M/s. Lite House, JODHPUR V. ITO, JODHPUR

ITA 353/JODH/2013

• Counselvise Citation: 35323314 RSA 2013
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 27-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: U C JAIN
• Keywords: Business income; Loose papers
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO.352/JODH/2013 (A.Y. 2009-10) SHRI ANISUR REHMAN, VS. ITO, WARD-1(1), C/O SHRI U.C. JAIN, ADVOCATE, JODHPUR. SHATRUNJAY HARI SINGH NAGAR, PALI ROAD, JODHPUR. PAN NO. ASCPR 6389 P (APPELLANT) (RESPONDENT) ITA NO.353/JODH/2013 (A.Y. 2009-10) M/S. LITE HOUSE, VS. ITO, WARD-1(1), C/O SHRI U.C. JAIN, ADVOCATE, JODHPUR. SHATRUNJAY HARI SINGH NAGAR, PALI ROAD, JODHPUR. PAN NO. AACFL 6561 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI U.C. JAIN & SHRI RAJENDRA JAIN DEPARTMENT BY : SHRI N.A. JOSHI- D.R. DATE OF HEARING : 12/03/2014. DATE OF PRONOUNCEMENT : 25/03/2014. 2 O R D E R PER N.K. SAINI, A.M THESE TWO APPEALS BY THE ASSESSEES ARE DIRECTED AG AINST SEPARATE ORDERS EACH DATED 21/03/2013 OF LD. CIT (A), JODHPU R. SINCE THE MAIN ISSUE INVOLVED IN THESE APPEALS IS COMMON AND THE A PPEALS WERE HEARD TOGETHER, SO, THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE: 2 FIRST WE WILL DEAL WITH THE APPEAL IN I.T.A.NO. 353 /JODH/2013. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) ERRED IN SUSTAINING ADDITION FOR RS. 7,62,199/- MAD E BY THE LD. AO FOR ALLEGED UNACCOUNTED STOCK FOUND DURING SURVEY REJEC TING EXPLANATION OF THE ASSESSEE. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, INTEREST LEVIED U/S 234A, 234B & 234C IS ERRONEOUS. 3. THAT THE PETITIONER MAY KINDLY BE PERMITTED TO R AISE ANY ADDITIONAL OR ALTERNATIVE GROUND AT OR BEFORE THE TIME OF HEARING . 4. THE PETITION PRAYS FOR JUSTICE & RELIEF. 3. GROUNDS NO. 3 & 4 ARE GENERAL IN NATURE, SO THESE GROUNDS DO NOT REQUIRE ANY COMMENTS ON OUR PART WHILE THE GRIEVANC E OF THE ASSESSEE VIDE GROUND NO.1 RELATES TO THE SUSTENANCE OF ADDIT ION OF RS. 7,62,199/-. 3 4. FACTS RELATING TO THIS ISSUE IN BRIEF ARE THAT TH E ASSESSEE IS ENGAGED IN THE RETAIL TRADING OF FANCY LIGHT, ELECTRIC GOOD S AND APPLIANCES. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED TH E RETURN OF INCOME ON 19/09/2009 DECLARING AN INCOME OF RS. 31,530/-. LA TER ON, CASE WAS SELECTED FOR SCRUTINY. THE ASSESSING OFFICER NOTIC ED THAT A SURVEY WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 17/08/2009 WHERE EXCESS STOCK OF RS. 13,40,150/- WAS FOUND. HE ALSO OBSERVED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ONE OF THE PA RTNER SHRI EJAJUR REHMAN KHILJI IN HIS STATEMENT IN REPLY TO THE QUES TION NOS. 16 & 18 STATED THAT THE SURVEY TEAM HAD TAKEN MAXIMUM RETAI L PRICE TO FIND OUT THE VALUE OF THE STOCK WHILE HE HAD ALLOWED THE DIS COUNT OF 20 TO 25% TO THE CUSTOMERS. IT WAS ALSO STATED THAT A PURCHASE B ILL OF RS. 5,50,000/- WAS NOT CONSIDERED DURING THE SURVEY. IT WAS CONTE NDED THAT SOME OF THE GOODS HAD BEEN RECEIVED ON CHALLAN BASIS AND THE CORRESPONDING BILLS WERE YET TO BE ENTERED IN THE BOOKS OF ACCOUNTS. T HE ASSESSEE VIDE LETTER DATED 14/11/2011 ALSO REPLIED AS UNDER:- AS PER STATEMENT TAKEN ON 17-3-2009 DURING SURVEY PROCEEDINGS YOUR HONOUR DESIRED ABOUT THAT ACCORDING TO PHYSICA L INVENTORY PREPARED AT THE TIME OF SURVEY STOCK VALUED AT RS. /- BUT AS PER TRADING A/C PREPARED ON DATE OF SURVEY IT WAS RS. /- AND THUS, DIFFERENC E OF RS. 13,40,150/- IN THIS CONTEXT IT IS SUBMITTED AS BELOW:- 4 1) FIRSTLY, THE RATE TAKEN WHE CALCULATION STOCK WA S MRP RATE AND ASSESSEE HAVE TO GIVE DISCOUNT @ 20% TO 25% ON MRP RATE, SEC ONDLY G.P. OF 15% ARE ALSO INCLUDED IN ABOVE RATE OF MRP. THUS, FACTS ALR EADY STATED BY ASSESSEE AT PAGE 10 IN REPLY TO NO. 16. ALSO SOME GOODS RECEIVED FROM M/S HINDUSTAN ELECTRI C HOUSE ON CHALLAN BASIS. THE COPIES OF CHALLAN, BILLS AND LEDGER A/C ARE ALSO ENCLOSED. THIS FACTS ALSO STATED BY ASSESSEE DURING STATEMENT TAKE N IN REPLY TO Q.NO. 18. TOTAL STOCK CALCULATED BY SURVEY PARTY ON MRP RATE 14,76,271 LESS: DISCOUNT 20% 2,95,254 11,81,017 LESS: G.P. RATE 15% 1,77,152 10,03,865 LESS: GOODS RECEIVED FROM M/S HINDUSTAN ELECTRIC HOUSE ON CHALLAN BASIS NOT ENTERED IN BOOKS. AS ON 16.3.2009 INCLUDING BILL NO. 2269 DTD. 26.2.0 9 RS. 1,16,129/- NOT ENTERED IN BOOKS 9,25,400 STOCK AS ON 16-3-2009 78,465 THUS THERE ARE MINOR DIFFERENCE OF RS. 57,656 IN STOCK AND MAY BE ACCEPTED.' 5. THE ASSESSING OFFICER AFTER CONSIDERING THE SUBMIS SIONS OF THE ASSESSEE, OBSERVED THAT CERTAIN PURCHASE BILLS AMOU NTING TO RS. 4,60,761/- WERE LYING AT THE BUSINESS PREMISES OF THE ASSESSEE DURING THE COURSE OF SURVEY AND SOME WERE IMPOUNDED ALONG WITH OTHER DOCUMENTS. THEREFORE, STOCK TO THE EXTENT OF RS. 4 ,60,761/- WAS VERIFIABLE. THE ASSESSING OFFICER ALSO OBSERVED TH AT NO SALE BILL ALLOWING DISCOUNT OF 20 TO 25% WAS FOUND DURING THE SURVEY. THEREFORE, DISCOUNT CLAIMED BY THE ASSESSEE COULD NOT BE ALLOWED, HOWEV ER, HE ALLOWED THE 5 BENEFIT OF GROSS PROFIT RATE DECLARED BY THE ASSESS EE IN THE LAST YEAR @ 11.54% AND WORKED OUT THE EXCESS STOCK AT RS. 7,62, 199/- AS UNDER:- TOTAL STOCK CALCULATED BY SURVEY PARTY ON THE SURVE Y DATE 14,76,271/- LESS : STOCK VERIFIED FROM THE PURCHASE BILLS/CHAL LAN 4,60,761/- BALANCE STOCK 10,15,510/- LESS : G.P. AS DECLARED LAST YEAR @ 11.54% 1, 17,190/- BALANCE STOCK 8,98,320/- LESS : STOCK AS PER BOOKS ON THE DATE OF SURVEY 1,36,121/- EXCESS STOCK 7,62,199/- ACCORDINGLY, ADDITION OF RS. 7,62,199/- WAS MADE. 6. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER T O THE LD. CIT(A) AND SUBMITTED AS UNDER:- (I) A SURVEY WAS CONDUCTED AT BUSINESS PREMISES OF ASSESSEE FIRM ALONG WITH ITS SISTER CONCERN M/S. HINDUSTAN ELECTRIC HOUSE, S OJATI GATE, JODHPUR AND M/S. HINDUSTAN LITES ON 17-3-2009. (II) DURING SURVEY INVENTORY CALCULATED BY SURVEY P ARTY AT RS. 14,76,271/- ON MRP RATE BASIS WHICH IS NOT CORRECT AS IT SHOULD BE ON COST PRICE BASIS AS DECLARED IN THE BOOKS OF A/C COST OF PURCHASE ENTER ED & AS SUCH BASIS OF CALCULATION OF STOCK IS ENTIRELY INCORRECT. (III) THE RATE TAKEN WHILE CALCULATING STOCK WAS MR P RATE & TO CALCULATE COST PRICE DISCOUNT @25% ON MRP RATE & GROSS PROFIT @15% ARE TO BE DEDUCTED. THIS FACT WAS ALSO STATED BY THE ASSESSEE IN STATEM ENT IN REPLY TO NO. 16 PAGE 10. THE ASSESSEE HAS VERIFIED THESE FROM SALE BILLS & PURCHASE BILL. THUS, DISCOUNT @25% & GROSS PROFIT 15% ON MRP RATE TO BE DEDUCTED TO CALCULATE CORRECT COST PRICE. 6 (IV) ALSO, SOME GOODS RECEIVED FROM SISTER CONCERNS M/S. HINDUSTAN ELECTRIC HOUSE ETC ON CHALLAN BASIS. THE DETAILS OF SAME ARE ENCLOSED AND ALSO VERIFIED WITH LEDGER A/C WITH SISTER CONCERN. (V) THE TOTAL GOODS RECEIVED ON CHALLAN BASIS & PUR CHASE BILLS FROM SISTER CONCERN NOT ENTERED IN THE BOOKS OF ACCOUNT ON DATE OF SURVEY WERE RS. 9,25,000/- BUT ASSESSING OFFICER ACCEPTED ONLY GOODS OF RS. 4,60,761 /- BUT IT SHOULD BE FULLY ACCEPTED I.E. RS. 9,25,400/- AND BALANCE RS. 4,64,639/- SHOULD ALSO BE ACCEPTED AS DETAILS ARE GIVEN AND VE RIFIED FROM BOOKS OF ACCOUNT CHALLANS AND BILLS ETC. (VI) MOREOVER, IT IS WORTHWHILE TO NOTE THAT IN SIS TER CONCERN M/S. HINDUSTAN ELECTRIC HOUSE, PROP. SH. FAZLUR REHMAN FATHER OF P ARTNER'S OF FIRM THERE WAS SURVEY ON SAME DATE 17-3-2009 AND IN THAT FIRM SHOR T STOCK FOUND, IN ASSESSEE'S CASE EXCESS STOCK FOUND AND THAT WAS DUE TO THE ABOVE REASON THAT GOODS SENT FROM M/S. HINDUSTAN ELECTRIC HOUSE TO M/S. LITE HOUSE (ASSESSEE'S FIRM) ON CHALLAN BASIS & THIS IS NORMAL PRACTICE OF THESE FIRM WHICH CAN BE VERIFIED FROM EARLIER YEARS RECORDS AN D RETURN FILED. (VII) LOOKING FOR ABOVE THE CORRECT POSITION OF COS T PRICE OF STOCK SHALL CALCULATED AS UNDER:- TOTAL INVENTORY CALCULATED BY SURVEY PARTY ON BASIS OF MRP RATE RS. 14,76,271/- LESS: GOODS RECEIVED ON CHALLAN BASIS AND PURCHASE BILLS NOT ENTERED IN BOOKS ON DATE OF SURREY ALLOWED BY A. 0. &RS. 4.60.761/- AND BALANCE RS. 4,64,639/- (TOTAL RS. 9,25,400/- - RS. 4,60,761/- ALLOW) RS. 4,60,761 /-(ALLOWED BY A.O.) RS. 4,64,639/- (TO BE ALLOWED BY A.O) LESS: 25% DISCOUNT ON 14.76.271/- DEDUCTED ON MRP RATE TO ARRIVE AT COST PRICE RS. 3,69,067/- LESS: 11.54% G.P. RATE ON 14.76.271/ , DEDUCTED FROM MRP RATE TO ARRIVE COST PRICE RS. 1,70,361/- COST PRICE OF STOCK RS. 11,452/- LOOKING TO ABOVE, THERE IS NO MAJOR DIFFERENCE IN S TOCK AT TIME OF SURVEY, SO ADDITION MADE BY ASSESSING OFFICER FOR ALLEGED EXCE SS STOCK OF RS. 7,62,199/- SHOULD KINDLY BE FULLY DELETE.' 7 7. THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE, OBSERVED THAT CLAIM OF THE ASSESSEE WAS N OT ACCEPTABLE BECAUSE MOST OF THE CHALLANS AND SALE BILLS WERE PREPARED AFTER THE DATE OF SUR VEY AND THERE WERE INTERVAL OF TIME BETWEEN THE DATE OF ISSUE OF CHALLAN AND THE DATE OF ISSUE OF BILLS. HE FURTHER OBSERVED TH AT THE ASSESSING OFFICER ACCEPTED THE STOCK OF RS. 4,60,761/- AFTER VERIFICA TION, BUT THE BALANCE WAS NOT VERIFIABLE. HE THEREFORE, CONFIRMED THE AD DITION MADE BY THE ASSESSING OFFICER. NOW, THE ASSESSEE IS IN APPEAL. 8. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE S UBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT SURVEY WAS CONDUCTED SIMULTANEOUSLY AT THE BUSINESS PREMISES O F THE ASSESSEE AND THE SISTER CONCERN M/S. HINDUSTAN ELECTRIC HOUSE, P ROPRIETORSHIP OF SHRI FAZLUR REHMAN FATHER OF THE ASSESSEE. IT WAS STAT ED THAT THE STOCK WAS FOUND SHORT IN THE HANDS OF SHRI FAZLUR REHMAN AND EXCESS STOCK WAS FOUND IN THE HANDS OF M/S. LIGHT HOUSE, THE DETAILS OF THE STOCK FOUND EXCESS AND SHORT WAS FURNISHED. IT WAS FURTHER STA TED THAT THE GOODS WERE RECEIVED BY THE ASSESSEE AND SHRI ANISUR REHMAN FRO M SHRI FAZLUR REHMAN ON THE BASIS OF CHALLAN . THEREFORE, THERE WAS NO EXCESS STOCK AVAILABLE WITH THE ASSESSEE IF THE GOODS WERE RECEIVED ON THE BASIS OF CHALLAN WHICH 8 WAS FOUND SHORT AT THE PREMISES OF SHRI FAZLUR REHM AN OUGHT TO BE CONSIDERED. IT WAS ALSO STATED THAT THE STOCK OF R S. 24,42,032/- FOUND SHORT AT THE PREMISES OF SHRI FAZLUR REHMAN WAS SUB JECT TO TAXATION AND G.P. RATE OF 8.31% WAS APPLIED AND IF THE ADDITION IS SUSTAINED IN THE HANDS OF THE ASSESSEE, ON THE STOCK FOUND EXCESS IN ASSESSEES PREMISES WHICH WAS CONSIDERED AS SHORT IN THE HANDS OF SHRI FAZLUR REHMAN, IT WILL BE A DOUBLE TAXATION. IN SUPPORT OF THE ABOVE CONT ENTION, COPIES OF THE APPELLATE ORDER AND ASSESSMENT ORDER OF SHRI FAZLUR REHMAN FOR THE A.Y. 2009-10 WERE FURNISHED WHICH ARE AVAILABLE AT PAGE NOS. 44-51 AND 52-57 RESPECTIVELY OF THE ASSESSEES PAPER BOOK. 9 . IN HIS RIVAL SUBMISSIONS, THE LEARNED D.R. SUPPOR TED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT EXCESS STO CK WAS FOUND IN THE PREMISES OF THE ASSESSEE. THEREFORE, ADDITION WAS R IGHTLY MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A). 10. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PAR TIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE SURVEY WAS CO NDUCTED SIMULTANEOUSLY IN THE THREE BUSINESS FIRMS WHICH HAS BEEN MENTIONE D IN THE FORMER PART 9 OF THIS ORDER. THE STOCK WAS FOUND EXCESS IN THE H ANDS OF THE ASSESSEE AND SHRI ANISUR REHMAN AND SHORT IN THE HANDS OF SH RI FAZLUR REHMAN, WHICH IS CLEAR FROM THE COPY OF THE ASSESSMENT ORDE R OF SHRI FAZLUR REHMAN PLACED AT PAGES 52-57 OF THE ASSESSEES PAPE R BOOK. IT IS NOTICED THAT THE ASSESSING OFFICER NARRATED THE REPLY OF SH RI FAZLUR REHMAN AT PAGE 2 OF HIS ASSESSMENT ORDER DATED 30/12/2011 AS UNDER:- THE REASON FOR DEFICIENCY ARE DUE TO THAT GOODS SO LD TO SISTER CONCERN I.E. M/S. LIGHT HOUSE AND M/S. HINDUSTAN LIGHT AND ALSO TO OTHER PARTIES ARE SENT ON CHALLAN BASIS AND BILLS OR PREPARED SO NOT ENTERED IN BOOKS OF ACCOUNTS MAINTAINED AND ALSO GOODS SENT BACK TO COM PANIES FOR REPLACEMENT AND SOLD SOME GOODS SENT AT DCOR INDIA MELA AT RAVAN KA CHABUTRA AND MELA WAS FINISHED AND GOODS KEPT AT G ODOWN BACK SIDE OF SOJTI GATE SHOP IN PACKING CONDITION AND NOT VALUED BY SURVEY TEAM. THUS DETAILS ARE AS BELOW:- STOCK VALUE BY SURVEY PARTY RS. 29,87,628.00 ADD I) GOODS SENT TO CO. FOR REPLACEMENT RS. 93,633.00 II) GOODS SENT ON CHALL A N BASIS AND BILLS NOT PREPARED AND NOT ENTERED IN BOOKS ON DATE OF SURVEY RS. 18,41,174.28 III) GOODS SENT TO DCOR INDIA MELA AT RAVAN KA CHABUTRA RECEIVED BACK ON THAT DATE BUT IN CARTON AND KEPT AT BACK SIDE OF GO DOWN NOT CALCULATED BY SURVEY PARTY RS. 6,00,858.00 TOTAL STOCK RS. 55,23,293.28 11. ON THE BASIS OF THE ABOVE EXPLANATION, IT CANNOT B E SAID THAT IT WAS AN AFTERTHOUGHT BECAUSE SHRI FAZLUR REHMAN HAD GIVE N THE DETAILS OF THE 10 STOCK WHICH WAS SENT TO THE ASSESSEE ON THE BASIS O F CHALLAN. THE ASSESSING OFFICER ALSO MENTIONED IN THE ASSESSMENT ORDER OF SHRI FAZLUR REHMAN THAT THE ITEMS VALUING AT RS. 7,82,088/- WER E SENT ON THE BASIS OF CHALLAN TO SISTER CONCERN-M/S. LIGHT HOUSE IN WHICH THREE SONS OF SHRI FAZLUR REHMAN ARE PARTNERS AND THE ITEMS OF RS. 2,6 5,991/- WERE SOLD TO THE FIRM M/S. HINDUSTAN ELECTRIC HOUSE IN WHICH SHR I ANISUR REHMAN IS PROPRIETOR. IN THE PRESENT CASE, IT IS NOT BROUGHT ON RECORD THAT THE ITEMS MENTIONED IN THE CHALLAN WERE NOT SUPPLIED TO THE ASSESSEE BY SHRI FAZLUR REHMAN , THEREFORE, THE EXPLANATION GIVEN BY THE ASSESSEE W AS PLAUSIBLE AND DESERVES TO BE ACCEPTED. ACCORDINGLY, WE HOLD THAT THE EXCESS STOCK FOUND IN THE BUSINESS PREMISES OF THE ASSESSEE WAS THE SAME WHICH WAS FOUND SHORT IN THE BUSINESS PREMISES OF SHRI FAZLUR REHMAN AND THE SAID STOCK WAS SUPPLIED TO THE ASSESSEE ON THE BASIS OF CHALLANS WHICH WERE NOT ENTERED IN THE BOOKS OF ACCOUNTS. SINCE THE BI LLS WERE NOT RECEIVED, THEREFORE, IN OUR CONSIDERED VIEW THE EXCESS STOCK FOUND IN THE SISTER CONCERN I.E. THE ASSESSEE AND SHRI ANISUR REHMAN PR OPRIETOR OF M/S. HINDUSTAN ELECTRIC HOUSE AND THE SHORT STOCK FOUND IN THE HANDS OF SHRI FAZLUR REHMAN SHOULD HAVE BEEN SET OFF. ACCORDINGL Y, THE IMPUGNED ADDITION OF RS. 7,62,199/- IS DELETED. 11 12 . THE NEXT ISSUE VIDE GROUND NO.3 RELATES TO THE CH ARGING OF INTEREST UNDER SECTION 234A, 234B & 234C OF THE ACT. AS REGARDS TO THIS ISSUE, IT WAS COMMON CONTENTION OF BOTH THE PARTIES THAT IT IS CONSEQUENTIAL IN NATURE. WE ORD ER ACCORDINGLY. 13. NOW WE WILL DEAL WITH APPEAL IN I.T.A.NO. 352/JODH/ 2013. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) ERRED IN SUSTAINING ADDITION FOR RS. 4,16,137/- MAD E BY THE LD. AO FOR ALLEGED UNACCOUNTED STOCK FOUND DURING SURVEY REJEC TING EXPLANATION OF THE ASSESSEE. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) ERRED IN SUSTAINING ADDITION OF RS. 66,168/- OUT OF TOTAL ADDITION OF RS. 6,89,505/- BY ESTIMATING TOTAL TURNOVER AT RS. 22,9 8,353/- AS AGAINST DECLARED BY THE ASSESSEE AT RS. 9,75,000/- FROM THE BUSINESS CARRYING IN PROPRIETORSHIP FIRM MACCHI GHAR. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, INTEREST LEVIED U/S 234A, 234B & 234C IS ERRONEOUS. 4. THAT THE PETITIONER MAY KINDLY BE PERMITTED TO R AISE ANY ADDITIONAL OR ALTERNATIVE GROUND AT OR BEFORE THE TIME OF HEARING . 5. THE PETITIONER PRAYS FOR JUSTICE & RELIEF. 14 . GROUNDS NO. 4 & 5 ARE GENERAL IN NATURE, SO THESE GROUNDS DO NOT REQUIRE ANY COMMENTS ON OUR PART. GROUND NO. 1 REL ATES TO THE 12 SUSTENANCE OF ADDITION OF RS. 4,16,137/- MADE BY TH E ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED STOCK FOUND EXCESS DURING T HE COURSE OF SURVEY. 15 . FACTS RELATING TO THIS ISSUE ARE IDENTICAL TO THE FACTS INVOLVED IN THE CASE OF M/S. LITE HOUSE IN I.T.A.NO. 353/JODH/2013, WHICH WE HAVE ALREADY ADJUDICATED IN THE FORMER PART OF THIS ORDE R. THEREFORE, OUR FINDINGS GIVEN THEREIN SHALL APPLY MUTATIS-MUTANDIS . IN THAT VIEW OF THE MATTER, THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) A MOUNTING TO RS. 4,16,137/- IS DELETED. 16 . THE NEXT ISSUE VIDE GROUND NO.2 RELATES TO THE SU STENANCE OF THE ADDITION OF RS. 66,168/- OUT OF TOTAL ADDITION OF R S. 6,89,505/-. 17 . FACTS RELATING TO THIS ISSUE IN BRIEF ARE THAT TH E ASSESSEE WAS RUNNING ANOTHER BUSINESS OF SELLING FISHES, AQUARIUM AND FI SH FOOD SIDE BY SIDE NAMED AS MACCHI GHAR. DURING THE COURSE OF SURVE Y, THE ASSESSEE WAS ASKED THAT WHO IS MANAGING THE WORK OF MACCHI GHAR AND WHICH BOOKS OF ACCOUNTS WERE MAINTAINED. THE ASSESSEE REPLIED THA T HIS NEPHEW SHRI 13 SAFDAR WAS MANAGING THE WORK OF MACCHI GHAR AND T HERE WAS NO BOOKS OF ACCOUNTS. THE ASSESSING OFFICER OBSERVED THAT P AGES NOS. 2 & 3 OF THE LOOSE PAPER BUNDLE AS EXHIBIT A-8, WHICH WAS IMPOUN DED DURING THE COURSE OF SURVEY REVEALED THAT THERE WAS A TOTAL SA LES FROM SEPTEMBER 2008 TO MARCH 2009 AT RS. 12,73,685/- WHICH WAS ALS O CONFIRMED BY THE NEPHEW OF THE ASSESSEE IN HIS STATEMENT DURING THE COURSE OF SURVEY. THE ASSESSING OFFICER, THEREFORE, CONSIDERING THE AVERA GE SALE OF RS. 1,81,955/- PER MONTH WORKED OUT THE SALE FROM A PRIL 2008 TO AUGUST 2008 AT RS. 9,09,775/- AND THE TOTAL SALE OF THE YE AR WAS DETERMINED AT RS. 21,83,460/- (RS. 12,73,685/- + 9,09,775/-). TH E ASSESSING OFFICER ALSO OBSERVED THAT DURING THE YEAR, ASSESSEE RECEIVED PA YMENT FROM ANNUAL CONTRACT OF MAINTENANCE OF AQUARIUM FROM CUSTOMERS, HE ESTIMATED THE SAME AT RS. 1,14,893/-. THE ASSESSING OFFICER, APP LIED NET PROFIT RATE OF 30% ON TOTAL ESTIMATED SALES OF RS. 22,98,353/- (RS . 21,83,460/- + RS. 1,14,893/-) AND ACCORDINGLY ADDITION OF RS. 6,8 9,505/- WAS MADE. 18 . BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER:- (I) THE ASSESSEE IS RUNNING A RETAIL SHOP OF LIVE FISHE S & AQUARIUM NAMED 'MACCHI GARH' AT CHANDSA TAKIYA, SOJATI GATE, JODHP UR & ONLY EMPLOYEES ARE WORKING THERE AND STATEMENT OF EMPLOY EE 'SAFDAR WAHAB' TAKEN AND ON THAT BASIS ESTIMATED FIGURE OF SALES OF RS. 14 1,81,955/- P. M. AND TOTAL YEARLY SALES OF RS. 21,8 3,460/-. THE ASSESSEE HAS DECLARED SALE OF RS. 9,75,500/- AND DE CLARED 5% NET PROFIT U/S 44AF OF I. T. ACT, 1961 WHICH IS CORRECT . THE A. O. ALSO ESTIMATED CONTRACT RECEIPTS OF RS. 1,14,893/- FOR M AINTENANCE OF AQUARIUM FROM CUSTOMERS WHICH IS ENTIRELY INCORRECT AS ASSESSEE HIMSELF IS NOT PROVIDING THESE SERVICES. (II) THE ABOVE ENTIRE FIGURE IS ON ESTIMATE BASIS & HIGHLY ESTIMATED AGAINST DECLARED SALES OF RS. 9,75,5,00/- (III) THE A. O. FURTHER ESTIMATED NET PROFIT RATE O F 30% ON ABOVE TOTAL SALES AND CONTRACT RECEIPTS ESTIMATED AT RS. 22,98,353/- AND ADDED AS INCOME OF RS. 6,89,505/-. (IV) THE ASSESSING OFFICER ESTIMATED 30% ON TOTAL SALES ON THE BASIS OF STATEMENT OF EMPLOYEE AND THUS BASIS ADOPTED IS WIT HOUT ANY CORRECT BASIS. THE ASSESSEE IS DECLARING PROFIT U/S 44AF OF THE I. T. ACT, 1961 @ 5% ON RETAIL SALES. THEREFORE, 5% NET PROFIT RATE S HOULD ONLY BE ON THESE RETAIL SALES AS PER PROVISION OF SEC. 44ADF O F THE I. T. ACT, 1961 AND NOT 30% WHICH IS VERY EXCESSIVE. WHILE ESTIMATING NET PROFIT RATE IN THIS TYPE OF B USINESS IT IS TO NOTICE THAT MORE THAN 50% ARE DEAD STOCK AND ONLY 50% OF F ISHES SAFELY REACHES TO ASSESSEE' BUSINESS PREMISES AT TIME OF P URCHASE. IN THIS RETAIL BUSINESS ASSESSEE CANNOT DEVOTE TIM E AS HE IS ALSO PROP, OF M/S. HINDUSTAN LITES AND SO DIRECT AND INDIRECT EXPENSES GREATER IN THIS BUSINESS. LOOKING TO THE ABOVE FACTS AND CIRCUMSTANCES, IT I S PRAYED TO KINDLY DELETE ENTIRE ADDITION OF RS. 6,89,505/-.' 19 . THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISS IONS OF THE ASSESSEE, OBSERVED THAT THE ASSESSEE DECLARED SALE OF RS. 9,75,500/- ON ACCOUNT OF RETAIL BUSINESS OF LIVE FISHES & AQUARI UM AND DECLARED 5% NET PROFIT UNDER SECTION 44AF OF THE ACT. HOWEVER, THE ASSESSING OFFICER 15 ESTIMATED THE SALES AT RS. 22,98,353/- AND APPLIED NET PROFIT RATE OF 30% ON THE BASIS OF STATEMENT OF SHRI SAFDAR WAHAB. TH E LD. CIT(A) FURTHER OBSERVED THAT THE ASSESSING OFFICER ON THE BASIS OF LOOSE PAPER BUNDLE, FOUND DURING THE COURSE OF SURVEY, ESTIMATED THE SA LES AT RS. 21,83,460/- WHEREAS THE ASSESSEE HAD NOT GIVEN ANY EVIDENCE THA T HIS SALE FROM MACCHI GHAR WAS ACTUALLY AT RS. 9,75,000/-, THERE FORE, THE ESTIMATE OF THE ASSESSING OFFICER WAS FOUND TO BE CORRECT. AS REGARDS TO THE CONTRACT RECEIPTS OF RS. 1,11,400/- FOR MAINTENANCE OF AQUA RIUM FROM CUSTOMERS, THE LD. CIT(A) OBSERVED THAT THOSE RECEIPTS PERTAIN ED TO THE ASSESSEES BUSINESS, SO, MERELY CLAIMING THAT THE ASSESSEE WAS NOT PROVIDING THOSE SERVICES WAS NOT SUFFICIENT, THEREFORE, THE ASSESSI NG OFFICER RIGHTLY ADDED THE CONTRACT RECEIPTS OF RS. 1,11,400/- TO THE TOTA L SALES. ACCORDINGLY, ESTIMATION OF SALES AT RS. 22,98,353/- WAS HELD AS JUSTIFIABLE. 20 . AS REGARDS TO THE APPLICATION OF NET PROFIT RATE OF 30%, THE LD. CIT(A) WAS OF THE VIEW THAT IN THIS BUSINESS THERE WERE HUGE EXPENSES TO MAINTAIN THE MACCHI GHAR AND THE ASSESSING OFFICE R HAD NOT DISCUSSED ANYTHING ABOUT THE EXPENSES, THEREFORE, THE NET PRO FIT RATE APPLIED BY THE ASSESSING OFFICER AT 30% WAS NOT JUSTIFIED. HE WAS OF THE VIEW THAT THE TURNOVER OF THE ASSESSEE WAS LESS THAN RS. 40 L AC AND THE ASSESSEE 16 WAS NOT MAINTAINING THE BOOKS OF ACCOUNTS FOR THIS BUSINESS, SO HE FALLS UNDER THE SCHEME OF 44AF OF THE ACT ON THE TOTAL ES TIMATED SALES OF RS. 22,98,353/-. THE LD. CIT(A), ACCORDINGLY, SUST AINED THE ADDITION OF RS. 66,168/-. NOW THE ASSESSEE IS IN APPEAL. 21 . LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE ADDITION SUSTAINED BY THE LD. CIT(A) ON THE ESTIMATED SALES WAS EXCESSIVE BECAUSE THERE WAS NO BASIS WITH THE ASSESSING OFFICER WHILE ESTIMATING THE SALES AT RS.22,98,353/-. 22 . IN HIS RIVAL SUBMISSIONS, LEARNED D.R. SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 23 . AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PAR TIES AND THE MATERIAL ON RECORD, IT APPEARS THAT THE ASSESSING O FFICER ESTIMATED THE SALE AND CONTRACT RECEIPTS ONLY ON THE BASIS OF STA TEMENT OF SHRI SAFDAR WAHAB ONE OF THE EMPLOYEE OF THE ASSESSEE. IN THE PRESENT CASE, FROM THE LOOSE PAPERS FOUND DURING THE COURSE OF SURVEY, THE TOTAL SALES FROM SEPTEMBER 2008 TO MARCH, 2009 WAS SHOWN AT RS. 12,7 3,685/-. IT IS TRUE THAT IN SUCH TYPE OF CASES, THE SALE CANNOT BE UNIF ORM THROUGHOUT THE 17 YEAR BECAUSE THE SALE DEPENDS ON MANY FACTORS LIKE WEATHER CONDITIONS AND CONSUMPTION, SO IT IS NOT POSSIBLE THAT IN SUMM ER SEASON, THE SALE WILL BE SIMILAR AS IN THE WINTER SEASON. GENERALLY, IN THE AREA IN WHICH ASSESSEE IS DOING THE BUSINESS FROM MARCH TO AUGUST IS SUMMER AND RAINY SEASON, THEREFORE, THE ESTIMATED OF SALE BY THE ASS ESSING OFFICER WHICH HAS BEEN SUSTAINED BY THE LD. CIT(A) APPEARS TO BE ON HIGHER SIDE. TO MEET THE ENDS OF JUSTICE, WE ARE OF THE VIEW THAT T HE ESTIMATED SALE OF RS.15,00,000/- WILL BE FAIR AND REASONABLE CONSIDER ING THE CLIMATIC CONDITIONS AND OTHER FACTORS. AS REGARDS TO THE CO NTRACT RECEIPTS OF RS. 1,14,893/- ESTIMATE BY THE ASSESSING OFFICER TH E ASSESSEE COULD NOT BRING ANY MATERIAL ON RECORD TO REBUT THE SAID ESTI MATE OF THE ASSESSING OFFICER. WE, THEREFORE, CONSIDERING THE AFORESAID DISCUSSION, DIRECT THE ASSESSING OFFICER TO APPLY NET PROFIT RATE OF 5% ON THE ESTIMATED SALES OF RS. 16,14,843/-. THUS, THE ASSESSEE WILL GET PART RELIEF. 24 . ANOTHER ISSUE RAISED IN THIS APPEAL VIDE GROUND N O.3 RELATES TO THE CHARGING OF INTEREST UNDER SECTION 234A, 234B & 234 C OF THE ACT. REGARDING THIS ISSUE, THE COMMON CONTENTION OF BOTH THE PARTIES WAS THAT IT IS CONSEQUENTIAL IN NATURE. WE ORDER ACCORDINGL Y. 18 25 . IN THE RESULT, APPEAL IN I.T.A.NO. 353/JODH/2013 IS ALLOWED AND APPEAL IN I.T.A.NO. 352/JODH/2013 IS PARTLY ALLOWED . (ORDER PRONOUNCED IN THE COURT ON 25 TH MARCH, 2014). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 25 TH MARCH, 2014. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.