The ACIT, Circle-6,, Surat v. M/s. Satya International,, Surat

ITA 2976/AHD/2009 | 2006-2007
Pronouncement Date: 08-01-2010 | Result: Dismissed

Appeal Details

RSA Number 297620514 RSA 2009
Assessee PAN AAOFS0992H
Bench Ahmedabad
Appeal Number ITA 2976/AHD/2009
Duration Of Justice 2 month(s) 1 day(s)
Appellant The ACIT, Circle-6,, Surat
Respondent M/s. Satya International,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 08-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 08-01-2010
Assessment Year 2006-2007
Appeal Filed On 06-11-2009
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' (BEFORE S/SHRI T K SHARMA AND N S SAINI) ITA NO.2976/AHD/2009 (ASSESSMENT YEAR:- 2006-07) THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-6 SURAT V/S M/S SATYA INTERNATIONAL PLOT NO.435 SAVALANI SILK MILL COMPOUND GID C INDUSTRIAL ESTATE PANDESARA SURAT PAN: AAOFS 0992 H [APPELLANT] [RESPONDENT] APPELLANT BY : - SMT. NEETA SHAH SR. DR RESPONDENT BY:- WRITTEN SUBMISSIONS O R D E R PER N S SAINI (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMIS SIONER OF INCOME-TAX (APPEALS) DATED 10-07-2009. 2 THE SOLE ISSUE RAISED IN THIS APPEAL BY THE REVEN UE IS THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ER RED IN DELETING THE ADDITION OF RS.7 15 067/- MADE BY THE LEARNED A SSESSING OFFICER ON ACCOUNT OF UNEXPLAINED EXPENDITURE. 3 THE BRIEF FACTS ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING MANUFACTURING AND EXPORT OF FABRICS. TH E BOOKS OF ACCOUNT OF THE ASSESSEE AND VOUCHERS WERE DESTROYED IN THE FLOOD AND THEREFORE THE SAME COULD NOT BE PRODUCED BEFO RE THE LEARNED ASSESSING OFFICER. THEREFORE THE LEARNED ASSESSING OFFICER MADE AN 2 ASSESSMENT OF THE INCOME OF THE ASSESSEE U/S 144 OF THE IT ACT 1961 AND DISALLOWED 5% OF THE TOTAL EXPENSES OF RS.1 43 01 331/- AND MADE AN ADDITION OF RS.7 15 067/- TO THE INCOME OF THE ASSESSEE. 4 ON AN APPEAL BY THE ASSESSEE THE LEARNED COMMISS IONER OF INCOME-TAX (APPEALS) DELETED THE ADDITION OBSERVING THAT THE TOTAL EXPENDITURE OF THE ASSESSEE DURING THE YEAR WAS 6.4 0% OF THE TOTAL SALES WHICH WAS 15.43% IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR AND THAT THE NET PROFIT SHOWN BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS 14.4% AS AGAINST 10% SHOWN IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. 5 THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTIN G THE ACTION OF THE LEARNED ASSESSING OFFICER ARGUED THAT IT IS THE ONUS OF THE ASSESSEE TO PROVE THE EXPENDITURE INCURRED BY P RODUCING THE VOUCHERS AND THE BOOKS OF ACCOUNT. IN ABSENCE OF SA ME THE LEARNED ASSESSING OFFICER WAS FULLY JUSTIFIED IN DISALLOWIN G 5% OF THE TOTAL EXPENSES CLAIMED BY THE ASSESSEE. THEREFORE THE LE ARNED COMMISSIONER OF INCOME-TAX (APPEALS) WAS NOT JUSTIF IED IN DELETING THE SAME. 6 THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS WHEREI N IT HAS BEEN STATED THAT THE BOOKS OF ACCOUNT WERE AUDITED U/S 4 4AB OF THE ACT AND NO ADVERSE COMMENTS HAVE BEEN MADE BY THE AUDIT ORS ON ITS ACCOUNTS. FURTHER THE NET PROFIT SHOWN IN THE YEAR OF 14.4% WAS HIGHER THAN THE NET PROFIT OF 10% SHOWN IN THE IMME DIATELY PRECEDING ASSESSMENT YEAR. THEREFORE THE LEARNED C OMMISSIONER OF INCOME-TAX (APPEALS) WAS FULLY JUSTIFIED IN DELETIN G THE DISALLOWANCE OF RS.7 15 067/- MADE BY THE LEARNED ASSESSING OFFI CER OUT OF THE EXPENDITURE CLAIMED BY THE ASSESSEE. 3 7 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS A VAILABLE ON RECORD. IN THE INSTANT CASE THE BOOKS OF ACCOUNT AND VOUCH ERS OF THE ASSESSEE WERE DESTROYED IN FLOOD AND THEREFORE THE SAME CO ULD NOT BE PRODUCED BY THE ASSESSEE BEFORE THE LEARNED ASSESSI NG OFFICER. THEREFORE THE LEARNED ASSESSING OFFICER DISALLOWED 5% OF THE TOTAL EXPENDITURE CLAIMED BY THE ASSESSEE AND MADE ADDITI ON OF RS.7 15 067/- TO THE INCOME OF THE ASSESSEE WHICH W AS DELETED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ON THE GROUND THAT THE EXPENDITURE CLAIMED DURING THE YEAR BY THE ASSE SSEE WAS 6.40% OF THE TOTAL SALES AS AGAINST 15.43% IN THE IMMEDIA TELY PRECEDING ASSESSMENT YEAR AND THAT THE NET PROFIT SHOWN DURIN G THE YEAR WAS 14.4% AS AGAINST 10% SHOWN IN THE IMMEDIATELY PRECE DING ASSESSMENT YEAR. IN THE ABOVE FACTS AND CIRCUMSTANC ES OF THE CASE WE ARE OF THE CONSIDERED OPINION THAT IT IS NOT IN DIS PUTE THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED AND NO ADVER SE COMMENTS HAVE BEEN MADE ON THE SAME BY THE AUDITORS. IN THE INSTA NT CASE THE ASSESSEE COULD NOT PRODUCE ITS BOOKS OF ACCOUNT AND VOUCHERS FOR VERIFICATION BY THE LEARNED ASSESSING OFFICER. IN S UCH CIRCUMSTANCES THE LEARNED ASSESSING OFFICER IS JUSTIFIED IN MAKIN G THE ASSESSMENT TO THE BEST OF HIS JUDGMENT BUT WHILE DOING SO HE C ANNOT MAKE A WILD GUESS WORK. THE LEARNED ASSESSING OFFICER CAN DISAL LOW SUCH EXPENSES WHICH HE FINDS UNREASONABLY HIGH CONSIDERI NG THE TURNOVER AND OTHER FACTS AND CIRCUMSTANCES OF THE CASE. IN T HE INSTANT CASE THE REVENUE COULD NOT CONTROVERT THE FINDING OF THE LEA RNED COMMISSIONER OF INCOME-TAX (APPEALS) THAT THE EXPEN DITURE CLAIMED BY THE ASSESSEE IN THE YEAR IS LESSER IN TERMS OF P ERCENTAGE OF TURNOVER IN COMPARE TO LAST YEAR AS WELL AS THE RAT E OF NET PROFIT DISCLOSED BY THE ASSESSES COMPARES FAVOURABLY WITH THE PAST ACCEPTED POSITION IN THE CASE OF THE ASSESSEE ITSELF. IN ABS ENCE OF ANY MATERIAL BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT THE E XPENSES CLAIMED 4 BY THE ASSESSEE WERE UNREASONABLY HIGH IN OUR CONSI DERED VIEW THE REVENUE WAS NOT JUSTIFIED IN DISALLOWING THE EXPENS ES WITHOUT ANY BASIS. TO MAKE AN ASSESSMENT TO THE BEST OF THE JUD GMENT IMPLIES AN HONEST JUDGMENT ON THE PART OF THE AUTHORITY AND TH E SAME SHOULD NOT BE AIMED TO PUNISH THE ASSESSEE FOR NOT BEING ABLE TO PRODUCE BOOKS AND VOUCHERS. IN THESE CIRCUMSTANCES WE FIND NO ER ROR IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) AND THEREFORE THE SAME IS UPHELD AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 08-01-2 010 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (N S SAINI) ACCOUNTANT MEMBER DATE : 08-01-2010 COPY OF THE ORDER FORWARDED TO : 1. M/S SATYA INTERNATIONAL PLOT NO.435 SAVALANI S ILK MILL COMPOUND GID C INDUSTRIAL ESTATE PANDESARA SURAT 2. THE ACIT CIRCLE-6 SURAT 3. CIT CONCERNED 4. CIT(A)-IV SURAT 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABA