Naresh Kumar And Company, SRIGANGANAGAR V. ITO, SRIGANGANAGAR

ITA 193/JODH/2013

• Counselvise Citation: 19323314 RSA 2013
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 18-10-2013
• Assessment Year: misc
• Appeal Filed On: 02-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: KRISHNA MURARI GARG
• Section: 144

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 193/JODH/2013 (A.Y. 2009-10) NARESH KUMAR & COMPANY VS INCOME-TAX OFFICER 31, DHAN MANDI WARD - 2 SRI KARANPUR SRIGANGANAGAR DIST. SRIGANGANAGAR PAN NO. AAAFN 8908 Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KRISHNA MURARI GARG. DEPARTMENT BY : SHRI N.A. JOSHI, DR. DATE OF HEARING : 18/10/2013. DATE OF PRONOUNCEMENT : 18/10/2013. O R D E R PER HARI OM MARATHA, J.M. : THIS APPEAL OF THE ASSESSEE FOR A.Y. 2009-10 IS DI RECTED AGAINST THE ORDER OF LD. CIT(A), BIKANER DATED 27/02/2013. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE-FIRM IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE O F BRICKS. FOR A.Y. 2009-10, THE ASSESSEE FIRM FILED RETURN OF INCOME O N 17/03/2010 2 DECLARING AN INCOME OF RS. 26,540/-. DURING ASSESSM ENT PROCEEDINGS, AFTER REJECTING THE BOOKS OF ACCOUNT U/S 145(3) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT', FOR SHO RT], THE A.O. HAS MADE BEST JUDGMENT ASSESSMENT ORDER UNDER THE PROVISIONS OF SECTION 144 OF THE ACT BY ESTIMATING THE MANUFACTURED BRICKS AT RS . 54.3 LAKHS AS AGAINST 15.2 LAKHS DISCLOSED BY THE ASSESSEE. HE H AS INCREASED THE GROSS PROFIT RATE FROM 17.22% DECLARED BY THE FIRM TO 22%. THE A.O. HAS DISALLOWED INTEREST AND REMUNERATION PAID TO PA RTNERS. ASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS. 13,35,139/-. AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL AND THE LD. CIT(A) HAS MADE HIS OWN ESTIMATION OF PRODUCTION OF BRICKS AND HAS ESTIMATE D SALES OF 3390000 BRICKS AGAINST 1520000 DECLARED BY THE ASSESSEE. BU T HE ALSO ADOPTED GROSS PROFIT RATE OF 22%. THE LD. CIT(A) HAS DELET ED DISALLOWANCE OF INTEREST AND SALARY PAID TO THE PARTNERS. NOW THE ASSESSEE IS FURTHER AGGRIEVED. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. IT WAS ARGUED BY TH E LD. A.R. THAT EVEN IF REJECTION OF BOOKS IS HELD TO BE PROPER, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ENHANCEMENT OF PRODU CTION AND SALE OF UNITS OF BRICKS AND ADOPTION OF GROSS PROFIT RATE O F 22% IS NOT JUSTIFIED 3 IN VIEW OF THE FACT THAT EVEN AFTER REJECTION OF BO OKS, THE PAST HISTORY OF THE ASSESSEE HAS TO BE TAKEN INTO CONSIDERATION. HE HAS INVITED OUR ATTENTION TO A CHART CONTAINED AT PAGE 1 OF THE PAP ER BOOK, WHICH IS ALSO REPRODUCED IN HIS WRITTEN SUBMISSIONS. 4. ON THE OTHER HAND, THE LD. D.R. HAS SUPPORTED TH E APPELLATE ORDER AND HAS TAKEN ALL THE ARGUMENTS WHICH ARE GIV EN AS REASONS TO ARRIVE AT A CONCLUSION BY THE LD. CIT(A). 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS IN THE L IGHT OF THE OBTAINING FACTS OF THIS CASE, WE ARE OF THE CONSIDE RED OPINION THAT THE ASSESSEE HAS DECLARED BETTER NET PROFIT RATE AS WEL L AS GROSS PROFIT RATE IN THIS YEAR AS COMPARED TO THE PAST A.YS. REJECTI ON OF BOOKS IS UPHELD TO BE JUSTIFIED IN THE LIGHT OF THE FACTS NARRATED ABOVE. HOWEVER, EVEN AFTER REJECTION OF BOOKS, PAST HISTORY HAS TO BE TA KEN INTO CONSIDERATION. IN ASSESSEES CASE, THE PAST HISTOR Y IS AS UNDER: A.Y. SALES GROSS PROFIT NET PROFIT GROSS PROFIT RATE NET PROFIT RATE 2007 - 08 2082280 303493 108559 14.57% 5.21% 2008 - 09 1710570 272015 94024 15.90% 5.49% 2009 - 10 2510140 432476 167810 17.22% 6.68% 4 FROM THE ABOVE, IT IS EVIDENT THAT THE ASSESSEE HAS DISCLOSED BETTER GROSS PROFIT RATE AS WELL AS BETTER NET PROFIT RATE IN THIS YEAR. THEREFORE, EVEN AFTER REJECTION OF BOOKS, NO TRADIN G ADDITION CAN BE MADE. MOREOVER, THERE SEEMS TO BE NO VALID BASIS F OR ENHANCING PRODUCTION AND SALE OF BRICKS AS THERE IS NO EVIDEN CE ON RECORD TO SUPPORT THE SAME. ACCORDINGLY, WE ARE OF THE CONSI DERED OPINION THAT NO TRADING ADDITION CAN BE MADE TO THE DECLARED RES ULTS OF THE FIRM AND ACCORDINGLY, WE ORDER TO DELETE THE ENTIRE TRADING ADDITION. ACCORDINGLY, ON MERITS, WE ALLOW THE APPEAL BUT WE UPHOLD THE REJECTION OF BOOKS. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH OCTOBER, 2013. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18 TH OCTOBER, 2013. VL/ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR