The ACIT, Circle-5, RAJKOT-GUJARAT V. M/s. Amrut Ceramics, Morbi

ITA 373/RJT/2014

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2949 (ITAT-RAJKOT)
• Duration Of Justice: 5 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 10-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P R CHAUHAN
• Assessee Lawyers: MJ RANPURA
• Section: 133(6); 201; 143(2); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE: SHRI MAHAVIR PRASAD , JUDICIAL MEMBER AND S H RI AMARJIT SINGH , ACCOUNTANT MEMBER [CONDUCTED THROUGH E - COURT AT AHMEDABAD] ACIT, CIRCLE - 5 , RAJKOT (APPELLANT /RESPONDENT ) VS M/S AMRUT CERAMICS, MORBI PAN: A ADFA7820M (RESPONDENT /CROSS OBJECTOR ) REVENUE BY : S H RI P. R. CHAUHAN , SR. D . R. ASSESSEE BY: S H RI M.J. RANPURA , A.R. DATE OF HEARING : 0 1 - 08 - 2 019 DATE OF PRONOUNCEMENT : 06 - 08 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THI S REVENUE S APPEAL AND ASSESSEE S CROSS OBJECTION FOR A.Y. 2009 - 10 , AR ISE FROM ORDER OF THE CIT(A) - IV, RAJKOT DATED 26 - 03 - 2014 , I N PROCEEDINGS UNDER SECTION 144 OF THE INCOME TAX ACT, 1961; IN SH ORT THE ACT . 2. THE INSTANT APPEAL OF REVENUE AND CROSS OBJECTION OF THE ASSSESSEE PERTAIN TO THE COMMON ISSUE , THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY ARE ADJUDICATED TOGETHER. I T A NO . 373 & CO NO. 15 / RJT /20 14 A SSESSMENT YEAR 200 9 - 10 I.T.A NO. 3 7 3 & CO NO.15 / RJT /20 14 A.Y. 2009 - 10 PAGE NO ACI T VS. M/S. AMRUT CERAMICS 2 3. THE FACT IN BRIEF IS THAT RETURN OF INCOME DECLARING INCOME OF RS. 23,43,310/ - WAS FILED ON 24 TH SEP, 2009. THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 24 TH AUGUST, 2010. 4. DURING THE COURSE OF ASSES SMENT, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS MADE SUBSTANTIAL AMOUNT OF PURCHASE IN CASH TO THE AMOUNT OF RS. 58,6 4 , 233/ - FROM 12 PARTIES LISTED AT PAGE NO. 3 OF THE ASSESSMENT ORDER. IN THIS CONNECTION, THE ASSESSEE WAS ASKED TO FURNISH THE COMPLETE NAMES AND ADDRESSES OF THE PERSONS FROM WHOM THE AFORESAID PURCHASE S IN CASH WAS MADE . THE ASSESSEE HAS FURNISHED THE ADDRESSES OF 7 PARTIES BUT HAS NOT FURNISHED ANY ADDRESSES IN RESPECT OF 4 PARTIES FROM WHOM THE ASSESSEE HAS MADE PURCHASE IN C AS H . TO VERIFY THE GENUINENESS OF THE PAYMENT MADE BY THE AS SESSEE, THE ASSESSIN G OFFICER HAS ISSUED NOTICES U/S. 133(6) OF THE ACT AND NOTICES ISSUED HAS BEEN RETURNED UN - SERVED WITH THE REMARKS THAT NOT KNOWN . THESE FACTS WERE BROUGHT TO THE NOTICE OF THE ASSESSEE AND HE WAS ALSO REQUESTED TO PROVIDE ANY OTHER ADDRESSES OF THE PA RTIES AND ALSO REQUESTED TO PRODUCE THESE PERSONS FOR VERIFICATION . HOWEVER, THE ASSES S EE HAS NOT MADE ANY COMPLIANCE. CONSEQUENTLY , THE ASSESSING OFFICER HAS DISALLOWED THE PURCHASE TO THE EXTENT OF RS. 58 , 64 , 2 3 3/ - AS UNEXPLAINED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. DURING THE COU RS E OF ASSESSMENT, THE ASSESSING OFFICER HAS ALSO NOTICED THAT ASSESSEE HAS SHOWN GROSS PROFIT OF RS. 1 , 65 , 88 , 9 61 / - @ 18.27% ON THE TOTAL TURNOVER OF RS. 9 , 07 , 8 9,7 38/ - AS AGAINST THE GROSS PROFIT OF RS 52 , 03 , 733/ - @ 20.57% SHOWN ON THE TOTAL TURNOVER OF RS. 2 , 52 , 99 .104 / - IN THE IMMEDIATE PRECEDING YEAR. THE ASSESSING OFFICER HAS NOTICED THAT THERE I.T.A NO. 3 7 3 & CO NO.15 / RJT /20 14 A.Y. 2009 - 10 PAGE NO ACI T VS. M/S. AMRUT CERAMICS 3 WAS FALL IN GROSS PROFIT @ 2.3 % DURING THE PREVIOUS YEAR AS COMPARED TO THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. TH E ASSESSING OFFICER HAS ALSO MADE COMPARISON WITH THE OTHER ASSESSEE ENGAGED IN THE SIMILAR LINE OF BUSINESS AS POINTED AT PAGE NO. 27 OF THE ASSESSMENT ORDER THAT THE GROSS PROFIT VARIES FROM 23% TO 39.40%, THEREFORE , THE ASSESSING OFFICER HAS ESTIMATED G ROSS PROFIT @ 25% ON TOTAL TURNOVER OF RS. 9 , 07 , 89 , 738/ - TO RS. 79 , 24 , 269/ - AND AFTER GIVING BENEFIT OF TELESCOPING TO THE EXTENT OF ADDITION OF R S. 58 , 64 , 233/ - MADE ON ACCOUNT OF DISALLOWANCE OF EXPEND ITURE ON CHARCOAL PURCHASES, FURTHER ADDITION OF RS. 2 0 , 60 , 036/ - WAS MADE . 6. AGGRIEVED ASSESSEE HAS FILED APPEAL B EF ORE THE LD. CIT(A). T HE LD. CIT(A) HAS RESTRICTED THE DISALLOWANCE ON ACCOUNT OF UNEXPLAINED PURCHASE OF R S. 58 , 64 , 233/ - TO THE EXTENT OF 25% OF SUCH PURCHASES TO THE AMOUNT OF RS. 11 , 72 , 847/ - AND DELETED THE ADDITION IN RESPECT OF GP ADDITION MADE BY THE ASSESSING OFFICER. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. DURING THE COURSE OF ASSESSMENT, TO VERIFY THE CASH PURCHASES OF CHARCOAL, T HE A SSES SING OFFICER HAS ISSUED NOTICES U/S. 133(6) OF THE ACT TO THE PERSONS FROM WHOM THE SUCH PURCHASE S WERE MADE. HOWEVER, SUCH NOTICES ISSUED U/S. 133(6) WERE RETURNED UN - SERVED WITH THE REMARKS NOT KNOWN. T HEREFORE , THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NOT PROVED TH E GENUINENESS OF SUCH PURCHASES WHICH WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED PURCHASES. THE ASSESSING OFFICER HAS ALSO MADE A N OTHER ADDITION OF RS. 20 , 60 , 036/ - ON ESTIMATION OF GROSS PROFIT AFTER COMPARING THE GROSS PROFIT WITH THE PRECEDING ASSESSMENT YEAR I.T.A NO. 3 7 3 & CO NO.15 / RJT /20 14 A.Y. 2009 - 10 PAGE NO ACI T VS. M/S. AMRUT CERAMICS 4 AND WITH THE GROSS PROFIT OF OTHER ASSESSEE S ENGAGED IN SIMILAR LINE OF BUSINESS. THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE STATING THAT THE ASSESSING OFFICER HAS INCORRECTLY DRAWN T HE INFERENCE THAT ASSESSEE HAD NOT MADE PURCHASES OF CHARCOAL ONLY ON THE FACT THAT INQUIRY LETTER SENT ON THE ADDRESSES WERE RETURNED UN - SERVED. THE LD. CIT(A) HAS FURTHER STATED THAT MANY A TIME THE PERSONS DO NOT RESPOND TO REMAIN AWAY FROM UN - NECESS ARY LEGAL PROCEEDINGS. THE LD. CIT(A) HAS ALSO OBSERVED THAT THERE WAS TREMENDOUS INCREASED IN THE PRODUCTION OF THE ASSESEE. THE PRODUCTION OF THE ASSESSEE HAS BEEN DOUBLE DURING THE YEAR UNDER CONSIDERATION AN D THE ASSESSING OFFICER HAS ALLOWED THE SIMI LAR EXPENSE S IN THE SUBSEQUENT ASSESSMENT YEAR 2011 - 12. HOWEVER , AFTER CONSIDERING THE FACT THAT ASSESSEE COULD NOT ADDUCE ANY BUSINESS CIRCUMSTANCES WHICH LED TO MAKE CASH PURCHASES OF CHARCOAL , THE LD. CIT(A) HAS RESTRICTED THE ADDITION TO THE EXTENT OF 25% OF CASH PURCHASES TO THE AMOUNT OF R S. 11 , 72 , 847/ - . IN THE LIGHT OF T HE FACT THAT TURNOVER OF THE ASSESSEE HAS BEEN INCREASED DURING THE YEAR UNDER CONSIDERATION AND DEFAULT ON THE PART OF THE ASSESSE E FOR NOT MAKING COMPLIANCE IN SPITE OF PROV IDING OPPORTUNITIES , WE DO NOT FIND ANY ERROR IN THE DECISION OF LD. CIT(A) IN RESTRICTING SUCH DISALLOWANCES TO THE EXTENT OF 20% OF RS. 11 , 72 , 847/ - . THEREFORE, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF REVENUE AND CROSS OBJECTION OF THE ASSES SEE ON THIS ISSUE. ACCORDINGLY , THIS GROUND OF APPEAL OF REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. 8. ON THE SECOND ISSUE, THE ASSESSING OFFICER HAS ESTIMATED THE GROSS PROFIT OF THE ASSESSEE @ 25% AND MADE ADDITION OF RS. 20,60,036 / - . T HE LD. CIT(A) HAS DELETED THE SAID ADDITION STATING THAT ASSESSING OFFICER HAS I.T.A NO. 3 7 3 & CO NO.15 / RJT /20 14 A.Y. 2009 - 10 PAGE NO ACI T VS. M/S. AMRUT CERAMICS 5 INCORRECTLY ESTIMATED THE GROSS PROFIT AT HIGHER MARGIN ON THE BASIS OF INCORRECT COMPARISON AND REJECTING THE BOOKS OF ACCOUNT MERELY ON PRESUMPTION BASIS WITHOUT CONSIDERING THE FACT THAT PRODUCTION AND TURNOVER OF THE ASSESSEE WERE INCREASED MANY FOLD DURING THE YEAR UNDER CONSIDERATION . THE LD. CIT(A) HAS ALSO STATED THAT ASSESSING OFFICER HAS MADE INCORRECT COMPARISON WITH SIMILAR LINE OF BUSINESS WITHOUT CONSIDERING THE C OMPLETE FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE OF THE ASSESSEE. IN THE L I GHT OF THE ABOVE FACTS AND FINDINGS OF LD. CIT(A) , WE CONSIDER THAT ASSESSING OFFICER HAS NOT CONSIDERED THE MATERIAL FACT THAT TURNOVER OF THE ASSESSEE DURING THE YEAR UND ER CONSIDERATION WAS INCREASED TO RS. 9 , 07 , 89 , 738/ - FROM TURNOVER OF RS. 2 , 52 , 99 , 104/ - SHOWN IN THE IMMEDIATE PRECEDING AS SESSMENT YEAR. I N THE PRECEDING ASSESSMENT YEAR ON THE SMALL TURNOVER THE ASSESSEE HAS SHOWN GROSS PROFIT @ 20.25% WHEREAS DURING T HE YEAR UNDER CONSIDERATION ON MUCH HIGHER TURNOVER THE ASSESSEE HAS SHOWN GROSS PROFIT @ 18.27% AND THE MARGINAL FALL IN THE GROSS PROFIT WAS DUE TO HIGHER TURNOVER ATTAINED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION . C ONSIDERING THE ABOVE FAC TS, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD. CIT(A). ACCORDINGLY, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE BOTH ARE DISMISSED. ORDER PR ONOUN CED IN THE OPEN C OUR T ON 06 - 08 - 201 9 SD/ - SD/ - (MAHAVIR PRASAD ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 06 /08 /201 9 I.T.A NO. 3 7 3 & CO NO.15 / RJT /20 14 A.Y. 2009 - 10 PAGE NO ACI T VS. M/S. AMRUT CERAMICS 6 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3 . CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, RAJKOT