Shri Lalit Garg (HUF), Mumbai V. The Income Tax Officer, Vapi Ward-5, Vapi

ITA 2603/AHD/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2110 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 07-10-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R P RASTOGI
• Assessee Lawyers: A GOPALAKRISHNAN

Judgement Text

SHRI.LALIT GARG (HUF) /I.T.A.NO.2603/AHD/2016/SRT /A.Y.:2012-13 PAGE 1 OF 3 , , IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT . . , . . , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . . ./ I.T.A NO.2603 /AHD/2016/SRT / A.Y.:2012-13 SHRI LALIT GARG (HUF), 1502, PARK RESIDENCY, UPPER GOVIND NAGAR, MALAD (EAST) MUMBAI, MUMBAI 400 097. PAN: AADHG 5087L V S . INCOME TAX OFFICER, VAPI WARD -5, VAPI. APPELLANT /RESPONDENT /ASSESSEE BY SHRI A.GOPALA K RISHNAN, CA /REVENUE BY SHRI R.P.RASTOGI, SR.DR / DATE OF HEARING: 17.04.2018 /PRONOUNCEMENT ON 17.04.2018 /O R D E R PER O. P. MEENA, ACCOUTANT MEMBER: 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-VALSAD [IN SHORT THE CIT(A)] DATED 02.07.2016 PERTAINING TO ASSESSMENT YEAR 2012-13, WHICH IN TURN HAS ARISEN FROM THE ORDER DATED 24.03.2015 PASSED BY THE ITO WARD-5, SURAT (IN SHORT THE AO ) UNDER SECTION 143 (3) OF INCOME TAX ACT,1961 ( IN SHORT THE ACT). 2. THE SOLE GROUND OF APPEAL RELATES TO ADOPTING NET PROFIT RATE AT 3% OF THE TURNOVER AS AGAINST 0.72% DISCLOSED BY THE ASSESSEE. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS TRADER IN PURCHASE AND SALE OF PAPER COLLECTED ON DAY TO DAY BASIS, FOR LAST 5 YEARS FOR WHICH COMPLETE QUANTITY DETAILS ARE MAINTAINED WHICH ARE ACCEPTED SHRI.LALIT GARG (HUF) /I.T.A.NO.2603/AHD/2016/SRT /A.Y.:2012-13 PAGE 2 OF 3 BY THE AO. THE ASSESSEE HAS SHOWN A SUM OF RS.14,18,355/- AS GROSS PROFIT AND RS.6,29,457/- AS NET PROFIT WHICH WORKED OUT TO 1.62% AND 0.72% OF TURNOVER RESPECTIVELY. HOWEVER, THE CIT (A) ADOPTED NET PROFIT RATE AT 3% ON THE BASIS OF FINDING OF HIS PREDECESSOR CIT (A) IN A.Y. 2011-12. THE LEARNED COUNSEL FOR THE ASSESSEES FAIRLY CONCEDED THAT THE RATE OF 3% ADOPTED WAS ALSO CONFIRMED BY TRIBUNAL IN APPEAL IN I.T.A. NO. 2073/AHD/2013 DTD. 31.08.2016 IN ASSESSEE OWN CASE. HOWEVER, THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT NET PROFIT RATE SHOULD BE ADOPTED AVERAGE RATE OF GROSS PROFIT AND NET PROFIT OF 1.68% + 0.72% TO MEET THE END OF JUSTICE. 4. PER CONTRA, THE LD. DR ARGUED THAT THE ISSUE IS COVERED IN FAVOUR OF REVENUE BY THE DECISION IN ASSESSEE`S OWN CASE BY THE ORDER OF TRIBUNAL. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THAT ISSUE OF ADOPTING NET PROFIT RATE AT 3% HAS BEEN DULY COVERED BY DECISION OF TRIBUNAL FOR A.Y. 2011-12 IN THE ASSESSEES` OWN CASE. THE FINDINGS RECORDED IN APPEAR 5 OF SAID ORDER IS REPRODUCED AS UNDER: WE HAVE HEARD RIVAL SUBMISSIONS, PRESSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO DISALLOWANCE OF PURCHASE ON ADHOC BASIS BY THE AO. WE FIND THAT THE LD.CIT(A) WHILE GRANTING PARTIAL RELIEF TO THE ASSESSEE HAS NOTED THAT ASSESSEE IS TRADER OF WASTE-PAPER AND PURCHASER OF WASTE-PAPER AND ASSESSEE PURCHASES IT FROM SMALL TIME VENDORS AND IN TURN THE WASTE-PAPER IS SUPPLIED TO THE PAPER-MILLS. HE HAS FURTHER GIVEN A FINDING THAT THE PURCHASE PRICE OF WASTE-PAPER IS FIXED BY THE GUJARAT PAPER MILLS ASSOCIATION AND THE WASTE-PAPER TRADERS HAVE VAT REGISTRATION AND OTHER REQUIRED PERMISSIONS AND IT FILES THE DETAILS OF TURNOVER, ETC. THROUGH THE VAT RETURNS BEFORE THE VAT AUTHORITIES. HE HAS FURTHER NOTED THAT AO HAS NOT DOUBTED THE PURCHASES MADE BY THE ASSESSEE NOR HAS GOT ON RECORD ANY INSTANCE OF WASTE-PAPER PURCHASES MADE BY THE ASSESSEE FOUND TO BE BOGUS OR INFLATED. HE HAS FURTHER NOTED THAT ASSESSEE HAD FURNISHED QUANTITATIVE DETAILS OF PURCHASE AND STOCK ALONGWITH TAX AUDIT REPORT AND HAD SHOWN A GP OF 7% AND THAT IN SIMILAR CASES, THE CENTRAL CIRCLE SURAT HAD ESTIMATED THE GROSS PROFIT AND ENHANCED THE RATE BETWEEN 0.5% TO 0.75 %. CONSIDERING THE TOTALITY OF THE FACTS, HE HAS GIVEN A FINDING THAT 15% MARGIN IN THE TRADING BUSINESS IS NOT POSSIBLE AND THEREAFTER HE CONSIDERED THAT THE NET PROFIT RATE AT 3% AS AGAINST 2.68% SHOWN BY THE ASSESSEE. BEFORE US, NEITHER THE REVENUE NOR THE ASSESSEE HAS PLACED ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF LD.CIT(A). WE FURTHER FIND THAT ON IDENTICAL ISSUE, IN THE CASE OF ITO VS. TAYAB YUNUS BARUDGAR (ITA NO.1351/AHD/2012 AND CO NO.155/2012) VIDE ORDER DATED 27/05/2016 THE COORDINATE BENCH OF TRIBUNAL HAD DISMISSED THE GROUND OF REVENUE BY HOLDING AS UNDER:- 4. WE HAVE HEARD THE LD.DR PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) WHILE DECIDING THE ISSUE IN FAVOUR OF ASSESSEE HAS GIVEN A FINDING THAT THOUGH THE AO HAS DOUBTED THE PURCHASES BUT HAS NOT BROUGHT ON RECORD ANY INSTANCE OF BOGUS OR INFLATED PURCHASE AND HAS ALSO NOT DOUBTED THE SALE FIGURE DISCLOSED BY SHRI.LALIT GARG (HUF) /I.T.A.NO.2603/AHD/2016/SRT /A.Y.:2012-13 PAGE 3 OF 3 THE ASSESSEE. HE HAS FURTHER GIVEN A FINDING THAT PAPER MILL ASSOCIATION HAD FIXED THE PRICE FOR PURCHASES OF WASTE-PAPER FROM THE TRADERS AND, THEREFORE, THE SCOPE OF MANIPULATED SALES PRICE WAS NOT ESTABLISHED AND THERE WAS NO EVIDENCE TO CONCLUDE THAT WASTE-PAPER SUPPLIER HAVE HIGHER GROSS MARGIN ON SALES ONLY BECAUSE THEIR PURCHASES ARE FROM SMALL TYPE VENDORS. HE HAS FURTHER GIVEN A FINDING THAT 15% MARGIN OF PROFIT IS NOT POSSIBLE IN THE CASE OF ASSESSEE. HE HAS FURTHER GIVEN A FINDING THAT CENTRAL CIRCLE SURAT HAD COMPLETED THE ASSESSMENT OF SMALL TRADERS BY ESTIMATING THE GROSS PROFIT AND HAD CONSIDERED THE GROSS PROFIT RATE BETWEEN 0.5% TO 0.75% ON SIMILAR FACTS AS THAT OF ASSESSEE. HE THEREAFTER AFTER CONSIDERING THE GROSS PROFIT AND NET PROFIT RATIO SHOWN BY THE ASSESSEE, ESTIMATED THE NET PROFIT AT 2% AS AGAINST 1.10% DISCLOSED BY THE ASSESSEE.. BEFORE US, REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF LD.CIT(A). LOOKING TO THE TOTALITY OF THE FACTS OF THE PRESENT CASE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A). THUS, THIS GROUND OF REVENUE IS DISMISSED. 6. CONSIDERING THE TOTALITY OF THE FACTS AND FOLLOWING THE DECISION OF COORDINATE BENCH CITED HEREINABOVE, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A) AND THUS GROUND OF THE REVENUE AS WELL ASSESSEE ARE DISMISSED 6. CONSIDERING THE TOTALLY OF FACTS AND FOLLOWING DECISION OF CO-ORDINATE BENCH IN THE CASE OF THE ASSESSEE ITSELF, WE FIND NO REASON TO DEVIATE WITH THE FINDING OF LD. CIT (A) . ACCORDINGLY SAME IS UPHELD. THUS, THIS GROUNDS OF APPEAL OF APPEAL OF THE ASSESSEE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.04.2018. SD/- SD/- ( . . /C.M. GARG) ( . . / O.P.MEENA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER / SURAT, DATED: 17 TH APRIL , 2018 S.GANGADHARA RAO COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT