ACIT, Pune V. Rishap Industries Pvt Ltd., Pune

ITA 1520/PUN/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6742 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-06-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 11-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Gross profit estimation; Business income; Cost of acquisition
• Section: 43B; 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.1520/PN/2012 (ASST. YEAR: 2008-09) DCIT, CIRCLE-10, PUNE APPELLANT VS. RISHAP INDUSTRIES PVT. LTD., D-II, BLOCK, PLOT NO.33, MIDC, CHINCHWAD, PUNE 411019 PAN: AACCR8953N RESPONDENT APPELLANT BY : SHRI S.P. WALIMBE RESPONDENT BY : NONE DATE OF HEARING : 04-06-2014 DATE OF PRONOUNCEMENT : 23-06-2014 ORDER PER R.S. PADVEKAR, JM: THIS APPEAL IS FILED BY THE REVENUE CHALLENGING TH E IMPUGNED ORDER OF THE CIT(A)-V, PUNE, DATED 04.04.2012 FOR T HE A.Y. 2008-09. 2. THE GROUND NO.1 IS IN RESPECT OF ADDITION MADE B Y THE ASSESSING OFFICER TOWARDS LOW G.P. WHICH WAS DELETED BY THE C IT(A) AND THIS ISSUE ARISES FROM GROUND NOS.1 AND 2. 3. THE FACTS WHICH ARE REVEALED FROM THE RECORD ARE AS UNDER. THE ASSESSEE COMPANY IS ENGAGED IN THE MANUFACTURI NG OF FERROUS AND NON-FERROUS CASTINGS. THE ASSESSEE FILED THE R ETURN OF INCOME FOR THE A.Y. 2008-09 DECLARING TOTAL INCOME AT 1,05,04,529/- ON 29.09.2008. THE ASSESSEES CASE WAS SELECTED FOR S CRUTINY AND THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE I.T . ACT. IT APPEARS THAT THERE WAS A SURVEY ACTION U/S 133A OF THE I.T. ACT IN THE BUSINESS PREMISES OF THE ASSESSEE ON 05.03.2008. THE ASSESS ING OFFICER HAS 2 OBSERVED THAT DURING THE YEAR, THE ASSESSEE COMPANY HAS SHOWN TOTAL SALES AT 9,24,83,673/- AGAINST WHICH GROSS PROFIT WAS DISCL OSED TO THE EXTENT OF 1,68,03,853/-. THE GROSS PROFIT RATIO WAS WORKED OUT TO 18.19% . IN THE IMMEDIATELY PRECEDING, THE SALES WERE SHO WN AT 5,17,84,330/- ON WHICH GROSS PROFIT WAS DECLARED AT 1,22,79,557/- AND THE GP WORKS OUT AT 21.66% . ON COMPARING THE GP PERCENTAGES, IT WAS OBSERVED THAT THERE WAS SUBSTANTIALLY FALL IN G P. THEREFORE, THE ASSESSEE WAS ASKED TO FURNISH THE REASONS FOR FALL IN GP VIDE A LETTER DATED 23.12.2010. 4. IN THE OPINION OF THE ASSESSING OFFICER, THERE W AS FALL IN THE GROSS PROFIT. HE, THEREFORE, ESTIMATED THE GP AT 20% AND MADE THE ADDITION IN RESPECT OF DIFFERENCE BETWEEN 20% AND 18.19% WHICH WAS WORKED OUT AT 16,80,353/- AND THE ASSESSING OFFICER MADE ADDITIO N TO THAT EXTENT. THE ASSESSEE CARRIED THE ISSUE BEFORE LD C IT(A). THE LD CIT(A) DELETED THE ADDITION TOWARDS ALLEGED LOW GP BY OBSE RVING AS UNDER: 7. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS FIL ED BY THE APPELLANT AS WELL AS FACTS OF THE CASE. IN THIS CA SE, THE TOTAL TURNOVER HAS INCREASED FROM 5,17,00,000/- TO 9,24,00,000/-. THIS INCREASE IS QUITE SUBSTANTIAL AND IT IS ESTABL ISHED FACT THAT WITH INCREASE IN TURNOVER, THE PROFIT MARGIN GETS R EDUCED. THE LEARNED COUNSEL OF THE APPELLANT HAS ALSO SUBMITTED THAT THERE WAS INCREASE IN INPUT COST OF 4.7%. AGAINST INCREASE O F INPUT COST OF 4.72% , THE VARIATION IN G.P. IS ONLY 3.7% WHICH IS QUITE REASONABLE. I FIND SUFFICIENT FORCE IN THE ARGUMEN T OF THE LEARNED COUNSEL OF THE APPELLANT AND THEREFORE, THE ASSESSI NG OFFICER IS DIRECTED TO DELETE THE ADDITION OF 16,80,353/- ON ACCOUNT OF FALL IN G.P. ACCORDINGLY, THE GROUND IS ALLOWED. 