M/S. NANDECHA BROTHERS, Khachrod V. THE ITO WARD 2(2), Ujjain

ITA 627/IND/2015

• Counselvise Citation: 62722714 RSA 2015
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 24-08-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S S DESHPANDE
• Keywords: Gross profit estimation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE (SINGLE MEMBER CASE) BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER I.T.A.NO. 627/IND/2015 A.Y. : 2006-07 M/S.NANDECHA BROTHERS, KAWAJAR MARG, ITO, WD.2(2), KHACHROD VS. UJJAIN APPELLANT RESPONDENT PAN NO. AACFN0903B A PPELLANT S BY : SHRI S.S.DESHPANDE, C. A. RESPONDENT BY : SHRI R.A.VERMA, DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-I, UJJAIN, DATED 17.06.2015 FOR THE ASSES SMENT YEAR 2006-07. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F IRM IS ENGAGED IN WHOLESALE AND RETAIL TRADER OF FERTILIZE S, RIGID PIPES. DATE OF HEARING : 1 5 .12. 2015 . DATE OF PRONOUNCEMENT : 15 . 1 2 .2015 M/S.NANDECHA BROTHERS,KHACHROD VS. ITO, WARD 2(2), UJJAIN I.T.A.NO. 627/IND/2015 A.Y.2006-07. 2 2 THE RETURN OF INCOME DECLARING TOTAL LOSS OF RS. 33 ,490/-. THE AO MADE ADDITION OF RS. 2,75,396/- ON ACCOUNT OF LO W GROSS PROFIT AND RS. 1,10,000/- ON ACCOUNT OF NON-GENUINE CREDITS. THE ASSESSEE IS IN APPEAL BEFORE ME. 3. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT(A) PARTLY ALLOWED THE APPEAL. 4. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PART IES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT THE ASSESSEE HAS SHOWN THE GROSS PROFIT @ 1.4 %, WH EREAS IN THE ASSESSMENT YEAR 2005-06 GROSS PROFIT RATE WAS S HOWN AT 2.26% AND IN THE ASSESSMENT YEAR 2004-05, THE GROSS PROFIT RATE WAS SHOWN AT 2.79 %. THE ASSESSEE HAD MARGINAL LY LOWER GROSS PROFIT. THE AO HAS TAKEN GROSS PROFIT AT 2.5 % AND MADE THE ADDITION AND THE LD. CIT(A) HAS DISMISSED THE A PPEAL. 5. I HAVE GONE THROUGH THE ORDER OF AO. FROM THE RECOR D IT WAS FOUND THAT THE ASSESSEE HAS SHOWN GROSS PROF IT RATE AT 1.4% WHEREAS IN ASSESSMENT YEAR 2005-06, GROSS PROF IT RATE WAS SHOWN AT 2.26% AND IN ASSESSMENT YEAR 2004-05, THE GROSS PROFIT RATE WAS SHOWN AT 2.79%. I FIND THAT T HERE WAS SUBSTANTIAL INCREASE IN THE TURNOVER OF THE ASSESSE E DURING M/S.NANDECHA BROTHERS,KHACHROD VS. ITO, WARD 2(2), UJJAIN I.T.A.NO. 627/IND/2015 A.Y.2006-07. 3 3 YEAR UNDER CONSIDERATION. THE TURNOVER OF THE ASSES SEE IS DECREASED MARGINALLY IN COMPARISON TO TURNOVER OF IMMEDIATELY PRECEDING YEAR. DURING THE COURSE OF HE ARING, THE ASSESSEE DID NOT GIVE ANY REASON FOR FALL IN GROSS PROFIT. THEREFORE, IN MY OPINION, THERE IS NO REASON FOR TA KING THE GROSS PROFIT AT 1.4 %. THEREFORE, I DIRECT THE AO T O TAKE THE AVERAGE GROSS PROFIT OF THREE YEARS, WHICH COMES TO 2.15%. THEREFORE, THE APPEAL OF THE ASSESSEE IS PARTLY ALL OWED AND I DIRECT THE AO TO ADOPT THE RATE OF GROSS PROFIT AT 2.15%. 6. THE NEXT ISSUE IS REGARDING UNSECURED BUSINESS CREDITORS. 7. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO HAS SCRUTINIZED SCHEDULE B CURRENT LIABILITIES AND PROVISIONS, ENCLOSED WITH THE AUDIT REPORT FILED WI TH THE RETURN OF INCOME. IT WAS OBSERVED THAT THE ASSESSEE HAS SH OWN THE BUSINESS CREDITORS OF RS. 55,000/- EACH, AS MADANLA L BADRILAL PORWAL AND RAMESH CHAND. WHEN THE ASSESSEE WAS ASKE D TO PRODUCE EVIDENCE IN THIS REGARD, THE ASSESSEE FAILE D TO GIVE THE EVIDENCE AND SUBSTANTIATE THEM AS A BUSINESS CREDIT ORS. M/S.NANDECHA BROTHERS,KHACHROD VS. ITO, WARD 2(2), UJJAIN I.T.A.NO. 627/IND/2015 A.Y.2006-07. 4 4 THEREFORE, THE AO HAS MADE THE ADDITION OF RS. 1,10 ,000/- TO THE INCOME OF THE ASSESSEE. 8. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) HAS CONFIRMED THE ADDITION.. 9. DURING THE COURSE OF HEARING OF THE APPEAL, THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE REGARD ING THE ADDITION OF RS. 1,10,000/-, THE ASSESSEE HAS SUBMIT TED THE EVIDENCE BEFORE THE CIT(A) AND THE LD. CIT(A) HAS N OT VERIFIED THIS DOCUMENTARY EVIDENCE, WHICH WAS SUBMITTED BEFO RE THE CIT(A). THEREFORE, IT MAY BE SENT BACK TO THE AO FO R VERIFICATION. 10. THE LD. DR HAS NO OBJECTION. 11. HAVING HEARD BOTH THE PARTIES AND LOOKING TO THE FA CTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT THE ASSE SSEE HAS SUBMITTED THE EVIDENCE BEFORE THE CIT(A) AND THE LD . CIT(A) HAS NOT VERIFIED THIS EVIDENCE WHICH WAS SUBMITTED BEFO RE HIM. THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY , I REVERSE THE FINDING OF CIT(A) AND RESTORE THAT OF THE AO. I, TH EREFORE, DIRECT THE AO TO VERIFY THE EVIDENCE AND THEN DECIDE THE M ATTER M/S.NANDECHA BROTHERS,KHACHROD VS. ITO, WARD 2(2), UJJAIN I.T.A.NO. 627/IND/2015 A.Y.2006-07. 5 5 AFRESH AS PER LAW. THE ASSESSEE IS DIRECTED TO REMA IN PRESENT BEFORE THE AO WITHIN 2 MONTHS AFTER THE RECEIPT OF THIS ORDER. 12. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OP EN COURT ON 15 TH DECEMBER, 2015. SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 15 TH DECEMBER, 2015. CPU*