ITO,, Ludhiana v. Sh. Sandeep Jain Prop., Ludhiana

ITA 437/CHANDI/2010 | 2006-2007
Pronouncement Date: 18-08-2010 | Result: Dismissed

Appeal Details

RSA Number 43721514 RSA 2010
Assessee PAN ABAPJ4562F
Bench Chandigarh
Appeal Number ITA 437/CHANDI/2010
Duration Of Justice 3 month(s) 20 day(s)
Appellant ITO,, Ludhiana
Respondent Sh. Sandeep Jain Prop., Ludhiana
Appeal Type Income Tax Appeal
Pronouncement Date 18-08-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 18-08-2010
Date Of Final Hearing 03-08-2010
Next Hearing Date 03-08-2010
Assessment Year 2006-2007
Appeal Filed On 28-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI G.S.PANNU ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA JUDICIAL MEMBER ITA NO. 437/CHD/2010 ASSESSMENT YEAR: 2006-07 THE INCOME TAX OFFICER V SANDEEP JAIN WARD VII-2 LUDHIANA PROP M/S PETIT FASHION CIVIL LINES LUDHIANA PAN: ABAPJ 4562 F (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. JAI SHREE SHARMA RESPONDENT BY: SHRI VIJAY GARG ORDER PER SUSHMA CHOWLA JM THE APPEAL BY THE REVENUE IS AGAINST THE ORDER OF CIT(A)-II LUDHIANA DATED 8.2.2010 RELATING TO ASSESSMENT YEAR 2006-07 AGAINST THE ORDER PASSED UNDER SECTION 144 R.W.S 145 OF THE I.T . ACT. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A)-II LUDHIANA HAS ERRED IN DELETING ADDITION OF RS. 10 62 818/= OUT OF TOTAL ADDITION OF RS. 16 57 756/ = MADE BY THE ASSESSING OFFICER IN THE TRADING ACCOUNT. 2 THAT THE ORDER OF LD. CIT(A)-II LUDHIANA BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WAS MANUFACTURING HOSIERY GARMENTS. DURING THE YEAR UNDER CONSIDERAT ION THE ASSESSEE HAS DECLARED GROSS PROFIT RATE OF 17.39% AS AGAINST 26 % DECLARED IN THE IMMEDIATELY PRECEDING YEAR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAD PRODUCED THE MONTHWIS E DETAILS OF STOCK QUANTITY PURCHASES SALES AND MANUFACTURING EXPENS ES. THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNT DESPITE SEVE RAL OPPORTUNITIES AFFORDED BY THE ASSESSING OFFICER. IN THE ABSENCE OF BOOKS OF ACCOUNT THE ASSESSING OFFICER REJECTED THE SAME U/S 145(3) OF THE ACT AND PROCEEDED TO COMPLETE THE ASSESSMENT U/S 144 OF THE ACT. THE ASSESSING OFFICER NOTICED THAT THE DURING THE YEAR THERE WAS DROP IN THE SALES AS COMPARED TO THE PRECEDING YEAR HOWEVER TRADING EX PENSES HAD INCREASED TO RS. 91 11 781 AS COMPARED TO RS. 53 73 375 CLAIM ED IN THE PRECEDING YEAR. FURTHER THERE WAS FALL IN GROSS PROFIT RATE DECLARED BY THE ASSESSEE I.E. THE ASSESSEE HAD DECLARED GROSS PROFIT RATE O F 17.39% DURING THE YEAR AS COMPARED TO 26% DECLARED IN THE PRECEDING YEAR. THE ASSESSING OFFICER ADOPTED THE GROSS PROFIT RATE OF 26% ON GR OSS SALES OF RS. 1 92 53 955/= AND COMPUTED THE INCOME AT RS. 50 06 028 RESULTING IN ADDITION OF RS. 16 57 756/=. 4 BEFORE THE CIT(A) THE CONTENTION OF THE LD. A.R. FOR THE ASSESSEE WAS THAT THE ASSESSMENT WAS COMPLETED U/S 144 OF TH E ACT ON THE PLEA THAT THE BOOKS OF ACCOUNT WERE NOT PRODUCED. IT WAS POI NTED OUT BY THE LD. A.R. FOR THE ASSESSEE BEFORE THE CIT(A) THAT THE B OOKS OF ACCOUNT WERE PRODUCED AND EXAMINED BY THE ASSESSING OFFICER ON 1 5.12.2008 AND COPY OF THE FORWARDED LETTER WAS FURNISHED BEFORE THE C IT(A). THE LD. A.R. FOR THE ASSESSEE POINTED OUT THAT THE NOTICE GIVE N BY THE ASSESSING OFFICER ON 24.12.2008 NOWHERE REFLECTED THE DATE AN D TIME FOR APPEARANCE AND HENCE THE SAID SHOW CAUSE NOTICE WAS NOT TO BE RELIED UPON AND HENCE PLEA OF ANNULMENT OF THE ASSESSMENT. IT WAS FURTHE R POINTED OUT THAT IN ASSESSMENT YEAR 2002-03 GROSS PROFIT RATE OF 20.4 8% WAS ACCEPTED BY THE ASSESSING OFFICER VIDE ORDER PASSED U/S 143(3) OF THE ACT. THE CIT(A) ON PERUSAL OF THE RECORDS UPHELD THE ORDER OF ASSES SING OFFICER IN COMPLETING THE ASSESSMENT U/S 144 OF THE ACT AS THE ASSESSEE HAD FAILED TO PROVE THAT THE BOOKS OF ACCOUNT WERE ACTUALLY PRODU CED DURING ASSESSMENT PROCEEDINGS. IN RESPECT OF THE DEFICIENCIES IN THE SHOW CAUSE NOTICE DATED 24.12.2008 IT WAS OBSERVED BY THE CIT(A) TH AT NOTICE U/S 142(1) OF THE ACT WAS ISSUED TO THE ASSESSEE BEFORE THE SH OW CAUSE NOTICE THE PLEA OF THE ASSESSEE WAS REJECTED. THE CIT(A) WAS NOT IN CONFIRMITY WITH THE ORDER OF ASSESSING OFFICER IN ADOPTING THE GR OSS PROFIT RATE OF IMMEDIATELY PRECEDING YEAR FOR COMPUTING THE INCOME FOR THE YEAR UNDER APPEAL IN VIEW OF THE FACT THAT THOUGH IN ASSESSME NT YEAR 2005-06 THE GROSS PROFIT RATE OF 26% WAS SHOWN WHEREAS IN ASSE SSMENT YEAR 2002-03 WHERE THE ASSESSMENT WAS COMPLETED U/S 143(3) OF TH E ACT GROSS PROFIT RATE OF 20.48% WAS ACCEPTED. IN LIEU OF THE VARIA TIONS IN THE GROSS PROFIT RATE IN VARIOUS YEARS IN THE LINE OF BUSINESS CARR IED ON BY THE ASSESSEE THE CIT(A) APPLIED GROSS PROFIT RATE OF 20.48% TO THE SALES TO COMPUTE THE INCOME FOR YEAR UNDER APPEAL WHICH RESULTED IN AN ADDITION OF RS. 5 94 938/= AND CONSEQUENTLY RELIEF TO THE ASSESSEE OF RS. 10 62 818/=. THE REVENUE IS AGGRIEVED BY THE DELETION OF ADDITIO N OF RS. 10 62 818/=. LD. A.R. FOR THE ASSESSEE HAS NOT POINTED OUT ANY APPEAL BEING FILED AGAINST THE ADDITION OF RS. 5 94 938/=. 5 THE LD. D.R. FOR THE REVENUE POINTED OUT THAT THE ASSESSING OFFICER HAD ADOPTED GROSS PROFIT RATE OF THE PRECEDING YEA R TO RECOMPUTE THE INCOME FOR THE YEAR UNDER APPEAL WHEREAS THE CIT(A) HAS ADOPTED GROSS PROFIT RATE OF ASSESSMENT YEAR 2002-03 TO WORK OUT THE INCOME FOR THE YEAR. THE LD. A.R. FOR THE ASSESSEE FILED ON RECO RD COMPARATIVE CHART OF SALES GROSS PROFIT AND GROSS PROFIT RATE BEING DE CLARED BY THE ASSESSEE SINCE ASSESSMENT YEAR 1998-99 TO ASSESSMENT YEAR 2 006-07. THE LD. A.R. FOR THE ASSESSEE POINTED OUT THAT THE BUSINES S OF THE ASSESSEE WAS CLOSED IN THE SUCCEEDING YEAR AND AS THE YEAR IN AP PEAL WAS HIS LAST YEAR OF THE WORKING HENCE GROSS PROFIT RATE BEING LOWE R. 6 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE RECORD. IN THE FACTS OF THE CASE BEFORE US THE ASSESSEE HAS FAILE D TO PRODUCE THE BOOKS OF ACCOUNT BEFORE THE ASSESSING OFFICER DURING THE COU RSE OF ASSESSMENT PROCEEDINGS. HENCE THE SAME WERE REJECTED U/S 145( 3) OF THE ACT. GROSS PROFIT RATE WAS ADOPTED FOR COMPUTING THE TRADING ADDITION IN THE HANDS OF THE ASSESSEE. THE ASSESSEE DURING THE YEAR UNDE R APPEAL HAD SHOWN SALES OF RS. 1 92 60 959/= ON WHICH GROSS PROFIT RA TE OF 17.39% WAS DECLARED AS AGAINST THE SALES OF RS. 2.21 CRORES DE CLARING GROSS PROFIT RATE OF 26% IN THE PRECEDING YEAR. THE TRADING RESULTS IN THE ASSESSMENT YEAR 2005-06 WERE ACCEPTED U/S 143(1) OF THE ACT. HOWEV ER IN THE ASSESSMENT YEAR RANGING FROM ASSESSMENT YEAR 1998-9 9 TO ASSESSMENT YEAR 2004-05 THE GROSS PROFIT RATE WAS IN THE RAN GE OF 20% AND IN ASSESSMENT YEAR 2002-03 THE ASSESSMENT WAS COMPLET ED U/S 143(3) OF THE ACT WHEREIN GROSS PROFIT RATE DECLARED BY THE ASSESSEE AT 20.42% WAS ACCEPTED. WE FIND NO MERIT IN THE ORDER OF ASSESSI NG OFFICER IN ADOPTING GROSS PROFIT RATE OF ASSESSMENT YEAR 2005-06 AS COM PARED TO AVERAGE GROSS PROFIT RATE SHOWN IN ALL YEARS IN WHICH THE ASSESSEE WAS CARRYING ON HIS BUSINESS. WE ARE IN CONFORMITY WITH THE ORD ER OF LD. CIT(A) IN ADOPTING THE GROSS PROFIT RATE OF 20.48% TO DETERM INE THE INCOME IN THE HANDS OF THE ASSESSEE. WE UPHOLD THE ORDER OF LD. C IT(A) IN THIS REGARD AND DISMISS THE GROUNDS OF APPEAL RAISED BY THE REV ENUE. 7 IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF AUGUST 2010. SD/- SD/- (G.S.PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18 AUGUST 2010 SURESH COPY TO:THE APPELLANT/THE RESPONDENT/THE CIT/THE CI T(A)/THE DR