FIBRE GROUP CORPORATION, MUMBAI V. ITO 14(1)(3), MUMBAI

ITA 5899/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9320 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 19-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 23-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR MANJUNATH KARKIHALLI
• Keywords: Gross profit estimation; Corroborative evidences
• Section: 43B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI . . !'#$ , % &' BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI N.K. BILLAIYA, AM ./I.T.A. NO.5899/MUM/2011 ( ( ( ( ( / ASSESSMENT YEAR : 2007-08 M/S.FIBRE GROUP CORPORATION, 377/B, J.S.S. ROAD, CHIRA BAZAR, MUMBAI-400 002 / VS. THE ITO 14(1)(3), MUMBAI ') % ./ *+ ./PAN/GIR NO. : AAAFF 1293J ( ), /APPELLANT ) .. ( -.), / RESPONDENT ) ), / / APPELLANT BY: SHRI K. GOPAL -.), 0 / / RESPONDENT BY : DR. MANJUNATH KARKIHALLI 0 12% / DATE OF HEARING : 19.11.2012 34( 0 12% / DATE OF PRONOUNCEMENT :23.11.2012 &5 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-25, MUMBAI DT.27.5.2011 PERTAINING TO A.Y. 2007-08. 2. THE ASSESSEE HAS RAISED SIX SUBSTANTIAL GROUNDS OF APPEAL DIVIDED IN THREE PARTS A, B & C. PART-A RELATES TO THE DISALL OWANCE U/S. 43B OF THE ACT OF VAT AND CST AMOUNTING TO RS. 1,45,642/-. 3. AT THE TIME OF THE SCRUTINY ASSESSMENT, THE ASSE SSING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED VAT AT RS. 1,44,167/- AND CST AT RS. 1,475/-. ITA NO. 5899/M/2011 2 IN THE ABSENCE OF ANY SUPPORTING EVIDENCES, THE AO D ISALLOWED BOTH VAT AND CST TOTALING TO RS. 1,45,642/- AND ADDED TO THE INC OME OF THE ASSESSEE. 4. WHEN THE MATTER WAS AGITATED BEFORE THE LD. CIT( A), THE ASSESSEE FURNISHED DETAILS OF DATE-WISE PAYMENTS OF VAT AND CST AND ALSO FILED COPY OF CERTIFICATE ISSUED BY THE BANK SHOWING THE PAYMENT AND THE CHALLAN NUMBER. THE DETAILS WERE TRANSMITTED BY THE LD. CIT(A) TO T HE AO WHO WAS ASKED TO VERIFY THE SAME. IN HIS REMAND REPORT, THE AO OBSER VED THAT THE ASSESSEE HAS SUBMITTED COPY OF BANK CERTIFICATE INSTEAD OF C OPY OF PAYMENT OF CHALLAN. THE AO IN HIS REMAND REPORT REJECTED THE CLAIM OF T HE ASSESSEE. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO PAGE-19 TO 22 OF THE PAPER BOOK AND EXPLAINED THAT SINCE THE ASSESSEE HAS MISPLACED THE CHALLAN OF PAYMENT OF VAT AND CST, IT HAS TAKEN CERTIFICATE FROM THE BANK WHICH HAS CERTIFIED THE DATE OF PAYME NT AND THE CHALLAN NUMBER AS EXHIBITED IN THE CERTIFICATE. 6. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES, REMAND REPORT AND THE COPIES OF THE BANK CERTIFICATE. WE FIND THAT IN HIS REMAND REPORT INSTEAD OF FOLLOWING THE DIRECTIONS OF THE L D. CIT(A), THE AO HAS SIMPLY RUBBISHED THE BANK CERTIFICATE FILED BY THE ASSESSE E. AS THESE BANK CERTIFICATES WERE BEFORE THE AO FOR VERIFICATION , WE HAVE CONSI DERED THE BANK CERTIFICATES AND FIND THAT THE CLAIM OF THE ASSESSEE IS IN ORDER AND ALSO AS PER PROVISIONS OF SEC. 43B OF THE ACT. WE THEREFORE FIND NO REASO N IN SUSTAINING THE ADDITION OF RS. 1,45,642/-. WE THEREFORE DIRECT THE AO TO D ELETE THE ADDITION OF RS. 1,45,642/-. GROUND AS PER PART-A IS ALLOWED. 8. PART-B CONSISTS OF TWO GROUNDS, GROUND NO. 3 & 4 . AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSING THE GROUNDS CONTAINED IN PART-B. THEREFORE, GROUND S NO. 3 & 4 OF PART-B ARE DISMISSED. ITA NO. 5899/M/2011 3 9. GROUND NO. 5 & 6 UNDER PART-C RELATES TO THE ADD ITION OF RS. 4,43,264/- ON ACCOUNT OF LOW GROSS PROFIT. 10. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , THE AO FOUND THAT THE ASSESSEE HAS SHOWN GROSS PROFIT OF RS. 25,85,04 1/- ON TOTAL TURNOVER OF RS. 1,90,24,203/- WHICH IS 13.59%. HOWEVER, WHEN THE AO COMPARED THE GROSS PROFIT RATE WITH THE IMMEDIATELY PRECEDING AS SESSMENT YEAR, HE NOTICED THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR O N A TURNOVER OF RS. 98,65,512/-, THE ASSESSEE HAS SHOWN GROSS PROFIT A T RS. 15,71,067/- WHICH COMES TO 15.92%. THE ASSESSEE WAS ASKED TO EXPLAIN THE FALL IN THE GROSS PROFIT MARGIN. THE ASSESSEE FILED A DETAILED REPLY ON 12.11.2009 STATING THAT DURING THE YEAR, THE TURNOVER HAS INCREASED FROM 98 LAKHS TO RS. 1.90 CRORES WHICH IS ALMOST A JUMP OF 100% DUE TO WHICH THE PRO FIT MARGIN HAS FALLEN DOWN. HOWEVER, THE SUBMISSION MADE BY THE ASSESSEE DID NOT FIND ANY FAVOUR FROM THE AO WHO WENT ON TO MAKE AN ADDITION OF RS. 4,43,264/- FOR LOW GP. 11. THE MATTER WAS CARRIED OVER BEFORE THE LD. CIT( A) BUT WITHOUT ANY SUCCESS. 12. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REI TERATED THAT THE FALL IN GP IS DUE TO INCREASE IN THE TURNOVER. 13. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE FINDINGS OF THE LOWER AUTHORITIES. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE ORDERS OF THE LOWER AUTHORITIES. IT IS NOT DISPUTED THAT THE ASSESSEE HAS NOT PRODUCED BOOKS OF ACCOUNT FOR VERIFICATION BEFORE THE AO DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS. AT THE SAME TIME, IT IS AL SO AN UNDISPUTED FACT THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE SUBJECT T O AUDIT U/S. 44AB OF THE ACT. THEREFORE, IN THE INTEREST OF JUSTICE AND FAI R PLAY, WE DEEM IT FIT TO ITA NO. 5899/M/2011 4 RESTRICT THE ADDITION TO RS. 50,000/- ONLY. THE AS SESSEE SHALL GET THE RELIEF OF RS. 3,93,264/-. THEREFORE, GROUNDS NO. 4 & 5 OF PA RT-C ARE PARTLY ALLOWED. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 6 17 61 0 8 5 '91 0 *1 :# ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD NOVEMBER, 2012 . &5 0 4( % 8 ;&7 23.11.2012 4 0 < SD/- SD/- (H.L. KARWA) (N.K. BILLAIYA) /PRESIDENT % &' / ACCOUNTANT MEMBER MUMBAI; ;& DATED 23.11.2012 . . ./ RJ , SR. PS &5 &5 &5 &5 0 00 0 -1! -1! -1! -1! =!(1 =!(1 =!(1 =!(1 / COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. -.), / THE RESPONDENT. 3. > ( ) / THE CIT(A)- 4. > / CIT 5. !?< -1 , , / DR, ITAT, MUMBAI 6. <@ / GUARD FILE. &5 &5 &5 &5 / BY ORDER, .!1 -1 //TRUE COPY// A AA A / : : : : * * * * (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI