Jitender Kumar Prop., Haryana V. ITO, Karnal

ITA 157/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65849 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 30-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 10-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHUMANA SEN
• Assessee Lawyers: PANKAJ JAIN
• Keywords: Rejection of books of accounts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : D NEW DELHI BEFORE SHRI J.SUDHAKAR REDDY, AM AND SHRI CM GARG, JM ITA NO. 157/DEL/2012 ASSESSMENT YEAR : 2007-08 SH. JITINDER KUMAR VS. ITO, WARD NO.1 PROP. M/S KRISHNA TIMBER STORES KARNAL IMAMBARA DT.KARNAL (HARYANA) PAN: AFZPK 3249 R (APPELLANT) (RESPONDENT) APPELLANT BY:- SH.PANKAJ JAIN & GURJEET SINGH ADV. RESPONDENT BY:- MS.SHUMANA SEN, D.R. O R D E R PER J.SUDHAKAR REDDY, AM THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED A GAINST THE ORDER OF THE CIT(A), KARNAL DATED 18.11.2011 PERTAINING TO THE ASSESSMENT YEAR 2007-08. 2. BRIEF FACTS :- THE ASSESSEE IS AN INDIVIDUAL AND CARRIES ON BU SINESS IN THE NAME AND STYLE OF M/S KRISHNA TIMBER STORE . HE DERIVES INCOME FROM TRADING IN TIMBER. MOST OF THE GOODS (TIMBER) ARE IMPORTED FROM SINGAPORE AND THEREAFTER SOLD AT GANDHIDHAM (GUJAR AT) AND AT KARNAL. THE ASSESSEE FILED A RETURN OF INCOME DECLARING INC OME OF RS.2,68,511/- ON 10.10.2007. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS ON THE GROUND THAT :- ITA NO: 157/DEL/2012 PAGE 2 OF 5 ASSESSMENT YEAR : 2007-08 JITENDER KUMAR PROP. M/S KRISHNA TIMBER STORE A) THE DESCRIPTION OF THE TIMBER WAS NOT GIVEN IN THE PURCHASE BILLS OR UNDER SALES BILLS; B) THE DESCRIPTION WAS NOT GIVEN IN THE STOCK REGISTER FOR THE OPENING STOCK NOR THE CLOSING STOCK; C) STOCK REGISTER WAS NOT MAINTAINED QUANTITY WISE. FOR THE DETAILED REASONS GIVEN IN HIS ORDER, HE CAM E TO A CONCLUSION THAT THE PRACTICE FOLLOWED BY THE ASSESSEE DO NOT REFLE CT THE PROPER TRADING RESULTS I.E. THE TRUE AND CORRECT PICTURE OF GROSS PROFIT EARNED BY THE ASSESSEE DURING THE YEAR. BOOKS OF ACCOUNTS WERE R EJECTED APPLYING PROVISIONS OF S.145(3). GROSS PROFIT WAS WORKED OU T @ 4.9%. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL. THE FIR ST APPELLATE AUTHORITY UP HELD THE REJECTION OF BOOKS OF ACCOUNTS. THEREA FTER HE RESTRICTED THE GROSS PROFIT TO THE RATE OF 4% ON THE GROUND THAT T HE SAME IS REASONABLE. FURTHER AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 3. MR.PANKAJ JAIN, THE LD.COUNSEL FOR THE ASSESSEE VEHEMENTLY CONTENDED THAT THE REJECTION OF BOOKS OF ACCOUNTS I S BAD IN LAW. HE REITERATED THE VARIOUS CONTENTIONS RAISED BY THE AS SESSEE BEFORE THE FIRST APPELLATE AUTHORITY. HE FURTHER RELIED ON THE DECI SION OF THE E BENCH OF THE TRIBUNAL IN THE CASE OF S.H.NIRAJ JAIN VS ITO I N ITA NO.289/DEL/2011 FOR THE ASSESSMENT YEAR 2007-08 ORDER DT. 15.6.2012 AND SUBMITTED THAT THE FACTS OF THE PRESENT CASE ARE IDENTICAL ON ALL ASPECTS WITH THE FACTS OF THE CASE OF SH NIRAJ JAIN (SUPRA) AND THAT THE REJE CTION OF BOOKS OF ITA NO: 157/DEL/2012 PAGE 3 OF 5 ASSESSMENT YEAR : 2007-08 JITENDER KUMAR PROP. M/S KRISHNA TIMBER STORE ACCOUNTS WAS HELD AS ILLEGAL BY THE TRIBUNAL UNDER SIMILAR CIRCUMSTANCES. HE FILED A COMPILATION AS WELL AS T HE WRITTEN SUBMISSIONS TO DEMONSTRATE THAT THE GROUNDS FOR REJECTION OF BO OKS IS BAD IN LAW. 4. ON PERCENTAGE ADOPTED BY THE COMMISSIONER OF INC OME TAX (APPEALS) THE LD.COUNSEL DREW THE ATTENTION OF THE BENCH TO PARA (V) PAGE 15 OF THE ASSESSMENT ORDER AND SUBMITTED THAT THE U NDISPUTED FACT RECORDED ;BY THE ASSESSING OFFICER IS THAT THE PRO FITS EARNED ON HIGH SEA SALES OF TIMBER BLOCKS WAS ONLY 2%. HE PRAYED THAT 2% BE ADOPTED ON TURNOVER WHICH RESULTED FROM HIGH SEA SALES. ON OT HER TURNOVER HE POINTED OUT THAT THE ASSESSING OFFICER AT PAGE 9, TOOK THE AVERAGE OF DIFFERENT ASSESSEES FOR DIFFERENT AYS AND ARRIVED A T A PERCENTAGE. HE POINTED OUT THAT THE ASSESSING OFFICER TOOK THE CAS E OF NIRAJ JAIN AS A COMPARABLE FOR THE PURPOSE OF ESTIMATED GROSS PROFI T AND SUBMITTED THAT THE TRIBUNAL HAS ADJUDICATED THE ISSUE IN THE CASE OF NIRAJ JAIN. HE REFERRED TO PAGE 10 AND 11 OF HIS PAPER BOOK AND CL AIMED THAT THE GROSS PROFIT DISCLOSED ON DOMESTIC SALES IS CONSISTENT OV ER THE YEARS. HE PRAYED FOR RELIEF. 5. LD.D.R. MRS.SUSHMA SEN ON THE OTHER HAND STRONGL Y OPPOSED THE ARGUMENTS OF THE ASSESSEES COUNSEL AND SUBMITTED T HAT THE REJECTION OF BOOKS WAS RIGHTLY MADE BY THE ASSESSING OFFICER. S HE TOOK THIS BENCH TO THE ORDER OF THE ASSESSING OFFICER AS WELL AS THE C OMMISSIONER OF INCOME TAX (APPEALS) AND RELIED ON THE SAME. ON ESTIMATIO N OF PROFITS SHE ITA NO: 157/DEL/2012 PAGE 4 OF 5 ASSESSMENT YEAR : 2007-08 JITENDER KUMAR PROP. M/S KRISHNA TIMBER STORE SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPE ALS) WAS REASONABLE AND GRANTED SUBSTANTIAL RELIEF TO THE AS SESSEE. 6. ON A QUERY FROM THE BENCH, BOTH PARTIES AGREED THAT THEY WOULD NOT INSIST ON ADJUDICATION OF THE ISSUE AS TO WHETH ER REJECTION OF BOOKS WAS CORRECTLY DONE IN THIS YEAR OR NOT, PROVIDED TH E SAME IS NOT TAKEN AS A PRECEDENT FOR THE FUTURE YEARS FOR THE ASSESSEE O R IN OTHER SIMILAR CASES. IT WAS FURTHER AGREED BETWEEN THE PARTIES THAT THE PERCENTAGE MAY BE FIXED BY THE TRIBUNAL, AND THE SAME WOULD NO T BECOME A PRECEDENT FOR THE FUTURE AYS OR IN OTHER SIMILAR CA SES. 7. IN VIEW OF THE ABOVE SUBMISSION, WE DO NOT ADJUD ICATE THE ISSUE AS TO WHETHER THE REJECTION OF BOOKS BY THE ASSESSING OFFICER WAS CORRECT IN LAW. 8. COMING TO THE ISSUE OF ESTIMATION OF GROSS PROFI T, WE HOLD THAT THE GROSS PROFIT ON HIGH SEA SALES IS TO BE FIXED AT 2% , AS THE ASSESSING OFFICER HAS HIMSELF RECORDED THIS FACT AT PAGE 15 O F THE ASSESSMENT RODER. COMING TO THE OTHER DOMESTIC SALES, WE ARE OF THE C ONSIDERED OPINION THAT THE ENDS OF JUSTICE WOULD BE MET IF THE GROSS PROFI T IS ESTIMATED AT 3.25% OF THE DOMESTIC SALES KEEPING IN VIEW THE RESULTS I N THE CASE OF SH NIRAJ JAIN (SUPRA), WHICH CASE WAS TAKEN AS A COMPARABLE BY THE ASSESSING OFFICER AND WHICH HAD BEEN ADJUDICATED BY THE TRIBU NAL. 9. WE REITERATE THAT NEITHER THE ISSUE OF REJECTION OF BOOKS OF ACCOUNTS NOR THE ISSUE OF FIXING OF PERCENTAGE IN THIS CASE , SHALL BE TAKEN AS A ITA NO: 157/DEL/2012 PAGE 5 OF 5 ASSESSMENT YEAR : 2007-08 JITENDER KUMAR PROP. M/S KRISHNA TIMBER STORE PRECEDENT BY THE ASSESSING OFFICER EITHER IN THE CA SE OF THE ASSESSEE OR IN ANY OTHER SUCH CASES. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST NOVEMBER,2012. SD/- SD/- (C.M.GARG) (J.SUDHAKA R REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: THE 21 ST NOVEMBER, 2012 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR; 6.GUARD FILE BY ORDER DY. REGISTRAR 1. DATE OF DICTATION: 2. DRAFT PLACED BEFORE THE AUTHOR ON: 3. DRAFT PROPOSED AND PLACED BEFORE SECOND MEMBER ON: 4. DRAFT DISCUSSED/APPROVED BY THE SECOND MEMBER ON: 5. APPROVED DRAFT CAME TO SR.P.S. ON: 6. DATE OF PRONOUNCEMENT : 7. FILE SENT TO BENCH CLERK ON : 8. DATE ON WHICH FILE GIVEN TO HEAD CLERK ON: 9. DATE OF DISPATCHING THE ORDER ON :