Mahavir Prasad Choudhary, CHURU V. ITO, CHURU

ITA 393/JODH/2010

• Counselvise Citation: 39323314 RSA 2010
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-07-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 14-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Assessee Lawyers: D S BOHRA
• Keywords: Business income
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI R.K.GUPTA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 393/JU/2010 ASSESSMENT YEAR: 2007-08 SHRI MAHAVIR PRASAD CHAUDHARY, VS. THE ITO, WARD-1, PROP. M/S SWAGATTAM SAREE CENTRE, CHURU CHURU PAN NO. AAIPC1173G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D.S BOHRA RESPONDENT BY : SHRI G.R. KOKANI DATE OF HEARING : 23.07.2012 DATE OF PRONOUNCEMENT : 23.07.2012 ORDER PER N.K.SAINI, A.M. THIS IS AN APPEAL BY THE ASSESSEE IS AGAINST THE OR DER DATED 10.3.2010 OF CIT(A)-3, JAIPUR. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEA L. 2 1. THE CIT(A) SHOULD NOT HAVE HELD THAT PROVISO TO SECTION 145 OF THE INCOME TAX ACT IS APPLICABLE IN THE CIRCUMSTANCES OF THE APPELLANT AS HE HAS MAINTAINED REGULAR BOOKS OF ACCOUNT AND SALES ARE SUPPORTED BY PURCHASE AND SALE VOUCHERS AND OTHER DOCUMENTARY EVIDENCE. 2. THE CIT(A) SHOULD NOT HAVE HELD THE RATE OF GRO SS PROFIT AT 14% AS REASONABLE BECAUSE THERE IS NO BAS IS OR EVIDENCE TO ARRIVE AT SUCH A CONCLUSION WHEN IN PREVIOUS YEARS IN EXACTLY SIMILAR CIRCUMSTANCES A M UCH LOWER RATE OF PROFIT HAS BEEN APPLIED EVEN BY THE AUTHORITIES. MOREOVER, THE ESTIMATE OF RATE IS GRO SSLY ARBITRARY AND BASED NO EVIDENCE AND RATE OF SIMILAR OTHER CASES. 3. THE CIT(A) SHOULD NOT HAVE HELD THE ENHANCEMENT OF HOUSE HOLD EXPENDITURES FROM RS. 40,0000/- TO RS. 84,000/- AS REASONABLE AS THERE IS NO EVIDENCE WHATSOEVER THAT ANY EXPENDITURE HAVE NOT BEEN ACCOUNTED FOR BY HIM IN HIS BOOKS. MOREOVER, THERE IS NO BASIS FOR SUCH ESTIMATE BY HIM. 3. GROUND NOS. 1 AND 2 OF THE APPEAL RELATES TO GRO SS PROFIT RATE APPLIED BY THE ASSESSING OFFICER AND SUSTAINED BY T HE LD CIT(A) . 4. THE FACTS RELATING TO THIS ISSUE IN BRIEF ARE TH AT THE ASSESSEE FILED HIS RETURN OF INCOME ON 31.10.2007 DECLARING AN INCOME OF RS. 2,85,470/-. 3 LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE DECLARED GROSS PROFIT RATE OF 12.89% AS AGAINST GRO SS PROFIT RATE OF 13.28% DECLARED IN THE IMMEDIATELY PRECEDING YEAR. HE AL SO POINTED OUT THAT THE GROSS PROFIT RATE DECLARED IN THE ASSESSMENT YEAR 2 005-06 WAS 14.02%. THE ASSESSING OFFICER ALSO POINTED OUT THAT THE SAL ES HAD NOT BEEN FULLY VOUCHED BY THE ASSESSEE AND THAT THE SALES BILLS WE RE NOT ISSUED ON REGULAR COURSE OF BUSINESS BUT A BILL OF LUMP SUM AMOUNT W AS ISSUED AT THE FAG END OF THE BUSINESS HOURS. THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 145 OF THE ACT AND APPLIED THE GROSS PRO FIT RATE OF 15% ON THE TOTAL SALES DECLARED BY THE ASSESSEE AT RS. 1,36,87 ,290/-, AS WAS DONE IN THE IMMEDIATE PRECEDING YEAR I.E. ASSESSMENT YEAR 2 006-07. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CI T(A) WHO SUSTAINED THE GROSS PROFIT RATE OF 14% ON THE SALES DECLARED BY THE ASSESSEE BY OBSERVING THAT THE ITAT HAD APPLIED A GROSS PROFIT RATE OF 14% IN THE PRECEDING YEAR AND HE ALSO APPLIED GROSS PROFIT RAT E OF 14.20% FOR THE ASSESSMENT YEAR 2006-07. NOW THE ASSESSEE IS IN AP PEAL. 6. THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUT SET STATED THAT THE ISSUE IS COVERED BY THE ORDER DATED 30.3.2012 IN IT A NO. 191/JODH/2010 FOR THE ASSESSMENT YEAR 2006-07 WHEREIN AN ADDITION OF RS. 50,000/- WAS SUSTAINED. IT WAS SUBMITTED THAT THE FACTS OF THE Y EAR UNDER CONSIDERATION 4 ARE IDENTICAL TO THE FACTS INVOLVED IN THE PRECEDIN G YEAR, THEREFORE, THE SAME COURSE SHOULD BE ADOPTED FOR THIS YEAR AS WAS DONE IN THE EARLIER YEAR. 7. THE LD DR ALTHOUGH SUPPORTED THE ORDER OF THE LD CIT(A) BUT COULD NOT CONTROVERT THE CONTENTION OF THE LD. COUNSEL FO R THE ASSESSEE. 8. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PA RTIES AND THE MATERIAL AVAILABLE ON RECORD, IT IS NOTICED THAT IN THE PRECEDING YEAR THIS BENCH OF THE TRIBUNAL WHILE DECIDING THE ASSESSEES APPEAL IN ITA NO. 191/JODH/2010 FOR THE ASSESSMENT YEAR 2006-07 VIDE ORDER DATED 30.3.2012 SUSTAINED AN ADDITION OF RS. 50,000/- BY MAKING OBSERVATIONS IN PARA 6 OF THE AFORESAID ORDER DATED 30.3.2012. SO, RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER OF THE ITAT (SUPRA) , WE SUSTAIN THE ADDITION OF RS. 50,000/- IN TRADING ACCOUNT WHICH W ILL MEET THE ENDS OF JUSTICE AND TAKE CARE OF THE GROSS PROFIT AND OTHER DISCREPANCIES FOUND. 9. ANOTHER ISSUE AGITATED BY THE ASSESSEE RELATES T O THE ENHANCEMENT OF HOUSE HOLD EXPENSES. 10. THE FACTS RELATING TO THIS ISSUE IN BRIEF ARE T HAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAS SHOWN WITHDRAWAL OF RS. 28,000/- AND H IS WIFE HAS ALSO 5 WITHDRAWN A SUM OF RS. 12,000/- FOR THE FAMILY CONS ISTED OF TWO PERSONS. THE ASSESSING OFFICER CONSIDERED THE WITHDRAWALS FO R HOUSE HOLD EXPENSES BY THE ASSESSEE AND HIS WIFE AT LOWER LEVE L. HE, THEREFORE, ESTIMATED THE ANNUAL HOUSE HOLD EXPENSES AT RS. 84, 000/- AND MADE AN ADDITION OF RS. 44,000/- (RS. 84,000 - RS. 40,000 = RS. 44,000/-). 11. THE ASSESSEE CARRIED THE MATTER TO THE LD CIT(A ) WHO OBSERVED THAT THE ADDITION ON ACCOUNT OF LOW HOUSEHOLD EXPENDITUR E TO BE TELESCOPED WITH THE TRADING ADDITION. NOW, THE ASSESSEE IS IN APPEAL. 12. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE IS ALSO COVERED BY THE DECISION OF THIS BENCH OF THE ITAT I N ITA NO. 191/JODH/2010. THE LD. DR ALSO ACCEPTED THAT THIS ISSUE WAS ADJUDICATED BY THE ORDER DATED 30.3.2012 IN ITA NO. 191/JODH/20 10 FOR THE ASSESSMENT YEAR 2006-07. 13. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE P ARTIES, IT IS NOTICED THAT THE ITAT WHILE DECIDING A SIMILAR ISSUE IN THE EARLIER YEARS VIDE ORDER DATED 30.3.2012 IN ITA NO. 191/JODH/2010 HAD IN PAR A 9 OF THE ORDER HELD AS UNDER:- 9. WE HAVE ALREADY SUSTAINED TRADING ADDITION OF R S. 50,000/- WHICH IS MORE THAN THE ADDITION MADE BY TH E ASSESSING OFFICER ON ACCOUNT OF HOUSEHOLD EXPENSES AND SINCE 6 TRADING ADDITION WAS AVAILABLE WITH THE ASSESSEE FO R INCURRING EXPENSES ETC., THEREFORE, WE FIND NO INFIRMITY IN T HE ORDER OF LD CIT(A) IN ALLOWING SET OFF OF THE INCOME MADE ON A CCOUNT OF HOUSEHOLD EXPENSES. ACCORDINGLY, WE CONFIRM THE AC TION OF LD CIT(A). IN FACT, THERE WILL BE NO ADDITION AS HOUS EHOLD EXPENSES ARE LESS THAN TRADING ADDITION SUSTAINED. WE ORDER ACCORDINGLY. 14. IN THE SAID YEAR, IT WAS HELD THAT THE TRADING ADDITION OF RS. 50,000/- WAS MORE THAN THE ADDITION MADE BY THE ASSESSING OF FICER ON ACCOUNT OF HOUSE HOLD EXPENSES AND THE ORDER OF THE LD CIT(A) IN ALLOWING SET OFF OF THE INCOME WAS CONFIRMED. SO, RESPECTFULLY FOLLOWI NG THE AFORESAID ORDER DATED 30.32012 OF ITAT, WE DO NOT SEE ANY VALID GRO UND TO INTERFERE WITH THE FINDINGS OF THE LD CIT(A). 15. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23.07.2 012) SD/- SD/- (R.K.GUPTA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : JULY, 2012 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR ITAT, JODHPUR 7