M/s Ayurvigyan Prayogshala Pvt. Ltd., Jabalpur V. ACIT Circle 1(1), Jabalpur

CO 7/JAB/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1115 (ITAT-JABALPUR)
• Duration Of Justice: 5 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-05-2019
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 27-03-2014
• Court: TRIBUNAL
• Department Lawyers: D P LATHORIYA
• Assessee Lawyers: ANIL AGRAWAL
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JABALPUR BENCH, JABALPUR BEFORE SHRI D.T. GARASIA, J.M. AND SHRI B.C.MEENA, A.M. I.T.A.NO. 06/JAB/2013 A.Y. : 2007-08 ACIT, CIRCLE 1(1), JABALPUR VS M/S.AYURVIGYAN PRAYOGSHALA PRIVATE LIMITED, OPP. STADIUM GATE NO.4, WRIGHT TOWN, JABALPUR. APPELLANT RESPONDENT PAN NO. : AAFCA1149J C.O.NO.07/JAB/2014 (ARISING OUT OF I.T.A.NO. 06/JAB/2013) A.Y. : 2007-08 M/S.AYURVIGYAN PRAYOGSHALA PRIVATE LIMITED, OPP. STADIUM GATE NO.4, WRIGHT TOWN, JABALPUR. VS ACIT, CIRCLE 1(1), JABALPUR CROSS OBJECTOR RESPONDENT -: 2: - 2 DEPARTMENT BY : SHRI D.P.LATHORIYA, DR ASSESSEE BY : SHRI ANIL AGRAWAL, C.A. DATE OF HEARING : 2 0 . 0 5 .201 5 DATE OF PRONOUNCEMENT : 25 . 0 6 .201 5 O R D E R PER GARASIA, J.M. APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF CIT(A), JABALPUR, DATED 17.02.2012 FOR THE ASSESSMENT YEAR 2007-08. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPA NY IS IN THE BUSINESS OF TRADING IN OXYGEN GAS CYLINDER. DURING THE SCRUTINY PROCEEDINGS, THE ASSESSEE WAS REQUESTED TO FURNISH THE COMPLETE DETAILS OF OPENING STOCK, PURCHASE, SA LES AND CLOSING STOCK. THE ASSESSEE COMPANY DID NOT MAINTAI N THE STOCK, THEREFORE, THE BOOKS OF ACCOUNT OF THE ASSES SEE WAS REJECTED AND THE AO HAS CONSIDERED THE COMPARABLE C ASES. THE AO HAS CALLED FOR THE PURCHASE RATE FROM VARIOUS BU SINESS -: 3: - 3 CONCERNS, WHICH ARE DEALING WITH THE BULK OXYGEN CY LINDERS AND ASCERTAINING INFORMATION, THE AO HAS CALLED FOR THE INFORMATION, WHICH IS REPRODUCED IN THE ASSESSMENT ORDER, WHICH READS AS UNDER :- BILLS OF INDIAN OXYGEN COMPANY ISSUED TO M.H. HOSPI TAL IN A.Y.2007-08 FOR MEDICAL OXYGEN DATE PARTICULARS VOLUME CU. METER RATE RS. RATE/ CU.M ET. 26.03.2007 BULK OXYGEN CYLINDER 7 165 24 26.03.2007 B TYPE OXYGEN CYLINDERS 1.5 70 47 27.02.2007 BULK OXYGEN CYLINDER 7 175 25 27.01.2007 BULK OXYGEN CYLINDER 7 175 25 27.01.2007 B TYPE OXYGEN CYLINDERS 1.5 75 50 31.12.2006 BULK OXYGEN CYLINDER 7 175 25 31.12.2006 B TYPE OXYGEN CYLINDERS 1.5 75 50 30.12.2006 BULK OXYGEN CYLINDER 7 175 25 30.12.2006 B TYPE OXYGEN CYLINDERS 1.5 75 50 29.12.2006 BULK OXYGEN CYLINDER 7 175 25 28.11.2006 BULK OXYGEN CYLINDER 7 175 25 29.11.2006 BULK OXYGEN CYLINDER 7 175 25 29.11.2006 BULK OXYGEN CYLINDER 1.5 75 50 30.10.2006 BULK OXYGEN CYLINDER 7 175 25 30.10.2006 BULK OXYGEN CYLINDER 7 175 25 30.10.2006 B TYPE OXYGEN CYLINDERS 1.5 75 50 29.09.2006 BULK OXYGEN CYLINDER 7 175 25 29.09.2006 B TYPE OXYGEN CYLINDERS 1.5 75 50 31.08.2006 BULK OXYGEN CYLINDER 7 175 25 31.08.2006 B TYPE OXYGEN CYLINDERS 1.5 75 50 30.08.2006 BULK OXYGEN CYLINDER 7 175 25 30.08.2006 B TYPE OXYGEN CYLINDERS 1.5 75 50 30.07.2006 BULK OXYGEN CYLINDER 7 175 25 29.07.2006 BULK OXYGEN CYLINDER 7 175 25 29.07.2006 B TYPE OXYGEN CYLINDERS 1.5 75 50 21.06.2006 BULK OXYGEN CYLINDER 7 175 25 27.05.2006 BULK OXYGEN CYLINDER 7 175 25 27.05.2006 B TYPE OXYGEN CYLINDERS 1.5 75 50 28.04.2006 BULK OXYGEN CYLINDER 7 175 25 28.04.2006 B TYPE OXYGEN CYLINDERS 1.5 75 50 TOTAL 144 4035 28 -: 4: - 4 3. FROM THE ABOVE RECORDS, THE AO FOUND THAT THE ASSESSEE IS EARNING GROSS PROFIT OF RS. 8/- PER CUB . MTR OF CYLINDER AND THIS COMES TO GROSS PROFIT RATE OF 28. 50 % AND IS TAKEN AS GROSS PROFIT RATE FOR THE BUSINESS OF THE ASSESSEE. ON APPLYING THIS RATE OF GROSS PROFIT UPON THE PURCHAS ES OF ASSESSEE COMPANY OF RS. 49,16,645/- THE GROSS MARGI N ON SALES COMES TO RS. 19,59,782/- AND THE AO HAS ESTIM ATED THE GROSS PROFIT @ 28.50% AND HE MADE ADDITION OF RS. 11,81,847/-. 4. THE MATTER CARRIED TO LD. CIT(A) AND THE LD. CIT(A) HAS DELETED THE ADDITION OBSERVING AS UNDER :- I HAVE PERUSED THE MATERIAL ON RECORD AND SUBMISSIO N OF THE APPELLANT CAREFULLY. THE AO IS TRIED TO MAKE OU T THE CASE FOR THE REJECTION OF THE BOOKS OF ACCOUNT MAIN LY DUE TO NON MAINTENANCE OF THE STOCK REGISTER BY THE APPELL ANT. THE AO HAS OPINED THAT THE BOOKS WERE REJECTED DUE TO THE INABILITY TO ARRIVE AT THE QUANTITATIVE DETAILS OF PURCHASES AS WELL AS AND CLOSING STOCK BECAUSE THE PURCHASES ARE MADE IN CUBIC METERS AND SOLD IN CYLINDERS OF VARIO US -: 5: - 5 SIZES. HE HAS THUS ARRIVED AT THE CONCLUSION THAT T HE VALUE OF THE CLOSING STOCK COULD NOT BE ASCERTAINED DUE T O NON- MAINTENANCE OF STOCK REGISTER. THE APPELLANT HAS ST ATED THAT AS THE COMPANY DEALT WITH OXYGEN IT WAS NOT PO SSIBLE TO MAINTAIN A STOCK REGISTER AND, THEREFORE, THE TO TAL SALES AND PURCHASES ARE THE BASIC BENCH MARK FOR CONCLUSI ON OF TRADING PROFIT, SALE PRICE OF OXYGEN GAS PER CYLIND ER PER CUBIC METERS HAD BEEN WORKED OUT FROM VARIOUS INVOI CES AND NO DIFFERENCE BETWEEN THE TOTAL SALES AND PURCH ASES AS DEPICTED IN THE BOOKS WERE FOUND BY THE ASSESSIN G OFFICER. I TEND TO AGREE WITH THE CONTENTION OF THE COUNSEL THAT BOOKS OF ACCOUNT CANNOT BE REJECTED SOLELY ON THE GROUND OF NON-MAINTENANCE OF STOCK REGISTER ESPECIA LLY WHEN THE COMMODITY IS SUCH THAT IT IS DIFFICULT AND IMPRACTICAL TO MAINTAIN ONE. THE BOOKS OF ACCOUNT O F THE COMPANY ARE AUDITED AND THE SALE, PURCHASE VOUCHERS/INVOICE WERE PRODUCED BEFORE THE AO WHEREI N NO DIFFERENCE WAS FOUND OUT BETWEEN THE TOTAL SALE AND PURCHASE DEPICTED IN THE BOOKS OF ACCOUNT AND THE S AME MATCHED WITH THE ORDER OF THE COMMERCIAL TAX -: 6: - 6 DEPARTMENT. NO OTHER SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNT HAVE BEEN POINTED OUT BY THE ASSESSING OFFI CER NOR AS HE ARRIVED AT THE OPINION THAT, IN ABSENCE O F A STOCK REGISTER, TAKING INTO ACCOUNT THE OTHER MATERIAL PL ACED BEFORE HIM, CORRECT PROFITS AND GAINS COULD NOT BE ADDUCED. RELIANCE IS PLACED ON S.N. NAMASIVAYAM CHETTIAR VS. CIT, (1960) 38 ITR 579 ( S.C.). II. THE APPELLANT COMPANY HAS MAINTAINED THAT IT HA S NOT MAINTAINED A STOCK REGISTER SINCE ITS INCEPTION IN FINANCIAL YEAR 1997-98; THE GROSS PROFIT HAD BEEN D ULY ACCEPTED BY THE DEPARTMENT FOR THE PAST THREE YEARS . THOUGH RES-JUDICATA IS NOT APPLICABLE TO INCOME TAX PROCEEDINGS, THE LAW OF CONSISTENCY CANNOT BE IGNOR ED. THE COMPARATIVE CASE OF M/S. INDIAN OXYGEN COMPANY TAKE N UP BY THE ASSESSING OFFICER WHEREIN HE STATED WAS A S PER RECORD, THE COUNSEL HAS CONTENDED HAS NO PAN AND AS WELL AS PROOF, I HOLD THAT THE ACTION OF THE AO IN REJEC TING THE BOOKS OF ACCOUNT SOLELY ON THE BASIS OF NON-MAINTEN ANCE OF STOCK REGISTER TO BE ERRONEOUS AND THE ADDITION MAD E ON ACCOUNT OF GROSS PROFIT OF RS. 11,81,847/- BY REJEC TING THE -: 7: - 7 BOOKS OF ACCOUNT IS HEREBY DELETED. THIS GROUND OF APPEAL IS ALLOWED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE FIND THAT THE ASSESSEE IS MAINTAINING AND AUDITED THE ACCOUNT AND THE ASSESSEE WAS NOT MAINTAINING ST OCK REGISTER SINCE INCEPTION OF THE BUSINESS AND THE SA ME IS REPORTED BY THE AUDITORS IN FORM NO.3-CD. THE GROSS PROFIT ADDITION IS BASED ON CONSIDERING THE BILLS OF INDIA N OXYGEN COMPANY HAVING NO MARKET SALE AND ISSUE THE BILLS T O ONE PARTY M.H. HOSPITAL. THE ASSESSEE HAS ENCLOSED COPY OF THIRD PARTY BILL OF M/S. LATHIYA OXYGEN COMPANY, WHEREIN THE CYLINDER HAS BEEN SOLD @ RS.18.50 PER CU.M. AND IN CASE OF M/S. LIFE CARE MEDISYSTEM, JABALPUR AND M/S. SAMADH AN HOSPITAL, JABALPUR, THE RATE IS TAKEN AT RS. 17.85 PER CU.M. THE ASSESSEE IS NOT MAINTAINING STOCK REGISTER AND STOCK REGISTER IS RELEVANT IN REJECTING BOOKS OF ACCOUNT AS SALES AND PURCHASE WERE DULY RECORDED. WE FIND THAT THE ASSES SEE IS SELLING OXYGEN IN FORM OF CYLINDERS AND THE STOCK R EGISTER OF CYLINDERS IS POSSIBLE. MOREOVER, THE ASSESSEE IS NO T MAINTAINING STOCK REGISTER, THEREFORE, WE ARE OF TH E VIEW THAT -: 8: - 8 THE LD. CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEES BOOK RESULTS CANNOT BE ACCEPTED. WE FIND THAT THE A SSESSEES GROSS PROFIT RANGING FROM 10.12% TO 13.89 % , THOUG H THE ASSESSEE IS NOT MAINTAINING STOCK REGISTER. FOR DET ERMINING THE GROSS PROFIT ONE HAS TO RELY UPON THE BOOKS OF THE ASSESSEE AND OTHERS IS COMPARABLE CASES. HERE, THE AO HAS CITED THE COMPARABLE CASES IN HIS ASSESSMENT ORDER AND FROM COMPARISON THE AO HAS DECIDED THE RATE OF THE OXYGE N AT RS. 28 PER CU.M. WHILE THE ASSESSEE HAS TAKEN THE RATE OF CU. M. AT DIFFERENT RATES AND THE AO HAS ESTIMATED THE NET PROFIT. THE AO HAS ESTIMATED THE NET PROFIT ON HIGHER SIDE, THE REFORE, WE ARE OF THE VIEW THAT THE GROSS PROFIT AT 28.50% IS ON HIGHER SIDE. THEREFORE, WE REDUCE IT TO 14 % GROSS PROFIT. WE ESTIMATE THE GROSS PROFIT @ 14% AND THE DEPARTMENTAL APPEAL IS ALLOWED PARTLY. 6. CROSS OBJECTION IS FILED MERELY IN SUPPORT OF THE O RDER OF THE CIT(A). CO IS DISMISSED, AS IT IS SUPPORTIVE . -: 9: - 9 7. IN THE RESULT, THE REVENUES APPEAL IS PARTLY ALLOW ED AND C.O. IS DISMISSED. THIS ORDER IS PRONOUNCED IN ACCORDANCE WITH RULE 34(4) OF I.T.A.T. RULES, BY PUTTING THE COPY OF THE SAME ON NOTICE BOARD ON 25 TH JUNE, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 25 TH JUNE , 2015. CPU*