M/s Selection House, V. I.T.O.,

ITA 98/RAN/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72662 (ITAT-RANCHI)
• Duration Of Justice: 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 11-11-2013
• Court: TRIBUNAL
• Department Lawyers: CHOUDHARY ORAM JCITLD
• Assessee Lawyers: M K CHOUDHARY LD
• Section: 133A

Judgement Text

INCOME TAX APPELLATE TRIBUNAL, CIRCUIT BENCH, RANCHI BEFORE HON'BLE SHRI H.L. KARWA, PRESIDENT , AND HON'BLE SHRI B.R. BASKARAN, ACCOUNTANT M EMBER ITA NO . 98 /RAN/201 3 A.Y 200 7 - 08 M/S. SELECTION HOUSE, D HANBAD VS. I.T.O , RANGE II(2), DHANBAD PAN: AATFS 3477N ( APPELLANT ) ( RESPONDENT ) FOR THE APPELLANT :SH RI M .K. CHOUDHARY, ADVOCATE, LD.AR FOR THE RESPONDENT : SHRI CHOUDHARY ORAM, JCIT/LD.DR DATE OF HEARING : 2 8 - 11 - 2014 DATE OF PRONOUNCEMENT: 2 8 - 11 - 201 4 O R D E R SHRI B.R. BASKARAN, ACCOUNTANT MEMBER : THIS APPEAL F ILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 06 - 08 - 2013 PASSED BY LD. CIT(A) , DHANABAD (JHARKHAND) AND IT RELATES TO THE ASSESSMENT YEAR 200 7 - 0 8 . 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LD. CIT(A) IN CONFIRMING THE FOLLOWING ISSUES : - A. ADDITION O N ACCOUNT OF GROSS PROFIT AND ON UNACCOUNTED SALES OF B. DISALLOWANCE OF REMUNERATION PAID TO THE PARTNERS OF RS. 72,000/ - . 3. THE FACTS RELATING TO THE SAID ISSUES ARE STATED IN BRIEF. THE ASSESSEE IS A PARTNERSHIP FIRM. IT IS ENGAGED IN THE BUSINESS OF READYMADE GARMENTS . THE DEPARTMENT CARRIED OUT A SURVEY OPERATION U/S. 133A OF THE ACT . DURING THE COURSE OF SURVE Y THE STOCK WAS INVENTORISED / VALUED AT RS. 15,16,634/ - THE ASSESSING OFFICER PREPARED A TRADING ACCOUNT UPTO THE DATE OF SURVEY BY ADOPTING THE GROSS PROFIT @ 25. 5% . THE ASSESSING OFFICER TOOK THE VALUE OF CLOSING STOCK AT RS. 21,18,437/ - . HE WORKED OUT THE CROSS PRICE OF PHYSICAL STOCK 2 ITA NO .98/RAN/13 - M/S. SELECTION HOU SE AS FOUND AT THE TIME OF SURVEY AT RS. 13,82,192/ - ACCORDINGLY, HE ASSESSED THE DIFFERENCE AMOUNT OF RS. 7,36,241 (RS. 13,82,192 RS. 21,18,437) BETWEEN THE VALUE OF BOOK STOCK AND THE CROSS PRICE OF PHYSICAL STOCK AS I TS INCOME . THE ASSESSE HAS PAID REMUNERATION TO ITS PARTNERS AT RS. 96,000/ - P.A THE ASSESSING OFFICER NOTICED THAT THE REMUNERATION IS PAYABLE TO ITS PARTNERS AS PER THE PARTNERSHIP DEED EXECUTED/ CONSTITUTED ON 01.04.1992 RS. 12,000/ - P.A FOR ITS TWO P ARTNERS. ACCORDINGLY, THE TOTAL REMUNERATION PAYABLE TO THE PARTNERS WAS RS. 24,000/ - P.A . HENCE, THE ASSESSING OFFICER DISALLOWED THE DIFFERENCE AMOUNT OF RS.72,000/ - (RS. 96,000 RS. 24,000) BY OBSERVING THAT THE SAME WAS NOT AUTHORIZED BY THE SAID PARTNERS HIP DEED. 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) HELD THAT THE SHORTAGE OF STOCK SHOULD BE CONSIDERED THE SALES MADE OUTSIDE THE BOOKS OF ACCOUNT. HE NOTICED THAT THE ASSESSING OFFICER ADDED BOTH ON ACCOUNT OF UNACCOUNTED SALES ON GROSS PRO FIT AND ON UNACCOUNTED SALES. SINCE THE ASSESSING OFFICER HAS ALREADY ASSESSED THE GROSS PROFIT ON UNACCOUNTED SALES, THE LD. CIT(A) HELD THAT THERE IS NO NECESSITY OF ASSESSING THE SHORTAGE OF STOCK. ACCORDINGLY, HE DELETED THE ADDITION OF RS. 7,36,24 1 / - PERTAINED TO SHORTAGE OF STOCK . 5. WITH REGARD TO THE ADDITION ON PARTNERS REMUNERATION , THE LD.CIT(A) CONFIRMED THE DISALLOWANCE. 6 . WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WITH REGARD TO THE ADDITION ON GROSS PROFIT SUSTAINED BY THE LD.CIT(A), THE LD.AR POINTED OUT THAT THE ASSESSING OFFICER HAS WORKED THE GROSS PROFIT BY ADOPTING THE GROSS PROFIT RATE @ 25.5% . THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER IN SO FAR AS NOTICED THAT THE GROSS PROFIT RATE WAS AT 25.5 % ON SAREES , ,DUPTATAS AND OTHER ITEMS AND @ 175.5% ON POPLEYNE , BLOUSE ETC. ACCORDINGLY, HE SUBMITTED THAT THE GROSS PROFIT RATE @ 25.5% IS ON HIGHER SIDE. WE HEARD THE LD.DR . W E FIND MERIT IN THE SUBMISSION OF THE LD.AR . SINCE THE ASSESSING OFFICER HIMSELF H AS NOTED DOWN THAT 3 ITA NO .98/RAN/13 - M/S. SELECTION HOU SE THE GROSS PROFIT RATE IS FOR DIFFERENT KINDS OF MATERIALS , I N OUR VIEW THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN A DOPTING THE GROSS PROFIT RATE @ 2 5 .5% IN RESPECT OF SAREES , SHAWLS, DU PTATAS & OTHER ITEMS S O ETC. OF THE ENTIRE AMO UNT OF STOCK SHORTAGE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO WORK OUT THE GROSS PROFIT ON SALES OF SAREES, SHAWLS, DUPTATAS & OTHER ITEMS SO ETC. AT AVERAGE RATE OF 20% AND ASSESS THE SAME ACCORDINGLY. IN OUR VIEW, TH IS WOULD BE ENDS OF JUST ICE. ACCORDINGLY, THE ORDER OF THE LD. CIT(A) ON THIS ISSUE STANDS MODIFIED. THIS ISSUE IS PARTLY ALLOWED. 7. THE NEXT ISSUE RELAT ING TO THE DISALLOWANCE ON ACCOUNT OF PAYMENT OF PARTNERS REMUNERATION , THE LD.AR SUBMITTED THAT THE ASSESSEE FIRM HAS AMEND ED THE PARTNERSHIP DEED BY ENHANCING THE REMUNERATION PAYMENT MADE TO THE PARTNERS . T HE TAX AUTHORITIES HAS FAILED TO CONSIDER THE ABOVE SAID DEED. ACCORDINGLY, T HE LD. AR PRAYED BEFORE US THAT THE MATTER MAY BE SET ASIDE TO THE FILE OF ASSESSING OFFIC ER FOR EXAMINATION TH IS ISSU E AFRESH BY DULY CONSIDERING THE AMENDMENT MADE IN THE PARTNERSHIP DEED . WE FIND MERIT IN THE SUBMISSION OF THE LD.AR . APPARENTLY, THE TAX AUTHORITIES HAS NOT CONSIDERED THE AMEND ED DEED . HENCE, WE SET ASIDE THE ORDER OF THE LD.CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THIS ISSUE AFRESH BY DULY CONSIDERING THE AMENDMENT OF THE DEED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED ACCORDINGLY ON 2 8 - 11 - 2014 SD/ - SD/ - [ H.L. KARWA ] [ B.R. BASKARAN ] PRESIDENT ACCOUNTANT MEMBER DT. 2 8 - 11 - 2014 4 ITA NO .98/RAN/13 - M/S. SELECTION HOU SE PLACE : RANCHI PP, SR. PS COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT : M/S. SELECTION HOUSE, DHANBAD 2 THE RESPONDENT: THE I.T.O , R II (2), DHANBAD 3. .THE CIT, 4.THE CIT(A), 5.DR, ITAT CIRCUIT BENCH, RANCHI 6. GUARD FILE. TRUE COPY, BY ORDER, ASST T. REGISTRAR 5 ITA NO .98/RAN/13 - M/S. SELECTION HOU SE 1. DATE OF DICTATION ............. 2 8 - 11 - 2014 ....................... 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ........................OTHER MEMBER ...... - 11 - 2014 ........................ 3 . DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. ..................... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.................................. 2 7 - 11 - 2014 ......................................... .......... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S ................ 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK ....................................... 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .......................... ............... 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................................................................................................. 9. DATE OF DESPATCH OF THE ORDER .................... ..........................................