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Income Tax Appellate Tribunal, “ SMC ” BENCH, AHMEDABAD
Before: SHRI N.K. BILLAIYA & SHRI MAHAVIR PRASAD
आदेश / O R D E R
PER MAHAVIR PRASAD, JUDICIAL MEMBER : This is an appeal by the assessee against the order of the Commissioner of Income Tax (Appeals)-4, Ahmedabad, vide Appeal New No.CIT(A)-4/289/ACIT/B.K/PLNPR/14-15 and Appeal old No.CIT(A)XV/ACIT/B.K Cir./PLNPR/50/14-15 dtd. 15/10/2015 for the Assessment Year (AY) 2011-12.
Assessee has taken following grounds of appeal: “1.1 The order passed u/s.250 on 15.10.2015 for A.Y.2011-12 by CIT(A)-4, Abad upholding the rejection of books of accounts and
ITA No.3535/Ahd/2015 Akshar Proteins Pvt. Ltd. vs. ACIT Asst.Year –2011-12 - 2 - the addition of Rs.22,61,555/- towards GP made by AO is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in passing the non-speaking and cryptic order without considering fully and properly the submissions made as well as evidence produced before him with regard to the impugned addition. 2.1 The Ld.CIT(A) has grievously erred in law and on facts in confirming rejection of books of accounts of the appellant by invoking section 145(3), though there were no defects or discrepancy found except for fall in GP. 2.2 That in the facts and circumstances of the case as well as in law, the Ld.CIT(A) ought not to have upheld the rejection of books of account of the appellant merely for fall in GP rate. 3.1 The Ld.CIT(A) has grievously erred in law and on facts in confirming the estimation of GP @3.96% and thereby making an addition of Rs.22,61,555/-. 3.2 That in the facts and circumstances of the case as well as in law, the Ld.CIT(A) ought not to have upheld the estimation of GP @3.96% and thereby making an GP addition of Rs.22,61,555/-. 3.3 Without prejudice to above and in alternative, the GP addition of Rs.2,61,555/- is highly excessive and calls for substantial reduction. It is, therefore, prayed that the GP addition of Rs.22,61,555/- upheld by the CIT(A) may kindly be deleted.”
The relevant facts as culled out from the materials on record are as under:- The assessee filed its return on 30.01.2012 showing NIL income. The case was selected for scrutiny after recording the reasons and taking approval. Notice u/s.143(2) was issued on 26.09.2012. The case was adjourned sine-die. Again, notice u/s.143(2) and 142(1) were issued on 19.08.2013. Thereafter query letter was issued on 04/12/2013. In compliance to the notice, Sh. Dilip Panchal, AR appeared on the fixed date and replies were filed. The books of accounts of the assessee are audited as per the provisions of Section 44AB of the I.T. Act. The
ITA No.3535/Ahd/2015 Akshar Proteins Pvt. Ltd. vs. ACIT Asst.Year –2011-12 - 3 - assessee was asked to produce the necessary audit report in Form No.3CB and 3CD but he failed to produce the same in spite of repeated requests and reminders. He even failed to produce the books of accounts and bills vouchers for verification. A final show cause notice to file certain information and of accounts was issued to the assessee on 20.03.2013. However, no one appeared on the fixed date. The assessee has been non co-operative all the time and has been reluctant in providing the necessary details. It appears that it does not have the books of accounts. Hence, I have been left with no option but to complete the assessment on the basis of material available on record.
3.1 The assessee is a manufacturer of Rapeseed oil and rapeseed D.O.C. During the year, the assessee has shown a G.P. rate of 3.36% as against a G.P. rate of 3.96% during the preceding year. The trading results of the assessee for the last two years is as follows:- Asstt. Year Turnover Gross Profit Gross Profit Rate 2010-11 39,36,82,172 1,55,96,067 3.96%
2011-12 37,52,19,263 1,25,97,128 3.36%
3.2 From the above chart, it is seen that the sales have declined as compared to the preceding year. The G.P. rate has also gone down substantially. The assessee was asked to submit details regarding opening and closing stock. The assessee in his reply dated 20.12.2013 stated that details of opening and closing stock of raw material, finished product and
ITA No.3535/Ahd/2015 Akshar Proteins Pvt. Ltd. vs. ACIT Asst.Year –2011-12 - 4 - traded goods in terms of amount and quantity would be submitted later on. Again, vide letter dated 20.03.2014, details of weight loss booked to manufacturing account were called for. The assessee failed to produce the books for verification or to provide the details called for. As the income of the assessee cannot be deduced properly in the absence of books, I have no option left but to invoke the provisions of Section 145 of the IT Act.
3.3 Now, coming to the question of estimating the income, assessee's own history is the best way to adopt. The assessee had itself shown a G.P. rate of 3.96% in the preceding year. Last year's results were not even subjected to scrutiny and were accepted as shown by the assessee. This year the sales are also comparatively lower. So, last year's G.P. rate can be adopted. Thus, applying a G.P. rate of 3.96% to the declared sales of Rs.37,52,19,263/- the gross profit works out to Rs.1,48,58,683/-. The assessee has shown gross profit of Rs. l,25,97,128/-. Therefore a trading addition of Rs.22,61,555/- is made to the returned income of the assessee.
3.4 Subject to the above remarks, the total income of the assessee is worked out as under:- Income as per Return Rs. NIL Add: Trading addition as discussed Rs.22,61,555/- Total Income Rs.22,61,555/- R.O Income Rs.22,61,560/-
ITA No.3535/Ahd/2015 Akshar Proteins Pvt. Ltd. vs. ACIT Asst.Year –2011-12 - 5 - 4. Against the said order assessee preferred first statutory appeal before the ld. CIT(A) who dismissed the appeal of the assessee.
We have gone through the relevant record and impugned order. Though assessee was given ample opportunity to produce books of accounts and other relevant record but because of some reason appellant could not file. Thereafter, at the appellate stage, details of overall stock of different verity, raw material consumption in terms of value is provided in the audit annual accounts and quantitative details of some of the raw material was given as a part of tax audit report. Before the ld. CIT(A) assessee vide his reply dated 20/12/2013 in their books of account would be produced during the onward dated of hearing. From 20/12/2013 to 31/03/2014, the assessee had ample opportunity to produce books of accounts and to submit quantitative details of stock as called for but assessee did not produce.
In view of the above, we are of the considered view that assessee should be given one more opportunity to be heard and to produced all relevant papers in support of his contention. Therefore, we set aside the order of the ld. CIT(A) and remit this matter back to the file of the Ld. AO to decide the matter afresh after submitting all the relevant papers before the ld. AO. Appellant has also directed to co-operate with the ld. AO and will appear before the ld. AO as and when he will be called by the ld. AO and will submit all the necessary papers in support of his contention.
ITA No.3535/Ahd/2015 Akshar Proteins Pvt. Ltd. vs. ACIT Asst.Year –2011-12 - 6 - 7. In the result, appeal filed by the appellant is allowed for statistical purpose. This Order pronounced in Open Court on 09/02/2018
Sd/- Sd/- एन.के. �ब�लैया महावीर �साद (लेखा सद�य) (�या�यक सद�य) ( MAHAVIR PRASAD ) ( N.K. BILLAIYA ) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 09/02/2018 Priti Yadav, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-4, Ahmedabad. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 07/02/2018 (dictation-pad 2 pages attached at the end of this appeal-file) 2. Date on which the typed draft is placed before the Dictating Member …08/02/2018 3. Other Member… 4. Date on which the approved draft comes to the Sr.P.S./P.S…………….. 5. Date on which the fair order is placed before the Dictating Member for pronouncement…… 6. Date on which the fair order comes back to the Sr.P.S./P.S……. 7. Date on which the file goes to the Bench Clerk………………… 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order………………