Sunrise Polymers & Industries (India) Ltd., Baroda V. The Income tax Officer,Ward-2(1), Baroda

ITA 271/AHD/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57129 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 17-01-2012
• Assessment Year: 1996-1997
• Appeal Filed On: 24-01-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K SRIVASTAVA

Judgement Text

I.T.A..NO.271/ AHD/2008. ASSESSMENT YEAR 1996-97 1 IN THE INCOME TAX APPELLATE TRIBUNALA BENCH,A HMEDABAD. (BEFORE SHRI G.C. GUPTA,VICE PRESIDENT & SHRI B .R.BASKARAN,A.M.) I.T.A. NO. 271/AHD/2008 (ASSESSMENT YEAR:1996-97) M/S. SUNRISE POLYMERS & INDUSTRIES (I) LTD., BLOCK NO.30, AT & POST GARADIA, TAL.SAVLI, DIST. BARODA. (APPELLANT) VS. INCOME TAX OFFICER, WARD 4(3), AAYAKAR BHAVAN, RACE COURSE CCIRCLE, BARODA. (RESPONDENT) PAN: AACCS 9813 J APPELLANT BY : SMT. URVASHI SHODHAN RESPONDENT BY : SHRI P.K. SRIVASTAVA, SR.D.R. DATE OF HEARING : 17-1-2012 DATE OF PRONOUNCEMENT : 25-1-2012 ( (( ( )/ )/)/ )/ ORDER PER: SHRI B.R.BASKARAN, ACCOUNTANT MEMBER:- IN THIS CASE, THE APPEAL OF THE ASSESSEE RELATING TO THE ASSESSMENT YEAR 1996-97 WAS ORIGINALLY DISPOSED OF BY THIS BENCH; V IDE ITS ORDER DATED 15-09- 2008. SUBSEQUENTLY, THE ASSESSEE MOVED A MISCELLAN EOUS PETITION POINTING OUT CERTAIN MISTAKES IN THE ABOVE SAID ORDER OF THE TRIBUNAL AND ACCORDINGLY, THE TRIBUNAL, VIDE ITS ORDER DATED 26-06-2009, RECA LLED THE ORDER FOR THE LIMITED PURPOSE OF DISPOSING THE GROUND NO.2 RELATI NG TO THE ESTIMATION OF GP AFRESH. I.T.A..NO.271/ AHD/2008. ASSESSMENT YEAR 1996-97 2 2. THE FACTS RELATING TO THE ISSUE OF ESTIMATIO N OF GP ARE STATED IN BRIEF. THE ASSESSEE HAD DISCLOSED GROSS PROFIT AT THE RATE OF 13.47% DURING THE YEAR UNDER CONSIDERATION, WHEREAS IN THE SUCCEEDING ASSE SSMENT YEAR, THE GP WAS SHOWN AT 48.28%. THE AO ALSO NOTICED CERTAIN DEFEC TS IN THE BOOKS MAINTAINED BY THE ASSESSEE. ACCORDINGLY, THE AO REJ ECTED THE BOOK RESULTS AND ADOPTED THE GP RATE AT 48.28% FOR THE INSTANT Y EAR ALSO AND RECOMPUTED THE GROSS PROFIT ACCORDINGLY AND ADDED THE DIFFEREN CE. IN THE APPEAL FILED BEFORE LD CIT (A), THE FIRST APPELLATE AUTHORITY CO MPARED THE GP RATES OF THE EARLIER AND SUBSEQUENT YEARS AS DETAILED BELOW: A.Y : 1995-96 1996-97 1997-98 1998- 99 G.P. RATE: 38.98% 13.47% 48.27% 31. 91%. THE LD CIT(A) CALCULATED THE AVERAGE GP RATE BY CON SIDERING THE GP RATES RELATING TO THE ASSESSMENT YEARS 1996-97 TO 1998-99 , WHICH WORKED OUT TO 31.22% AND ACCORDINGLY DIRECTED THE AO TO RESTRICT THE ADDITION BY ADOPTING THE AVERAGE GP RATE WORKED OUT BY HIM. STILL AGGRI EVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE LD A.R SUBMITTED THAT THE ASSESSEE WAS D OING ONLY JOB WORKS IN THE YEAR RELATING TO THE ASSESSMENT YEAR 1995-96. ONLY DURING THE YEAR UNDER CONSIDERATION, IT STARTED MANUFACTURING ACTIVITIES ON ITS OWN AND HENCE FACED INITIAL TEETHING PROBLEM WITH REGARD TO MARKETING A ND MANUFACTURING, I.E. HIGH RAW MATERIAL CONSUMPTION, SEARCHING OF NEW CUS TOMERS, LIBERAL SALES POLICY BY OFFERING HEAVY DISCOUNTS ETC. THE LD A.R FAIRLY CONCEDED THAT THE AO WAS RIGHT IN REJECTING THE BOOK RESULTS IN VIEW OF THE DEFICIENCIES POINTED OUT BY HIM, BUT PRAYED THAT THE GP RATE MAY BE ESTI MATED AT A REASONABLE LEVEL. ON THE OTHER HAND, THE LD D.R STOOD BY THE ORDER OF LD CIT(A). I.T.A..NO.271/ AHD/2008. ASSESSMENT YEAR 1996-97 3 4. WE HAVE DULY CONSIDERED THE RIVAL SUBMISSION S AND RECORD. IT IS AN UNDENIABLE FACT THAT THE GP RATE OF THE ASSESSEE IM PROVED DRASTICALLY IN THE SUCCEEDING YEARS. THE FACT THAT THE ASSESSEE ENTER ED INTO ITS OWN MANUFACTURING ACTIVITY WAS ALSO NOT DENIED. HENCE, THERE IS MERIT IN THE CONTENTION OF THE ASSESSEE THAT IT HAD TO FACE INIT IAL TEETHING PROBLEMS WITH REGARD TO OWN MANUFACTURING ACTIVITIES AND ALSO PRO BLEMS WITH MARKETING ACTIVITIES, SINCE IT HAD TO COMPETE WITH THE ESTABL ISHED CONCERNS. HOWEVER, THE FACT REMAINS THAT THE BOOK RESULTS HAD TO BE RE JECTED IN VIEW OF THE DEFICIENCIES POINTED OUT BY THE AO AND HENCE THE ES TIMATION OF GP, IN OUR VIEW, IS INEVITABLE. WE NOTICE THAT THE TAX AUTHOR ITIES HAVE ADOPTED THE BASIS OF SUBSEQUENT YEARS WORKING RESULTS TO DETERMINE T HE GP RATE FOR THE CURRENT YEAR. HOWEVER, THE SUBSEQUENT YEARS RESULTS WOULD NOT TAKE INTO ACCOUNT THE EXPLANATION OF THE ASSESSEE ABOUT THE PROBLEMS FACED BY IT IN THE INSTANT YEAR. ACCORDINGLY, IN ORDER TO MEET THE ENDS OF JU STICE, THE GP RATE MAY BE ADOPTED AT 22%, WHICH WOULD FACTOR IN THE PROBLEMS CITED BY THE ASSESSEE AND WE ORDER ACCORDINGLY. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF LD CIT (A) ON THIS ISSUE AND DIRECT THE AO TO RESTRICT THE ADDITION ON THIS ISSUE BY ADOPTING THE GP RATE AT 22%. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE ON THIS ISSUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON SD/- SD/- ( G.C. GUPTA) (B.R.BASKARAN) VICE PRESIDENT ACCOUNTAN T MEMBER AHMEDABAD. S.A.PATKI. I.T.A..NO.271/ AHD/2008. ASSESSMENT YEAR 1996-97 4 COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-III, BARODA. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. 1.DATE OF DICTATION 17 - 1 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 17 / 1 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 23 - 01 -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 25 -01 -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 25 -01 -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2 5 -01 -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..