M/s. Shri.Shakti Minerals Industries, Durg V. Assistant Commissioner of Income-Tax,-I,Bhilai, Durg

ITA 67/BIL/2011

• Counselvise Citation: 6724714 RSA 2011
• Duration Of Justice: 3 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 25-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MEENA
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI REJENDRA, ACCOUNTANT MEMEBR ITA NO.67/BLPR/2011 A.Y. 2006-07 M/S. SHRI SHAKTI MINERALS INDUSTRIES VS. ASSTT. COMMISSIONER OF INCOME TAX 39/12, NEHRU NAGAR (W), CIRCLE-1, BHILAI (CG) (PAN: AABFI 4113 P) (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI. S.K. MEENA, SR. D.R. DATE OF HEARING : 17.12.2014 DATE OF PRONOUNCEMENT : 17.12.2014 ORDER PER H.L. KARWA, PRESIDENT THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), BILASPUR DATED 30.11.2010 RELATING TO A.Y. 2006-07. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IN THIS APPEAL READS AS UNDER :- THAT THE LEARNED A.O. GROSSLY ERRED IN REJECTING T HE AUDITED REPORT U/S 44AB AND FURTHER ERRED IN ESTIMATING THE GROSS PROF IT U/S 144 WITHOUT CONSIDERING THE FACTS IN ITS RIGHT PERSPECTIVE BUT MERELY PROCEEDED ON PRESUMPTION & SURMISES AND MADE AN ADDITION OF RS.9 ,35,540/- (BY ESTIMATING THE G.P. AT 12.34% ON SALES OF DOLOMITE AND 10% G.P. ON JOB WORK) TO THE RETURNED INCOME & THE LEARNED CIT( A) FURTHER ERRED 2 ITA NO. 67/BLPR/2011 A.Y. 2006-07 IN ESTIMATING THE ABOVE G.P. AT 10% ON SALES OF DOL OMITE AND 8% ON JOB WORK THUS GROSSLY ERRED IN SUSTAINING THE ADDIT ION OF RS.382023/-. YOUR PETITIONER SUBMITS THAT THE GROSS PROFIT RATE AS DISCLOSED BY THE APPELLANT BE ACCEPTED AND THE ADDITION OF RS.38 2023/- MAY KINDLY BE DELETED. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS ENGAGED IN THE BUSINESS OF MINING AND SALE OF DOLOMITE CHIPS, TRAN SPORTATION AND HANDLING WORK. FOR THE A.Y. 2006-07, THE ASSESSEE FILED THE RETURN OF INCOME DECLARING THE NET TAXABLE INCOME AT RS.6,06,490/-. AFTER PROCESSING RETURN OF INCOME UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE A CT), THE ASSESSMENT WAS TAKEN UP FOR SCRUTINY AND WAS COMPLETED UNDER SECTION 143 (3) OF THE ACT ON 24.11.2008 COMPUTING TOTAL INCOME AT RS.15,48,153/-. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. REQUIRED THE ASSESSEE TO PROD UCE BOOKS OF ACCOUNT. HOWEVER, THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNT STATING THAT THE SAME ALONG WITH OTHER DOCUMENTS WERE LOST IN TRANSIT WHILE PROCEEDI NG FROM BHILAI TO MANDALA ON 15.02.2008. THE A.O., AFTER GIVING AMPLE OPPORTUNI TY OF BEING HEARD TO THE ASSESSEE, OBSERVED THAT THERE WAS DECLINE IN G.P. A S COMPARED TO THE IMMEDIATELY PRECEDING YEAR. FURTHER, IN THE ABSENCE OF BOOKS O F ACCOUNT, THE A.O. REJECTED THE BOOK RESULTS INVOKING PROVISIONS OF SECTION 145(3) OF THE ACT. ACCORDINGLY, THE A.O. WORKED OUT THE G.P. AT RS.28,18,796/- ON SALES OF DOLOMITE AND JOB WORK AS AGAINST RS.18,83,216/- SHOWN BY THE ASSESSEE FIRM A ND MADE ADDITION OF RS.9,35,580/- TO THE RETURNED INCOME. 3 ITA NO. 67/BLPR/2011 A.Y. 2006-07 4. ON APPEAL, THE LD. CIT(A) RESTRICTED THE ADDITIO N TO RS.3,82,023/- OBSERVING AS UNDER :- 3.2.4 THE ABOVE SUBMISSIONS HAVE BEEN CAREFULLY C ONSIDERED. IN THE INSTANT CASE, THE A.O. RELIED ONLY ON THE G. P. DISCLOSED IN EARLIER YEARS. THE G.P. VARIES FROM YEAR TO YEAR DEPENDING ON SEVERAL FACTORS, SUCH AS LOCAL MARKET CONDITIONS, FLUCTUATIONS IN RA TES ETC. THOUGH REFERENCE TO EARLIER YEARS RESULTS ARE ALSO NECESSA RY, IT ALONE IS NOT SUFFICIENT TO ADOPT HIGHER G.P. FOR THE RELEVANT AS ST. YEAR WITHOUT CONDUCTING CERTAIN ENQUIRIES, REGARDING THE LOCAL M ARKET CONDITIONS AND OTHER CIRCUMSTANCES LEAD TO SUCH LOW G.P. OR BR INGING ANY COMPARABLE CASES ON RECORD FOR THE RELEVANT ASST. Y EAR. EVEN IN RESPECT OF THE JOB WORKS UNDERTAKEN BY THE APPELLAN T, THE A.O. COULD NOT TAKE INTO ACCOUNT THE RESULTS OF THE PREVIOUS Y EAR, SINCE THIS IS THE FIRST YEAR FOR THE APPELLANT TO UNDERTAKE THIS WORK , NOR THE A.O. BROUGHT ON RECORD ANY COMPARABLE CASES, NOR CONDUCT ED ANY ENQUIRIES AND BROUGHT SOME MATERIAL ON RECORD TO JUSTIFY THE ADDITION. - AS HELD BY THE HONBLE S.C. IN THE CASE OF BRIJ B HUSHANLAL PANDUMAN KUMAR VS.CIT (1978) 115 ITR 524 ESTIMATE M UST BE FAIR AND HONEST. - AS HELD IN THE CASE OF SRIRAM JHANWARLAL VS. ITO (2005) 98 IIJ (JODH) 639, AFTER REJECTING THE BOOK RESULTS THE A. O. IS SUPPOSED TO BE GUIDED EITHER BY PREVIOUS RESULTS OF THE APPE LLANT OR SOME COMPARABLE CASE. - AS HELD IN THE CASE OF MADANLAL VS. ITO (2006) 9 SOT 1 (URO) JODHPUR, IF THE APPELLANT IS ABLE TO EXPLAIN, THE M AGICAL FIGURE OF PAST YEAR CAN NOT BE APPLIED IN THIS YEAR. IT IS MORE JUDIC IOUS TO CONSIDER ALL THESE FACTORS AND IN THAT EVENTUALITY, EVEN PAST HISTORY MAY NOT HAVE MUCH RELEVANCE. 5. IT IS OBSERVED THAT THE A.O. ESTIMATED THE G.P. AT 12.34% ON SALES OF DOLOMITE AND 10% G.P. ON JOB WORK. ON APPEAL, THE LD. CIT(A ) ADOPTED G.P. @ 10% IN RESPECT OF SALE OF DOLOMITE AND @ 8% IN RESPECT OF JOB WORK. IT IS TRUE THAT G.P. RATE CANNOT BE UNIFORM IN ALL THE YEARS AND IT VARIES FR OM YEAR TO YEAR DEPENDING ON 4 ITA NO. 67/BLPR/2011 A.Y. 2006-07 SEVERAL FACTORS SUCH AS LOCAL MARKET CONDITION, FLU CTUATION IN RATES ETC. IT IS ALSO OBSERVED THAT THE A.O. HAS NOT CITED ANY COMPARABLE CASE WHILE ESTIMATING G.P. IN RESPECT OF SALE OF DOLOMITE. AS REGARDS THE JOB WO RK UNDERTAKEN BY THE ASSESSEE, IT IS STATED THAT THIS IS THE FIRST YEAR FOR THE ASSES SEE TO UNDERTAKE THIS WORK AND THE A.O. FAILED TO CITE ANY COMPARABLE CASE WHILE APPLY ING 10% G.P. ON JOB WORK. IT IS SEEN THAT THE LD. CIT(A) HAS SUSTAINED THE ADDITION OF RS.3,82,023/- WHICH APPEARS TO BE ON HIGHER SIDE PARTICULARLY CONSIDERING THE F ACTS AND CIRCUMSTANCES OF THE PRESENT CASE. KEEPING IN VIEW THE PECULIAR FACTS O F THE PRESENT CASE AND NATURE OF THE BUSINESS CARRIED OUT BY THE ASSESSEE, WE THINK IT PROPER TO RESTRICT THE ADDITION TO RS.1,50,000/- ON BOTH COUNTS. THUS, THE ASSESSEE G ETS A RELIEF OF RS.2,32,023/-. 6. IN THE RESULT, APPEAL IS ALLOWED PARTLY AS INDIC ATED ABOVE. 7. ORDER PRONOUNCED IN THE OPEN COURT ON 17.12.2014 . SD/ SD/- (RAJENDRA) (H.L. KARWA) ACCOUNTANT MEMBER PRESIDENT RAIPUR, DATED: 17.12.2014 PBN/* COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. D.R. ITAT, RAIPUR BENCH, RAIPUR 6. GUARD FILE //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, RAIPUR