JOGINDER SINGH HUF, Ajmer V. ITO, Ajmer

ITA 193/JPR/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5153 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 03-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMAADDL CIT DR DHK
• Assessee Lawyers: SUDHIR SOGANI
• Keywords: Depreciation

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 193/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13 SHRI JOGINDER SINGH HUF PROP. BANSHIRAM KARTARCHAND SONS, LAL KOTHI, KAISERGANJ, AJMER CUKE VS. THE ITO WARD- 1 (2) AJMER LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAAHJ 4538 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI SUDHIR SOGANI, ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY:SHRI R.A. VERMA,ADDL.CIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 12/07/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 15/07/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A), AJMER DATED 19-01-2016 FOR THE ASSESSMENT YEAR 201 2-13 RAISING THEREIN FOLLOWING GROUNDS:- 1. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN SUSTAINI NG ADDITION OF RS. 97,391/- BY CONFIRMING APPLICATION OF GROSS PROFIT RATE OF 1.24% ON THE DECLARED RESULTS. 2. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN SUSTAINI NG DISALLOWANCE OF EXPENDITURE UNDER THE FOLLOWING HEA DS. ITA NO. 193/JP/2016 SHRI JOGINDER SINGH HUF VS. ITO, WARD- 1(2), AJMER . 2 (A) OUT OF TELEPHONE EXPENSES RS. 9,602/- (B) OUT OF VEHICLE RUNNING EXPENSES INCL. INS. RS . 41,623/- OUT OF DEPRECIATION OF CAR RS. 17,294/- (D) OUT OF SHOP EXPENSES RS. 10,000/- 3. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN SUSTAINING DISALLOWANCE OF DEP.OF NEW MOBILES ACQUIRED IN EXCH ANGE OF OLD MOBILES, THEREBY MAKING AN ADDITION OF RS. 1,60 0/- 2.1 APROPOS GROUND NO. 1 OF THE ASSESSEE WHEREIN BR IEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED E-RETURN DECLA RING INCOME OF RS. 3,18,090/- ON 29-09-2012. THE CASE OF THE ASSESSEE WAS SELECTED IN SCRUTINY THOUGH CASS AS PER CBDT GUIDELINES CIRCULA TED FOR THE F.Y. 2013-14. NOTICE U/S 143(2) OF THE I.T. ACT WAS ISSU ED ON 6-08-2013 FIXING THE CASE FOR HEARING ON 19-08-2013 WHICH WAS SERVED UPON THE ASSESSEE ON 12-08-2013 AND THE SAME WAS COMPLIED WITH. THE A O OBSERVED THAT ON VARIOUS DATES THE LD. AR OF THE ASSESSEE ATTENDE D THE HEARING AND PRODUCED THE BOOKS OF ACCOUNT CONSISTING OF CASH BO OK, LEDGER, PURCHASE AND SALES BILLS, VOUCHERS OF EXPENSES DEBIT IN P/L ACCOUNT AND OTHER INFORMATIONS AS REQUIRED BY THE AO. IT IS NOTED THA T THE ASSESSEE IS CARRYING ON THE WHOLESALE BUSINESS OF SUGAR, RICE, EDIBLE OILS ETC. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASKED T HE ASSESSEE TO FURNISH THE COMPARATIVE OF G.P. AND N.P.RATE CHART WHICH HA D BEEN SUBMITTED BY THE ASSESSEE AS UNDER:- ITA NO. 193/JP/2016 SHRI JOGINDER SINGH HUF VS. ITO, WARD- 1(2), AJMER . 3 A.Y. TURNOVER GROSS PROFIT GROSS PROFIT RATE NET PROFIT NET PROFIT RATE 2012-13 407105095.36 4950712 1.22% 257940 0.06% 2011-12 314869519.47 3908421 1.24% 203816 0.06% 2010-11 294495617.47 3836959 1.30% 181752 0.06% THE AO FURTHER OBSERVED THAT THE GROSS PROFIT RATE THE FOR THE YEAR UNDER CONSIDERATION IS 1.22% BUT THE GROSS PROFIT RATE DECLARED DURING THE YEAR IS LOW IN COMPARISON TO IMMEDIATE PRECEDING YEAR FO R WHICH THE ASSESSEE WAS ASKED TO EXPLAIN THE REASON. THE ASSESSEE SUBMI TTED THAT HE MAINTAINS PROPER BOOKS OF ACCOUNT WHICH ARE DULY AUDITED U/S 44AB OF THE ACT AND THE DAY TO DAY STOCK REGISTER AND Q TALLY OF THE GO ODS IS MAINTAINED. ALL THE PURCHASES AND SALES ARE VERIFIABLE AND THE BUSI NESS OF THE ASSESSEE IS IN WHOLESALE. THE ASSESSEE SUBMITTED THAT HE IS DEA LING IN COMMODITY MARKET. THE MARKET FLUCTUATES DAILY AND THE SLIGHT FALL IN GROSS PROFIT RATE IS ON ACCOUNT OF VAGARIES OF THE MARKET CONDITION. THE AO CONSIDERED THE CONTENTIONS OF THE ASSESSEE BUT HE FELT THAT THE AS SESSEE HAS NOT BEEN ABLE TO GIVE THE QUALITATIVE DETAILS OF THE QUANTITATIVE TALLY OF THE STOCK REGISTER AS THE COMMODITIES TRADED IN BY THE ASSESSEE ARE SU GAR AND RICE. CONSIDERING ALL THESE FACTS INTO CONSIDERATION, THE AO APPLIED THE GROSS PROFIT RATE OF 1.24% AND MADE ADDITION OF RS. 97,39 1/- AS AGAINST THE GROSS PROFIT RATE OF 1.22% DECLARED BY THE ASSESSEE . HENCE, THE ADDITION MADE OF RS. 97,391/- HAS BEEN ADDED TO THE TOTAL IN COME OF THE ASSESSEE. ITA NO. 193/JP/2016 SHRI JOGINDER SINGH HUF VS. ITO, WARD- 1(2), AJMER . 4 2.2 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R BEFORE THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE AO BY OBSERV ING AS UNDER:- 4.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, STATEMENT OF FACTS, GROUNDS OF APPEAL, WRITTEN SUBM ISSION, REMAND REPORT AND REJOINDER CAREFULLY. IT IS SEEN T HAT IN THE WRITTEN SUBMISSION FILED BY THE APPELLANT, THE ASS ESSEE HAD CONTENDED THAT THE ASSESSEE HAS MAINTAINED DAY TO D AY STOCK REGISTER BOTH QUANTITYWISE AS WELL AS QUALITYWISE O F GOODS TRADED-IN. HOWEVER, IN THE REMAND REPORT, THE AO HA S CLEARLY MENTIONED THAT NO QUALITATIVE DETAILS OF THE SUGAR TRADED BY THE APPELLANT HAS BEE MAINTAINED BY THE APPELLANT. THIS FACT HAS NOT BEEN DENIED BY THE APPELLANT IN THE REJOINE D FILED ON JANUARY 19, 2016. AS THE ASSESSEE HAS NOT MAINTAIN ED THE QUANTITATIVE DETAIL OF THE SUGAR TRADED BY HIM, THE REFORE, I AM OF THE CONSIDERED VIEW THAT THE BOOK RESULT DECLARE D BY THE APPELLANT CANNOT BE FULLY VERIFIED. THE GROSS PROFI T RATE ESTIMATED BY THE AO(1.24%) IS MARGINALLY HIGHER THA N THE GROSS PROFIT DECLARED BY THE APPELLANT (1.22%). HEN CE, I AM OF THE CONSIDERED VIEW THAT THE ESTIMATION OF THE P ROFIT MADE BY THE AO IS QUITE REASONABLE AND FAIR. ACCORDINGLY , THE ADDITION OF RS. 97,391/- MADE BY THE AO ON THIS GRO UND IS HEREBY CONFIRMED. 2.3 NOW THE ASSESSEE IS BEFORE ME AND FILED THE WRI TTEN SUBMISSION PRAYING THEREIN THAT THE GROSS PROFIT RATE DEPENDS UPON THE VAGARIES AND FLUCTUATION OF MARKET. IT IS NOT POSSIBLE FOR HIM T O MAINTAIN THE SAME GROSS ITA NO. 193/JP/2016 SHRI JOGINDER SINGH HUF VS. ITO, WARD- 1(2), AJMER . 5 PROFIT RATE AND RISE & FALL DEPENDS ON THE MARKET C ONDITION. A PRUDENT BUSINESSMAN WILL ALWAYS LOOK FORWARD TO HAVING MORE REVENUE BUT AT THE SAME TIME HE HAS TO BE CONTENDED WITH THE MARKET CO NDITION. THE ASSESSEE SUBMITTED THAT WHEN HE HAS MAINTAINED HIS ACCOUNTS PROPERLY, ALL HIS PURCHASES, SALES AND EXPENSES ARE RECORDED AND VERI FIABLE, DAY TO DAY STOCK REGISTER IS BEING MAINTAINED THEN THERE IS NO REASON TO DISTURB THE TRADING ADDITION AND THUS FINALLY PRAYED TO DELETE THE ADDITION CONFIRMED BY THE LD. CIT(A). 2.4 THE LD. DR RELIED ON THE ORDER OF THE LOWER AUT HORITIES. 2.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED THAT THE ASSESSEE WAS MAINTAINING QUALITYWISE AND QUANTITYWISE STOCK OF RICE. ADMITTE DLY, THE ASSESSEE WAS NOT MAINTAINING QUALITYWISE AND QUANTITYWISE DETAIL S OF STOCK OF SUGAR AS SUGAR WAS A NATURAL PRODUCT AND IT IS SUBJECT TO EN VIRONMENTAL VAGARIES. THEREFORE, THE GRADES OF THE SUGAR KEEPS ON CHANGIN G. IT WAS NOT PRACTICALLY POSSIBLE TO MAINTAIN QUALITYWISE AND QU ANTITYWISE STOCK DETAILS OF SUGAR. HOWEVER, THE DAY TO DAY STOCK POSITION WA S MAINTAINED. MOREOVER, THE AO HAS ACCEPTED THE BOOK RESULTS IN T HE IMMEDIATELY SUCCEEDING YEAR AND HAS NOT MADE ANY TRADING ADDITI ON. HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. GO TAN LIME KHANIJ ITA NO. 193/JP/2016 SHRI JOGINDER SINGH HUF VS. ITO, WARD- 1(2), AJMER . 6 UDYOG, 256 ITR 243 HAS HELD THAT MERE REJECTION OF BOOKS OF ACCOUNT U/S 145(2) OF THE ACT WOULD NOT NECESSARILY LEAD TO ADD ITIONS IN THE TRADING ACCOUNT. KEEPING THIS FACT IN VIEW AND THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. GO TAN LIME KHANIJ UDYOG (SUPRA), I AM OF THE VIEW THAT THE AUTHORITIE S BELOW WERE NOT JUSTIFIED IN MAKING AND SUSTAINING ADDITION WITHOUT SPECIFYING ANY SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNT. HENCE SUC H ADDITION DESERVES TO BE DELETED. I DIRECT TO DELETE THE ADDITION. THUS G ROUND NO. 1 OF THE ASSESSEE IS ALLOWED. 3.1 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE HAS NOT PRESSED GROUND NO. 2. HENCE, THE SAME IS DISMISSED BEING NOT PRESSED. 4.1 THE GROUND NO. 3 OF THE ASSESSEE IS REGARDING N OT ALLOWING DEPRECIATION ON MOBILE SET. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. ADMITTED LY, NO EVIDENCE REGARDING ACQUISITION OF MOBILE SET WAS PRODUCED BE FORE THE AUTHORITIES BELOW. IN THE ABSENCE OF ANY EVIDENCE AS TO ACQUISI TION OF MOBILE SET BY THE ASSESSEE, I AM OF THE VIEW THAT DEPRECIATION HA S RIGHTLY BEEN DISALLOWED BY THE LOWER AUTHORITIES. THUS GROUND NO . 2 OF THE ASSESSEE IS DISMISSED. ITA NO. 193/JP/2016 SHRI JOGINDER SINGH HUF VS. ITO, WARD- 1(2), AJMER . 7 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 /07 /2016 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 15 /07/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI JOGINDER SINGH HUF, AJMER 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 1 (2), AJMER 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 193/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR