ITO,, Ludhiana v. M/s Shree Matsya Impex Pvt. Ltd.,, Ludhiana

ITA 881/CHANDI/2009 | 2005-2006
Pronouncement Date: 28-04-2010 | Result: Dismissed

Appeal Details

RSA Number 88121514 RSA 2009
Assessee PAN AAHCS1952R
Bench Chandigarh
Appeal Number ITA 881/CHANDI/2009
Duration Of Justice 8 month(s) 3 day(s)
Appellant ITO,, Ludhiana
Respondent M/s Shree Matsya Impex Pvt. Ltd.,, Ludhiana
Appeal Type Income Tax Appeal
Pronouncement Date 28-04-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 28-04-2010
Assessment Year 2005-2006
Appeal Filed On 25-08-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI G.S.PANNU ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA JUDICIAL MEMBER ITA NO. 881/CHD/2009 ASSESSMENT YEAR: 2005-06 ITO WARD-1(3) VS. M/S SHREE MATSYA IMPEX PVT LTD. LUDHIANA LUDHIANA PAN NO. AAHCS1952R & C.O. NO. 58/CHD/2009 (IN ITA NO. 881/CHD/2009) ASSESSMENT YEAR: 2005-06 M/S SHREE MATSYA IMPEX PVT LTD. VS. ITO WARD-1(3) LUDHIANA LUDHIANA PAN NO. AAHCS1952R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K.SAINI DR RESPONDENT BY: SHRI SUDHIR SEHGAL ORDER PER SUSHMA CHOWLA JM THE APPEAL BY THE REVENUE IS AGAINST THE ORDER OF CIT(A)-I LUDHIANA DATED 10.6.2009 RELATING TO ASSESSMENT YEA R 2005-06 AGAINST THE ORDER PASSED UNDER SECTION 144 OF THE I.T. ACT. T HE ASSESSEE HAS ALSO FILED CROSS OBJECTION AGAINST THE APPEAL FILED BY T HE REVENUE. 2. THE APPEAL OF THE REVENUE AND THE CROSS OBJECTI ON OF THE ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY T HIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2 3. THE REVENUE HAS RAISED THE FOLLOWING GROUND OF A PPEAL: THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND FACTS IN ALLOWING RELIEF OF RS. 33 21 204/- OUT OF TOTAL ADD ITION OF RS. 34 21 204/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LOW GP AS NO BOOKS OF ACCOUNT AND SUPPORTING VOUCHERS WERE PRODUCED DURING ASSESSMENT PROCEEDINGS FOR EXAMINATION. 4. THE ASSESSEE HAS RAISED THE FOLLOWING CROSS OBJE CTION: - THAT THE CIT(A) LUDHIANA HAS ERRED IN SUSTAINING A N ADDITION OF RS. 1 LAC AND THE SUSTAINING THE ADDITI ON OF RUPEES ONE LAKHS IS AGAINST THE FACTS AND CIRCUMSTA NCES OF THE CASE . 5. THE ASSESSMENT IN THIS CASE WAS COMPLETED U/S 14 4 OF THE ACT. THE ASSESSEE HAD SHOWN SALES OF RS. 13.62 CRORES AND GP RATE OF 0.49%. THE ASSESSING OFFICER ADOPTED THE GP RATE AT 3% AND MAD E ADDITION OF RS.34 21 204/-. BEFORE THE CIT(A) THE ASSESSEE EXP LAINED THAT BECAUSE OF THE ILLNESS OF THE MOTHER THERE WAS NO COMPLIANCE B EFORE THE ASSESSING OFFICER . THE ASSESSEE ALSO EXPLAINED THAT IT WAS E NGAGED IN THE BUSINESS OF TRADING OF HOSIERY GOODS OF MEDIUM AND LOWER MED IUM CLASS AND THE SALE RATE WAS NOMINAL VARYING BETWEEN RS. 100/- TO RS. 300/-. THE SECOND PLEA OF THE ASSESSEE WAS THAT THE ASSESSING OFFICER HAD ADOPTED THE GP RATE BY COMPARISON TO GP RATE SHOWN BY MANUFACTURER S OF HOSIERY ITEMS OR DIRECT EXPORTERS OF HOSIERY ITEMS. THE CIT(A) UPHE LD THE EX. PARTE ORDER PASSED BY THE ASSESSING OFFICER. IN VIEW OF NON COM PLIANCE BY THE ASSESSEE THE CIT(A) FURTHER HELD THAT IN A BEST JUD GMENT ASSESSMENT THE ASSESSING OFFICER WAS TO MADE A FAIR AND REASONABLE ESTIMATE OF INCOME BASED ON EVIDENCE AND RECORD. THE CIT(A) THUS OBS ERVED AS UNDER:- 3 COMING TO THE QUANTUM OF INCOME THE LEARNED COUNS EL HAS EXPLAINED IN THE SUBMISSIONS REPRODUCED ABOVE A S TO HOW THE GP RATE SHOWN BY THE APPELLANT WAS JUSTIFIE D. HOWEVER AS THE APPELLANT FAILED TO ATTEND BEFORE T HE ASSESSING OFFICER THE MERIT / DEMERIT OF THESE ARG UMENTS CANNOT BE TAKEN INTO CONSIDERATION AS THE DECISION OF ASSESSING OFFICER IN COMPLETING THE ASSESSMENT U/S 144 WAS UPHELD. HOWEVER AS ALTERNATIVELY CONTENDED BY THE LEARNED COUNSEL IN VIEW OF THE RATIO OF VARIOUS DE CISIONS IN THIS RESPECT EVEN IN THE CASE OF BEST JUDGMENT ASSESSMENT THE ASSESSING OFFICER IS DUTY BOUND TO MAKE FAIR AND REASONABLE ESTIMATE OF INCOME BASED ON EVI DENCE AND MATERIAL ON RECORD. THOUGH THE ASSESSING OFFICE R HAS COMPARED TWO CASES TO DECIDE GP RATE IN THIS CASE IT HAS NOT BEEN BROUGHT OUT AS TO WHETHER THE NATURE OF BU SINESS OF THE APPELLANT AND OF THESE PARTIES WAS SIMILAR A ND AS TO WHETHER THEY WERE PLACED UNDER SIMILAR CIRCUMSTANCE S. EVEN THE ASSESSING OFFICER HIMSELF HAS NOT APPLIED GP RATE OF ANY OF THESE TOW PARTIES AND HAS RATHER HEL D THAT THE GP RATE SHOULD HAVE BEEN AT LEASE 3% IN THE CAS E OF THE APPELLANT. ON THE OTHER HAND THE ASSESSMENT IN THE CASE OF THE APPELLANT IS SHOWN TO BE COMPLETED U/S 143(3) OF THE ACT ITSELF FOR THE ASSESSMENT YEAR 2006-07 ALSO. IN THAT ASSESSMENT YEAR THE APPELLANT IS SHOWN TO HAV E GP RATE OF 0.48% AS AGAINST THAT OF 0.49% IN THE ASSES SMENT YEAR UNDER CONSIDERATION. VIDE LETTER DATED 23.10.2 008 FILED DURING THE ASSESSMENT PROCEEDINGS THE APPELL ANT EXPLAINED THE SLIGHT FALL IN THE GP RATE DURING THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2006-07. TAKING INTO ACCOUNT THE SUBMISSION OF THE APPELLANT AND EXAMINATION OF BOOKS OF ACCOUNT ETC OF THE APPELLAN T VIDE ORDER U/S 143(3) OF THE ACT DATED 31.10.2008 THE ITO WARD-1(3) LUDHIANA ACCEPTED THE RETURNED INCOME OF THE APPELLANT. THIS IMPLIES THAT THE GP RATE 0.48% IN T HE ASSESSMENT YEAR 2006-07 HAS BEEN ACCEPTED IN THE OR DER MADE U/S 143(3) OF THE ACT. 4 KEEPING IN VIEW THE ABOVE POSITION AND FURTHER TAKI NG INTO ACCOUNT THAT IN SPITE OF NUMBER OF OPPORTUNITI ES PROVIDED TO THE APPELLANT THE PENALTY PROCEEDINGS DID NOT FURNISH NECESSARY INFORMATION AND ALSO DID NOT PROD UCE THE BOOKS OF ACCOUNT BEFORE THE ASSESSING OFFICER IN MY VIEW IT WOULD MEET THE ENDS OF JUSTICE IF THE ADDI TION OF RS. 1 LAC ONLY IS SUSTAINED OUT OF HUGE ADDITION OF RS. 34 21 204/- MADE BY THE ASSESSING OFFICER . THEREF ORE ADDITION OF RS. 1 LAC IS SUSTAINED AND THE APPELLAN T WOULD GET RELIEF OF RS. 33 21 204/-. 6. MR. N.K. SAINI APPEARED FOR THE REVENUE AND SHR I SUDHIR SEHGAL APPEARED FOR THE ASSESSEE AND PUT FORWARD THEIR CO NTENTIONS. THE GRIEVANCE OF THE REVENUE IS AGAINST THE DELETION OF ADDITION OF RS. 33 21 204/- AND THE CROSS OBJECTION RAISED BY THE A SSESSEE IS AGAINST SUSTAINING OF ADDITION OF RS. 1 LAC. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ASSESSEE DURING THE UNDER CONSIDERATION WAS ENGAGED IN TRADING OF HOSIERY ITEMS. DURING THE YEAR UNDER CONSIDERATION THE ASS ESSEE HAD SHOWN SALES OF RS. 13.62 CRORES ON WHICH GP RATE OF 0.49% WAS SHOW N BY THE ASSESSEE. THE ASSESSEE FAILED TO APPEAR BEFORE THE ASSESSING OFFICER AND CONSEQUENTLY ASSESSMENT WAS COMPLETED U/S 144 OF TH E ACT. THE ASSESSING OFFICER COMPARED GP RATE SHOWN BY THE ASSESSEE WITH THE GP RATE SHOWN BY OTHER ASSESSEES OF LUDHIANA WHICH VARY BETWEEN 7% TO 12%. HOWEVER GP RATE OF 3% WAS APPLIED BY THE ASSESSING OFFICER TO WORK OUT THE INCOME FOR THE YEAR UNDER APPEAL. THE PLEA OF THE ASSESSE E IN THIS REGARD IS THAT IT IS A TRADER OF HOSIERY GOODS AND IS DEALING IN MEDI UM AND LOWER CLASS HOSIERY ITEMS. THE MARGIN OF PROFIT EARNED BY THE ASSESSEE IS ON THE LOWER SIDE. THE COMPARATIVE CHART OF SALES GROSS PROFIT AND GP RATE FOR THE PRECEDING AND SUCCEEDING YEAR FURNISHED BY THE ASSE SSEE IS AS UNDER:_ 5 S N ASSESSME NT SALE(RS.) GROSS PROFIT (IN RS.) % AGE OF GP. 1 2004-05 62 541 437 665 190 1.01% 2 2005-06 136 366 395 665 190 0.48% 3 2006-07 181 822 823 878 070 0.48% 4 2007-08 427 632 801 1 333 227 0.31% 5 2008-09 392 224 611 1 176 670 0.29% 8. IN THE FACTS OF THE PRESENT CASE THE ASSESSEE H AD DECLARED GP RATE OF 0.49% DURING THE YEAR AND IN THE SUCCEEDING YEAR GP RATE OF 0.48% WAS DECLARED. THE ASSESSING OFFICER HAS ACCEPTED THE GP RATE OF 0.48% IN THE HANDS OF THE ASSESSEE IN ASSESSMENT YEAR 2006-07 VI DE ORDER PASSED U/S 143(3) OF THE ACT. THE ASSESSEE HAD SHOWN GP RATE OF 1.01% IN ASSESSMENT YEAR 2004-05. THE ADOPTION OF GP RATE AT 3% BY THE ASSESSING OFFICER IS NOT JUSTIFIED IN THE CIRCUMSTA NCES OF THE CASE WHERE THE ASSESSEE IS A TRADER OF HOSIERY ITEMS AND HIS G P RESULTS WERE COMPARED WITH THE MANUFACTURERS OF HOSIERY ITEMS WHO WERE EX PORTING THE SAME WHEREAS THE ASSESSEE WAS MAKING DOMESTIC SALES. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES AND IN VIEW OF THE ACCEPTANCE OF GP RATE OF 0.48% IN ASSESSMENT YEAR 2006-07 AND GP RATE OF 1.01% SHOWN DURING THE PRECEDING YEAR WE ARE IN CONFORMITY WITH THE ORDE R OF CIT(A) THAT IN VIEW OF THE ASSESSEE NOT FURNISHING THE NECESSARY INFORM ATION BEFORE THE ASSESSING OFFICER AND NOT PRODUCING THE BOOKS OF AC COUNT DURING ASSESSMENT PROCEEDINGS JUSTICE DEMANDS AN ADDITION IN THE HANDS OF THE ASSESSEE OVER AND ABOVE TRADING RESULTS SHOWN BY T HE ASSESSEE. WE FURTHER CONFIRM THE ORDER OF CIT(A) IN SUSTAINING AN ADDIT ION OF RS. 1 LAC ON THIS ACCOUNT AND DELETING THE BALANCE ADDITION OF RS. 33 21 204/-. ACCORDINGLY 6 THE GROUND OF APPEAL RAISED BY THE REVENUE AND CROS S OBJECTION OF THE ASSESSEE ARE DISMISSED. 9. IN THE RESULT APPEAL OF THE REVENUE AND CROSS OB JECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF APRIL 2010. SD/- SD/- (G.S.PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 TH APRIL 2010 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR