M/s. Savera Papers Pvt. Ltd., Muzaffarnagar V. JCIT, Muzaffarnagar

ITA 2445/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97098 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 31-08-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 21-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Additional evidence
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH SMC - 2 : NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 2445 /DEL/201 4 A.Y. : 20 10 - 1 1 M/S SAVERA PAPERS PVT. LTD., VS. JCIT , 55 - B, VAKIL ROAD, RANGE - 2, NEW MANDI, MUZAFFARNAGAR - 251001 MUZAFFARNAGAR (PAN : AACCS2791M) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SH. SUJIT KUMAR, SR. DR DATE OF HEARING : 31 - 8 - 2015 DATE OF ORDER : 0 1 - 9 - 2015 O R D E R PER H.S. SIDHU, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER OF THE LD. COMMI SSIONER OF INCOME TAX (APPEALS), MUZAFFARNAGAR DATED 27 . 1 .201 4 PERTAINING TO ASSESSMENT YEAR 20 10 - 11 . 2. T HE GROUNDS OF APPEAL READ AS UNDER: - 1. THE IMPUGNED ORDER OF THE LEARNED AO IS BAD IN LAW, IS DEVOID OF JURISDICTION, IS ARBITRARY ON CONJECTURES AND SURMISES, PASSED WITHOUT APPLICATION OF MIND, WITHOUT GRANTING PROPER OPPORTUNITY TO DEFEND AND WITHOUT FOLLOWING THE PROPER LEGAL PROCEDURE AGAI NST THE PRINCIPLES OF NATURAL JUSTICE. AS SUCH THE ORDER IS NULL AND VOID AB - INITIO. 2 2. THE ORDER IS AGAINST THE PROVISIONS OF THE ACT AND THE APPELLANT DENIES HIS LIABILITY TO TAX AS DETERMINED AND COMPUTED BY THE LEARNED AO AND THE MANNER IN WHICH IT H AS BEEN SO DETERMINED OR COMPUTED. THE LEARNED CIT(A) HAS ERRED IN LAW IN UPHOLDING THE LEGAL VALIDITY OF THE IMPUGNED ORDER, WHETHER IN SPECIFIC TERMS OR BY IMPLICATION. 3. THE LD. AO HAS ERRED IN LAW ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN MAKIN G THE ADDITIONS OF RS. 97635/ - ON ACCOUNT OF GROSS PROFIT AND THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN SUSTAINING THE IMPUGNED ADDITION IN TOTAL OR TO THE EXTENT OF RS. 97635/ - . 4. THE APPELLANT CRAVES LEAVE TO AND PERMISSION OF THE ITAT TO A DD OR TO ALTER ANY OF THE GROUND OF APPEAL AT ANY TIME UPTO THE FINAL DECISION OF THE APPEAL. 5. THE APPELLANT CRAVES LEAVE AND SANCTION OF THE ITAT TO FILE ADDITIONAL EVIDENCE, IF SO REQUIRED FOR PROPER PROSECUTION OF THE CASE, BASED ON FACTS AND CIRCUM STANCES, WHICH HAS NOT BEEN OR COULD NOT BE PRODUCED OR FILED BEFORE LOWER AUTHORITIES EITHER BECAUSE OF PROPER AND SUFFICIENT OPPORTUNITY WAS NOT PROVIDED OR BECAUSE IT WAS NOT SOLICITED OR ITS NEED WAS NOT APPRECIATED. 3. THE BRIEF FACTS OF THE CASE AR E THAT THE ASSESSEE IS A COMPANY DERIVING INCOME FROM MANUFACTURE AND TRADING OF PAPER. RETURN DECLARING INCOME OF RS. 44,835/ - WAS FILED ON 12.9.2010. DURING THE 3 COURSE OF ASSESSMENT PROCEEDINGS IT WAS GATHERED BY THE AO THAT THE ASSESSEE HAS SHOWN GP @ 6.49% AS AGAINST GP DECLARED DURING THE IMMEDIATELY PRECEDING YEAR @ 8.03%. THUS THE AO REQUIRED THE ASSESSEE TO JUSTIFY DECLINED IN GP RATE IN COMPARISON TO THE PR ECEDING YEAR. IN RESPONSE THE ASSESSEE FURNISHED WRITTEN SUBMISSION WHICH HAVE BEEN REPRODUCED BY THE AO READS AS UNDER: - RATE OF GROSS PROFIT DEPENDS UPON THE MARKET RATES. IN CASE THE COMPANY PURCHASES THE GOODS AND THEN THERE IS INCREASE IN SELLING RA TES, GROSS PROFIT WILL INCREASE. SIMILARLY, DUE TO INCREASE IN SELLING RATES, GROSS PROFIT DECREASES. 3.1 HOWEVER, THE AO REJECTED THE AFORESAID CONTENTION MADE BY THE AO ON THE GROUND THAT THE SAME WERE GENERAL IN NATURE AND NO SPECIFIC REASON FOR DECLIN E IN GP RATE WAS FURNISHED BY THE ASSESSEE. BASED ON SUCH INFERENCE THE AO ESTIMATED GP AT THE AVERAGE RATE OF 7.26%(8.03% + 6.49%/2) WHICH RESULTED IN ADDITION OF RS. 97,635/ - TO THE INCOME OF THE ASSESSEE VIDE ASSESSMENT ORDER DATED 2 2 . 3 .201 3 PASSED U/ S. 143(3) OF THE I.T. ACT, 1961. 4. AGGRIEVED WITH THE ASSESSMENT ORDER DATED 27 . 1 .201 4 , ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 27 .1.2014 HAS DISMISSED THE APPEAL BY UPHOLDING THE ACTION OF THE ASSESSING OFFICER. 5. AGAINST THE AFORESAID ORDER THE ASSESSEE IS IN APPEAL BEFORE ME. 6 . IN THIS CASE, NOTICE OF HEARING TO THE ASSESSEE WAS SENT BY THE REGISTERED AD POST, IN SPITE OF THE SAME, ASSESSEE, NOR HIS AUTHORIZED REPRESENTATIVE APPEARED TO PROSECUTE THE MATTER IN DISPUTE, NOR FILED ANY APPLICATION FOR ADJOURNMENT. KEEPING IN VIE W THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE ISSUE INVOLVED IN THE PRESENT APPEAL, I AM OF THE VIEW THAT NO USEFUL PURPOSE WOULD BE 4 SERVED TO ISSUE NOTICE AGAIN AND AGAIN TO THE ASSESSEE, THEREFORE, I AM DECIDING THE PRESENT APPEAL EXPARTE Q UA ASSESSEE, AFTER HEARING THE LD. DR AND PERUSING THE RECORD S. 7. LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 8. I HAVE HEARD THE LD. DR AND PERUSED THE RECORDS AVAILABLE WITH ME, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES . I FIND T HAT ON BEING ASKED BY THE AO DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED COMPLETE DETAILS OF SALES AND PURCHASES (QUANTITY AS WELL AS VALUE BOTH) AND EXPLAINED THAT ALL THE SALES AND PURCHASES HAVE BEEN MADE FROM THE REGISTERED DEALERS ONLY AND EXPLAINED THAT THE RATE OF GROSS PROFIT DEPENDS UPON THE MARKET RATES. IN CASE THE COMPANY PURCHASES THE GOODS AND THEN THERE IS INCREASE IN SELLING RATES, GROSS PROFIT WILL INCREASE. SIMILARLY, DUE TO INCREASE IN SELLING RATES, GROSS PROFIT DECREASE S. I FIND THIS VERSION OF THE ASSESSEE SEEMS TO BE GENUINE ONE. THE DETAILS OF SALES AND GROSS PROFIT OF THE UNIT FOR THE LAST 3 YEARS ARE TABULATED BELOW: - A.Y. SALES GROSS PROFIT GP RATIO 2008 - 09 4298019.00 191756.00 4.46% 2009 - 10 13466765.00 1082667.92 8.03% 2010 - 11 12826340.00 833557.00 6.49% FROM PERUSING THE AFORESAID TABLE FOR THE LAST 3 YEARS WHICH SUPPORTS THE CONTENTION OF THE ASSESSEE THAT RATE OF GROSS PROFIT DEPENDS UPON THE MARKET RATES AND IN CASE THE COMPANY PURCHASES THE GOODS AND THEN THERE IS INCREASE IN SELLING RATES, GROSS PROFIT WILL INCREASE. SIMILARLY, DUE TO DECREASE IN SELLING RATES, GROSS PROFIT DECREASE, WHICH OCCURRED IN THE PRESENT CASE OF THE ASSESSEE . I ALSO FIND THAT THE ACTION OF THE AO IN INCREAS ING THE GROSS PROFIT OF THE 5 COMPANY, AFTER ACCEPTING THE BOOKS OF ACCOUNTS, FROM 6.49% TO 7.26% IS NOT BASED ON ANY COGENT REASONS AND HENCE THE SAME IS NOT SUSTAINABLE IN THE EYES OF LAW, WHICH NEEDS TO BE REJECTED. 9. IN THE BACKGROUND OF THE AFORESAID D ISCUSSIONS, I REJECT THE INCREASE GROSS PROFIT OF THE COMPANY, AS ADOPTED BY THE AO I.E. FROM 6.49% TO 7.26% AND ACCORDINGLY DELETE ADDITION MADE AS A RESULT THEREOF I.E. RS. 97,635/ - . I ALSO DIRECT THE AO TO ADOPT GROSS PROFIT RATE 6.49% WHICH THE ASSES SEE HAS DECLARED AND COMPUTE THE INCOME ACCORDINGLY. 1 0 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 0 1 / 9 /201 5 . S D / - [ H.S. SIDHU ] JUDICIAL MEMBER DATE: 0 1 / 9 /201 5 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES