ITO, Jind V. Sh. Dhan Raj Singla, Jind

ITA 1121/CHANDI/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90208 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-06-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 18-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 1121/CHD/2014 ASSESSMENT YEAR: 2010-11 THE INCOME TAX OFFICER, VS SHRI DHAN RAJ SINGLA, WARD - 2, PROP. M/S HARYANA TRADERS, JIND. ROHTAK ROAD, JIND. PAN: ACDPS7262H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH RESPONDENT BY : SHRI VIRENDER SINGLA (S/O SHRI DHAN RAJ SINGLA) DATE OF HEARING : 23.06.2015 DATE OF PRONOUNCEMENT : 30.06.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LD. CIT(APPEALS) ROHTAK DATED 01.10.2014 FOR ASSESSMENT YEAR 2010-11. 2. IN ALL THE GROUNDS OF APPEAL, THE REVENUE CHALLE NGED THE ORDER OF LD. CIT(APPEALS) IN DELETING THE ADDIT ION OF RS. 20,32,698/- AND SETTING ASIDE THE FINDINGS OF T HE ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNT UNDER SECTION 145(3) OF THE INCOME TAX ACT. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS DERIVING INCOME FROM CARRYING THE BUSINESS OF SALE AND 2 PURCHASE OF CEMENT. THE NATURE OF BUSINESS IS WHOL ESALE AS WELL AS RETAIL TRADING. THE CASE WAS SELECTED F OR SCRUTINY. THE ASSESSEE FILED REQUIRED DETAILS BEFO RE ASSESSING OFFICER. THE ASSESSING OFFICER ON PERUSA L OF THE TRADING ACCOUNT, NOTED THAT ASSESSEE HAS SHOWN SALE S AMOUNTING TO RS. 3.55 CR AND PURCHASES AMOUNTING TO RS. 3.49 CR AFTER DEDUCTING TRADE DISCOUNT. THE ASSESS EE PRODUCED BOOKS OF ACCOUNT, STOCK REGISTER, PURCHASE BILL AND SALES BILLS WHICH WERE EXAMINED BY ASSESSING OF FICER. THE ASSESSING OFFICER NOTED FOLLOWING DISCREPANCIES : I) THE ASSESSEE IS TRADING IN TWO TYPES OF CEMENT I.E. 43 GRADE AND PPC GRADE BUT NO SEPARATE STOCK REGISTER WAS MAINTAINED FOR BOTH ITEMS. II) THE GRADE AND QUALITY OF CEMENT IS NOT MENTIONED IN SOME OF THE BILLS I.E. 8 IN NUMBER. THE ASSESSING OFFICER, THEREFORE, NOTED THAT IN THE ABSENCE OF SAME, IT IS DIFFICULT TO ASCERTAIN THE CORRECT GROSS PROFIT. III) IN SOME OF THE SALES BILLS, THE ASSESSEE HAD NOT MENTIONED ADDRESS OF THE PURCHASER I.E. 5 BILLS. THEREFORE, GENUINENESS OF THE SALE CANNOT BE ASCERTAINED. IV) THE ASSESSEE HAS SHOWN AVERAGE PROFIT OF 5.81% WHEREAS ASSESSEE HAS SHOWN GP OF 0.81%. THE ASSESSING OFFICER, IN VIEW OF THE ABOVE DISCREPANCIES NOTED THAT HE IS NOT SATISFIED ABOUT THE CORRECTNESS OR GENUINENESS OF THE ACCOUNTS OF THE ASSESSEE AND ACCORDINGLY REJECTED THE BOOK RESULTS UNDER SECTION 145(3) AND ESTIMATED THE SALES OF ASSESSEE AT RS. 4 CRORES AGAINST SALES OF RS. 3.55 CR AND APPLIED 3 GP OF 5.81% AND MADE ADDITION OF RS. 20,32,698/-. 4. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD. CIT(APPEALS) AND IT WAS SUBMITTED THAT ACCOUNTS OF THE ASSESSEE ARE AUDITED AND SUPPORTED BY INVOICES AND VOUCHERS. THE STOCK REGISTER WAS ALSO PRODUCED BEF ORE ASSESSING OFFICER. THE ASSESSING OFFICER HAS ONLY S ELECTED 8 BILLS ON WHICH GRADE OF CEMENT WAS NOT MENTIONED BUT QUALITY IS DULY MENTIONED. THE ASSESSEE PRODUCED 10 0 INVOICES BEFORE LD. CIT(APPEALS) TO SHOW THAT IN AL L THE BILLS AND INVOICES, GRADE OF CEMENT IS FULLY MENTIO NED. IT WAS ALSO EXPLAINED THAT IN FIVE BILLS, THE ADDRESSE S OF THE PURCHASERS WAS NOT MENTIONED BUT IN REMAINING, THE SAME IS MENTIONED AND IT MAY NOT BE GROUND FOR REJECTION OF THE ACCOUNTS. THE ASSESSEE IS DOING WHOLESALE AND RETA IL BUSINESS AND TURNOVER IS INCREASED FROM RS. 267.28 LACS TO RS. 355.88 LACS. THEREFORE, REJECTION OF THE BO OKS OF ACCOUNT IS UNJUSTIFIED. 5. THE LD. CIT(APPEALS) CONSIDERING THE MATERIAL ON RECORD AND IN THE LIGHT OF THE SUBMISSIONS OF ASSES SEE AND ON PERUSAL OF THE INVOICES, SET ASIDE THE FINDINGS OF THE ASSESSING OFFICER REGARDING REJECTION OF THE BOOKS OF ACCOUNT AND IN MAKING ADDITION, THE ADDITION WAS DE LETED. THE FINDINGS OF LD. CIT(APPEALS) IN PARA 3 OF THE A PPELLATE ORDER ARE REPRODUCED AS UNDER : 3. I HAVE EXAMINED THE FACTS OF THE CASE AND THE SUBMISSIONS MADE BY THE APPELLANT. AN EXAMINATION O F THE 4 ABOVE SHOWS THAT NO SPECIFIC DEFECTS HAVE BEEN FOUN D IN THE BOOKS OF ACCOUNTS IN RESPECT OF PURCHASES ON EXPENS ES. THE APPELLANT HAS ONLY 2 GRADES OF CEMENT IN ITS STOCK. THE EIGHT BILLS MENTIONED BY THE AO IN WHICH THE GRADE OF CEME NT IS NOT MENTIONED, DOES HAVE INFORMATION REGARDING THE QUALIT Y AND THE RATE AT WHICH IT HAS BEEN SOLD. I HAVE MYSELF SE EN AROUND 100 INVOICES OF THE CONCERN AND THIS LACUNA IS NOT SEEN IN THE REST. MOREOVER-, THE FINANCIAL ASPECT CANNOT BE DOUB TED BECAUSE THE QUANTITY AND RATES ARE MENTIONED. NOT MENTIONIN G ADDRESSES OF THE PURCHASER DOES NOT LEAD TO DEFECTS IN ACCOUNTS. THE AO COULD HAVE CARRIED OUT FURTHER ENQUIRIES. THE CONCL USION IS DRAWN ON THE BASIS OF ABSENCE OF ADDRESSES IN 5 INV OICES OUT OF 600 INVOICES. THIS IS NOT CONCLUSIVE EVIDENCE. THE FACT THAT THE AO HAS NOT CONSIDERED THAT THE APPELLANT WAS CAR RYING ON WHOLESALE AND RETAIL BUSINESS HAS NOT BEEN CONSI DERED WHILE CALCULATING THE GP. THE ENTIRE EXERCISE OF ESTIM ATING THE GP IS FLAWED AND NOT REALISTIC. IN THE ABSENCE O F ANY CORROBORATIVE EVIDENCE OF DISTORTION OF ACCOUNTS. I D ELETE THE IMPUGNED ADDITION OF RS. 23,22,608/-. THIS GROUND OF APPEAL IS ALLOWED. 6. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. CIT(APPEALS) ON EXAMINATION OF THE FACTS CORRECTLY FOUND THAT NO SPECIFIC DEFECTS HAVE BEEN POINTED OUT IN T HE BOOKS OF ACCOUNT. THE ASSESSEE DEALS ONLY IN TWO GR ADES OF CEMENT. THE LD. CIT(APPEALS) EXAMINED HIMSELF 100 INVOICES OF THE CEMENT WHICH SHOWS THAT THE DISCREP ANCY POINTED OUT BY THE ASSESSING OFFICER WAS WHOLLY UNJUSTIFIED. THE LD. CIT(APPEALS) FOUND THAT QUANT ITY ANDDATES ARE MENTIONED IN THE BILLS. MERELY BECAUSE NO ADDRESS OF THE PURCHASER IS MENTIONED IN THE SALE B ILL, IS NO GROUND TO REJECT BOOKS OF ACCOUNT OF THE ASSESSE E. 5 FURTHER, MERE FALL IN GP MAY NOT BE CRITERIA FOR RE JECTION OF THE BOOKS OF ACCOUNT. THE REASONS GIVEN BY THE ASSESSING OFFICER WERE, THEREFORE, WHOLLY UNJUSTIFI ED FOR REJECTION OF THE BOOKS OF ACCOUNT. THE ASSESSEE MAI NTAINED PROPER BOOKS OF ACCOUNT ALONGWITH STOCK REGISTER IN WHICH NO SPECIFIC DEFECTS HAVE BEEN POINTED OUT THEREFORE , LD. CIT(APPEALS) WAS JUSTIFIED IN DELETING THE WHOLE AD DITION. THUS, THERE IS NO MERIT IN THE APPEAL OF THE REVENU E AND THE SAME IS ACCORDINGLY, DISMISSED. 7. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE,2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH JUNE,2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH