The ITO, Ward-9(1), Surat V. M/s. Bhadiyadra Gems, Surat

ITA 3384/AHD/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9377 (ITAT-AHMEDABAD)
• Duration Of Justice: 40 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2010
• Appeal Filed By: Department
• Assessment Year: misc
• Appeal Filed On: 01-01-1970
• Court: TRIBUNAL
• Department Lawyers: H P MEENA SRDR
• Keywords: Gross profit estimation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD B BENCH BEFORE SHRI G.D. AGARWAL, VICE-PRESIDENT (AZ) AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.3384/AHD/2008 [ASSTT.YEAR 2005-06] ASSTT. COMMISSIONER OF INCOME- -VS- M/S. BHADIYADRA GEMS, TAX, CIRCLE-9, ROOM NO.423, 4 TH 9-10, SAVANI ESTATE, B/H FLOOR, AAYAKAR BHAVAN, MAJURA GITANJALI CINEMA, V ARACHHA GATE, SURAT ROAD, SURAT PAN NO.AAAFB1561H (APPELLANT) (RESPONDENT) REVENUE BY : SHRI H.P. MEENA, SR-DR ASSESSEE BY: NONE O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY REVENUE IS ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-V, SURAT IN APPEAL NO.CAS-V/33 3/2007-08 DATED 08-07- 2008. THE ASSESSMENT WAS FRAMED BY ACIT, CIRCLE-9, SURAT U/S.143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) VIDE HIS ORDER DATED 24-12-2007 FOR ASSESSMENT YEAR 2005-06. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) IN RESTRICTING THE ADDITION OF LOW GROSS PROFIT AT RS.21,70,280/- OUT OF THE ADDITION MADE BY ASSESSING OFFICER AT RS.27,70,280/ -. ITA NO.3384/AHD/2008 A.Y. 2005-06 ACIT CIR-9, SRT V. M/S. BHADIYADRA GEMS PAGE 2 3. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT RETURN OF INCOME FOR ASSESSMENT YEAR 2005-06 WAS FILED BY THE ASSESSEE O N 18-07-2005 DECLARING TOTAL INCOME OF RS.8,79,965/-. THE ASSESSEE IS ENGA GED IN THE BUSINESS OF IMPORT, EXPORT AND MANUFACTURING OF DIAMOND. THE CA SE WAS TAKEN UP FOR SCRUTINY U/S.143(3) OF THE ACT. DURING THE COURSE O F ASSESSMENT PROCEEDINGS NUMBER OF DEFECTS WERE FOUND IN THE BOOKS OF ACCOUN T AND THE BOOK RESULTS WERE REJECTED U/S.145(3) OF THE ACT. THE ASSESSMENT WAS COMPLETED ON 24-12- 2007, WHEREIN THE INCOME WAS ASSESSED AT RS.36,50,2 50/- ON ACCOUNT OF LOW GROSS PROFIT AT RS.27,70,280/-. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A) AND CIT(A) RESTRICTED THE ADDITION AT RS.6 L AKH ON LUMP SUM BASIS AND DELETED THE BALANCE ADDITION OF RS.21,70,280/- BY G IVING FOLLOWING FINDING AT PAGE-5 OF HIS APPELLATE ORDER:- I HAVE CONSIDERED THE ISSUE CAREFULLY. ACKNOWLEDGI NG THAT THE A.RS ARGUMENTS CONTAIN MERIT IN ARGUMENT OF G.P COMING D OWN WHEN TURNOVER INCREASES AND THE FACT THAT THE SIMILAR FA LL WAS ACCEPTED BY THE DEPARTMENT IN IMMEDIATELY PRECEDING YEAR WHEN THERE WAS A MARGINAL INCREASE IN TURNOVER, IT MAY BE SAFELY HELD THAT TH E ARGUMENT CANNOT SUCCEED IN ENTERITY. SINCE REASONABILITY OF FALL IN G.P CAN NOT BE MATHEMATICALLY CALCULATED VIS.A.VIS. INCREASE IN TU RNOVER, SOME KIND OF ESTIMATION WILL HAVE TO BE MADE. ESPECIALLY, WHEN T HE BOOKS OF ACCOUNTS SAND REJECTED. I FELT A LUMP-SUM ADDITION OF RS.6,00,000/- CAN BE CONFIRMED TO COVER THIS POINT. THE BALANCE AMOUN T IS THEREFORE DIRECTED TO BE DELETED. 4. WE HAVE HEARD THE LD. SR-DR AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT ASSESSEE BE FORE LOWER AUTHORITIES CONTENDED THAT THE TURNOVER DURING THE YEAR HAD INC REASED BY ALMOST FIVE TIMES. IN THIS RESPECT IT IS POINTED OUT BY THE ASS ESSEE THAT IN ASSESSMENT YEAR 2003-04 THE GROSS PROFIT WAS 13.96% ON A TURNOVER O F RS.1,27,56,516/- AND GROSS PROFIT FELL TO 9.67% IN THE SUCCEEDING ASSESS MENT YEAR 2004-05 WHEREIN THE TURNOVER ROSE TO RS.1,92,54,347/-. THE ASSESSEE FURTHER ARGUED THAT THE DEPARTMENT ITSELF HAD ACCEPTED A FALL OF 4.29% WHEN THE TURNOVER INCREASED BY 50% FROM RS.1,27,565\6,516/- TO RS.1,92,54,347/-. W E FIND THAT IN THE PRESENT ASSESSMENT YEAR THE TURNOVER HAS INCREASED FROM RS. 1,92,54,347/- TO ITA NO.3384/AHD/2008 A.Y. 2005-06 ACIT CIR-9, SRT V. M/S. BHADIYADRA GEMS PAGE 3 RS.9,23,42,690/- REGISTERING AN INCREASE OF 38.0%. THE CIT(A) TO COVER-UP THE DISCREPANCY OF BOOKS OF ACCOUNT, WHICH HAS BEEN REJ ECTED BY ASSESSING OFFICER AND REJECTION IS CONFIRMED BY CIT(A), ESTIM ATED GROSS PROFIT IN LUMP SUM AT RS.6 LAKH TO COVER-UP THE FALL IN GROSS PROF IT. WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND EVEN THE LD. SR-DR COULD NOT PO INT OUT ANY DEFECT IN THE SAME. ACCORDINGLY, WE CONFIRM THE FINDING OF CIT(A) AND THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS DAY OF 26 TH NOV, 2010 SD/- SD/- ( G.D.AGARWAL ) ( MAHAVIR SINGH ) (VICE PRESIDENT) (JUDICIAL MEMBER) AHMEDABAD, DATED : 26/11/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-V, SURAT 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD