DCIT, New Delhi V. M/s Shades of India Crafts Pvt. Ltd., Delhi

ITA 2337/DEL/2013

• Counselvise Citation: 233720114 RSA 2013
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2007-2008
• Appeal Filed On: 22-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDDI SRIVASTAVA
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO. 2337/DEL/2013 ASSESSMENT YEAR: 2007-08 DY.CIT VS. M/S SHADES OF INDIA CRAFTS, CIRCLE- 8 (1), PVT. LTD., K-23, 1 ST FLOOR, ROOM NO. 163, HAUZ KHAS ENCLAVE, C.R. BUILDING NEW DELHI. NEW DELHI- PAN: AAACS0089C (APPELLANT) (RESPONDENT) REVENUE BY : SMT. NIDDI SRIVASTAVA, SR. DR. ASSESSEE BY : SHRI. K. SAMPATH, ADV. ORDER PER RAJPAL YADAV JM. THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF LD. CIT (A) DATED 31 ST JANUARY 2013, PASSED FOR AY 2007-08. 2. THE GRIEVANCE OF REVENUE IS THAT LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.16,55,655/-. THE BRIEF FACTS OF THE CASE ARE THAT, ASSESSEE IS IN THE BUSINESS OF MANUFACTURING AND EXPORT OF HANDICR AFTS ETC. IT HAS FILED ITS 2 RETURN OF INCOME ON 31.10.2007, DECLARING AN INCOME OF RS.45,33,193/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSE SSMENT AND A NOTICE U/S 143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE. THE LD. AO HAS OBSERVED THAT IN THE IMMEDIATELY PRECEDING YEAR ASSESSEE HAS SHOWN GP AT 61.39% WHEREAS IN THIS YEAR THE GP DECLARED BY THE ASSESSE E IS AT 60.10% OF THE SALES. THERE IS A FALL IN GP BY 1.29% IN COMPARISON TO IMMEDIATELY PRECEDING YEAR. THE LD. AO THEREAFTER OBSERVED THAT ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNTS IN PHYSICAL FORM FOR VERIFICATION ; HENCE HE MADE AN ADDITION BY MAKING A DISALLOWANCE OUT OF EXPENSES I N SUCH A WAY THAT GP COULD BE ACHIEVED AT SAME LEVEL AS IT WAS IN THE LA ST YEAR. IN THIS WAY, LD. AO HAS MADE AN ADDITION OF RS.16,55,655/-. 3. ON APPEAL IT WAS CONTENDED BY THE ASSESSEE THAT IT HAS BEEN MAINTAINING ITS ACCOUNTS ON COMPUTER, AND COMPUTERI ZE ACCOUNTS WERE PRODUCED BEFORE THE AO. THE ASSESSEE HAS SUBMITTED ALL SUPPORTING EVIDENCE FROM TIME TO TIME. ON 23 RD SEPTEMBER 2009, ASSESSEE WROTE A LETTER TO THE AO THAT IT HAS SUBMITTED ALL REQUISITE DETAILS, IF ANY OTHER INFORMATION IS REQUIRED, PLEASE ASSESSEE BE INTIMATED. THE LD. AO DID NOT INTIMATE ANYTHING TO THE ASSESSEE AND HEARING WAS ADJOURNED TO 28 TH SEPTEMBER 2009. HE DID NOT CALL FOR ANY OTHER INFORMATION ON THIS DATE ALS O, THE ASSESSEE REMAINED UNDER THE IMPRESSION THAT AO DID NOT REQUIRE ANYTHI NG. THE LD. AO HAS 3 PASSED THE ASSESSMENT ORDER ON 11 TH DECEMBER 2009. ACCORDING TO THE ASSESSEE THERE WAS A TIME GAP OF MORE THAN 10 WEEKS IN BETWEEN 28.09.2009 TO 11.12.2009. HAD THE AO ANY DOUBT? HE COULD HAVE INTIMATED THE ASSESSEE. THE LD. CIT (A) REMITTED THE SUBMISSIONS OF THE ASSESSEE TO THE AO AND CALLED FOR A REMAND REPORT. LD. AO HAS OBSERVED THAT HE HAD ISSUED A NOTICE TO THE ASSESSEE FOR APPEARANCE FOR 25.11.201 1 BUT NO ONE HAS APPEARED NOR PRODUCED ANY PAPER BOOK. THE ASSESSEE SUBMITTED TO THE CIT (A) THAT IT HAS ALREADY INTIMATED THE AO VIDE LETTER DATED 7.7. 2010 THAT IT HAD CHANGED ITS ADDRESS. LD. AO DID NOT SEND NOTICE ON THE NEW ADDRESS. THE LD. CIT (A) AGAIN CALLED FOR A REMAND REPORT FROM THE AO AND AL SO POINTED OUT THAT SHE HAS GONE THROUGH THE BOOKS OF ACCOUNTS OF THE ASSES SEE, ON TEST CHECK BASIS, THE BOOKS ARE MAINTAINED. THE LD. AO DID NOT SUBMIT ANY REPORT. THE LD. FIRST APPELLATE AUTHORITY HAS GIVEN THREE OPPORTUNITIES T O THE AO FOR COMMENTING ON THE BOOKS OF ACCOUNTS SUBMITTED BY THE ASSESSEE. FURTHER UNDER COMPELLING CIRCUMSTANCES LD. CIT (A) GONE THROUGH T HE RECORD CAREFULLY AND DELETED THE ADDITION. 4. THE LD. DR RELIED UPON THE ORDER OF THE AO WHERE AS LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF LD. CIT (A). 5. WITH THE ASSISTANCE OF LD. REPRESENTATIVE, WE HA VE GONE THROUGH THE RECORD CAREFULLY. WE ARE OF THE VIEW THAT THERE IS A SLIGHT FALL IN THE GP, LD. 4 AO COULD NOT MAKE OUT HIS CASE AS TO HOW HE COULD N OT DEDUCE THE TRUE INCOME FROM THE ACCOUNTS OF THE ASSESSEE. RATHER FR OM PERUSAL OF THE ASSESSMENT ORDER IT REVEALS THAT HE HAS NOT CONDUCT ED THE PROCEEDING IN A JUDICIOUS MANNER. IN AN IRRESPONSIBLE WAY, HE HAS O BSERVED THAT ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNTS. THIS OBSERVATION FOUND TO BE FACTUALLY INCORRECT BY THE LD. FIRST APPELLATE AUTHORITY. THE LD. CIT (A) GRANTED THREE OPPORTUNITIES TO THE AO FOR COMMENTING ON THE BOOKS . HE DID NOT CHOOSE TO COMMENT. UNDER SUCH CIRCUMSTANCES, WE ARE OF THE VI EW THAT CIT (A) HAS RECORDED A FINDING OF FACT THAT NO DEFECTS ARE AVAI LABLE IN THE BOOKS OF ACCOUNTS. UNLESS THE DEFECTS ARE POINTED OUT IN THE BOOKS OF ACCOUNTS WHICH, FORCED THE LD. AO TO BELIEVE THAT TRUE INCOME CANNO T BE DEDUCE FROM THE ACCOUNTS, HE CANNOT APPLY SECTION 145(3). THE LD. A O HAS ALSO NOT MENTIONED ANY COMPARABLE CASE WHICH GAVE A GROSS PROFIT MARGI N OR MORE THAN 60% OF THE SALES. A SLIGHT FALL IN GP CAN BE FOR MANY REAS ONS. 6. THUS ON DUE CONSIDERATION OF THE FACTS AND CIRCU MSTANCES OF THE RECORD, WE DO NOT FIND ANY MERIT IN THIS APPEAL, IT IS REJECTED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/10/2013. SD/- SD/- ( T. S. KAPOOR ) (RAJP AL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R 5 DATED: 31/10/2013 *AK VERMA* COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(APPEALS) 5.DR: ITAT ASSISTANT REGISTRAR