Daan Marble & Granite Ind., Vapi v. The ACIT., Cent.Circle-2,, Surat

ITA 4075/AHD/2007 | 2003-2004
Pronouncement Date: 22-11-2011 | Result: Allowed

Appeal Details

RSA Number 407520514 RSA 2007
Assessee PAN AACFD4506A
Bench Ahmedabad
Appeal Number ITA 4075/AHD/2007
Duration Of Justice 4 year(s) 15 day(s)
Appellant Daan Marble & Granite Ind., Vapi
Respondent The ACIT., Cent.Circle-2,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 22-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 23-02-2010
Date Of Final Hearing 22-11-2011
Next Hearing Date 22-11-2011
Assessment Year 2003-2004
Appeal Filed On 07-11-2007
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE S/SHRI D.K.TYAGI JM AND A. MOHAN ALANKAMON Y AM. DAAN MARBLE & GRANITE INDUSTRIES NR.BRAHMDEV TEMPLE NATIONAL HIGHWAY NO.8 BALITHA VAPI. VS. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2 AAYAKAR BHAVAN MAJURA GATE SURAT. (APPELLANT) .. (RESPONDENT) PAN NO.AACFD 45 06A APPELLANT BY :- SHRI S.N.L. AGARWALA. RESPONDENT BY:- SHRI A.K. PATEL SR. D.R. DATE OF HEARING : 22/11/2011 DATE OF PRONOUNCEMENT : 22/11/11 O R D E R PER D. K. TYAGI JUDICIAL MEMBER . THIS IS AN ASSESSEES APPEAL AGAINST THE ORDER OF LD. CIT (A)-II AHMEDABAD IN APPEAL NO. CIT (A)-II/CC.II/52/2006-07 DATED 6-9-2007. 2. AT THE TIME OF HEARING THE LD. COUNSEL OF THE AS SESSEE PLACED RELIANCE ON THE WRITTEN SUBMISSIONS WHICH READ AS U NDER:- THE APPELLANT IS A PARTNERSHIP FIRM. IT IS ENGAGED IN THE BUSINESS OF GRANITE AND MARBLE TRADING. THE APPELLA NT FILED ITS ITA NO.4075/AHD/2007 ASST. YEAR :2003-04 ITA NO. 4075/AHD/2007 ASST. YEAR 2003-04. 2 2 RETURN OF INCOME FOR A.Y. 2003-04 FOR TOTAL INCOME OF RS.34 183/- BEING NET PROFIT AS PER PROFIT AND LOSS ACCOUNT. IN THE PROFIT AND LOSS ACCOUNT THE APPELLANT HAS I N ADDITION TO GROSS PROFIT OF RS.1 18 477/- FROM GRANITE AND MARB LE TRADING CREDITED RS.9 41 445/- FOR INCOME REPRESENTED BY E XCESS STOCK FOUND DURING SURVEY ON 17-7-2002. DURING SURVEY O N 17-7-2002 STOCK OF RS. 23 50 091/- WAS FOUND AS AGAINST STOCK OF RS.8 31 146/- IN BOOKS OF ACCOUNT THERE BEING EXCESS STOCK OF RS .15 12 345/-. IN THE PROFIT AND LOSS ACCOUNT AND RETURN OF INCOME TH E APPELLANT ADMITTED EXCESS STOCK AND OFFERED IT AS INCOME REDU CING ITS VALUE BY RS.5 77 500/- ON TWO COUNTS GP @ 15% RS. 3 52 500/- UNSALEBLE STOCK WRITTEN OFF. RS. 2 25 000/- 2. LD. ASSESSING OFFICER BY HIS ORDER DATED 14-3-20 06 (PARA-9) ASSESSED TOTAL INCOME OF THE ASSESSEE AT RS.18 73 6 20/- AS UNDER - RS.3 61 092/- GROSS PROFIT (PARA-8 OF AOS ORDER) @ 27.7% RS.4 79 569/-ONDECLAFED SALES MINUS GP SHOWN RS.1 18 477/- RS.15 12 345/- EXCESS STOCK FOUND DURING SURVEY (PARA-7 OF AOS ORDER) RS.18 73 620/- TOTAL INCOME. LD. A.O. DISALLOWED ASSESSEES CLAIM OF TWO ADJUSTM ENTS TO THE VALUE OF EXCESS STOCK OBSERVING THAT (I) THERE IS NOTHING ON RECORD TO SHOW THAT THE INVENTORY OF STOCK WAS MADE AT SAL E VALUE AND THE ASSESSEE HAD NOT OBJECTED TO THE VALUATION OF THE I NVENTORY OF STOCK DURING SURVEY OR THEREAFTER(PARA 3.1); (II) THE CLA IM OF UNSOLD STOCK OF RS.2 25 000/- FOR WAS DISALLOWED BY AO IN A.Y. 2002-03 AND APPEAL OF THE DEPARTMENT AGAINST ORDER OF CIT ( A) IS PENDING BEFORE ITAT FOR A.Y. 2002-03 AND WRITTEN OFF OF RS. 2 25 000/- FOR UNSALEABLE STOCK IS UNBELIEVABLE (PARA 3.2). THE LD. A.O. FURTHER HELD THAT FOLLOWING THREE ITEM S OF EXPENSES DEBITED TOP/L ACCOUNT ARE NOT ALLOWABLE. ITA NO. 4075/AHD/2007 ASST. YEAR 2003-04. 3 3 ITEM OF EXPENSE AMOUNT RS. REASON FOR DISALLOWANCE PARA OF ORDER GROUND LEVELING EXPENSES 3 05 565/- THEY ARE CAPITAL EXPS. 4 TO 4.2 GROUND RENT 72 000/- TOTAL DEBIT OF GROUND RENT OF RS.1 08 000/- IS EXCESSIVE BY RS.72 000/- PAID TOFATHER OF A PARTNER. 4.3 COST OF TEMPORARY SHED 44 850/- CONSTRUCTED AND WRITTEN OFF IN THE SAME YEAR. 4.4 THE LD. A.O. CONCLUDED THAT THE TWO ADJUSTMENTS TO VALUE OF STOCK AND THREE ITEMS OF EXPENSES TOTALING RS.9 99 415/- IS R EQUIRED TO BE ADDED TO BOOK RESULTS (WHICH IS RS.34 183/-) (PARA 4.5). HOWEVER HE COMPLETELY REJECTED THE BOOK RESULTS ON ACCOUNT OF EXCESS STOCK FOUND IN SURVEY (PARA-5) AND MADE ASSESSMENT AT TOTAL INCOME OF RS.18 73 620/- (PARA-9). 3. COMMISSIONER (APPEALS) UPHELD THE REJECTION OF A DJUSTMENT OF RS.3 52 500/- @ 15% GP ON STOCK OF RS.23 50 091/- F OUND DURING SURVEY (PARA 4.2). HE UPHELD DISALLOWANCE OF GROUND LEVELI NG EXPENSES OF RS.3 05 565/- AS PAID TO A RELATED PERSON IN CASH ( PARA 5.3) AND DISALLOWANCE OF RS.72 000/- OUT OF RENT CONSIDERING THAT IT IS UNJUSTIFIED PAYMENT TO A PERSON RELATED TO A PARTNER (PARA-7). COMMISSIONER (APPEALS) DIRECTED THE AO TO CONSIDER THE CLAIM FOR ADJUSTMENT OF RS.2 25 000/- FOR UNSALABLE STOCK(PARA 4.2) AND TO ALLOW DEDUCTION OF RS.44 850/- FOR TEMPORARY SHED WRITTEN OFF ( PARA 6 ). COMMISSIONER (APPEALS) UPHELD REJECTION OF STOCK R ESULT DUE TO ADMITTED UNACCOUNTED STOCK FOUND DURING SURVEY AND THE ESTIMATE OF GP OF RS.4 97 569/- BY AO @ 27.7% SHOWN FOR EARLIER YE AR AS AGAINST GP OF RS.1 18 477/- AS PER BOOKS OF ACCOUNT (PARA 3). 4. SUBMISSIONS OF APPELLANT BEFORE THE TRIBUNAL: I. THE LD. AO HAS COMPUTED THE TOTAL INCOME OF RS.1 8 73 620/- WHICH COMPRISES OF ESTIMATED GROSS PROFIT OF RS.3 61 092/ - PLUS EXCESS STOCK OF RS.15 12 345/- FOUND DURING THE SURVEY. HE HAS NOT ALLOWED ANY OF THE UNQUESTIONED ITEMS OF EXPENDITUR E DEBITED TO TRADING ACCOUNT AND P/L A/C. CIT (A) HAS ERRED IN N OT DIRECTING THE LD. AO TO ALLOW UNQUESTIONED ITEMS OF EXPENSES IN T HE P/L A/C ITA NO. 4075/AHD/2007 ASST. YEAR 2003-04. 4 4 THOUGH A SPECIFIC GROUND OF APPEAL GROUND NO.5 WA S TAKEN BEFORE HIM. II. LD. AO HAD DISALLOWED THREE ITEMS OF EXPENDITUR E IN P/L A/C TEMPORARY SHED GROUND LEVELING CHARGES AND LAND RE NT OUT OF WHICH CIT (A) UPHELD DISALLOWANCE OF TWO ITEMS GRO UND LEVELING CHARGES AND LAND RENT. (A) AS REGARDS DISALLOWANCE OF GROUND LEVELING EXPE NSES OF RS.3 05 565/- THE AO DISALLOWED IT AS CAPITAL EXPEN DITURE. ON THE OTHER HAND CIT (A) CIT (A) HAS CONFIRMED THE DISALLOWANCE ON THE GROUND THAT THIS AMOUNT IS PAID TO A RELATED PERSON. IT IS SUBMITTED THAT THE HONBLE TR IBUNAL AHMEDABAD BENCH A IN ORDER DATED 8-8-2008 IN THE CASE OF ACIT VS. M/S. CHANOD CLINE PARK IN ITA NO.2033/AHD/ 2008 ON SIMILAR FACTS HELD AND ALLOWED THE EXPENSES AS R EVENUE EXPENSES. THE FACT OF INCURRING OF EXPENSES OF RS.3 05 565/- IS NOT IN DISPUTE. THE RECIPIENT OF THIS PAYMENT HA S SHOWN IT IN HIS INCOME. THE ASSESSEE HAS DEDUCTED TAX AT SOU RCE. THERE IS NO EVIDENCE THAT THE PAYMENT MADE IS EXCES SIVE. THE PAYMENT IS FOR THE PURPOSE OF BUSINESS OF THE ASSES SEE. IT IS SUBMITTED THAT THE DISALLOWANCE IS NOT JUSTIFIED ME RELY ON SUSPICION OR BECAUSE IT GOES TO REDUCE THE TAXABLE INCOME. (B) AS REGARDS DISALLOWANCE OF ADDITIONAL RENT OF R S.72 000/- IT IS SUBMITTED THAT THE PAYMENT OF THE INCREASED RENT IS WELL ESTABLISHED BY THE FACT THAT ITS RECIPIENT SHRI DAM JIBHAI HAS OFFERED AND IS ASSESSED FOR THE FULL AMOUNT OF THE RENT OF RS.1 08 000/- FOR THIS ASSESSMENT YEAR. THE HONBLE APPELLATE TRIBUNAL IN ITS ORDER DATED 30 TH JULY 2010 IN ITA NO.1401/AHD/2010 IN HIS CASE HAS ACCEPTED THAT SUM OF RS.1 08 000/- BEING RENTAL INCOME WAS AVAILABLE WIT H THE ASSESSEE HIS INCOMING. IT IS SUBMITTED THAT THE DIS ALLOWANCE MERELY ON SUSPICION IS NOT JUSTIFIED. III. ASSESSED TOTAL INCOME OF RS.18 73 620/- COMPRI SES OF ESTIMATED GROSS PROFIT OF RS.3 61 092/- PLUS EXCESS STOCK OF RS.15 12 345/- FOUND DURING SURVEY. THE EXCESS STOCK FOUND DURING SURVEY IS INCORPORATED IN THE ACCOUNTS AND ALSO IN ASSESSED T OTAL INCOME. IT IS SUBMITTED THAT THE EXCESS STOCK FOUND DURING SUR VEY HAVING BEEN INCORPORATED BY THE ASSESSEE IN THE P/L ACCOUNT PRE PARED AFTER SURVEY AND IN THE RETURN OF INCOME AND BY THE LD. A O IN THE ASSESSED TOTAL INCOME REJECTIONOF BOOKS OF ACCOUNT AND FURTHER ITA NO. 4075/AHD/2007 ASST. YEAR 2003-04. 5 5 ADDITION IN ASSESSED TOTAL INCOME OF ESTIMATED GRO SS PROFIT ON ACCOUNT OF EXCESS STOCK FOUND DURING SURVEY IS NOT JUSTIFIED WHEN NO OTHER DISCREPANCY IS FOUND IN THE BOOKS OF ACCOU NT. REJECTION OF BOOKS OF ACCOUNT AND ESTIMATE OF GROSS PROFIT IN TH IS CASE IS ONLY ON ACCOUNT OF EXCESS STOCK FOUND DURING SURVEY. FURTHE R IN THE CASE OF THE ASSESSEE FOR THE SUBSEQUENT YEAR A.Y. 2004-05 B OOK RESULT IS FULLY ACCEPTED WITHOUT MAKING ANY ADDITION BY ESTIM ATE OF GROSS PROFIT. IN ANY CASE ESTIMATE OF GP @ 27.7% IS UNJUSTIFIED. IN THE EARLIER YEAR IN THE CASE OF THE APPELLANT IN ITA NO.111 AND 203/AHD/2006 HONBLE TRIBUNAL HAS ACCEPTED GP OF 15% ON THE BASI S OF PAST RECORD. (PARA- 9-13). IV .AS REGARDS THE ADJUSTMENT OF RS.3 52 500/- FOR 15% GP ON STOCK OF RS.23 73 091/- FOUND DURING SURVEY THE APPELLATE T RIBUNAL IN ITS ORDER DATED 9-9-2009 IN THE CASE OF THE APPELLANT F OR A.Y. 2002-03 IN ITA NO.111 AND 203/AHD/2006 HAS ACCEPTED THAT THE S URVEY INVENTORY LIST WAS AT COST PRICE. (PARA 10-13). V. HOWEVER AS REGARDS THE ADJUSTMENT OF RS.2 25 000/- FOR UNSALABLE STOCK APPELLATE TRIBUNAL (CAMP SURAT) ORDER DATED 9 -9-2009 IN THE CASE OF THE APPELLANT FOR A.Y. 2002-03 IN ITA NO.11 1 & 203/AHD/2006 HAS ALLOWED ADJUSTMENT OF RS.1 91 250/ - OUT OF RS.2 25 000/- FOR UNSALABLE STOCK (PARA 9-13). COMM ISSIONER (APPEALS) HAD DIRECTED THE AO TO CONSIDER THE CLAIM FOR ADJUSTMENT OF RS.2 25 000/- FOR UNSALABLE STOCK. LD. AO MAY BE DIRECTED TO ALLOW ADJUSTMENT OF RS.1 91 250/- OUT OF RS.2 25 00 0/- FOR UNSALABLE STOCK. VI. [GROUND NO.1 REGARDING JURISDICTIONAL IS NOT PRESSED]. PRAYER: THE HONBLE TRIBUNAL MAY CONSIDER THE ABOVE SUBMISS IONS AND DIRECT LD. AO TO I. ALLOW UNDISPUTED EXPENSES DEBITED TO P & L ACCOUNT. II. ALLOW DISPUTED RENT OF RS.72 000/- AND GROUND LEVEL ING EXPENSES OF RS.3 05 565/- III. NOT TO MAKE ADDITION BY ESTIMATE OF GROSS PROFIT AF TER HAVING MADE ADDITION FOR EXCESS STOCK FOUND DURING SURVEY AND ITA NO. 4075/AHD/2007 ASST. YEAR 2003-04. 6 6 IV. ALLOW ADJUSTMENT OF RS.1 91 250/- FOR UNSALABLE STO CK OF EXCESS STOCK OF RS.15 12 345/- FOUND DURING SURVEY. 3. SINCE THE SUBMISSIONS MADE BY THE ASSESSEE IN IT S WRITTEN SUBMISSIONS REQUIRE VERIFICATION AT THE END OF THE AO BOTH THE PARTIES AGREED THAT THE MATTER BE RESTORED BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION. THEREFORE THE MATTER IS RESTORED BAC K TO THE FILE OF THE AO FOR FRESH ADJUDICATION AFTER GIVING SUFFICIENT AND REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THEREFORE THE APPEAL O F THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN OPEN COURT ON 22-11-11. SD/- SD/ - (A. MOHAN ALANKAMONY) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICI AL MEMBER AHMEDABAD PATKI COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- II AHMEDABAD. 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD ITA NO. 4075/AHD/2007 ASST. YEAR 2003-04. 7 7 1.DATE OF DICTATION 22 /11/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER.OTHER MEMBER 23 /11/2011 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 23-11-11. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 22-11-11 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 23-11-11 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 24 -11-11. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..