Akshar Proteins Pvt. Ltd., Banaskantha V. The ACIT, B.K. Circle , Palanpur

ITA 3535/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6205 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 17-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVATIA
• Keywords: Rejection of books of accounts; Opportunity of being heard
• Section: 145

Judgement Text

, ,L ,L,L ,L- -- -,E ,E,E ,E- -- -LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER !# I.T.A. NO. 3535/AHD/2015 ( / ASSESSMENT YEAR : 2011-12) AKSHAR PROTEINS PVT. LTD. GANDHI CHOWK, SHREE RAM CHOWK, DEESA 385 535 # VS. THE ACIT, B. K. CIRCLE, SECOND FLOOR, ABU HIGHWAY, PALANPUR 385 001 $ # % & # PAN/GIR NO. : AAFCA 9457 P ( !$' / APPELLANT ) .. ( ($' # RESPONDENT ) !$') # APPELLANT BY : SHRI S. N. DIVATIA, A.R. ($'*) / RESPONDENT BY : SHRI MUDIT NAGPAL, SR. D.R. + ,*-. / DATE OF HEARING 07/02/2018 /012*-. / DATE OF PRONOUNCEMENT 09/02/2018 3# O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-4, AHMEDABAD, VIDE APPEAL NEW NO.CIT(A)-4/289/ACIT/B.K/PLNPR/14-15 AND APPEAL OLD NO.CIT(A)XV/ACIT/B.K CIR./PLNPR/50/14-15 DTD. 15/10 /2015 FOR THE ASSESSMENT YEAR (AY) 2011-12. 2. ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1.1 THE ORDER PASSED U/S.250 ON 15.10.2015 FOR A. Y.2011-12 BY CIT(A)-4, ABAD UPHOLDING THE REJECTION OF BOOKS OF ACCOUNTS AND ITA NO.3535/AHD /2015 AKSHAR PROTEINS PVT. LTD. VS. ACIT ASST.YEAR 2011-12 - 2 - THE ADDITION OF RS.22,61,555/- TOWARDS GP MADE BY A O IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NAT URAL JUSTICE. 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AN D OR ON FACTS IN PASSING THE NON-SPEAKING AND CRYPTIC ORDER WITHOUT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AS WELL AS EVIDENCE PRODUCED BEFORE HIM WITH REGARD TO THE IMPUGNED ADD ITION. 2.1 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING REJECTION OF BOOKS OF ACCOUNTS OF THE AP PELLANT BY INVOKING SECTION 145(3), THOUGH THERE WERE NO DEFEC TS OR DISCREPANCY FOUND EXCEPT FOR FALL IN GP. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD.CIT(A) OUGHT NOT TO HAVE UPHELD THE REJECTIO N OF BOOKS OF ACCOUNT OF THE APPELLANT MERELY FOR FALL IN GP RATE . 3.1 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND O N FACTS IN CONFIRMING THE ESTIMATION OF GP @3.96% AND THEREBY MAKING AN ADDITION OF RS.22,61,555/-. 3.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD.CIT(A) OUGHT NOT TO HAVE UPHELD THE ESTIMATI ON OF GP @3.96% AND THEREBY MAKING AN GP ADDITION OF RS.22,6 1,555/-. 3.3 WITHOUT PREJUDICE TO ABOVE AND IN ALTERNATIVE, THE GP ADDITION OF RS.2,61,555/- IS HIGHLY EXCESSIVE AND CALLS FOR SUB STANTIAL REDUCTION. IT IS, THEREFORE, PRAYED THAT THE GP ADDITION OF RS .22,61,555/- UPHELD BY THE CIT(A) MAY KINDLY BE DELETED. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- THE ASSESSEE FILED ITS RETURN ON 30.01.2012 SHOWING NIL INCOME. THE CASE WAS SELECTED FOR SCRUTINY AFTER RECORDING THE REASONS AND TAKING APPROVAL. NOTICE U/S.143(2) WAS ISSUED ON 26.09.201 2. THE CASE WAS ADJOURNED SINE-DIE. AGAIN, NOTICE U/S.143(2) AND 14 2(1) WERE ISSUED ON 19.08.2013. THEREAFTER QUERY LETTER WAS ISSUED ON 0 4/12/2013. IN COMPLIANCE TO THE NOTICE, SH. DILIP PANCHAL, AR APP EARED ON THE FIXED DATE AND REPLIES WERE FILED. THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE AUDITED AS PER THE PROVISIONS OF SECTION 44AB OF TH E I.T. ACT. THE ITA NO.3535/AHD /2015 AKSHAR PROTEINS PVT. LTD. VS. ACIT ASST.YEAR 2011-12 - 3 - ASSESSEE WAS ASKED TO PRODUCE THE NECESSARY AUDIT R EPORT IN FORM NO.3CB AND 3CD BUT HE FAILED TO PRODUCE THE SAME IN SPITE OF REPEATED REQUESTS AND REMINDERS. HE EVEN FAILED TO PRODUCE T HE BOOKS OF ACCOUNTS AND BILLS VOUCHERS FOR VERIFICATION. A FINAL SHOW C AUSE NOTICE TO FILE CERTAIN INFORMATION AND OF ACCOUNTS WAS ISSUED TO T HE ASSESSEE ON 20.03.2013. HOWEVER, NO ONE APPEARED ON THE FIXED D ATE. THE ASSESSEE HAS BEEN NON CO-OPERATIVE ALL THE TIME AND HAS BEEN RELUCTANT IN PROVIDING THE NECESSARY DETAILS. IT APPEARS THAT IT DOES NOT HAVE THE BOOKS OF ACCOUNTS. HENCE, I HAVE BEEN LEFT WITH NO OPTION BUT TO COMPLETE THE ASSESSMENT ON THE BASIS OF MATERIAL AVAILABLE ON RE CORD. 3.1 THE ASSESSEE IS A MANUFACTURER OF RAPESEED OIL AND RAPESEED D.O.C. DURING THE YEAR, THE ASSESSEE HAS SHOWN A G. P. RATE OF 3.36% AS AGAINST A G.P. RATE OF 3.96% DURING THE PRECEDING Y EAR. THE TRADING RESULTS OF THE ASSESSEE FOR THE LAST TWO YEARS IS A S FOLLOWS:- ASSTT. YEAR TURNOVER GROSS PROFIT GROSS PROFIT RATE 2010-11 39,36,82,172 1,55,96,067 3.96% 2011-12 37,52,19,263 1,25,97,128 3.36% 3.2 FROM THE ABOVE CHART, IT IS SEEN THAT THE SALES HAVE DECLINED AS COMPARED TO THE PRECEDING YEAR. THE G.P. RATE HAS A LSO GONE DOWN SUBSTANTIALLY. THE ASSESSEE WAS ASKED TO SUBMIT DET AILS REGARDING OPENING AND CLOSING STOCK. THE ASSESSEE IN HIS REPLY DATED 20.12.2013 STATED THAT DETAILS OF OPENING AND CLOSING STOCK OF RAW MATERIA L, FINISHED PRODUCT AND ITA NO.3535/AHD /2015 AKSHAR PROTEINS PVT. LTD. VS. ACIT ASST.YEAR 2011-12 - 4 - TRADED GOODS IN TERMS OF AMOUNT AND QUANTITY WOULD BE SUBMITTED LATER ON. AGAIN, VIDE LETTER DATED 20.03.2014, DETAILS OF WEIGHT LOSS BOOKED TO MANUFACTURING ACCOUNT WERE CALLED FOR. THE ASSESSEE FAILED TO PRODUCE THE BOOKS FOR VERIFICATION OR TO PROVIDE THE DETAIL S CALLED FOR. AS THE INCOME OF THE ASSESSEE CANNOT BE DEDUCED PROPERLY I N THE ABSENCE OF BOOKS, I HAVE NO OPTION LEFT BUT TO INVOKE THE PROV ISIONS OF SECTION 145 OF THE IT ACT. 3.3 NOW, COMING TO THE QUESTION OF ESTIMATING THE I NCOME, ASSESSEE'S OWN HISTORY IS THE BEST WAY TO ADOPT. THE ASSESSEE HAD ITSELF SHOWN A G.P. RATE OF 3.96% IN THE PRECEDING YEAR. LAST YEAR 'S RESULTS WERE NOT EVEN SUBJECTED TO SCRUTINY AND WERE ACCEPTED AS SHO WN BY THE ASSESSEE. THIS YEAR THE SALES ARE ALSO COMPARATIVELY LOWER. S O, LAST YEAR'S G.P. RATE CAN BE ADOPTED. THUS, APPLYING A G.P. RATE OF 3.96% TO THE DECLARED SALES OF RS.37,52,19,263/- THE GROSS PROFIT WORKS OUT TO RS.1,48,58,683/-. THE ASSESSEE HAS SHOWN GROSS PROFIT OF RS. L,25,9 7,128/-. THEREFORE A TRADING ADDITION OF RS.22,61,555/- IS MADE TO T HE RETURNED INCOME OF THE ASSESSEE. 3.4 SUBJECT TO THE ABOVE REMARKS, THE TOTAL INCOME OF THE ASSESSEE IS WORKED OUT AS UNDER:- INCOME AS PER RETURN RS. NIL ADD: TRADING ADDITION AS DISCUSSED RS.22,61,555/- TOTAL INCOME RS.22,61,555/- R.O INCOME RS.22,61,560/- ITA NO.3535/AHD /2015 AKSHAR PROTEINS PVT. LTD. VS. ACIT ASST.YEAR 2011-12 - 5 - 4. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO DISMISSED THE APPEAL OF T HE ASSESSEE. 5. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. THOUGH ASSESSEE WAS GIVEN AMPLE OPPORTUNITY TO PROD UCE BOOKS OF ACCOUNTS AND OTHER RELEVANT RECORD BUT BECAUSE OF S OME REASON APPELLANT COULD NOT FILE. THEREAFTER, AT THE APPELLATE STAGE, DETAILS OF OVERALL STOCK OF DIFFERENT VERITY, RAW MATERIAL CONSUMPTION IN TERMS OF VALUE IS PROVIDED IN THE AUDIT ANNUAL ACCOUNTS AND QUANTITATIVE DETAI LS OF SOME OF THE RAW MATERIAL WAS GIVEN AS A PART OF TAX AUDIT REPORT. B EFORE THE LD. CIT(A) ASSESSEE VIDE HIS REPLY DATED 20/12/2013 IN THEIR B OOKS OF ACCOUNT WOULD BE PRODUCED DURING THE ONWARD DATED OF HEARING. FRO M 20/12/2013 TO 31/03/2014, THE ASSESSEE HAD AMPLE OPPORTUNITY TO P RODUCE BOOKS OF ACCOUNTS AND TO SUBMIT QUANTITATIVE DETAILS OF STOC K AS CALLED FOR BUT ASSESSEE DID NOT PRODUCE. 6. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED V IEW THAT ASSESSEE SHOULD BE GIVEN ONE MORE OPPORTUNITY TO BE HEARD AN D TO PRODUCED ALL RELEVANT PAPERS IN SUPPORT OF HIS CONTENTION. THERE FORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMIT THIS MATTER BACK TO THE FILE OF THE LD. AO TO DECIDE THE MATTER AFRESH AFTER SUBMITTING ALL THE RELEVANT PAPERS BEFORE THE LD. AO. APPELLANT HAS ALSO DIRECTED TO C O-OPERATE WITH THE LD. AO AND WILL APPEAR BEFORE THE LD. AO AS AND WHEN HE WILL BE CALLED BY THE LD. AO AND WILL SUBMIT ALL THE NECESSARY PAPERS IN SUPPORT OF HIS CONTENTION. ITA NO.3535/AHD /2015 AKSHAR PROTEINS PVT. LTD. VS. ACIT ASST.YEAR 2011-12 - 6 - 7. IN THE RESULT, APPEAL FILED BY THE APPELLANT IS ALLOWED FOR STATISTICAL PURPOSE. THIS ORDER PRONOUNCED IN OPEN COURT ON 09/02/2018 SD/- SD/- ( ) 4 5 ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 09/02/2018 PRITI YADAV, SR.PS !'# $#! # COPY OF THE ORDER FORWARDED TO : 1. !$' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 67- + 8- / CONCERNED CIT 4. + 8- 4!5 / THE CIT(A)-4, AHMEDABAD. 5. 9:;-67 !.!672 ! / DR, ITAT, AHMEDABAD 6. ;<=, # GUARD FILE. % & / BY ORDER, (9-- //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 07/02/2018 (DICTATION-PAD 2 PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 08/02/2018 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER