M/s. R.K. Enterprise, Ahmedabad V. The Jt.CIT.,Range-2, Ahmedabad

ITA 2144/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6456 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 31-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 06-07-2009
• Result in Favour of: Set Aside
• Court: TRIBUNAL
• Department Lawyers: A K PATEL
• Assessee Lawyers: A R SHAH
• Keywords: Gross profit estimation; Principle of natural justice
• Section: 145; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' BEFORE SHRI T K SHARMA,JM & SHRI A N PAHUJA,AM ITA NO.2144/AHD/2009 (ASSESSMENT YEAR:-2006-07) M/S R K ENTERPRISE, 28, 1 ST FLOOR, SIDDHARTH BHAVAN, RELIEF ROAD, AHMEDABAD V/S JT. COMMISSIONER OF INCOME-TAX, RANGE-2, AHMEDABAD PAN: AABFR 0796 H [APPELLANT] [RESPONDENT] ITA NO.2239/AHD/2009 (ASSESSMENT YEAR:-2006-07) INCOME-TAX OFFICER, WARD- 2(2), 2 ND FLOOR,INSURANCE BUILDING,ASHRAM ROAD,AHMEDABAD V/S M/S R K ENTERPRISE, 28, 1 ST FLOOR, SIDDHARTH BHAVAN, RELIEF ROAD, AHMEDABAD PAN: [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI ASHOK DHARIWAL & SHRI A R SHAH, ARS REVENUE BY:- SHRI A K PATEL, DR O R D E R A N PAHUJA: THESE CROSS APPEALS AGAINST AN ORDER DATED 12-05- 2009 OF THE LD. CIT(APPEALS)-VII, AHMEDABAD, FOR TH E ASSESSMENT YEAR 2006-07, RAISES THE FOLLOWING GROUNDS:- ITA NO.2144/AHD/2009[ASSESSEE] 1] THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-VII, AHMEDABAD, HAS ERRED IN LAW AND FACTS OF CASE BY CONFIRMI NG LUMP SUM ADDITION OF RS.1,00,000/- ON ACCOUNT OF LOW GP WIT HOUT ANY BASIS OR EVIDENCE ON RECORD. THE APPELLANT IS MAINTAINING COMPLETE BOOKS OF ACCOUNTS, BOOKS ARE AUDITED AND LEARNED AO HAS NO T MENTIONED DEFECTS IN THE BOOKS OF ACCOUNTS. [2] IT IS PRAYED THAT THE GP ADDITION OF RS.1,00,000/- CONFIRMED BY LEARNED COMMISSIONER (APPEALS)-VII, AHMEDABAD BE DELET ED. 2 ITA NOS.2144 & 2239/AHD/2009 2 [3] THE APPELLANT CRAVES LEAVE TO ADD, ALTER AND / OR M ODIFY THE GROUNDS OF APPEAL. ITA NO.2239/AHD/2009[REVENUE] [1] THE CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.16,20,270/- MADE ON ACCOUNT OF FALL IN GROSS PROFIT. [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO SINCE THE ASSESSEE HAS FAILED TO DISCLOSE HIS TRUE INCOME. 2 ADVERTING TO THE GROUND NO.1 IN THE APPEAL OF TH E ASSESSEE AND THE REVENUE, FACTS, IN BRIEF, AS PER RELEVANT O RDERS ARE THAT RETURN DECLARING INCOME OF RS.7,49,530/- FILED ON 1 2-10-2006 BY THE ASSESSEE-FIRM, TRADING IN GRAIN & CLOTH BESIDES CO MMISSION AGENT, AFTER BEING PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT], WAS SELECTE D FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE ACT ON 1 1-09-2007.DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT THE ASSESSEE HAD SHOWN GROSS PR OFIT[G.P] @ 8.31% ON THE TOTAL TURNOVER OF RS.147.08 LACS IN TH E YEAR UNDER CONSIDERATION AS AGAINST GP @ 19.09 % ON THE TURNOV ER OF RS.62.11 LACS IN THE PRECEDING YEAR. THE GP IN THE PRECEDIN G YEARS WERE AS UNDER:- PARTICULARS AY 2006-07 AY 2005-06 AY 2004-05 SALES/TURNOVER RS.147.08 RS.62.11 RS.10.00 G.P. - % 8.31 % 19.09 % 31.43 2.1. IN RESPONSE TO A SHOWCAUSE NOTICE ISSUED BY T HE AO, SEEKING REASONS FOR FALL IN GP RATE , THE ASSESSEE REPLIED THAT THEIR BUSINESS WAS SEASONAL AND DEPENDED UPON MONSOONS WHILE TURNO VER INCREASED IN THE YEAR UNDER CONSIDERATION. SINCE TH E COMMODITIES WERE TRADED IN MCX, THE RATE FLUCTUATIONS BECAME T OO MUCH VOLATILE HAVING ADVERSE IMPACT ON GROSS PROFIT RATIO WHILE T HE MARGINS WERE 3 ITA NOS.2144 & 2239/AHD/2009 3 THIN BECAUSE OF COMPETITIVE MARKET. THE ASSESSEE AL SO SUBMITTED THE FOLLOWING CHART FOR DECLINE IN GROSS PROFIT IN GWAR REFIND DAL SR. NO. PARTICULARS A.Y. 2005- 06 (31/03/05) A.Y. 2006- 07 (31/03/06) TOTAL 1. AVERAGE RATE OF PURCHASE DURING THE YEAR 37.23 41.60 2. AVERAGE RATE OF SALES DURING THE YEAR 45.94 45.51 3. CONTRIBUTION TO GROSS PROFIT 8.71 3.91 (-)4.80 4. AVERAGE LOSS PER KGS IN CONTRIBUTION IN G.P: PER KG (-)4.80 5. SALES QUANTITY DURING THE A. Y. 2006-07 319534.80 6. TOTAL LOSS IN GROSS PROFIT DURING THE YEAR (IN AMOUNT) (-) 1533767.04 2.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NO TICES U/S. 133(6) OF THE ACT WERE ISSUED TO M/S. LAXMI VISHNU TRADERS; SUNITA MINECHEM INDUSTRIES; MANHARLAL & CO.; MAHESH & CO.; BHARATKUMAR; SMT. KANCHAN JAIN; M/S. MUKTI TRANSFOR MERS LTD.; SUDHIR STEEL CORPORATION; M/S. AMBICA PULSE MILLS; M/S. SATYAM ENTERPRISE, SEEKING THEIR PAN, DESIGNATION OF THE A O, A/C. COPIES, MODE OF PAYMENTS, BANK STATEMENTS AND COPY OF THEIR RETURNS FOR THE AY 2006-07 ALONGWITH ALL THE ENCLOSURES. IN REPONSE , ONLY SUNITA MINECHEM INDUSTRIES FURNISHED AN INCOMPLETE REPLY BY MENTIONING JUST THEIR PAN AND A COPY OF THE LEDGER ACCOUNT. N ONE ELSE 4 ITA NOS.2144 & 2239/AHD/2009 4 SUBMITTED ANY REPLY NOR COPY OF THE BANK STATEMENT, MODE OF PAYMENTS, COPY OF RETURN. MOREOVER, THE NOTICES WER E RETURNED IN THE CASE OF SMT. KANCHAN JAIN AND M/S. LAXMI VISHNU TRADERS, MENTIONING THAT NO ONE RESIDED ON THESE ADDRESSES B Y THESE NAMES. IN THESE CIRCUMSTANCES, THE ASSESSEE WAS SHOWCAUSED AS TO WHY THE BOOKS OF ACCOUNTS BE NOT REJECTED U/S. 145(3) O F THE ACT AND AVERAGE GP FOR THE PRECEDING THREE YEARS @ 20.01% S HOULD BE ADOPTED. IN RESPONSE, THE ASSESSEE REPLIED THAT THE Y MAINTAINED REGULAR BOOKS OF ACCOUNTS AS WELL AS DAY TO DAY QUANTITAT IVE RECORDS AND STOCK RECORDS WHILE NO DEFECTS HAD BEEN POINTED OUT BY DEPART MENT .THE GROSS PROFIT DECLINED BECAUSE OF INCREASE IN AVERAGE RATE OF PURCHASE BY RS.4.37 PER/KG, THOUGH THERE WAS NO INCREASE IN SALE PRICE AND IN FACT T HERE WAS REDUCTION IN AVERAGE SALE PRICE BY RS.0.43 PER KG . WHILE SUBMITTING COPIES OF SPEED POST RECEIPTS OF REPLY OF DINESHKUMAR BHARATKUMAR; MADANL AL & CO.; AMBICA PULSE MILLS AND MAHESH & CO. ALONG WITH THEIR PAN , COPY OF I. T RETURN, DESIGNATION OF AO, COPY OF A/C IN THEIR BOOKS AND BANK STATEMENT, THE ASSESSEE POINTED OUT THAT FOR THE REMAINING PARTIES, REPLY WOULD ALSO BE MADE AVAILABLE . IN CASE OF SMT. KANCHAN JAIN & LAXMI VISHNU TRADERS, IT WAS STATED THAT THE ADDRESS OF BOTH PARTIES AVAILABLE IN THE PARTICULAR YEAR WERE MENTI ONED IN THEIR EARLIER REPLY. HOWEVER, THE AO DID NOT ACCEPT THESE SUBMISSIONS ON THE GR OUND THAT THE ASSESSEE DID NOT SUBMIT ANY DOCUMENTARY EVIDENCE OR ANY OTHER COMPARABLE EVIDENCE TO SHOW THAT THERE HAS BEEN RI SE IN AVERAGE PURCHASE PRICE AND DECLINE IN AVERAGE SALE PRICE A S COMPARED TO LAST YEAR, THE ONUS BEING ON THE ASSESSEE TO ESTABL ISH THAT THE AVERAGE RATE OF PURCHASE INCREASED FROM RS.37.23 L AST YEAR TO 41.60 THIS YEAR AND THE AVERAGE RATE OF SALES DECL INED FROM RS.45.94 TO RS.45.51 THIS YEAR. APART FROM THE FACT THAT M/S. LAXMI VISHNU TRADERS, SMT. KANCHAN JAIN ,M/S. MUKTI TRANSFORMERS LTD. AND M/S. SATYAM ENTERPRISE DID NOT RESPOND TO NOTICE ISSUE DU/S 13 3(6) OF THE ACT , THE ASSESSEE DID NOT PRODUCE BILL NOS. 284 & 285 DATED 03- 08-05 FOR AN AMOUNT OF RS. 3,62,500/- AND RS. 5,43,048/- RESPECTIVELY AS ALSO BIL L NO. 297 DATED 8-08- 05 FOR AN AMOUNT OF RS. 7,32,500/- ON ACCOUNT OF PURCHASES FROM M/S. MANOHARLAL & CO NOR THE LEDGER ACCOUNT AND THE STATE MENTS OF THE SAID PARTY 5 ITA NOS.2144 & 2239/AHD/2009 5 TALLIED WITH THE BOOKS OF THE ASSESSE AND NOR EVEN THE AMOUNT OF ADAT PURCHASES AND SALES WERE REFLECTED IN THE BOOKS OF THE ASSESSEE WHILE REPLY TO THE NOTICE U/S. 133(6) FROM M/S. MANOHARLAL & CO., REVEALED THAT THE ASSESSEE HAD ,IN FACT, MADE PURCHASES FROM M/S. MANOHARLAL & CO AND THESE WE RE NOT ON ADAT BASIS. ACCORDING TO THE AO, THE ASSESSEE DID NOT MAKE ANY ATTEMP T TO RECONCILE ITS ACCOUNTS WITH THE BOOKS OF M/S. MANOHARLAL & CO. NOR IT WAS MENTIONED ON THE PURCHASE BILLS OF MANOHARLAL & CO. THAT THESE WERE ON ADAT ACCOUNT. 2.3 IN VIEW OF THE AFORESAID DISCUSSION, THE AO OBSER VED THAT THE ASSESSEE HAD NOT BEEN ABLE TO TALLY THE STOCK DURING THE ASSESSMENT PR OCEEDINGS IN THE ABSENCE OF VARIOUS BILLS NOR HAD BEEN ABLE TO PROVE TH E EXISTENCE OF THE PARTIES FROM WHOM NO REPLIES HAD BEEN RECEIVED. IN NUTSHELL , THE AO SUMMARIZED THE FOLLOWING DISCREPANCIES IN PARA 6.3 OF THE ASSESSMENT ORD ER:- (I) THE ASSESSEE FAILED TO MAKE A QUANTITATIVE TALLY OF ADAT PURCHASES AND SALES. (II) THE ADAT PURCHASES AND SALES HAVE NOT BEEN ENTERE D INTO THE ASSESSEE'S BOOKS OF ACCOUNTS, EVEN THOUGH THE ASSESSEE HAS PAID DIRECTLY TO THE PURCHASER. THE ASSESSEE HAS RECEIVED ONLY SM ALL COMMISSION AMOUNT AND THEREBY NOT SHOWING ITS TRUE PROFI TS. IN FACT, THE ADAT TRANSACTIONS ARE FULL FLEDGED PURCHASE AND SALE S TRANSACTIONS. (III) THE REPLIES FROM NUMBER OF PARTIES HAVE NOT BEE N RECEIVED UNDER SECTION 133(6) OF THE IT ACT, WHICH COULD PROVE THAT SALE S WERE GENUINE. THE CORRECT SALE RATES COULD NOT BE PROVED IN T HE ABSENCE OF REPLIES OF THE ABOVE PARTIES. (IV) THE BOOKS OF ACCOUNTS PRODUCED BY THE ASSESSEE DO NOT A PPEAR GO BE GENUINE, AS THEY HAVE BEEN WRITTEN IN, THE SAME HA NDWRITING AND INK AND BY THE SAME PERSONS AND ON THE SAME DAY. (V) AS PER THE AUDIT REPORT, THE STOCK REGISTER IS NOT MAI NTAINED BY THE R ASSESSEE AS PER COLUMN 9(B). IT ONLY MAINTAINS CASH BOOK, BA NK BOOK, LEDGER, SALES & PURCHASE REGISTER AND WHICH HAVE BEE N EXAMINED AND AUDITED, IF THE STOCK REGISTER HAS NOT BEEN PRODUCED BEFORE THE AUDITOR THEN HOW IT HAS BEEN PRODUCED BEFO RE THE A.O. THE GENUINENESS OF THE STOCK REGISTER IS DOUBTFUL FOR THE PURPOSE OF QUANTITATIVE TALLY. 6 ITA NOS.2144 & 2239/AHD/2009 6 2.4 ACCORDINGLY, WHILE RELYING UPON THE DECISIONS IN DH ONDIRAM DHALICHAND VS CIT (81 ITR 609) (BOM) ;AMIYAKUMAR ROY & BROTHERS VS C IT (206 ITR 306) (CAL); AUGUSTIN & CO. VS. STATE OF KERALA; AND VRAJLAL MANI LAL & CO. VS. CIT (92 ITR 287) (M.P.) THE AO REJECTED THE BOOK RESULTS, INVOKING THE PROVISIONS OF SEC.145 OF THE ACT AND ADDED AN AMOUNT OF RS. 17,20,270/- AS COMPUTED IN PARA 7 OF THE ASSESSMENT ORDER: 3. ON APPEAL, THE LEARNED CIT(A) ADJUDICATED THE IS SUE AS UNDER:- THE SUBMISSIONS MADE BY THE A. R. OF THE APPELLANT HAVE B EEN PERUSED. THE DECISIONS, REFERRED AS ABOVE, WHICH ARE RELIED UPON BY THE A. R. OF THE APPELLANT AND THE OBSERVATIONS OF THE ASSESSING OFFICER I N THE ASSESSMENT ORDER HAVE ALSO BEEN EXAMINED. 2.2.1 IT IS SEEN THAT THE BOOKS OF ACCOUNTS OF THE APPEL LANT ARE AUDITED BY THE TAX AUDITORS AS PER THE PROVISIONS OF SECTION 44AB OF THE I. T. ACT, 1961. THE AUDITORS HAVE NOT GIVEN ANY ADVERSE COMMENTS WITH REGARD TO THE BOOKS OF ACCOUNTS MAINTAINED BY THE APPELLANT. HOWEVER , THE GP SHOWN FOR AY 2004-05 IS AT 31.43%, FOR THE A. Y. 2005-06 AT 19.89% AND FOR THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION IS AT ONLY 8.31%. THE REASONS CLAIMED BY THE APPELLANT CANNOT BE JUSTIFIED, FOR THE LOW G. P. SINCE CERTAIN CHARACTERS AND NATURE OF BUSINESS WERE PREVAILI NG IN THE PREVIOUS YEARS ALSO. THE APPELLANT IS HAVING THE SIMILAR F ACTS AND CIRCUMSTANCES AND THE NATURE OF BUSINESS FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THEREFORE, I AM OF THE VIEW THAT THE GP ADMITTED IS AT LOW RATE AND THEREFORE SOME ADDITION ARE VERY MUCH WARRAN TED. 2.2.2. AS IT COULD BE SEEN FROM THE APPELLANT'S EXPLANAT ION WHICH THE APPELLANT HAS MAINTAINED REGULAR BOOKS OF ACCOUNTS WHICH A RE SUPPORTED BY PURCHASES AND SALES BILLS AND OTHER VOUCHERS, IT CANNOT B E SAID THAT THE BOOKS OF ACCOUNTS ARE DEFECTIVE. FURTHER, THE AO HAS NOT P OINTED OUT ANY DEFECTS IN THE BOOKS EXCEPT IT IS POINTED OUT THAT THERE IS A LOW G. P. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. 2.2.3. HENCE, TAKING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT AN ADDITION OF RS.1 LAKH TOWARDS LOW G. P. COULD BE REASONABLE. ACCORDINGLY THE AO IS DIRECTED TO DELETE THE BALANCE ADDITION. THUS, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 4. THE ASSESSEE AS WELL AS REVENUE ARE NOW IN APPEA L BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LEARNED CIT(A ). THE LEARNED AR ON BEHALF OF THE ASSESSEE MERELY REITERATED THEIR S UBMISSIONS BEFORE 7 ITA NOS.2144 & 2239/AHD/2009 7 THE LEARNED CIT(A) WHILE THE LEARNED DR SUPPORTED T HE FINDINGS OF THE AO. TO A QUERY BY THE BENCH, THE LD. AR DID NOT REPLY AS TO WHETHER BILL NOS. 284 & 285 DATED 03-08-05 FOR AN AMOUNT OF RS. 3,62,500/- AND RS. 5,43,048/- RESPECTIVELY AS ALSO BILL NO. 297 DATED 8-08-05 FOR AN AMOUNT OF RS.7,32,500/- ON ACC OUNT OF PURCHASES FROM M/S. MANOHARLAL & CO MENTIONED IN TH E ASSESSMENT ORDER, WERE PRODUCED BEFORE THE LD. CIT(A) OR WHETH ER ANY RECONCILIATION OF ITS ACCOUNTS WITH THE BOOKS OF M/ S. MANOHARLAL & CO WAS PLACED BEFORE HIM ,ESPECIALLY IN VIEW OF SPECIF IC FINDINGS ON THIS ASPECT WERE RECORDED BY THE AO IN THE IMPUGNED ORD ER. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AS IS APPARENT FROM THE AFORESAID FINDING S IN THE IMPUGNED ORDER, THE LD. CIT(A) CONCLUDED THAT THE AO DID NOT POINT OUT ANY DEFECTS IN THE BOOKS EXCEPT THAT THERE WAS LOW G. P. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, WITHOUT RECOR DING ANY FINDINGS ON EACH OF THE DISCREPANCIES POINTED OUT B Y THE AO IN THE ASSESSMENT ORDER AND SUMMARIZED BY HIM IN PARA 6.3 OF THE ASSESSMENT ORDER. EVEN IN RESPONSE TO A SPECIFIC QU ERY BY THE BENCH, THE LD. AR DID NOT REPLY AS TO WHETHER BILL NOS. 284 & 285 DATED 03-08-05 FOR AN AMOUNT OF RS. 3,62,500/- AND RS. 5,43,048/- RESPECTIVELY AS ALSO BILL NO. 297 DATED 8-08-05 FOR AN AMOUNT OF RS.7,32,500/- ON ACCOUNT OF PURCHASES FROM M/S. MAN OHARLAL & CO MENTIONED IN THE ASSESSMENT ORDER, WERE PRODUCED BE FORE THE LD. CIT(A) OR WHETHER ANY RECONCILIATION OF ITS ACCOUNT S WITH THE BOOKS OF M/S. MANOHARLAL & CO WAS PLACED BEFORE HIM . THE LD. CIT(A) DID NOT RECORD HIS FINDINGS AS TO WHETHER PURCHASES F ROM M/S. MANOHARLAL & CO WERE ADAT PURCHASES , ESPECIALLY W HEN THE AO CONCLUDED THAT THE REPLY TO THE NOTICE U/S. 133(6) OF THE ACT FROM M/S. MANOHARLAL & CO., REVEALED THAT THE ASSESSEE HAD, IN FACT, MADE PURCHASES FROM M/S. MANOHARLAL & CO AND THESE WERE NOT ON ADAT BASIS. EVEN ON THE CONCLUSION OF THE AO THAT THE ASSESSEE DID NOT SUBMIT ANY DOCUMENTARY EVIDENCE TO SHOW THAT TH ERE HAS BEEN 8 ITA NOS.2144 & 2239/AHD/2009 8 RISE IN AVERAGE PURCHASE PRICE AND DECLINE IN AVER AGE SALE PRICE AS COMPARED TO LAST YEAR, THE LD. CIT(A) DID NOT RECOR D HIS SPECIFIC FINDINGS NOR THE LD. AR THREW ANY LIGHT ON THIS ASP ECT BEFORE US. THERE IS NO MATERIAL BEFORE US AS TO WHETHER OR NO T THE WRITTEN SUBMISSIONS OR THE DETAILS FILED BEFORE THE LD. C IT(A),WERE CONFRONTED TO THE AO. IN THESE CIRCUMSTANCES, ESPEC IALLY WHEN THE LD. CIT(A) HAVE NOT ASCERTAINED THE COMPLETE FACTS NOR RECORDED HIS SPECIFIC FINDINGS ON THE FACTS FOUND BY THE AND NOR EVEN PASSED A SPEAKING ORDER ON THE VARIOUS DISCREPANCIES POINTED OUT BY THE AO, WE ARE OF THE OPINION THAT ISSUES RAISED IN GROUND NO.1 IN THE APPEAL OF THE ASSESSEE AND THE REVENUE REQUIRE RECONSIDERA TION BY HIM. THE APPLICATION OF MIND TO THE MATERIAL FACTS AND T HE ARGUMENTS SHOULD MANIFEST ITSELF IN THE ORDER. SECTION 250(6) OF THE ACT MANDATES THAT THE ORDER OF THE CIT(A) WHILE DISPOSI NG OF THE APPEAL SHALL BE IN WRITING AND SHALL STATE THE POINTS FOR DETERMINATION, THE DECISION THEREON AND THE REASON FOR THE DECISION. AS IS APPARENT FROM THE IMPUGNED ORDER, IN OUR OPINION, THE ORDER PASSED BY THE LD. CIT(A) IS CRYPTIC AND GROSSLY VIOLATIVE OF ONE OF THE FACETS OF THE RULES OF NATURAL JUSTICE, NAMELY, THAT EVERY JUDICI AL/QUASI-JUDICIAL BODY/AUTHORITY MUST PASS REASONED ORDER, WHICH SHOU LD REFLECT APPLICATION OF MIND BY THE CONCERNED AUTHORITY TO T HE ISSUES/POINTS RAISED BEFORE IT. THE REQUIREMENT OF RECORDING OF R EASONS AND COMMUNICATION THEREOF HAS BEEN READ AS AN INTEGRAL PART OF THE CONCEPT OF FAIR PROCEDURE AND SAFEGUARD TO ENSURE O BSERVANCE OF THE RULE OF LAW. IT INTRODUCES CLARITY, CHECKS THE INTR ODUCTION OF EXTRANEOUS OR IRRELEVANT CONSIDERATIONS AND MINIMIZ ES ARBITRARINESS IN THE DECISION-MAKING PROCESS. WE MAY POINT OUT TH AT A DECISION DOES NOT MERELY MEAN THE CONCLUSION. IT EMBRACES WITHIN ITS FOLD THE REASONS FORMING BASIS FOR THE CONCLUSION.[MUKHT IAR SINGH VS. STATE OF PUNJAB,(1995)1SCC 760(SC)]. IN VIEW OF TH E FOREGOING, WE CONSIDER IT FAIR AND APPROPRIATE TO SET ASIDE THE O RDER OF THE LD. CIT(A) AND RESTORE THE ISSUES RAISED IN GROUND NO .1 IN THE APPEAL OF THE ASSESSEE AND THE REVENUE, TO HIS FILE FOR DECIDING THE MATTER 9 ITA NOS.2144 & 2239/AHD/2009 9 AFRESH IN ACCORDANCE WITH LAW IN THE LIGHT OF OUR A FORESAID OBSERVATIONS AND OF COURSE AFTER ALLOWING SUFFICIEN T OPPORTUNITY TO BOTH THE PARTIES. NEEDLESS TO SAY THAT WHILE REDECI DING THE APPEAL, THE LEARNED CIT(A) SHALL PASS A SPEAKING ORDER, KEE PING IN MIND, INTER ALIA, THE MANDATE OF PROVISIONS OF SEC. 250(6 ) OF THE ACT, BRINGING OUT CLEARLY AS TO WHETHER OR NOT INVOCAT ION OF PROVISIONS OF SEC. 145 OF THE ACT WAS WARRANTED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. WITH THESE OBSERVATIONS, GROUND NO. 1 I N THE APPEAL OF THE ASSESSEE AND THE REVENUE IS DISPOSED OF. 6. GROUND NO.2 IN THE APPEAL OF THE ASSESSEE AND THE R EVENUE, BEING MERE PRAYER NOR ANY SUBMISSIONS HAVING BEEN M ADE ON THESE GROUNDS, DO NOT REQUIRE ANY SEPARATE ADJUDICATION W HILE NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN T ERMS OF RESIDUARY GROUND NO.3 IN THE APPEAL OF THE ASSESSEE, ACCORDI NGLY, ALL THESE GROUNDS ARE DISMISSED. 7. IN THE RESULT, BOTH THESE APPEALS ARE ALLOWED, B UT FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT TODAY ON 10-06-2011 SD/- SD/- ( T K SHARMA ) JUDICIAL MEMBER A N PAHUJA ) ACCOUNTANT MEMBER DATED : 10-06-2011 COPY OF THE ORDER FORWARDED TO: 1. M/S R K ENTERPRISE, 28, 1 ST FLOOR, SIDDHARTH BHAVAN, RELIEF ROAD, AHMEDABAD 2. JT. COMMISSIONER OF INCOME-TAX, RANGE-2, AHMEDAB AD 3. CIT CONCERNED 4. CIT(A)-VII, AHMEDABAD 5. DR, ITAT, AHMEDABAD BENCH-A, AHMEDABAD 10 ITA NOS.2144 & 2239/AHD/2009 10 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD