DCIT, SONEPAT vs. M/S. HARYANA CONDUCTORS PVT. LTD., SONEPAT

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ITA 3016/DEL/2014Status: DisposedITAT Delhi24 March 2017AY 2010-115 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the order of the Ld. CIT(A) and dismissed the appeal of the Revenue. The Tribunal found that the AO had not brought any cohesive material on record to justify the rejection of the assessee's books of account. It was noted that the AO did not compare the GP rate with the immediately preceding year, which would have been a logical step, especially since the GP for the current year (6.97%) had increased compared to the previous year (AY 2009-10 at 6.85%). The AO also failed to take a logical view of the accounts or consider trends in production costs versus sales realization. The assessee had provided all details to the AO, and no specific defects or discrepancies in the books were pointed out. Furthermore, the assessee was not confronted with the possibility of its books being rejected. The Tribunal agreed with the Ld. CIT(A) that the GP rate of 6.97% was acceptable and that the deletion of the addition of Rs. 1,06,59,187/- was justified. Therefore, no interference was deemed necessary.

What were the facts?

The Revenue, represented by the DCIT, Sonepat Circle, filed an appeal against an order dated March 14, 2014, passed by the CIT(A), Rohtak. The appeal pertains to Assessment Year 2010-11. The assessee, M/s Haryana Conductors Pvt. Ltd., is engaged in the manufacturing of ACSR and AAC aluminum conductors. The assessee had filed its return declaring an income of Rs. 80,07,471/-. The Assessing Officer (AO), during scrutiny under Section 143(3), made an addition of Rs. 1,06,59,187/- by adopting a Gross Profit (GP) rate of 10.19%, thereby assessing the total income at Rs. 1,86,66,660/-. The CIT(A) allowed the assessee's appeal, deleting the addition. The Revenue is aggrieved by this deletion.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) erred in law and facts by deleting the addition of Rs. 1,06,59,187/- made by the AO by applying a GP rate of 10.19% as declared by the assessee for AY 2008-09, invoking Section 145(3) and rejecting the books of account without appreciating the facts of the case? Assessee's Contention: The assessee relied on the order of the Ld. CIT(A). Revenue's Contention: The Ld. DR relied on the order of the AO, reiterating the grounds of appeal, and stated that the Ld. CIT(A) had wrongly deleted the addition.

Which sections of the Income-tax Act were involved?

Section 145(3),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “C”, NEW DELHI

Before: SHRI H.S. SIDHU & SHRI O.P. KANT

ORDER PER H.S. SIDHU : JM

The Revenue has filed this Appeal against the impugned Order dated 14.3.2014 passed by the Ld. CIT(A), Rohtak relevant to assessment year 2010-11.

2.

The grounds raised in the Revenue’s Appeal read as under:-

1.

On the facts and in the circumstances of the case Ld. CIT(A) has erred in law and in facts in deleting the addition of Rs.

1,06,59,187/- made by the AO by applying the GP rate

@10.19% as declared by the assessee for the AY 2008-09 by invoking the provisions of section 145(3) of the I.T. Act and rejecting the books of account without appreciating the facts of the case.

2. The appellant craves leave to add, amend, alter, modify, delete

and or change any of the above grounds on or before at the time of hearing.

3.

The brief facts of the case are that the assessee was engaged in the business of manufacturing of ACSR and AAC aluminum conductors. The return for the year under consideration was filed on 15.10.2010 declaring an income of Rs. 80,07,471/-. The same was selected for scrutiny u/s. 143(3) and the AO vide its assessment order dated 28.3.2013 made an addition for a sum of Rs. 1,06,59,187/- assessing the income at Rs. 1,86,66,660/- by adopting the gross profit rate at 10.19%.

4.

Against the said order of the Ld. AO, assessee appealed before the Ld. CIT(A), who vide impugned order dated 14.3.2014 has allowed the appeal of the assessee.

5.

Aggrieved with the aforesaid order of the Ld. CIT(A), Revenue is in appeal before the Tribunal

6.

Ld. DR relied upon the Order of the AO and reiterated the contentions raised in the grounds of appeal and stated that the Ld. CIT(A) has wrongly deleted the addition.

7. On the contrary, Ld. Counsel of the assessee relied upon the order of the Ld. CIT(A).

8.

We have heard both the parties and perused the relevant records available with us, especially the orders of the revenue authorities. We find that Ld. CIT(A) has elaborately discussed the issue in dispute vide para no. 3 at page no. 8 of the impugned order which reads as under:-

“3. I have examined the submissions made by the appellant and the facts on record. The AO has not brought any cohesive material on record for rejecting the books of account. Moreover, he did not make comparison, for the purpose of calculating the GP, with the immediately preceding year which would have been the logical thing to do given the fact that the GP for this year has increased to 6.97% as compared to 6.85% in AY 2009-10. The AO has not taken a logistic view of the accounts; he has not considered the trends in the cost of production vis-à-vis sales realization. All details were produced before the AO and no specific defect or discrepancy in the books has been pointed out by him. Nor was the assessee confronted with the fact that its books of accounts were being rejected. The appellant has submitted numerous case laws in support of its claim. Therefore, the GP rate of 6.97% is accepted.

In view of these facts, I delete the addition of Rs. 1,06,59,187/- on account of GP rate.”

8.1 On perusing the above finding of the ld. CIT(A), we find that the AO has not brought any cohesive material on record for rejecting the books of account. We further note that even he did not make comparison, for the purpose of calculating the GP, with the immediately preceding year which would have been the logical thing to do given the fact that the GP for this year has increased to 6.97% as compared to 6.85% in AY 2009-10. Even the AO has not taken a logistic view of the accounts; he has not considered the trends in the cost of production vis-à-vis sales realization. All details were produced before the AO and no specific defect or discrepancy in the books has been pointed out by him. Nor was the assessee confronted with the fact that its books of accounts were being rejected. We further find that the assessee has submitted numerous case laws in support of its claim. Therefore, the Ld. CIT(A) has rightly accepted the GP rate of 6.97% and accordingly, deleted the addition of Rs. 1,06,59,187/- on account of GP rate, which does not need any interference on our part, therefore, we uphold the order of the Ld. CIT(A) on the issue in dispute and accordingly, dismiss the appeal of the Revenue.

9.

In the result, the Appeal filed by the Revenue stands dismissed. Order pronounced in the Open Court on 24/03/2017.

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