Shri Amit Kiritkumar Shah, Vapi V. The Income Tax Officer, Ward-1, Vapi

ITA 2624/AHD/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1864 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 10-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P S CHOUDHARY
• Keywords: Rule of consistency

Judgement Text

AMIT KIRITKUMAR SHAH VS. ITO, VAPI, WARD-1, VAPI /ITA NO.2624/AHD/2016/A.Y.2013-14 PAGE 1 OF 4 , , IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT , . . , BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . . ./ I.T.A. NO.2624/AHD/2016 / ASSESSMENT YEAR : 2013-14 SHRI AMIT KIRITKUMAR SHAH, PROP. OF SHAH BROTHERS, 201/D, ADARSH VIHAR, NR.GUNJAN CINEMA, GIDC, VAPI 396 195. [PAN: AOAPS 0443 M] VS. INCOME TAX OFFICER , VAPI, WARD-1, VAPI. APPELLANT /RESPONDENT /ASSESSEE BY SHRI RAJESH M.UPADHYAY CA /REVENUE BY SHRI P.S.CHOUDHARY SR.DR / DATE OF HEARING: 0 8 . 0 1 .201 9 /PRONOUNCEMENT ON 09 .01.2019 /O R D E R PER DIVA SINGH, JM: 1. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASSAILING THE CORRECTNESS OF THE ORDER DATED 02.07.2016 OF CIT(A),VALSAD PERTAINING TO 2013-14 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS : [1] LR.CIT(A), VALSAD HAS ERRED IN LAW AND ON FACTS TO REJECT GROUND PERTAIN TO EVOCATION OF PROVISION OF SECTION 145(3) OF THE ACT BY NOT DECIDING THE SAID ISSUE THOUGH IT WAS RAISED AND ARGUED BEFORE HIM. [2] LR.CIT(A), VALSAD HAS ERRED IN LAW AND ON FACTS TO DIRECT THE A.O. TO ESTIMATE 2.5% N.P. AS AGAINST 1.77% N.P. DECLARED BY THE APPELLANT ON THE BASIS OF AUDITED BOOKS OF ACCOUNT. 2. THE LD.AR SUBMITTED THAT THE GROUNDS ORIGINALLY FILED IN THE PRESENT APPEAL WERE MISTAKENLY FILED AND DID NOT PERTAIN TO THE ASSESSEE. ACCORDINGLY, REVISED GROUNDS ACCOMPANIED BY FORM NO.36 HAS BEEN FILED ON 26.09.2018 AND IT WAS HIS PRAYER THAT THE GROUNDS RAISED THEREIN MAY BE SUBSTITUTED FOR THE ORIGINALLY INCORRECT GROUNDS RAISED. THE AMIT KIRITKUMAR SHAH VS. ITO, VAPI, WARD-1, VAPI /ITA NO.2624/AHD/2016/A.Y.2013-14 PAGE 2 OF 4 SUBSTITUTION OF THE ORIGINAL GROUNDS WAS CARRIED OUT AFTER HEARING THE LD.SR.DR MR.P.S.CHOUDHARY AND THESE HAVE BEEN EXTRACTED ABOVE. 3. REFERRING TO THE GROUNDS THE LD.AR SUBMITTED THAT HE DOES NOT WISH TO PRESS GROUND NO.1 AND MADE A PRAYER FOR RELIEF ON THE BASIS OF GROUND NO.2 MOVED BEFORE THE ITAT RELYING UPON ORDER DATED 16.03.2018 IN ASSESSEES OWN CASE PERTAINING TO 2011-12 AND 2012-132 ASSESSMENT YEARS. FILING A COPY OF THE SAID ORDER I.E. ITA NO.3245/AHD/2015/SRT AND 1882/AHD/2016/SRT IT WAS SUBMITTED THAT ON IDENTICAL SET OF FACTS AND CIRCUMSTANCES FOLLOWING THE RULE OF CONSISTENCY THE REVENUES APPEAL WAS DISMISSED WHEREIN THE NP RATE OF 2% WAS UPHELD AS CORRECTLY APPLIED TO THE TOTAL TURNOVER BY THE CIT(A) AND IN 2012 - 13 ASSESSMENT YEAR AND ON SIMILAR REASONING THE ASSESSEES APPEAL WAS ALLOWED WHEREIN THE CIT(A) HAD ADOPTED A NP RATE OF 2.5%. 4. THE LD.SR.DR DID NOT OBJECT TO THE PRAYER OF THE ASSESSEE. 5. WE HAVE HEARD THE SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT IN THE FACTS OF THE PRESENT CASE AS IN THE EARLIER YEARS THE ASSESSEE IS ENGAGED IN BUSINESS ACTIVITIES OF TRADING OF WASTE PAPERS AT VAPI IN THE NAME AND STYLE OF M/S.SHAH BROTHERS AS A PROPRIETARY CONCERN. THE BOOKS OF THE ACCOUNTS OF THE ASSESSEE ARE AUDITED AS PER THE PROVISIONS OF SECTION 44AB OF THE I.T.ACT AS PER AUDIT REPORT, THE ASSESSEE HAS SHOWN NET PROFIT OF RS.8,49,014/- AS PER TURNOVER OF RS.74,79,10,968/- AT 1.77%. THE AO IN THE FACTS OF THE PRESENT CASE PROCEEDED TO REJECT THE BOOKS OF ACCOUNTS AND ESTIMATE NP @3% OF SALES. THE CIT(A) IT IS SEEN RESTRICTED THE ESTIMATE TO 2.5% RELYING UPON THE PAST HISTORY OF THE ASSESSEE. ON GOING THROUGH THE ORDER OF THE ITAT WE FIND THAT THE SIMILAR REJECTION OF RELIEF BY THE CIT(A) DID NOT FIND FAVOUR WITH THE CO-ORDINATE BENCH AND THIS PRECEDENT RELIED UPON BY THE CIT(A) HAS NOT BEEN ACCEPTED AS THE ESTIMATE WAS RESTRICTED TO 2%. FOR READY REFERENCE RELEVANT EXTRACT OF ORDER IS REPRODUCED HEREUNDER : AMIT KIRITKUMAR SHAH VS. ITO, VAPI, WARD-1, VAPI /ITA NO.2624/AHD/2016/A.Y.2013-14 PAGE 3 OF 4 4. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON THE RECORD OF THE TRIBUNAL, INTER ALIA PAPER BOOKS FILED BY THE ASSESSEE FOR BOTH THE YEARS SPREAD OVER 37-45 RESPECTIVELY. BOTH THE PARTIES HAVE AGREED TO THE FACT THAT THE FACTS AND CIRCUMSTANCES OF BOTH THE APPEALS ARE SIMILAR AND IDENTICAL AND THE SOLE ISSUE IN BOTH THE APPEALS IS REGARDING ADOPTION FOR NET PROFIT RATE, WHICH WAS ADOPTED BY THE ASSESSING OFFICER (AO) AT 15% OF TOTAL TURNOVER WHEREAS FOR AY 2011-12 THE LD. CIT(A) HAS REDUCED THE SAME TO 2% OF TOTAL TURNOVER. IN APPEAL FOR AY 2012-13, THE ASSESSEE IS CHALLENGING THE CONFIRMATION OF ESTIMATED RATE OF 2.5% AS AGAINST THE NP RATE SHOWN BY THE APPELLANT @ 1.68%. 5. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO ADOPT 2% OF NP RATE AGAINST TOTAL DISALLOWANCE MADE BY THE AO @ 15% OF NP RATE IGNORING THE FACT THAT THE AO DISALLOWING 15% OF PURCHASES MADE, AS THE ASSESSEE COULD NOT SUBSTANTIATE/PROVIDE COMPLETE DETAILS ETC., OF PURCHASES DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE LD. DR STRONGLY SUPPORTED THE ACTION OF THE AO AND SUBMITTED THAT THE LD. CIT(A) HAS GRANTED RELIEF WITHOUT ANY BASIS THEREFORE, IMPUGNED ORDER MAY KINDLY BE SET ASIDE BY RESTORING THAT OF THE AO. 6. REPLYING TO THE ABOVE, THE ASSESSEES REPRESENTATIVE (AR) SUBMITTED THAT THE AO ESTIMATED THE GP RATE WITHOUT ANY LOGIC AND BASIS @ 15% WHICH WAS RIGHTLY REDUCED, BY THE FIRST APPELLATE ORDER, TO 2%. THE LD. AR VEHEMENTLY POINTED OUT THAT LD. CIT(A) HAS FOLLOWED THE DECISION IN ASSESSEES OWN CASES FOR AYS 2007-08 AND 2008-09 AGAINST WHICH THERE IS NO APPEAL BY THE DEPARTMENT, WHEREIN THE LD. CIT(A) HAS DIRECTED THE AO TO ADOPT 2% OF NP RATE BY FOLLOWING THE PRINCIPLE OF CONSISTENCY. THE LD. AR, REGARDING ASSESSEES APPEAL FOR AY 2012-13, SUBMITTED THAT THE LD. CIT(A) HAS DIRECTED THE AO TO MAKE ADDITION OF NP RATE @ 2.5% AS AGAINST 1.68% WHICH WAS SHOWN BY THE ASSESSEE AND THERE IS NO BASIS FOR ADOPTING THE 2.5% NP RATE INSTEAD OF 2% WHICH WAS ADOPTED BY THE AUTHORITIES BELOW FOR PRECEDING ASSESSMENT YEARS. 7. PLACING REJOINDER TO THE ABOVE, THE LD. DR SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE COULD NOT SUBSTANTIATE BY WAY OF DOCUMENTARY EVIDENCE TO THE IMPUGNED PURCHASES. THEREFORE, THE AO WAS RIGHT IN ADOPTING 15% OF NP RATE ON THE BASIS OF ALLOCATIONS AGAINST THE ASSESSEE. THE LD. DR IN ALL FAIRNESS SUBMITTED THAT THERE IS NO APPEAL BY THE DEPARTMENT FOR AY 2012-13 WHEREIN THE FIRST APPELLATE AUTHORITY HAS ADOPTED 2.5% OF GP RATE FOR GRANTING RELIEF TO THE ASSESSEE. 8. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSIONS, IN THE PRESENT CASE FROM PARA 6 OF THE FIRST APPELLATE ORDER FOR AY 2011-12 WE OBSERVE THAT THE LD. CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE WITH THE FOLLOWING OBSERVATIONS: 6. DECISION: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AS CONTAINED IN THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER AS WELL AS THE WRITTEN SUBMISSIONS MADE BY AR OF THE APPELLANT DURING THE APPELLATE PROCEEDINGS. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS THE DISALLOWANCE OF PURCHASES ON ESTIMATED BASIS AT 15% BY THE ASSESSING OFFICER AFTER FINDING THEM NOT GENUINE. A SIMILAR ISSUE ALSO CROPPED UP IN THE APPELLANTS OWN CASE FOR A.Y. 2007-08 & 2008-09 WHERE MY PREDECESSOR DELETED THE ADDITION MADE BY DISALLOWING PURCHASES @ 15% OF TOTAL PURCHASES ON ESTIMATED BASIS. INSTEAD THE NET PROFIT RATE WAS ALLOWED TO THE ESTIMATED @2%. AS THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE IDENTICAL WITH THE FACTS OF A.Y 2007-08 & 2008-09 SO BY FOLLOWING THE PRINCIPLE OF CONSISTENCY HERE ALSO THE NET PROFIT RATE IS ALLOWED TO BE ADOPTED AT 2% FOR DETERMINING THE TAXABLE INCOME. AS PER SUBMISSIONS OF THE AR OF THE AMIT KIRITKUMAR SHAH VS. ITO, VAPI, WARD-1, VAPI /ITA NO.2624/AHD/2016/A.Y.2013-14 PAGE 4 OF 4 APPELLANT THE NET PROFIT HAS SHOWN AT 1.72% WHICH THE ASSESSING OFFICER IS DIRECTED TO ADOPT AT 2%. THEREFORE, THE GROUNDS OF APPEAL OF THE APPELLANT ARE ALLOWED ON THIS ISSUE. 9. FURTHER, FROM RELEVANT PARA 6 OF THE FIRST APPELLATE ORDER FOR A.Y 2012-13, WE OBSERVE THAT THE FIRST APPELLATE AUTHORITY HAS TAKEN COGNIZANCE OF EARLY ORDERS FOR AY 2007-08, 2008-09 & 2011-12 WHEREIN HIS PREDECESSOR DELETED THE ADDITION AND ALLOWED THE NET PROFIT RATE TO BE ESTIMATED AT 2% ON TURNOVER. HOWEVER, INSTEAD OF FOLLOWING RULE OF CONSISTENCY, THE LD. CIT(A) BY REFERRING THE DECISION OF ITAT, AHMEDABAD IN THE CASE OF ABDUL FARID KHAN IN ITA NO.1339/AHD/2012 DIRECTED THE AO TO ESTIMATE N.P RATE @ 2.5% BY OBSERVING THAT THE PRESENT ASSESSEE IS ALSO DOING THE SAME TYPE OF BUSINESS AND THE AO WAS DIRECTED TO RECALCULATE THE NET PROFIT @ 2.5%. IN OUR HUMBLE UNDERSTANDING THERE IS NO LOGIC OR BASIS IN ADOPTING RATIO OF THE ORDER OF OTHER ASSESSEE I.E., ABDUL RAFID KHAN (SUPRA), KEEPING ASIDE THE CONSISTENT ORDERS IN ASSESSEES OWN CASES FOR PRECEDING YEARS, WHEREIN THE FIRST APPELLATE AUTHORITY DIRECTED THE AO TO ESTIMATE NET PROFIT @ 2%. 10. IN VIEW OF OUR FOREGOING DISCUSSION, WE REACH TO LOGICAL CONCLUSION THAT THE LD. CIT(A) WAS RIGHT IN FOLLOWING RULE OF CONSISTENCY AND BY ADOPTING N.P RATE OF 2% OF TOTAL TURNOVER, WHICH WAS ADOPTED BY HIS PREDECESSOR IN ASSESSEES OWN CASE FOR SEVERAL PRECEDING ASSESSMENT YEARS. SO FAR AS DIRECTION OF LD. CIT(A) FOR ADOPTION OF THE N.P RATE OF 2.5% FOR AY 2012-13 IS CONCERNED WE ARE UNABLE TO UNDERSTAND TO ANY LOGIC IN TAKING A DEVIATED VIEW AND FLOUTING THE RULE OF CONSISTENCY AND IGNORING THE NP RATE ADOPTED BY THE LD. CIT(A) WHICH WAS ACCEPTED BY THE DEPARTMENT AS NO APPEAL HAS BEEN FILED AGAINST THE ORDERS OF LD. CIT(A) FOR A.Y 2007-08 & 2008-09. THEREFORE, ORDER OF LD. CIT(A) FOR AY 2011-12 IS UPHELD AND SOLE GROUND OF THE REVENUE IS DISMISSED. FOR A.Y 2012-13, THE ASSESSEES SOLE GROUND IS PARTLY ALLOWED AND THE AO IS DIRECTED TO ADOPT 2% OF N.P RATE FOR A.Y 2012-13 BY FOLLOWING THE ORDERS IN ASSESSEES OWN CASES FOR PRECEDING YEARS. 11. IN THE RESULT, APPEAL OF THE REVENUE FOR A.Y 2011-12 IS DISMISSED AND THAT OF THE ASSESSEE FOR A.Y 2012-13 IS PARTLY ALLOWED. 6. ACCORDINGLY, RESPECTFULLY FOLLOWING THE PRECEDENT OF THE ASSESSEES OWN CASE NOTING THAT FACTS AND CIRCUMSTANCES REMAIN THE SAME GROUND NO.2 OF THE ASSESSEE IS PARTLY ALLOWED. GROUND NO.1 AS NOTED HAS NOT BEEN PRESSED BY THE ASSESSEE THE SAME IS DISMISSED AS NOT PRESSED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 8. THE ORDER PRONOUNCED IN THE OPEN COURT ON 09.01.2019. SD/- SD/- ( .. / O.P.MEENA) ( /DIVA SINGH) /ACCOUNTANT MEMBER ( /JUDICIAL MEMBER) / SURAT, DATED : 9 TH JANUARY , 2019/ S.GANGADHARA RAO, SR.PS COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT