SMT. SUNITA KKHINCHI, Jaipur V. INCOME TAX OFFICER, WARD-6-5, Jaipur

ITA 1461/JPR/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5039 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-03-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 18-12-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANMOHAN KANDPAL ACIT DHK
• Keywords: Principle of natural justice
• Section: 143(3); 145(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA , ACCOUNTANT MEMBER VK;DJ VIHY LA -@ ITA NO. 1461/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2013-14 SMT. SUNITA KHINCHI, P-51, RAJ ANAGAN, NRI COLONY, PRATAP NAGAR, SANGANER, JAIPUR. CUKE VS. I.T.O., WARD 6(5), JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: ALQPK 3638 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI MANISH AGARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI MANMOHAN KANDPAL (ACIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 25/11/2019 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 20/02/2020 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD.CIT(A), AJMER DATED 22/10/2018 FOR THE A.Y. 2013-14 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS GROSSLY . ERRED IN CONFIRMING APPLICATION OF PROVISIONS OF SECTION 145(3) OF THE INCOME TAX ACT, 1961 ARBITRARILY WITHOUT CONSIDERING THE MATERIAL AVAILABLE ON RECORD AND PRODUCED DURING THE COURSE OF PROCEEDINGS, HENCE THE ORDER SO PASSED DESERVES TO BE QUASHED. ITA 1461/JP/2018 SUNITA KHINCHI VS ITO 2 1.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN CONFIRMING APPLICATION OF PROVISION OF SECTION 145(3) FOR THE REASON OF NON-MAINTENANCE OF STOCK REGISTER OF M/S S.R. PETROLEUM AND NON-PRODUCTION OF THE BOOKS OF ACCOUNTS OF M/S S.R. MARBLES (PROPRIETORSHIP CONCERN) WHEN IN FACT THE PRECISE DETAILS OF STOCK MAINTAINED IN M/S S.R. PETROLEUM WAS SUBMITTED AND IT WAS CATEGORICALLY INFORMED THAT THE CONCERN M/S S.R. MARBLES HAD BEEN CLOSED IN THE PRECEDING YEAR AND WAS NOT IN EXISTENCE DURING THE YEAR UNDER CONSIDERATION. THUS, WHEN BOTH THE REASONS ON WHICH THE BOOKS WERE-REJECTED WERE INCORRECT, INVOCATION OF SEC 145(3) WAS VOID- AB-INITIO AND THE ORDER SO PASSED DESERVES TO BE QUASHED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING ADDITION OF RS. 1,00,000/- MADE TO THE TRADING RESULTS DECLARED BY THE ASSESSEE IN THE PROPRIETOR SHIP. CONCERN M/S S.R. PETROLEUM ARBITRARILY WITHOUT POINTING OUT ANY MISTAKE, HENCE THE ADDITION SO MADE DESERVES TO BE DELETED. 2.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN BRUSHING ASIDE THE STOCK DETAILS SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ALSO THE DOCUMENTS IN SUPPORT OF THE MONTHLY REPORTS OF STOCK SUBMITTED TO THE DISTRICT SUPPLY OFFICER WHICH IS MANDATORY. IN CASE OF FILLING STATIONS. THEREFORE, WHEN EACH AND EVERY DETAIL OF STOCK ON MONTHLY AND YEARLY BASIS WERE SUBMITTED AND THE CLOSING STOCK WAS DULY VERIFIED BY THE LD. AO WITH THE QUANTITATIVE DETAILS MAINTAINED (WHICH IS A FACT ON RECORD AND DULY MENTIONED IN THE ASSESSMENT ORDER), THE ADDITION SO CONFIRMED OF RS. 1.00 LAC SPECIFICALLY FOR THE REASON OF NON- MAINTENANCE OF STOCK DESERVES TO BE DELETED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING ADDITION OF RS. 2,00,000/- IN THE PROPRIETORSHIP CONCERN M/S S.R. MARBLES ARBITRARILY, HENCE THE ADDITION SO MADE DESERVES TO BE DELETED. 3.1 THAT THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING TRADING ADDITION FOR A PROPRIETORSHIP CONCERN WHICH NEVER EXISTED DURING THE FINANCIAL YEAR UNDER CONSIDERATION AND WAS CATEGORICALLY INFORMED AND SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HENCE SUCH AN OBSERVATION OF THE AO AND THEREAFTER ITA 1461/JP/2018 SUNITA KHINCHI VS ITO 3 CONFIRMATION OF SUCH ADDITION BY LD. CIT(A) IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND BARRED BY LAW WHICH ORDER DESERVES TO BE QUASHED. 3.2 THAT THE LD. AO HAS FURTHER ERRED IN MAKING THE TRADING ADDITION OF RS. 2.00 LACS FOR THE REASON THAT SALE AND PURCHASE BILL, STOCK REGISTER ETC. IS NOT MAINTAINED BRUSHING ASIDE THE SUBMISSION THAT THE PROPRIETORSHIP CONCERN NEVER EXISTED. HENCE THE ORDER SO PASSED DESERVES TO BE QUASHED. 4. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, DELETE, AMEND OR ABANDON ANY OF THE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF APPEAL. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS IN INDIVIDUAL AND DURING THE YEAR UNDER APPEAL WAS ENGAGED IN THE BUSINESS OF FILING STATION UNDER THE NAME OF M/S S.R. PETROLEUM AND JOB WORK INCOME OF MARBLE-CUTTING WHEREFROM JOB-WORK INCOME WAS RECEIVED DURING THE YEAR UNDER CONSIDERATION. 3. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE A.O. REJECTED THE BOOKS OF ACCOUNT U/S 145(3) OF THE ACT AND MADE TRADING ADDITION OF RS. 2.00 LACS IN RESPECT OF MARBLE BUSINESS AND RS. 1.00 LAC IN RESPECT OF FILLING STATION BUSINESS UNDER THE NAME OF S.R. PETROLEUM. BY THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED BOTH THE ADDITIONS SO MADE BY THE A.O., AGAINST WHICH, THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE ITAT. 4. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE AO MADE A ITA 1461/JP/2018 SUNITA KHINCHI VS ITO 4 LUMPSUM TRADING ADDITION OF RS. 100,000/- IN THE CASE OF FILING STATION BY ALLEGING A POSSIBLE LEAKAGE OF REVENUE. THE ASSESSEE HAS DECLARED BETTER RESULTS IN THE YEAR UNDER APPEAL. THE G.P. DECLARED BY THE ASSESSEE FOR THE YEAR UNDER APPEAL AND PRECEDING TWO ASSESSMENT YEARS IS AS UNDER: F.Y. TURNOVER G.P. G.P.% 2012-13 2,62,02,808 7,41,761 2.83 2011-12 38,84,030 86,087 2.21 2010-11 92,38,250 3,51,502 3.29 THE ITAT JAIPUR BENCH IN THE ASSESSEE'S OWN CASE HAS HELD N P RATE OF 0.42% AS REASONABLE AFTER UPHOLDING INVOKING OF PROVISIONS OF SEC 145(3) OF THE ACT FOR AY 200809 VIDE ITS ORDER IN ITA NO, 274/JP/2014. THIS HAS BEEN FURTHER ACCEPTED BY HON'BLE ITAT JAIPUR BENCH FOR AY 2009-10 ALSO. DURING THE YEAR UNDER APPEAL THE ASSESSEE HAS DECLARED A NET PROFIT OF RS. 1,76,441/- AND THE RESULTANT NP RATE FOR THE YEAR UNDER APPEAL IS 0.67% WHICH IS HIGHER THAN THAT ACCEPTED BY THE BENCH. ACCORDINGLY, I DO NOT FIND ANY MERIT IN THE AD HOC ADDITION OF RS. 1.00 LAC SO MADE BY THE A.O. 5. IN RESPECT OF MARBLE BUSINESS, DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS SUBMITTED THAT ASSESSEE HAD DISCONTINUED THE BUSINESS RUN UNDER THE NAME M/S S R MARBLES FROM THE FY 2012-13. DURING THE ITA 1461/JP/2018 SUNITA KHINCHI VS ITO 5 YEAR THE ASSESSEE HAD DONE ONLY SOME JOB WORK AND THE RECEIPT FROM WHICH WAS SHOWN IN THE PROFIT AND LOSS ACCOUNT OF M/S S R PETROLEUM AS OTHER RECEIPTS AT A GROSS AMOUNT. THE COPY OF LEDGER ACCOUNT SHOWING THE TOTAL GROSS RECEIPTS OF RS. 10,11,504/- ON JOB WORK DONE WAS PRESENTED BEFORE THE AO. HOWEVER, THE AO CONSIDERED THIS RECEIPT OF JOB WORK AS INCOME OF THE ERSTWHILE M/S S R MARBLES AND FURTHER MADE AN AD-HOC ADDITION OF RS. 200,000/- BY ALLEGING THAT SINCE THE BOOKS AND VOUCHERS OF M/S SR MARBLES WERE NOT PRODUCED FOR VERIFICATION THE CORRECT INCOME THEREFROM COULD NOT BE ADDUCED AND MADE THE SAID ADDITION FOR A POSSIBLE LEAKAGE OF REVENUE. FROM THE RECORD, I FOUND THAT THE COPY OF LEDGER SHOWING GROSS RECEIPTS WAS SUBMITTED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. THE AO DID NOT PROBE INTO ANY FURTHER DETAIL TO SUBSTANTIATE THE ALLEGATION OF POSSIBLE LEAKAGE. THE COPY OF WAGE A/C WAS ALSO FILED WITH THE AO. HOWEVER, AT THE VERY SAME TIME, IT IS TRUE THAT THE ASSESSEE HAS NOT PRODUCED ANY BILLS AND VOUCHERS OF EXPENSES NOR THE BILLS OF JOB WORK RECEIPTS. KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE BOOKS OF ACCOUNT WERE NOT SEPARATELY MAINTAINED, I DEEM IT APPROPRIATE TO UPHOLD THE ADDITION OF RS. 1.00 LACS IN THE JOB WORK BUSINESS OF MARBLE KEEPING IN VIEW THE VARIOUS SHORT COMINGS POINTING OUT BY THE A.O. AND CONFIRMED BY THE CIT(A). I DIRECT ACCORDINGLY. ITA 1461/JP/2018 SUNITA KHINCHI VS ITO 6 6. IN THE RESULT, APPEAL OF THE ASSESSEE IN ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH FEBRUARY, 2020. SD/- JES'K LH 'KEKZ ( RAMESH C SHARMA ) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 20/02/2020 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SMT. SUNITA KHINCHI, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE I.T.O., WARD 6(5), JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 1461/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR