The Dy. CIT, Circle-6, Surat, Surat V. Shri Dharmendra P. Jain, Surat

ITA 2527/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94896 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 10-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K PANDAY
• Assessee Lawyers: M K PATEL
• Keywords: Rejection of books of accounts

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ./ ITA. NO. 2527/AHD/2011 ( / ASSESSMENT YEAR: 2008-09) DY. COMMISSIONER OF INCOME-TAX CIRCLE-6, SURAT .. APPELLANT VERSUS SHRI DHARMENDRA P. JAIN, G-6, SHAKTI CHAMBERS, RAGHUNATHPURA MAIN ROAD, SURAT .. RESPONDENT PAN : ACXPJ 6191 Q REVENUE BY : SHRI A.K. PANDAY, SR. DR ASSESSEE(S) BY : SHRI M.K. PATEL , AR / DATE OF HEARING : 07/12/2015 /DATE OF PRONOUNCEMENT: 11/12/2015 / O R D E R PER SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER:- THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, SUR AT DATED 29.06.2011 FOR ASSESSMENT YEAR 2008-09, ON THE FOLL OWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A)-IV, SURAT HAS ERRED IN DELETING THE ADDITION OF RS.25,41,939/- MADE BY THE ASSESSING OF FICER ON ACCOUNT OF ESTIMATION OF GROSS PROFIT. ITA NO.2527/AHD/2011 DCIT VS. SHRI DHARMENDRA P JAIN AY :2008-09 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A)-IV, SURAT OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICE.R 3. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A )-IV, SURAT MAY BE SET ASIDE AND THAT OF THE ASSESSING OF FICER RESTORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER MADE ADDITION OF RS.25,41,939/- BY ESTIMATING GROSS PROFIT ON THE BASIS OF AVERAGE RATE OF LAST THREE YEARS AND T HIS WAS DONE BY REJECTING THE BOOK RESULT OF THE ASSESSEE BY INVOKI NG PROVISIONS OF SECTION 145(3) OF THE ACT ON THE GROUND THAT QUALIT Y-WISE DETAILS OF DIAMONDS WERE NOT MAINTAINED BY THE ASSESSEE. MA TTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, WHERE IN VARIOUS CONTENTIONS WERE RAISED BY THE ASSESSEE AND HAVING CONSIDERED THE SUBMISSIONS ON BEHALF OF THE ASSESSEE, THE CIT( A) ALLOWED THE APPEAL OF THE ASSESSEE ON BOTH COUNTS, I.E., ESTIMA TION OF GP AND REJECTION OF BOOKS OF ACCOUNTS, AND THE SAME HAS BE EN OPPOSED BEFORE US ON BEHALF OF REVENUE, INTER ALIA , SUBMITTED THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.25, 41,939/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ESTIMATION O F GROSS PROFIT. ACCORDINGLY, THE DEPARTMENTAL REPRESENTATIVE PLEADE D THAT THE ITA NO.2527/AHD/2011 DCIT VS. SHRI DHARMENDRA P JAIN AY :2008-09 3 ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF ASSESS ING OFFICER BE RESTORED. ON THE OTHER HAND, THE AUTHORIZED REPRES ENTATIVE FOR THE ASSESSEE RELIED UPON THE ORDER OF THE CIT(A) AN D SUBMITTED THAT, UNDER THE SIMILAR SET OF FACTS AND CIRCUMSTAN CES, THE CO- ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. DHAMI BROTHERS VS. ACIT, IN ITA NO.2309/AHD/2009, HELD TH AT THE REJECTION OF BOOKS OF ACCOUNTS WAS NOT PROPER. HE A CCORDINGLY PLEADED THAT THE ORDER OF CIT(A) MAY BE UPHELD. 3. AFTER GOING THROUGH THE RIVAL CONTENTIONS AND MA TERIAL ON RECORD, WE FIND THAT THE BOOKS WERE REJECTED BY THE ASSESSING OFFICER ON THE GROUND THAT QUALITY-WISE DETAILS WER E NOT MAINTAINED. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER OBSERVED THAT THE GROSS PROFITS MARGIN OF THE ASSES SEE DURING THE YEAR UNDER CONSIDERATION HAD SUBSTANTIALLY REDUCED. HOWEVER, SUBSTANTIAL REDUCTION IN THE GROSS PROFIT CANNOT BE A SOUND BASIS FOR REJECTION OF BOOKS OF ACCOUNTS OF THE ASSESSEE. REJECTION OF BOOKS OF ACCOUNTS CAN BE MADE ONLY IF THEY ARE NOT COMPLETE AND CORRECT. THE ASSESSING OFFICER HELD THAT THE BOOKS TO BE NOT COMPLETE AND CORRECT AS QUALITY-WISE DETAILS WERE N OT MAINTAINED. ITA NO.2527/AHD/2011 DCIT VS. SHRI DHARMENDRA P JAIN AY :2008-09 4 IN SIMILAR CIRCUMSTANCES, THE ITAT, AHMEDABAD BENCH IN THE CASE OF M/S. DHAMI BROTHERS (SUPRA) HAS HELD AS UND ER:- FROM THE ABOVE, IT IS EVIDENT THAT IF THE AO IS NO T SATISFIED ABOUT THE CORRECTNESS OR THE COMPLETENESS OF THE AC COUNTS OF THE ASSESSEE, HE MAY MAKE AN ASSESSMENT IN THE MANN ER PROVIDED IN SECTION 144. IN THIS CASE, THERE IS NO DISPUTE ABOUT THE CORRECTNESS OF THE ASSESSEES ACCOUNTS. A S PER THE AO FOR WANT OF QUALITATIVE DETAILS OF THE PROCESSIN G OF DIAMONDS, THE ACCOUNTS OF THE ASSESSEE CANNOT BE SA ID TO BE COMPLETE. WE ARE UNABLE TO AGREE WITH THE ABOVE VIE WS OF THE AO. SECTION 44AA PROVIDES FOR MAINTENANCE OF THE BO OKS OF ACCOUNTS. AS PER THE SUB-SECTION (2), EVERY PERSON CARRYING ON BUSINESS OR PROFESSION IS REQUIRED TO KEEP AND M AINTAIN SUCH BOOKS OF ACCOUNTS AND OTHER DOCUMENTS AS MAY E NABLE TO THE AO TO COMPUTE THE TOTAL INCOME OF ASSESSEE I N ACCORDANCE WITH THE PROVISIONS OF THIS ACT. SUB-SEC TION (3) OF SECTION 44AA EMPOWERS THE CENTRAL BOARD OF DIRECT T AX TO PRESCRIBE BY RULES THE BOOKS AND OTHER DOCUMENTS TO BE KEPT AND MAINTAINED BY THE ASSESSEE. THE CBDT AS PE R RULE 6F HAS PRESCRIBED THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS TO BE KEPT AND MAINTAINED BY THE PERSONS CARRYING ON CERTAIN SPECIFIC PROFESSION. HOWEVER, N O BOOKS OF ACCOUNTS ARE PRESCRIBED FOR THE PERSON CARRYING ON BUSINESS. THUS, THE ASSESSEES CARRYING ON BUSINESS ARE REQUIR ED MAINTAIN SUCH BOOKS OF ACCOUNTS AS WILL ENABLE THE AO TO COMPUTE THE INCOME OF THE ASSESSEE. THE PRESENT ASS ESSEE HAS MAINTAINED THE REGULAR BOOKS OF ACCOUNTS WHICH WERE DULY AUDITED. THE SALE AND PURCHASE OF THE ASSESSEE IS VOUCHED AND VERIFIABLE. THE ASSESSEE HAS ALSO MAINT AINED QUANTITATIVE DETAILS IN RESPECT OF DIAMONDS PURCHAS ED AND SOLD BY IT AS WELL AS FOR PROCESSING OF DIAMOND. TH ERE IS NO ADVERSE COMMENT FROM THE AUDITOR THAT THE PROFIT CA NNOT BE COMPUTED FROM THE BOOKS OF ACCOUNTS MAINTAINED BY T HE ASSESSEE. IN OUR OPINION, THE QUALITATIVE DETAILS O F EACH PIECE OF DIAMOND IS NOT NECESSARY FOR COMPUTATION OF THE INCOME ITA NO.2527/AHD/2011 DCIT VS. SHRI DHARMENDRA P JAIN AY :2008-09 5 OF THE ASSESSEE. INCOME OF THE ASSESSEE CAN BE VERY WELL COMPUTED ON THE BASIS OF ACCOUNTS ALREADY MAINTAINE D BY THE ASSESSEE. IN VIEW OF THE ABOVE, WE ARE UNABLE T O AGREE WITH THE AO THAT THERE IS DEFECT IN THE SYSTEM OF M ETHOD OF ACCOUNTING OF THE ASSESSEE WHICH REQUIRES REJECTION OF THE BOOK RESULTS UNDER SECTION 145(3) OF THE ACT AND ES TIMATION OF THE GP. 4 FACTS BEING SIMILAR, FOLLOWING THE SAME REASONING , WE ARE NOT INCLINED TO INTERFERE IN THE FINDINGS OF THE CI T(A) WHO, FOLLOWING THE DECISION OF ITAT IN THE CASE OF M/S. DHAMI BROTHERS (SUPRA), HAS RIGHTLY HELD THAT THE REJECTION OF BOO KS AND ESTIMATION OF GROSS PROFIT BY THE ASSESSING OFFICER WAS NOT JUSTIFIED; AND ACCORDINGLY, GRANTED THE RELIEF TO T HE ASSESSEE ON BOTH COUNTS. THEREFORE, THIS REASONED FINDING OF T HE CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 5. AS A RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 11 TH OF DECEMBER, 2015. SD/- SD/- ( RAJESH KUMAR ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 11/12/2015 *BT ITA NO.2527/AHD/2011 DCIT VS. SHRI DHARMENDRA P JAIN AY :2008-09 6 ! '#$% &%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. #$% &&'( , '( / DR, ITAT, AHMEDABAD 6. %*+, / GUARD FILE / BY ORDER, //TRUE COPY // / (DY./ASSTT. REGISTRAR) / ITAT, AHMEDABAD