BELA JAIN,SAWAI MADHOPUR V. ITO, SAWAI MADHOPUR

ITA 1117/JPR/2024

AI Insights

The case involves Bela Jain, the appellant, who contested the trading addition made by the Income Tax Officer (ITO), Ward (1), Sawai Madhopur, for the Assessment Year 2017-18. The ITO had enhanced the Net Profit (N.P.) rate to 4%, similar to the previous year, citing a substantial decline in results compared to the previous year. The Ld. CIT (A) upheld this decision, leading to the present appeal. The tribunal examined the procedural adherence in applying the N.P. rate and found that the AO did not properly reject the books of accounts nor apply section 145 of the Act, which led to the setting aside of the previous orders and the allowance of the appeal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 474495 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-11-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 29-08-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTAM SINGH CHOUDHARY
• Assessee Lawyers: RAJENDRA SISODIA; LD
• Section: 143(2); 250; 139; 145

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH “SMC”, JAIPUR BEFORE Dr. S. SEETHALAKSHMI, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER ITA No. 1117/JPR/2024 (A.Y. 2017-18) Bela Jain, 6 Banger Dharamshala, Bajariya, Sawai Madhopur – 344 001. PAN No.: ABMPJ 4057B ..... Appellant Vs. ITO, Ward (1), Sawai Madhopur – 344 001. ..... Respondent Appellant by : Mr. Rajendra Sisodia, Adv., Ld. AR Respondent by : Mr. Gautam Singh Choudhary, JCIT- Ld. Sr. DR (Through V.C.) Date of hearing : 21/11/2024 Date of pronouncement : 25/11/2024 O R D E R PER GAGAN GOYAL, A.M: This appeal by assessee is directed against the order of Ld. Addl.CIT/JCIT (A), Mysore dated 07.08.2024 passed u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’) for A.Y. 2017-18. The assessee has raised the following grounds of appeal:- 1. The Ld. CIT (A) has erred in confirming the trading addition made by the AO notwithstanding the fact that trading addition cannot be made without rejecting the books of accounts. 2 2. The Ld. CIT (A) has erred in confirming the trading addition made by the AO by applying an arbitrary rate of 4% without any basis. 3. The Appellant reserves its right to add, amend/modify the grounds of appeal.” 2. The brief facts of the case are that the assessee individual filed her return of income on 27-10-02017 u/s. 139 of the Act, declaring total income at Rs. 4,24,350/-. Case of the assessee was selected under CASS and a notice u/s. 143(2) of the Act was issued vide dated: 09-08-2018. During the scrutiny it was observed by the AO that there is a substantial down fall in the results declared by the assessee as compared to the results of previous year, hence applied the N.P. rate @ 4% (Almost similar to previous year) and assessed the income of the assessee at Rs. 12,80,554/- against the declared results of Rs. 5,74,353/-. 3. The assessee being aggrieved with this order of the AO preferred an appeal before the Ld. CIT (A), who in turn confirmed the action of the AO and sustained the addition on account N.P. rate enhancement. The assessee being further aggrieved preferred the present appeal before us. We have gone through the order of the AO, order of the Ld. Addl.CIT/JCIT (A), Mysore and submissions of the assessee along with grounds taken before us. 4. It is observed that the Ld. Addl.CIT/JCIT (A), Mysore vide para 4 of his order observed as under: Date of hearing of notice Date of compliance fixed Date of Response Mail-ID to which the notices issued and delivered as per income 3 tax portal 31-01-2021 15-02-2021 No Response [e-mail] 15-09-2021 30-09-2021 No Response [e-mail] 21-02-2024 26-02-2024 No Response [e-mail] 01-03-2024 08-03-2024 07-03-2024 [e-mail] 25-07-2024 29-07-2024 No Response [e-mail] Based on above, the Ld. Addl.CIT/JCIT (A), Mysore decided the matter almost on ex-parte pattern and followed the line of the AO, while confirming his order against the assessee. The only submission made by the assessee was dated: 07- 03-2024. The same has been observed by us vis-à-vis documents and explanations submitted before us. 5 It is observed that the claim of the assessee before us and the Ld. Addl.CIT/JCIT (A), Mysore remained unchallenged by the Revenue, that during the assessment proceedings the assessee had submitted complete set of book of accounts comprising all purchases, stock register, cash book, bank book, other ledgers and audited financial statements etc. Apparently the query of the AO about difference in results of the concerned year vis-à-vis preceding year is relevant, but that can’t be the sole basis for making any addition by applying N.P. Rate of preceding year without applying the provisions of section 145 of the Act. As in this case it is clearly visible that no show cause has been issued by the AO for application of section 145 of the Act and there is no action visible to us which confirms that defects in the books of the assessee has been pointed out, which justifies the application of N.P. Rate @ 4%. 4 6. Apparently, five opportunities were given to the assessee as mentioned (supra) but based on the assessee’s submission dated: 07-03-2024, the Ld. Addl.CIT/JCIT (A), Mysore was duty bound to ask for a remand report from the AO to establish the facts of the case and to ascertain the contentions of both the sides. Considering the facts discussed above, we are not in agreement with the view taken by the AO and decision of the first appellate authority. Hence both the orders set-aside and the appeal of the assessee are allowed. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 25th day of November 2024. Sd/- Sd/- (Dr. S. SEETHALAKSHMI) (GAGAN GOYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Jaipur, िदनांक/Dated: 25/11/2024 Copy of the Order forwarded to: 1. अपीलाथ\r/The Appellant , 2. \u000eितवादी/ The Respondent. 3. आयकर आयु\u0015 CIT 4. िवभागीय \u000eितिनिध, आय.अपी.अिध., Sr.DR., ITAT, 5. गाड\u001e फाइल/Guard file. 5 BY ORDER, //True Copy// (Asstt. Registrar) ITAT, Jaipur Details Date Initials Designation 1 Draft dictated on PC on 25.11.2024 Sr.PS/PS 2 Draft Placed before author 25.11.2024 Sr.PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member JM/AM 5. Approved Draft comes to the Sr.PS/PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS/PS 7. File sent to the Bench Clerk Sr.PS/PS 8 Date on which the file goes to the Head clerk 9 Date of Dispatch of order "