Shri Ashokkumar B.Modi, Surat V. The Addl.CIT.,Circle-6, Surat

MA 236/AHD/2010

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 7109 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 31-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 28-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: RASESH SHAH
• Keywords: Unexplained investment

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD , . .!'#$, % & BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER 1.MA NO.236/AHD/2010 (ARISING OUT OF ITA NO.1060/AH D/2008) 2.MA NO.237/AHD/2010 (ARISING OUT OF ITA NO.1061/AH D/2008) ( ' ( ' ( ' ( ' ( / / / / ASSESSMENT YEAR : 2004-05) 1. SHRI ASHOKUMAR B.MODI 97-98, GIDC PANDESARA, SURAT PAN : ABPPM 9008A 2. SHRI ASHISH MODI (HUF) PROP.NAKODA TEXTILES 2, GIDC PANDESARA SURAT PAN : AAEHA 0462Q ' ' ' ' / VS. 1. ADDL.CIT RANGE-6 SURAT 2. ADDL.CIT RANGE-6 SURAT ( *+ / // / APPELLANTS ) .. ( ,-*+ / RESPONDENTS ) *+ . / APPELLANTS BY : SHRI RASESH SHAH ,-*+ / . / RESPONDENT BY : SHRI O.P.BATHEJA, SR. D.R. '0 / 1% / / / / DATE OF HEARING : 23/09/2011 2'( / 1% / DATE OF PRONOUNCEMENT : 31.10.2011 3 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : BOTH THESE MISCELLANEOUS APPLICATIONS HAVE IDENTI CAL FACTS BEING DECIDED BY THE TRIBUNAL VIDE ORDERS IDENTICALLY DAT ED 24/09/2010. BOTH THE APPLICANTS ARE IN THE BUSINESS OF PROCESSING OF MAN-MADE FABRICS. IN MA NO.236 & 237/AHD/2010 (OUT OF ITA NOS.1060 & 1061/AHD/2008 RESPECTIVELY) ASST.YEARS 2004-05 - 2 - THE CASE OF BOTH THE APPLICANTS, THE ASSESSMENT WAS MADE U/S.143(3) OF THE I.T.ACT, 1961 ON THE SAME DATE ON 01/12/2006 FO R ASSESSMENT YEAR 2004-05. 2. THROUGH RESPECTIVE MISCELLANEOUS PETITIONS DATED 15/10/2010 THE MAIN GRIEVANCE OF THE APPLICANTS IS THAT ONE OF THE GROUND BEFORE THE TRIBUNAL WAS IN RESPECT OF ESTIMATED GROSS PROFIT A DDITION, HOWEVER, THAT GROUND WAS NOT DECIDED THEREFORE A MISTAKE WAS COMM ITTED. 2.1. IN THE CASE OF SHRI ASHOKKUMAR B.MODI; RELEVAN T PORTION OF THE MISCELLANEOUS PETITION IS REPRODUCED BELOW:- 2. THE GROUND WAS DISMISSED BY CONCURRING THE WRO NG FINDING GIVEN BY CIT(A) THAT LD. ASSESSING OFFICER DID NOT MAKE ANY ADDITION ON ACCOUNT OF G.P. @ 13.38% BUT HAS ONLY M ADE ADDITION ON ACCOUNT OF UNACCOUNTED STOCK FOUND DURING THE C OURSE OF SURVEY. 3. THE ABOVE FINDING MADE BY CIT(A) IS CONTRARY TO FACTS ON RECORD IN AS MUCH AS ADDITION WAS IN FACT MADE @ 13 .38% BY ESTIMATING G.P. BY ASSESSING OFFICER AS PER HIS OBS ERVATIONS MADE AT PARA NO.10.10 AND 10.11 OF ASSESSMENT ORDER. 4. IN THE COURSE OF HEARING OF THE APPEAL, THE ATT ENTION OF HONOURABLE TRIBUNAL WAS DRAWN AT ABOVE MENTIONED PA RAS WHERE OBSERVATION FOR THE G.P. ADDITION WAS MADE. ASSESS EE ALSO FILED WRITTEN SUBMISSION BEFORE HONOURABLE BENCH WHERE TH E MENTION ABOUT THE G.P. ADDITION MADE BY ASSESSING OFFICER W AS DESCRIBED AT PARA NO.4. MOREOVER, ASSESSEE ALSO FILED WORKIN G OF ADDITION OF RS.17,82,565/- ALONG WITH THIS WRITTEN SUBMISSION. MA NO.236 & 237/AHD/2010 (OUT OF ITA NOS.1060 & 1061/AHD/2008 RESPECTIVELY) ASST.YEARS 2004-05 - 3 - 2.2. IN THE CASE OF SHRI ASHISH MODI (HUF); RELEVAN T PORTION OF THE MISCELLANEOUS PETITION IS REPRODUCED BELOW:- 2. THE GROUND WAS DISMISSED BY CONCURRING THE WRON G FINDING GIVEN BY CIT(A) THAT LD. ASSESSING OFFICER DID NOT MAKE ANY ADDITION ON ACCOUNT OF G.P. @ 13.62% BUT HAS ONLY M ADE ADDITION ON ACCOUNT OF UNACCOUNTED STOCK FOUND DURING THE C OURSE OF SURVEY. 3. THE ABOVE FINDING MADE BY CIT(A) IS CONTRARY T O FACTS ON RECORD IN AS MUCH AS ADDITION WAS IN FACT MADE @ 13 .62% BY ESTIMATING G.P. BY ASSESSING OFFICER AS PER HIS OBS ERVATIONS MADE AT PARA NO.10.10 AND 10.11 OF ASSESSMENT ORDER. 4. IN THE COURSE OF HEARING OF THE APPEAL, THE AT TENTION OF HONOURABLE TRIBUNAL WAS DRAWN AT ABOVE MENTIONED PA RAS WHERE OBSERVATION FOR THE G.P. ADDITION WAS MADE. ASSESS EE ALSO FILED WRITTEN SUBMISSION BEFORE HONOURABLE BENCH, WHERE T HE MENTION ABOUT THE G.P. ADDITION MADE BY ASSESSING OFFICER W AS DESCRIBED AT PARA NO.4. MOREOVER, ASSESSEE ALSO FILED WORKIN G OF ADDITION OF RS.19,76,001/- ALONG WITH THIS WRITTEN SUBMISSION. 3. WE HAVE HEARD BOTH THE SIDES. ON PERUSAL OF RE CORD AS WELL AS ON CAREFUL READING OF THE ORDERS REFERRED, WE ARE OF T HE VIEW THAT THE MISTAKE AS POINTED OUT BY THE APPLICANTS ARE APPARE NT FROM FACE OF RECORDS. TO ARRIVE AT THIS CONCLUSION, WE HAVE OBSERVED AS FOLLOWS:- A) THAT, THE TRIBUNAL VIDE IMPUGNED ORDER DATED 24/ 09/2010 HAS QUOTED A PORTION FROM THE ORDER OF THE LD.CIT(A ) THAT THE ASSESSING OFFICER HAD NOT MADE THE ADDITION ON ACCO UNT OF ESTIMATION OF GROSS PROFIT AT 13.38% [IN THE CASE O F SHRI MA NO.236 & 237/AHD/2010 (OUT OF ITA NOS.1060 & 1061/AHD/2008 RESPECTIVELY) ASST.YEARS 2004-05 - 4 - ASHOKKUMAR B.MODI] AND AT 13.62% [IN THE CASE OF A SHISH MODI (HUF)], BUT THE ADDITION WAS MADE ON ACCOUNT O F UNEXPLAINED INVESTMENT IN THE STOCK FOUND DURING SU RVEY. GUIDED BY THE SAID OBSERVATION OF THE LD.CIT(A), TH E TRIBUNAL HAS ALSO HELD AS UNDER:- 7.BEFORE US THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS NOT DISPUTED THE ABOVE FINDING OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND COULD NOT SHOW THAT ANY ADDITION WAS MADE IN TH E ASSESSMENT BY ESTIMATING GROSS PROFIT RATE AT THE RATE 13.38% FOR THE PRE SURVEY PERIOD. IN THE ABOVE CIRCUMSTANCES, WE DO NOT FIND ANY MERIT IN THIS ARGUMENT OF THE ASSESSEE. WE THEREFORE, DO NOT FIN D ANY MERIT IN THIS APPEAL OF THE ASSESSEE AND THEREF ORE, THE SAME IS DISMISSED. (B) THAT, THE OBSERVATION OF THE TRIBUNAL IS PRIMA-FACIE WRONG BECAUSE AS PER GROUNDS OF APPEAL VIDE GROUND NO.3 A SPECIFIC GROUND ON GROSS PROFIT ADDITION WAS CHALLENGED; FOR READY REF ERENCE, REPRODUCED BELOW:- 3. THE ABOVE FINDING MADE BY CIT(A) IS CONTRARY T O FACTS ON RECORD IN AS MUCH AS ADDITION WAS IN FACT MADE @ 13.38% [IN THE CASE OF SHRI ASHOKKUMAR B.MODI] AND @ 13.62% [IN THE CASE OF ASHISH MODI (HUF)] BY ESTIMATING G.P. BY ASSESSING OFFICER AS PER HIS OBSERVATIONS MADE AT PARA NO.10.10 AND 10.1 1 OF ASSESSMENT ORDER. MA NO.236 & 237/AHD/2010 (OUT OF ITA NOS.1060 & 1061/AHD/2008 RESPECTIVELY) ASST.YEARS 2004-05 - 5 - 4. FROM THE ORDER OF THE ASSESSING OFFICER VIDE PAR A 10.10, IT IS CLEAR THAT AN ADDITION OF RS.10,80,570/- (IN THE CASE OF SHRI ASHOKKUMAR B.MODI) WAS MADE BY ADOPTING GROSS PROFIT RATE AT 1 3.38%; RELEVANT PARAGRAPH REPRODUCED BELOW:- 10.10. AS REGARDS ACTUAL PROFIT OF THE BUSINESS CL AIMED TO BE REFLECTED ON THE BASIS OF RECORDS CONSTRUCTED AFTER SURVEY, IT IS RELEVANT TO MENTION THAT PROFIT HAS BEEN SUPPRESSED TO THE SUBSTANTIAL EXTENT. HENCE, IT IS IN THE FITNESS OF THE THINGS TO ASCERTAIN THE ACTUAL PROFIT OF SUCH NORMAL BUSINESS OF THE ASSESSEE. IN FINANCIAL YEAR 2002-03 G.P. RATIO OF THE ASSESSE E WAS AT THE RATE OF 13.38%. HENCE IN THIS YEAR IT CANNOT BE LE SS THAN THIS THAT TOO IN THE EVENT OF INCOMPLETENESS AND INCORRECTNES S OF BOOKS OF ACCOUNTS. IN SUCH CIRCUMSTANCES ASSESSEES OWN REC ORD MAY BE CONCLUSIVE EVIDENCE OR PARALLEL CASES MAY ALSO BE O F EQUAL IMPORTANCE. IN SUCH BUSINESS, PROFIT CANNOT BE BEL OW 13%. THEREFORE TAKING THE ASSESSEES OWN EVIDENCE INTO C ONSIDERATION, G.P. ON TOTAL TURNOVER OF THIS YEAR OF RS.8072126/- AT THE RATE OF 13.38% IS ASCERTAINED AT RS.10,80,570/- IS TO BE CO NSIDERED IN COMPUTATION OF INCOME. LIKEWISE, IN THE CASE OF ASHISH MODI HUF, FROM THE ORDER OF THE ASSESSING OFFICER VIDE PARA 10.10, IT IS CLEAR THAT AN ADDITION OF RS.11,07,692/- WAS MADE BY ADOPTING GROSS PROFIT R ATE AT 13.62% AS IN THE CASE OF SHRI ASHOKKUMAR B.MODI. MA NO.236 & 237/AHD/2010 (OUT OF ITA NOS.1060 & 1061/AHD/2008 RESPECTIVELY) ASST.YEARS 2004-05 - 6 - (C) THIS FACT WAS BROUGHT TO THE NOTICE OF THE BE NCH VIDE ANNEXURE TO THE WRITTEN SUBMISSION; RELEVANT PORTIO N REPRODUCED BELOW:- WORKING OF NET PROFIT TAKEN BY ASSESSING OFFICER. GROSS PROFIT @ 13.38% ON SALES OF RS.80,72,126 10,80,570 LESS: EXPENSES ALLOWED AS AGAINST CLAIMED OF RS.7,45,394 7,38,010 NET PROFIT (A) 3,42,560 WORKING OF NET PROFIT DISCLOSED BY ASSESSEE (WITHOUT DISCLOSURE) NET PROFIT 25,44,995 LESS:DISCLOSURE 39,85,000 NET LOSS (B) (14,40,005) TOTAL ADDITIONS MADE BY ASSESSING OFFICER [(A)-(B) ] 17,82,565 5. IN THE LIGHT OF THE ABOVE OBSERVATIONS IT I S CLEAR THAT THIS PARTICULAR ASPECT WAS LEFT FOR ADJUDICATION HENCE FOR THIS LIM ITED PURPOSE WE HEREBY RECALL THE SAID ORDER OF THE TRIBUNAL AND THE REGIS TRY IS DIRECTED TO FIX THE HEARING AS PER LAW. 6. IN THE RESULT PETITIONS ARE HEREBY ALLOWED ON THE DIRECTED TERMS. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 31.10. 2011. SD/- SD/- ( A.K. GARODIA ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEM BER AHMEDABAD; DATED 31/ 10 /2011 MA NO.236 & 237/AHD/2010 (OUT OF ITA NOS.1060 & 1061/AHD/2008 RESPECTIVELY) ASST.YEARS 2004-05 - 7 - 41..', .'../ T.C. NAIR, SR. PS 3 / ,5 6 5( 3 / ,5 6 5( 3 / ,5 6 5( 3 / ,5 6 5(/ COPY OF THE ORDER FORWARDED TO : 1. *+ / THE APPELLANT 2. ,-*+ / THE RESPONDENT. 3. 7 / CONCERNED CIT 4. 7() / THE CIT(A)-IV, SURAT 5. 5:! ,' , , / DR, ITAT, AHMEDABAD 6. !$ ;0 / GUARD FILE. 3' 3' 3' 3' / BY ORDER, -5 , //TRUE COPY// < <<