M/s. Automat Controls, Ahmedabad V. The Income tax Officer,Ward-6(4), Ahmedabad

ITA 2649/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9394 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-02-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 21-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P MAURYA
• Assessee Lawyers: M K PATEL
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER) ITA. NO: 2649/AHD/2011 (ASSESSMENT YEAR: 2002-03) M/S. AUTOMAT CONTROLS, 29/30, KARNAVATI ESTATE, TRIKAMPURA PATIA, GIDC, PHASE-3, VATVA, AHMEDABAD 382445 V/S INCOME TAX OFFICER, WARD- 6 (4), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAGFA1890E APPELLANT BY : SHRI M.K. PATEL, AR RESPONDENT BY : SHRI R.P. MAURYA, SR. D.R. ( )/ ORDER DATE OF HEARING : 24 -02-20 16 DATE OF PRONOUNCEMENT : -02-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A)-XI, AHMEDABAD DATED 09.08.2011 PERTAINING TO A.Y. 2002-03. ITA NO. 2649 /AHD/2011 . A.Y.2002-03 2 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE ASSES SEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE REJECTION OF THE BOO KS OF ACCOUNTS AND FURTHER ERRED IN ESTIMATING THE GROSS PROFIT @ 12% ON ESTIMATE BASIS. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSMENT WAS MADE U/S. 144 OF THE ACT VIDE ORDER DATED 23.02.2005 WHE REIN AN ADDITION ON ACCOUNT OF GROSS PROFIT OF RS. 12,01,710/- WAS M ADE. 4. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), IT WAS STRONGLY CONTENDED THAT IN THE IMMED IATELY PREVIOUS YEAR I.E. 01-02, THE ASSESSEE DONE BUSINESS ONLY FO R 4 AND A HALF MONTHS. THEREFORE, COMPARISON OF THE PROFITABILITY WITH EARLIER YEAR IS FACTUALLY INCORRECT. IT WAS FURTHER BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT THE DURING THE YEAR UNDER CONSIDERATION , THE BUSINESS WAS DONE FOR THE WHOLE YEAR AND THE ASSESSEE HAD TO PAY EXCISE DUTY AND LABOUR CHARGES WHICH REDUCED THE PROFIT MARGIN OF T HE ASSESSEE. IT WAS FURTHER CONTENDED THAT IF THE EXCISE DUTY AND LABOU R CHARGES ARE REMOVED FROM THE YEAR UNDER CONSIDERATION, THE GROS S PROFIT RATIO WOULD COME TO 15.49% AS AGAINST 12.74% OF THE IMMED IATE PRECEDING YEAR. 5. NECESSARY DOCUMENTARY EVIDENCES/BILLS/VOUCHERS ALON G WITH DETAILS OF EXPENDITURES WERE SUBMITTED BEFORE THE LD. CIT(A) W HO CALLED FOR A REMAND REPORT FOR THE A.O AND AFTER CONSIDERING THE FACTS AND THE DETAILED SUBMISSIONS DIRECTED THE A.O TO ASSESS THE INCOME OF THE ASSESSEE BY TAKING GROSS PROFIT RATE AT 12%. 6. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. THE L D. COUNSEL FOR THE ASSESSEE TOOK US THROUGH VARIOUS DOCUMENTARY EVIDEN CES FILED IN THE ITA NO. 2649 /AHD/2011 . A.Y.2002-03 3 FORM OF PAPER BOOK. THE LD. COUNSEL FURTHER BROUGHT TO OUR NOTICE, THE REMAND REPORT SUBMITTED BY THE A.O BEFORE THE LD. C IT(A). IT IS THE SAY OF THE LD. COUNSEL THAT SINCE ALL THE DETAILS WERE FURNISHED BEFORE THE LD. CIT(A) WHICH WERE REMANDED TO THE A.O FOR VERIF ICATION THERE REMAINS NO ROOM FOR THE ESTIMATION OF PROFIT, THE B OOK PROFIT SHOULD BE ACCEPTED. PER CONTRA, THE LD. D.R. SUPPORTED THE FI NDINGS OF THE A.O. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. 7. IT IS A SETTLED PROPOSITION OF LAW THAT EVEN IF THE A.O HAS TO MAKE THE ASSESSMENT U/S. 144 OF THE ACT. HE CANNOT IGNORE TH E RECORDS OF THE ASSESSEE. THE AUDITED STATEMENT OF ACCOUNTS WERE BE FORE THE A.O AND SIMPLY BECAUSE THE AUDITORS HAVE REMARKED THAT THE STOCK RECORDS IN REQUIRED FORMAT HAS NOT BEEN MAINTAINED WOULD NOT J USTIFY THE ACTION OF THE A.O TO ESTIMATE THE GP AT 15% WHEN IN THE IM MEDIATELY PRECEDING ASSESSMENT YEAR, THE GP RATE WAS 12.74%. 8. HOWEVER, EVEN THIS GP RATE OF 12.74% CANNOT BE ACCE PTED, SINCE IN THE EARLIER ASSESSMENT YEAR, THE ASSESSEE HAD DONE BUSINESS ONLY FOR 4 MONTHS, FURTHER THE GOODS OF THE ASSESSEE WERE NOT SUBJECTED TO EXCISE DUTY. DURING THE YEAR UNDER CONSIDERATION, T HE ASSESSEE HAS DONE BUSINESS FOR THE WHOLE YEAR AND HAS PAID EXCIS E DUTY AND LABOUR CHARGES WHICH WERE THE MAJOR CAUSE FOR THE FALL IN THE GROSS PROFIT. IF THESE TWO ITEMS ARE REMOVED THAN THE GP RATE COMES TO 15.49% WHICH IS MUCH HIGHER THAN THE PREVIOUS YEAR RATIO. WE FUR THER FIND THAT THE ASSESSEE HAD GIVEN A COMPLETE DETAILS OF PURCHASES AND SALES, EXPENSES ARE SUPPORTED BY BILLS/VOUCHERS, WITHOUT P OINTING OUT ANY SPECIFIC DEFECT IN THESE DETAILS, THERE WAS NO OCCA SION FOR THE ESTIMATION OF THE PROFIT, NEITHER BY THE A.O NOR BY THE FIRST APPELLATE ITA NO. 2649 /AHD/2011 . A.Y.2002-03 4 AUTHORITY. CONSIDERING THE FACTS IN TOTALITY, WE RE VERSE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O TO ACCEPT THE BOO K RESULTS OF THE ASSESSEE. 9. APPEAL FILED BY THE ASSESSEE IS ACCORDINGLY ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON 26 - 02 - 2016. SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMED ABAD