DCIT, Meerut V. M/s. Mastermind Publication (India) Pvt. Ltd., Meerut

ITA 3755/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3139 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 24-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S K JAIN
• Section: 143(3); 133(6)

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT ME MBER ITA NO.:- 2139/DEL/2016 ASSESSMENT YEAR: 2012-13 ITA NO. 3755/DEL-2016 ASSTT. YEAR 2012-13 O R D E R MASTERMIND PUBLICATION (INDIA) PVT. LTD. C/O M.L. DHAWAN & CO. 326, THAPAR NAGAR, MEERUT PAN AADCM3466G VS. ACIT CIRCLE-1, MEERUT. (APPELLANT) (RESPONDENT) DCIT CIRCLE-1, AAYAKAR BHAWAN, BHAINSALI GROUND, DELHI ROAD, MEERUT VS. MASTERMIND PUBLICATION (INDIA) PVT. LTD. 40, JAL DEVI NAGAR, GARH ROAD, MEERUT PAN AADCM3466G ASSESSEE BY : SHRI S.K. JAIN, ADVOCATE DEPARTMENT BY : SHRI AMIT JAIN, SR. DR DATE OF HEARING 26/02/2018 DATE OF PRONOUNCEMENT 28/02/2018 2 PER AMIT SHUKLA, J.M. THE AFORESAID CROSS APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 14.3.2016 PASSED BY LD. CIT(A) MEERUT FOR THE ASSESSMENT YEAR 2012-13. THE ASSESSEE I S MAINLY AGGRIEVED BY ESTIMATION OF GROSS PROFIT RATE OF 12% AS AGAINST GROSS PROFIT DECLARED AT 9.99% BY THE ASSESSEE AND ALSO REJE CTION OF BOOKS OF ACCOUNT WHEREAS THE REVENUE IS IN APPEAL WITH REGARD TO THE RELIEF GIVEN BY THE LD. CIT(A) BY ADOPTING THE GP RATE OF 12% IN P LACE OF 15% AS ESTIMATED BY THE AO. THE BRIEF FACTS OF THE CASE ARE TH AT ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PUBLICATION OF BOOKS. IT HAS BEEN MAINTAINING REGULAR BOOKS OF ACCOUNTS WHICH WAS SUBJECT TO AUDIT U/S 44AB. THE AO, NOTED THAT ASSESSEE IS NOT BEIN G MAINTAINING ANY PRODUCT / STOCK REGISTER AND THEREFORE HE CAME TO TH E CONCLUSION THAT FINANCIAL RESULTS DECLARED BY THE ASSESSEE ON THE B ASIS OF BOOKS OF ACCOUNTS ARE NOT RELIABLE AND ACCORDINGLY HE APPLIED GP RATE OF 15% INSTEAD OF 9.99% SHOWN BY THE ASSESSEE ON A TURN OVER OF RS. 24,95,67,691/- AS DECLARED BY THE ASSESSEE AND THEREB Y DIFFERENCE AMOUNTING TO RS. 1,25,01,424/- WAS ADDED. LD. CIT(A) HAS REDUCED THE GP RATE @ 12% BY TAKING THE AVERAGE RESULT AND GP RATE O F THE PRECEDING YEARS WHICH WAS AROUND 11.6%. BEFORE US L D. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNAL IN ASSESSEES O WN CASE FOR ASSTT. YEAR 2010-11 AND 2012-13 HAS HELD THAT BOOKS OF ACCOUNTS AND 3 TRADING RESULT CANNOT BE REJECTED MAINLY ON THE GROUND THAT STOCK REGISTER HAS NOT BEEN MAINTAINED. SIMILAR NATURE OF AD DITION BY ESTIMATION OF GP RATE HAS BEEN DELETED. IN SUPPORT HE FILED A COPY OF ORDER DATED 15.3.2016 IN ITA NO. 6641/DEL/2014 AND ITA NO. 129/DEL/2015. 2. ON THE OTHER HAND LD. DR STRONGLY RELIED UPON THE ORDER. AFTER CONSIDERING THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER AS WELL AS MATERIAL PLACED ON RECORD, WE FIND THAT ASSESSEE HAS BEEN MAINTAINING BOOKS OF ACCOUNTS LIKE CASH BOOK, LEDGER ACCOUNTS, PU RCHASE INVENTORIES, VOUCHERS FOR EXPENSES AND DETAILS OF OP ENING STOCK AND CLOSING STOCK. THESE BOOKS OF ACCOUNTS HAVE BEEN SUB JECTED TO AUDIT AND BASED ON THAT TRADING AND PROFIT LOSS ACCOUNT HAS BEEN PREPARED. ON A TURN OVER OF RS. 24,95,67,691/- ASSESSEE HAS S HOWN GP RATE OF 9.99%. THE ADDITION HAS BEEN MADE BY REJECTING THE TR ADING RESULT ON THE GROUND THAT ASSESSEE DOES NOT MAINTAIN STOCK REGISTE R AND ACCORDINGLY LD. CIT(A) HAS BEEN ESTIMATED ON 15% WHI CH HAS BEEN REDUCED TO 12% BY THE LD. CIT(A). IT HAS BEEN POINTED O UT BEFORE US THAT ASSESSEE IS NOT MAINTAINING THE STOCK REGISTER SINCE STARTING OF THE BUSINESS AND LOOKING TO THE NATURE OF ASSESSEES BUSI NESS IT WAS NOT PHYSICALLY POSSIBLE TO MAINTAIN STOCK REGISTER. WE FIND THAT SIMILAR ISSUE HAS COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE WHEREIN 4 THE TRIBUNAL HAS DELETED THE SAID ADDITION SIMILAR NATU RE OF ADDITION IN THE FOLLOWING MANNER :- THE ID. OR COULD NOT POINT OUT ANY INFIRMITY IN TH E ORDER OF LD. CIT(A). FURTHER, WE ARE ALSO OF THE VIEW THAT I N ABSENCE OF ANY LATENT} PATENT AND SERIOUS DEFECT IN THE BOO KS OF ACCOUNT OF THE ASSESSEE IT CANNOT BE REJECTED. FURT HERMORE AS PER OFFICE NOTE ATTACHED WITH THE ORDER OF THE A O IT IS NOTED THAT CONFIRMATION OF SUNDRY CREDITORS HAS BEE N OBTAINED BY ISSUING NOTICE U/S 133(6) OF THE INCOME TAX ACT. THIS SHOWS THAT ALL THIRD PARTY ENQUIRIES ALSO CONF IRMS PROPER BOOKING OF PURCHASES AND MAINTENANCE OF ACCO UNTS. SUBSEQUENTLY} THE MONTH WISE QUANTITATIVE DETAILS ALONGWITH OPENING AND CLOSING STOCK WERE ALSO VERIF IED BY THE AO. THE COMPARATIVE CHART OF GROSS PROFIT IS SU BMITTED BY THE ASSESSEE AT PAGE 133 OF HIS PAPER BOOK WHEREIN STARTING FROM ASSESSMENT YEAR 2003-04 TO 2010-11 CONSISTENTL Y THE ASSESSEE HAS SHOWN GROSS PROFIT FROM 6.35% TO 7.09% AND FOR ASSESSMENT YEAR 2003-04 ASSESSMENT HAS BEEN MAD E U/S 143(3) OF THE ACT. FURTHER, THE NATURE OF THE B USINESS OF THE ASSESSEE IS PUBLICATION OF THE BOOKS AND ASSESS EE SUBMITTED THAT IT IS NOT FEASIBLE FOR MAINTENANCE O F REGULAR STOCK ACCOUNT, THIS FACTS WAS NOT CONTROVERTED BY A O. FURTHER MERELY NON MAINTENANCE OF STOCK REGISTER CA NNOT BE THE BASIS OF REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE WHEN THE COMPLETE DETAILS OF PURCHASES, SALES AND S TOCK IS AVAILABLE AND ON VERIFICATION NO DEFECTS ARE NOTICE D. IN VIEW OF THE ABOVE FACTS, WE DO NOT ANY INFIRMITY IN THE ORDER OF THE ID.CIT (A) AND CONFIRM THE DELETION OF ADDITION OF 5 RS.51258801/ - BY REJECTING THE BOOKS OF ACCOUNTS A ND ESTIMATING GP RATIO @ 35 %. 3. THE TRIBUNAL HAS CATEGORICALLY HELD THAT IN THE N ATURE OF ASSESSEES BUSINESS WHICH IS PUBLICATION OF BOOKS I T IS NOT PHYSICAL FOR MAINTAINING STOCK REGISTER ACCOUNT AND MERELY NON MAINTAINING OF STOCK REGISTER CANNOT LEAD TO REJECTION OF BOOKS OF ACC OUNTS. THUS FOLLOWING THE SAME JUDICIAL PRECEDENTS, WE HOLD THAT FOR THIS YEAR ALSO THE TRADING RESULT CANNOT BE DISTURBED ON THE GROUND THA T STOCK REGISTER HAS NOT BEEN MAINTAINED. ACCORDINGLY THE ADDITI ON MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) IS DELETED. CO NSEQUENTLY APPEAL FILED BY THE ASSESSEE IS ALLOWED AND REVENUE S APPEAL IS DISMISSED. 4. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS ALLOWED AND REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2018. SD/- SD/- (PRASHANT MAHARISHI) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28 /02/2018 VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 6 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI