The DCIT, Circle-7,., Surat V. M/s. Krunal Enterprise, Mumbai

ITA 2003/AHD/2010

• Counselvise Citation: 200320514 RSA 2010
• Duration Of Justice: 2 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 09-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y P VERMA
• Assessee Lawyers: KK SHAH
• Keywords: Rejection of books of accounts

Judgement Text

, , , , B, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ %& %& %& %& , , , , &' ( & &' ( & &' ( & &' ( & ' ' ' ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND TEJ RAM MEENA, ACCOUNTANT MEMBER) ITA NO.2003/AHD/2010 WITH CO NO.166/AHD/2010 [ASSTT.YEAR : 2007-2008] DCIT, CIR.7 SURAT. /VS. M/S.KRUNAL ENTERPRISES 7/2982, PARSI SHERI SAIYEDPURA, SURAT. PAN : AACFK 9318 F ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) ( . / &/ REVENUE BY : SHRI Y.P. VERMA 1% . / &/ ASSESSEE BY : SHRI K.K. SHAH 2 . %3'/ DATE OF HEARING : 9 TH NOVEMBER, 2012 456 . %3'/ DATE OF PRONOUNCEMENT : 07-12-2012 &7 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL OF THE REVENUE AND CO BY THE ASSESSEE FOR THE ASSESSMENT Y EAR 2007-2008 ARE DIRECTED AGAINST THE ORDER OF THE CIT(A)-V, SU RAT DATED 30.03.2010. THESE ARE BEING DISPOSED OF WITH THIS CONSOLIDATED ORDER. ITA NO.2003/AHD/2010 WITH CO NO.166/AHD/2010 -2 ITA NO.2003/AHD/2010 (REVENUES APPEAL) 2. THE GROUNDS OF THE APPEAL OF THE REVENUE ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD.CIT(A) HAS ERRED IN RESTRICTING THE ADDI TION OF RS.77,11,874/- ON ACCOUNT OF ESTIMATION OF GROSS PR OFIT TO RS.23,30,660/- EVEN THOUGH THE ACTION OF THE AO IN REJECTING THE BOOKS OF ACCOUNTS U/S.145(3) OF THE ACT HAS BEEN CO NFIRMED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ADDITION MADE ON ACCOUNT OF ESTIMATION OF GROSS PROFIT, AS THE AO HA S ENUMERATED VARIOUS DEFECTS IN THE BOOKS OF ACCOUNTS OF THE ASS ESSEE AND THEREAFTER REJECTED THE BOOKS OF ACCOUNTS U/S.145(3 ) OF THE ACT AND THE ACTION OF THE AO IN REJECTION OF BOOK RESUL TS HAS UPHELD BY THE LD.CIT(A). 3. THE LEARNED DR HAS RELIED ON THE ORDER OF THE AO . HE SUBMITTED THAT THE ASSESSEE HAS NOT MAINTAINED QUAL ITY-WISE DETAILS OF THE STOCK, AND THEREFORE THE ACCOUNT BOOKS OF THE A SSESSEE WERE RIGHTLY REJECTED UNDER SECTION 145(3) OF THE ACT. HE SUBMI TTED THAT THE ASSESSEE HAS DECLARED GP RATE OF 8.42% IN THIS YEAR , AS AGAINST 18.71% OF THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, AND T HEREFORE THE AO HAS RIGHTLY APPLIED THE GP RATE OF 13.65% TO THE TU RNOVER OF THE ASSESSEE. HE SUBMITTED THAT THERE IS NO JUSTIFICAT ION FOR APPLICATION OF GP RATE OF 10% BY THE CIT(A). 4. THE LEARNED COUNSEL FOR THE ASSESSEE HAS OPPOSED THE SUBMISSIONS OF THE LEARNED DR. HE SUBMITTED THAT T HE ASSESSEE HAS MAINTAINED QUANTITY-WISE DETAILS OF THE STOCK AND T O MAINTAIN THE QUALITY-WISE DETAILS OF THE STOCK IS NOT POSSIBLE I N THIS LINE OF TRADE. HE SUBMITTED THAT THE GP RATE APPLIED AT 10% BY THE CIT(A) WAS ON ITA NO.2003/AHD/2010 WITH CO NO.166/AHD/2010 -3 THE HIGHER SIDE AND IN FACT NO TRADING ADDITION WAS CALLED FOR, AND ACCOUNT BOOKS OF THE ASSESSEE COULD NOT BE REJECTED . 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 DUE TO DEFECT I N THE ACCOUNT BOOKS OF THE ASSESSEE, THE SAME WERE REJECTED UNDER SECTION 145(3) OF THE ACT AND ON THIS ISSUE NO INTERFERENCE IS CALLED FOR. HOWEVER, WITH REGARD TO THE APPLICATION OF FLAT RATE OF GP AT 10% BY THE CIT(A), WE FIND THAT HE HAS PASSED A WELL REASONED SPEAKING OR DER ON THE ISSUE. THE CIT(A) HAS RECORDED THAT THE AO HAS NOT GIVEN A NY COGENT REASON FOR ENHANCING THE GP. HOWEVER, CONSIDERING THE TOT ALITY OF THE FACTS OF THE CASE, THE CIT(A) HAS RECORDED THAT ABOUT 10 % FALL IN GP DURING THE YEAR APPEARS VERY HIGH, AND HAS ACCORDINGLY APP LIED A GP RATE OF 10% AS AGAINST 8.42% SHOWN BY THE ASSESSEE. WE FIN D THAT THE ESTIMATE MADE BY THE CIT(A) COULD NOT BE SAID TO BE UNREASONABLE OR UNJUSTIFIED. THERE BEING NO MISTAKE IN THE ORDER O F THE CIT(A) ON THIS ISSUE, WE CONFIRM THE SAME AND THE GP ADDITION SUST AINED BY THE CIT(A) AT RS.23,30,660/- IS CONFIRMED AND THE GROU NDS OF THE APPEAL OF THE REVENUE ARE DISMISSED. CO NO.166/AHD/2010 (ASSESSEES CO) 6. THE ONLY GROUND OF THE ASSESSEES CO IS AS UNDER : 1. THE LD.CIT(A) GROSSLY ERRED IN CONFIRMING THE A DDITION OF RS.23,30,660/- ON ACCOUNT OF FALL IN GP OUT OF HUGE ADDITION OF RS.77,11,874/- AS PER PARA 7 OF THE CIT(A) ORDER. 7. WE HAVE HEARD THE PARTIES. FOR THE REASONS RECOR DED IN THE FOREGOING PARAS OF THIS ORDER, WHILE DISPOSING OF T HE REVENUES ITA NO.2003/AHD/2010 WITH CO NO.166/AHD/2010 -4 APPEAL, WE HOLD THAT THERE IS NO MERIT IN THE GROUN D OF THE CO OF THE ASSESSEE AND GP RATE OF 10% WAS RIGHTLY APPLIED BY THE CIT(A), AND ACCORDINGLY, THE ORDER OF THE CIT(A) IS CONFIRMED A ND THE GROUND OF THE CO IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CO OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %& %& %& %& / TEJ RAM MEENA) &' ( &' ( &' ( &' ( /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