M/s. Sonica Textiles, Surat v. The Addl.CIT.,Range-6,, Surat

ITA 2990/AHD/2009 | 2006-2007
Pronouncement Date: 22-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 299020514 RSA 2009
Assessee PAN AAKFS8857R
Bench Ahmedabad
Appeal Number ITA 2990/AHD/2009
Duration Of Justice 2 month(s) 16 day(s)
Appellant M/s. Sonica Textiles, Surat
Respondent The Addl.CIT.,Range-6,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 22-01-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 22-01-2010
Assessment Year 2006-2007
Appeal Filed On 06-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND SHRI D.C. AGRAWAL ACCOUNTANT MEMBER DATE OF HEARING : 06/01/2010 DRAFTED ON: 19/01/ 2010 ITA NO.2990/AHD/2009 ASSESSMENT YEAR : 2006-07 M/S.SONICA TEXTILES 9/1639 KELAPITH BALAJI ROAD SURAT VS. ADDL.CIT RANGE-6 SURAT PAN/GIR NO. : AAKFS 8857 R (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI R.M.UPADHYAY ADV. RESPONDENT BY: SHRI P.ORAM SR. D.R. O R D E R PER D.C.AGRAWAL ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED CIT(APPEALS)-IV SURAT DATED 18/08/2009 PA SSED FOR ASSESSMENT YEAR 2006-07 BY RAISING FOLLOWING GROUNDS: 1. LR. A.O. HAS ERRED IN LAW AND ON FACTS TO ADD A N AMOUNT OF RS.13 03 390/- TO THE INCOME RETURNED THOUGH APPEL LANT CORRECTLY ACCOUNTED DISCLOSED INCOME FOUND IN FORM OF DIFFERE NCE IN STOCK-IN- TRADE AS PER INVENTORY PREPARED ON THE DAY OF SURVE Y AND AS PER BOOKS OF ACCOUNTS. LR. LEARNED CIT(APPLS.) HAS ERR ED IN CONFIRMING ADDITION. 2. LR. A.O. WITHOUT POSITIVE / DOCUMENTARY EVIDENC E CANNOT CONCLUDE THAT SALES MIGHT HAVE BEEN MADE OUTSIDE TH E BOOKS WHICH RESULTED IN SHORTAGE OF PHYSICAL STOCK. LR. CIT(AP PLS.) HAS ERRED IN CONFIRMING ADDITION MADE BY A.O. ITA NO .2990/AHD/2009 M/S.SONICA TEXTILES VS. ADDL. CIT ASST.YEAR - 2006-07 - 2 - 3. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS GROSS PROFIT ADDITION OF RS.13 03 390/-. THE BRIEF FACTS OF THE CASE ARE TH AT ASSESSEE IS A PARTNERSHIP-FIRM ENGAGED IN THE BUSINESS OF RETAIL TRADING OF SAREES ETC. DURING THE FINANCIAL YEAR RELEVANT TO ASSESSMENT Y EAR IN APPEAL BEFORE US ASSESSING OFFICER CARRIED OUT SURVEY U/S.133A OF TH E I.T. ACT 1961 AT THE BUSINESS PREMISES OF THE ASSESSEE AT KELAPITH BAL AJI ROAD SURAT ON 21/12/2005. DURING THE COURSE OF SURVEY STOCK OF SAREES AND OTHER MATERIAL WERE INVENTORIZED STATEMENT ON OATH WAS R ECORDED AND DISCREPANCY IN THE STOCK WAS FOUND. AFTER RE-CONC ILIATION OF THE STOCK FOUND AND COMPARISON THEREOF WITH THE STOCK RECORDE D IN THE BOOKS UNDISCLOSED STOCK OF RS.41 09 420/- WAS WORKED OUT WHICH WAS DECLARED BY THE ASSESSEE IN THE REGULAR RETURN OF INCOME FIL ED FOR THIS FINANCIAL YEAR. THE ASSESSING OFFICER HAD APPARENTLY ACCEPT ED ABOVE DECLARATION BUT PROCEEDED TO REJECT THE BOOKS OF ACCOUNT AND ES TIMATE THE PROFITS. HE NOTICED THAT DURING PREVIOUS ASSESSMENT YEAR ASSES SEE HAD DECLARED A GROSS PROFIT RATE OF 21.91% WHEREAS IN THE CURRENT YEAR IT WAS WORKED OUT AT 19.43%. THUS THERE WAS A DIFFERENCE OF 2.57%. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPLAIN THE FALL I N GROSS PROFIT. IT WAS EXPLAINED THAT :- ITA NO .2990/AHD/2009 M/S.SONICA TEXTILES VS. ADDL. CIT ASST.YEAR - 2006-07 - 3 - (I) SELL OF ITEMS DISPLAYED AT THE WINDOWS OF EXHIBITIO N SHOW- ROOM VALUED AT RS.44 62 500/- WAS SOLD AT A DISCOUN T OF 15 TO 20%. (II) THE ASSESSEE HAS CARRIED OUT SALES DURING EXHIBITIO NS FOR 15 20 DAYS IN THIS YEAR. DURING THIS PERIOD SALES WE RE MADE RS.56 58 550/- INCLUDING SALES OF DEAD STOCK RS.7 5 7 862/-. THIS HAS RESULTED IN A LOSS AND FALL IN GROSS PROFI T OVERALL. THE STYLE HAS CHANGED FROM VAST THEREFORE DATA S TOCK INCREASED WHICH IS SOLD AT MUCH LOWER RATE THAN THE MARKET RATES. 4. THE ASSESSING OFFICER WAS HOWEVER NOT SATISFIE D. HE WORKED OUT ADDITION COME @ 2.57% ON TOTAL SALES DECLARED AT RS .5 06 22 650/- AND MADE AN ADDITION OF RS.13 03 390/-. 5. THE LEARNED CIT(APPEALS) DISMISSED THE APPEAL ON THE GROUND THAT SALES ARE NOT VERIFIABLE. EXHIBITION SALES AND CLE ARANCE OF DEAD STOCK IS AN ANNUAL EVENT NOT PECULIAR TO THE CURRENT YEAR. TH US THERE IS NO CASE FOR ANY RELIEF. 6. WE HAVE HEARD THE PARTIES. AFTER CAREFULLY CON SIDERING THE MATERIAL ON RECORD AND ARGUMENTS OF THE PARTIES WE ARE OF T HE CONSIDERED VIEW THAT SOME RELIEF IS REQUIRED BECAUSE ASSESSEE HAD BROUGH T ON STOCK OF RS.40 LACS PLUS INTO THE TRADING ACCOUNT WHICH WOUL D HAVE IMPACT ON GROSS PROFIT. SALE OF GOODS AT A DISCOUNTED AMOUNT SALE OF GOODS IN EXHIBITION SALE OF DEAD STOCK SALE OF GOODS ON APPROVAL BASIS ETC. WOULD HAVE SOME ITA NO .2990/AHD/2009 M/S.SONICA TEXTILES VS. ADDL. CIT ASST.YEAR - 2006-07 - 4 - IMPACT ON THE OVERALL GROSS PROFIT RATE. IT IS A LWAYS NOT NECESSARY THAT SAME GROSS PROFIT RATE SHOULD BE DECLARED EVERY YEA R AS BUSINESS IS NOT MATHEMATICS. CONSIDERING OVER ALL CIRCUMSTANCES O F THE CASE WE DIRECT THE ASSESSING OFFICER TO APPLY A GROSS PROFIT RATE OF 21% AND WORK OUT THE ADDITION. THE ASSESSEE THEREFORE GETS CONSEQUEN TIAL RELIEF. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 22/01/ 2010. SD/- SD/- ( BHAVNESH SAINI ) ( D.C.AGR AWAL ) JUDICIAL MEMBER ACCOUNTANT M EMBER AHMEDABAD; DATED 22/ 01 /2010 T.C. NAIR COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-IV SURAT 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD