ITO, Jaipur V. SMT SONU KHANDELWAL, Jaipur

ITA 262/JPR/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59535 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 24-10-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 29-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHRI
• Section: 131; 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.262/ JP/2011 ASSESSMENT YEAR 2007-08 PAN: AHEPK 3168 N THE ITO VS., SMT. SONU KHANDELWAL WARD- 2 (3) C-19, JAGAN PATH JAIPUR CHOMU HOUSE, JAIPUR (APPELLANT ) (RESPONDENT) C.O. 49/JP/2011 (ARISING OUT OF ITA NO.262/ JP/2011) ASSESSMENT YEAR 2007-08 PAN: AHEPK 3168 N SMT. SONU KHANDELWAL VS. THE ITO C-19, JAGAN PATH WARD- 2 (3) CHOMU HOUSE, JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI P.C. PARWAL DEPARTMENT BY : SHRI VINOD JOHRI DATE OF HEARING: 24-01-2012 DATE OF PRONOUNCEMENT: 31-01-2012 ORDER PER N.L. KALRA, AM:- THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDE R OF THE LD. CIT(A)-I, JAIPUR DATED 12-01-2011 FOR THE ASSESSMENT YEAR 2007-08. T HE ASSESSEE HAS FILED THE CROSS OBJECTION. 2 2.1 THE FIRST GROUND OF APPEAL OF THE REVENUE IS T HAT THE LD. CIT(A) HAS ERRED IN REDUCING THE TRADING ADDITION FROM RS. 11,97,260/- TO RS. 4,95,787/- AND GROSS PROFIT RATE FROM 15% TO 12%. 2.2 THE ASSESSEE IN HER GROUND NO. 2 OF THE C.O. IS AGGRIEVED AGAINST CONFIRMATION OF TRADING ADDITION OF RS. 4,95,532/-. 2.3 THE ASSESSEE IS A PROP. OF M/S. SEJAL ENTERPRIS ES AND IS ENGAGED IN RUNNING OF BUSINESS OF MANUFACTURING AND TRADING OF IRON STEEL , FURNITURE FOR OFFICE, HOSPITAL FURNITURE AND AGRICULTURE ITEMS, MAINLY SUPPLIED TO THE GOVT . DEPARTMENTS. THE ASSESSEE HAS SHOWN THE GROSS PROFIT RATE OF 9.88% ON SALE OF RS. 2.34 CRORES. IN THE IMMEDIATELY PRECEDING YEAR, THE GROSS PROFIT RATE WAS SHOWN AT 13.40%. IN THE ASSESSMENT YEAR 2005- 06, THE ASSESSEE SHOWED THE GROSS PROFIT RATE OF 12 .31%. THE AO NOTICED THAT THE GROSS PROFIT RATE OF 15% WAS APPLIED FOR THE ASSESSMENT Y EAR 2005-06 AND THE APPEAL WAS STILL PENDING BEFORE THE LD. CIT(A). THE ASSESSEE WAS ASK ED TO EXPLAIN AS TO WHY THE BOOKS OF ACCOUNTS SHOULD NOT BE REJECTED FOR NOT MAINTAINING THE STOCK REGISTER. THE AO IN HIS ORDER HAS ALSO MENTIONED THAT THE ASSESSEE HAS NOT PRODUCED THE BOOKS OF ACCOUNTS. ACCORDINGLY, THE AO HAS APPLIED THE GROSS PROFIT RA TE OF 15%. 2.4 BEFORE THE LD. CIT(A) IT WAS SUBMITTED THAT THE TURNOVER DURING THE YEAR HAS INCREASED TO RS. 233 CRORES AS AGAINST 1.22 CRORES OF THE IMMEDIATELY PRECEDING YEAR. DUE TO INCREASE IN THE TURNOVER , THE MARGIN OF PRO FIT STANDS REDUCED. THE ENTIRE SALES ARE TO THE GOVT. OFFICES OR GOVT. UNDERTAKINGS AND SUCH SALES ARE VERIFIABLE. ANOTHER REASON GIVEN FOR FALL IN THE GROSS PROFIT RATE WAS INCREAS E IN THE PRICE OF RAW MATERIAL. THE CHART SHOWING COMPARATIVE POSITION OF RAW MATERIAL WAS F ILED BEFORE THE AO. IT WAS FURTHER 3 SUBMITTED BEFORE THE LD. CIT(A) THAT GROSS PROFIT R ATE OF 12.31% SHOWN BY THE ASSESSEE WAS ACCEPTED FOR THE ASSESSMENT YEAR 2005-06. 2.5 THE LD. CIT(A) HAS CONSIDERED THE INCREASE IN T URNOVER AND DUE TO TURNOVER , THE FALL IN PROFIT RATE WAS CONSIDERED TO BE EXPLAINED TO SOME EXTENT. ACCORDING TO THE LD. CIT(A), THERE IS SUBSTANTIAL FALL IN GROSS PROFIT R ATE. IN THE ASSESSMENT YEAR 2005-06, THE GROSS PROFIT RATE OF 12.31% WAS ACCEPTED. THE LD. CIT(A) THEREFORE, DIRECTED THE AO TO APPLY THE GROSS PROFIT RATE OF 12% AS AGAINST 15% A PPLIED BY HIM ON THE DECLARED SALES. 2.6 WE HAVE HEARD BOTH THE PARTIES. THE AO IN HIS O RDER HAS MENTIONED THAT STATUTORY NOTICE U/S 143(2) WAS ISSUED FOR THE FIRST TIME ON 29-09-2008. THE AO FIXED THE CASE FOR HEARING ON 2-09-2009 AND ON THIS DATE, WRITTEN SUBM ISSION WERE FILED CONTAINING THE COPY OF LETTER ADDRESSED TO THE THEN ITO, WARD- 6 (4). T HE AO ISSUED A COPY OF QUESTIONNAIRE ON 25-09-2009 AND THE CASE WAS FIXED FOR HEARING ON 5-10-2009. AGAIN NONE ATTENDED THE PROCEEDINGS AND ONLY WRITTEN SUBMISSIONS WERE FILED . THE AO THEREFORE, DIRECTED HIS INSPECTOR TO CONTACT THE ASSESSEE SO AS COLLECT THE DOCUMENTS REQUIRED FOR COMPLETING THE ASSESSMENT. THE HUSBAND OF THE ASSESSEE WAS CONTACT ED AND HE WAS ASKED TO PRODUCE THE DETAILS/ DOCUMENTS IN CONNECTION WITH ASSESSMENT PR OCEEDINGS OF HIS WIFE. IN SPITE OF PROMISING TO ATTEND OFFICE, NONE ATTENDED THE PROCE EDINGS. DUE TO NON-COOPERATIVE ATTITUDE OF THE ASSESSEE, THE AO WAS LEFT WITH NO A LTERNATIVE BUT TO COMPLETE THE ASSESSMENT U/S 144 OF THE ACT. THE AO IN HIS ORDER HAS MENTIONED THAT SUMMON U/S 131 WAS ISSUED ON 19 TH NOV. 2009 AND THE SAME WAS SENT THROUGH INSPECTOR BUT THE ASSESSEE REFUSED TO TAKE AND STATED THAT HER HUSBAND IS OUT OF STATION AND THEREFORE, SHE CANNOT ACCEPT ANY PAPER. THE AO TELEPHONICALLY TALKED TO T HE ASSESSEE AND THE ASSESSEE REPEATED THE SAME FACTS ON PHONE. HENCE, THE SUMMON COULD NO T BE SERVED ON THE ASSESSEE. FINALLY 4 A LETTER DATED 30-11-2009 ADDRESSED TO THE ASSESSEE AND THE ASSESSEE'S ADVOCATE CAME ON 2 ND DEC. 2009 AT 3.00 PM AND FILED HIS POWER OF ATTORN EY. THE AO HAS CLEARLY MENTIONED THAT ASSESSEE HAS NOT PRODUCED THE BOOKS OF ACCOUNT S. LOOKING TO THE ABOVE FACTUAL POSITION, WE FEEL THAT THE ASSESSEE HAS NOT COOPERA TED WITH THE REVENUE IN COMPLETION OF HER ASSESSMENT. IN THESE CIRCUMSTANCES, THE MAINTEN ANCE OF BOOKS OF ACCOUNTS CANNOT BE ACCEPTED WHEN SUCH BOOKS OF ACCOUNTS WERE NOT PRODU CED. THUS THE TRADING RESULTS AS SHOWN BY THE ASSESSEE ARE NOT AT ALL VERIFIABLE. T HE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION GIVEN BY THE ASSESSEE FOR FALL IN GROSS PROFIT RATE HAS REDUCED THE TRADING ADDITION FROM RS. 11,97,260/- TO RS. 4,95,787/-. WE THEREFORE, FEEL THAT THE LD. CIT(A) WAS FAIR AND REASONABLE IN RESTRICTING THE ADDITION AFTER TAKING INTO ACCOUNT THE GROSS PROFIT RATE OF 12.37% SHOWN IN THE ASSESSMENT YEAR 2005-06 WHEN TURNOVER WAS AROUND RS. 1.22 CRORE. WE THEREFORE, CONFIRM THE FINDINGS OF THE LD. CIT(A). THUS THE GROUND NO. 1 OF THE REVENUE IS DISMISSED AND GROUND NO. 2 OF T HE C.O. OF THE ASSESSEE IS ALSO DISMISSED. 3.1 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE HAS NOT PRESSED THE GROUND NO. 1 OF THE C.O. HENCE, THE SAME IS DISMISS ED BEING NOT PRESSED. 4.1 THE AO WHILE COMPLETING THE ASSESSMENT MADE THE ADDITION OF RS. 20,43,800/- U/S 68 OF THE ACT IN RESPECT OF THE CREDITS APPEARING IN THE NAME OF 15 PERSONS. 4.2 BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT TH E ASSESSEE WAS HAVING OPENING UNSECURED LOANS OF RS. 25,63,650/- AND THESE ARE RE DUCED TO RS. 21,43,800/-. OUT OF ADDITION OF RS. 20,43,800/- MADE BY THE AO , THE LO AN TO THE EXTENT OF RS. 13,24,300/- WAS RECEIVED IN THE LAST YEAR AND THEREFORE, THE A DDITION TO THAT EXTENT WAS UNCALLED FOR. BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT SUMMON S WERE SERVED ON THE CREDITORS AND 5 THEY HAVE RESPONDED AND FILED THE DETAILS IN VERIFI CATION OF THE AMOUNT ADVANCED BY THEM. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CONFIRMED THE ADDITION TO THE EXTENT OF RS. 7,19,500/-. CONTENTION OF THE LD. AR IS CONSIDERED. SUMMONSES ISSUED U/S 131 WERE NOT RESPONDED BY MOST OF THE CREDITORS AND THEREFORE, IDENTITY OF THE CREDITORS REMAINED UNIDENTIFIED. HOWEVER, CONSI DERING THE FACT THAT OUT OF TOTAL CREDITS OF RS. 2043800/- THE CREDITS OF RS . 1324300/- ARE OLD AND NO ADDITION WAS MADE IN THE EARLIER YEARS, ADDITIO N TO THAT EXTENT CANNOT BE JUSTIFIED IN THE YEAR UNDER CONSIDERATION. HOWEV ER, CREDITS OF RS. 719500/-WERE INTRODUCED DURING THE YEAR UNDER CONSI DERATION. THE IDENTIFY OF THE CREDITORS AS WELL AS THEIR CREDITWORTHINESS REMAINS UN-ESTABLISHED AND THEREFORE, ADDITION TO THAT EXTENT OF RS. 71950 0/- IS JUSTIFIED. THE AO IS THEREFORE, DIRECTED TO REDUCE THE ADDITION OF RS . 2043800/- TO RS. 719500/-. THE APPELLANT THUS GETS PARTIAL RELIEF. 4.3 THE REVENUE IN GROUND NO. 2 IS AGAINST REDUCING THE ADDITION OF RS. 7,19,500/- U/S 68 OF THE ACT WHILE THE ASSESSEE IN HER C.O. 3 WAS AGGRIEVED AGAINST CONFIRMATION OF ADDITION OF RS. 7,19,500/- 4.4 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE HAS NOT PRESSED THE GROUND NO. 3 OF THE C.O. IN RESPECT OF CONFIRMATION OF ADDITION OF RS. 7,19,500/-. HENCE, THE SAME IS DISMISSED BEING NOT PRESSED. 4.5 WE HAVE HEARD BOTH THE PARTIES. THE LD. CIT(A) HAS RECORDED THE FINDINGS THAT CREDITS OF RS. 13,24,300/- ARE OLD. WE ARE NOT AWAR E AS TO WHETHER THE CREDITS WHICH ARE CONSIDERED OLD WERE GENUINE IN RESPECT OF THE IDEN TITY. IN CASE THE CREDITORS WERE NOT VERIFIABLE IN RESPECT OF THE IDENTITY THEN THE ADD ITION SHOULD HAVE BEEN MADE IN THE YEAR IN WHICH SUCH CREDITORS WERE INTRODUCED. HOWEVER, I F THE CREDITORS CAN BE LOCATED AND IT 6 CAN BE FOUND THAT THEY HAVE RECEIVED BACK THE CRED ITS THEN ADDITION CAN BE MADE U/S 41(1) OF THE ACT IN THE YEAR IN WHICH SUCH REPAYMEN T HAS BEEN MADE. WE THEREFORE, FEEL THAT THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 7,19,500/-. 5. IN THE RESULT, THE APPEAL OF THE REVENUE AS WEL L AS C.O. OF THE ASSESSEE ARE DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 31-01 -2012. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 31/01/2012 *MISHRA COPY FORWARDED TO :- 1. THE ITO, WARD- 2 (3), JAIPUR 2. SMT. SONU KHANDELWAL, JAIPUR 3 THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5 THE LD.DR 6 THE GUARD FILE (ITA NO. 262/JP /11) A.R, ITAT, JAIPUR