RAJEEV KUMAR JAIN, SAHARNAPUR V. PR. CIT, Muzaffarnagar

ITA 2323/DEL/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1522 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 04-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F , NEW DELHI BEFORE SH. AMIT SHUKLA , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO .2323 /DE L/ 2018 ASSESSMENT YEAR: 2013 - 14 SH. RAJEEV KUMAR JAIN, M/S. PARASMANI MARKETING COMPANY, MORE GANJ, SAHARANPUR, UP VS. PR. CIT, MUZAFFARNAGAR, SAHARNPUR PAN : ABQPJ2955G (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 13/03/2018 PASSED BY THE LD. P RINCIPAL COMMISSIONER OF I NCOME TAX, MEERUT [ IN SHORT THE LD. PCIT ] FOR ASSESSMENT YEAR 2013 - 14 UNDER SECTION 263 OF THE INCOME - TAX A CT, 1961 (IN SHORT THE A CT ) HOLDING THE ORDER PASSED BY THE ASSESSING OFFIC ER UNDER SECTION 143(3) OF THE A CT AS AN ERRONEOUS INSOFAR AS PREJ UDICIAL TO THE INTEREST OF THE R EVENUE. THE GRO UNDS OF APPEAL RAISED BY THE ASSESSEE ARE REPRODUCED AS UNDER: APPELLANT BY SH. ANIL KUMAR JAIN, ADV. RESPONDENT BY SH. SUREN D ER PAL, SR.DR DATE OF HEARING 22.10.2018 DATE OF PRONOUNCEMENT 28.11.2018 2 ITA NO. 2323/DEL/2018 1. THE LD. PR. CIT HAS ERRED IN CANCELLING THE ASSESSMENT ORDER U/S 143(3) DATED 30.10.2015 PASSED BY ASSESSING OFFICER AND THEREBY ORDERING FRESH ASSESSMENT AND HAS ERRED IN HOLDING THAT THE ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REV ENUE IGNORING THE FACT THAT ALL THE ISSUES HAS DULY BEEN REPLIED AND CONSIDERED DURING THE ASSESSMENT STATE. 2. THE ORDER OF THE LD. CIT IS AGAINST LAW AND FACTS OF THE CASE. 3. THE APPELLANT CRAVES THE RIGHT TO ADD, AMEND OR WITHDRAW ANY GROUNDS OF APPE AL AT THE TIME OF HEARING. 2. B RIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL DERIVES INCOME FROM TRADING OF EDIBLE OILS AND F OR THE YEAR UNDER CONSIDERATION , FILED RETURN OF INCOME ON 21/09/201 3 DECLARING TOTAL INCOME OF RS. 11,87, 210/ - . THE ASSESSMENT UNDER SECTION 143(3) OF THE A CT WAS COMPLETED ON 30/10/2015 AFTER MAKING TRADING ADDITION OF RS.1,41,657/ - AND DIS ALLOWANCE OF RS.1,50,000/ - OUT OF VARIOUS EXPENSES LIKE CONVEYANCE, TRAVELLING, REPAIR AND MAINTENANCE, TELEPHO NE ETC. S UBSEQUENTLY, THE LD. P CIT CALLED FOR THE RECORD AND AFTER EXAMINATION OF THE RECORDS OF OBSERVED THAT THE ASSESSMENT WAS COMPLETED WITHOUT EXAMINING THE CA SE PROPERLY. ACCORDING TO THE P CIT THE ASSESSING OFFICER SHOULD HAVE COMPLETED THE ASSESSMENT AFTER E XAMINING THE QUANTITATIVE DETAILS OF THE ITEMS TRADED BY THE ASSESSEE AND HE SHOULD HAVE APPLIED THE GROSS PROFIT RATE AFTER REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE. ACCORDINGLY, INVOKING THE SECTION 263 OF THE A CT , HE HELD THE ASSESSMENT ORDER PAS SED AS ERRONEOUS INSOFAR AS THE J UDICIAL TO THE INTEREST OF THE R EVENUE. AGGRIEVED, THE ASSESSEES IS IN APPEAL BEFORE THE TRIBUNAL, RAISING THE GROUNDS A S REPRODUCED ABOVE. 3. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE FILED A PAP ER BOOK CONTAINING PAGES 1 TO 22 , WHICH INCLUDED DETAILS OF PURCHASES, 3 ITA NO. 2323/DEL/2018 SALES AND VAT ANNUAL ASSESSMENT ORDER. HE SUBMITTED THAT THE QUANTITATIVE DETAILS OF ITEMS TRADED WAS ASKED BY THE ASSESSING OFFICER IN THE NOTICE D ATED 27/01/2015 AT POINT NO. 16 AND SAME WAS FILED BEFORE THE ASSESSING OFFICER ALONGWITH VAT ORDER. ACCORDING TO LD. COUNSEL, REPLY IN THIS RESPECT WAS SUBMITTED BEFORE THE LD. PCIT, HOWEVER HE IGNORED THE SUBM ISSION OF THE ASSESSEE. FURTHER, ON THE ISSUE OF GROSS PROFIT RATE, THE LD. COUNSEL SUBMITTED THAT THE GRO SS PROFIT RATE OF 1.03 % DECLARED BY THE ASSESSEE WAS FOUND ON LOWER SIDE BY THE ASSESSING OFFICER, AND HE APPLIED THE GROSS PROFIT RATE OF 1.062%, WHICH WAS APPLIED BY THE ASSESSING OFFICER IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2012 - 13. IN VIEW OF THE SUBMISSION , THE LD. COUNSEL SUBMITTED THAT THERE MIGHT BE ERROR IN NOT REJECTING BOOKS OF ACCOUNTS, HO WEVER THERE IS NO R EVENUE LOSS AND THUS ORDER IS NOT PREJUDICIAL TO THE INTEREST OF THE R EVENUE. HE SUBMITTED THAT TWIN CONDITIONS OF ERRONEOUS INSOFAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE ARE NOT FULFILLED SIMULTANEOUSLY AND THUS THE LD. P CIT IS NOT CORRECT IN SETTING ASIDE THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER. 4. ON THE OTHER HAND, LD. DR RELIED ON THE ORDER OF THE P CIT AND SUBMITTED THAT THE ACTION OF THE ASSESSING OFFICER REJECTING THE GROSS PROFIT RATE OF THE ASSESSEE AND APPL YING THE GROSS PROFIT RATE ADOPTED IN IMMEDIATELY PRECEDING YEAR, WITHOUT REJECTING BOOKS OF ACCOUNTS IS CLEARLY ERRONEOUS. ACCORDING TO HIM, THE LD. PCIT IS JUSTIFIED IN SETTING ASIDE THE ASSESSMENT ORDER. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE RELEVANT MATERIAL ON RECORD. FOR INVOKING JURISDICTION UNDER SE CTION 263 OF THE A CT, THE LD. P CIT WAS REQUIRED TO INSURE EXISTENCE OF THE TWIN CONDITIONS OF THE ORDER TO BE ERRONEOUS AS 4 ITA NO. 2323/DEL/2018 WELL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN THE INST ANT CASE, THE ASSESS EE DECLARED GROSS PROFIT OF RS.39,64, 769/ - ON THE SALES OF RS. 38,66,69, 918/ - WHICH RESULTED INTO GROSS PROFIT RATE OF 1.03%. THE ASSESSING OFFICER FOUND THIS GROSS PROFIT RATE BEING LOWER THAN THE GROSS PROFIT RATE OF 1.10% DECLARED IN ASSESSMENT YEAR 2011 - 12. THE ASSESSING OFFICER NOTICE D THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR ALSO THE GROSS PROFIT RATE DECLARED BY THE ASSESSEE WAS FOUND TO BE 1.01% AND THE ASSESSING OFFICER APPLIED GROSS PROFIT RATE OF 1.062%. ACCORDINGLY, F OR THE YEAR UNDER CONSIDERATION, ALSO THE ASSESSING OFFICER APPLIED THE GROSS PROFIT RATE OF 1.062% ON THE SALES DECLARED DURING THE YEAR INTO CONSIDERATI ON AND MADE THE ADDITION OF RS.1, 4 1, 657/ - . THOUGH THE ASSESSING OFFICER MISSED TO REJECT THE BOOKS OF ACCOUNTS , BUT EVEN HAD ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS AND THEREAFTER APPLIED THE GROSS PROFIT RATE OF 1.062%, THE NET ADDITION WOULD HAVE REMAINED THE SAME AND THUS AS FAR AS THE R EVENUE IS CONCERNED, NO PREJUDICE HAS BEEN CAUSED . THE ORD ER CANNOT BE THE SAID A S PREJ UDICIAL TO THE INTEREST OF THE R EVENUE. 6. FURTHER, THE CONTENTION OF THE P CIT THAT THE ASSESSING OFFICER HAS NOT EXAMINED THE QUANTITATIVE DETAILS OF THE ITEMS TRADED, IS CONCERNED, WE FIND THAT THIS FINDING OF THE LD. P CIT I S NOT CORRECT. IN PAR A 4 OF THE IMPUGNED ORDER, THE P CIT HAS REPRODUCED THE SUBMISSION OF THE ASSESSEE. ACCORDING TO THE SUBMISSION, IT IS CLEAR THAT THE ASSESSING OFFICER CALLED FOR THE QUANTITATI VE DETAILS OF THE ITEMS TRADED V IDE POINT NO. 16 OF HIS NOTICE DATED 27/01/2015 AND THE ASSESSEE ALSO SUBMITTED SAID DETAILS ALONG WITH ORDER OF VALUE ADDED TAX (VAT) AUTHORITIES. THE 5 ITA NO. 2323/DEL/2018 ASSESSEE HAS FILED COPY OF DETAILS OF PURCHASE AND SALES BEFORE US ALSO. 7. IN VIEW OF THE AFORESAID DI SCUSSION, WE ARE OF THE OPINION THAT THE TWIN CONDITIONS OF ORDER BEING ERRONEOUS AS WELL AS PREJ UDICIAL TO THE INTEREST OF THE R EVENUE HAVE NOT BEEN SATISFIED SIMULTANEOUSLY AND , THUS , THE ACTION OF THE LD. PCIT IN SETTING ASIDE THE ORDER OF THE ASSESSING OFFICER IS NOT JUSTIFIED AND ACCORDINGLY WE CANCEL THE SAME. THE GROUND OF THE APPEAL OF THE ASSESSEES ARE ACCORDINGLY ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEES ALLOWED. ORDER IS PRONOUN CED IN THE OPEN COURT ON 2 8 T H NOVEMBER , 201 8 . S D / - S D / - AMIT SHUKLA O.P. KANT JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 8 T H NOVEMBER , 201 8 . RK / - (D.T.D . ) COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI