M/s. Industrial Machinery Associates, Ahmedabad V. The Income tax Officer,Ward-10(1), Ahmedabad

ITA 964/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 9018 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 03-02-2010
• Assessment Year: 1990-1991
• Appeal Filed On: 05-03-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. N. PAHUJA, AM) ITA NO.964/AHD/2007 A. Y.: 1990-91 M/S. INDUSTRIAL MACHINERY ASSOCIATES, C/O. PHARMALAB ENGG. (I) PVT. LTD., PLOT NO.6A &7, SANTEZ VADSRA ROAD, VILLAGE : SANTEJ, AHMEDABAD PA NO. AABFI 2019L VS THE INCOME TAX OFFICER, WARD 10 (1), AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY SHRI S. N. DIVETIA, AR RESPONDENT BY SHRI SANJEEV KASHYAP, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-XVI, AHMEDABAD DATE D 21-12-2006 FOR ASSESSMENT YEAR 1990-91. 2. THE ASSESSEE IN GROUNDS OF APPEAL RAISED 4 GROUN DS OF APPEAL. THE LEARNED COUNSEL FOR THE ASSESSEE HOWEVER, SUBMITTED THAT HE WOULD NOT BE PRESSING ALL THE 4 GROUNDS OF APPEAL AND HENCE A LL THE 4 GROUNDS OF APPEAL OF THE ASSESSEE ARE BEING DISMISSED BEING AS NOT PRESSED. 3. THE ASSESSEE HOWEVER, MOVED APPLICATION FOR ADMI SSION OF ADDITIONAL GROUNDS CHALLENGING REJECTION OF BOOK RE SULTS AS WELL AS ADDITION OF RS.7,36,216/- ON ACCOUNT OF LOW GROSS P ROFIT. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ABOVE ISSUE IS CONSIDERED BY THE LEARNED CIT(A) AND CONFI RMED THE ADDITION. ITA NO.964/AHD/2007 INDUSTRIAL MACHINERY ASSOCIATES 2 HOWEVER, DUE TO OVERSIGHT AND INADVERTENT MISTAKE O F THE ASSESSEE, THE SAME GROUND COULD NOT BE RAISED IN THE ORIGINAL GRO UNDS OF APPEAL. HE HAS SUBMITTED THAT SINCE THE SAME ISSUE IS ARISING OUT OF THE IMPUGNED ORDER, THEREFORE, THE SAME MAY BE ADMITTED FOR THE PURPOSE OF HEARING. 5. THE LEARNED DR HAS NOT OBJECTED FOR ADMISSION OF THE ABOVE ADDITIONAL GROUNDS OF APPEAL. 6. CONSIDERING THE ABOVE FACTS AND SUBMISSION OF TH E PARTIES AND THAT THE ADDITIONAL GROUNDS ARISE OUT OF THE ORDER OF TH E LEARNED CIT(A), WE ARE OF THE VIEW THAT THE ABOVE ADDITIONAL GROUNDS SHOUL D BE ADMITTED FOR THE PURPOSE OF HEARING TO DO SUBSTANTIAL JUSTICE TO THE PARTIES. WE ACCORDINGLY ADMIT THE ADDITIONAL GROUNDS OF APPEAL. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT HE WOULD NOT BE PRESSING THE GROUND FOR REJECTION OF BOOK RESULT S. HOWEVER, HE HAS SUBMITTED THAT THE ASSESSEE IS ENGAGED IN MANUFACTU RE OF PHARMACEUTICAL EQUIPMENTS WHICH IS A TAILOR MADE IT EM MANUFACTURED AS PER THE SPECIFIC REQUIREMENT OF THE PARTIES. SINCE THE WORK INVOLVES FABRICATION, CALCULATION OF YIELD ON SUCH TYPE OF W ORK IS NOT POSSIBLE. HE HAS SUBMITTED THAT THE TURNOVER OF THE ASSESSEE HAS INCREASED AS COMPARED TO EARLIER YEARS SUBSTANTIALLY AND THAT TH E GROSS PROFIT RATE OF THE ASSESSEE HAS FALLEN DOWN AS COMPARED TO EARLIER YEARS. THEREFORE, REASONABLE GROSS PROFIT RATE MAY BE ESTIMATED. HE H AS FILED A CHART SHOWING SALES AND GROSS PROFIT RATE IN THE ASSESSME NT YEAR IN QUESTION AND THE EARLIER YEARS WHICH ARE SUPPORTED BY THE AS SESSMENT ORDERS FILED FOR SEVERAL YEARS TO SHOW THAT THE HISTORY OF THE A SSESSEE SHOWS THAT GROSS PROFIT RATE OF 30% APPLIED BY THE LEARNED CIT (A) IS EXCESSIVE AND UNREASONABLE. 8. ON THE OTHER HAND, THE LEARNED DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE H AS NOT PRODUCED ITA NO.964/AHD/2007 INDUSTRIAL MACHINERY ASSOCIATES 3 SUFFICIENT EVIDENCE BEFORE THE AUTHORITIES BELOW DE SPITE DIRECTION OF THE TRIBUNAL. THEREFORE, THE APPEAL OF THE ASSESSEE MAY BE DISMISSED. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. THE AO MENTIONED THAT THE ASSES SEE COULD NOT PRODUCE ANY EVIDENCE BEFORE HIM WHICH WAS PRODUCED BEFORE THE LEARNED CIT(A) IN THE FIRST ROUND OF APPEAL. THE ASSESSEE S UBMITTED BEFORE THE AO THAT THE ASSESSEE IS NOT ABLE TO LAY HIS HANDS ON T HE JOB CARDS AFTER THE LAPSE OF ABOUT 15 YEARS. THE DAY TO DAY QUANTITY RE CORDS ARE NOT AVAILABLE. THE ASSESSEE ACCORDINGLY HAD SHOWN ITS I NABILITY TO PRODUCE BOOKS OF ACCOUNTS, JOB CARD CHARGES AND REGISTER OF DAY TO DAY CONSUMPTION OF RAW MATERIALS. THE DISCREPANCIES NOT ED BY THE AO WERE ALSO NOT EXPLAINED. THE ABOVE FACTS, THEREFORE, SHO W THAT REJECTION OF BOOK RESULTS IS JUSTIFIED IN THE MATTER. THE LEARNED COU NSEL FOR THE ASSESSEE ALSO DID NOT DISPUTE THE ABOVE FINDINGS OF FACTS RE CORDED BY THE AUTHORITIES BELOW. THE LEARNED CIT(A) CONSIDERING T HE HISTORY OF THE ASSESSEE THAT IN THE ASSESSMENT YEAR 1988-89 IT HAD SHOWN GROSS PROFIT RATE OF 30% AND IN THE ASSESSMENT YEAR 1989-90 THE GROSS PROFIT RATE WAS 23.97% NOTED THAT GROSS PROFIT RATE HAD GONE DOWN I N THE ASSESSMENT YEAR UNDER APPEAL TO 22.46%. THE ASSESSEE HAS FAILE D TO EXPLAIN THE FALL IN GROSS PROFIT RATE. THE LEARNED CIT(A) ACCORDINGL Y CONFIRMED THE APPLICATION OF GROSS PROFIT RATE OF 30% AND REJECTE D THE APPEAL OF THE ASSESSEE. 10. THE LEARNED COUNSEL FOR THE ASSESSEE HAS HOWEVE R, FILED A CHART SHOWING SALES AND GROSS PROFIT FOR THE ASSESSMENT Y EAR IN QUESTION AND EARLIER YEARS WHICH IS REPRODUCED BELOW: PARTICULARS AY 1988-89 AY 1987-88 AY 1989-90 AY 1990-91 SALES 59,18,000 57,74,000 70,08,044 97,69,918 G.P. RATE 30.10% 24.75% 26.49% 22.46% ITA NO.964/AHD/2007 INDUSTRIAL MACHINERY ASSOCIATES 4 11. CONSIDERING THE HISTORY OF THE ASSESSEE AS NOTE D ABOVE AND THAT TURNOVER OF THE ASSESSEE HAS INCREASED AS COMPARED TO THE EARLIER YEAR AND THAT NATURE OF THE BUSINESS OF THE ASSESSEE IS SAME, WE ARE OF THE VIEW THAT APPLICATION OF GROSS PROFIT RATE OF 30% I S EXCESSIVE IN THE MATTER. WE ACCORDINGLY MODIFY THE ORDERS OF THE AUT HORITIES AND DIRECT THE AO TO ADOPT GROSS PROFIT RATE OF 26% AS AGAINST 30% AND MAKE NECESSARY ADDITION IN THE MATTER. ACCORDINGLY, WE R ESTRICT THE APPLICATION OF GROSS PROFIT RATE TO 26% AS AGAINST 30% APPLIED BY THE AUTHORITIES BELOW. AS A RESULT, ADDITIONAL GROUND OF THE ASSESS EE IS PARTLY ALLOWED. 12. AS A RESULT, APPEAL OF THE ASSESSEE IS PARTLY A LLOWED. ORDER PRONOUNCED ON 05 -02-2010 SD/- SD/- (A. N. PAHUJA) ACOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 05-02-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD