DCIT, Coimbatore V. M/s. Devaraj & Others, CHENNAI

MA 31/CHNY/2012

• Counselvise Citation: [2013] 123 COUNSELVISE.COM (IT) 9964 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-03-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-03-2013
• Assessment Year: misc
• Appeal Filed On: 08-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAMASAMY K SR
• Assessee Lawyers: S SRIDHAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER M.P. NO.31(MDS)/2012 IN IT(SS)A NO.82(MDS)/2006 BLOCK PERIOD : 1-4-1986 TO 13-2-1996 THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE I, COIMBATORE. VS. M/S.DEVARAJ & OTHERS, 688, TRUNK ROAD, POONAMALLEE, CHENNAI-56. PAN AAAAD3810C. (PETITIONER) (RESPONDENT) PETITIONER BY : SHRI RAMASAMY K., SR .STANDING COUNSEL RESPONDENT BY : SHRI S.SRIDHAR, ADVOCATE DATE OF HEARING : 22 ND MARCH, 2013 DATE OF PRONOUNCEMENT : 26 TH MARCH, 2013 O R D E R PER DR.O.K.NARAYANAN, VICE PRESIDENT THIS MISCELLANEOUS PETITION IS IN THE NATURE OF A RECTIFICATION PETITION. IT IS FILED BY THE REVENUE . THE PETITION IS FILED IN THE CONTEXT OF THE ORDER PASSED BY THE TRI BUNAL ON 21 ST - - MP NO.31 OF 2012 2 SEPTEMBER, 2011, IN IT(SS)A NO.82(MDS)/2006. THE S AID APPEAL WAS FILED BY THE ASSESSEE-RESPONDENT. 2. THE RELEVANT TEXT FROM THE PETITION FILED BY TH E REVENUE IS EXTRACTED BELOW FOR A BETTER APPRECIATIO N OF THE MISTAKE POINTED OUT BY THE REVENUE:- THE HONBLE TRIBUNAL IN PARA 14 OF THEIR ORDER IN IT(SS)A NO.82(MDS)/2006 DATED 21-09-2011 IN THE CASE OF M/S.DEVARAJ & OTHERS VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-I, COIMBATORE FOR THE BLOCK PERIOD 1-4-1986 TO 13-2- 1996 DISPOSED OFF THE APPEAL WITH THE OBSERVATION THAT: WE MODIFY THE RATE OF PROFIT TO 5%. THIS MUCH REL IEF IS GRANTED IN THE PRESENT APPEAL. 2. IT IS RESPECTFULLY SUBMITTED THAT THE ABOVE DIRECTION IS BASED ON THE ERRONEOUS APPRECIATION THAT THE RATE OF PROFIT IN THE ASSESSMENT ORDER DAT ED 27-3-2006 WHICH WAS THE SUBJECT MATTER OF THE APPEAL WAS DETERMINED AT 8%. - - MP NO.31 OF 2012 3 3. IT IS RESPECTFULLY SUBMITTED THAT THE ASSESSING OFFICER IN THE ORDER DATED 27-3-2006 HAS NOT ADOPTED THE PROFIT RATE AT 8% AS ASSUMED BY THE HONBLE TRIBUNAL. ON THE OTHER HAND, THE ASSESSING OFFICER HAS ADOPTED VARYING RATES OF PROFIT AS DETAILED UNDER AND THE AVERAGE OF SUCH RATES DOES NOT WORK OUT TO 8%: SUPPLY OF UNIFORM CLOTH - 120% SUPPLY OF DHOTIS & SAREES 19.79% SUPPLY OF POLYESTER SAREES 15% SUPPLY OF SAREES & DHOTIES DIRECTLY TO SOCIETY 10 % SUPPLIES MADE OTHER THAN TO NTC -2.5% 3. WE HEARD SHRI K.RAMASAMY, THE LEARNED SENIOR STANDING COUNSEL APPEARING FOR THE REVENUE AND SHRI S.SRIDHAR, THE LEARNED COUNSEL APPEARING FOR THE RESPONDENT-AS SESSEE. 4. IN THE ORIGINAL ASSESSMENT ORDER, THE ASSESSING AUTHORITY HAD COMPUTED THE INCOME IN THE HANDS OF T HE ASSESSEE ON THE BASIS OF GROSS PROFIT WORKED OUT ON DIFFEREN T PERCENTAGES IN THE CASES OF DIFFERENT TURNOVERS REPORTED BY THE ASSESSEE. IN THE CASE OF SUPPLY OF UNIFORM CLOTH THE GROSS PROFI T RATE WAS - - MP NO.31 OF 2012 4 120%. IN THE CASE OF SUPPLY MADE OTHER THAN TO TNT C, THE GROSS PROFIT WAS ESTIMATED AT 2.5%. IN OTHER WORDS , THE ASSESSING OFFICER HAD ESTIMATED THE GROSS PROFIT AT DIFFERENT RATES AGAINST DIFFERENT CLASSES OF TURNOVER, DEPENDING UP ON THE NATURE OF THOSE GOODS DEALT IN BY THE ASSESSEE. THIS ORDE R WAS TAKEN BEFORE THE TRIBUNAL IN SECOND APPEAL AND THE TRIBUN AL HAD SENT IT BACK TO THE ASSESSING OFFICER FOR ESTIMATING THE IN COME