Bloom Decor Ltd., Ahmedabad V. The ACIT.,Cent.Circle-2(1), Ahmedabad

ITA 1817/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76783 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 23-05-2014
• Assessment Year: 1995-1996
• Appeal Filed On: 15-07-2011
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Gross profit estimation

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD 0 00 0 0 00 0 , , , , !'# !$ !'# !$ !'# !$ !'# !$0 00 0! !! !0 00 0 %$ %$ %$ %$, , , , &' ( &' ( &' ( &' ( & & & & BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NO. 1817/AHD/2011 ASSESSMENT YEAR 1995-96 BLOOM DECOR LTD. AHMEDABAD. PAN: AAACB6221B VS ACIT, CENTRAL CIRCLE-2(1), AHMEDABAD. )*/ APPELLANT ,-)* / RESPONDENT REVENUE BY : SHRI P.L. KUREEL, SR. DR ASSESSEE(S) BY : NONE $'. / 0'/ // / DATE OF HEARING : 23/05/2014 123 / 0' / DATE OF PRONOUNCEMENT : 30/05/2014 &4 &4 &4 &4/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-VI, AHMEDABAD D ATED 04.05.2011. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN HOLDING THAT GR OSS PROFIT SHOWN BY THE ASSESSEE WAS LOW AS COMPARED TO THE INDUSTRY, AND C ONFIRMING THE ADDITION OF RS 13,36,731/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LOW GROSS PROFIT RATE. ITA NO. 1817/AHD/2011 BLOOM DECOR LTD., AHMEDABAD. FOR A.Y. 1995-96 - 2 - 3. WE HAVE HEARD THE DEPARTMENTAL REPRESENTATIVE A ND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILA BLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE COMMENCED BUSINESS OF MA NUFACTURING OF LAMINATE SHEETS DURING THE YEAR UNDER CONSIDERATION . THE GROSS PROFIT SHOWN BY THE ASSESSEE WORKED OUT TO 22.56%. THE ASSESSIN G OFFICER OBSERVED CERTAIN DISCREPANCIES IN THE RATE OF CONSUMPTION OF RAW MATERIALS ON MONTH TO MONTH BASIS AND THEREFORE, REJECTED THE BOOK RES ULTS OF THE ASSESSEE. THE ASSESSING OFFICER FOUND FROM A COMPARABLE CASE OF ANOTHER ASSESSEE M/S. SUNDEK INDIA LIMITED THAT THE SAID ASSESSEE DI SCLOSED GROSS PROFIT RATE OF 35% AND CONSIDERING THE FACT THAT THIS WAS THE F IRST YEAR OF OPERATION OF THE ASSESSEE WHEREIN GROSS PROFIT RATE IS BOUND TO BE LOW, HE ESTIMATED THE GROSS PROFIT RATE OF THE ASSESSEE AT THE RATE OF 30 % AND MADE ADDITION OF RS 13,36,731/-. 4. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5. WE FIND THAT IT IS NOT IN DISPUTE THAT IN THE F IRST YEAR, THERE IS EVERY POSSIBILITY THAT THERE WILL BE MORE WASTAGE O F RAW MATERIALS BECAUSE OF NEW MACHINERIES AND NEW PRODUCTION PROCEDURE, NEW L ABOUR ETC. THEREFORE, CONSUMPTION OF INPUT RATIO VARIES TILL THE TIME SM OOTH PRODUCTION TAKES PLACE. 6. IN THE INSTANT CASE, THE GROSS PROFIT RATE OF 3 0% ESTIMATED BY THE ASSESSING OFFICER IS WITHOUT BASIS AND THE ASSE SSING OFFICER HAS BROUGHT NO MATERIAL ON RECORD TO SHOW WHAT WAS THE RATE OF GROSS PROFIT WHICH WAS ACCEPTED BY THE DEPARTMENT IN THE CASE OF M/S. SUND EK INDIA LIMITED IN ITS FIRST YEAR OF OPERATION. 7. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE, IN OUR CONSIDERED VIEW, IT SHALL BE FAIR AND REASONABLE TO ESTIMATE THE GROSS PROFIT ITA NO. 1817/AHD/2011 BLOOM DECOR LTD., AHMEDABAD. FOR A.Y. 1995-96 - 3 - OF THE ASSESSEE AT THE RATE OF 26% IN PLACE OF 22.5 6% DISCLOSED BY THE ASSESSEE AND 30% ESTIMATED BY THE ASSESSING OFFICER . THUS, THE GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 30 TH OF MAY, 2014 AT AHMEDABAD. SD/- SD/- (G.C. GUPTA) VICE PRESIDENT ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 30/05/2014 GHANSHYAM MAURYA, SR. P.S. TRUE COPY &4 / ,5 6&53 &4 / ,5 6&53 &4 / ,5 6&53 &4 / ,5 6&53/ COPY OF THE ORDER FORWARDED TO : 1. )* / THE APPELLANT 2. ,-)* / THE RESPONDENT. 3. ## 7 / CONCERNED CIT 4. 7() / THE CIT(A)-III, AHMEDABAD 5. 5': ,$ , , / DR, ITAT, AHMEDABAD 6. ;< =. / GUARD FILE. &4$ &4$ &4$ &4$ / BY ORDER, / // / # # # # ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD