ITO, Jaipur V. PODDAR YARD AGENCIES, Jaipur

ITA 221/JPR/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5398 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 04-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN D
• Assessee Lawyers: MANISH AGARWAL CA DHK
• Keywords: Rejection of books of accounts
• Section: 143(3); 145; 2

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 221/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 THE ITO WARD- 1(2) JAIPUR CUKE VS. M/S. PODDAR YARD AGENCIES KATLA PUROHIT, JOHRI BAZAR JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABFP 5654 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI S.K. JAIN, DCIT-DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY :SHRI MANISH AGARWAL , CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 28/04/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 05 /05/2016 VKNS'K@ ORDER PER KUL BHARAT, JM THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-1, JAIPUR DATED 06-12-2012 PERTAINING TO AS SESSMENT YEAR 2009- 10. THE REVENUE HAS RAISED SOLITARY GROUND AS UND ER:- (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN DEL ETING THE TRADING ADDITION OF RS. 39,91,104/- BY APPLYING GROSS PROFI T OF 2.50% DUE TO DISCREPANCY IN STOCK REGISTER MAINTAINED BY ASSE SSEE WITHOUT CONSIDERING THE FACT THAT TRADING ADDITION WERE MAD E BY THE AO AFTER PROPER INVESTIGATION AND THE ASSESSEE WAS NOT ABLE TO FURNISH ANY REASON FOR THE DECREASE IN GROSS PROFIT RATE. ITA NO. 221/JP/2013 ITO,WARD- 1(2), JAIPUR VS. M/S. PODDAR YARN AGENCIE S, JAIPUR . 2 2.1 BRIEFLY STATED THE FACTS THAT THE CASE OF THE A SSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND ASSESSMENT WAS MADE U /S 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO ACT FOR SHORT) VIDE ORDER DATED 05-12-2011 BY THE AO. WHILE FRAMING THE ASSES SMENT, THE AO REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE AND E STIMATED THE GROSS PROFIT RATE OF 2.50% AND THUS MADE AN ADDITION 39,9 1,104/-. 2.2 THE ASSESSEE PREFERRED FIRST APPEAL BEFORE THE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS DELETED THE ADDITION BY OBSERVING AS UNDER:- 4.3 I HAVE CAREFULLY PERUSED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE A.R. ALONGWITH THE PAPER BOOK FI LED. THE FOUR FACTORS REQUIRED TO DETERMINE THE GROSS PROFIT RATE ARE PURCHASE AND SALE BILS AND THE VALUATION OF THE OPENING AND CLOSING STOCK. THE AO HAS NOT MENTIONED ANY DEFECT IN THE PURCHASE AND SALE BILLS OF THE APPELLANT. THE MAIN CONTENTION OF THE AO IS THAT IT WAS NOT POSSIBLE TO VERIFY THE VALUATION OF THE CLOSING STO CK ON THE BASIS OF THE DETAILS MAINTAINED BY THE APPELLANT. HOWEVER, O N EXAMINATION OF THE DETAILS GIVEN IN THE PAPER BOOK BY WAY OF TH E PARTICULARS OF THE CLOSING STOCK IT IS SEEN THAT THE ASSESSEE WAS MAINTAINING THE RECORDS METICULOUSLY BY MENTIONING THE CODE NUMBER OF THE YARN AND FIBRE, QUANTITY OF THE OPENING BALANCE, INWARD QUANTITY AND OUTWARD QUANTITY ALONGWITH THE SUPPORTING PURCHASE BILLS. GIVEN THESE DETAILS, I DO NOT CONCUR WITH THE OBSERVATION OF THE AO THAT IT WAS NOT POSSIBLE TO DETERMINE THE VALUATION OF THE CLOSING STOCK ON THE BASIS OF THE RECORDS MAINTAINED BY THE ASSESSEE . THE SECOND OBSERVATION OF THE AO IS THAT THE APPELL ANT WAS NOT ABLE TO FURNISH ANY REASON FOR THE DECREASE IN THE GROSS PROFIT RATE. THE A.R. HAS SUBMITTED THAT THE AO HAS FAILED TO APPRECIATE THAT IN A.Y. 2007-08 THE ASSESSEE WAS NOT DEALING I N FIBRE WHICH HE STARTED IN A.Y. 2008-09. THE GROSS PROFIT RATE ON THIS PRODUCT WAS LOW AS COMPARED TO THE REGULAR PRODUCTS TRADED BY T HE APPELLANT. ITA NO. 221/JP/2013 ITO,WARD- 1(2), JAIPUR VS. M/S. PODDAR YARN AGENCIE S, JAIPUR . 3 THE GROSS PROFIT MARGIN ON THIS PRODUCT WAS 0.44% W HEREAS THE GROSS PROFIT RATE ON YARN WAS 1.67%. THUS TRADE IN FIBRE HAD PULLED DOWN THE OVERALL GROSS PROFIT RATE. IT WAS ALSO EXP LAINED THAT OVERALL TURNOVER HAD INCREASED TO RS. 30,07,67,530 /- DURING THIS A.Y. AS COMPARED TO RS. 24,53,85,409/- IN THE IMM EDIATELY PRECEDING YEAR. I CONCUR WITH THESE SUBMISSIONS OF THE A.R. BECAUSE IT IS A GENERALLY ACCEPTED FACTS THAT THE G ROSS PROFIT RATE IS COMPROMISED WITH THE INCREASE IN TURNOVER. MOREOVER , THE ASSESSEE WAS ABLE TO BIFURCATE THE GROSS PROFIT RATE IN THE TRADE OF YARN AND FIBRE AND TO ESTABLISH THE DECREASE IN OVERALL GROS S PROFIT RATE WAS DUE TO THE TRADE IN FIBRE. IN VIEW OF THE ABOVE FAC TS, IT IS HELD THAT THERE IS NO JUSTIFICATION FOR THE REJECTION OF BOOK S OF ACCOUNT OF THE APPELLANT BY INVOKING THE PROVISIONS OF SECTION 145 (3) AND THE DECISION OF THE AO TO DO SO IS NOT SUSTAINED. MOREO VER, GIVEN THE RECORDS MAINTAINED AND THE EXPLANATION GIVEN REGARD ING THE DECLINE IN GROSS PROFIT RATE THE TRADING ADDITION O F RS. 39,91,104/-IS DELETED. 2.3 BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 2.4 THE LD. DR SUPPORTED THE ORDER OF THE AO. 2.5 ON THE CONTRARY, THE LD. AR OF THE ASSESSEE SUP PORTED THE ORDER OF THE LD. CIT(A). THE LD. AR OF THE ASSESSEE SUBMITTE D THAT THE REVENUE HAS NOT RAISED ANY GROUND WITH REGARD TO REJECTION OF B OOKS OF ACCOUNT. THE REVENUE RAISED SOLITARY GROUND IN ITS APPEAL AGA INST DELETION OF ADDITION WHICH IS NOT SUSTAINABLE IN THE EYES OF LAW. THE LD . AR OF THE ASSESSEE RELIED ON FOLLOWING CASE LAWS:- (I) CIT VS. . GOTAN LIME KHANIJ UDYOG, 256 ITR 243 (RAJ.) ITA NO. 221/JP/2013 ITO,WARD- 1(2), JAIPUR VS. M/S. PODDAR YARN AGENCIE S, JAIPUR . 4 (II) PODDAR YARN AGENCIES VS. ITO (ITA NO. 9/JP/201 3 FOR THE ASSESSMENT YEAR 2008-09 VIDE ORDER DATED 13 -03- 2014) (III) ST. SERESAS OIL MILL VS. STATE OF KERALA (19 70), 365 ITR (KER) (IV) CIT VS. VIKRAM PLASTICS (1998) 147 TAXMAN 699 (GUJ) (V) MD. UMER VS. CIT, 101 ITR 526 (PAT.) (VI) M/S. SHREE HARI INDUSTRIES VS. ADDL. CIT , 47 TW 241 (JAIPUR ) (VII) BRIJ BHUSHAN LAL PARDUMAN KUMAR VS. CIT, 115 ITR 524 (SC) (VIII) JAI PULSE MILLS VS. ITO, (2010) 5 TAXMANN.CO M 42 (AHD. ITAT ) 2.6 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE AO PROCEEDED TO REJECT THE BOOKS OF ACCOUNT BY ESTIMATING THE GROSS PROFIT RATE AT 2.50 % ON THE TURNOVER OF THE ASSESSEE. THE LD. CIT(A) OBSERVED THAT THE REJECTIO N OF BOOKS OF ACCOUNT IS NOT JUSTIFIED AND THE AO HAD NOT POINTED OUT ANY SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. HE THUS DELETED T HE ADDITION MADE BY THE AO. WE ALSO FIND THAT SIMILAR ISSUE IN ASSESSE E'S OWN CASE FOR THE ASSESSMENT YEAR 2008-09 (SUPRA) HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE COORDINATE BENCH OF THIS TRIBUNAL I N ITA NO. 09/JP/2013. ITA NO. 221/JP/2013 ITO,WARD- 1(2), JAIPUR VS. M/S. PODDAR YARN AGENCIE S, JAIPUR . 5 MOREOVER ADMITTEDLY, THE REVENUE HAS NOT RAISED ANY GROUND AGAINST THE FINDING OF LD. CIT(A) QUA THE REJECTION OF BOOKS OF ACCOUNTS. IN THE ABSENCE OF SUCH GROUND, IT CAN BE CONCLUDED THAT TH E REVENUE IS NOT AGGRIEVED BY THE FINDING OF THE LD. CIT(A) IN THIS REGARD. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WH ICH IS SUSTAINED. THUS THE APPEAL OF THE REVENUE IS DISMISSED. 3.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 /05/ 2016. SD/- SD/- VH-VKJ-EHUK DQY HKKJR (T.R. MEENA) (KUL BHARAT) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 05 /5/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ITO, WARD- 1(2), JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S. PODDAR YARD AGENCIES, JAIPUR 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.221/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR