Saheli Synthetics Pvt. Ltd.,, Surat v. The Income Tax Officer, Ward 2(4),, Surat

MA 135/AHD/2013 | 2003-2004
Pronouncement Date: 11-04-2014 | Result: Dismissed

Appeal Details

RSA Number 13520524 RSA 2013
Assessee PAN AADCS3521L
Bench Ahmedabad
Appeal Number MA 135/AHD/2013
Duration Of Justice 9 month(s) 10 day(s)
Appellant Saheli Synthetics Pvt. Ltd.,, Surat
Respondent The Income Tax Officer, Ward 2(4),, Surat
Appeal Type Miscellaneous Application
Pronouncement Date 11-04-2014
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 11-04-2014
Assessment Year 2003-2004
Appeal Filed On 01-07-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER AND SHRI T.R. MEENA ACCOUNTANT MEMBER M.A. NOS.161/AHD/2012 & 135/AHD/2013 (ARISING OUT OF ITA NO.434/AHD/2007) A.YS. 2003-04 SAHELI SYNTHETICS PVT. LTD. NAND NIWAS OPP. NITIN APT. ADARSH SOCIETY ATHWA LINE SURAT. PAN: AADCS 3521L VS INCOME TAX OFFICER WARD-2(4) SURAT. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI P.L. KUREEL SR.D.R. ASSESSEE(S) BY : URVASHI SODHAN A.R. / DATE OF HEARING : 07/03/2014 / DATE OF PRONOUNCEMENT: 11/04/2014 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT JUDICIAL MEMBER THERE ARE TWO MISC. PETITIONS BEFORE US PERTAINING TO THE ASSESSMENT YEAR 2003-04 ARISING FROM THE ORDER OF I TAT D BENCH AHMEDABAD BEARING ITA NO.434/AHD/2007 (A.Y.2003-04 ) DATED 19.03.2010. AS FAR AS M.A. NO.161 FILED ON 14 TH OF AUGUST 2012 IS CONCERNED THE SAME IS NOT PRESSED BY LEARNED AR; H ENCE THE SAME IS HEREBY DISMISSED BEING NOT PRESSED. THEREFORE THE OTHER M.A. NO.135/AHD/2013 FILED ON 1 ST OF JULY 2013 HAS NOW BEEN CONTESTED. THE MAIN CONTENTION AS ALSO THE GRIEVANCE OF THE APPLIC ANT AS EMERGED FROM THE PETITION IS REPRODUCED BELOW: 3. THE APPLICANT MOST RESPECTFULLY SUBMITS THAT TH E HONBLE ITAT TAKING INTO CONSIDERATION THE FACT THAT THE APPELLA NT DUE TO SEIZURE OF BOOKS OF ACCOUNT BY THE EXCISE AUTHORITIES WAS UNAB LE TO PRODUCE THEM BEFORE AO WHO AFTER REJECTING THE SAME PROCEEDED TO MAKE HUGE MA NOS. 161/AHD/2012 & 135/AHD/2013 IN ITA NO.434/A HD/2007 SAHELI SYNTHETICS PVT. LTD. VS. ITO SURAT. A.YS. 2003-04 - 2 - ADDITION OF RS.74 38 446/- MERELY BY MULTIPLYING CO ST OF JOB-WORK PER METER AND THE TOTAL METERS SOLD BY THE APPELLANT. T HE HONBLE ITAT NOTING SUBMISSIONS OF THE COUNSEL FOR THE APPELLANT TO APPLY REASONABLE GROSS PROFIT REMITTED THE ISSUE TO THE FILE OF AO T O WORK OUT AVERAGE GROSS PROFIT RATE OF PREVIOUS 3 YEARS TAKING INTO C ONSIDERATION LOSS INCURRED ON ACCOUNT OF REJECT AND WASTE OF OPENING STOCK. 4. THE APPELLANT RESPECTFULLY SUBMITS THAT AO PURSU ANT TO THE DIRECTION OF THE HONBLE ITAT PROCEEDED TO APPLY GP RATE OF 6.20% AND MADE ADDITION OF RS.3 50 74 274/- IN PLACE OF ADDIT ION OF RS.74 38 446/- MADE IN THE ORIGINAL ASSESSMENT. THE APPELLANT BEIN G AGGRIEVED BY SUCH ADDITION IS IN APPEAL BEFORE THE HONBLE ITAT. HOWE VER IN THE INTEREST OF JUSTICE IT NEEDS TO BE CLARIFIED IN THE EARLIER ORDER THAT AFTER GIVING EFFECT TO THE ORDER OF THE HONBLE ITAT THE ASSESSE D INCOME SHOULD NOT EXCEED THE INCOME ORIGINALLY ASSESSED BY AO BECAUSE IT IS WELL ESTABLISHED THAT THE APPELLATE TRIBUNAL HAS NO POWE R TO TAKE BACK THE BENEFIT CONFERRED BY THE ASSESSING OFFICER OR TO EN HANCE THE ASSESSMENT. RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS OF TH E SUPREME COURT. 2. FROM THE SIDE OF THE APPLICANT LEARNED AR URVA SHI SODHAN APPEARED AND INFORMED THAT ORIGINALLY AN ASSESSMENT WAS MADE U/S.143(3) WHICH WAS DATED 24TH OF MARCH 2006 AND THE INCOME WAS ASSESSED AT RS.16 25 101/-. IN THE SAID ORDER AN A DDITION OF RS.74 38 446/- WAS MADE ON ACCOUNT OF LOW GROSS PRO FIT. THAT ADDITION WAS CONTESTED BEFORE LEARNED CIT(A) AND THEREAFTER REACHED UPTO THE TRIBUNAL. THE TRIBUNAL HAS SET ASIDE THE PROCEEDING S VIDE IMPUGNED ORDER DATED 19 TH OF MARCH 2010 AND DIRECTIONS WERE AS UNDER: WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROU GH THE FACTS AND CIRCUMSTANCES OF THE CASE. AT THE OUTSET LD. COUNS EL FOR THE ASSESSEE SHRI S.N. SOPARKAR MADE AN ARGUMENT THAT HE IS NOT CHALLENGING THE REJECTION OF BOOK RESULTS BUT HE URGED THE BENCH TO APPLY A REASONABLE GROSS PROFIT RATE. WE FIND THAT THE ASSESSING OFFIC ER AFTER REJECTING THE BOOK RESULTS HAS NOT TAKEN ANY BASIS FOR APPLYING T HE NET PROFIT. HE HAS MERELY GONE THROUGH THE COST OF JOB-WORK PER METER AND THE TOTAL METERS SOLD BY THE ASSESSEE WERE MULTIPLIED. IN OUR VIEW FOR FAIR ESTIMATING THE GP RATE THE AO SHOULD HAVE GONE INTO THE PREVIOUS 3 YEARS GP DECLARED AND ASSESSED IN THE CASE OF THE ASSESSEE A ND AVERAGE OF THE SAME SHOULD HAVE BEEN APPLIED. TAKING INTO CONSIDER ATION THE LOSS INCURRED BY THE ASSESSEE ON ACCOUNT F REJECT AND WA STE OF OPENING STOCK SHOULD HAVE BEEN CONSIDERED. ACCORDINGLY WE DIRECT THE ASSESSING MA NOS. 161/AHD/2012 & 135/AHD/2013 IN ITA NO.434/A HD/2007 SAHELI SYNTHETICS PVT. LTD. VS. ITO SURAT. A.YS. 2003-04 - 3 - OFFICER TO ADOPT THE AVERAGE GP OF PREVIOUS THREE Y EARS AND ACCORDINGLY ESTIMATE THE GP OF THE ASSESSEE AND ASS ESS THE INCOME ACCORDINGLY. ACCORDINGLY THIS ISSUE OF THE ASSESSE ES APPEAL IS SET ASIDE TO THE FILE OF AO AS INDICATED ABOVE. 2.1 IN CONSEQUENCE THEREUPON AN ASSESSMENT ORDER W AS PASSED BY AO U/S. 143(3) R.W.S. 250 DATED 29.12.2011. HOWEVER THE TOTAL INCOME WAS ASSESSED AT RS.2 91 88 737/-. THE AVERAGE PROFIT WA S DETERMINED AT RS.3 50 74 274/-. SINCE THE INCOME WAS ENHANCED CO NSEQUENT UPON THE DIRECTION OF THE TRIBUNAL; THEREFORE THE MAIN CONT ENTION OF LEARNED AR IS THAT THE IMPUGNED DIRECTIONS OF THE TRIBUNAL WERE B AD IN LAW. LEARNED AR HAS ARGUED THAT THE TRIBUNAL HAS NO POWER TO ENH ANCE THE INCOME ORIGINALLY ASSESSED DUE TO THE REASON THAT THE IMPU GNED DIRECTIONS HAVE RESULTED INTO AN ENHANCEMENT THEREFORE SUCH DIREC TIONS ARE BAD IN LAW. FOR THIS LEGAL PROPOSITION SHE HAS PLACED RELIANCE ON THE CASE LAWS AS MENTIONED IN THE M.A. PETITION. 3. FROM THE SIDE OF THE REVENUE LEARNED SR.D.R. M R. P.L. KUREEL APPEARED AND ARGUED THAT THERE WAS NO FAULT IN THE DIRECTIONS GIVEN BY THE RESPECT TRIBUNAL. THE ASSESSEE IS IN THE BUSINESS O F PROCESSING OF GRAY CLOTH BUT FAILED TO MAINTAIN RECORDS LIKE DETAILS O F RAW MATERIAL DAILY PRODUCTION RECORD ETC. THE TRIBUNAL HAS RECORDED TH AT THE REJECTION OF BOOKS OF ACCOUNT HAS NOT BEEN CHALLENGED BY THE COU NSEL OF THE ASSESSEE. THE ARGUMENT WAS TO ADOPT A REASONABLE GP RATE. BY ACCEPTING THAT PLEADING OF LEARNED AR IT WAS THOUGHT PROPER BY TH E TRIBUNAL TO RESTORE THE ISSUE BACK TO THE FILE OF THE AO WHICH WAS FOLL OWED BY THE AO. THERE WAS NO DIRECTION OF ENHANCEMENT BY THE TRIBUNAL BUT IT WAS A QUESTION OF ARITHMETICAL CALCULATION WHICH SHOULD HAVE BEEN KEP T IN MIND BY THE MA NOS. 161/AHD/2012 & 135/AHD/2013 IN ITA NO.434/A HD/2007 SAHELI SYNTHETICS PVT. LTD. VS. ITO SURAT. A.YS. 2003-04 - 4 - LEARNED COUNSEL WHILE RENDERING A PROPOSITION BEFOR E THE TRIBUNAL. THERE WAS NO MISTAKE OF THE TRIBUNAL; HENCE THE PETITION SHOULD BE DISMISSED. 4. HAVING HEARD THE SUBMISSION OF BOTH THE SIDES W E ARE OF THE CONSIDERED OPINION THAT THE PETITION HAS NO LEGAL F ORCE. FROM THE PARAGRAPH REPRODUCED FROM THE ORDER OF THE TRIBUNAL WE HAVE NOTED THAT THE RESPECTED CO-ORDINATE BENCH HAS ACCEPTED THE RE QUEST OF LEARNED COUNSEL IN A WAY BY RESTORING THE ISSUE TO THE FILE OF THE AO WITH THE DIRECTION THAT THE AO SHOULD EXAMINE THE GP RATE OF PREVIOUS YEARS AS ASSESSED IN THE CASE OF THE ASSESSEE AND THE AVERAG E OF THE SAME WAS DIRECTED TO BE APPLIED. THE AO IN THE CONSEQUENTIAL ORDER DATED 29.12.2011 HAS COMPARED THE GP RATE OF A.Y.2000-01 A.Y. 2001-02 A.Y. 2002-03 AND THEN CALCULATED THE AVERAGE GP RAT E AT 6.2%. HE HAS APPLIED THE SAID AVERAGE GP RATE OF 6.2% ON THE TUR NOVER. THE ASSESSEE HAS AFFECTED THE TOTAL SALES AS NOTED IN THE ORIGI NAL ASSESSMENT ORDER DATED 24 TH OF MARCH 2006 WERE AT RS.47 77 71 638/- THAT VER Y SALES WERE NOT DISTURBED AND THE AVERAGE GP RATE WAS APPLIED I N THE ORDER PASSED U/S.143(3)/250 DATED 29.12.2011. THE ASSESSEE MUST HAVE CHALLENGED THIS CONSEQUENTIAL ORDER OBJECTING THE ASSESSMENT OF THE PROFIT SO DETERMINED BY THE AO. PRIMA FACIE THERE WAS NO APPARENT MISTA KE IN THE DIRECTIONS OF THE TRIBUNAL BECAUSE THE SAME WERE ISSUED AFTER UNDERSTANDING THE ARGUMENTS OF LEARNED AR. THIS IS NOT THE CASE WHERE THE TRIBUNAL HAD GONE OUT OF THE SUBJECT MATTER OF APPEAL WHICH HAS RESULTED INTO ENHANCEMENT. ACCORDING TO US THE TRIBUNAL IS REQUI RED TO PASS SUCH ORDER AS THINKS FIT. THE TRIBUNAL HAS NOT GIVEN ANY DIREC TION FOR THE ENHANCEMENT OF THE INCOME. THERE ARE FEW METHODS GE NERALLY APPLIED FOR THE PURPOSE OF DETERMINING CORRECT INCOME. ONE OF S UCH METHOD MA NOS. 161/AHD/2012 & 135/AHD/2013 IN ITA NO.434/A HD/2007 SAHELI SYNTHETICS PVT. LTD. VS. ITO SURAT. A.YS. 2003-04 - 5 - GENERALLY BEING APPLIED IS THE METHOD TO ADOPT AVER AGE GP RATE OF PAST THREE YEARS. THE TRIBUNAL HAS SIMPLY FOLLOWED THIS WIDELY ACCEPTED GENERAL PRINCIPLE WHICH IS OTHERWISE A SIMPLE METHO D AND ACCEPTABLE TO THE REVENUE DEPARTMENT AS WELL AS THE ASSESSEE. IN THE CASE OF HUKUMCHAND MILLS LTD. 63 ITR 232 THE OBSERVATION OF THE HONBLE COURT WAS THAT THE TRIBUNAL HAS ALL THE POWERS TO P ASS SUCH ORDERS AS THINK FIT EXCEPT POSSIBLY THE POWER OF ENHANCEMENT. ACCORDING TO US THE TRIBUNAL IN THE IMPUGNED ORDER DATED 19.03.2010 HAS NOT EXERCISED ANY SUCH POWER OF ENHANCEMENT. WE HAVE ALSO EXAMINED TH E DECISION OF MCORP. GLOBAL PVT. LTD. 309 ITR 434 WHICH WAS IN RESPECT OF WITHDRAWAL OF BENEFIT ALLOWED BY THE AO AND IT WAS HELD THAT THE TRIBUNAL HAD NO POWER TO TAKE BACK THE BENEFIT GRAN TED BY THE AO. THE SITUATION AS WELL AS THE FACTS OF THE PRESENT APPEA L ARE DIAMETRICALLY OPPOSITE FROM THE FACTS OF THE CITED DECISION BECAU SE THE TRIBUNAL HAD NOT DIRECTED TO WITHDRAW ANY SUCH BENEFIT WHICH WAS ORI GINALLY GRANTED BY THE AO BUT THE TRIBUNAL HAS SIMPLY FOLLOWED ONE OF THE METHOD TO DETERMINE THE GROSS PROFIT AS TRANSPIRED DURING THE COURSE OF HEARING. WE ACCORDINGLY HEREBY HOLD THAT GRIEVANCE RAISED IN TH IS MISC. PETITION IS ILL FOUNDED; HENCE DISMISSED. 4. IN THE RESULT BOTH THE PETITIONS ARE HEREBY DIS MISSED. SD/- SD/- (T.R. MEENA) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 11/04/2014 PRABHAT KR. KESARWANI SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT MA NOS. 161/AHD/2012 & 135/AHD/2013 IN ITA NO.434/A HD/2007 SAHELI SYNTHETICS PVT. LTD. VS. ITO SURAT. A.YS. 2003-04 - 6 - 4. ( ) / THE CIT(A)-III AHMEDABAD 5. / DR ITAT AHMEDABAD 6. / GUARD FILE. / BY ORDER / ( DY./ASSTT.REGISTRAR) / ITAT AHMEDABAD