DCIT, Jaipur V. BHAWANI SILICATE INDUSTRIES, Jaipur

ITA 32/JPR/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5143 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 04-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Rejection of books of accounts; Question of law
• Section: 145

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 32/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13 THE DCIT CIRCLE- 7 JAIPUR CUKE VS. M/S. BHAWANI SILICATE INDUSTRIES F-143, JETPURA INDUSTRIAL AREA JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABFB 8373 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY :SHRI R.A. VERMA, ADDL CIT-. DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI P.C. PARWAL, CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 04/07/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 05/07/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-3, JAIPUR DATED 29-10-2015 FOR THE ASSESSME NT YEAR 2012-13 RAISING THEREIN FOLLOWING GROUNDS:- (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE TRAD ING ADDITION OF RS. 33,41,059/- RELYING UPON THE DECISION OF THE ITAT COMMON ORDER DATED 13-02-2015 IN A.Y. 2008-09 AND 2 009- 10 IGNORING THAT THE FACTS OF THE A.Y. 2012-13 (THE YEAR UNDER CONSIDERATION ARE DIFFERENT INASMUCH AS THE A SSESSEE HAS NOT MAINTAINED QUALITYWISE STOCK REGISTER AS PU RCHASE OF ITA NO. 32/JP/2016 THE DCIT, CIRCLE- 7, JAIPUR VS. M/S. BHAWANI SILICA TE INDUSTRIES, JAIPUR . 2 MUSTARD SEEDS IS BASED ON OIL CONTENT OF SEEDS, ASS ESSEE DID NOT FURNISH ALL LABORATORY TEST REPORTS OF OIL CONT ENT IN THE MUSTARD SEEDS, NON-MAINTENANCE OF PRIMARY REGISTERS / DOCUMENTS RELATING TO INCOME AND OUTGOING OF RAW MA TERIAL AND FINISHED PRODUCTS, IMPROPER SUPPORTING VOUCHERS OF LABOUR PAYMENTS. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDI TION OF RS. 85,971/- RELYING UPON DECISION OF HON'BLE RAJASTHA N HIGH COURT WHICH WAS MADE BY THE ON ACCOUNT OF LATE PAY MENT OF EMPLOYEES CONTRIBUTION TO PF AND ESI, AS THE DEPART MENT HAS NOT ACCEPTED THE DECISION OF HON'BLE RAJASTHAN HIGH COURT 2.1 AS REGARDS GROUND NO. 1 OF THE REVENUE, THE LD. AR OF THE ASSESSEE AT THE OUTSET OF THE HEARING PRAYED THAT T HE ISSUE IN QUESTION RAISED BY THE REVENUE IS SQUARELY COVERED BY THE DE CISION OF ITAT IN ASSESSEE'S OWN CASE. THE GROSS PROFIT RATE DECLARED BY THE ASSESSEE DURING THE YEAR IS BETTER AS COMPARED TO EARLIER YEARS. HE NCE, THE LD. CIT(A) CONSIDERING THE ORDER OF THE ITAT HAD DELETED THE TRADING ADDITION MADE BY THE AO BY APPLYING GROSS PROFIT RATE OF 1.98% AS AGAINST GROSS PROFIT RATE OF 1.71% DECLARED BY THE ASSESSEE. DURING TH E COURSE OF HEARING, THE LD. AR OF THE ASSESSEE ALSO BROUGHT TO NOTICE OF TH E BENCH THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN ASSESSEE'S OWN CAS E FOR THE ASSESSMENT ITA NO. 32/JP/2016 THE DCIT, CIRCLE- 7, JAIPUR VS. M/S. BHAWANI SILICA TE INDUSTRIES, JAIPUR . 3 YEAR 2008-09 AND 2009-10 WHO HAS AFFIRMED THE DECIS ION OF THE TRIBUNAL IN ASSESSEE'S OWN CASE (SUPRA). 2.2 THE LD. DR RELIED ON THE ORDER OF THE AO. 2.3 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT EMERGES FROM THE RECORD THA T ITAT JAIPUR BENCH HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE VID E ITS ORDER DATED 13-02-2015 FOR THE ASSESSMENT YEARS 2008-09 AND 200 9-10 WHICH HAS ALSO BEEN AFFIRMED BY THE HON'BLE JURISDICTIONAL HIGH CO URT IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEARS 2008-09 AND 2009-10 ( (PR.COMMISSIONER VS. BHAWANI SILICATE INDUSTRIES, 236 TAXMAN 0596 (R AJ.). FOR THE SAKE OF CONVENIENCE AND BREVITY, THE OBSERVATION OF THE HON 'BLE JURISDICTIONAL HIGH COURT IN ASSESSEE'S OWN CASE IS AS UNDER:- 9. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADV ANCED BY COUNSEL FOR THE REVENUE AND IN OUR VIEW, THE TRIBUNAL, WHIC H IS THE ULTIMATE FINAL FACT FINDING AUTHORITY, AFTER ANALYZING THE MATERIAL AGA IN PLACED BEFORE IT AND HAVING GONE INTO THE ISSUE ONCE AGAIN HAS COME TO T HE CONCLUSION THAT MERELY BECAUSE QUALITATIVE RECORD WAS NOT MAINTAINED AND O N THIS PREMISE, THE BOOKS OF ACCOUNTS COULD NOT HAVE BEEN REJECTED. IT IS ALS O AN ADMITTED FACT THAT MUSTARD SEED IS ONLY SINGLE COMMODITY USED BY THE A SSESSEE FOR MANUFACTURING OF MUSTARD OIL AND THE TRIBUNAL NOTICED THAT THE AS SESSEE FILED YIELD PERCENTAGE FOR TWO MONTHS BEFORE THE AO IN WHICH NO DISCREPANC Y WAS FOUND BY THE AO. THE TRIBUNAL HAS FOUND THAT THE PRODUCTION OF MUSTA RD OIL IS A CONTINUOUS PROCESS AND THE SEEDS ARE PUT INTO THE MILLING FOR CONTINUOUS OIL PRODUCTION. THE TRIBUNAL HAS FURTHER FOUND THAT 80% OF ITS MUST ARD OIL IS BY WAY OF TRADING SALE AND NEITHER DISCREPANCIES WERE NOTICED BY THE AO IN EITHER PURCHASE OR SALE NOR ANY SALE OR PURCHASE, FOUND UNRECORDED. TH E TRIBUNAL ALSO FOUND THAT THE BOOKS OF ACCOUNTS HAD BEEN MAINTAINED IN THE SA ME MANNER AS IN THE PAST ITA NO. 32/JP/2016 THE DCIT, CIRCLE- 7, JAIPUR VS. M/S. BHAWANI SILICA TE INDUSTRIES, JAIPUR . 4 AND THE ASSESSEE CANNOT BE EXPECTED TO STOP THE PLA NT AS AND WHEN THE NEW LOT OF MUSTARD SEED IS SUBJECTED TO CRUSHING AS MANUFAC TURING OF MUSTARD OIL IS A CONTINUOUS PROCESS. THE TRIBUNAL HAS ALSO FOUND AS A FINDING OF FACT THAT EXCEPT QUALITY, QUANTITY WISE STOCK DETAILS HAS BEE N MAINTAINED BUT NO OTHER DEFECT WAS NOTICED BY THE AO IN THE QUANTITATIVE DE TAILS AND AFTER NOTICING THE ABOVE FACT, HAS COME TO THE CONCLUSION THAT THE BOO KS OF ACCOUNTS OUGHT NOT TO HAVE BEEN REJECTED. IN OUR VIEW, SUCH A FINDING OF FACT WHICH HAS BEEN REACHED BY THE TRIBUNAL IS AFTER APPRECIATING THE MATERIAL AND EVIDENCE ON RECORD AND SUCH A FINDING HAS BEEN ARRIVED AT BY THE TRIBUNAL AFTER ANALYZING THE MATERIAL AND IN OUR VIEW, NO SUBSTANTIAL QUESTION OF LAW CAN BE SAID TO ARISE OUT OF THE ORDER OF THE TRIBUNAL. ONCE THE STOCK REGISTER HAS BEEN HELD TO BE PROPERLY MAINTAINED AND HAS BEEN HELD TO BE PROPER, NO TRADI NG ADDITION COULD HAVE BEEN MADE AND RIGHTLY SO, EVEN OTHERWISE, MINOR DIS CREPANCIES CANNOT RESULT INTO REJECTION OF BOOKS OF ACCOUNTS. 10. LEAVE APART THE ABOVE, IN OUR VIEW, WHAT CONCLU SIONS ARE TO BE REACHED IS INDEPENDENT OF THE RESULTS SHOWN IN THE BOOKS OF ACCOUNTS IF ANY MAINTAINED BY THE ASSESSEE. SECTION 145 ONLY PROVID ES THE BASIS ON WHICH COMPUTATION OF INCOME IS TO BE MADE FOR THE PURPOSE OF DETERMINING THE AMOUNT OF TAX PAYABLE BY AN ASSESSEE. THE PROVISION BY ITSELF DOES NOT DEAL WITH THE ADDITION OR DELETION IN THE INCOME. BEST J UDGMENT IS ALSO BASED ON THE MATERIAL AVAILABLE ON RECORD AND THEREFORE, WHILE M AKING AN ADDITION SOMETHING MORE IS TO BE COLLECTED BY THE AO WHO MAK ES ASSESSMENT OF AN ASSESSEE. AS POINTED OUT ABOVE, MERELY BECAUSE THER E IS SOME DEFICIENCY OF QUALITY WISE RECORD IN THE BOOKS OF ACCOUNTS, OR ME RELY BECAUSE OF REJECTION OF THE BOOKS OF ACCOUNTS, IT DOES NOT MEAN THAT IT MUS T NECESSARILY LEAD TO ADDITION IN THE RETURN OF INCOME OF THE ASSESSEE. A S NOTICED EARLIER, EVEN THE AO ESTIMATED THE INCOME BY MAKING ESTIMATED ADDITIO N BY APPLYING A PARTICULAR GP RATE SO ALSO THE CIT(A) REDUCED IT FU RTHER. THEREFORE, THESE TWO AUTHORITIES EVEN WHILE RESORTING TO BEST JUDGMENT H AD NO BASIS FOR COMING TO THE CONCLUSION REACHED AND EVEN IN A CASE OF ESTIMA TED/ADHOC ADDITION, PRIMA- FACIE, SOME MATERIAL IS REQUIRED TO BE BROUGHT ON R ECORD. THE REVENUE HAS AMPLE POWERS UNDER THE ACT, IF AN ASSESSEE AVOIDS O R EVADES TO UNEARTH OF TAX EVASION, THIS OBSERVATION IS ON THE CONTENTION OF C OUNSEL FOR THE REVENUE THAT EXCEPT RESORTING TO REJECTION OF BOOKS OF ACCOUNTS, REVENUE POSSIBLY HAS NO OTHER ALTERNATIVE AND COME TO MAKE ESTIMATED ADDITI ON AFTER RESORTING TO PROVISIONS OF SEC. 145(3). 11. IN THE LIGHT OF THE OBSERVATIONS MADE HEREIN AB OVE, THE ORDER OF THE TRIBUNAL IS JUST AND PROPER AND NO PERVERSITY IS NO TICED AND ACCORDINGLY WE ITA NO. 32/JP/2016 THE DCIT, CIRCLE- 7, JAIPUR VS. M/S. BHAWANI SILICA TE INDUSTRIES, JAIPUR . 5 FIND THAT NO SUBSTANTIAL QUESTION OF LAW CAN BE SAI D TO ARISE OUT OF THE ORDER OF THE TRIBUNAL. 2.4 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE JURI SDICTIONAL HIGH COURT (SUPRA), THIS GROUND OF THE REVENUE IS DISMISSED. 3.1 AS REGARDS GROUND NO. 2 OF THE REVENUE WHEREIN BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAD DEPOSITED THE AMOUNT OF EMPLOYEES CONTRIBUTION TOWARDS ESI AMOUNTING TO RS. 9,351/- A ND THE AMOUNT OF EMPLOYEES CONTRIBUTION TOWARDS PF AMOUNTING TO RS. 76,620/- FOR THE PERIOD APRIL 2011 TO MARCH 2012. THE AO OBSERVED TH AT THE ASSESSEE DEPOSITED THESE CONTRIBUTIONS AFTER DUE DATES OF TH E ESI AND PF ACT. ACCORDINGLY, THE AO MADE THE ADDITION OF RS. 85,971 /- U/S 36(1)(VA) OF THE I.T. ACT. 3.2 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R BEFORE THE LD. CIT(A) WHO HAS DELETED THE ADDITION BY FOLLOWING OB SERVATION. 6.3 I HAVE CONSIDERED THE FACTS OF THE CASE. IT I S SEEN THAT THE ASSESSEE HAS MADE THE PAYMENT OF PF AND ES I BEFORE THE DUE DATE OF FILING OF THE INCOME TAX RETURN AND THEREFORE, NO DISALLOWANCE IS REQUIRED. THE VARIOUS DECISIONS INCLUDING THE DECISION OF RAJASTHAN HIGH COURT REFERRED BY TH E APPELLANT ARE FULLY APPLICABLE TO THE FACTS OF THE PRESENT CASE. RESPECTFULLY FOLLOWING THE SAME, THE ADDITION MADE BY THEAO IS DELETED. 3.3 THE LD. DR RELIED ON THE ORDER OF THE AO. ITA NO. 32/JP/2016 THE DCIT, CIRCLE- 7, JAIPUR VS. M/S. BHAWANI SILICA TE INDUSTRIES, JAIPUR . 6 3.4 THE LD. AR OF THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT(A) AND THE CASE LAWS PLACED BEFORE THE LD. CIT(A) TO THIS EFFECT. 3.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. I HAVE GONE THROUGH THE ORDER OF THE LD. CIT(A) AND THE CASE LAWS SUBMITTED BEFORE THE LD. CIT(A) WHICH FINDS FAVOUR OF THE ASSESSEE. HENCE, THIS GROUND OF THE REVENUE IS DISM ISSED. 4.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 /07/2 016 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 05/07/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE DCIT, CIRCLE- 7,JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S. BHAWANI SILICATE INDUSTRIES, JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 32/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR