M/s. Shri Shakti Tobacco Co.,, Anand v. The Income tax Officer, Ward-1,, Anand

ITA 1422/AHD/2008 | 2003-2004
Pronouncement Date: 03-02-2012 | Result: Partly Allowed

Appeal Details

RSA Number 142220514 RSA 2008
Bench Ahmedabad
Appeal Number ITA 1422/AHD/2008
Duration Of Justice 3 year(s) 9 month(s) 11 day(s)
Appellant M/s. Shri Shakti Tobacco Co.,, Anand
Respondent The Income tax Officer, Ward-1,, Anand
Appeal Type Income Tax Appeal
Pronouncement Date 03-02-2012
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 03-02-2012
Date Of Final Hearing 03-01-2012
Next Hearing Date 03-01-2012
Assessment Year 2003-2004
Appeal Filed On 22-04-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD D BENCH . .. . . .. . !! '#$ !! '#$ !! '#$ !! '#$ %& %& %& %& % %% %. .. .' '' ' . .. .() () () () '* + '* + '* + '* + ' $ ' $ ' $ ' $ BEFORE S/SHRI G.C. GUPTA VICE-PRESIDENT AND A. K. GARODIA ACCOUNTANT MEMBER) ITA NO.1422/AHD/2008 [ASSTT.YEAR : 2003-2004] M/S. SHRI SHAKTI TOBACCO CO. SARSA TAL. DIST. ANAND. ! /VS. ITO WARD-4 ANAND. ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) ! 12 3 4 '/ ASSESSEE BY : SHRI ASEEM THAKKER + 3 4 '/ REVENUE BY : SHRI B.L. YADAV !6 3 2*/ DATE OF HEARING : 3 RD JANUARY 2012 7(8 3 2*/ DATE OF PRONOUNCEMENT : 03-02-2012 '9 / O R D E R PER G.C. GUPTA VICE-PRESIDENT: THIS APPEAL OF THE ASSESSEE FOR A.Y.2003-2004 IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV BARODA. 2. THE GROUND NO.1 OF THE ASSESSEES APPEAL READS A S UNDER: 1 ) THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFI RMING DISALLOWANCE OF INTEREST RS.2 19 260/- U/S.36(1)(II I) ON ACCOUNT OF ADVANCES THOUGH THEY ARE FOR BUSINESS. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE DISALLOWANCE OF RS.2 19 260/- WAS MADE ON ACCOUNT O F DIFFERENCE IN RATE OF INTEREST AT 6% BETWEEN THE RATE OF INTEREST CHAR GED AND PAID BY THE ASSESSEE. HE SUBMITTED THAT IN ANY CASE THE DISAL LOWANCE COULD NOT BE MORE THAN RS.1 08 323/- SINCE IN THE PROFIT AND LOS S ACCOUNT OF THE ASSESSEE THE ASSESSEE HAS DEBITED THE AMOUNT OF RS .1 08 323/- AS INTEREST PAID. THE LEARNED DR HAS RELIED ON THE ORDERS OF T HE AO AND THE CIT(A). ITA NO.1422/AHD/2008 -2- 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE PE RUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THERE IS A DIFFERENCE BETWEEN THE RATE OF INTEREST CHARGED AND PAID BY THE ASSESSEE. THE ASSESSEE HAS ADVANCED SOME MONEY TO ITS SISTER CONCERN AT A LOWE R RATE OF INTEREST AND THERE APPEARS NO COMMERCIAL EXPEDIENCY TO ADVANCE S UCH LOAN. HOWEVER WE ARE INCLINED TO ACCEPT THE ALTERNATIVE PLEA OF T HE ASSESSEE THAT THE AMOUNT OF RS.1 08 323/- WAS DEBITED TO THE PROFIT A ND LOSS ACCOUNT FOR THE RELEVANT ACCOUNTING YEAR THE DISALLOWANCE COULD NO T BE MORE THAN THE AMOUNT OF RS.1 08 323/-. WE HAVE PERUSED THE COPY OF THE PROFIT AND LOSS ACCOUNT FILED IN THE COMPILATION BY THE ASSESSEE BE FORE US. THE ASSESSEE HAS DEBITED A SUM OF RS.1 08 323/- UNDER THE HEAD INTEREST PAID FOR THE YEAR. IN THESE FACTS WE HOLD THAT THE DISALLOWANC E HAS TO BE RESTRICTED TO THE AMOUNT OF INTEREST CLAIMED BY THE ASSESSEE IN I TS PROFIT AND LOSS ACCOUNT AND ACCORDINGLY DISALLOWANCE IS RESTRICTED TO RS.1 08 323/- AND THIS GROUND NO.1 OF THE ASSESSEES APPEAL IS PARTLY ALLOWED. 5. THE GROUND NO.2 OF THE ASSESSEES APPEAL READS A S UNDER: 2. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN CONF IRMING DISALLOWANCE OF CAR EXPENSES AND PETROL AND DIESEL IN PART RS.47 733/- BEING 1/8 TH OF RS.3 82 280/- 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE OPERATES IN A MOFUSSIL TOWN AND HAS TO GO TO INTERIOR PLACES. THEREFORE THE DISALLOWANCE RESTRICTED TO 1/8 TH OF THE EXPENSES BY THE CIT(A) IS ON THE HIGHER SIDE. THE LEARNED DR SUBMITTED THAT THE DISALLOWANCE RESTRICTED BY THE CIT(A) IS 1/8 TH OF THE CAR EXPENSES IS MOST REASONABLE. ITA NO.1422/AHD/2008 -3- 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE IMPUGNED ORDERS. THE FACT THAT THERE COULD BE PERSONAL USE OF THE VEHICLE COULD NOT BE CONTROVERTED ON BEHALF OF THE ASSESSEE. THE CIT (A) HAS PASSED A WELL REASONED ORDER ON THIS ISSUE AND WE FIND NO JUSTIFI CATION TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS ISSUE. ACCORDINGLY THE ORDER OF THE CIT(A) ON THIS ISSUE IS CONFIRMED AND GROUND NO.2 O F THE ASSESSEES APPEAL IS DISMISSED. 8. GROUND NO.3 OF THE ASSESSEES APPEAL READS AS UN DER: 1. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN CONF IRMING THE ADDITION OF RS.11 02 425/- UNEXPLAINED BUSINESS INC OME BEING DIFFERENCE IN STOCK. 9. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE AO HAS MADE THE ADDITION OF RS.11 02 425/- ON ACCOUNT OF D IFFERENCE IN STOCK IN ITS PROFIT AND LOSS ACCOUNT. HE SUBMITTED THAT THE AO HAS MADE GP ADDITION OF RS.4 36 830/- SEPARATELY ALTHOUGH THE ASSESSEE HAS DECLARED GP RATE OF 2.39% WHICH WAS QUITE REASONABLE. HE SU BMITTED THAT MERELY BECAUSE THE GP RATE IN THE IMMEDIATELY PRECEDING AS SESSMENT YEAR WAS 3.50% IT CANNOT BE SAID THAT THE ADDITION MADE BY THE AO WAS JUSTIFIED. THE LEARNED DR SUBMITTED THAT THE ASSESSEE COULD NO T EXPLAIN THE REASON FOR FALL IN ITS GP RATE FROM 3.5% IN A.Y.2002-2003 AND 3.60% IN A.Y.2001-02 TO 2.39% IN THE RELEVANT ASSESSMENT YEA R. HE SUBMITTED THAT THE ASSESSEE HAS NOT CHALLENGED THE REJECTION OF TH E BOOKS OF ACCOUNTS FOR VARIOUS DEFECTS POINTED OUT BY THE AO IN THE ASSESS MENT ORDER. HE RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 10. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE REJECTION OF BOOKS OF ACCOUNTS ITA NO.1422/AHD/2008 -4- BY THE AO HAS NOT BEEN DISPUTED BY THE ASSESSEE. W ITH REGARD TO THE APPLICATION OF FLAT RATE OF GP AT 3.5% BY THE AO W E FIND THAT IN THE IMMEDIATELY PRECEDING ASSTT.YEAR 2002-2003 THE ASS ESSEE HAS ITSELF DECLARED A GP RATE OF 3.50% AND THE ASSTT.YEAR 2001 -02 AT 3.60%. IN THE ABSENCE OF ANY COGENT REASON TO APPLY A LESSER RATE OF GP WE HOLD THAT THE REVENUE AUTHORITIES WERE JUSTIFIED IN APPLYING FLAT RATE OF GP AT 3.5% AS DECLARED BY THE ASSESSEE ITSELF IN THE IMMEDIATE LY PRECEDING ASSTT.YEAR 2002-2003 ON TURNOVER OF RS.3.76 CRORES. 11. WITH REGARD TO OTHER ISSUE OF ADDITION OF RS.11 02 425/- ON ACCOUNT OF DIFFERENCE IN STOCK WE FIND THAT THE ASSESSEE H AS FILED COPY OF ITS TRADING AND PROFIT & LOSS ACCOUNT AT PAGE NO.26 OF ITS COMPILATION FILED BEFORE THE TRIBUNAL. THE ASSESSEE HAS ADDED THE SU M OF RS.11 02 425/- AS UNDISCLOSED INCOME FOR THE RELEVANT ACCOUNTING YEAR ENDING ON 31-3-2003 UNDER THE HEAD SALES WHICH HAS RESULTED IN THE AD DITION TO THE INCOME OF THE ASSESSEE FOR THE RELEVANT PERIOD. THE AO HAS D EDUCTED A SUM OF RS.11 02 425/- OUT OF GP DECLARED BY THE ASSESSEE W HILE APPLYING THE AVERAGE RATE OF GP AT 3.5%. IN THESE FACTS WE HOL D THAT THERE WAS NO JUSTIFICATION WITH THE DEPARTMENT TO ADD THE SUM OF RS.11 02 425/- ONCE AGAIN AS THE ASSESSEE ITSELF HAS SURRENDERED THE AM OUNT OF RS.11 02 425/- AS ITS UNDISCLOSED INCOME IN ITS TRADING ACCOUNT AN D ITS NET PROFIT HAS BEEN DETERMINED AFTER CONSIDERING THE SAID SUM OF RS.11 02 425/- AS ITS INCOME. HOWEVER WE FIND THAT THE CIT(A) HAS DELET ED THE ADDITION OF RS.4 36 830/- MADE ON ACCOUNT OF LOW GP TO THE TRAD ING RESULT OF THE ASSESSEE FOR THE REASON THAT HIGHER AMOUNT OF RS.11 02 425/- HAS BEEN ADDED SEPARATELY BY THE AO. IN VIEW OF OUR DECISIO N DELETING THE ADDITION OF RS.11 02 425/- MADE BY THE AO AND ALSO IN VIEW O UR FINDING THAT ADDITION OF RS.4 36 830/- MADE TO THE TRADING RESUL TS OF THE ASSESSEE ON ITA NO.1422/AHD/2008 -5- ACCOUNT OF LOW GROSS PROFIT WAS JUSTIFIED WE HOLD THAT THE ADDITION OF RS.11 02 425/- BE RESTRICTED TO RS.4 36 830/- AND T HE GROUND NO.3 OF THE ASSESSEE IS PARTLY ALLOWED. 12. IN THE RESULT THE ASSESSEES APPEAL IS PARTLY ALLOWED. 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