M/s. Welsuit Glass & Ceramics Pvt. Ltd., Baroda V. The ACIT.,Circle-4, Baroda

ITA 2359/AHD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76847 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2014
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 10-06-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 19-10-2012
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Assessee Lawyers: K C THAKER
• Keywords: Depreciation; Assessment record
• Section: 194C

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , , , , 0 00 0 0 00 0 ' ' ' ' , , , , #$ #$ #$ #$ # % # % # % # % BEFORE SHRI MUKUL SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NO. 2295/AHD/2012 ASSESSMENT YEAR 2009-10 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-4, BARODA. VS M/S. WELSUIT GLASS & CERAMICS PVT. LTD. BARODA. PAN: AAACW1720G &'/ APPELLANT )*&' / RESPONDENT ITA NO. 2359/AHD/2012 ASSESSMENT YEAR 2009-10 M/S. WELSUIT GLASS & CERAMICS PVT. LTD. BARODA. PAN: AAACW1720G VS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-4, BARODA. &'/ APPELLANT )*&' / RESPONDENT REVENUE BY : SHRI K.C. MATHEWS, SR. DR ASSESSEE(S) BY : SHRI K.C. THAKER, AR + , $/ // / DATE OF HEARING : 10/06/2014 -./ , $ / DATE OF PRONOUNCEMENT : 20/06/2014 #0 #0 #0 #0/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THESE ARE THE CROSS-APPEALS FILED BY THE REVENUE AN D THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 20.07.2012. ITA NOS. 2295 & 2359/AHD/2011 M/S WELSUIT GLASS & CERAMICS PVT. LTD., BARODA FOR A.Y. 2009-10 - 2 - 2. GROUND NO. 1 OF THE APPEAL OF THE REVENUE IS DI RECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S) DIRECTING THE ASSESSING OFFICER TO VERIFY AND ALLOW THE DISALLOWA NCE U/S. 40(A)(IA), IF THE EXPENDITURE IS PAID BY 31.03.2009 WITHOUT CONSIDERI NG THE FACT THAT TDS PROVISION U/S. 194C WERE NOT COMPLIED WITH BY THE A SSESSEE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS ING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED SHIPPING AND FORWARDING EXPENSES OF RS 40,86,749/- IN THE PROFIT AND LOSS ACCOUNT. THE ASSESSEE WAS REQUIRED TO FURNISH THE DETAILS OF SHIPPING AND FORWARDING EXPE NSES ALONGWITH TDS DETAILS. ON VERIFICATION OF THE DETAILS FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NO T DEDUCTED TDS ON SHIPPING AND FORWARDING EXPENSES. THEREFORE, THE A SSESSING OFFICER ISSUED SHOW CAUSE NOTICE REQUIRING THE ASSESSEE TO EXPLAIN WHY SHIPPING AND FORWARDING EXPENSES OF RS 40,86,749/- SHOULD NOT BE DISALLOWED U/S. 40(A)(IA) OF THE INCOME TAX ACT, 1961. THE ASSESSE E SUBMITTED THAT SUCH CHARGES ARE ACTUAL CHARGES PAID ON BEHALF OF THE CO MPANY BY THE AGENT AND HE IS BEING REIMBURSED FOR SUCH EXPENSES. THESE AR E EXPENSES RELATED TO IMPORT OF MATERIALS AND CUSTOMS CLEARING AGENT IS S IMPLY ACTING AS AN AGENT. TDS CLAUSES ON SUCH PAYMENTS ARE NOT APPLICABLE. T HE BILLS OF SUCH EXPENSES ARE RAISED IN THE NAME OF THE COMPANY. TH E ASSESSEE SUBMITTED THAT ON GOING THROUGH THE STATEMENT FURNISHED, IT W ILL BE OBSERVED THAT OF THE TOTAL CHARGES, MAJOR PART OF THE CHARGES WERE I N RELATION TO THE GOVERNMENT PAYMENTS I.E. CWC CHARGES I.E. CENTRAL W AREHOUSING CHARGES OF RS 2,57,954/-, DETENTION CHARGES OF RS 7,59,627/-, STAMP DUTY CHARGES OF RS 38,694/-, CCI CHARGES I.E. CONTAINER CORPORATION OF INDIA LTD. (A GOVERNMENT ORGANIZATION) RS 3,54,510/-, INLAND HAUL AGE CHARGES I.E. SHIPPING LINE CHARGES OF MOVEMENT OF MATERIAL FROM SHIP TO PORT AND PORT TO CUSTOM BONDED WAREHOUSE RS 23,60,227/-, AGGREGATING TO RS 37,71,012/- OF THE BALANCE, RS 4,98,955/- WAS CONTAINER CHARGES AN D BALANCE ARE MISCELLANEOUS EXPENSES. THUS, IT WAS SUBMITTED THA T RS 37,71,012/- WAS ITA NOS. 2295 & 2359/AHD/2011 M/S WELSUIT GLASS & CERAMICS PVT. LTD., BARODA FOR A.Y. 2009-10 - 3 - PAYMENT DIRECTLY TO THE GOVERNMENT IN ONE OR THE OT HER FORM AND THEREFORE IS NOT LIABLE TO TDS. IT WAS ALSO SUBMITTED THAT I N FACT ALL PAYMENTS WERE MADE BY THE COMPANY TO THE RESPECTIVE EXPENSES HEAD VIA CLEARING AGENT WHO WAS REIMBURSED LATER FOR SUCH EXPENSES. THE CL EARING AGENT HAS RAISED SEPARATE BILLS FOR REIMBURSEMENT OF EXPENDITURE AND BILL FOR PROVIDING SERVICES. THE PROVISION OF SECTION 194C WILL APPLY ONLY TO THE BILL FOR PROVIDING SERVICES AND NOT ON SEPARATE BILLS FOR RE IMBURSEMENT OF ACTUAL EXPENSES. THE ASSESSEE RELIED ON THE DECISION OF T HE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. DR. WILLMAR SCHWABE INDIA (P) LTD. (2005) 95 TTJ DELHI 53. IT WAS ALSO SUBMITTED THAT CIRCULAR NO. 175 DATED AUGUST 8, 1995 QUESTION NO. 30 SPECIFICALLY REQUIRES THAT FRO M THE TOTAL PAYMENT, REIMBURSEMENT OF ACTUAL EXPENSES BE DEDUCTED FOR TH E PURPOSE OF ARRIVING AT THE AMOUNT LIABLE TO TDS. THEREFORE, IT WAS ARGUED THAT TDS WAS REQUIRED TO BE MADE ONLY ON PAYMENT MADE TO THE CLEARING AGE NT FOR SERVICES RENDERED BY THEM AND NOT ON THE REIMBURSEMENT OF EX PENSES MADE TO THEM. 4. THE ASSESSING OFFICER DID NOT ACCEPT THE SAID E XPLANATION OF THE ASSESSEE AND BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, MADE A DISALLOWANCE OF EXPENSES INCURRED TOWARDS IN LAND HAULAGE CHARGES OF RS 23,60,227/- AND CONTAINER CORPORATION OF INDIA L TD. CHARGES OF RS 3,54,510/- AND THEREBY MADE A TOTAL DISALLOWANCE OF RS 27,14,737/-. 5. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) DELETED THE DISALLOWANCE BY FOLLOWING THE DECISION OF THE V ISHAKHAPATNAM SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPI NG & TRANSPORTS LIMITED VS. ACIT (2012) 136 ITD 23 (VISHAKHAPATNAM)(SB) ON THE GROUND THAT PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE AND SHOULD NOT BE INVOKED TO MAKE THE DISALLOWANCE WHERE THE RELEVANT AMOUNT IS DULY PAID DURING THE YEAR. ITA NOS. 2295 & 2359/AHD/2011 M/S WELSUIT GLASS & CERAMICS PVT. LTD., BARODA FOR A.Y. 2009-10 - 4 - 6. THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT IN VIEW OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS. SIKANDAR KHAN N. TUNVAR 295 CTR 75, THE DECISION OF THE VISH AKHAPATNAM SPECIAL BENCH OF THE TRIBUNAL IS OVERRULED AND THEREFORE, T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) SHOULD BE REVE RSED AND THE ORDER OF THE ASSESSING OFFICER SHOULD BE UPHELD. 7. ON THE OTHER HAND, THE AUTHORIZED REPRESENTATIV E OF THE ASSESSEE SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) THOUGH DELETED THE ADDITION BY FOLLOWING THE DECISION OF T HE VISHAKHAPATNAM SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPI NG & TRANSPORTS LIMITED (SUPRA), HE HAS NOT ADJUDICATED UPON THE SUBMISSION OF THE ASSESSEE THAT PROVISIONS OF SECTION 194C ARE NOT APPLICABLE ON RE IMBURSEMENT OF EXPENSES MADE BY THE ASSESSEE TO HIS AGENT. THE ASSESSEE HA S RELIED ON THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF D R. WILLMAR SCHWABE INDIA (P) LTD. (SUPRA) WHICH IS IN FAVOUR OF THE ASSESSEE . IT WAS, THEREFORE, PRAYED THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (A PPEALS) SHOULD BE CONFIRMED. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON REC ORD, WE FIND THAT THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER DISALLOWED EXPENSES OF RS 27,14,737/- OUT OF THE TOTAL EXPENSE S OF RS 40,86,749/- CLAIMED BY THE ASSESSEE UNDER THE HEAD SHIPPING AN D FORWARDING EXPENSES ON THE GROUND THAT THE ASSESSEE FAILED TO DEDUCT TA X AT SOURCE U/S. 194C OF THE ACT AND THEREFORE, THE EXPENSES WERE NOT ALLOWA BLE DEDUCTION TO THE ASSESSEE IN VIEW OF THE PROVISIONS OF SECTION 40(A) (IA) OF THE ACT. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED TH E APPEAL OF THE ASSESSEE BY FOLLOWING THE DECISION OF VISHAKHAPATNA M SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING & TRANSPOR TS LIMITED (SUPRA). WE FIND THAT THIS DECISION OF VISHAKHAPATNAM SPECIAL B ENCH OF THE TRIBUNAL WAS ITA NOS. 2295 & 2359/AHD/2011 M/S WELSUIT GLASS & CERAMICS PVT. LTD., BARODA FOR A.Y. 2009-10 - 5 - OVERRULED BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SIKANDAR KHAN N. TUNVAR (SUPRA). WE FURTHER FIND FROM THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT THE ASSESSEE HAS RAISED A PLEA THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE FROM RS 27, 14,737/- AS THE SAME WAS REIMBURSEMENT OF EXPENSES MADE BY THE ASSESSEE TO T HE CLEARING AGENT OF THE ASSESSEE. THIS PLEA OF THE ASSESSEE WAS NOT AD JUDICATED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AS HE ALLOWED THE APPEAL OF THE ASSESSEE BY FOLLOWING THE DECISION OF VISHAKHAPATNA M SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING & TRANSPOR TS LIMITED (SUPRA). THEREFORE, WE SET ASIDE THE ORDERS OF THE LOWER AUT HORITIES AND REMAND THE MATTER BACK TO THE FILE OF THE COMMISSIONER OF INCO ME TAX (APPEALS) TO ADJUDICATE THE ISSUE AFRESH WHETHER THE ASSESSEE WA S LIABLE TO DEDUCT TAX AT SOURCE ON AMOUNT OF RS 27,14,737/- PAID AS REIMBURS EMENT OF EXPENSES TO THE CLEARING AGENT OR NOT. THE COMMISSIONER OF INCOME TAX (APPEALS) SHALL ALLOW REASONABLE AND PROPER OPPORTUNITY OF HEARING TO BOTH THE PARTIES BEFORE ADJUDICATING THE ISSUE AFRESH. THUS, THIS G ROUND OF REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 9. GROUND NO. 2 OF THE REVENUES APPEAL READS AS U NDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN EXCLUDING THE GAS EXPENSES AND DEPRECIATION FROM TH E TOTAL EXPENSES AND TO APPLY THE RATIO OF RESULTANT NET PR OFIT ON SUPPRESSED AND UNDISCLOSED SALES TO ARRIVE AT THE U NDISCLOSED PROFIT WITHOUT CONSIDERING THE FACT THAT THE ASSESS EE HAD CLAIMED SUBSTANTIAL PART OF EXPENSES WITH RESPECT OF THE SU PPRESSED SALES. 10. THE GROUNDS RAISED BY THE ASSESSEE IN ITS APPE AL ARE AS FOLLOWS: 1. THE LEARNED C.I.T. (A) HAS ERRED IN LAW AND ON F ACTS IN CONFIRMING THE ASSESSING OFFICER' S ACTION IN COMPUTING ALLEGED UNDISCLOSED/SUPPRESSED SALES OF RS. 6,74,81,761/- ITA NOS. 2295 & 2359/AHD/2011 M/S WELSUIT GLASS & CERAMICS PVT. LTD., BARODA FOR A.Y. 2009-10 - 6 - AND IN FURTHER UPHOLDING ADDITION OF ALLEGED PROFIT FROM SUCH SALES TO THE EXTENT OF RS. 1,11,59,372/- OUT OF RS. 1,68,70,442/-, THEREBY UPHOLDING THE ADDITION TO TH E RETURNED INCOME TO THAT EXTENT. 2. THE LEARNED C.I.T. (A) HAS FURTHER ERRED IN IGNO RING THE FACT THAT THE ASSESSING OFFICER, IN ADOPTING THE ALLEGED SUPPRESSION OF SALES OF RS. 6,74,81,761/-, HAD IN HIS OWN WORDS 'FULLY RELIED UPON THE SHOW CAUSE NOTICE' ISSUED BY THE DGCE THEREBY DISREGARDING THE FACT THAT A SHOW- CAUSE NOTICE ONLY EXPRESSES SUSPICIONS/ALLEGATIONS WHICH ARE AT THAT STAGE IN THE PROCESS OF VERIFICATION AND DO NO T REFLECT FINDINGS OF ESTABLISHED FACTS. 3. THE LEARNED C.I.T.(A) HAS ALSO ERRED IN UPHOLDIN G THE ACTION OF THE ASSESSING OFFICER IN ADOPTING THE ALL EGED SUPPRESSION OF SALES IN RESPECT OF EACH AND EVERY TRANSACTION OF SALES MADE TO A LARGE NUMBER OF BUYE RS BY RELYING UPON THE STATEMENTS OF ONLY THIRTEEN (13) P ERSONS WHICH ALSO STOOD RETRACTED. 4. THE LEARNED C.I.T.(A) HAS ALSO ERRED IN IGNORING THE FACT THAT THE ASSESSING OFFICER DID NOT MAKE ANY INDEPEN DENT INQUIRY AND DID NOT BRING ANY CORROBORATIVE MATERIA L ON RECORD WHILE PROCEEDING TO MAKE HUGE ADDITION BASED ON THE UNSUBSTANTIATED SUSPICIONS/ALLEGATIONS AS PER T HE SHOW-CAUSE NOTICE ISSUED BY DGCE. 5. THE LEARNED C.I.T. (A) HAS ALSO ERRED IN IGNORIN G THE FACT THAT THE ASSESSING OFFICER HAS NOT DEALT WITH THE F ACTUAL CONTENTIONS BASED ON STATEMENTS OF THE DIRECTOR, B. M,. THAKKAR AND PRODUCTION SUPERVISOR, K. P. VACHHANI, RECORDED BY THE DGCE ITSELF. 6. THE LEARNED C.I.T.(A) HAS ALSO ERRED IN IGNORING THE FACT THAT THE ASSESSING OFFICER SOUGHT TO SUPPORT HIS CONCLUSIONS BY RELYING UPON THE SHOW-CAUSE NOTICE CONCERNING A THIRD PARTY, SANYO CERA PVT. LTD., ALT HOUGH THE FACTS CONCERNING THE SAID PARTY WERE NEVER PLAC ED BEFORE THE APPELLANT IN THE COURSE OF ASSESSMENT PROCEEDINGS. 7. THE LEARNED C.I.T. (A) HAS ALSO ERRED IN MAKING REFERENCES TO THE ORDER OF THE COMMISSIONER (APPEALS), CENTRAL EXCISE, BEING MATERIAL EXTRANEOUS TO THE ASSESSMENT RECORD, AND THEREBY IGNORING THE SETTLED POSITION O F LAW ITA NOS. 2295 & 2359/AHD/2011 M/S WELSUIT GLASS & CERAMICS PVT. LTD., BARODA FOR A.Y. 2009-10 - 7 - THAT THE ORDER ONCE PASSED HAS TO STAND ON ITS OWN REASONING AND CANNOT BE SUPPLEMENTED BY FRESH REASO NS. 8. THE LEARNED C.I.T. (A) HAS ALSO ERRED IN IGNORIN G A NUMBER OF JUDICIAL PRONOUNCEMENTS INCLUDING THOSE OF THE JURISDICTIONAL HIGH COURT CITED IN THE WRITTEN SUBM ISSIONS FILED BEFORE HIM WHILE PROCEEDING TO DISPOSE OFF TH E APPEAL. 9. THE LEARNED C.I.T.(A) HAS ALSO ERRED IN NOT GIVI NG DUE AND APPROPRIATE CONSIDERATION TO THE ALTERNATIVE CONTEN TIONS TAKEN WITHOUT PREJUDICE TO THE MAIN CONTENTIONS, TO THE EFFECT THAT THE ALLEGED SUPPRESSION OF SALES COULD BE COMPUTED ONLY TO THE EXTENT RELATABLE TO THE SALES MADE TO THE THIRTEEN (13) PARTIES (WHOSE STATEMENTS ARE REL IED UPON BY THE AO), AND THAT THE ELEMENT OF PROFIT THE REON COULD NOT BE TAKEN TO BE MORE THAN THE BOOK-RESULT DISCLOSED BY THE APPELLANT AND DULY ACCEPTED BY THE ASSESSING OFFICER. 10. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE ADDITION CONFIRMED TO THE EXTENT OF RS. 1,11,59,372/- BEING UNWARRANTED ON FACTS OF THE CAS E AND UNSUSTAINABLE IN LAW MAY BE DELETED. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD . IN THE INSTANT CASE, THE ADDITION OF RS 1,68,70,442/- WAS MADE BY THE ASSESS ING OFFICER AS GROSS PROFIT ESTIMATED AT THE RATE OF 25% ON THE SUPPRESS ED SALE OF RS 6,74,81,767/- ON THE GROUND THAT SUPPRESSION OF SAL E WAS FOUND BY THE CENTRAL EXCISE AUTHORITIES. 12. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APP EALS) WAS OF THE VIEW THAT THE ESTIMATION OF GROSS PROFIT AT THE RATE OF 25% WAS NOT CORRECT ON THE GROUND THAT EXPENSES ON GAS ARE NOT VARIABLE ON ACCOUNT OF ITS PURCHASES BEING FROM OIL & NATURAL GAS CORPORAT ION. BESIDES, THE COMMISSIONER, CE & C IN HIS ORDER HAS ALSO HELD THA T EXPENSES ON GAS WERE FULLY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. THE C OMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVED THAT SIMILARLY DEPRE CIATION WAS ALSO NOT ITA NOS. 2295 & 2359/AHD/2011 M/S WELSUIT GLASS & CERAMICS PVT. LTD., BARODA FOR A.Y. 2009-10 - 8 - VARIABLE. THEREFORE, HE HELD THAT IF THESE EXPENSE S ARE TAKEN OUT, THEN THE RATIO OF RESULTANT NET PROFIT TO SALES WAS 16.54%. HE, THEREFORE, HELD THAT THE ASSESSEE WAS EXPECTED TO EARN AT LEAST THIS AMO UNT OF PROFIT ON THE SUPPRESSED VALUE OF SALES. HE, THEREFORE, BY APPLY ING RATE OF 16.54% ON THE SUPPRESSED SALE OF RS 6,74,81,767/- ESTIMATED THE U NDISCLOSED PROFITS AT RS 1,11,59,372/- AND THEREBY DELETED THE ADDITION OF R S 57,11,070/-. 13. BEING AGGRIEVED BY THE ORDER OF THE COMMISSION ER OF INCOME TAX (APPEALS), BOTH THE PARTIES ARE IN APPEAL BEFOR E US. THE ASSESSEE IS IN APPEAL AGAINST ADDITION OF RS 1,11,59,372/- CONFIRM ED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND REVENUE IS IN APPEAL AG AINST DELETION OF ADDITION OF RS 57,11,070/-. 14. BEFORE US, THE AUTHORIZED REPRESENTATIVE OF TH E ASSESSEE SUBMITTED THAT THE FACTS OF THE INSTANT CASE ARE EX ACTLY SIMILAR TO THE FACTS IN THE CASE OF PRIMA CERAMICS PVT. LTD. VS. DCIT, ITA NO 453/AHD/2013 ASSESSMENT YEAR 2009-10 WHEREIN THE TRIBUNAL VIDE I TS ORDER DATED 05.09.2013 HELD AS UNDER: 2. THE EFFECTIVE GROUNDS OF APPEAL OF THE ASSESSEE ARE AS UNDER: 1. LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIR MING ADDITION MADE BY AO OF RS.1,37,56,700/- TAKING GROSS PROFIT OF 25% ON ALLEGED UNACCOUNTED SALES DETERMINED BY EXCISE AUTHORITY. LD. CIT (A) FAILED TO APPRECIATE THE FACT THAT THE UNACCOUNTED SALES AS DETERMINED BY THE EXCISE AUTHORITY ARE CHALLENGED BEFORE THE EXCISE TRIBUNAL THAT HAS NOT ATTAINED FINALITY. UNDER SUCH CIRCUMSTANCES LD. CIT(A) OUGHT TO HAVE QUASHED ADDITION MADE SIMPLY ON THE BASIS OF UNACCOUNTED SALES QUANTIFIED BY EXCISE DEPARTMENT WITHOUT ANY EVIDENCE ON RECORD OF ALLEGED SUPPRESSED SALES. 2. ALTERNATIVELY AND WITHOUT PREJUDICE IT IS SUBMIT TED THAT THE LD. CIT (A) OUGHT TO HAVE TAKEN INTO ACCOU NT ITA NOS. 2295 & 2359/AHD/2011 M/S WELSUIT GLASS & CERAMICS PVT. LTD., BARODA FOR A.Y. 2009-10 - 9 - SUBMISSION OF THE APPELLANT TO COMPUTE ADDITION AT AVERAGE NET PROFIT RATIO OF 5.29% FOR LAST SIX YEAR S IN PLACE OF 25% OF GROSS PROFIT OF ALLEGED UNACCOUNTED SALES. THE ORDER OF LD. CIT (A) BEING PREJUDICIAL & ERRONEOUS DESERVES TO BE QUASHED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT WHOLE ADDITION IS BASED ON THE ADDITION MADE IN THE EXCIS E CASE OF THE ASSESSEE, WHICH IS PENDING BEFORE THE EXCISE AND CU STOM TRIBUNAL. SHE SUBMITTED THAT MATTER MAY BE RESTORED TO THE AO FOR FRESH CONSIDERATION IN ACCORDANCE WITH THE DECI SION OF EXCISE AND CUSTOM TRIBUNAL, WHICH IS YET TO BE PRONOUNCED. THE LEARNED DR COULD NOT CONTROVERT THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE PE RUSED THE ORDER OF THE AO AND THE CIT(A). WE FIND THAT IN THE PECULIAR FACTS OF THE CASE THAT THE ISSUE OF ADDITION MADE I N THE INCOME TAX CASE IS BASED ON ADDITION MADE IN EXCISE CASE O F THE ASSESSEE, WHICH IS PENDING IN APPEAL BEFORE THE EXC ISE AND CUSTOM TRIBUNAL, WE ARE OF THE VIEW THAT IT WOULD B E JUSTIFIED TO RESTORE THE ISSUE IN THE GROUNDS OF THE APPEAL OF T HE ASSESSEE TO THE FILE OF THE CIT(A) WITH DIRECTION TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW ON MERIT IN THE LIGHT OF THE OR DER OF THE EXCISE AND CUSTOM TRIBUNAL, TO BE PASSED IN THIS CA SE, AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO BOTH THE PARTIES. WE DIRECT ACCORDINGLY. 15. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THEREFORE SUBMITTED THAT FOLLOWING THE SAME, THE ISSUE SHOULD BE RESTORED BACK TO THE FILE OF THE COMMISSIONER OF INCOME TAX (APPEALS) FO R FRESH ADJUDICATION OF THE ISSUE WITH SAME DIRECTIONS. 16. THE DEPARTMENTAL REPRESENTATIVE EXPRESSED HIS NO OBJECTION TO THE ABOVE PRAYER OF THE AUTHORIZED REPRESENTATIVE O F THE ASSESSEE. 17. IN VIEW OF THE ABOVE, WE SET ASIDE THE ABOVE I SSUES INVOLVED IN BOTH THE APPEALS BACK TO THE FILE OF THE COMMISSION ER OF INCOME TAX ITA NOS. 2295 & 2359/AHD/2011 M/S WELSUIT GLASS & CERAMICS PVT. LTD., BARODA FOR A.Y. 2009-10 - 10 - (APPEALS) FOR FRESH ADJUDICATION WITH THE SAME DIRE CTION AS QUOTED ABOVE IN THE ORDER OF THE TRIBUNAL. 18. THUS, THE ABOVE GROUNDS OF APPEAL OF THE REVEN UE AS WELL AS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. 19. IN THE RESULT, THE APPEALS OF THE REVENUE AND THE ASSESSEE, BOTH ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 20 TH OF JUNE, 2014 AT AHMEDABAD. SD/- SD/- (MUKUL KR. SHRAWAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 20/06/2014 GHANSHYAM MAURYA, SR. P.S. TRUE COPY #0 , )1 2#1/ #0 , )1 2#1/ #0 , )1 2#1/ #0 , )1 2#1// COPY OF THE ORDER FORWARDED TO : 1. &' / THE APPELLANT 2. )*&' / THE RESPONDENT. 3. 3 / CONCERNED CIT 4. 3() / THE CIT(A)-III, AHMEDABAD 5. 167 ) , , / DR, ITAT, AHMEDABAD 6. 78 9+ / GUARD FILE. #0 #0 #0 #0 / BY ORDER, : :: :/ // / ; ; ; ; ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD