M/s Sarda & Semee Electromec Pvt. Ltd., Indore V. The ITO 1(3), Indore

ITA 739/IND/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6181 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 31-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 18-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJ KUMAR BHATIA
• Assessee Lawyers: S S DESHPANDE; PIYUSH MANDOVRA
• Keywords: Income from undisclosed sources
• Section: 133A

Judgement Text

M/S SARDA &CEMEC ELECTROMA PVT. LTD. ITA NOS. 739/IND/2013 & 21/IND/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO. 739/IND/2013 A.Y.2009-10 M/S SARDA & SEMEC ELECTROMEC PVT. LTD. INDORE PAN AACCS 7591R ::: APPELLANT VS INCOME TAX OFFICER 1(3) INDORE ::: RESPONDENT ITA NO. 21/IND/2014 A.Y. 2009-10 ACIT 1(2) INDORE ::: APPELLANT VS M/S SARDA & SEMEC ELECTROMEC PVT. LTD. INDORE ::: RESPONDENT APPELLANT BY SHRI S.S. DESHPANDE & SHRI PIYUSH MANDOVRA RESPONDENT BY SHRI RAJ KUMAR BHATIA DATE OF HEARING 31.3.2016 DATE OF PRONOUNCEMENT 2 . 5 . 2016 M/S SARDA &CEMEC ELECTROMA PVT. LTD. ITA NOS. 739/IND/2013 & 21/IND/2014 2 O R D E R PER SHRI B.C. MEENA, AM THESE APPEALS FILED BY THE ASSESSEE AND THE REVENUE EMANATE FROM THE ORDER OF THE LEARNED CIT(A) I, INDOR E, 11.10.2013 WHEREBY THE LEARNED CIT(A) HAS REDUCED T HE ASSESSED INCOME FROM RS.99,45,480/- TO RS. 30,00,000 /- BY SUSTAINING THE ADDITION OF RS. 21,95,690/-. THE ASS ESSEE IS IN APPEAL AGAINST SUSTENANCE OF ADDITION OF RS.21,95,690/- WHEREAS THE REVENUE HAS COME UP IN APPEAL AGAINST THE RELIEF OF RS.69,45,480/- AS A RESULT O F WHICH THE ASSESSED INCOME WAS REDUCED BY THE LEARNED CIT(A). FOR THE SAKE OF CONVENIENCE, THESE APPEALS ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF FABRICATION OF IR ON STEEL DOORS, WINDOWS AND CHANNELS, ETC. THE ASSESSEE I S ALSO CARRYING ON TRADING ACTIVITY OF IRON STEEL, CEMENT , PIPE, M/S SARDA &CEMEC ELECTROMA PVT. LTD. ITA NOS. 739/IND/2013 & 21/IND/2014 3 G.C. SHEET, CHEMICALS, ETC. IN THIS CASE A SURVEY ACTIO N U/S 133A OF THE ACT WAS CARRIED OUT AT THE BUSINESS PREMIS ES OF THE ASSESSEE AT THE FAG END OF THE YEAR I.E. ON 27.3.2 009 AND 28.3.2009 DURING WHICH UNACCOUNTED EXCESS STOCK O F RS.19,63,123/- AND UNACCOUNTED CASH OF RS.7,88,391/- WAS FOUND WHICH WAS ADMITTED BY THE ASSESSEE AS UNACCOUNTED AND TOTAL AMOUNT OF RS. 27,40,514/- WAS DISCLOSED AS CONCEALED INCOME. THEREAFTER, THE ASSESSE E RETURNED A TOTAL INCOME OF RS.8,01,310/- EVEN AFTER INCORPORATING THE DISCLOSURE OF RS. 27,40,514/-. TH E ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE R EASON FOR THE SAME. THE ASSESSEE EXPLAINED THAT IT HAD A LOSS DURING THE YEAR AS PRICES OF STEEL WERE ON A DECLINING TREND THROUGHOUT THE YEAR AND THAT HAS SQUEEZED THE MARGIN IN TRADING OF STEEL. IT WAS ALSO EXPLAINED THAT THE ASSESSE E HAD HUGE STOCK OF STEEL IN THE BEGINNING OF THE YEAR WHICH WAS PURCHASED AT A HIGHER RATE AND CLOSING STOCK AS ON M/S SARDA &CEMEC ELECTROMA PVT. LTD. ITA NOS. 739/IND/2013 & 21/IND/2014 4 31.3.2009 WAS MUCH SMALLER. HOWEVER, THESE SUBMISSI ONS OF THE ASSESSEE DID NOT SATISFY THE ASSESSING OFFICER AND HE OBSERVED THAT THE SURRENDERED INCOME OF RS.27,40,514 /- SHOULD HAVE BEEN SHOWN SEPARATELY IN THE RETURN OF INC OME AND IT SHOULD NOT HAVE BEEN INCLUDED IN THE OVERALL RE SULT OF THE BUSINESS. THE LEARNED ASSESSING OFFICER, THE REFORE, MADE THE ADDITION OF RS. 27,40,514/- AS INCOME OF THE ASSESSEE. FURTHER, THE ASSESSING OFFICER CONSIDERING THE GP RATE OF EARLIER YEARS, ADOPTED THE GP RATE OF 10.34% AND THEREBY MADE THE ADDITION OF RS. 64,00,652/-. 3. BEING AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFOR E THE LEARNED CIT(A), WHO AFTER CONSIDERING THE FACTS OF THE CASE AND THE DETAILED SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT THE ASSESSEE WAS TRYING TO FLOAT A THEORY THEY IT HAD INCURRED LOSSES WHICH IS QUITE CONTRARY TO THE FACTS FOUND AS A RESULT OF SURVEY. HE ALSO FOUND THAT DURING THE SURVEY, THE ASSESSEE WAS FOUND IN POSSESSION OF EXCES S M/S SARDA &CEMEC ELECTROMA PVT. LTD. ITA NOS. 739/IND/2013 & 21/IND/2014 5 UNACCOUNTED STOCK AND EXCESS UNACCOUNTED CASH BOTH OF WHICH DO NOT INDICATE LOSS AND IT IS NEITHER POSSIBL E NOR PROVED THAT SUCH LOSS OCCURRED AFTER SURVEY. THE LEARN ED CIT(A) OBSERVED THAT SINCE THE EXCESS STOCK ADMITTED BY THE ASSESSEE WAS ADMITTING BY THE ASSESSEE WHICH WAS DULY INCORPORATE IN THE OPENING STOCK AS WELL AS PURCHASES AN D SALES, THEREFORE, THE SUBMISSION OF THE ASSESSEE THAT THERE WAS A LOSS, WAS NOT ACCEPTED BY THE LEARNED CIT(A). H E ALSO OBSERVED THAT THE FACT OF UNACCOUNTED PROFIT EARNED BY THE ASSESSEE IS ALSO PROVED FROM UNACCOUNTED CASH FOUND. HOWEVER, CONSIDERING THE SUBMISSION OF THE ASSESSEE THAT METAL PRICE WENT DOWN DURING THE YEAR, THE LEARNED CI T(A) HELD THAT INCOME OF THE ASSESSEE COULD NOT BE ASSESSED ON THE BASIS OF COMPARISON WITH LAST YEARS GP RATE WITHOUT EXAMINING A VALID ARGUMENT RAISED BY THE ASSESSEE THAT METAL PRICES FELL DURING THE YEAR AND WITHOUT DISLODGI NG THIS ARGUMENT AND WITHOUT DISLODGING THE SAME BY THE M/S SARDA &CEMEC ELECTROMA PVT. LTD. ITA NOS. 739/IND/2013 & 21/IND/2014 6 ASSESSING OFFICER. HE OBSERVED THAT ESTIMATION OF IN COME OF THE ASSESSEE ON THE BASIS OF ADOPTING GP RATE OF EARLIER YEAR AND MAKING ADDITION OF RS. 64,00,652/- AS ADDITION OF GP CANNOT BE SUSTAINED IN FULL, ALL THE MORE WHEN THE PR OFIT DISCLOSED IN THE RETURN OF RS.8,04,310/- AND DISCLOS URE OF INCOME DURING SURVEY OF RS. 27,40,514/- WAS SEPARATELY ADDED BY THE ASSESSING OFFICER. HE ALSO OBSERVED THAT AT THE SAME TIME THE INCOME DISCLOSED BY THE ASSESSEE I N THE RETURN OF INCOME OF RS. 8,04,310/- ALSO CANNOT BE ACCE PTED AS THE FALL IN GP RATE FROM 10.34% TO 4.06% IS NOT FUL LY EXPLAINED BY THE ASSESSEE ESPECIALLY WHEN A SURVEY WAS CONDUCTED AT THE FAG END OF THE YEAR IN WHICH UNACCOUNT ED INVESTMENT IN STOCK OF RS.19,63,123/- AND UNACCOUNTED CASH OF RS. 7,77,391/- WAS DETECTED AND AS A RESULT UNACCOUNTED INCOME OF RS. 27,40,514/- WAS ADMITTED BY THE ASSESSEE. THE LEARNED CIT(A) CONSIDERING ALL THE SE FACTS, CONCLUDED THAT THE ASSESSING THE ASSESSEE AT THE M/S SARDA &CEMEC ELECTROMA PVT. LTD. ITA NOS. 739/IND/2013 & 21/IND/2014 7 INCOME OF RS.30,00,000/- WILL MEET THE ENDS OF JUST ICE WHICH HE ESTIMATED ON THE BASIS THAT UNACCOUNTED INCOM E OF RS. 27,40,514/- WAS ADMITTED BY THE ASSESSEE ITSEL F IN A SURVEY DATED 27.3.2009. THE LEARNED CIT(A), THEREFOR E, HELD THE INCOME OF THE ASSESSEE TO BE RS.30 LACS IN PLACE OF RS.99,45,480/- AS DETERMINED BY THE ASSESSING OFFICE R AND IN THIS MANNER GRANTED RELIEF OF RS. 69,45,480/-. 4. AGAINST THE ABOVE ACTION OF THE LEARNED CIT(A), TH E ASSESSEE AS WELL AS THE DEPARTMENT ARE IN APPEAL BEFORE TH E TRIBUNAL. 5. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE CO ULD NOT CONTROVERT THE FINDINGS OF THE LEARNED CIT(A). 6. ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER BUT COULD NOT CONTRO VERT THE FINDINGS OF THE LEARNED CIT(A). M/S SARDA &CEMEC ELECTROMA PVT. LTD. ITA NOS. 739/IND/2013 & 21/IND/2014 8 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SI DES. SINCE BEFORE US NEITHER THE LEARNED COUNSEL FOR THE ASSESSEE NOR THE LEARNED DR COULD CONTROVERT THE ORDE R OF THE LEARNED CIT(A), THEREFORE, WE HAVE NO OPTION BUT TO HOLD THAT THE LEARNED CIT(A) WAS JUSTIFIED IN ESTIMATING THE INCOME OF THE ASSESSEE AT RS.30 LACS IN PLACE OF RS.99,45,480/- AS DETERMINED BY THE ASSESSING OFFICE R. IN THIS VIEW OF THE MATTER, WE FIND NO FLAW IN THE ORDE R OF THE LEARNED CIT(A) AND CONSEQUENTLY CONFIRM SAME. 8. IN THE RESULT, THE ASSESSEES APPEAL AS WELL AS THE APPEAL OF THE REVENUE STAND DISMISSED. PRONOUNCED IN OPEN COURT ON 2/5/2016 SD/- SD/- (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 2 ND MAY, 2016 M/S SARDA &CEMEC ELECTROMA PVT. LTD. ITA NOS. 739/IND/2013 & 21/IND/2014 9