DCIT , FIROZABAD V. S.R. GLASS INDUSTRIES, FIROZABAD

ITA 93/AGR/2019

AI Insights

The case involves an appeal by the DCIT against M/s SR Glass Industries concerning the assessment year 2014-15. The primary issues in the appeal were the rejection of the books of accounts of the assessee under Section 145(3) of the Income Tax Act, 1961, and the subsequent estimation of net profit at 10% of total turnover, as well as the addition of Rs. 14,74,725 on account of alleged bogus purchases. The Commissioner of Income Tax (Appeals) had reversed the assessment findings, leading to the Revenue's appeal. The Tribunal examined the discrepancies noted by the Assessing Officer and the evidences provided by the assessee, ultimately deciding to make a minor adjustment to the income while rejecting the other grounds of appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34438 (ITAT-AGRA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Other Referred Cases: M/s Hycons Infrastructure (India) Ltd., Hyderabad vs DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHAILENDRA SRIVASTAVA
• Assessee Lawyers: PANKAJ GARGH
• Keywords: Corroborative evidences; Bogus purchase; Bogus
• Section: 68; 145(3)

Judgement Text

"P a g e | 1 ITA No.93/Agr/2019 The DCIT Vs. M/s SR Glass Industries IN THE INCOME TAX APPELLATE TRIBUNAL “DB” BENCH, AGRA BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER & SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA No. 93/Agr/2019 (Assessment Year 2014-15) The DCIT, Circle 2(2)(1) Civil Lines, Dabrai NH-2 Firozabad- 283205 Vs. M/s S.R. Glass Industries Mainpuri Gate, New Rasoolpur, Firozabad 283203 \u0001थायीलेखासं./जीआइआरसं./PAN/GIR No: AAZFS7907H Appellant .. Respondent Appellant by : Sh. Shailendra Srivastava, SR.DR Respondent by : Sh. Pankaj Gargh, adv. Date of Hearing 10.02.2025 Date of Pronouncement 17.02.2025 O R D E R PER BENCH: This revenue’s appeal for assessment year 2014-15 arises against Commissioner of Income Tax (Appeals)-2 [in short, the “CIT(A)”] Agra order dated 28.12.2018, involving proceedings under Section143(3) of the Income Tax Act, 1961, [hereinafter referred to as ‘the Act’]. Heard both the parties. Case filed perused. P a g e | 2 ITA No.93/Agr/2019 The DCIT Vs. M/s SR Glass Industries 2. The revenue raised the following substantive grounds in the instant appeal. “1. That the Ld. Commissioner of Income Tax (Appeals)-2. Agra has erred in law and on facts in deleting the addition of Rs. 2,39,39,527/- made by rejecting the books of accounts of the assessee u/s 145(3) of the I.T. Act, 1961 and income taken @ 10% of the total turnover of Rs. 23,93,95,269/-. 2. That the Ld. Commissioner of Income Tax (Appeals)-2, Agra has erred in law and on facts in deleting the addition of Rs. 14,74,725/- made on account of bogus Purchase of Soda ash from M/s Rama Shyama Papers Pvt. Ltd. 3. Thai the order of Ld. Commissioner of Income Tax (Appeals)-2, Agra being erroneous in law and on facts deserves to be set-aside and that of the Assessing Officer deserves to be restored. 4. That the appellant craves leave to add or alter any or more ground or grounds of appeal as may be deemed fit at the time of hearing of appeal.” 3. Both the parties refer to the CIT(A)’s detailed discussion reversing the assessment findings rejecting the assessee’s books thereby estimating its Net Profit @ 10% as under : “6.2 As regards the grounds no. 1(a), 1(b), 2(a), 2(b), 2(c), 2(d) and 2(e), all of which are against the addition of Rs. 2,39,39,527/- to the appellant's returned income after rejection of its books of account under section 145(3), it is seen that on the basis of discrepancies described by the A.O. at paragraph numbers 5 to 12 of the impugned order, the appellant's books of account were found unreliable by him and the appellant's net profit was estimated @10% relying on the judgment of Hon'ble ITAT, Hyderabad in the case of M/s Hycons Infrastructure (India) Ltd., Hyderabad vs DCIT. 6.3 Before me, the appellant has vehemently argued against the addition of Rs. 2,39,39,527/- to its returned income after rejection of its books of account under section145(3). After carefully going through paragraphs no. 2.3 (a) to 2.3(h) of its written submission and also examining the supporting evidences annexed by it in its written submission, I am convinced that the discrepancies identified by the A.O. in its books of account are either non-existent or are not supported by sufficient evidence. Further, with due respect to it, the A.O.'s reliance on the judgment in the case of M/s Hycons Infrastructure (India) Ltd., Hyderabad vs DCIT, for the purpose P a g e | 3 ITA No.93/Agr/2019 The DCIT Vs. M/s SR Glass Industries of estimating the appellant's books of account, in my opinion, is not justified. The judgment in that case was based on materially different facts because in that case books of account or bills and vouchers were not produced by the assessee. In this context, I find merit in appellant's contention that its books of account for the impugned year are duly audited and produced for verification, and have also been accepted by the A.O. in scrutiny proceedings for A.Y. 2013- 14 without drawing any adverse inference. Further, from a perusal of the past history, it is observed that the appellant's gross profit% during the impugned year was 25.28% compared to 24.53% and 12.36% in the immediately preceding two years. Compared to A.Y. 2012-13, the net profit has declined in the impugned year but is still greater than the net profit of A. Y. 2013-14, when it was a net loss of 26.73%. Finally, I find the judicial precedents cited by the appellant strongly support its contentions and cannot be brushed aside on the basis of facts available on record. Hence, in view of the above discussion grounds no. 1(a), 1(b), 2(a). 2(b), 2(C), 2(d) and 2(e) are allowed.” 4. We have given our thoughtful consideration to the Revenue’s and assessee’s vehement contentions. The Revenue supports rejection of books of accounts whereas the assessee submits that the impugned estimation is still on a higher side. The fact however remain that no specific defect had been noticed by the learned Assessing Officer while rejecting the assessee’s book results. 5. Be that as it may, we are of the considered view that a lump sum addition of Rs.5 lac in this case would be just and proper to plug all leakages with a rider that the same shall not be treated as a precedent. This grounds stands partly allowed in very terms. 6. So far as the Revenue’s substantive ground qua Section 68 addition of Rs.14,74,725/- alleging bogus purchases is concerned, it could hardly dispute that the same is in fact duly reflected in the assessee’s trading account and it had duly discharged the onus of proving the genuineness and creditworthiness of the parties hereinabove. This latter ground stands also fails therefor. P a g e | 4 ITA No.93/Agr/2019 The DCIT Vs. M/s SR Glass Industries 7. The Revenue’s appeals stands partly allowed in above terms. Order pronounced in the open court on .02.2025 Sd/- (Manoj Kumar Aggarwal) Sd/- (Satbeer Singh Godara ) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated .02.2025 PS: Rohit Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT AGRA "