Gujarat High Court Case Information System
Print
TAXAP/665/2010 3/ 3 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 665 of 2010
=========================================================
COMMISSIONER
OF INCOME TAX-I - Appellant(s)
Versus
COSMOS
TRADING CO - Opponent(s)
=========================================================
Appearance
:
MRS
MAUNA M BHATT for
Appellant(s) : 1,
None for Opponent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE AKIL KURESHI
and
HONOURABLE
MS JUSTICE SONIA GOKANI
Date
: 04/10/2011
ORAL
ORDER
(Per
: HONOURABLE MS JUSTICE SONIA GOKANI)
Revenue
has challenged order of the Income Tax Appellate Tribunal dated
30.6.2009 proposing following questions of law for consideration of
this Court :
“Whether
the Appellate Tribunal is right in law and on facts in restricting
the addition to Rs.21,87,551/- as against the addition made by the
Assessing Officer of Rs.43,09,476/- on account of estimation of G.P.
At the rate of 4%?”
Heard
learned counsel Mrs. Mauna Bhatt and perused the papers with her
assistance. It appears that for the assessment year 2003-2004, the
Assessing officer had issued a show cause notice to the assessee as
to why gross profit should not be estimated at the rate of 9.23% of
gross sales receipts. Considering various discrepancies and finding
that there were no genuine confirmation, the Assessing Officer had
made estimation of gross profit rate at 4% of gross receipts and
thereby had added sum of Rs.43 lakhs(rounded up). This was
challenged before the CIT(Appeals) which restricted the addition to
0.5% of gross receipts, allowing relief of Rs.32 lakhs(rounded up)
to the assessee. Against this order when the Department preferred
appeal before the Tribunal, it noted that since some of the
creditors had not been verified, the Assessing Officer was
justified in estimating the gross profit but, at the same time, the
books of account of the assessee were not reliable. It also further
held that CIT(Appeals) was not justified in holding that the book
result could not be rejected only on the ground that some of the
creditors were not verifiable. Tribunal noted that books of assessee
though could not be relied since some of the transactions carried
out cannot be verified, but at the same time the ratio of 4%
estimated by the Assessing Officer was not justified. It was also of
the opinion that addition should be at lower rate of 0.5%.
Considering the entire gamut of facts, it concluded that gross
profit addition should be made at 1% instead of 0.5% and thereby
retained sum of Rs.21,87,55,123/- .
As
can be seen from the discussion of the Tribunal issue is essentially
based on facts. Although Tribunal has mainly upheld the order of the
Assessing Officer by saying that stand taken by CIT(Appeals) was not
justifiable, however, instead of confirming 4% of estimated gross
profit, Tribunal has given its own reasons for reducing said gross
profit rate to 1%. Having done so, on the basis of material made
available before the Tribunal and as entire issue being essentially
based on facts, no interference in opinion of this Court is
required. Tax Appeal is therefore, dismissed.
(Akil
Kureshi,J.)
(Ms.
Sonia Gokani,J.)
(raghu)
Top