The ITO,Vapi Ward-2, Vapi V. M/s. J.N. Steels, Vapi

ITA 25/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60401 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-03-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 02-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Keywords: Business income
• Section: 142(1)

Judgement Text

ITA NO.2 5/AHD/2009 ASSESSME NT YEAR 2005- 06 . 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, A HMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T.A. NO.25 /AHD/2009 (ASSESSMENT YEAR: 2005 - 06) INCOME TAX OFFICER, VAPI WARD-2, ROOM NO.205, SHIVAM COMMERCIAL COMPLEX, NATIONAL HIGHWAY NO.8, VAPI. (APPELLANT) VS. M/S. J. N. STEELS, 103, ROYAL TWINS, VAPI DAMAN ROAD, VAPI. (RESPONDENT) PAN: AADFJ 9732B APPELLANT BY : MR. RAHULKUMAR SR. D.R. RESPONDENT BY : NONE. ( )/ ORDER DATE OF HEARING : 6-3-2012. DATE OF PRONOUNCEMENT : 1-6-2012 PER: SHRI ANIL CHATURVEDI,A.M. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF CIT (A)- VALSAD DATED 27-10-2008 FOR THE ASSESSMENT YEAR 200 5-06. 2. THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEA L:- ITA NO.2 5/AHD/2009 ASSESSME NT YEAR 2005- 06 . 2 1 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION MADE OF RS.33,59,180/- BEING THE PROFIT EARNED FROM UNACCOU NTED SALES WORTH RS.2,08,81,533/-. 2. WHILE DELETING THE ADDITION OF RS.33,59,180/-, O N THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. C IT (A) HAS ERRED IN TREATING THE SALES AS PER RETURN OF RS.3,1 4,44,217/- IS INCLUSIVE OF UNACCOUNTED SALES WORTH RS.2,08,81,.53 3/-. 3. WHILE DELETING THE ADDITION OF RS.33,59,180/-,ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. C IT (A) HAS ERRED IN TREATING THE PROFIT ESTIMATED OF RS.50,05, 949/- IS INCLUSIVE OF PROFIT WORKED OUT OF RS.33,59,180/- ON UNACCOUNTED SALES WORTH RS.2,08,81,533/-. 4. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD. CIT (A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. THE APPELLANT CRAVES TO ADD, ALTER OR AMEND ANY GRO UNDS OF APPEAL. 3. THE HEARING IN THIS CASE WAS FIXED SEVERAL TIMES BUT NOBODY APPEARED. AT THE TIME OF HEARING FIXED ON 12-10-201 1 WHEN NO APPEARANCE WAS THERE FROM SIDE OF THE ASSESSEE A NO TICE FIXING THE HEARING ON 1-12-2011 WAS SENT THROUGH THE DEPARTMEN TAL REPRESENTATIVE AND THE SAID NOTICE CAME TO BE SERVE D BY ITO. VAPI WARD-2, VAPI ON 28-11-2011. AGAIN ON THE DATE OF H EARING I.E. ON 6-3- 2012 ALSO NOBODY APPEARED ON BEHALF OF THE ASSESSEE . THE CASE IS THEREFORE, DECIDED ON MERIT. ITA NO.2 5/AHD/2009 ASSESSME NT YEAR 2005- 06 . 3 4. THE ASSESSEE FILED RETURN OF INCOME ON 16-3-2006 DECLARING TOTAL INCOME AT RS. NIL AFTER CLAIMING DEDUCTION U/S. 80I B OF RS.4,27,520/-. THE CASE WAS TAKEN UP FOR SCRUTINY. NOTICE U/S. 143 (2) AND 142(1) WERE SERVED ON ASSESSEE. THERE WAS NO COMPLIANCE BY ASSE SSEE. THE A.O. THEREFORE FINALIZED THE ASSESSMENT U/S.144 AND DETE RMINED THE TOTAL INCOME AT RS.1,51,10,830/- AFTER MAKING VARIOUS ADD ITIONS/ DISALLOWANCES. THEREAFTER, THE ASSESSEE FILED APPEA L BEFORE CIT (A). 5. BEFORE CIT (A) THERE WAS NO PERSONAL APPEARANCE ON BEHALF OF THE ASSESSEE, DESPITE SERVICE OF VARIOUS NOTICES. C IT (A) THEREAFTER ON THE BASIS OF MATERIAL ON RECORD FINALIZED THE ORDER BY GIVING PARTIAL RELIEF TO ASSESSEE. THE REVENUE BEING AGGRIEVED BY THE ORDER OF CIT (A) IS NOW IN APPEAL BEFORE US. 6. BEFORE US THE DEPARTMENT HAS RAISED 3 GROUNDS WI TH RESPECT TO UNACCOUNTED SALES AND PROFIT THEREON. SINCE ALL THE 3 GROUNDS ARE RELATED AND INTERLINKED ALL THE 3 GROUNDS ARE TAKEN TOGETHER. 7. DURING THE COURSE OF ASSESSMENT PROCEEDINGS A.O. OBSERVED THAT THE TOTAL SALES OF ASSESSEE AS PER PROFIT AND LOSS ACCOUNT WAS RS.3,14,44,217/-. IN THE ABSENCE OF ANY DETAILS/CLA RIFICATION FROM ASSESSEE, THE A.O. CONSIDERED AND ALLOWED RS.2,64,3 8,268/- AS BEING TOWARDS THE COST OF RAW MATERIALS AND OTHER EXPENSE S. THE A.O. ACCORDINGLY COMPUTED NET PROFIT OF RS.50,05,949/- ( 3,14,44,217 LESS 2,64,38,268) AND ADDED IT TO THE TOTAL INCOME. FURT HER ON THE BASIS OF ITA NO.2 5/AHD/2009 ASSESSME NT YEAR 2005- 06 . 4 INFORMATION PROVIDED BY THE CENTRAL EXCISE AND CUST OMS DEPARTMENT TO CHIEF COMMISSIONER OF INCOME TAX, IT WAS REVEALE D THAT ON 1-8-2006 , CENTRAL EXCISE AND CUSTOMS DEPARTMENT, DAMAN COND UCTED ENQUIRY AT THE BUSINESS PREMISES OF ASSESSEE AND RECOVERED 12 INVOICES WHICH SHOWED ILLICIT SALES. THE ILLICIT SALES WERE ADMITTED BY THE PARTNER BEFORE CENTRAL EXCISE AUTHORITIES. IN THE A BSENCE OF ANY REPLY FROM ASSESSEE, THE A.O. BASED ON THE DETAILS OF PAR ALLEL INVOICES AND OTHER DOCUMENTS LIKE LORRY RECEIPTS ETC, ESTIMATED UNACCOUNTED SALES AT RS.2,11,00,317/-. AS THE RATIO OF PROFIT ON SALE AS PER P & L ACCOUNT WAS 15.92%, HE ESTIMATED PROFIT ON SALE OF RS.2,11, 00,317/- @ 15.92% I.E. RS.33,59,180/- AND ADDED TO TOTAL INCOME. 8. BEFORE CIT (A), THE ASSESSEE ONLY FILED GROUNDS OF APPEAL ALONG WITH STATEMENT OF FACTS. THERE WAS NO APPEARANCE BY ANY REPRESENTATIVE OF ASSESSEE BEFORE CIT (A). THE LD. CIT (A) UPHELD THE ADDITION OF RS.50,05,949/-, BEING THE ESTIMATE MADE TO NET PROFIT BUT DELETED THE ADDITION OF RS.33,59,180/- OF ESTIMATED NET PROFIT ON THE GROUND THAT THE TOTAL TURNOVER OF RS.3,14,44,217/- WAS INCLUSIVE OF UNACCOUNTED SALES OF RS.2,11,00,377/-. LD. CIT(A) O PINED THAT SINCE THE ESTIMATION OF PROFIT WAS MADE ON TOTAL SALES OF RS.3.14 CRORE, WHICH WAS INCLUSIVE OF UNACCOUNTED SALE, THE NET P ROFIT OF UNACCOUNTED SALE WAS AUTOMATICALLY INCLUDED IN THE ESTIMATED NET PROFIT OF RS.50,05,949/.THE DEPARTMENT BEING AGGRIE VED BY THE AFORESAID DECISION OF CIT (A) IS IN APPEAL BEFORE U S. ITA NO.2 5/AHD/2009 ASSESSME NT YEAR 2005- 06 . 5 9. BEFORE US, THE LD. D.R. CONTENDED THAT LD. CIT ( A) FAILED TO APPRECIATE THE FACT THAT THE NET PROFIT OF RS.50,05 ,949/- HAS BEEN CALCULATED ON THE BASIS OF SALES SHOWN BY ASSESSEE. THE EXCISE DEPARTMENT HAD IN THEIR ENQUIRY FOUND UNACCOUNTED S ALE OF RS.2,11,00,377/-. THE LD. CIT(A) CONSIDERED THIS AC COUNTED SALE AS PART OF THE SALE SHOWN IN THE BOOKS WHICH IS NOT TH E FACT. HE THEREFORE, CONTENDED THAT THE DELETION OF RS.33,59,180/- WAS W RONG AS 2 TYPES OF SALES NAMELY ACCOUNTED AND UNACCOUNTED SALES ARE IN VOLVED. ON THE ACCOUNTED SALE THE NET PROFIT COMES TO RS.50,05,949 /- AND ON UNACCOUNTED SALE THE NET PROFIT COMES TO RS.33,59,1 80/-.SINCE LD. CIT (A) HAS UPHELD NET PROFIT ON ACCOUNTED SALE HE SHOU LD HAVE UPHELD THE NET PROFIT ON UNACCOUNTED SALE ALSO. HE FURTHER CONTENDED THAT THERE WAS NO MATERIAL ON RECORD TO PROVE THAT PROFI T ON UNACCOUNTED SALE WAS INCLUSIVE OF THE TOTAL NET PROFIT ESTIMATE D BY A.O. 10. WE HAVE HEARD LD. D.R. AND PERUSED THE MAT ERIAL ON RECORD. THE FACTUAL MATRIX OF THE CASE IS THAT THE ASSESSME NT WAS MADE BY A.O. U/S.144 AS THERE WAS NO APPEARANCE BEFORE A.O. EVEN BEFORE CIT (A), THERE WAS NO REPRESENTATION FROM ASSESSEES SI DE. CENTRAL EXCISE DEPARTMENT CONDUCTED ENQUIRY AT BUSINESS PREMISES O F ASSESSEE AND THE PARTNER ADMITTED BEFORE THEM, THAT THE ASSESSEE HAD MADE SALES AND WHICH REMAINED UNRECORDED IN THE BOOKS OF ACCOU NTS. ON THE BASIS OF INFORMATION RECEIVED FROM EXCISE, THE A.O. ESTIMATED UNRECORDED SALES OF RS.2,11,00,377/- AND ESTIMATED NET PROFIT BY APPLYING THE NET PROFIT RATE OF THE RECORDED SALES (I.E.@ 15.92%) AT RS.33,59,180/-. THERE IS NOTHING ON RECORD EITHER B EFORE LOWER ITA NO.2 5/AHD/2009 ASSESSME NT YEAR 2005- 06 . 6 AUTHORITIES OR BEFORE US TO PROVE THAT THE UNACCOUN TED SALES OF RS.2.11 CRORE WAS INCLUDED IN THE SALE OF RS.3.14 CRORES AND THEREBY THE PROFIT ON UNACCOUNTED SALES ESTIMATED BY A.O. W AS ALSO THEREBY INCLUDED IN THE NET PROFIT ESTIMATED ON THE RECORDE D SALES. IN VIEW OF THESE FACTS, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.33,59,180/- MADE BY A.O. WE ACCORDINGLY, UPHELD THE ORDER OF A.O. 11. IN THE RESULT, APPEAL OF THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 1-6 - 2012. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNT ANT MEMBER AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) VALSAD. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD.