The DCIT, Central Circle-2, Surat V. Smt. Sarita Ashok Daga, Surat

ITSSA 13/AHD/2013

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9251 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-06-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 03-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHUPENDRAKUMAR
• Keywords: Additional evidence

Judgement Text

, , , , B, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ # ## #. .. .% %% % . .. .&'( &'( &'( &'(, , , , %) * %) * %) * %) * % ' % ' % ' % ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND A. K. GARODIA, ACCOUNTANT MEMBER) IT(SS)A NOS.13, 14 AND 15/AHD/2013 WITH CO NOS.46, 47 AND 48/AHD/2013 [ASSTT.YEAR : 2008-2009, 2009-2010 AND 2010-2011] DCIT, CENT.CIR.2 SURAT. /VS. SARITA ASHOK DAGA 5B, RATNA SHYAM APT., GHOD DOD ROAD. PAN : AGXPD 7932 K ( (( (,- ,- ,- ,- / APPELLANT) ( (( (./,- ./,- ./,- ./,- / RESPONDENT) * 0 1 %/ REVENUE BY : SHRI BHUPENDRAKUMAR, CIT-DR 34 0 1 %/ ASSESSEE BY : MS.URVASHI SHODHAN 5 0 46)/ DATE OF HEARING : 26 TH JUNE, 2013 7&8 0 46)/ DATE OF PRONOUNCEMENT : 05-07-2013 %9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THESE THREE APPEALS BY THE REVENUE AND THREE CROSS-OBJECTIONS BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2008-2009 TO 2010-2011 ARE DIRECTED AGAINST T HE ORDERS OF THE CIT(A)-II, AHMEDABAD. THESE ARE BEING DISPOSED WIT H THIS CONSOLIDATED ORDER. IT(SS)A NOS.13, 14 AND 15/AHD/2013 2. THE IDENTICAL GROUND NO.1 OF THE REVENUES APPEA LS IS AS UNDER: IT(SS)A NOS.13, 14 AND 15/AHD/2013 WITH CO NOS.46, 47 AND 48/AHD/2013 -2- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN ADMITTING ADDITIONAL EVIDENCES WHILE CALCULATING THE SUPPRESS ED INCOME, WITHOUT GIVING THE AO AN OPPORTUNITY TO OFFER HIS C OMMENTS, IN CONTRAVENTION OF PROVISIONS OF RULE 46A OF THE I.T. RULES. 3. THE LEARNED DR HAS RELIED ON THE ORDER OF THE AO . THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS NO VIOLATION OF RULE 46A OF THE I.T.RULES IN THIS CASE. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FI ND THAT NO VIOLATION OF THE PROVISION OF RULE 46A COULD BE SHOWN BY THE REVENUE, AND ACCORDINGLY, THE GROUND NO.1 OF THE APPEAL OF THE R EVENUE IS DISMISSED. 4. THE IDENTICAL GROUND NO.2 OF THE APPEAL OF THE R EVENUE IS AS UNDER: 2. THE LD.CIT(A) ERRED IN APPLYING THE GROSS PROFI T RATIO OF 28.44% TO SUPPRESSED JOB WORK RECEIPTS BY RELYING O N THE NEW EVIDENCES FURNISHED BY THE ASSESSEE AND WITHOUT PRO PERLY APPRECIATING FACTS OF THE CASE, BECAUSE THE TRIAL B ALANCE SEIZED FROM THE ASSESSEE DURING THE COURSE OF SEARCH SHOWE D GP RATIO OF ASSESSEE AT 38.77% 5. THE LEARNED DR REFERRED TO RELEVANT PORTIONS OF THE ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE. HE SU BMITTED THAT ONCE A SUPPRESSED JOB CHARGES ARE FOUND BY THE DEPARTMENT, THE GP RATIO AS PER THE TRIAL BALANCE SHEET SEIZED FROM THE ASSESSEE AT 38.77% SHOULD HAVE BEEN APPLIED TO THE TOTAL SUPPRESSED JOB CHARGES FO R ALL THREE ASSESSMENT YEARS IN APPEAL BEFORE THE TRIBUNAL. HE REFERRED TO THE RELEVANT PORTIONS OF THE ORDERS OF THE CIT(A) AND SUBMITTED THAT THE CIT (A) HAS NOT GIVEN ANY VALID REASON FOR REDUCING THE GP RATE ON THE SUPPRE SSED JOB CHARGES BELOW 38.77%. HE RELIED ON THE ORDER OF THE AO. THE LE ARNED COUNSEL FOR THE ASSESSEE HAS OPPOSED THE SUBMISSIONS OF THE LEARNED DR. SHE SUBMITTED THAT THE CIT(A) HAS PASSED A WELL REASONED SPEAKING ORDER ON THIS ISSUE AND THE ENTIRE SUPPRESSED JOB CHARGES COULD NOT BE ADDED AS INCOME IN THE IT(SS)A NOS.13, 14 AND 15/AHD/2013 WITH CO NOS.46, 47 AND 48/AHD/2013 -3- HANDS OF THE ASSESSEE. SHE SUBMITTED THAT THE CIT( A) WAS JUSTIFIED IN APPLYING THE GP RATE DECLARED BY THE ASSESSEE ON AC COUNTED JOB WORK ON THE FIGURE OF SUPPRESSED JOB WORK ALSO. SHE SUBMI TTED THAT IF THE ENTIRE AMOUNT OF ESTIMATED SUPPRESSED JOB CHARGES IS TREAT ED AS INCOME, IT WILL RESULT IN ABNORMALLY HIGHER PERCENTAGE OF GP AT 61. 27% FOR A.Y.2010- 2001 AND 42% FOR A.Y.2009-2010. SHE HAS RELIED ON THE ORDER OF THE CIT(A). SHE ALSO RELIED ON THE DECISION OF THE ITA T, AHMEDABAD IN ITO VS. M/S.SWASTIK ENGINEERING STORES, ITA NO.1907/AHD /2007 ORDER DATED 15 TH JULY, 2011, AND THE DECISIONS OF THE HONBLE JURIS DICTIONAL HIGH COURT IN COMMISSIONER OF INCOME-TAX VS PRESIDENT IN DUSTRIES, 258 ITR 654 AND COMMISSIONER OF INCOME-TAX VS GURUBACHHAN S INGH J. JUNEJA, 302 ITR 63, IN SUPPORT OF SUBMISSIONS. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE CIT(A) HAS PASSED A WELL CONSIDERED SPEAKING ORDER ON THE ISSUE. WE FIND T HAT THE CIT(A) HAS APPLIED THE GP RATE AS DECLARED BY THE ASSESSEE ON ACCOUNTED JOB WORK ON THE FIGURE OF SUPPRESSED JOB CHARGES FOR ALL THREE YEARS IN APPEAL BEFORE US. WE FIND THAT IN FACT THIS GP RATE APPLIED BY T HE CIT(A) ON THE SUPPRESSED JOB CHARGES AMOUNTS TO APPLYING OF NET P ROFIT RATE AS NO FURTHER DEDUCTION OF EXPENDITURE WAS ALLOWED TO THE ASSESSEE. THERE SEEMS TO BE NO JUSTIFICATION FOR APPLYING THE GP RA TE OF 38.77% ON THE FIGURE OF SUPPRESSED JOB CHARGES, AS CANVASSED ON B EHALF OF THE REVENUE. THE REVENUE COULD NOT SHOW THAT HOW THE GP RATE OF 38.77% HAS BEEN ARRIVED AT AND HOW THE SAME IS APPLICABLE TO THE SU PPRESSED JOB CHARGES OF THE ASSESSEE. IF THE ENTIRE SUPPRESSED JOB WORK RE CEIPT IS CONSIDERED AS SUPPRESSED INCOME OF THE ASSESSEE, IT WILL RESULT I N ABNORMALLY HIGH PERCENTAGE OF GP, WHICH WILL GIVE UNREALISTIC HIGHE R FIGURE OF INCOME TO THE ASSESSEE. WE FIND THAT THE ENTIRE JOB CHARGES COULD NOT BE SUBJECTED TO IT(SS)A NOS.13, 14 AND 15/AHD/2013 WITH CO NOS.46, 47 AND 48/AHD/2013 -4- THE TAX, AS ALL THE DIRECT EXPENDITURE, WHICH ARE E SSENTIAL PART FOR EARNING GROSS JOB RECEIPTS CHARGES HAVE TO BE ALLOWED TO TH E ASSESSEE TO ARRIVE AT A REALISTIC AND REASONABLE FIGURE OF PROFIT ON THE SU PPRESSED JOB CHARGES RECEIVED BY THE ASSESSEE. THE CASE LAW CITED BY TH E LEARNED COUNSEL FOR THE ASSESSEE SUPPORTS THE CASE OF THE ASSESSEE. IN THESE FACTS OF THE CASE, WE HOLD THAT THERE IS NO INFIRMITY IN THE ORDER OF THE CIT(A) IN PARTLY ALLOWING THE GROUND OF THE APPEAL OF THE ASSESSEE, AND ESTIMATING THE GP RATE ON THE SUPPRESSED JOB CHARGES AT GP DECLARED O N ACCOUNTED JOB WORK BY THE ASSESSEE. ACCORDINGLY, THE ORDER OF THE CIT (A) ON THIS ISSUE IS CONFIRMED AND THE GROUND NO.2 OF THE REVENUE IS DIS MISSED. 7. THE IDENTICAL GROUND NO.3 OF THE APPEAL OF THE R EVENUE IS AS UNDER: 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING ADDITION OF RS.52,378/- OUT OF TOTAL ADDITION OF RS .73,1294/- FOR A.Y.2008-2009, ADDITION OF RS.7,90,215/- OUT OF TOT AL ADDITION OF RS.11,12,040/- FOR A.Y.2009-2010 AND ADDITION OF RS .15,02,018/- OUT OF TOTAL ADDITION OF RS.20,70,036/- FOR A.Y.201 0-2011 8. WE HAVE HEARD THE PARTIES. WE FIND THAT THIS GR OUND OF THE APPEAL OF THE REVENUE IS COVERED BY THE GROUND NO.2 OF THE REVENUE IN ALL THESE THREE APPEALS, AND ACCORDINGLY, NEEDS NO SEPARATE A DJUDICATION. CO NOS.46, 47 AND 48/AHD/2013 (ASSESSEES CO) 9. THE LEARNED COUNSEL FOR THE ASSESSEE, AT THE OUT SET, SUBMITTED THAT THE GROUNDS IN THE COS. OF THE ASSESSEE FOR THE ASS ESSMENT YEAR 2008- 2009 TO 2010-2011 ARE MERELY SUPPORTIVE THE ORDER O F THE CIT(A), AND ACCORDINGLY NEEDS NO SEPARATE ADJUDICATION. THE LE ARNED DR SUPPORTED THE CONTENTIONS OF THE LEARNED COUNSEL OF THE ASSES SEE. WE HAVE CONSIDERED RIVAL SUBMISSIONS. IN VIEW OF THE SUBMI SSIONS OF THE PARTIES, AND THE CO BEING MERELY SUPPORTIVE TO THE ORDER OF THE CIT(A), WE HOLD IT(SS)A NOS.13, 14 AND 15/AHD/2013 WITH CO NOS.46, 47 AND 48/AHD/2013 -5- THAT IT NEEDS NO SEPARATE ADJUDICATION, AND ACCORDI NGLY THE CO OF THE ASSESSEE FOR ALL THREE YEARS ARE DISMISSED. 10. IN THE RESULT, THE THREE APPEALS OF THE REVENUE AND THREE COS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( # ## #. .. .% %% % . .. .&'( &'( &'( &'( /A.K. GARODIA) %) * /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT VK* C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD