M/s Jai Maa Plastics, Chandigarh V. ITO, Chandigarh

ITA 329/CHANDI/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60906 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 28-06-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 13-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: DEEPINDER MALHOTRA
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 329/CHD/2012 ASSESSMENT YEAR: 2007-08 M/S JAI MAA PLASTICS, VS THE ITO, WARD-1(2), CHANDIGARH CHANDIGARH PAN NO. AACFJ3756E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DEEPINDER MALHOTRA RESPONDENT BY : SHRI AKHILESH GUPTA DATE OF HEARING : 28.06.2012 DATE OF PRONOUNCEMENT : 29.06.2012 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), CHANDIGARH DATED 12.12.2011 RELATING TO ASS ESSMENT YEAR 2007-08. 2. GROUND NO.1 OF THE APPEAL READS AS UNDER:- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS FACTS IN UPHOLDING THE ADDITION OF RS. 1,18,000/- M ADE ON ACCOUNT OF NON DEDUCTION OF TAX FROM INTEREST PAYME NT U/S 194A OF THE INCOME TAX ACT, 1961 TO SMT. MURTI DEVI . THE LD. CIT(A) IGNORED THE FORM 15H PLACED BY THE APPELLANT ON RECORD. 2 3. AT THE TIME OF HEARING OF THE APPEAL, SHRI DEEPI NDER MALHOTRA DID NOT PRESS FOR THIS GROUND OF APPEAL AND ACCORDINGLY WE DISMISS THE SAME AS NOT PRESSED. 4. GROUND NO.2 OF THE APPEAL READS AS UNDER:- 2. THAT THE ORDER OF CIT(A) IS ARBITRARY AND UNJUSTIFIED AS IT UPHELD THE ADDITION OF RS. 1,00,0 00/- ON AD HOC BASIS IN THE TRADING ACCOUNT. THE ADDITION H AS BEEN MADE WITHOUT GIVING ANY MATERIAL REASONING FOR THE SAME, WHICH IS ALSO AGAINST THE PRINCIPLES OF NATUR AL JUSTICE. 5. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS EARNING INCOME FROM TRADING OF PLASTIC GRANUALS. DURING TH E ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE HAS DECLARED A GP RATE OF 2.78% AS COMPARED TO 4.03% SHOWN IN IMMEDIATELY PRECEDING YEAR. THE ASSE SSING OFFICER REQUIRED THE ASSESSEE TO EXPLAIN THE REASONS FOR FALL IN GP RATE AS COMPARED TO THE IMMEDIATELY PRECEDING YEAR. IN RESPONSE TO THE ABO VE QUERY, THE ASSESSEE SUBMITTED THAT DURING THE YEAR FIRM HAS SOLD THE RAW MATERIAL WHIC H WAS PURCHASED FORM RELIANCE INDUSTRIES AND IPCL TO THE TUNE OF RS. 106251676/- AND VIRTUALLY THE SALES WERE INCREASED TO DOUBLE TH IS YEAR AS COMPARED TO THE PREVIOUS YEAR I.E. 2005-06. IT IS FURTHER SUBMITTE D THAT THE NET PROFIT HAS BEEN DECLARED BY THE FIRM AT RS. 321952/- DURING TH E YEAR AS COMPARED TO RS. 194820/-, DECLARED IN THE PRECEDING YEAR . THE ASSESSING OFFICER MADE AN AD HOC ADDITION OF RS. 1,00,000/- TO THE TRADING AC COUNT OBSERVING AS UNDER:- THE EXPLANATION OFFERED FOUND REASONABLE AND CONVI NCING TO SOME EXTENT. ON CHECKING THE RECORD IT WAS NOTICED THAT THE FACTS STATED BY THE ASSESSEE ARE CORRECT. THE STOCK REGISTER 3 WAS NOT PRODUCED BY THE ASSESSEE. HENCE, THE TRADIN G RESULTS ARE NOT SUBJECT TO VERIFICATION. AFTER CONSIDERING THE EXPLANATION OFFERED AND TRADING RESULTS DISCLOSED, TO PLUG THE POSSIBLE LEAKAGES IN THE TRADING ACCOUNT AN ADHOC A DDITION OF RS. 1,00,000/- IS MADE TO TRADING ACCOUNT. 