Vimal kumar mantri, Jaipur V. ACIT, Jaipur

ITA 230/JPR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99338 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 27-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA CIT DHK

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 VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 230/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 SHRI VIMAL KUMAR MANTRI 166, RADHA GOVIND COLONY DHER KA BALAJI, SIKAR ROAD, JAIPUR CUKE VS. THE ACIT CIRCLE- 4 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ACTPM 0738-J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL, CA JKTLO DH VKSJ LS@ REVENUE BY: SHRI O.P. BHATEJA, ADDL. CIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 21/09/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : /10/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LD. CIT(A)-II, JAIPUR DATED 2-01-2014 FOR THE ASSESSMEN T YEAR 2008-09 WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING REJECTIO N OF BOOKS OF ACCOUNT ON THE BASIS OF NON-MAINTENANCE OF STOCK REGISTER, WHILE IN FACT ASSESSEE HAS MAINTAINED THE DETAILS O F OPENING STOCK, PRODUCTION, SALES AND CLOSING STOCK OF RAW M ATERIAL AS WELL AS FINISHED GOODS, WHICH WAS NOT CONSIDERED BY THE AO ITA NO. 230/JP/2014 SHRI VIMALKUMAR MANTRI VS. DCIT , CIRCLE- 4, JAIPUR . 2 AS WELL AS LD. CIT(A), HENCE INVOKING OF PROVISIONS U/S 145(3) DESERVES TO BE QUASHED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING APPLICAT ION OF GROSS PROFIT RATE OF 2.58% AS AGAINST THE GROSS PRO FIT RATE OF 1.19% DECLARED BY THE ASSESSEE IN M/S. S.R. PRESSTR ESS INDUSTRIES RESULTING INTO TRADING ADDITION OF RS. 2 ,94,528/- ARBITRARILY, THUS THE ADDITION SO SUSTAINED DESERVE S TO BE DELETED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING APPLICAT ION OF GROSS PROFIT RATE OF 6.32% S AGAINST GROSS PROFIT R ATE OF 5.80% DECLARED BY THE ASSESSEE IN M/S. MANTRI POLE UDYOG, RESULTING INTO TRADING ADDITION OF RS. 60,418/- ARB ITRARILY, THUS THE ADDITION SO SUSTAINED DESERVES TO BE DELET ED. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS GROSSLY ERRED IN SUSTAINING FOLLOWIN G DISALLOWANCES OUT OF EXPENSES CLAIMED IN THE PROFIT AND LOSS ACCOUNT. S.N. PARTICULARS AMOUNT DISALLOWANCE @ 5% 1. MISC. EXPENSES 59,324.00 2,966.00 2. TRAVELLING EXPENSES 68,008.00 3,400.00 3. WAGES 5,91,026.00 29,551.00 35,917.000 4.1 THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE TH E FACT THAT THE LD. AO HAS NOT POINTED OUT EVEN A SINGLE I NSTANCE WHEREIN PERSONAL ELEMENT IS INVOLVED AND HAS BASED HIS CONCLUSION ON MERE ASSUMPTION AND PRESUMPTIONS. THU S THE DISALLOWANCE SO SUSTAINED DESERVES TO BE DELETED. ITA NO. 230/JP/2014 SHRI VIMALKUMAR MANTRI VS. DCIT , CIRCLE- 4, JAIPUR . 3 2.1 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE PRAYED AS UNDER:- (I) REJECTION OF BOOKS OF ACCOUNT U/S 145(3) OF THE ACT . (II) ESTIMATION OF GROSS PROFIT RATE OF 2.58% AS AG AINST GROSS PROFIT RATE OF 1.19% DECLARED BY THE ASSESSEE IN RESPECT OF M/S. S.R. PRESSTREES INDUSTRIES AND GROSS PROFI T RATE OF 6.32% AS AGAINST GROSS PROFIT RATE OF 5.80% DECLARE D BY THE ASSESSEE IN RESPECT OF M/S. MANTRI POLE UDYOG. (III) CONFIRMATION OF EXPENSES OUT OF MISC. EXPENSE S, TRAVELING EXPENSES AND WAGES AT RS. 35,917/- 2.2 THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE ASSESSEE IS A PROPRIETOR OF FOLLOWING THREE FIRMS NAMELY (I) M/S. S.R. PRESSTRESS INDUSTRIES. (II) M/S. MANTRI INDUSTRIES (III) M/S. MANTRI POLE UDYOG AN ADDITION OF RS. 2,94,538/- AND RS. 60,418/- WAS MADE BY LD. AO BY APPLYING G.P. RATE OF 2.58% IN CASE OF M/S S.R. PRE SSTRESS INDUSTRIES, 6.32% IN M/S MANTRI POLE UDYOG AS AGAINST THE G.P. RATE OF 1.19% AND 5.80% DECLARED BY THE ASSESSEE IN CASE OF S.R. PRES TRESS INDUSTRIES AND MANTRI POLE UDYOG, RESPECTIVELY. ITA NO. 230/JP/2014 SHRI VIMALKUMAR MANTRI VS. DCIT , CIRCLE- 4, JAIPUR . 4 2.3 LD. COUNSEL CONTENDS THAT THE LD. AO HAS ERRON EOUSLY REJECTED BOOKS OF ACCOUNTS ON THE REASON THAT ASSESSEE HAS N OT MAINTAINED ANY STOCK AND MANUFACTURING RECORDS. ASSESSEE BOOKS OF ACCOUNTS ARE AUDITED, STATUTORY AUDIT REPORT IN FORM 3CD ALONG WITH REQUI RED ENCLOSURES OF ALL THE THREE PROPRIETARY CONCERNS WERE PRODUCED BEFORE THE LD. AO. THEY CONTAINED QUANTITATIVE DETAILS OF FINISHED GOODS IN CASE OF MANUFACTURING CONCERNS. ASSESSEE ALSO FURNISHED ALL THE RELEVANT DETAILS REGARDING OPENING STOCK, PRODUCTION, SALES AND CLOSING STOCK OF RAW MATERIAL AS WELL AS FINISHED GOODS BEFORE THE LD. AO, BESIDES DETAIL S OF CLOSING STOCK, ITS VALUATION BASED ON BILLS OF PURCHASE DURING THE COU RSE OF ASSESSMENT PROCEEDINGS. DESPITE VOLUMINOUS COMPLIANCE, A WRON G FINDING HAS BEEN GIVEN THAT PROPER STOCK RECORDS ARE NOT MAINTAINED. 2.4 IT IS CONTENDED THAT WHEN PROPER BOOKS OF ACCO UNT ALONG WITH DULY AUDITED BY FORM 3CD, REQUISITE DETAILS BEFORE LD. A O THEN THERE IS NO JUSTIFICATION FOR REJECTING THE BOOKS OF ACCOUNT AN D MAKING ESTIMATED ADDITION ON GROSS PROFIT. RELIANCE IS PLACED AS UND ER:- (I) CIT VS. GOTAN LIME KHANIJ UDYOG, 256 ITR 243 ( RAJ. (II) AJAY GOYAL VS. ITO, 99 TTJ 164 ITA NO. 230/JP/2014 SHRI VIMALKUMAR MANTRI VS. DCIT , CIRCLE- 4, JAIPUR . 5 2.5 APROPOS GROUND NO. 3, IT IS CONTENDED THAT THE DISALLOWANCE HAS BEEN MADE BY THE LD. AO BY MAKING CASUAL REMARKS AB OUT THE NON- VERIFICATION OF EXPENSE BEING FOR BUSINESS PURPOSES , HOWEVER NOT EVEN A SINGLE INSTANCE HAS BEEN CITED FOR THEM BEING FOR N ON BUSINESS PURPOSES. THE EXPENDITURES ON TRAVELLING AND UNDER THE HEAD M ISC. EXPENSES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND UNDER THE CONCEPT OF BUSINESS EXPEDIENCY LD. AO CANNOT STEP I NTO THE SHOES OF THE BUSINESSMAN TO LOOK INTO THE NECESSITY AND PURPOSE, THUS THE EXPENDITURE BEING FOR BUSINESS PURPOSES, THE DISALLOWANCE DESER VES TO BE ALLOWED. 2.6 AS REGARDS TO PAYMENT OF WAGES THROUGH SELF MAD E VOUCHERS, IT IS SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS ASSESSEE HAS FILED EVERY PRECISE DETAILS REGARDING THE WAGES PAI D TO LOCALLY AVAILABLE SKILLED LABORERS FOR WORK DONE FOR MANUFACTURING O F PCC POLES. THE COMPLETE DETAILS WITH NAMES AND PAYMENT VOUCHERS AC KNOWLEDGED BY THEM WERE ALSO FURNISHED. 2.7 LD. CIT(A) AFTER CONSIDERING THE FACTS HAS REDU CED THE DISALLOWANCE TO 5% WITHOUT SPECIFYING AS TO WHICH O F THE EXPENSES ITA NO. 230/JP/2014 SHRI VIMALKUMAR MANTRI VS. DCIT , CIRCLE- 4, JAIPUR . 6 CLAIMED IS NOT VERIFIABLE THUS IT IS HUMBLY PRAYED THAT DISALLOWANCES AS UPHELD AT 5% DESERVES TO BE DELETED. 2.8 RELIANCE IS PLACED AS UNDER:- (I) S.A. BUILDES VS. CIT , 288 ITR 1 (SC) (II) EMPIRE JUTE CO. LTD. VS. CIT, 124 ITR 1 (SC) 2.9 THE LD. DR SUPPORTED THE ORDERS OF THE LOWER AU THORITIES. 2.10 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AS FAR AS THE GROSS PROFIT ADD ITION IN RESPECT OF M/S. S.R. PRESSTRESS INDUSTRIES, MANTRI INDUSTRIES AND M/S. MANTRI POLE UDYOG ARE CONCERNED, THE ASSESSEE MAINTAINED PROPER BOOKS OF ACCOUNT DULY SUPPORTED BY THE AUDIT REPORT IN FORM 3 CD. THE MIS TAKES POINTED OUT BY THE AO FOR REJECTING THE BOOKS OF ACCOUNT ARE UNTEN ABLE INASMUCH AS ASSESSEE'S TAXABLE PROFITS CAN BE ASCERTAINED ON TH E BASIS OF DOCUMENTS AND RECORDS FURNISHED BY THE ASSESSEE. IN VIEW THER EOF, I SEE NO JUSTIFICATION IN REJECTING THE BOOKS OF ACCOUNT AND ESTIMATION OF GROSS PROFIT. CONSEQUENTLY BOOKS ARE UPHELD, ADDITION IN THIS BEHALF IS DELETED. 2.11 APROPOS 3 RD GROUND OF THE ASSESSEE ABOUT DISALLOWANCE OF MISCELLANEOUS EXPENSES, IT IS OBSERVED THAT THE EXP ENDITURE IS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. MERELY BECAUSE SOME ITA NO. 230/JP/2014 SHRI VIMALKUMAR MANTRI VS. DCIT , CIRCLE- 4, JAIPUR . 7 EXPENDITURE IS CLAIMED ON THE BASIS OF SELF MADE VO UCHERS CANNOT MAKE THE EXPENDITURE DISALLOWABLE. IN VIEW THEREOF, GRO UND NO. 3 OF THE ASSESSEE IS ALLOWED AND ADDITION OF RS. 35,917/- IS DELETED. 3.0 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON /10/201 5 VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- /10/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI VIMAL KUMAR MANTRI, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE- 4, 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. 230/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR