The DCIT, 2(1), Ujjain V. M/s. Saatal Kattha & Chemicals (P) Ltd., Rajgarh

ITA 298/IND/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0411 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 1996-1997
• Appeal Filed On: 15-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Business income
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNA L INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO. 298/IND/2013 A.Y. 1996-97 DCIT 2(1) UJJAIN ::: APPELLANT VS M/S SAATAL KATTHA AND CHEMICAL (P) LD. SARANGPUR ::: RESPONDENT APPELLANT BY SHRI R.A. VERMA RESPONDENT BY NONE DATE OF HEARING 15 .7.2015 DATE OF PRONOUNCEMENT 22 .7.2015 O R D E R PER SHRI B.C. MEENA, AM THIS APPEAL FILED BY THE REVENUE EMANATES FROM THE ORDER OF THE LEARNED CIT(A), UJJAIN, DATED 26.2.2013. 2 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF KATTHA. THE RETURN OF INCOME WAS FILED DECLARING INCOME AT RS.48,460/-. THE ASSESSING OFFICE R COMPLETED THE ASSESSMENT U/S 143(3) AFTER INVOKING PROVISIONS OF SECTION 154(2) OF THE ACT AND MADE AN ADDITION OF RS. 1,70,87,000/- BY APPLYING GROSS PROFI T RATE OF 25% AS AGAINST 8.61% DECLARED BY THE ASSESSEE. DURIN G THE YEAR THE ASSESSEE WAS ALSO ENGAGED IN THE TRADING O F KATTHA. THE LEARNED CIT(A) REDUCED THE ESTIMATE OF GROS S PROFIT TO 15% ON THE MANUFACTURING ACTIVITY AND 7% ON THE TRADING ACTIVITIES AND CONFIRMED THE ADDITION OF RS.26,24,170/-. 3. THIS APPEAL WAS FIXED FOR HEARING ON VARIOUS DATES AND FINALLY THE NOTICE WAS GOT SERVED THROUGH DR AND IT WAS REPORTED THAT THE NOTICE WAS DULY SERVED UPON THE ASSE SSEE ON 27.6.2015 FIXING THE DATE OF HEARING ON 15.7.2015. 3 HOWEVER, NONE ATTENDED ON BEHALF OF THE ASSESSEE EVEN AFTER SERVICE OF NOTICE. THIS APPEAL IS, THEREFORE, B EING DECIDED AFTER HEARING THE LEARNED DR AND CONSIDERING T HE RELEVANT MATERIAL AVAILABLE ON RECORD. 4. IT IS A FACT THAT IN EARLIER YEARS THE ASSESSEE HIMSE LF DECLARED GROSS PROFIT RATE OF 25%. IN THE ASSESSMENT YEAR 1991-92 THE ASSESSEE DECLARED GROSS PROFIT RATE OF 24. 99%. HON'BLE HIGH COURT OF MADHYA PRADESH CONFIRMED THE GR OSS PROFIT RATE OF 25% IN THE ASSESSMENT YEAR 1989-90 IN T HE ASSESSEES OWN CASE. HOWEVER, DURING THAT RELEVANT PERI OD THE ASSESSEE WAS ENGAGED ONLY IN MANUFACTURING OF KATTHA. IN THE YEAR UNDER CONSIDERATION THE ASSESSEE WAS ALSO DOING TRADING IN KATTHA. THE TOTAL SALES FOR THE YEAR UN DER CONSIDERATION ON ACCOUNT OF MANUFACTURING OF KATTHA WERE OF RS. 538.24 LACS. THE TRADING OF KATTHA SALES WERE O F RS.504.51 LACS. 4 5. AFTER CONSIDERING ALL THE RELEVANT FACTS AVAILABLE O N RECORD, WE ARE OF THE VIEW THAT THERE WAS NO APPARENT REASON FOR REDUCING THE GROSS PROFIT FROM 25% TO 15% ON THE MANUFACTURING OF KATTHA SALES. HON'BLE JURISDICTION AL HIGH COURT IN THE ASSESSEES OWN CASE HAD HELD 25% O F GP ON MANUFACTURING OF KATTHA SALES AS REASONABLE. THEREFORE, WE DIRECT TO ESTIMATE GROSS PROFIT @ 25% ON THE SALES OF MANUFACTURING KATTHA AMOUNTING TO RS.5,38,24,000/-. SINCE MARGIN IN TRADING OF GOODS IS NOT AS HIGH AS IN TRADING OF OWN MANUFACTURED GOODS, THEREFORE, WE HOLD THAT THE LEARNED CIT(A) WAS JUSTIFI ED IN ESTIMATING GP @ 7% ON THE GROSS SALES OF RS.5,04,51,0 00/-. WE DIRECT ACCORDINGLY. IN RESPECT OF THE TRADING SAL ES OF RS.5,04,51,000/-, WE HOLD THAT THE LEARNED CIT(A) WAS JUSTIFIED IN ESTIMATING 7% AS GROSS PROFIT. 5 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS PART LY ALLOWED. PRONOUNCED IN OPEN COURT ON 22 ND JULY, 2015 SD SD (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 22 ND JULY, 2015 DN/-