Shri Shivprakash U. Rathi, Surat V. The Income Tax Office,Ward-5(2), Surat

ITA 2569/AHD/2014

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1704 (ITAT-SURAT)
• Duration Of Justice: 4 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 17-09-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: RASESH SHAH
• Keywords: Opportunity of being heard
• Section: 5(2)

Judgement Text

SHIVPRAKASH U RATHI V. ITO WD-5(2) SURAT /I.T.A. NO.2569/AHD/2014/A.Y.04-05 PAGE 1 OF 4 , , IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRIBHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O. P. MEENA, ACCOUNTANT MEMBER . . ./ I.T.A NO.2569/AHD/2014: / ASSESSMENT YEAR: 2004-05 SHRI SHIVPRAKASH U RATHI, G-450, RADHA KRISHNA TEXTILE MARKET , RING ROAD SURAT 395002 PAN:ABBPR 3957M V. INCOME TAX OFFICER, WARD- 5(2) SURAT APPELLANT /RESPONDENT ASSESSEE BY SHRI RASESH SHAH, CA REVENUE BY SHRI PRASOON KABRA, SR. D.R. DATE OF HEARING 16.05.2019 DATE OF PRONOUNCEMENT 16.05.2019 /ORDER PER O. P. MEENA, AM 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I, SURAT (IN SHORT THE CIT (A)) DATED 12.06.2014PERTAINING TO ASSESSMENT YEAR 2004-05. 2. GROUND NO. 1 STATES THE LD. CIT (A) HAS ERRED IN ESTIMATION OF AVERAGE GROSS PROFIT OF LAST THREE YEARS WHEN THE ASSESSEE HAS SHOWN CORRECT TRADING RESULT AND THERE WAS NO JUSTIFICATION FOR ANY ADDITION. 3. SUCCINCT FACTS ARE THAT THE ASSESSEE HAS DISCLOSED GROSS PROFIT RATE AT RS. 5.67% ON TURNOVER OF RS. 1.21 CRORES IN COMPARING TO LAST YEAR`S GROSS PROFIT RATE OF 6.7% . THE AO MADE ADDITION OF RS. 5,25,796 BY SHIVPRAKASH U RATHI V. ITO WD-5(2) SURAT /I.T.A. NO.2569/AHD/2014/A.Y.04-05 PAGE 2 OF 4 ESTIMATING GROSS PROFIT OF AVERAGE GROSS PROFIT RATE AT 10% ON THE BASIS OF GROSS PROFIT RATE ADOPTED IN THE CASE OF M/S. DHRU PRINTS A SISTER CONCERN, OF THE ASSESSEE BY THE AO. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT (A)WHO HAD CONFIRMED THE ABOVE ADDITION. THE ASSESSEE HAS FILED AN APPEAL BEFORE THE TRIBUNAL WHO VIDE ORDER DATED 11.02.2011 HAS SET-ASIDE THE ISSUE TO THE FILE OF CIT (A). IN CONSEQUENCE TO FRESH PROCEEDINGS, THE CIT (A) DIRECTED THE AO TO CONSIDER THE CONSIDER AVERAGE GROSS PROFIT RATE OF LAST THREE YEARSAS DISCLOSED BY THE ASSESSEE. 4. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO HAS APPLIED GROSS PROFIT RATE AT 10% BASED ON GROSS PROFIT RATE ADOPTED BY THE AO IN THE CASE OF M/S. DHRUV PRINTS, A SISTER CONCERN, BEING SAME LINE OF BUSINESS. HOWEVER, IN APPEAL, THE TRIBUNAL HAS DELETED THE SAID ESTIMATION OF GROSS PROFIT IN SAID CASE VIDE APPEAL IN I.T.A.NO. 2037/AHD/2008 DATED 29.05.2015. COPY OF ORDER IS PLACED ON RECORD. FURTHER THE TRIBUNAL HAS SET-ASIDE THE CASE OF THE ASSESSEE TO THE FILE OF THE CIT (A) WITH A DIRECTION TO CONSIDER THE GROSS PROFIT RATE OF SISTER CONCERN IN THE CASE OF M/S. DHRU PRINTS VIDE ORDER DATED 11.02.2011 IN I.T.A.NO. 2073/AHD/2008 A.Y. 2004-05 IN THE CASE OF THE ASSESSEE. THEREFORE, THE BASIS ON WHICH ADDITION MADE BY THE AO IS STANDS DELETED BY THE TRIBUNAL HENCE, THIS CASE IS SHIVPRAKASH U RATHI V. ITO WD-5(2) SURAT /I.T.A. NO.2569/AHD/2014/A.Y.04-05 PAGE 3 OF 4 COVERED BY SAID DECISION, THEREFORE, THE ADDITION MADE BASED ON GROSS PROFIT OF SISTER CONCERN BE DELETED IN THE CASE OF THE ASSESSEE. 5. PER CONTRA, THE LD. SR. D.R. RELIED ON THE ORDER OF CIT (A) AND SUBMITTED THAT CIT (A) HAS RIGHTLY DIRECTED THE AO TO CONSIDER AVERAGE GROSS PROFIT RATE OF LAST THREE YEARS AS DISCLOSED BY THE ASSESSEE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE AO HAS MADE ADDITION ON ACCOUNT OF GROSS PROFIT BY APPLYING GROSS PROFIT RATE AS ADOPTED IN THE CASE OF SISTER CONCERN OF THE ASSESSEE I.E. M/S. DHRU PRINTS. HOWEVER, THE TRIBUNAL VIDE DATED 11.02.2011 IN PARA 7.1 HAS DIRECTED THE CIT (A) TO CONFRONT THE ASSESSEE WITH THE RESULT OF DHRU PRINTS AND RE-ADJUDICATE THE ISSUE AFRESH AFTER GIVING OPPORTUNITY OF BEING HEARD TO BOTH SIDES.WE FIND THAT THE TRIBUNAL HAS DELETED THE GROSS PROFIT ADDITION MADE IN THE CASE OF M/S. DHRU PRINTS VIDE ITS ORDER DATED 29.05.2015 (SUPRA). HENCE, THE VERY BASIS ON WHICH GROSS PROFIT RATE APPLIED STANDS TO BE DELETED. THEREFORE, THE ADDITION MADE ON ACCOUNT OF GROSS PROFIT RATE BY CONSIDERING GROSS PROFIT RATE OF SISTER CONCERN IS NO LONGER SURVIVED, HENCE, ADDITION BASED ON SUCH FINDING IS THEREFORE, DIRECTED TO BE DELETED. THIS GROUND OF APPEAL IS THEREFORE, ALLOWED. 7. GROUND NO.2: IS NOT PRESSED BEFORE US BY THE LEARNED COUNSEL FOR THE ASSESSEE, EX-CONSEQUENTI, IT IS TREATED AS DISMISSED AS NOT PRESSED. SHIVPRAKASH U RATHI V. ITO WD-5(2) SURAT /I.T.A. NO.2569/AHD/2014/A.Y.04-05 PAGE 4 OF 4 8. GROUND NO.3 : IS GENERAL IN NATURE; HENCE, DOES NOT REQUIRE OUR ADJUDICATION. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 10. THE ORDER PRONOUNCED IN THE OPEN COURT ON 16-05-2019 SD/- SD/- (BHAVNESH SAINI) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER SURAT: DATED: 16 TH MAY, 2019/OPM COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT