SHASHI KALA MUNDRA L/H OF LATE SHYAM SUNDER MUNDRA, Sikar V. ITO, Sikar

ITA 103/JPR/2014

• Counselvise Citation: 10323114 RSA 2014
• Duration Of Justice: 1 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 10-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DR DHK
• Assessee Lawyers: H M SINGHVI

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 103/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SHASHI KALA MUNDRA L/H OF LATE SHRI SHYAM SUNDRA MUNDRA PROP. M/S. SHAYM SUNDER RAKESH KUMAR, BAWARI GATE, SIKAR (RAJ.) CUKE VS. THE ITO WARD- 1 SIKAR (RAJ) LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ABCPM 5217 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI H.M. SINGHVI, CA JKTLO DH VKSJ LS@ REVENUE BY :SHRI RAJ MEHRA, JCIT -DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 13/10/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 23 /10/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LD. CIT(A)-III, JAIPUR DATED 20-12-2013 FOR THE ASSESSM ENT YEAR 2009-10 WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: - 1 BECAUSE THE LD. CIT(A) HAS ERRED IN CONFIRMING THE TRADING ADDITION OF RS. 2,92,680/- OVERLOOKING AND SUMMARILY REJECTING THE DETAILED SUBMISSION, WITH V ARIOUS STATEMENTS AND EVIDENCE PLACED BEFORE HIM. ITA NO. 103/JP/2014 SHASHI KALA MUNDRA L/H OF LATE SHYAM SUNDER MUNDRA VS. ITO, WARD- 1, SIKAR . 2 2. THAT NO OPPORTUNITY HAS BEEN GIVEN BY LD. CIT(A) WHILE APPLYING THE GROSS PROFIT OF A COMPARABLE CAS E VIZ. JEEVAN RAM JOGANI.THE FACTS OF THE COMPARABLE CASE MAY BE DISTINGUISHABLE. 3. BECAUSE THE LD. CIT(A) HAS ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE WHILE CONFIRMING THE FOLL OWING DISALLOWANCES MADE BY THE AO. 1. SHOP EXPENSES RS. 6716/- 2. TELEPHONE EXPENSES RS. 4749/- 3. TRAVELLING EXPENSES RS. 1820/- 4. OUT OF CAR AND MOTOR CYCLE EXPENSES RS. 16,589 /- 2.1 DURING THE COURSE OF HEARING, THE LD. COUNSEL F OR THE ASSESSEE CONTENDS THAT THE LD. CIT(A) UPHELD THE TRADING ADD ITION BY FOLLOWING OBSERVATIONS :- 4.3 I HAVE CAREFULLY CONSIDERING THE FINDINGS OF THE AO AS ALSO THE SUBMISSIONS OF THE APPELLANT. IT MAY BE NOTED THAT THE ASSESSEE IS SHOWING EXACT GROSS PROFIT RAT E OF 5.6% DURING THE 3 CONTINUOUS ASSESSMENT YEARS. THE GROSS PROFIT RATE IS DEFINITELY BASED ON THE VALUE OF OPENING AN D CLOSING STOCK SALES AND PURCHASES AS ALSO VARIOUS EXPENSES DEBITED IN THE TRADING ACCOUNT. THEREFORE, THE GROSS PROFIT RA TE CANNOT BE OF THE EXACT SAME RATE INASMUCH AS THE RELATIVE VAL UES OF DIFFERENT ITEMS OF TRADING ACCOUNT CANNOT REMAIN EX ACTLY THE SAME. THEREFORE, PRIMA FACIE, SHOWING EXACT GROSS P ROFIT RATE MAY INDICATE THAT SUCH RATE MAY NOT BE BASED ON THE ACTUAL RESULTS OF THE BOOKS OF ACCOUNTS. IT MAY FURTHER BE NOTED THAT THE AO HAS POINTED OUT CERTAIN DEFECTS IN THE BOOKS OF ACCOUNT BY WAY OF NON-MAINTENANCE OF STOCK REGISTER , NON- MAINTENANCE OF DAY TODAY QUANTITATIVE AND QUALITAT IVE DETAILS OF THE ITEMS BEING TRADED BY THE APPELLANT. THE AO HAS ALSO POINTED OUT THAT EVEN THE CLOSING STOCK IS NOT SUBJ ECT TO PROPER VERIFICATION. THE APPELLANT HAS BROADLY NOT DISPUTED ITA NO. 103/JP/2014 SHASHI KALA MUNDRA L/H OF LATE SHYAM SUNDER MUNDRA VS. ITO, WARD- 1, SIKAR . 3 SUCH DEFECTS BUT ONLY CLAIMED THAT MAINTENANCE OF S TOCK REGISTER WAS NOT FEASIBLE. HOWEVER, EVEN SUCH EXPLA NATION IS NOT CONVINCING INASMUCH AS THE APPELLANT IS DEALING IN A VERY LIMITED NUMBER OF ITEMS I.E. SAREEES THAT TOO ON WH OLESALE BASIS AND THEREFORE, MAINTENANCE OF STOCK REGISTER AND DAY TODAY QUANTITATIVE DETAILS OF SALES AND PURCHASES C ANNOT SAID TO BE NON-FEASIBLE. THEREFORE, THE ABOVE MENTIONED DEFECTS IN THE BUSINESS OF THE APPELLANT ARE DEFINITELY OF VIT AL NATURE AND THESE ATTRACTED THE PROVISIONS OF SECTION 145(3) OF I.T. ACT. AS REGARDS THE RELIANCE ON THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF MALANI RAM JEEVAN VS. ACI T, 316 ITR 120 BY THE APPELLANT, IT MAY BE MENTIONED THAT IN THIS CASE EVEN THE OPENING STOCK AND CLOSING STOCK WAS N OT UNDER DISPUTE WHEREAS THE APPELLANT HAS EVEN THE VALUATIO N OF OPENING STOCK AND CLOSING STOCK IS DISPUTED AND WAS NOT SUBJECT TO PROPER VERIFICATION. ACCORDINGLY, THE AP PLICATION OF PROVISIONS OF SECTION 145(3) OF I.T. ACT BY THE AO IS CONFIRMED. AS REGARDS ESTIMATION OF PROFIT AFTER RE JECTION OF BOOKS OF ACCOUNT, IT IS A SETTLED LAW THAT THE PROF IT CAN BE ESTIMATED EITHER ON THE BASIS OF PAST HISTORY OF TH E APPELLANT CASE OR ON THE BASIS OF ANY COMPARABLE CASE. IN THI S CONNECTION, IT MAY BE NOTED THAT APPELLANT CASE WAS NOT SUBJECT TO SCRUTINY ASSESSMENTS IN THE EARLIER ASSE SSMENT YEARS. IT IS ALSO NOTED THAT THE AO HAS APPLIED GRO SS PROFIT RATE OF 6.6% ON THE BASIS OF COMPARABLE CASE OF THE SAME AREA AND OF THE SAME BUSINESS IN THE CASE OF SHRI J EEVAN RAM JOGANI WHO HAS SHOWN GROSS PROFIT RATE OF 8.97%. TH E AO HAS DULY CONSIDERED THE INCREASED TURNOVER OF THE ASSE SSEE. IN THIS BACK GROUND THE APPLICATION OF GROSS PROFIT RA TE OF 6.6% WAS FAIR AND REASONABLE. AS REGARDS THE RELIANCE OF THE APPELLANT ON CERTAIN CASE LAWS OF THE HON'BLE JUR ISDICTIONAL HIGH COURT AS DISCUSSED IN PARA 4.2 OF THIS ORDER W HEREIN IT IS STATED TO BE HELD THAT THE PAST HISTORY OF THE APPE LLANT CASE MAY BE GIVEN PRIORITY. IT MAY BE MENTIONED THAT EVE N IN SUCH CASE LAWS, THE HON'BLE COURT HAS NOT GIVEN ANY SUC H FINDINGS THAT AFTER REJECTION OF BOOKS OF ACCOUNT, THE PROFIT CAN BE ESTIMATED ONLY ON THE BASIS OF PAST HISTORY OF THE CASE AND NOT ON THE BASIS OF ANY OTHER COMPARABLE CASE. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES DISCUSSED ABOVE , THE ITA NO. 103/JP/2014 SHASHI KALA MUNDRA L/H OF LATE SHYAM SUNDER MUNDRA VS. ITO, WARD- 1, SIKAR . 4 ADDITION MADE BY THE AO AMOUNTING TO RS. 2,92,286/- IS CONFIRMED. THIS GROUND OF APPEAL IS DISMISSED. IT IS CONTENDED THAT ADDITION IS TOO HIGH AND ARBIT RARY AND LENIENT APPROACH MAY BE TAKEN. 2.2 APROPOS GROUND NO. 2, IT IS CONTENDED THAT THAT DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE PLEADED THAT DISALLOWANCE MAY BE RESTRICTED TO 10%. THE LD. CIT(A) HOWEVER, HAS UPHE LD 20% DISALLOWANCE WHICH IS EXCESSIVE. 2.3 THE LD. DR ON THE OTHER HAND CONTENDS THAT THE ASSESSEE HAS NOT GIVEN ANY COGENT REASONS AS TO WHY ESTIMATE MADE BY THE AO AND LD. CIT(A) IS ARBITRARY OR UNJUSTIFIED. SIMILARLY APRO POS DISALLOWANCE OF VARIOUS EXPENSES, NO REASONS HAVE BEEN GIVEN AS TO WHY 20% DISALLOWANCE IS UNJUSTIFIED. THEREFORE, THE ORDERS OF THE LOWER AUTHORITIES MAY BE UPHELD. 2.4 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. INTEREST OF JUSTICE IS SERVED IF A LENIENT VIEW IS TAKEN ON THE TRADING ADDITION WHICH ARE REDUCED TO ONE AN D A HALF OF CONFIRMATION MADE BY THE AO I.E. RESTRICTED TO RS. 1,46,340/-. THE ASSESSEE GROUND NO. 1 IS PARTLY ALLOWED. ITA NO. 103/JP/2014 SHASHI KALA MUNDRA L/H OF LATE SHYAM SUNDER MUNDRA VS. ITO, WARD- 1, SIKAR . 5 2.5 APROPOS SECOND GROUND, I AM OF THE CONSIDERED V IEW THAT DISALLOWANCES HAVE BEEN MADE DUE TO PERSONAL USAGE OF EXPENSES. THE LD. COUNSEL FOR THE ASSESSEE COULD NOT ESTABLISH AS TO HOW DISALLOWANCES ARE UNJUSTIFIED. IN VIEW THEREOF, THE DISALLOWANCES MAD E ARE UPHELD AND GROUND NO. 2 OF THE ASSESSEE IS DISMISSED. 3.0 IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 /10/2015 . SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 23/10/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHASHI KALA MUNDRA L/H OF LATE SHYA M SUNDER MUNDRA, SIKAR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WED 1, SIKAR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 103/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR