ROHIT S. VISHWASRAO, MUMBAI V. ITO WD 32(3)(2), MUMBAI

ITA 6700/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7747 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 15-11-2016
• Court: TRIBUNAL
• Department Lawyers: PURUSHOTTAM KUMAR SR
• Section: 143(3)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI D.T. GARASIA, JM AND SHRI RAJESH KUMAR, AM I.T.A. NO. 6700/MUM/2016 ASSESSMENT YEAR: 2012 - 13 ROHIT S. VISHWASRAO 104, RAJ SHREE ROYAL COMPLEX, EKSAR ROAD, BORIVALI (W), MUMBAI - 400092 VS. ITO - WARD 32(3)(2) MUMBAI PAN: A DJPV4439N (APPELLANT) : (RESPONDENT) APPELLANT BY : SHRI DHARMESH SHAH RESPONDENT BY : SHRI PURUSHOTTAM KUMAR (SR. A .R.) DATE OF HEARING : 08 /03/2017 DATE OF PRONOUNCEMENT : 29 /03/2017 O R D E R PER D. T. GARASIA, JM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 44, MUMBAI, DATED 28 / 10/2016 ARISING OUT OF ORDER OF ITO WARD - 32(3)(2), MUMBAI PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 201 2 - 13 . 2 ROHIT VISHWASRAO ITA NO. 6700/M/2016 FOLLOWING GROUNDS ARE RAISED WHICH READS AS UNDER: 1. ON THE FACTS CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN MAKING AN ADDITION OF RS.30,04,203/ - ON A CCOUNT OF ESTIMATION OF GROSS P OFIT , WHICH MAY BE DELETED/REDUCED. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN DISALLOWING THE LOSS CLAIMED OF RS.5,09,706/ - ON TRADING IN DERIVATIVES. 3. THE SHORT FACTS OF THE CASE ARE AS UNDER: - THE ASSESSEE IS AN INDIVIDUAL RUNNING PROPRIETORSHIP CONCERN UNDER T HE NAME OF ROHIT SYNTHETICS. THIS GROUND RELATE TO ADDITION OF RS.30,04,203/ - ON ACCOUNT OF ESTIMATI ON OF GROSS PROFIT. THE AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT AS COMPARE D TO LAST TWO YEARS, THE GP OF THE ASSESSEE YEAR UNDER HAS FALLEN DOWN. THE AO ASK THE ASSESSEE TO EXPLAIN FALL IN GP. IN REPLY THE ASSESSEE MENTION ED THAT THERE IS FALL IN GP MAINLY BECAUSE OF RISE IN ELECTRICITY EXPENSES AND ALSO BECAUSE OF RISE IN OTHER EXPENSES LIKE COST OF MATERIAL. HOWEVER, THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND ESTIMATED GP @ 2% . AS A CONSEQUENCE THIS ADDITION OF RS.30,04,203/ - WAS MAD E TO THE TOTAL INCOME OF THE ASSESSEE. MATTER CARRIED TO CIT(A) AND CIT(A) HAS DISMISSED. 4. DURING THE COURSE OF HEARING THE LD. AR HAS SUBMITTED THAT THE ASSESSING OFFICER HAS ESTIMATED THE GP ON TRADING THE TURNOVER OF THE ASSESSEE WITHOUT REJECTING THE BOOK OF THE ASSESSEE CONTRARY TO LAW AND UNJUSTIFIED. THE ASSESSING OFFICER HAS NOT REJECTED THE BOOK RESULT. THE 3 ROHIT VISHWASRAO ITA NO. 6700/M/2016 ASSESSING OFFICER HAS ESTIMATED THE INCOME FROM TRADING BUSINESS ON THE GROUND THEIR GROSS PROFIT EARNED BY THE ASSESSEE DURING THE ASSESS MENT YEARS I.E. 2010 - 11 & 2011 - 12 IS HIGHER THAN EARNED DURING THE YEAR UNDER APPEAL. FURTHER, ACCORDING TO THE ASSESSING OFFICER ELECTRICITY EXPENSES CLAIM ARE ALSO TOO HIGH A S A RESULT WITH THE PROFIT HAS GONE DOWN. THE ASSESSING OFFICER WAS OF THE VIEW THAT PROFIT HAS BEEN SUPPRESSED FROM TRADING ACTIVITIES BY REDUCING THE PROFIT FROM JOB WORK. THE PROFIT OF THE GROSS PROFIT, GROSS PROFIT DE PENDS UPON THE VARIOUS FACTOR S SUCH AS I NCREASE IN MATERIAL COST, BONUS , STORES AND SPARES, ELECTRICITY EXPEN SES. 5. THE LD. AR SUBMITTED BEFORE, CIT(A) THAT THE GROSS PROFIT OF ESTIMATING THE GROSS PROFIT @ 2% CONTRARY VERY HIGH AT THE LAST. THE ASSESSING OFFICER ADOPTED GROSS PROFIT @ 0.24% AS CONSIDERING THE FACT THAT THE ASSESSEE HAS DECLARE GROSS PROFIT IS 0.11%. THEREFORE, THE ADDITION COULD HAVE BEEN MADE ONLY TO THE EXTENT OF 0.13% OF THE TURNOVER OF THE ASSESSEE. HENCE, THE ADDITION IS UNJUSTIFIED. 6. ON THE OTHER HAND THE LD. DR SUBMITTED THAT , IF WE LOOK TO THE ASSESSMENT ORDER THE ASSESSEE HAD HARDL Y SHOWN GROSS PROFIT IS VERY LOW WHICH IS NOT POSSIBLE IN THIS LINE OF BUSINESS. IN REPLY TO DRS ARGUMENT THAT THE ASSESSEE HAS TURNOVER OF RS.13.13 CR ORES AND HE HAS DECLARED GP OF 0.11 % WHICH IS VERY LOW. 7. HAVING HEARD BOTH THE PARTIES . L OOKING TO T HE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSEE HAS ALREADY ADMITTED BEFORE CIT(A) THAT THE ASSESSEE HAS DECLARE GROSS PROFIT OF 0.11% AND HE HAS NO OBJECTION THE ADDITION SHOULD HAVE MADE TO THE EXPENDITURE OF 0.13% OF THE TURNOVER FROM TRADING BUSINESS OF THE ASSESSEE. CONSIDERING THIS SUBMISSION AND WITHOUT GOING TO THE MERIT OF THE CASE WE FIND THAT IN 4 ROHIT VISHWASRAO ITA NO. 6700/M/2016 THIS CASE THE ASSESSING OFFICER HAS NOT REJECTED THE BOOK RESULT U/S 145(3) OF THE INCOME TAX ACT. THEREFORE, THE ASSESSEES BOOK RESUL T SHOULD HAVE BEEN ACCEPTED BUT LOOKING TO THE FACTS AND ADMISSION OF THE ASSESSEE HIMSELF WE DIRECT THE AO TO TAKE THE GP @ 0.24% INSTEAD OF 0.11% DECLARED BY THE ASSESSEE. IN THE RESULT , APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 8. DURING THE COURSE OF AO NOTED THAT THE ASSESSEE HAS CLAIM DERIVATIVE LOSS OF RS.5,09,706/ - AND SAID OF AGAINST THE BUSINESS FROM PROPRIETARY CONCERN. THE AO STATED THAT THE ASSESSEE HAS NOT SUBMITTED BOOKS OF ACCOUNT RELATED TO THE TRANSACTION WHICH HAVE LET TO DERIVATIVE L OSS. THEREFORE, IT WAS DISALLOWED AND CIT(A) CONFIRM THE SAME. 9. DURING THE COURSE OF HEARING THE LD. AR SUBMITTED THAT THE ONLY REASON FOR DISALLOWING THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS NOT FILED FORM NO.10DB BEFORE THE AO AND CIT(A). 10. LD. AR IS NOW READY TO FILE THAT FORM BEFORE THE AO . T HEREFORE, HE REQUESTED THE MATTER MAY BE RESTORED TO THE AO TO VERIFY THE SAME. 11. THE LD. DR HAS NO OBJECTION IF THE MATTER IS RESTORED TO AO. CONSIDERING THE ABOVE SUBMISSION OF THE ASS ESSEE WE ARE OF THE VIEW THAT THE DERIVATIVE LOSS CAN BE VERIFIED ONLY TO THE 10DB FORMS THAT THE ASSESSEE IS WANTED TO FILE BEFORE THE AO THEREFORE, WE REVERSE THE ORDER OF REVENUE AUTHORITIES AND RESTORE THE MATTER BACK TO THE FILE OF THE AO. THE ASSESSE E IS DIRECTED TO FILE FORM NO. 10DB WITHIN THREE MONTHS FROM THE RECEIPT OF THIS ORDER AND AFTER FILING THE NECESSARY INFORMATION THE AO IS DIRECTED TO MAKE THE ASSESSMENT AS PER LAW. AFTER GIVEN DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. 5 ROHIT VISHWASRAO ITA NO. 6700/M/2016 IN THE RESULT APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. JUDGMENT PRO NOUNCED IN OPEN COURT ON 29 TH MARCH 2017. SD/ - SD/ - (RAJESH KUMAR) ACCOUNTANT MEMBER (D.T. GARASIA) JUDICIAL MEMBER MUMBAI, DATED: 29 TH MARCH 2017 *RAHUL SHARMA* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, D BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI