M/S MANAKCHAND KAILASHCHAND SARAF, Kota V. ACIT Q, Kota

ITA 343/JPR/2012

• Counselvise Citation: 34323114 RSA 2012
• Duration Of Justice: 2 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 09-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS NEENA JEPH JCIT DHK
• Keywords: Condonation of delay

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 343/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2004-05 M/S.MANAKCHAND KAILASHCHAND SARRAF CHOUTH MATA BAZAR KOTA CUKE VS. THE ACIT CIRCLE- 1 KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AADCM 7002 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA JKTLO DH VKSJ LS@ REVENUE BY : MRS. NEENA JEPH (JCIT). LQUOKBZ DH RKJH[K@ DATE OF HEARING : 18/12/2014 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 13/02/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A),KOTA DATED 12-01-2012 FOR THE ASSESSMENT YE AR 2004-05 WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. AO HAS ERRED IN INVOKING THE PROVISION OF SECTI ON 145(3) OF THE I.T. ACT AND IN REJECTING THE BOOKS OF ACCOU NTS OF THE APPELLANT AND THE LD. CIT(A) HAS FURTHER ERRED IN C ONFIRMING THE INVOCATION OF THE PROVISIONS OF SECTION 145(3) AND THE REJECTION OF THE BOOKS OF ACCOUNT OF THE APPELLANT. ITA NO. 343/JP/2012 M/S. MANAKCHAND KAILASHCHAND SARAF VS. ACIT CIRCLE- 1, KOTA . 2 2. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. AO HAS ERRED IN ESTIMATING THE TURNOVER IN GOL D ACCOUNT AT RS. 94,30,000/- AS AGAINST DECLARED TURNOVER AT RS. 85,73,324/- AND ESTIMATING THE GROSS PROFIT RATE OF GOLD ACCOUNT @ 20% AS AGAINST THE DECLARED GROSS PROFIT RATE OF 18.85% AND ESTIMATING THE TURNOVER IN SILVER ACCOU NT AT RS. 15,80,000/- AS AGAINST THE DECLARED TURNOVER AT RS . 14,36,319/- AND ESTIMATING THE GROSS PROFIT RATE OF 25% AS AGAINST DECLARED GROSS PROFIT OF SILVER ACCOUNT OF 21.14%. THE LD. CIT(A) HAS FURTHER ERRED IN CONFIRMING THE ADDITION OF RS. 1 LAC IN GOLD AND SILVER ACCOUNT. 2.1 DURING THE COURSE OF HEARING, IT IS PRAYED BY T HE LD. AR OF THE ASSESSEE THAT THE FILING OF APPEAL IS DELAYED BY 23 DAYS AND THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FOR NOT FILING TH E APPEAL IN TIME WHICH IS EXPLAINED AS UNDER BY FILING OF AFFIDAVIT BY TH E ANOTHER PARTNER OF THE FIRM OF THE AS THE ASSESSEE FIRM IS A PARTNERSHIP FIRM. 1. THAT THE ORDER DATED 12-01-2012 PASSED BY THE LD. CIT(A), KOTA WAS RECEIVED ON DATED 17-01-2012. 2. THAT HOWEVER, IMMEDIATELY ON THE RECEIPT OF THE SAID ORDER, THEREAFTER I HAVE TO RUSH FOR A RELIGIOUS ON E MONTH TOUR FOR SAMMED SHIKHAJI, JHARKHAND. 3. THAT WHILE I WAS ON THE SAID RELIGIOUS TOUR SAMM ED SHIKHARJI, JHARKHAND, I HAD TO SUFFER DIARRHEA AND HAD T REMAIN FOR 15 DAYS TREATMENT. 4. THAT I COULD COME TO RESUME MY BUSINESS ONLY IN THE SECOND HALF OF MARCH, 2012. ITA NO. 343/JP/2012 M/S. MANAKCHAND KAILASHCHAND SARAF VS. ACIT CIRCLE- 1, KOTA . 3 5. THAT IMMEDIATELY THEREAFTER, I DISCUSSED THE MAT TER WITH MY LOCAL COUNSEL MR. NEERAJ JAIN, FCA, WHO IN TURN CONTACTED AT JAIPUR AND THIS APPEAL COULD BE FILED THEREAFTER ON DATED 09-04-2012 WITH A DELAY. 6. THAT THERE WAS NO INTENTION OR NO ULTERIOR MOTIV E BEHIND DELAYING THE APPEAL AND THAT I DID NOT GAIN ANYTHING FROM THE DELAY SO CAUSED. 7. THAT I AM AN OLD INCOME TAX ASSESSEE AND AS WHEN NEED AROSE AND WHEN ADVISED, I IMMEDIATELY FILED AP PEALS WITHIN LIMITATION. 2.2 IN THE PETITION FILED ALONGWITH AFFIDAVIT, THE LD. AR THE PLACED RELIANCE IN THE CASE OF COLLECTOR, LAND & ACQUISITI ON VS. MST. KATIJI & OTHERS (1987) 167 ITR 471 (SC) WHEREIN THE HON'BLE APEX COURT HAS OBSERVED AS UNDER:- THE LEGISLATURE HAS CONFERRED THE POWER TO CONDON E DELAY BY ENACTING SECTION 5 OF THE LIMITATION ACT, 1963 IN ORDER TO ENABLE THE COURTS TO DO SUBSTANTIAL JUSTICE TO PART IES BY DISPOSING OF MATTERS ON MERITS. THE EXPRESSION SUFFICIENT CAU SE EMPLOYED BY THE LEGISLATURE IS ADEQUATELY ELASTIC TO ENABLE THE COURTS TO APPLY IN LAW IN A MEANINGFUL MANNER WHICH SUB-SERVES THE END S OF JUSTICE THAT BEING THE LIFE PURPOSE OF THE EXISTENCE OF THE INSTITUTION OF COURTS. IT IS COMMON KNOWLEDGE THAT THIS COURT HAS BEEN MAKING A JUSTIFIABLY LIBERAL APPROACH IN MATTERS INSTITUTED IN THIS COURT. BUT, THE MESSAGE DOES NOT APPEAR TO HAVE PERCOLATED DOWN TO ALL THE OTHER COURTS IN THE HIERARCHY. ITA NO. 343/JP/2012 M/S. MANAKCHAND KAILASHCHAND SARAF VS. ACIT CIRCLE- 1, KOTA . 4 2.3 THE LD. AR PLEADED THAT THERE BEING SUFFICIENT CAUSE FOR THE ASSESSEE FOR NOT FILING THE APPEAL IN TIME, THE CON DONATION OF DELAY OF THE APPEAL MAY BE ALLOWED THE APPEAL MAY BE HEARD ON ME RITS. 2.4 THE LD. DR ON OTHER HAND VEHEMENTLY OPPOSED THA T ANOTHER PARTNER OF ASSESSEE FIRM HAS GIVEN VAGUE AND GENERAL REASON S FOR THE DELAY IN FILING THE APPEAL. NO DATE OF HIS DEPARTURE FROM KO TA IS GIVEN. THOUGH IT HAS BEEN ADMITTED THAT THE ORDER OF THE LD. CIT(A) WAS RECEIVED BY HIM ON 17-01-2012 YET NO SPECIFIC DATE IS GIVEN AS TO WHEN THE ASSESSEE PROCEEDED FOR ALLEGED ONE MONTH RELIGIOUS TOUR AND THERE IS NO SPECIFIC PURPOSE OF ABOUT TAKING ONE MONTH RELIGIOUS TOUR. I T IS FURTHER CONTENDED THAT IF THE ASSESSEE HAD UNDERTAKEN ONE MONTH TOUR THEN IT CLEARLY IMPLIES THAT THE THERE WOULD BE SOME PRE-PLAN RESERVATION F OR CONDUCTING ONE MONTH RELIGIOUS TOUR FOR JHARKHAND. SIMILARLY, THE DATE OF RETURN IS NOT SPECIFIED. THUS IN THE ENTIRETY OF THE FACTS, IT I S PLEADED THAT REASONS BEING VAGUE, NON-SPECIFIC AND AFTER THOUGHT, THE CONDONAT ION OF DELAY IN FLING THE APPEAL MY NOT BE ALLOWED. 2.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE ASSE SSEE HAS FILED AN AFFIDAVIT ALONGWITH MEDICAL CERTIFICATE AS TO DELAY IN FILING OF THE APPEAL. ITA NO. 343/JP/2012 M/S. MANAKCHAND KAILASHCHAND SARAF VS. ACIT CIRCLE- 1, KOTA . 5 THE HON'BLE APEX COURT IN THE CASE OF COLLECTOR, LA ND & ACQUISITION VS. MST.KATIJI & OTHERS (1987), 167 ITR 471 HELD THAT W HEN TECHNICAL CONSIDERATION AND CAUSE OF SUBSTANTIAL JUSTICE ARE BITERNESS AGAINST EACH OTHER THE CAUSE OF SUBSTANTIAL JUSTICE SHOULD PREVA IL. CONSEQUENTLY, WE ARE OF THE VIEW THAT THE ASSESSEE WAS PREVENTED BY SUFF ICIENT CAUSE FOR FLING 23 DELAY IN FILING THE APPEAL. THUS IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CONDONATION OF DELAY IN FILING THE APPEAL IS ALLOWED. 3.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S DOING BUSINESS OF SARAFFA I.E. GOLD AND SILVER JEWELLERY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO RAISED OBJECTIONS IN RESPECT OF MAINTENANCE OF BOOKS OF ACCOUNT AS UNDER:- (A) NON-AVAILABILITY OF INVENTORY OF ORNAMENTS REMA INED AT THE END OF THE YEAR. (B) NAME AND ADDRESS OF THE PERSONS FROM WHOM THE O LD JEWELLERY WAS PURCHASED OR TO WHOM NEW ORNAMENTS WE RE SOLD ARE NOT AVAILABLE. CROSS VERIFICATION OF THE SHORTAGES CLAIMED IN TH E ACCOUNTS IS NOT POSSIBLE. (D) SHORTAGE AND WASTAGES ARE ONLY SUPPORTED BY SUNAR PURCHIS. THE ASSESSEE FILED REPLY. HOWEVER, THE AO REJECTED THE BOOKS OF ACCOUNT U/S 145(3) OF THE ACT. THE AO APPLIED GROSS PROFIT RATE OF 20% ON ITA NO. 343/JP/2012 M/S. MANAKCHAND KAILASHCHAND SARAF VS. ACIT CIRCLE- 1, KOTA . 6 ESTIMATED TURNOVER OF RS. 94.30 LACS (10% TURNOVER WAS ALSO ENHANCED) IN GOLD ACCOUNT AND APPLIED RATE OF 25% ON ESTIMATE D TURNOVER OF RS. 15.80 LACS (10% TURNOVER WAS ENHANCED) AND THUS AD DED TO RS. 3,61,432/- TO THE TOTAL INCOME OF THE ASSESSEE. THE AO FRAMED THE ASSESSMENT BY MAKING THE RELEVANT ADDITIONS AS UNDE R:- TOTAL INCOME AS DECLARED BY ASSESSEE RS. 2,36,34 2/- ADD 1. TRADING ADDITION AS PER PARA NO.4 RS. 3,61,432/ - 2. DISALLOWANCES OUT OF EXPENSES RS. 66,638/- AS PER PARA 5 3. DISALLOWANCE OF WAGES AS PER RS. 8,989/- PARA 6 4. DISALLOWANCES OUT OF INTEREST AS PER RS. 12,2 00/- RS. 4,49,259/- PARA 7 TOTAL INCOME RS. 6,85,601/- R/O RS. 6,85,000/- 3.2 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL BEFORE THE LD. CIT(A) CHALLENGING THE REJECTION OF BOOKS OF ACCOUNT AND R ETENTION OF ADDITIONS WHEREIN THE LD. CIT(A) UPHELD THE REJECTION OF BOOK S OF ACCOUNT AFTER FOLLOWING OBSERVATIONS. 4.12 .. THE ASSESSEE WAS FOUND TO HAVE MAINTAINED COMPLETE QUANTITATIVE DETAILS OF STOCK, PURCHASES, SALE AND MELTING OF OLD ORNAMENTS. HOWEVER, IT HAS NOT MAINTAINED INVENTORY OF STOCK, ONLY QUANTITATIVE DETAILS WERE MAINTAINED. ITA NO. 343/JP/2012 M/S. MANAKCHAND KAILASHCHAND SARAF VS. ACIT CIRCLE- 1, KOTA . 7 IT IS SEEN THAT ALL THE PURCHASES WERE IN CASH AND PURCHASERS WEE NOT IDENTIFIABLE. THE ASSESSEE ALSO FAILED TO EXPLAIN SHORTAGE OF 23.9% ON MELTING OF O LD ORNAMENTS ON 12-04-2003 AS AGAINST PURCHASES WITH IMPURITY OF 21% TO 22% RESULTING IN EXCESS LOSS OF APPROXIMATELY 26 GRAMS OF GOLD. IT IS ALSO SEEN THAT IMPURITIES MIXED IN MAKING THE ORNAMENTS FROM BULLION WAS NOT ACCOUNTED ON DAY TO DAY BASIS AND SOMETIMES THESE WERE RECORDED IN DIFFERENT YEAR THAN THE ACTUAL YEAR OF OCCURRENCE ( AS MENTIONED IN ASSESSING OFFICERS ORDER ALSO.). THUS IT CAN BE SEEN THAT THOUGH THE ASSESSEE HAS MAINTAINED COMPLETE BOOKS OF ACCOUNT , THESE DID NO T GIVE CORRECT RESULT. IN VIEW OF THE ABOVE, THE REJECTION OF BOOKS OF ACC OUNT U/S 145(3) IS UPHELD. 3.3 THEREAFTER, THE LD. CIT(A) HELD THAT ESTIMATION OF SALES WAS NOT CALLED FOR AND APROPOS ASSESSEE'S GROUND QUA ADDITI ON OF RS. 3,61,432/-, WAS REDUCED TO RS. 1.00 LAC BY FOLLOWING OBSERVATIO N. 4.42 . CONSIDERING THE FACTS OF THE CASE, THE SALES FIGURES WERE NOT REQUIRED TO BE DISTURBED AS NO DEFECT RELATED TO SALES WAS POINTED OUT BY THE ASSESSING OFFICER. CONSIDERING THE DEFECT POINTED OUT BY ASSESSING OFFICER AND CONSIDERING THE FACTS OF THE CASE, IN M Y OPINION AN ADDITION OF RS. 1,00,000/- WILL MEET THE ENDS OF JUSTICE. ITA NO. 343/JP/2012 M/S. MANAKCHAND KAILASHCHAND SARAF VS. ACIT CIRCLE- 1, KOTA . 8 THE ADDITION OF RS. 1,00,000/- IS CONFIRMED. THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITIO N OF RS. 2,61,432/-. 3.4 AGGRIEVED, THE ASSESSEE IS BEFORE US REGARDING CHALLENGING THE BOOKS OF ACCOUNT AS WELL AS RETENTION OF ADDITION O F RS. 1.00 LAC. 3.5. THE LD. COUNSEL FOR THE ASSESSEE REITERATED TH E FACTS AS RAISED BEFORE THE LD. CIT(A) AND FURTHER CONTENDS THAT THERE IS N O POTENTIAL DEFECTS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE MERELY BECAUSE THE INVENTORY OF STOCK ON THE BASIS OF QUANTITATIVE DETAILS ARE NOT MAINTAINED. THUS THERE IS NO QUESTION OF REJECTION OF BOOKS OF ACCOUNT OF THE ASSESSEE. 4.1 APROPOS RETENTION OF ADDITION OF RS. 1.00 LAC, IT IS PRAYED THAT THE AO HAS NOT GIVEN ANY BASIS AS TO HOW THE DEFECTS CA N BE QUANTIFIED TO RS. 1.00 LAC. 4.2. THE LD. DR ON THE OTHER HAND CONTENDS THAT APA RT FROM THE DEFECTS IN MAINTAINING STOCK INVENTORY IN QUANTITATIVE DETA ILS WHICH IS VERY CRUCIAL TO DECIDE WHICH TYPE OF QUALITY WAS SOLD AN D WAS IN STOCK. IT IS QUITE DIFFICULT TO ASCERTAIN TRUE PROFITS OF THE AS SESSEE. THEREFORE, THE PROVISIONS OF SECTION 145(3) HAVE RIGHTLY BEEN APPL IED AND UPHELD BY THE LD. CIT(A), BESIDES THE ASSESSEE COULD NOT EXPLAIN THE SHORTAGE OF 23.9% ON MELTING OF ORNAMENTS AND IMPURITIES OF 21% TO 22 % AS EXCESS LOSS OF ITA NO. 343/JP/2012 M/S. MANAKCHAND KAILASHCHAND SARAF VS. ACIT CIRCLE- 1, KOTA . 9 ABOUT 28 GMS. THUS THE ENTIRE BOOKING KEEPING OF TH E ASSESSEE WAS NOT REFLECTIVE OF CORRECT PROFIT. THEREFORE, THE LD. CI T(A) HAS BEEN VERY REASONABLE IN REDUCING THE ADDITION BY MORE THAN 1/ 3 RD OF MERELY RS. 1.00 LAC. 4.3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. APROPOS ISSUE OF REJECTION OF BOOKS OF ACCOUNT, THE DEFECTS POINTED OUT BY THE LD. CIT(A) AND AGITATED BY THE LD. DR COULD NOT BE DENIED BY THE LD. COUNSEL FOR THE ASSESSEE FROM THE RECORD. THUS IN VIEW THEREOF, WE UPHOLD THE ORDER OF THE LD. CIT(A) IN REJECTING THE BOOKS OF ACCOUNT. 5.1 APROPOS SECOND GROUND OF THE ASSESSEE REGARDING RETENTION OF RS. 1.00 LAC, ONCE THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE REJECTED THEN THE ESTIMATION OF CORRECT TAXABLE PROFIT IS INEVITABLE. THE LD. CIT(A) HAS REDUCED THE ADDITION FROM RS. 3,61,432/- TO RS. 1.0 0 LAC. THE LD. COUNSEL FOR THE ASSESSEE COULD NOT DEMONSTRATE AS TO HOW TH IS ESTIMATE IS ARBITRARY OR HARSH. IN THIS VIEW OF THE MATTER, WE SEE NO JUS TIFICATION IN THE ASSESSEE'S STAND INASMUCH AS IT HAS NEITHER BEEN DE MONSTRATED THAT THE ADDITION IS ARBITRARY OR EXCESSIVE NOR ANY JUSTIFIC ATION COULD BE PROVIDED AS TO HOW THE AMOUNTS SHOULD HAVE BEEN LESSER. IT I S TRITE LAW THAT ESTIMATE ITA NO. 343/JP/2012 M/S. MANAKCHAND KAILASHCHAND SARAF VS. ACIT CIRCLE- 1, KOTA . 10 MADE BY THE AUTHORITIES CANNOT BE DISTURBED UNLESS THERE ARE PALPABLE REASON FOR THE APPELLATE AUTHORITIES TO INTERFERE W HICH HAVE NOT BEEN DEMONSTRATED BEFORE US. THUS IN THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE UPHOLD THE ADDITION O F RS. 1.00 LAC CONFIRMED BY THE LD. CIT(A). 6.0. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED.` ORDER PRONOUNCED IN THE OPEN COURT ON 13 /02/201 5. SD/- SD/- VH-VKJ-EHUK VKJ-IH-RKSYKUH (T.R. MEENA) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 13 TH FEB. 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. MANAKCHAND KAILASHCHAND SARRAF, KOTA 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE- 1, KOTA 3. VK;DJ VK;QDRVIHY@ THE CIT(A). 4. VK;DJ VK;QDR@ CIT, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.343/JP/2012) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR ITA NO. 343/JP/2012 M/S. MANAKCHAND KAILASHCHAND SARAF VS. ACIT CIRCLE- 1, KOTA . 11