AFRESH. IN THE SECOND ROUND OF ASSESSMENT, RATHER REMAND AS SESSMENT, THE ASSESSING OFFICER HAS ESTIMATED THE INCOME ON A DIFFERENT FOOTING. HE FOUND THAT THE SEVERAL GROSS PROFIT RA TES ADOPTED BY THE ASSESSING OFFICER IN THE FIRST ROUND OF ASSESSM ENT IN RESPECT OF DIFFERENT CLASSES OF TURNOVER WERE IN FACT ON TH E HIGHER SIDE. HE FOUND THAT IN THE ORIGINAL ASSESSMENT THE INCOME WAS DETERMINED AT ` 9,25,51,290/- ON THE BASIS OF THAT UNREASONABLE GROSS PROFIT RATES. INSTEAD OF REDUCING THE GROSS PROFIT RATES ITEM BY ITEM, IN THE SECOND ROUND OF REMAND ASSESSMENT, THE ASSESSING OFFICER REDUCED THE INCOME OF THE ASSESSE E ON A LUMP SUM BASIS. THE ASSESSING OFFICER HELD THAT THE INC OME OF THE ASSESSEE DETERMINED IN THE ORIGINAL ASSESSMENT MAY BE REDUCED BY ONE-THIRD OF THAT INCOME AND THE BALANCE INCOME ALONE BE - - MP NO.31 OF 2012 5 TREATED AS THE INCOME OF THE ASSESSEE. THE DEDUCTI ON OF ONE- THIRD GIVEN BY THE ASSESSING OFFICER WORKED OUT TO ` 3,08,50,430/-. THE BALANCE AMOUNT OF ` 6,17,00,860/- HAS BEEN DETERMINED BY THE ASSESSING OFFICER AS THE MOD IFIED INCOME OF THE ASSESSEE IN THE REMAND ASSESSMENT. I T IS THE ABOVE MODIFIED INCOME, WHICH WAS CONSIDERED BY THE TRIBUNAL IN THE ORDER IMPUGNED. IN THAT IMPUGNED ORDER OF THE TRIBUNAL IT WAS DIRECTED TO ESTIMATE THE INCOME OF THE ASSESSEE AT THE AVERAGE GROSS PROFIT RATE OF 5%. WHILE HOLDING SO, THE TRIBUNAL HAS RELIED ON AN ERRONEOUS PRESUMPTION THAT THE INC OME IN THE REMAND ASSESSMENT HAS BEEN DETERMINED BY THE ASSESS ING OFFICER BY APPLYING A GROSS PROFIT RATE OF 8%. THE FACT IS THAT IN THE REMAND ASSESSMENT NO GROSS PROFIT RATE AS SUCH WAS APPLIED. THE ASSESSING OFFICER HAS REDUCED THE ORI GINAL INCOME BY ONE-THIRD AND THE RELIEF WAS GIVEN IN A LUMP SUM MANNER. THIS CRUCIAL POINT WAS OVERLOOKED BY THE TRIBUNAL W HILE GIVING THE DIRECTION THAT THE INCOME MAY BE ESTIMATED ON THE B ASIS OF A FLAT RATE OF GROSS PROFIT AT 5%. 5. THEREFORE, WE ARE DUTY-BOUND TO RECTIFY THE MIS TAKE. THEREFORE, WE WITHDRAW OUR FINDING THAT THE INCOME OF THE - - MP NO.31 OF 2012 6 ASSESSEE BE DETERMINED ON THE BASIS OF THE GROSS PR OFIT RATE AT 5%. THIS DIRECTION IS, THEREFORE, RECALLED AND VAC ATED. 6. INSTEAD, WE ARE PROCEEDING TO DETERMINE THE ESTIMATED INCOME IN THE HANDS OF THE ASSESSEE ON TH E SAME LINE OF LUMP SUM RELIEF GRANTED BY THE ASSESSING OFFICER IN THE REMAND ASSESSMENT. THE INCOME DETERMINED IN THE OR IGINAL ASSESSMENT IS ` 9,25,51,290/-. IN THE REMAND ASSESSMENT THE ASSESSING OFFICER HAS MODIFIED THE SAID INCOME TO ` 6,17,00,860/-. HE HAS MADE A REDUCTION AT ONE-THI RD OF THE ORIGINAL INCOME. AT PAR WITH OUR FINDING REFLECTED IN THE IMPUGNED ORDER, WE MODIFY THE INCOME OF THE ASSESSEE AT 50% OF THE INCOME DETERMINED IN THE ORIGINAL ASSESSMENT. IN O THER WORDS, AS AGAINST THE RELIEF OF ONE-THIRD GIVEN BY THE ASS ESSING OFFICER IN THE REMAND ASSESSMENT ORDER, WE ARE GIVING A RELIEF OF HALF. ACCORDINGLY, THE INCOME SHALL BE DETERMINED AT 50% OF THE INCOME DETERMINED IN THE ORIGINAL ASSESSMENT. 7. WITH THIS MODIFICATION, OUR ORDER DATED 21-9-20 11 IS AMENDED WITH THE SAME RESULT THAT THE ASSESSEES AP PEAL IS PARTLY ALLOWED. - - MP NO.31 OF 2012 7 8. IN RESULT, THIS MISCELLANEOUS PETITION FILED BY THE REVENUE IS ALLOWED TO THE ABOVE EXTENT. ORDERS PRONOUNCED ON TUESDAY, THE 26 TH OF MARCH, 2013 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 26 TH MARCH, 2013. V.A.P. COPY TO: 1. PETITIONER 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GF.