ACIT,, Ludhiana v. M/s Apex Enterprises,, Ludhiana

ITA 839/CHANDI/2009 | 2006-2007
Pronouncement Date: 25-02-2011 | Result: Dismissed

Appeal Details

RSA Number 83921514 RSA 2009
Assessee PAN AAHFA9008M
Bench Chandigarh
Appeal Number ITA 839/CHANDI/2009
Duration Of Justice 1 year(s) 6 month(s) 11 day(s)
Appellant ACIT,, Ludhiana
Respondent M/s Apex Enterprises,, Ludhiana
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 25-02-2011
Date Of Final Hearing 30-12-2014
Next Hearing Date 30-12-2014
Assessment Year 2006-2007
Appeal Filed On 13-08-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL: A BENCH: CH ANDIGARH BEFORE HONBLE SHRI D K SRIVASTAVA AM AND HONBLE MS. SUSHMA CHOWLA JM ITA NO. 839/CHANDI/2009 ASSESSMENT YEAR: 2006-07 A.C.I.T. V M/S APEX ENTERPRISES CIRCLE-I C-176 PHASE V FOCAL POINT LUDHIANA. LUDHIANA. PAN: AAHFA9008M (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI N.K.SAINI DR RESPONDENT BY: SHRI ASHWANI KUMAR ORDER D K SRIVASTAVA: THE APPEAL FILED BY THE DEPARTMEN T IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (A) ON 29.5.2009 ON THE FOLLOWING GROUNDS : 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING THE ADDITION OF RS.54 61 025/- MADE BY THE ASSESSING OF FICER BY APPLYING GP RATE OF 5% ON SALES OF RS.10 92 20 503/- MADE TO TH E SISTER CONCERNS IGNORING THE FACT THAT THE SALES WERE BEING MADE TO ITS SISTER CONCERNS AT THE RATES LOWER THAN THE MARKET RATES THEREBY SHIF TING THE BURDEN OF TAX ACROSS UNITS. 2. THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AN D THAT OF THE A.O. BE RESTORED. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE IT IS FINALLY DISPOSED OFF. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF IRON AND STEEL FORGINGS AND PRECISION TOOLS. THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY. IN THE CO URSE OF SCRUTINY THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD MADE SUBSTANT IAL SALES TO ITS SISTER CONCERNS NAMELY M/S BAJAJ SONS LTD. AND SAROOPSON S EXPORTS. IT WAS FURTHER NOTICED THAT THE ASSESSEE WAS MAKING BULK OF ITS PU RCHASES FROM M/S UPPER INDIA STEEL MANUFACTURING & ENGG. CO. LTD. AND BHUSHAN LT D. AND SELLING THOSE VERY GOODS TO THE AFORESAID SISTER CONCERNS. THE ASSESS ING OFFICER NOTICED THAT THESE 2 GOODS WERE PURCHASED AND SOLD BY THE ASSESSEE AT TH E SAME RATE. THE ASSESSING OFFICER FURTHER NOTICED THAT THE ASSESSEE HAD MADE PROFITS ON SALES TO CONCERNS OTHER THAN SISTER CONCERNS. HE THEREFORE CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY THE SAME RATE OF GROSS PROFIT AS IN THE CASE OF SALES MADE TO OTHER NON- SISTER CONCERNS SHOULD NOT BE APPLIED TO THE SALES MADE TO THE SISTER CONCERNS OF THE ASSESSEE. THE SUBMISSIONS MADE BY THE ASSESSEE IN THIS BEHALF WERE REJECTED. THE ASSESSING OFFICER NOTICED THAT THE P ROFIT RATE ON SALES MADE TO THE NON-SISTER CONCERNS WAS 5% AND THEREFORE APPLIED THE SAME RATE OF PROFIT ON THE SALES MADE TO THE SISTER CONCERNS. 3. AGGRIEVED BY THE ORDER PASSED BY THE ASSESSING O FFICER THE ASSESSEE FILED THE APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (A ). 4. THE LEARNED COMMISSIONER OF INCOME-TAX (A) EXAMI NED THE CASE IN DETAIL. HE NOTED THAT THE ASSESSEE WAS GETTING 5% CASH DISC OUNT ON THE PURCHASES WHICH WERE SUBSEQUENTLY SOLD TO SISTER CONCERNS. HE ALSO NOTED THAT THE REQUISITE APPROVAL OF THE CENTRAL GOVT. UNDER SECTION 297 OF THE COMPANIES ACT WAS OBTAINED BEFORE ENTERING INTO THE TRANSACTIONS WITH THE SAID SISTER CONCERNS. HE ALSO COMPARED THE GP RATE AND NET PROFIT RATE SHOWN BY THE ASSESSEE IN THE YEAR UNDER APPEAL WITH THOSE IN THE PRECEDING YEARS AND NOTED THAT THEY WERE COMPARABLE TO EARLIER YEARS. IN THIS VIEW OF THE M ATTER THE LEARNED COMMISSIONER OF INCOME-TAX (A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 5. AGGRIEVED BY THE ORDER PASSED BY THE COMMISSIONE R OF INCOME-TAX (A) THE DEPARTMENT IS NOW IN APPEAL BEFORE THIS TRIBUNAL. IN SUPPORT OF THE APPEAL THE LEARNED D.R. STRONGLY RELIED UPON THE ORDER PASSED BY THE ASSESSING OFFICER. 6. IN REPLY THE LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE NOT ONLY RELIED UPON THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (A) BUT ALSO REITERATED THOSE VERY SUBMISSIONS WHICH WERE EARLIE R MADE BEFORE THE COMMISSIONER OF INCOME-TAX (A). 7. WE HAVE HEARD BOTH THE PARTIES. WE HAVE ALSO CA REFULLY PERUSED THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (A). THE LEARNED COMMISSIONER OF INCOME-TAX (A) HAS GIVEN COGENT REASONS FOR DELETIN G THE IMPUGNED ADDITION. THE DEPARTMENT HAS NOT BEEN ABLE TO POINT OUT ANY I NFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME-TAX (A) WARRANTING OUR INTER FERENCE. IN THIS VIEW OF THE 3 MATTER WE ENDORSE THE ORDER PASSED BY THE COMMISSIO NER OF INCOME-TAX (A) AND CONSEQUENTLY DISMISS THE APPEAL FILED BY THE DEPART MENT. ORDER PRONOUNCED ON 25 FEBRUARY 2011 SD/- SD/- (SUSHMA CHOWLA) (D K SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT MEMBER CHANDIGARH: THE 25 FEBRUARY 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 4. THE D.R. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT CHANDIGARH