ITO, New Delhi v. M/s. Transworld Textile Solution PVt. Ltd., New Delhi

ITA 297/DEL/2010 | 2006-2007
Pronouncement Date: 21-05-2010 | Result: Allowed

Appeal Details

RSA Number 29720114 RSA 2010
Assessee PAN AACCT1677P
Bench Delhi
Appeal Number ITA 297/DEL/2010
Duration Of Justice 4 month(s)
Appellant ITO, New Delhi
Respondent M/s. Transworld Textile Solution PVt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 21-05-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted H
Tribunal Order Date 21-05-2010
Date Of Final Hearing 13-05-2010
Next Hearing Date 13-05-2010
Assessment Year 2006-2007
Appeal Filed On 20-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H : NEW DELHI BEFORE SHRI RAJPAL YADAV AND SHRI K.D.RANJAN ITA NO. 297/DEL/2010 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER WARD 16(3) NEW DELHI. VS. M/S TRANSWORLD TEXTILE SOLUTIONS PVT. LTD. A-27 SOURTH EXTENSION-II NEW DELHI. PAN AACCT1677P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANISH GUPTA SR. D.R. RESPONDENT BY : NONE (WRITTEN SUBMISSIONS ) ORDER PER K.D.RANJAN AM: THIS APPEAL BY THE REVENUE ARISES OUT OF ORDER OF L D. CIT(A)-XIX NEW DELHI. 2. THE GROUNDS OF APPEAL ARE REPRODUCED AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E LD.CIT(A) HAS ERRED IN ACCEPTING GROSS PROFIT DECLARED BY THE ASS ESSEE AT RS.14 53 165/- WITHOUT ANY SUPPORTING DOCUMENTARY E VIDENCE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E LD.CIT(A) HAS ERRED IN DETERMINING THE INCOME OF THE ASSESSEE AT RS.9 31 637/- AS AGAINST THE INCOME DETERMINED BY THE ASSESSING OFFI CER AT RS.30 08 000/- BY TAKING 10% OF THE GROSS RECEIPTS AS TOTAL INCOME. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E LD. CIT(A) HAS ERRED IN ALLOWING CLAIM OF 50% OF THE EXPENSES WITH OUT VERIFYING THE EXPENSES ESPECIALLY WHEN THE ASSESSMENT WAS FRA MED U/S 144 2 ON ACCOUNT OF DEFAULT OF THE ASSESSEE IN FURNISHING THE DETAILS CALLED BY THE ASSESSING OFFICER. 3. WHEN THE CASE CAME UP FOR HEARING SHRI ADITYA N ARAYAN FILED WRITTEN SUBMISSIONS IN SUPPORT OF ORDER OF LD. CIT(A). THER EFORE THE APPEAL IS BEING DECIDED AFTER HEARING THE LD. D.R. AND WRITTE N SUBMISSIONS FILED BY THE ASSESSEE. 4. THE FIRST ISSUE FOR CONSIDERATION RELATES TO ACC EPTING GROSS PROFIT DECLARED BY THE ASSESSEE AT RS.14 53 165/-. FACTS O F THE CASE STATED IN BRIEF ARE THAT RETURN OF INCOME WAS FILED ON 25/11/2006 D ECLARING INCOME AT RS.3 22 744/-. THE ASSESSEE WAS TRADING IN TEXTILE FABRIC AND DRESSES. THE ASSESSING OFFICER ISSUED NOTICE U/S 143(2) AND 115W E(2) BUT THERE WAS NO RESPONSE FROM THE ASSESSEE. THE ASSESSING OFFICER COMPLETED ASSESSMENT U/S 144. WHILE COMPLETING THE ASSESSMENT U/S 144 T HE ASSESSING OFFICER NOTICED THAT TIME OF ONE YEAR AND GIVING OPPORTUNIT Y FOR MORE THAN THREE TIMES WOULD MEAN GIVING MORE THAN REASONABLE OPPORT UNITY. THE ASSESSEE CANNOT KEEP ON POSTPONING THE PROCEEDINGS TO THE FA G END OF THE LIMITATION PERIOD AND THEN YELL INJUSTICE AT THE LATER STAGE. THE ASSESSING OFFICER ESTIMATED NET PROFIT @ 10% OF TOTAL RECEIPT DETERMI NING INCOME AT RS.30 08 000/-. 5. ON APPEAL IT WAS SUBMITTED THAT ADJOURNMENT WAS SOUGHT ON 13/11/2008 FOR A PERIOD OF TWO WEEKS. THE ASSESSING OFFICER INSISTED ON EARLIER DISPOSAL OF THE CASE. THE ASSESSEE CO-OPERA TED AND SUBMITTED ALL THE DETAILS CALLED FOR BY THE ASSESSING OFFICER ON 20/1 1/2008. THE ASSESSING OFFICER RELIED ON THESE DETAILS BUT HAS PASSED ASSE SSMENT ORDER U/S 144 ON 19/11/2008. THE ASSESSING OFFICER ESTIMATED GROSS P ROFIT AT 10% AS AGAINST DECLARED BY THE ASSESSEE AT 4.845% WHICH RESULTED I N AN ADDITION OF 5.15%. 3 THE ASSESSEE FIRM HAD INCURRED ADMINISTRATIVE EXPEN SES OF RS.9 60 673/- WHICH INCLUDED RENT OF RS.5 72 475/- AND SALARY OF RS.2 94 000/-. THE OTHER SMALL EXPENSES WERE ALSO INCURRED. THE ASSESSEE HAD PAID THE BANK CHARGES AMOUNTING TO RS.2 14 624/-. THE TOTAL EXPENDITURE W AS AT RS.12 17 786.24. THEREFORE NO ADDITION ON ACCOUNT OF GROSS PROFIT R ATE COULD BE MADE. LD. CIT(A) CONSIDERED THE SUBMISSIONS MADE BY THE ASSES SEE. THE TURNOVER OF THE ASSESSEE WAS AT RS.3 08 00 000/- WHICH WAS ACCE PTED BY THE SALES TAX DEPARTMENT AND BY THE ASSESSING OFFICER. THE PURCHA SES COULD NOT BE DISBELIEVED BECAUSE MOST OF THE PURCHASES WERE BY W AY OF IMPORTS AND CUSTOMS DUTY WAS PAID. THE GROSS PROFIT WAS DECLARE D AT RS.14 53 165/-. LD. CIT(A) ON THE BASIS THAT PURCHASES WERE BY WAY OF I MPORTS AND CUSTOMS DUTY WAS PAID ACCEPTED THE GROSS PROFIT RATE ADMIT TED BY THE ASSESSEE AT RS.14 53 165/-. 6. THE NEXT ISSUE FOR CONSIDERATION RELATES TO DISA LLOWANCE OF 50% OF EXPENSES. BEFORE THE LD. CIT(A) IT WAS ACCEPTED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT IT COULD NOT FURNISH THE DETAILS OF THE EXPENDITURE ASKED FOR. THE LD. CIT(A) OBSERVED THAT AFTER GOING THROUGH TH E FACTS AND SUBMISSIONS OF LD. A.R. GROSS PROFIT OF RS. 14 53 165/- COULD N OT BE DISBELIEVED. THE LD. CIT(A) DISALLOWED 50% OF EXPENSES AS AGAINST THE TO TAL CLAIM OF RS.12 17 786/-. THE LD. CIT(A) THUS COMPUTED THE TO TAL INCOME AT RS.9 31 637/- (RS.3 22 734 + 6 08 893) AS AGAINST T HE INCOME DETERMINED BY THE ASSESSEE AT RS. 30 08 000/-. 7. BEFORE US THE LD. D.R. FURTHER SUBMITTED THAT T HERE IS NO JUSTIFICATION ON THE PART OF THE LD. CIT(A) TO DELETE THE ADDITIO N MADE ON ACCOUNT OF GROSS PROFIT. THE LD. SR. D.R. SUBMITTED THAT WHILE ACCE PTING THE CLAIM OF THE 4 ASSESSEE THE LD. CIT(A) HAD NOT COME TO A LOGICAL CONCLUSION AS TO WHY THE NET PROFIT RATE SHOULD NOT BE 10% OF THE TOTAL SALE S. HE HAS DISALLOWED 50% OF EXPENSES ON ESTIMATED BASIS ON THE GROUND THAT DETAILS OF EXPENSES INCURRED WERE NOT FILED. 8. ON THE OTHER HAND LD. A.R. OF THE ASSESSEE IN H IS WRITTEN SUBMISSIONS HAS SUBMITTED THAT ESTIMATION OF GROSS PROFIT MADE BY LD. CIT(A) IS CORRECT. IT HAS FURTHER BEEN SUBMITTED THAT THE EXPENDITURE AT RS. 12 17 786.34 WAS INCURRED ON ADMINISTRATIVE EXPENSES BUT THE LD. CIT (A) RESTRICTED THE ALLOWANCE OF THE EXPENDITURE TO THE EXTENT OF 50%. THE ASSESSEE HAS REQUESTED THAT 100% OF EXPENDITURE SHOULD BE ALLOWE D. 9. WE HAVE HEARD THE LD. D.R. AND GONE THROUGH THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE. IT IS A FACT THAT ASSESSEE H AD NOT CO-OPERATED WITH THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS ESTIMA TED NET PROFIT AT 10% AS AGAINST THE GROSS PROFIT RATE ADMITTED AT 4.85%. TH E LD. CIT(A) HAS ACCEPTED THE GROSS PROFIT ESTIMATED BY THE ASSESSEE MERELY O N THE GROUND THAT THE PURCHASES WERE MADE BY WAY OF IMPORTS AND CUSTOMS D UTIES WERE PAID THEREON. THE LD. CIT(A) HAS NOT COMMENTED ANYTHING ABOUT THE CLOSING STOCK AND THE SALE MADE BY THE ASSESSEE DURING THE YEAR. THE LD. CIT(A) HOWEVER INSTEAD OF CONFIRMING THE GROSS PROFIT RATE HAS DI SALLOWED 50% OF THE EXPENDITURE CLAIMED BY THE ASSESSEE AND THUS RETAIN ING THE ADDITION OF RS.6 08 894/-. NO JUSTIFICATION HAS BEEN GIVEN FOR DISALLOWANCE OF 50% OF EXPENDITURE. THE ASSESSEE IN HIS WRITTEN SUBMISSION S HAS SOUGHT FOR ALLOWANCE OF 100% OF THE EXPENDITURE. THE REQUEST O F THE ASSESSEE THAT 100% EXPENDITURE SHOULD BE ALLOWED CANNOT BE ACCEP TED ON THE GROUND THAT ASSESSEE IS NOT IN APPEAL AND THEREFORE NO RELIEF CAN BE PROVIDED AS REQUESTED BY THE ASSESSEE. HOWEVER SINCE THE ASSES SEE HAS NOT FILED THE 5 DETAILS BEFORE THE ASSESSING OFFICER AND THE LD. CI T(A) HAS RESTRICTED THE DISALLOWANCE OUT OF ADMINISTRATIVE EXPENSES AND DEL ETED THE ADDITION ON ACCOUNT OF GROSS PROFIT RATE UNDER THESE CIRCUMSTA NCES WE FEEL IT PROPER TO SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING O FFICER WITH THE DIRECTION TO EXAMINE THE CASE OF ASSESSEE AFRESH. THE ASSESSEE I S DIRECTED TO CO-OPERATE WITH THE ASSESSING OFFICER AND FILE NECESSARY DETAI LS IN RESPECT OF GROSS PROFIT ADDITION AS WELL AS ADMINISTRATIVE EXPENSES INCURRED BY IT. THE ASSESSING OFFICER WILL PROVIDE NECESSARY OPPORTUNIT Y TO THE ASSESSEE. WE ORDER ACCORDINGLY. 10. THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST MAY 2010. SD/- SD/- (RAJPAL YADAV) (K.D.RANJAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21.05.2010. PSP COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT DEPUTY REGISTRAR