Shri Mahavir S.Shah, Surat v. The ACIT.,Circle-6,, Surat

ITA 3190/AHD/2009 | 2006-2007
Pronouncement Date: 30-12-2011 | Result: Partly Allowed

Appeal Details

RSA Number 319020514 RSA 2009
Assessee PAN ACOPS2644E
Bench Ahmedabad
Appeal Number ITA 3190/AHD/2009
Duration Of Justice 2 year(s) 1 month(s) 3 day(s)
Appellant Shri Mahavir S.Shah, Surat
Respondent The ACIT.,Circle-6,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 30-12-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 30-12-2011
Date Of Final Hearing 27-12-2011
Next Hearing Date 27-12-2011
Assessment Year 2006-2007
Appeal Filed On 27-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD .. !' #$ # % BEFORE SHRI MUKUL KR.SHRAWAT JUDICIAL MEMBER AND SHRI B.P.JAIN ACCOUNTANT MEMBER ./ I.T.A. NO.3190/AHD/2009 ( ' ' ' ' ' ' ' ' / / / / ASSESSMENT YEAR : 2006-07) MAHAVIR S. SHAH PROP.BANARAS SILK SAGAR 170 SARVODAYA NAGAR SOCIETY SARDARBAUG BARDOLI SURAT ' ' ' ' / VS. THE ACIT CIRCLE-6 SURAT ( #$ ./ ) ./ PAN/GIR NO. :ACOPS 2644 E ( (* / // / APPELLANT ) .. ( + (* / RESPONDENT ) (* - # / APPELLANT BY : SHRI TUSHAR HEMANI A.R. + (* . - # / RESPONDENT BY : SHRI ABHISHEK KUMAR SR.D.R. '/ . 0$ / / / / DATE OF HEARING : 27/12/2011 12' . 0$ / DATE OF PRONOUNCEMENT : 30/12/2011 #3 / O R D E R PER SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE W HICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-IV SURAT DATED 11/09/2009 PASSED FOR A.Y. 2006-07. THE ONLY SUBS TANTIVE GROUND READS AS FOLLOWS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A)-IV SURAT HAS ERRED IN SUSTAINING THE ADDIT ION OF RS.437955 I.E. GROSS PROFIT RATIO @ 10% TO THE TOTAL TAXABLE INCOM E OF THE ASSESSEE. ITA NO.3190/AHD/2009 MAHAVIR S.SHAH VS. ACIT ASST.YEAR 2006 -07 - 2 - THE LD. CIT(A) HAS SOMEHOW IGNORED ALL THE SUBMISSI ON AND CONFIRMED THE ADDITION. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S. 143(3) R.W.S. 145(3) OF THE I.T. ACT 1 961 DATED 31/07/2008 WERE THAT THE ASSESSEE IN INDIVIDUAL CAPACITY IS IN THE BUSINESS OF TRADING AND MANUFACTURING OF ART SILK CLOTHS. A RETURN OF INCOME WAS FILED DECLARING AN INCOME OF RS.22 14 265/-. A SURVEY U/ S.133A OF THE I.T.ACT WAS CONDUCTED ON 27/12/2005. IN THE CASE OF ASSESS EE CONSEQUENCE UPON THE SURVEY TO COVER UP TO CERTAIN DISCREPANCY A DIS CLOSURE OF RS.20 48 700/- WAS MADE. IT HAS ALSO BEEN NOTED BY THE ASSESSING OFFICER THAT IT WAS ADMITTED THAT INVESTMENT WAS MA DE IN THE EXCESS STOCK FOUND. DESPITE THE DISCLOSURE OF RS.20 48 700/- T HE GROSS PROFIT RATIO HAD GONE DOWN AS DISCLOSED AT 8.52% AND IN THIS CON NECTION A CHART WAS MADE BY THE ASSESSING OFFICER AS UNDER:- A.Y. TURNOVER (RS.) GROSS PROFIT (RS.) GP MARGIN (IN %) 2006-07 2 04 63 116 17 43 557 8.52 2005-06 1 29 64 047 15 14 200 11.68 2004-05 98 69 226 9 895 935 9.99 2.1. FURTHER IT HAS ALSO BEEN NOTED BY THE ASSESSI NG OFFICER THAT AS PER THE PRE-SURVEY PERIOD THE TRADING RESULTS HAD SH OWN GROSS PROFIT AT 11.84% HOWEVER AS PER THE POST-SURVEY PERIOD TH E TRADING RESULTS WERE SHOWN (-)8.36%. THE ALLEGATION OF THE ASSESSI NG OFFICER WAS THAT WHATEVER DISCLOSURE WAS MADE HAD EVENTUALLY BEEN EA TEN UP IN THE POST- SURVEY PERIOD. THE ASSESSING OFFICER HAD INVOKED T HE PROVISIONS OF SECTION 145(3) OF THE I.T.ACT. THEREAFTER THREE O PTIONS WERE DISCUSSED ITA NO.3190/AHD/2009 MAHAVIR S.SHAH VS. ACIT ASST.YEAR 2006 -07 - 3 - BY THE ASSESSING OFFICER TO ESTIMATE THE PROFIT FOR THE YEAR UNDER CONSIDERATION AS FOLLOWS:- THE ASSESSEE HAS SHOWN 11.68% GROSS PROFIT IN THE LAST YEAR AND 8.52% THIS YEAR. HENCE GROSS PROFIT OF 1 1.68% CAN BE EXTENDED TO THIS YEAR ALSO. THE ASSESSEE HAS SHOWN 9.99% GROSS PROFIT IN THE LA ST TO LAST YEAR AND 8.52% THIS YEAR. HENCE GROSS PROF IT OF 9.99% CAN BE EXTENDED TO THIS YEAR ALSO. THE ASSESSEE HAS SHOWN 11.68% GROSS PROFIT IN THE L AST YEAR AND 9.99% IN THE LAST TO LAST YEAR. IF THE AV ERAGE OF GROSS PROFIT OF BOTH YEARS IS TAKEN THEN IT COMES T O 10.84%. THIS 10.84% GROSS PROFIT CAN BE TAKEN FOR THIS YEAR ALSO. 21. IN THE LIGHT OF THE ABOVE DISCUSSION AND CONSID ERING FACT OF THE CASE THE UNDERSIGNED IS OF CONSIDERATE OPINION THAT CONSIDERING THE EFFECT OF COMPETITION INCREASE IN TURNOVER & TAXABLE PROFIT AND OTHER BUSINESS COMPULSIONS VIS- -VIS INTRINSIC ERROR IN ESTIMATION TOOL IT WOULD BE FAIR TO CONSI DER THE PROFIT IN THIRD OPTION AS THE PROFIT OF THIS YEAR ALSO I.E. AT 10.84%. THE DIFFERENCE BETWEEN THE ESTIMATED G.P. RATIO AND G.P . RATIO SHOWN BY THE ASSESSEE IS 2.32%. IN RS. TURNOVER FOR THE ASSESSMENT YEAR 2006-07 20463116/- INCREASE IN GROSS PROFIT (ENHANCEMENT BY 2.32% OF TURNOVER) = (RS.20463116/- * 2.32/100) 474744/- IN THE RESULT AN A1DDI1TION OF RS.4 74 744/- WAS MADE BY ESTIMATING THE GROSS PROFIT OF THE ASSESSEE. THE S AID ADDITION WAS CHALLENGED BEFORE THE FIRST APPELLATE AUTHORITY. ITA NO.3190/AHD/2009 MAHAVIR S.SHAH VS. ACIT ASST.YEAR 2006 -07 - 4 - 3. ON HEARING THE SUBMISSIONS THE FIRST APPELLATE AUTHORITY HAS RESTRICTED THE PERCENTAGE OF GROSS PROFIT AT 10% AN D DIRECTED THE ASSESSING OFFICER TO APPLY THE GROSS PROFIT RATE AT 10% TO THE TURNOVER AND RE-COMPUTE THE ASSESSABLE INCOME. 4. FROM THE SIDE OF THE ASSESSEE LD.AR MR.TUSHAR H EMANI AND FROM THE SIDE OF THE REVENUE LD.DR MR.ABHISHEK KUMAR AP PEARED. THE MAIN CONTENTION OF THE LD.AR IS THAT TURNOVER OF THE ASS ESSEE FOR A.Y. 2005-06 WAS RS.1 29 64 047/- WHICH HAD GONE UP IN A.Y. 2006 - 07 (ASSESSMENT YEAR UNDER APPEAL) TO RS.2 04 63 116/-. HENCE HE HAS PLEADED THAT WHENEVER THERE IS INCREASE IN THE TURN OVER THE CONSEQUENCE IS THAT THE MARGIN OF PROFIT GOES DOWN. ON THE OTH ER HAND FROM THE SIDE OF THE REVENUE LD.DR HAS PLACED RELIANCE ON THE OR DER OF THE ASSESSING OFFICER AND ARGUED THAT THE DISCREPANCY WAS DETECTE D AFTER THE SURVEY THEREFORE THE ASSESSEE DO NOT DESERVE ANY FURTHER RELIEF. 5. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES WE HAVE NOTICED THAT THIS IS A CASE WHERE ASSESSING OFFICER HAD ADO PTED AN ESTIMATION TO ASSESS THE GROSS PROFIT AT 10.84% AND THAT ESTIMATI ON HAS FURTHER BEEN DISTURBED BY THE FIRST APPELLATE AUTHORITY AND IN HIS OPINION THE GROSS PROFIT PERCENTAGE COULD BE ESTIMATED AT 10%. FACTS OF THE CASE HAVE THUS DEMONSTRATED THAT ONE ESTIMATION WAS PITTED AGAINST AN ANOTHER ESTIMATION BY THE REVENUE AUTHORITIES. SINCE THE REVENUE AUTH ORITIES HAVE ADOPTED THE PATH OF GUESS WORK THOUGH A SURVEY WAS CONDUCTE D THEREFORE UNDER SUCH EXTRA-ORDINARY SITUATION AND ALSO CONSIDERING THE ARGUMENT OF LD.AR WE ARE HEREBY TEMPTED TO EXERCISE OUR DISCRETIONARY POWER THOUGH SHOULD BE EXERCISED SPARINGLY AND GIVE A RELIEF OF RS.1 LAC ON ADHOC BASIS ITA NO.3190/AHD/2009 MAHAVIR S.SHAH VS. ACIT ASST.YEAR 2006 -07 - 5 - WITHOUT COMMENTING UPON THE PERCENTAGE OF GROSS PRO FIT AS DETERMINED BY THE LOWER AUTHORITIES SO THAT IN THIS REGARD NO PRECEDENT SHOULD BE MADE. RESULTANTLY THIS GROUND IS PARTLY ALLOWED. 6. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLOWED . SD/- SD/- ( .. !' ) ( ) #$ ( B.P. JAIN ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD; DATED 30/ 12 /2011 40..' .'../ T.C. NAIR SR. PS #3 . +5 6#5' #3 . +5 6#5' #3 . +5 6#5' #3 . +5 6#5'/ COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. + (* / THE RESPONDENT. 3. 7 / CONCERNED CIT 4. 7() / THE CIT(A)-IV SURAT 5. 5:; +' / DR ITAT AHMEDABAD 6. ;< =/ / GUARD FILE. #3' #3' #3' #3' / BY ORDER 5 + //TRUE COPY// > >> >/ // / ( DY./ASSTT.REGISTRAR) / ITAT AHMEDABAD 1. DATE OF DICTATION..27/12/2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 27/12/2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 30/12/2011. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30/12/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER