The ACIT, 3(1), Bhopal v. M/s. DAULATRAM INDUSTRIES, Bhopal

ITA 436/IND/2014 | 2009-2010
Pronouncement Date: 29-09-2016 | Result: Dismissed

Appeal Details

RSA Number 43622714 RSA 2014
Assessee PAN AAAFD7012M
Bench Indore
Appeal Number ITA 436/IND/2014
Duration Of Justice 2 year(s) 3 month(s) 24 day(s)
Appellant The ACIT, 3(1), Bhopal
Respondent M/s. DAULATRAM INDUSTRIES, Bhopal
Appeal Type Income Tax Appeal
Pronouncement Date 29-09-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 29-09-2016
Date Of Final Hearing 08-09-2016
Next Hearing Date 08-09-2016
Assessment Year 2009-2010
Appeal Filed On 04-06-2014
Judgment Text
DCIT VS. M/S DAULATRAM INDUSTRIES ITA NO. 436/IND/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI D.T. GARASIA JM & SHRI O.P. MEENA AM ITA NO. 436/IND/2014 A.Y.2009-10 DCIT 3(1) BHOPAL ::: APPELLANT VS M/S DAULATRAM INDUSTRIES BHOPAL PAN AAAFD 7012M ::: RESPONDENT APPELLANT BY SHRI RAJEEV VARSHNEY RESPONDENT BY SHRI S.S. DESHPANDE DATE OF HEARING 8.9.2016 DATE OF PRONOUNCEMENT 2 9 .9.2016 O R D E R PER SHRI D.T. GARASIA JM THIS IS AN APPEAL PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A)-II BHOPAL DATED 21.3.20 14. 2. THE SUM AND SUBSTANCE OF THE GROUNDS OF APPEAL IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DELETING THE DCIT VS. M/S DAULATRAM INDUSTRIES ITA NO. 436/IND/2014 2 ADDITION OF RS. 5 33 07 201/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SUPPRESSION OF CLOSING STOCK. 2. THE FACTS IN BRIEF ARE THAT THE THE ASSESSEE IS A PARTNERSHIP FIRM DERIVING INCOME FROM MANUFACTURE OF R AIL BREAK SYSTEM AND AIR CONDITIONING EQUIPMENT. THE ASSESSE E MAINLY SUPPLIES THE GOODS TO THE INDIAN RAILWAYS. THE ASSESSEE HAS TWO UNITS; ONE AT BHOPAL AND THE ANOTHER NE W UNIT AT HARIDWAR. THE BHOPAL UNIT HAS STARTED THE PRODUCTION SINCE 1974-75 AND IT IS MANUFACTURING DYNAMI C BREAKING RESISTORS FROM 1990. THESE ARE USED FOR BREAK S. THE HARIDWAR UNIT WAS ESTABLISHED IN 2003 AND IT IS MANUFACTURING THE ROOF MOUNTED AIR CONDITIONER UNITS FOR INDIAN RAILWAYS. BOTH THE UNITS ARE MANUFACTURING ABSOLUTELY TWO DIFFERENT PRODUCTS AND IT COMPRISES TH E USE OF NUMBER OF COMPONENTS. THE INCOME OF HARIDWAR UNIT IS EXEMPT FROM TAX U/S 80IC. SEPARATE BOOKS OF ACCOUNTS AR E MAINTAINED FOR BOTH THE UNITS AND SEPARATE PROFIT AND LOS S DCIT VS. M/S DAULATRAM INDUSTRIES ITA NO. 436/IND/2014 3 ACCOUNT ARE PREPARED. SINCE THE ASSESSEE USES NUMBER OF COMPONENTS THE DAY TO DAY STOCK REGISTERS COULD NO T BE MAINTAINED FOR EACH OF THE COMPONENTS. THE STOCKS ARE TAKEN AT THE END OF THE YEAR. THE ASSESSEE IS REQUIRED T O USE THE ELECTRIC MOTORS WHICH ARE APPROVED BY THE RAILWAYS. THE RETURN OF INCOME WAS FILED DECLARING THE INCOME OF RS 86 68 147/- AFTER CLAIMING THE DEDUCTION U/S 80IC OF RS 17 28 404/-. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS T HE LD AO COMPARED THE GROSS PROFIT OF HARIDWAR UNIT AND THE BHOPAL UNIT AND OBSERVED THAT BOTH THE UNITS ARE MANUFACTURING THE SAME PRODUCTS AND ARE SELLING THEIR PRODUCTS TO RAILWAY DEPARTMENT AND AS SUCH THE GROSS PROFIT SHOULD BE SAME IN BOTH THE UNITS. HOWEVER TH E ASSESSEE HAS SHOWN THE GP AT 36.96% IN HARIDWAR UNIT ON THE SALE OF RS. 3.12 CRORES AND HAS SHOWN GP OF 16.85% IN BHOPAL UNIT ON A SALE OF RS. 49.6 CRORES. HE THUS OBSE RVED DCIT VS. M/S DAULATRAM INDUSTRIES ITA NO. 436/IND/2014 4 THAT LESS GROSS PROFIT HAS BEEN SHOWN IN THE BHOPAL UN IT AS COMPARED TO HARIDWAR UNIT. HE COMPARED THE STOCK OF 01.01.2009 AND THEN AFTER CONSIDERING THE PURCHASES MAD E AND DEDUCTING THE MATERIAL CONSUMPTION AT 75% OF THE SALES CONCLUDED THAT THE STOCKS HAS BEEN SUPPRESSED AT RS. 5.33 CRORES. ACCORDINGLY THE ASSESSING OFFICE R MADE THE ADDITION. ON APPEAL THE LEARNED CIT(A) DELETED T HE ADDITION AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE T HE TRIBUNAL. 4. BEFORE US THE LEARNED DR RELIED UPON THE ORDER OF THE ASSESSING OFFICER WITH THE SUBMISSION THAT THE LEARN ED CIT(A) HAS GROSSLY ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. 5. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD CIT(A) AFTER CONSIDERIN G THE FACT THAT BOTH THE UNITS ARE PRODUCING THE SEPARATE PRODUCTS HAS RIGHTLY CONCLUDED THAT THE GP OF BOTH TH E DCIT VS. M/S DAULATRAM INDUSTRIES ITA NO. 436/IND/2014 5 UNITS CANNOT BE COMPARED. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE LEARNED CIT(A) HAS RIGH TLY HELD THAT THE MATERIAL SUPPLIED BY THE SISTER CONCERN DURING THE EARLIER MONTHS OF DECEMBER HAVE BEEN ACCOUNTED FOR IN THE BOOKS DURING THE SUBSEQUENT PERI OD WHICH HAS EFFECTED THE STOCK. THE LEARNED COUNSEL FO R THE ASSESSEE FURTHER SUBMITTED THAT THE LEARNED CIT(A) ONL Y AFTER CONSIDERING THE FACTS OF THE CASE IN DETAIL HAS RI GHTLY DELETED THE ADDITION. 6. WE HAVE HEARD BOTH THE SIDES. WE FIND THAT THE LEARN ED CIT(A) WHILE GRANTING RELIEF HAS OBSERVED AS UNDER :- 5. THE APPELLANTS SUBMISSIONS ALONG WITH ASSESSMEN T ORDER HAVE BEEN CONSIDERED CAREFULLY AND ARE FOUND ACCEPTABLE. ASSE SSMENT RECORDS ALONG WITH IMPOUNDED BILLS AS MENTIONED BY THE A.O. HAVE ALSO BEEN PERUSED. A.O. HAS MADE THE IMPUGNED ADDITION ON THE GROUND THAT P RODUCTS MANUFACTURED BY BOTH THE UNITS ARE SAME AND ALSO SOLD TO SAME BU YER I.E. INDIAN RAILWAYS; BILLS/VOUCHERS VIS--VIS STOCK STATEMENT DO NOT TAL LY AND THAT THE APPELLANT HAS SHOWN PURCHASE OF MOTOR FROM ITS SISTER CONCERN AT HIGHER PRICE WITHOUT DCIT VS. M/S DAULATRAM INDUSTRIES ITA NO. 436/IND/2014 6 ANY JUSTIFICATION ALL RESULTING INTO SUPPRESSION OF SALES CLOSING STOCK AND LOWER PROFITS IN THE APPELLANTS HANDS. FIRST OF AL L IT IS SEEN THAT APPELLANTS HARIDWAR UNIT HAS COME INTO EXISTNCE W.E.F. THE YEA R 2004 WHEREAS ITS BHOPAL UNIT IS FOUND OPERATIONAL SINCE LAST 35-40 Y EARS. THE PRODUCTS MANUFACTUED AT BOTH THE UNITS ARE ALSO FOUND TO BE DISTINCT FROM EACH OTHER. IT MANUFACTURED DBR (DYNAMIC BRAKE RESISTORS) RAIL BRAKE SYSTEMS AT BHOPAL UNIT WHEREAS HARIDWAR UNIT IS ENGAGED IN MAN UFACTURING OF AC UNITS AND THEIR MAINTENANCE THOUGH BOTH THE PRODUC TS ARE BEING SOLD TO INDIAN RAILWAYS. THE SCALE OF OPERATIONS AT BOTH TH E UNITS IS ALSO FOUND COMPARABLE (RS.49.6 CRORES AT BHOPAL & RS.3.15 CROR ES AT HARIDWAR). THEN HARIDWAR UNIT ALSO ENJOYS BENEFITS OF TAX EXEMPTION U/S 80IC AS PER PROVISIONS OF THE IT ACT. THUS A.O. IS NOT FOUND J USTIFIED TO COMPARE GROSS PROFIT RATE OF BOTH THE UNITS AND THEN ESTIMATE/APP LY GROSS PROFIT RATE OF HARIDWAR UNIT TO ITS BHOPAL OPERATIONS. A.O. IS ALS O NOT FOUND JUSTIFIED IN ESTIMATING SUPRESSED SALES/CLOSING STOCK ON THE GRO UND THAT BIULLS AND STOCK TALLY DO NOT MATCH ON THE BASIS OF ONE MONTHS SALE AND PURCHASE COMPARISON. THE APPELLANT IS FOUND TO HAVE DULY EXP LAINED THE REASONS FOR THE SAME BEFORE THE A.O. IN FACT APPELLANTS SUBMIS SIONS AS MADE BEFORE A.O. ARE ALSO FOUND ACCEPTABLE IN THAT BILLS OF EAR LIER PERIOD I.E. BEFORE THE M/O JAN. 2009 ARE ALSO FOUND EXISTING AND AVAILABLE AS PER CASE FILED IN DCIT VS. M/S DAULATRAM INDUSTRIES ITA NO. 436/IND/2014 7 HON'BLE HIGH COURT DELHI ON 31.01.2010 PERTAINING TO DISPUTE BETWEEN THE ERSTWHILE PARTNERS AS PER EXCISE REGISTER AND AS PE R BULLS IMPOUNDED BY THE AO. ALSO THE FACT OF PURCHASE OF MOTORS FROM SISTER CONCERN AT INTENTIONALLY/ALLEGEDLY HIGHER RATES RESULTING INTO LOWER PROFITS HAS NO MERITS IN THAT THE SISTER CONCERN VIZ.M/S DAULATRAM ENGINE ERING SERVICE PVT. LTD. IS THE SOLD MANUFACTURER OF THESE MOTORS THE INCREASE D PRICE HAS BEEN PAID BY THE APPELLANT AS PER BILLS/TERMS RAISED BY ITS SIST ER CONCERN INCREASING THE PRICE FROM RS.2 68 000/- PER MOTOR RELIED UPON RS.3 84 400/- W.E.F. DEC. 2007. FURTHER AUDITED BOOKS OF ACCOUNTS OF BOTH TH E APPELLANT- AS WELL AS ITS SISTER CONCERN HAVE BEEN ACCEPTED BY THE RESPECTI VE A.O.S DECLARED TGRADING RESULTS AND SALES HAVE ALSO BEEN ACCEPTED BY THE A.O. I.E. ACIT CIRCLE 1(1) BHOPAL IN CASE OF DAULATRAM RAM ENGIN EERING SERVICES PVT. LTD. VIDE ORDER DT. 17.11.2011 PASSED U/S 143(3) OF THE IT ACT. APPELLANTS BOOKS OF ACCOUNTS HAVE ALSO BEEN ACCEPTED BY THE A. O. BUT TRADING RESULTS EMANATING THEREFROM BEEN NOT FOUND ACCEPTABLE. IT I S ALSO SEEN FROM RECORDS THAT THE SAME A.O. HAS ACCEPTED APPELLANTS SIMILAR LY DECLARED GROSS PROFIT RATE OF 18.76% AND 2.23% FOR ITS BHOPAL UNIT FOR LA ST 2 YEARS AS PER RESPECTIVE ASSESSMENT ORDERS PASSED U/S 143(3) OF T HE IT ACT ON 24.12.2009 AND 06.12.2010 FOR A.YS. 2007-08 AND 2008-09 RESPEC TIVELY. DCIT VS. M/S DAULATRAM INDUSTRIES ITA NO. 436/IND/2014 8 5. AFTER PERUSAL OF ENTIRE MATERIAL ON RECORD ASSE SSMENT ORDER ASSESSMENT RECORDS AND APPELLANTS SUBMISSIONS EST IMATED ADDITION OF RS.5 33 07 201/- IS NOT FOUND SUSTAINABLE AND ACCOR DINGLY DELETED. 7. WE HAVE CAREFULLY GONE THROUGH THE FINDINGS RECORD ED BY THE LEARNED CIT(A) BEFORE ARRIVING AT A CONCLUSION AN D FIND THAT THE LEARNED CIT(A) HAS VERY RIGHTLY HELD THAT SAME A.O. HAS ACCEPTED THE ASSESSEES SIMILARLY DECLARED GR OSS PROFIT RATE OF 18.76% AND 2.23% FOR ITS BHOPAL UNIT FO R LAST 2 YEARS AS PER RESPECTIVE ASSESSMENT ORDERS PASSED U/S 143(3) OF THE IT ACT ON 24.12.2009 AND 06.12.2010 FO R A.YS. 2007-08 AND 2008-09 RESPECTIVELY. WE FAIL TO UNDERSTAND AS TO HOW WITHOUT SHOWING ANY REASONS THE ASSESSING OFFICER CAN TAKE A DIFFERENT VIEW OTHER THAN THE VIEW TAKEN IN EARLIER YEARS ON THE SAME FACTS WITHOUT SHOWING ANY REASON THEREFOR. WE THEREFORE FIND NO FLAW IN THE ORDER OF THE LEARNED CIT(A) AND ACCORDINGLY UPHOLD THE SAME. DCIT VS. M/S DAULATRAM INDUSTRIES ITA NO. 436/IND/2014 9 8. IN THE RESULT THE DEPARTMENTAL APPEAL STANDS DISMISSED. PRONOUNCED IN OPEN COURT ON 29 SEPTEMBER 2016 SD/- SD/- (O.P. MEENA) (D.T. G ARASIA) ACCOUNTANTMEMBER JUDICIAL MEMB ER 29 SEPTEMBER 2016 DN/- DCIT VS. M/S DAULATRAM INDUSTRIES ITA NO. 436/IND/2014 10