DCIT 23(3), MUMBAI V. RAVI COMBINES, MUMBAI

ITA 140/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3491 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 03-06-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 07-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C N VAZE
• Keywords: Gross profit estimation

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL D DD D BENCH, BENCH, BENCH, BENCH, MUMBAI MUMBAI MUMBAI MUMBAI , . . . !' !' !' !' , # # # # $% $% $% $% BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM & & & & SHRI SHRI SHRI SHRI . N. K. BILLAIYA N. K. BILLAIYA N. K. BILLAIYA N. K. BILLAIYA, ,, , AM AM AM AM , ,, , ./ I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.140/MUM/2011 140/MUM/2011 140/MUM/2011 140/MUM/2011 ( & & & & ' ' ' ' / ASSESSMENT YEAR:2007-08) DCIT 23(3) PRATYAKSHAKAR BHAVAN, C-10/4 TH FLOOR, BKC, MUMBAI-51 / VS. RAVI COMBINES 41, LALAN BLDG., DEVIDAYAL ROAD, PANCH RASTA MULUND (W) MUMBAI-80 %( # ./ ) ./ PAN/GIR NO. : AAAFR7986A ( (* / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( +,(* / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) (* (* (* (* - - - - / APPELLANT BY : SHRI C. N. VAZE +,(* +,(* +,(* +,(* . .. . - - - - /RESPONDENT BY : SHRI JAVED AKHTAR . .. . /# /# /# /# / DT. OF HEARING : 6 TH JUNE 2013 01' 01'01' 01' . .. ./# /# /# /# / DT.OFPRONOUNCEMENT: 12 TH JUNE 2013 $2 / O R D E R PER : , . . / VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 4.10.2010 OF THE CIT(A) FOR THE ASSESSMENT YEAR 200 7-08. 2. THE REVENUE HAS RAISED THE ONLY EFFECTIVE GROUND S IS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION O F ` 24,49,512/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LOW GP RATIO WITHOUT DISCUSSING THE ISSUE IN DETAIL. 2.1 THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEAL ERSHIP AND COMMISSION AGENT OF VARIOUS BRANDS OF CEMENTS AND B UILDING MATERIAL. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HA S ACHIEVED THE TURN ITA NO. 140/M/2011 . 2 OVER OF ` 12.24 CRORE AND DECLARED GP AT ` 57.52 L AKHS WHICH IS AT 4.68%. THE ASSESSING OFFICER HAS MADE AN ADDITION OF GP OF 2% TO THE ASSESSEES INCOME ON THE GROUND THAT THE ASSESSEES GP FOR THE YEAR UNDER CONSIDERATION IS LESS IN COMPARISON TO THE ASSESSME NT YEAR 2006-07. ON APPEAL THE CIT(A) HAS DELETED THE ADDITION BY FOLLO WING THE ASSESSMENT YEAR 2006-07. 3. WE HAVE HEARD THE LD. DR AS WELL AS LD. AR AND C ONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, THE LD. AR OF THE ASSESSEE HAS POINTED OUT THAT AN IDENTICAL ISSUE IN GROUP CONCER N OF THE ASSESSEE M/S RAVI TRADING COMPANY HAS BEEN CONSIDERED AND DECIDE D BY THIS TRIBUNAL VIDE ORDER DATED 16.5.2012 IN ITA NO. 6042/M/2010. HE HAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS MADE THE G P ADDITION WITHOUT REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE REFORE, IN VIEW OF THE DECISION OF THIS TRIBUNAL, IN CASE OF RAVI TRADING COMPANY (SUPRA), THE GP ADDITION MADE BY THE ASSESSING OFFICER IS NOT SUSTA INABLE. 3.1 ON THE OTHER HAND, THE LD. DR HAS RELIED UPON T HE ORDER OF THE ASSESSING OFFICER . 4. HAVING CONSIDERED THE RIVAL SUBMISSION AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE ASSES SING OFFICER MADE AN ADDITION ON ACCOUNT OF GP BY ADDING 2% TO THE GP DE CLARED BY THE ASSESSEE. THE ASSESSEE HAS DECLARED THE GP OF 4.68% WHICH WAS FOUND BY THE ASSESSING OFFICER IS LESS THAN THE GP DECLARED IN THE ASSESSMENT YEAR 2006-07 AT 7.07%. ITA NO. 140/M/2011 . 3 4.1 IT IS PERTINENT TO NOTE THAT THE TURNOVER OF TH E ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAS INCREASED THREE FOLDS IN CO MPARISON TO THE ASSESSMENT YEAR 2006-07 FROM ` 4.14 CRORE TO ` 12.2 4 CRORE. THEREFORE, WHEN THE TURNOVER HAS BEEN SUBSTANTIALLY INCREASED FOR THE YEAR UNDER CONSIDERATION, THE GP DECLARED BY THE ASSESSEE EVEN IF IS LESS THAN THE GP FOR THE ASSESSMENT YEAR 2006-07 CANNOT BE REASON FO R ADDITION. FURTHER, WE NOTE THAT IN THE CASE OF RAVI TRADING COMPANY, T HE GP WAS AT 3.12% FOR THE ASSESSMENT YEAR 2007-08 WHICH WAS COMPARED BY THE ASSESSING OFFICER WITH THE GP OF THE ASSESSEE IN HAND AND ACC ORDINGLY MADE THE ADDITION WHICH HAS BEEN DELETED BY THE TRIBUNAL VID E ORDER DATED 16.5.2012 IN PARA 4-5 AS UNDER: 4 AFTER CONSIDERING THE RIVAL CONTENTION AND OTHER RE LEVANT MATERIAL ON RECORD, WE FIND THAT THERE IS A SUBSTANTIAL INCREASE I N THE TURNOVER OF THE ASSESSEE IN COMPARISON TO THE EARLIER YEAR AND THE T URNOVER IS DOUBLE IN THE YEAR UNDER CONSIDERATION FROM ` 10.20 CRORES TO ` 19.96 CRORES. SIMILARLY, THE GP RATIO IS ALSO INCREASED FROM 2.67% TO 3.12%. 4.1 HAVING REGARD TO THESE FACTS AND WHEN THE BOOKS OF ACCOUNT OF THE ASSESSEE HAS NOT BEEN REJECTED BY THE ASSESSING OFF ICER, THEN MAKING AN ADHOC GP ADDITION ON THE BASIS OF COMPARISON OF THE OTHER COMPANIES WITHOUT CONSIDERING THE RELEVANT MATERIAL, DETAILS, REVENUE AND EXPENSES AS RECORDED IN THE BOOKS OF ACCOUNT, IS NOT JUSTIFIED. 4.2 WE FURTHER NOTE THAT THE ADDITION MADE BY THE ASS ESSING OFFICER IN THE CASE OF M/S RAVI COMBINES FOR THE ASSESSMENT YEAR 20 07-08, WHICH WAS RELIED AND COMPARED BY THE ASSESSING OFFICER IN MAKING THE ADDITION IN THE CASE OF THE ASSESSEE WAS DELETED BY THE COMMISSIONER OF INCO ME TAX(APPEALS) VIDE ITS ORDER DATED 4.10.2010, COPY OF WHICH WAS FURNISH ED BY THE LD AR OF THE ASSESSEE. 5 IN VIEW OF THE ABOVE DISCUSSION, WE AGREE WITH TH E VIEW OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT LOW PROFIT BY ITSELF CANNOT BE A REASON FOR ESTIMATION OF THE GP RATIO WHEN THE ASSESSI NG OFFICER IS NOT DOUBTED THE PURCHASE AND EXPENSES BOOKED BY THE ASSE SSEE. ACCORDINGLY, WE UPHOLD THE ORDER OF THE COMMISSIONER OF INCOME TAX( APPEALS) ON THIS ISSUE. ITA NO. 140/M/2011 . 4 4.2 IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE C ASE, WHEN THE BOOKS OF ACCOUNTS OF THE ASSESSEE HAVE BEEN REJECTED, THE TURNOVER OF THE ASSESSEE HAS INCREASED SUBSTANTIALLY IN COMPARISON TO THE ASSESSMENT YEAR 2006-07 AS WELL AS DECISION OF THIS TRIBUNAL I N CASE OF RAVI TRADING (SUPRA), WE FIND NO ERROR OR ILLEGALITY IN THE IMPU GNED ORDER OF THE CIT(A) AND THE SAME IS UPHELD. 5. IN THE RESULT, THE APPEAL REVENUE IS DISMISSED. 3 /4 & 3/ / % . 5 . / 6! ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 2 TH JUNE 2013 $2 . 01' # 5 8$4 1 . 9 SD/- SD/- ( . . !' !' !' !' ) # $% ( N. K. BILLAIYA N. K. BILLAIYA N. K. BILLAIYA N. K. BILLAIYA ) ACCOUNTANT MEMBER ( ) & $% (VIJAY PAL RAO) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 12 TH JUNE 2013 SUBODH COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/