ITO, New Delhi V. M/s. Tosiba Industries Ltd., New Delhi

ITA 2387/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0348 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 03-02-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 19-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRENDRA KUMAR SENIOR
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H : NEW DELHI) BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.2387/DEL./2010 (ASSESSMENT YEAR : 2007-08) ITO, WARD 16 (3), VS. M/S. TOSIBA INDUSTRIES LIM ITED, NEW DELHI. 85, NAVJIWAN VIHAR, NEW DELHI 110 017. (PAN : AABCT3759K) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI AMRENDRA KUMAR, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE ARISES OUT OF THE ORDER OF CIT (APPEALS)-XIX, NEW DELHI DATED 12.3.2010. THE GRO UNDS OF APPEAL READ AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.17 ,20,438/- MADE BY THE A.O. BY APPLYING THE GP RATE OF 15% AS AGAINST THE GP RATE OF 13.82% DECLARED BY THE ASSESSEE, WITHOUT MAKING ANY VERIFICATION AND ESPECIALLY WHEN THE BOOKS OF A CCOUNTS WERE NOT PRODUCED BEFORE THE A.O. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.40 ,00,000/- MADE U/S 68 OF THE INCOME-TAX ACT ESPECIALLY WHEN T HE IDENTITY ITA NO.2387/DEL./2010 2 AND CREDIT WORTHINESS O THE PARTIES AND GENUINENESS OF TRANSACTION WERE NOT ESTABLISHED SATISFACTORILY. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF RUBBER FOOTWEAR, PACKING MATERIAL, ETC. THE GROSS TURNOVER OF THE COMPANY DURING THE YEAR WAS RS.14,63,95,539/-. THE TURNOVE R IN THE IMMEDIATE PRECEDING YEAR WAS RS.10,24,77,052/-. THE ASSESSIN G OFFICER COMPARED THE CURRENT YEAR G.P. WITH THE IMMEDIATE PRECEDING YEAR AND MADE THE ADDITION. THE ASSESSEE STATED BEFORE THE ASSESSING OFFICER TH AT THE BOOKS OF ACCOUNTS AND BILLS & VOUCHERS WERE DESTROYED IN FIRE. THE A SSESSING OFFICER ESTIMATED THE G.P. RATE @ 15%. 3. WHILE PLEADING ON BEHALF OF THE REVENUE, LEARNED DR SUBMITTED THAT THE CIT (A) HAS ACCEPTED THE GROSS PROFIT RATE WITHOUT ANY COGENT REASON. HE ALSO PLEADED THAT THE CIT (A) COULD NOT JUSTIFY IN HOLDI NG THAT THE ASSESSING OFFICER HAS NOT MADE OUT A CASE FOR REJECTION OF BO OKS OF ACCOUNTS. HE ALSO PLEADED THAT THE CIT (A)S REMARK THAT ASSESSING O FFICER HAS CASUALLY MADE THE ADDITIONS WITHOUT VERIFYING THE DETAILS FURNISH ED AND PAST RECORD, IS NOT JUSTIFIED. 4. FROM THE RECORDS, IT IS FOUND THAT ASSESSEE HAD PLEADED HIS CASE BEFORE THE CIT (A) THAT THE TURNOVER OF THE ASSESSEE IS IN CREASED BY 24% AND WHENEVER THERE IS INCREASE IN THE TURNOVER, THE SAM E AMOUNT OF MARGINS CANNOT BE REALIZED. FURTHER, THE GROSS PROFIT IS R ESULTANT OF VARIOUS HEADS OF ITA NO.2387/DEL./2010 3 ACCOUNT AND SAME CANNOT BE CONSISTENT OVER THE YEAR S. NEW BUYERS WERE ADDED DURING THE YEAR, LIKE, SAMTEL COLOUR LIMITED, VIDEOCON INDUSTRIES LIMITED, WHIRLPOOL INDIA LIMITED, ETC. AND THESE AR E BIG MULTI-NATIONAL COMPANIES AND THEY WERE PRICE SENSITIVE WITH THE LO W MARGINS. THE BULK ORDERS WERE RECEIVED, WHICH WAS ALSO ONE OF THE FAC TORS OF FALL IN THE G.P. RATE. THE ASSESSEE ALSO INDULGED IN TRADING OF THE GOODS WHILE IN THE IMMEDIATE PRECEDING YEAR, THERE WAS NO TRADING DONE BY THE AS SESSEE. THE MARKET BECAME COMPETITIVE, COST AND BORROWING PRICES INCRE ASED. THE MONTHLY SALES AND PURCHASE BILLS WERE MADE AVAILABLE AND PROPER R ECORDS WERE MAINTAINED IN RESPECT OF THE INVENTORIES AND THERE WAS SUFFICIENT AND ADEQUATE INTERNAL CONTROL IN RESPECT OF THE PURCHASE OF INVENTORY AND SALE OF GOODS. THE CIT (A) HAS ACCEPTED THE ASSESSEES NET RESULT. THE CI T (A) NOTED THAT ASSESSING OFFICER HAS NOT POINTED OUT ANY OMISSION OR DEFECT IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. NO MATERIAL WAS BROUGH T ON RECORD WHICH COULD SHOW THAT THE ASSESSEE HAS INFLATED THE PURCHASES A ND SUPPRESSED THE SALES OR INFLATED THE EXPENSES. RELIANCE WAS PLACED ON VARI OUS COURT DECISIONS BEFORE CIT (A). 5. AFTER HEARING REVENUE AND CONSIDERING FACTS AVAI LABLE ON RECORD, WE ARE OF THE VIEW THAT THERE WAS INCREASE IN THE TURNOVER OF THE ASSESSEE. THERE WAS A CHANGE IN THE COMPOSITION OF THE TURNOVER OF THE ASSESSEE BY WAY OF TRADING OF GOODS ALSO. NEW CORPORATE CUSTOMERS ADDED DURIN G THE YEAR. THERE WAS ITA NO.2387/DEL./2010 4 NO SPECIFIC FINDING BY THE ASSESSING OFFICER FOR RE JECTING THE BOOK RESULTS. THERE IS NOTHING ON RECORD WHICH COULD SHOW THAT TH E PURCHASES AND EXPENSES WERE INFLATED OR THE SALES WERE SUPPRESSED. KEEPIN G THESE FACTS IN VIEW AND VARIOUS DECISIONS OF THE COURT, WE SUSTAIN THE ORDE R OF CIT (A) AND DISMISS THIS GROUND OF REVENUES APPEAL. 6. WHILE PLEADING ON GROUND NO.2 WHICH IS RESULTED TO DELETION OF ADDITION OF RS.40 LACS MADE U/S 68 OF THE INCOME-TAX ACT, LE ARNED DR SUBMITTED THAT THE IDENTITY AND CREDITWORTHINESS OF THE PARTIES AN D GENUINENESS OF THE TRANSACTIONS WERE NOT ESTABLISHED SATISFACTORILY AN D HE RELIED ON THE ORDER OF ASSESSING OFFICER. 7. RECORDS SHOW THAT THE SHARE APPLICATION MONEY HA S BEEN RECEIVED FROM CREDITORS. THE AMOUNT HAS BEEN TRANSFERRED FROM TH EIR LOAN ACCOUNT TO THE SHARE APPLICATION ACCOUNT. THE IDENTITY OF THESE C REDITORS HAS NOT BEEN DOUBTED WHILE RECEIVING THE LOAN. THE AMOUNT OF SH ARE APPLICATION HAS GONE FROM THE LOAN ACCOUNT. 8. AFTER HEARING REVENUE ON THIS ISSUE, WE FIND THA T THE SHARE APPLICATION MONEY HAS COME OUT ON LOAN ACCOUNTS OF CREDITORS. ALL THESE SHARE APPLICANTS WERE CREDITORS. THE IDENTITY AND CREDITWORTHINESS OF THESE CREDITORS HAVE NOT BEEN CHALLENGED OR DOUBTED BY THE ASSESSING OFFICER . THE AMOUNT HAS BEEN TRANSFERRED FROM THE LOAN ACCOUNT TO THE SHARE APPL ICATION ACCOUNT. IN VIEW OF THESE, WE HOLD THAT THE IDENTITY AND CREDITWORTHINE SS OF THESE PERSONS WERE ITA NO.2387/DEL./2010 5 WELL ESTABLISHED AND THE GENUINENESS OF THE TRANSAC TIONS IS ALSO NOT IN QUESTION. IN VIEW OF THESE, WE SUSTAIN THE ORDER O F CIT (A) AND DISMISS THIS GROUND OF REVENUES APPEAL. 9. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 11 TH DAY OF FEBRUARY, 2011. SD/- SD/- (I.P. BASNAL) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 11 TH DAY OF FEBRUARY, 2011 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XIX, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.