Forum Traders Pvt. Ltd., Ahmedabad V. The Income Tax Officer, Ward-4(3), Now Ward-2(1)(3), Ahmedabad

ITA 2793/AHD/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8440 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 05-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P MAURYA
• Section: 143(3)

Judgement Text

ITA NO.2793/AHD/2015 ASSESSMENT YEAR : 2012-13 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD SMC BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM] ITA NO.2793/AHD/2015 ASSESSMENT YEAR: 2012-13 FORUM TRADERS PVT. LTD., .... ............................ APPELLANT 1 ST FLOOR, ADITYA BUILDING, OPP. SARDAR PATEL SEVA SAMAJ HALL, MITHAKHALI SIX ROADS, AHMEDABAD 380 006. [PAN : AAACF 8604 N] . VS. INCOME TAX OFFICER, WARD 4(3), AHMEDABAD. .............RESPONDENT APPEARANCES BY IRA KAPOOR FOR THE APPELLANT R.P. MAURYA FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 30.01.2018 DATE OF PRONOUNCING THE ORDER : 20.04.2018 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HA S CHALLENGED CORRECTNESS OF LEARNED CIT(A)S ORDER DATED 7 TH SEPTEMBER, 2015, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER), F OR THE ASSESSMENT YEAR 2012-13, ON THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ASSESSING OFFICERS REJECTION OF THE AUDITED BOOKS OF ACCOUNT OF THE APPELLANT-COMPANY WITHOUT POINTING OUT ANY DEFECTS. 2. WITHOUT PREJUDICE TO THE ABOVE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITI ON OF RS.38,96,640/- ARBITRARILY MADE BY THE ASSESSING OFFICER BY APPLYING A FLAT GROSS P ROFIT RATE OF 2%. 2. TO ADJUDICATE ON THIS APPEAL ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS NOT PRODUCED EVIDENCE FOR DELIVERY OF THE GOODS PURCHASED AND HE ACCORDINGLY REJECTED THE BOOKS RESULT SHOWN BY THE ASSESSEE. HE THEN ALSO P ROCEEDED TO ESTIMATE G.P. @ 0.03% ITA NO.2793/AHD/2015 ASSESSMENT YEAR : 2012-13 PAGE 2 OF 3 DECLARED BY THE ASSESSEE. THIS ADDITION WORKS OUT TO RS.38,96,640/- (I.E. RS.39,65,990/- - RS.69,350/-). 3. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ACTION OF THE ASSESSING OFFICER. THE ASSESSEE IS IN FURTHER APPEAL BEFORE ME. 4. I HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LE GAL POSITION. 5. WHEN THIS APPEAL WAS TAKEN UP FOR HEARING, I DID ASK THE LD. DEPARTMENTAL REPRESENTATIVE AS TO WHAT WAS THE BASIS ON WHICH G. P. OF 2% WAS ADOPTED. LD. DEPARTMENTAL REPRESENTATIVE DID NOT HAVE MUCH TO SAY EXCEPT POIN TING OUT THAT THE G.P. SHOWN BY THE ASSESSEE AT 0.03% IS EXCEPTIONALLY LOW. HOWEVER, I N THE CASE WHERE BOOKS OF ACCOUNT ARE REJECTED WHAT IS IMPORTANT IS THAT THERE SHOULD BE A REASONABLE BASIS FOR ADOPTING SUCH ESTIMATION. UNLESS THE REVENUE AUTHORITIES ARE ABL E TO POINT OUT ANY BASIS OR FOUNDATION FOR ADOPTING SUCH G.P., ESTIMATION OF PROFIT CANNOT MEE T ANY JUDICIAL APPROVAL. AT THIS STAGE, I AM NOT REALLY CONCERNED ABOUT THE REJECTION OF BOOKS O F ACCOUNT BUT I AM ONLY CONCERNED THAT EVEN IF BOOKS OF ACCOUNT ARE TO BE REJECTED, THE ASSESSI NG OFFICER HAS TO ADOPT ESTIMATION ON SOME REASONABLE BASIS. DESPITE SPECIFIC OPPORTUNITY HAV ING BEEN GIVEN TO THE LD. DEPARTMENTAL REPRESENTATIVE, NO SUCH BASIS IS POINTED OUT TO ME. THE STATEMENT CONTAINING COMPARATIVE G.P. RATES IS AS FOLLOWS :- WORKING OF GROSS PROFIT FROM F.Y. 2004-05 TO F.Y. 2 014-15 FINANCIAL YEAR ASST. YEAR SALES TURNOVER (RS.) GROSS PROFIT (RS.) GROSS PROFIT (%) 2014-15 2015-16 688,454,468 150,471 0.03 2013-14 2014-15 711,112,275 768,925 0.11 2012-13 2013-14 162,437,032 62,581 0.04 2011 - 12 2012 - 13 198,299,515 69,350 0.03 2010-11 2011-12 543,936,035 185,156 0.03 2009-10 2010-11 265,409,848 104,467 0.04 2008-09 2009-10 272,909,635 114,653 0.04 2007-08 2008-09 163,359,017 77,201 0.05 2006-07 2007-08 250,669,523 112,875 0.05 2005-06 2006-07 943,239,609 413,259 0.04 2004-05 2005-06 299,367,169 172,224 0.06 6. IN THE LIGHT OF THE INFORMATION TAKEN FROM THE A CCEPTED CASE HISTORY OF THE ASSESSEE, THE HIGHEST G.P. RATE SHOWN BY THE ASSESSEE IS 0.11%. IN THESE CIRCUMSTANCES, I FIND NO MATERIAL TO JUSTIFY THE ADOPTION OF G.P. RATE AT 2%. EVEN IF W E ADOPT THE HIGHEST RATE SHOWN BY THE ASSESSEE WHICH IS 0.11%, THE IMPUGNED ADDITION HAS TO BE SUBSTANTIALLY SCALED DOWN. I, ITA NO.2793/AHD/2015 ASSESSMENT YEAR : 2012-13 PAGE 3 OF 3 THEREFORE, DEEM IT FIT AND PROPER TO ADOPT G.P. RAT E AT 0.11 % AND DIRECT THE ASSESSING OFFICER TO RECOMPUTE THE INCOME ON THE BASIS OF THIS ESTIMATIO N. THE MATTER IS RESTORED TO THE FILE OF ASSESSING OFFICER WITH THESE DIRECTIONS. 7. IN THE RESULT, APPEAL IS PARTLY ALLOWED FOR STAT ISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF APRIL, 2018. SD/- PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: AHMEDABAD, THE 20 TH DAY OF APRIL, 2018. PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD