ASSTT COMMISSIONER OF INCOME TAX1(1), RAIPUR (CG) V. M/S RAMESH STEEL INDUSTRIES, RAIPUR (CG)

ITA 145/BIL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94018 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 30-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K JAIN
• Assessee Lawyers: RAMESH KUMAR SINGHANIA
• Keywords: Rejection of books of accounts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE S/SHRI MUKUL K SHRAWAT, ( JM) AND SHAMIM YAHYA,(AM) I TA . NO . 145 / BLPR / 201 1 (ASSESSMENT YEAR : 200 6 - 07 ) THE ASSISTANT COMMISSIONER OF INCOME TAX - 1 ( 1 ), CENTRAL REVENUE BUILDING, CIVIL LINES, RAIPUR, CHHATTISGARH. VS. M/S RAMESH STEEL INDUSTRIES, AGRAWAL COMPLEX, SAMATA COLONY, RAIPUR. APPELLANT .. RESPONDENT PAN/GIR NO. : AA ABCR0914L APPELLANT BY : SHRI D K JAIN RESPONDENT BY : SHRI RAMESH KUMAR SINGHANIA DATE OF HEARING : 1 1 .6.2015 DATE OF PRONOUNCEMENT : 19 . 6. 201 5 O R D E R PER MUKUL K SHRAWAT, ( JM) : THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF LD. CIT(A) - DATED 31.03 .2 011 FOR THE ASSESSMENT YEAR S 200 7 - 08. 2. T HE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. WHETHER IN LAW AND ON THE FACTS THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.38,67,710/ - MADE BY THE AO BY APPLYING N P @0.73% BY INVOKING PROVISIONS U/S 145(3) OF THE INCOME TAX ACT, 1961 2. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS BOTH IN LAW AND ON FACTS 3. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED UNDER SECTION 143(3), DATED 19.11. 2008 WERE THAT THE ASSESSEE ITA. NO. 145 /BLPR/201 1 2 FIRM IS ENGAGED IN THE BUSINESS OF MANUFACTURING A ND COMMISSION BUSINESS OF REROLLED STEEL PRODUCT AND MS INGOTS . THE OBJECTION OF THE AO WAS THAT THE PRODUCTION DURING THE YEAR WAS LOWER THAN THE LAST TWO PREVIOUS YEAR S . T HE A SSESSEE HAS INFORMED THAT THERE WAS INCREASE IN THE POWER CONSUMPTION THAN THE LAST YEAR. HOWEVER , AS PER THE AO , THE ASSESSEE WAS NOT IN A POSITION TO EXPLAIN THE REASON FOR THE LOWER PRODUCTION. NET PR OFIT RATE DISCLOSED BY THE ASSESSEE WAS ( - ) 0.01 %, HOWEVER IN THE PAST TWO YEARS IT WAS 0.01%. THEREFORE , THE AO HAS APPLIED THE NET RATE OF PROFIT AT 0.01 % AND WORKED OUT THE INCOME OF THE ASSESSEE AT RS.79,66,176/ - WHICH WAS TAXED IN THE HANDS OF THE ASSESSEE. 4. WHEN THE MATTER WAS CARRIED BEFORE THE LD. CIT(A), AT THE OUTSET, IT WAS OBSERVED THAT IN THE FIRST ROUND OF PROCEEDINGS , THE APPEAL WAS FILED BY THE ASSESSEE WHICH WAS DECIDED BY THE LD. CIT(A) VIDE AN ORDER DATED 29.10.2009. SINCE THE RELIEF WAS GRANTED TO THE ASSESSEE, THEREFORE , THE REVE NUE HA D FILED THE APPEAL BEFORE TH E BILASPUR BENCH OF THIS TRIBUNAL . THE TRIBUNAL HAD RESTORED THE MATTER IN RELATION TO THE IMPUGNED ADDITION BACK TO THE FILE OF LD.CIT(A). SINCE THE MATTER WAS RESTORED FOR RE - ADJUDICATION, THE LD.CIT(A) HAS RE - ADJUDICA TED THE ISSUE AS PER THE IMPUGNED APPELLATE ORDER WHICH IS NOW UNDER CONSIDERATION BEFORE US. THE LD.CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE AS PER THE FOLLOWING OBSERVATIONS: 3. I HAVE GONE THROUGH THE OBSERVATIONS OF AO AND SUBMISSIONS OF THE A PPELLANT. IN THE ASSESSMENT ORDER, THE AO HAS MADE GENERAL OBSERVATIONS FOR INVOKING PROVISIONS OF SECTION 145(3), THE INCREASE IN POWER CONSUMPTION WAS HELD NOT PROPERLY EXPLAINED BUT THE FACT OF PAYMENT OF ELECTRICITY CHARGES TO ELECTRICITY BOARD SUBSTA NTIATES GENUINENESS OF THE PAYME N T . THERE IS NO AVERMENT THAT THE APPELLANT HAS MADE UNRECORDED SALES OR PURCHASES. IN THE CASE OF ALUMINUM INDUSTRY (P) LTD V/S CIT (1995) 80 TAXMAN 184 (GAU), THE HONBLE HIGH COURT HAS HELD THAT ADDITION TO THE PROFITS OF THE ASSESSEE MADE SOLELY ON THE GROUND THAT IT WAS LOW WITHOUT GIVING SPECIFIC FINDING THAT THE ACCOUNTS OF THE ASSE SS EE WERE NOT CORRECT AND COMPLETE , OR THAT THE INCOME COULD NOT BE PROPERLY DETERMINED AND DEDUCED FROM THE ACCOUNTING METHOD EMPLOYED BY THE ASSESSEE IS NOT JUSTIFIED. THE MERE FACT ITA. NO. 145 /BLPR/201 1 3 THAT THERE WAS A LESS RATE OF GROSS PROFIT DECLARED BY AN ASSESSEE AS COMPARED TO THE PREVIOUS YEAR WOULD NOT BY ITSELF BE SUFFICIENT TO JUSTIFY THE ADDITION. A CASE DEMONSTRATING AVAILABI LI TY OF INGREDIENTS FOR APPLYING PROVISIONS OF SECTION 145(3) WAS NOT MADE OUT BY THE AO . THEREFORE, IN THE ABSENCE OF NECESSARY INGREDIENTS FOR INVOKING OF PROVISIONS OF SECTION 145(3), IT IS HELD THAT THE ADDITION MADE BY THE AO IS NOT SUSTAINABLE, HENCE DELETED. THE APP EAL IS ALLOWED ON THIS GROUND 5. WITH THIS BACKGROUND, WE HEARD BOTH THE PARTIES. WE HAVE PERUSED THE SAID ORDER PASSED BY THE TRIBUNAL TITLED AS ACIT V/S M/S RAMESH STEEL INDUSTRIES , ITA NO.14/BLPR/2010(AY - 2006 - 07) DATED 14.7.2010 AND NOTED THAT AFTER R EPRODUCTION OF VERDICT OF LD. CIT(A) GIVEN AT THAT TIME , THE TRIBUNAL HAS RESTORED THE MATTER BACK TO THE FILE OF THE LD. CIT(A) ON THE GROUND THAT NO CLEAR CUT FINDINGS WAS GIVEN WHILE GRANTING RELIEF. 6. HOWEVER, THE SUBMISSIONS OF THE ASSESSEE WERE T HAT REGULAR BOOKS OF ACCOUNTS HAVE BEEN MAINTAINED WHICH WERE DULY AUDITED. ALL THE PURCHASE AND SALES WERE VERIFIABLE . IT WAS ALSO VEHEMENTLY PLEADED THAT ON DAY TO DAY BASIS THE QUANTITATIVE DETAILS WA S MAINTAINED . APART FROM THE ABOVE RECORDS, IT HAS ALSO BEEN PLEADED THAT MANUFACTURED ITEMS WAS SUBJECT TO SURVIVELANCE OF E XCISE DEPARTMENT. IT HAS ALSO BEEN ARGUED THAT WITHOUT GIVING ANY SPECIFIC REASON THE PROVISIONS OF SECTION 145(3) WERE INVOKED BY THE AO, ALTHOUGH THERE WAS NO DEFECT IN THE BOOKS OF ACCOUNT. MERELY BECAUSE THERE WAS FALL IN THE PROFIT , THE AO WAS NOT JUSTIFIED IN ESTIMATING THE PROFIT BY APPLYING THE PROFIT RATE AS PER THE PAST YEARS RESULTS. IN THE LIGHT OF THESE FACTS AND CONSIDERING THE PAST HISTORY OF THE CASE, WE ARE ALSO OF THE OPINION THAT THE GRAPH OF THE BUSINESS PROFIT IS ALWAYS NOT A STRAIGHT LINE BUT IT FLUCTUATES YEAR TO YEAR. THE REASONS FOR THE FLUCTUATIONS AS GIVEN BY THE ASSESSEE THAT THERE WAS HIGHER EXPENDITURE OF ELECTRICITY, STATED TO BE MAIN INGREDIE NT FOR THE MANUFACTURING OF STEEL PRODUCTS AND MS INGOTS. IT IS ALSO WORTH TO MENTION THAT THE AO HAS NOT GIVEN ANY SPECIFIC REASON FOR REJECTION OF BOOKS OF ACCOUNTS. WHEN THE DAY TO DAY CONSUMPTION REGISTER W A S MAINTAINED AND THE SALES/PURCHASE WERE STA T ED TO BE VERIFIABLE BY ITA. NO. 145 /BLPR/201 1 4 SUPPORTING BILLS/VOUCHERS, HENCE IN OU R OPINION AS WELL ; THE INVO KING OF THE PROVISIONS OF SECTION 145 THAT TOO IN A CURSIVE MANNER WAS NOT APPRECIABLE IN THE EYES OF LAW. FOR THIS LEGAL PROPOSITION FEW CASE LAWS HAVE BEEN CITED BUT KEEPING BREVITY IN MIND SAME ARE NOT TO BE DISCUSSED IN DETAIL. WE, THEREFORE, UPH O LD THE VIEW TAKEN BY THE LD. CIT(A) . THIS GROUND IS DISMISSED. 7 . I N THE RESULT , THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19TH JUNE , 201 5 SD SD ( SHAMIM YAHYA ) ( MUKUL K SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER RAIPUR : 19TH JUNE,2015. SRL , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - CONCERNED 4. CIT CONCERNED 5. DR, ITAT, RAIPUR CONCERNED 6. GUARD FILE. BY ORDER, SENIOR PRIVATE SECRETARY /AR