5. NOW, THE REVENUE IS IN APPEAL BEFORE US. IN THI S CASE, THE NOTICE WAS SERVED ON THE ASSESSEE WITH ACK. DUE, BUT NONE REMAIN PRESENT. THE LD DR IS PRESENT. AS PER THE SUBMISSIONS MADE BEFORE LD CIT(A), THE ASSESSEE JUSTIFIED THE GP DECLARED AT 18.19% . AS PER THE BOOK RESULTS FOR THE FINANCIAL YEAR 2007-08, IT WAS STAT ED THAT DURING THE YEAR, THE ASSESSEE GOT THE ORDER FOR 498.57 LACS OUT OF TOTAL SALES IN COMPETITIVE RATE WHICH IN TURN HAS ENHANCED THE ASS ESSEES EXPORT SALES FROM 151.75 LACS TO 498.57 LACS. THE ASSESSEE ALSO STATED THAT IN THE FINANCIAL YEAR 2007-08, THE RAW MATERIAL WAS OF SPE CIAL NATURE AND QUALITY WHICH WAS REQUIRED TO BE COMPLIED WITH THE EXPORT ORDERS AND RESULTED INTO THE RISE OF THE PURCHASE COST BY 4.72 %. THE ASSESSEE ALSO 3 PLEADED THAT THERE WAS INCREASE IN THE LABOUR COST. THE ASSESSEE ALSO FILED THE COMPARATIVE FIGURES IN RESPECT OF THE SAL ES AS WELL AS DIRECT AND INDIRECT EXPENSES FOR THE FINANCIAL YEARS 2006-07 A ND 2007-08. THE LD CIT(A) WAS CONVINCED WITH THE EXPLANATION OF THE AS SESSEE AND DELETED THE ADDITION. 6. WE FIND THAT THE REASONS GIVEN BY THE ASSESSING OFFICER ARE VERY CRYPTIC. THERE CAN BE VARIATION IN THE GROSS PROFI T BUT MAKING THE ADDITION ON THE CHARGE OF SHOWING THE LOWER GROSS P ROFIT BY THE ASSESSEE, THE ASSESSING OFFICER MUST BRING ON RECOR D THE CIRCUMSTANCES AND THE EVIDENCES TO SUPPORT THE ADDITION ON THAT R EASON. MERE COMPARISON OF THE EARLIER YEARS CANNOT BE THE SOLE GROUND. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD C IT(A) ON THIS ISSUE. WE ACCORDINGLY, CONFIRM THE SAME. 7. THE NEXT ISSUE IS DISALLOWANCE OF EMPLOYEES CON TRIBUTION TO ESI / PF PENSION FUND U/S 43B OF THE I.T. ACT. THE ASSES SING OFFICER HAS OBSERVED THAT FROM THE DETAILS FILED BY THE ASSESSE E, IT WAS NOTICED THAT THE PAYMENTS ON THE DUE DATE PRESCRIBED UNDER THE P ROVISIONS OF LAW HAVE NOT BEEN PAID, BUT THE SAME WERE PAID ON 27.12 .2007 AND THUS, THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 36(1)(VA) OF THE I.T. ACT. THE ASSESSING OFFICER, THEREFORE, MADE ADDITI ON OF 1,22,567/-. THE ASSESSEE CHALLENGED THE SAID ADDITION BEFORE LD CIT(A) AND THE LD CIT(A) DELETED THE ADDITION FOLLOWING THE DECISION OF ITAT, PUNE BENCH IN THE CASE OF GHATGE PATIL TRANSPORTERS IN ITA NO.340 /PN/2010. WE FIND THAT THE ISSUE STANDS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS. ALOM EXTRUSIONS LTD. (2009) 319 ITR 306 (SC) AS WELL AS THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. AIMIL LTD. (2010) 321 ITR 508 (DEL). 8. WE, THEREFORE, FIND NO REASON TO INTERFERE WITH THE ORDER OF LD CIT(A) ON THIS ISSUE ALSO. ACCORDINGLY, THE GROUND S OF APPEAL NOS.3 TO 6 ARE DISMISSED. THE GROUND NO.7 IS GENERAL IN NATUR E. 9. IN THE RESULT, THE REVENUE'S APPEAL IS DISMISSED . 4 PRONOUNCED IN THE OPEN COURT ON THIS THE 23 RD DAY OF JUNE, 2014. SD/- SD/- (G.S. PANNU) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED 23 RD JUNE, 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A) V, PUNE 4) THE CIT-V, PUNE 5) THE DR, B BENCH, I.T.A.T., PUNE 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY ITAT PUNE BENCHES, PUNE