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Income Tax Appellate Tribunal, SURAT
Before: SHRI C.M.GARG & SHRI O.P.MEENA
आयकरअपीलीयअिधकरणसूरत�ायपीठ,सूरत IN THE INCOME TAX APPELLATE TRIBUNAL,SURAT BENCH,SURAT �ीसीएमगग�, �ाियकसद�एवं�ीओपीमीना, लेखासद�केसम� BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER आयकरअपीलसं. / ITA No.3245/AHD/2015/SRT िनधा�रणवष�/ Assessment Year: 2011-12 Income Tax Officer, Vs. ShriAmitKiritkumar Shah, Vapi Ward-1, Prop. Of M/s. Shah Brothers, Vapi. 201/D, AdarshVihar, Nr. Gunjan Cinema, GIDC, Vapi – 369 195. [PAN: AOAPS 0443M] (अपीलाथ�/Appellant) (��थ�/Respondent) आयकरअपीलसं. / ITA No.1862/AHD/2016/SRT िनधा�रणवष�/ Assessment Year: 2012-13 ShriAmitKiritkumar Shah, Income Tax Officer, C/o. Shah Brothers, Vapi Ward-1, 201/D, AdarshVihar, Vapi. Nr. Gunjan Cinema, GIDC, Vapi – 369 195. [PAN: AOAPS 0443M] अपीलाथ�कीओरसे/ Assessee by : Shri Rajesh M. Upadhyay, ITP ��थ�कीओरसे/Department by : Mrs. R.Kavitha, Sr. D.R सुनवाईकीतारीख/Date of Hearing : 07-03-2018 घोषणाकीतारीख/Date of Pronouncement : 16-03-2018 आदेश/ORDER PERC.M.GARG, JUDICIAL MEMBER: Appeal for Assessment Year (AY) 2011-12 has been filed by the Revenue challenging the order of Commissioner of Income Tax (Appeals),
2 ITA Nos.3245/AHD/2015/SRT & 1862/AHD/2016/SRT ShriAmitKiritkumar Shah (A.Y: 2011-12 & 2012-13) Valsad (‘CIT(A)’ for short) dated 16.09.2015 and appeal for AY 2012-13 by the Assessee has been filed against theorder of CIT(A), Valsad dated 10.05.2016.
The sole ground raised by the Revenue for AY 2011-12 reads as follows: “On the facts and circumstances of the case and in law, the CIT(A) has erred in directing the AO to adopt 2% of NP against the total disallowance made in the assessment order @15% of NP ignoring the fact that the AO while disallowing 15% of the purchase made, as the assessee could not substantiate / provide complete details ect. of purchases during the course of assessment proceedings.” 3. The sole ground raised by the Assessee for AY 2012-13 reads as follows: “The ld. CIT(A), Valsad has erred in law in on facts to confirm estimated N.P. @ 2.5% instead of N.P. shown by the appellant @ 1.68% and thereby sustained addition of Rs. 3,62,000/-.” 4. We have heard the arguments of both sides and carefully perused the relevant material placed on the record of the Tribunal, inter aliapaper books filed by the assessee for both the years spread over 37-45 respectively. Both the parties have agreed to the fact that the facts and circumstances of both the appeals are similar and identical and the sole issue in both the appeals is regarding adoption for net profit rate, which was adopted by the Assessing Officer (AO) at 15% of total turnover whereas for AY 2011-12 the ld. CIT(A) has reduced the same to 2% of total turnover. In appeal for AY 2012-13, the assessee is challenging the confirmation of estimated rate of 2.5% as against the NP rate shown by the appellant @ 1.68%.
3 ITA Nos.3245/AHD/2015/SRT & 1862/AHD/2016/SRT ShriAmitKiritkumar Shah (A.Y: 2011-12 & 2012-13) 5. The ld. Departmental Representative (DR) submitted that the ld. CIT(A) has erred in directing the AO to adopt 2% of NP rate against total disallowance made by the AO @ 15% of NP rate ignoring the fact that the AO disallowing 15% of purchases made, as the assessee could not substantiate/provide complete details etc., of purchases during the course of assessment proceedings. The ld. DR strongly supported the action of the AO and submitted that the ld. CIT(A) has granted relief without any basis therefore, impugned order may kindly be set aside by restoring that of the AO.
Replying to the above, the Assessee’s Representative (AR) submitted that the AO estimated the GP rate without any logic and basis @ 15% which was rightly reduced, by the first appellate order, to 2%. The ld. AR vehemently pointed out that ld. CIT(A) has followed the decision in assessee’s own cases for AYs 2007-08 and 2008-09 against which there is no appeal by the department, wherein the ld. CIT(A) has directed the AO to adopt 2% of NP rate by following the principle of consistency. The ld. AR, regarding assessee’s appeal for AY 2012-13, submitted that the ld. CIT(A) has directed the AO to make addition of NP rate @ 2.5% as against 1.68% which was shown by the assessee and there is no basis for adopting the 2.5% NP rate instead of 2% which was adopted by the authorities below for preceding assessment years.
4 ITA Nos.3245/AHD/2015/SRT & 1862/AHD/2016/SRT ShriAmitKiritkumar Shah (A.Y: 2011-12 & 2012-13) 7. Placing rejoinder to the above, the ld. DR submitted that during the assessment proceedings, the assessee could not substantiate by way of documentary evidence to the impugned purchases. Therefore, the AO was right in adopting 15% of NP rate on the basis of allocations against the assessee. The ld. DR in all fairness submitted that there is no appeal by the department for AY 2012-13 wherein the first appellate authority has adopted 2.5% of GP rate for granting relief to the assessee.
On careful consideration of above rival submissions, in the present case from para 6 of the first appellate order for AY 2011-12 we observe that the ld. CIT(A) has granted relief to the assessee with the following observations:
“6. Decision: I have carefully considered the facts of the case as contained in the assessment order passed by the assessing officer as well as the written submissions made by AR of the appellant during the appellate proceedings. The only issue involved in this appeal is the disallowance of purchases on estimated basis at 15% by the assessing officer after finding them not genuine. A similar issue also cropped up in the appellant’s own case for A.Y. 2007-08 & 2008-09 where my predecessor deleted the addition made by disallowing purchases @ 15% of total purchases on estimated basis. Instead the net profit rate was allowed to the estimated @2%. As the facts and circumstances of the present case are identical with the facts of A.Y 2007-08 & 2008-09 so by following the principle of consistency here also the net profit rate is allowed to be adopted at 2% for determining the taxable income. As per submissions of the AR of the appellant the net profit has shown at 1.72% which the assessing officer is directed to adopt at 2%. Therefore, the grounds of appeal of the appellant are allowed on this issue.”
5 ITA Nos.3245/AHD/2015/SRT & 1862/AHD/2016/SRT ShriAmitKiritkumar Shah (A.Y: 2011-12 & 2012-13) 9. Further, from relevant para 6 of the first appellate order for A.Y 2012-13, we observe that the first appellate authority has taken cognizance of early orders for AY 2007-08, 2008-09 & 2011-12 wherein his predecessor deleted the addition and allowed the net profit rate to be estimated at 2% on turnover. However, instead of following rule of consistency, the ld. CIT(A) by referring the decision of ITAT, Ahmedabad in the case of Abdul Farid Khanin ITA No.1339/Ahd/2012directed the AO to estimate N.P rate @ 2.5% by observing that the present assessee is also doing the same type of business and the AO was directed to recalculate the net profit @ 2.5%. In our humble understanding there is no logic or basis in adopting ratio of the order of other assessee i.e., Abdul Rafid Khan (supra), keeping aside the consistent orders in assessee’s own cases for preceding years, wherein the first appellate authority directed the AO to estimate net profit @ 2%.
In view of our foregoing discussion, we reach to logical conclusion that the ld. CIT(A) was right in following rule of consistency and by adopting N.P rate of 2% of total turnover, which was adopted by his predecessor in assessee’s own case for several preceding assessment years. So far as direction of ld. CIT(A) for adoption of the N.P rate of 2.5% for AY 2012-13 is concerned we are unable to
6 ITA Nos.3245/AHD/2015/SRT & 1862/AHD/2016/SRT ShriAmitKiritkumar Shah (A.Y: 2011-12 & 2012-13) understand to any logic in taking a deviated view and flouting the rule of consistency and ignoring the NP rate adopted by the ld. CIT(A) which was accepted by the Department as no appeal has been filed against the orders of ld. CIT(A) for A.Y 2007-08 & 2008-09.Therefore, order of ld. CIT(A) for AY 2011-12 is upheld and sole ground of the Revenue is dismissed. For A.Y 2012-13, the assessee’s sole ground is partly allowed and the AO is directed to adopt 2% of N.P rate for A.Y 2012-13 by following the orders in assessee’s own cases for preceding years.
In the result, appeal of the Revenue for A.Y 2011-12 is dismissed 11. and that of the assessee for A.Y 2012-13 is partly allowed.
Order pronounced in the open court on this day of 16th March, 2018.
Sd/- Sd/- (ओपीमीना) (सीएमगग�) (O.P.MEENA) (C.M.GARG) लेखासद�/Accountant Member �ाियकसद�/Judicial Member सूरत/Surat; िदनांकDated :16thMarch, 2018 EDN आदेशकी�ितिलिपअ�ेिषत/Copy of the Order is forwarded to : 1. अपीलाथ�/ The Appellant; 2. ��थ�/ The Respondent; 3. आयकरआयु�(अपील) / The CIT(A),Valsad; 4. Pr. CIT, Valsad; 5. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण,सूरत/ DR, ITAT, Surat; 6 गाड�फाईल / Guard file. आदेशानुसार/ BY ORDER, स�ािपत�ित //True Copy// सहायकप�जीकर / Assistant Registrar
7 ITA Nos.3245/AHD/2015/SRT & 1862/AHD/2016/SRT ShriAmitKiritkumar Shah (A.Y: 2011-12 & 2012-13) आयकरअपीलीयअिधकरण,सूरत / ITAT, Surat