The DCIT, Circle-4, Ahmedabad V. Fairdeal Suppliers Pvt.Ltd., Ahmedabad

ITA 181/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80253 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-07-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 24-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: PF JAIN
• Keywords: Gross profit estimation

Judgement Text

, , , , C, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + ) ' )* + ) ' )* + ) ' )* + ) ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.181/AHD/2011 [ASSTT.YEAR : 2006-2007] THE DCIT, CIR.4 AHMEDABAD. /VS. FAIRDEAL SUPPLIERS P. LTD. 4 TH FLOOR, SHALIN BUILDING ASHRAM ROAD, AHMEDABAD. PAN : AAACF 2878 C ( (( (-. -. -. -. / APPELLANT) ( (( (/ // /0-. 0-. 0-. 0-. / RESPONDENT) + 1 2 )/ REVENUE BY : SHRI B.L. YADAV, SR.DR 4& 1 2 )/ ASSESSEE BY : SHRI P.F. JAIN 5 1 &(*/ DATE OF HEARING : 1 ST JULY, 2014 678 1 &(*/ DATE OF PRONOUNCEMENT : 08/08/2014 )9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL BY THE REVENUE FOR THE ASSTT.YEAR 2006-2007 IS DIRECTED AGAINST TH E ORDER OF THE CIT(A). 2. THE ONLY EFFECTIVE GROUND OF THE APPEAL OF THE R EVENUE IS AS UNDER: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.48,49,074/- MADE BY THE AO ON AC COUNT OF LOW GP WITHOUT PROPERLY APPRECIATING THE FACTS OF THE C ASE AND THE MATERIAL BROUGHT ON RECORD BY THE AO. ITA NO.181/AHD/2011 -2- 1.2 THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE AFORESAID DISALLOWANCE ON THE GROUND THAT MERE FALL IN GP CANNOT BE A GROUND TO REJECT THE BOOKS, WITHOUT APPRECIATING THAT THE AO HAD POINTED OUT A NUMBER OF PARAMETERS WHICH THE ASSESS EE HAD NOT BEEN ABLE TO SUBSTANTIATE AND CONSEQUENTLY THE AO HAD ES TIMATED THE PROFIT OF THE BUSINESS. 3. THE LEARNED DR SUBMITTED THAT THE ASSESSEE IS IN THE BUSINESS OF TRADING AND MANUFACTURING OF MET COKE AND THERE IS A STEEP FALL IN THE GP RATE IN MANUFACTURE OF MET COKE AND DURING THE RELE VANT PERIOD, THE ASSESSEE HAS DECLARED GP RATE OF 6.73% ON SALE OF 1 646 LAKHS, AS AGAINST THE GP RATE OF 28.96% ON SALES OF 1189 LAKHS OF THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. HE SUBMITTED THAT THE AO WAS REAS ONABLE IN APPLYING THE GP RATE OF 16.83% TO THE TURNOVER OF THE ASSESSEE. HE RELIED ON THE ORDER OF THE AO. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT NOT A SINGLE DEFECT IN THE ACCOUNTS OF THE ASSESSEE COULD BE POI NTED OUT BY THE AO AND THE ACCOUNTS OF THE ASSESSEE WERE AUDITED BY THE CH ARTERED ACCOUNTANT. HE RELIED ON THE DECISION OF THE HONBLE JURISDICTI ONAL HIGH COURT IN THE CASE OF CIT VS. SYMPHONY COMFORT SYSTEM LTD., TAX A PPEAL NO.1501 OF 2011 DATED 1.10.2012 IN SUPPORT OF HIS ARGUMENT THA T WHEN THE AO COULD NOT POINT OUT ANY DEFECT IN THE ACCOUNTS OF THE ASS ESSEE, THE TRADING RESULTS COULD NOT BE DISTURBED MERELY BECAUSE THERE WAS A F ALL IN THE GP. HE RELIED ON THE ORDER OF THE CIT(A). 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE ASSESSEE HAS MAINTAINED COMPLETE BOOKS OF ACCOUNTS WITH REGARD TO ITS MET COKE BUSIN ESS AND ACCOUNTS WERE AUDITED FOR THE PURPOSE OF COMPANIES ACT AS WELL AS FOR THE PURPOSE OF INCOME TAX ACT. WE FIND NO DEFECT, IN THE ACCOUNT BOOKS OF THE ASSESSEE, ITA NO.181/AHD/2011 -3- COULD BE POINTED OUT BY THE AO. MERELY BECAUSE THE RE IS A FALL IN THE GP RATE IN THE MANUFACTURING UNIT OF MET COKE, IT DOES NOT FOLLOW THAT TRADING ACCOUNT OF THE ASSESSEE COULD BE REJECTED. THE CIT (A) HAS RECORDED THAT THE AO HAS NOT FOUND ANY OTHER DEFECT IN THE ACCOUN TS WHATSOEVER, APART FROM THE REDUCTION IN THE GROSS PROFIT OF THE ASSES SEE. HE FURTHER RECORDED THAT FALL IN GP COULD BE DUE TO SEVERAL FACTORS, SU CH AS, INCREASE IN PRICES OF RAW MATERIAL, INCREASE IN THE COST OF MANUFACTURING , DECREASE IN SALE PRICE ETC. HE HAS CITED A NUMBER OF DECISIONS OF THE HON BLE COURTS IN SUPPORT OF THESE PROPOSITIONS. WE FIND THAT THE ASSESSEE H AS SHOWN MUCH BETTER TRADING RESULTS IN THE TRADING UNIT OF MET COKE BY DECLARING THE GP RATE OF 16.83% ON INCREASED SALES TURNOVER OF RS.481 LAKHS AS AGAINST THE GP RATE OF 9.43% ON SALES OF RS.137 LAKHS IN THE IMMEDIATEL Y PRECEDING ASSESSMENT YEAR. IN THE FACTS OF THE CASE OF THE A SSESSEE, WE HAVE NO HESITATION IN HOLDING THAT THERE WAS NO VALID REASO N TO REJECT THE ACCOUNT BOOKS OF THE ASSESSEE, ACCORDINGLY, THE ORDER OF TH E CIT(A) IN DELETING THE TRADING ADDITION IS CONFIRMED, AND THE GROUNDS OF T HE APPEAL OF THE REVENUE ARE REJECTED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD