M/s. Sigma Ceramics, Sabarkantha V. The Income Tax Officer, Sabarkantha Ward-3, Sabarkantha

ITA 2420/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0368 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 09-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P MEENA
• Keywords: Principle of natural justice
• Section: 143(3); 148

Judgement Text

I.T.A. NO . 2 4 20 /AHD/201 3 A SSESSMENT Y EAR: 200 4 - 05 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH, SMC , AHMEDABAD [CORAM: PRAMOD KUMAR AM] I.T.A. NO. 24 20 /AHD/ 20 1 3 ASSESSMENT Y EAR : 200 4 - 05 SI GMA CERAMICS ................... . APPELLANT B/H. POLYTECHNIC COLLEGE N.H. NO.8, AT & P.O. HADIYOL , TA. HIMATNAGR. [ PAN: A AHFS 7098 F ] VS. INCOME TAX OFFICER , SABARKANTHA WARD - 3, HIMATNAGAR. . ...... . ... . RESPONDENT APPEARANCES BY: TUSHAR P. HEMANI , FOR THE APPELLANT O.P. MEENA , FOR THE RESPONDENT D ATE OF CONCLUDIN G THE HEARING : 19 .0 7 .2016 DATE OF PRONOUNCING THE ORDER : 30 . 0 9 .2016 O R D E R THIS APPEAL IS TIME BARRED BY FOUR DAYS B UT T HE ASSESSEE HAS MOVED A CONDONATION PETITION. H A VING PERUSED THE S A ID PETITION AND HAVING HEARD RI V AL CONT ENTIONS ON THE S A ME, I AM INCLINED TO CONDONE THE DELAY WHICH IS S TATED TO BE DUE TO LAPSES ON THE PART OF THE ACCOUNTANT EMPLOYED BY THE ASSESSEE. ACCORDINGLY , DELAY IS CONDONED A ND I PROCEED TO TAKE UP THE MATT E R ON MERITS. BY W A Y OF THIS APPEAL, THE A SSESSEE CALLS INTO QUES T ION CORRECTNESS OF THE ORDER DATED 30 TH J ULY , 201 3 PASSED BY THE LEANED CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF T HE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2004 - 05. I.T.A. NO . 2 4 20 /AHD/201 3 A SSESSMENT Y EAR: 200 4 - 05 PAGE 2 OF 4 2. GRIEVANCE S RAISED BY THE AS SESSEE ARE AS FOLLOWS : - 1. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN DISMISSING THE APPELLANT'S GROUND OF APPEAL CHALLENGING THE VALIDITY OF THE NOTICE ISSUED U/S. 148 OF THE ACT AS REGARDS RE - OPENING THE ASSESSMENT. ON T HE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE NOTICE ISSUED U/S. 148 OF THE ACT AND THE CONSEQUENTIAL RE - ASSESSMENT PROCEEDINGS ARE INVALID. THE SAME BE HELD SO NOW. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ADDITION ON ACCOUNT OF CASH SALES/ON MONEY RECEIVED OF RS.22,60,270 / - , OUTSIDE BOOKS OF ACCOUNTS THROUGH THE BANK ACCOUNT OF SHRI BHANDARI IN HAND O F APPELLANT. NO SUCH CASH SALES/ ON MONEY RECEIVED BY THE APP ELLANT AS ALLEGED OR FOR THE REASONS AS ALLEGED. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ADDITION OF G.P. @ 25% ON THE UNACCOUNTED SALES OF RS.22,60,270 / - SO ESTIMATED IN THE HANDS OF THE APPELLANT. THE APPEL LANT HAS EARNED NO SUCH PROFIT. 4. ALTERNATIVELY AND WITHOUT PREJUDICE, THE RATE OF NET PROFITS IS HIGHLY EXAGGERATED AND EXCESSIVE. 5. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDERS WITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHER ERRED IN GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFORMATION SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERED BEFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF THE LOWER AUTHORITIES IS IN CLEAR BREACH OF LAW AND PR INCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUASHED. 6. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE ID. AO IN LEVYING INTEREST U/S 234A/B/C OF THE ACT. 7. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE ID. AO IN INITIATING PENALTY U/S 271(L)(C) OF THE ACT. 3. WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, LEARNED COUNSEL FAIRLY SUBMITTED THAT IN THE EVENT OF HIS SUBMISSION THAT NP @ 5% IS AT BEST REQUIRE D TO BE ADDED TO INCOME, AS AGAINST GP @ 25% ADOPTED BY THE LEARNED CIT ( A ) , IN RESPECT OF ALLEGED ON MONEY ON SALES, HE DOES NOT WISH T O PURSUE OTHER GROUNDS OF APPEAL. I , THEREFORE, T AKE UP THIS ISSUE FIRST. I.T.A. NO . 2 4 20 /AHD/201 3 A SSESSMENT Y EAR: 200 4 - 05 PAGE 3 OF 4 4. ON THE BASIS OF SEARCH ACTION CARRIED OUT IN THE CASE OF A THIRD PARTY, THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE WAS RECEIVING CERTAIN UNACCOUNTED MONEY, IN RESPECT OF SALES , AMOUNTING TO RS.22,60,270/ - . THIS AMOUNT WAS BROUGHT TO TAX, AS SUPPRESSED S ALE, IN THE HANDS OF THE ASSESSEE. W HEN MATTER WAS CARRIED IN APPEAL BEFORE THE LEARNED CIT ( A ) , HE RESTRICTED THE ADDITION TO 25% , BEING GP ON SUCH SALES, BUT THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE ME. 5 . I HAVE HE A RD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RE CORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLICABLE LEGAL POSITION. 6 . I FIND THAT THE ISSUE WHETHER THE AMOUNT OF INCOME SHOULD BE ON THE BASIS OF GP RATE OR NP RA T E IS NOW COVERED BY SEVERAL BINDING JUDICIAL PRECEDENTS. ONCE IT IS NOT IN DISPUTE THAT ONLY INCOME ELEMENT OF SUCH SUPPRESSED SALES IS TO BE BROUGHT TO TAX, AS IS THE POSITION IN THE LIGHT OF CIT ( A ) S ORDER NOT BEING CHALLENGED BY THE ASSESSING OFFICER, ONLY NET PROFIT ELEMENT CAN BE BROUGHT TO TAX. AS TO THE QUESTION AS TO WHAT SHOULD BE THE AVERAGE NET PROFIT RATE TO BE ADOPTED FOR THIS PURPOSE, I FIND THAT, AS EVIDENT FROM CHART SET OUT IN PAGE NO. 16 OF CIT ( A ) S ORDER, AN AVERAGE RATE OF 5% WILL BE REASONABLE AND JUSTIFIED. I, THEREFORE, UPHOLD THE PLEA OF THE ASSESSEE A ND DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO 5% OF SUPP RESSED SALES ON MONEY . THE ASSE SS EE GETS THE RELIEF ACCORDINGLY . 7. AS I HAVE UPHELD THE ABOVE PLEA OF THE ASSESSEE, I SEE NO NEED TO DEAL WITH OTHER ISSUES AT THIS STAGE. I.T.A. NO . 2 4 20 /AHD/201 3 A SSESSMENT Y EAR: 200 4 - 05 PAGE 4 OF 4 8. IN T HE RESULT, APPEAL IS PARTL Y ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF SEPTEMBER, 2016. SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: THE 30 TH DAY OF SEPTEMBER , 2016. PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD