MITTAL POLYPLAST PRIVATE LIMITED, MUMBAI V. INCOME TAX OFFICER 2(2)(3), MUMBAI

ITA 4178/MUM/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1669 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 13-06-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K BEPAIR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM I.T.A. NO. 4178/MUM/2018 ( ASSESSMENT YEAR: 2013 - 14) MITTAL POLYPLAST PRIVATE LIMITED 22/24, GAMI HOUSE, MODI STREET, MUMBAI - 400 001 VS. ITO - 2(2)(3) AAYAKAR BHAVAN, M . K. ROAD, MUMBAI - 400 020 PAN/GIR NO. AADCM 8149 C ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : NONE RESPONDENT BY : SHRI S. K. BEPAIR DATE OF HEARING : 21.08.2018 DATE OF PRONOUNCEMENT : 05.09 .2018 O R D E R PER S HAMIM YAHYA, A. M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 5, MUMBAI (LD.CIT(A) FOR SHORT) DATED 22.03.2018 AND PERTAINS TO THE ASSESSMENT YEAR (A.Y.) 2013 - 14. 2. T HE GROUNDS OF APPEAL READ AS UNDER : 1. THA T THE ASSESSMENT ORDER U/S 143(3) OF THE INCOME TAX ACT. 1961 ('THE ACT') DATED 30.03.2016 PASSED BY THE ASSESSING OFFICER ('AO') AND THE ADDITIONS/DISALLOWANCES MADE THEREIN ARE ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION. 2. THAT THE AO AND THE COMMIS SIONER OF INCOME TAX (APPEALS) (' K CIT(A)') HAVE GROSSLY ERRED ON FACTS AND IN LAW IN PASSING THE ORDERS WITHOUT GIVING A SUFFICIENT AND REASONABLE OPPORTUNITY TO THE ASSESSEE TO BE HEARD. THE ORDERS HAVE BEEN PASSED IN VIOLATION OF PRINCIPLES OF NATURAL JU STICE. 3. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE EASE, THE C1T(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ASSESSMENT ORDER U/S 143(3} OF THE ACT AND THE ADDITIONS/DISALLOWANCES MADE THEREIN. 4. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE AO HAS ERRED ON FACTS AND IN LAW IN REJECTING THE NET PROFIT RATIO OF 0.13% AS DECLARED BY THE APPELLANT ON A TOTAL TURNOVER OF RS. 6.25 CRORE DURING THE YEAR UNDER CONSIDERATION AS PER ITS 2 ITA NO. 4178/MU M/2018 MITTAL POLYPLAST PRIVATE LIMITED AUDITED ACCOUNTS AND ARBITRARILY ESTIMATING THE SAME AT 1% WITHOUT ANY BASIS AND MAKING AN ADDITION OF RS. 5.44.253'' - . 5. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED ON FACTS AIA IN LAW IN UPHOLDING THE REJECTION OF NP RATIO BY THE AO HAS CONSIDER NP RATIO OR THE BASIS OF EARLIER ASS ESSMENT YEAR. A.Y. 2012 - 13. THE AO AS WELL AS THE CIT(A) HAVE FAILED TO CONSIDER THE EXPLANATION RENDERED BY THE APPELLANT FOR DECLINE OF NP RATIO FOR THE YEAR UNDER CONSIDERATION. 6. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE AO AND CIT(A) H AVE FAILED TO PROPERLY CONSTRUE AND JUDICIOUSLY INTERPRET THE EVIDENCE FILED AND MATERIALS AVAILABLE ON RECORD, HENCE THE ADDITION/DISALLOWANCE MADE IS UNCALLED FOR. 7. THAT INTEREST U/S 234B, AND 234C OF THE INCOME TAX ACT. 1961 HAS BEEN WRONGLY AND ILL EGALLY CHARGED AND HAS BEEN WRONGLY WORKED OUT. - , 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING POLYPLAST, INKJET PRINTERS AND INKJET PHOTO PAPER . I N THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ( A.O. FOR SHORT) ASKED THE ASSESSEE TO EXPLAIN A REDUCTION IN THE PROFIT AS COMPARED TO THE PRE VIOUS YEAR. IN ABSENCE OF EXPLANATION THE A.O. HELD THAT IT IS CLEAR THAT THE ASSESSEE HAS INFLATED THE EXPENSES TO REDUCE THE PROFIT. HENCE , THE A.O. MADE AN ES TIMATED ADDITION BY HOLDING THAT THE PROFIT SHOULD BE 1% MAKING THE PROFIT AT RS.6,25,000/ - . 4. UPON THE ASSESSEE'S APPEAL , THE L D CIT ( A ) NOTED THAT ASSESSEE HAS NOT APPEARED BEFORE HIM. HE PROCEEDED TO CONFIRM THE ADDITION . 5. A GAINST THE ABOVE ORDER , T HE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 6. I HAVE HEARD THE L D . D EPARTMENTAL R EPRESENTATIVE (LD. DR) . NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE NOTICE. 3 ITA NO. 4178/MU M/2018 MITTAL POLYPLAST PRIVATE LIMITED 7. UPON CAREFUL CONSIDERATION I FIND THAT THE A.O. HAS MADE THE ADDITION ON AD HOC BASIS. HE H AS NOTED THAT SINCE THERE IS A REDUCTION IN THE RATE OF PROFIT AS COMPARED TO PREVIOUS YEAR, THE ASSESSEE MUST HAVE INFLATED THE EXPENSES. DESPITE MAKING THIS OBSERVATION THERE IS NO WHISPER WHATSOEVER WHETHER THE ASSESSING OFFICER HAS FOUND ANY DEFICIENCY IN THE VOUCHERS. AS HELD BY HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PANDIT BROS. VS. CIT [1954] 26 ITR 159 (P & H) A REDUCTION IN PROFIT RATE CAN GIVE RISE TO FURTHER INVESTIGATION , I T CANNOT BE THE SOLE REASON FOR ADDITION. IN THE BACKGROUND O F AFORESAID DISCUSSION AND PRECEDENT , I SET ASIDE THE ORDER S OF THE A UTHORITIES BELOW AND DELETE THE ADDITION . 8. I N THE RESULT , THIS APPEAL BY THE ASSESSEE STANDS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 05.09.2018 SD/ - (S HAMIM YAHYA) A CCOUNTA NT MEMBER MUMBAI ; DATED : 05.09.2018 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD F ILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI