M/s. M.R. Bhandari & Sons Pvt. Ltd., Belgaum V. The Asst. Comm. Of Income-Tax. Circle-2, Belgaum

ITA 192/PAN/2014

• Counselvise Citation: 19224114 RSA 2014
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 16-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINAY SINGH RAWAT
• Assessee Lawyers: V K GURUNATHAN
• Keywords: Gross profit estimation
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 192/PNJ/2014 : (ASST. YEAR : 2007 - 08) M/S. M.R. BHANDARI & SONS PVT. LTD., 87A, SAMBHAJI ROAD, JOSHIMALA KHASBAG, BELGAUM 590 004 (APPELLANT) PAN : AAECM9226B VS. ASST. COMMISSIONER OF INCOME TAX CIRCLE - 2, BELGAUM (RESPONDENT) ASSESSEE BY : V.K. GURUNATHAN , ADV. REVENUE BY : VINAY SINGH RAWAT, DR DATE OF HEARING : 06/01/2015 DATE OF PRONOUNCEMENT : 06/01/2015 O R D E R PER P.K. BANSAL 1. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), BELGAUM DT. 15.4.2014 BY TAKING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL : 1. THE ORDER OF THE COMMISSIONER OF INCOME - TAX (A) IS BAD IN LAW AND NOT SUSTAINABLE IN THE EYE OF LAW AS THE SAME IS NOT BASED ON ANY MATERIAL PIECE OF EVIDENCE. 2. THE COMMISSIONER (A) GROSSLY ERRED IN IGNORING THE FINDINGS GIVEN BY THE ASSESSING AUTHORITY THAT THE ADDITION WAS MADE ON ACCOUNT OF GROSS PROFIT WAS ON ESTIMATED BASIS AND WAS ON HIGHER SIDE. 3. WITHOUT PREJUDICE, THE COMMISSIONER (A) OUGHT TO HAVE APPRECIATED THAT THE APPE LLANT HAD IN FACT EXPLAINED THE REASONS FOR A LOW GROSS PROFIT WHICH WAS NOT AT ALL REBUTTED BY THE COMMISSIONER (A) OR EVEN BY THE ASSESSING OFFICER. 2 ITA NO. 192/PNJ/2014 (A.Y 2007 - 08) 4. WITHOUT PREJUDICE, THE APPELLANT HAVING EXPLAINED THE REASONS FOR LOW GROSS PROFIT FOR THE YEAR UNDER CHALLENGE, NO ADDITION MUCH LESS AN ADDITION ON ESTIMATED BASIS WAS CALLED FOR ESPECIALLY WHEN THE APPELLANTS BOOKS OF ACCOUNTS WERE FOUND TO BE IN ORDER. 5. THE COMMISSIONER (A) OUGHT TO HAVE DELETED THE INTEREST CHARGED U/S.2348 AND 234C OF THE ACT. 2. GROUND NOS. 1 TO 4 RELATE TO THE ISSUE OF ADDITION IN THE GROSS PROFIT ON ACCOUNT OF LOW GROSS PROFIT SHOWN BY THE ASSESSEE IN THE OPINION OF THE AO. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY SUBMITTED RETURN FOR THE IMPUGNED ASSE SSMENT YEAR ON 16.11.2007 AT AN INCOME OF RS.7,47,119/ - . THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEALING IN TEXTILES, YARN, FIBRE AND RELATED ACTIVITIES. THE AO NOTED THAT THERE IS A FALL IN THE GROSS PROFIT SHOWN BY THE ASSESSEE BY 2.5% AS COMPARED T O THE GROSS PROFIT SHOWN IN THE EARLIER YEAR. THE AO WAS NOT CONVINCED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE THEREFORE MADE ADDITION OF ABOUT 2% IN THE INCOME RETURNED BY THE ASSESSEE. ASSESSEE WENT IN APPEAL BEFORE CIT(A). CIT(A) DISMISSED TH E APPEAL OF THE ASSESSEE. 4. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONGWITH THE ORDER OF THE TAX AUTHORITIES BELOW. WE NOTED THAT THE AO HAS ASKED FOR THE BOOKS OF ACCOUNTS. THE ASSESSEE PRODUCED THE BOOKS OF ACCOUNTS AND EVE N THE EVIDENCES IN RESPECT OF THE VARIOUS EXPENSES AS DESIRED BY THE AO ALONGWITH THE BILLS AND VOUCHERS. THE AO HAS TEST CHECKED THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS AND VERIFIED THE SAME ON SAMPLE BASIS. THE AO DID NOT FIND ANY DEFECT IN THE BOOKS OF ACCOUNTS AND VOUCHERS PRODUCED BY THE ASSESSEE. EVEN THE ASSESSEE HAS SUBMITTED CONFIRMATION IN RESPECT OF SUNDRY CREDITORS AS DESIRED BY THE AO. THE AO WITHOUT FINDING 3 ITA NO. 192/PNJ/2014 (A.Y 2007 - 08) ANY DEFECT IN THE BOOKS OF ACCOUNTS NOTED THAT THERE HAD BEEN FALL IN THE GROSS P ROFIT BY 2.5% AS COMPARED TO THE EARLIER YEAR AND THUS, MADE ADDITION OF ABOUT 2% IN THE RETURNED INCOME. WE ARE OF THE VIEW THAT THE AO CANNOT MAKE THE ADDITION IN THE GROSS PROFIT JUST ON THE BASIS THAT THERE IS A FALL IN THE GROSS PROFIT WITHOUT REJECT ING THE BOOKS OF ACCOUNTS AND F OR REJECTING THE BOOKS OF ACCOUNTS THE AO HAS ALSO TO GIVE A SPECIFIC FINDING WHICH HAS NOT BEEN DONE BY THE AO IN THIS CASE. ONCE THE BOOKS OF ACCOUNTS ARE REJECTED BY INVOKING THE PROVISIONS OF SEC. 145, ASSESSMENT CAN BE MADE IN THE MANNER AS SPECIFIED U/S 144. SINCE THE AO DID NOT REJECT THE BOOKS OF ACCOUNTS, WE DELETE THE ADDITION MADE ON ACCOUNT OF LOW GROSS PROFIT. OUR AFORESAID VIEW IS DULY SUPPORTED BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SARGA M CINEMA VS. CIT, 328 ITR 513 (SC) . THUS, GROUND NOS. 1 TO 4 STANDS ALLOWED. 5. GROUND NO. 5 IS ABOUT CHARGING OF INTEREST U/S 234B & 234C WHICH IS CONSEQUENTIAL IN NATURE. THE AO IS THEREFORE DIRECTED TO RE - COMPUTE THE INTEREST AFTER GIVING EFFECT TO T HIS ORDER. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON 06/01/2015. S D / - (D.T.GARASIA) JUDICIAL MEMBER S D / - (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI DATED : 0 6 /01/2015 *SSL* 4 ITA NO. 192/PNJ/2014 (A.Y 2007 - 08) COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT(A) CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER