Ved Parkash, Ludhiana V. DCIT, CC-II, Ludhiana

ITA 1202/CHANDI/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6537 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2001-2002
• Appeal Filed On: 04-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Keywords: Set aside
• Section: 143(3); 263

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH , ! '# $ % & '# , () BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NOS. 1202 & 1203/CHD/2017 / ASSESSMENT YEARS : 2001-02 & 2002-03 SH. VED PARKASH S/O SH. DEWAN CHAND, 788-I, BRS NAGAR, LUDHIANA THE DCIT, CENTRAL CIRCLE-II, LUDHIANA ./PAN NO: AIAPP7775R / APPELLANT /RESPONDENT ! /ASSESSEE BY : SHRI DEEPAK AGGARWAL, ADVOCATE ' ! / REVENUE BY : SMT. MONA MOHANTY, CIT DR # $ % /DATE OF HEARING : 20.02.2019 &'() % / DATE OF PRONOUNCEMENT : 20.02.2019 (* / ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEALS HAVE BEEN PREFERRED BY THE ASSE SSEE AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX ( APPEALS)-5, LUDHIANA [HEREINAFTER REFERRED TO AS CIT(A)] DATED 08.05.201 7. 2. FIRST, WE SHALL TAKE ASSESSEES APPEAL FOR ASS ESSMENT YEAR 2001-02 (ITA NO. 1202/CHD/2017) , WHEREIN, FOLLOWING GROUNDS HAVE BEEN RAISED:- 1. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACT ION OF THE LD. A.O. IN MAKING AN ADDITION OF RS.51,497/- TOWARDS G ROSS PROFIT ON TRADING ITEMS @ 3.5%, ON THE GROUND THAT THE ASS ESSEE FAILED TO PRODUCE THE SUPPORTING VOUCHERS, WHEREAS AS PER THE ASSESSEE THE GROSS PROFIT RATE APPLIED IS EXORBITANTLY HIGH WITHOUT TAKING INTO CONSIDERATION ANY COMPARABLE CASE, PAST OR FUT URE HISTORY OF THE ASSESSEE HIMSELF THEREFORE, IT IS PRAYED THAT THE ADDITION MAY KINDLY BE DELETED. ITA NOS. 1202 & 1203/CHD/2016- SH. VED PARKASH, LUDHIANA 2 2. THAT THE LD. CIT(A) HAS ERRED IN NOT ADJUDICATING T HE GROUND ARRAYED AS GROUND NO. 5(II) IN THE GROUNDS OF APPEA L THAT THE LD. A.O. WAS NOT JUSTIFIED IN NOT PROVIDING THE CRE DIT AMOUNTING TO RS.785200/- RECEIVED ON SALE OF OPENING STOCK OF WHEAT AS ON 01.04.2000, WHEREIN THE DOCUMENT RECORDING THE SAID TRANSACTION IS FORMING PART OF SEIZED RECORD, IT IS THEREFORE P RAYED THAT DECISION MAY KINDLY BE TAKEN IN ACCORDANCE WITH LAW . 3. THAT THE ASSESSEE PRAYS FOR ANY CONSEQUENTIAL RELIE F AND/OR LEGAL CLAIM ARISING OUT OF THIS APPEAL BEFORE THE DISPOSA L OF THE SAME. 4. THAT THE ASSESSEE PRAYS FOR ANY ADDITION, DELETION, AMENDMENT AND MODIFICATION IN THE GROUNDS OF APPEAL BEFORE THE DI SPOSAL OF THE SAME IN THE INTEREST OF SUBSTANTIAL JUSTICE TO THE ASSESSEE. 3. THE ASSESSEE IN THIS APPEAL HAS TAKEN FOUR GROUN DS OF APPEAL. HOWEVER, GROUND NOS. 3 & 4 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY SPECIFIC ADJUDICATION, HENCE, DISMISSED. 4. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE HAS STATED AT BAR THAT AS PER INSTRUCTIONS OF HIS CLIENT HE DOES NOT PRESS GROUND NO. 2 , HENCE, THIS GROUND IS DISMISSED AS NOT PRESSED. 5. SO FAR AS THE GROUND NO.1 IS CONCERNED, THE ISSUE RAISED BY THE ASSESSEE IN THIS GROUND IS REGARDING ESTIMATION OF GROSS PROFIT (GP). IT HAS BEEN STATED THAT IN THE ORIGINAL ASSESSMENT PROCEED INGS CARRIED OUT U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE A CT'), THE ASSESSING OFFICER ESTIMATED THE GP @ 2% OF THE TURNOVER AS TR ADING ITEMS. THEREAFTER, THE COMMISSIONER OF INCOME TAX EXERCISING HIS REVIS ION JURISDICTION U/S 263 OF THE ACT SET ASIDE THE ORDER OF THE ASSESSING OFFICER FOR MAKING A FRESH ASSESSMENT ON MERITS, INTER ALIA ON THE IS SUE OF ESTIMATION OF GP. 6. THE LD. COUNSEL FOR THE ASSESSEE HAS STATED THAT IN THE SET ASIDE PROCEEDINGS, IN COMPLIANCE OF THE SECTION 263 ORDE R OF THE COMMISSIONER ITA NOS. 1202 & 1203/CHD/2016- SH. VED PARKASH, LUDHIANA 3 OF INCOME TAX, THE LD. ASSESSING OFFICER HAS ESTIMA TED THE GP RATE @ 3.5% OF THE TURN OVER AS AGAINST 2% ESTIMATED IN THE ORI GINAL ASSESSMENT PROCEEDINGS. THE LD. COUNSEL HAS FURTHER SUBMITTED THAT NO NEW MATERIAL OR EVIDENCE HAD COME TO THE KNOWLEDGE OF THE ASSESS ING OFFICER PROMPTING HIM TO ENHANCE THE GP RATE. 7. THE LD. DR, ON THE OTHER HAND, HAS INVITED OUR A TTENTION TO THE IMPUGNED ORDER OF THE ASSESSING OFFICER AND HAS SU BMITTED THAT THE ASSESSING OFFICER HAS COMPARED THE GP RATE WITH THE SISTER CONCERN OF THE ASSESSEE NAMELY SHARMA ENTERPRISES, WHEREIN, A MUCH HIGHER GP RATE HAS BEEN RETURNED BY THE ASSESSEE. FURTHER, THE ASS ESSING OFFICER HAS OBSERVED THE EVEN U/S 44AF OF THE ACT, IT IS ASSUME D THAT IN THE RETAIL BUSINESS THERE IS NORMALLY 5% NET PROFIT RATIO OF THE TURNOVER. SHE, THEREFORE, HAS SUBMITTED THAT THE LD. ASSESSING OFF ICER HAS RIGHTLY ESTIMATED THE GP RATE @ 3.5% IN THIS CASE. 8. IN REBUTTAL, THE LD. COUNSEL FOR THE ASSESSEE H AS SUBMITTED THAT M/S SHARMA ENTERPRISES WAS IN THE WHOLE SALE BUSINESS, WHEREAS, THE ASSESSEE WAS IN THE RETAIL TRADING AND THAT THE GP RATE OF ASSESSEE CANNOT BE COMPARED WITH THAT OF SHARMA ENTERPRISES. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. TAKIN G INTO CONSIDERATION THE FACT AND CIRCUMSTANCES OF THE CASE, SINCE IT IS PURE CASE OF ESTIMATION OF GP, AND THERE IS MARGINAL DIFFERENCE OF THE RATE WH ICH HAS BEEN APPLIED BY THE REVENUE AS AGAINST WHICH HAS BEEN CONTENDED BY THE ASSESSEE AND SINCE THE LD. COUNSEL FOR THE ASSESSEE HAS FAIRLY AGREED IN THE COURT THAT HIS CLIENT WILL BE SATISFIED, IF GP RATE IS APPLIED AT 3%, IN OUR VIEW, THAT IS A FAIR ENOUGH AFTER ON THE PART OF THE ASSESSEE AND E VEN THE LD. DR HAS NOT ITA NOS. 1202 & 1203/CHD/2016- SH. VED PARKASH, LUDHIANA 4 OBJECTED TO THE SAME. WE, ACCORDINGLY DIRECT THAT T HE GP RATE FOR THE YEAR UNDER CONSIDERATION BE ESTIMATED AT 3% OF THE TURN OVER ON TRADING ITEMS. IT IS MADE CLEAR THAT OUR ABOVE FINDINGS OR ANY ADM ISSION OF THE LD. REPRESENTATIVES OF THE PARTIES FOR AGREEING TO THE GROSS PROFIT RATE FOR THE YEAR UNDER CONSIDERATION WILL NOT BE TAKEN AS PRECE DENT OR OTHERWISE BINDING FOR OTHER ASSESSMENT YEARS. WITH THE ABOVE OBSERVATIONS, THIS APPEAL OF THE AS SESSEE IS TREATED AS PARTLY ALLOWED. ITA NO. 1203/CHD/2017 (A.Y. 2002-03) 10. NOW COMING TO THE ASSESSEE APPEAL FOR THE ASSES SMENT YEAR 2002-03 (ITA NO. 1203/CHD/2017), WHEREIN, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 11. THE ASSESSEE HAS TAKEN FIVE GROUNDS OF APPEAL:- 1. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACT ION OF THE LD. A.O, IN MAKING AN ADDITION OF RS. 3,50,000/- TOWARDS CAP ITAL INTRODUCTION IN SHARMA ENTERPRISES, FOUND RECORDED IN REGULAR BO OKS OF ACCOUNTS, ON THE GROUND THAT THE ASSESSEE FAILED TO GIVE PLAUSIBLE EXPLANATION, WHEREAS AS PER THE ASSESSEE THE CAPIT AL CONTRIBUTION IS BACKED BY SALE OF WHEAT STOCK DURING THE FINANCI AL YEAR 2000-01 WHICH FORMS PART OF SEIZED MATERIAL I.E. DOCUMENT A -13/1-81 THEREFORE, IT IS PRAYED THAT THE ADDITION MAY KINDL Y BE DELETED. 2. THAT THE LD. C1T(A) HAS ERRED IN CONFIRMING THE ACT ION OF THE LD. A.O. IN MAKING AN ADDITION OF RS. 3,32,418/- TOWARDS GRO SS PROFIT ON TRADING ITEMS @ 3.5%, ON THE GROUND THAT THE ASSESS EE FAILED TO PRODUCE THE SUPPORTING VOUCHERS, WHEREAS AS PER THE ASSESSEE THE GROSS PROFIT RATE APPLIED IS EXORBITANTLY HIGH WITH OUT TAKING INTO CONSIDERATION ANY COMPARABLE CASE, PAST OR FUTURE H ISTORY OF THE ASSESSEE THEREFORE, IT IS PRAYED THAT THE ADDITION MAY KINDLY BE DELETED. 3. THAT THE LD. CIT(A) HAS ERRED IN NOT ADJUDICATING T HE GROUND ARRAYED AS GROUND NO. 5(II) IN THE GROUNDS OF APPEAL THAT T HE LD. A.O. WAS NOT JUSTIFIED IN NOT PROVIDING THE CREDIT AMOUNTING TO RS. 785200/- RECEIVED ON SALE OF OPENING STOCK OF WHEAT AS ON 01 .04.2000, WHEREIN THE DOCUMENT RECORDING THE SAID TRANSACTION IS FORM ING PART OF SEIZED ITA NOS. 1202 & 1203/CHD/2016- SH. VED PARKASH, LUDHIANA 5 RECORD, IT IS THEREFORE PRAYED THAT DECISION MAY KI NDLY BE TAKEN IN ACCORDANCE WITH LAW. 4. THAT THE ASSESSEE PRAYS FOR ANY CONSEQUENTIAL RELIE F AND / OR LEGAL CLAIM ARISING OUT OF THIS APPEAL BEFORE THE DISPOSA L OF THE SAME. 5. THAT THE ASSESSEE PRAYS FOR ANY ADDITION, DELETION, AMENDMENT AND MODIFICATION IN THE GROUNDS OF APPEAL BEFORE THE DI SPOSAL OF THE SAME IN THE INTEREST OF SUBSTANTIAL JUSTICE TO THE ASSES SEE. 12. GROUND NOS. 4 & 5 ARE GENERAL AND NATURE AND DO NOT REQUIRE ANY SPECIFIC ADJUDICATION, HENCE, DISMISSED. 13. VIDE GROUND NO. 3 , THE LD. COUNSEL FOR THE ASSESSEE HAS STATED AT BAR THAT AS PER THE INSTRUCTIONS OF THE CLIENT, HE DOES NOT PRESS GROUND. GROUND NO.3, IS THEREFORE, DISMISSED AS NOT PRESSE D. 14. NOW, WE LEFT WITH ONLY TWO GROUNDS OF APPEAL. THE ASSESSEE VIDE GROUND NO.1 OF THE APPEAL HAS AGITATED THE ADDITION OF RS. 3.5 LACS TOWARDS CAPITAL INTRODUCTION IN SHARMA ENTERPRISES , THE SISTER CONCERN OF THE ASSESSEE. THE LOWER AUTHORITIES HAVE MADE THE I MPUGNED ADDITION ON THE GROUND THAT ASSESSEE COULD NOT DIVULGE THE SOUR CE OF THE AFORESAID CAPITAL INTRODUCTION. THE LD. COUNSEL FOR THE ASSES SEE HAS SUBMITTED THAT DURING THE SEARCH ACTION IT WAS FOUND THAT HE ASSES SEE HAD SOLD WHEAT DURING PREVIOUS YEAR ON ACCOUNT OF WHICH THE ASSESS EE HAD RECEIVED SALE CONSIDERATION COMPRISED OF INVESTMENT AND PROFITS T HEREUPON. THAT OUT OF THE AFORESAID AMOUNT RECEIVED BY THE ASSESSEE, THE AMOUNT OF RS. 3.5 LACS WAS INTRODUCED AS CAPITAL IN SHARMA ENTERPRISES. IN VIEW OF THE ABOVE SUBMISSIONS, WE RESTORE THIS MATTER TO THE FILE OF THE ASSESSING OFFICER TO VERIFY THE AFORESAID CO NTENTION OF THE ASSESSEE AND IF IT IS FOUND THAT THE ASSESSEE HAD THE SOURCE OF THE AMOUNT OUT OF THE ITA NOS. 1202 & 1203/CHD/2016- SH. VED PARKASH, LUDHIANA 6 SALE OF WHEAT, AS HAS BEEN CONTENDED, THEN TO GIVE RELIEF TO THE ASSESSEE IN ACCORDANCE WITH LAW. 15. SO FAR AS G ROUND NO.2 IS CONCERNED, THE ISSUE HEREIN RAISED IS IN RESPECT TO ESTIMATION OF GP. THE FACTS AND CIRCUMS TANCES ARE IDENTICAL TO THAT FOR THE ASSESSMENT YEAR 2001-02 AND BOTH THE PARTIES HAVE AGREED THAT SINCE IT IS PURE CASE OF ESTIMATION OF INCOME , EST IMATION OF GP @ 3% WILL BE JUSTIFIED, WHICH IS ACCEPTABLE TO BOTH THE PARTI ES. 16. IN VIEW OF THIS, GP FOR THE YEAR UNDER CONSIDER ATION ON THE TRADING ITEMS IS DIRECTED TO BE ESTIMATED AT THE RATE OF 3 % OF THE TURNOVER. OUR FINDINGS GIVEN WILL NOT HAVE ANY BEARING OR OTHERWI SE BINDING EFFECT IN ESTIMATION AND EVEN OTHERWISE DETERMINING OF THE PR OFITS OF THE ASSESSEE FOR ANY OTHER ASSESSMENT YEAR. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE TREATED AS PARTLY ALLOWED. ORDER DICTATED AND PRONOUNCED IN THE OPEN COURT IMM EDIATELY ON COMPLETION OF HEARING. SD/- SD/- ( $ % & '# / ANNAPURNA GUPTA) () / ACCOUNTANT MEMBER ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 20.02.2019 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE ITA NOS. 1202 & 1203/CHD/2016- SH. VED PARKASH, LUDHIANA 7 '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR