ALAKNANDA TEA LIMITED, V. THE ACIT.,

ITA 3506/AHD/2003

• Counselvise Citation: 350620514 RSA 2003
• Duration Of Justice: 8 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-01-2012
• Assessment Year: 1996-1997
• Appeal Filed On: 17-09-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA SRDR
• Keywords: Depreciation; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD B BENCH BEFORE SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER AND SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO.3506/AHD/2003 ASSESSMENT YEAR:1997-96 ALAKNANDA TEA LIMITED, KIRAN PATEL & CO GURUKRUPA BUILDING, MAYFAIR ROAD, ANAND PAN NO.AABCA9593L / V/S . ACIT, ANAND CIRCLE, ANAND / APPELLANT .. / RESPONDENT / BY APPELLANT SHRI ASSEM L THAKKAR, AR / BY RESPONDENT SHRI RAJ MEHRA, SR-DR / DATE OF HEARING 18-01-2012 / DATE OF PRONOUNCEMENT 20-01-2012 !' !' !' !' / / / / ORDER PER B.P. JAIN, ACCOUNTANT MEMBER:- THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER O F LD. COMMISSIONER OF INC- TAX (APPEALS)-V, BARODA DATED 30-06-2003 FOR THE AS SESSMENT YEAR 1996-97. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THE LEARNED CIT(A)-V, ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.1,07,931 ON ACCOUNT OF GROSS PROFIT. 2. THE LEARNED CIT(A)-V, ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.55,218/- ON ACCOUNT OF UNACCOUNTED SALES. 3. THE LEARNED CIT(A)-V, ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.3,425/- ON ACCOUNT OF UNACCOUNTED PURCHASE & RS.3,90,098 OUT OF EXPENSES. 4. THE LEARNED CIT(A)-V, ERRED IN LAW & ON FACTS IN CONFIRMING THE D OF RS.11,280//- OUT OF ADVERTISEMENT EXPENSES. ITA NO.3506/AHD/2003 A.Y. 1996-97 ALAKNANDA TEA LTD. V. ACIT, ANAND CIR PAGE 2 5. THE LEARNED CIT(A)-V, ERRED IN LAW & ON FACTS IN CONFORMING THE ADDITION OF RS.1,23,000/- OUT OF SHARE CAPITAL. 6. THE LEARNED CIT(A)-V, ERRED IN LAW & ON FACTS IN CONFIRMING THE ADDITION OFRS.1,21,000/- OUT OF ON ACCOUNT OF UNSECURED LOAN U/S 68. 7/ THE LEARNED CIT(A)-V, ERRED IN LAW & ON FACTS IN CONFIRMING THE DISALLOWANCE OF RS.6,34,418/- OUT OF DEPRECIATION. 2. THE BRIEF FACTS AS REGARDS GROUNDS NO.1 TO 3 ARE THAT A SURVEY U/S.133A OF THE INCOME-TAX ACT, 1961 WAS CONDUCTED ON 20-03-1997, W HERE SOME MATERIAL WAS IMPOUNDED. THE ASSESSEE HAS NOT ACCOUNTED FOR CERTA IN SALES, PURCHASE AND THE EXPENSES WERE FOUND NOT FULLY VOUCHED AND NOT ACCOU NTED FOR. THE ASSESSING OFFICER ISSUED THE SHOW-CAUSE NOTICE TO THE ASSESSEE. THE E XPLANATION SUBMITTED BY THE ASSESSEE WAS NOT FOUND SATISFACTORY. THE AO OBSERVE D THAT THE ASSESSEE WAS NOT MAINTAINING PROPER QUANTITATIVE DETAILS, THE ASSESS EE FAILED TO PRODUCE DETAILS OF CLOSING STOCK AND ITS VALUATION, PURCHASES AND SALE S WERE NOT PROPERLY ACCOUNTED FOR. THE AO ALSO NOTICED CERTAIN SALES AMOUNTING TO RS.5 5,218/- WERE NOT ACCOUNTED FOR AS PER THE IMPOUNDED MATERIAL. THE DETAILS OF THE S ALE ARE AVAILABLE AT PAGE-4 OF THE ASSESSMENT ORDER. THE ASSESSEE HAS ALSO NOT ACCOUNT ED FOR CERTAIN EXPENSES AMOUNTING TO RS.3,90,098/- AND PURCHASES OF RS.3,42 5/-. THE AO INVOKING THE PROVISIONS OF SECTION 145(1) OF THE ACT REJECTED TH E BOOKS OF ACCOUNT, AND ESTIMATED THE SALES AT RS.20 LAKH AND GROSS PROFIT RATE AT 10 % AND ACCORDINGLY MADE THE GROSS PROFIT ADDITION OF RS.1,07,931/- ALONG WITH ADDITIO N OF RS.54,218/- ON ACCOUNT OF UNACCOUNTED SALES AND RS.3,93,523/- ON ACCOUNT OF U NACCOUNTED EXPENSES AND PURCHASES. 3. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AS REGARDS GROUNDS NO.1 TO 3 THERE IS NO DISPUTE AS FA R AS REJECTION OF BOOKS OF ACCOUNT AND INVOKING OF SECTION 145(1) OF THE ACT IS CONCER NED. AS REGARDS UNACCOUNTED SALES AND THE PURCHASES ETC., THE SAME ARE PART OF THE TRADING ACCOUNT, THEREFORE A SEPARATE ADDITION FOR THE SAME CANNOT BE MADE. THE ASSESSING OFFICER HAS ESTIMATED THE SALES AND HAS APPLIED THE GROSS PROFI T RATE TO THE ESTIMATED SALES. NOW THE QUESTION ARISES WHAT SHOULD BE THE ESTIMATED SA LES AND THE GROSS PROFIT OF THE ITA NO.3506/AHD/2003 A.Y. 1996-97 ALAKNANDA TEA LTD. V. ACIT, ANAND CIR PAGE 3 ASSESSEE. IN THIS REGARD, NONE OF THE PARTIES HAS P RODUCED ANY COMPARABLE CASE BEFORE US AND ALSO THE SALES OR THE GROSS PROFIT DE CLARED IN THE PRECEDING YEARS WAS ALSO NOT PRODUCED BY ANY OF THE PARTIES. IN THE CIR CUMSTANCES AND FACTS OF THE CASE WE HAVE TO DECIDE THE ESTIMATION OF SALES AND THE G ROSS PROFIT ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS DECL ARED THE SALES OF RS.13,70,790/- DURING THE IMPUGNED YEAR. THE UNACCOUNTED SALES FOU ND WERE AT RS.55,218/- AND UNACCOUNTED EXPENSES AND PURCHASES WERE AT RS.3,93, 523/-. THE TOTAL OF SALES DECLARED AND UNACCOUNTED SALES AND CORRESPONDING SA LES TO UNACCOUNTED EXPENSES AND PURCHASES IF TAKEN, COMES MORE THAN RS.18,19,53 1/- PLUS PROFIT ON UNACCOUNTED PURCHASES AND EXPENSES. THE AO HAS ESTIMATED THE SA LES AT RS. 20 LAKH WHICH APPEARS TO BE QUITE REASONABLE AND IN THE ABSENCE O F ANY MATERIAL ON RECORD WE DO NOT INTERFERE IN THE GROSS PROFIT RATE OF 10% CONFI RMED BY LD. CIT(A). THEREFORE, GROUND NO.1 OF THE ASSESSEE IS DISMISSED AND GROUND S NO.2 AND 3 OF THE ASSESSEE ARE ALLOWED. 5. AS REGARDS GROUND NO.4, THE ASSESSING OFFICER HA S MADE A DISALLOWANCE OFRS.11,280/- OUT OF ADVERTISEMENT EXPENSES BEING E XPENSE OF EARLIER YEAR. THE LD. CIT(A) CONFIRMED THE ACTION OF ASSESSING OFFICER. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE EXPENSES ARE PERTAINING TO EARLIER YEARS HAS BEEN A SSERTED BY BOTH THE PARTIES, WHICH HAS BEEN CLAIMED DURING THE YEAR. NO COGENT E XPLANATION HAS BEEN PRODUCED BEFORE ANY OF THE AUTHORITIES BELOW OR EVEN BEFORE US. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) IN THIS REGARD. THUS, GR OUND NO.4 OF THE ASSESSEE IS DISMISSED. 7. AS REGARDS GROUND NO.5 OF THE ASSESSEE. THE BRIE F FACTS ARE THAT ASSESSEE HAD MADE AN INCREASE IN THE SHARE CAPITAL OF RS.1.2 3 LAKH AND HAS FILED THE CONFIRMATION LETTERS IN SOME CASES. THE ASSESSING O FFICER TREATED THE SAME AS BOGUS AND ADDED TO THE INCOME OF THE ASSESSEE. THE LD. CI T(A) CONFIRMED THE ACTION OF AO. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ASSESSEE HAS FILED THE CONFIRMATION LETTERS IN SOME CASES BUT THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD THE SAID CONFIRMATIONS AR E BOGUS OR HAS NOT DISPROVED THE ITA NO.3506/AHD/2003 A.Y. 1996-97 ALAKNANDA TEA LTD. V. ACIT, ANAND CIR PAGE 4 SAME. IN THE CIRCUMSTANCES AND FACTS OF THE CASE AN D IN THE INTEREST OF JUSTICE THE SAID CONFIRMATION REMAINS TO BE VERIFIED BY THE ASS ESSING OFFICER AND THEREFORE WE SET ASIDE THE ISSUE TO THE FILE OF THE AO WHO WILL DECIDE THE ISSUE DE NOVO BUT BY AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. THUS, GROUND NO.5 OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 9. AS REGARDS GROUND NO.6 THE ASSESSEE DECLARED CAS H CREDITS OF RS.1.21 LAKH I.E. RS.21,000/- FROM ARVINDBHAI DOSHI AND RS.1 LAK H FROM SMT. KALPANABEN. THE ASSESSEE HAS FILED THE CONFIRMATION LETTER IN THE C ASE OF ARVINDBHAI DOSHI BUT HAS NOT FILED CONFIRMATION LETTER IN THE CASE OF SMT. KALPANABEN . THE ASSESSING OFFICER DID NOT FIND THE EXPLANATION OF THE ASSESSEE AS SATISFA CTORY AND ADDED THE SAID CASH CREDITS IN THE INCOME OF THE ASSESSEE. 10. LD. CIT(A) CONFIRMED THE ACTION OF THE ASSESSIN G OFFICER. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. IT WAS ARGUED THAT THE ASSESSEE HAS FILED CONFIRMATIONS OF BOTH THE PARTIES BUT THE ASSESSING OFFICER HAS NOT EXAMINED THE SAME. THE AR GUMENTS MADE BY LD. AR AND IN THE ABSENCE OF ANY CONTRARY MATERIALS ARE FOUND TO BE CONVINCING AND THEREFORE IN THE INTEREST OF JUSTICE WE SET ASIDE THE MATTER TO THE FILE OF AO WHO WILL EXAMINE THE ISSUE AFRESH BUT BY AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS, GROUND NO.6 OF THE ASSESSEE IS ALLOWED FOR STATISTI CAL PURPOSES. 12. AS REGARDS GROUND NO.7 THE ASSESSEE HAS CLAIMED THE DEPRECIATION AS UNDER:- 1. FACTORY BUILDING RS.4,35,906/- 2. OFFICE BUILDING RS.2,00,387/- 3. PLANT & MACHINERY RS. 1,125/- AT THE TIME OF SURVEY, THE DIRECTOR OF THE COMPANY STATED THAT THE MANUFACTURING WORKING HAS NOT BEEN DONE IN THE FACTORY BUILDING A ND OFFICE BUILDING AND THE AUDITOR OF THE COMPANY HAS ALSO MENTIONED THE SAME IN THEIR AUDITORS REPORT. THE ASSESSING OFFICER ACCORDINGLY DISALLOWED THE DEPRECIATION. 13. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSE SSING OFFICER. ITA NO.3506/AHD/2003 A.Y. 1996-97 ALAKNANDA TEA LTD. V. ACIT, ANAND CIR PAGE 5 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. IT WAS ARGUED THAT THE FACTORY HAD ALREADY COME INTO PRODU CTION AND THIS ISSUE PENDING BEFORE THE LD. CIT(A) IN THE PRECEDING YEAR ALSO. T HEREFORE THE MATTER SHOULD BE SENT BACK TO THE FILE OF AO WHO WILL DECIDE THE ISSUE AS PER THE DECISION IN THE LAST YEAR BY THE LD CIT(A). WE ARE CONVINCED WITH THE ARGUMENT M ADE BY LD. AR AND IN THE INTEREST OF JUSTICE WE REMAND THE MATTER TO THE FIL E OF AO WHO WILL DECIDE THE ISSUE DE NOVO BY PASSING A SPEAKING ORDER AND TAKING INTO CO NSIDERATION THE DECISION IN THE PRECEDING YEAR BY THE LD. CIT(A) BUT BY AFFORDING O PPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS, GROUND NO.7 OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSES. 0 # !' $!%& 20 / 01 /201 2 * + , - THIS ORDER PRONOUNCED IN OPEN COURT ON 20/01/ 201 2. SD/- SD/- ( MUKUL KUMAR SHRAWAT ) ( B.P. JAIN ) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) $!%&- 20/01/2012 /!! - DKP* !' !' !' !' 001 001 001 001 21 21 21 21 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. %%05 6 / CONCERNED CIT 4. 6- / CIT (A) 5. 19, 0005, 05, /!! / DR, ITAT, AHMEDABAD 6. ,<= ># / GUARD FILE. BY ORDER/ !' , /TRUE COPY/ ?// %@ 05, /!! -