ACIT, New Delhi V. Smt. Monika Jain Prop., New Delhi

ITA 1400/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7344 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2012-2013
• Appeal Filed On: 14-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Keywords: Gross profit estimation
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI B BENCH, NEW DELHI BEFORE SHRI N.K. BILLAIYA , ACCOUNTANT MEMBER, AND MS. SUCHITRA KAMBLE , JUDICIAL MEMBER ITA NO. 1400 /DEL/20 1 6 [A.Y 20 1 2 - 1 3 ] THE A . C.I.T VS. S MT. MONICA JAIN CIRCLE - 62 ( 1 ) PROP. M/S PHARMA CARE NEW DELHI 871, VEER APARTMENT SECTOR 3, PLOT NO. 28 ROHINI, NEW DELHI PAN : AAHPJ 6205 D [APPELLANT] [RESPONDENT] DATE OF HEARING : 14 . 0 1 .201 9 DATE OF PRONOUNCEMENT : 1 5 . 0 1 .201 9 ASSESSEE BY : SHRI SANJIV SAPRA, FCA REVENUE BY : MS. ASHIMA NEB , SR. DR ORDER PER N.K. BILLAIYA , ACCOUNTANT MEMBER, THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE CIT(A) - 20 , NEW DELHI DATED 2 7 .0 1 . 201 6 PERTAINING TO A.Y 20 1 2 - 1 3 . 2 2. THE SOLITARY GRIEVANCE RAISED BY THE REVENUE IS THAT THE CIT( A) ERRED IN DELETING THE ADDITION OF RS. 1,26,22,783 / - ON ACCOUNT OF LOW GP/NP. 3. REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LENGTH AND CASE RECORDS WERE CAREFULLY PERUSED. 4. FACTS ON RECORD SHOW THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE TRADING BUSINESS OF PHARMACEUTICALS ITEMS UNDER THE NAME AND STYLE OF M/S PHARMA CARE. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN N.P OF RS. 29 , 81 , 157/ - OF GROSS RECEIPTS OF RS. 1 , 11 , 70 , 60 , 512/ - . N.P. RATE WAS AT 0.27%. 5. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE A.O OBSERVED THAT THE AUDITORS HAVE NOT MENTIONED THE TRANSACTIONS COVERED U/S 40A(2)(B) OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT]. THE ASSESSING OFFICER WAS O F THE OPINION THAT THE AUDIT REPORT IS FAULTY AND, THEREFORE, THE BOOK RESULTS CANNOT BE RELIED UPON. THE BOOKS OF ACCOUNT WERE REJECTED AND ACCORDINGLY, PROFIT WAS ESTIMATED AND ADDITION OF RS. 1,26,22,783/ - WAS MADE. 3 6. THE ASSESSEE AGITATED THE MATTER B EFORE THE CIT(A) AND POINTED OUT THAT BOOK RESULTS ARE BETTER THAN THE RESULTS FOR THE IMMEDIATELY PRECEDING A.Y , WHICH WAS ASSESSED U/S 143(3) OF THE ACT. 7. AFTER CONSIDERING THE FACTS AND SUBMISSIONS, THE CIT(A) WAS CONVINCED WITH THE BOOK RESULTS AND DIRECTED THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITION. 8. BEFORE US, THE LD. DR STRONGLY SUPPORTED THE FINDINGS OF THE AO. 9. PER CONTRA, THE LD. AR REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. 10. THE RATIO ANALYSIS OF PROFIT CAN BE UNDERSTOOD FROM THE FOLLOWING CHART: A. Y. TOTAL TURNOVER (RS.) GROSS PROFIT (RS.) NET PROFIT (RS.) GP RATIO% NP RATIO % 2012 - 13 1,11,70,60,512 1,29,51,461 29,81,157 1.16 0.27 2011 - 12 71,41,13,195 65,72,730 15,77,976 0.92 0.22 2010 - 11 40,37,29,326 92,35,753 13,49,284 2.29 0.33 4 11 . FROM THE AFOREMENTIONED CHART, IT CAN BE SEEN THAT THE NP RATE FOR THE YEAR UNDER CONSIDERATION IS BETTER THAN THE IMMEDIATELY PRECEDING A.Y 2011 - 12. G.P IS ALSO BETTER THAN THE IMMEDIATELY PRECEDING A.Y. MERELY BECAUSE THE AUDITORS FAILED TO MENTION THE TRANSACTIONS WITH RELATED PARTY U/S 40A(2)(B) OF THE ACT WOULD NOT ALLOW THE ASSESSING OFFICER TO REJECT THE BOOKS OF ACCOUNT. WE FIND THAT NO SPECIFIC DEFECT HAS BEEN POINTED OUT BY THE ASSESSING OFFICER IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THEREFO RE, THE ESTIMATION OF PROFIT IS UNCALLED FOR AND DESERVES TO BE REJECTED AS HAS RIGHTLY BEEN DONE BY THE CIT(A). THEREFORE, NO INTERFERENCE IS CALLED FOR. 12 . IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 1400 /DEL/201 6 IS DISMISSED. THE ORDER IS PRON OUNCED IN THE OPEN COURT ON 1 5 . 0 1 .201 9 . S D / - S D / - [ SUCHITRA KAMBLE ] [ N.K. BILLAIYA ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 5 T H JANUARY , 201 9 VL/ 5 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER