Gomti Silk Mills Ltd., Surat V. The Income Tax Officer,Ward-1(2), Surat

ITA 2892/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9570 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-02-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 15-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: HIREN N VEPARI
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER ./ ITA.NO.2892/AHD/2015 / ASSTT. YEAR: 2003-2004 GOMTI SILK MILLS LTD. 983, ADARSH NAGAR GUJARAT HOUSING BOARD, SACHIN SURAT 394 230. PAN : AAACG 8675 J VS ITO, WARD-1(2) SURAT. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI HIREN N. VEPARI, AR REVENUE BY : PRAJNA PARAMITA, SR.DR / DATE OF HEARING : 16/02/2016 / DATE OF PRONOUNCEMENT: 17/02/2016 $%/ O R D E R THIS APPEAL OF THE ASSESSEE AROSE FROM ORDER OF THE LD.CIT(A)-1, SURAT DATED 27.7.2015 FOR THE ASSTT.YEAR 2003-2004. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: (I) ADDITION U/S.68 RS.7,40,977: (1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND AS PER LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) WAS NO T JUSTIFIED IN CONFIRMING ADDITION U/S.69 WHEN THE ASSESSING OFFIC ER HAD MADE ADDITION U/S 68 OF THE ACT. (2) WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED C OMMISSIONER OF INCOME-TAX (APPEALS) WAS NOT JUSTIFIED IN SUSTAININ G ADDITION OF RS.7,40,977/- WHEN ADMITTEDLY GOODS PURCHASED HAVIN G BEEN ACCEPTED ITA NO.2892/AHD/2015 2 AS CONSUMED, NO ADDITION CAN BE MADE AS GOODS CANNO T BE CONSUMED WITHOUT HAVING BEEN PURCHASED. (3) BESIDES, THE LEARNED COMMISSIONER OF INCOME- TAX(APPEALS) OUGHT TO HAVE APPRECIATED THAT THE ASSESSING OFFICER FAIL ED TO FOLLOW THE DIRECTIONS OF THE TRIBUNAL. (II) UNVERIFIED PURCHASES RS.1,12,456/-: (1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND AS PER LAW, ADDITION OF RS.1,12,456/- WAS NOT WARRANTED WHEN TH E GOODS WERE PURCHASED AND ADMITTEDLY PAYMENT WAS MADE BY ACCOUN T PAYEE CHEQUE ONLY BECAUSE AFTER TEN YEARS, THE SUPPLIER DID NOT RESPOND TO NOTICE U/S.133(6) OF THE ACT. (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE ADDITION IS REQUIRED TO BE DELETED. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE-COMP ANY IS PRIMARILY IN THE BUSINESS OF PURCHASE OF GREY CLOTH AND SELL THEREAF TER CONVERTING THE SAME INTO THE FINISHED FABRICS, AS IS EVIDENT FROM THE ORDERS OF THE AUTHORITIES BELOW. IN THE ORIGINAL ASSESSMENT PROCEEDINGS, THE AO MADE AD DITION OF RS.7,68,38,132/- AND RS.1,12,457/- ON ACCOUNT OF BO GUS PURCHASE AND UNVERIFIED PURCHASES. THE MATTER WAS CARRIED TO TH E TRIBUNAL, AND THE TRIBUNAL VIDE PARA-4 OF THE ORDER GAVE THE DIRECTIO N THAT ONLY RS.7,40,977/- HAS BEEN DEBITED TO THE P&L ACCOUNT ON ACCOUNT OF C ONSUMPTION OF RAW- MATERIAL AND BALANCE AMOUNT WAS CARRIED TO THE BALA NCE SHEET AS CLOSING STOCK. IN CASE, THE ENTIRE PURCHASE IS FOUND TO BE BOGUS, THE ADDITION CANNOT EXCEED THE AMOUNT OF RS.7,40,977/-, AND SINCE THIS ASPECT WAS NOT EXAMINED BY THE AO, THE TRIBUNAL, ACCORDINGLY, RESTORED THE MATTER IN ENTIRETY BACK TO THE AO FOR FRESH DECISION AFTER PROVIDING ADEQUATE OPPORTU NITY OF HEARING TO THE ASSESSEE. THE AO AFTER ISSUING THE LETTERS TO VARI OUS PARTIES, WHICH REMAINED UNSERVED WITH THE REMARKS NO SUCH PARTY/ADDRESS DO ES NOT EXIST. THE ASSESSEE WAS ALSO REQUESTED TO FURNISH CONFIRMATION FROM ALL THESE PARTIES AND ALSO TO PRODUCE THEIR COMPLETE AND CORRECT ADDRESS, WHICH WERE NOT PRODUCED, ITA NO.2892/AHD/2015 3 EVEN THE PANS. OF THE PARTIES WERE NOT FURNISHED. ACCORDINGLY, THE AO CONFIRMED THE ADDITION OF RS.7,40,977/- WHICH WAS C ONFIRMED BY THE LD.CIT(A). 4. I HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE F ACTS OF THE PRESENT CASE. THE UNDISPUTED THE FACTS IN THE PRESENT CASE ARE TH AT THE PURCHASES OF RS.7,40,977/- REMAINED TO BE UNVERIFIED AND BOGUS P URCHASES DEBITED TO THE P&L ACCOUNT. AT THE SAME TIME, AS POINTED OUT BY T HE LD.AR, SALES ARE NOT DOUBTED, AND ALL THE SALES HAVE BEEN ACCEPTED BY BO TH THE AUTHORITIES BELOW, AND ALSO IN THE FIRST ROUND OF LITIGATION BEFORE TH E TRIBUNAL. SIMILARLY, WITH REGARD TO UNVERIFIABLE PURCHASE OF FINISHED PRODUCT S, AMOUNTING TO RS.1,12,456/-, THE SALES ARE NOT IN DOUBT, THE ASSE SSEE HAS DEFINITELY MADE PURCHASES WITHOUT WHICH NO SALES CAN BE LEVIED. TH E LD.AR AND ALSO LD.DR HAVE CONCEDED TO DISALLOW THE PURCHASE AT THE RATE OF 25% TO MEET BOTH THE ENDS OF JUSTICE IN VIEW OF DECISION OF ITAT, AHMEDA BAD BENCH IN THE CASE OF VIJAY PROTEINS LTD. ACIT, 58 ITD 428. ACCORDINGLY, IN THE CIRCUMSTANCES AND THE FACTS OF THE CASE, WE ORDER THE AO TO DISAL LOW 25% OF THE PURCHASES/CONSUMPTION OF RAW-MATERIAL AMOUNTING TO RS.7,40,977/- AND 25% OF RS.1,12,456/-. IT IS ORDERED ACCORDINGLY. THUS ALL THE GROUNDS OF APPEAL OF THE ASSESSEE ARE PARTLY ALLOWED. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 17 TH FEBRUARY, 2016 AT AHMEDABAD. SD/- ( B.P. JAIN ) ACCOUNTANT MEMBER AHMEDABAD; DATED 17/02/2016