VAMAN SHANKAR MARATHE PVT. LTD, V. DCIT CIR-E,

MA 3/MUM/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6694 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2004-2005
• Appeal Filed On: 03-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T T JACOB
• Assessee Lawyers: SUBODH RATNAPARKHI
• Keywords: Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER MA NO. 03/MUM/2011 (ASSESSMENT YEAR: 2004-05) M/S. VAMAN SHANKAR MARATHE P. LTD. DCIT, CIRCLE 3 ABHIVADAN, 1ST FLOOR INCOME TAX OFFICE, VARDAN SHIVAJI PATH, AMBEDKAR CHOWK VS. WAGALE ESTATE, THANE (W) THANE (W) PAN - AAACV 5507 E APPELLANT RESPONDENT APPELLANT BY: SHRI SUBODH RATNAPARKHI RESPONDENT BY: SHRI .T.T. JACOB O R D E R PER B. RAMAKOTAIAH, A.M. BY THIS MISCELLANEOUS APPLICATION ASSESSEE IS PRAYI NG FOR RECTIFICATION OF THE ORDER PASSED BY THE ITAT IN APPEAL NO. 7566/MUM /2007 DATED 28 TH JULY 2009. 2. THE PRAYER FOR RECTIFICATION IS AS UNDER: - (I) THE APPELLANT MOST HUMBLY PRAYS THAT THE ARGUME NT OF THE APPLET THAT THE ESTIMATED ADDITION TO GROSS PROFIT AMOUNTING TO RS.17,98,448/- IS NOT WARRANTED (GROUND NO. 1B) AS THE SAID AMOUNT IS A PART OF THE SURVEY DECLARATION OF RS.25 ,02,894/- AND IS INCLUDED IN THE TOTAL INCOME OF THE APPELLAN T AS PER RETURN FILED U/S 139(1), THEREBY CURING THE DEFECT THAT OR IGINALLY EXISTED IN THE BOOKS OF ACCOUNTS (ARGUMENT APPEARING AT PAR A NO. 5/PAGE NO. 3 OF THE APPEAL ORDER) HAS REMAINED TO B E ADDRESSED BY YOUR HONOURS. (II) THE INFERENCE APPEARING AT PARA 6/PG. NO. 3 OF THE APPEAL ORDER THAT INCREASE IN LABOUR CHARGES RECEIPTS BY MORE TH AN RS.21,00,000/- (28.09-9.04 LAKHS) WOULD RESULT IN I NCREASE IN 2 PROFIT OF THE APPELLANT TO THAT EXTENT IS NOT ACCUR ATE. APART FROM THE ARITHMETICAL ERROR, THE APPELLANT SUBMITS THAT FOR EARNING THE LABOUR CHARGES HE IS ALSO REQUIRED TO BEAR EXPENDIT URE ON LABOUR CHARGES (TERMED AS MAKING CHARGES AND REPORTED UN DER THE HEAD MANUFACTURING EXPENSES) AND HENCE THE ENTIRE LABOUR CHARGES RECEIVED CANNOT BE CONSIDERED AS PROFIT OF THE APPELLANT. (III) THE APPELLANT MOST HUMBLY PRAYS THAT THE ORDE R DT. 28.07.09 BE KINDLY RECALLED AND THE ARGUMENTS OF THE APPELLANT ON THE ABOVE GROUND BE CONSIDERED FOR WHICH YOUR APPELLANT SHALL REMAIN EVER GRATEFUL. 3. THE LEARNED COUNSEL REITERATED THE FACTS AND SUBMIT TED THAT THE ARGUMENT THAT ADDITION OF ` 25.02 LAKHS IN THE P & L ACCOUNT AS FURTHER ADDITION IN G.P. CONFIRMED BY THE ITAT WILL RESULT IN DOUBLE ADDITION AND THIS ASPECT OF THE ARGUMENT WAS NOT CONSIDERED BY THE IT AT IN THE ORDER. THEREFORE THE ASSESSEE PRAYS FOR CONSIDERING THE AB OVE AND GIVE JUSTICE. ASSESSEE RELIED ON THE PRINCIPLES ESTABLISHED BY TH E HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF LAXMI ELECTRONIC CORPORATION L TD. VS. CIT 188 ITR 398 AND FURTHER THE JUDGEMENT OF THE HON'BLE SUPREME CO URT IN 305 ITR 325 TO SUBMIT THAT THE GROUND WHICH IS NOT DEALT WITH CAN BE CONSIDERED AS A MISTAKE APPARENT FROM RECORD. 4. THE LEARNED D.R., HOWEVER, SUBMITTED THAT THE ARGUM ENT HAS BEEN CONSIDERED BY THE ITAT AND A DETAILED ORDER WAS PAS SED. THEREFORE ANY MODIFICATION WOULD RESULT IN REVIEW BUT NOT RECTIFI CATION. 5. WE HAVE CONSIDERED THE ISSUE. THE ORDER PASSED BY T HE ITAT VIDE PARA 6 IS AS UNDER: - 6. WE HAVE CONSIDERED THE ISSUE. AS SEEN FROM THE P&L ACCOUNT THE ASSESSEE HAD DECLARED A TOTAL SALE OF RS.2,30,30,45 7/- AGAINST RS.1,74,81,479/- OF EARLIER YEAR. DURING THE YEAR L ABOUR CHARGES WERE RECEIVED TO THE TUNE OF RS.28,09,313/- AS AGAINST R S.9,04,512/-. THE OTHER INCOME DECLARED IS RS.26,62,347/- AS AGAINST RS.3,74,972/- OF EARLIER YEAR. THIS INCLUDES THE DISCLOSURE OF INCOM E MADE DURING THE SURVEY. BY SHOWING HIGHER SALES AND ALSO BY SHOWING LABOUR CHARGES RECEIVED AND ALSO OTHER INCOME INCLUDING THE DECLAR ED AMOUNT THE ASSESSEES PROFIT WAS ARRIVED AT RS.27,54,343/-. TH IS SEEMS TO BE MORE 3 THAN THE PROFIT DISCLOSED IN EARLIER YEAR. HOWEVER, IF ONE WERE TO EXCLUDE RS.25.02 LAKHS DISCLOSED IN THE YEAR THE NE T PROFIT WILL BE ABOUT RS.2.5 LAKHS. CONSIDERING THIS PROFIT IN THE LIGHT OF INCREASE IN LABOUR CHARGES RECEIVED OF MORE THAN RS.21 LAKHS (RS 28.09 -9.04 LAKHS) AND REDUCTION OF FINANCIAL EXPENSES FROM RS.16.62 LAKHS TO RS.7.30 LAKHS INDICATE THAT THERE WAS LOSS OF MORE THAN RS.28 LAK HS IN THE SALE OF GOLD JEWELLERY WHICH CANNOT BE ACCEPTED AS A GENUINE ONE . THERE IS NO REDUCTION IN SALE PRICE OF GOLD DURING THE YEAR AND AS SUBMITTED IN THE PAPER BOOK SALE PRICES ARE INCREASING YEAR AFTER YE AR. CONSEQUENTLY THE ASSESSEES JUSTIFICATION OF LESS GP CANNOT BE ACCEP TED CONSIDERING THAT THERE IS INCREASE OF ABOUT RS.21 LAKHS IN THE LABOU R CHARGES RECEIVED, THE REDUCTION OF RS. 9.32 LAKHS (RS.16.61 RS.7.30 LAKHS) IN THE FINANCIAL EXPENSES. JUXTAPOSING THESE TWO AMOUNTS V IS--VIS BOOKS RESULTS THE OBVIOUS FINDING IS THAT THE ASSESSEE HA S INCURRED LOSS IN ITS TRADING/MANUFACTURING ACCOUNT OF PURCHASE AND SALE OF GOLD JEWELLERY. CONSEQUENTLY THE ASSESSEES CONTENTION THAT THIS GP IS BECAUSE OF INCREASE IN SALES OR LESS MARGIN CANNOT BE ACCEPTED . THE FACT THAT DURING THE COURSE OF SURVEY IN THE FINANCIAL YEAR T HE ASSESSEE HAD DISCLOSED UNACCOUNTED SALES AS WELL EXCESS STOCK OF GOLD JEWELLERY AND SILVER INDICATES THAT THE BOOKS RESULTS ARE NOT REL IABLE AND IT DOES NOT REFLECT THE TRUE AND FAIR AFFAIRS OF THE COMPANY. I N VIEW OF THIS, WE UPHOLD THE ACTION OF THE AO IN ESTIMATING THE GP. C OMING TO THE RATE OF GP ALSO, AS STATED BY THE A.O., THE GP RATE IN EARL IER YEARS WAS 16.69% IN A.Y. 2003-04, 18.98% IN A.Y. 2002-03 AND 19.67% IN 2001-02. THE A.O. HAD ADOPTED A REASONABLE AMOUNT OF 17% IN THIS YEAR. WE CONSIDER THAT THE GP ESTIMATED IS REASONABLE AND ACCORDINGLY THE ORDERS OF THE A.O. AND THE CIT (A) ON THIS ISSUE ARE UPHELD. GROU ND REJECTED. 6. AS CAN BE SEEN FROM THE ABOVE, WHILE CONFIRMING THE G.P. THE ITAT TOOK INTO CONSIDERATION THE FACT OF ADDITION OF ` 25.02 LAKHS OFFERED BY THE ASSESSEE AS OTHER SOURCES OF INCOME IN THE P & L AC COUNT AND EXCLUDED THIS AMOUNT. THERE WAS A REDUCTION IN THE G.P. WHICH WAS NOT PROPERLY EXPLAINED. ADOPTION OF G.P. WAS CONSIDERED GENUINE BASED ON VARIOUS FACTORS. SINCE THE ARGUMENT OF THE ASSESSEE THAT IT WOULD RESULT IN DOUBLE ADDITION WAS CONSIDERED IN A DIFFERENT WAY BY EXCLU DING THE ADDITIONAL AMOUNT OFFERED AND EXAMINING THE ACTUAL G.P, THE AP PLICATION MADE BY THE ASSESSEE PRESENTLY IS NOT FOR RECTIFICATION OF THE ORDER BUT REVIEW OF THE ORDER. THE PRINCIPLES ESTABLISHED IN THE ABOVE TWO JUDGEME NTS RELIED UPON BY THE ASSESSEE ARE GIVEN IN DIFFERENT CONTEXT AND THE FAC TS ARE NOT APPLICABLE. THE ITAT HAS NO POWER TO REVIEW ITS OWN ORDER AS CONSID ERED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RAMESH ELE CTRIC AND TRADING CO. 203 ITR 497. THEREFORE, WE ARE OF THE OPINION THAT THERE IS NO MERIT IN 4 ASSESSEES APPLICATION MADE IN THE GUISE OF RECTIFI CATION APPLICATION UNDER SECTION 254(2). 7. IN THE RESULT, MISCELLANEOUS APPLICATION IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE 2011. SD/- SD/- (R.S. PADVEKAR) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 30 TH JUNE 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 1, THANE 4. THE CIT II, THANE 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.