M/s. Hitech Rubber Moulds Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 1937/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3650 (ITAT-DELHI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 30-06-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 29-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANEESH BAHUGUNA
• Assessee Lawyers: P K MISRA CA S
• Keywords: Business income
• Section: 145; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.1937/DEL/2010 ASSESSMENT YEAR : 2006-07 M/S HITECH RUBBER MOULDS PVT. LTD., A-17, B-1, MOHAN CO-OPERATIVE INDUSTRIAL ESTATE, BADARPUR, NEW DELHI 110 044 PAN : AAACH0647M . VS. ITO, WARD 12 (4), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NIRAJ JAIN & SHRI P.K. MISRA, CA S REVENUE BY : SHRI MANEESH BAHUGUNA, SR.DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST THE ORDER OF THE CIT (A) DATED 23.02.2010 FOR ASSESSMENT YEAR 20 06-07. GROUNDS OF APPEAL READ AS UNDER:- 1. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (AP PEALS) HAS ERRED IN UPHOLDING THE REJECTION OF BOOKS OF AC COUNTS BY THE LEARNED ASSESSING OFFICER UNDER SECTION 145 (3) OF THE INCOME-TAX ACT, 1961. 2. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (A PPEALS) HAS ERRED IN CONFIRMING TRADING ADDITION OF RS.3,37 ,790/- MADE BY THE ASSESSING OFFICER BY ESTIMATING THE G.P. RAT E AT 18.14% ON TOTAL SALES OF RS.72,92,752/-. 3. THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDI CE TO EACH OTHER. ITA NO.1937/DEL/2010 2 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AM END AND/OR MODIFY THE ABOVE GROUNDS OF APPEAL. 2. THE RETURN OF INCOME WAS FILED AT RS.1,27,421/-. THE BOOKS OF ACCOUNT, ETC. WERE PRODUCED BEFORE THE ASSESSING OFFICER AND IT WAS FOUND THAT THE GROSS PROFIT RATE AS COMPARED TO EARLIER YEAR WAS LOW. F OR THE YEAR UNDER CONSIDERATION, THE GP RATE WAS 13.5% ON THE SALES O F RS.72,92,752/- AS COMPARED TO THE GROSS PROFIT RATE OF EARLIER YEAR O F RS.18.14% AGAINST THE SALES OF RS.55,22,252/-. IN RESPONSE TO EXPLANATION REQU IRED TO BE SUBMITTED IT WAS STATED BY THE ASSESSEE THAT FOR THE YEAR UNDER CONS IDERATION THE ASSESSEE ENTERED INTO THE NEW CATEGORY OF GOODS I.E., THE SA LE OF EVA SHEETS IN WHICH THERE WAS LOWER MARGIN OF PROFIT WHICH WAS ABOUT 0. 37% WHICH BROUGHT DOWN THE PROFIT OF ANOTHER COMMODITY ON WHICH THE ASSESSEE H AS EARNED HIGHER PROFIT DURING THE YEAR UNDER CONSIDERATION WHICH WAS 26.31 %. THEN, THE ASSESSING OFFICER FOUND THAT GP RATE OF THE ASSESSEE ALSO AND ALSO PURCHASE AND SALE OF MARCH, 2006 WERE VARYING BETWEEN 15 TO 20%. THE SA ID FACT WAS CONFRONTED BY THE ASSESSING OFFICER TO THE ASSESSEE AND IN RESPON SE, THE DIRECTOR OF THE ASSESSEE COMPANY SHRI RAJIV KUMAR AGGARWAL SUBMITTE D THAT THE GP RATE OF THE ASSESSEE MAY BE ADOPTED AT 18% SUBJECT TO NON-LEVY OF PENALTY. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT SUCH SUBMISSIONS A ND APPLIED 18.14% GP RATE WHICH WAS THE GP RATE OF IMMEDIATE PRECEDING YEAR A ND, THUS, ADDITION OF RS.3,37,790/- WAS MADE. LD. CIT (A) HAS ALSO UPHEL D THE ADDITION ON THE BASIS OF ADMISSION OF THE ASSESSEE DURING THE COURSE OF A SSESSMENT PROCEEDINGS WHEREBY THE DIRECTOR OF THE ASSESSEE COMPANY HAD AD MITTED TO BE ASSESSED FOR 18% GP RATE. THE ASSESSEE IS AGGRIEVED, HENCE, IN APPEAL. 3. AFTER NARRATING THE FACTS, IT WAS VEHEMENTLY PLE ADED BY LD. AR THAT THE ASSESSEE HAS BEEN MAINTAINING PROPER ACCOUNTS FROM WHERE THE PROFIT OF THE ASSESSEE COULD BE DEDUCED. IT WAS SUBMITTED THAT T HE COMPLETE RECORD OF STOCKS WERE KEPT AS IT APPEARS FROM THE STOCK DETAILS MAIN TAINED BY THE ASSESSEE. HE DREW OUR ATTENTION TOWARDS THE PAGE NUMBERS FROM 37 TO 41 OF THE PAPER BOOK. HE ALSO INVITED OUR ATTENTION TO PAGE 6 OF THE PAPE R BOOK WHERE ASSESSEE HAS ITA NO.1937/DEL/2010 3 COMPILED THE FIGURES OF SALES IN RESPECT OF TWO DIF FERENT ITEMS, NAMELY EVA SHEETS AND BATTERY CONTAINERS. IT WAS SEEN THAT EX PENSES HAVE BEEN ALLOCATED TO THAT ACCOUNT ON PROPORTIONATE BASIS AND AFTER CONSI DERING THOSE PROPORTIONATE EXPENSES, THE GP RATE HAS BEEN ARRIVED AT 0.37% AND 26.31% RESPECTIVELY. THUS, IT WAS SUBMITTED BY LD. AR THAT THERE BEING N O DEFECT FOUND BY THE ASSESSING OFFICER DESPITE EXAMINATION OF THE BOOKS OF ACCOUNT, THE APPLICATION OF GP RATE COULD NOT BE HELD PROPER. HE CONTENDED THA T FOR APPLYING THE GP RATE, THE ASSESSING OFFICER IS REQUIRED TO REJECT THE BOO KS OF ACCOUNT AND IN THE ABSENCE OF SUCH REJECTION, THE ADDITION MADE IS BAD IN LAW. 4. ON THE OTHER HAND, IT WAS SUBMITTED BY LD. DR TH AT THE ASSESSEE HIMSELF HAS AGREED FOR APPLICATION OF 18% GP RATE AND PREVE NTED THE ASSESSING OFFICER FROM MAKING FURTHER INQUIRIES TO REJECT THE BOOKS O F ACCOUNT AND, THUS, IT WILL BE IMPROPER TO SAY THAT NO DEFECT WAS FOUND BY THE ASS ESSING OFFICER. HE SUBMITTED THAT THE ASSESSING OFFICER HAS RIGHTLY MADE THE ADD ITION AND THE LD. CIT (A) HAS RIGHTLY SUSTAINED THE SAME AS THE ASSESSEE HIMSELF HAD AGREED FOR APPLICATION OF GP RATE OF 18%. 5. IN A REJOINDER, IT WAS SUBMITTED BY LD. AR THAT EVEN IF THE ARGUMENT OF LD. DR THAT THE ADMISSION OF THE ASSESSEE HAS PREVENTED THE ASSESSING OFFICER TO MAKE FURTHER INVESTIGATION IS ACCEPTED, THE ASSESSE E HAS NO OBJECTION IF THE MATTER IS RESTORED BACK TO THE FILE OF ASSESSING OF FICER FOR COMPLETE EXAMINATION OF THE BOOKS OF ACCOUNT. 6. WE HAVE HEARD BOTH THE PARTIES IN THE LIGHT OF T HE MATERIAL PLACED BEFORE US. THERE IS SUBSTANCE IN THE ARGUMENT OF LD. DR T HAT THE ADMISSION OF THE DIRECTOR BEFORE THE ASSESSING OFFICER FOR APPLICATI ON OF 18% GP RATE MAY HAVE PREVENTED THE ASSESSING OFFICER FROM MAKING FURTHE R VERIFICATION OF THE BOOKS OF ACCOUNT. IN SUCH SITUATION, IT WILL BE JUST AND PR OPER IF THE MATTER IS RESTORED BACK TO THE FILE OF ASSESSING OFFICER FOR FRESH CONSIDER ATION. THE ASSESSING OFFICER AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO T HE ASSESSEE SHALL RE-DETERMINE THE ISSUE REGARDING APPLICATION OF GP RATE. WE DIR ECT ACCORDINGLY. ITA NO.1937/DEL/2010 4 7. IN THE RESULT, FOR STATISTICAL PURPOSES THE APPE AL FILED BY THE ASSESSEE IS ALLOWED IN THE MANNER AFORESAID. . THE ORDER PRONOUNCED IN THE OPEN COURT ON 30.06.20 10. [B.C. MEENA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 30.06.2010. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES