M/s. Yash Silk Mills, Surat v. The Income tax Officer,Ward-4(2),, Surat

ITA 4193/AHD/2007 | 2003-2004
Pronouncement Date: 24-12-2010 | Result: Partly Allowed

Appeal Details

RSA Number 419320514 RSA 2007
Bench Ahmedabad
Appeal Number ITA 4193/AHD/2007
Duration Of Justice 3 year(s) 1 month(s)
Appellant M/s. Yash Silk Mills, Surat
Respondent The Income tax Officer,Ward-4(2),, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 24-12-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 24-12-2010
Date Of Final Hearing 09-12-2010
Next Hearing Date 09-12-2010
Assessment Year 2003-2004
Appeal Filed On 23-11-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD C BENCH (BEFORE S/SHRI G.D. AGARWAL VICE-PRESIDENT AND T.K. SHARMA JUDICIAL MEMBER) ITA.NO.4193/AHD/2007 [ASSTT. YEAR : 2003-2004] M/S.YASH SILK MILLS 249/2 GIDC PANDESARA SURAT VS. ITO WARD-4(2) SURAT. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI J.P. SHAH REVENUE BY : SHRI K. MADHUSUDAN O R D E R G.D. AGARWAL VICE-PRESIDENT : THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)I SURAT DATED 06.09.2007 ARISING OUT OF THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 143(3) O F THE INCOME TAX ACT 1961. 2. THE GROUND NO.1 OF THE ASSWESSEES APPEAL READS AS UNDER: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING AN ADDITION ON ACCOUNT OF LOW GROSS PROFIT RATIO OF RS.18 99 631/- 3. AT THE TIME OF HEARING BEFORE US IT IS SUBMITTE D BY THE LEARNED COUNSEL THAT THE ASSESSEE DERIVES INCOME FROM THE BUSINESS OF DYEING OF ART SILK CLOTH ON JOB WORK BASIS. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE R ECEIVED JOB WORK CHARGE OF RS.2 63 69 655/- ON WHICH GP OF RS.49 56 479/- WAS DISCLOSED WHICH WAS AT THE RATE OF 18.80%. IN THE IMMEDIATELY PRECEDING YEAR THE JOB WORK RECEIVED WAS RS.2 08 15 410/- ON WHICH GP OF RS.54 11 830/- WAS DISCLOSED WHICH WORK ED OUT TO 26%. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER REJECTED THE BOO KS OF ACCOUNTS AND APPLIED GP RATE OF 26% WHICH RESULTED IN THE ADDITION OF RS.18 99 631/-. AT THE TIME OF HEARING BEFORE US THE LEARNED COUNSEL DID NOT SERIOUSLY CHALLENGE THE REJECTION O F THE BOOKS OF ACCOUNTS. HOWEVER HE SUBMITTED THAT DESPITE THE REJECTION OF THE BOOKS NO ADDITION TO THE GP WAS REQUIRED TO BE MADE. HE EXPLAINED THAT FOR THE PURPOSE OF PROCESS ING OF CLOTH GAS IS BEING USED WHICH IS PURCHASED FROM THE GUJARAT GAS COMPANY LTD. (GGCL FOR SHORT). THAT DURING THE YEAR UNDER CONSIDERATION THE GGCL ISSUED ADDITIONAL B ILL OF RS.17 LAKHS ON 10-5-2002. THIS BILL IN THE FORM OF A DEBIT NOTE WAS ISSUED ON THE GROUND OF DISCREPANCY IN THE METER. THAT THE GGCL IS THE ONLY SUPPLIER OF THE GAS AND THEREFOR E THE ASSESSEE HAD NO OPTION BUT TO ACCEPT THE ADDITIONAL BILL AND MAKE THE PAYMENT THEREFOR. THAT THE BILL WAS RAISED IN THE BEGINNING OF THE YEAR AND THEREFORE THE DISCREPANCY WAS IN THE R ECORDING OF THE GAS IN THE PRECEDING YEAR. ITA.NO.4193/AHD/2007 -2- THAT IF THIS ADDITIONAL BILL OF RS.17 LAKHS IS REDU CED FROM THE EXPENSES OF THE YEAR UNDER CONSIDERATION THE GP DISCLOSED BY THE ASSESSEE WOU LD BE ALMOST AT PAR WITH THE PRECEDING YEAR. DURING THE ASSESSMENT PROCEEDINGS THE ASSES SEE ALSO POINTED OUT THAT THERE WAS INCREASE IN THE COST OF OTHER CONSUMABLES IN THE YE AR UNDER CONSIDERATION. HE THEREFORE SUBMITTED THAT CONSIDERING THE FACTS OF THE CASE T HE GP DISCLOSED IN THE YEAR UNDER CONSIDERATION IS NOT LOW AND THEREFORE NO ADDITION TO THE TRADE RESULT IS CALLED FOR. 4. THE LEARNED DR ON THE OTHER HAND RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW AND HE HAS STATED THAT IF THE CONTENTION OF THE LEA RNED COUNSEL THAT THE BILL OF RS.17 LAKHS IS RAISED FOR THE GAS CONSUMED IN THE PRECEDING YEAR I S ACCEPTED THEN THE ENTIRE EXPENDITURE OF RS.17 LAKHS WOULD NOT BE ALLOWABLE IN THE YEAR UNDE R CONSIDERATION. BECAUSE THEN IT WOULD BE THE EXPENDITURE RELATING TO THE EARLIER YEAR. HE A LSO STATED THAT IF THE ASSESSEE WAS MANIPULATING THE METER SO AS NOT TO DISCLOSE THE CO RRECT CONSUMPTION OF THE GAS WHICH WAS ULTIMATELY DETECTED BY THE GGCL IT SHOWS THAT TH E ASSESSEE WAS DOING THE UNACCOUNTED JOB WORK AND ADDITION SHOULD HAVE BEEN MADE FOR THE SUP PRESSION OF THE JOB RECEIPT AS WELL. HE THEREFORE SUBMITTED THAT CONSIDERING THE FACTS OF T HE CASE THE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LEARNED COMMISSIONER O F INCOME TAX (APPEALS) IS QUITE FAIR AND REASONABLE WHICH SHOULD BE UPHELD. 5. IN THE REJOINDER IT WAS STATED BY THE LEARNED C OUNSEL THAT THERE WAS DISCREPANCY IN THE METER SUPPLIED BY THE GGCL AND THERE IS NO ALLEGA TION ON THEIR PART THAT THE ASSESSEE MADE ANY MANIPULATION WITH THAT METER. HE FURTHER STATE D THAT THE LIABILITY OF ADDITIONAL PAYMENT OF RS.17 LAKHS AROSE DURING THE ACCOUNTING YEAR RELEVA NT TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND ACTUAL PAYMENT IS ALSO MADE. THE REFORE THE ASSESSING OFFICER HIMSELF HAS NOT DISALLOWED THE PAYMENT OF RS.17 LAKHS TO THE G GCL. THAT NO EVIDENCE OF ANY UNRECORDED JOB WORK DONE BY THE ASSESSEE WAS FOUND BY THE ASSESSING OFFICER AND THEREFORE THERE IS NO QUESTION OF MAKING ANY ADDITION FOR THE SUPPRESSED JOB RECEIPT. 6. WE HAVE CAREFULLY CONSIDERED ARGUMENTS OF BOTH T HE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. IN THE ASSESSMENT ORDER THE ASS ESSING OFFICER HAS DISCUSSED AT LENGTH THE REASONS FOR THE REJECTION OF THE BOOKS OF ACCOUNTS. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO NOT SERIOUSLY DISPUTED THE REJECTION OF THE BO OKS OF ACCOUNTS. WE THEREFORE UPHOLD THE REJECTION OF THE BOOKS OF ACCOUNTS. 7. NOW WE COME TO THE APPLICATION OF THE GP RATE. ADMITTEDLY THE BILL OF RS.17 LAKHS WAS RAISED BY THE GGCL ON 10-5-2002 ON THE GROUND OF THE METER DISCREPANCY. IT IS NOT CLEAR FROM WHICH DAY THERE WAS METER DISCREPANCY AN D HOW THE ABOVE AMOUNT OF RS.17 LAKH ITA.NO.4193/AHD/2007 -3- WAS WORKED OUT. HOWEVER THE CONSUMPTION OF THE GA S FOR THE YEAR UNDER CONSIDERATION INCLUDING THE ABOVE BILL OF RS.17 LAKH WAS RS.46.96 LAKHS. THUS EXCLUDING THE ABOVE BILL OF RS.17 LAKHS THE CONSUMPTION WOULD BE RS.29.96 LAKH . IN THE IMMEDIATELY PRECEDING YEAR THE CONSUMPTION OF THE GAS WAS RS.27.98 LAKHS. CONSID ERING THIS SMALL CONSUMPTION FOR THE WHOLE YEAR THE DISCREPANCY OF RS.17 LAKHS IN RECOR DING THE QUANTITY OF THE GAS CONSUMED COULD NOT OCCUR WITHIN THE SHORT SPAN OF FORTY DAYS I.E. 1 ST APRIL 2002 TO 10 TH MAY 2002 (OF THE YEAR UNDER CONSIDERATION). THEREFORE WE ACCEP T THE ASSESSEES CONTENTION THAT THE DISCREPANCY IN THE METER MIGHT HAVE OCCURRED IN THE EARLIER YEAR RESULTING IN LOWER RECORDING OF CONSUMPTION OF GAS. THUS THE GAS WAS CONSUMED IN EARLIER YEAR WHICH ASSESSEE WAS REQUIRED TO PAY IN THE YEAR UNDER CONSIDERATION WH ICH HAS ADVERSELY AFFECTED THE GP OF THE YEAR UNDER CONSIDERATION. THE CONTENTION OF THE LE ARNED DR THAT EXPENSES OF RS.17 00 000/- CANNOT BE ALLOWED IN THE YEAR UNDER CONSIDERATION C ANNOT BE ACCEPTED BECAUSE LIABILITY FOR SUCH PAYMENT ACCRUED ONLY ON 10-5-2002 WHEN DEBIT NOTE IS RAISED BY THE GGCL. THE CONTENTION OF THE LEARNED DR FOR ADDITION ON ACCOUN T OF SUPPRESSION OF JOB RECEIPT ALSO CANNOT BE ACCEPTED BECAUSE NEITHER ANY EVIDENCE OF JOB WOR K BEING DONE BY THE ASSESSEE OUTSIDE BOOKS WAS FOUND NOR ANY SUCH ADDITION WAS MADE BY T HE ASSESSING OFFICER. THE ASSESSEE HAS ALSO EXPLAINED THE INCREASE IN THE COST OF VARIOUS OTHER RAW-MATERIAL/CONSUMABLES. THE ASSESSING OFFICER HAS ALSO POINTED OUT THAT THERE W AS INCREASE IN THE JOB WORK RATE ALSO. CONSIDERING THE TOTALITY OF THE ABOVE FACTS AND THE ARGUMENTS OF BOTH THE SIDES IN OUR OPINION IT WOULD MEET ENDS OF JUSTICE IF THE GP RATE OF 20 % IS ADOPTED AS AGAINST 26% ADOPTED BY THE ASSESSING OFFICER. WE DIRECT HIM TO WORK OUT THE A DDITION AFTER ADOPTING THE GP RATE OF 20%. 8. GROUND NO.2 AND 3 OF THE ASSESSEES APPEAL ARE A GAINST THE DISALLOWANCE OF RS.7 468/- OUT OF TELEPHONE EXPENSES AND RS.57 348/- OUT OF MO TOR CAR EXPENSES RESPECTIVELY. AT THE TIME OF HEARING BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUND NOS.2 AND 3 OF THE APPEAL. ACCORDINGLY THE SAME ARE REJECTE D AS NOT PRESSED. 9. GROUND NOS.4 TO 6 OF THE APPEAL ARE OF GENERAL N ATURE NEEDS NO SEPARATE ADJUDICATION. 10. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON 24 TH DECEMBER 2010. SD/- SD/- (T.K. SHARMA ) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 24-12-2010 ITA.NO.4193/AHD/2007 -4- COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR/AR ITAT AHMEDABAD