The ACIT,Vapi Circle,, Vapi v. M/s. Mars Packaging Industries, Nani Daman

ITA 367/AHD/2013 | 2009-2010
Pronouncement Date: 25-10-2013 | Result: Allowed

Appeal Details

RSA Number 36720514 RSA 2013
Assessee PAN AAIFM3136H
Bench Ahmedabad
Appeal Number ITA 367/AHD/2013
Duration Of Justice 8 month(s) 17 day(s)
Appellant The ACIT,Vapi Circle,, Vapi
Respondent M/s. Mars Packaging Industries, Nani Daman
Appeal Type Income Tax Appeal
Pronouncement Date 25-10-2013
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 25-10-2013
Date Of Final Hearing 15-10-2013
Next Hearing Date 15-10-2013
Assessment Year 2009-2010
Appeal Filed On 08-02-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BENCH AHMEDABAD .. ! ! ! ! ' #$ BEFORE SHRI N.S. SAINI ACCOUNTANT MEMBER AND SHRI KUL BHARAT JUDICIAL MEMBER !./ I.T.A. NO.367/AHD/2013 ( & '& & '& & '& & '& / / / / ASSESSMENT YEAR : 2009-10) ASST.CIT VAPI CIRCLE VAPI / VS. M/S.MARS PACKAGING INDUSTRIES SURVEY NO.98/1 DAMAN INDUSTRIAL ESTATE KADAIYA DAMAN 396 210 ( !./)* !./ PAN/GIR NO. :AAIFM 3136 H ( (+ / // / APPELLANT ) .. ( -(+ / RESPONDENT ) (+ . / APPELLANT BY : SHRI O.P.BATHEJA SR.DR -(+ / . / RESPONDENT BY : SHRI TUSHAR P.HEMANI A.R. ' 0 / $1 / / / / DATE OF HEARING : 15/10/2013 23' / $1 / DATE OF PRONOUNCEMENT : 25/10/2013 4 / O R D E R PER SHRI KUL BHARAT JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-VALSAD (CIT(A) FOR SHORT) DATED 30/10/2012 PERTAINING TO ASSESSMENT YEAR (AY) 2009- 10. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 42 55 053/- MADE BY THE AO ON ACCOUNT OF LOW G.P. 2. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD.C IT(A) BE SET ASIDE AND THAT THE ORDER OF THE AO BE RESTORED. 3. THE APPELLANT CRAVES TO ADD MODIFY OR ALTER ANY GR OUNDS DURING THE COURSE OF APPEAL PROCEEDINGS. ITA NO.367/AHD/ 2013 ASST.CIT VS.M/S.MARS PACKAGING INDUSTRIES ASST.YEAR 2009-10 - 2 - 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143(3) O F THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED V IDE ORDER DATED 27/12/2011 THEREBY THE ASSESSING OFFICER(AO) MADE DISALLOWANCE IN RESPECT OF INTEREST ON LOAN AND ALSO MADE ADDITION ON ACCOUNT OF FALL IN G ROSS PROFIT ON THE BASIS THAT NO BOOKS OF ACCOUNTS SUPPORTING THE BOOK RESULT WER E PRODUCED TILL DATE. AGAINST THIS THE ASSESSEE FILED AN APPEAL BEFORE T HE LD.CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS PARTLY ALLOWED THE APP EAL OF THE ASSESSEE. 3. THE ONLY ISSUE BEFORE US IS THAT THE LD.CIT(A) E RRED IN DELETING THE ADDITION OF RS.42 55 053/- MADE BY THE AO ON ACCOUN T OF LOW GROSS PROFIT. THE LD.SR.DR SUBMITTED THAT THE AO HAD MADE THE AD DITION ON ACCOUNT OF LOW GP. HE SUBMITTED THAT THE ASSESSEE COULD NOT EXPLA IN THE REASON FOR LOW GP AND DESPITE HAVING BEEN GIVEN VARIOUS OPPORTUNITIES TO PRODUCE THE BOOKS OF ACCOUNTS THE ASSESSEE FAILED TO PRODUCE BOOKS OF A CCOUNTS THEREFORE THE AO WAS JUSTIFIED IN MAKING THE ADDITION ON THE BASIS O F ESTIMATION. 