Surinder Singh, New Delhi V. ITO, Haryana

ITA 2711/DEL/2012

• Counselvise Citation: 271120114 RSA 2012
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 06-08-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 04-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SURJANI MOHANTY
• Keywords: Gross profit estimation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.2711/DEL/2012 ASSESSMENT YEAR : 2008-09 SHRI SURINDER SINGH, ITO, PROP. SURINDRA WINES, WARD-2, C/O KAPIL GOEL, ADVOCATE, NARNAUL, A-125, SECTOR-15, ROHINI. HARYANA. NEW DELHI. V. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.BCLPS BCLPS BCLPS BCLPS- -- -1970 1970 1970 1970- -- -D DD D APPELLANT BY : SHRI KAPIL GOEL, ADVOCATE. RESPONDENT BY : SMT. SURJANI MOHANTY, SR. DR. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD CIT(A) DATED 28.3.2012. THE GROUNDS RAISED BY THE ASSESSEE ARE A S UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) ERRED IN CONFIRMING THE ADDITION OF ` .8,45,443/- MADE BY LD ASSESSING OFFICER ON MERE BASIS OF SUSPICION, CONJECTURES AND SURMISES. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD CIT(A) ERRED IN CONFIRMING THE ADDITION OF ` .8,45,443/- MADE BY LD WITHOUT APPRECIATING THAT GP RATE OF 10% AS APPLIED AND ADOPTED BY LD ASSESSING OFFICER IS HIGHLY UNREASONABL E AND EXCESSIVE. ITA NO2711/DEL/2012 2 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN CONFIRMING THE ADDITION OF ` .8,45,443/- MADE BY LD ASSESSING OFFICER WITHOUT APPRECIATING THAT ASSESSED GP RATE OF 10% IN ASSESSEES LINE IS IMAGINARY AND UNREAL ISTIC. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A WINE CONTRACTOR AND RETURN FOR THE YEAR ENDING 31.3.2008 WAS FILED ON 30.9.2008 DECLARING AN INCOME OF ` .2,76,245/- ON A TURNOVER OF ` .3.05,16,751/- . THE GP RATE HAS BEEN SHOWN AT 3.12% AND NET PROFIT HAS BEEN SHOWN AS 0.91%. THE ASSESSING OFFICER COMPARED TH E GP RATE AND NET PROFIT RATE AS SHOWN BY THE ASSESSEE WITH OTHER A SSESSEES IN THE SAME TRADE AND FOUND THAT GP RATE AND NET PROFIT RATE SHOWN BY THE ASSESSEE WAS VERY MUCH ON THE LOWER SIDE AS COMPARED WITH COMPARABLE CASES. FURTHER THE ASSESSING OFFICER NOTED THA T ASSESSEE HAD CLAIMED AN AMOUNT OF TCS AT ` .25,380/- AGAINST PURCHASES OF ` .22,40,000/- FROM M/S MILLENNIUM BEER INDUSTRIES LTD. TWICE. SIMILARLY HE NOTED THAT TCS CLAIM OF ` .17,766/- AGAINST PURCHASES OF ` .15,68,000/- FROM THE SAME COMPANY WAS CLAIMED TWICE. HE REFERRED TO TCS CERTIFICATE NO. 8 & 14 FOR ` .25,380/- AND TCS CERTIFICATE NO. 10 & 16 FOR ` .17,766/- IN HIS ASSESSMENT ORDER. THE ASSESSEE WAS REQUIRED TO REPLY AS TO WHY HE HAD INCREASED PURCHASES BY CLAIMI NG TCS IN RESPECT OF TWO INVOICES OF TOTAL PURCHASE VALUE OF ` .38,08,000/- (BEING PURCHASES REFLECTED BY THE ABOVE TCS CERTIFICATES) AND THEREFORE HAD DECREASED GP TO THAT EXTENT. IN REPLY, THE ASSESSEE SUBM ITTED THAT LIST OF TCS CERTIFICATES AVAILABLE WITH THE ASSESSEE AT THE T IME OF FILING OF RETURN OF INCOME WAS NEITHER A COMPLETE LIST OF TCS C ERTIFICATES NOR IS A LIST OF TOTAL PURCHASES. HOWEVER, GROSS TCS OF ` .3,37,893/- WAS RIGHTLY CLAIMED AND GROSS PURCHASES OF ` .2,83,20,383/- WAS RIGHTLY CLAIMED BY THE ASSESSEE. THE ASSESSING OFFICER DID NOT AGREE WITH THE CONTENTIONS OF ASSESSEE AND HELD THAT PURCHASES FROM M/S MILLENNIUM B EER ITA NO2711/DEL/2012 3 INDUSTRIES LTD. AMOUNTING TO ` .22,40,000/- HAS BEEN SHOWN AT SL. NO.2 OF THE LIST AGAINST WHICH TCS CLAIM OF ` .25,380/- HAD BEEN CLAIMED AND AGAIN PURCHASES OF THE SAME AMOUNT WAS MENTIONED AT SL. NO.5 AND SIMILAR CLAIM OF TCS WAS CLAIMED. SIMILARLY, PURCHASE S FROM THE SAID COMPANY AMOUNTING TO ` .15,68,000/- IS MENTIONED AT SL. NO.3 AGAINST WHICH TCS CLAIM OF ` .17,766/- HAD BEEN CLAIMED AND THE SAME PURCHASES WERE SHOWN AT SL. NO.6 WITH THE SAME AMOUNT O F CLAIM OF TCS OF ` .17,766/-. IN VIEW OF THE ABOVE FACTS, THE ASSESSING OF FICER ASKED THE ASSESSEE AS TO WHY BOOKS OF ACCOUNT SHOULD NOT BE REJECTED U/.S 145(3) OF THE INCOME TAX ACT, 1961 ON THE FOLL OWING BASIS:- 1. NO QUANTITATIVE DETAILS WERE PRODUCED. 2. AS PER THE CAPITAL DETAILS FILED OPENING CAPITAL WAS ` .13,44,800/- ADDED PROFIT DURING THE YEAR WAS SHOWN AT ` .2,76,245/- CLOSING CAPITAL WAS ` .7,51,245/-. HENCE YOU HAVE WITHDRAWN ` .8,69,800/-. NO PURPOSE OF WITHDRAWAL HAS BEEN EXPLAINED. 3. YOU HAVE MADE PURCHASES FROM M/S MILLENNIUM BEER INDUST RIES LTD. WHICH HAS NOT BEEN RECONCILED BY YOU. 4. YOU HAVE NOT GIVEN SATISFACTORY REASON FOR LOW GP AS CO MPARED TO SIMILAR CASES. 5. AS PER TRADING ACCOUNT, THE GROSS TURNOVER OF ` .3,05,16,751/- AND AS PER THE AUDITORS COMPARATIVE DETAILS THE GROSS TURNO VER IS ` .3,11,38,383/-. 6. THE BOOKS OF ACCOUNT WERE ALSO NOT PRODUCED. 3. THE ASSESSEE DID NOT FILE ANY REPLY EXCEPT THE COMPA RATIVE DETAILS IN THE CASE OF MAHESH & CO., WHO HAD SHOWN GP R ATE OF 4.26% WERE FILED. THE ASSESSING OFFICER HELD THAT CASE REFERR ED BY THE ASSESSEE WAS NOT UNDER SCRUTINY AND HENCE GP RATE OF THE SAID CASE ITA NO2711/DEL/2012 4 WAS NOT VERIFIABLE. HE, THEREFORE, MADE AN ADDITION OF ` .8,45,443/- ON THE BASIS OF 10% GP. 4. DISSATISFIED WITH THE ORDER, THE ASSESSEE FILED AN APP EAL BEFORE LD CIT(A) BUT DID NOT APPEAR BEFORE LD CIT(A) NOR S UBMITTED ANY WRITTEN SUBMISSIONS. THE LD CIT(A) ON THE BASIS OF STATEM ENT OF FACTS FOUND THE FOLLOWING SUBMISSIONS OF ASSESSEE:- 1. THAT BOOKS OF ACCOUNT WERE DULY AUDITED U/S 44AB OF T HE ACT AND SALES WERE MADE ONLY TO RETAIL DEALERS AS PER PERMIT I SSUED BY THE EXCISE DEPARTMENT. 2. THAT AUDITOR IN FORM NO.3 CD HAD BY MISTAKE DEPICTED THE GROSS TURNOVER AT ` .3,11,38,388/- AND GP AT 3.12%. AFTER CONSIDERING THE ABOVE SUBMISSIONS FROM THE STATEME NT OF FACTS, THE LD CIT(A) DID NOT AGREE WITH THE CONTENTIONS OF ASSESSEE AND UPHELD THE DECISION OF THE ASSESSING OFFICER. THE RELEVA NT PARAGRAPH OF LD CIT(A)S ORDER IS REPRODUCED BELOW:- I HAVE CONSIDERED THE ISSUE AND THE AVERMENTS MADE IN SOF, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT S IN VIEW OF DIFFERENCE IN THE TURNOVER REFLECTED IN THE TRADING ACCOUNT AND IN THE TAX AUDIT REPORT, NON RECONCILIA TION OF PURCHASES FROM M/S MILLENNIUM BEER INDUSTRIES LTD. AND N O PRODUCTION OF QUANTITATIVE DETAILS. IN VIEW OF THE DEFECTS/DISCREPANCIES AS MENTIONED ABOVE, IN THE BOOKS O F ACCOUNTS, IT CANNOT BE HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNTS. ON THE ISSUE OF ESTIMATION OF GROSS PROFIT, THE ASSESSING OFFICER GAVE SOME COMPARABLE CASES IN THE ASSESSMENT ORDER AND ON THAT BASIS HE ESTIMATED THE GP AT 10%. THIS ACTION OF ITA NO2711/DEL/2012 5 THE ASSESSING OFFICER IN MAKING THE GP ADDITION IS THERE FORE UPHELD AND THE GROUND OF APPEAL IS DISMISSED. 5. DISSATISFIED WITH THE ORDER OF LD CIT(A), THE ASSESSEE FILED APPEAL BEFORE THIS TRIBUNAL. 6. AT THE OUT SET, LD AR SUBMITTED THAT IT WAS THE FIR ST AND LAST YEAR OF BUSINESS OF ASSESSEE IN THIS LINE OF TRADE AND ARGUED T HAT DUE TO HIS IN-EXPERIENCE THE ASSESSEE MIGHT HAVE EARNED A LOWER GP AS COMPARED TO THE CASES REFERRED TO BY THE ASSESSING OFFICER. HE FU RTHER ARGUED THAT THE AMOUNT OF TURNOVER IN THE COMPARED CASES WAS MUCH LOWER THAN THE TURNOVER OF THE ASSESSEE. THEREFORE, HE ARGUED THAT GP RATE WAS LOWER BECAUSE OF MORE TURNOVER AS COMPARED TO OTH ER TRADERS. HE FURTHER ARGUED THAT GP RATE AS OBSERVED BY THE ASSESSIN G OFFICER AT 3.12% IS WRONG AS FROM THE TRADING ACCOUNT IT IS APPA RENT THAT GP RATE WAS ABOUT 7% AND ASSESSING OFFICER HAD BY MISTAKE TAKEN IT AS 3.12%. IN VIEW OF THE ABOVE, HE SUBMITTED THAT 7% GP RATE W AS QUITE REASONABLE AND NET PROFIT RATIO OF 0.91% IS ALSO QUIT E REASONABLE AND OFFERED 1% NET PROFIT INSTEAD OF 0.91%. 7. ON THE OTHER HAND, LD DR SUBMITTED THAT ASSESSEE DID NOT COOPERATE WITH LD CIT(A) AND DID NOT APPEAR BEFORE HIM TO REBUT THE ADDITIONS MADE BY THE ASSESSING OFFICER. HE, THEREFORE, ARGUED THAT ONUS WAS ON THE ASSESSEE TO PROVE THAT GP WAS ON THE LOWE R SIDE. 8. IN HIS REJOINDER, THE LD AR SUBMITTED THAT COMPLET E FACT WAS WRITTEN ON THE STATEMENT OF FACTS ITSELF. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE OBSERVE THAT ITA NO2711/DEL/2012 6 THE ASSESSING OFFICER HAD COMPARED GP RATES OF 4 PARTIES IN THE SAME TRADE AND IN THEIR CASES GP RATE WAS BETWEEN 31% TO 38 % AND ALSO NET PROFIT RATIO WAS BETWEEN 1% TO 3% EXCEPT IN ONE CASE WHERE NET PROFIT RATIO WAS 0.09%. THE ASSESSEE HAD NOT SERIOUSLY SUBMITTED A NY EXPLANATION REGARDING DIFFERENCE IN THE ACCOUNT OF M/S MILLENNIUM BEER INDUSTRIES LTD AND THEREFORE THERE IS EVERY POSSIBILITY THAT ASSESSEE MIGHT HAVE INFLATED THE PURCHASES. BEFORE LD CIT(A), THE LD AR OR THE ASSESSEE DID NOT APPEAR TO CLARIFY ANYTHING. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT ASSESSING OFFICER HAD RIGHTLY RE JECTED THE BOOKS OF ACCOUNTS AND HAD ADOPTED A LIBERAL GP RATIO OF 10% AS COMPARED TO THE CASES CITED BY ASSESSING OFFICER. THE LD AR COULD NOT DISTINGUISH BETWEEN THE CASES RELIED UPON BY THE ASSESSING OFFICER WITH THE CASE OF ASSESSEE EXCEPT TO THE EXTENT THAT TU RNOVER IN THE COMPARED CASES WAS LOWER AS COMPARED TO TURNOVER OF ASS ESSEE. EVEN IF WE CONSIDER THIS ARGUMENT OF LD AR THE 10% GP RATI O ADOPTED BY ASSESSING OFFICER AS COMPARED TO MORE THAN 30% GP RATIO OF COMPARED CASES, THE ADDITION LOOKS TO BE QUITE REASONABLE. IN VI EW OF THE ABOVE, WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF LD CIT(A). 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DI SMISSED. 11. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST DAY OF SEPTEMBER, 2012. SD/- SD/- (I.C. SUDHIR) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 21.09.2012. HMS ITA NO2711/DEL/2012 7 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 6.8.2012 DATE OF DICTATION 18.9.2012 DATE OF TYPING 18.9.2012 DATE OF ORDER SIGNED BY 21.9.2012 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET 24.9.2012 & SENT TO THE BENCH CONCERNED.