Income Tax Appellate Tribunal - Ahmedabad
Symphony Comfort Systems Limited, ... vs Department Of Income Tax
THE INCOME TAX APPELLATE TRIBUNAL
'A' BENCH - AHMEDABAD
(BEFORE S/SHRI G. D. AGARWAL, VP AND BHAVNESH SAINI, JM)
ITA No.3952/Ahd/2008
A. Y.: 2005-06
The A. C. I. T. (OSD), Circle-8, Vs Symphony Comfort System
4th Floor, Ajanta Commercial Ltd.,
Centre, 'A' Wing, Ashram Road, Saskrut Building, 1st Floor,
Ahmedabad Old High Court Road,
Off. Ashram Road,
Ahmedabad
PA No. AACCS 6739 B
(Appellant) (Respondent)
Appellant by Shri Albinus Tirkey, DR
Respondent by Shri S. N. Soparkar, AR
ORDER
PER BHAVNESH SAINI: This appeal by the revenue is directed against the order of the learned CIT(A)-XIV, Ahmedabad dated 30-09-2008, for assessment year 2005-06.
2. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the materials available on record.
3. The revenue on ground No.1 of the appeal, challenged the deletion of addition of Rs.61,21,033/- on account of low gross profit. During the assessment proceedings, the AO asked the assessee to produce purchase register, stock register, inward and outward register for verification. The assessee stated before the AO that day ITA No.3952/Ahd/2008 2 ACIT (OSD), Cir-8, Ahmedabad Vs Symphony Comfort System Ltd.
to day sock register and inward and outward register were maintained on computer as per excise records and furnished the copy of the same before the AO. It was further stated that entries are made on the computer and no separate books for day to day stock or inward and outward register was maintained. The AO rejected the submission of the assessee saying that unless separate books are maintained for stock register, no entry could be passed in computer and, therefore, original books and registers are required for verification which the assessee did not produce. The assessee has shown gross profit rate at 17.63% as compared to gross profit rate shown at 21.63% in the preceding assessment year. It was submitted before the AO that all the records of excise are audited and quantitative details are maintained which are subjected to examination by excise authorities. It was submitted that prices of raw materials have increased and there is a competition in the market. Therefore, there was fall in the gross profit. The AO did not accept the contention of the assessee and noted that the profit of the assessee has fallen down. Book results were accordingly rejected due to mainly the assessee has not maintained the stock register as was supposed to maintained By enhancing the gross profit, addition was accordingly made. The assessee reiterated the same submissions before the learned CIT(A) and submitted that the assessee maintained proper books of accounts and day to day stock register on computer and complete details have been produced before the AO, therefore, addition is unjustified. The learned CIT(A) considering the explanation of the assessee noted that the AO has not been able to point out any mistake or error in the books of ITA No.3952/Ahd/2008 3 ACIT (OSD), Cir-8, Ahmedabad Vs Symphony Comfort System Ltd.
accounts maintained by the assessee. The reasons for fall in gross profit were also accepted. Since the assessee maintained records in the computer, therefore, no fault was found. Accordingly, addition was deleted.
4. On consideration of the rival submissions, we do not find any justification to interfere with the order of the learned CIT(A) in deleting the addition. The AO merely gone by the fact that there was a fall in the gross profit rate as compared to the preceding assessment year which itself is no ground to reject the books of accounts of the assessee. No specific defect in the maintenance of the books of accounts by the assessee has been pointed out AO. The AO further noted that day to day stock and inward and outward registers are maintained on computer. Perhaps, this was the sole reason which swayed the AO to reject the books of accounts and make the addition. Now-a-days it is common knowledge that all the records are maintained on computer including by the government and semi- government organizations. Even if, records are maintained on computer is not ground to reject the explanation of the assessee. The AO should have verified the entries from the computerized records also to point out any defect thereon. In the absence of any specific defect pointed out in the books of accounts and the records maintained on computer, the AO was not justified in rejecting the book results, or to enhance the gross profit rate. Accordingly, there is no merit in this ground of appeal of the revenue. The same is accordingly dismissed.
ITA No.3952/Ahd/2008 4ACIT (OSD), Cir-8, Ahmedabad Vs Symphony Comfort System Ltd.
5. On ground No.2 of the appeal, the revenue challenged the deletion of addition of Rs.45,19,044/- on account of excessive expenses. During the assessment proceedings the AO found that the turnover of the assessee has decreased as compared to the preceding year, however, indirect expenses were on the higher side. It was submitted that all the expenses were incurred for the purpose of business. The AO did not accept the contention of the assessee and by comparing the expenses from the preceding assessment year noted that the expenses claimed in the year under consideration are higher as it is at 1.89%. Therefore, addition was made by disallowing the expenses. The learned CIT(A) noted that the addition is made without any reasons and without pointing out any expenditure to be bogus and non-genuine. Addition was accordingly deleted.
6. On consideration of the rival submissions, we do not find any merit in this ground of appeal of the revenue. The AO merely made comparative study of the expenses for the year under consideration with the preceding assessment year and found that expenses incurred in the preceding assessment year were 2.89% on turnover but in the assessment year under appeal it was 4.78% on the turnover. The expenses were, therefore, found excessive without pointing out as to which of the expenses incurred by the assessee was not connected with the business activity of the assessee. The AO has not pointed out which of the expenditure were not admissible in law. In the absence of any pointing out inadmissible expenses, the AO cannot make addition merely by comparing the expenditure with the preceding year's expenditure. The learned ITA No.3952/Ahd/2008 5 ACIT (OSD), Cir-8, Ahmedabad Vs Symphony Comfort System Ltd.
CIT(A) on proper appreciation of the facts and material on record rightly deleted the addition. This ground of appeal of the revenue is accordingly dismissed.
7. On ground No.3 of the appeal, the revenue challenged the deletion of addition of Rs.24,42,330/- on account of excessive claim of depreciation on moulds and dyes at 25% instead of 40% claimed by the assessee. The learned CIT(A) noted that the issue is covered in favour of the assessee by the order of ITAT Ahmedabad Bench for assessment year 1991-92 and accordingly directed to allow higher depreciation as claimed by the assessee. The learned Counsel for the assessee submitted that order of the Tribunal for assessment year 1991-92 is filed at page 3 of the paper book to show that claim of the assessee is allowed for higher depreciation. The learned DR conceded that the issue is covered in favour of the assessee by the order of the Tribunal (supra).
8. On consideration of the above facts we are of the view that the issue is covered in favour of the assessee by the order of the Tribunal mentioned by the learned CIT(A) in the appellate order. The same order is followed by the Tribunal in the case of same assessee in assessment year 2002-03 in ITA No.113/Ahd/2006 and departmental appeal has been dismissed on identical grounds vide order dated 21- 11-2008. This ground of appeal of the revenue has no merit and is dismissed.
ITA No.3952/Ahd/2008 6ACIT (OSD), Cir-8, Ahmedabad Vs Symphony Comfort System Ltd.
9. In the result, the departmental appeal is dismissed.
Order pronounced in the open Court on 30-06-2011 Sd/- Sd/-
(G. D. AGARWAL) (BHAVNESH SAINI)
VICE PRESIDENT JUDICIAL MEMBER
Date : 30-06-2011
Lakshmikant/-
Copy of the order forwarded to:
1. The Appellant
2. The Respondent
3. The CIT concerned
4. The CIT(A) concerned
5. The DR, ITAT, Ahmedabad
6. Guard File
BY ORDER
Dy. Registrar, ITAT, Ahmedabad