The DCIT, Circle-9, Surat V. M/s. Modern Embroidery, Surat

ITA 3262/AHD/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0465 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 05-10-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 26-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained investment; Audit objection; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER ./ ITA NOS. 145 & 3262/AHD/2011 / ASSESSMENT YEAR : 2007-08 & 2008-09 DCIT, CIRCLE-9, SURAT VS M/S. MODERN EMBROIDERY, 355-A, ISHWAR NIWAS, A.K. ROAD, SURAT PAN : AALFM 4242 K / (APPELLANT) / (RESPONDENT REVENUE BY : SMT. SONIA KUMAR, SR. DR ASSESSEE BY : SHRI M.K. PATEL, AR / DATE OF HEARING : 05/10/2016 / DATE OF PRONOUNCEMENT: 06/10/2016 / O R D E R THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGAIN ST SEPARATE ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS)- V, SURAT, DATED 28.10.2010 & 22.08.2010 FOR ASSESSMENT YEARS 2007-0 8 AND 2008-09 RESPECTIVELY. 2. FOR ASSESSMENT YEAR 2007-08, THE REVENUE HAS TAK EN FOLLOWING EFFECTIVE GROUNDS:- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.8,2 1,479/- MADE BY THE AO ON ACCOUNT OF UNACCOUNTED INVESTMENT IGNORING TH E FACT THAT THE ADDITION OF UNACCOUNTED PEAK INVESTMENT WAS MADE ON THE BASIS OF WORKING SUBMITTED BY THE ASSESSEE FIRM ITSELF DURIN G THE ASSESSMENT PROCEEDINGS. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.4,3 5,685/- MADE BY THE AO ON ACCOUNT OF GROSS PROFIT ADOPTED @ 10% ON THE DIFFERENTIAL AMOUNT OF UNACCOUNTED PURCHASES MADE BY THE ASSESSE E WORKED OUT ON THE BASIS OF THE STATEMENT OF THE PARTNER OF THE FI RM BEFORE THE DRI. SMC-ITA NOS. 145 & 3262/AHD/2011 DCIT VS. MODERN EMBROIDERY AY : 2007-08 & 2008-09 2 3. THE EFFECTIVE GROUNDS RAISED BY THE REVENUE IN I TS APPEAL FOR ASSESSMENT YEAR 2008-09 READ AS UNDER:- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.8,9 6,163/- MADE BY THE AO ON ACCOUNT OF UNACCOUNTED INVESTMENT IGNORING TH E FACT THAT THE ADDITION OF UNACCOUNTED PEAK INVESTMENT WAS MADE ON THE BASIS OF WORKING SUBMITTED BY THE ASSESSEE FIRM ITSELF DURIN G THE ASSESSMENT PROCEEDINGS. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.4,0 8,712/- MADE BY THE AO ON ACCOUNT OF GROSS PROFIT ADOPTED @ 10% ON THE DIFFERENTIAL AMOUNT OF UNACCOUNTED PURCHASES MADE BY THE ASSESSE E WORKED OUT ON THE BASIS OF THE STATEMENT OF THE PARTNER OF THE FI RM BEFORE THE DRI. 4. BEFORE ME, AT THE OUTSET, LD. COUNSEL FOR THE AS SESSEE SUBMITTED THAT THE PRESENT APPEALS OF THE REVENUE NEED TO BE DISMI SSED ON ACCOUNT OF LOW TAX EFFECT IN VIEW OF THE CBDT CIRCULAR NO.21 O F 2015 DATED 10.12.2015. THE LD. DEPARTMENTAL REPRESENTATIVE FAI RLY ADMITTED THAT THE TAX EFFECT IS LESS THAN THE LIMIT PRESCRIBED BY THE AFORESAID CBDT CIRCULAR. 5. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. ON PERUSING THE GROUNDS OF AP PEALS RAISED BY THE REVENUE, I PRIMA-FACIE FIND THAT THE TAX EFFECT IN BOTH THESE APPEALS IS BELOW RS.10 LACS. AS PER THE ANNOUNCEMENT OF CENTR AL BOARD OF DIRECT TAXES (CBDT) DATED 10.12.2015 (CIRCULAR NO.21 OF 20 15), NO DEPARTMENT APPEALS ARE TO BE FILED AGAINST RELIEF GIVEN BY LD. CIT(A) BEFORE THE INCOME TAX APPELLATE TRIBUNAL UNLESS THE TAX EFFECT , EXCLUDING INTEREST, EXCEEDS RS.10 LACS AND IT FURTHER STATES THAT THE I NSTRUCTIONS WILL APPLY RETROSPECTIVELY TO THE PENDING APPEALS. THE BOARD HAS PROVIDED EXEMPTIONS AT CLAUSE (8) OF THE INSTRUCTIONS WHEREI N IT HAS BEEN PROVIDED SMC-ITA NOS. 145 & 3262/AHD/2011 DCIT VS. MODERN EMBROIDERY AY : 2007-08 & 2008-09 3 THAT THESE INSTRUCTIONS WILL NOT BE APPLICABLE, IF VIRES OF ANY PROVISIONS HAS BEEN QUASHED BY IMPUGNED ORDER OR ADDITION WAS MADE ON SOME AUDIT OBJECTIONS OR THE ADDITION RELATES TO UNDISCL OSED FOREIGN ASSETS/BANK ACCOUNTS, ETC. I PRIMA-FACIE FIND THAT THE PRESENT CASES DO NOT FALL WITHIN THE EXEMPTION CLAUSE AND THE TAX EFFECT OF BOTH THESE APPEALS IS BELOW RS. 10 LAKHS. THEREFORE, THESE APPEALS OF TH E REVENUE ARE NOT MAINTAINABLE AND HENCE DISMISSED. 6. IN THE RESULT, BOTH APPEALS OF THE REVENUE ARE D ISMISSED IN LIMINE. ORDER PRONOUNCED IN THE COURT ON 6 TH OCTOBER, 2016 AT AHMEDABAD. SD/- R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 06/10/2016 *BIJU T. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD