Vishnu Aggarwal, Faridabad V. ITO, Faridabad

ITA 357/DEL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7290 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 23-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: K C SINGHAL
• Keywords: Gross profit estimation; Salary income
• Section: 2(22)(e); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A .NO.-357/DEL/2017 (ASSESSMENT YEAR-2012-13) VISHNU AGGARWAL H.NO. 1669, SECTOR-55, FARIDABAD. PAN NO. AGAPA1634N (APPELLANT) VS ITO WARD 11(4) FARIDABAD. (RESPONDENT) APPELLANT BY SHRI K.C. SINGHAL, CA RESPONDENT BY SHRI S.L. ANURAGI, SR. DR ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 10.11.2016 OF THE LD. CIT(APPEALS), FARIDABAD RELEVANT TO ASSESSMENT YEAR 2012-13 ON THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) , FARIDABAD, HAS ERRED IN LAW AS WELL AS ON FACTS AND IN CIRCUMSTANCES OF THE CASE IN UPHOLDING THE ADDITION OF RS. 23,30,490/- MADE BY THE ASSESSING OFFICER BY REJECTI NG BOOKS OF ACCOUNTS AND BY PRESUMING GROSS PROFIT RAT E AT 4% AGAINST DECLARED BY THE ASSESSEE AT 0.77% WITHOUT APPRECIATING FACTS OF THE CASE. 2. THAT THE LD.CIT(APPEALS), FARIDABAD, HAS ERRED IN L AW AS WELL AS ON FACTS AND IN CIRCUMSTANCES OF THE CASE I N UPHOLDING GP ADDITION WITHOUT CONSIDERING THE VERDI CTS OF VARIOUS COURTS RELIED BY THE ASSESSEE DURING THE CO URSE OF APPELLATE PROCEEDINGS. 3. THAT THE LD. CIT(APPEALS), FARIDABAD, HAS ERRED IN LAW AS WELL AS ON FACTS AND IN CIRCUMSTANCES OF THE CASE I N UPHOLDING GP ADDITION WITHOUT APPRECIATING MATERIAL AVAILABLE ON RECORD. 4. THAT THE LD. CIT(APPEALS), FARIDABAD, HAS ERRED IN LAW AS WELL AS ON FACTS AND IN CIRCUMSTANCES OF THE CASE I N PARTLY ITA NO. 357/D/2017 2 DELETED ADDITION U/S 2(22)(E) WITHOUT APPRECIATING THE FACTS THAT AMOUNT RECEIVED BY THE ASSESSEE WAS ON ACCOUNT OF BUSINESS TRANSACTION. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR VARY FR OM THE AFORESAID GROUNDS OF APPEAL AT OR BEFORE THE TIME O F HEARING. 2. THE GROUND NO.1 TO 3 WERE ONLY PRESSED WHICH AR E INTER- CONNECTED. HOWEVER, THE GROUND NO. 4 WAS NOT PRES SED, HENCE, THE GROUND NO. 4 IS DISMISSED AS NOT PRESSED. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED RETURN FOR THE ASSESSMENT YEAR 2012-13 ON 27.9.2012 DECLARING INCO ME OF RS. 11,40,490/-. THE RETURN OF THE ASSESSEE WAS PROCES SED U/S. 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). SUBS EQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED UNDER SCRUTINY AND STA TUTORY NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASS ESSEE DERIVES INCOME FROM SALARY, BEING DIRECTOR IN M/S SINGHAL M ETALLOYS PVT. LTD.. INCOME FROM HOUSE PROPERTY RS. 1,26,000/- FRO M PREMISES GIVEN TO HIS COMPANY AND INCOME FROM BUSINESS RS. 2,34,27 6/- FROM HIS PROPRIETARY FIRM M/S SHREE HARI METAL, AS TRADING I N METAL SCRAP. THE AO COMPLETED THE ASSESSMENT ON 27.3.2015 AT AN INCOME OF RS. 47,00,030/- BY MAKING THE ADDITION OF RS. 23,30,390 /- ON ACCOUNT OF GP VARIATION BY REJECTING THE BOOKS OF ACCOUNTS AN D TRADING RESULTS U/S. 145(3) OF THE ACT VIDE ORDER DATED 07.4.2015 P ASSED U/S. 144/145(3) OF THE ACT. AGAINST THE ASSESSMENT ORDER , ASSESSEE ITA NO. 357/D/2017 3 APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGN ED ORDER DATED 10.11.2016 HAS PARTLY ALLOWED THE APPEAL OF THE ASS ESSEE. AGGRIEVED WITH THE IMPUGNED ORDER, ASSESSEE IS IN APPEAL BEFO RE THE TRIBUNAL. 4. LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT LD. CIT(A) HAS WRONGLY UPHELD THE ADDITION OF RS. 23,30,490/- MADE BY THE ASSESSING OFFICER BY REJECTING BOOKS OF ACCOUNTS AN D BY PRESUMING GROSS PROFIT RATE AT 4% AGAINST DECLARED BY THE ASS ESSEE AT 0.77% WITHOUT APPRECIATING FACTS OF THE CASE. IT WAS FURT HER SUBMITTED THAT THE LD. FIRST APPELLATE AUTHORITY HAS ERRED IN UP HOLDING GP ADDITION WITHOUT CONSIDERING THE VERDICTS OF VARIOUS COURTS RELIED BY THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS . IT WAS FURTHER SUBMITTED THAT LD. CIT(A) ALSO WRONGLY UPHELD GP AD DITION WITHOUT APPRECIATING MATERIAL AVAILABLE ON RECORD. HE FURTH ER SUBMITTED THAT THE AO IS NOT JUSTIFIED IN OBSERVING THAT PURCHASES WERE NOT FOUND GENUINE. HE FURTHER SUBMITTED THAT THE MAINTENANCE OF DAY TO DAY STOCK REGISTER IS NOT THE LEGAL REQUIREMENT AS HELD BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JACKSONS HO USE 198 TAXMANN 385. FINALLY IT WAS SUBMITTED THAT SECTIO N 145(3) OF THE ACT CANNOT BE INVOKED ON THE MERE GROUND GP RATE IS LOW AS COMPARED TO EARLIER YEAR AND IN THIS REGARD HE RELI ED UPON THE DECISION OF THE HONBLE PUNJAB AND HARYANA HIGH COU RT IN THE CASE OF ITA NO. 357/D/2017 4 SURINDER KUMAR CHARANJIT KUMAR 282 ITR 78. IN VIEW OF THE ABOVE, HE REQUESTED THAT THE APPEAL OF THE ASSESSEE MAY BE ALLOWED. 5. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND STATED THAT THE GP RATE DECLARED BY THE ASSESSEE WAS MUCH LOWER THAN DECLARED IN THE PR ECEDING YEAR. HE FURTHER SUBMITTED THAT THE APPELLANT NEITHER MAI NTAINED STOCK REGISTER NOR DECLARED ANY QUANTITATIVE DETAILS OF G OODS AND NO BOOKS OF ACCOUNT WITH PURCHASE AND SALE BILLS WERE PRODUC ED FOR VERIFICATION. IT WAS FURTHER SUBMITTED THAT M/S SAI METAL FROM WHOM PURCHASES WERE MADE WAS NOT FOUND AS PER INSPECTOR S REPORT AND THE PURCHASES FROM HARYANA METAL TRADERS AND SAI ME TAILS WERE NOT FOUND TO BE GENUINE. IN VIEW OF ABOVE, HE REQUESTE D TO DISMISS THE GROUND NO. 1 TO 3 RAISED BY THE ASSESSEE. 6. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS. I FIND THAT THE ASSESSEE WAS ENGAGED IN BUSINESS OF WHOLES ALE TRADING IN ALUMINIUM SCRAP AND ALUMINIUM INGOTS. HE DECLARED G ROSS PROFIT @ 0.77 % AS AGAINST 4.19% IN THE PRECEDING YEAR. THE BOOKS OF A/C WERE DULY AUDITED AND THERE WAS NO ADVERSE REMARK R EGARDING BOOKS MAINTAINED BY HIM. IT IS NOTED THAT ALL PURCHASES & SALES WERE SUPPORTED BY VOUCHERS. COPIES OF THE SAME WERE FURN ISHED BEFORE THE AO ALONG WITH LETTER DATED 17.02.2015 AND NO QUANTI TATIVE DETAILS OF ITA NO. 357/D/2017 5 STOCK WERE MAINTAINED ON DAY TO DAY BASIS. HOWEVER, SUCH DETAILS WERE FURNISHED BEFORE AO VIDE LETTER DATED 23.2.201 5. IT IS ALSO NOTED THAT CLOSING STOCK WAS VALUED ON THE BASIS OF FIFO METHOD AT COST. IT IS ALSO NOTED THAT AO HAS OBSERVED THAT THE GP RATE DECLARED BY THE APPELLANT WAS MUCH LOWER THAN DECLARED IN THE PRECE DING YEAR. AS PER AO, THE ASSESSEE NEITHER MAINTAINED STOCK REGI STER NOR DECLARED ANY QUANTITATIVE DETAILS OF GOODS AND NO BOOKS OF A CCOUNTS WITH PURCHASE & SALE BILLS WERE PRODUCED FOR VERIFICATIO N. AO ALSO NOTED THAT M/S SAI METAL FROM WHOM PURCHASES WERE MADE WA S NOT FOUND AS PER INSPECTOR'S REPORT AND ACCORDING TO HIM THE PURCHASES FROM HARYANA METAL TRADERS & SAI METALS WERE NOT FOUND T O BE GENUINE. HOWEVER, THE FACT OF THE CASE ARE THAT THE BOOKS O F A/C ARE DULY AUDITED RAISES A PRESUMPTION TO THE CORRECTNESS OF SUCH BOOKS UNLESS PROVED OTHERWISE. I NOTE THAT MAINTENANCE OF DAY TO DAY STOCK REGISTER IS NOT THE LEGAL REQUIREMENT AS HELD BY TH E HON'BLE DELHI HC IN CIT-V-JACKSONS HOUSE 198 TAXMAN 385; MARUTI UDYO G LTD-V-CIT 253 TAXMAN 60(DEL) AS WELL AS OF GUJ HC IN JAYTICK INTERMEDIATES (P) LTD 242 TAXMAN 319. HOWEVER, QUANTITATIVE DETAILS A LONG WITH INVOICES WERE FURNISHED BEFORE THE AO VIDE LETTER D ATED 17.02.2015. HENCE, NO ADVERSE INFERENCE COULD BE DRAWN BY AO. I T IS FOUND THAT THAT THE CLOSING STOCK WAS QUANTIFIED & VALUED AT C OST AS PER FIFO ITA NO. 357/D/2017 6 METHOD WHICH IS RECOGNISED METHOD. THE DETAILS WIT H VOUCHERS WERE ALSO FILED BEFORE AO VIDE LETTER DATED 17.02.2015. IN MY VIEW THAT THE AO IS ALSO NOT JUSTIFIED IN OBSERVING THAT PURCHASE S WERE NOT FOUND GENUINE. AFTER PERUSING THE PARA NO. 2.5 OF THE ASS ESSMENT ORDER, I FIND THAT THE PURCHASES WERE MADE BY TWO PARTIES NAMELY M/S HARYANA METAL TRADERS & SAI METALS. THE ENQUIRY NOT ICE SENT TO HARYANA METAL TRADERS WAS SERVED AND ADMITTED BY TH E AO HIMSELF. FURTHER BOTH THE PARTIES WERE REGISTERED WITH EXCIS E & TAXATION DEPARTMENT WHICH IS PROVED BY THE INVOICES ITSELF. IT IS ALSO NOTED THAT PAYMENTS WERE ALSO MADE THROUGH BANKS. 6.1 ALSO IT IS SETTLED LAW THAT SECTION 145(3) CAN NOT BE INVOKED ON THE MERE GROUND THAT GP RATE IS LOW AS COMPARED TO EARLIER YEAR, AS HELD IN THE DECISION OF HON'BLE P&H HIGH COURT IN S URINDER KUMAR CHARANJIT KUMAR 282 ITR 78 PH, WHEREIN IT HAS BEEN HELD THAT A LOW GP RATE MAY NOT PER SE LEAD TO AN INFERENCE THA T ACCOUNTS ARE FALSE, BUT COUPLED WITH OTHER RELEVANT CIRCUMSTANCE S, IT DOES AFFORD A SUFFICIENT GROUND FOR REJECTION OF THE ACCOUNTS AND ESTIMATION OF PROFITS. 6.2 KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE PRECEDENTS, THE ADDITION IN DISPUTE MADE ITA NO. 357/D/2017 7 BY THE AO AND CONFIRMED BY THE LD. CIT(A) IS HEREB Y DELETED AND ACCORDINGLY THE GROUND NO. 1 TO 3 ARE ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED ON 26-04-2019. SD/- (H.S. SIDHU) JUDICIAL MEMBER DT. 26-4-2019 SR BHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT AR, ITAT DELHI BENCHES