M/s. Transgulf Frozen Food Containers Pvt. Ltd., Ghaziabad V. JCIT, Ghaziabad

CO 151/DEL/2014

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3335 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 9 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 14-12-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 07-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 04-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : D : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.4081/DEL/2013 ASSESSMENT YEAR : 2009-10 JCIT, RANGE-2, GHAZIABAD. VS. TRANSGULF FROZEN FOOD CONTAINERS PVT. LTD., R-2/209, RAJ NAGAR, GHAZIABAD. PAN: AACCT2067R CO NO.151/DEL/2014 (ITA NO.4081/DEL/2013) ASSESSMENT YEARS : 2009-10 TRANSGULF FROZEN FOOD CONTAINERS PVT. LTD., R-2/209, RAJ NAGAR, GHAZIABAD. PAN: AACCT2067R VS. JCIT, RANGE-2, GHAZIABAD. ASSESSEE BY : SHRI AKHILESH KUMAR, ADVOCATE & SHRI VIPIN GARG, CA DEPTT. BY : SHRI AMIT JAIN, SR. DR DATE OF HEARING : 14.12.2017 DATE OF PRONOUNCEMENT : 14.12.2017 ITA NO.4081/DEL/2013 CO NO.151/DEL/2014 2 ORDER PER R.S. SYAL, VP: THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARISE OUT OF THE ORDER PASSED BY THE C IT(A) ON 20.04.2013 IN RELATION TO THE ASSESSMENT YEAR 2009- 10. 2. THE ONLY ISSUE RAISED BY THE DEPARTMENT IN ITS A PPEAL IS AGAINST REDUCTION IN THE AMOUNT OF ADDITION FROM GO ODS CARRIAGE MADE BY THE ASSESSING OFFICER. THE ASSESS EE IN ITS CROSS OBJECTION IS AGAINST THE SUSTENANCE OF ADDITI ON TO A CERTAIN LEVEL. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRANSPORTATION OF FROZEN FOODS, MILK & MILK PRODUCTS, FRUITS AND VEGETABLES IN CANNED BO TTLES ETC. THE RETURN WAS FILED DECLARING A LOSS OF RS.2,09,04 ,537/-. THEREAFTER, A REVISED RETURN WAS FILED CLAIMING CER TAIN AMOUNT OF REFUND. DURING THE COURSE OF ASSESSMENT PROCEED INGS, THE ASSESSING OFFICER OBSERVED THAT NET LOSS OF RS.2.60 CRORE WAS ITA NO.4081/DEL/2013 CO NO.151/DEL/2014 3 DECLARED BY THE ASSESSEE ON GROSS RECEIPTS OF RS.8. 59 CRORE. THIS WAS CONTRASTED WITH THE CORRESPONDING FIGURES FOR THE ASSESSMENT YEAR 2007-08 IN WHICH THE TURNOVER WAS R S.12.63 CRORE AND NET PROFIT OF RS.8.60 LAC. ON BEING CALL ED UPON TO EXPLAIN AS TO WHY THE BOOKS OF ACCOUNT BE NOT REJEC TED, THE ASSESSEE TENDERED ITS REPLY WHICH HAS BEEN INCORPOR ATED IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER OBSERVED T HAT SOME OF THE EXPENSES, NAMELY TRIP TRANSIT EXPENSES WER E NOT PROPERLY SUPPORTED BY VOUCHERS. IT WAS SEEN THAT SI MILAR ISSUE AROSE IN THE PROCEEDINGS FOR THE ASSESSMENT YEAR 20 08-09 IN WHICH A VOLUNTARY DISCLOSURE OF RS.35 LAC WAS MADE BY THE ASSESSEE ON THIS SCORE. IT WAS FURTHER NOTICED THA T SOME OF THE SUNDRY CREDITORS WERE LYING FOR MANY YEARS AND NO C ONVINCING REPLY WAS GIVEN EXCEPT THAT THE SAME WERE PAID IN L ATER YEARS. IT WAS STILL FURTHER NOTICED THAT THE ASSESSEE WAS NOT MAINTAINING STOCK OF TYRES AND MATERIAL ETC. CONSI DERING THE ABOVE FACTORS, THE ASSESSING OFFICER INVOKED THE PR OVISIONS OF ITA NO.4081/DEL/2013 CO NO.151/DEL/2014 4 SECTION 145(3) OF THE ACT AND REJECTED THE BOOKS OF ACCOUNT. PLACING RELIANCE ON THE PROVISIONS OF SECTION 44AE, THE ASSESSING OFFICER COMPUTED INCOME @ RS.3,500/- PER MONTH PER TRUCK WHICH RESULTED INTO DETERMINATION OF INCO ME AT RS.37.38 LAC. THE LD. CIT(A) DID NOT APPROVE THE R EJECTION OF BOOKS OF ACCOUNT. FOLLOWING THE ORDER FOR THE ASSE SSMENT YEAR 2008-09, THE LD. CIT(A) SUSTAINED THE ADDITION AT R S.23.50 LAC TO THE INCOME DECLARED. THIS IS HOW, BOTH THE SIDE S HAVE COME UP IN APPEAL BEFORE THE TRIBUNAL IN SUPPORT OF THEI R RESPECTIVE STANDS. 4. WE HAVE HEARD THE PARTIES AND PERUSED THE RELEVA NT MATERIAL ON RECORD. THE FIGURES OF SALES, GROSS PRO FIT, GROSS PROFIT RATE, NET PROFIT AND NET PROFIT RATE ETC. RE LATING TO ASSESSMENT YEARS 2007-08 TO 2010-11 HAVE BEEN TABUL ATED BY THE ASSESSING OFFICER ON PAGE 7 OF HIS ASSESSMENT O RDER, WHICH IS REPRODUCED AS UNDER:- ITA NO.4081/DEL/2013 CO NO.151/DEL/2014 5 A.Y. 2007-08 2008-09 2009-10 2010-11 TURN OVER (RS.) 126395653 137345084 85974925 126431540 GROSS PROFIT (RS.) 23662999 12375305 6489940 17648754 GP RATE % 18.72 9.01 9.5 13.95 NET PROFIT (RS.) 860411 ( - )31932501 - 26002619 - 2130629 N.P. RATE % 0.68 - 23.25 - 30.25 - 1.68 DUE TO DEPRECIATION ADJUSTMENT AS PER COMPANY LAW & AS PER IT ACT, RETURNED INC. -13146 -26851032 -20904537 -61218668 5. IT IS DISCERNIBLE FROM THE ABOVE TABLE THAT THE ASSESSEES GROSS PROFIT RATE FOR THE CURRENT YEAR STOOD AT 9.5 % AS AGAINST 9.01% FOR THE IMMEDIATELY PRECEDING YEAR. THE ASSE SSEE MAINTAINED PROPER BOOKS OF ACCOUNT ALONG WITH VOUCH ERS WHICH WERE PRODUCED BEFORE THE ASSESSING OFFICER AS HAS B EEN RECORDED IN PARA 2 OF THE ASSESSMENT ORDER. THE ME RE FACT THAT THE ASSESSEE SUFFERED NET LOSS CANNOT BE A REASON T O REJECT THE BOOKS OF ACCOUNT, MORE SPECIFICALLY WHEN IT WAS CON TENDED BEFORE THE ASSESSING OFFICER THAT THE LOSS OCCURRED DUE TO HEAVY AMOUNT OF DEPRECIATION DURING THE YEAR UNDER CONSIDERATION, WHICH FACT HAS NOT BEEN CONTROVERTED BY THE AO. THE OTHER REASONS RECORDED BY THE ASSESSING OFFICER , SUCH AS, ITA NO.4081/DEL/2013 CO NO.151/DEL/2014 6 NON-MAINTENANCE OF STOCK OF TYRES AND MATERIALS ETC . AND SUNDRY CREDITORS LYING FOR MANY YEARS, ETC. CANNOT GIVE RISE TO THE REJECTION OF BOOKS OF ACCOUNT. WHEN THE ASSESS EE RETURNED GROSS PROFIT RATE OF 9.5%, WHICH IS HIGHER THAN THA T OF PRECEDING YEAR AT 9.01%, WE HOLD THE BOOKS OF ACCOU NT, EVEN IF RIGHTLY REJECTED, CANNOT CALL FOR A TRADING ADDITIO N. BE THAT AS IT MAY, WE FIND THAT NO CONVINCING OR LEGALLY SUSTAINA BLE REASONS HAVE BEEN GIVEN FOR THE REJECTION OF BOOKS OF ACCOU NT. WE THUS COUNTENANCE THE VIEW POINT OF THE LD. CIT(A) ON THI S ISSUE. 6. IT IS FURTHER SEEN THAT THE PROVISIONS OF SE CTION 44AE, AS INVOKED BY THE AO FOR DETERMINING THE INCOME, ARE N OT ATTRACTED AS THE ASSESSEE ADMITTEDLY OWNS MORE THAN TEN GOODS CARRIAGES ETC. AS SUCH, THE APPLICATION OF SECTION 44AE CANNOT BE MAGNETIZED. 7. TO SUM UP, IT IS HELD THAT THE BOOKS OF ACCO UNT WERE PROPERLY MAINTAINED BY THE ASSESSEE AND THEIR REJEC TION HAS BEEN RIGHTLY OVERTURNED IN THE FIRST APPEAL. ITA NO.4081/DEL/2013 CO NO.151/DEL/2014 7 8. HOWEVER, IT IS CLEAR FROM THE ASSESSMENT ORDER T HAT CERTAIN EXPENSES WERE NOT PROPERLY SUPPORTED AND WERE BASED ON SELF MADE VOUCHERS. THIS CERTAINLY REQUIRES DISALLOWANC E OF SOME EXPENSES. SIMILAR POSITION WAS PREVAILING DURING T HE COURSE OF PROCEEDINGS FOR THE ASSESSMENT YEAR 2008-09 IN WHIC H THE ASSESSEE AGREED FOR 4% DISALLOWANCE OF TRIP TRANSI T EXPENSES AND CERTAIN OTHER EXPENSES. THE LD. CIT(A) HAS APPL IED THE SAME YARDSTICK FOR SUSTAINING THE DISALLOWANCE @ 4% OF TRIP TRANSIT EXPENSES AND CERTAIN AMOUNT OF `OTHER EXPE NSES, WHICH IN TOTAL COMES TO RS.23.50 LAC. WE, THEREFOR E, UPHOLD THE IMPUGNED ORDER SUSTAINING THE DISALLOWANCE TO T HIS EXTENT. 9. IN THE RESULT, BOTH THE APPEAL AS WELL AS THE CR OSS OBJECTION STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.12.2017. SD/- SD/- [KULDIP SINGH] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 14 TH DECEMBER, 2017. ITA NO.4081/DEL/2013 CO NO.151/DEL/2014 8 DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.