ACIT 16(1), MUMBAI V. JATINDERNATH SINGH, MUMBAI

ITA 2806/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 9249 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2005-2006
• Appeal Filed On: 01-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANILKUMAR MISHRA
• Keywords: Non-deduction of tax

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI N.V.VASUDEVAN, JM ITA NO.2806/MUM/2009 : ASST.YEAR 2005-2006 THE ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE 16(1) MUMBAI. VS. SHRI JATINDERNATH SINGH C/O.P.C.GHADIALI & CO. 206 ARUN CHAMBERS, TARDEO MUMBAI 400 034. PA NO.AACPS5819M. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANILKUMAR MISHRA RESPONDENT BY : SHRI JAYESH DADIA O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 28.01.2009 IN RELATION TO THE ASSESSMENT YEAR 2005-2006 2. THE ONLY ISSUE RAISED BY THE REVENUE IN THIS APP EAL IS AGAINST THE DELETION OF ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT O F VAST VARIATION IN GROSS PROFIT. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE WAS PROPRIETOR OF THREE CONCERNS VIZ. M/S.JAGAR EXPORTS ENGAGED IN MANUFACT URING OF LEATHER MENS SHOES UPPER AND EXPORT OF THE SAME; M/S.NATIONAL EXPORT C ORPORATION ENGAGED IN TRADING OF CORRECTED GRAIN SIDES / FINISHED LEATHER AND M/ S.AARIAY INTERNATIONAL ENGAGED IN JOB WORKS RELATING TO LEATHER SHOES UPPERS. THE ASS ESSING OFFICER NOTED THAT THE ASSESSEES WIFE WAS ALSO RUNNING PROPRIETORSHIP CON CERN IN THE NAME AND STYLE AS M/S.RADHIKA EXPORTS. HE ANALYZED THE TOTAL FIGURE O F SALES, GROSS PROFIT WITH ITS PERCENTAGE, N.P. AND SOME OF THE EXPENSES IN THE TWO PROPRIETORSHIP CONCERNS OF THE ASSESSEE AS WELL AS M/S.RADHIKA EXPORTS. IT WAS FURTHER OBSERVED THAT THERE WAS DECLINE IN THE G.P. RATE. AFTER CONSIDERING THE FAC TS HE REJECTED THE BOOKS OF ACCOUNT BY INVOKING THE PROVISIONS OF SECTION 145(3) AND AP PLIED G.P. RATE OF 5%. IN ITA NO.2806/MUM/2009 SHRI JATINDERNATH SINGH. 2 APPLYING THIS RATE OF PROFIT, HE ALSO TOOK INTO ACC OUNT ONE DISALLOWANCE CALLED FOR U/S 40A(IA) FOR NON-DEDUCTION OF TAX AT SOURCE. THE LEARNED CIT(A) OVERTURNED THE ACTION OF THE ASSESSING OFFICER BY NOTING THAT HE H AD NOT CALLED FOR ANY BOOKS OF ACCOUNT OR MADE ANY VERIFICATION TO ASCERTAIN THE C ORRECTNESS OR COMPLETENESS OF THE ACCOUNTS AND HENCE IT WAS NOT OPEN TO HIM TO REJECT THE BOOKS OF ACCOUNT. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS OBSERVED THAT THE LEARNED CIT(A) HAS R ECORDED A CATEGORICAL FINDING THAT THE ASSESSING OFFICER HAD NOT EVEN CALLED FOR ANY B OOKS OF ACCOUNT OR MADE ANY VERIFICATION TO ASCERTAIN THEIR CORRECTNESS. THE LE ARNED DEPARTMENTAL REPRESENTATIVE, ON A SPECIFIC QUESTION, COULD NOT L EAD ANY EVIDENCE TO CONTROVERT THIS FINDING OF THE ASSESSING OFFICER. UNDER THESE CIRCUMSTANCES WE ARE OF THE CONSIDERED OPINION THAT THE LEARNED CIT(A) WAS JUST IFIED IN DELETING THE ADDITION MADE BY THE A.O. BY APPLYING 5% G.P. RATE FOR THE R EASON THAT THE PERUSAL AND REJECTION OF BOOKS OF ACCOUNT IS SINE QUA NON FOR RESORTING TO THE APPLICATION OF ANY PROFIT RATE BASED ON A COMPARABLE CASE OR THE HISTO RY IN ASSESSEES OWN CASE. THE MERE FACT THAT THERE IS DECLINE IN THE G.P. RATE IS NOT, IN ITSELF, SUFFICIENT TO WARRANT THE REJECTION OF BOOKS OF ACCOUNT. IN OUR CONSIDERE D OPINION, THE LEARNED CIT(A) WAS JUSTIFIED IN SUSTAINING THE ADDITION TO THE EXT ENT OF RS.9,66,819 U/S.40A(IA) AND DELETING THE BALANCE ADDITION TOWARDS APPLICATION O F GROSS PROFIT RATE. WE, THEREFORE, APPROVE THE VIEW TAKEN BY THE LEARNED CI T(A). 4. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 28 TH DAY OF JANUARY, 2010. SD/- SD/- (N.V.VASUDEVAN) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI : 28 TH JANUARY, 2010. DEVDAS* ITA NO.2806/MUM/2009 SHRI JATINDERNATH SINGH. 3 COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A)-XVI, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI. ITA NO.2806/MUM/2009 SHRI JATINDERNATH SINGH. 4 DATE INITIAL 1. DRAFT DICTATED ON 27.01.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 27.01.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 9. DATE OF DISPATCH OF ORDER. &