PRINCIPAL COMMISSIONER OF INCOME TAX 3 vs. M/S N A EXPORT

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TAXAP/461/2018HC GujaratGJHC24025585201809 May 2018Author: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA2 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeal filed by the Revenue was dismissed. The Court observed that the entire issue was fact-based and no question of law arose for consideration. The ITAT and the CIT(A) had provided concurrent reasons for not justifying the Assessing Officer's approach. The addition made by the AO was deleted by the lower appellate authorities. The High Court found no merit in the Revenue's appeal, concluding that the Tribunal's decision to uphold the deletion of the addition of Rs. 1,54,69,089 was correct based on the facts of the case. No specific finding on the gross profit ratio itself was detailed, but the deletion of the addition implies that the authorities found the assessee's reported gross profit ratio to be acceptable or that the AO's method of arriving at a 'low gross profit' addition was flawed.

What were the facts?

The Revenue, specifically the Principal Commissioner of Income Tax 3, filed an appeal against an order of the Income Tax Appellate Tribunal (ITAT) dated November 29, 2017. The appeal pertains to the assessment year 2010-11 for the respondent-assessee, M/s N A Export. The Assessing Officer (AO) had doubted the book reserves of the assessee and, after rejecting the assessee's accounts, made additions. The Commissioner of Income Tax (Appeals) and the ITAT found that these additions would result in an abnormal gross profit ratio for the assessee's business. The ITAT and CIT(A) provided concurrent reasons for deeming the AO's approach unjustified.

What were the issues?

1. Whether the Appellate Tribunal was right in law and on facts in upholding the decision of the CIT(A) and thereby deleting the addition made by the AO of Rs. 1,54,69,089 on account of Low Gross Profit? Assessee's Contention: The judgment does not record any specific contentions made by the assessee. The reasoning of the CIT(A) and the Tribunal, which upheld the deletion of the addition, suggests that the assessee likely argued against the AO's rejection of accounts and the subsequent addition. The ITAT's observation that the issue is fact-based implies that the assessee's arguments would have focused on the factual inaccuracies or unjustified nature of the AO's assessment. Revenue's Contention: The Revenue contended that the Appellate Tribunal was not right in law and on facts in upholding the decision of the CIT(A) and deleting the addition of Rs. 1,54,69,089 made by the AO on account of Low Gross Profit. The Revenue's appeal is predicated on the belief that the AO's addition was justified.

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

C/TAXAP/461/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 461 of 2018 ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX 3 Versus M/S N A EXPORT ========================================================== Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA Date : 09/05/2018

ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI)

Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal dated 29.11.2017 raising following question for our consideration: “Whether the Appellate Tribunal was right in law and on facts in upholding the decision of the CIT(A) and thereby deleting the addition

made

by the A.O.

of Rs.1,54,69,089/ on account of Low Gross Profit ?”

Perusal of the documents on record would show that in case of the respondentassessee, for the assessment year 201011, the Assessing Officer doubted the book reserves. After rejecting the accounts of the assessee, he made additions which, as noticed by the Commissioner of Income Tax (Appeals) C/TAXAP/461/2018 ORDER and the Tribunal, would bring the gross profit ratio of the business of the assessee at abnormal level. The Commissioner of Income Tax (Appeals) and the Tribunal gave concurrent reasons why such approach of the Assessing Officer was not justified. Entire issue is fact based, no question of law arises.

Tax Appeal is dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) ANKIT SHAH

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