Etawah Dugdh Utpadak Sahakari Sangh Ltd., Etawah V. I.T.O., Etawah

ITA 136/AGR/2014

• Counselvise Citation: 13620314 RSA 2014
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 26-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT SHUK LA
• Assessee Lawyers: GAURAV GOYAL
• Section: 143(3)

Judgement Text

I.T.A. NO. 136/AGR/2014 ASSESSMENT YEAR 2009-10 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AGRA (SMC) BENCH, AGRA [CORAM:PRAMOD KUMAR AM ] I.T.A. NO. 136/AGRA/2014 ASSESSMENT YEAR: 2009-10 ETAWAH DUGDH UTPADAK SAHKARI SANGH LTD., .APP ELLANT AURAIYA ROAD, BAKEWAR, ETAWAH. [PAN: AAAAE 1805 D] VS. INCOME-TAX OFFICER, .RESPONDENT ETAWAH. APPEARANCES BY: GAURAV GOYAL FOR THE APPELLANT AMIT SHUKLA FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JUNE 19 , 2015 DATE OF PRONOUNCING THE ORDER : JUNE 24 , 2015 O R D E R 1. THIS APPEAL, FILED BY THE ASSESSEE, IS DIRECTED AGAINST THE ORDER DATED 13 TH NOVEMBER 2013, PASSED BY THE CIT(A), IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961, F OR THE ASSESSMENT YEAR 2009-10. 2. THE SHORT ISSUE THAT WE ARE REALLY REQUIRED TO A DJUDICATE IN THIS APPEAL IS WHETHER THE CIT(A) WAS JUSTIFIED IN UPHOLDING TH E REJECTION OF BOOKS OF ACCOUNT AND THUS ADOPTING THE GROSS PROFIT OF 8.50% AS AGAINST 8.18% DISCLOSED BY THE ASSESSEE. 3. THE RELEVANT MATERIAL FACTS ARE LIKE THIS. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT THERE IS A FALL IN GROSS PROFIT RATE FROM 9.91% IN THE IMMEDIATELY PRE CEDING YEAR TO 8.18% IN I.T.A. NO. 136/AGR/2014 ASSESSMENT YEAR 2009-10 PAGE 2 OF 4 THE PRESENT YEAR. HE SOUGHT EXPLANATION OF THE ASSE SSEE ON THIS FALL IN GP RATE, AND, UNSATISFIED WITH THE EXPLANATION, PROCEE DED TO REJECT THE BOOKS OF ACCOUNT BY OBSERVING AS FOLLOWS : THE ASSESSEE WAS REQUIRED TO EXPLAIN ABOUT THE SHOR T FALL IN G.P. RATE AND N.P. RATE. IN RESPONSE TO THE QUERY THE ASSESSE E HAS SUBMITTED HIS EXPLANATION VIDE HIS REPLY DATED 19.08.2011 THAT DUE TO EXPENSES UNDER SALARY AND WAGES HEAD & INCR EASING OF DIESEL RATE, THE TRANSPORT FOR MILK CORRECTION & MI LK SALE EXPENSES INCREASED AND ALSO MARKET RATE INCREASED OF CHEMICA LS STEEL ETC. THE AVERAGE PROCUREMENT OF THE YEAR 2007-08 AS 2756 4 KG BUT IN THE YEAR 2008-09 THE AVERAGE PROCUREMENT AS 24811 K G. THEREFORE, THE GROSS PROFIT AND NET PROFIT HAS DECR EASED. THE REPLY OF THE ASSESSEE HAS BEEN CONSIDERED UPTO SOME EXTENT BUT IT IS NOT SATISFACTORY REPLY WITH THE REASONS THAT THE ASSESSEES EXPLANATION REGARDING LOW G.P. RATE AND N.P. RATE I S THE GENERAL EXPLANATION WHICH IS APPLICABLE FOR EACH AND EVERY YEAR. NO CONCRETE REPLY WAS GIVEN BY THE ASSESSEE. HOWEVER, THE ASSES SEE HAS PRODUCED THE BOOKS OF ACCOUNTS AS WELL AS BILLS & VOUCHERS B UT SOME OF THE VOUCHERS COULD NOT BE VERIFIED AT THE TIME OF ASSES SMENT PROCEEDINGS. HENCE, BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE ARE NOT FULLY RELIABLE. HENCE, AFTER CONSIDERING THE ALL ABOVE FA CTS OF THE CASE AS WELL AS REASONABILITY OF THE CASE AND ON THE BASIS OF MA TERIAL AVAILABLE ON RECORD THE GROSS PROFIT IS TAKEN @ 8.5%, AGAINST @ 8.18% SHOWN BY THE ASSESSEE. ON THE BASIS OF THE G.P. RATE @8.5%, THE GROSS PROFIT IS QUANTIFIED AT RS.1,34,96,928/- (15,87,87,390*8.5%) AGAINST RS.1,29,82,593/- SHOWN BY THE ASSESSEE IN HIS RETUR N OF INCOME. THUS THE DIFFERENCE IN GROSS PROFIT COMES RS.5,14,335/- (1,34,96,928 1,29,82,593) WHICH IS BEING ADDED TO THE INCOME OF THE ASSESSEE BEING TREATED AS CONCEALED INCOME. 4. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. LEARNED CIT(A) REJECTED THE GR IEVANCE OF THE ASSESSEE, AND, WHILE DOING SO, OBSERVED AS FOLLOWS : 5. I HAVE CONSIDERED THE ABOVE WRITTEN SUBMISSION AND ALSO THE DISCUSSION MADE IN THE ASSESSMENT ORDER. THE MAIN C ONTENTION OF THE LD AR FOR FALL IN G.P. RATE AND N.P. RATE AS COMPAR ED TO PREVIOUS YEAR IS THE RISE IN SALARY AND WAGES, RISE IN PRICE OF D IESEL, CHEMICAL & RISE IN TRANSPORTATION CHARGES IN COLLECT OF MILK & TRAN SPORT OF MILK FOR SALE EXPENSES. HE ALSO ARGUED THAT ALL BILLS AND VOUCHER S WERE PRODUCED BEFORE THE AO, WHICH HAVE NOT BEEN CONSIDERED BY HI M. AFTER GOING THROUGH THE ASSESSMENT ORDER, I FOUND THAT THE SAME EXPLANATIONS HAVE ALSO BEEN FILED BY THE APPELLANT BEFORE THE AO BUT NO SUPPORTING I.T.A. NO. 136/AGR/2014 ASSESSMENT YEAR 2009-10 PAGE 3 OF 4 DOCUMENTS SHOWING THE COMPUTATION AND JUSTIFYING TH E FALL IN G.P. RATE HAVE BEEN PRODUCED BEFORE HIM AND, THEREFORE, SUCH EXPLANATIONS HAVE BEEN CONSIDERED BY THE AO AS GENERAL IN NATURE. HE HAS ALSO MENTIONED THAT SOME OF THE VOUCHERS PRODUCED BY THE ASSESSEE (APPELLANT) CANNOT BE VERIFIED AND HE CONSIDERED BO OKS OF THE ACCOUNT MAINTAINED BY THE ASSESSEE AS NOT RELIABLE. THEREFO RE, FOR COMPUTING THE PROFIT OF THE ASSESSEE (APPELLANT) TAKING ITS P AST HISTORY, HE DECIDED TO APPLY THE G.P. RATE OF 8.5%. IN THE APPEAL PROCEEDINGS BEFORE ME, THE LD.AR HAS NOT PUT UP ANY ARGUMENTS AGAINST THE DECISION OF THE AO FOR NO T TREATING THE BOOKS OF THE ACCOUNT OF THE ASSESSEE (APPELLANT) AS NOT R ELIABLE. BEFORE ME ALSO, ONLY GENERAL EXPLANATION HAS BEEN FILED FOR C LAIMING THE FALL IN G.P. RATE BUT NO COMPUTATION OR ANY SUPPORTING DOCU MENTS HAVE BEEN PRODUCED JUSTIFYING SUCH FALL IN G.P. RATE. AFTER C ONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE AND LOOKING TO THE PAST HISTORY OF THE ASSESSEE(APPELLANT), I DO NOT FIND THAT ESTI MATED G.P. RATE TAKEN BY THE AO AT 8.5% IS UNREASONABLE. THEREFORE, IN MY CONSIDERED OPINION, THE ADDITION OF RS.5,14,335/- MADE BY THE AO IN THE ASSESSMENT ORDER IS QUITE JUSTIFIED AND DOES NOT CA LL FOR ANY INTERFERENCE, THEREFORE, I CONFIRM THE ADDITION OF RS.5,14,335/- THEREFORE, ALL THE GROUNDS TAKEN FROM GROUND NUMBER 1 TO GROUND NUMBER 5 ARE DISMISSED. IN FACT, IN THESE FIVE GROU NDS, THE APPELLANT HAS NOWHERE DISPUTED THE ADDITION OF RS.5 ,14,335/- SPECIFICALLY, HE HAS ONLY PUT UP HIS CONTENTION ABO UT HIS EXPLANATIONS FOR FALL IN G.P. RATE AND PRODUCING AL L THE PURCHASES AND SALE BILLS AND OTHER DOCUMENTS. THEREFORE, EVEN AS PER THE GROUND TAKEN BY THE APPELLANT, NO INTERFERENCE IS R EQUIRED TO BE MADE AGAINST THE ADDITION OF RS.5,14,335/- MADE BY THE AO IN THE ASSESSMENT ORDER. 5. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE ME. 6. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PE RUSED THE MATERIAL ON RECORD, I FIND THAT THE REJECTION OF BOOKS OF ACCOU NT BY THE AUTHORITIES BELOW IS WHOLLY UNSUSTAINABLE IN LAW. THE ONLY REASON JUSTIF YING THIS ACTION IS ASSESSEES INABILITY TO EXPLAIN FALL IN PROFIT RATE , BUT THEN NEITHER BUSINESS SITUATIONS CAN BE SO STATIC AS TO ENSURE A UNIFORM PROFIT RATE FROM YEAR NOR FALL IN GROSS PROFIT RATE, BY ITSELF, CAN BE A REASON EN OUGH TO REJECT THE BOOKS OF ACCOUNTS. THE FACT THAT SOME OF THE VOUCHERS COULD NOT BE VERIFIED, WITHOUT ATTRIBUTING THAT TO THE LAPSES BY THE ASSESSEE, CAN NOT BE PUT AGAINST THE ASSESSEE EITHER. IN ANY EVENT, EVEN THE VARIATION I N REASONABLE PROFIT MARGIN, ADOPTED BY THE ASSESSING OFFICER, AND THE ACTUAL PR OFIT MARGIN, AS DISCLOSED BY THE ASSESSEE, IS ONLY MARGINAL. UNLESS THE ASSES SING OFFICER SHOWS ANY I.T.A. NO. 136/AGR/2014 ASSESSMENT YEAR 2009-10 PAGE 4 OF 4 DEFECTS IN THE BOOKS OF ACCOUNTS, THE BOOKS OF ACCO UNTS COULD NOT HAVE BEEN LAWFULLY REJECTED. IN VIEW OF THESE DISCUSSIONS AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, I UPHOLD THE GRIEVANCE OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO DELETE IMPUGNED ADDITION OF RS.5,14,335/ -.THE ASSESSEE GETS THE RELIEF ACCORDINGLY. 7. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCE D IN THE OPEN COURT TODAY ON THIS 24 TH DAY OF JUNE, 2015. SD/- PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: THE 24 TH DAY OF JUNE 2015 *AKS/- COPIES TO: (1) THE APPELLANT (2) THE RESPONDE NT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA