The ITO, Ward-6(4),, Ahmedabad v. Surekhaben S. Arya,, Ahmedabad

ITA 1664/AHD/2007 | 2002-2003
Pronouncement Date: 21-05-2010 | Result: Dismissed

Appeal Details

RSA Number 166420514 RSA 2007
Bench Ahmedabad
Appeal Number ITA 1664/AHD/2007
Duration Of Justice 3 year(s) 28 day(s)
Appellant The ITO, Ward-6(4),, Ahmedabad
Respondent Surekhaben S. Arya,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 21-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 21-05-2010
Date Of Final Hearing 13-05-2010
Next Hearing Date 13-05-2010
Assessment Year 2002-2003
Appeal Filed On 23-04-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD D BENCH (BEFORE S/SHRI G.D. AGARWAL VICE-PRESIDENT AND BHAVESH SAINI JUDICIAL MEMBER) ITA.NO.1664/AHD/2007 ASSTT.YEAR : 2002-2003 ITO WARD-6(4) AHMEDABAD. VS. SUREKHABEN S. ARYA PROP. YASH PRINTERS 38-39 FARIYAWALA ESTATE OPP: AVTAR HOTEL ISANPUR NAROL AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI C.K. MISHRA ASSESSEE BY : SHRI A.L. THAKKAR O R D E R PER G.D. AGARWAL VICE-PRESIDENT: THIS IS REVENUES APPEAL AGAINST THE ORDER OF THE CIT(A) DATED 03-5-2007 ARI SING OUT OF ORDER OF THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCO ME TAX ACT 1961. 2. IN THIS APPEAL FOLLOWING THREE GROUNDS ARE RAISE D: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE OF RS.5 00 636/- ON ACCOUNT OF ESTIMA TION OF GROSS PROFIT. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN D ELETING THE ADDITION MADE OF RS.6 26 850/- ON ACCOUNT OF DISALL OWANCE EOF BOGUS PURCHASES. 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN D ELETING THE ADDITION MADE OF RS.37 750/- ON ACCOUNT OF DISALLOW ANCE OF DEPRECIATION BY ADMITTING ADDITIONAL EVIDENCE IN TH E FORM OF BILLS FOR THE PURCHASE OF MACHINERY IN CONTRAVENTION OF THE PROVI SIONS OF RULE 46A(3) OF THE INCOME TAX RULES 1962. 3. AT THE TIME OF HEARING BEFORE US IT IS SUBMITTE D BY THE LEARNED DR THAT GROUND NO.2 SHOULD BE CONSIDERED FIRST BECAUSE THE ADDITION IN GROUND NO.1 IS PROTECTIVE. THE LEARNED COUNSEL FOR THE ASSESSEE H AS NO OBJECTION TO THE ABOVE ITA.NO.1664/AHD/2007 -2- REQUEST OF THE LEARNED DR THEREFORE WE TAKE UP FI RSTLY GROUND NO.2 OF THE REVENUES APPEAL FOR ADJUDICATION. 4. IT IS STATED BY THE LEARNED DR THAT THE ASSESSEE CLAIMED TO HAVE MADE THE PURCHASE OF INK AMOUNTING TO RS.6 26 850/- FROM M/S .PREKSHA PRINTERS. HOWEVER WHEN THE AO ISSUED NOTICE UNDER SECTION 13 3(6) OF THE ACT THE SAME WAS RETURNED UN-SERVED. DURING THE COURSE OF ASSES SMENT PROCEEDINGS THE ASSESSEE WAS INTIMATED ABOUT THIS FACT AND WAS DIRE CTED TO FURNISH THE CONFIRMATION OF THE PARTY ALONG WITH PERMANENT ACCO UNT NUMBER. HOWEVER NO SUCH CONFORMATION WAS FURNISHED THEREFORE THE AO TREATED THE PURCHASE OF RS.6 26 850/- AS BOGUS PURCHASE. BEFORE THE CIT(A ) THE ASSESSEE FURNISHED CONFIRMATION OF THE PARTY. THE CIT(A) ASKED FOR TH E REMAND REPORT OF THE AO. IN THE REMAND REPORT THE AO STATED THAT THE ADDITI ON MADE IN THE ASSESSMENT ORDER IS CORRECT AND RELIEF SHOULD NOT BE ALLOWED T O THE ASSESSEE. HOWEVER THE CIT(A) IGNORING THE REMAND REPORT DELETED THE ADDIT ION OF RS.6 26 850/- MADE BY THE AO. HE THEREFORE STATED THAT THE ORDER OF T HE CIT(A) ON THIS POINT BE REVERSED. 5. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTH ER HAND EXPLAINED THAT THE ADDRESS OF PREKSHA PRINTERS WAS NOT AVAILABLE W ITH THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREAFTER WHEN THE ASSESSEE COULD GET HIS NEW ADDRESS HE OBTAINED THE CONFIRMATION OF THE PA RTY ALONG WITH PA NUMBER AND FURNISHED THE SAME BEFORE THE CIT(A). THE CIT( A) FORWARDED THE CONFIRMATION TO THE AO AND ASKED FOR THE REMAND REP ORT. IN THE REMAND REPORT THE AO HAS NOT MADE ANY ADVERSE COMMENTS WITH REGAR D TO THE CONFIRMATION FURNISHED DURING THE APPELLATE PROCEEDINGS BUT SIM PLY STATED THAT THE ADDITION MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS IS CORRECT. HE HAS STATED THAT THE DURING THE ASSESSMENT PROCEEDINGS THE ADD ITION WAS MADE BECAUSE NO CONFIRMATION WAS PRODUCED. BUT NOW THE CONFIRMATIO N OF THE PARTY WAS PRODUCED AND NEW ADDRESS WAS ALSO GIVEN THUS THERE WAS NO JUSTIFICATION FOR ITA.NO.1664/AHD/2007 -3- THE VIEW OF THE AO THAT THE ADDITION SHOULD STILL B E MADE. THEREFORE THE CIT(A) RIGHTLY REJECTED THE REMAND REPORT AND DELET ED THE ADDITION. 6. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE FACTS O F THE CASE ARE NOT IN DISPUTE THAT DURING THE ASSESSMENT PROCEEDINGS THE LETTER ISSUED TO THE SELLER I.E. PREKSHA PRINTERS WAS RETURNED UNSERVED AND NO CONFI RMATION OF THE PARTY WAS PRODUCED. HOWEVER DURING THE APPELLATE PROCEEDIN GS THE ASSESSEE PRODUCED THE CONFIRMATION OF THE PARTY ALONG WITH THE PERMAN ENT ACCOUNT NUMBER. THE CIT(A) ALLOWED THE OPPORTUNITY TO THE AO TO EXAMINE SUCH ADDITIONAL EVIDENCE FURNISHED BEFORE THE CIT(A). THE AO IN HIS REMAND REPORT STATED AS UNDER: IN THIS CONTEXT I HAVE GONE THROUGH THE SUBMISSIO N MADE BY THE ASSESSEE AND FACTS OF THE CASE. THE SUBMISSION MAD E BY THE ASSESSEE IS CONSIDERED BUT NOT ACCEPTED. THE ADDITION OF RS.62 6850/- ON ACCOUNT OF BOGUS PURCHASES AND RS.500636/- ON ACCOUNT OF GROSS PROFIT IS MADE AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF TH E CASE AND MATERIALS EVIDENCES PRODUCED BY THE ASSESSEE. THE ASSESSEE H AD FAILED TO PRODUCE ANY EVIDENCE REGARDING GENUINENESS OF PURCHASES AN D THEREFORE THE ADDITION MADE IN THIS CASE IS FOUND CORRECT. THE A SSESSEE DOES NOT ENTITLE FOR ANY RELIEF ON THIS ISSUE. FROM THE ABOVE IT IS EVIDENT THAT DURING THE REMAN D PROCEEDINGS THE AO REITERATED WHAT WAS MENTIONED IN THE ASSESSMENT ORD ER WITHOUT MAKING ANY COMMENT ON THE FRESH EVIDENCE FURNISHED BEFORE THE CIT(A). DURING THE ASSESSMENT PROCEEDINGS ADDITION WAS MADE BECAUSE T HE CONFIRMATION OF THE SELLER WAS NOT PRODUCED. THE SAME WAS PRODUCED DUR ING THE APPELLATE PROCEEDINGS. THE AO HAS NOT POINTED OUT ANY DISCREP ANCY IN SUCH CONFIRMATION. HE HAS ALSO NOT GIVEN ANY OTHER REAS ON WHY THE PURCHASE SHOULD STILL BE TREATED AS BOGUS DESPITE CONFIRMATION OF SELLER. IN VIEW OF THE ABOVE IN OUR OPINION THE CIT(A) WAS FULLY JUSTIFIED IN DELE TING THE ADDITION OF RS.6 25 850/- MADE BY THE AO ON ACCOUNT OF BOGUS PU RCHASE. ACCORDINGLY GROUND NO.2 OF THE REVENUE IS REJECTED. ITA.NO.1664/AHD/2007 -4- 7. WITH REGARD TO GROUND NO.1 IT IS STATED BY THE LEARNED DR THAT THE ASSESSEE DERIVES INCOME FROM JOB WORK OF PRINTING. DURING THE YEAR UNDER CONSIDERATION THE GP OF THE ASSESSEE HAS REDUCED T O 21.27% AS AGAINST 40.90% IN THE IMMEDIATELY PROCEEDING YEARS. SINCE NO SATI SFACTORY EXPLANATION FOR SUCH FALL IN THE GP WAS GIVEN THE AO REJECTED THE BOOKS OF ACCOUNTS AND APPLIED THE GP RATE OF 40% WHICH RESULTED IN THE AD DITION OF RS.5 00 636/-. HOWEVER THE AO HAD ALREADY MADE THE ADDITION ON AC COUNT OF BOGUS PURCHASE AMOUNTING TO RS.6 26 850/- WHICH WAS MORE THAN THE GP ADDITION. HE MADE THE GP ADDITION ONLY ON PROTECTIVE BASIS. THUS IF THE ADDITION FOR BOGUS PURCHASE IS SUSTAINED THE GP ADDITION WILL NOT SUR VIVE. HOWEVER THE LEARNED CIT(A) NOT ONLY DELETED THE ADDITION FOR BOGUS PURC HASE BUT ALSO DELETED THE GP ADDITION. HE HAS STATED THAT IF THE ORDER OF TH E CIT(A) ON THE BOGUS PURCHASE IS ACCEPTED THEN THE GP ADDITION MADE BY THE AO SHOULD BE SUSTAINED. 8. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTH ER HAND STATED THAT THE ASSESSEE HAS MAINTAINED THE REGULAR BOOKS OF ACCOUN TS. ALL THE RECEIPTS FOR THE JOB WORK AS WELL AS THE EXPENSES ON PURCHASE OF INK ELECTRICITY WORKERS SALARY ETC. ARE VERIFIABLE. THAT DURING THE YEAR UNDER C ONSIDERATION THE ASSESSEE HAD PURCHASED FOUR COLOUR PRINTING MACHINES; THAT TILL LAST YEAR THE ASSESSEE WAS USING ONLY ONE COLOUR PRINTING MACHINE; THAT THE CO NSUMPTION OF PLATE INK AS WELL AS ELECTRICITY IS MORE IN THE FOUR COLOUR PRIN TING MACHINES AS AGAINST ONE COLOUR PRINTING MACHINE; THAT DUE TO USE OF THE FOU R COLOUR PRINTING MACHINES THE RECEIPT OF THE ASSESSEE HAS ALMOST INCREASED TO DOUBLE THAN THE LAST YEAR. HE THEREFORE SUBMITTED THAT MERELY BECAUSE DUE TO NEW MACHINE THE EXPENDITURE HAS INCREASED IT CANNOT BE SAID THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE LIABLE TO BE REJECTED. HE ALSO SUBMITTED THAT THE A SSESSEE IS A SMALL PRINTER WHOSE TOTAL JOB WORK RECEIPT IN THE LAST YEAR WAS O NLY RS.13.58 LAKHS AND EVEN IN THIS YEAR IT IS RS.26.75 LAKHS. FOR SUCH A SMA LL BUSINESS DAY-TO-DAY MAINTENANCE OF STOCK REGISTER OF INK WAS NOT PRACTI CAL. HE THEREFORE SUBMITTED THAT THE ORDER OF THE CIT(A) ON THIS POINT SHOULD B E SUSTAINED. ITA.NO.1664/AHD/2007 -5- 9. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF TH E BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND TH AT THE CIT(A) HAS CONSIDERED THIS ISSUE AT LENGTH AND HAS RECORDED THE FOLLOWING FINDING: 3.3 I HAVE CONSIDERED THE FACTS OF THE CASE AND SU BMISSION MADE BY THE LD. COUNSEL FOR THE APPELLANT. IN FACT DURING THE YEAR GP OF THE APPELLANT HAS FALLEN FROM 40.90% TO 21.27%. THE AP PELLANT IS DOING JOB WORK ONLY. FOR DOING THE JOB THE APPELLANT IS USI NG MERELY INK AND PHOTOGRAPHIC PLATES WHICH ARE IN THE NATURE OF CON SUMABLE STORES. THE CUSTOMERS PROVIDED THE BASIC RAW MATERIALS I.E. PAP ER FOR GETTING THE JOB WORK DONE FROM THE APPELLANT. IN VIEW OF THIS FACT I FIND THAT IF STOCK REGISTER IS NOT MAINTAINED THE BOOKS CANNOT BE REJ ECTED. AS REGARDS INFLATION OF EXPENSES DURING THE RELEVANT YEAR THE APPELLANT HAD PURCHASED A NEW FOUR COLOUR PRINTING MACHINE THE P RINTING COST OF WHICH IS HIGHER THAN THE SINGLE COLOUR PRINTING MAC HINE USED BY THE APPELLANT IN THE PRECEDING YEAR. ALSO CONSUMPTION OF ELECTRICITY EXPENSES ARE HIGHER FROM THIS MACHINE. AS REGARDS THE INFLATION OF WORKERS WAGES THE APPELLANT STATED THAT ONLY 1% SA LARY HAS INCREASED AS AGAINST THE LAST YEAR. THESE FACTS AND CIRCUMST ANCES WERE ALREADY EXPLAINED BY THE APPELLANT DURING THE COURSE OF ASS ESSMENT PROCEEDINGS BUT THE AO HAS NOT CONSIDERED THE SAME. THE AO ALS O NOT BROUGHT OUT ANY COGENT MATERIAL/EVIDENCE IN HIS ORDER FOR MAKIN G THIS HUGE ESTIMATED ADDITION. HE MERELY STATED THAT CONSUMPT ION OF RAW MATERIAL IS HIGHER AS AGAINST THE PREVIOUS YEAR. IN VIEW OF THE FACTS AND CIRCUMSTANCES EXPLAINED BY THE LD. COUNSEL FOR THE APPELLANT AND AS STATED ABOVE I AM OF THE OPINION THAT THE AO WAS N OT JUSTIFIED IN MAKING THE ESTIMATE OF GP AT 40% AS AGAINST DISCLOSED GP A T RS.21.27% WITHOUT APPRECIATING FULL FACTS AND JUSTIFYING THE BASIS OF HIS ESTIMATION. THE AO IS DIRECTED TO DELETE THE ADDITION MADE ON T HIS COUNT. THIS GROUND OF APPEAL THEREFORE STANDS ALLOWED. AT THE TIME OF HEARING BEFORE US THE ABOVE FACTUAL FINDING RECORDED BY THE CIT(A) COULD NOT BE CONTROVERED BY THE REVENUE. TH OUGH THERE WAS FALL IN THE GP RATE HOWEVER THE ASSESSEE HAS GIVEN SATISFACTO RY EXPLANATION FOR SUCH FALL. NO SPECIFIC DEFECT IN THE BOOKS OF ACCOUNTS WAS POI NTED OUT BY THE AO JUSTIFYING THE REJECTION OF THE BOOKS. IN VIEW OF THE ABOVE WE AGREE WITH THE ABOVE FINDINGS OF THE CIT(A) AND REJECT THE GROUND NO.2 OF THE REVENUES APPEAL. ITA.NO.1664/AHD/2007 -6- 10. WITH REGARD TO GROUND NO.3 WE FIND THAT THE AO DENIED THE DEPRECIATION OF RS.37 750/- ON THE ONLY GROUND THAT THE PURCHASE BILL FOR PURCHASE OF MACHINERY AMOUNTING TO RS.1 51 000/- WA S NOT PRODUCED DURING THE ASSESSMENT PROCEEDINGS. BEFORE THE CIT(A) IT W AS POINTED OUT THAT DURING THE ASSESSMENT PROCEEDINGS THE BILL WAS MISPLACED AND THEREFORE COULD NOT BE PRODUCED. THE ASSESSEE HAS FILED CONFIRMATION FROM I.E. SUHAS PRINTERS I.E. SELLER ALONG WITH HIS PERMANENT ACCOUNT NUMBER. TH IS FACT IS NOTED BY THE AO HIMSELF AT PAGE NO.2 OF THE ASSESSMENT ORDER. THE P URCHASE BILL WAS ALSO PRODUCED BEFORE THE CIT(A). CONSIDERING THESE FACT S THE CIT(A) DIRECTED THE AO TO ALLOW DEPRECIATION. AFTER HEARING ARGUMENTS OF BOTH THE SIDES AND THE FACTS OF THE CASE WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS ISSUE. THE ACTUAL USER OF THE MA CHINE FOR THE PURPOSE OF PRINTING IS NOT DISPUTED. THE ONLY DISPUTE WAS THE ABSENCE OF THE PURCHASE BILL. HOWEVER THE PURCHASE WAS ALSO ESTABLISHED BY THE A SSESSEE BY PRODUCING CONFIRMATION OF THE SELLER ALONG WITH HIS PERMANENT ACCOUNT NUMBER. THEREFORE IN OUR OPINION THERE IS NO JUSTIFICATIO N TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS POINT. THE SAME IS SUSTAINED AN D THE GROUND NO.3 OF THE REVENUE IS REJECTED. 11. IN THE RESULT THE REVENUES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON 21 ST MAY 2010. SD/- SD/- (BHAVESH SAINI) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 21-05-2010 VK* COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER AR ITAT AHMEDABAD