ITO, New Delhi V. Sh. Hargovind Jain, Delhi

ITA 3497/DEL/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 6418 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 02-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A Y CHALLENGING
• Keywords: TDS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES C : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER ITA.NO.3497/DEL./2017 ASSESSMENT YEAR 2011-2012 THE INCOME TAX OFFICER, WARD-55(2) [ERSTWHILE WARD 35(2)], ROOM NO.216, D- BLOCK, 2 ND FLOOR, VIKAS BHAWAN, I.P. ESTATE, NEW DELHI 110 002. [ VS. SHRI HARGOVIND JAIN, PROP. M/S. SHRI VARDHMAN FASION, IX/3435, GALI NO.03, DHARAMPURA, GANDHI NAGAR, DELHI-031. PAN ADJPJ5609E ( APPELLANT ) (RESPONDENT) F OR REVENUE : SHRI PRAKASH DUBEY, SR. DR FOR ASSESSEE : - NONE - DATE OF HEARING : 18 . 01 .20 2 1 DATE OF PRONOUNCEMENT : 01 . 02 .20 2 1 ORDER PER BHAVNESH SAINI, J.M. THIS APPEAL BY REVENUE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-19, NEW DELHI, DATED 15.03.2017, FOR THE A.Y. 2011-2012, CHALLENGING THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.2,12,53,958/- MADE BY A.O. ON ESTIMATE BASIS. 2 ITA.NO.3497/DEL./2017 SHRI HARGOVIND JAIN, DELHI. 2. WE HAVE HEARD THE LD. D.R. AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT IN THIS CASE ASSESSEE FILED RETURN OF INCOME AT RS.4,08,550/-. THE A.O. NOTED THAT THERE IS NON-COMPLIANCE BY THE ASSESSEE IN FILING THE DETAILS AND DOCUMENTS. THE A.O. NOTED THAT ASSESSEE IS ENGAGED IN BUSINESS OF WHOLESALE TRADING IN READYMADE GARMENTS (EXPORT BASIS) UNDER THE NAME AND STYLE OF M/S. VARDHMAN FASHION. THE A.O. NOTED THAT INSPITE OF VARIOUS OPPORTUNITIES GIVEN, EVEN NO FINANCIAL STATEMENTS/AUDIT REPORT HAS BEEN FILED BY THE ASSESSEE. HOWEVER, A PERUSAL OF ITR-4 FILED FOR YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN TOTAL TURNOVER OF RS.3,68,46,437/- AS AGAINST THE TURNOVER OF RS.13,43,51,188/- SHOWN BY THE ASSESSEE IN THE IMMEDIATELY PRECEDING YEAR. A PERUSAL OF THE ASSESSMENT ORDER FOR THE A.Y. 2010-11 SHOWS THAT AS AGAINST THE RETURNED INCOME OF RS 6,97,500/-, INCOME OF THE ASSESSEE WAS DETERMINED AT RS.8,56,53,840/- AFTER MAKING ADDITIONS /DISALLOWANCES UNDER VARIOUS HEADS OF INCOME. SINCE THE ASSESSEE FAILED TO FILE ANY FINANCIAL STATEMENTS, AUDIT REPORT 3 ITA.NO.3497/DEL./2017 SHRI HARGOVIND JAIN, DELHI. AND OTHER DETAILS EXCEPT BANK STATEMENTS, THE A.O. ESTIMATED THE INCOME OF ASSESSEE AT RS.2,50,00,000/- AS AGAINST THE RETURNED INCOME. 4. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT(A). THE LD. CIT(A) CONSIDERING THE EXPLANATION OF ASSESSEE ACCEPTED THE TRADING RESULTS OF THE ASSESSEE. THE FINDINGS OF THE LD. CIT(A) IN PARAS 5 TO 7 ARE REPRODUCED AS UNDER : 5. DURING THE PRECEDING YEAR, IT WAS FOUND THAT, THERE WAS A DISCREPANCY IN THE PURCHASE OF CLOTHS AND THE CONSUMPTION OF CLOTH IN RESPECT OF GARMENTS PRODUCED AND SOLD. IT WAS FOUND THAT THE APPELLANT HAD SHOWN AN EXCESSIVE CONSUMPTION OF CLOTH AMOUNTING TO RS.4,91,71,046/-, SECONDLY, IT WAS FOUND THAT THE APPELLANT HAD NOT DEDUCTED TDS IN RESPECT OF THE PAYMENTS MADE TO FABRICATORS AND THE ENTIRE PAYMENT IN RESPECT OF EMBROIDERY, DYEING AND WASHING ETC. HAD BEEN MADE BY WAY OF CASH AND THEREFORE, WAS NOT VERIFIABLE. AFTER 4 ITA.NO.3497/DEL./2017 SHRI HARGOVIND JAIN, DELHI. CONSIDERING THESE DEFECTS, GROSS PROFIT OF THE APPELLANT WAS ESTIMATED AT 25% OF THE TURNOVER. THE AR OF THE APPELLANT WAS THEREFORE, ASKED TO FURNISH :- THE RECONCILIATION IN RESPECT OF THE CLOTH PURCHASED AND CONSUMED. DETAILS OF FABRICATION EXPENSES AND FACTS REGARDING DEDUCTION OF TAX. THE DETAILS OF OTHER EXPENSES AND DETAILS OF COMMISSION PAID. 6. THE APPELLANT HAS FURNISHED THE RECONCILIATION OF CLOTH. HE HAS SHOWN THE PIECE- WISE CONSUMPTION OF CLOTH. THE NUMBER OF PIECE PRODUCED AND THE CLOTH CONSUMED/PURCHASED ARE FOUND TO BE IN ORDER. THE DETAILS OF FABRICATION EXPENSES SHOW THAT ALL THE PAYMENTS HAD BEEN MADE BY CHEQUE AND THE TAX HAD BEEN DEDUCTED THERE FROM. HOWEVER, THE EXPENSES IN RELATION TO THE DYEING, 5 ITA.NO.3497/DEL./2017 SHRI HARGOVIND JAIN, DELHI. EMBROIDERY AND WASHING EXPENSES CONTINUED TO BE IN CASH AND REMAIN UN-VERIFIABLE. 7. ALTHOUGH, THE RELEVANT DETAILS FILED SHOW THAT THE MANUFACTURING EXPENSES ARE TO A LARGE EXTENT VERIFIABLE AND INCURRED IN THE PURPOSE OF BUSINESS. IT IS ALSO A FACT THAT BOOKS HAVE NOT BEEN PRODUCED. IN THE PRECEDING YEAR, I HAD ESTIMATING THE GROSS PROFIT AT 25%' AFTER REJECTING THE BOOKS OF GROUNDS.. DURING THE YEAR, UNDER REVIEW THE APPELLANT HAS DISCLOSED A GROSS PROFIT OF 24%. CONSIDERING THE SIGNIFICANT DROP IN THE TURNOVER AND SINCE G.P. CANNOT REMAIN THE SAME IN EVERY YEAR THE TRADING RESULTS OF THE APPELLANT ARE ACCEPTED. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE LD. D.R, WE ARE OF THE VIEW THAT NO INTERFERENCE IS REQUIRED IN THE MATTER. THE LD. D.R. CONTENDED THAT ASSESSEE DID NOT FILE REQUISITE DETAILS BEFORE A.O. THEREFORE, ESTIMATION OF INCOME IS JUSTIFIED. THE LD. CIT(A) WHILE CONSIDERING THE APPEAL OF ASSESSEE IN PRECEDING ASSESSMENT YEAR AND CONSIDERING THE DEFECTS, ESTIMATED THE GROSS PROFIT OF THE ASSESSEE AT 25% OF 6 ITA.NO.3497/DEL./2017 SHRI HARGOVIND JAIN, DELHI. THE TURNOVER. THE LD. CIT(A) ACCORDINGLY FOUND THAT SINCE IN THE PRECEDING ASSESSMENT YEAR HE HAS ESTIMATED THE G.P. AT 25% AFTER REJECTING THE BOOKS OF ACCOUNT, THEREFORE, THE G.P. DECLARED BY THE ASSESSEE AT RS.24% IS JUSTIFIED, PARTICULARLY, IN THE LIGHT OF SIGNIFICANT DROP OF THE TURNOVER. EVEN THOUGH ASSESSEE HAS NOT FILED CERTAIN DETAILS CALLED FOR BY THE A.O. AT ASSESSMENT PROCEEDINGS, BUT, NO BASIS IS SHOWN AS TO HOW THE INCOME OF THE ASSESSEE HAVE BEEN ESTIMATED AT RS.2.50 CRORES. THE A.O. EVEN WHILE ESTIMATING THE INCOME HAS NOT REJECTED THE BOOK RESULTS OF THE ASSESSEE. THE A.O. HAS ALSO NOT BROUGHT ANY MATERIAL ON RECORD TO JUSTIFY HIGHER ESTIMATION OF INCOME AND EVEN NO COMPARABLE CASE OR HISTORY OF THE ASSESSEE HAVE BEEN MENTIONED. THUS, IT WAS A MERE ESTIMATION OF INCOME WITHOUT ANY JUSTIFICATION. THE A.O. HAS ALSO REFERRED TO HIS ORDER FOR PRECEDING A.Y. 2010- 2011 WHILE MAKING ESTIMATION OF INCOME, BUT, THE LD. CIT(A) ON CONSIDERATION OF THE DETAILS ON RECORD FOUND THAT IN PRECEDING ASSESSMENT YEAR HE HAS REJECTED THE BOOK RESULTS OF THE ASSESSEE AND ESTIMATED THE GROSS PROFIT AT 25%. IN ASSESSMENT YEAR UNDER APPEAL THERE IS A SIGNIFICANT FALL IN 7 ITA.NO.3497/DEL./2017 SHRI HARGOVIND JAIN, DELHI. THE TURNOVER OF THE ASSESSEE AND ASSESSEE HAS DISCLOSED G.P. AT 24%. THE A.O. HAS NOT REJECTED THE BOOK RESULTS OF THE ASSESSEE EVEN IN ASSESSMENT YEAR UNDER APPEAL. THEREFORE, THE LD. CIT(A) CONSIDERING THE HISTORY OF THE ASSESSEE AND NATURE OF THE BUSINESS OF THE ASSESSEE, CORRECTLY DELETED THE ADDITION PARTICULARLY WHEN BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED IN ASSESSMENT YEAR UNDER APPEAL. WE, THEREFORE, DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). ACCORDINGLY, APPEAL OF THE DEPARTMENT IS DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (B.R.R. KUMAR) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 01 ST FEBRUARY, 2021 VBP/- 8 ITA.NO.3497/DEL./2017 SHRI HARGOVIND JAIN, DELHI. COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT C BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASSISTANT REGISTRAR : ITAT DELHI BENCHES : DELHI.