M/s R S Associates, Kanpur V. Income Tax Officer-2(3), Kanpur

ITA 217/LKW/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4008 (ITAT-LUCKNOW)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-08-2016
• Assessment Year: 2000-2001
• Appeal Filed On: 27-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH : LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER ITA NO.217/LKW/2016 ASSESSMENT YEAR : 2000-01 M/S. R.S. ASSOCIATES, 2, MIG, RATAN LAL NAGAR, KANPUR. PAN: AABFR 0426J VS. THE INCOME TAX OFFICER, WARD 2(3) [NOW WARD 1(2)(3)], KANPUR 208 001. APPELLANT RESPONDENT APPELLANT BY : SHRI ABHINAV MEHROTRA, ADVOCATE RESPONDENT BY : SHRI AMIT NIGAM, DR DATE OF HEARING : 15.07.2016 DATE OF PRONOUNCEMENT : 31.08.2016 O R D E R THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF CIT(APPEALS)-I, KANPUR DATED 03.02.2016 INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S-1) HAS NOT APPRECIATED THAT THE A.O. HAS ERRED IN LAW AS WELL AS ON FACTS IN NOT FOLLOWING THE DIRECTIONS OF THE HON'BL E ALLAHABAD HIGH COURT HOLDING THAT THE ASSESSMENT SHOULD BE CO MPLETED, DE- NOVO AFTER APPRISING THE FACTS OF THE CASE AND AFTE R APPLYING A SUITABLE NET PROFIT RATE. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S-1) HAS FURTHER ERRED IN LAW AS WELL AS ON FACTS IN NOT APPRECIATING THAT HON'BLE ALLAHABAD HIGH COURT HAS NEVER DIRECTED TO MAKE SPECIFIC ADDITION NAMELY ADDITION FOR CASH, MISCELL ANEOUS RECEIPT ITA NO.217/LKW/2016 PAGE 2 OF 4 AND STOCK IN ANY MANNER BUT THE HON'BLE COURT DIREC TED TO COMPLETE THE ASSESSMENT BY APPLYING A SUITABLE NET PROFIT RATE ONLY. 3. THAT THE LD. COMMISSIONER OF INCOME TAX HAS ERRE D IN JUSTIFYING ACTION OF THE A.O. WHILE APPLYING N.P. R ATE OF 10% ON THE GROSS RECEIPTS OF RS. 1,32,71,985/- WITHOUT APP RECIATING THAT G.P. RATE OF 8% HAS BEEN APPLIED IN THE ASSESSMENT YEAR 2001-02 AS PER ORDER OF THE HON'BLE ITAT. 4. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS-1 ) HAS FURTHER ERRED IN LAW AS WELL AS ON FACTS IN NOT APPRECIATING THAT ONCE BOOKS OF ACCOUNTS ARE REJECTED NO FURTHER ADDI TION CAN BE MADE AND IF THIS IS DONE U/S. 145(3) OF THE ACT, IN TEREST ON DEPOSITS AND PARTNERS, REMUNERATION AND DEPRECATION SHOULD HAVE BEEN ALLOWED. 5. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS-1 ) HAS FURTHER ERRED IN LAW AS WELL AS ON FACTS IN CO NFIRMING ADDITION FOR OTHER INCOME OF RS. 4,51,000/-, EVEN AFTER REJE CTING THE BOOKS OF ACCOUNTS, WHICH IS THE RECEIPT FOR INSTALLATION OF ELECTRIC CONNECTION IN THE FLATS THOUGH ACCOUNTED SEPARATELY . 6. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS-1 ) HAS FURTHER ERRED IN LAW AS WELL AS ON FACTS IN CON FIRMING ADDITION FOR UNDERVALUATION OF STOCK AMOUNTING TO RS. 11,04, 128/- SEPARATELY, EVEN AFTER REJECTING THE BOOKS OF ACCOU NTS, ON PURELY ESTIMATED BASIS WITHOUT APPRECIATING THE FACTS OF T HE CASE. 7. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS- 1) HAS FURTHER ERRED IN LAW AS WELL AS ON FACTS IN CON FIRMING ADDITION FOR CASH AMOUNTING TO RS. 14,98,842/-, EVEN AFTER REJECTING THE BOOKS OF ACCOUNTS, WHICH WAS AS PER TRIAL BALANCE W ITHOUT APPRECIATING THE FACTS OF THE CASE AND SUBMISSIONS MADE. 8. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS- 1) HAS FURTHER ERRED IN LAW AS WELL AS ON FACTS IN NOT ALLOWING CREDIT FOR ADDITION OF STOCK OF RS. 11,04,128/- IN THE SUBSEQUENT ASSESSMENT YEAR I.E. 2001-02 AS THE SAME HAS BECOME THE OPENING STOCK OF THE NEXT YEAR. 9. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME T AX (APPEALS-1) IS BAD IN LAW AND AGAINST THE SPIRIT OF THE ORDER OF THE HON'BLE HIGH COURT AND THEREFORE IS NOT TENABLE IN LAW. ITA NO.217/LKW/2016 PAGE 3 OF 4 2. DURING THE COURSE OF HEARING, THE LD. COUNSEL F OR THE ASSESSEE HAS INVITED MY ATTENTION TO THE FACT THAT THE ASSESSING OFFICER HAS REJECTED THE BOOKS OF ACCOUNTS AND HAS APPLIED THE NET PROFIT RA TE @ 10% OF THE GROSS RECEIPT AGAINST WHICH AN APPEAL WAS FILED BEFORE TH E CIT(APPEALS) AND THE CIT(APPEALS) HAS CONFIRMED THE ESTIMATION OF NET PR OFIT @ 10% OF THE GROSS RECEIPTS WITHOUT LOOKING TO THE FACT THAT THE NET P ROFIT RATE DECLARED BY THE ASSESSEE IN OTHER ASSESSMENT YEARS. 3. AGGRIEVED, THE ASSESSEE HAS PREFERRED APPEAL BEF ORE THE TRIBUNAL AND REITERATED ITS CONTENTIONS. IN SUPPORT OF HIS CONTENTION THAT WHILE ESTIMATING NET PROFIT RATE IN THE IMPUGNED ASSESSME NT YEAR, THE NET PROFIT RATE ASSESSED IN OTHER ASSESSMENT YEARS SHOULD BE T AKEN INTO ACCOUNT, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED MY ATTENTI ON TO THE TRIBUNALS ORDER FOR AY 2001-02 IN WHICH THE NET PROFIT RATE WAS APP LIED AT 8% OF THE SALE PROCEEDS. REJECTION OF BOOKS OF ACCOUNT WAS NOT M UCH DISPUTED BY THE ASSESSEE, THE DISPUTE WAS ONLY WITH REGARD TO NET P ROFIT RATE TO BE ESTIMATED. SINCE THE TRIBUNAL HAS ESTIMATED THE NE T PROFIT RATE IN AY 2001- 02 AT 8% OF THE SALE PROCEEDS, I SET ASIDE THE ORDE R OF THE CIT(APPEALS) AND DIRECT THE AO TO ESTIMATE THE NET PROFIT RATE @ 8% OF THE GROSS RECEIPTS. 4. BESIDES ESTIMATING THE NET PROFIT, THE AO HAS MA DE ADDITION UNDER DIFFERENT HEADS AND IN THIS REGARD THE TRIBUNAL HAS ALSO TAKEN A VIEW THAT WHERE THE BOOKS OF ACCOUNT ARE REJECTED AND NET PRO FIT RATE IS ESTIMATED, NO FURTHER DISALLOWANCE CAN BE MADE RELYING UPON THE S AME BOOKS OF ACCOUNT. ITA NO.217/LKW/2016 PAGE 4 OF 4 FOLLOWING THE VIEW TAKEN BY THE TRIBUNAL, I AM ALSO OF THE VIEW THAT ONCE THE NET PROFIT RATE IS ESTIMATED AFTER REJECTING BO OKS OF ACCOUNT, NO FURTHER ADDITION UNDER DIFFERENT HEADS IS CALLED FOR. ACCO RDINGLY, I SET ASIDE THE ORDER OF THE CIT(APPEALS) AND DELETE THE ADDITIONS MADE UNDER DIFFERENT HEADS. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF AUGUST, 2016. SD/- (SUNIL KUMAR YADAV ) JUDICIAL MEMBER LUCKNOW, DATED, THE 31 ST AUGUST, 2016. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT. BY ORDER ASSISTANT REGISTRAR.