M/s. Satyanarayan Sheoratan & Co., Kolkata v. ITO, Ward - 43(4), Kolkata

ITA 1523/KOL/2009 | 2005-2006
Pronouncement Date: 28-05-2010

Appeal Details

RSA Number 152323514 RSA 2009
Assessee PAN AAUFS2832G
Bench Kolkata
Appeal Number ITA 1523/KOL/2009
Duration Of Justice 9 month(s)
Appellant M/s. Satyanarayan Sheoratan & Co., Kolkata
Respondent ITO, Ward - 43(4), Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 28-05-2010
Appeal Filed By Assessee
Bench Allotted C
Tribunal Order Date 28-05-2010
Date Of Final Hearing 12-05-2010
Next Hearing Date 12-05-2010
Assessment Year 2005-2006
Appeal Filed On 28-08-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SRI D. K. TYAGI JM & HONBLE SRI C. D. RAO AM] I.T.A. NO.1523/KOL/2009 ASSESSMENT YEAR: 2005-06 M/S. SATYANARAYAN SHEORATAN & CO. -VS- INCOME-TAX OFFICER WD-43(4) KOLKATA (PA NO. AAUFS 2832 G) (APPELLANT) (RESPONDENT) APPELLANT BY : SRI MANOJ KATARUKA RESPONDENT BY : SRI P. KOLHE O R D E R PER D. K. TYAGI JM: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE LD. CIT(A) KOLKATA DATED 17.06.2009 FOR ASSESSMENT YEA R 2005-06 ON THE SOLE GROUND OF CONFIRMING THE ADDITION OF RS. 1 LAKH ON ACCOUNT OF LOW GROSS PROFIT. : 2. FACTS OF THE CASE ARE THAT THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE DISCLOSED GROSS PROFIT MARGIN OF 2.42% ON THE SALE. THE AO HELD THAT CONSIDERING THE AVERAGE COST METHOD THE GROSS PROF IT MARGIN IS HIGHER THAN THE MARGIN DISCLOSED BY THE ASSESSEE. THE DETAILS OF GROSS PR OFIT MARGIN ARE AVAILABLE AT PAGE 2 OF THE ASSESSMENT ORDER. AFTER EXAMINING THE ASSESSEE S CONTENTION THE AO HELD THAT GROSS PROFIT MARGIN DISCLOSED BY THE ASSESSEE IS NOT REAS ONABLE. HE THEREFORE ENHANCED THE GROSS PROFIT MARGIN AND MADE THE ADDITION OF RS.2 0 5 933/-. IN APPEAL IT WAS ARGUED BEFORE THE LD. CIT(A) THAT THE AO ERRED IN RECALCUL ATING THE GROSS PROFIT MARGIN ON AVERAGE COST METHOD WITHOUT CONSIDERING THE COMPON ENT OF THE TRADING ACCOUNT. IT WAS ALSO CONTENDED THAT THE AO ERRED IN ESTIMATING THE PROFIT WITHOUT REJECTING THE BOOKS OF ACCOUNTS. NO DEFECTS WERE NOTICED IN THE BOOKS OR I N THE VALUATION OF STOCK. THE LD. CIT(A) RESTRICTED THIS ADDITION TO RS. 1 LAKH BY OB SERVING AS UNDER : THE AO EXAMINED THE GROSS PROFIT DISCLOSED BY THE APPELLANT. THE AO EXAMINED THE TRADING RESULTS DISCLOSED BY THE APPELLANT MADE REC OMPUTED THE GROSS PROFIT MARGIN AS PER AVERAGE COST METHOD. THE AO NOTICED THAT THE G ROSS PROFIT DISCLOSED BY THE APPELLANT IS LOWER BY .88%. THE AO CALLED FOR APPE LLANTS EXPLANATION. THE SUBMISSION MADE BY THE APPELLANT WERE CONSIDERED BY THE AO. T HE DETAILS OF AVERAGE COST METHOD IS GIVEN AT PAGE 2 OF THE ASSESSMENT ORDER. AFTER CONSIDERING THE APPELLANTS SUBMISSIONS THE AO ADJUSTED GROSS PROFIT MARGIN AN D ARRIVED AT UNDISCLOSED PROFIT ADOPTING GROSS PROFIT RATE AT .30%. THE AO MADE AN ADDITION OF RS.2 05 933/-. IT IS SEEN THAT THE AO HAS NOT REJECTED THE BOOKS OF ACCO UNTS ON THE BASIS OF ANY DEFECTS NOTICED. THE AO HAS NOT ALSO DISPUTED THE CLOSING STOCK VALUE GIVEN BY THE APPELLANT. 2 THE GROSS PROFIT IS ARRIVED AT BY THE AO ONLY ON T HE BASIS OF AVERAGE COST METHOD BY CHANGING THE PRINCIPLE OF COMPUTING PROFIT. THERE IS A MERIT IN THE APPELLANT CONTENTION THAT CONSEQUENT TO SALE OF DAMAGED GOODS AND PRICE FLUCTUATION THERE IS A FALL IN THE GROSS PROFIT. CONSIDERING THE SUBMISSION MADE BY T HE APPELLANT MAKING AN ADDITION OF RS.1 00 000/- TOWARDS PROFIT WOULD MEET THE ENDS O F JUSTICE. THE ADDITION OF RS.1 00 000/- IS SUSTAINED. THE APPELLANT GETS REL IEF OF RS.1.05 933/- (2 05 933 1 00 000). AGGRIEVED BY THE SAID ORDER NOW THE ASSESSEE IS IN APPEAL BEFORE US. 3. AT THE TIME OF HEARING BEFORE US THE LD. COUNSE L FOR THE ASSESSEE REITERATED THE SAME SUBMISSIONS AS SUBMITTED BEFORE THE LD. CIT(A) AND ALSO PLACED RELIANCE ON A COMPUTATION OF STATEMENT OF GROSS PROFIT FOR THE AS SESSMENT YEARS 2003-04 TO 2005-06 AND ARGUED THAT GROSS PROFIT RATE SHOWN DURING THE YEAR UNDER APPEAL IS MORE THAN IN THE EARLIER YEARS. THEREFORE THE LD. CIT(A) WAS NOT J USTIFIED IN RESTRICTING THE ADDITION TO RS. 1 LAKH AND THE ENTIRE ADDITION DESERVES TO BE D ELETED. 4. ON THE OTHER HAND THE LD. DR RELIED ON THE ORDE R OF THE LD. CIT(A) AND PRAYED BEFORE THE BENCH TO CONFIRM THE SAME. 5. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND NO MERITS IN THE ARGUMENT OF THE LD. COUNSE L FOR THE ASSESSEE THAT GROSS PROFIT SHOWN DURING THE YEAR IS MORE THAN THE EARLIER YEAR S DUE TO THE FACT THAT EARLIER YEARS GROSS PROFIT SHOWN BY THE ASSESSEE HAS BEEN ACCEPTE D BY THE DEPARTMENT BY PASSING ORDERS U/S. 143(1) AND THE YEAR UNDER APPEAL WAS TH E FIRST YEAR IN WHICH SCRUTINY ASSESSMENT HAS BEEN MADE. WE FURTHER FIND THAT OTH ER SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE WERE DULY TAKEN CARE OF BY THE LD. CIT(A) AND HE HAS BEEN REASONABLE IN RESTRICTING THE ADDITION TO RS. 1 LAKH. THEREF ORE WE ARE OF THE CONSIDERED OPINION THAT THIS IS NOT A FIT CASE IN WHICH ANY INTERFEREN CE ON OUR PART IS REQUIRED AND THE ORDER OF THE LD. CIT(A) IS UPHELD. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DIS MISSED. 7. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 28. 5.10 SD/- SD/- (C. D. RAO) (D. K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :28TH MAY 2010 COPY TO : 1. M/S. SATYANARAYAN SHEORATAN & CO. 203/1 MAHATMA GA NDHI ROAD PAREKH KOTHI GROUND FLOOR KOLKATA-700 007. 3 2. ITO WARD-43(4) KOLKATA. 3. CIT(A) KOLKATA. 4. CIT KOLKATA. 5. D.R. ITAT KOLKATA. TRUE COPY BY ORDER DEPUTY REGISTRAR JD.(SR.P.S.) I.T.AT. KOLKATA