M/s. Eastern Enterprises, Surat V. The ACIT.,Circle-5, Surat

ITA 352/AHD/2010

• Counselvise Citation: 35220514 RSA 2010
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 07-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 04-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: SAPNESH SETH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER I.T.A. NO.352 / AHD/2010 (ASSESSMENT YEAR 2006-07) M/S. EASTERN ENTERPRISES, 4/3150, MAIN ROAD, SALABATPURA, SURAT VS. ACIT, CIRCLE 5, SURAT PAN/GIR NO. : AAAFF6427H (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI SAPNESH SETH, AR RESPONDENT BY: SHRI B L YADAV, SR. DR DATE OF HEARING: 07.05.2012 DATE OF PRONOUNCEMENT: 15.06.2012 O R D E R PER SHRI A. K. GARODIA, AM:- THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A) IV, SURAT DATED 12.11.2009 FOR THE ASSESSMEN T YEAR 2006-07. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT _ (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDIT ION OF RS.11,92,336/- FOR GROSS PROFIT ON ALLEGED UNACCOUN TED PRODUCTION OF YARN. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.7,76,260/- FOR UNRECORDED INVESTMENT IN STOCK. 3. IT IS THEREFORE PRAYED THAT ABOVE ADDITIONS M ADE BY ASSESSING OFFICER AND CONFIRMED BY CIT (APPEALS) MAY PLEASE B E DELETED. I.T.A.NO.351 /AHD/2010 2 3. AT THE VERY OUTSET, IT WAS SUBMITTED BY THE LD. A.R. THAT IN THE PRESENT CASE, THE ISSUE INVOLVED IS COVERED IN FAVO UR OF THE ASSESSEE BY THE TRIBUNAL ORDER RENDERED IN THE ASSESSEES OWN CASE IN ASSESSMENT YEAR 2005-06 IN I.T.A.NO. 3027/AHD/2008 DATED 04.02.2011 . HE DRAWN OUR ATTENTION TO PARA 4 & 5 OF THIS TRIBUNAL DECISION. 4. LD. D.R. OF THE REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE TRIBUNAL DECISION IN THE ASSESSEES OWN CASE OF THE ASSESSMENT YEAR 2005- 06. IN THE PRESENT YEAR, THE ADDITIONS IN DISPUTE ARE TWO. THE FIRST ADDITION DISPUTE IS OF RS.11,92,336/- BEING THE GP ADDED BY THE A.O. IN RESPECT OF UNACCOUNTED TURNOVER COMPUTED BY THE A.O . ON THE BASIS OF CONSUMPTION OF ELECTRICITY. THE 2 ND ADDITION IN DISPUTE IS OF RS.7,76,260/- MADE BY THE A.O. BY ALLEGING THAT FOR THIS UNACCOUN TED TURNOVER OF RS.93,15,124/- FOR THE WHOLE YEAR, THERE MUST BE UN ACCOUNTED INVESTMENT TO THE EXTENT OF TURNOVER OF ONE MONTH I.E. 7,76,26 0/-. IN ASSESSMENT YEAR 2005-06 ALSO, ADDITION WAS MADE BY THE A.O. OF RS.2 6,97,383/- ON ACCOUNT OF SUPPRESSION OF PRODUCTION DUE TO EXCESS CONSUMPTION OF ELECTRIC POWER. IN THIS YEAR, THE ADDITION WAS DEL ETED BY LD. CIT(A) BY MAKING FOLLOWING OBSERVATION AS REPRODUCED BY THE TRIBUNAL ON PAGE 5 OF THE TRIBUNAL ORDER IN ASSESSMENT YEAR 2005-06. THE SAME IS REPRODUCED HEREIN BELOW: 5. WE FIND THAT NO MATERIAL WAS BROUGHT ON R ECORD BY THE LEARNED ASSESSING OFFICER TO SHOW, THAT THE ASSESSE E HAD IN FACT MADE AN OIL GAIN OF 1.51% ON USE OF OIL IN THE PROD UCTION OF YARN. WE-FIND THAT THE ASSESSEE EXPLAINED THAT IN THE CAS E RELIED UPON BY THE LEARNED ASSESSING OFFICER THE ASSESSEE HAD USED OIL WHICH WAS 5.12% OF THE TOTAL CONSUMPTION OF YARN WHEREAS IN T HE CASE OF THE ASSESSEE THE OIL USED WAS 0.7% OF THE TOTAL CONSUMP TION OF YARN AND THEREFORE, IN THE CASE OF THE ASSESSEE THERE WA S NO OIL GAIN AND I.T.A.NO.351 /AHD/2010 3 THE YIELD WAS 99.93% OF THE TOTAL CONSUMPTION. THIS EXPLANATION OF THE ASSESSEE WAS NOT FOUND TO BE FALSE BY THE LEARN ED ASSESSING OFFICER. FURTHER, THE OTHER COMPARABLE CASES USED B Y THE LEARNED ASSESSING OFFICER WERE NOT CONFRONTED TO THE ASSESS EE AND THEREFORE IN OUR CONSIDERED OPINION WITHOUT CONFRON TING THE SAME TO THE ASSESSEE THE SAME SHOULD NOT HAVE BEEN USED AGAINST THE ASSESSEE. WE THEREFORE DO NOT FIND ANY ERROR IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE I S DISMISSED. 6. THE TRIBUNAL HAD CONFIRMED THE ORDER OF LD. CIT( A) IN THAT YEAR ON THE BASIS THAT THE CONSUMPTION OF ELECTRICITY MAY R ISE DUE TO HUNDREDS OF FACTORS AND THEREFORE, NO ADDITION IS JUSTIFIED. I N THE PRESENT YEAR ALSO, APART FROM ESTIMATING PRODUCTION ON THE BASIS OF EX CESSIVE CONSUMPTION OF ELECTRICITY IN THE PRESENT YEAR AS COMPARED TO T HE PRECEDING YEAR, NO OTHER ADVERSE MATERIAL HAS BEEN BROUGHT OUT ON RECO RD BY THE A.O. IN SUPPORT OF THE ALLEGATION REGARDING UNACCOUNTED PRO DUCTION. THEREFORE, WE DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW I N THE PRESENT YEAR AND, THEREFORE, ADDITION MADE BY THE A.O. IN RESPECT OF GP ON SUCH ALLEGED UNACCOUNTED PRODUCTION IS NOT SUSTAINABLE. ONCE TH E UNACCOUNTED PRODUCTION IS NOT ACCEPTED, THERE IS NO CASE FOR MA KING ANY ADDITION IN RESPECT OF INITIAL INVESTMENT FOR SUCH UNACCOUNTED PRODUCTION. HENCE, ON BOTH THESE ISSUES, THE ADDITION MADE BY THE A.O. AN D CONFIRMED BY LD. CIT(A) IS NOT JUSTIFIED AND, THEREFORE, BOTH ADDITI ONS ARE DELETED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . 8. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD/- SD./- (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP I.T.A.NO.351 /AHD/2010 4 COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 12/6 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13/6.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 15/6 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.15/6 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 15/6/12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .