M/s M/S Ganesh Dass Piara Lal Jain, Ambala City V. Income Tac Officer, Ambala

ITA 464/CHANDI/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9842 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 02-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Opportunity of being heard
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES SMC CHANDIGARH BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.464 /CHD/2016 (ASSESSMENT YEAR: 2011-12) M/S GANESH DASS PIARA LAL JAIN, VS. THE INCOME TAX OFFICER, 375, DEV SAMAJ COLLEGE ROAD, WARD 1, AMBALA CITY. AMBALA. PAN NO. AAAFG9705C (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI S.K. MITTAL, DR DATE OF HEARING : 23.06.2016 DATE OF PRONOUNCEMENT : 23.06.2016 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-2 , GURGAON DATED 16.2.2016, AND PERTAINS TO ASSESSMENT YEAR 2011-12, PASSED. 2. THE GROUNDS OF APPEAL READ AS UNDER : 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN REJECTING THE DULY AUDITED BOOKS OF ACCOU NTS BY APPLYING THE PROVISIONS OF SECTION145(3) OF THE INCO ME TAX ACT. 2. NOTWITHSTANDING THE ABOVE SAID GROUND OF APPEAL, T HE 2 WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ADDITI ON OF RS.19,71,495/- MADE BY THE ASSESSING OFFICER BY APPLYING THE G.P.RATE OF 12% AS AGAINST THE G.P.RAT E OF 6.7% SHOWN BY THE APPELLANT. 3. THAT THE WORTHY CIT (A) HAS ERRED IN NOT CONSIDE RING THAT APPLICATION OF GROSS PROFIT RATE OF 12% ON THE GROS S SALES BY THE ASSESSING OFFICER IS ARBITRARY AND WITHOUT AN Y BASIS AND IS HIGHLY UNJUSTIFIED CONSIDERING THE RATE BEING APPLIED AND ACCEPTED IN SIMILAR OTHER CASES AS WELL AS IN ASSESSEE'S OWN CASE. 4. THAT THE WORTHY CIT (A) HAS ERRED IN NOT CONSIDE RING PROPERLY THE SUBMISSION MADE DURING THE COURSE OF HE ARING BEFORE HIM AND ALSO DURING ASSESSMENT PROCEEDINGS. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND TH E GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD OR DISPOSED OFF. 3. IN THIS CASE, THE ASSESSING OFFICER HAS REJECTE D THE BOOKS OF ACCOUNT AND APPLIED THE GROSS PROFIT R ATE OF 12%, AS AGAINST THE GROSS PROFIT RATE OF 6.7% DISCL OSED BY THE ASSESSEE. THE ASSESSEE HAD SUBMITTED THAT IN PRECEDING YEAR, THE GROSS PROFIT RATE SHOWN @ OF 7. 4% HAS BEEN ACCEPTED UNDER SECTION 143(3) OF THE INCOME TA X ACT, 1961 (IN SHORT THE ACT). IT WAS FURTHER SUBMITTE D THAT THE GROSS PROFIT RATE APPLIED IN OTHER SIMILAR CASE S VARIES FROM 4.5% TO 7%. HENCE, IT WAS SUBMITTED THAT THE RATE OF 12% APPLIED IS EXCESSIVE AND UN-REASONABLE. HOWEVE R, THIS PLEA OF THE ASSESSEE WAS REJECTED BY THE ASSES SING OFFICER AS WELL AS THE LEARNED CIT (APPEALS) BY MAK ING SOME REFERENCES TO THE FIGURES OF OUTSTANDING SUNDR Y CREDITORS. 3 4. AGAINST THIS ORDER, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. I HAVE HEARD THE LEARNED D.R. AND PERUSED THE RECORD. NONE APPEARED ON BEHALF OF THE ASSESSEE. AN ADJOURNMENT PETITION ON BEHALF OF THE ASSESSEE HAS BEEN MOVED. HOWEVER, THE SAME HAS BEE N REJECTED AS IT IS THE CONSIDERED OPINION THAT THE I SSUE CAN BE DISPOSED OFF BY PERUSING THE RECORDS AND HEARING THE LEARNED D.R. 5. UPON CAREFUL CONSIDERATION I FIND THAT AFTER REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE THE REVENUE AUTHORITIES HAVE APPLIED A GROSS PROFIT RATIO OF 12 % WITHOUT ANY BASIS WHATSOEVER. NO COGENT REASON HAS BEEN RECORDED BY THE AUTHORITIES BELOW AS TO WHY THE GRO SS PROFIT RATES OF THE ASSESSEE ACCEPTED BY THE DEPART MENT IN EARLIER YEARS AND THAT PREVAILING IN OTHER SIMILAR CASES SHOULD NOT BE ADOPTED. I HOLD THAT APPLYING THE GRO SS PROFIT RATE AT A MUCH HIGHER THAN THAT MANDATED BY PAST RECORDS BY REFERRING TO THE FIGURES FROM THE BOOKS OF ACCOUNT, WHICH HAVE BEEN REJECTED IS QUITE ILLOGICA L AND UNSUSTAINABLE. IT IS SETTLED LAW THAT WHEN THE BOO KS OF ACCOUNT ARE REJECTED, GROSS PROFIT RATE APPLIED SHO ULD NOT BE AT THE WHIMS AND FANCIES OF THE ASSESSING OFFICE R. IT IS ALSO SETTLED LAW THAT WHILE APPLYING THE GROSS P ROFIT RATE, THE PAST RECORDS OF THE ASSESSEE AND THE PREV ALENT RATE IN THE INDUSTRY ARE SOUND INDICATOR. 6. IN THESE CIRCUMSTANCES, I REMIT THE ISSUE TO TH E FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFIC ER IS 4 DIRECTED TO CONSIDER THE ISSUE AFRESH AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, AND KEEPING INTO ACCOUNT THE DIRECTIONS AND OBSERVATIONS AS ABOVE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF JUNE, 2016 SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBER DATED : 23 RD JUNE, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH