The Dy,CIT, Circle-6, Surat V. Shri Rameshchandra I. Gandhi, Surat

ITA 1562/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6221 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-03-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 19-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAILESH D RATNOO
• Assessee Lawyers: P M JAGASHETH
• Keywords: Additional evidence

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL CAMP AT SURAT BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.1562/AHD/2014 / ASSTT. YEAR: 2003-2004 DCIT, CIR.6 SURAT. VS. SHRI RAMESHCHANDRA I. GANDHI 8/2507, MAHIDHARPURA LIMBU SHERI, SURAT. PAN : ABKPG 0797 R / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI KAILESH D. RATNOO, SR.DR ASSESSEE BY : SHRI P.M. JAGASHETH ! / DATE OF HEARING : 10/03/2017 '#$ ! / DATE OF PRONOUNCEMENT: 05/04/2017 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDER OF THE LD.CIT(A)- I, SURAT DATED 24.2.2014 PASSED FOR THE ASSTT.YEAR 2003-04. 2. THOUGH THE REVENUE HAS TAKEN FOUR GROUNDS OF APP EAL, BUT IT GRIEVANCE REVOLVES AROUND A SINGLE ISSUE, VIZ. THE LD.CIT(A) HAS ERRED IN RESTRICTING THE ADDITION OF RS.1,92,28,170/- TO RS. 24,03,521/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 17.10.2003 SHOWING TOTAL INCOME AT NIL. IT EMERGES OUT FROM THE RECORD THAT DURING THE COURSE OF ASSESSMEN T PROCEEDINGS, THE LD.AO HAS VERIFIED PURCHASES DEBITED BY THE ASSESSE E IN ITS ACCOUNTS. IT ITA NO.894 AND 1099/AHD/2014 2 CAME TO THE NOTICE OF THE AO THAT THE ASSESSEE HAS MADE PURCHASES THROUGH THREE BROKERS VIZ. SHIVANGI JARI HOUSE, SHR EE HARE RAM TEXTILES AND DIPTI TEXTILES. THESE THREE BROKERS F URTHER ALLEGED TO HAVE BEEN PROCURED MATERIAL FROM Y.Z. TRADERS, R.K. TEXT ILES AND SABIA TEXTILES. ACCORDING TO THE AO, THE BILLS PROCURED FROM THESE CONCERNS WERE FOUND TO BE BOGUS AND IN THIS WAY, THE AO HAS DISALLOWED THE TOTAL CLAIM OF EXPENDITURE INCURRED ON PURCHASE OF GREY C LOTH. HE MADE ADDITION OF RS.1,92,28,170/-. 4. DISSATISFIED WITH THE ASSESSMENT ORDER DATED 24. 3.2006 THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD .CIT(A). THE LD.CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE VIDE ORDER DATED 5.3.2007. THE LD.CIT(A) HAS OBSERVED THAT APART FR OM THE ASSESSEE, THERE ARE SEVEN MORE CONCERNS, WHICH WERE INVOLVED IN THIS TYPE OF ACTIVITIES, AND THEIR APPEALS WERE ALSO DISMISSED. IN THE OPINION OF THE LD.CIT(A), THE LEAD CASE WAS SUNDAY EXPORTS LTD. W HEN THIS MATTER WAS TRAVELLED UPTO THE TRIBUNAL, THEN IT WAS CONTENDED THAT AN APPLICATION TO LEAD ADDITIONAL EVIDENCE BEFORE THE LD.CIT(A) WAS E RRONEOUSLY DISMISSED. THE TRIBUNAL HAS DISPOSED OF EIGHT APPE ALS OF SIMILARLY SITUATED ASSESSMENTS. THE TRIBUNAL HAS SET ASIDE I SSUE TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION. THE LD.CIT(A) HAS O BSERVED THAT PROFIT ELEMENT EMBEDDED IN THIS MODUS OPERANDI OF MAKING PURCHASES FROM A BY TAKING BILLS FROM B IS TO BE ASSESSED IN T HE HANDS OF THE ASSESSEE. CIT(A) HAS ESTIMATED THE PROFIT AT THE R ATE OF 12.5% AND ACCORDINGLY CONFIRMED ADDITION AT RS.23,03,521/- IN STEAD OF GROSS AMOUNT ADDED BY THE AO. 5. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE CONTE NDED THAT SIMILAR ADDITION WAS MADE IN THE CASE OF SUNDAY EXPORTS. T HE CIT(A) HAS CONFIRMED THE ADDITION TO THE EXTENT OF 12.5% OF TH E GROSS PURCHASES CLAIMED BY THE ASSESSEE. THE REVENUE CHALLENGED TH E ORDER OF THE LD.CIT(A) IN ITA NO.764/AHD/2013. THIS APPEAL OF T HE REVENUE HAS ITA NO.894 AND 1099/AHD/2014 3 BEEN DISMISSED BY THE TRIBUNAL ON 25.11.2016. HE P LACED ON RECORD COPY OF THE TRIBUNALS ORDER. THE LD.DR, ON THE OT HER HAND, RELIED UPON THE ORDER OF THE AO. 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. THERE IS NO DISPUTE THAT THE ASS ESSEE FAILED TO PROVE PURCHASES MADE BY IT. THE AO HAS NOT DISPUTED THE SALES MADE BY THE ASSESSEE. IT INDICATES THAT THE ASSESSEE MUST HAVE PROCURED RAW- MATERIAL FOR ACHIEVING SALES SHOWN BY IT IN THE BOO KS. THE CASE OF THE ASSESSEE SHOULD BE THAT IT HAD MADE ACTUAL PURCHASE S FROM A, BUT PROCURED BILLS FROM B. RAW-MATERIAL MUST HAVE CO ME TO THE PREMISES OF THE ASSESSEE, WHICH WERE USED FOR THE FINISHED P RODUCTS, AND WHOSE SALES WERE MADE. BY ADOPTING THIS MODUS OPERANDI , THE ASSESSEE MUST HAVE MADE SOME MORE PROFIT EITHER BY SAVING EXCIS E DUTY AND SOME OTHER LEVIES. CONSIDERING THIS ASPECT, THE LD.CIT( A) HAS OBSERVED THAT ELEMENT OF PROFIT INVOLVED IN THIS MODUS OPERANDI OUGHT TO BE ADDED. THE LD.CIT(A) CONSIDERED THAT IN ALL THE CASES, PRO FIT HAS BEEN ESTIMATED AT 12.50% OF THE ALLEGED GROSS PURCHASES COST CLAIM ED BY THE ASSESSEE. IN OUR OPINION, ANALYSIS MADE BY THE LD.CIT(A) IS M ORE APPROPRIATE AND GENERALLY ACCEPTED METHOD IN A SITUATION LIKE THIS FOR ARRIVING AT PROFIT ON ESTIMATION. THEREFORE, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD.CIT(A), WHICH IS CONFIRMED, AND THE APPEAL OF TH E REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 5 TH APRIL, 2017 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 05/04/2017