3.1. ON THE CONTRARY LD.COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE BOOKS OF ACCOUNTS WERE PRODUCED BEFORE LD.CIT(A). HE SUBMIT TED THAT THE AO HAS STATED THAT BOOKS OF ACCOUNTS WERE NOT PRODUCED BEF ORE HIM WHICH IS FACTUALLY INCORRECT. IN FACT BOOKS OF ACCOUNTS WERE PLACED BEFORE THE AO. HOWEVER THE JURISDICTION OF THE ASSESSEES CASE HAD CHANGED FOU R TIMES DURING THE YEAR UNDER CONSIDERATION AND DETAILS OF NOTICES ISSUED B Y VARIOUS ASSESSING OFFICERS. ON ACCOUNT OF SUCH A FREQUENT CHANGE IN JURISDICTION EVENTHOUGH THE BOOKS OF ACCOUNTS HAD BEEN PRODUCED BEFORE THE AO SUCH FINDING HAS NOT BEEN RECORDED PROPERLY BY THE AO WHILE FRAMING THE ASSES SMENT. HE SUBMITTED THAT THE LD.CIT(A) HAS GIVEN A FINDING THAT BOOKS OF ACC OUNTS WERE PRODUCED. HE FURTHER SUBMITTED THAT REASONS FOR DECREASE IN PROF IT HAVE BEEN EXPLAINED AND DREW OUR ATTENTION TOWARDS PAGE NO.7 OF THE PAPER-B OOK WHEREIN THE NOTES ON ITA NO.367/AHD/ 2013 ASST.CIT VS.M/S.MARS PACKAGING INDUSTRIES ASST.YEAR 2009-10 - 3 - THE REASON FOR LOW GROSS PROFIT IS GIVEN. HE SUB MITTED THAT THERE IS A MARGINAL INCREASE IN VARIOUS EXPENSES. THE AO HAS NOT BROUGH T ON RECORD ANY PARTICULAR EXPENSE THAT HAS ABNORMALLY GONE UP AND FOR NO SATI SFACTORY EXPLANATION HAS BEEN OFFERED BY THE ASSESSEE. 3.2. IN REJOINDER THE LD.SR.DR SUBMITTED THAT THE SUBMISSION OF THE LD.AR THAT THE BOOKS OF ACCOUNTS WERE PRODUCED AND A FIND ING TO THIS EFFECT HAS BEEN GIVEN BY THE LD.CIT(A) IS FACTUALLY INCORRECT. HE SUBMITTED THAT LD.CIT(A) HAS MERELY RECORDED THE SUBMISSIONS OF THE ASSESSEE IN HIS ORDER. HE SUBMITTED THAT NO REMAND REPORT HAS BEEN CALLED FOR FROM THE AO BY THE LD.CIT(A) ON THE SUBMISSIONS OF THE ASSESSEE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND THAT THE LD.CIT(A) HAS DECIDED THIS ISSUE IN PARAGRAPH NO.5. 3 OF HIS ORDER WHICH IS REPRODUCED HEREINBELOW FOR THE SAKE OF CLARITY. 5.3.DECISION : I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS OF T HE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTIO N RAISED BY THE AR OF THE APPELLANT IN THE WRITTEN SUBMISSION. THE AO NOTICED THAT THE APPELLANT HAD SHOWN LESS G.P. DURING THE YEAR COMPA RED TO THE PREVIOUS TWO YEARS. HE ASKED THE APPELLANT TO SUBMIT REASON S FOR ALL OF G.P. DURING THE YEAR.THE APPELLANT SUBMITTED THE REASONS WHICH WAS NOT CONVINCING AS FAR AS AO WAS CONCERNED. BEFORE ME T HE LD.AR CONTENDED THAT THE ASSESSEE HAS MAINTAINED ALL THE BOOKS OF ACCOUNT WHICH HAS BEEN SUBJECT TO AUDIT AND THE DETAILED RE ASON FOR ALL IN GP ARE AS UNDER: I) MAIN RAW MATERIAL USED IS PLASTIC FILMS FOR VARIOUS MATERIALS LIKE PP POLISTER LDP LLDP ETC. PETRO-CHEMICAL PRODUC TS. THE PRICES OF WHICH ARE VERY MUCH SENSITIVE WITH REFERE NCE TO INTERNATIONAL MARKET PRICES. DURING THE YEAR UNDER CONSIDERATION THE PETRO-CHEMICAL PRICES HAD SHOWN INCREASE TREND INTERNATIONALLY WHICH AS RESULTED IN INCREASE INPUT COST WHICH THE ASSESSEE COULD NOT PASSED ON TO HIS CUSTO MERS. IN THIS ITA NO.367/AHD/ 2013 ASST.CIT VS.M/S.MARS PACKAGING INDUSTRIES ASST.YEAR 2009-10 - 4 - TYPE OF INDUSTRIES WE HAVE TO ACCEPT ORDERS FOR LO NGER PERIOD WHICH MAY RANGES FROM 12 TO 18 MONTHS WHICH SPECIFI ED DELIVERY SCHEDULES. IN VIEW OF SUCH POSITION WE CANNOT PAS SED ON INCREASE IN RAW MATERIAL PRICES TO OUR CUSTOMERS BU T CERTAIN PORTION ONLY CAN BE PASS ON TO OUR CUSTOMERS. II) DURING THE YEAR CONSIDERATION EXPENSES ON EMPLOYEES ARE INCREASES BY 0.5% COMPARE TO SALE. IN EVERY INDUST RY SALARY AND WAGES OF EMPLOYEES ARE REVIEWED ON YEARLY BASIS AND GENERAL TREND ON INCREASE OF 10% EVERY YEAR TO PREVAILING I N INDIA. III) WITH PASSAGE OF TIME PLANT AND MACHINERY REQUIRES M ORE REPAIRS AND MAINTENANCE EXPENSES YEAR BY YEAR. IN OUR CASE COMPARE TO LAST YEAR INCREASE BY 0.17% WHICH IS VERY MUCH NORM AL COMPARE TO GENERAL INFLATION RATE OF MORE THAN 10%. IV) THE INCREASE IN FREIGHT EXPENSES COMPARE TO LAST YE AR IS BY 0.14% WHICH IS VERY MUCH NORMAL COMPARE TO GENERAL INFLATION RATE OF MORE THAN 10%. V) DURING THE YEAR UNDER CONSIDERATION THE INCREASE I N OTHER MANUFACTURING EXPENSES COMPARE TO LAST YEAR IS BY 1 .24% WHICH IS VERY MUCH NORMAL COMPARE TO GENERAL INFLATION RA TE OF MORE THAN 10%. VI) THE ASSESSEE HAD ALSO PRODUCED BOOKS OF ACCOUNTS WH ICH HAS ALSO BEEN VERIFIED. BUT BECAUSE OF CHANGE IN JURIS DICTION FREQUENTLY ALL THESE FACTS WERE NOT PROPERLY REFLEC TED ON THE FILE ON THE BASIS OF WHICH THE ASSESSMENT ORDER U/S.143( 3) HAS BEEN FRAMED. FROM THE ABOVE SUBMISSION IT IS VERY CLEAR THAT IN ALL MAJOR HEADS OF EXPENSES ONLY A MARGINAL INCREASE WAS EVIDENT. THE BOOKS OF A/C WAS SUBJECT MATTER OF STATUTORY AUDIT U/S.44AB. THE AO HAS ALSO NOT BROUGHT ON RECORD WHICH PARTICULAR EXPENSES HAS ABN ORMALLY GONE UP FOR WHICH THE EXPLANATION OF THE APPELLANT WAS NOT SATISFACTORY. IN THIS CIRCUMSTANCES ESTIMATION OF G.P. BY AO IS UNWARRANT ED AND LEGALLY NOT SUSTAINABLE. THEREFORE I AM INCLINED TO GRANT REL IEF TO THE APPELLANT. ACCORDINGLY THIS GROUND OF APPEAL IS ALLOWED. 4.1. WE FIND MERIT IN THE CONTENTION OF THE LD.SR.D R THAT THE LD.CIT(A) HAS MERELY REPRODUCED THE SUBMISSIONS OF THE ASSESSEE. THE LD.CIT(A) HAS ALSO NOT CALLED FOR ANY REMAND REPORT FROM THE AO ON THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE LD.CIT(A). SINCE THERE IS A CA TEGORICAL FINDING ON A FACT BY THE AO THAT NO BOOKS OF ACCOUNTS WERE PRODUCED EV EN IF AT THE APPELLATE ITA NO.367/AHD/ 2013 ASST.CIT VS.M/S.MARS PACKAGING INDUSTRIES ASST.YEAR 2009-10 - 5 - STAGE IN OUR CONSIDERED VIEW THE LD.CIT(A) OUGHT TO HAVE CALLED FOR REMAND REPORT FROM THE AO. WE FIND THAT THE LD.CIT(A) HAS NOT GIVEN A CATEGORICAL FINDING THAT THE BOOKS OF ACCOUNTS WERE PRODUCED AN D SAME ARE VERIFIED. IN THE ABSENCE OF SAME THE FINDING OF LD.CIT(A) CANNOT BE SUSTAINED. THEREFORE WE SET ASIDE THE ORDER OF THE LD.CIT(A) ON THIS ISSUE AND REMIT THIS MATTER BACK TO THE FILE OF LD.CIT(A) TO DECIDE THE SAME AFRESH AND GIVE A SPECIFIC FINDING ABOUT THE BOOKS OF ACCOUNT AFTER CALLING A REMAND R EPORT FROM THE AO AND DECIDE THIS ISSUE AFRESH. THUS THIS GROUND OF APP EAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. 5. IN THE RESULT REVENUES APPEAL IS ALLOWED BUT FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE SD/- SD/- ( .. ) (' #$) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 25/ 10 /2013 71.. .../ T.C. NAIR SR. PS 4 / $8 98'$ 4 / $8 98'$ 4 / $8 98'$ 4 / $8 98'$/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. -(+ / THE RESPONDENT. 3. !! $ ': / CONCERNED CIT 4. ':() / THE CIT(A)-VALSAD 5. 8 #; $ / DR ITAT AHMEDABAD 6. ;<& =0 / GUARD FILE. 4' 4' 4' 4' / BY ORDER -8$ $ //TRUE COPY// > >> >/ // / !) !) !) !) ( DY./ASSTT.REGISTRAR) / ITAT AHMEDABAD ITA NO.367/AHD/ 2013 ASST.CIT VS.M/S.MARS PACKAGING INDUSTRIES ASST.YEAR 2009-10 - 6 - 1. DATE OF DICTATION .. 21.10.13 (DICTATION-PAD 13 -PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21.10.2013 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 FAIR ORDER PLACED BEFORE OTHER MEMBER 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.25.10.13 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 25.10.13 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER