Sigma Ceramics v. Income Tax Officer, Sabarkantha Ward-3, Himatnagar
[Citation -2016-LL-0930-15]

Citation 2016-LL-0930-15
Appellant Name Sigma Ceramics
Respondent Name Income Tax Officer, Sabarkantha Ward-3, Himatnagar
Court ITAT-Ahmedabad
Relevant Act Income-tax
Date of Order 30/09/2016
Assessment Year 2005-06
Judgment View Judgment
Keyword Tags unaccounted sales • suppressed sales • natural justice • net profit rate • on money
Bot Summary: Having perused the said petition and having heard rival contentions on the same, I am inclined to condone the delay which is stated to be due to lapses on the part of the Accountant employed by the assessee. The learned CIT(A) has erred both in law and on the facts of the case in dismissing the appellant's ground of appeal challenging the validity of the notice issued U/s. The learned CIT(A) has erred in law and on the facts of the case in confirming the addition on account of cash sales/on money received of Rs.19,25,600/-, outside books of accounts through the bank account of Shri Bhandari in hand of appellant. Vide my order of even date I have upheld the aforesaid plea of the assessee in the said case by inter alia observing as follows :- 4. On the basis of search action carried out in the case of a third party, the Assessing Officer concluded that the assessee was receiving certain unaccounted money, in respect of sales, amounting to Rs.22,60,270/-. I uphold the plea of the assessee and direct the Assessing Officer to restrict the addition to 5 of suppressed sales on money. Respectfully following the same, I direct the Assessing Officer to restrict the addition to 5 of the suppressed sales on money received by the assessee.


I.T.A. No.2421/Ahd/2013 Assessment Year: 2005-06 Page 1 of 4 IN INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH, SMC , AHMEDABAD [Coram: Pramod Kumar AM] I.T.A. No.2421/Ahd/2013 Assessment Year: 2005-06 Sigma Ceramics .................... Appellant B/h. Polytechnic College N.H. No.8, At & P.O. Hadiyol, Ta. Himatnagr. [PAN: AAHFS 7098 F] Vs. Income Tax Officer, Sabarkantha Ward-3, Himatnagar. ........... .Respondent Appearances by: Tushar P. Hemani, for appellant O.P. Meena, for respondent Date of concluding hearing: 19.07.2016 Date of pronouncing order: 30.09.2016 O R D E R 1. This appeal is time barred by four days but assessee has moved condonation petition. Having perused said petition and having heard rival contentions on same, I am inclined to condone delay which is stated to be due to lapses on part of Accountant employed by assessee. Accordingly, delay is condoned and I proceed to take up matter on merits. By way of this appeal, assessee calls into question correctness of order dated 30th July, 2013 passed by leaned CIT(A) in matter of assessment under section 143(3) r.w.s. 147 of Income Tax Act, 1961, for assessment year 2005-06. I.T.A. No.2421/Ahd/2013 Assessment Year: 2005-06 Page 2 of 4 2. Grievances raised by assessee are as follows :- 1. learned CIT(A) has erred both in law and on facts of case in dismissing appellant's ground of appeal challenging validity of notice issued U/s. 148 of Act as regards re-opening assessment. On basis of facts and circumstances of case, learned CIT(A) ought to have held that notice issued U/s. 148 of Act and consequential re-assessment proceedings are invalid. same be held so now. 2. learned CIT(A) has erred in law and on facts of case in confirming addition on account of cash sales/on money received of Rs.19,25,600/-, outside books of accounts through bank account of Shri Bhandari in hand of appellant. No such cash sales/on money received by appellant as alleged or for reasons as alleged. 3. learned CIT(A) has erred in law and on facts of case in confirming addition of G.P. @ 25% on unaccounted sales of Rs.19,25,600/- so estimated in hands of appellant. appellant has earned no such profit. 4. Alternatively and without prejudice, rate of net profits is highly exaggerated and excessive. 5. Both lower authorities have passed orders without properly appreciating fact and that they further erred in grossly ignoring various submissions, explanations and information submitted by appellant from time to time which ought to have been considered before passing impugned order. This action of lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 6. learned CIT(A) has erred in law and on facts of case in confirming action of Id. AO in levying interest u/s 234A/B/C of Act. 7. learned CIT(A) has erred in law and on facts of case in confirming action of Id. AO in initiating penalty u/s 271(l)(c) of Act. 3. When this appeal was called out for hearing, learned counsel fairly submitted that in event of his submission that NP @ 5% is at best required to be added to income, as against GP @ 25% adopted by learned CIT(A), in respect of alleged on money on sales, he does not wish to pursue other grounds of appeal. I, therefore, take up this issue first. I.T.A. No.2421/Ahd/2013 Assessment Year: 2005-06 Page 3 of 4 4. Learned representatives fairly agreed that whatever I decide in ITA No.2420/Ahd/2013 in case of Sigma Ceramics vs. ITO for A.Y. 2004-05, which was heard along with this appeal, will apply mutatis mutandis in this appeal as well. Vide my order of even date I have upheld aforesaid plea of assessee in said case by inter alia observing as follows :- 4. On basis of search action carried out in case of third party, Assessing Officer concluded that assessee was receiving certain unaccounted money, in respect of sales, amounting to Rs.22,60,270/-. This amount was brought to tax, as suppressed sale, in hands of assessee. When matter was carried in appeal before learned CIT(A), he restricted addition to 25%, being GP on such sales, but assessee is not satisfied and is in further appeal before me. 5. I have heard rival contentions, perused material on record and duly considered facts of case in light of applicable legal position. 6. I find that issue whether amount of income should be on basis of GP rate or NP rate is now covered by several binding judicial precedents. Once it is not in dispute that only income element of such suppressed sales is to be brought to tax, as is position in light of CIT(A) s order not being challenged by Assessing Officer, only net profit element can be brought to tax. As to question as to what should be average net profit rate to be adopted for this purpose, I find that, as evident from chart set out in page no.16 of CIT(A) s order, average rate of 5% will be reasonable and justified. I, therefore, uphold plea of assessee and direct Assessing Officer to restrict addition to 5% of suppressed sales on money. assessee gets relief accordingly. 7. As I have upheld above plea of assessee, I see no need to deal with other issues at this stage. 5. I see no reasons to take any other view of matter than view so taken by me in above case. Respectfully following same, I direct Assessing Officer to restrict addition to 5% of suppressed sales on money received by assessee. Assessee will get relief accordingly. I.T.A. No.2421/Ahd/2013 Assessment Year: 2005-06 Page 4 of 4 6. As I have upheld main plea of assessee, I see no reasons to deal with other issues raised in appeal at this stage. 7. In result, appeal is partly allowed in terms indicated above. Pronounced in open Court on this 30th day of September, 2016. Sd/- Pramod Kumar (Accountant Member) Dated: 30 th day of September, 2016. PBN/* Copies to: (1) appellant (2) respondent (3) CIT (4) CIT(A) (5) DR (6) Guard File By order Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad Sigma Ceramics v. Income Tax Officer, Sabarkantha Ward-3, Himatnagar
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