Techno Industries, Ahmedabad V. The Addl.CIT,Ragne-6, Ahmedabad

ITA 2319/AHD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9337 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-10-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 12-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Assessee Lawyers: P R SHAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD A BENCH BEFORE SHRI G.D. AGARWAL, VICE-PRESIDENT (AZ) AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER DATE OF HEARING:15.10.10 DRAFTED: 18.10 & 8.11.1 0 ITA NO.2319/AHD/2010 [ASSTT.YEAR 2007-08] TECHNO INDUSTRIES (OSD) -VS ADDL. COMMISSIONER OF INCOME PLOT NO.613, PHASE IV, GIDC TAX RANGE-6, AHMEDABAD ESTAGE, VATVA, AHMEDABAD PAN NO.AACFT1503D (APPELLANT) (RESPONDENT) REVENUE BY : SHRI R.K. DHANESTA, DR ASSESSEE BY: SHRI P.R. SHA H, AR O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDE R OF COMMISSIONER OF INCOME-TAX (APPEALS)-XVI, AHMEDABAD IN APPEAL NO.CI T(A)XVI/ADDL. CIT. R.6 /855/2009-10 DATED 20-04-2010. THE ASSESSMENT WAS F RAMED BY ADDL. CIT, RANGE- 6, AHMEDABAD U/S.143(3) OF THE INCOME-TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 15-10-2009 FOR ASSESSMEN T YEAR 2007-08. 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE AT RS.60,000/- FOR FALL IN GROSS PROFIT AT 1.25%. FOR THIS, ASSESSEE HAS RAISED THE FOLLOWING GROUND :- THE LD. CIT (A)-XVI, AHMEDABAD HAS ERRED IN CONFIR MING THE DISALLOWANCE TO RS.60,000/- FOR FALL IN G.P. RATIO BY 1.25% ONLY. T HE DISALLOWANCE OF RS.60,000/- BE ALSO DELETED. ITA NO.2319/AHD/2010 A.Y. 2007-08 TECHNO INDS. V. ACIT RNG-6, ABD PAGE 2 3. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS REJECTE D THE BOOK RESULTS ON ACCOUNT OF NON MAINTENANCE OF STOCK REGISTER, NON MAINTENAN CE OF DAY-TO-DAY CONSUMPTION REGISTER, NON MAINTENANCE OF PRODUCTION REGISTER, S CRAP GENERATION NOT VERIFIABLE AND EXPENSES NOT PROPERLY SUPPORTED BY THE BILLS AND VO UCHERS. ACCORDINGLY, BOOK RESULTS WERE REJECTED AND ADDITION ON ACCOUNT OF LOW G.P. W AS MADE ON LUMP-SUM BASIS AT RS.1,50,000/-. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE CIT (A) RESTRICTED THE ADDITION AT RS.60,000/- BY GIVING FO LLOWING FINDINGS IN PARA-4 OF HIS APPELLATE ORDER:- 4. I HAVE GONE THROUGH THE SUBMISSIONS OF THE APPE LLANT ON THIS POINT. THE GP HAS REDUCED FROM 18.81% IN A.Y. 2006-07 TO 17.56 % IN A.Y. 2007-08. THE REASONS FOR FALL IN GP WERE STATED TO BE AS ABOVE. IN THE ASSESSMENT ORDER ALSO THE AO MENTIONED THAT THE COST OF RAW MATERIAL (MOTOR) INCREASED FROM RS.4928/- TO RS.6080/- IN A.Y. 2007-08. SIMILARLY T HAT OF CONTRACTOR INCREASED FROM 463 TO 533 IN A.Y. 2007-08. TO SOME EXTENT THE CONTENTION OF THE APPELLANT IS FOUND TO BE CORRECT. HOWEVER, THERE AR E FEW OTHER REASONS STATED BY THE AO FOR MAKING THE DISALLOWANCE. IN MY OPINIO N, IT WOULD BE FAIR TO RESTRICT SUCH DISALLOWANCE TO RS.60,000/- AS AGAINS T RS.1,50,000/-. AGGRIEVED, NOW ASSESSEE CAME IN SECOND APPEAL BEFOR E US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE RECORDS AND ARGUMENTS OF BOTH THE SIDES THAT THE ASSESSEE HAS GIVEN FOLLOWING REASONS FOR VARIATION IN GROSS PROFIT BY ONLY 1.25%. 1) THERE WAS AN INCREASE IN PURCHASE PRICE OF TWO I MPORTANT MATERIALS I.E. ELECTRIC MOTOR AND CONTRACTORS. 2) THE SALES HAVE INCREASED BY 40.53% FROM THE SALE S OF PREVIOUS YEAR. THE ASSESSEE MANUFACTURES CRANES, WIRE ROPE HOIST I .E. TAILOR MADE MACHINERY. IT IS A FACT THAT IN TAILOR MADE MACHINERIES, THERE CANNOT BE CONSISTENCY IN G.P. AS COMPARED TO THE GP IN STANDARD PRODUCTS MANUFACTURE D. THE ASSESSEE DEALS IN VARIOUS TAILOR MADE PRODUCTS AND THEY ARE SUBJECT T O EXCISE DUTY. THE ASSESSEE FILES ER1 FORMS EVERY MONTH. THE ACCOUNTS OF THE ASSESS EE ARE SUBJECT TO GOVERNMENT AUDIT AS WELL AS AUDIT U/S. 44AB OF THE I. T. ACT. THE ASSESSING OFFICER HAS MADE THE ADDITION MAINLY STATING THAT STOCK REGISTER OF RAW MATERIALS, NON PRODUCTION OF ITA NO.2319/AHD/2010 A.Y. 2007-08 TECHNO INDS. V. ACIT RNG-6, ABD PAGE 3 PRODUCTION/CONSUMPTION REGISTERS ETC. IN SHORT, THE AO HAS STATED THAT DAY-TO-DAY STOCK REGISTER IS NOT MAINTAINED. 5. WE FIND THAT IT IS AN ADMITTED FACT THAT STOCK R EGISTER, BILLS AND VOUCHERS ARE NOT MAINTAINED BY THE ASSESSEE AND REJECTION OF BOO K RESULTS UPHELD BY THE CIT(A) HAS NOT BEEN CHALLENGED. IN THAT EVENTUALITY, WE A RE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY RESTRICTED THE DISALLOWANCE ON ACCOUNT OF G P AT RS.60,000/- AS AGAINST THE ADDITION MADE BY THE AO AT RS.1,50,000/-. WE CONFIR M THE ORDER OF THE CIT(A) ON THIS ISSUE AND DISMISS THE APPEAL OF THE ASSESSEE. 6. IN THE RESULT, ASSESSEES IS DISMISSED. ORDER PRONOUNCED ON THIS DAY OF 19 TH NOV,2010 SD/- SD/- ( G.D.AGARWAL ) ( MAHAVIR SINGH ) (VICE PRESIDENT) (JUDICIAL MEMBER) AHMEDABAD, DATED : 19/11/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-XVI, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD