Bajranglal Agarwala, Kolkata V. ITO, Ward-1, Ballurghat,

ITA 1038/KOL/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7927 (ITAT-KOLKATA)
• Duration Of Justice: 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 12-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY SR D R THIS IS
• Keywords: Rejection of books of accounts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: K OLKATA [BEFORE SMT. DIVA SINGH, HONBLE JUDICIAL MEMBER ] I.T.A. NO.1038/KOL/2012 ASSESSMENT YEARS : 2008-09 SRI BAJRANGLAL AGARWALA, VS- ITO, WARD-3(1), KOLKATA 127, B.K.PAL AVENUE, 2 ND FLOOR, KOLKATA 700 005 (PAN:ACSPA 5225B) ( APPELLANT ) ( RESPONDENT ) DATE OF CONCLUDING THE HEARING : 02.08.2012 DATE OF PRONOUNCING THE ORDER : 02.08.2012 APPEARANCES : FOR THE APPELLANT : SHRI SUBAS H AGARWAL : FOR THE RESPONDENT : SRI SANJAY, SR.D.R . O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AG AINST THE ORDER DATED 25.04.2012 OF COMMISSIONER OF INCOME TAX (APPEALS), JALPAIGURI PE RTAINING TO THE ASSESSMENT YEAR 2008-09 ON THE FOLLOWING TWO EFFECTIVE GROUNDS : 1. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITI ON OF RS.3,19,086/- MADE BY THE A.O. BY MAKING AN ESTIMATION OF GROSS PROFIT WITHOUT ANY BASIS. 2. FOR THAT THE LD. CIT(A) OUGHT TO HAVE DELETED THE ADDITION OF RS.3,19,086/- SINCE THE A.O. ESTIMATED THE GROSS PROFIT WITHOUT REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE. 2. THE RELEVANT FACTS OF THE CASE ARE THAT TH E ASSESSEE DECLARED AN INCOME OF RS.1,56,291/- EARNED FROM MERCANTILE BUSINESS I.E. BY TRADING IN BATTERY, TORCH LIGHT, TEA, SOAP AND JUTE. THE CASE WAS SELECTED FO R SCRUTINY. THE AO OBSERVED THAT THE ASSESSEE, IN THE COURSE OF THE HEARING, PRODUCE D SOME OF THE BILLS IN SUPPORT OF THE BOOKS OF ACCOUNTS WHICH WERE EXAMINED. THE EXAM INATION SHOWED THAT THE 2 ITA NO.1038/KOL/2012 BAJRANGLAL AGARWALA ASSESSMENT YEAR: 2008-09 ASSESSEE HAS SHOWN GROSS PROFIT OF RS.9,28,150/- ON LY WHICH WORKED OUT TO 3.72% OF TOTAL TURNOVER OF RS.2,49,44,733/-. THE AO WAS O F THE VIEW THAT ON THE BASIS OF PRODUCED PAPERS FROM THE BUSINESS TRANSACTION, IT S EEMED THAT MINIMUM GROSS PROFIT SHOULD BE SHOWN AS 5% OF TOTAL TURNOVER. CON SEQUENT TO THIS, ADDITION OF RS.3,19,086/- WAS MADE TO THE INCOME OF THE ASSESSE E. THE SAID ACTION WAS ASSAILED IN APPEAL BEFORE THE CIT(A). ON THE ACCOUN T OF THE FACT, THERE WAS NO REPRESENTATION ON BEHALF OF THE ASSESSEE, DESPITE T HE ISSUANCE OF NOTICE, THE CIT(A) CONFIRMED THE ADDITION MADE BY THE AO. AGGRIEVED BY WHICH, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. THE LD. A.R. PLACED HEAVY RELIANCE ON THE FACT T HAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE NOT REJECTED AND LD. AO COULD NOT POINT OUT ANY DEFECT IN THE BOOKS OF ACCOUNTS AND AN AD HOC ADDITION HAS BEEN M ADE CONTRARY TO THE SETTLED LEGAL PRINCIPLES WITHOUT PROVIDING ANY COMPARABLE C ASES. THE LD. SR.D.R., MR. SANJAY, ON THE OTHER HAND, PLACED RELIANCE ON THE I MPUGNED ORDER. 4. HAVING HEARD RIVAL SUBMISSIONS AND PERUSED THE M ATERIALS AVAILABLE ON RECORD, IT IS SEEN THAT THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND HAD PROCEEDED TO ESTIMATE THE G.P. AT 5% GIVING NO REASONING OR BASIS. NO EFFORTS HAVE BEEN MADE TO COMPARE THE G.P. WITH ASS ESSEES OWN CASE FOR THE EARLIER YEARS NOR ANY COMPARISON HAS BEEN MADE WITH ANY COMPARABLE CASES WITHIN THAT AREA IN AN IDENTICAL LINE OF BUSINESS. THE SAI D ACTION OF THE AO WHICH HAS BEEN SUSTAINED BY THE CIT(A) CANNOT BE SUPPORTED IN LAW AS IT IS A SETTLED LEGAL PRINCIPLE THAT IF THE G.P. DISCLOSED BY THE ASSESSEE IS NOT T O BE ACCEPTED THEN THE REASONING SHOULD BE BASED ON THE FACT THAT THE BOOKS OF ACCOU NT ARE TO BE REJECTED SPELLING OUT THE REASONS FOR DOING SO. HAVING ESTABLISHED THAT T HE TRUE INCOME HAS NOT BEEN DISCLOSED THE AO IS BOUND TO MAKE A RATIONALE AND R EASONABLE ESTIMATE BASED ON ACCEPTED LEGAL PRINCIPLES. IT IS A SETTLED LEGAL PR INCIPLE THAT ASSESSEES OWN PAST HISTORY IS A LEGITIMATE RATIONALE AND IF THAT IS NO T AVAILABLE OR RELIABLE THEN A 3 ITA NO.1038/KOL/2012 BAJRANGLAL AGARWALA ASSESSMENT YEAR: 2008-09 COMPARISON WITH THAT OF AN IDENTICALLY SITUATED ASS ESSEE WITHIN THAT AREA AFTER CONFRONTING TO THE ASSESSEE CAN BE RESORTED TO. THE AO IS NOT AT LIBERTY TO TINKER WITH THE G.P. AS PER HIS WHIMS AND WISHES. THE SAID EXERCISE HAS NOT BEEN DONE. IN VIEW OF THE FACT THAT BOOKS OF ACCOUNT HAVE NOT BEE N REJECTED, ACCORDINGLY, FOR THE REASONS GIVEN HEREINABOVE, THE ACTION OF THE CIT(A) IN SUSTAINING THE ADDITION IS NOT ACCEPTABLE. THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASS ESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02.08. 2011 IMMEDIATELY AFTER COMPLETION OF THE HEARING. SD/- (DIVA SINGH) JUDICIAL MEMBER DATED : 02/ 08/ 2011 COPY OF THE ORDER FORWARDED TO: 1. SRI BAJRANGLAL AGARWALA, 127, B.K.PAL AVENUE, 2 ND FLOOR, KOLKATA 700 005 2 ITO, WARD-1, BALURGHAT 3. CIT(A)- ,KOLKATA 4. CIT- , KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA (TRUE COPY) BY ORDER ASSISTANT REGISTRAR, I.T.A.T., KOLKA TA. TALUKDAR/SR.P.S.