The Principal Commissioner Of Income Tax-3 v. M/S Vijay Steels

IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/TAX APPEAL NO. 414 of 2019 ==========================================================THE PRINCIPAL COMMISSIONER OF INCOME TAX-3 VersusM/S VIJAY STEELS ========================================================== Appearance:MRS MAUNA M BHATT(174) for the Appellant(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALAandHONOURABLE MR.JUSTICE A.C. RAO Date : 16/07/2019 ORAL ORDER (PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) 1.00.This appeal under section 260(A) of the Income Tax Act, 1961 (for short “the Act, 1961”) is at the instance of the revenue and is directed against the order passed by the Income Tax Appellate Tribunal, C-Bench, Ahmedabad dated 23/01/2019 in ITA No.2601/AHD/2016 for the A.Y. 2013-14. 2.00.The revenue has proposed the following questions of law in this Tax Appeal :- “Whether the Appellate Tribunal has erred in law and on facts in upholding the order of CIT(A) and not appreciating the findings of the Assessing Officer white estimating the burning loss @2% of the total input of the raw materia1?” 3.00.It appears from the materials on record that the revenue preferred appeal before the tribunal against the order of CIT(A) deleting addition of Rs.1,79,12,777/- out of the total addition of Rs.1,84,38,444/-made on account of the excess burning loss. 3.01.The case of the revenue is that the burning loss shown by the assessee ranging from 7.64% to 10% is on a higher side more particularly considering the nature of the business and consumption of electricity. 3.02.The assessee appears to be in the business of Re- rolling of Steel. It manufactures Angles, flat, Square and Round Bars, TMT etc. by using iron and steel plates obtained from the ship breaking industry as its principal raw material. 4.00.We take notice of the fact that the tribunal took into consideration the order passed by the Co-ordinate Bench in the assessee's own case for the A.Y. 2010-12. The findings recorded by the tribunal are as follows :- “9.4. We find that the Ld.CIT(A) in appeal though upheld the AO’s view in not considering the order passed by his predecessor in respect of A.Y. 2010-11 in appeal in deleting the addition simply on the ratio of non-applicability of principle of res-judicata as held by the Hon’ble Madras High Court we however, cannot ignore the same since the Appellate Order was confirmed by the Co-ordinate Bench on 12.12.2018. However, we appreciate the trouble taken by the Ld.CIT(A) in the impugned Judgment is adopting the rational method by taking the latest profitable Assessment Year 2014-15 as standard GP to compute GP addition for the reason so narrated at para 5.13 which is as follows: “5.13 As can be seen above, I have upheld the rejection of books of account u/s. 145(3) of IT Act, 1961. The arguments of AO have rationale but have been critically analyzed. The addition can't be sustained to the extent it is done in assessment order. Therefore, a rational method to uphold the addition has to be carved out from the facts and figures record. An attempt is being made to make GP addition. The GP ratio is on decline and the same has become negative in A. Y.2015-l6, therefore, the GP ratio for A. Y. 2015-16 is ignored. The year earlier than A.Y.2012-13 are also decided not to be considered for benchmarking as it would create non-scientific results in a case where the GP ratio is on decline year after year and finally became negative in A.Y. 2015-16. Hence the comparative chart of turnover and GP for immediate preceding three years is being considered which is as under: C/TAXAP/414/2019 ORDER C/TAXAP/414/2019 ORDER As already mentioned that the GP ratio is on decline and the same has become negative in A.Y.2015-16, therefore, the latest profitable assessment year i.e. 2014-15 is taken as standard GP to compute the GP addition. If the standard GP at 4.65% is accepted then the GP addition for A.Y. 2012-l3 and A.Y.2013-14 is computed at Rs.5,25,667/- and Rs.l,58,614/- respectively. Hence it is considered quite fair and reasonable to compute the GP addition for A.Y.2012-13 at Rs.5,25,667/-. As all the expenditure has already been accounted while computing the basic GP percentage of 4.48, no further deduction for any expenses can be given. Consequently the addition of Rs.1,79,12,777/ -is hereby deleted and addition of Rs.5,25,667/- is hereby confirmed. The ground No. 2 is partly allowed.” 4.01.Having heard Ms.Mauna Bhatt, learned Senior Standing counsel appearing for the revenue and having gone through the materials on record, we are of the view that no error not to speak any error of law could be said to have been committed by the tribunal in recording the aforesaid findings. The matter is substantially on facts much less on any question of law. In view of the concurrent findings of fact recorded by two revenue authorities against the revenue, we are not inclined to disturb such finding. In the result, this appeal fails and is hereby dismissed. RAFIK... Sd/- (J. B. PARDIWALA, J) Sd/- (A. C. RAO, J)