M/s. Sigma Ceramics,, Sabarkantha v. The Income Tax Officer, Sabarkantha Ward-3,, Sabarkantha

ITA 2421/AHD/2013 | 2005-2006
Pronouncement Date: 30-09-2016 | Result: Partly Allowed

Appeal Details

RSA Number 242120514 RSA 2013
Assessee PAN AAHFS7098F
Bench Ahmedabad
Appeal Number ITA 2421/AHD/2013
Duration Of Justice 2 year(s) 11 month(s) 21 day(s)
Appellant M/s. Sigma Ceramics,, Sabarkantha
Respondent The Income Tax Officer, Sabarkantha Ward-3,, Sabarkantha
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 30-09-2016
Assessment Year 2005-2006
Appeal Filed On 09-10-2013
Judgment Text
I.T.A. NO . 2 4 2 1 /AHD/201 3 A SSESSMENT Y EAR: 200 5 - 06 PA GE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC AHMEDABAD [CORAM: PRAMOD KUMAR AM] I.T.A. NO. 24 2 1 /AHD/ 20 1 3 ASSESSMENT Y EAR : 200 5 - 06 SI GMA CERAMICS ................... . APPELLANT B/H. POLYTECHNIC COLLEGE N.H. NO.8 AT & P.O. HADIYOL TA. HIMATNAGR. [ PAN: A AHFS 7098 F ] VS. INCOME TAX OFFICER SABARKANTHA WARD - 3 HIMATNAGAR. . ...... . ... . RESPONDENT APPEARANCES BY: TUSHAR P. HEMANI FOR THE APPELLANT O.P. MEENA FOR THE RESPONDENT D ATE OF CONCLUDIN G THE HEARING : 19 .0 7 .2016 DATE OF PRONOUNCING THE ORDER : 30 . 0 9 .2016 O R D E R 1. THIS APPEAL IS TIME BARRED BY FOUR DAYS B UT T HE ASSESSEE HAS MOVED A CONDONATION PETITION. H A VING PERUSED THE S A ID PETITION AND HAVING HEARD RI V AL C ONTENTIONS ON THE S A ME I AM INCLINED TO CONDONE THE DELAY WHICH IS S TATED TO BE DUE TO LAPSES ON THE PART OF THE ACCOUNTANT EMPLOYED BY THE ASSESSEE. ACCORDINGLY DELAY IS CONDONED A ND I PROCEED TO TAKE UP THE MATT E R ON MERITS. BY W A Y OF THIS APPEAL TH E ASSESSEE CALLS INTO QUES T ION CORRECTNESS OF THE ORDER DATED 30 TH J ULY 201 3 PASSED BY THE LEANED CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF T HE INCOME TAX ACT 1961 FOR THE ASSESSMENT YEAR 200 5 - 06 . I.T.A. NO . 2 4 2 1 /AHD/201 3 A SSESSMENT Y EAR: 200 5 - 06 PA GE 2 OF 4 2. GRIEVANCE S RAISED BY THE ASSESSEE ARE AS FOLLOWS : - 1. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN DISMISSING THE APPELLANT'S GROUND OF APPEAL CHALLENGING THE VALIDITY OF THE NOTICE ISSUED U/S. 148 OF THE ACT AS REGARDS RE - OPENING THE ASSESSMENT. O N THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE NOTICE ISSUED U/S. 148 OF THE ACT AND THE CONSEQUENTIAL RE - ASSESSMENT PROCEEDINGS ARE INVALID. THE SAME BE HELD SO NOW. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ADDITION ON ACCOUNT OF CASH SALES/ON MONEY RECEIVED OF RS. 19 25 600 / - OUTSIDE BOOKS OF ACCOUNTS THROUGH THE BANK ACCOUNT OF SHRI BHANDARI IN HAND O F APPELLANT. NO SUCH CASH SALES/ ON MONEY RECEIVED BY THE APPELLANT AS ALLEGED OR FOR THE REASONS AS ALLEGED. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ADDITION OF G.P. @ 25% ON THE UNACCOUNTED SALES OF RS. 19 25 600 / - SO ESTIMATED IN THE HANDS OF THE APPELLANT. THE AP PELLANT HAS EARNED NO SUCH PROFIT. 4. ALTERNATIVELY AND WITHOUT PREJUDICE THE RATE OF NET PROFITS IS HIGHLY EXAGGERATED AND EXCESSIVE. 5. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDERS WITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHER ER RED IN GROSSLY IGNORING VARIOUS SUBMISSIONS EXPLANATIONS AND INFORMATION SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERED BEFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF THE LOWER AUTHORITIES IS IN CLEAR BREACH OF LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUASHED. 6. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE ID. AO IN LEVYING INTEREST U/S 234A/B/C OF THE ACT. 7. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE ID. AO IN INITIATING PENALTY U/S 271(L)(C) OF THE ACT. 3. WHEN THIS APPEAL WAS CALLED OUT FOR HEARING LEARNED COUNSEL FAIRLY SUBMITTED THAT IN THE EVENT OF HIS SUBMISSION THAT NP @ 5% IS AT BEST REQU IRED TO BE ADDED TO INCOME AS AGAINST GP @ 25% ADOPTED BY THE LEARNED CIT ( A ) IN RESPECT OF ALLEGED ON MONEY ON SALES HE DOES NOT WISH T O PURSUE OTHER GROUNDS OF APPEAL. I THEREFORE T AKE UP THIS ISSUE FIRST. I.T.A. NO . 2 4 2 1 /AHD/201 3 A SSESSMENT Y EAR: 200 5 - 06 PA GE 3 OF 4 4. LEARNED REPRESENTATIVES FAIRLY AGREED T HAT WHATEVER I DECIDE IN ITA NO.2420/AHD/2013 IN THE CASE OF S IGMA CERAMICS VS. IT O FOR A.Y. 2004 - 05 WHICH WAS HEARD ALONG WITH THIS APPEAL WILL APPLY MUTATIS MUTANDIS IN THIS APPEAL AS WELL. VIDE MY ORDER OF EVEN DATE I HAVE UPHELD THE AFORESAID PLEA O F THE ASSESSEE IN THE SAID CASE BY IN T ER ALIA OBSERVING AS FOLLOWS : - 4. ON THE BASIS OF SEARCH ACTION CARRIED OUT IN THE CASE OF A THIRD PARTY THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE WAS RECEIVING CERTAIN UNACCOUNTED MONEY IN RESPECT OF SALE S AMOUNTING TO RS. 22 60 270 / - . THIS AMOUNT WAS BROUGHT TO TAX AS SUPPRESSED S ALE IN THE HANDS OF THE ASSESSEE. WHEN MATTER WAS CARRIED IN APPEAL BEFORE THE LEARNED CIT ( A ) HE RESTRICTED THE ADDITION TO 25% BEING GP ON SUCH SALES BUT THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE ME. 5 . I HAVE HE A RD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLICABLE LEGAL POSITION. 6 . I FIND THAT THE ISSUE WHETHER THE AMOUNT OF INCOM E SHOULD BE ON THE BASIS OF GP RATE OR NP RA T E IS NOW COVERED BY SEVERAL BINDING JUDICIAL PRECEDENTS. ONCE IT IS NOT IN DISPUTE THAT ONLY INCOME ELEMENT OF SUCH SUPPRESSED SALES IS TO BE BROUGHT TO TAX AS IS THE POSITION IN THE LIGHT OF CIT ( A ) S ORDER NO T BEING CHALLENGED BY THE ASSESSING OFFICER ONLY NET PROFIT ELEMENT CAN BE BROUGHT TO TAX. AS TO THE QUESTION AS TO WHAT SHOULD BE THE AVERAGE NET PROFIT RATE TO BE ADOPTED FOR THIS PURPOSE I FIND THAT AS EVIDENT FROM CHART SET OUT IN PAGE NO. 16 OF CIT ( A ) S ORDER AN AVERAGE RATE OF 5% WILL BE REASONABLE AND JUSTIFIED. I THEREFORE UPHOLD THE PLEA OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO 5% OF SUPP RESSED SALES ON MONEY . THE ASSE SS EE GETS THE RELIEF ACCORDINGLY . 7. AS I HAVE UPHELD THE ABOVE PLEA OF THE ASSESSEE I SEE NO NEED TO DEAL WITH OTHER ISSUES AT THIS STAGE. 5. I SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY ME IN THE ABOVE CASE. RESPECTFULLY FOLLOWING THE SAME I DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO 5% OF THE SUPPRESSED SALES ON MONEY RECEIVED BY THE ASS E S S EE. ASSESSEE WILL GET THE RELIEF ACCORDINGLY. I.T.A. NO . 2 4 2 1 /AHD/201 3 A SSESSMENT Y EAR: 200 5 - 06 PA GE 4 OF 4 6. AS I HAVE UPHELD THE MAIN PLEA OF THE ASSESSEE I SEE NO REASONS TO DEAL WITH OTHER ISSUES RAISED IN THE APPEAL AT THIS STAGE. 7 . IN T HE RESULT APPEAL IS PARTL Y ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF SEPTEMBER 2016. SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: THE 30 TH DAY OF SEPTEMBER 2016. PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRI BUNAL AHMEDABAD BENCHES AHMEDABAD