ITO, Kollam V. K.Sreekantan Nair, Kollam

ITA 477/COCH/2006

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58250 (ITAT-COCHIN)
• Duration Of Justice: 5 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 17-08-2006
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: MANOJ RAMASWAMY

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND SANJAY AROR A, AM I.T.A NO. 477 /COCH/2006 ASSESSMENT YEAR: 2003-04 I.T.O., WARD-3, KOLLAM VS. K.SREEKANTAN PILLAI, THOTTATHIL RUBBERS, KOTTUKKAL, ANCHAL, KOLLAM. [PAN:AHHPP 1885F] (REVENUE-APPELLANT) (ASSESSEE - RESPONDENT) ASSESSEE BY SHRI MANOJ RAMASWAMY, ADV. REVENUE BY MS. S. VIJAYAPRABHA, JR.DR DATE OF HEARING 28/11/2011 DATE OF PRONOUNCEMENT 31/01/2012 O R D E R PER SANJAY ARORA, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-III, TRIVANDRUM (CIT(A) FOR SHORT) DATED 30-05-2006, AND THE ASSESSMENT YEAR (A.Y.) UNDER REFERENCE IS 2003-04. 2. THIS IS THE THIRD ROUND IN THE TRIBUNAL. IN THE FIRST ROUND, IT DISMISSED THE REVENUES APPEAL AS NOT MAINTAINABLE, RELYING ON TH E DECISION IN THE CASE OF CIT V. ITAT (1998) 232 ITR 207 (DEL.). THE HONBLE JURISDICTIO NAL HIGH COURT VIDE ITS ORDER DATED 17-07-2008 (IN I.T.A. NO. 18 OF 2008/COPY ON RECORD ) SET ASIDE THE SAME, AND RESTORED THE APPEAL BACK TO THE TRIBUNAL FOR A DISPOSAL ON MERIT S. THE APPEAL WAS ADJUDICATED BY THE TRIBUNAL VIDE ITS ORDER DATED 31-12-2008 (IN I.T.A. NO. 477/COCH/2006/COPY ON RECORD). THE REVENUE HAVING NOT RAISED ANY GROUND ON QUANTUM ; ITS SOLE GROUND RAISING ONLY A LEGAL GROUND, ON WHICH THE LD. CIT(A) HAD ALLOWED T HE ASSESSEES APPEAL, THE MATTER WAS I.T.A. NO. 477/COCH/2006 ITO, KOLLAM V. SREEKANTAN PILLAI 2 RESTORED BACK BY IT TO THE FILE OF THE FIRST APPELL ATE AUTHORITY FOR A DECISION ON MERITS. THE MATTER WAS, AT THE INSTANCE OF THE REVENUE, AGAIN C ONSIDERED BY THE HONBLE HIGH COURT, AND VIDE ITS JUDGEMENT DATED 02-02-2010 (IN I.T.A. NO. 1775 OF 2009/COPY ON RECORD) RESTORED BACK TO THE FILE OF THE TRIBUNAL FOR CONSI DERING THE APPEAL ON MERITS, I.E., QUA THE ASSESSMENT OF THE GROSS PROFIT, AFTER PROVIDING OPP ORTUNITY OF HEARING TO BOTH THE SIDES. HENCE THE INSTANT APPEAL. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD, WHICH COMPRISES ONLY THE ORDERS BY THE AUTHORITIES BELOW. ON AN EXA MINATION OF THE ASSESSEES RETURN, IT WAS REVEALED THAT IT, A DEALER IN RUBBER, HAD DISCL OSED A GROSS PROFIT (G.P.) AT 0.78% FOR THE CURRENT YEAR AS AGAINST A G.P. AT 1.13% FOR THE IMMEDIATELY PRECEDING YEAR, I.E., A.Y. 2002-03. IN EXPLANATION, IT WAS SUBMITTED BY THE A SSESSEE THAT THE TURNOVER FOR THE YEAR STANDS INCREASED BY 45% AS AGAINST AN INCREASE IN Q UANTITY BY 10%, I.E., VIS--VIS THE IMMEDIATELY PRECEDING YEAR, SO THAT, APART FROM THE QUANTITY INCREASE, THERE HAS BEEN PRICE RISE, ON AN AVERAGE, BY 32% FOR THE YEAR. NOW, ONLY A CORRESPONDING INCREASE IN THE PURCHASE PRICE WOULD SUSTAIN THE GROSS PROFIT AT TH E SAME RATE, I.E., AS OBTAINING IN THE PAST, WHILE IT IS ONLY A HIGHER INCREASE THEREIN TH AT WOULD LEAD TO A DECLINE IN THE TRADING MARGIN, AND TOWARD WHICH (PURCHASE COST/S) NO EXPLA NATION OR INFORMATION STANDS FURNISHED BY THE ASSESSEE AT ANY STAGE, INCLUDING B EFORE US. ACCORDINGLY, THE ACTION BY THE AO IN ASSESSING THE GROSS PROFIT FOR THE YEAR AT 1. 0% OF THE TURNOVER BEARS NO INFIRMITY. THE ADDITION ON ACCOUNT OF G.P. AT ` 1,45,510/- IS ACCORDINGLY, UPHELD, RESTORING THE OR DER OF THE AO ON THIS COUNT. THE FINDING BY THE LD. CIT (A) THAT THE AO HAS NOT DOUBTED THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS, OR OTH ERWISE RENDERED ANY FINDING WITH REGARD TO THE VIOLATION OF S. 145(3) OF THE ACT, WE FIND AS UNFOUNDED IN VIEW OF THE CONFIRMED FACTS, AND TOWARD WHICH THE ASSESSEE COUL D NOT FURNISH ANY EXPLANATION; THE COMPARISON BEING ONLY WITH THE ACCOUNTS FOR THE PRE CEDING YEARS, SIMILARLY MAINTAINED, AND FOR THE SAME TRADE. ALSO, IT NEEDS TO BE BORNE IN MIND THAT THE ASSESSMENT IS FRAMED U/.S 144, INVOCATION OF WHICH HAS NOT BEEN CHALLENG ED, SO THAT THERE WAS NO PRODUCTION OF BOOKS OF ACCOUNT BY THE ASSESSEE BEFORE THE AO. THE AO HAS ALSO ADDED ANOTHER ` 64,500/- ON ACCOUNT OF CREDIT IN THE NAME OF ONE, D .SHAHJAHAN, KALLARA IN THE ABSENCE OF I.T.A. NO. 477/COCH/2006 ITO, KOLLAM V. SREEKANTAN PILLAI 3 ANY CONFIRMATION, THOUGH TELESCOPED THE SAME AGAINS T THE G.P. ADDITION. WHILE WE CONSIDER THE SAID ADDITION AS MAINTAINABLE IN THE F ACTS AND CIRCUMSTANCES OF THE CASE, THE SAME IN OUR VIEW STANDS RIGHTLY TELESCOPED BY THE A O. FURTHER, THOUGH THE ASSESSMENT ORDER BEARS A SEPARATE ADDITION U/S. 68, THE ADDITI ON ON ACCOUNT OF LOW TRADING PROFIT, WHICH OTHERWISE WORKS TO ` 2.10 LAKHS, STANDS REDUCED BY THE SAID AMOUNT. WE, ACCORDINGLY, CONFIRM BOTH, I.E., THE ADDITION U/S. 68 AS WELL AS ITS TELESCOPING AFORESAID. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE REVENUES APPEAL IS ALLOWED. SD/- SD/- (N.R.S.GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 31ST JANUARY, 2012 GJ COPY TO: 1. SHRI K.SREEKANTAN PILLAI, THOTTATHIL RUBBERS, KO TTUKKAL, ANCHAL, KOLLAM. 2. THE INCOME TAX OFFICER, WARD-3, KOLLAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-III, TR IVANDRUM. 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE . BY ORDER (ASSISTANT REGISTRAR) ITAT, COCHIN BENCH