M/s. NBA Diamond Mfg.Co.,, Surat v. The ACIT.,Circle-9,, Surat

ITA 741/AHD/2009 | 2006-2007
Pronouncement Date: 15-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 74120514 RSA 2009
Assessee PAN AADFN5698Q
Bench Ahmedabad
Appeal Number ITA 741/AHD/2009
Duration Of Justice 2 year(s) 4 month(s) 9 day(s)
Appellant M/s. NBA Diamond Mfg.Co.,, Surat
Respondent The ACIT.,Circle-9,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 15-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 15-07-2011
Date Of Final Hearing 07-07-2011
Next Hearing Date 07-07-2011
Assessment Year 2006-2007
Appeal Filed On 06-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI MUKUL SHRAWAT JUDICIAL MEMBER AND SHRI A. K. GARODIA ACCOUNTANT MEMBER I.T.A. NO.741 / AHD/2009 (ASSESSMENT YEAR 2006-07) MS. NBA MANUFACTURING CO. AMBICA NIVAS MOHAN-NI CHAWL VARACHHA ROAD SURAT VS. ACIT CIRCLE 9 SURAT PAN/GIR NO. : AADFN 5698 Q (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI A K PAREKH AR RESPONDENT BY: SHRI B L YADAV DR O R D E R PER SHRI A. K. GARODIA AM:- THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAI NST THE ORDER OF LD. CIT(A) V SURAT DATED 29.01.2009 FOR THE ASSESSMENT YEAR 2006-07. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UND ER: I. THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN REJECTING THE BOOKS OF ACCOUNTS WITHOUT FINDING ANY DEFECT IN MANUFACTURING REGISTER AND OTHER BOOKS OF ACCOUNTS MAINTAINED BY ASSESSEE. THE BOOKS OF ACCOUNTS SHOULD BE ACCEPTED. II. THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED I N LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS. 28 83 612/- BY ESTIM ATING GROSS PROFIT AT 6% ON DIAMOND COMMISSION BUSINESS AS AGAINST THE NET PROFIT OF 1% DETERMINED B Y ITAT IN THE CASE OF ASSESSEE FOR ASSESSMENT YEAR 2005-06. THE ADDITION OF RS.28 83 612/- SHOULD BE DELETED. 2. THE BRIEF FACTS OF THE CASE ARE THAT FOR THE VAR IOUS REASONS ENUMERATED IN THE ASSESSMENT ORDER RELATED TO REJECTION OF BOO KS OF ACCOUNTS THE A.O. BY I.T.A.NO. 741/AHD/2009 2 INVOKING THE PROVISIONS OF SECTION 145(3) OF THE IN COME TAX ACT 1961 PROCEEDED TO REJECT THE BOOKS AND TO ESTIMATE THE G P OF THE ASSESSEE. THE A.O. ESTIMATED THE GP OF THE ASSESSEE @ 6% AS AGAIN ST GP REPORTED BY THE ASSESSEE OF ONLY 1.18%. IN THIS MANNER HE MADE AD DITION OF RS.28 83 612/-. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER BE FORE LD. CIT(A) BUT WITHOUT SUCCESS AND NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. REGARDING GROUND NO.1 OF THE APPEAL IT IS SUBMI TTED BY THE LD. A.R. THAT THE ONLY REASON GIVEN BY THE A.O. FOR REJECTIN G THE BOOKS OF ACCOUNTS OF THE ASSESSEE IS THAT THE ASSESSEE IS NOT MAINTAININ G QUALITY-WISE STOCK REGISTER. REGARDING THE MERITS OF ADDITION I.E. R EGARDING GROUND NO.2 IT IS SUBMITTED THAT IN ASSESSMENT YEAR 2004-05 IN THE A SSESSEES OWN CASE GP WAS ESTIMATED BY THE A.O. @ 6%. IN THAT YEAR ALSO NO RELIEF WAS ALLOWED BY THE LD. CIT(A) BUT THE TRIBUNAL HAS HELD IN THAT YE AR THAT GP RATE OF 3% OF GROSS RECEIPT IS REASONABLE. HE SUBMITTED A COPY O F THE TRIBUNAL DECISION DATED 02.07.2010 IN THE ASSESSEES OWN CASE IN I.T .A.NO. 4056/AHD/2007 FOR THE ASSESSMENT YEAR 2004-05 WHICH IS AVAILABLE ON PAGES 1-8 OF THE PAPER BOOK. IT IS ALSO SUBMITTED THAT IN THE ASSES SMENT YEAR 2005-06 ALSO THE A.O. ESTIMATED GP @ 5% OUT OF JOB RECEIPTS. TH E LD. CIT(A) HAS HELD THAT THE NET PROFIT RATE OF 1% IS REASONABLE IN THE ASSESSEES CASE AND HE DIRECTED THE A.O. TO ADOPT 1% OF NET PROFIT. AGAI NST THIS ORDER OF LD. CIT(A) REVENUE WAS IN APPEAL BEFORE THE TRIBUNAL A ND THAT APPEAL OF THE REVENUE WAS DISMISSED BY THE TRIBUNAL ON THE BASIS OF LOW TAX EFFECT IN I.T.A.NO. 2528/AHD/2008 DATED 04.09.2008. IT IS SU BMITTED THAT A COPY OF THIS TRIBUNAL DECISION IS AVAILABLE ON PAGES 22-24 OF THE PAPER BOOK. IT IS SUBMITTED BY HIM THAT IN THE PRESENT YEAR ALSO THE A.O. MAY BE DIRECTED TO ADOPT 1% NET PROFIT AS IN THE PRECEDING YEAR. 4. AS AGAINST THIS THE LD. D.R. OF REVENUE SUPPORT ED THE ORDERS OF AUTHORITIES BELOW. I.T.A.NO. 741/AHD/2009 3 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. REGARDING GROUND NO.1 OF THE ASSESSEE I.E. REGARDING REJECTI ON OF BOOKS OF ACCOUNTS WE FIND THAT BOOKS OF ACCOUNTS WERE REJECTED BY THE A.O. NOT FOR THE ONLY REASON THAT ASSESSEE IS NOT MAINTAINING QUALITY WIS E STOCK REGISTER. WE FIND THAT IT IS NOTED BY THE A.O. IN THE ASSESSMENT ORDE R THAT IT WAS SUBMITTED BY THE ASSESSEE BEFORE HIM THAT QUALITY WISE RECORD OF DIAMOND WAS BEING MAINTAINED BY M/S. CLASSIC DIAMONDS (I) LTD. AND NO T BY THE ASSESSEE. IT IS ALSO NOTED BY THE A.O. THAT IT IS AN ESTABLISHED FA CT THAT DIAMONDS WERE CUT AND THE LABOUR CHARGES VARIES FROM LOT TO LOT OF DI AMONDS DEPENDING UPON QUALITY OF DIAMONDS. THE CASE OF THE A.O. IS THAT IF THE QUALITY IS THE BASIS FOR DECIDING THE RATES FOR LABOUR COST/CONTRACT TH EN HOW THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE RELIABLE IF THE ASSESSE E IS NOT MAINTAINING ANY RECORD ABOUT QUALITY OF DIAMONDS. UNDER THESE FACT S WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) REGARDING GROU ND NO.1 OF THE ASSESSEES APPEAL BECAUSE WE FIND THAT AT PAGE 10 OF THE ASSES SMENT ORDER IN PARA 11 IT IS NOTED BY THE A.O. THAT THE FACTS ARE IDENTICAL I N ASSESSMENT YEAR 2004-05 2005-06 AND THE PRESENT YEAR. IN THOSE TWO YEARS A LSO THE BOOKS OF ACCOUNTS WERE REJECTED BY THE A.O. AND THE ASSESSEE HAS FAIL ED TO BRING ANY MATERIAL ON RECORD TO SHOW THAT THERE IS ANY DIFFERENCE IN F ACTS IN THE PRESENT YEAR. HENCE GROUND NO.1 OF THE ASSESSEES APPEAL STANDS REJECTED. 6. REGARDING GROUND NO.2 OF THE ASSESSEE WE FIND T HAT THE ASSESSEE HAS SUBMITTED BEFORE US THAT IN ASSESSMENT YEAR 2004-05 THE TRIBUNAL HAS DIRECTED THE A.O. TO ADOPT GP RATE OF 3% OF GROSS R ECEIPTS. NOW THE POINT OF THE ASSESSEE IS THAT IN ASSESSMENT YEAR 2005-06 LD. CIT(A) HAS DIRECTED THE A.O. TO ADOPT NET PROFIT RATE OF 1% AND THE SAM E BASIS SHOULD BE ADOPTED IN THE PRESENT YEAR INSTEAD OF ESTIMATING THE GP AN D THEN ALLOWING DEDUCTION ON ACCOUNT OF EXPENSES. IN ASSESSMENT YEAR 2005-0 6 THE MATTER HAS REACHED I.T.A.NO. 741/AHD/2009 4 BEFORE THE TRIBUNAL BUT THE APPEAL OF THE REVENUE W AS DISMISSED BY THE TRIBUNAL ON THE BASIS OF TAX EFFECT AND HENCE THER E IS NO TRIBUNAL DECISION IN RESPECT OF ASSESSMENT YEAR 2005-06. WE ALSO FEEL T HAT IF THE INCOME IS TO BE ESTIMATED BETTER APPROACH IS TO ESTIMATE THE G.P. INSTEAD OF N.P. THEREFORE WE HAVE TO FOLLOW THE TRIBUNAL ORDER IN ASSESSMENT YEAR 2004-05. IN THAT YEAR IT WAS DIRECTED BY THE TRIBUNAL THAT 3% OF GP SHOULD BE ADOPTED. THIS DIRECTION OF THE TRIBUNAL IN THAT YEAR IS ON THE BA SIS THAT IN ASSESSMENT YEAR 2003-04 THE ASSESSMENT WAS COMPLETED BY THE A.O. U /S 143(3) ON 24.01.2006 WHEREIN HE ESTIMATED GP @ 3% OF GROSS RE CEIPTS ON AGREED BASIS. THE RELEVANT PORTION OF THAT ASSESSMENT ORDE R OF THAT YEAR HAS BEEN REPRODUCED BY THE TRIBUNAL IN ITS ORDER. SINCE THE TRIBUNAL HAS APPROVED THE GP RATE OF 3% IN ASSESSEES OWN CASE THAT TOO ON TH E BASIS OF AGREED ASSESSMENT ORDER IN ASSESSEES OWN CASE FOR THE ASS ESSMENT YEAR 2003-04 WE FIND NO REASON TO TAKE A CONTRARY VIEW IN THE PR ESENT YEAR AND HENCE WE DIRECT THE A.O. TO ASSESS THE INCOME OF THE ASSESSE E BY ESTIMATING THE GP RATE OF 3% OF GROSS RECEIPT. THE ASSESSEE HAS FURN ISHED WORKING OF THE ADDITION TO BE MADE BY ADOPTING GP RATE OF 3%. AS PER THE SAME ADDITION HAS TO BE MADE BY THE A.O. OF RS.9 83 506/-. THE A .O. IS DIRECTED TO VERIFY THIS WORKING AND FINALIZE THE INCOME OF THE ASSESSE E ON THE BASIS OF GP @ 3% OF GROSS RECEIPT. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JULY 2011. SD./- SD./- (MUKUL SHRAWAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED : 15 TH JULY 2011 SP I.T.A.NO. 741/AHD/2009 5 COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR AHMEDABAD 6. THE GUARD FILE 1. DATE OF DICTATION 12/7 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13/7 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 14/7 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 15/7 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S. 15/7 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 15/7/11 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..