5. ON APPEAL, THE CIT(A) CONFIRMED THE ADDITION AND HENCE THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. SHRI DEEPINDER MALH OTRA, LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE IMPUGNED ADDITI ON MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) IS NO T SUSTAINABLE IN LAW. THE ASSESSING OFFICER HIMSELF HAS ADMITTED THE EXPL ANATION OFFERED BY THE ASSESSEE REGARDING FALL IN GP RATE AS REASONABLE AN D CONVINCING. THE ASSESSING OFFICER STATED THAT ON CHECKING THE RECOR DS, IT WAS NOTICED THAT THE FACTS STATED BY THE ASSESSEE WERE CORRECT. THUS, TH E ADDITION MADE BY THE ASSESSING OFFICER WAS WITHOUT ANY BASIS. IN FACT, THE ASSESSING OFFICER HAS ACCEPTED THE CONTENTION OF THE ASSESSEE REGARDING T HE FALL IN GP DUE TO INCREASED SALE AND, THEREFORE, HE HAS STATED THAT THE EXPLANATION OFFERED BY THE ASSESSEE IS REASONABLE AND CONVINCING BUT ON T HE OTHER HAND HE MADE THE IMPUGNED ADDITION WITHOUT ASSIGNING ANY COGENT REAS ON. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DEFECT IN THE BOOKS OF ACCOUNT REGULARLY MAINTAINED BY THE ASSESSEE. THE ASSESSING OFFICER HAS ALSO NOT REJECTED THE BOOK RESULTS BY RESORTING TO SECTION 145 OF THE INC OME TAX ACT, 1961. SHRI DEEPINDER MALHOTRA, LD. COUNSEL FOR THE ASSESSEE AL SO SUBMITTED THAT THE REFERENCE MADE BY THE ASSESSING OFFICER REGARDING N ON PRODUCTION OF STOCK 4 REGISTER IS ALSO NOT RELEVANT. THE ASSESSING OFFICE R IN ITS ORDER HAS CATEGORICALLY STATED AS UNDER:- ---A DETAILED QUESTIONNAIRE WAS ISSUED TO THE ASSE SSEE WHICH WAS COMPLIED WITH BY THE ASSESSEE THROUGH HIS COUNS EL. SHRI T.R. MALHOTRA, ADVOCATE, SHRI T.R. MALHOTRA, ADVOCA TE ATTENDED THE ASSESSMENT PROCEEDINGS FROM TIME TO TIME AND IN FORMATION AS CALLED FOR WAS FURNISHED. THE BOOKS OF ACCOUNT WER E PRODUCED AND TEST CHECKED. 7. FROM THE ABOVE IT IS CLEAR THAT THE ASSESSEE HAS PRODUCED THE RELEVANT RECORDS AS REQUIRED BY THE ASSESSING OFFICER. WE M AY ALSO OBSERVE HERE THAT ASSESSING OFFICER HAS NOT GIVEN ANY FINDINGS AS TO WHY THE STOCK REGISTER WAS RELEVANT IN THIS CASE PARTICULARLY WHEN THE ENTIRE PURCHASE, SALES AND CLOSING STOCK WERE VERIFIABLE. IN THE ABSENCE OF SUCH FIND INGS ALSO, THERE IS NO JUSTIFICATION IN MAKING THE ADDITION. IT APPEARS T HAT THE ASSESSING OFFICER HAS MADE ADHOC ADDITION OF RS. 1,00,000/- WITHOUT A NY BASIS, WHICH DESERVES TO BE DELETED. IT IS ALSO OBSERVED THAT THE CIT(A) HAS ALSO NOT CORRECTLY APPRECIATED THE FACTS OF THE PRESENT CASE. CONSIDE RING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE VI EW, THAT THERE WAS NO JUSTIFICATION IN MAKING THE IMPUGNED ADDITION. WE, THEREFORE, DELETE THE IMPUGNED ADDITION OF RS. 1,00,000/- MADE BY THE ASS ESSING OFFICER AND CONFIRMED BY THE CIT(A). 8. IN THE RESULT, APPEAL IS ALLOWED PARTLY. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF JUNE, 2012 SD/- SD/- (T. R. SOOD) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 29 TH JUNE, 2012 5 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR