Shree Keshav Oil Mills, Baroda vs Assessee

(BEFORE SHRI PRAMOD KUMAR, A.M. AND SHRI S.S. GODARA, J.M.)

ITA No.1020/Ahd/2011 A.Y. 2004-05

Shri Keshav Oil Mills vs. ACIT, Baorda. 10, Shakuntala Park Society Behind Shreyas High School, Manjalpur, Baroda (PAN: AAMFS 4225K)

(Appellant) (Respondent)

Assessee/Appellant by : Shri P.L. Kureel, Sr. D.R.

Revenue/Respondent by : Shri Mukund Bakshi, A.R.

Date of hearing : 22.04.2015

Date of pronouncement : 30.04.2015

PER S.S. GODARA, JUDICIAL MEMBER:

This assessee's appeal for A.Y. 2004-05 arises from order of the CIT(A)-II, Baroda

dated 5.1.2011 passed in case no.554/2006-07 confirming the assessing officer's action

adding a sum of Rs.18,39,976/- on account of low gross profits thereby approximating

the figure of sales @ 1.0555 x (consumption + expenses), in proceedings u/s 143(3) of

the Income Tax Act, 1961 (in short 'the Act') 2

2. The assessee firm manufactures oil and oil cakes. It filed its return on 1.11.2004

declaring loss of Rs.19,78,358/-. The same was summarily processed. The Assessing

Officer took up scrutiny. He noticed the assessee's gross profit of Rs.2,02,377/- from

total sales amounting to Rs.4,06,47,972/- @ 0.45% thereof. Similar GP in the preceding

assessment year had been shown @ 4.34%. The assessee attributed this fall in gross

profits to variation on account of external factors such as quality of inputs and

availability on consistent basis. The Assessing Officer in assessment order on

19.12.2006 appears to have compared sales, expenses, gross profit and its rates

opening stock, purchases, closing stock of financial years 2002-2003 and 2003-04 to

hold that there were no cogent and logical reasons forthcoming from the assessee's

clarification justifying the impugned low gross profits. It also appears to have not

produced its book of accounts and other relevant documents verifying purchases,

consumption and production of its business produce. Therefore, the Assessing Officer

followed the GP rate of 1.0555% in the preceding assessment year and arrived at

relevant gross profit of Rs.20,42,353/- as against Rs.2,02,377/- already declared. The

differential amount of Rs.18,39,979/- stood added in the assessee's taxable income re-

computing the loss declared to Rs.1,38,382/-.

3. The assessee preferred an appeal. The CIT(A) has also affirmed the Assessing

Officer's action quoting its failure in producing relevant books and other documents in

the course of assessment. The steep fall in the impugned gross profits has been held to

be nowhere supported by way of cogent material on record. The assessee has lost in the

lower appellate proceedings as well.

4. We have heard both sides and perused the case files. The assessee in the

tribunal's proceedings has filed copy of its balance sheet along with tax audit report 3

justifying the low gross profit in the impugned assessment year. It has come on record

that the same were not filed either in the course of scrutiny or before the lower

appellate authority. The Revenue objects admissibility of these documents at this

belated stage. At the same time, it fails to verify contents thereof. In these

circumstances, we feel that interest of substantial justice would be met in case the

Revenue's technical objection is rejected and assessee's balance sheet and audited

report along with other details are taken on record. We proceed accordingly. However,

since it has filed this material without any verification, we remit the issue back to the

Assessing Officer for afresh decision as per law. The assessee would be entitled to

produce on record all its material supporting its low gross profits in the impugned

assessment year. We reiterate that the impugned assessment year is 2004-05.

Therefore it would be appreciated if the ld. Assessing Officer reframes the assessment

within a period of six months of receiving this order. The assessee's grounds are

allowed for statistical purpose.

5. The assessee's appeal is allowed for statistical purposes.

Order pronounced in the court on this day the 30th April, 2015 in Ahmedabad.

Sd/- Sd/- (PRAMOD KUMAR) (S.S. GODARA) Accountant Member Judicial Member Ahmedabad; Dated : 30 April, 2015 Prabhat Kumar Kesarwani Copy of the order forwarded to: 1. The Appellant 2. The Respondent 3. Concerned CIT 4. CIT(A) 5. D.R., ITAT, Ahmedabad 6. Guard File 4

By order,

Dy./Asstt. Registrar

ITAT, Ahmedabad