The ITO, Ward-10(2), Ahmedabad V. M/s. Circle-P, Ahmedabad

ITA 2232/AHD/2009

• Counselvise Citation: 223220514 RSA 2009
• Duration Of Justice: 2 year(s) 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-01-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 17-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SOURYAWANSHI
• Keywords: Rejection of books of accounts; Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.2232/AHD/2009 ASSESSMENT YEAR: 2003-04 INCOME TAX OFFICER, VS. M/S. CIRCLE-P, WARD - 10(2), AHMEDABAD. NR. HOTEL ROCK REGENCY, OPP. SAMARTHESHWAR MAHADEV, LAW GARDEN, AHMEDABAD. PAN: AAFGM 1286 N). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.S. SOURYAWANSHI, SR. D.R . RESPONDENT BY : SHRI DHIREN SHAH, A.R. DATE OF HEARING : 12.01.2012 DATE OF PRONOUNCEMENT : 16.03.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 11.05.2009 PASSED BY THE CIT(A)-XVI, AHMEDABAD FOR THE ASSESSM ENT YEAR 2003-04 ON THE FOLLOWING GROUNDS :- (1) THE LD. CIT(A) HAS ERRED IN LAW AND FACTS DELE TING THE GP ADDITION OF RS.35,77,215/- WITHOUT ANALYZING OR APP RECIATING THE FACTS IN PROPER PERSPECTIVE. ITA NO.2232/AHD/2009 A.Y. 2003-04 2 (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. (3) IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD . CIT(A) MAY BE SET ASIDE AND THAT OF THE ORDER OF THE ASSESSING OF FICER BE RESTORED TO THE ABOVE EXTENT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FIRM IS ENGAGED IN THE BUSINESS OF TRADING IN ALL TYPES OF READYMADE GARME NTS, MENS-WEAR, WOMENS- WEAR, CHILDREN-WARE INCLUDING SPORTS-WEAR ETC. A S URVEY UNDER SECTION 133(A) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) WA S CARRIED OUT ON 21.01.2003. THE ASSESSEE FILED THE RETURN OF INCOME SHOWING TOT AL INCOME NIL. THE ASSESSEE ATTACHED NOTE TO THE RETURN OF INCOME FORMING PART OF STATEMENT OF TOTAL INCOME STATING THAT THE SURVEY PARTY HAS FAILED TO COMPLET E THE INVENTORY OF PHYSICAL VERIFICATION AS WELL AS TO HAND OVER THE COPY OF IN VENTORY TAKEN. IT IS FURTHER STATED THAT NO COMPARISON WAS MADE OF THE PHYSICAL STOCK W ITH THE BOOK STOCK. THE ASSESSING OFFICER, AFTER POINTING OUT IN HIS ORDER VARIOUS DISCREPANCIES IN THE BOOKS OF ACCOUNTS, HAS REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE ASSESSING OFFICER MADE THE ADDITION OF RS.35,77,215/- AFTER W ORKING OUT THE ACTUAL SALE AT RS.4,48,86,200/-. THE ASSESSING OFFICER REDUCED TH E SALE DECLARED IN THE BOOKS OF ACCOUNTS AT RS.3,13,10,428/-. THE BALANCE UNACCOUN TED SALE CALCULATED BY THE ASSESSING OFFICER IS RS.1,35,75,772/-. THE ASSESSI NG OFFICER FOR THE PURPOSE OF ESTIMATION OF INCOME APPLIED G.P. RATE OF 26.35%. THE ASSESSING OFFICER APPLIED ITA NO.2232/AHD/2009 A.Y. 2003-04 3 THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. H.M. ESUFALI FOR ESTIMATING THE SALE. 3. THE CIT(A) DELETED THE SAID ADDITION AS UNDER :- 3.2 I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT AND GONE THROUGH THE ASSESSMENT ORDER. I HAVE ALSO VERIFIED ANN AF-16 AND ALSO THE BOOKS OF ACCOUNTS OF THE APPELLANT. THE A SSESSING OFFICER HAS DISCUSSED THIS ISSUE FROM PARA 6 TO 9.9 OF THE ASSE SSMENT ORDER. THE ENTRIES OF SALES AS PER ANN. AF-16 ARE ALSO REPRODU CED BY HIM IN PAGE NO.32, 33 & 34 AT PARA 9.6 OF THE ASSESSMENT ORDER. AS PER THIS THE TOTAL SALES FROM THE PERIOD 01.01.2002 TO 20.01.200 3 IS SHOWN OF RS.96,09,475/-. INCIDENTALLY AS PER THE BOOKS OF A CCOUNTS OF THE APPELLANT TOTAL SALES FROM 01.01.2002 TO 20.01.2003 TALLY WITH THIS ANNEXURE. THE APPELLANT HAD SHOWN TOTAL SALES DURI NG THE YEAR AT RS.3,13,10,428/-. THE ASSESSING OFFICER AFTER TAKI NG THE AVERAGE SALES AS PER ANN AF-16 EXTRAPOLATED THE SALES FOR THE WHO LE YEAR. I HAVE VERIFIED MYSELF SOME OF THE ENTRIES ON TEST CHECK B ASIS AND FOUND THAT ALL THE SALES AS PER THIS ANN. AF-16 ARE DULY ACCOU NTED FOR IN THE SALES REGISTER. THEREFORE THERE IS NO QUESTION OF EXTRAP OLATING THE SALES ON THE BASIS OF THE IMPOUNDED ANN. AF-16. FURTHER THE APPELLANT HAS GIVEN COGENT REASONS FOR VARIATION IN SALES IN DIFF ERENT MONTHS OF A YEAR. IT CAN BE SEEN FROM THE ANN-AF-16 AND THE SA LES REGISTER OF THE APPELLANT THAT DURING THE MONTH OF NOVEMBER WHEN TH ERE IS DIWALI FESTIVAL, THERE IS MAXIMUM SALES APPEARING AS ON 01 .11.2002 OF RS.3,17,512/- AND THE MINIMUM SALES IS SHOWN AT RS. 54,090/- IMMEDIATELY AFTER DIWALI ON 09.11.2002. THIS SHOWS THAT THE SALES ARE NOT UNIFORM DURING THE YEAR. THE SHOP WAS CLOSED D URING 05.11.2002 TO 08.11.2002. THEREFORE WITHOUT FINDING ANY DEFEC T IN THE SALES REGISTER, THE ASSESSING OFFICER CANNOT RESORT TO EX TRAPOLATION OF THE SALES DURING THE YEAR. THE ASSESSING OFFICER IS TH EREFORE DIRECTED TO DELETE THE ADDITION OF RS.35,77,215/- ON THIS ACCOU NT. 4. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. WE NOTICED THAT BEFORE DELETING THE ADDITION, THE C IT(A) CONSIDERED THE BASIS OF ITA NO.2232/AHD/2009 A.Y. 2003-04 4 ADDITION MADE BY THE ASSESSING OFFICER AND ALSO CON SIDERED THE ASSESSEES SUBMISSIONS. THE ENTRIES OF SALES FOR THE PERIOD 0 1.01.2002 TO 20.01.2003 AMOUNTING TO RS.96,09,475/- AND EXTRAPOLATION OF TH E SALES ESTIMATED BY THE ASSESSING OFFICER HAS BEEN VERIFIED BY THE CIT(A) H IMSELF AND FOUND THAT ALL THE SALES AS PER THIS ANNEXURE AF-16 ARE DULY ACCOUNTED FOR IN SALE REGISTER. THE CIT (A) ALSO ACCEPTED THE ASSESSEES CONTENTION THAT TH ERE CANNOT BE A UNIFORM SALE THROUGHOUT 365 DAYS OF AN YEAR AS IN THE MONTHS OF APRIL, MAY & JUNE THERE ARE NO MANY SALES DUE TO EXAMINATION OF THE STUDENTS ETC. WHEN THE ASSESSEE HAS RECONCILED THE BASIS ON WHICH THE ASSESSING OFFICER ESTIMATED EXTRAPOLATED SALES FOR THE WHOLE YEAR, THE ADDITION MADE ON THAT BASIS IS NOT SUSTAINABLE. THE REVENUE HAS FAILED TO POINT OUT ANY CONTRARY MATERIAL TO TH E FINDING OF THE CIT(A), NEITHER THE SAME IS AVAILABLE ON RECORD. WE, THEREFORE, IN CLINE TO UPHOLD THE ORDER OF CIT(A). 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D SD/- SD/- (G.C. GUPTA) (A.L. GEHLOT) VICE PRESIDENT ACCOUNTANT MEMBER DATE: 16 TH MARCH,2012 PBN/* ITA NO.2232/AHD/2009 A.Y. 2003-04 5 COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT (APPEALS)- 4. THE CIT CONCERNED 5. THE D.R., ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT. REGISTRAR ITAT, AHMEDABAD 1. DATE OF DICTATION 24/02/2012. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER 29/02/2012.OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT.. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSTT. RE GISTRAR FOR SIGNATURE ON THE ORDER 9. DATE OF DESPATCH OF THE ORDER..