ALKARIM SCRAP TRADERS PVT. LTD., MUMBAI V. ITO 6(1)(2), MUMBAI

ITA 2615/MUM/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1666 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 11-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S R KIRTANE
• Section: 143(3); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER ITA NO.2614/MUM/2016 (ASSESSMENT YEAR 2009-10) ITA NO.2615/MUM/2016 (ASSESSMENT YEAR 2011-12) M/S. ALKARIM SCRAP TRADERS PVT. LTD., 204, QUAY STREET, DARUKHANA, MUMBAI . PAN: AAECA 1442P ...... AP PELLANT VS. THE INCOME TAX OFFICER 6(1)(1), MUMBAI. .... RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SHRI S.R.KIRTANE DATE OF HEARING : 28/11/2016 DATE OF PRONOUNCEMENT : 30/11/2016 ORDER BOTH THE APPEALS RELATE TO THE SAME ASSESSEE INVO LVING A COMMON ISSUE FOR ASSESSMENT YEARS 2009-10 AND 2011-12 AND ACCORD INGLY, THEY HAVE BEEN CONSOLIDATED AND HEARD TOGETHER FOR THE SAKE OF CON VENIENCE AND BREVITY. 2. THESE APPEALS ARE DIRECTED AGAINST SEPARATE O RDERS PASSED BY CIT(A)- 12, MUMBAI DATED 13/01/2016 AND 11/01/2016, WHICH I N TURN, ARISE OUT OF TWO ORDERS PASSED BY THE ASSESSING OFFICER FOR ASSE SSMENT YEARS 2009-10 AND 2011-12 UNDER SECTION 143(3) R.W.S. 147 OF THE IN COME TAX ACT, 1961 (IN SHORT THE ACT) DATED 18/02/2015 AND 24/2/2014 RESPECT IVELY. 2 ITA NO.2614&2615/MUM/2016 (ASSESSMENT YEAR 2009-10&2011-12) 3. THE ONLY DISPUTE AGITATED BY THE ASSESSEE IN BOT H THE ASSESSMENT YEARS IS WITH REGARD TO THE ACTION OF THE INCOME TAX AUTH ORITIES IN DETERMINING THE TOTAL INCOME BY ADOPTING THE G.P. RATE OF 8% AS AGA INST THE DECLARED GROSS PROFITS. AT THE TIME OF HEARING, NO APPEARANCE HAS BEEN MADE ON BEHALF OF THE ASSESSEE, BUT A LETTER DATED 23/11/2016 HAS BEEN SU BMITTED BY THE APPELLANT COMPANY, WHICH READS AS UNDER:- I MINAZ MOHAN GADHIA, DIRECTOR OF ABOVE COMPANY, F URNISH THE SUBMISSION IN ABOVE CASE AS UNDER:- ASST. YR. 2009 - 10 & 2011 12 LD. ASSESSING OFFICER HAS ACCEPTED SALES TURNOVER & EXPENSES CLAIMED. LD. ASSESSING OFFICER CALCULATED GROSS PROFIT @ 8% ON TURNOVER AND DEDUCTED EXPENSES DEBITED TO PROFIT AND LOSS AC COUNT AND DERIVED AT TOTAL INCOME. DURING THE FINANCIAL YEAR 2008-09 & 2 010-11, YOUR APPELLANT HAD MADE, PURCHASES FROM CERTAIN PARTIES WHOSE M.VAT REGISTRATION NO. WERE SUBSEQUENTLY CANCELLED AND PU RCHASES COULD NOT BE PROVED. YOUR HONOUR, APPELLANT COMPANY IS DEALER OF SCRAP M ATERIAL OF IRON AND STEEL LD. ASSESSING OFFICER DERIVED GP RAT IO OF 8% ON THE BASIS OF STATISTIC DATA AS AVAILABLE TO HIM OF IRON AND STEE L MANUFACTURING INDUSTRIES WHICH HAS NO RELATION WITH THE GP MARGIN ON RE-SELLING OF SCRAP MATERIAL OF IRON AND STEEL, WHEREIN 1.5% TO 2 .5% GP MARGIN IS REASONABLE AND ACCEPTABLE WHICH YOUR APPELLANT HAS DECLARED. EXPECTING JUSTICE FROM YOUR HONOUR. FINANCIAL CONDI TION OF YOUR APPELLANT IS SUCH THAT NO COUNSEL OR ADVOCATE CAN B E APPOINTED. 3.1 ON THE AFORESAID BASIS, THE APPEAL IS BEING DIS POSED OFF AFTER CONSIDERING THE ABOVE SUBMISSIONS AND HEARING THE LD. DEPARTMEN TAL REPRESENTATIVE ON MERITS. 4. IN BRIEF, THE RELEVANT FACTS ARE THAT ASSESSEE W AS FOUND TO HAVE MADE PURCHASES FROM CERTAIN CONCERNS, WHICH WERE FOUND T O BE BOGUS, AND THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 145 OF THE ACT AND REJECTED THE BOOK RESULTS DECLARED. THE ASSESSING OFFICER D ETERMINED THE TOTAL INCOME 3 ITA NO.2614&2615/MUM/2016 (ASSESSMENT YEAR 2009-10&2011-12) BY ADOPTING G.P RATE OF 8% OF THE TOTAL TURNOVER DE CLARED BY THE ASSESSEE AS AGAINST THE G.P RATE OF 1.48% DECLARED BY THE ASSES SEE FOR ASSESSMENT YEAR 2009-10 AND 2.36% FOR ASSESSMENT YEAR 2011-12. AS A CONSEQUENCE, ADDITIONS OF RS.19,87,938/- AND RS.37,80,128/- HAVE BEEN MADE TO THE RETURNED INCOME FOR THE ASSESSMENT YEARS2009-10 AND 2011-12 RESPECT IVELY. THE SAID ADDITIONS HAVE SINCE BEEN SUSTAINED BY THE CIT(A), AGAINST AS SESSEE IS FURTHER IN APPEAL BEFORE THE TRIBUNAL. 5. BEFORE ME, THE ONLY PLEA RAISED BY THE ASSESSEE IN ITS WRITTEN SUBMISSION IS THAT THE G.P RATE OF 8% ADOPTED BY THE ASSESSING OFFICER IS WRONG INASMUCH AS, IT RELATES TO IRON & STEEL INDUSTRIES, WHEREAS ASSESSEE IS A DEALER/TRADER OF IRON& STEEL SCRAP MATERIAL. IN THIS MANNER, IT IS SOUGHT TO BE POINTED OUT THAT THE G.P.RATE DECLARED BY THE ASSESSEE IN BOTH THE A SSESSMENT YEARS IS REASONABLE. 6. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE POINTED OUT THAT THE ASSESSING OFFICER HAD JUSTIFIABLE REASONS TO MA KE THE ADDITIONS INASMUCH AS THE CORRECTNESS AND FAIRNESS OF THE ACCOUNTS BOOK S TOOD DISCREDITED IN VIEW OF THE FINDINGS CONTAINED IN THE ASSESSMENT ORDER, WHI CH IN ANY CASE ARE NOT BEING CHALLENGED BY THE ASSESSEE . 7. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION . QUITE CLEARLY, ASSESSEE COMPANY DOES NOT DISPUTE THE ACTION OF THE ASSESSI NG OFFICER IN REJECTING THE BOOKS OF ACCOUNT AND ESTIMATING THE INCOME FOR THE CAPTIONED ASSESSMENT YEARS. THE ONLY POINT OF DISPUTE BROUGHT OUT BY THE APPELLANT BEFORE ME IS THE LEVEL OF ESTIMATION MADE BY THE ASSESSING OFFIC ER. IT IS POINTED OUT THAT THE G.P RATE OF 8% ADOPTED BY THE ASSESSING OFFICER IS ON A HIGHER SIDE BECAUSE THE 4 ITA NO.2614&2615/MUM/2016 (ASSESSMENT YEAR 2009-10&2011-12) ASSESSING OFFICER HAS CONSIDERED THE PROFIT RATES O F BUSINESSES, WHICH ARE ENGAGED IN IRON & STEEL MANUFACTURING, WHEREAS ASSE SSEE IS MERELY A DEALER/TRADER OF IRON & STEEL SCRAP. IN MY CONSI DERED OPINION, THE PLEA OF THE ASSESSEE IS VERY MUCH EMERGING FROM THE ASSESSMENT ORDER ITSELF, INASMUCH AS, THE BUSINESS OF THE ASSESSEE HAS BEEN REGARDED AS DEALER OF IRON AND STEEL. THUS, THE ASSESSING OFFICER HAS MISDIRECTED HIMSELF IN ADOPTING THE G.P RATE @8%. AT THE SAME TIME, IT IS ALSO QUITE CLEAR FROM THE ASSESSMENT ORDER THAT THE UNRELIABILITY OF THE BOOK RESULTS DECLARED BY T HE ASSESSEE STOOD ESTABLISHED AND IN ANY CASE, THE SAME IS NOT BEING DISPUTED BY THE ASSESSEE. UNDER THESE CIRCUMSTANCES, THE PLEA OF THE ASSESSEE TO DETERMIN E THE INCOME BASED ON THE G.P RATE DECLARED IN THE BOOKS OF ACCOUNT ITSELF IS ALSO UNJUSTIFIED AND INEXPLICABLE. SO HOWEVER, CONSIDERING THE EXCESSIV E RATE OF ESTIMATION MADE BY THE ASSESSING OFFICER, I DEEM IT FIT AND PROPER TO REDUCE THE ESTIMATION, AND FOR THAT MATTER, IT IS HEREBY DIRECTED THAT THE G.P RATE OF 4% BE ADOPTED IN BOTH THE ASSESSMENT YEARS IN ORDER TO DETERMINE THE TOTA L INCOME ASSESSABLE IN THE HANDS OF THE ASSESSEE. AS A CONSEQUENCE, THE RESPE CTIVE ORDERS OF THE CIT(A) ARE SET-ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE THE INCOME OF THE ASSESSEE ACCORDINGLY. 8. IN THE RESULT, APPEALS OF THE ASSESSEE ARE PARTL Y ALLOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 30/11/2016 SD/- (G.S.PANNU) ACCOCUNTANT MEMBER MUMBAI, DATED 30/11/2016 VM , SR. PS 5 ITA NO.2614&2615/MUM/2016 (ASSESSMENT YEAR 2009-10&2011-12) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI