M/s. Sushil Traders, Ahmedabad V. The Income tax Officer.Ward-3(4), Ahmedabad

ITA 583/AHD/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6962 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 02-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 24-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: VIJAY RANJAN
• Keywords: Business income

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD 0 0 , 0 0 , BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI N.S. SAINI , ACCOUNTANT MEMBER ./ ITA NO. 583 /AHD/201 1 [ [ / ASSESSMENT YEAR: 20 0 7 - 08 M /S. SUSHIL TRADERS, 39, 2 ND FLOOR, K.B. COMMERCIAL CENTRE, NR. DINBHAI TOWER, LAL DARWAJA, AHMEDABAD PAN: ABFFS 4833 D VS INCOME TAX OFFICER, WARD - 3 (4) AHMEDABAD / (APPELLANT) / (RESPONDENT) ASSESSEE(S) BY : SHRI VIJAY RANJAN, AR REVENUE BY : SMT. SONIA KUMAR, SR. DR. / DATE OF HEARING : 02 / 12 /2014 / DATE OF PRONOUNCEMENT: 12 /1 2 /2014 / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - XVI, AHMEDABAD DATED 20 . 12 .201 0 FOR THE ASSESSMENT YEAR 20 07 - 0 8 . 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.8,59,636/ - MADE BY THE ASSESSING OFFICER ON THE GROUND THAT RECEIPT OF SALES OF THE AFORESAID AMOUNT WERE NOT RECORDED IN THE ASSESSEES BOOKS OF ACCOUNT AND THAT EVEN IT IS PRESUMED THAT THE TOTAL SALES OF RS.8,59,636/ - WERE NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, THEN THE CONSEQUENTIAL ADDITION SHOULD BE OF THE ELEMENT OF PROFIT ATTRIBUTABLE TO THOSE SALES. ITA NO.583/AHD/2011 SUSHIL TRADERS FOR AY 2007 - 08 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT ON VERIFICATION OF THE INFORMATION/EVIDENCES IN THE FORM OF SALES INVOICES ISSUED BY THE ASSESSEE - FIRM WERE OBTAINED FROM SOME BUYERS, IT WAS FOUND THAT ASSESSEE HAS NOT RECORDED S ALES TO THE FOLLOWING PARTIES IN ITS REGULAR BOOKS OF ACCOUNTS : - SR. NO. NAME OF BUYERS TOTAL AMOUNT OF SALES NOT RECORDED BY THE ASSESSEE 1 INTAS PHARMACEUTICALS LTD. 1,80,180 2 CADILA HEALTHCARE LTD 10,868 3 SUN PHARMACEUTICALS LTD 2,06,709 4 TORRENT PHARMA LTD 92,894 5 CADILA PHARMACEUTICALS LTD 1,32,527 TOTAL. 6,23,178 4. THE ASSESSING OFFICER FURTHER OBSERVED THAT TO VERIFY THE GENUINENESS OF THE CONTRA ACCOUNT FURNISHED BY THE BUYERS FURTHER DETAILS WERE CALLED FOR IN THE FORM OF INVOICES ISSUED BY THE ASSESSEE AS WELL AS THE PAYMENT S MADE BY THE BUYERS AGAINST THESE PURCHASES WHICH WERE NOT FOUND CORRECT IN THE BOOKS OF ASSESSEE - FIRM. THE FOLLOW ING PARTIES CONFIRMED THAT THEY HAVE MADE PAYMENTS AGAINST THE PURCHASES THROUGH CHEQUES. THE DETAILS RECORDED BY THE ASSESSING OFFICER ARE AS UNDER: - SR. NO. NAME OF BUYERS TOTAL AMOUNT RECEIVED AND NOT RECORDED BY THE ASSESSEE 1 INTAS PHARMACEUTICALS LTD. 2,56,016 2 CADILA HEALTHCARE LTD 2,13,928 3 SUN PHARMACEUTICALS LTD 2,95,240 4 TORRENT PHARMA LTD 60,700 5 CADILA PHARMACEUTICALS LTD 33,752 TOTAL. 8,59,636 5. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PRODUCE THE BANK STATEMENT FOR VERIFICATION WHERE THE CHEQUES OF RS.8,59,636/ - WERE DEPOSITED. THE ASSESSEE COULD NOT FURNISH THE DETAILS AND THE BANK ITA NO.583/AHD/2011 SUSHIL TRADERS FOR AY 2007 - 08 3 STATEMENT; THEREFORE, THE ASSESSING OFFICER MADE ADDITION OF RS.8,59,636/ - TO THE INCOME AS UNRECORDED SALES MADE/PAYMENT S RECEIPT. 6. ON APPEAL, THE CIT(A) CONFIRMED THE ADDITION. 7. THE ARGUMENT OF THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE IS THAT , IN VIEW OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V S. PRESIDENT INDUSTRIES , REPORTED IN (2002) 258 ITR 654 (GUJ) , ONLY PROFIT ELEMENT IN THE UNRECORDED SALES SHOULD BE ADDED TO THE INCOME OF THE ASSESSEE. HE ALSO RELIED ON THE D ECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS GUR UBACHHAN SINGH J. JUNEJA , [2008] 302 ITR 63 (GUJ .) . 8. ON THE OTHER HAND, THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES . 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS MADE SALES/RECEIPT PAYMENTS WHICH WERE NOT RECORDED IN THE REGULARLY MAINTAINED BOOKS OF ACCOUNT OF THE ASSESSEE. HE, THEREFORE, MADE ADDITION OF THE ENTIRE AMOUNT OF UNRECORDED SALES/RECEIPT OF RS.8,59,636/ - TO THE INCOME OF THE ASSESSEE. THE CONTENTION OF THE AUTHORIZED REPRESENTATIVE OF THE ASSE SSEE IS T HAT THE ENTIRE SALES PROCEEDING CANNOT BE THE INCOME OF THE ASSESSEE AND THAT THE INCOME EMBEDDED IN THE SALES PROCEEDING SHOULD ONLY BE ADDED TO THE INCOME OF THE ASSESSEE. WE FIND THAT IN THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V S. PRESIDENT INDUSTRIES (SUPRA), IT WAS HELD THAT THE SALES ONLY REPRESENTED THE PRICE RECEIVED BY THE SELLER OF THE GOODS; ONLY THE REALIZATION OF THE EXCESS OVER THE COST INCURRED COULD FORM PART OF THE PROFIT INCLUDED IN THE CONSIDERATION FOR THE SALES. ITA NO.583/AHD/2011 SUSHIL TRADERS FOR AY 2007 - 08 4 10. THE AUTHORIZED REPRESENTATIVE FILED BEFORE US A COPY OF THE PROFIT AN D LOSS ACCOUNT OF THE ASSESSEE FROM WHICH IT IS OBSERVED THAT THE SALES OF THE ASSESSEE ARE RS.63,31,840/ - AND THE GROSS PROFIT SHOWN AS RS.3,96,980/ - , T HE PERCENTAGE OF WHICH WORKS OUT TO 6.27%. KEEPING IN VIEW THE ABOVE FACTS OF THE CASE AND ALSO THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V S. PRESIDENT INDUSTRIES (SUPRA), IT W OULD BE JUST AND FAIR TO ESTIMATE THE INCOME FRO M THE UNRECORDED SALES OF THE ASSESSEES AT 10%. ACCORDINGLY, WE CONFIRM THE ADDITION OF RS.86,000/ - AND DELETE THE BALANCE AMOUNT OF ADDITION OF RS.7,73,636/ - . THUS, THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 11. IN THE RESULT, THE APPEA L OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE CO URT ON F R I D A Y , THE 1 2 T H OF DECEMBER , 2014 AT AHMEDABAD. SD/ - SD/ - ( G.C. GUPTA ) VICE PRESIDENT ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 1 2 /1 2 /2014 BIJU T., PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - XVI, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. [ / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD