ITO WD 1(4)., KALYAN V. S.G.S.C. TEXTILES P. LTD`, BHIWANDI

ITA 5567/MUM/2011

• Counselvise Citation: 556719914 RSA 2011
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 29-07-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P C MOURYA
• Assessee Lawyers: SUBODH L RATNAPARKHI
• Keywords: Additional evidence; Corroborative evidences

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , ! , ' # BEFORE SHRI B.R. MITTAL, JUDICIAL MEMBER, AND SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO. 5567/MUM./2011 ( $ % &% / ASSESSMENT YEAR : 200708 ) INCOME TAX OFFICER WARD1(4), WAYALE NAGAR MOHAN PLAZA, KHADAK PADA KALYAN (WEST) 421 301 .. '( / APPELLANT $ V/S M/S. S.G.S.C. TEXTILES P. LTD. 74/1, NEW KANERI, PANDURANG ARYA SMRUTI, FLAT NO.102 PAYAL TALKIES, BHIWANDI .... )*'( / RESPONDENT ' ' ./ + ./ PAN/GIR NO.AAHCS5401P , - / REVENUE BY : MR. P.C. MOURYA $ %./ , - / ASSESSEE BY : MR. SUBODH L. RATNAPARKHI $ , /' / DATE OF HEARING 19.06.2012 0 12& , /' / DATE OF ORDER 04.07.2012 0 / ORDER PER B.R. MITTAL, J.M. THE PRESENT APPEAL PREFERRED BY THE REVENUE, IS DIR ECTED AGAINST THE IMPUGNED ORDER 15 TH APRIL 2001, PASSED BY THE COMMISSIONER (APPEALS)I , THANE, FOR ASSESSMENT YEAR 200708, ON THE FOLLOWIN G GROUNDS: M/S. S.G.S.C. TEXTILES P. LTD. 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION O F ` 15,05,575 ON ACCOUNT OF G.P. VARIATION. THE LEARNED CIT(A) ERRED IN ADMITTING FRESH EVIDENCE WITHOUT GIVING AN OPPORTUNITY TO A.O. THER EBY VIOLATING THE PROVISIONS OF RULE 46A OF THE I.T. RULES. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF TRADING OF COTTON SYNTHETIC YARNS, AND ALSO IN YARN BILLS DISCOUNTING ACTIVITY. THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF ` 79,890. THE ASSESSING OFFICER HAS STATED THAT THE GROSS PROFIT WAS DISCLOSED AT ` 5,78,980, I.E., 1.32% AND NET PROFIT AT ` 1,51,152, I.E., @ 0.35%. 3. THE ASSESSING OFFICER STATED THAT THE ASSESSEE WAS ASKED DURING THE ASSESSMENT PROCEEDINGS TO EXPLAIN THE RETURN OF INC OME WITH REFERENCE TO BOOKS OF ACCOUNT AND SUPPORTING EVIDENCES. HE HAS S TATED THAT ON EXAMINATION OF THE MATERIAL AVAILABLE ON RECORD AS WELL AS THE SUBMISSIONS OF THE ASSESSEE, IT IS OBSERVED THAT THE ASSESSEE HAD DEBITED EXPENDITURE TO THE TRADING ACCOUNT AND PROFIT & LOSS ACCOUNT. THE ASSE SSEE WAS ASKED TO FURNISH BOOKS OF ACCOUNT RELEVANT DOCUMENT BILLS AN D VOUCHERS TO PROVE THE GENUINENESS OF THE EXPENDITURE. HOWEVER, THE ASSESS EE FAILED TO PRODUCE ANY SUCH EVIDENCES. THE ASSESSING OFFICER STATED TH AT IN THE ABSENCE OF ANY EVIDENCE SUCH AS BILLS AND VOUCHERS, ETC. TO SUPPOR T THE EXPENDITURE THE GENUINENESS OF THE EXPENDITURE CANNOT BE ACCEPTED. THE ASSESSING OFFICER HAS FURTHER STATED THAT ON VERIFICATION OF FINANCIA L STATEMENTS AND FORM 3CD, THE GROSS PROFIT RATIO IN THE ASSESSMENT YEAR UNDER CONSIDERATION IS JUST 1.32% WHEREAS IN THE ASSESSMENT YEAR 200607 I.E., IMMEDIATELY PRECEDING YEAR, IT WAS 5.05%. THE ASSESSING OFFICER HAS STATE D THAT THE TOTAL TURNOVER OF THE ASSESSEE HAS INCREASED FROM ` 2,76,48,787, IN ASSESSMENT YEAR 2006 07 TO ` 4,39,77,279, IN THE ASSESSMENT YEAR UNDER CONSIDER ATION I.E., ASSESSMENT YEAR 200708. THE ASSESSING OFFICER, CON SIDERING THE FACT THAT THE ASSESSEE HAS FAILED TO PRODUCE BILLS AND VOUCHE RS AND OTHER EVIDENCES TO JUSTIFY THE EXPENDITURE AS WELL AS ABNORMAL LOW PRO FIT ALL OF A SUDDEN IN THE ASSESSMENT YEAR UNDER CONSIDERATION, ESTIMATED THE GROSS PROFIT @ 5.05% ON SALES I.E., GROSS PROFIT OF THE IMMEDIATELY PREC EDING YEAR WHICH COMES TO ` 21,94,648. THE ASSESSING OFFICER, THUS, MADE AN AD DITION OF ` 16,15,668, TO THE INCOME OF THE ASSESSEE. M/S. S.G.S.C. TEXTILES P. LTD. 3 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BE FORE THE FIRST APPELLATE AUTHORITY, WHEREIN THE LEARNED COMMISSION ER (APPEALS), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE COMPARATIVE CHART OF PURCHASE AND SALE OF YARN, FABRICS AND GROSS MARGIN , DETAILS OF WHICH ARE GIVEN IN PAGE7 OF THE IMPUGNED ORDER, HELD THAT TH E GROSS PROFIT IN THE IMMEDIATELY PRECEDING YEAR I.E., ASSESSMENT YEAR 20 0607, WAS AT A HIGHER PRECENTAGE MAINLY DUE TO DEALING IN FABRICS. DEALIN G IN FABRICS REWARDED HIGHER PERCENTAGE OF PROFIT @ 10.08% AND WHEREAS GR OSS PROFIT IN TRADING IN YARN ESTIMATION AT 1.72%. HE HAS STATED THAT THE AS SESSEE HAS NOT DEALT IN FABRICS IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THE GROSS PROFIT FOR TRADING IN YARN IN THE ASSESSMENT YEAR UNDER CONSID ERATION STANDS AT 1.25%, THEREFORE, THERE IS A MARGINAL FALL IN GROSS PROFIT BY 0.50% AND WHEREAS IN RESPECT OF FABRICS, THERE IS NO DEALING AT ALL DURI NG THE ASSESSMENT YEAR UNDER APPEAL. THE LEARNED COMMISSIONER (APPEALS), K EEPING IN MIND THE ABOVE FACTS, DIRECTED THE ASSESSING OFFICER TO MAKE AN ADDITION OF ` 1,09,943, BEING 0.25% OF THE TOTAL TURNOVER AND DEL ETED THE BALANCE AMOUNT OF ` 15,05,725. AGGRIEVED, THE DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL. 5. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL F OR THE ASSESSEE JUSTIFIED THE ORDER OF THE LEARNED COMMISSIONER (AP PEALS) AND MADE HIS SUBMISSIONS REITERATING THE FACTS AS STATED BEFORE ASSESSING OFFICER. HOWEVER, THE LEARNED DEPARTMENTAL REPRESENTATIVE SU BMITTED THAT THE ASSESSEE FILED BEFORE THE LEARNED COMMISSIONER (APP EALS), DETAILS OF THE BILLS OF THE PARTIES WHICH WERE NOT FILED BEFORE THE ASSE SSING OFFICER. THUS, THE LEARNED COMMISSIONER (APPEALS) CONSIDERED NEW FACTS AND ACCEPTED THE CONTENTIONS OF THE ASSESSEE. HE SUBMITTED THAT THE NEW FACTS HAVE BEEN CONSIDERED BY THE LEARNED COMMISSIONER (APPEALS) WI THOUT SEEKING REMAND REPORT FROM THE ASSESSING OFFICER. DURING THE COURS E OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE DID CONCEDE THE FACTS THAT THE LEARNED COMMISSIONER (APPEALS) ACCEPTED THE DETAILS WHICH W ERE NOT MADE AVAILABLE BEFORE THE ASSESSING OFFICER. HE SUBMITTED THAT HE HAS NO OBJECTION IF THE MATER IS RESTORED TO THE FILE OF THE LEARNED COMMIS SIONER (APPEALS) FOR HIS CONSIDERATION TO DECIDE THE SAME AFRESH AFTER GIVIN G ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSING OFFICER. M/S. S.G.S.C. TEXTILES P. LTD. 4 6. IN VIEW OF ABOVE FACTS THAT THE LEARNED COMMISSIONE R (APPEALS) HAS ADMITTED ADDITIONAL EVIDENCE IN CONTRAVENTION OF PR OVISIONS OF RULE46A, WE CONSIDER IT PRUDENT TO SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) ON THE ABOVE ISSUE AND RESTO RE THE MATTER TO HIM WITH DIRECTION TO DECIDE THE SAME AFRESH AFTER GIVI NG DUE OPPORTUNITY OF HEARING TO THE PARTIES AND CONSIDERING SUCH EVIDENC E AS MAY BE PLACED BEFORE HIM. THUS, THE GROUND OF APPEAL TAKEN BY THE DEPARTMENT IS ALLOWED FOR STATISTICAL PURPOSES. 7. . /3 , 4, 56 7 / 8 , / 9: ; 10. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR STAT ISTICAL PURPOSE. 0 , 2& ' < =$3 4 TH JULY 2012 2 , > ; ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH JULY 2012 SD/- ! ' RAJENDRA ACCOUNTANT MEMBER SD/- . . B.R. MITTAL JUDICIAL MEMBER MUMBAI, DATED: 4 TH JULY 2012 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, B BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI