M/s Nova Publication, Jalandhar V. The Addl. Commissioner of Income Tax, Jalandhar

ITA 376/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0595 (ITAT-AMRITSAR)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 09-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKAR
• Assessee Lawyers: R D SHARMA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR (CAMP AT JA LANDHAR ) BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO.376(ASR)/2015 ASSESSMENT YEAR: 2009-10 M/S NOVA PUBLICATION, FOCAL POINT EXTENSION, JALANDHAR. PAN: AABFN-1358B VS. ADDL. CIT, RANGE-II, JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. R. D. SHARMA (CA) RESPONDENT BY: SH. BHAWANI SHANKAR (DR) DATE OF HEARING: 23.06. 2016 DATE OF PRONOUNCEMENT : 30.06.2016 ORDER PER T.S.KAPOOR (AM): THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORD ER OF LEARNED CIT(A), JALANDHAR, DATED 01.05.2015, FOR ASST. YEAR :2009-10. 2. THE ONLY ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS THE ACTION OF LEARNED CIT(A) BY WHICH HE HAD CONFIRMED THE ADDITI ON OF RS.5,00,000/- WHICH THE ASSESSING OFFICER HAD MADE TO THE TRADING RESULTS OF THE ASSESSEE. 3. THE BRIEF FACTS OF THE CASE AS NOTED IN ASSESSME NT ORDER ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PUBLICAT ION OF SCHOOL BOOKS. THE CASE WAS SELECTED FOR SCRUTINY. DURING THE ASS ESSMENT PROCEEDINGS, ITA NO.37 6 (ASR)/2015 ASST. YEARS: 2009-10 2 THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HA D DECLARED GP RATE FROM 29.58% TO 30.67% FOR THE THREE YEARS FROM 2007 -08 TO 2009-10 AND THE GP RATE DECLARED DURING THE YEAR UNDER CONSIDER ATION WAS 29.58%. THE ASSESSING OFFICER WANTED THE ASSESSEE TO FILE T HE QUANTITATIVE DETAILS OF OPENING AND CLOSING STOCK AND IN REPLY THE ASSES SEE SUBMITTED NO STOCK RETISTER HAS BEEN MAINTAINED. HOWEVER, IT SUB MITTED THAT ASSESSEE HAS BEEN VALUING OPENING AND CLOSING STOCK AT COST PRICE. THE ASSESSING OFFICER IN VIEW OF NON MAINTENANCE OF QUANTITATIVE FIGURES OF CLOSING STOCK HELD THAT CORRECTNESS OF OPENING AND CLOSING STOCK CANNOT BE ASCERTAINED, THEREFORE, HE MADE AN ADDITION OF RS.5,00,000/- 4. AGGRIEVED WITH THE ORDER THE ASSESSEE FILED APPE AL BEFORE LEARNED CIT(A) AND LEARNED CIT(A) ALSO CONFIRMED THE ADDITI ON. 5. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 6. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT COM PLETE BOOKS OF ACCOUNTS WERE FURNISHED AND ASSESSING OFFICER DID N OT POINT OUT ANY MISTAKE IN THE BOOKS OF ACCOUNTS AND THE METHOD OF ACCOUNTING HAS BEEN REGULARLY FOLLOWED BY THE ASSESSEE FIRM. IT WAS FUR THER SUBMITTED THAT BOOKS OF ACCOUNTS OF THE ASSESSEE WERE AUDITED AND NO DISCREPANCY WAS POINTED OUT BY AUDITORS ALSO. 7. CONTINUING HIS ARGUMENTS, THE LEARNED AR SUBMITT ED THAT SECTION 145(3) CAN BE APPLIED ONLY IN CASE THE BOOKS OF ACC OUNTS WERE NOT CORRECT OR COMPLETE OR METHOD OF ACCOUNTING HAS NOT BEEN RE GULARLY FOLLOWED BY THE ASSESSEE OR IF THE INCOME HAS NOT BEEN COMPUTED IN ACCORDANCE WITH ITA NO.37 6 (ASR)/2015 ASST. YEARS: 2009-10 3 STANDARDS NOTIFIED U/S 145(2) OF THE ACT. HE SUBMIT TED THAT NO SPECIFIC DEFECTS HAS BEEN POINTED OUT AND THEREFORE, ADDITIO N WAS AD HOC AND ARBITRARY AND WAS NOT AS PER LAW. RELIANCE IN THIS RESPECT WAS PLACED ON THE FOLLOWING CASE LAWS. (I) CIT VS. OM OVERSEAS, 315 ITR 185 (P&H). (II) PANDIT BROTHERS VS. CIT, 26 ITR 159 (DEL). THE LEARNED AR FURTHER SUBMITTED THAT HONBLE ITAT, DELHI BENCH IN THE CASE OF EVERGREEN PUBLICATIONS (INDIA) LTD., [ASSOC IATE CONCERN OF THE ASSESSEE ] HAS DELETED THE SIMILAR ADDITION IN ITA NO.237(ASR)/2011 AND IN THIS RESPECT HE FILED A COPY OF THE JUDGMENT OF HONBLE ITAT, DELHI BENCHES. 8. THE LEARNED DR, ON THE OTHER HAND, HEAVILY PLACE D HIS RELIANCE ON THE ORDER OF AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH E MATERIAL PLACED ON RECORD. WE FIND THAT IT IS A FACT THE ASSESEE HA S BEEN MAINTAINING BOOKS OF ACCOUNTS EXCEPT STOCK REGISTER AND IT IS A LSO A FACT THAT ASSESSING OFFICER COULD NOT POINT OUT ANY DEFECT IN THE BOOKS OF ACCOUNTS. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. OM OVERSEAS 315 ITR 185 (P&H) HAS HELD THAT THERE IS N O REQUIREMENT IN LAW TO MAINTAIN THE STOCK RECORDS AND STOCK RECORDS ARE NOT BOOKS OF ACCOUNTS. IT WAS ALSO HELD THAT ONUS IS ON THE ASSE SSING OFFICER TO POINT OUT SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNTS AND M AKE SUCH ADDITION ON ITA NO.37 6 (ASR)/2015 ASST. YEARS: 2009-10 4 THE BASIS OF MATERIAL. SIMILAR VIEW HAS BEEN TAKEN IN THE CASE OF PANDIT BROTHERS VS. CIT, 26 ITR 159 (DELHI). 10. IT IS A MATTER OF RECORD THAT NO SUCH DEFECT IN THE BOOKS OF ACCOUNTS WERE POINTED OUT BY ASSESSING OFFICER AND IT IS ALS O A FACT THAT AS COMPARED TO EARLIER YEAR THE ASSESSEE HAD DECLARED A BETTER GP RATIO AND THEREFORE, THERE WAS NO OCCASION FOR ASSESSING OFFI CER TO MAKE SUCH ADDITION. IN THE GROUP CASE OF THE ASSESEE COMPANY IN THE CASE OF EVERGREE PUBLICATIONS (INDIA) LTD. (SUPRA), SIMILAR ADDITION HAS BEEN DELETED BY THE HONBLE ITAT, DELHI BENCHES BY HOLDI NG AS UNDER: 26. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTION. THE ASSESSEE IS A PRIVATE LTD. COMPANY WHICH GETS ITS BOOKS OF ACCOUNT AUDITED AND SAME WERE ALSO PRODUCED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCE EDING. ON READING OF THE ASSESSMENT ORDER, WE COULD NOT FIND THAT ANY DEFECT HAS BEEN POINTED OUT BY THE AO IN THE BOOKS OF ACCOUNTS OR DETAILS SUBMITTED. IT IS ALSO NOT THE CASE OF THE AO THAT ALL THE DETAILS ASKED FOR HAS NOT BEEN FURNISH ED. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ALSO CONFIRMED THE ADDITIO N HOLDING THAT IT IS SMALL ADDITION OF 0.15% TO THE GROSS PROFIT OF COMPANY. W E DO NOT SUBSCRIBE TO THAT VIEW. IN THE CASE OF THE ASSESSEE THE GROSS PROFIT RATE F OR THE LAST YEAR IS 26.1% COMPARED TO 26.57% IN THIS YEAR. THEREFORE, THE ASS ESSEE HAS SHOWN PROGRESSIVE GROSS PROFIT. IN THE AUDIT REPORT PRODUCED BEFORE U S, IT HAS BEEN CERTIFIED BY THE AUDITOR THAT ASSESEE HAS VALUED CLOSING STOCK AS PE R THE VALUATION METHOD CONSISTENTLY FOLLOWED. IT IS ALSO MENTIONED IN THE SAME REPORT THAT PHYSICAL VERIFICATION OF THE INVENTORY HAS BEEN CARRIED OUT AND NO MATERIAL DISCREPANCY IS FOUND. AO OR LD. DR HAS NOT DISPUTED THIS FACT. FURT HER, IF THE ASSESSEE HAS NOT MAINTAINED THE DETAILS OF THE CLOSING STOCK THEN AO SHOULD HAVE MADE DEFINITE ASCERTAINABLE ADDITIONS/DISALLOWANCE AND NOT AD HOC ADDITION/DISALLOWANCES. THE MANNER OF MAKING ADDITIONS ON ADHOC BASIS IS A SHORT CUT ADOPTED BY AO, WHICH CANNOT BE APPROVED MERELY BECAUSE STOCK REGIS TER IS NOT AVAILABLE IN ABSENCE OF ANY LATENT, PATENT AND GLARING DEFECTS I N THE BOOKS OF ACCOUNT OR IN THE DETAILS PRODUCED BY THE ASSESSEE. IN SIMILAR CIRCUM STANCES HONBLE DELHI HIGH COURT HAS HELD IN CASE OF CIT V JACKSON HOUSE [195 TAXMAN 385] THAT WHERE BOOKS OF ACCOUNT OF ASSESSEE WERE DULY AUDITED, ASSE SSING OFFICER HAD NOT POINTED OUT ANY SPECIFIC DEFECT OR DISCREPANCY THER EIN AND INCOME OF ASSESSEE WAS CLEARLY DISCERNIBLE FROM ACCOUNTING METHOD FOLLOWED BY IT, ACCOUNTS OF ASSESSEE COULD NOT BE SAID TO BE DEFECTIVE OR INCOMPLETE, ME RELY BECAUSE STOCK REGISTER WAS NOT MAINTAINED. IN THE CASE OF THE ASSESEE BILLS, S UPPORTED PURCHASES, SALES, AND ACCOUNTS ARE AUDITED, NONE OF THE EXPENSES WAS FOUN D TO BE INFLATED OR UNSUPPORTED. FURTHER ASSESSEE IS IN THE BUSINESS OF PUBLICATION WHERE LOOKING TO ITA NO.37 6 (ASR)/2015 ASST. YEARS: 2009-10 5 THE SIZE AND NATURE OF THE BUSINESS IT MAY NOT BE P OSSIBLE TO MAINTAIN MINUTE QUANTITY DETAILS OF THE PAPER, INKS AND OTHER COLOU R MATERIAL ETC. IN VIEW OF THIS WE DELETE THIS ADDITION OF RS.5 LAC MADE BY AO AND CONF IRMED BY THE CIT(A) REVERSE THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS COUNT AND ALLOW GROUND NO.2 OF THE APPEAL. 10. IN VIEW OF THE ABOVE JUDICIAL PRECEDENTS, WE AL LOW THE APPEAL OF THE ASSESSEE. 11. IN NUTSHELL, THE APPEAL FILED BY ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30.06.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER