M/s. Suraj Prakash Jain Pvt. Ltd., BIKANER V. ITO, BIKANER

ITA 228/JODH/2015

• Counselvise Citation: 22823314 RSA 2015
• Duration Of Justice: 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 08-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K SHARDA
• Section: 145; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : JODHPRU BENCH : JODHPUR BEFORE SHRI R.C. SHARMA, HONBLE ACCOUNTANT MEMBER (S.M.C.) ITA NO. 228 /JODH/2015 (ASSTT. YEAR 20 11 - 12 ) M/S. SURAJ PRAKASH JAIN PVT. LTD. VS ITO, WARD - 1(4), SHRI VIRENDRA JAIN (ADVOCATE) BIKANER. C/O. JAI KUMAR PUGALIA, SETHIA MAROTHI GUWAD, BIKANER. PAN NO. AAECS1439A (APPELLANT ) (RESPONDENT ) A SSESSEE BY : NONE (W/S). DEPARTMENT BY : SHRI R.K. SHARDA, JCIT DATE OF HEARING : 20/05/2015 DATE OF PRONOUNCEMENT : 21/05/2015 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A ) BIKANER DATED 29 .0 4 .201 5 IN THE MATTER OF ORDER U/S 143(3) OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT, FOR SHORT]. 2 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS CASE RELATES TO THE RESTRICTION OF LUMPSUM TRADING ADDITION AT RS. 75,000/ - . 3. NONE APPEARED ON BEHALF OF THE ASSESSEE IN SPITE OF SERVICE OF NOTICE. HOWEVER, WRITTEN SUBMISSIONS HAVE BEEN FILED. I, THEREFORE, DISPOSE OF THE APPEAL AFTER HEARING THE LD. D.R. AND CONSIDERING THE MATERIAL PLACED ON RECORD . 4. I HAVE HEARD THE LD. D.R. AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE AO HAS MADE AN ADDITION OF RS. 1 LAKH BY REJECTING THE BOOKS OF ACCOUNT U/S 145 OF THE ACT ON THE PLEA THAT THE ASSESSEE HAD SHOWN LOWER G.P. RATE AS COMPARED TO THE PRECEDING YEA R. THE AO OBSERVED THAT THE G.P. RATE SHOWN DURING THE YEAR IS ALSO LOWER AT 7.94% AS COMPARED TO THE G.P. RATE OF THE EARLIER YEARS. AN OBSERVATION WAS ALSO MADE TO THE EFFECT THAT EXPENDITURE INCURRED ON CARTAGE AS WELL AS SALES PROMOTION, STAFF WELFAR E, TRAVELLING, TELEPHONE, VEHICLE AND TRUCK EXPENSES ARE NOT SUBJECT TO VERIFICATION AS IN MOST OF THE CASES SELF MADE VOUCHERS HAVE BEEN KEPT. CONSIDERING ALL THESE FACTS, THE AO MADE LUMPSUM ADDITION OF RS. 1 LAKH . IN APPEAL, THE ADDITION WAS RESTRIC TED TO RS. 75,000/ - BY THE LD. CIT(A) BY OBSERVING 3 THAT ADHOC ADDITION MADE BY THE AO APPEARS TO BE ON HIGHER SIDE BUT THE DEFECTS NOTICED BY THE AO IN THE BOOKS OF ACCOUNTS WERE SERIOUS ENOUGH. THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 5. ON CONSIDERING THE ENTIRE MATERIAL PLACED ON RECORD, I FIND THAT THE ASSESSEE HAS FILED RETURN OF INCOME AT RS. 2.04 LAKHS ALONGWITH AUDITED ACCOUNTS AS REQUIRED U/S 44AB. DURING THE COURSE OF SCRUTINY ASSESSMENT ALL THE RELEVANT RECORDS REQUIRED BY THE AO WERE PRODUCED ALONGWITH BOOKS OF ACCOUNTS. THE BOOKS OF ACCOUNTS WERE REJECTED MERELY ON THE PLEA THAT THE G.P. RATE SHOWN WAS LOWER. HOWEVER, NO SPECIFIC DEFECT WAS PIN - POINTED OUT IN THE BOOKS OF ACCOUNTS. AS PER OUR CONSIDERED VIEW MERELY ON THE P LEA THAT THE G.P. RATE IS LOWER THAN THE EARLIER YEARS, THE BOOKS OF ACCOUNT CANNOT BE REJECTED. BEFORE REJECTING THE BOOKS OF ACCOUNT, THE AO IS REQUIRED TO BRING ON RECORD THE SPECIFIC DEFECTS FOUND BY HIM IN THE BOOKS OF ACCOUNT WHICH SHOW THAT THE BO OK RESULTS SHOWN BY THE ASSESSEE CANNOT BE RELIED UPON. SO FAR AS THE OBSERVATION MADE BY THE AO REGARDING SALES PROMOTION EXPENSES, STAFF WELFARE, TRAVELLING, TELEPHONE, VEHICLE AND TRUCK EXPENSES ARE CONCERNED, THE SAME ARE IN THE NATURE OF INDIRECT EXPE NSES AND DOES NOT AFFECT THE G.P. RATE SHOWN BY THE ASSESSEE. EVEN THOUGH SUCH EXPENSES ARE HAVING BEARING ON THE 4 N.P. RATE SHOWN BY THE ASSESSEE. HOWEVER THERE IS NO DISCUSSION BY THE AO WITH REGARD TO THE N.P. RATE SHOWN BY THE ASSESSEE DURING THE YEAR AS WELL AS IN THE PRECEDING YEAR. KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, I RESTRICT THE ADHOC ADDITION MADE BY THE AO AT RS. 25,000/ - AS AGAINST RS. 75000/ - SUSTAINED BY THE LD. CIT(A). 4 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOU NCED IN THE OPEN COURT ON 21 ST MAY, 2015. SD/ - [R.C. SHARMA] ACCOUNTANT MEMBER DATED : 21 /05/2015 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) 4 ITO CONCERNED 5 DR, ITAT, JODHPUR. ASSISTANT REGISTRAR