ITO 9(2)-2, MUMBAI v. KUSHI FASHION P. LTD, MUMBAI

ITA 3660/MUM/2009 | 2002-2003
Pronouncement Date: 22-07-2011 | Result: Dismissed

Appeal Details

RSA Number 366019914 RSA 2009
Assessee PAN AABCK2484L
Bench Mumbai
Appeal Number ITA 3660/MUM/2009
Duration Of Justice 2 year(s) 1 month(s) 18 day(s)
Appellant ITO 9(2)-2, MUMBAI
Respondent KUSHI FASHION P. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 22-07-2011
Assessment Year 2002-2003
Appeal Filed On 04-06-2009
Judgment Text
1 ITA 3660 /M/2009 M/ S KUSHI FASHION PVT. LTD.. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A BEFORE SHRI D. MANMOHAN V.P. AND SHRI R.K. PANDA A.M. ITA NO. 3660/MUM/2009 ASSESSMENT YEAR 2002-03 INCOME TAX OFFICER 9(2)-2 AAYKAR BHAWAN ROOM NO. 225 2 ND FLOOR M.K. ROAD MUMBAI - 20. VS. M/S KUSHI FASHION PVT. LTD. B-39 FLAT NO. 502 YOGI NAGAR BORIVALI (W) MUMBAI. PAN AABCK2484L APPELLANT RESPONDENT APPELLANT BY SHRI P.C. MAURYA RESPONDENT BY SHRI HARESH SHAH ORDER PER R.K. PANDA A.M. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DT. 25.3.2009 OF CIT(A)- IX MUMBAI RELATING TO A.Y. 2002-03. 2. THIS IS THE SECOND ROUND OF LITIGATION BEFORE TH E TRIBUNAL. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORTING OF GARMENTS. DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS THE FOLLOWING PURCHASES COU LD NOT BE VERIFIED BY THE A.O. EVEN AFTER CONDUCTING INTENSIVE ENQUIRIES U/S 133(6)/131 OF THE I.T. ACT:- PURCHASES OF LADIES EMBROIDERED DRESSES: (I) M/S SAPNA SAGAR TRADING CO. P. LTD. ` 18 90 560 E/18 YOGI GURUKRUPA HSC LTD. YOGI NAGAR BORIVALI (W) MUMBAI 400 091. 2 ITA 3660 /M/2009 M/ S KUSHI FASHION PVT. LTD.. (II) M/S FAMOUS TRADING CO. ` 17 89 280/- 66-88 KIDWALA BUILDING IST FLOOR KAXI SAYED STREET MUMBAI 400 003. (III) M/S TEJAL APPARELS 2/116 MAHAVIR SADAN ` 8 88 310/- BHULESHWAR MUMBAI 400 002. ` 45 68 150/ PURCHASE OF T-SHIRTS: M/S TEJAL APPARELS 2/116 MAHAVIR SADAN ` 4 01 750/- (I) BHULESHWAR MUMBAI 400 002. (II) M/S GIRIRAJ TRADING CO. ` 4 01 700/- R NO. 882 AGARWAL WADI S.K. MISTRI ROAD WADALA MUMBAI 400 037. (III) M/S OMTRADING CO. ` 2 03 700/- R NO. 881/A-1-2 S.K. MISTRY DARGAN S.K. MISTRI ROAD WADALA MUMBAI -400 037. ` 10 07 150/ ` 18 400/ ` 55 93 700/ 3.1 THE NOTICES ISSUED U/S 133(6) TO SL. NO. 1 2 3 & 4 ABOVE REMAINED UN- SERVED SINCE THE PARTIES WERE NOT AVAILABLE AT THE ADDRESS FURNISHED BY THE ASSESSEE. THE WARD INSPECTOR WHO WAS DEPUTED TO SE RVE THE NOTICES U/S 133(6) TO THE REMAINING PARTIES FROM WHOM PURCHASES WERE M ADE OF READYMADE GARMENTS COULD NOT FIND THOSE PARTIES SINCE THEY WE RE NOT AVAILABLE AT THE ADDRESS FURNISHED BY THE ASSESSEE. IN THE ORIGINAL ASSESSMENT PROCEEDINGS THE A.O. FURTHER NOTED THAT THE GROSS PROFIT DURING THE YEAR AT 17.35% IS MUCH LESS THAN THE GP RATE OF 41.87% DECLARED IN THE PRECEDIN G ASSESSMENT YEAR. INSPITE OF REPEATED OPPORTUNITIES GIVEN THE ASSESSEE FAILE D TO FURNISH THE DETAILS AND EXPLANATION FOR THE ABOVE DIFFERENCE IN THE GP RATE . THE DIRECTOR OF THE ASSESSEE COMPANY SHRI AJAY PODDAR WAS ALSO SUMMONED AND HIS STATEMENT WAS ALSO RECORDED BY THE THEN A.O. AT THAT TIME OF RECORDING THE STATEMENT THE DIRECTOR COULD NOT SUBSTANTIATE THE CLAIMS OF THE A SSESSEE COMPANY AND HAD ASSURED TO FURNISH THE SUPPORTING EVIDENCE FOR THE SAME. SINCE THE ASSESSEE DID NOT COMPLY WITH THE DIRECTION OF THE THEN A.O. AND FAILED TO PRODUCE THE 3 ITA 3660 /M/2009 M/ S KUSHI FASHION PVT. LTD.. PARTIES AND COULD NOT EVEN FILE THE CONFIRMATIONS W ITH WHOM THE PURCHASES WERE MADE THE A.O. HAD MADE AN ADDITION OF ` 18 85 658/- TO THE TOTAL INCOME OF THE ASSESSEE. 3.2 DURING THE FIRST APPELLATE PROCEEDING THE LD. CIT(A) AFTER CALLING FOR THE REMAND REPORT HAD CONFIRMED THE ADDITION AND ON FUR THER APPEAL BEFORE THE TRIBUNAL THE TRIBUNAL RESTORED THE MATTER TO THE F ILE OF THE A.O. WITH THE FOLLOWING OBSERVATIONS:- WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE ORDERS OF THE REVENUE AUTHORITIES. IN THE REMAND REPORT VIDE PA RA 7 OF HIS ORDER ASSESSING OFFICER STATES: I HAVE CAREFULLY CONSID ERED THE NECESSARY EVIDENCE FURNISHED BY THE ASSESSEES REPRESENTATIVE BEFORE YOUR HONOUR TO ESTABLISH THE GENUINENESS OF THE PURCHAS ES AND ALSO PRECEDING YEARS RATE OF GROSS PROFIT. THE ADDITION AL EVIDENCE PRODUCED BEFORE ME HAVE BEEN VERIFIED WHICH APPEARS TO BE CORRECT. I HEREBY REQUEST YOUR HONOUR TO DECIDE THE CASE ON ME RIT. SINCE THE ASSESSING OFFICER HIMSELF HAS ACCEPTED THE EVIDENCE AS GENUINE WE ARE OF THE VIEW THAT THE MATTER HAS TO GO BACK TO H IM TO DECIDE THE ISSUE AFRESH AGAIN SEEING THE GENUINENESS OF THE C LAIM MADE BY THE ASSESSEE. APPEAL BY THE ASSESSEE HENCE ON THIS G ROUND IS ALLOWED FOR STATISTICAL PURPOSE. 3.3 DURING THE ASSESSMENT PROCEEDINGS AFTER THE ORD ER OF THE TRIBUNAL THE A.O. ASKED THE ASSESSEE TO PRODUCE ALL THE CONCERNE D PARTIES FROM WHOM THE PURCHASES HAVE BEEN MADE ALONG WITH RELEVANT DOCUME NTS LIKE RETURN OF INCOME OF THE SAID CONCERNS BANK STATEMENTS ORIGI NAL PURCHASE/SALE BILLS PURCHASE AND SALE REGISTER AND CASH BOOK ETC. HOWEV ER THE A.R. OF THE ASSESSEE WHO APPEARED BEFORE THE A.O. EXPLAINED THA T THE PURCHASE PARTIES CANNOT BE PRODUCED AND INSISTED TO COMPLETE THE ASS ESSMENT PROCEEDINGS ON THE BASIS OF THE REMAND REPORT FILED BY THE A.O. BE FORE THE LD. CIT(A) AND WHO HAS CONFIRMED THE ADDITION AFTER CONSIDERING THE RE MAND REPORT. IT WAS FURTHER SUBMITTED THAT ALL THE RECORDS HAVE BEEN DESTROYED IN THE DELUGE OF 26.7.2005. THE ASSESSEE ALSO FILED COPY OF AN AFFIDAVIT DT. 20 .10.2007. NOT BEING SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND NOTE D THAT THE PURCHASES MADE BY THE ASSESSEE ARE BOGUS AND HOLDING THAT THE ASSE SSEE COULD NOT PROVE THE GENUINENESS OF THE SAME THE A.O. REPEATED THE ADDI TION MADE IN THE ORIGINAL 4 ITA 3660 /M/2009 M/ S KUSHI FASHION PVT. LTD.. ASSESSMENT AND MADE ADDITION OF ` 18 75 658/- TO THE TOTAL INCOME OF THE ASSESSEE. 3.3 BEFORE THE LD. CIT(A) IT WAS SUBMITTED THAT IN PURSUANCE OF THE DIRECTIONS GIVEN BY THE TRIBUNAL THE A.O. RE-FIXED THE MATTER FOR HEARING. THE ASSESSEE DURING THE PROCEEDINGS BEFORE THE A.O. DREW HIS ATT ENTION TO THE REMAND REPORT ORDER OF THE LD. CIT(A) AND THE ORDER OF THE ITAT. IT WAS SUBMITTED THAT DURING THE REMAND PROCEEDINGS THE A.O. HAD EXAMINED ALL T HE NECESSARY EVIDENCE AND EXPLANATION OF THE ASSESSEE ABOUT THE FALL IN THE P ERCENTAGE OF THE GP DURING THE YEAR AND HAS ACCEPTED THE GENUINENESS OF PURCHA SES AS WELL AS EXPLANATION REGARDING FALL IN THE GP RATE. IT WAS SUBMITTED THA T THE A.O. HAD NOT CONSIDERED THE REMAND REPORT AND PASSED HIS ORDER ON THE BASIS OF ORIGINAL ASSESSMENT AND SUSTAINED THE ADDITION. IT WAS SUBMITTED THAT THE A.O. COULD NOT HAVE MADE THE SAME ADDITION WITHOUT DISLODGING THE REMAN D REPORT WHICH WAS NOT CONSIDERED BY THE CIT(A) BUT CONSIDERED BY THE TRIB UNAL WHO ACCEPTED THE GENUINENESS OF PURCHASES AND DIRECTED THE A.O. TO R E-CONSIDER THE SAME. ACCORDINGLY IT WAS ARGUED THAT THE ADDITION MADE B Y THE A.O. CANNOT BE SUSTAINED. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD. CIT(A) DELETED THE ADDITION MADE BY THE A.O. BY HOLDING AS UNDER: I HAVE CONSIDERED THE ABOVE FACTS OF THE CASE APP ELLANTS SUBMISSION HON'BLE ITATS ORDER REMAND REPORT AS WELL AS AOS CONTENTION. WITH REGARD TO THE ADDITION ON ACCOUNT OF GROSS PROFIT OF RS.18 75 658/- THE AO IN THE REMAND REPORT HAS CLE ARLY STATED THAT HE HAD GONE THROUGH THE LEDGER AND PURCHASE BILLS OF T HE PARTIES VIZ. SAPNA SAGAR TRADING CO. FAMOUS TRADING CO. TEJAL ENTERP RISE SHRI GIRIRAJ TRADING CO. OM TRADING CO. AS WELL AS QUANTITATIVE DETAILS AS PER TAX AUDIT REPORT FILED ALONGWITH THE ROI WITH THE STOCK STATEMENT RECONCILIATION OF OPENING STOCK SALES AND CLOSING STOCK. THE AO HAS FURTHER STATED THAT THE DETAILED CALCULATION OF G.P . SUBMITTED AT THE TIME OF ASSESSMENT PROCEEDINGS BY THE ASSESSEE WHICH IS A PART OF THE ASSESSMENT ORDER WAS ADOPTED AS PER LAST YEARS MET HOD OF PRINCIPLE AND STANDARDS WHICH SHOWS THE G.P. AT 17.35 OF THE TURN OVER DURING THE YEAR UNDER CONSIDERATION. THE ADDITIONAL EVIDENCE PRODUC ED BEFORE THE AO WAS VERIFIED AND FOUND TO BE CORRECT. THE REASON FO R FALL IN GROSS PROFIT IN THE YEAR UNDER CONSIDERATION AS COMPARED TO LAST YE AR AS STATED ABOVE HAS BEEN ACCEPTED BY THE AO. IT IS AN UNDISPUTED FA CT THAT THE AO IN THE REMAND PROCEEDINGS WAS SATISFIED ABOUT THE GENUINEN ESS OF PURCHASES 5 ITA 3660 /M/2009 M/ S KUSHI FASHION PVT. LTD.. AND G.P. WHICH REMAINED TO BE CONSIDERED BY MY LD. PREDECESSOR AND AS A RESULT THE SAME WAS SENT BACK TO AO FOR DECIDING ON MERITS BY THE HON'BLE ITAT. HOWEVER THE AO DID NO CONSIDER THE R EMAND REPORT SENT BY THE PREDECESSOR AND AGAIN MADE THE ADDITION SINC E THE ASSESSEE HAD SHOWN ITS INABILITY TO PRODUCE THE PARTIES. IT WILL NOT BE OUT OF PLACE TO MENTION HERE THAT ALL THE RELEVANT RECORDS WERE DES TROYED IN THE DELUGE OF 26.07.2005 FOR WHICH THE COPY OF AFFIDAVIT DTD. 28.08.2007 WAS ALSO FILED BEFORE THE AO. UNDER THE CIRCUMSTANCES AND FA CTS OF THE CASE AND KEEPING IN VIEW THE REMAND REPORT AND THE CIRCUMSTA NCES IN WHICH THE RECORDS COULD NOT BE PRODUCED SECOND TIME AS IT WAS DESTROYED IN THE FLOOD I HOLD THAT BENEFIT OF DOUBT HAS TO BE GIVEN TO THE ASSESSEE FOR THE REASON THAT AGAINST THE FACTS FILED IN THE AFFIDAVI T AND FAVOURABLE REMAND REPORT THE AO HAS NOT BROUGHT ANY EVIDENCE ON RECO RD CONTRARY TO THE FACTS SUBMITTED BY THE APPELLANT. KEEPING IN VIEW THE SATISFACTORY EXPLANATION WITH REGARD TO THE G.P. I DIRECT THE AO TO DELETE THE ADDITION ON ACCOUNT OF G.P. THE APPELLANTS APPEAL IS ALLOWE D. 3.4 AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A) TH E REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) CIT(A) ERRED IN DELETING THE ADDITION OF RS. 18 75 658/- ON ACCOUNT OF BOGUS PURCHASES RELYING ON THE REMAND R EPORT DATED 24.10.2005 (ACCORDING TO WHICH LEDGER AND PURCHASE BILLS WERE PRODUCED ALONGWITH QUANTITATIVE DETAILS AND TAX AUD IT REPORT) WHEREAS THE LD. CIT(A) IN HER ORDER HAS CATEGORICAL LY MENTIONED THAT ALL THE RELEVANT RECORDS WERE ALREADY DESTROYED IN THE DELUGE OF 26.07.2005 MEANING THAT REMAND REPORT WAS BASED ON ASSUMPTION AND CONTRARY TO THE FACTS OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) CIT(A) ERRED IN ALLOWING THE ABOVE MENTIONED RELIEF TO THE ASSESSEE RELYING ON THE REMAND REPORT FILED DATED 2 4.10.2005 FILED IN THE EARLIER APPEAL PROCEEDING IN UTTER DISREGARD TO THE ITATS ORDER DATED 12.11.2007 WHEREIN THE HON'BLE ITAT AFTER CO NSIDERING THE SAID REMAND REPORT HAD SET ASIDE THE AOS ORDER AG AIN TO DECIDE THE ISSUE AFRESH. 4. THE LD. D.R. SUBMITTED THAT THE G.P. RATE OF THE ASSESSEE HAS FALLEN DOWN TO 17% DURING THE IMPUGNED A.Y. AS AGAINST 41% IN T HE PRECEDING A.Y. THE LD. CIT(A) DID NOT MAKE ANY FURTHER ENQUIRY AND ALLOWED THE APPEAL OF THE ASSESSEE ON THE BASIS OF THE PAPERS ALREADY AVAILABLE ON REC ORD. THEREFORE HE WAS NOT JUSTIFIED IN DELETING THE ADDITION WITHOUT BRINGING ANY FURTHER MATERIAL 6 ITA 3660 /M/2009 M/ S KUSHI FASHION PVT. LTD.. ESPECIALLY WHEN THE GENUINENESS OF THE PARTIES REMA INED UNPROVED. FURTHER THE BOOKS OF ACCOUNT WERE ALSO NOT PRODUCED. 5. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER H AND WHILE SUPPORTING THE ORDER OF THE LD. CIT(A) DREW THE ATTENTION OF THE B ENCH TO THE REMAND REPORT PLACED AT PAPER BOOK PAGE 13 TO 15. HE SUBMITTED T HAT THE A.O. IN THE REMAND REPORT HAS MENTIONED THE VERIFICATION OF BILLS OF P URCHASES AND LEDGER ACCOUNT OF THE FIVE PARTIES MENTIONED IN THE ASSESSMENT ORD ER. THE A.O. HAD COMPARED THE QUANTITATIVE DETAILS AS PER THE TAX AUDIT REPOR T FILED ALONG WITH THE RETURN OF INCOME WITH THE STOCK STATEMENT PRODUCED DURING THE REMAND PROCEEDINGS AND HAS VERIFIED THE RECONCILIATION OF OPENING AND SALE S STOCK. HE ALSO CONSIDERED THE REASONS FOR FALL IN THE GP RATE AND ACCEPTED TH E CONTENTION OF THE ASSESSEE AS REASONABLE. HE HAS REPORTED IN HIS REMAND REPOR T THAT THE ADDITION EVIDENCE PRODUCED BEFORE HIM WERE VERIFIED BY HIM AND FOUND TO BE CORRECT THEREFORE THE ORDER OF THE LD. CIT(A) IS IN ACCORDANCE WITH L AW AND THEREFORE THE SAME SHOULD BE UPHELD. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE SIDES PERUSED THE ORDERS OF THE A.O. AND THE CIT(A) AND T HE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. IN THE INSTANT CASE WE FIN D THE TRIBUNAL RESTORED THE MATTER TO THE FILE OF THE A.O. WITH A DIRECTION TO DECIDE THE ISSUE AFRESH IN VIEW OF THE REMAND REPORT OF THE A.O. STATING THAT THE A DDITIONAL EVIDENCE FILED BEFORE HIM WERE VERIFIED WHICH APPEARS TO BE CORRECT. HOWE VER WE FIND THE A.O. DURING THE SECOND ROUND OF LITIGATION BEFORE HIM DI D NOT CONSIDER THE REMAND REPORT. FOR THE SAKE OF CLARITY COPY OF THE REMAN D REPORT WHICH HAS BEEN REPRODUCED IN THE ASSESSMENT ORDER IS BEING REPRODU CED WHICH IS AS UNDER:- IN CONNECTION WITH THE ABOVE MATTER A LETTER DATE D 9.9.2005 WAS ISSUED TO THE ASSESSEE COMPANY FOR VERIFICATION OF ADDITIONAL EVIDENCE FILED IN RESPECT OF ADDITIONS/DISALLOWANCES WERE MA DE IN THE ASSESSMENT ORDER FOR ASSTT. YEAR 2003-04 WHICH ARE AS UNDER :- A) DISALLOWANCE OF JOB CHARGES OF RS.1 71 043/- OUT OF JOB CHARGES RS.8 91 425/- AND 7 ITA 3660 /M/2009 M/ S KUSHI FASHION PVT. LTD.. B) ADDITIONS ON ACCOUNT OF GROSS PROFIT OF RS.18 75 65 8/-. C) THE ASSESSEE COMPANYS AUTHORIZED REPRESENTATIVE S HRI J. C. KABRA & SHRI D. C. JAIN C.AS ATTENDED THE HEARING FIXED O N 26.09.2005 AND PRODUCED BOOKS OF ACCOUNTS LEDGER SALES AND PURCH ASES BILLS DELIVERY CHALLANS PARTIES CONFIRMATIONS ALONGWITH PAN ETC. FOR VERIFICATION. I HAVE GONE THROUGH A REQUEST MADE BY THE ASSESSEES REPRESENTATIVES BEFORE YOUR HONOUR FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 46A. THEY HAVE POINTED OUT THAT A LETTER DATED 28.2.2005 HAS BEEN FURNISHED BEFORE MY PREDECESSOR CONTAINING THE DETAILS WHICH WAS NOT ACCEPTED AS THE ASSESSMENT OR DER WAS PASSED ON THE SAME DAY I.E. ON 28.2.2005 BEFORE FILING THE SAID LETTER ALONGWITH DETAILS. I) REGARDING DISALLOWANCE OF RS.1 71 043/- OUT OF J OB CHARGES THE A.R.S HAVE PRODUCED THE BILLS DELIVERY CHALLAN S. COPY OF LEDGER ACCOUNT ALONGWITH CONFIRMATION LETTERS WITH PAN ETC . OF THE FOLLOWING PARTIES. A) S.S. ENTERPRISES B) BALAJI APPAREL C) K. K. FASHIONS AND D) R.K. FASHIONS II) THE ARS HAVE SUBMITTED THAT THE TDS WAS DEDUCTE D IN THE CASE OF FIRST TWO PARTIES AS THE PAYMENT WAS EXCEED RS.20 0 00/- AND IN RESPECT OF REMAINING TWO PARTIES NO TDS WAS MADE A S THE PAYMENT DID NOT EXCEED RS.20 000/-. HOWEVER DURING THE COU RSE OF ASSESSMENT PROCEEDINGS THE DETAILS SUBMITTED IN THE CASE OF M/S. K.K. FASHIONS AND M/S. R. K. FASHIONS IT WAS CLARIF IED THAT THERE WAS TYPOGRAPHICAL ERROR BY SHOWING JOB CHARGES PAID TO R.K. FASHIONS WERE SHOWN IN THE NAME OF R. K. FASHIONS. IN SUPPOR T OF THIS THE ASSESSEE HAS PRODUCED TDS DETAILS ALONGWITH A COPY OF RETURN IN FORM NO.26C FOR THE YEAR ENDED 31.03.2002. THE SAME HAVE BEEN VERIFIED FROM THE LEDGER ACCOUNT WHICH CLEARLY SHOW S THE JOB CHARGES HAVE BEEN PAID TO K. K. FASHIONS & R. K. FASHIONS W HICH ARE BELOW RS.20 000/-. THUS IN MY OPINION THE CLAIM OF THE AS SESSEE COMPANY IS APPEARS TO BE ADMISSIBLE AND MAY BE DECIDED ON M ERIT. 6 I) REGARDING ADDITION OF RS.18 75 658/- ON ACCOUN T OF GROSS PROFIT I HAVE GONE THROUGH THE ASSESSMENT ORDER AND I FIND THAT FOR NON SUBMISSION OF EVIDENCE OF THE REASONS STATED AS ABO VE MY PREDECESSOR HAS DRAWN INFERENCE THAT PURCHASES TO T HE TUNE OF RS.35 93 700/- WERE NOT GENUINE. HAVING REGARD TO T HE GROSS PROFIT OF 41.87% IN THE IMMEDIATE PRECEDING YEAR AND AFTER GIVING SOME REBATE THE GROSS PROFIT WAS ADOPTED AT THE RATE OF 37.19% ON THE SAID OF RS.94 55 569/- AS DECLARED BY THE ASSESSEE WHICH LED THE PREDECESSOR TO MAKE ADDITIONS OF RS.18 75 658/-. TH E WORKING OF THE SAME WAS AS UNDER :- 8 ITA 3660 /M/2009 M/ S KUSHI FASHION PVT. LTD.. GROSS PROFIT @ 37.19% OF RS.94 55 569/- RS.35 16 526/- LESS: DISCLOSED BY THE ASSESSEE RS.16 40 868/- ADDITION MADE TO THE TOTAL INCOME RS.18 75 658/- II) THE ASSESSEES REPRESENTATIVE HAVE PRODUCED BIL LS FOR PURCHASE AND LEDGER ACCOUNT OF THE FOLLOWING PARTIES CONCERNED: A) SAPANA SAGAR TRADING CO. B) FAMOUS TRADING CO. C) TEJAL ENTERPRISED D) SHRI GIRIRAJ TRADING CO. E) OM TRADING CO. III) I HAVE GONE THROUGH THE LEDGER AND PURCHASE BI LLS OF ABOVE PARTIES AND THE SAME ARE APPEARS TO BE IN ORDER. ALSO THE QUANT ITATIVE DETAILS AS PER TAX AUDIT REPORT FILED ALONGWITH RETURN OF INCOME ARE C OMPARED WITH THE STOCK STATEMENT NOW PRODUCED WITH RECONCILIATION OF OPENI NG STOCK SALES AND CLOSING STOCK. THE DETAILS CALCULATION OF G.P. SUBM ITTED AT THE TIME OF ASSESSMENT PROCEEDINGS BY THE ASSESSEES REPRESENTA TIVE WHICH IS A PART OF ASSESSMENT ORDER WAS ADOPTED AS PER LAST YEARS MET HOD OF PRINCIPLE AND STANDARDS WHICH SHOWS THE GROSS PROFIT AT 17.35% OF THE TURNOVER DURING THE YEAR UNDER CONSIDERATION. A. THE ASSESSEE HAS SUBMITTED SOME OF THE REASONS FOR THE FALL IN GROSS PROFIT THIS YEAR AS COMPARED TO THE LAST YEAR WHICH ARE REPRODUCED BELOW: A) THERE IS PRODUCT MIX IN EXPORT ORDER. THERE WER E NO REPEATED AND FIXED QUALITY OF GOODS ARE ORDER. EVERY ORDER HAS D IFFERENT IN QUANTITY QUALITY AND RATE WHICH IS NOT COMPARABLE WITH PREV IOUS ORDER AND DUE TO TOUGH COMPLETION IN THE INTERNATIONAL MARKET . THE PRICE DEPENDS ON THE BASIS OF DEMAND AND SUPPLY IN THE MA RKET. B. THE GROSS PROFIT ALSO DEPENDS UPON GOVERNMENT POLIC Y PREVAILING DURING THE YEAR AS THE DUTY DRAWBACK RECEIVED/RECE IVABLE HAS BEEN FALLEN BY 3.1% AS COMPARED TO LAST YEARS RECEIPT O F TOTAL NET SALES. IV) THE INCOME OF EXCHANGE RATE DIFFERENCE HAS BEC OME NEGLIGIBLE AS COMPARED TO LAST YEAR OF 1.58 % OF NET SALES. V) ASSESSEE HAD EXPORTED MAXIMUM GARMENTS WHICH WER E EMBROIDERED AND HAVE BEEN EXPENSIVE BY 14.15% OF COST. WHEREAS THE SALE REALIZATION OF THE SAME WAS NOT INCREASED TO THAT EXTENT. 9 ITA 3660 /M/2009 M/ S KUSHI FASHION PVT. LTD.. VI) DURING THE YEAR ASSESSEE HAD PURCHASED MAXIMUM READY MADE SWITCHED GARMENTS FROM DIFFERENT TRADERS RESULTED I N 9% TO 10% COSTLY AS TRADERS MARGIN. 2. I HAVE CAREFULLY CONSIDERED THE NECESSARY EVIDENCE FURNISHED BY THE ASSESSEES REPRESENTATIVE BEFORE YOUR HONOUR TO EST ABLISH THE GENUINENESS OF THE PURCHASES AND ALSO PRECEDING YEA RS RATE OF GROSS PROFIT. THE ADDITIONAL EVIDENCE PRODUCED BEFORE ME HAVE BEEN VERIFIED WHICH APPEARS TO BE CORRECT. THEREBY REQUEST YOUR H ONOUR TO DECIDE THE CASE ON MERIT. 6.1 SINCE THE A.O. IN THE REMAND REPORT HAS CONSIDE RED THE PURCHASE AS GENUINE ON THE BASIS OF PURCHASE BILLS AND LEDGER A CCOUNT OF THE CONCERNED PARTIES AND HAS RECONCILED THE QUANTITATIVE DETAILS AND HAS ALSO CONSIDERED THE REASONS FOR FALL IN THE G.P. RATE AND CAME TO THE C ONCLUSION THAT THE ADDITIONAL EVIDENCE PRODUCED BEFORE HIM APPEARS TO BE CORRECT THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DEL ETING THE ADDITION MADE BY THE A.O. AFTER THE MATTER WAS SET ASIDE BY THE TRIBUNA L WE FIND THE A.O. HAS NOT CONSIDERED AT ALL THE COPY OF THE REMAND REPORT AVA ILABLE BEFORE HIM AND HAS REPEATED THE ADDITION MADE BY HIS PREDECESSOR. SINC E THE LD. CIT(A) AFTER CONSIDERING THE REMAND REPORT HAS PASSED THE ORDER THEREFORE IN ABSENCE OF ANY DISTINGUISHABLE FEATURE BROUGHT TO OUR NOTICE B Y THE LD. D.R. AND IN VIEW OF THE DETAIL ORDER PASSED BY THE LD. CIT(A) WE DO NO T FIND ANY INFIRMITY IN THE SAME. THE GROUNDS RAISED BY THE REVENUE ARE ACCORD INGLY DISMISSED. 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON 22.7.2011. SD/- SD/- (D. MANMOHAN) (R.K. PANDA) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI DATED 22.7.2011 RK 10 ITA 3660 /M/2009 M/ S KUSHI FASHION PVT. LTD.. COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) IX MUMBAI 4. THE CIT -IX MUMBAI 5. THE DR BENCH C 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI 11 ITA 3660 /M/2009 M/ S KUSHI FASHION PVT. LTD.. DATE INITIALS 1 DRAFT DICTATED ON 13.7.2011 19.7.11 SR. PS 2 DRAFT PLACED BEFORE THE AUTHOR 14.7.2011 19.7.11 SR. PS 3 DRAFT PLACED BEFORE THE SECOND MEMBER 4 APPROVED DRAFT COMES TO THE SR. PS SR. PS 5 KEPT FOR PRONOUNCEMENT ON SR. PS 6 FILE SENT TO THE BENCH CLERK SR. PS 7 DATE ON WHICH FILE GOES TO THE HEAD CLERK 8 DATE ON WHICH FILE GOES TO THE AR 9 DATE OF DISPATCH OF ORDER