S. Avtar Singh C/O M/s Avtar Industries, Jalandhar V. THE Income Tax Officer, Jalandhar

ITA 168/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0663 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 30-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A N MISRA
• Assessee Lawyers: S K VATTA
• Keywords: Rejection of books of accounts
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR (CAMP AT JA LANDHAR ) BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO.168(ASR)/2015 ASSESSMENT YEAR: 2008-09 SH. AVTAR SINGH C/O M/S. AVTAR INDUSTRIES, GURU RAM DAS NAGAR, SANTOKH PURA, JALANDHAR. PAN: ABOPS0693J VS. INCOME TAX OFFICER RANGE-II(3), JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. S.K. VATTA (CA) RESPONDENT BY: SH. A.N.MISRA (DR) DATE OF HEARING: 21.06. 2016 DATE OF PRONOUNCEMENT: 22.06.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORD ER OF LEARNED CIT(A), JALANDHAR, DATED 09.12.2014 FOR ASST. YEAR: 2008-09. 2. THE ONLY ISSUE RAISED BY ASSESSEE IN THIS CASE I S THE ACTION OF LD. CIT(A) BY WHICH HE HAD CONFIRMED AN ADDITION OF RS. 2,00,000/- OUT OF ADDITION OF RS.3,88,946/- WHICH THE ASSESSING OFFI CER HAD MADE TO THE TRADING RESULTS OF THE ASSESEE AFTER REJECTION OF H IS BOOKS OF ACCOUNTS. 3. THE BRIEF FACTS OF THE CASE AS NOTED IN THE ASSE SSMENT ORDER ARE THAT THE ASSESSEE IS A MANUFACTURER OF AUTOMOBILE P ARTS. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. DURING THE ASSE SSMENT PROCEEDINGS, ITA NO.16 8(ASR)/2015 ASST. YEAR: 2008-09 2 THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD DE CLARED A G.P RATE OF 19.55% AS AGAINST G.P RATE OF 15.55% DECLARED IN EA RLIER YEAR. THE A.O ALSO OBSERVED THAT ASSESSEE HAD NOT MAINTAINED QUAN TITATIVE AND QUALITATIVE RECORD FOR MANUFACTURER OF GOODS AND TH EREFORE, THE A.O ASSUMED A G.P RATE OF 24% AND MADE ADDITION OF RS.3 ,88,946/-. ON APPEAL BEFORE LD. CIT(A), THE LEARNED CIT(A) REDUCE D THE ADDITION TO RS.2 LACS. 4. STILL AGGRIEVED THE ASSESSEE IS IN APPEAL BEFOR E US. 5. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT ASS ESSEES BOOKS OF ACCOUNTS WERE AUDITED AND NO DISCREPANCIES WERE FOU ND BY ASSESSING OFFICER EXCEPT THE FACT THAT ASSESSEE HAD NOT MAINT AINED QUANTITATIVE RECORDS. THE LD. AR SUBMITTED THAT UNDER THE LAW TH E ASSESSEE WAS NOT REQUIRED TO MAINTAIN QUANTITATIVE AND QUALITATIVE R ECORDS AND LD. CIT(A) HIMSELF AT PARA 5.5 OF HIS ORDER HAS NOTED THIS FAC T. THE LD. AR SUBMITTED THAT THE ADDITION WAS NOT JUSTIFIED AND RELIANCE IN THIS RESPECT WAS PLACED A NUMBER OF CASE LAWS AS PLACED IN (PB PAGES 32 TO 71). 6. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDER OF AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT LD. CIT(A) HIMSELF AT PARA 5.5 OF HIS ORDER HAS MENTIONED THERE IS NO LAW UNDER WHICH QUANTITATIVE DETAILS ARE TO BE MAINTAINED BUT HE HELD THAT TO VERIFY THE CORRECTNESS OF PROFITS ITA NO.16 8(ASR)/2015 ASST. YEAR: 2008-09 3 DECLARED BY ASSESSEE, THESE DETAILS WERE NECESSARY. THE LD. CIT(A), HOWEVER, RESTRICTED THE ADDITION OF RS. 2 LACS ON L UMP SUM BASIS WITHOUT ANY BASIS. BOTH AUTHORITIES BELOW I.E. LD. A.O AND LD. CIT(A) HAD MADE ADDITION ON THE BASIS OF ASSUMPTIONS ONLY AND NO TA NGIBLE MATERIAL WAS AVAILABLE WITH LD. CIT(A) TO SUSTAIN PART ADDITION . WE FURTHER FIND THAT ASSESSEE HAD SUBMITTED MONTHLY TRADING ACCOUNTS AS WELL AS STOCK INVENTORY PHYSICALLY PREPARED AS ON 31.03.2008 AND THE ASSESSING OFFICER DID NOT MAKE ANY ADVERSE COMMENT ON THESE DETAILS. THE ASSESSING OFFICER HAD MADE THE ADDITION ON THE BASIS OF COMPA RISON OF TRADING RESULTS WITH SOME OF THE FIRMS WHICH WAS NOT CONFRO NTED TO THE ASSESSEE. THE AO DID NOT FIND ANY DISCREPANCY IN THE BOOKS OF ACCOUNTS EXCEPT THE NON MAINTENANCE OF QUANTITATIVE RECORDS AND THEREFO RE, THE REJECTION OF BOOKS OF ACCOUNTS WAS NOT JUSTIFIED. THE HONBLE IT AT, BANGLORE BENCH IN THE CASE OF DCIT VS. GAJANAN TRADERS, 12 SOT 36 HAS HELD AS UNDER: IT HAS BEEN HELD THAT A FALL IN GP IS NOT A CRITE RION OF REJECTING THE BOOKS OF ACCOUNTS. THERE IS NO PROVISION IN THE ACT, WHICH SU GGESTS THAT THE DAY OF DAY STOCK REGISTER HAS TO BE MAINTAINED, OR IN ABSENCE THEREOF, THE BOOKS OF ACCOUNTS ARE LIABLE TO BE REJECTED. WHAT IS REQUIRED TO INVO KE PROVISIONS TO SECTION 145 OR TO REJECT BOOKS RESULTS IS TO ESTABLISH THE INCORRECTN ESS AND INCOMPLETENESS OF THE ACCOUNTS, OR WHERE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE IS INCONSISTENT WITH THE ACCEPTED METHOD OF ACCOUNTING. SINCE NO SUCH CASE HAD BEEN MADE OUT BY THE AO, THE AO WAS NOT JUSTIFIED IN REJECTING THE BOOK RESULTS AND MAKING ADDITION. HEN CE THE REVENUES APPEAL IS TO BE DISMISSED. WE FIND THAT IN THE PRESENT CASE THE ADDITION TO TR ADING RESULTS WAS MADE BY REJECTING BOOKS OF ACCOUNTS AND THE BOOKS OF ACC OUNTS WAS REJECTED BECAUSE OF THE FACT THAT ASSESSEE HAD NOT MAINTAINE D QUANTITATIVE ITA NO.16 8(ASR)/2015 ASST. YEAR: 2008-09 4 RECORDS AND OTHERWISE THE AO DID NOT FIND ANY DISCR EPANCIES IN THE BOOKS OF ACCOUNTS AND THEREFORE, THE ADDITION MADE BY AO WAS NOT JUSTIFIED. 9. IN VIEW OF THE ABOVE, THE ADDITION SUSTAINED BY LD. CIT IS NOT JUSTIFIED AND WE DELETE THE ADDITION SUSTAINED BY L D. CIT. 10. IN VIEW OF THE ABOVE, THE APPEAL FILED BY ASSES SEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JUNE, 2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22.06.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER