DCIT, Muzaffarnagar V. M/s. Ravi Organics Ltd., Muzaffarnagar

ITA 3670/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9002 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 06-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHARAT B GARG
• Keywords: Gross profit estimation
• Section: 145(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI F BEN CH, NEW DELHI (THROUGH VIDEO CONFERENCING] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND MS. MADHUMITA ROY, JUDICIAL MEMBER ITA NO. 3670/DEL/2017 [A.Y 2012-13] THE DY. C.I.T VS. M/S RAVI ORGANICS LTD CIRCLE - 2 19-A, NEW MANDI MUZAFFARNAGAR MUZAFFARNAGAR PAN : AABCR 4274 M [APPELLANT] [RESPONDENT] DATE OF HEARING : 10.08.2021 DATE OF PRONOUNCEMENT : 10.08.2021 ASSESSEE BY : SHRI M.P. RASTOGI, ADV REVENUE BY : SHRI BHARAT B. GARG, S R. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX [APPEALS], MUZAFFARNAGAR DATED 06.03.2017 PERTAINING TO ASSESSMENT YEAR 2012-13 . 2 2. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT TH E LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 3,85,62,210/- MADE ON ACCOUNT OF LOW GROSS PROFIT RATE AFTER REJECTING THE BOOKS OF ACCO UNT. 3. REPRESENTATIVE OF BOTH THE SIDES WERE HEARD AT L ENGTH. CASE RECORDS CAREFULLY PERUSED. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT D URING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFI CER SPECIFICALLY REQUIRED THE ASSESSEE TO JUSTIFY THE G.P. OF THE YE AR UNDER CONSIDERATION ALONGWITH COMPARATIVE TRADING RESULTS OF LAST TWO YEARS. THE ASSESSEE FURNISHED NECESSARY DETAILS FROM WHICH THE ASSESSING OFFICER NOTICED THAT DURING THE YEAR, THE G.P. DECL ARED BY THE ASSESSEE IS 0.23% AS AGAINST 6.55% DECLARED LAST YEAR. 5. THE ASSESSING OFFICER OBSERVED THAT SOME BILLS/V OUCHERS WERE NOT PROPERLY MAINTAINED AND THEREFORE, IN THE ABSENCE O F THE SAME, THE EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT ARE NOT FULLY VERIFIABLE. APPLYING G.P. RATE OF 6.55%, THE ASSESSING OFFICER MADE ADDITION OF RS. 3,85,62,210/-. 3 6. BEFORE THE LD. CIT(A), THE ASSESSEE EXPLAINED TH E NATURE OF ITS BUSINESS AND VEHEMENTLY CONTENDED THAT THE BOOKS OF ACCOUNT ARE AUDITED WHICH WERE PRODUCED AND EXAMINED BY THE ASS ESSING OFFICER. IT WAS ALSO BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC DEFECT OR ERROR IN THE BOOKS OF ACCOUNT AND HAS MADE GENERAL OBSERVATIONS FOR ADOPT ING THE G.P RATE OF 6.55%. 5. AFTER CONSIDERING THE FACTS AND SUBMISSIONS AND AFTER EXAMINING THE DOCUMENTARY EVIDENCES, THE LD. CIT(A) HELD AS UNDER: ON CONSIDERATION OF FACTS OF THE CASE, IT IS NOTED FROM THE ASSESSMENT ORDER THAT BOOKS OF ACCOUNT ALONG WITH B ILLS/VOUCHERS WERE PRODUCED BEFORE THE AG WHICH HAVE BEEN TEST CH ECKED THE AO HAS NOT POINTED OUT ANY SPECIFIC DEFECT IN THE B ILLS/VOUCHERS. NOT EVEN A SINGLE INSTANCE HAS BEEN MENTIONED IN TH E ASSESSMENT ORDER TO MY DISCREPANCY. THUS THE OBSERVATIONS OF T HE AO ARE GENERAL AND VAGUE. THE APPELLANT HAS RELIED UPON AU DITED BOOKS OF ACCOUNT ALONG WITH OTHER RECORDS SUCH AS EXCISE, VA T IN ITS SUPPORT. THE REASONS FOR DECLINE IN GP HAVE BEEN EX PLAINED BEFORE AO VIDE SUBMISSION DATED 20-.03-2015. THE APPROACH OF THE A O IN REJECTING THE BOOK OF ACCOUNT HAS BEEN AD HOC. IT H AS BEEN PROVIDED U/S 145(3) OF THE ACT THAT ONCE LTS.UCU TH AT BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT ARE NOT COMPLET E OR CORRECT OR METHOD OF ACCOUNTING HAS NOT BEEN REGULARLY, FOLLOW ED THEN SUCH 4 BOOKS OF ACCOUNT ARE TO BE REJECTED. THE AO HAS NOT MADE ANY SUCH SPECIFIC FINDING BEFORE OR THE SAME U/S 145(3) OF THE ACT. THE SATISFACTION OF THE AO HAS BEEN MECHANICAL AND GENERAL. UNDER THE FACTS, IT IS HELD THAT THE AO HAS NOT BEEN JUST IFIED TO REJECT THE BOOKS OF ACCOUNT U/S 145(3) OF THE ACT AND THER EBY M MAKING ADDITION OF RS. 3,85,62,210/-.. THE SAME IS HEREBY DELETED. GROUND OF APPEAL NO.2 IS ALLOWED, 6. BEFORE US, THE LD. DR COULD NOT POINT OUT ANY FA CTUAL ERROR OR INFIRMITY IN THE ABOVE FINDINGS OF THE LD. CIT(A). WE, THEREFORE, DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF T HE LD. CIT(A). GROUND RAISED BY THE REVENUE STANDS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I N ITA NO. 3670/DEL/2017 IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 10.08. 2021 IN THE PRESENCE OF BOTH THE RIVAL REPRESENTATIVES. SD/- SD/- [ MADHUMITA ROY ] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10 TH AUGUST, 2021 5 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER