The DCIT, Circle-6, Surat V. M/s. Global Syntex, Surat

ITA 2852/AHD/2011

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8870 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 17-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: M K PATEL
• Keywords: Gross profit estimation; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NO: 2852/AHD/2011 (ASSESSMENT YEAR: 2007-08) DY. COMMISSIONER OF INCOME-TAX CIRCLE-6, SURAT V/S M/S. GLOBAL SYNTEX 2087, GIDC, PANDESARA, SURAT (APPELLANT) (RESPONDENT) ITA. NOS: 510 & 595/AHD/2012 (ASSESSMENT YEAR: 2008-09) M/S. GLOBAL SYNTEX 2087, GIDC, PANDESARA, SURAT DY. COMMISSIONER OF INCOME-TAX, CIRCLE-6, SURAT V/S V/S DY. COMMISSIONER OF INCOME-TAX CIRCLE-6, SURAT M/S. GLOBAL SYNTEX 2087, GIDC, PANDESARA, SURAT (APPELLANT) (RESPONDENT) ITA. NOS: 560& 2850/AHD/2013 (ASSESSMENT YEARS: 2009-10 & 2010-11) M/S. GLOBAL SYNTEX 2087, GIDC, PANDESARA, SURAT V/S ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-6, SURAT (APPELLANT) (RESPONDENT) PAN: AACFG9622Q ITA NOS. 285 2/AHD/11, 510 & 595/A/12 & 560 & 2850/AHD/2013 . A.YS. 2007-0 8 TO. 2009-10 AND 2011-12 2 APPELLANT BY : SMT. SONIA KUMAR, SR. D.R. RESPONDENT BY : SHRI M.K. PATEL ( )/ ORDER DATE OF HEARING : 22 -03-201 7 DATE OF PRONOUNCEMENT : 24 -03-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER 1. ITA NO. 2852/AHD/2011 APPEAL BY THE REVENUE IS PREF ERRED AGAINST THE ORDER OF THE LD. CIT(A)-IV, SURAT DATED 12.07.2011 PERTAINING TO A.Y. 2007- 08, ITA NOS. 510 & 595/AHD/2012 ARE CROSS APPEALS F ILED BY THE REVENUE AND THE ASSESSEE PREFERRED AGAINST THE ORDER OF LD. CIT(A)-6, SURAT DATED 30.11.2011 FOR A.Y. 2008-09 AND ITA NOS. 560/AHD/20 13 & 2850/AHD/2015 ARE APPEALS FILED BY THE ASSESSEE PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)-1, SURAT DATED 27.12.2012 AND 25.08.2015 FOR A.YS. 2009-10 & 2011- 12. 2. THE ABOVE CAPTIONED APPEALS HAVE COMMON ISSUES; THE REFORE, THEY WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON F OR THE SAKE OF CONVENIENCE AND BREVITY. 3. REPRESENTATIVES OF BOTH SIDES WERE HEARD AT LENGTH, ORDERS OF THE AUTHORITIES BELOW WERE PERUSED CAREFULLY. WE TAKE U P THE IMPUGNED APPEALS ONE BY ONE. ITA NOS. 285 2/AHD/11, 510 & 595/A/12 & 560 & 2850/AHD/2013 . A.YS. 2007-0 8 TO. 2009-10 AND 2011-12 3 ITA NO. 2852/AHD/2011 REVENUES APPEAL FOR A.Y. 200 7-08 4. A PERUSAL OF THE GRIEVANCE OF THE REVENUE SHOWS THA T IT IS ERRED BY THE DELETION OF THE ADDITION OF RS. 22, 18,717/-. THIS APPEAL BY THE REVENUE HAS TO BE DISMISSED IN THE LIGHT OF THE CBDT CIRCULAR N O. 23 OF 2015 DATED 10.12.2015 BY WHICH THE CBDT HAS DIRECTED NOT TO PR EFER THE APPEAL BEFORE THE TRIBUNAL IF THE TAX EFFECT IS LESS THAN RS. 10 LACS. 5. APPEAL FILED BY THE REVENUE IS ACCORDINGLY DISMISSE D. 6. ITA NO. 510/AHD/2012 & 595/AHHD/2012 ARE CROSS APPE ALS BY THE ASSESSEE AND THE REVENUE. FIRST WE TAKE UP ASSESSEES APPEAL IN ITA NO. 510/AHD/2012. 7. GROUND NO. 1 RELATES TO THE ESTIMATION OF PROFIT AN D MAKING ADDITION OF RS. 61,18,856/-. 8. WE FIND THAT THE A.O. HAS MADE ADDITION OF RS. 98,5 4,062/- WHICH WAS CONFIRMED BY THE LD. CIT(A) AT RS. 61,18,856/- WHIC H PROMPTED THE ASSESSEE AND THE REVENUE TO PREFER APPEAL BEFORE US. 9. AFTER GOING THROUGH THE ORDERS OF THE AUTHORITIES B ELOW, WE FIND THAT THE ENTIRE DISPUTE REVOLVES AROUND THE FACT THAT WHETHE R RS. 75 LACS DISCLOSED DURING THE COURSE OF SURVEY SHOULD BE INCLUDED IN T HE BUSINESS PROFIT OF THE ASSESSEE FOR THE COMPUTATION OF PROFIT RATIO. WE FI ND THAT THE A.O. DID NOT ITA NOS. 285 2/AHD/11, 510 & 595/A/12 & 560 & 2850/AHD/2013 . A.YS. 2007-0 8 TO. 2009-10 AND 2011-12 4 CONSIDER THE DISCLOSURE OF RS. 75 LACS AND FOUND TH AT THE GROSS PROFIT OF THE ASSESSEE IS AT 5.67% AND ESTIMATED THE SAME AT 13.6 9%. WE FURTHER FIND THAT IF THE DISCLOSURE OF RS. 75 LACS IS ACCEPTED A S PART OF THE TRADING RESULTS, THE GROSS PROFIT RATE OF THE ASSESSEE COMES TO 11.0 9% AS COMPARE TO 12.14% SHOWN IN THE IMMEDIATELY PRECEDING ASSESSMEN T YEAR. 10. IN OUR CONSIDERED OPINION, THE DISCLOSURE OF RS. 75 LACS OUGHT TO BE CONSIDERED AS PART OF THE TRADING RESULTS AS THE DI SCLOSURE WAS MADE ON ACCOUNT OF PURCHASES AND CASH FOUND AT THE TIME OF SURVEY. OBVIOUSLY, THE EXCESS CASH FOUND WAS OUT OF THE UNACCOUNTED SALES MADE OUTSIDE THE BOOKS OF ACCOUNTS AND THE UNEXPLAINED PURCHASES WER E OF TRADING GOODS. THUS, IF THE DISCLOSURE OF RS. 75 LACS IS CONSIDERE D AS PART OF THE TRADING RESULTS THEN THE GROSS PROFIT RATIO COMES TO 11.09% WHICH IS IN LINE WITH THE TRADING RESULTS OF THE IMMEDIATELY PRECEDING ASSESS MENT YEAR. WE FIND THAT THE LD. CIT(A) HAS CONFIRMED THE ADDITION OF RS. 61 ,18,856 WHICH SHOULD MEET THE ENDS OF JUSTICE. THEREFORE, WE DECLINE TO INTERFERE WITH THE FINDINGS OF THE FIRST APPELLATE AUTHORITY. GROUND N O. 1 IS ACCORDINGLY DISMISSED AND FOR SIMILAR REASONS, GROUND NO. 1 OF REVENUES APPEAL IN ITA NO. 595/AHD/2012 IS ALSO DISMISSED. 11. GROUND NO. 2 RELATES TO THE GRIEVANCE OF UPHOLDING THE ADDITION OF RS. 7,095/- OUT OF RS. 26,50,421/- IN RESPECT OF UNEXPL AINED CREDITS IN BOOKS OF ACCOUNTS. ITA NOS. 285 2/AHD/11, 510 & 595/A/12 & 560 & 2850/AHD/2013 . A.YS. 2007-0 8 TO. 2009-10 AND 2011-12 5 12. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESSE E STATED THAT THE SAME MAY BE DISMISSED FOR THE SMALLNESS OF THE AMOUNT IN VOLVED. WE, ACCORDINGLY, DISMISS GROUND NO. 2. 13. GROUND NO. 3 RELATES TO THE ADDITION OF RS. 44,857/ - MADE IN RESPECT OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND. 14. THIS ISSUE IS NO MORE RES INTEGRA AS THE SAME HAS B EEN DECIDED BY THE HONBLE JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF GUJARAT STATE ROAD TRANSPORT CORPORATION 366 ITR 170 IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. THEREFORE, RESPECTFULLY FOLLO WING THE FINDINGS OF THE HONBLE JURISDICTIONAL HIGH COURT, WE DECLINE TO IN TERFERE. GROUND NO. 3 IS ACCORDINGLY DISMISSED. ITA NO. 595/AHD/2012 REVENUES APPEAL FOR A.Y. 2008 -09 15. THE FIRST GRIEVANCE HAS ALREADY BEEN DISMISSED QUA GROUND NO. 1 IN ASSESSEES APPEAL (SUPRA). 16. GROUND NO. 2 RELATES TO THE DELETION OF THE ADDITIO N OF RS. 10,98,838/- MADE BY THE A.O. ON ACCOUNT OF BOGUS AND UNVERIFIED PURC HASE CLAIMS. 17. THIS GRIEVANCE OF THE REVENUE HAS TO BE DISMISSED C ONSIDERING THE FACTS IN TOTALITY. THE UNDISPUTED FACT IS THAT THE BOOK RESU LTS WERE REJECTED BY THE A.O. AND THE PROFIT OF THE ASSESSEE WAS ESTIMATED. THEREFORE, IN OUR ITA NOS. 285 2/AHD/11, 510 & 595/A/12 & 560 & 2850/AHD/2013 . A.YS. 2007-0 8 TO. 2009-10 AND 2011-12 6 CONSIDERED OPINION, ONCE THE ASSESSING OFFICER HAS ESTIMATED THE BOOKS PROFITS BY REJECTING THE BOOK RESULTS THEN HE SHOUL D NOT HAVE MADE FURTHER ADDITIONS BY RELYING UPON SAME BOOKS FOR MAKING ADD ITION ON ACCOUNT OF UNVERIFIED PURCHASES. FOR THIS PROPOSITION, WE DRAW SUPPORT FROM THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT O F GUJARAT IN THE CASE OF DHIRAJ R. RUNGTA IN TAX APPEAL NO. 1152 OF 2011 DAT ED 26.09.2012. GROUND NO. 2 IS ACCORDINGLY DISMISSED. 18. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ITA NO. 560/AHD/2013 ASSESSEES APPEAL FOR A.Y. 200 9-10 19. THE FIRST GRIEVANCE OF THE ASSESSEE RELATES TO THE ADDITION OF RS. 52,33,851/- MADE ON ACCOUNT OF LOW GROSS PROFIT. WE FIND THAT T HE ASSESSEE HAS SHOWN GP RATE AT 10.44% ON TOTAL TURNOVER OF RS. 16,10,41 ,559/-. WE FURTHER FIND THAT THE FIRST APPELLATE AUTHORITY IN A.Y. 2008-09 HAS RESTRICTED THE GP RATE AT 10.65% WHICH WAS CONFIRMED BY US IN ITA NO. 510/ AHD/2012 (SUPRA). THEREFORE, TAKING A LEAF OUT OF THE FINDINGS GIVEN BY THE FIRST APPELLATE AUTHORITY IN A.Y. 2008-09, WE DIRECT THE A.O. TO RE STRICT THE GROSS PROFIT RATE AT 10.65%. THIS GRIEVANCE OF THE ASSESSEE IS PARTLY ALLOWED. 20. THE NEXT GRIEVANCE OF THE ASSESSEE RELATES TO THE A DDITION OF RS.1,39,219/- MADE ON ACCOUNT OF LATE PAYMENT OF PF/ESIC CONTRIBU TION. ITA NOS. 285 2/AHD/11, 510 & 595/A/12 & 560 & 2850/AHD/2013 . A.YS. 2007-0 8 TO. 2009-10 AND 2011-12 7 21. THIS GRIEVANCE HAS TO BE DISMISSED IN THE LIGHT OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF GUJARAT STATE ROAD TRANSPORT CORPORATION IN 366 ITR 170. 22. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTY ALLOWED. ITA NO. 2850/AHD/2013 ASSESSEES APPEAL FOR A.Y. 20 11-12 23. THE FIRST GRIEVANCE OF THE ASSESSEE RELATES TO THE ADDITION OF RS. 39,34,648/- MADE ON ACCOUNT OF LOW GROSS PROFIT. WE FIND THAT T HE ASSESSEE HAS SHOWN A GROSS PROFIT RATE OF 8.05% ON A TOTAL TURNOVER OF R S. 17,02,96,490/-. WE FURTHER FIND THAT THE A.O. HAS ASSESSED AS GROSS PR OFIT RATE OF 10.31%. SINCE IN THE APPEAL FOR A.Y. 2009-10 IN ITA NO. 560/AHD/2 013, WE HAVE DIRECTED TO RESTRICT THE GP ADDITION AT 10.65% BUT THE SAME CANNOT BE APPLIED FOR THE YEAR UNDER CONSIDERATION AS THE A.O. HIMSELF HA S ASSESSED AT 10.31%. THEREFORE, THE RATE ADOPTED BY THE A.O. AT 10.31% I S FOUND TO BE CORRECT. NO INTERFERENCE IS CALLED FOR IN THE FINDINGS OF TH E FIRST APPELLATE AUTHORITY. THIS GRIEVANCE OF THE ASSESSEE IS ACCORDINGLY DISMI SSED. 24. THE SECOND GRIEVANCE OF THE ASSESSEE RELATES TO THE ADDITION OF RS. 1,10,111/- MADE ON ACCOUNT OF LATE PAYMENT OF PF/ES IC CONTRIBUTION. 25. THIS GRIEVANCE HAS TO BE DISMISSED IN THE LIGHT OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF GUJARAT STATE ROAD TRANSPORT CORPORATION IN 366 ITR 170. ITA NOS. 285 2/AHD/11, 510 & 595/A/12 & 560 & 2850/AHD/2013 . A.YS. 2007-0 8 TO. 2009-10 AND 2011-12 8 26. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. 27. BEFORE CLOSING, IT WOULD BE PERTINENT TO MENTION TH AT THE ESTIMATION OF PROFIT IS BASED UPON THE PECULIAR FACTS OF THE APPE ALS IN HAND. THEREFORE, THE ADDITIONS SUSTAINED ON THE BASIS OF GP RATE ADD ITION SHOULD NOT BE TAKEN AS A BENCH MARK IN SUBSEQUENT YEARS. ORDER PRONOUNCED IN OPEN COURT ON 24 - 03- 20 17 SD/- SD/- (RAJPAL YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 24 /03/2017 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,AHME DABAD