ADDL.CIT.,-25(1), MUMBAI v. NEW KAMLESH JEWELLERS (JASDANWALA), MUMBAI

ITA 3344/MUM/2011 | 2008-2009
Pronouncement Date: 24-07-2013 | Result: Allowed

Appeal Details

RSA Number 334419914 RSA 2011
Assessee PAN AADFN7400N
Bench Mumbai
Appeal Number ITA 3344/MUM/2011
Duration Of Justice 2 year(s) 2 month(s) 27 day(s)
Appellant ADDL.CIT.,-25(1), MUMBAI
Respondent NEW KAMLESH JEWELLERS (JASDANWALA), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 24-07-2013
Appeal Filed By Department
Order Result Allowed
Bench Allotted B
Tribunal Order Date 24-07-2013
Date Of Final Hearing 27-06-2013
Next Hearing Date 27-06-2013
Assessment Year 2008-2009
Appeal Filed On 27-04-2011
Judgment Text
B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH MUMBAI !' $ % BEFORE SHRI I.P. BANSAL JM AND SHRI KARUNAKARA RAO AM ./I.T.A. NO.3344/M/2011 ( & ' (' / ASSESSMENT YEAR :2008-2009) ACIT - 25(1) MUMBAI. & / VS. M/S. NEW KAMLESH JEWELLERS (JASDANWALA) 201 SAHYOG BUILDING LOKMANYA TILAK ROAD BORIVALI (W) MUMBAI 400 051. ) $ ./PAN : AADFN 7400 N ( )* /APPELLANT) .. ( + )* / RESPONDENT) )* - . / APPELLANT BY : SHRI MOHIT JAIN DR + )* - . / RESPONDENT BY : SHRI PRADEEP KAPASI & - /$ /DATE OF HEARING : 27.6.2013 01( - /$ /DATE OF PRONOUNCEMENT : 24.7.2013 2 2 2 2 / O R D E R PER D. KARUNAKARA RAO AM: THIS APPEAL FILED BY THE REVENUE ON 27.4.2011 IS AG AINST THE ORDER OF CIT (A)-35 MUMBAI DATED 8.3.2011 FOR THE ASSESSMENT YEAR 2008- 2009. 2. IN THIS APPEAL REVENUE RAISED THE FOLLOWING GRO UNDS WHICH READ AS UNDER: 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD CIT (A) ERRED IN DIRECTING THE AO TO DELETE THE ADDITION OF RS. 16 14 189/- MADE BY THE AO ON ACCOUNT OF LOW NET PROFIT. . 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE T HAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEALING IN GOLD DIAMOND AND BRANDED OR NAMENTS & JEWELERS. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCO ME OF RS. 93 14 150/-. ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT DETERMINING THE TOTAL INCOME OF RS. 1 16 08 640/-. 2 ADDITION WAS MADE ON ACCOUNT OF LOW NET PROFIT AMOUNTING TO RS. 16 14 189/- AND PARA 5 OF THE ASSESSMENT ORDER RELEVANT IN THIS REG ARD. FROM THE SAID PARA LD DR MENTIONED THAT NET PROFIT RATE FOR THE ASSESSMENT Y EAR 2007-2008 WAS 4.66% AGAINST CURRENT NET PROFIT WHICH IS AT 3.96% . CONSIDERING THE ASSESSEES FAILURE TO FURNISH VALID EXPLANATION FOR DROP IN THE NET PROFIT FROM 4.66% TO 3.96% TH E ASSESSEE AGREED FOR TAXING THE SAID DIFFERENCE 0.07%. RELEV ANT NOTING OF THE AO IN THIS REGARD READS THAT IN VIEW OF THE SAME WHEN ASSESSEES AR VIDE O RDER SHEET NOTING OF THIS OFFICE DATED 21.12.2010 ASSESSEES AR WAS CON FRONTED WHY THE PROFIT OF THE ASSESSEE FOR THE ASSESSMENT YEAR CONSIDERATION SHAL L NOT BE CALCULATED ON THE BASIS OF NET PROFIT PERCENTAGE SHOWN FOR THE AY 2007-08 HE HAS AGREED FOR THE APPLICATION OF THE NET PROFIT RATIO TO ARRIVE AT THE CURRENT ASSES SMENT YEAR 2008-2009. THE ADDITIONAL INCOME BROUGHT TO TAX ON ACCOUNT OF DIFFERENCE OF 0 .7% OF THE TURNOVER WORKS OUT TO RS. 16 14 189/-. THUS IT IS THE CASE OF THE AGREE D ADDITION ORIGINALLY IN THE ASSESSMENT AND HOWEVER ASSESSEE CARRIED MATTER TO THE CIT (A) . CIT (A) DISMISSED THE SAID ESTIMATE OF THE NET PROFIT BY THE AO HOLDING THAT A O SHOULD HAVE POINTED OUT GIVING SPECIFIC DISCREPANCIES BEFORE ESTIMATE IS MADE. THE RE WAS NO DISCUSSION IN THE ORDER OF THE CIT(A) ON (I) WHY THE ASSESSEE RETRACTED FROM T HE SAID AGREEMENT AND (II) WHY THE AO WAS PREVENTED FROM COMPLETING THE INVESTIGATION INTO THE SAID FALL IN NP IN THIS ASSESSMENT YEAR. 4. DURING THE PROCEEDINGS BEFORE US LD DR IS CRITI CAL OF THE FACT THAT THE ASSESSEE HAS NOT CATEGORICALLY DENIED OF REACHING AN AGREEME NT WITH THE AO DURING THE ASSESSMENT PROCEEDINGS ABOUT THE FALL IN NET PROFIT . BY RELYING ON THE DECISION OF THE PUNJAB & HARYANA HIGH COURT JUDGMENT IN THE CASE OF KANSHI RAM WADHWA VS COMMISSIONER OF INCOME-TAX (P&H) 138 ITR 830 WHIC H IS RELEVANT FOR THE PROPOSITION THAT WITH THE OFFER OF CONCESSION BY THE ASSESSEE T O THE AO IT IS NATURAL THAT THE AOS STOP THEIR FURTHER INVESTIGATIONS UNDER THE BON A FIDE BELIEF . LD DR STATED THAT IN THE INSTANT CASE ALSO WITH THE CITED AGREEM ENT THE AO MADE THE ADDITION OF RS. 16 14 189/- UNDER BONA FIDE BELIEF. AO WAS UNDER T HE BONA FIDE BELIEF THAT THE MATTER SHALL NOT BE CARRIED TO THE CIT (A). LD DR ALSO MEN TIONED THAT HE HAS NEVER DENIED 3 CATEGORICALLY ABOUT THE OFFER OF ADDITIONAL INCOME OF RS. 16 14 189/- AS EVIDENT FROM THE STATEMENT OF FACTS AND OTHER CORRESPONDENCE AVAILAB LE BEFORE US. DEVIATING FROM THE GROUNDS LD DR MENTIONED THAT THE MATTER MAY BE SET ASIDE TO THE FILES OF THE AO FOR DE NOVO ASSESSMENT CONSIDERING THE ASSESSEES DEVIATION FRO M THE AGREEMENT REACHED DURING THE ASSESSMENT PROCEEDINGS. 5. ON THE OTHER HAND LD COUNSEL FOR THE ASSESSEE A GREED TO THE FACT THAT THERE IS NO CATEGORICAL DENIAL OF OFFERING OF ADDITIONAL INC OME OF RS. 16 14 189/-. HOWEVER THE CONDUCT OF THE ASSESSEE SUGGESTS THE DEVIATION FROM THE SAID AGREEMENT WITH AO AND ARGUED THAT THE AO MUST MAKE ASSESSMENT ONLY IN ACC ORDANCE WITH THE PROVISIONS OF THE LAW AND HE IS AUTHORIZED TO SETTLE THE DISPUTES BY MANIPULATING THE ADDITIONS ON ADHOC BASIS IN THE ASSESSMENT PROCEEDINGS. HE HOWE VER HAS NO OBJECTION IF THE MATTER IS SET ASIDE FOR DE NOVO ASSESSMENT. 6. WE HAVE HEARD BOTH THE PARTIES PERUSED THE ORDE RS OF THE REVENUE AND THE PAPERS FILED BEFORE US. IT IS AN UNDISPUTED FACT T HAT THE ASSESSEES COUNSEL AGREED DURING THE ASSESSMENT PROCEEDINGS FOR OFFERING OF A DDITIONAL INCOME OF RS. 16 14 189/- WHICH IS EQUIVALENT OF 0.7% OF THE TURNOVER. VIDE T HE STATEMENT OF FACTS FILED BEFORE THE CIT(A) AND IN THE OTHER CORRESPONDENCES IN THE FILES ASSESSEE DO NOT DENY THE SAID AGREEMENT FOR ADDITION EQUALANT OF 0.07%. IN SUCH F ACTUAL CIRCUMSTANCES THE ARGUMENT OF THE LD DR IS THAT ASSESSEE HAVING DERIVED THE BE NEFIT OF THE AGREEMENT CANNOT WIN THE APPEAL BEFORE THE CIT(A) ON SOME OTHER GROUND WHICH WAS NOT EXAMINED BY THE AO AND CANNOT ARGUE THAT CLAIM OF THE ASSESSEE WAS NOT ALLOWED. IN THIS REGARD WE PERUSED THE JUDGMENT OF THE HONBLE HIGH COURT OF P UNJAB & HARYANA IN THE CASE OF KANSHI RAM WADHWA (SUPRA) AND HELD PORTION OF THE S AME READS AS UNDER: HELD: THAT THE ASSESSEE HAVING DERIVED THE BENEFIT OF AN AGREED ORDER OF ASSESSMENT COULD NOT CONTEND THAT THE ITO DID NOT ALLOW ANY DE PRECIATION DURING THE RELEVANT ASSESSMENT YEAR. THE TRIBUNAL WAS RIGHT IN HOLDING THAT DEPRECIATION WAS COMPUTED AND ALLOWED ACTUALLY IN 1971-72. 7. THE ABOVE RATIO APPLIED TO THE FACTS OF THE PRES ENT CASE WHERE ASSESSEE AGREED TO CERTAIN CONDITIONS DURING THE ASSESSMENT PROCEED INGS AND AO STALLED HIS PROCEEDINGS 4 OF INVESTIGATION AND VERIFICATION UNDER BONA FIDE BELIEF. SUBSEQUENTLY ASSESSEE CARRIED THE MATTER TO THE CIT (A) WITHOUT DENYING THE SAID AGREEMENT WITH THE AO GIVING REASONS FOR SUCH DEVIATION IF ANY. IT IS IN OUR O PINION THERE IS A BREACH OF BONA FIDE BELIEF AND IN ALL FAIRNESS THE MATTER SHOULD BE SE T ASIDE TO THE FILES OF THE AO CONSIDERING THE DEVIATION OF THE ASSESSEE FROM THE SAID AGREED ADDITIONS. WE DIRECT THE ASSESSING OFFICER TO MAKE A DE NOVO ASSESSMENT STRICTLY IN ACCORDANCE WITH THE LAW AND PROCEDURE LAID DOWN RELATING TO THE ASSESSMENT. WHE N THE ASSESSEE CLAIMS THAT THE NP IS ONLY 3.66% FOR THIS YEAR UNDER CONSIDERATION TH E ONUS IS ON THE AO TO DEMONSTRATE THAT THE SAID NP IS MORE. FURTHER AO MUST UNDERSTA ND THAT GP/NO ADDITIONS ARE NOT SUSTAINABLE IN LAW UNLESS THERE EXISTS THE INCRIMIN ATING EVIDENCES OR THE AO SUCCESSFULLY GARNER ANY MATERIAL TO SUPPORT SUCH ADDITIONS. THE STATUTE CONFERS MANY POWERS ON THE AO TO COLLECT SUCH EVIDENCES. IN THE SET ASIDE ASSE SSMENT PROCEEDINGS AO SHALL GRANT A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. ACCORDINGLY GROUNDS RAISED BY THE REVENUE ARE SET ASIDE . 8. IN THE RESULT APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24.7.2013. SD/- SD/- ( I.P. BANSAL) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER MUMBAI; 3& 24.7.2013 . & . ./ OKK SR. PS 2 2 2 2 - -- - +/45 +/45 +/45 +/45 65(/ 65(/ 65(/ 65(/ / COPY OF THE ORDER FORWARDED TO : 1. )* / THE APPELLANT 2. + )* / THE RESPONDENT. 3 . 7 ( ) / THE CIT(A)- 4. 7 / CIT 5. 5 89 +/& / DR ITAT MUMBAI 5 6. 9!' : / GUARD FILE. 5/ +/ //TRUE COPY// 2& 2& 2& 2& / BY ORDER ; ;; ; / < < < < = = = = (DY./ASSTT. REGISTRAR) / ITAT MUMBAI