Income Tax Appellate Tribunal - Ahmedabad
Suryanarayan Silk Mills Pvt.Ltd.,, ... vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "D" BENCH AT SURAT CAMP,
AHMEDABAD
Before Shri T.K. Sharma, Judicial Member, and
Shri D. C. Agrawal, Accountant Member
ITA No.1051/Ahd/2008
Assessment Year: 2004-05
Date of hearing:24.5.10 Drafted:25.5.10
Ssuryanarayan Silk V/s. Assistant
Mills, Gandhi Colony, Commissioner of
A.K. Road, Surat Income-Tax, Circle-9,
PAN No.AAQFS4159J Surat
(Appellant) .. (Respondent)
Appellant by :- Shri P.M. Jagasheth, AR
Respondent by:- Shri H.P. Meena, SR-DR
ORDER
PER D.C.Agrawal, Accountant Member:-
This is an appeal filed by assessee raising following grounds:-
"1. On the facts and circumstances of the case as well as law on the subject, the learned commissioner of Income Tax (Appeals) has erred confirming the action of the assessing officer in making addition of lump sum Rs.10,00,000/- of Colour & Chemicals expenses.
2. On the facts and circumstances of the case as well as law on the subject, the learned commissioner of the Income Tax (Appeals) has erred confirming the action of the assessing officer in disallowing interest of partner's capital of Rs.3,55,988/-."
2. Ld. AR did not press ground No.2, hence, it is rejected as not pressed.
3. Ground No.1 relates to addition of Rs.10 lakh out of colour & chemicals expenses.
ITA No.1051/Ahd/2008 A.Y. 2004-05Suryanarayan Silk Mills v. ACIT Cir-9, SRT Page 2
4. The facts of the case are that assessee declared Gross Profit of Rs.68,52,928/- @ 11.35% on total turnover of Rs.6,03,52,721/-. As against this last year GP rate was 9.69% on total turnover of Rs.6,15,15,472/-. The Assessing Officer produced following chart for comparison:-
Year Turnover Gross Profit G.P. margin 2004-05 6,03,,52,721 68,,52,928 11.35% 2003-04 6,15,15,472 59,59,818 9.69% 2002-03 3,84,11,673 (-) 27,24,677 - 7.09% Though, assessee has shown a GP rate of 11.3% but in the audited accounts GP rate was @ 8.60% turnover being the same. When assessee was asked to reconcile he gave following working for two years as under:-
A.Y. Total sales G.P. G.P. %
2004-05 6,03,52,721 51,84,869 8.59%
2003-04 6,15,15,472 39,52,596 6.43%
The Assessing Officer noticed that assessee is getting job work done from several parties. It is also consuming colour and chemical. Total consumption of colour and chemicals was at Rs.1,31,39,595/- whereas in the immediately preceding year, the consumption was at Rs.85,89,851/-. Total turnover on the other hand had decreased. The AO required the assessee to give details of the parties from whom colour and chemicals were procured. He sent noticed u/s.133(6) of the Act on 12 parties as under:-
Sl. Name of the party Remarks
No.
1. Sun Silk Though the letter was sent on the given
address, the same was returned un-
served with the remarks "left/not known"
2. Utsav Silk Mills P. Though the letter was sent on the given Ltd. address, the same was returned un- served with the remarks "left/not known"ITA No.1051/Ahd/2008 A.Y. 2004-05
Suryanarayan Silk Mills v. ACIT Cir-9, SRT Page 3
3. Devang Fabrics Though the letter was sent on the given address, the same was returned un- served with the remarks "left/not known"
4. Yesh Enterprises Though the letter was sent on the given address, the same was returned un- served with the remarks "left/not known"
5. Y.Z.Traders Though the letter was sent on the given address, the same was returned un- served with the remarks "left/not known"
6. Heena Chemicals Though the letter was sent on the given address, the same was returned un- served with the remarks "left/not known"
7. Tapan Enterprises Though the letter was sent on the given address, the same was returned un- served with the remarks "left/not known"
8. Embee Corporation Though the letter was sent on the given address, the same was returned un- served with the remarks "left/not known"
9. Remik Trading Co. Though the letter was sent on the given P. Ltd. address, the same was returned un- served with the remarks "left/not known"
10. Shri Laxmi Till date no response has been received, Textiles though the letter was sent on the given address
11. Umelite Sales Till date no response has been received, Corpn. though the letter was sent on the given address.
12. Amisha Enterprises Till date no response has been received, P. Ltd. though the letter was sent on the given address.
According to Assessing Officer the consumption of colour and chemicals has increased from 12.7% of the turnover to 21.5% of the turnover. No satisfactory explanation has been furnished and hence he disallowed a sum of Rs.10 lakh by estimate.
5. Ld. CIT(Appeals) confirmed the same by finding that assessee is not co- operating.
ITA No.1051/Ahd/2008 A.Y. 2004-05Suryanarayan Silk Mills v. ACIT Cir-9, SRT Page 4
6. We have considered the rival submissions of the parties and perused the materials on record. Ld. AR on the other hand submitted that above addition is excessive where Ld. SR-DR relied on the order of Ld. CIT(Appeals).
7. Considering the totality of the facts and circumstances of the case we confirm the addition of Rs.5 lakh. It means that assessee gets relief of Rs.5 lakh. As a result, this issue of assessee's appeal is partly allowed.
8. In the result, appeal filed by assessee is partly allowed. Order pronounced in Open Court on 28/05/2010 Sd/- Sd/-
(T.K.Sharma) (D.C.Agrawal)
(Judicial Member) (Accountant Member)
Ahmedabad,
Dated : 28/05/2010
*Dkp
Copy of the Order forwarded to:-
1. The Appellant.
2. The Respondent.
3. The CIT(Appeals)-V, Surat
4. The CIT concerns.
5. The DR, ITAT, Ahmedabad
6. Guard File.
BY ORDER,
/True copy
Deputy/Asstt.Registrar
ITAT, Ahmedabad