ITO, CHITTORGARH V. M/s. Bhandari Tiles Pvt. Ltd., CHITTORGARH

ITA 386/JODH/2013

• Counselvise Citation: 38623314 RSA 2013
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 21-11-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 12-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: U C JAIN
• Keywords: Business income
• Section: 143(3); 145; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER ITA NO.386/JODH/2013 ASSESSMENT YEAR: 2008-09 INCOME TAX OFFICER, VS. M/S. BHANDARI TILES PVT. LTD., WARD-1, CHITTORGARH. H-64-65, RIICO INDUSTRIAL A REA, CHITTORGARH. (PAN: AABCB 1151 H). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.A. JOSHI, D.R. RESPONDENT BY : SHRI U.C. JAIN & SHRI RAJENDRA JAI N DATE OF HEARING : 21.11.2013 DATE OF PRONOUNCEMENT : 28.11.2013 ORDER PER HARI OM MARATHA, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2008 -09 IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), UDAIPUR DATED 28.03.2013. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE COMPANY IS ENGAGED IN MANUFACTURING OF MARBLE SLABS BY CUTTING OF MARB LE BLOCKS PURCHASED AS RAW MATERIAL FROM THE MINE OWNERS. FOR THAT PURPOSE TH E ASSESSEE HAS GOT INSTALLED A MARBLE GANGSAW UNIT. FOR A.Y. 2008-09 THE ASSESSEE DECLARED TOTAL INCOME OF 2 ITA NO.386/JODH/2013 A.Y. 2008-09 RS.7,94,530/- BUT AGAINST WHICH THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, THE ACT FOR S HORT, ON 09.12.2010 AT A TOTAL INCOME OF RS.31,22,486/-. THE ASSESSEE HAD COMPUTE D ITS TAXABLE INCOME BY CLAIMING THE SET OFF LOSSES BY MAKING IT CLAIM IN S CHEDULE CFL OF ITR, RELATING TO ASSESSMENT YEARS 2000-01 UPTO 2004-05. HOWEVER, TH E A.O. DID NOT ALLOW SET OFF LOSSES BECAUSE THE ASSESSEE FAILED TO SUPPORT ITS C LAIM WITH DOCUMENTARY EVIDENCE. HOWEVER, SUBSEQUENT TO PASSING OF THE ASSESSMENT OR DER THE ASSESSEE FILED APPLICATION UNDER SECTION 154 OF THE ACT AND FILED VARIOUS EVIDENCES TO SUPPORT THE CLAIM OF THE LOSS AS DISCUSSED ABOVE. AFTER CONSID ERING THE EVIDENCES SO FILED THE A.O. FOUND THE CLAIM OF THE ASSESSEE IN ORDER AND T HUS ALLOWED THE CLAIM OF SET OFF. DURING THE RELEVANT YEAR, A SURVEY WAS CONDUCTED ON THE BUSINESS PREMISES OF THE ASSESSEE ON 10.03.2008. DURING THE COURSE OF SURVE Y, THE ASSESSEE AGREED TO SURRENDER THE VALUE OF EXCESS STOCK AND CASH WHICH WERE DETERMINED ON PHYSICAL VERIFICATION BY THE SURVEY PARTY. A STATEMENT OF T HE ASSESSEE WAS ALSO RECORDED AT THE TIME OF SURVEY AND IN THAT STATEMENT THE ASSESS EE AGREED TO DECLARE THE VALUE OF THE EXCESS CASH AND EXCESS STOCK AT RS.25,05,684/- WHICH WAS ESTIMATED AT THE VERY TIME OF THE SURVEY. DURING THE ASSESSMENT PROCEEDI NGS, THE A.O. FOUND THAT THE BOOKS WERE NOT RELIABLE AS THERE WERE NUMEROUS DISC REPANCIES WHICH WERE NOTICED. WITH REGARD TO VARIATION IN THE CASE OF FREIGHT TO RAW MATERIAL COST BETWEEN 13.50% (MINIMUM) TO 43.73% (MAXIMUM) FROM MONTH TO 2 MONTH S. VARIATION IN CUBIC 3 ITA NO.386/JODH/2013 A.Y. 2008-09 FEET OF POWER CONSUMPTION BETWEEN 12.81 (MINIMUM) T O 40.53 (MAXIMUM) AND NON-MAINTENANCE OF BLADES AND SEGMENTS AND ALSO THE RE BEING IRREGULARITY IN PURCHASE OF BLADES AND SEGMENTS. ACCORDINGLY, AFTE R REJECTING THE BOOKS OF ACCOUNT AND INVOKING THE PROVISIONS OF SECTION 145 OF THE ACT, THE A.O. MADE TRADING ADDITION OF RS.23,27,956/- ON ESTIMATE BASI S. THE ASSESSEE OBJECTED TO THE REJECTION OF BOOKS OF ACCOUNT AND ALSO THE TRADING ADDITION AND AFTER CONSIDERING THE OBJECTION OF THE ASSESSEE THE LD. CIT(A) JUSTIF IED THE REJECTION OF BOOKS OF ACCOUNT AND INVOCATION OF PROVISIONS OF SECTION 145 (3) OF THE ACT. 3. THE ASSESSEE HAS DECLARED TURNOVER OF RS.1,36,92 ,985/- AS AGAINST WHICH THE A.O. HAS ESTIMATED THE SAME AT RS.1,91,42,985/- AND DETERMINED UNDISCLOSED TURNOVER OF RS.54,50,000/-. THIS ADDITION IS APPRO XIMATELY 1.39 TIMES OF THE TURNOVER DECLARED AS PER THE BOOKS OF ACCOUNT. THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED AND IN THE BALANCE SHEET THE A SSESSEE HAS SHOWN PRODUCTION OF 62945 CUBIC FEET OF MARBLE. THE A.O. HAS ESTIMATED THE TURNOVER ON THE BASIS OF STOCK TURNOVER RATIO. THE ASSESSEE CHALLENGED THIS ESTIMATION BEFORE THE LD. CIT(A). THE A.O. HAS ALSO MADE AN ADDITION OF RS.2 3,27,956/- BY ADOPTING G.P. RATE @ 16.86% ON THE ESTIMATED TURNOVER AND WITHOUT CONSIDERING THE SURRENDERED INCOME OF RS.25,05,684/- DURING THE COURSE OF SURVE Y. THE ASSESSEE COMPANY HAS DULY INCLUDED THE SURRENDERED INCOME OF RS.25,05,68 4/- IN ITS P&L ACCOUNT AND 4 ITA NO.386/JODH/2013 A.Y. 2008-09 HAS FURNISHED THE RETURN DECLARING THE BUSINESS INC OME ON THE BASIS OF THE SAME. THE ASSESSEE HAS TREATED THE SURRENDERED INCOME AS ITS BUSINESS INCOME OF THE CURRENT YEAR AND HAS SUBMITTED THAT AFTER CONSIDERI NG THE SURRENDERED INCOME THE G.P. WILL INCREASE AND THE G.P. ESTIMATED BY THE A. O. WOULD BE LESS THAN THE DECLARED BY THE ASSESSEE. THE ISSUE BEFORE THE LD. CIT(A) WAS WHETHER THE SURRENDERED AMOUNT OF RS.25,05,684/- IS A PART OF I TS BUSINESS INCOME OR NOT. AFTER CONSIDERING VARIOUS ARGUMENTS OF THE ASSESSEE, THE LD. CIT(A) HAS CONSIDERED THIS FIGURE AS INCLUDIBLE IN THE BUSINESS RECEIPT AND TH EREFORE, HE HAS DELETED THE ADDITION OF RS.23,27,956/- MADE BY THE A.O. NOW TH E REVENUE IS AGGRIEVED AGAINST THIS DELETION OF TRADING ADDITION OF RS.23, 27,956/-. 4. BOTH THE PARTIES HAVE ALMOST REITERATED THEIR SI MILAR SUBMISSIONS BEFORE US ALSO. AFTER CONSIDERING THE RIVAL SUBMISSIONS, IN THE LIGHT OF THE AVAILABLE RECORDS, WE HAVE FOUND IT FOR A FACT THAT THE SURRENDERED AM OUNT PERTAINS TO THE RELEVANT YEAR AND IS TOWARDS BUSINESS RECEIPTS. THEREFORE, THE S URRENDERED AMOUNT HAS TO BE INCLUDED IN THE TOTAL TURNOVER OF THE YEAR TO DETER MINE THE G.P. OR G.P. RATE. THE LD. CIT(A) HAS CONFIRMED THE REJECTION OF BOOKS OF ACCO UNT AND THE ASSESSEE HAS NOT CHALLENGED THE SAME. HOWEVER, EVEN AFTER REJECTION OF THE BOOKS OF ACCOUNT NO ADHOC ADDITION IS PERMISSIBLE. WHEN THE G.P. RATE OF THIS YEAR IS FOUND TO BE BETTER THAN THE LAST YEAR AFTER INCLUSION OF THE SURRENDER ED INCOME, IN THAT CASE, THERE IS NO 5 ITA NO.386/JODH/2013 A.Y. 2008-09 QUESTION OF MAKING ANY FURTHER TRADING ADDITION. A CCORDINGLY, IN OUR CONSIDERED OPINION, THE LD. CIT(A) HAS CORRECTLY MADE THE IMPU GNED DELETION. 5. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISM ISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 28.11.2013) SD/- SD/- (N.K. SAINI) (HARI OM MARATHA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28 TH NOVEMBER, 2013 PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, JODHPUR BENCH, JODHPUR 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE T RIBUNAL, JODHPUR