The DCIT, Circle-1, Surat V. M/s. Mahalaxmi Infracon Pvt.Ltd., Surat

ITA 2947/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60442 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 17-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 30-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revised return
• Section: 133A

Judgement Text

ITA NO.2 947/AHD/2009 ASSESSME NT YEAR 2006- 07 . 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T.A. NO.2947/AHD/2009 (ASSESSMENT YEAR: 2006- 07) THE DEPUTY COMMISSIONER OF INCOME TAX,CIRCLE-1, ROOMNO.108, AAYAKAR BHAVAN,MAJURA GATE, SURAT. (APPELLANT) VS. M/S. MAHALAXMI INFRACON P .LTD., A-65, ATOP NAGAR, BHATAR ROAD, SURAT. (RESPONDENT) PAN: AADCM 1717C BY REVENUE : SHRI VINOD TANWANI, SR. D.R. BY ASSESSEE : NONE. ( )/ ORDER DATE OF HEARING : 17-5-2012 DATE OF PRONOUNCEMENT : 25-5-2012 PER: SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. THIS APPEAL IS FILED BY REVENUE AGAINST THE ORDER O F LD. CIT (A)-I, SURAT DATED 26-8-2009 FOR THE ASSESSMENT YEAR 2006- 07. ITA NO.2 947/AHD/2009 ASSESSME NT YEAR 2006- 07 . 2 2. THE ONLY EFFECTIVE GROUND OF APPEAL TAKEN BY THE REVENUE READS AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN RESTRICTING THE ADDITION M ADE BY THE A.O. OF RS.33,66,450/- ON ACCOUNT OF EXCESS STOCK FOUND DURING THE COURSE OF SURVEY TO RS.16,54,475/-. 3. THE NOTICE FIXING THE DATE OF HEARING ON 17-5-20 12 WAS SERVED ON THE ASSESSEE ON 24-4-2012 BY REGISTERED POST A.D. O N THE DATE OF HEARING, THERE WAS NO APPEARANCE OF ANY PERSON ON B EHALF OF THE ASSESSEE NOR ANY APPLICATION FOR ADJOURNMENT WAS RE CEIVED. WE THEREFORE PROCEED TO DECIDE THE CASE ON MERIT. 4. THE FACTS OF THE CASE ARE THAT ASSESSEE IS ENGAG ED IN THE BUSINESS OF MANUFACTURING AND SALE OF CLOTH. ASSESS EE FILED ITS E- RETURN OF INCOME ON22-12-2008 DECLARING TOTAL INCOM E AT RS. NIL. SUBSEQUENTLY IT FILED REVISED RETURN OF INCOME ON 2 7-12-2008. A SURVEY ACTION U/S. 133A TOOK PLACE AT THE PREMISES OF ASSE SSEE ON 13-3-2006. THE ASSESSEE MADE DISCLOSURE OF RS.94,84,222/- DURI NG THE SURVEY PROCEEDINGS. IN THE RETURN OF INCOME THE ASSESSEE OFFERED ONLY RS.6,88,891/- AFTER DEDUCTING MANUFACTURING EXPENSE S OF RS.87,95,331/- FROM THE DISCLOSURE OF RS.94,84,222/ - MADE DURING THE COURSE OF SURVEY. THE A.O. ASKED THE ASSESSEE TO GI VE DETAILED BREAK UP OF MANUFACTURING EXPENSES. FROM THE DETAILS OF M ANUFACTURING EXPENSES SUBMITTED BY THE ASSESSEE, THE A.O. NOTED THAT THE ITA NO.2 947/AHD/2009 ASSESSME NT YEAR 2006- 07 . 3 ASSESSEE HAD TAKEN SOME OF FIGURES ON ADHOC BASIS. HE FURTHER OBSERVED THAT MANY OF THE HEADS OF MANUFACTURING EX PENSES WERE NOT TALLYING AS PER THE TRIAL BALANCE. THE ASSESSEE HAD ALSO INCLUDED VARIOUS PROVISIONS OF EXPENSES IN THE MANUFACTURING EXPENSES. THE A.O., IN VIEW OF ABSENCE OF CLEAR CUT DETAILS AND S UPPORTING DOCUMENTS FOR EXPENSES, ADOPTED THE RATIO OF MANUFA CTURING EXPENSES TO TURNOVER FOR A.Y. 2005-06 FOR WORKING O UT THE MANUFACTURING EXPENSES TILL DATE OF SURVEY. HE ACCO RDINGLY, WORKED OUT THE EXCESS STOCK AS ON 13-3-2006 AT RS.39,55,34 1/-.SINCE THE ASSESSEE HAD SHOWN RS.6,88,891/- IN THE RETURN, THE A.O. MADE AN ADDITION OF RS.32,66,450/- (RS.39,55,341 RS.6,88, 891) TO TOTAL INCOME. AGGRIEVED BY THE ACTION OF THE A.O. THE ASSESSEE CA RRIED THE MATTER BEFORE CIT (A). 5. BEFORE CIT (A), THE ASSESSEE CONTENDED THAT THE AUTHORISED OFFICER DURING THE SURVEY CALCULATED THE G.P. RATE WITHOUT CONSIDERING THE MANUFACTURING EXPENSES OF RS.87,95,331/- BECAUS E OF WHICH THERE WAS A HUGE DIFFERENCE IN STOCK DETERMINED BY THE AU THORIZED OFFICER. THE ASSESSEE POINTED VARIOUS POINTS THAT OUGHT TO H AVE BEEN CONSIDERED BY THE A.O. WHILE ARRIVING AT THE CORREC T FIGURE OF MANUFACTURING EXPENSES. IT WAS FURTHER STATED THAT THE BASIS OF ACCOUNTING OF MANUFACTURING EXPENSES ADOPTED BY A.O . WAS WRONG. THE LD. CIT (A) AGREED WITH THE CONTENTION OF THE A SSESSEE THAT THE CALCULATION OF MANUFACTURING EXPENSES ON THE PROPOR TIONATE BASIS AS PER LAST YEAR CANNOT BE ADOPTED. THE LD. CIT (A) TH EREFORE, IN THE PRESENCE OF THE ASSESSEE AND THE A.O. WORKED OUT TH E MANUFACTURING ITA NO.2 947/AHD/2009 ASSESSME NT YEAR 2006- 07 . 4 EXPENSES OF RS.73,60,487/- INSTEAD OF RS.87,95,331/ - THAT WAS CLAIMED BY THE ASSESSEE AND OF RS.66,51,476/- THAT WAS WORK ED OUT BY THE A.O. WITH THE ADOPTION OF RS.73,60,487/- THE STOCK IN HA ND ON THE DATE OF SURVEY WAS WORKED OUT AT RS.23,43,366/-. AS THE ASS ESSEE HAD ALREADY OFFERED RS.6,88,891/-, THE ADDITIONAL AMOUNT OF ST OCK WAS WORKED OUT AT RS.16,54,475/-. ACCORDINGLY, CIT (A) SUSTAINED T HE ADDITION OF RS. 16,54,475/- INSTEAD OF RS.32,66,450/- MADE BY A.O. 6. AGGRIEVED BY THE DECISION OF THE CIT (A), THE RE VENUE IS NOW IN APPEAL BEFORE US. BEFORE US, THE LD. D.R. SUBMITTE D THAT FOR WORKING OUT THE MANUFACTURING EXPENSES THE ASSESSEE HAD TAK EN SOME FIGURES ON ADHOC BASIS, SOME OF THE FIGURES THOUGH NOT APPE ARING IN THE TRIAL BALANCE WERE CONSIDERED FOR WORKING OUT THE MANUFAC TURING EXPENSES. IN THE ABSENCE OF FULL DETAILS, THE LD. A .R. STATED THAT THE A.O. WAS RIGHT IN WORKING OUT THE MANUFACTURING EXP ENSES BASED ON THE RATIO OF A.Y. 2005-06. HE THUS, RELIED ON THE O RDER OF A.O. 7. WE HAVE HEARD THE LD. D.R. AND PERUSED THE DOCUM ENTS ON RECORDS. IT IS AN UNDISPUTED FACT THAT DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, IN THE ABSENCE OF FULL DETAILS, THE A. O. WORKED OUT THE MANUFACTURING EXPENSES BASED ON THE RATIO OF A.Y. 2 005-06. IT IS ALSO AN UNDISPUTED FACT THAT DURING THE COURSE OF APPELL ATE PROCEEDINGS, THE LD. CIT (A), IN THE PRESENCE OF AUTHORIZED REPR ESENTATIVE AND THE A.O. PREPARED A TABLE CONSIDERING THE CLAIM OF THE ASSESSEE, FIGURES AS PER THE TRIAL TAKEN DURING THE SURVEY. IN THE AB SENCE OF DOCUMENTARY EVIDENCE BEFORE HIM, THE LOWER OF THE C LAIM OF ASSESSEE ITA NO.2 947/AHD/2009 ASSESSME NT YEAR 2006- 07 . 5 AND THE FIGURE AS PER TRIAL BALANCE TAKEN DURING S URVEY WAS CONSIDERED FOR WORKING OUT THE MANUFACTURING EXPENS ES AND ACCORDINGLY THE ADDITION WAS WORKED OUT BY CIT(A). THE LD. D.R. HAS NOT POINTED OUT ANY DEFECT OR LACUNAE IN THE SYSTEM FOLLOWED BY THE LD. CIT (A) TO ARRIVE AT THE FIGURE OF MANUFACTURIN G EXPENSES. THUS IN VIEW OF THE TOTALITY OF FACTS, WE DO NOT FIND ANY I NFIRMITY IN THE ORDER OF CIT (A). WE ACCORDINGLY, DISMISS THE APPEAL OF THE REVENUE. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON 25- 5 - 2012. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-I, SURAT. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. ITA NO.2 947/AHD/2009 ASSESSME NT YEAR 2006- 07 . 6 1.DATE OF DICTATION 17 - 5 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 23 / 5 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S - -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 25 - 5 -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 25 - 5 -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2 8 - 5 -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..