The ITO, Ward-6(4), Ahmedabad V. M/s. Corro Care Industries, Ahmedabad

ITA 2047/AHD/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9444 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 10-11-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 29-05-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K DHANESA
• Assessee Lawyers: H S PATEL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.2047/AHD/2008 ASSESSMENT YEAR:2005-06 DATE OF HEARING:10..11.10 DRAFTED:10..11.10 INCOME TAX OFFICER, WARD-6(4), C.U. SHAH BUILDING, ASHRAM ROAD, AHMEDABAD V/S . M/S. CORRO CARE INDUSTRIES, 4718, GIDC ESTATGE, PHASE-IV, VATVA, AHMEDABAD PAN NO.AACFC1412E (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI R.K. DHANESA, DR RESPONDENT BY:- SHRI H.S. PATEL, AR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE O RDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-XI, AHMEDABAD IN APPEAL NO. CIT(A)-XI/365/07-08 DATED 24-03-2008. THE ASSESSMENT WAS FRAMED BY ITO, WARD-6(4), AHMEDABAD U/S143(3) OF THE INCOME TAX ACT, 1961 (HE REINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 04-10-2007 FOR ASSE SSMENT YEAR 2005-06. 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) IN RESTRICTING THE ADDITION OF GROSS PROFIT (GP FOR SHORT) AT RS.90,000/- AS AGAINST RS.6,74,608/- MADE BY ASSESSING OFFICER. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE BRIEF FACTS ARE THAT THE ASSESSING OFFICER AFTER REJECTING THE BOOKS OF ACCOUNT ESTIMATED THE GP BY APPLYING THE GP RATE OF ITA NO.2047/AHD/2008 A.Y.2005-06 ITO WD-6(4), ABD V. M/S. CORRO CARE INDS. PAGE 2 THE ASSESSEE AS IN IMMEDIATE PRECEDING YEAR. DURING THIS YEAR, THE ASSESSEE HAS DISCLOSED THE GP AT 23.37% AS AGAINST THE EARLI ER YEARS GP AT 26.98%. THE ASSESSING OFFICER APPLIED THE GP AT 26.98%. BEF ORE THE ASSESSING OFFICER AND BEFORE THE CIT(A), ASSESSEE CONTENDED THAT MAIN REASON FOR FALL IN GP IS INCREASE IN RAW MATERIALS COST AND INCREASE IN INWA RD FREIGHT CHARGES. ACCORDING TO ASSESSEE, IT HAS TO INCUR FREIGHT CHAR GE TO PROCURE THE BUSINESS. ACCORDING TO ASSESSEE, THE SALE FOR THE YEAR UNDER CONSIDERATION HAS REDUCED TO RS.1,88,19,671/- AS AGAINST THE LAST YEAR SALE A T RS.2,57,37,652/-. THE CIT(A) AFTER CONSIDERING THE ABOVE STATED REASONS R ESTRICTED THE GP ADDITION AT RS.90,000/-. AGGRIEVED, NOW REVENUE PREFERRED AP PEAL BEFORE TRIBUNAL. 4. WE FIND THAT THE CIT(A) HAS NOT GIVEN ANY BASIS FOR ESTIMATING AT RS.90,000/- FOR GP ADDITION AND IN OUR VIEW THE GP OF BOTH YEARS SHOULD BE AVERAGED OUT I.E. IN THE PRESENT YEAR I.E. 23.39% A ND IMMEDIATE PRECEDING YEAR IT IS 26.98% WHICH COMES TO 25.18%. GOING BY T HE REASON THAT THE ASSESSEES COST OF RAW MATERIAL HAS INCREASED COMPA RED TO EARLIER YEAR AND IN THE PRESENT YEAR THE ASSESSEES FREIGHT CHARGE HAS ALSO INCREASED. WE FEEL THAT A REASONABLE GP RATE SHOULD HAVE BEEN ESTIMATE D AT 25% AND ACCORDINGLY WE DIRECT THE ASSESSING OFFICER TO RE-C OMPUTE THE INCOME AFTER APPLYING GP RATE AT 25%. ACCORDINGLY, THIS ISSUE OF REVENUES APPEAL IS PARTLY ALLOWED. 5. COMING TO THE NEXT ISSUE, WHICH IS IN RESPECT OF DELETION OF ADDITION OF RS.57,062/- MADE BY ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE IN SALES. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH T HE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSI NG OFFICER HAS MADE THE ADDITION BEING DIFFERENCE OF RS.74,593/- BETWEEN TH E SALES AS PER BOOKS OF ACCOUNT AND SALES AS PER SALES TAX RETURN. WE FIND THAT ASSESSEE HAS FILED RECONCILIATION OF SALES AND AS PER HIM, THE FIRST T WO QUARTERS SALES AS PER THE BOOKS OF ACCOUNTS ARE LESS AT RS.12,828/- AND RS.74 ,209/- COMPARED TO THE SALES TAX RETURN AND FOR THE LAST QUARTERS SALES AS PER BOOKS OF ACCOUNTS WAS ITA NO.2047/AHD/2008 A.Y.2005-06 ITO WD-6(4), ABD V. M/S. CORRO CARE INDS. PAGE 3 MORE AT RS.12,084/- AND THE ASSESSEES SALE FOR THE TWO QUARTERS IS LESS ON ACCOUNT OF CANCELLATION OF BILLS. THE ASSESSEE HAS FILED COMPLETE RECONCILIATION BEFORE AO AS WELL AS CIT(A) AND FROM THE RECONCILIA TION, IT IS CLEAR THAT THE AO WITHOUT GOING INTO FACTS, MADE THE ADDITION OF UNDI SCLOSED SALES. HOWEVER, WE ARE IN AGREEMENT WITH THE RECONCILIATION SUBMITTED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES AND DUE TO OUR REASONS AS NARRATE D ABOVE WE ACCEPT THE RECONCILIATION. ACCORDINGLY, THIS ISSUE OF REVENUE S APPEAL IS DISMISSED. 6. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 10/11/2010 SD/- SD/- (N.S.SAINI) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED : 10/11/2010 *DKP COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-XI, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD