The ACIT, Circle-6,, Surat v. M/s. Puja Chemicals, Surat

ITA 4101/AHD/2007 | 2004-2005
Pronouncement Date: 21-05-2010 | Result: Dismissed

Appeal Details

RSA Number 410120514 RSA 2007
Assessee PAN AAFFP5721Q
Bench Ahmedabad
Appeal Number ITA 4101/AHD/2007
Duration Of Justice 2 year(s) 6 month(s) 12 day(s)
Appellant The ACIT, Circle-6,, Surat
Respondent M/s. Puja Chemicals, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 21-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 21-05-2010
Date Of Final Hearing 20-05-2010
Next Hearing Date 20-05-2010
Assessment Year 2004-2005
Appeal Filed On 08-11-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABAD CAMP AT SURAT (BEFORE HONBLE SHRI T.K. SHARMA J.M. & HONBLE SH RI D.C. AGRAWAL A.M.) I.T.A. NO. 4101/AHD./2007 ASSESSMENT YEAR : 2004-2005 ASSISTANT COMMISSIONER OF INCOME TAX -VS.- M/S. PUJA CHEMICALS SURAT CIRCLE-6 SURAT (PAN : AAFFP 5721 Q) (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. JYOTI LAXMI SR. D.R. RESPONDENT BY : N O N E O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER DATED 31.08.2007 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-IV SURAT DELET ING THE ADDITION OF RS.6 88 307/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDER-STATING O F SALE PRICE FOR THE ASSESSMENT YEAR 2004-05. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S ENGAGED IN THE BUSINESS OF MANUFACTURING AS WELL AS TRADING IN SPECIALLY CHEMICALS. FOR THE ASSESSMENT YEAR UNDER APPEAL IT FILED THE RETURN OF INCOME DECLARING LOSS OF RS.15 22 767/- ON 01.11 .2004. THE ASSESSING OFFICER FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 30.11.2006 AT TO TAL LOSS OF RS.8 34 460/-. IN THIS ASSESSMENT ORDER THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS UNDER SECTION 145 OF THE INCOME TAX ACT AND MADE THE ADDITION OF RS.6 88 307/- ON ACCOU NT OF UNEXPLAINED DIFFERENCE IN SALE PRICES. THE OBSERVATION MADE BY THE ASSESSING OFFICER READS AS UNDER :- DURING THE ASSESSMENT PROCEEDINGS THE AO NOTICED THAT ON VERIFICATION OF PURCHASE AND SALE REGISTER REVEALED THAT THE PURCHA SE PRICE AND SALE PRICE OF SOME CHEMICALS VARIED EVEN DURING THE MONTH. THE AO TOOK SOME INSTANCES OF SALE PRICE WHILE THAT OF NID WHERE THE PRICE STAND HIGH OF RS.119/- IN THE MONTH OF JULY 2003 AND IT WAS LOW AS RS.79.90 IN SEPTEMBER AND IT WAS AGAIN RISE RS.106/- IN FEBRUARY 2004. IN THE CASE OF PURCHASE OF PEG 4 00 THE PRICE WAS RS.70/- IN THE MONTH OF DECEMBER 2003 AND IT WAS REACHED TO LO W OF RS.57.50. IN THE SAME 2 ITA NO. 4101/AHD/200 7 MONTH BUT AGAIN PRICE TO RS.78 IN JANUARY 2004. IN CASE INSTANCES THE PRICE VARIED IN THE SAME MONTH FOR EXAMPLE IN THE CASE OF 60 40 DURING JULY AUGUST AND JANUARY. THE AO REJECTED THE SALE AND PURCHASE PRICES AS SHOWN BY THE ASSESSEE. THE PRICES HAVE BEEN SHOWN IRREGULARLY AN D UNACCEPTABLE VALUATION WHICH ARE NEITHER RELIABLE TO PURCHASE PRICE NOR TO ANY OTHER DEFINITE ACCEPTABLE FACTOR. THE AO FURTHER REJECTED SUCH ABNORMAL SALE PRICE U/S. 145 OF THE ACT. THE SALE PRICE HAVE BEEN TAKEN AT THE AVERAGE OF THE PR ICES REPORTED BY THE ASSESEE FOR EACH CHEMICALS. ACCORDINGLY THE AO DETERMINED THE PRICE AT RS.96 66 863/- AS AGAINST RS.89 78 550/- SHOWN BY THE ASSESSEE. THUS THE AO HAS MADE AN ADDITION OF RS.6 88 307/- IN SALE PROCEEDS SHOWN AND ADDED T O THE TOTAL INCOME OF THE ASSESSEE WITHOUT DISTURBING THE PURCHASES CLAIMED. 3. ON APPEAL IN THE IMPUGNED ORDER DATED 31.08.200 7 THE LD. CIT(A)-IV SURAT DELETED THE ENTIRE ADDITION OF RS.6 88 307/- MADE ON ACCOUNT OF DIFFERENCE IN SALES MADE BY THE AO. THE LEARNED CIT(A) OBSERVED THAT THE A.O. HAD TAKEN AVE RAGE OF DIFFERENT PRODUCTS HAVING DIFFERENT PRICES AND SUCH AN EXERCISE WOULD ALWAYS GIVE OR DI STURBED PICTURE OF THE STATE OF AFFAIRS. HE FURTHER STATED THAT HE CANNOT COMPARE AN AVERAGE NE T PRODUCTS DIFFERENT PRICES AND APPARENTLY THE ENTIRE EXERCISE UNDERTAKEN BY AO IS FUTILE. IN HIS OPINION SINCE ONLY TWO INSTANCES WOULD REDUCE THE TOTAL SALES WORKED OUT BY THE AY BY RS.6 96 275 /- THERE WOULD BE NO JUSTIFICATION WHATSOEVER IN MAKING AN ADDITION OF RS.6 88 307/- ON ACCOUNT O F DIFFERENCE IN SALES. THE LD. CIT(A) DIRECTED THE A.O. TO DELETE THE ADDITION. 4. AGGRIEVED BY THE ORDER OF LD. CIT(A) THE REVENU E IS IN APPEAL BEFORE THE TRIBUNAL. 5. ON THE DATE FIXED FOR HEARING I.E. ON 20.05.201 0 NEITHER ANYBODY APPEARED ON BEHALF OF THE ASSESSEE NOR AN APPLICATION FOR ADJOURNMENT WAS FILED. ON THE OTHER HAND SMT. JYOTI LAXMI SR. D.R. APPEARING ON BEHALF OF THE REVENUE CONTEND ED THAT THE ORDER OF LD. CIT(A) IS NOT ACCEPTABLE. SHE CONTENDED THAT THE AO WAS JUSTIFIED IN MAKING THE ADDITION OF RS.6 88 307/- AS THE ASSESSEE FAILED TO ADVANCE ANY COGENT EXPLANATI ON OR CONFIRMATION TOWARDS THE VALUATION. MOREOVER THE ASSESSEE HAD NOT KEPT ANY QUANTITY AN D CONCENTRATION WISE DETAILS OF THE ACIDS AND CHEMICALS THE BOOKS OF ACCOUNTS AND PURCHASE AND S ALE REGISTER OF THE ASSESSEE ALSO INCOMPLETE 3 ITA NO. 4101/AHD/200 7 AND INCORRECT AND ACCORDINGLY IT WAS RIGHTLY REJEC TED UNDER SECTION 145 OF THE ACT/ THE AO HAS THUS CORRECTLY MADE AN ADDITION OF RS.6 88 307/- T O THE SALES AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE WITHOUT DISTURBING THE PURCHASE CLAIMED. THE LD. D.R. SUGGESTED THAT THE ORDER OF LD. CIT(A) SHOULD BE DELETED. 6. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THE ASSESSMENT ORDER THE ASSESSING OFFIC ER TOOK SOME INSTANCES OF SALE PRICE LIKE THAT OF NID WHERE THE PRICE STARTED FROM A HIGHER OF RS. 119/- IN THE MONTH OF JULY 2003 AND WAS AS LOW AS RS.79.90 IN SEPTEMBER AND AGAIN ROSE TO RS.1 06/- IN FEBRUARY 2004. IN SOME INSTANCES THE PRICES VARIED IN THE SAME MONTHS FOR EXAMPLE IN THE CASE OF 60-40 DURING JULY AUGUST AND JANUARY. BEFORE THE LD. CIT(A) THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT WHILE PREPARING THE WORKING OF AVERAGE RATE OF EACH ITEM OF CHEMICAL AS REFLECTED IN ANNEXURE ATTACHED TO THE ASSESSMENT ORDER THE AO COMMITTED ERRORS AND THAT IS WHY DIFFERENCE HAS ARISEN. ON PAGE 12 OF THE ASSESSMENT ORDER THE AO CALCULATED AVERAGE RAT E OF TWO DIFFERENCE ITEMS VIZ. HP 99 AND LAXSOFT. THE PRICE OF HP-99 WAS RS.55.30 WHILE THE PRICE OF LAXSOFT WAS RS.287.70 BY TAKING AVERAGE OF TWO DIFFERENT PRODUCTS THE AO TOOK THE VALUE AT RS.1 75 289/- WHEREAS THE CORRECT VALUE SHOULD BE RS.96 277/-. SIMILARLY ON PAGE 14 O F THE ASSESSMENT ORDER THE AO CALCULATED THE AVERAGE OF THREE DIFFERENT PRODUCTS VIZ. Z-211 Z- 213 AND Z-229 THE PRICES OF WHICH WAS RS.24.60 RS.71.30 RS.24.60 RESPECTIVELY AND BY A VERAGING THE THREE DIFFERENT PRODUCTS AN INCORRECT PICTURE HAD COME OUT WHEREIN THE AO TOOK THE TOTAL VALUE AT RS.26 59 340/- AGAINST THE CORRECT VALUE OF RS.20 41 577/-. EVEN IF ONLY THESE TWO INSTANCES ARE TAKEN INTO ACCOUNT THE TOTAL DIFFERENCE DUE TO INCORRECT ADOPTION OF AVERAGE WOR KED OUT TO RS.6 96 775/- AND THE ENTIRE ADDITION WAS MADE ON INCORRECT APPRECIATION OF FACT S AND ADOPTION OF AVERAGE RATE OF DIFFERENCE CHEMICALS. 6.1. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE LD COUNSEL OF THE ASSESSEE THE LD. CIT(A) OBSERVED THAT ONE CANNOT COMPARE AN AVERAGE OUT OF PRODUCTS HAVING DIFFERENT PRICES AND APPARENTLY THE ENTIRE EXERCISE UNDERTAKEN BY THE AS SESSING OFFICER IS FUTILE. ACCORDING TO LD. CIT(A) SINCE ONLY TWO INSTANCES AS NARRATED ABOVE WOULD REDUCE THE TOTAL SALES WORKED OUT BY THE AO BY RS.6 96 275/-. THEREFORE THERE WOULD BE NO JUSTIFICATION WHATSOEVER IN MAKING AN ADDITION OF RS.6 88 307/- ON ACCOUNT OF DIFFERENCE IN SALES WORKED OUT BY THE A.O. IN OUR 4 ITA NO. 4101/AHD/200 7 OPINION THE LD. CIT(A) HAS GIVEN COGENT REASON FOR DELETING THE ADDITION OF RS.6 88 307/-. WE THEREFORE INCLINE TO UPHOLD THE ORDER OF LD. CIT(A ). 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 21.05.2010 . SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21 / 05 /2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT AHMEDABAD LAHA/SR.P.S.