ACIT CEN CIR 32, MUMBAI V. ANIL R. CHORDIA, MUMBAI

ITA 8153/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8868 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 25-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS RUPINDER BRAR
• Assessee Lawyers: S L PODDAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA NO. : 8153/MUM/2010 ASSESSMENT YEAR : 2005-06 ACIT, CENTRAL CIRCLE 32, ROOM NO.32(2), GROUND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MARINE LINES, MUMBAI-400 020 VS. SHRI ANIL R. CHORDIA, PROP. M/S. SHAMBHAV DIAMONDS, 604, BHISHMA VISHAL NAGAR, MARVE ROAD, MALAD (WEST), MUMBAI-400 097 PAN NO: ABNPJ 1533 H (APPELLANT) (RESPONDENT) APPELLANT BY : MRS. RU PINDER BRAR RESPONDENT BY : SHRI S. L. PODDAR DATE OF HEARING : 30.08.2012 DATE OF PRONOUNCEMENT : 12.09.2012 ORDER PER RAJENDRA SINGH, A.M. : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 08.09.2010 OF CIT(A)-41, MUMBAI FOR THE A.Y. 2005-0 6. THE ONLY DISPUTE RAISED BY THE REVENUE IN THIS APPEAL IS REGARDING T HE ADDITION MADE BY THE A.O. ON ACCOUNT OF G.P. RATE. 2. THE FACTS IN BRIEF ARE THAT THE A.O. DURING THE ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAD SHOWN SALES OF `. 12.09 CRORES IN THE SCHEDULE-7 WHICH HAD BEEN DIRECTLY REDUCED FROM THE PURCHASES OF IMPORTED DIAMONDS AND NOT ADDED TO THE TOTAL TURNOV ER. THE ASSESSEE ITA NO : 8153/MUM/2010 SHRI ANIL R. CHORDIA 2 EXPLAINED THAT THE SAID SALES HAD BEEN MADE ON BEHA LF OF THE PARTIES FOR WHOM ROUGH DIAMONDS WERE IMPORTED AND THERE WAS NO MARGIN ON SALES. HOWEVER, THE ASSESSEE OFFERED A SUM OF `. 3,64,186/- BEING THE NET PROFIT ON THE BASIS OF N.P. RATE DECLARED FOR THE YEAR. T HE A.O., THEREFORE, ADDED THE SAID AMOUNT TO THE TOTAL INCOME. HOWEVER, IN T HE COMPUTATION OF THE INCOME, THE A.O. ADDED THE SUM OF `. 10,28,018/- AS UNDECLARED G.P. THE ASSESSEE DISPUTED THE DECISION OF THE A.O. AND SUBMITTED BEFORE THE CIT(A) THAT SALES OF ROUGH DIAMONDS WERE DULY ACCOU NTED IN THE REGULAR BOOKS OF ACCOUNT WHICH WERE ALSO AUDITED. IT WAS A LSO SUBMITTED THAT THE SALES WERE OF THE ROUGH DIAMONDS IMPORTED ON BE HALF OF THE OTHER PARTIES AND, THEREFORE, SALE BEING AT THE SAME RATE THERE WAS NO PROFIT. NECESSARY DETAILS WERE GIVEN. THE CIT(A) WAS CONVIN CED BY THE EXPLANATION GIVEN. IT WAS OBSERVED BY HIM THAT THE A.O. HAD NOT DISTURBED THE QUANTITATIVE DETAILS FURNISHED BY THE ASSESSEE NOR ANY DISCREPANCIES HAD BEEN POINTED OUT IN THE BOOKS OF ACCOUNTS. IT WAS ALSO OBSERVED BY HIM THAT EVEN DURING THE COURSE OF SEAR CH NO INCRIMINATING DOCUMENTS WERE FOUND OR SEIZED. THE CIT(A) ALSO NO TED THAT THE ASSESSMENT U/S.143(3) BEFORE THE SEARCH HAD BEEN MA DE IN THIS CASE AND NO ADDITION HAD BEEN MADE ON ACCOUNT OF GROSS PROFI T ON SALE OF ROUGH DIAMONDS. THE CIT(A), THEREFORE, HELD THAT THERE W AS NO GROUND FOR MAKING ANY G.P. ADDITION. HOWEVER, SINCE THE ASSES SEE HIMSELF HAD OFFERED AN AMOUNT OF `. 3,64,186/- TO AVOID LITIGATION AND TO BUY PIECE OF MIND, THE ADDITION WAS RESTRICTED TO THAT EXTENT. THE CIT(A), THEREFORE, DELETED THE BALANCE ADDITION OF `. 6,63,832/- AGGRIEVED BY WHOM THE REVENUE IS IN APPEAL. 3. BEFORE US, THE LD. AR FOR THE ASSESSEE REITERATE D THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES, WHEREAS THE LD. DR PLACED RELIANCE ON THE ORDER OF THE A.O. ITA NO : 8153/MUM/2010 SHRI ANIL R. CHORDIA 3 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE M ATTER CAREFULLY. THE DISPUTE IS REGARDING THE ADDITION ON ACCOUNT OF G.P. RATE IN RESPECT OF SALE OF ROUGH DIAMONDS. THE ASSESSEE HAD DECLARED THE SALE OF ROUGH DIAMONDS OF `. 12.09 CRORES IN THE SCHEDULE-7 OF THE BALANCE SHEET AND THIS HAD BEEN DIRECTLY REDUCED FROM THE PURCHASES. THE CASE OF THE ASSESSEE IS THAT THE ROUGH DIAMONDS HAD BEEN IMPORT ED ON BEHALF OF THE CLIENTS AND, THEREFORE, THE SAME HAD BEEN SOLD TO T HEM AT THE SAME RATE AND ACCORDINGLY THESE SALES HAD BEEN REDUCED FROM T HE PURCHASES. HOWEVER, TO AVOID THE LITIGATION, THE ASSESSEE HAD AGREED FOR THE ADDITION OF `. 3,64,186/- ON THE BASIS OF N.P. RATE DECLARED FOR T HE YEAR. WE FIND EVEN THE A.O. IN THE ASSESSMENT ORDER MENTIONED THA T THE SUM OF `. 3,64,186/- WAS TO BE ADDED TO THE TOTAL INCOME BUT IN THE COMPUTATION OF THE INCOME, HE ADDED `. 10,28,018/- WITHOUT GIVING ANY BASIS. NEITHER ANY DEFECT WAS POINTED OUT IN THE BOOKS OF ACCOUNTS NOR HAVE ANY INCRIMINATING MATERIALS BEEN FOUND AT THE TIME OF T HE SEARCH. THEREFORE, WE AGREE WITH THE FINDING OF THE CIT(A) THAT THERE WAS NO BASIS FOR ANY ADDITION. HOWEVER, SINCE THE ASSESSEE HIMSELF HAD A GREED FOR ADDITION OF `. 3,64,186/-, THE ADDITION HAD BEEN RIGHTLY UPHELD TO THAT EXTENT. WE SEE NO INFIRMITY IN THE ORDER OF THE CIT(A) AND THE SAM E IS, THEREFORE, UPHELD. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON THIS 12 TH DAY OF SEPTEMBER, 2012. SD/- SD/- ( D. MANMOHAN ) ( RAJENDRA SINGH ) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DT: 12.09.2012 ITA NO : 8153/MUM/2010 SHRI ANIL R. CHORDIA 4 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI