Shri Rajubhai B.Shah, Baroda V. The Dy.CIT.,Circle-2(2), Baroda

ITA 3468/AHD/2010

• Counselvise Citation: 346820514 RSA 2010
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 29-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Gross profit estimation
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH . . , , ! . ' . #$ , % ' ITA NO.3468/AHD/2010 [ASSTT. YEAR : 2006-2007] RAJUBHAI B. SHAH 4, RAJENDRA SOCIETY MANJALPUR, BARODA. /VS. DCIT, CIR.2(2) BARODA. ( &' / APPELLANT) ( (#&' / RESPONDENT) )* + , ' / ASSESSEE BY : SHRI S.N. SOPARKAR % + , ' / REVENUE BY : SHRI SAMIR TEKRIWAL -. + */ / DATE OF HEARING : 2 ND SEPTEMBER, 2011 012 + */ / DATE OF PRONOUNCEMENT : 9 TH SEPTEMBER, 2011 '3 / O R D E R G.D. AGARWAL, VICE-PRESIDENT : THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I V, BARODA DATED 20.10.2010 ARISING OUT OF THE ORDER OF THE ASSESSI NG OFFICER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961. 2. THE ONLY GROUND RAISED IN THIS APPEAL BY THE ASS ESSEE READS AS UNDER: ITA NO.3468/AHD/2010 -2- 1. THE LD.CIT(A) ERRED IN CONFIRMING THE ADDITION ON ACCOUNT OF GROSS PROFIT AMOUNTING TO RS.4,69,340/- DESPITE THE FACT THAT THE BOOKS OF ACCOUNTS WERE NOT REJECTED BY THE AO WHILE MAKIN G THE SAID ADDITION. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. THE ONLY BUSINESS OF THE ASSESSEE IS TRADING O F VARIOUS ITEMS INCLUDING PAN MASALA ETC. THAT DURING THE YEAR UNDER CONSIDERATION, TH E GP RATE OF THE ASSESSEE HAS REDUCED. IT WAS EXPLAINED BY THE ASSE SSEE THAT THE FALL IN THE GP RATE WAS BECAUSE DURING THE YEAR UNDER CONSIDERATIO N, THE ASSESSEE STARTED TRADING IN NEW ITEMS SUCH AS POHA , PARLE GLUCOSE, MAGGI ETC. IN WHICH MARGIN OF PROFIT IS LOW. HOWEVER, THE AO DID NOT ACCEPT T HE ASSESSEES EXPLANATION AND APPLIED GP RATE OF 5% WHICH RESULTED IN THE ADD ITION OF RS.4,69,340/-. THE SAME IS SUSTAINED BY THE CIT(A) HENCE THIS APPEAL B Y THE ASSESSEE. 4. HAVING HEARD BOTH THE PARTIES, WE HAVE GONE THRO UGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE AO HAS NOT POI NTED OUT A SINGLE DEFECT IN THE ASSESSEES BOOKS OF ACCOUNTS. MERELY BECAUSE T HE RATE OF GP HAS REDUCED FROM LAST YEAR, WOULD BE NO GROUND FOR REJECTION OF THE BOOKS OF ACCOUNTS. THOUGH THE ASSESSEE HAS GIVEN EXPLANATION FOR FALL IN THE GP, HOWEVER, IF IN THE OPINION OF THE AO, THE EXPLANATION WAS NOT SATISFAC TORY, HE COULD HAVE EXAMINED THE ASSESSEES BOOKS OF ACCOUNTS IN DEPTH AND IF HE HAD FOUND SOME DEFECTS IN THE BOOKS OF ACCOUNTS OR THE METHOD OF A CCOUNTING EMPLOYED BY THE ASSESSEE THEN ONLY ASSESSEES BOOKS OF ACCOUNTS COU LD HAVE BEEN REJECTED. HOWEVER, IN THIS CASE, THE AO HAS NOT POINTED OUT A SINGLE DEFECT IN THE BOOKS OF ACCOUNTS. THEREFORE, THE SAME CANNOT BE REJECTE D. ONCE THE BOOKS OF ACCOUNTS CANNOT BE REJECTED, THE PROFIT CANNOT BE E STIMATED. IN VIEW OF THE ABOVE, WE HOLD THAT THE REJECTION OF THE BOOKS OF A CCOUNTS BY THE AO AND ITA NO.3468/AHD/2010 -3- ESTIMATION OF GP BY HIM CANNOT BE UPHELD. ACCORDIN GLY, THE ADDITION OF RS.4,69,340/- MADE BY THE AO ON ACCOUNT OF LOW GP I S DELETED. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( . .. .' '' ' . .. .#$ #$ #$ #$ /D.K. TYAGI) % % % % /JUDICIAL MEMBER ( . .. . . .. . G.D. AGARWAL) /VICE-PRESIDENT COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE 2) : DEPARTMENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD