Kaushal Roller Floor Mills (P) Ltd., Una V. Addl. CIT, Palampur

ITA 425/CHANDI/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68563 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-10-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 16-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Assessee Lawyers: R R THAKUR
• Keywords: Rejection of books of accounts; Depreciation; Assessment record
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 425/CHD/2013 ASSESSMENT YEAR: 2006-07 M/S KAUSHAL ROLLER FLOOR. VS. THE ADDL. CIT MILLS(P) LTD PALAMPUR RANGE INDUSTRIAL AREA PALAMPUR TAHIWAL, DISTT. UNA PAN NO. AAACK6899C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. R.R. THAKUR RESPONDENT BY : SHRI J.S. NAGAR DATE OF HEARING : 30/10/2013 DATE OF PRONOUNCEMENT : 07/11/2013 ORDER PER T.R.SOOD, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 12/02/2013 OF CIT (APPEALS), SHIMLA, H.P. 2. IN THIS APPEAL ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1) THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) SOLAN (H.P.) HAS NOT DECIDED THE POINT OF INCREASE IN G.P. RATE MADE BY THE ASSESSING 2 OFFICER ON THE ESTIMATED ENHANCED SALE OF RS. 1,00,00,000/-. THE ORDER IS WRONG AS FOR AS THE APPLICATION OF G.P. RATE AT 8.5% IS CONCERNED. 2) THAT THE G.P. RATE OF 8.5% MAY KINDLY BE REDUCED TO 4% ON THE ESTIMATED ENHANCED SALE ADDED IN THE INCOME OF THE APPELLANT. 3) THAT ANY OTHER GROUND OF APPEAL WHICH MAY BE TAKEN WITH THE APPROVAL OF THE HONBLE COURT AT THE TIME OF HEARING OF THE APPEAL. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG THE ASSESSMENT PROCEEDING AO FOUND VARIOUS DEFECTS IN THE ACCOUNTS IN RESPECT OF QUANTITY OF OPENING STOCK OF BRAN AND REFRACTION ET C. THEREFORE HE REJECTED THE BOOKS OF ACCOUNTS AND ESTIMATED THE G.P. RATE O F 8.5% BY ESTIMATING THE SALE AT RS. 1,00,00,000/- BY FOLLOWING PARA: AS THE AVERAGE COST OF BRAN AND REFRACTION FROM DEPARTMENT OF PDS AND MILITARY SUPPLIES TAKEN TOGETHER WITH REFRACTION STANDS 17.5% AND ASSESSEES YIELD STANDS TO 54%. THUS THE DIFFERENCE OF 26.5% COMPELS ME TO STATE THAT THE SALES OF 4% TAX ITEM AS WELL AS STOCK REGISTER SHOWING ATTA, SU ZI, MAIDA PRODUCTION IS NOT RELIABLE AND THUS I HAVE TO COMPUTE THE TOTAL INCOME OF THE ASSESS IN THE MANNER LAID DOWN U/S 144 OF THE I.T. ACT BY INVOKING SUB SECTION 3 OF SECTION 145. THE ASSESSEE HAS SHOWN 1% TAX ITEM TO THE EXTENT OF RS. 22.95LACS, SALE OF THE BRAN AND REFRACTION SHOULD NOT EXCEED RS. 56 LACS WHEREAS THE ASSESSEE HAS SHOWN THE INFLATED SALE OF TAX FREE ITEM BRAN AND REFRACTION TO THE EXTENT OF RS. 1.56 CRORES. THE HA S ALREADY DEBITED THE MARKET FEE ON HIS PURCHASE AS WELL S OTHER FEE PAID ON PURCHASE OF WHEAT IN HIS TRADING ACCOUNT ITSELF AND SUPPRESSING THE PRODUCTION OF 4% TAX ITEMS BY SHOWING EXCESSIVE PRODUCTION OF BRAN AND REFRACTION. THUS HE IS SELLING THE WHEAT PRODUCT OTHER THAN 1% TAX ITEM AND TAX FREE ITEM. SINCE THE NET SAVING BY WAY OF T AX @ 4% I HAVE TO APPLY G.P. RATE ON RS. 1 CRORE SALE INCLUDED IN SALE OF BRAN AND REFRACTION AT 4.5% AN D SINCE THE ASSESSEE IS ALSO SAVING THE TAX OF 4%, TH E 3 G.P. RATE HAS TO BECOME 8.5% AND THE SAME IS WORKED OUT AT RS. 8,50,000/- WHICH IS TO BE ADDED BACK IN THE GROSS PROFIT SHOWN BY THE ASSESSEE. 4. THE MATTER TRAVELED TO TRIBUNAL AND BEFORE THE T RIBUNAL TWO GROUNDS (GROUND NO. 2 & 3) WERE TAKEN IN RESPECT OF THIS ISSUE WHICH ARE AS UNDER:- GROUND NO. 2- THAT THE .LD. CIT(A) HAS ERRED IN C ONFIRMING THE WRONGLY ESTIMATED TAXABLE SALE OF RS. 1,00,00,0 00/-OUT OF TAX FREE SALE WITHOUT GOING THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE ESTIMATE OF THE LD. AO IS NOT BASED ON ANY CIRCUMSTANCES AND MAY BE DELETED. GROUND NO. 3- THAT THE LD. CIT(A) HAS ERRED IN CONF IRMING THE ADDITION OF RS. 8,25,945/- IN THE CASE OF THE A PPELLANT BY APPLYING A G.P. RATE OF 8.5% WHICH MAY KINDLY BE DE LETED. 5. THE TRIBUNAL SET ASIDE THIS ISSUE TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION. IN THE SECOND ROUND OF APPEAL BEFORE CIT(A) THE LD. CIT(A) AGREED THAT OPENING STOCK OF BRAN IS RS. 16, 51,382 INSTEAD OF 2,82,771/-. THEREFORE SHE ISSUED DIRECTIONS VIDE PA RA 2.3 WHICH IS AS UNDER: 2.3 A PERUSAL OF THE ABOVE TRADING ACCOUNT REVEA LS THAT THE OPENING STOCK AS REDUCED BY THE CIT(A) ACTUALLY REP RESENTS THE QUANTUM(2827.71 QTLS), WHEREAS THE SAME HAS BEE N TAKEN BY THE CIT(A) IN VALUE TERMS AS RS. 2,82,771/-. IT IS ALSO NOTICED THAT THE VALUE OF THE SAID OPENING STOCK OF BRAN AS PER THE ASSESSEES RECORD WAS RS. 16,51,382.64 AND NOT RS. 12,55,814/- AS THE RATE OF RS. 584/- PER QTL. WAS S HOWN BY THE ASSESSEE FOR THE SAID OPENING STOCK EVEN AS PER THE ACCOUNT STATEMENTS AVAILABLE ON ITS ASSESSMENT RECORD. THER EFORE, ON THE GIVEN FACTS, THE A.O. IS DIRECTED TO GIVE THE C REDIT FOR THE OPENING STOCK OF BRAN AT RS. 16,51,382.64 AS AGAINS T RS. 2,82,771/- EARLIER ALLOWED. 6. BEFORE US LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT G.P. RATE HAS BEEN TAKEN AT THE VERY HIGH RATE AND THEREFORE, SAM E SHOULD BE ESTIMATED AT 4%. 4 7. ON THE OTHER HAND LD. DR STRONGLY SUPPORTED THE ORDER OF AO. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSION CAREFULL Y AND FIND THAT EVEN AFTER ADDITION OF RS. 8,50,000/- THE TOTAL INC OME WAS DETERMINED AFTER DEPRECIATION AT RS. 19,83,570/-. AFTER SUBSTI TUTION OF THE OPENING STOCK AT RS. 16,51,382/- INSTEAD OF RS. 2,82,771/- THE NET PROFIT WOULD REDUCE BY RS. 13,68,611/- (I.E; 16,51,382-2,82,771) . THUS THE NET PROFIT COMPUTED BY THE AO AT RS. 19,83,570/- WOULD BECOME RS. 6,14,959/- (I.E; RS.1983570- RS.1368611) WHEREAS ASSESSEE HAS HIMSEL F SHOWING NET PROFIT OF RS. 4,43,151/-. THIS MEANS AFTER RELIEF GIVEN BY THE LD. CIT(A) THE NET ADDITION WOULD AMOUNT OF ABOUT RS. 1,71,000/- I.E; AFTER AMOUNT OF RELIEF GIVEN BY LD. CIT(A) IS CONSIDERED. THEREFORE, IF FU RTHER RELIEF OF 4% IS GIVEN ON ACCOUNT OF EXCESS G.P THEN THE INCOME WOUL D GO BELOW THE INCOME SHOWN BY THE ASSESSEE WHICH IS NOT POSSIBLE. THEREFORE WE FIND NO MERIT IN THE APPEAL BECAUSE LD. CIT(A) HAS ALREADY ALLOWED THE APPEAL AS DIRECTED BY THE TRIBUNAL IN ITA NO. 1151/CHD/2010. 9. IN THE RESULT, APPEAL OF THE ASSESSE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 07/11/20 13 SD/- SD/- (SUSHMA CHOWLA) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 7 TH NOVEMBER, 2013 AG COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR