ITO, New Delhi V. M/s. Madhya Pradesh Vanijya Company, Delhi

ITA 1812/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6374 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 11-02-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 01-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJA
• Keywords: Gross profit estimation; Business income
• Section: 133(6)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER I.T.A .NO.1812/DEL/2013 ASSESSMENT YEAR-2008-09 ITO, WARD 29(1), ROOM NO. 103, DRUM SHAPE BUILDING, NEW DELHI. VS MADHYA PRADESH VANIJYA COMPANY, 3958/2, NAYA BAZAR, DELHI. AALFM6943M APPELLANT BY SH. P. DAM KANUNJA, SR. DR RESPONDENT BY SHRI SH. VED JAIN, CA ORDER PER BEENA A. PILLAI, JM THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF THE LD. CIT(A)-XXV, NEW DELHI VIDE ORD ER DATED 04/01/2013 ON THE FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELE TING THE ADDITION OF RS. 2,35,97,135/- BY IGNORING THE F ACT THAT THE ASSESSEE HAS NOT PRODUCED BOOKS OF ACCOUNT S & VOUCHERS TO PROVE THAT THE TRADING RESULTS AS DECLARED ARE CORRECT AND VERIFIABLE. 2. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELETI NG THE ADDITION OF RS. 2,23,47,685/- BY IGNORING THE FACT THAT ON THE DIRECTIONS OF LD. CIT(A) LETTER U/S 133(6) O F THE INCOME TAX ACT, 1961 WERE ISSUED TO 75 DATE OF HEARING 11.02.2016 DATE OF PRONOUNCEMENT 09.03.2016 I.T.A. NO. 1812/D/2013 2 CREDITORS/PURCHASERS. OUT OF 75 PARTIES REPLIES WE RE RECEIVED FROM 37 PARTIES. THIS ITSELF SHOWS THAT T HE BOOKS OF THE ASSESSEE ARE NOT RELIABLE. 2. THE BRIEF FACTS ARE AS UNDER: THE ASSESSEE IS A WHOLE SALE DEALER IN FOOD GRAINS. IT HAS THREE BRANCHES AT, ITARSI, SAGAR AND MORENA IN MADHYA PRA DESH. THE HEAD OFFICE OF THE ASSESSEE IS SITUATED AT DELHI HA VING ADDRESS AT 3958/2, NAYA BAZAR. DURING THE YEAR UNDER CONSIDER ATION THE ASSESSEE HAD SHOWN TOTAL SALES OF RS. 1,00,28,11,60 1/- AND GROSS PROFIT OF RS. 2,55,43,445/- YIELDING A GP RATE OF 2 .5%. THE BRANCH WISE DETAILS OF THE SALES AND GROSS PROFIT R ATE ARE AS UNDER: S.NO. BRANCH TURNOVER GP GP % 1 ITARSI RS. 40,35,61,885/- RS. 1,36,92,207/- @3.3% 2 MORENA RS. 25,93,89,530/- RS. 20,89,169/- @ 0.8 % 3 SAGAR RS. 33,99,60,184/- RS. 97,62,068/- @ 2.8% 2.1. THE LD. AO OBSERVED THAT, ASSESSEE HAS DECLARE D THE GP RATE AT 2.5% AS COMPARED TO 5% IN PREVIOUS YEAR BEING 20 07-08. THE LD. AO MADE AN ADHOC ADDITION OF GP AT 5% ON THE GR OUND THAT NO DETAILS/BOOKS OF ACCOUNTS WERE PRODUCED BY THE A SSESSEE. THE LD. AO COMPLETED THE ASSESSMENT BY MAKING THE F OLLOWING ADDITIONS: I. ADDITION ON ACCOUNT OF LOW GP RATE AMOUNTING TO RS. 2,45,97,135/-; II. ADDITION ON ACCOUNT OF NET PROFIT RATE AMOUNTING TO RS. 2,23,47,688/-; III. ADDITION ON ACCOUNT OF CREDITORS AMOUNTING TO RS. 73,17,454/-; IV. ADDITION ON ACCOUNT OF FBT CLAIMED AMOUNTING TO RS. 25,431/-. I.T.A. NO. 1812/D/2013 3 3. AGGRIEVED BY THE ORDER OF THE LD. ASSESSING OFFICER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). 3.1. BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED THAT S UFFICIENT OPPORTUNITY WAS NOT GRANTED TO PRODUCE THE BOOKS OF ACCOUNTS AND OTHER RELEVANT DETAILS THAT WAS REQUIRED AT THE TIME OF ASSESSMENT PROCEEDINGS. THE ASSESSEE THEREFORE, SU BMITTED THE DETAILS OF AUDITED BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE BEFORE THE LD. CIT(A). THE LD. CIT(A) REMANDED THE DETAILS SUBMITTED BY THE ASSESSEE TO THE LD. ASSESSING OFFI CER. 3.1. THE LD. ASSESSING OFFICER SUBMITTED THE REMAND REPORT VIDE HIS LETTER DATED 7/12/2012, WHEREIN NO ADVERSE FIND INGS WERE RECORDED IN RESPECT OF THE BOOKS OF ACCOUNTS THAT H AS BEEN FILED BY THE ASSESSEE. THE LD. CIT(A) OBSERVED THAT THE LD. ASSESSING OFFICER HAS VERIFIED AND EXAMINE THE BOOKS OF ACCOU NTS ON TEST CHECK BASIS. HE ALSO OBSERVED THAT THE LD. ASSESSI NG OFFICER HAS NOT RECORD ANY ADVERSE FINDINGS OBSERVATION, REGARD ING ANY THE BOOKS OF ACCOUNTS. 3.2. THE LD. CIT(A) ACCORDINGLY RESTRICTED THE ADDI TION MADE BY THE LD. ASSESSING OFFICER IN RESPECT OF THE ADHOC A DDITION MADE ON GP RATE, TO AN EXTENT OF RS. 10 LACS. THE LD. CIT( A) DELETED THE OTHER ADDITIONS MADE BY THE LD. ASSESSING OFFICER I N RESPECT OF NET PROFITS AND THE ADDITION MADE UNDER THE HEAD CURRE NT LIABILITIES. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE REV ENUE IS IN APPEAL BEFORE US. 4.1. AT THE OUTSET IT IS SUBMITTED BY THE LD. AR TH AT NO APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ADDI TION CONFIRMED BY THE LD. CIT(A). THE LD.AR SUPPORTED TH E PRDER OF THE LD.CIT(A). I.T.A. NO. 1812/D/2013 4 4.2. THE LD. DR ON THE CONTRARY SUBMITTED THAT THE ADDITION MADE BY THE LD. ASSESSING OFFICER IN RESPECT OF THE GP RATE SHOULD BE CONFIRMED AS THE ASSESSEE HAD NOT PRODUCED BOOKS OF ACCOUNTS OR DETAILS DURING THE ASSESSMENT PROCEEDIN GS. HE ALSO SUBMITTED THAT THE GP RATE DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS MUCH LESS THAN THE GP RATE DECLARED BY THE ASSESSEE IN THE PRECEDING ASSESSMENT YEAR. THE LD. DR PLACED HIS RELIANCE ON THE ORDER PASSED BY THE LD. ASSESSING OFFICER. 5. WE HAVE PERUSED THE ORDERS PASSED BY THE AUTHORI TIES BELOW THE REMAND REPORT AND THE PAPER BOOK FILED BEFORE U S. 5.1. IT IS OBSERVED THAT THE LD. CIT(A) HAS RESTRIC TED THE ADDITION MADE BY THE LD. ASSESSING OFFICER ON GP RATE TO AN EXTENT OF RS. 10 LACS, AS THE LD. ASSESSING OFFICER HAS ARBITRARI LY, IN AN ADHOC MANNER, MADE ADDITION BASED ON THE GP RATE OF THE P RECEDING YEAR. THE LD. CIT(A) HAS ALSO RECORDED A FINDING T HAT IN THE REMAND REPORT THERE IS NO ADVERSE OBSERVATION MADE BY THE LD. ASSESSING OFFICER. 5.2. WE DO NOT FIND ANY INFIRMITY IN THE DELETION O F THE ADDITION BY THE LD. CIT(A). IN RESPECT OF THE ADDITION, HAS BEEN DELETED BY THE LD. CIT(A) OF THE NET PROFIT, HE RELIED UPON TH E REMAND REPORT, WHEREIN THE ASSESSING OFFICER HAS TEST CHECKED, VER IFIED THE DETAILS FILED BY THE ASSESSEE, AND HAS NOT MADE ANY ADVERSE OBSERVATION. WE ARE, THEREFORE, OF THE CONSIDERED OPINION THAT THE ORDER OF THE LD. CIT(A) DOES NOT SUFFER FROM ANY IN FIRMITY. WE, THEREFORE, UPHOLD THE ORDER OF THE LD. CIT(A) AND D ISMISSED THE GROUNDS FILED BY THE REVENUE. I.T.A. NO. 1812/D/2013 5 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.03. 2016 SD/- SD/- (J.S. REDDY) (BEENA A. PILLAI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 09.03.2016 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSTT. REGISTRAR