Aisling Technologies Pvt.Ltd., Surat V. The ACIT.,Cent.Circle-4, Surat

ITA 2455/AHD/2009

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94390 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 25-08-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 20-08-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D C MISHRA
• Keywords: Business income
• Section: 133A; 132

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO.2455/AHD/2009 / ASSTT. YEAR: 2007-2008 AISLING TECHNOLOGIES P. LTD. SURVEY NO.91 OPP: NAVIN FLOURINE UDHNA NAVSARI ROAD,SURAT. PAN : AACCA 8132 G VS ACIT, CENT.CIR.4 SURAT. / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI D.C. MISHRA, CIT-DR ASSESSEE BY : SHRI SANJAY KAPADIA WITH SHRI ANKUR D. SHAH ! / DATE OF HEARING : 25/08/2015 '#$ ! / DATE OF PRONOUNCEMENT: 16/09/2015 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORDER OF THE CIT(A) DATED 17.6.2009 PASSED FOR THE ASSTT.YEAR 2007-08. 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT T HE LD.FIRST APPELLATE AUTHORITY HAS ERRED IN CONFIRMING THE ADDITION OF R S.7,68,494/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY, WHICH BELONGS TO COLOURTEX GROUP OF SURAT. A SEARCH UNDE R SECTION 132 OF THE INCOME TAX ACT WAS CARRIED OUT AT THE PREMISES OF M EMBERS OF COLOURTEX GROUP ON 26.7.2006. AT THE PREMISES OF TH E ASSESSEE, A ITA NO.2455/AHD/2009 2 SURVEY UNDER SECTION 133A WAS CARRIED OUT. THE ASSE SSEE HAS FILED ITS RETURN OF INCOME ON 31.10.2007 DECLARING TOTAL INCO ME AT RS.4,74,610/- THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) OF THE INCOME TAX ACT D ATED 27.6.2008 WAS ISSUED AND DULY SERVED UPON THE ASSESSEE. ON SCRUT INY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT SURVEY TEAM IN ITS REPOR T HAS SUBMITTED A DEFICIT OF STOCK HAVING VALUE OF RS.92,25,618/- ON THE DATE OF SURVEY. IT EMERGE OUT THAT THE STOCK AS PER THE BOOKS WAS RS.4 ,65,49,491/- WHEREAS THE ACTUAL STOCK FOUND WAS OF HAVING VALUE OF RS.3,73,23,873/- . THE LD.AO HAS MADE ADDITION OF RS.7,68,494/- BY APPLYING THE GP RATIO OF 8.33% ON THE ALLEGED DEFICIT OF STOCK. AC CORDING TO THE AO, THE ASSESSEE MUST HAVE SOLD THIS STOCK OUT OF BOOKS, AN D THEREFORE, PROFIT HAS NOT BEEN ACCOUNTED. THE CASE OF THE ASSESSEE, ON THE OTHER HAND, IS THAT ULTIMATELY THE SALE OF THE ASSESSEE HAS NOT BEEN DOUBTED. IF THERE WAS ANY DEFICIT IN THE STOCK, THEN THAT DEFIC IT MUST HAVE BECOME PART OF THE TOTAL SALES AT THE END OF THE YEAR. ME ANING THEREBY, THE PROFIT ELEMENT AT THE RATE OF 8.33% HAS ALREADY BEE N WORKED OUT FROM THE TOTAL SALES DISCLOSED BY THE ASSESSEE. IF A SE PARATE ADDITION IS BEING MADE OF THE GP, IN RESPECT OF THIS ALLEGED UNACCOUN TED SALE, REPRESENTING DEFICIT OF STOCK FOUND AT THE TIME OF SURVEY, THEN THAT ADDITION WOULD BE TWICE. THE ASSESSEE HAS EXPLAINE D ITS POSITION BY GIVING AN EXAMPLE. NAMELY, IF THE SALE VALUE IS 10 0, THEN IN THE GIVEN CASE, THE GP MARGIN WOULD BE 8.33% AND AS PER THEOR Y ADVANCED BY THE LD.AO, THE INCOME THAT IS REQUIRED TO BE OFFERE D WAS TAXED 100 PLUS 8.33% I.E. TOTAL 108.33 AND NOT JUST 8.33% AS GENER ALLY UNDERSTOOD IN COMMERCIAL PARLANCE. ACCORDING TO THE ASSESSEE, TH E SALE VALUE OF 100 IN ITSELF CONTAINED THE PROFIT ELEMENT OF 8.33%. H OWEVER, THE LD.AO DID NOT FIND SUBSTANCE IN THIS CONTENTION OF THE ASSESS EE. 4. ON APPEAL, THE LD.FIRST APPELLATE AUTHORITY HAS ALSO CONFIRMED THE ADDITION. THE OBSERVATION BY THE CIT(A) READS AS U NDER: ITA NO.2455/AHD/2009 3 6. I HAVE CONSIDERED THE FACTS AND SUBMISSIONS OF THE APPELLANT. I DO NOT AGREE WITH THE APPELLANTS VIE W. THE APPELLANT HAS NOT SATISFACTORILY EXPLAINED THE DEFICIT IN THE STOCK FOUND BEFORE THE AO AS WELL AS NOT EXPLAINED DURING THE A PPELLANT PROCEEDINGS ALSO. WHEN THERE IS DEFICIT IN STOCK FOUND AND THERE IS NO SATISFACTORY EXPLANATION, THE ASSESSING OFFIC ER IS JUSTIFIED IN TREATING IT AS SALE OUTSIDE BOOKS OF ACCOUNTS AND A PPLYING G.P. RATE THEREON. HENCE, AO IS JUSTIFIED IN MAKING THE ADDITION AND ACCORDINGLY, THE ACTION OF THE AO IS UPHELD AND THI S GROUND IS REJECTED. 5. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE REITE RATED THE CONTENTIONS AS WERE RAISED BEFORE THE AO. ON THE O THER HAND, THE LD.DR RELIED UPON THE ORDER OF THE AO. ON DUE CONSIDERAT ION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ASSESSEE HAS TO EXPLAIN THE DEFICIT IN THE PHYSICAL STOCK ON THE DA TE OF SURVEY. THE LOGICAL INFERENCE WOULD BE THAT THIS MUCH OF STOCK MUST HAVE BEEN SOLD BY THE ASSESSEE, WITHOUT MAKING ENTRIES IN THE BOOK S OF ACCOUNTS. IN THE ASSESSMENT ORDER, THE LD.AO HAS JUST ADOPTED TH E FIGURE OF 8.33% FOR THE PURPOSE OF APPLYING IT ON THE ALLEGED UNACC OUNTED SALES. HE HAS NOWHERE DEALT WITH THE ISSUE WHETHER IN THE TOTAL S ALES COMPUTED BY THE ASSESSEE THIS DEFICIT HAS BEEN ACCOUNT FOR OR NOT. BEFORE US ALSO, THE ASSESSEE HAS NOT DEMONSTRATED THE OPENING STOCK PLU S PURCHASES AND THE TOTAL SALES, INDICATING THE FACT THAT THE ALLEG ED DEFICIT IN STOCK WAS ALREADY MADE PART OF THE TOTAL SALES COMPUTED AT TH E END OF THE YEAR. NO SUCH RECONCILIATION IS AVAILABLE ON THE RECORD. THE LD.AO HAS RIGHTLY MADE ADDITION OF RS.7,68,494/-. WE DO NOT FIND ANY MERIT IN THIS APPEAL OF THE ASSESSEE. 6. BEFORE PARTING WITH THIS ORDER, WE WOULD LIKE TO OBSERVE THAT THE LD.AO HAS DETERMINED THE INCOME OF THE ASSESSEE AT NIL. HE HAS GIVEN THE TELESCOPING BENEFIT OF THE ADDITION AGAINST THE DISCLOSURE MADE BY HEAD OF THE GROUP, SHRI JAYANTILAL JARIWALA. THAT STAND OF THE AO HAS NOT BEEN DISTURBED BY THE LD.CIT(A) OR BY US. THUS , EVEN AFTER THE CONFIRMATION OF ADDITION, THE INCOME IN THE HANDS O F THE ASSESSEE WILL REMAIN AT NIL. THE ADDITION WILL BE CONSIDERED FOR TELESCOPING AGAINST ITA NO.2455/AHD/2009 4 THE DECLARATION BY SHRI JAYANTILAL JARIWALA OR IT W ILL BE CONSIDERED IN HIS HANDS. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 16 TH SEPTEMBER, 2015 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER