The ITO, Ward-1(3)(2), Vadodara V. Smt. Namrata Alpitbhai Patel, Vadodara

ITA 3026/AHD/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 3554 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 18-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Assessee Lawyers: K P SINGH
• Section: 143(3); 201; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE ITO, WARD - 1(3)(2), VADODARA (APPELLANT) VS SMT. NAMRATA ALPITBHAI PATEL, M/S. ALLIANCE INFRASTRUCTURE & LOGISTICS, 110, YOGINAGAR TOWNSHIP. OP. PRABHUTA MARRIAGE, HALL CHHANI, VADODARA - 391740 PAN: ARJPP8791R (RESPONDENT) REVENUE BY : S H RI LALIT P. JAIN , SR. D . R. ASSESSEE BY: SHRI K.P. SINGH , A.R. DATE OF HEARING : 18 - 09 - 2 018 DATE OF PRONOUNCEMENT : 27 - 09 - 2 01 8 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS REVENUE S APPEAL FOR A. Y. 2012 - 13 , ARI SES FROM ORDER OF THE CIT(A) - 5, VADODARA DATED 30 - 08 - 2 016 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2 . SOLITAR Y GROUND OF APPEAL IS PERTAINED TO DELETING OF ADDITION OF RS. 73 , 44 , 533/ - ON ACCOUNT OF SUPPRESSION OF PROFIT PERTAINING TO TRANSACTIONS WITH PERSONS COVERED U/S. 40A(2)(B). I T A NO . 3026 / A HD/2 0 16 A SS ESSMENT YEAR 2012 - 13 I.T.A NO. 3026 /AHD/20 16 A.Y. 2012 - 13 PAGE NO IT O V S. SMT. NAMRATA ALPITBHAI PATEL M/S ALLIANCE INFRASTRUCTURE & LOGISTICS 2 3 . THE BRIEF FACT OF THE ISSUE IN APPEAL IS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED FROM THE DETAILS FILED BY THE ASSESSEE THAT ASSESSEE HAS MADE 100% SALE AND PURCHASE TRANSACTIONS WITH THE PERSONS COVERED U/S/ 40A(2)(B) OF THE ACT. HE HAS ALSO NOTICED THAT THERE WAS NO OPENING OR CLOSING STOC K ON THE FIRST AND LAST DAY OF THE FINANCIAL YEARS AND ALL THE GOODS PURCHASES WERE SOLD ON T H E SAME DAY. HE HAS FURTHER NOTICED THAT THERE WAS TOTAL 165 NO. OF TRANSACTIONS DURING THE YEAR . I N RESPECT OF 81 TRANSACTIONS THE ASSESSEE H A S SHOWN GROSS P ROFI T OF 3.64% , IN RESPECT OF 28 TRANSACTIONS HAS NOT SHOWN ANY PROFIT AND IN RESPECT OF 56 TRANSACTIONS HAS SHOWN LOSS OF RS. 31,05,300/ - . T HEREFORE THE ASSESSING OFFICER HAS SHOW CAUSE THE ASSESSEE TO EXPLAIN WHY THE GROSS PRO FIT SHOULD NOT BE CALCULATE D @ 3.64% OF TOTAL SALE OF RS . 23 .8 CRORES. THE ASSESSEE EXPLAINED THAT ALL THE PURCHASE AND SALE TRANSACTIONS WERE VERIFIABLE WITH RESPECT TO QUANTITY , RA TE AND QUALITY, THEREFORE , BOOKS OF ACCOUNT CANNOT BE REJECTED. HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND ESTIMATED THE GROSS PROFIT @ 3.64% AT RS. 86 , 77 , 335/ - AFTER ADJUSTING THE DECLARED PROFIT OF RS. 13 , 36 , 802/ - . THE ASSESSING OFFICER HAS ADDED THE DIFFERENCE PROFIT OF RS. 73 , 4 4, 533/ - TO THE TOTAL INCOME OF THE ASSESSEE. 4 . AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. THE RELEVANT PART OF THE DECISION OF THE LD. CIT(A) IS REPRODUCED AS UNDER: - 6.3 I HAVE CAREFULLY C ONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE, THE OBSERVATIONS OF THE ASSESSING OFFICER, THE SUBMISSIONS OF THE ASSESSEE, MATERIAL AVAILABLE ON RECORD AND THE JUDICIAL PRONOUNCEMENTS ON THE SUBJECT. THIS IS A CASE WHERE 100% OF ASSESSEE'S TRANSACTIONS WERE WITH ENTITIES COVERED U/S 40A(2)(B) OF THE ACT, THERE WAS NO OPENING OR CLOSING STOCK ON THE FIRST AND LAST DAY OF THE F.Y. AND ALL THE PURCHASE AND SALES WERE M ADE BILL TO BILL. THE GOODS PURCHAS ED ON A DAY WERE SOLD EITHER ON T HE SAME DAY OR A DAY AFTER IN SA ME QUANTITY. THIS, COUPLED WITH THE FACT T HAT THE ASSESSEE HAD BOOKED LOSS IN SOME OF THE TRANSACTIONS, WAS THE SOLE REASON FOR ESTIMATING THE GROSS PROFIT OF THE ASSESSEE IN THIS CA SE. NONE OF THE ABOVE IS PROHIBITED BY L AW. NOTHING HAS BEEN B ROUGHT ON REC ORD TO ESTABLISH THAT THE TRANSACTIONS ARE SHAM. THERE IS ABSOLUTELY NO EVIDENCE TO ESTABLISH THAT THE ASSESSEE HAS INVENTED A COLOURABLE DEVICE TO REDUCE HER PROFITS. THERE IS NOTHING ON RECORD TO EVEN WHISPER THAT THE ASSESSEE ACTUALLY RECEI VED ANYTHING MORE THAN THE AMOUNTS DECLARED IN HER BOOKS OF ACCOUNTS. IT IS ALSO NOTED THAT THE ASS ESSING OFFICER HAS NOT POINTED O UT ANY SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNTS. NON - MENTIONING OF TRANSACTIONS U/S 40A(2)(B) IN FORM 3CD IS DEFECT WITH THE AUDIT REPORT AND NOT THE BOOKS OF ACCOUNTS PER SE. NOTHING HAS BEEN BROUGHT ON RECORD TO ESTABLISH THAT EITHER THE PURCHASES OR THE SALES WERE NOT VERIFIABLE. THE ASSESSING OFFICER HAS EVEN NOTED IN PARA 1 OF THE ASSESSMENT ORDER THAT ALL THE I.T.A NO. 3026 /AHD/20 16 A.Y. 2012 - 13 PAGE NO IT O V S. SMT. NAMRATA ALPITBHAI PATEL M/S ALLIANCE INFRASTRUCTURE & LOGISTICS 3 DETAILS CALL ED FOR WERE FURNISHED BY THE ASSESSEE/AR, WHICH WERE VERIFIED AND KEPT ON RECORD. IT IS OBVIOUS THAT IN THIS CASE, THE GROSS PROFIT HAS BEEN /ESTIMATED WITHOUT REJECTING ASSESSEE'S BOOKS OF ACCOUNTS U/S ' 145(3) OF THE ACT OR EVEN WITHOUT POINTING OUT ANY SPECIFIC DEFECT IN THE SAME, WHICH IS NOT PERMISSIBLE IN LAW. FURTHER, BEFO RE ESTIMATING THE PROFITS OF THE ASSESSEE, THE NOT INVOKED THE PRO VISIONS OF SECTION 144 OF THE ACT AND THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE ACT. 6.4 HON'BLE IT AT, CUTTACK HAS, IN THE CASE OF GAYOTRI OIL MILLS VS AC1T [2012] 23 TAXMANN.COM 186 (CUTTACK - TRIB.), HELD THAT WHERE ASSESSEE FIRM GOT ITS BOOKS OF ACCOUNT AUDITED UNDER SECTION 44AB, ASSESSING OFFICER COULD NOT MAKE ADDITION BY MERELY ESTIMATING NET PROFIT AT HIGHER RATE ON SALES WITHOUT REJECTING THOSE BOOKS OF ACCOUNT UNDER SECTION 145(3) OF THE ACT. HON'BLE ALLAHABAD HIGH COURT HAS, IN THE CASE OF C1T VS JANANAMANDAL LTD. [2013] 31 TAXMANN.COM 51 (ALLAHABAD), HELD THAT THE ASSESSING OFFICER IS NOT EMPOWERED TO REJECT ASSESSEE'S BOOKS OF ACCOUNTS UNLESS SOME SPECIFIC DEFECT IS POINTED OUT IN ITS MAINTENANCE. HON'BLE GUJARAT HIGH COURT HAS, IN THE CASE OF CIT VS SHAK T I INDUSTRIES (2013) 36 TAM ANN.COM 16 (GUJARAT), HELD THAT WHERE BOOKS OF ACCOUNT WERE NOT REJE CTED, ADDITION OF AMOUNTS S HOWN IN AUDITED ACCOUNT WERE NOT SUSTAINABLE. HON'BLE ALLAHABAD HAS ALSO HELD, IN THE CASE OF DCIT VS HANUMAN SUGAR (KHANDSARI) MILLS (P.) LTD. [2013] 38 TAXMANN.COM 53 (ALLAHABAD), THAT THE FACT THAT ASSESSEE'S PROFIT FOR THE YE AR UNDER CONSIDERATION WAS LOW, COULD NOT BE A GROUND FOR REJECTION OF BOOKS OF ACCOUNT. 6.5 HON'BLE ITAT, DELHI HAS, IN THE CASE OF YAMAHA MOTOR INDIA (P.) LTD. VS CIT [2015] 57 TAXMANN.COM 26 (DELHI - TRIB.) (TM), HELD THAT IN CASE THERE IS NO DISCREPANCY IN BOOKS OF ACCOUNT AND BOOKS OF ACCOUNT HAVE BEEN ACCEPTED, PROFIT OR LOSS HAS TO BE DETERMINED AS PER BOOKS OF ACCOUNT AND NOT ON ESTIMATION BASIS. HON'BLE ITAT HAS HELD AS UNDER ON THE ISSUE IN THE CASE CITED SUPRA - '..... WE ARE OF THE VIEW THAT ESTIM ATION OF PROFIT CAN BE RESORTED TO ONLY WHEN THERE IS A DISCREPANCY IN THE BOOKS OF ACCOUNT WHICH MAKES THE DETERMINATION OF THE PROFIT OR LOSS DIFFICULT. SINCE THERE IS NO DISCREPANCY IN THE BOOKS OF ACCOUNT AND THE BOOKS OF ACCOUNT HAVING BEEN ACCEPTED, THE PROFIT OR LOSS HAS TO BE DETERMINED AS PER THE BOOKS OF ACCOUNT AND NOT ON ESTIMATION BASIS.' 6.6 IN VIEW OF THE ABOVE DISCUSSION AND CONSIDERING THE FACT THAT THE ASSESSING OFFICER HAS FAILED TO POINT OUT ANY SPECIFIC DEFECT IN ASSESSEE'S BOOKS OF ACC OUNTS, HAS EVEN FAILED TO REJECT ASSESSEE'S BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT, HAS ESTIMATED THE GROSS PROFITS OF THE ASSESSEE U/S 143(3), INSTEAD OF U/S 144 OF THE ACT AND THE FACT THAT HE COULD NOT HAVE VENTURED TO ESTIMATE ASSESSEE'S GROSS PROFIT WITHOUT FIRST REJECTING HER BOOKS OF ACCOUNTS. THE ESTIMATION OF PROFITS BY THE ASSESSING OFFICER CANNOT BE SUSTAINED IN LAW, ONCE THE BOOKS OF ACCOUNT ARE ACCEPTED BY THE ASSESSING OFFICER. CONSEQUENTLY, THE ADDITION OF RS.73,40,533/ - ON THIS ACCOUNT IS D ELETED. THE ASSES SEE SUCCEEDS ON THIS GROUND OF APPEAL. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAS MADE ALL THE SALE TRANSACTION S WITH THREE PERSONS COVERED U/S. 40 A(2)(B) OF THE ACT. HE ALSO OBSERVED THAT THERE W AS NO OPENING STOCK AS ON 01/04/2011 AND NO CLOSING S TOCK ON 31/03/2012 AS THE GOODS PURCHASED ON A DAY W ER E SO L D ON THE SAME DAY. IN THE LIGHT OF THE ABOVE CIRCUMSTANCES , HE HAS PROVIDED FIVE INSTANCES AT PAGE NO. 5 OF THE ASSESSMENT ORDER STATING TH ER E WAS LOSS INCURRED BY THE ASSESSEE ON SALE TRANSACTIONS MADE WITH THE PERSONS COVERED U/S. 40A(2)(B) OF THE ACT. HE HAS CONCLUDED THAT ASSESSEE HAS PURCHASED GOODS FROM PERSONS COVERED U/S. 40(A)(2)(B) OF T HE ACT. WE HAVE CONSIDERED THE DETAILED FINDINGS OF LD. CIT(A) AS I.T.A NO. 3026 /AHD/20 16 A.Y. 2012 - 13 PAGE NO IT O V S. SMT. NAMRATA ALPITBHAI PATEL M/S ALLIANCE INFRASTRUCTURE & LOGISTICS 4 ELABORATE ABOVE IN THIS ORDER STATING THAT THE ASSESSING OFFICER HAS ESTIMATED THE PROFIT OF THE ASSESSE E WITHOUT REJECTING BOOKS OF ACCOUNTS U/S. 143(3) OF THE ACT AND WITHOUT POINTING OU T ANY SPECIFIC DEFECT IN HER BOOKS OF ACCOUNTS. IT IS NOTICED THAT THE BOOKS OF AC COUNTS OF THE ASSESSEE WERE AUDI TED AND I T IS NOT THE CASE O F T HE ASSESSEE THAT SHE HAS NOT PRODUCED THE A WAITED P & L A/C, BALANCE SHEET , AUDIT REPORT, BOOKS OF ACCOUNTS AND BILLS/VOUCHES ETC. HOWEVER, THE ASSESSING OFFICER HAS FAILED TO POINT OUT ANY DEFECT IN THE MAINTENANCE OF BOOKS OF ACCOUNT BY THE ASSESSEE AS HE HAS FAILED TO DEMONSTRATE WITH RELEVANT EVIDENCES THAT THE TRANSACTIONS OF THE ASSSESEE WITH THE PERSON COVE RED U/S. 40A(2)(B) OF THE ACT WERE NOT GENUINE. THE ASSESSING OF FICER HAS FAILED TO CONTRADICT T H E CONTENTION OF THE ASSESSEE THAT THE PERSONS COVERED U/S. 40 A(2)(B) OF THE ACT HAVE DISCLOSED GROSS PROFIT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. T HE FINDINGS OF THE ASSESSING OFFICER IS NOT BAS ED O N ANY RELEVANT MATERIAL THAT THE TRANSACTIONS OF THE ASSESSEE WITH THE PERSONS COVERED U/S. 40A(2)(B) OF THE ACT WERE BOGUS AND NOT GENUINE. INTER ALIA HE HAS ALSO NOT CARRIED OUT ANY INVESTIGATION TO C OME TO THE CONCLUSION THAT T H E T HERE WAS A SUPPRESSION OF PROFIT MADE BY THE ASSESSEE F R O M THE IMPUGNED TRANSACTIONS. TH EREFORE, THE IMPUGNED ESTIMATED GROSS PROFITS ON ASSUMPTION BASIS IS NOT JUSTIFIED, THEREFORE, WE DO NOT FIND ANY ERROR IN THE DECISIO N OF THE LD. CIT(A). ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 27 - 09 - 201 8 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 27 /09 /2018 / COPY OF ORDER FORWARDED TO: - I.T.A NO. 3026 /AHD/20 16 A.Y. 2012 - 13 PAGE NO IT O V S. SMT. NAMRATA ALPITBHAI PATEL M/S ALLIANCE INFRASTRUCTURE & LOGISTICS 5 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDA BAD 6. GUARD FILE. BY ORDER/ , / ,