT BY .8% AS COMPARED TO EARLIER YEAR WHICH WA S COVERED BY THE ADDITIONAL INCOME OF RS. 15.00 LAKHS SURRENDERED DURING SURVEY . THEREFORE, IN THIS YEAR ALSO THERE WAS NO JUSTIFICATION OF ADDITION OF RS. 16,20,385/- DESPITE THE FACT THAT THE ADDITION OF RS. 30.00 LAKHS HAD ALREADY BEEN SU RRENDERED BY THE ASSESSEE. 11. THE LD. CIT(A) ALLOWED PART RELIEF VIDE PARA 5. 2 WHICH READ AS UNDER:- I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE B Y THE APPELLANT AND ALSO THE REASONING GIVEN BY THE ASSESSING OFFICER W HILE MAKING THE ADDITION OF RS. 16,20,385/- BY APPLYING THE GP RAT E OF 15.7% AS AGAINST 14.63% SHOWN BY THE APPELLANT. A PERUSAL OF THE FA CTS AS NARRATED ABOVE CLEARLY REVEAL THAT THE APPELLANT HIMSELF ACCEPTED THE GROSS PROFIT OF 15.7% AT THE TIME OF SURVEY WHICH WAS TOWARDS THE F AG END OF THE FINANCIAL YEAR AND WORKED OUT TO THE CONSEQUENTIAL DIFFERENCES IN S TOCK ETC. NOW COMING TO THE VARIOUS REASONS GIVEN BY TH E APPELLANT FOR A FALL IN GROSS PROFIT - E.G. INCREASE IN REJECTION RATE AN D CONSEQUENTIAL INCREASE IN OVER HEAD EXPENDITURE, I AGREE WITH THE ASSESSING OFFICER THAT THERE CANNOT BE ANY SUDDEN CHANGE OF CIRCUMSTANCES IN THE LAST ONE MONTH SO AS TO JUSTIFY A LOWER RATE OF GROSS PROFIT . FURT HER THE APPELLANT HAS SOUGHT RELIEF BASED ON THE ASSESSMENT ORDER OF A.Y 2006-07 WHEREIN AN ADDITION ON ACCOUNT OF FALL IN GROSS PROFIT OF .8% WAS ADJUS TED AGAINST THE ADDITIONAL INCOME OF RS. 15 LAKHS OFFERED BY THE APPELLANT DUR ING THE COURSE OF SURVEY. I AGREE WITH THE APPELLANT TO THE EXTENT T HAT THE ADDITION ON ACCOUNT OF FALL IN GROSS PROFIT SHOULD BE ADJUSTED AGAINST THE AMOUNT SURRENDERED ON THIS ACCOUNT DURING THE COURSE OF SU RVEY. A PERUSAL OF THE OFFER OF ADDITIONAL INCOME IN SURVEY, ENGLISH TRANS LATION OF WHICH IS ALREADY PLACED ON FILE REVEAL THAT THE APPELLANT SURRENDERE D AN ADDITIONAL INCOME OF RS. 15 LAKHS FOR THE A.Y 2006-07 TO COVER DISCR EPANCY IN GROSS PROFIT RATE AND OTHER DISCREPANCIES IN THE BOOKS OF ACCOUN T, DEDUCTIONS CLAIMED UNDER THE I.T. ACT. THEREFORE, FOR THE A.Y 2006- 07 THE ASSESSING OFFICER WAS CORRECT IN ADJUSTING THE ADDITION ON ACCOUNT OF LOW GROSS PROFIT AGAINST THE ADDITIONAL INCOME. IN THE YEAR UNDER C ONSIDERATION IT IS SEEN THAT THE APPELLANT HAS SURRENDERED ONLY RS. 8.5 LAK HS ON ACCOUNT OF STOCK, GP RATE AND OTHER DISCREPANCIES IN THE BOOKS OF ACC OUNT. THE BALANCE RS. 21.5 LAKHS HAS BEEN OFFERED ON ACCOUNT OF UNEXP LAINED CASH. THEREFORE, THE APPELLANT CAN GET BENEFIT OF ONLY RS . 8.5 LAKHS SURRENDER AGAINST THE DISCREPANCIES OF STOCK AND GROSS PROF IT AND NOT RS. 21.5 6 LAKHS. THE ADDITION THEREFORE, IS REDUCED TO THAT EXTENT I.E. OUT OF RS. 16,20,385/-, RS. 8.5 LAKHS IS REDUCED THEREBY AN AD DITION OF RS. 7,70,385/- IS SUSTAINED ON ACCOUNT OF LOW GROSS PROFIT . TH IS GROUND OF APPEAL IS PARTLY ALLOWED. 12. BEFORE US, THE LD. DR FOR THE REVENUE SUBMITTED THAT THE ASSESSEE HAS ITSELF SHOWN GP RATE OF 15.7% DURING SURVEY ON 23. 2.2007 THEN HOW CAN THE PROFIT FALL BY 1.1% IN THE LAST MONTH OF THE YEAR. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER WAS JUSTIFIED. 13. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSE SSEE SUBMITTED THAT THIS MATTER HAS TRAVELED TO THE TRIBUNAL. THE ASSESSEE HAS FILED THE APPEAL AGAINST PART CONFIRMATION OF ADDITION AMOUNTING TO RS. 7,70 ,385/- WHEREAS REVENUE HAD FILED APPEAL AGAINST THE DELETION OF ADDITION AMOUN TING TO RS. 8.05 LAKHS BY THE LD. CIT(A). WHEN THIS MATTER WAS ARGUED THOUGH THE TRIBUNAL DISMISSED THE APPEAL BUT THE ISSUE REGARDING GROSS PROFIT WAS C ONSIDERED VIDE PARA 9 AND THE CONTENTIONS OF THE ASSESSEE WAS ACCEPTED BY HOL DING THAT NO SPECIFIC DEFECT WAS FOUND AND NO ADDITION COULD BE MADE ON FALL IN GROSS PROFIT . 14. WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY A ND FIND THAT THIS ISSUE WAS ADJUDICATED BY THE TRIBUNAL VIDE PARA 9 WHICH READS AS UNDER:- 9 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. AFTER SURVEY THE STOCK INVENTORY OF THE GOODS WAS TAKEN B Y THE SURVEY TEAM AND THOUGH NO DISCREPANCY WAS FOUND IN THE STOCK WHICH TALLIED WITH THE STOCK REGISTER MAINTAINED BY THE ASSESSEE. THE SURVEY TE AM COMPUTED THE TRADING ACCOUNT ON THE BASIS OF TRADING RESULTS SHOWN BY TH E ASSESSEE IN THE PRECEDING YEAR. DURING THE YEAR UNDER CONSIDERATION TILL THE DATE OF SURVEY THE GROSS PROFIT RATE DECLARED BY THE ASSESSEE IN THE BOOKS OF ACCOU NT WAS 14.42%. THE ASSESSING OFFICER APPLIED THE GROSS PROFIT RATE OF 15.7% WHICH WAS DECLARED BY THE ASSESSEE IN THE PRECEDING YEAR AND COMPUTED THE DIFFERENCE IN THE GROSS PROFIT RESULTS, WHICH WAS ADDED AS INCOME OF THE AS SESSEE. THE ASSESSEE HAS FILED THE TRADING ACCOUNT FOR THE PERIOD UP TO THE DATE OF SURVEY I.E. 23.2.2007 IN WHICH GROSS PROFIT RATE OF 14.42% HAS BEEN DECLARED . A SEPARATE TRADING ACCOUNT HAS BEEN FURNISHED FOR THE PERIOD FROM 23.2 .2007 TO 31.3.2007 I.E. POST SURVEY PERIOD IN WHICH GROSS PROFIT RATE OF 15.92% HAS BEEN DECLARED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. THE ASSESSEE HAD SURRENDERED A SUM OF RS.30 LACS DURING THE COURSE OF SURVEY. THE PERUSA L OF THE SURRENDER LETTER FILED BY THE ASSESSEE PLACED AT PAGE 36 OF THE PAPER BOOK , REFLECT THAT THE ADDITIONAL INCOME OF RS.8.5 LACS, WAS OFFERED TO COVER DIFFERE NCES OF STOCK, GROSS PROFIT RATE AND OTHER DISCREPANCIES IN THE BOOKS OF ACCOUN T AND ADDITIONAL INCOME OF RS.21.5 LACS WAS OFFERED IN THE FORM OF EXTRA CASH LYING AT OTHER LOCATION. THE ASSESSEE THEREAFTER FILED RETURN OF INCOME DECLARIN G TOTAL INCOME OF RS.52,59,801/- I.E INCLUDING THE SURRENDER OF RS.30 LAS. THE CLAIM OF THE ASSESSEE IS THAT IT IS MAINTAINING PROPER STOCK DET AILS BY WAY OF STOCK REGISTER AND NO DISCREPANCY WAS FOUND DURING THE COURSE OF S URVEY AND AS REFLECTED IN THE BOOKS OF ACCOUNT. FURTHER THE ADDITION WAS COM PUTED ONLY ON ACCOUNT OF APPLICATION OF GROSS PROFIT RATE DECLARED BY THE AS SESSEE DURING THE PRECEDING 7 YEAR TO THE SALES CARRIED OUT DURING THE YEAR UNDER CONSIDERATION AND THE BALANCE WAS TREATED AS ADDITIONAL INCOME NOT SHOWN BY THE ASSESSEE. IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND NO MERIT IN THE AFORESAID ADDITION BEING MADE BY THE ASSESSING OFFI CER AND PARTLY BEING CONFIRMED BY THE CIT (APPEALS) WHERE NO DISCREPANCY WAS FOUND IN THE STOCK INVENTORY FOUND FROM THE PREMISES OF THE ASSESSEE D URING THE COURSE OF SURVEY. MERELY BECAUSE THE ASSESSEE HAD DECLARED A LOWER GR OSS PROFIT RATE DURING THE YEAR UNDER CONSIDERATION WHICH, IN ANY CASE, IS PAR TLY COVERED BY THE GROSS PROFIT RATE REFLECTED IN THE POST SURVEY PERIOD, AN D FURTHER THE ASSESSEE HAVING DECLARED THE ADDITIONAL INCOME ON THE DATE OF SURVE Y, NO FURTHER ADDITION IS WARRANTED IN THE HANDS OF THE ASSESSEE. ACCORDINGL Y, WE DELETE THE ADDITION OF RS.7,70,385/-. THE GROUND NOS.1 AND 2 RAISED BY TH E ASSESSEE ARE THUS ALLOWED. THE ABOVE MAKES IT CLEAR THAT THE TRIBUNAL HAS ALRE ADY ACCEPTED THE REASONS FOR LOWER PROFIT AND ALSO ALLOWED RELIEF AGAINST PA RT ADDITION WHICH WAS CONFIRMED BY THE LD. CIT(A) BY OBSERVING THAT SINCE NO DEFECT WAS FOUND IN THE BOOKS OF ACCOUNT AND THE ASSESSEE HAS SURRENDERED R S. 8.5 LAKHS ON ACCOUNT OF DIFFERENCE IN STOCK, WE ARE OF THE OPINION THAT THIS WOULD MEAN THAT THE TRIBUNAL HAS ACCEPTED THE TRADING RESULTS OF THE AS SESSEE. THEREFORE, NOW THE RELIEF CANNOT BE DENIED BY REVERSING THE EARLIER DE CISION BECAUSE THE BENCH OF THE TRIBUNAL CANNOT SIT IN APPEAL AGAINST THE ORDER OF EARLIER BENCH. IN THE CIRCUMSTANCES WE DISMISS GROUNDS NO. 2 & 3 OF REVEN UES APPEAL. 15. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED ON 31.08.2012 SD/- SD/- (H.L. KARWA) (T.R. SOOD) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 31.08.2012 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/ THE DR 8