M/S V.P. CARRIER, AJMER V. INCOME TAX OFFICER, WARD-2-3, AJMER

ITA 1084/JPR/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5947 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 17-09-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A.K. MAHELA
• Keywords: Rejection of books of accounts
• Section: 145(3); 22; 20

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH SMC, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; DS LE{K BEFORE: SHRI SHRI VIJAY PAL RAO, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 1084/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2015-16. M/S. V.P. CARRIER, 246, SADAR BAZAR, NASIRABAD, AJMER. CUKE VS. THE INCOME TAX OFFICER, WARD 2(3), AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAIFV 3837 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI A.K. MAHELA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 24.09.2019. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 26/09/2019. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 16.07.2018 OF LD. CIT (APPEALS), AJMER FOR THE ASSESSMENT YEAR 20 15-16. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE ORDER PASSED BY LD. CIT (A) AJMER IS BAD IN LAW AND FACTS OF THE CASE AND NEEDS TO BE REDRESSED AS :- A. LD. CIT (A) AJMER HAS ERRED IN CONFIRMING THE REJEC TION OF BOOKS OF ACCOUNTS AND INVOKING OF PROVISIONS OF SEC TION 145(3) BY LD. A.O. DESPITE :- AUDITED BOOKS OF ACCOUNTS MAINTAINED ON DAY TO DAY BASIS WERE PRODUCED ALONG WITH VOUCHERS IN THE COURSE OF HEARING. ALL BILLS/VOUCHERS/DOCUMENTARY EVIDENCES ALONG WITH INDIVIDUAL TRIP SHEETS WERE PRODUCED/SUBMITTED TO L D. 2 ITA NO. 1084/JP2018 M/S. V.P. CARRIER, AJMER. A.O. ON 6.12.2017 AND OTHER DATES ( A FACT INCORPORATED IN A.OS ORDER PAGE NO. 4 & 5) LD. AOS OBSERVATIONS ARE BASED ON MERE CONJECTURES & SURMISES AND THE ACCEPTANCE OF APPLICABILITY OF SECTION 145(3) IS UNJUSTIFIED AS NOT WARRANTED FROM THE UNSUBSTANTIATED ALLEGATIONS. B. LD. CIT (A)S OBSERVATION THAT NO ONE ATTENDED THE DATE OF HEARING IS CONTRARY TO THE FACTS AS ALL THE DATES O F HEARINGS FIXED WERE ATTENDED, WRITTEN SUBMISSIONS FILED (IN CONTEXT OF HEARING DATE 11.06.2018) AND ADJOURNMENTS SOUGHT BY APPELLANT IN SPECIFIC CIRCUMSTANCES. LD. CIT (A)S SYSTEM OF INVARIABLY SENDING WRITTEN SUBMISSIONS MADE IN THE COURSE OF APPELLATE PROCEED INGS TO LD. A.O. (FOR REMAND REPORT); PROVIDING COPY OF REM AND REPORT TO APPELLANT AND THEN REFIXING THE CASE FOR REHERING WAS NOT FOLLOWED IN THE INSTANT CASE; RESULTING IN UNNECESSARY EX-PARTE ORDER. THE INJUSTICE NEEDS TO BE REMEDIED. C. LD. CIT (A) HAS IN PLACE OF DELETING ADDITIONS OF R S. 13,33,298/- MERELY DELETED RS. 4,46,542/-. THE WRO NGLY CONFIRMED ADDITIONS OF RS. 8,86,754/- NEEDS TO BE D ELETED. THE ESTIMATION OF INCOME @ 4% ON TURNOVER BY LD. A. O. AND ESTIMATION OF INCOME @ 3.5% BY LD. CIT (A) BOTH ON HIGHER SIDE ARE WITHOUT BASIS AND UNWARRANTED. AS THE APP ELLANT HAS ALREADY RETURNED NET PROFIT OF 5.34% (BEFORE DE DUCTION OF INTEREST & REMUNERATION TO PARTNERS), UNNECESSAR Y ADDITIONS NEED TO BE DELETED. 2. THAT THE APPELLANT CARVES TO ADD, AMEND AND ALTE R THE GROUND OF APPEAL BEFORE OR AT THE TIME OF APPELLATE HEARING. 2. THE ASSESSEE IS A PARTNERSHIP FIRM AND ENGAGED I N THE BUSINESS OF TRANSPORTATION. THE ASSESSEE FILED ITS RETURN OF I NCOME ON 22 ND SEPTEMBER, 2015 DECLARING TOTAL INCOME OF RS. 22,39,220/-. IN THE S CRUTINY ASSESSMENT, THE AO NOTED CERTAIN DEFECTS IN THE BILLS AND VOUCHERS AND BOOKS OF ACCOUNTS AND CONSEQUENTLY REJECTED THE BOOKS BY INVOKING THE PROVISIONS OF SE CTION 145(3) OF THE IT ACT. THE AO THEN ESTIMATED THE INCOME BY APPLYING NET PROFIT RATE AT 4% AGAINST THE NET 3 ITA NO. 1084/JP2018 M/S. V.P. CARRIER, AJMER. PROFIT DECLARED BY THE ASSESSEE AT 2.51% AND THEREB Y MADE A TRADING ADDITION OF RS.13,33,296/-. ON APPEAL, THE LD. CIT (A) HAS RES TRICTED THE TRADING ADDITION BY ADOPTING NP AT 3.5% AS AGAINST 4%. 3. BEFORE THE TRIBUNAL, THE LD. A/R OF THE ASSESSEE HAS SUBMITTED THAT THE PROFIT DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDE RATION IS IN LINE WITH THE PAST HISTORY OF THE ASSESSEE AS WELL AS IN THIS TRADE. HE HAS REFERRED TO THE DETAILS OF NET PROFIT DECLARED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2013-14, 14-15 AND 15-16 AND SUBMITTED THAT FOR THE PRECEDING TWO YEARS THE AO HAS ACCEPTED THE INCOME DECLARED BY THE ASSESSEE AND, THEREFORE, THE INCOME /PROFIT DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IS BETTER THAN THE EARLIER YEARS WHICH SHOWS THE PROGRESSIVE RESULT OF THE ASSESSEE. HENCE EVEN AFT ER REJECTION OF BOOKS OF ACCOUNTS WHEN THE NET PROFIT DECLARED BY THE ASSESSEE IS BET TER THAN THE PRECEDING YEAR, NO ADDITION IS CALLED FOR. THUS THE LD. A/R HAS SUBMI TTED THAT THE ADDITION SUSTAINED BY THE LD. CIT (A) BE DELETED. 4. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE AO HAS POINTED OUT SER IOUS DEFECTS AND DEFICIENCIES IN THE BILLS AND VOUCHERS AS WELL AS THE BOOKS OF ACCO UNTS AND, THEREFORE, THE ASSESSMENT WAS COMPLETED ON THE BASIS OF ESTIMATION OF INCOME OF THE ASSESSEE AS PER THE PROVISIONS OF THE ACT. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. AFTER REJECTION OF BOOKS OF ACCOUNTS UNDER SECTION 145(3), THE AO ESTIMATED THE INCOME OF THE ASSESSEE BY APPLYING NP RATE AT 4 % OF TURNOVER AS AGAINST NP DECLARED BY THE ASSESSEE AT 2.51%. THERE IS NO QUA RREL THAT ONCE THE AO HAS 4 ITA NO. 1084/JP2018 M/S. V.P. CARRIER, AJMER. INVOKED THE PROVISIONS OF SECTION 145(3), THE ASSES SMENT IS REQUIRED TO BE COMPLETED ON BEST JUDGMENT BASIS AND THE INCOME OF THE ASSESS EE HAS TO BE ESTIMATED ON SOME REASONABLE AND PROPER BASIS. THE PAST HISTORY OF THE ASSESSEE WHICH IS ACCEPTED BY THE DEPARTMENT IS A PROPER GUIDANCE AND REASONABLE BASIS FOR ESTIMATION OF INCOME OF THE ASSESSEE FOR THE YEAR U NDER CONSIDERATION. THE AO HAS APPLIED 4% NET PROFIT WITHOUT CITING ANY BASIS OR C OMPARABLE INSTANCE. THEREFORE, IGNORING THE PAST HISTORY OF THE ASSESSEE AND ESTIM ATING THE INCOME BASED ON NP AT 4% WITHOUT GIVING ANY BASIS AS TO HOW NP RATE OF 4% IS REASONABLE AND PROPER, THE ACTION OF AO IS CONTRARY TO THE SETTLED PROPOSITION OF LAW. THE POWER OF ESTIMATION DOES NOT MEAN AN ARBITRARY POWER WITH THE AO BUT TH E ESTIMATION HAS TO BE ON SOME REASONABLE AND PROPER BASIS. THE LD. CIT (A) THOUG H RESTRICTED THE ADDITION BY APPLYING 3.5% NP, HOWEVER, THERE WAS NO BASIS EXPLA INED BY THE LD. CIT (A) FOR APPLYING THE NP AT 3.5%. THE COMPARATIVE DETAILS O F NP DECLARED BY THE ASSESSEE FOR THE PRECEDING YEAR AS WELL AS FOR THE YEAR UNDE R CONSIDERATION ARE AS UNDER :- A.Y. TURNOVER NP BEFORE INTEREST ON CAPITAL AND REMUNERATION TO PARTNERS % NP AFTER INTEREST ON CAPITAL AND REMUNERATION TO PARTNERS % 2013 - 14 8,62,29,993 29,16,945.93 3.38% 18, 68,945.93 2.17% 2014 - 15 9,60,68,297 16,30,950.46 1.70% 2,94,598.88 0.31% 2015 - 16 8,93,07,825 47,72,179.50 5.34% 22,39,017.10 2.51% THUS IT IS CLEAR THAT THE ASSESSEE HAS DECLARED A B ETTER RESULT FOR THE YEAR UNDER CONSIDERATION IN COMPARISON TO THE RESULT OF THE PR ECEDING YEARS WHICH WERE ACCEPTED BY THE DEPARTMENT. ACCORDINGLY, IN VIEW O F THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE, THE A DDITION SUSTAINED BY THE LD. CIT (A) IS NOT JUSTIFIED AND THE SAME IS DELETED. 5 ITA NO. 1084/JP2018 M/S. V.P. CARRIER, AJMER. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 26/09/2 019. SD/- ( FOT; IKY JKWO (VIJAY PAL RAO) U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 26/09/2019. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S. V.P. CARRIER, AJMER. 2. THE RESPONDENT THE ITO WARD 2(3), AJMER. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 1084/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR