Sanyo Cera Tiles Pvt. Ltd, v. The Dy. Comm. of Income Tax, Himatnagar

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH C CC C BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI T.K.SHARMA T.K.SHARMA T.K.SHARMA T.K.SHARMA JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER AND AND AND AND SHRI N.S. SAINI ACCOUNTANT MEMBER SHRI N.S. SAINI ACCOUNTANT MEMBER SHRI N.S. SAINI ACCOUNTANT MEMBER SHRI N.S. SAINI ACCOUNTANT MEMBER DATE OF HEARING:21-2-11 DRAFTED ON:21-2-1 1 ITA NO. 942 /AHD/ 2009 ASSESSMENT YEAR :2005-06 SANYO CERA TILES PVT. LTD. OPP. SAHAKARI JIN NATIONAL HIGHWAY NO.8 HIMATNAGAR DIST.SABARKANTHA. VS. THE DEPUTY COMMISSIONER OF INCOME TAX SABARKANTHA CIRCLE HIMATNAGAR. PAN/GIR NO. : AAGCS 1256 D (A PPELLANT ) .. ( RESPONDENT ) APPELLANT BY : NONE RESPONDENT BY: SHRI SAMIR TEBRIWAL SR. D.R. O R D E R O R D E R O R D E R O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-X AHMEDABAD DATED 28-11-2008. 2. THE SOLE GROUND OF APPEAL TAKEN BY THE ASSESSEE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN L AW AND ON FACTS IN CONFIRMING THE ADDITION OF THE ENTIRE SALES INSTEAD OF THE ELEMENT OF PROFIT THEREIN AND THE CHARGING OF TAX UNDER SECTION 115JB ACCORDINGLY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE APPELLA NT IS A PRIVATE LIMITED COMPANY ENGAGED IN MANUFACTURING OF CERAMIC TILES A T HIMATNAGAR DISTRICT SABARKANTHA. THE APPELLANT FILED ITS RETURN OF INCO ME FOR THE RELEVANT PERIOD DECLARING TOTAL INCOME AT ` NIL. THE ASSESSMENT IN THIS CASE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT. IT MAY BE POINTED OUT THAT AN ENQUIRY WAS CARRIED OUT BY THE CENTRAL EXCISE DEPARTMENT IN THE CASE OF M/S. SWAGAT 138 G.T. ROAD HOWRA KOLKATTA ON 31-5-2005.DURING THE SCRUTINY OF THE RECORD OF THE SAID DEALER THE INVOICES OF THE APPE LLANT WERE FILED IN THE - 2 - PURCHASE FILE OF THAT CONCERN FOR THE F.Y. 2003-04 AND 2004-05. THE OFFICERS OF CENTRAL EXCISE PREVENTIVE UNIT AHMEDABAD-III S UBSEQUENTLY SEARCH THE FACTORY PREMISES OF THE APPELLANT ON 25-8-2008 AND COMPARED THE INVOICES OF THE APPELLANT FOUND IN THE PURCHASE RECORDS OF M /S. SWAGAT KOLKATTA. ON COMPARISON OF THE SAID DETAILS IT WAS DETECTED THA T THE APPELLANT HAD MADE SALES OF `.3 02 747/- TO THAT PARTY OUTSIDE THE BOO KS OF ACCOUNT DURING THE RELEVANT PERIOD. THE DIRECTOR OF THE COMPANY SHRI M ITTALBHAI B. PATEL IN HIS STATEMENT RECORDED BY THE EXCISE AUTHORITY ON25-8-2 008 ACCEPTED THE SAID DISCREPANCY AND PAID THE EXCISE DUTY ON SUCH SALES ACCORDINGLY. THE LEARNED ASSESSING OFFICER WHILE COMPLETING THE ASSE SSMENT UNDER REFERENCE ADDED THE AMOUNT OF `.3 02 747/- AS SALES OUTSIDE T HE BOOKS OF ACCOUNT. 4. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INC OME TAX (APPEALS) THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESS EE OBJECTED TO THE LEARNED ASSESSING OFFICERS ACTION AND MADE THE FOL LOWING SUBMISSIONS: 2. THE ONLY GRIEVANCE OF YOUR HONOURS APPELLANT I S IN RESPECT OF LEARNED ASSESSING OFFICERS ACTION IN MAKING ADDITI ON OF THE ENTIRE AMOUNT OF UNACCOUNTED SALES OF `.3 02 747/- NOTICE D DURING THE OPERATIONS OF THE EXCISE DEPARTMENT INSTEAD OF THE ELEMENT OF PROFIT EMBEDDED IN SUCH SALES. THE LEARNED ASSESSING OFFIC ER OUGHT TO HAVE WORKED OUT THE PROFIT ON SUCH SALES WHICH COMES TO 33.27% AS PER THE WORKING FURNISHED WITH THE AUDITED ACCOUNTS. WE ARE ENCLOSING HEREWITH COPY OF AUDITED ACCOUNTS WITH SUCH WORKING PROVIDED BY THE AUDITORS FOR YOUR HONOURS KIND PERUSAL AND RECORD. 2.2. IN VIEW OF THE ABOVE FACTS WE SUBMIT THAT THE LEARNED ASSESSING OFFICER MAY BE DIRECTED TO MAKE ADDITION OF 33.27% OF THE UNACCOUNTED SALES OF `.3 02 747/- AND NOT OF THE AM OUNT OF SALES ITSELF. 2.3. FURTHER WE HAVE TO SUBMIT THAT THE LEARNED AS SESSING OFFICER HAS MADE THE ADDITION TO THE PROFIT WORKED OUT UNDE R SECTION 115JB OF THE ACT. ACCORDINGLY THE TAX PAYABLE MAY KINDLY BE DIRECTED TO BE CHARGED ON THE REVISED WORKING TAKING INTO CONSIDER ATION THE ADDITION OF PROFIT AND NOT THE SALES. 2.4. IN THIS REGARD WE RELY UPON THE FOLLOWING DECI SIONS OF THE ITAT. AHMEDABAD BENCH AND REQUEST YOUR HONOUR TO KINDLY FOLLOW THE SAID DECISIONS. I) ITO VS. GURTBACHANSINGH J. JUNEJA 55 ITD 75 (AHD) ( TM). II) ABHISHEK CORPORATION VS. DCIT 63 TTJ (AHD) 651. - 3 - III) B & BROTHERS ENG. WORKS VS. DCIT 84 ITD 243 (AHD)(T M). 5. AFTER CONSIDERING THE SUBMISSIONS OF THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE LEARNED COMMISSION ER OF INCOME TAX (APPEALS) OBSERVED AS UNDER:- 5.2. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS OF THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE C AREFULLY. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE H AS NOT BROUGHT ON RECORD THE COMPLETE DETAILS OF PURCHASES MADE BY THE APPELLANT IN ORDER TO SHOW THAT THE SALES EFFECTED OUTSIDE THE B OOKS OF ACCOUNTS WERE OUT OF SUCH RECORDED PURCHASES. THEREFORE UND ER THESE CIRCUMSTANCES THE LEARNED ASSESSING OFFICER HAS RI GHTLY ADDED THE ENTIRE AMOUNT OF SALES MADE OUTSIDE THE BOOKS OF AC COUNTS DURING THE RELEVANT PERIOD. THE CASE LAWS RELIED UPON BY THE L EARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE ARE NOT OF ANY HELP AS THEY HAVE BEEN RENDERED ON DIFFERENT FACTS. THEREFORE THE ADDITIO N MADE BY THE LEARNED ASSESSING OFFICER IS HEREBY CONFIRMED. 6. NOTICE OF HEARING WAS SENT ON 19-1-2011 TO THE A PPELLANT-ASSESSEE BY REGISTERED POST ACKNOWLEDGEMENT DUE AND THE SAME WA S RETURNED BY THE POSTAL AUTHORITIES WITH THE REMARKS LEFT. THE BEN CH OF THE OPINION THAT THE APPEAL CAN BE DECIDED WITHOUT THE ASSISTANCE OF THE ASSESSEE. THEREFORE THE APPEAL WAS HEARD EX-PARTE QUA THE APPELLANT-ASS ESSEE AND DISPOSED OFF AFTER CONSIDERING THE SUBMISSIONS OF THE LEARNED DE PARTMENTAL REPRESENTATIVE AND THE MATERIAL AVAILABLE ON RECORD . 7. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENT ATIVE AND PERUSED THE MATERIAL ON RECORD. IN THE INSTANT CASE THE DISPUTE IS RELATING TO THE COMPUTING OF BOOK PROFIT UNDER SECTION 115JB OF THE ACT. THE PRECISE ISSUE BEFORE US IS WHETHER THE AMOUNT OF SALES OR I NCOME WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE RELEVANT PR EVIOUS YEAR CAN BE ADDED TO THE NET PROFIT DISCLOSED BY AUDITED PROFIT AND LOSS ACCOUNT OF THAT YEAR OR NOT FOR COMPUTING BOOK PROFIT UNDER SECTION 115JB OF THE ACT. 8. WE FIND THAT THE HONBLE SUPREME COURT IN THE CA SE OF APOLLO TYRES LTD. V. ASSISTANT COMMISSIONER OF INCOME-TAX (2002) 255 ITR 273 (SC) HAS HELD THAT ANY ADJUSTMENTS SPECIFIED IN EXPLANATION CAN BE MADE TO THE NET PROFIT SHOWN AS PER THE AUDITED PROFIT AND LOSS ACC OUNT OF THE ASSESSEE FOR - 4 - COMPUTING BOOK PROFIT AS PER THE PROVISIONS OF INCO ME TAX ACT. WE FIND THAT THERE IS NO SPECIFIC PROVISION IN THE EXPLANATION T O SECTION 115JB WHICH EMPOWERS THE LEARNED ASSESSING OFFICER TO ADD ANY I NCOME OR SALE WHICH HAS NOT BEEN RECORDED IN THE BOOKS OF ACCOUNT OF THE AS SESSEE FOR THE RELEVANT YEAR. 8. WE FIND THAT THE ABOVE CITED DECISION OF THE HON BLE SUPREME COURT WAS NOT TAKEN INTO CONSIDERATION BY THE LOWER AUTHORITI ES IN DECIDING THE ISSUE UNDER CONSIDERATION. WE THEREFORE SET ASIDE THE OR DERS OF THE LOWER AUTHORITIES AND RESTORE THE MATTER BACK TO THE FILE OF THE LEAR NED ASSESSING OFFICER TO READJUDICATE AFRESH AS PER LAW AFTER TAKING INTO CO NSIDERATION THE ABOVE DECISION AND AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 25 TH DAY OF FEBRUARY 2011. SD/- SD/- ( T.K. SHARMA ) ( T.K. SHARMA ) ( T.K. SHARMA ) ( T.K. SHARMA ) ( N.S. SAINI ) ( N.S. SAINI ) ( N.S. SAINI ) ( N.S. SAINI ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATED: AHMEDABAD 25 TH DAY OF FEBRUARY 2011. COMPILED AND COMPARED BY : PATKI COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE R ESPONDENT 3. THE CIT CONCERNED 4. THE LD. C IT(APPEALS)-GANDHINAGAR 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD - 5 - DATE INITIALS 1. DRAFT DICTATED ON 21-2-2011 --------------- ---- 2. DRAFT PLACED BEFORE AUTHORITY 22-2-2011 ------ ------------- 3. DRAFT PROPOSED & PLACED 22-2-2011 ----------- -------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED --------------- ---- --------------- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S ---------------- -- ------------------ 6. KEPT FOR PRONOUNCEMENT ON ---------------- -- ------------------ 7. FILE SENT TO THE BENCH CLERK ---------------- -------------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- -- -------------------