Saheli Synthetics Pvt.Ltd., Surat V. The Income tax Officer,Ward-4(20, Surat

ITA 301/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5958 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-05-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 28-01-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR JAYANT JHAVERI
• Keywords: Set aside
• Section: 191

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI G.D.AGRAWAL, VICE-PRESIDENT (AZ) AND SHRI MUKUL SHRAWAT, JUDICIAL MEMBER AND DATE OF HEARING : 20/05/2010 DRAFTED ON: 07/0 6/2010 ITA NO.301/AHD/2008 ASSESSMENT YEAR : 2003-04 SAHELI SYNTHETICS PVT.LTD. 374/2, GIDC PANDESARA SURAT VS. ITO WARD-4(2) SURAT PAN/GIR NO. : AADCS 3521 L (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI BANDI SOPARKAR, C.A. RESPONDENT BY: DR. JAYANT JHAVERI, SR. D.R. O R D E R PER SHRI MUKUL SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE W HICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-I, SURAT DAT ED 01/11/2007 AND THE GRIEVANCE IS IN RESPECT OF CONFIRMATION OF PEN ALTY OF RS.5,97,220/- LEVIED U/S.271(1)(C) OF THE I.T. ACT, 1961. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING PENALTY ORDER PASSED U/S.271(1)(C) OF THE I.T.ACT, 1961 DATED 29 /03/2007 WERE THAT THE ASSESSEE IS IN THE BUSINESS OF PROCURING AND DY EING OF GREY SYNTHETIC FABRICS. THE GOODS WERE STATED TO BE SOLD EITHER I N THE LOCAL MARKET OR EXPORTED OUT OF INDIA. IT WAS STATED BY THE ASSES SING OFFICER THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME DECLARING A LOSS OF RS.6,20,970/-, ITA NO .301/AHD/2008 SAHELI SYNTHETICS PRIVATE LIMITED VS. ITO ASST.YEAR - 2003-04 - 2 - HOWEVER, ASSESSMENT WAS MADE U/S.143(3) ON 24/03/20 06 DETERMINING INCOME AT RS.16,25,100/-. IT WAS NOTICED BY THE AS SESSING OFFICER THAT IN THE IMMEDIATELY PAST ASSESSMENT YEAR ON A TOTAL TUR NOVER OF RS.29.94 CRORES A GROSS PROFIT OF RS.51.86 LACS WAS DISCLOSE D AS AGAINST THAT DURING THE YEAR UNDER CONSIDERATION OVER A TURNOVER OF RS. 47.77 CRORES A LOSS OF RS.73,17,397/- WAS DISCLOSED. IT WAS ALSO NOTED B Y THE ASSESSING OFFICER THAT AS AGAINST THE RATIO OF PROFIT AT 1.73 % THE ASSESSEE HAS DISCLOSED A LOSS OF 1.53%, THEREFORE, SHOWING A DEC LINE OF 3.26% AS COMPARED TO THE LAST YEAR. IT HAS ALSO BEEN NOTED BY THE ASSESSING OFFICER THAT THE COST OF PRODUCTION WAS RS.26.09 PE R METER, WHEREAS THE SALE WAS MADE AT 25.69 PER METER. THE ASSESSING OF FICER HAS, THEREFORE, WORKED OUT THE DIFFERENCE AND MADE AN ADDITION OF R S.74,38,446/-. 3. WITH THIS BRIEF BACKGROUND, NOW BEFORE US, IT IS STATED THAT AGAINST THE CONFIRMATION OF ADDITION BY LEARNED CIT (APPEALS), THIS APPELLANT HAD PREFERRED AN APPEAL BEFORE THE TRIBUN AL. NOW BEFORE US IN RESPECT OF THE IMPUGNED QUANTUM ADDITION, AN ORDER OF RESPECTED CO-ORDINATE BENCH D AHMEDABAD DATED 19 /03/2010 BEARING ITA NO.434/AHD/2007 IN ASSESSEES OWN CASE, I.E. SAHELI SYNTHETICS PVT.LTD. FOR ASSESSMENT YEAR 2003-04 IS PLACED ON RECORD WHEREIN VIDE PARAGRAPH NO.5, THE MATTER WAS RESTORED BACK TO THE FILE OF ASSESSING OFFICER WITH THE CERTAIN DIR ECTIONS:- 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. AT THE OU TSET, LD. COUNSEL FOR THE ASSESSEE, SHRI S.N. SOPARKAR MADE A N ITA NO .301/AHD/2008 SAHELI SYNTHETICS PRIVATE LIMITED VS. ITO ASST.YEAR - 2003-04 - 3 - ARGUMENT THAT HE IS NOT CHALLENGING THE REJECTION O F BOOK RESULTS BUT HE URGED THE BENCH TO APPLY A REASONABL E GROSS PROFIT RATE. WE FIND THAT THE ASSESSING OFFICER AF TER REJECTING THE BOOK RESULTS HAS NOT TAKEN ANY BASIS FOR APPLYI NG THE NET PROFIT. HE HAS MERELY GONE THOROUGH THE COST OF JO B-WORK PER METER AND THE TOTAL METERS SOLD BY THE ASSESSEE WER E MULTIPLIED. IN OUR VIEW, FOR FAIR ESTIMATING THE G P RATE, THE AO SHOULD HAVE GONE INTO THE PREVIOUS 3 YEARS GP D ECLARED AND ASSESSED IN THE CASE OF THE ASSESSEE AND AVERAG E OF THE SAME SHOULD HAVE BEEN APPLIED. TAKING INTO CONSID ERATION, THE LOSS INCURRED BY THE ASSESSEE ON ACCOUNT OF REJ ECT AND WASTE OF OPENING STOCK SHOULD HAVE BEEN CONSIDERED. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ADO PT THE AVERAGE GP OF PREVIOUS THREE YEARS AND ACCORDINGL Y ESTIMATE THE GP OF THE ASSESSEE AND ASSESS THE INC OME ACCORDINGLY. ACCORDINGLY, THIS ISSUE OF THE ASSESS EES APPEAL IS SET ASIDE TO THE FILE OF AO AS INDICATED ABOVE. 4. SINCE THE QUANTUM ADDITION IS STILL SUBJECT TO F INALIZATION AT THE FIRST LEVEL OF ASSESSMENT, I.E. BEFORE ASSESSING O FFICER, THEREFORE, THE CASE LAWS CITED BY THE LEARNED AUTHORISED REPRE SENTATIVE OF THE ASSESSEE, NAMELY CASE(S) OF CIT VS. RAVAIL SINGH AN D CO. (2002) 254 ITR 191 (P&H), OF CIT VS. SANGRUR VANASPATI MI LLS LTD.(2008) 303 ITR 53 AND OF SHREE NIRMAL COMMERCIAL LTD. VS. CIT (2008) 308 ITR 406 (BOM.) ARE OF NO CONSEQUENCE AT PRESEN T. IT IS PRE- ITA NO .301/AHD/2008 SAHELI SYNTHETICS PRIVATE LIMITED VS. ITO ASST.YEAR - 2003-04 - 4 - MATRUE TO DECIDE THE QUESTION OF CONCEALMENT OF PEN ALTY SINCE THE QUANTUM IS YET TO BE SETTLED, THEREFORE, WE DEEM IT PROPER TO RESTORE THIS ISSUE BACK TO THE STAGE OF ASSESSING OFFICER T O BE DECIDED DE NOVO IN THE LIGHT OF FINALIZATION OF THE ASSESSMENT PR OCEEDINGS. RESULTANTLY, GROUND RAISED BY THE ASSESSEE MAY BE T REATED AS ALLOWED ONLY FOR STATISTICAL PURPOSES. 5. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS A LLOWED BUT FOR STATISTICAL PURPOSES. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 11/ 06 /2010. SD/- SD/- ( G.D.AGRAWAL ) ( MUKUL SHRAWAT ) VICE PRESIDENT (AZ) JUDICIAL MEMBER AHMEDABAD; DATED 11 / 06 /2010 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-I, SURAT 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD