M/s. Kaneriya Oil Industries, RAJKOT-GUJARAT V. The Deputy Commissioner of Income Tax, Circle-1, RAJKOT-GUJARAT

ITA 478/RJT/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85422 (ITAT-RAJKOT)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 05-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: RD LALCHANDANI
• Keywords: Rejection of books of accounts
• Section: 143(3); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: RAJKOT BENCH, RAJKOT (BEFOR E SHRI ANIL CHATURVEDI , A.M. & SHRI KUL BHARAT, J.M. ) I. T. A. NO. 478 / RJT / 20 1 3 (A SSESSMENT YEAR: 2010 - 11) M/S.KANERIYA OIL INDUSTRIES, GONDAL ROAD,B/H.GOKULNAGAR DR. VIKRAM SARABHAI MARD, RAJKOT V/S THE D.C.I.T.,CIRLCE - 1,RAJKOT (APPELLANT) (RESPONDENT) I.T.A. N O. 424/RJT/2013 & 2/RJT /2014 (ASSESSMENT YEARS: 2009 - 10 & 2010 - 11) THE D.C.I.T.,CIRLCE - 1,RAJKOT V/S M/S.KANERIYA OIL INDUSTRIES, GONDAL ROAD,B/H.GOKULNAGAR DR. VIKRAM SARABHAI MARD, RAJKOT (APPELLANT) (RESPONDENT ) PAN: AACFK3239M APPELLANT BY : SHRI R.D. LALCHANDANI, ADVOCATE RESPONDENT BY : SHRI AVINASH KUMAR, D.R. ( )/ ORDER DATE OF HEARING : 2 - 12 - 2014 DATE OF PRONOUNCEMENT : 04 - 12 - 2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THESE THREE APPEALS OF WHICH TWO ARE FILED BY THE REVENUE AND ONE IS FILED BY THE ASSESSEE ARE AGAINST THE ORDER OF CIT(A) - 1, RAJKOT DATED 21.10.2013 FOR A.Y. 2009 - 10 & 2010 - 11 RESPECTIVELY . ITA NO S478 & 424/RJT/13 & 2/RJT/2014 . A.Y S . 2009 - 10 & 2010 - 11 2 2. WE FIRST PROCEED WITH APPEAL FOR A.Y. 2010 - 2011. 3. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 4. ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BU SINESS OF MANUFACTURING, REPACKING AND TRADING OF EDIBLE OIL. ASSESSEE ELECTRONICALLY FILED ITS RETURN OF INCOME FOR A.Y. 10 - 11 ON 25.07.2007 DECLARING TOTAL INCOME OF RS. 1,45,56,010/ - . THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WA S FRAMED UNDER SECTION 143(3) R.W.S. 145(3) VIDE ORDER DATED 04.03.2013 AND THE TOTAL INCOME WAS DETERMINED AT RS. 3, 02,32, 060/ - . AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO VIDE ORDER DATED 21.10.2013 GRANTED SUBSTANTI AL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A) REVENUE AS WELL AS ASSESSEE ARE NOW IN APPEAL BEFORE US . THE GROUNDS RAISED BY REVENUE READS AS UNDER: - 1. THE LD. CIT(A) - II, RAJKOT HAS ERRED IN LAW AND ON FACT BY REDUCING THE ADDITION O F RS. 1,56,76,041/ - TO RS. 32,31,350/ - . 2. THE LD. CIT(A) - II, RAJKOT HAS ERRED IN LAW AND ON FACT BY ESTIMATING THE GROSS PROFIT @ 3.1% AS AGAINST @ 3.75% OF THE TOTAL TURNOVER ADOPTED BY THE ASSESSING OFFICER. 3. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE L D. CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5. ON THE OTHER HAND THE GROUNDS RAISED BY THE ASSESSEE READS AS UNDER: - 1. THE LD. CIT(A) ERRED AN UPHOLDING REJECTION OF BOOKS SUBMITTED AND APPLICATION ;OF SECTION 145(3) OF THE ACT. THE BOOKS OF ACCOUNTS ARE REGULARLY MAINTAINED AND ARE SUPPORTED BY BILLS, VOUCHERS, STOCK REGISTERS, QUANTITY DETAILS AND DULY AUDITED BY C.A. THE REJECTION OF RESULTS AS DISCLOSED BY BOOKS OF ACCOUNTS IS UNWARRANTED AND UNJUSTIFIED. 2. WITHOUT PREJUDICE TO GROUND NO. 1, THE CIT(A) ERRED IN UPHOLDING APPLICATION OF SECTION 144 OF THE ACT. THE BOOKS OF ACCOUNTS HAVE BEEN ACCEPTED FROM YEAR TO YEAR. THE LD.CIT(A) ERRED IN NOT APPRECIATING THE OBSERVATIONS OF THE HONORABLE TRIBUNAL IN APPEAL FOR A.Y. 2009 - 10. 3. T HE LD. CIT(A) ERRED IN HOLDING THAT THE SHORTAGE WAS ON ESTIMATE BASIS. THE APPELLANT HAS SHOWN THE ACTUAL SHORTAGE IN THE; BOOKS OF ACCOUNT. THE BOOKS SHOW THE ACTUAL QUANTITY PURCHASED AND ACTUAL QUANTITY SOLD AND ACTUAL QUANTITY IN THE OPENING AND CLOSI NG STOCK. THE SHORTAGE IS THE ACTUAL SHORTAGE AND NOT ESTIMATED SHORTAGE. ITA NO S478 & 424/RJT/13 & 2/RJT/2014 . A.Y S . 2009 - 10 & 2010 - 11 3 4. WITHOUT PREJUDICE TO ABOVE GROUNDS, THE CIT(A), ERRED IN HOLDING THAT THE SHORTAGE IN GROUNDNUT OIL IN SHARPAR BRANCH WAS MORE TO THE EXTENT OF 0.10% AND THAT VALUE OF THE SAME WAS RS. 7,15,972/ - IGNORING THE FACT THAT THE SHORTAGE VARIED FROM YEAR TO YEAR DUE TO VARIOUS FACTORS. 5. WITHOUT PREJUDICE TO ABOVE GROUNDS, THE CIT(A), ERRED IN ESTIMATING GROSS PROFIT AT 3.10% AND SUSTAINING THE ADDITION TO THE EXTENT OF RS. 32,31,350/ - . 6. WI THOUT PREJUDICE TO ABOVE GROUNDS, THE ADDITION SUSTAINED BY CIT(A) AT RS. 32,31,350/ - IS TOO HEAVY ARBITRARY AND NOT UNWARRANTED BY THE FACTS OF THE CASE. 6. SINCE THE GROUNDS RAISED BY THE ASSESSEE AND REVENUE ARE INTERCONNE CTED BOTH THE APPEALS ARE CONSI DERED TOGETHER. 7. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NOTICED THAT ASSESSEE HAS BEEN CLAIMING SHORTAGE IN PURCHASES OF OIL ON ADHOC BASIS WHICH HAD NO CO - RELATION TO THE ACTUAL PURCHASES MADE. A.O. ALSO NOTICED THAT ASSESSEE HAS BE EN CLAIMING SHORTAGE AT 30 KG. PER 10 TONS. ON PERUSING THE STOCK REGISTER A.O NOTICED THAT ASSESSEE HAS BEEN DEBITING SHORTAGE ON ESTIMATE BASIS EVEN IN EXCESS OF 30 KG. IN ROUND SUM. A.O WAS THEREFORE OF THE VIEW THAT ASSESSEE HAD NO QUANTITATIVE BASIS OF MEASUREMEN T OF SHORTAGE AND THE SH ORTAGE WAS ESTIMATED AT THE SWEET WILL AND W HIMS, AND WAS CLAIMING A CONSTANT RATIO OF SHORTAGE WHICH ACCORDING TO THE A.O WAS NOT BELIEVABLE IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE. A.O. THEREFORE CONCLUDED THAT THE RESULTS SHO WN BY THE ASSESSEE WERE NOT RELIABLE AND THE REFORE THE BOOKS OF ACCOUNTS TO BE DEFECTIVE AS THEY DO NOT SHOW THE TRUE AND CORRECT PICTURE OF THE AFFAIRS OF THE ASSESSEE S BUSINESS. HE ACCORDINGLY RE JECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE U/S 145(3) OF THE ACT AND THEREAFTER PROCEEDED TO DETERMINE THE GROSS PROFIT OF THE ASSESSEE. A.O NOTICED THAT THE GROSS PROFIT SHOWN BY THE ASSESSEE FOR THE UNDER CONSIDERATION WAS 2.9% AS AGAINST 3.5% SHOWN IN THE IMMEDIATE PRECEDING YEAR . HE THEREAFTER PROCEEDED TO ESTIMATE THE GROSS PROFIT AT 3.75% WHICH ACCORDING TO HIM WAS FAIR AND REAS ONABLE AND ACCORDINGLY ESTIMATED THE PROFIT AT RS. 7,17 ,96,291/ AFTER GRANTING CREDIT OF GROSS PROFIT OF RS. 5,61,20,250/ - SHOWN BY THE ASSESSEE AND MADE THE ADDITION OF DIFFERENCE OF RS. 1,56,76,041/ - . AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MAT TER BEFORE CIT(A) WHO ITA NO S478 & 424/RJT/13 & 2/RJT/2014 . A.Y S . 2009 - 10 & 2010 - 11 4 AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DECIDED THE ISSUE AND GRANTED PARTIAL RELIEF TO THE ASSESSEE BY HOLDING AS UNDER: - 5.4 I HAVE CAREFULLY CO NSIDERED THE ASSESSMENT ORDER, THE SUBMISSION OF THE APPELLANT AND THE APPELLATE ORDERS. IN THIS CONNECTION, I HAVE FOLLOWING OBSERVATIONS TO MAKE: - 1. IT IS QUITE OBVIOUS THAT THE APPELLANT HAS PUT THE SHORTAGE ON THE BASIS OF AN ESTIMATE. IT IS EQUALLY T RUE THAT SOME SHORTAGE IS INEVITABLE IN THIS LINE OF BUSINESS AND CANNOT BE DENIED IN TOTO. THE QUESTION IS ABOUT THE EXACT QUANTUM OF SHORTAGE WHICH CANNOT BE, IN MY OPINION, BE DETERMINED ON AN EXACT BASIS. 2. THE APPELLANT HAS CLAIMED SHORTAGE IN VARI OUS CATEGORIES OF OIL AS UNDER: - SR. NO. COMMODITY PURCHASE (KG.) PURCHASE AMOUNT SHORTAGE AVG. PRICE SHORT AGE PERCENT AGE SHORTAGE VALUE 1 GROUNDNUT OIL (GONDAL RD. BR.) 2610495 173152455 68960 66.32 0.26 4573427.2 2 COTTONSEED REF OIL (GONDAL RD . BR.) 6477058 283052091 20945 43.70 0.32 915296.5 3 GROUNDNUT OIL (SHAPAR BR.) 10717638 682864058 44951 63.71 0.41 2863828.21 4 COTTONSEED REF OIL (SHAPAR BR.) 645650 28552213 1972 44.22 0.3 87201.84 5 COTTONSEED REF OIL (ADRAJ BR.) 20730 913000 60 44. 04 0.28 2642.4 1168533817 8442396.15 IT IS SEEN FROM THE ABOVE CHART THAT THE MAXIMUM SHORTAGE HAS BEEN CLAIMED BY THE APPELLANT IN THE GROUNDNUT OIL SHARPER BRANCH WHICH IS 0.41%. LAST YEAR, THE APPELLANT HAD CLAIMED SHORTAGE OF 0.3% IN GROUNDNU T OIL SHARPAR BRANCH. THUS, THE SHORTAGE IN THIS CATEGORY IS MORE BY 0.1%. THIS TRANSLATES TO 11,238 KG. VALUED AT RS. 7,15,972/ - . APART FROM THIS, THE SHORTAGE CLAIMED IS ON PAR WITH LAST YEAR. 3. THE A.O S ACTION OF R E J EC TIN G TH E B OOKS O F ACCO UNT S I S BA S ED ON TH E ES TIM A T E D S H O RT AGE C LAIM E D B Y TH E A PP E LLANT . T HI S, IN M Y O PINI O N , I S A SO U N D BASE F O R R E J E CTIN G TH E B OO K S OF ACCO UNT S . HO WE V E R , IT I S E QU A LL Y TRU E TH A T TH E A . O . H AS N O T B EE N A BL E T O FIND A N Y O TH ER B AS I S O R D EFEC T IN TH E BOOKS O F ACCO UNT S FOR REJE C TI NG TH E BOO K S OF ACCO UNT S. AS M E NTI O N E D IN PAR A - 2 A B OVE, TH E O NL Y EXCESS S H O RT AGE CL A IM E D I S IN TH E G ROUNDNUT O IL S HAP E R BR A N C H TH E V ALU E OF W HI C H T RA N S LAT ES T O R S.7, 1 5, 9 72 / - . IT I S TRUE THAT TH E G P OF TH E A PP E LL A NT H AS DECREASE D FR O M 3.5% L AS T YEAR TO 2 .9% THI S YEA R , E V E N TH O U G H TH E R E I S A D EC R EASE IN S A L E S. AS P ER TH E ES T A BLI S H E D P RIN C IPL ES , TH E G P I S IN VE R SE L Y P RO P O RTI O N A L H E TURN OVE R . HI G H E R TH E TURN OVE R , L OWE R I S TH E G P . H OWEVE R , IN T H E PR ESE NT CASE , EVE N TH O U G H TH E T URN OVE R H AS D E CR EAS ED , TH E G P H AS A L SO D E CR EASE D INDICATIN G A REVE R SE TR E ND TH A N N O RM A L . THE A PP E LLANT HA S S TAT E D TH A T THI S I S M A INL Y BECA U S E OF FLU C TU A TI O N IN R A T ES A ND M A RKET C ONDITION S. H O W EVE R , AS DI SC U SSE D EA RLI ER , TH E R E IS A D EF INIT E E L E M E NT O F ES TIMAT E IN THE S HORTA G E C L A IM E D B Y TH E A PP E LLANT . T H I S INDI CA T ES THAT TH E A . O . HAD E V E R Y REASON TO B E DI SSA TI S FI E D A B O UT TH E CORREC TN ESS A ND CO MPL E T E NE SS O F TH E AC C O UNT S OF TH E A PP E LL A NT AS M E NTI O N E D IN SECTION 145(3) T H E R EFO R E, TH E A.O. I S F ULL Y J U S TIFI E D IN M AK IN G A N ASSESS M E N T IN TH E M A NN E R PR OV ID E D I N S .144 AFT E R R E J E CTIN G TH E BOOK S O F A C C O UNT S. T H E QU ES TI O N I S W H A T WO ULD AMOUNT T O A R EASO NABL E ES TIM A T E . T H E A . O . H A S H E LD TH E G P T O B E 3 . 75% A S AGA IN S T ITA NO S478 & 424/RJT/13 & 2/RJT/2014 . A.Y S . 2009 - 10 & 2010 - 11 5 2.9% D EC L A R E D B Y TH E A PP E LL A NT . A J U MP O F 0.85% IN TH E G P A PP EA R S T O B E T OO H ARS H A ND UN R EASO N A BL E . I T HA S A LR EA D Y BE E N ES T A BLI S H E D IN PAR A 5 . 4 . 2 TH A T TH E EXCESS S H O RT AGE C L A IM E D B Y T H E APPE LL A NT A S CO M PA R E D T O L AS T YEAR I S R S. 7, 15 ,972 / - IN CASE OF G R O UNDNUT O IL , SHAPAR BRANCH. ALSO, THE TOTAL SHORTAGE HAS BEEN QUANTIFIED BY THE APPELLANT AT RS. 84,42,396/ - . CONSIDERING THE FINDING THAT THE SHORTAGE IS PURELY ON ESTIMATE BASIS, IT WOULD BE, IN MY OPINION, REASONABLE TO ESTIMATE THE GP AT 3.1% AS AGAINST 2.9% DISCLOSED BY THE APPELLANT. ON THE GROSS TURNOVER OF RS. 191,45,67,761/ - , THE GP WORK S OUT TO RS. 5,93,51,600/ - . THE GP SHOWN BY THE APPELLANT IS RS. 5,61,20,250/ - @ 2.9%. THE DIFFERENCE WORKS OUT TO RS. 32,31,350/ - . THE ADDITION IS SUSTAINED TO THIS EXTENT. THE A.O IS DIRECTED TO ADOPT THE ABOVE FIGURES FOR COMPUTATION OF INCOME OF THE AP PELLANT. THE GROUNDS OF APPEAL ARE PARTLY ALLOWED. 8. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A) REVENUE AND ASSESSEE ARE NOW IN APPEAL BEFORE US. 9. BEFORE US, LD. D .R. POINTED TO THE VARIOUS FINDINGS OF A.O AND FURTHER SUBMITTED THAT ASSESSEE WAS CLAIMING T HE SHORTAGE ON THE BASIS OF ESTIMATE AND THEREFORE THE; BOOKS OF ACCOUNTS DID NOT REFLECT TRUE AND CORRECT PICTURE. HE FURTHER SUBMITTED THAT ONCE THE BOOKS OF ACCOUNTS ARE REJECTED , A FAIR ESTIMATE OF THE PROFIT HAS TO BE MADE BY THE A.O AND IN SUCH CIRCU MSTANCES THE ESTIMATION OF GROSS PROFIT AT 3.75% MADE BY THE A.O WAS FULLY JUSTIFIED. HE ALSO RELIED ON THE DECISION OF HON BLE APEX COURT IN THE CASE OF KACHWALA JEMS VS. JCIT 288 ITR 10 (SC). HE THUS SUPPORTED THE ORDER OF A.O. 10. O N THE OTHER HAND LD. A.R . SUBMITTED THAT ASSESSEE HAS BEEN MAKING THE CLAIM OF SHORTAGE ON SIMILAR BASIS IN EARLIER YEARS ALSO AND THE RESULTS OF THE ASSESSEE HAS BEEN ACCEPTED BY THE DEPARTMENT. HE FURTHER SUBMITTED THAT SIMILAR ADDITION ON ACCOUNT OF SHORTAGE WAS MADE BY THE A. O WHILE DECIDING THE APPEAL FOR A.Y. 2009 - 10 AGAINST WHICH ASSESSEE AND REVENUE BOTH CARRIED THE MATTER BEFORE HON BLE TRIBUNAL. HON BLE TRIBUNAL WHILE DECIDING THE APPEAL IN ITA NO. 219 & 363/RJT/2012 ORDER DATED 26.04.2013 DISMISSED THE APPEAL OF REVENUE AND ALLOWED THE APPEAL OF THE ASSESSEE. HE ALSO PLACED ON RECORD THE COPY OF THE AFORESAID DECISION OF TRIBUNAL AT PAGE 104 TO 111 OF THE PAPER BOOK . HE FURTHER SUBMITTED THAT SINCE THE FACTS OF THE CASE IN THE PRESENT APPEAL ARE IDENTICAL TO THAT OF A.Y. 09 - 10 AND SINCE THE APPEAL FOR A.Y. 2009 - 10 HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE, THE APPEAL OF THE ASSESSEE FOR THE YEA R UNDER CONSIDERATION BE ALSO DECIDED IN FAVOUR OF ASSESSEE . ITA NO S478 & 424/RJT/13 & 2/RJT/2014 . A.Y S . 2009 - 10 & 2010 - 11 6 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RE CORD. IT IS AN UNDISPUTED FACT THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE REJECTED MAINLY FOR THE REASON THAT ASSESSEE WAS CLAIMING SHORTAGE ON THE BASIS OF ESTIMATE BASIS AND ONCE THE BOOKS OF ACCOUNTS WAS REJECTED THE GROSS PROFIT OF THE ASSESSEE WA S ESTIMATED BY THE A.O. WE FIND THAT IN CA SE OF ASSESSEE FOR A.Y. 2009 - 10 SIMILAR ISSUE AROSE AND THE MATTER WAS CARRIED BY ASSESSEE AND REVENUE BEFORE HON BLE TRIBUNAL. THE CO - ORDINATE BENCH OF THE TRIBUNAL WHILE DECIDING THE APPEAL FOR A.Y. 2009 - 10 VIDE ORDER DATED 26.04.2013 DISMISSED THE APPEAL OF REVENUE AND ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER: - 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD AND THE PAPER BOOKS SUBMITTED BY THE ASSESSEE. IT IS APPARENT FROM THE ORDER OF THE REVENUE THAT IT HAD REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE FOR NOT ACCURATELY RECORDING THE SHORTAGES IN THE BOOKS OF ACCOUNTS. FURTHER IN THE CASE OF OTHER ASSESSEES HAVING SIMILAR BUSINESS, THE G P. RATE DECLARED BY THEM WERE MUCH HIG HER I.E. 8.29% AND 9.09% AS COMPARED TO 3.48% DECLARED BY THE ASSESSEE. WITH THESE REASONS THE REVENUE HAD REJECTED THE BOOKS OF ACCOUNTS AND THE LD. A.O ESTIMATED THE G.P AT 3.75% OF THE TURNOVER ARBITRARILY WITHOUT CITING ANY ,LOGICAL REASON AND SIMILARL Y THE LD. CIT(A) HAS THE STAND OF THE REVENUE. ADDITION BASED ON PRESUMPTIONS AND ASSUMPTIONS WITHOUT ANY SCIENTIFIC BASICS OR LOGICAL REASONING CANNOT BE SUSTAINED. IN THIS CASE, THE ASSESSEE IS MAINTAINING ITS BOOKS OF ACCOUNTS ON DAY TO DAY BASIS AND TH E ONLY DEFECT POINTED OUT BY THE REVENUE IS THAT THE DISCREPANCY WITH RESPECT TO RECORDING OF SHORTAGES. REVENUE COULD HAVE INVESTIGATED THE ISSUE IN DETAILS AND ADOPTED A LOGICAL METHOD TO ARRIVE AT THE CORRECT PROFIT OF THE ASSESSEE IF AT ALL THERE WERE GENUINELY SOME DISCREPANCIES WITH RESPECT TO SHORTAGES. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY JUSTIFICATION IN THE STAND OF THE REVENUE AND ACCORDINGLY WE HEREBY DELETE THE ADDITIONS MADE BY THE LD. A.O WHICH WAS FURTHER P ARTLY SUSTAINED BY THE LD. CIT(A) ON THE ISSUE. WE ALSO DO NOT FIND ANY JUSTIFICATION IN THE STAND OF REVENUE FOR REJECTING THE BOOKS OF ACCOUNTS. ACCORDINGLY GROUND NOS. 1,2 & 3 RAISED BY THE ASSESSEE IN ITS APPEAL ARE ALLOWED IN ITS FAVOUR AND CONSEQUENT LY GROUND NO. 1 RAISED BY THE REVENUE IN ITS APPEAL IS DISMISSED. 12. BEFORE US REVENUE HAS BEEN BROUGHT ANY DISTINGUISHING FEATURE OF THE CASE AS COMPARED TO THE CASE OF ASSESSEE FOR A.Y. 2009 - 10 WHICH WAS DECIDED BY TRIBUNAL IN ASSESSEE S FAVOUR. WE THERE FORE , RESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH FOR A.Y. 2009 - 10 , DISMISS T HE GROUND OF REVENUE AND ALLOW THE GROUND OF THE ASSESSEE. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND THE APPEAL OF ASSESSEE IS ALLOWED. ITA NO. 424/AHD/2013 REVENUE S APPEAL (FOR A.Y. 2009 - 10) ITA NO S478 & 424/RJT/13 & 2/RJT/2014 . A.Y S . 2009 - 10 & 2010 - 11 7 14. ASSESSEE ELECTRONICALLY FILED ITS RETURN OF INCOME FOR A.Y. 09 - 10 ON 25.07.2009 DECLARING TOTAL INCOME OF RS. 3,90,14,170/ - . THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 29.12 .20 11 AND THE TOTAL INCOME WAS ASSESSED AT RS. 4 , 53 , 16,330 / - BY MAKING ESTIMATION OF GROSS PROFIT. ON THE ESTIMATION OF GROSS PROFIT MADE A.O VIDE PENALTY ORDER DATED 26.06.2012 LEVIED PENALTY OF RS. 15,75,680/ - U/S 271(1)(C) OF THE ACT . AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO DELETE D THE PENALTY BY HOLDING AS UND ER: - 4.3 I HAVE DULY CONSIDERED THE SUBMISSION OF THE APPELLANT. I FIND THAT THE HON BLE ITAT, RAJKOT B ENCH VIDE ITS ORDER IN ITA NO. 219 & 363/RJT/2012 DATED 26.04.2013 HAS DELETED THE ENTIRE ADDITIONS MADE BY THE A.O IN APPELLANT S CASE FOR A.Y. 2009 - 10. SINCE THE ADDITION ON WHICH PENALTY U/S. 271(1)(C) WAS LEVIED HAS BEEN DELETED BY THE HON BLE ITAT, TH E PENALTY OF RS. 15,75,680/ - LEVIED U/S. 271(1)(C) BY THE ASSESSING OFFICER IS ALSO CANCELLED. 15. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A) REVENUE IS NOW IN APPEAL BEFORE US. 16. BEFORE US, LD. D .R. SUBMITTED THAT AGAINST THE DECISION OF ITAT WHEREBY THE E NTIRE ADDITION ON ACCOUNT OF LOW G.P WAS DELETED, REVENUE HAS CHALLENGED THE ORDER OF TRIBUNAL BEFORE HON BLE GUJARAT HIGH COURT. HE FURTHER SUBMITTED THAT SIN CE THE APPEAL HAS BEEN ADMITTED, THE ISSUE OF PENALTY IS REQUIRED TO BE KEPT ALIVE. HE THEREFORE SUPPORTED THE ORDER OF A.O. ON OTHER HAND LD. A.R. SUBMITTED THAT ONCE THE ENTIRE ADDITION MADE WHILE FRAMING THE ASS ESSMENT ITSELF BEEN DELETED THERE REMAINS NO QUESTION OF LEVY OF PENALTY U/S 271(1)(C) ON SUCH ADDITION. HE THUS SUPPORTED THE ORDER OF CI T(A). 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ADDITION ON ACCOUNT OF ESTIMATION OF GROSS PROFIT MADE BY A.O WAS DELETED BY THE CO - ORDINATE BENCH OF TRIBUNAL VIDE ORDER DATED 2 6.04.2013 . WE ARE OF THE VIEW THAT SINCE THE ADDITION MADE ON ACCOUNT OF GROSS PROFIT ITSELF HAS BEEN DELETED THE PENALTY U/S 271(1)(C) DOES NOT SURVIVE . WE THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS THE APPEAL OF REVENUE IS DISMISSED. ITA NO S478 & 424/RJT/13 & 2/RJT/2014 . A.Y S . 2009 - 10 & 2010 - 11 8 18. THUS THE APPEAL OF R EVENUE IS DISMISSED. 19. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE DISMISSED AND THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 04 - 12 - 201 4 . SD/ - SD/ - (KUL BHARAT ) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT . TRUE COPY R AJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, RAJKOT