M/s. Inal Motors, Chikhli V. The Income tax Officer,Ward-2, Navsari

ITA 1748/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85689 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 01-07-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: MODI
• Keywords: Gross profit estimation

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , .. ' , #$ # % BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NO. 1748/AHD/2011 [ASSTT. YEAR: 2007-08] M/S.INAL MOTORS CHIKHLI-BILIMORA ROAD P.O. MAJIGAM CHIKHLI 396 521. PAN : AABFI 3586 Q VS ITO, WARD - 2 NAVSARI. &' / (APPELLANT) )* &' / (RESPONDENT) ASSESSEE(S) BY : SHRI M.S. MODI REVENUE BY : SHRI DINESH SINGH, SR.DR / DATE OF HEARING : 05/02/2015 / DATE OF PRONOUNCEMENT: 13/02/2015 #+/ O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), VALSA D DATED 31.1.2011 FOR THE ASSTT.YEAR 2007-08. 2. SOLE GROUND OF APPEAL TAKEN BY THE ASSESSEE IN T HIS APPEAL IS THAT THE CIT(A) ERRED IN CONFIRMING THE ORDER OF AO IN M AKING LUMPSUM ADDITION OF RS.2 LAKHS ON ACCOUNT OF LOW GP. 3. BRIEF FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT THE ASSESSEE IS NOT MAINTAINING QUANTITATIVE DETAILS OF PURCHASE AND CONSUMPTION OF SPARE PARTS, OIL ETC. UTILISED DURING THE YEAR. HE , THEREFORE, WAS OF THE OPINION THAT IT WAS NOT POSSIBLE TO VERIFY WHETHER EACH PURCHASE HAS BEEN ACCOUNTED FOR OR NOT. HE OBSERVED THAT THE CL AIM OF THE ASSESSEE THAT AT THE YEAR-END PHYSICAL STOCK TAKEN WAS ALSO NOT CORRECT BECAUSE ITA NO.1748/AHD/2011 2 THE ASSESSEE HAS NOT GIVEN BREAK-UP OF DIFFERENT IT EMS OF CLOSING STOCK. HE, THEREFORE, HELD THAT THE ACCOUNTS OF THE ASSESS EE WERE INCOMPLETE AND INCORRECT. HE ALSO OBSERVED THAT THE GP DECLAR ED IN THE CURRENT YEAR AT 25.78% WAS LOWER THAN THE GP SHOWN IN THE I MMEDIATELY PRECEDING YEAR AT 40.02%. HE, THEREFORE, HELD THA T THERE WAS SUBSTANTIAL FALL IN THE GP BY 14.24%. THE ASSESSEE COULD NOT EXPLAIN THE REASON FOR FALL IN GP WHETHER IT WAS ON ACCOUNT OF INCREASE IN COST OF MATERIAL OR INCREASE IN OTHER EXPENSES. 4. BEFORE US, THE AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS AN AUTHORIZED SERVICE STATION, AND IS BOUND TO APPO INT QUALIFIED PERSON AT THE SERVICE STATION. ALL PURCHASES ARE TOWARDS ORDER PLACED, AND GOODS RECEIVED ARE TOTALLY UNDER DIRECT CONTROL, SU PERVISION AND CHECK OF THE SERVICE STATION. THE SUPPLIER ISSUES BILLS ON PLACE OF ORDERS ON-LINE ON COMPUTER, WHICH SHOWS COMPLETE DETAILS OF VARIOU S ACCOUNTS OF GOODS/MATERIAL, AND THEREFORE, THERE WAS NO QUESTIO N OF NON- MAINTENANCE OF DAY-TO-DAY RECORDS OF PURCHASE/SALES AND STOCK POSITION. IT WAS SUBMITTED THAT INSPITE OF SUCH RE CORDS PRODUCED FOR VERIFICATION BEFORE THE AO, HE ARBITRARILY PUT ASID E ALL THESE TRANSACTIONS WHICH ARE DULY RECORDED IN THE AUDITED BOOKS OF ACC OUNTS, AND PRESUMED THAT THE GP WAS NOT TENABLE IN LAW. IT WA S, THEREFORE, SUBMITTED THAT THE ADDITION OF RS.2 LAKHS TO THE IN COME OF THE ASSESSEE SHOULD BE DELETED. 5. ON THE OTHER HAND, THE DR ARGUED THAT NEITHER BE FORE THE LOWER AUTHORITIES NOR BEFORE THE TRIBUNAL, THE ASSESSEE H AS NOT BEEN ABLE TO PLACE MATERIAL TO SHOW THE REASON FOR FALL IN GP. THEREFORE, THE ADDITION MADE WAS FULLY JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE CONSIDERED OPINI ON THAT THE AO MADE ADDITION OF RS.2 LAKHS ON ACCOUNT OF LOW GP FOR THE REASON THAT THE ITA NO.1748/AHD/2011 3 ASSESSEE COULD NOT FILE ANY DOCUMENTS TO SUBSTANTIA TE ITS CLAIM FOR FALL IN GP BY 14.24% AS COMPARED TO THE GP SHOWN IN THE IMM EDIATELY PRECEDING ASSESSMENT YEAR. THE AO ALSO MADE ADDITI ON ON THE GROUND THAT NO QUANTITATIVE RECORDS WERE MAINTAINED BY THE ASSESSEE. THE AR OF THE ASSESSEE HAS REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES, BUT FAILED TO FILE ANY MATERIAL ON REC ORD TO SHOW THAT THE ADDITION MADE BY THE AO ON ACCOUNT OF LOW GP WAS EX CESSIVE OR WAS NOT JUSTIFIED. IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, IN OUR CONSIDERED VIEW, THE ADDITION OF RS.2 LAKHS MADE TO THE TOTAL INCOME OF THE ASSESSEE BY THE AO ON ACCOUNT OF LOW GP WAS FUL LY JUSTIFIED AS THERE WAS A STEEP FALL IN THE GP BY 14.24%, AS COMPARED T O GP SHOWN BY THE ASSESSEE IN THE IMMEDIATELY PRECEDING ASSESSMENT YE AR, AND THE SAME COULD NOT BE EXPLAINED BY THE ASSESSEE BY FILING AN Y EVIDENCE. HENCE, WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS CONFIRMED AND THE GROUND OF APPEAL OF ASSESSEE I S DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 13 TH FEBRUARY, 2015 AT AHMEDABAD. SD/- SD/- (MUKUL KR. SHRAWAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER