Singal Udyog, Ludhiana V. ITO, W-1(3), Ludhiana

ITA 256/CHANDI/2018

AI Insights

The case involves M/s Singal Udyog, a partnership firm dealing in ferrous metals and scrap, which appealed against the order of the CIT(A), Ludhiana, confirming an addition of Rs.37,12,424 to their income for the assessment year 2014-15. The addition was based on the alleged suppression of sales to a sister concern, M/s Singal Overseas, during high seas sales. The Assessing Officer had noted discrepancies in profit margins on sales to this sister concern, particularly losses incurred in March 2014, which were not satisfactorily explained by the assessee. The Tribunal dismissed the appeal due to repeated non-compliance and lack of prosecution by the assessee, despite multiple opportunities given to present their case.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133744 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 18-01-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 28-02-2018
• Other Referred Cases: CIT Vs. Durga Prasad More [82 ITR 540], Sumati Dayal Vs. CIT[214 ITR 801]
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 13

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,च瀃डीगढ़ 瀈यायपीठ च瀃डीगढ़ 瀈यायपीठच瀃डीगढ़ 瀈यायपीठ च瀃डीगढ़ 瀈यायपीठ , च瀃डीगढ़ च瀃डीगढ़च瀃डीगढ़ च瀃डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘SMC CHANDIGARH BEFORE: SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकर आयकरआयकर आयकर अपील अपीलअपील अपील सं संसं सं./ ITA No. 256/CHD/2018 Assessment Year : 2014-15 M/s Singal Udyog, B-82/20, College Road, Civil Lines, Ludhiana. बना म VS The ITO, Ward 1(3), Ludhiana. 瀡थायी लेखा सं./PAN /TAN No: ABNFS5533L अपीलाथ牸/Appellant 灹瀄यथ牸/Respondent िनधा榁琇रती क琉 ओर से/Assessee by : None राज瀡व क琉 ओर से/ Revenue by : Shri Akashdeep, JCIT, Sr.DR तारीख/Date of Hearing : 19.01.2023 उदघोषणा क琉 तारीख/Date of Pronouncement : 24.01.2023 आदेश आदेशआदेश आदेश/ORDER This is an appeal filed by the assessee against the order of ld. CIT(A), Ludhiana dated 18.12.2017 pertaining to assessment year 2014-15 wherein the assessee has taken the following grounds of appeal: 1. The Worthy Commissioner of Income Tax (Appeals)-I has erred in dismissing the appeal filed by the Appellant. 2. That the Ld. CIT(A)-1 has erred in confirming the addition of Rs.37,12,424 made by the Assessing Officer by holding that the Assessing Officer was justified in treating the income at Rs.37,12,424/- as suppression of sales as per Para 1 of the order of CIT(A)-1. 3. That the Ld. CIT(A)-1 has erred in not considering and ignoring the submissions and facts as filed before the CIT(A)-1 as well as before the Assessing Officer. 4. That the Ld. CIT(A)-1 has also erred in holding that no explanation was given regarding the objections raised by the Assessing Officer during the course of assessment proceedings. ITA 256 /CHD/2018 A.Y. 2014-15 Page 2 of 5 5. That all the information and explanation already filed before the Assessing Officer and also before the CIT(A)-1 and the same are not considered properly. 6. That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 2. At the outset, it is noted that none has appeared on behalf of the assessee nor any adjournment application has been filed. The appeal was filed way back in the year 2018 and on account of non prosecution on behalf of the assessee, the matter was dismissed by the Co-ordinate Bench vide its order dated 23.05.2018. Subsequently, the assessee moved a Miscellaneous Application stating that the assessee did not receive any notice about the scheduled date of hearing and it was prayed that the order so passed by the Co-ordinate Bench may be recalled and assessee be allowed to be heard on merits. 3. Taking into consideration the explanation submitted by the assessee, the order was recalled by the Coordinate Bench vide its order dated 21.06.2022 and matter was fixed for hearing on 21.07.2022. Thereafter, the matter was fixed up from time to time and again there was no compliance on the part of the assessee/AR. The ld. AR subsequently withdrawn his Power of Attorney and thereafter, the notice was again served on the assessee through the Departmental Representative at the revised address given in Form 36. Again, there was no compliance and thereafter to give one final opportunity to the assessee, notice ITA 256 /CHD/2018 A.Y. 2014-15 Page 3 of 5 was again issued through RPAD and again there was no compliance on the part of the assessee. Therefore, taking into consideration the fact that the appeal was filed way back in the year 2018 and there has been complete non compliance on the part of the assessee showing its lack of interest in prosecuting the present appeal, it was decided that no useful purpose would be served in adjourning the matter any further and basis the material available on record and after hearing the ld. DR, the matter is hereby decided. 4. During the course of hearing, ld. DR taken me through the order of the AO as well as the ld. CIT(A) and it was submitted that the matter has been duly examined by the ld. CIT(A) and in absence of any explanation submitted by the assessee even during the appellate proceedings, the suppression of sales to sister concern determined by the AO has been confirmed by the ld. CIT(A). In this regard, our reference was drawn to the findings of the ld. CIT(A) at para 1 and para 3 of the impugned order which reads as under: “1. The appellant is a partnership firm dealing in all types of ferrous metals and scrap. For the Assessment Year under consideration i.e. A.Y.2014-15, the appellant firm returned an income of Rs.10,00,850/-, which return was scrutinised. In the assessment proceedings, the AO noted that the appellant firm incurred losses in making high seas sales to one of the sister concerns viz. M/s Singal Overseas. The said sister concern happened to be the proprietorship concern of Sh. Mahesh Gupta, who is also a partner in the appellant firm. The AO analysed the data of high seas sales to the said sister concern on 13 occasions during the year under consideration, from which analysis it was found that on 8 occasions of sale, there was an average profit of 1.85% whereas ITA 256 /CHD/2018 A.Y. 2014-15 Page 4 of 5 on 5 occasions of sales, all in the months of March, 2014, the appellant firm incurred an average loss of 26.6%. On being confronted with this analysis of the AO, the appellant firm chose to justify be same by stating that orders are placed with delivery schedule of 2 to 3 months. The prices were stated to be high at the time of placement order in December, 2013, which experienced a drop of 30% when the imported material was sold by way of high seas sales in the month of March, 2014. No proof of the said contention was adduced before the AO except the Steel Authority of India Ltd.'s Ex-Plant Base prices for representative steel items as on 1 st of January, 2014. The AO noted in the impugned assessment order that the appellant firm was trying to compare the prices of different materials of steel to justify the contention of drop in prices from December, 2013 to March, 2014. The AO, however, noted that during the said period some high seas sale were made to the sister concern at a huge loss of around 26.6%, whereas on sales made on 16/03/2014, there was a profit of 4.6%. In view of this meticulous finding by the AO, the contention of the appellant was rejected. Applying the ratio of CIT Vs. Durga Prasad More [82 ITR 540] & Sumati Dayal Vs. CIT[214 ITR 801], wherein the Hon'ble Supreme Court laid down the proposition of law that in appreciating documents, evidences and evidence on record, the Courts cannot be oblivious to the surrounding facts and circumstances of the case and surrounding probabilities, the AO estimated the sale price of the high seas sales made to the sister concern on 5 occasions during the month of March, 2014 at an average profit of 1.85%, to bring them at par or in consonance with the sales made in the months of January and February, 2014[8 occasions] at an average profit of 1.48%. The said estimation resulted in an addition of Rs.37,12,424/- on account of suppression of sales made to the sister concern. 2.................. 3. In the appellate proceedings also, no explanation was given regarding the objections raised by the AO in the assessment proceedings except stating that the AO has made presumptious addition. It was again reiterated that the price of the traded items had declined during the month of March, 2014 which resulted in generation of losses. However, the appellant has not been able to controvert the findings of the AO that even in the month of March 2014, on some sales, there were profits. Besides, the appellant has not been able to bring on record the necessity of incurring losses by making sales to the proprietorship concern of one of the partners of the appellant firm by way of high sea sales. In the circumstances, it is held that the AO's estimation of the sale prices on 5 occasions in the month of March, 2014 qua the sales made to the said sister concern is too reasonable and fair to be interfered with. The consequent addition to the returned income is, thus, upheld.” 5. Having gone through the material available on record and after hearing the ld. DR, I find that the matter has been duly examined by the lower authorities and in view of lack of appropriate explanation submitted by the assessee justifying the ITA 256 /CHD/2018 A.Y. 2014-15 Page 5 of 5 incurrence of loss of 26.6% in the month of March on sales to its sister concern as against average profit of 1.85% in earlier period, the AO was justified in estimating the average profit at 1.48% taking into consideration the profit declared in the earlier period and determining the suppressed sales to sister concern which has been brought to tax. Even during the appellate proceedings before the ld CIT(A), the assessee didn’t furnish any explanation supported by appropriate documentation to rebut the findings of the AO. In light of the same, I, do not see any justifiable basis to interfere with the findings of the ld CIT(A) and the same is herby confirmed. 6. In the result, the appeal of the assessee is dismissed. Order pronounced in the Open Court on 24 th January, 2023. Sd/- (VIKRAM SINGH YADAV) लेखा लेखालेखा लेखा सद瀡य सद瀡यसद瀡य सद瀡य/ Accountant Member “Poonam” आदेश क琉 灹ितिलिप अ灡ेिषत/ Copy of the order forwarded to : 1. अपीलाथ牸/ The Appellant 2. 灹瀄यथ牸/ The Respondent 3. आयकर आयु猴/ CIT 4. आयकर आयु猴 (अपील)/ The CIT(A) 5. िवभागीय 灹ितिनिध, आयकर अपीलीय आिधकरण, च瀃डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड榁 फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar