Ilakshi Synthetics Pvt.Ltd.,, Surat v. The Income tax Officer,Ward-1(3),, Surat

ITA 3208/AHD/2008 | misc
Pronouncement Date: 16-12-2010

Appeal Details

RSA Number 320820514 RSA 2008
Assessee PAN NAAAC1842O
Bench Ahmedabad
Appeal Number ITA 3208/AHD/2008
Duration Of Justice 40 year(s) 11 month(s) 15 day(s)
Appellant Ilakshi Synthetics Pvt.Ltd.,, Surat
Respondent The Income tax Officer,Ward-1(3),, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 16-12-2010
Appeal Filed By Assessee
Assessment Year misc
Appeal Filed On 01-01-1970
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD A BENCH (BEFORE S/SHRI G.D. AGARWAL VICE-PRESIDENT AND BHAVNESH SAINI JUDICIAL MEMBER) ITA NO.3208/AHD/2008 [ASSTT. YEAR : 2004-2005] ILAKSHI SYNTHETICS PVT. LTD. 2/1960 MALI FALIAS RUDERPURA SURAT. PAN AAAC 1842 OK VS. ITO WARD-1(3) SURAT. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI HARDIK VORA REVENUE BY : SHRI M. MATHIVANAM O R D E R PER G.D. AGARWAL VICE-PRESIDENT : THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I SURAT DATED 24.07.2008 ARISING OUT OF THE ORDER OF THE ASSESSIN G OFFICER PASSED UNDER SECTION 143(3) OF THE I.T. ACT 1961. 2. THE GROUND NO.1 OF THE ASSESSEES APPEAL READS A S UNDER: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.67 45 00 0/- U/S.68 OF THE ACT FOR UNEXPLAINED UNSECURED LOANS. 3. AT THE TIME OF HEARING BEFORE US IT IS STATED B Y THE LEARNED COUNSEL THAT THE ASSESSING OFFICER MADE ADDITION OF RS.67 45 000 /- BEING THE CREDIT IN THE ACCOUNT OF THE FOLLOWING PARTIES: I) DILIP WEAVING WORKS : RS.1 50 000 II) DILIP SILK : RS.20 40 000 III) RAJESH RAYON : RS.1 30 000 IV) SIDDHARTH SILK : RS.50 000 V) SHIV SILK : RS.24 35 000 VI) SHREENATHJI SILK : RS.19 40 000 TOTAL : RS.67 45 000 ITA NO.3208/AHD/2008 -2- THAT THE ABOVE CREDIT BALANCES WERE FOUND BY THE AS SESSING OFFICER AS PER THE AUDIT REPORT SUBMITTED ALONG WITH RETURN OF INCOME. THAT ALL THE ABOVE CREDITORS ARE SISTER CONCERN/ASSOCIATED CONCERN OF THE ASSESS EE-COMPANY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FURN ISHED CONFIRMATION OF ALL THE ABOVE CREDITORS IN WHICH THEIR PERMANENT ACCOUN T NUMBER WAS GIVEN. THAT DUE TO FLOOD IN SURAT BOOKS OF ACCOUNTS OF THE ASS ESSEE AS WELL AS THE SISTER CONCERN HAVE BEEN LOST/DESTROYED. THEREFORE THE S ISTER CONCERN COULD NOT FURNISH THE DATE WISE DETAILS OF THEIR ACCOUNT WITH THE ASSESSEE BUT HAS FURNISHED CONFIRMATION FOR THE CREDIT BALANCE AT TH E END OF THE YEAR WHICH WAS TAKEN FROM THEIR BALANCE SHEET FURNISHED ALONG WITH THEIR RETURN OF INCOME. THAT THE ASSESSING OFFICER AS WELL AS THE LEARNED C OMMISSIONER OF INCOME TAX (APPEALS) DID NOT ACCEPT THE ABOVE EVIDENCE AS SUFF ICIENT TO DISCHARGE THE ASSESSEES ONUS TO ESTABLISH THE CASH CREDIT. THAT NOW THE ASSESSEE HAS OBTAINED COPY OF THE BANK ACCOUNT OF THE SISTER CONCERN AS W ELL AS THE ASSESSEE. THAT ENTIRE CREDIT IN THE ASSESSEES BOOKS OF ACCOUNTS W AS RECEIVED BY CHEQUE AND IS VERIFIABLE FROM THE BANK ACCOUNT OF THE CREDITORS V IS--VIS ASSESSEES BANK ACCOUNT. THAT THE HONBLE JURISDICTIONAL HIGH COUR T AS WELL AS HONBLE APEX COURT HAVE HELD THAT IF CREDITORS ARE ASSESSED TO INCOME-TAX AND THE ASSESSEE HAS FURNISHED THEIR CONFIRMATION IN WHICH THEIR PER MANENT ACCOUNT NUMBERS ARE MENTIONED THEN THE ONUS WHICH LAY UPON THE ASSESSE E WOULD BE DISCHARGED. HE ALSO STATED THAT ALMOST EVERY CREDITOR IS ASSESSED WITH THE SAME ASSESSING OFFICER. EVEN IF THE CREDITOR WAS ASSESSED WITH A NY OTHER ASSESSING OFFICER FROM THEIR BALANCE SHEET FILED WITH INCOME TAX RETU RN THE CREDIT BALANCE OF THE ASSESSEE CAN BE EASILY VERIFIED. IN SUPPORT OF THE ASSESSEES CONTENTION HE RELIED UPON THE FOLLOWING DECISIONS: I) CIT VS. ORISSA CORPORATION LTD. 159 ITR 78 (SC) II) DCIT VS. ROHINI BUILDERS 258 ITR 360 (GUJ) 4. THE LEARNED DR ON THE OTHER HAND RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW. HE HAS SUBMITTED THAT THE ORDER S OF THE LOWER AUTHORITIES ARE QUITE FAIR AND REASONABLE. THE ASSESSEE HAS NOT PR ODUCED EITHER HIS OWN BOOKS ITA NO.3208/AHD/2008 -3- OF ACCOUNTS OR THE BOOKS OF ACCOUNTS OF THE CREDITO RS AND THEREFORE THE CREDIT BALANCE IN THE ASSESSEES ACCOUNT COULD NOT BE VERI FIED. THE BANK STATEMENT WHICH IS BEING PRODUCED BEFORE THE ITAT WAS NOT PRO DUCED BEFORE THE ASSESSING OFFICER. THEREFORE IF THE SAME IS ADMIT TED THE MATTER SHOULD BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR VERI FICATION OF THE BANK ACCOUNT. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. FROM PAGE N O.3 TO 8 OF THE ASSESSEES PAPER BOOK THERE IS AN ENGLISH TRANSLATION OF THE CONFIRMATION PRODUCED BEFORE THE ASSESSING OFFICER. IT WAS EXPLAINED THAT THE O RIGINAL CONFIRMATION WAS IN GUJARATI AND THEREFORE THE ENGLISH TRANSACTION THE REOF IS PRODUCED BEFORE THE ITAT. FROM THE CONFIRMATION WE FIND THAT EACH CRE DITOR IS ASSESSED TO INCOME TAX AND THEIR PAN IS GIVEN IN CONFIRMATION. HOWEVER IN THE CONFIRMATION ONLY CLOSING BALANCE IS MENTIONED AND NOT THE ENTIRE TRA NSACTION OF THE YEAR UNDER CONSIDERATION. NOW THE LEARNED COUNSEL FOR THE ASS ESSEE HAS PRODUCED BEFORE US THE BANK STATEMENT OF THE ASSESSEE AS WELL AS O F THE CREDITORS AND HAS CONTENDED THAT EACH AND EVERY TRANSACTION CAN BE VE RIFIED FROM THE BANK STATEMENT OF THE CREDITORS AS WELL AS THE ASSESSEE. ADMITTEDLY THESE EVIDENCES WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER AND THE NATURAL JUSTICE DEMANDS THAT THE ASSESSING OFFICER SHOULD BE GIVEN AN OPPORTUNITY TO EXAMINE THESE EVIDENCES. WE THEREFORE SET ASIDE THE ORDER OF THE AUTHORITIES BELOW ON THIS POINT AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER. WE DIRECT HIM TO ALLOW ADEQUATE OPPORTUNITY TO THE ASS ESSEE TO PRODUCE THESE BANK STATEMENTS BEFORE HIM. THEREAFTER THE ASSESSING O FFICER WILL DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW. BEFORE WE PART WITH THE MATTER WE MAY MENTION THAT THE ASSESSEE HAS ALSO RELIED UPON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF ORISSA CORPORATION (SUPRA) AND THE DECISION IN THE CASE OF ROHINI BUILDERS (SUPRA) WHICH THE ASSESSING OFFICE R WILL CONSIDER WHILE ADJUDICATING THIS ISSUE. 6. GROUND NO.2 OF THE APPEAL READS AS UNDER: ITA NO.3208/AHD/2008 -4- 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT THE LD.CIT(A) HAS ERRED IN PARTLY CONF IRMING THE ADDITION OF RS.1 95 829/- OUT OF ADDITION OF RS.2 32 586/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LOW GROSS PROFIT. 7. THE FACTS OF THE CASE ARE THAT FOR THE YEAR UNDE R CONSIDERATION THE ASSESSEE HAS DISCLOSED TURNOVER OF RS.85.89 LAKHS O N WHICH THE GP RATE OF 8.27% WAS DECLARED. IN THE PRECEDING YEAR THE ASS ESSEE HAD DISCLOSED THE GP RATE OF 10.55% ON THE TURNOVER OF RS.25.38 LAKHS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE COULD NOT PROD UCE THE BOOKS OF ACCOUNTS AND THEREFORE THE ASSESSING OFFICER REJECTED THE BO OKS OF ACCOUNTS AND APPLIED GP RATE OF 11%. ON APPEAL THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) UPHELD THE REJECTION OF BOOKS OF ACCOUNTS BUT REDUCED THE GP RATE TO 10.55%. THE AGGRIEVED ASSESSEE IS IN APPEAL BEFORE US. 8. AT THE TIME OF HEARING BEFORE US THE LEARNED CO UNSEL FOR THE ASSESSEE DID NOT DISPUTE THE REJECTION OF THE BOOKS OF ACCOUNTS HOWEVER HIS SUBMISSION WAS THAT WHEN THE TURNOVER HAS INCREASED MORE THAN THRE E TIMES AS COMPARED TO THE LAST YEAR THE CIT(A) WAS NOT JUSTIFIED IN APPLYING THE GP RATE SIMILAR TO THE LAST YEAR. HE HAS STATED THAT A HUGE INCREASE IN THE TU RNOVER COULD BE POSSIBLE ONLY BY REDUCING THE GP RATE. HE THEREFORE SUBMITTED TH AT DUE TO SUBSTANTIAL INCREASE IN THE TURNOVER NO ADDITION TO THE GP RAT E IS REQUIRED AND GP DECLARED AT 8.27% SHOULD BE ACCEPTED AS REASONABLE. THE L EARNED DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 9. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THA T DURING THE YEAR UNDER CONSIDERATION THE TURNOVER HAS INCREASED MORE THAN THREE TIMES AS COMPARED TO THE LAST YEAR. IN SUCH CIRCUMSTANCES THE APPLICAT ION OF THE SAME GP RATE AS DECLARED IN THE LAST YEAR CANNOT BE SAID TO BE JUST IFIED. THE CONTENTION OF THE LEARNED COUNSEL THAT THE ASSESSEE COULD ACHIEVE SUC H SUBSTANTIAL INCREASE IN THE TURNOVER ONLY BY SELLING THE GOODS AT LESSER MARGIN CANNOT BE BRUSHED ASIDE ITA NO.3208/AHD/2008 -5- LIGHTLY. AT THE SAME TIME SINCE THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNTS THE REJECTION OF THE BOOK RESULTS BY THE ASSESSING OFFICER CANNOT BE SAID TO BE UNJUSTIFIED. CONSIDERING THE FACTS OF T HE CASE IN OUR OPINION IT WOULD MEET ENDS OF THE JUST IF IT IS DIRECTED THAT THE GP RATE OF 9% BE APPLIED AS AGAINST 8.27% DECLARED BY THE ASSESSEE. WE ORDE R ACCORDINGLY AND DIRECT THE ASSESSING OFFICER TO WORK OUT THE GP ADDITION BY AP PLYING GP RATE OF 9%. 10. GROUND NO.3 OF THE ASSESSEES APPEAL READS AS U NDER: ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING DEPRECIATION OF RS .19 800/- ON COMPUTERS. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED MATE RIAL PLACED BEFORE US. WE FIND THAT THE ASSESSEE CLAIMED DEPRECIATION AT T HE RATE OF 60% ON THE COMPUTER CLAIMED TO HAVE BEEN PURCHASED DURING THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER DENIED THE ASSESSEES CLAIM O F DEPRECIATION ON THE GROUND THAT THE ASSESSEE COULD NOT PRODUCE ANY EVID ENCE IN SUPPORT OF THE PURCHASE OF COMPUTER. AT THE TIME OF HEARING BEFO RE US THE LEARNED COUNSEL FOR THE ASSESSEE WAS UNABLE TO PRODUCE ANY EVIDENCE IN SUPPORT OF PURCHASE OF COMPUTER BY THE ASSESSEE. IN THE ABSENCE OF ANY EV IDENCE HAVING BEEN BROUGHT ON RECORD BY THE ASSESSEE FOR PURCHASE OF COMPUTER IN OUR OPINION THE LOWER AUTHORITIES WERE FULLY JUSTIFIED IN DISALLOWING THE DEPRECIATION IN RESPECT OF COMPUTERS CLAIMED TO HAVE BEEN PURCHASED DURING THE YEAR UNDER CONSIDERATION. 12. IN RESULT THE APPEALS OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 16 TH DECEMBER 2010. SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 16-12-2010 ITA NO.3208/AHD/2008 -6- COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR/AR ITAT AHMEDABAD