DEORA TRADING COMPANY,MUMBAI vs. ITO 20(2)(1), MUMBAI

This appeal has been filed by the assessee against the order of the CIT(A)- 21, Mumbai dated 28.11.2013 passed under section 246A of the income tax Act 1961 (in short the Act) for the assessment year 2003-04.

Brief facts of the case are that the assessee, engaged in the business of trading in fabrics, filed its return of income for the assessment year 2003-04. The original assessment under section 143(3) of the Act was completed on 27.02.2006 determining the total income of Rs. 11,08,607/– after making addition of Rs. 7,23,816/- on account of gross profit, Rs. 1,61,704/– on account of labour charges and Rs. 1,59,047/- on account of car hiring charges under section 40A (2)(b).

This case was fixed for hearing on 06.07.15. On the said date the assessee sought adjournment. Accordingly, the case was adjourned to 02.11.15. On 02.11.15 none appeared on behalf of the assessee. Case was adjourned to 17.02.16 and notice to this effect was sent to the assessee through registered post/AD. On 17.02.16 on the request of the assessee hearing was adjourned to 18.02.16. On 18.02.16, case was called several times for hearing but none appeared on behalf of the assessee. From the conduct of the assessee we are convinced that the assessee is no more interested in pursuing its case. Moreover, sufficient opportunity has already been given to the assessee to argue its case.

Before us, the Ld. DR relying on the order passed by the Ld. CIT(A) submitted that the Ld. CIT (A) has rightly confirmed the findings of AO as the assessee has failed brought on record any material detail/evidence to show that the quality of goods sold to the sister concerns was inferior than those sold to third the parties

We have considered the submissions of Ld. Departmental Representative (DR) and also perused the material available on record. The sole grievance of the assessee is that the Ld. CIT(A) has wrongly confirmed the addition of Rs. 7,23,816/-made by the AO on account of gross profit. The AO has made this addition on the ground that the assessee had sold goods to third parties with the margin of 1.959% and to its sister concerns with a margin of Rs 0.236% so as to pass over the profit to the sister concerns and to declare less gross profit ratio of the assessee firm for the relevant assessment year. Accordingly, during the second round of assessment the assessee was asked to explain and justify the same. In response thereof the assessee contended that it had sold the goods to its sister concerns at market price and earned income on those transactions. The assessee further contended that in the business of clothing material, the price of goods is affected by the quality quantity and nature of goods and further explained that the goods sold to its sister concerns were of a different quality than those sold to third parties. The AO did not accept the explanation given by the assessee as no documentary evidence was produced by the assessee to substantiate its claim. Even before the Ld. CIT (A) no evidence was produced by the assessee in support of its claim. The learned CIT(A) has confirmed the addition made by the AO on the ground that the assessee has failed to prove the contention during the assessment/reassessment before AO or during appellate proceedings. Under these circumstances, it cannot be concluded that the concurrent findings of the AO and the appellate authority is not based on evidence on record or contrary to the provisions of law or against the settled

In the result, the appeal filed by the assessee for the assessment year 2003-04 is dismissed. Order pronounced in the open court on 17th May, 2016.