DCIT, Central Circle - XX, Kolkata, Kolkata V. M/s. Todays Writing Products Ltd., Kolkata

ITA 408/KOL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83023 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2014
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 10-03-2011
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Assessee Lawyers: N O N E
• Keywords: Rejection of books of accounts
• Section: 143(3)

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , . . . . ! ! ! ! /AND ' #!' ' #!' ' #!' ' #!' , ) [BEFORE SHRI P. K. BANSAL, AM & SHRI MAHAVIR SINGH, JM] !$ / I.T.A NO.408/KOL/2011 #% &'/ ASSESSMENT YEAR: 2007-08 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. TODAY S WRITING PRODUCTS LTD. CENTRAL CIRCLE-XX, KOLKATA. (PAN:AABCT1487E) ()* /APPELLANT ) (+,)*/ RESPONDENT ) DATE OF HEARING: 30.07.2014 DATE OF PRONOUNCEMENT: 01.08.2014 FOR THE APPELLANT: SHRI VARINDER MEHTA, CIT, DR FOR THE RESPONDENT: N O N E / ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A), CENTRAL-III, KOLKATA IN APPEAL NO. 26/CC-XX/CIT(A)C-III/09-10 DATED 21.12.2010. A SSESSMENT WAS FRAMED BY DCIT, C.C- XX, KOLKATA U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEARS 2007-08 VIDE HIS ORDER DATED 04.05 .2009. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) IN ACCEPTING THE BOOK RESULTS AS THE BOOKS OF ACCOUNT WERE REJECTED BY THE AO FOR SPECIFIC REASONS AS DISCUSSED IN THE ASSESSMENT ORDER. FOR THIS, REVENUE HAS RAI SED FOLLOWING TWO GROUNDS: 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO ACCEPT BOOK RESULTS WITHOUT PRO PER APPRECIATION OF THE FACT THAT BOOKS OF ACCOUNTS WERE ALREADY REJECTED FOR SPECIFIC REAS ONS DISCUSSED IN THE ASSESSMENT ORDER. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN HOLDING THAT THERE IS NO REASON OF REJECTING THE BO OKS OF ACCOUNTS WITHOUT PROPER APPRECIATION OF THE FACT THAT THE ASSESSEE FAILED T O PRODUCE QUANTITATIVE DETAILS FOR RAW MATERIALS, FINISHED GOODS AND TRADED GOODS. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A LIMITED COMPANY ENGAGED IN THE MANUFACTURING AND TRADING OF WRITING PRODUCTS AND S TATIONERY ITEMS. THE AO NOTICED FROM EARLIER YEAR RECORDS I.E. AY 2006-07 THAT THE BOOKS OF ACCOUNT WERE REJECTED IN THAT YEAR AND ACCORDINGLY, FOLLOWING EARLIER YEAR REJECTED THE BO OKS OF ACCOUNT BY QUOTING AS UNDER: PERUSAL OF EARLIER RECORDS REVEALED THAT DURING TH E A.YR. 2006-07 ALSO THE BOOKS OF A/CS OF THE ASSESSEE WERE REJECTED FOR VARIOUS IRRE GULARITIES NOTED BY THE A.O. FURTHER BOOKS OF ACCOUNTS DESTROYED IN FIRE OCCURRED ON 18 MAY, 2006 AND VARIABLE NET PROFIT 2 ITA NO.408/K/2011 TODAYS WRITING PRODUCTS LTD. AY 2007-08 SHOWN BY DIFFERENT UNITS OF THE ASSESSEE AND ASSESS MENT COMPLETED 10 THE BEST OF ESTIMATE ON THE BASIS OF MATERIALS AVAILABLE IN PAS T AND PRESENT RECORDS. AS PER THE TAX AUDIT REPORT AND PARTICULARS SUBMITT ED IN 3 CD, NO QUANTITATIVE DETAILS HAVE BEEN FURNISHED IN RESPECT OF FINISHED GOODS, R AW MATERIALS CONSUMED AND TRADED GOODS. THE REASONS FOR NON SUBMISSIONS OF ABOVE DET AILS, LD. A/R STATED THAT ALL BOOKS OF ACCOUNTS AND RECORDS OF THE ASSESSEE WERE DESTROYED IN FIRE. IN VIEW OF NON-SUBMISSION OF QUANTITATIVE DETAILS, THE EXACT PROFIT CAN NOT BE DERIVED AND THE LD. A/R COULD NOT PRODUCED ANY DOCUMENTARY EVID ENCE OR ANY OTHER PROOF TO SUBSTANTIATES THE ASSESSEES CLAIMS MADE IN THE RET URN. THEREFORE I REJECT BOOKS OF ACCOUNTS AND ESTIMATE THE NET PROFIT AT 8% ON TURNO VER OF RS.151,42,55,568/-. 4. AGGRIEVED, ASSESSEE CAME IN APPEAL BEFORE CIT(A) , WHO ACCEPTED THE BOOK RESULTS AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE VIDE PA RA 5 OF HIS APPELLATE ORDER AS UNDER: 5. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDE R AS WELL AS THE SUBMISSION OF THE APPELLANT. I FLND THAT THE AO HAS REJECTED THE BOOKS OF ACCOUN TS ON THE FOLLOWNG GROUND: A) DURING THE A.Y. 2006-07 ALSO THE BOOK OF A/CS. OF T HE ASSESSEE WERE REJECTED FOR VARIOUS IRREGULARITIES NOTED BY THE A.O B) THE TAX AUDIT REPORT DOES NOT CONTAIN QUANTITATIVE DETAILS FOR RAW MATERIALS, FINISHED GOODS AND TRADED GOODS. ON EXAMINATION OF THE FACTS I FIND, THE CIRCUMSTANC ES IN THE ASST YEAR 2006-07 WERE ENTRELY DIFFERENT THAN THE CIRCUMSTANCE N THE ASST YEAR UN DER CONSIDERAION. IN THE ASST YEAR 2006-07, NO BOOKS OF ACCOUNTS COULD BE PRODUCED, WHEREAS IN THE ASSESSMENT YEAR UNDER CONSIDERATION, FULL BOOKS OF ACCOUNTS AND OTHER DOCUMENTS WERE PRO DUCED BEFORE THE AO. THE AO HAS NOT FOUND OUT AN MISTAKE THEREIN. EVEN THE QUANTITATIVE DETAILS AFTER THE DATE OF FIRE, I.E FROM L9.5.2006 TO 31.3.2007 WERE PRODUCED BEFORE THE AO. AS SUCH THERE S NO REASON OF REJECTING THE BOOKS OF ACCOUNTS. MOREOVER THE REJECTION OF BOOKS OF ACCOUNTS FOR THE ASST YEAR 2006-07 HAS ALSO BEEN HELD BY ME AS INVALID BY RESPECTFULLY FOL LOWING THE ORDER OF HON. ITAT KOLKATA BENCH A DATED 21.8.2009. AS SUCH THERE IS NO REJECTION OF BOOKS OF ACCOUNTS IN THIS YEAR. THEREFORE THE BOOK RESULTS IS TO BE ACCEPTED. 5. WE HAVE HEARD LD. CIT, DR AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAS PRODUCED BOOKS OF ACCOUN T AND OTHER RELATED DETAILS AND EXPLAINED THE RETURN OF INCOME. THE ASSESSEES ACCOUNTS ARE AUDI TED BUT AS PER TAX AUDIT REPORT NO QUANTITATIVE DETAILS IN RESPECT OF FINISHED GOODS, RAW MATERIAL CONSUMED AND TRADED GOODS WAS AVAILABLE. ACCORDING TO AO, THESE ARE CRUCIAL DETA ILS FOR A MANUFACTURING CONCERN AND IN THE ABSENCE OF THE SAME, AO REJECTED THE BOOK RESULTS A ND ESTIMATED THE PROFIT @ 8%. THE ASSESSEE SUBMITTED BEFORE THE LOWER AUTHORITIES THAT THE ASS ESSEE HAS PRODUCED DULY AUDITED BOOKS OF ACCOUNT, ASSESSEE BEING A QUOTED COMPANY. ACCORDIN G TO ASSESSEE, AS SUCH, BESIDES TAX AUDIT, AUDIT UNDER COMPANIES ACT AND QUARTERLY AUDIT WERE CARRIED OUT FOR PUBLISHING QUARTERLY RESULTS IN THE NEWSPAPERS AS PER REQUIREMENT UNDER COMPANIE S ACT. THE ASSESSEE PRODUCED COMPLETE DETAILS BEFORE THE AO BUT HE COULD NOT POINT OUT AN Y DEFECT. EVEN IN THE BOOKS OF ACCOUNT, 3 ITA NO.408/K/2011 TODAYS WRITING PRODUCTS LTD. AY 2007-08 THERE WAS NO DEFECT POINTED OUT BY THE AO AND ONE M ORE PERTINENT FACT WAS BROUGHT BY THE ASSESSEE WAS THAT A FIRE TOOK PLACE ON 18.05.2006 D ESTROYING THE ENTIRE BOOKS OF ACCOUNT AND OTHER RECORDS. ASSESSEE FILED A PAPER CUTTING NARR ATING EXTENT OF FIRE AS WELL AS COPY OF FIR. SINCE THE FIRE TOOK PLACE ON 18.05.2006, ASSESSEE C OULD NOT PRODUCE THE STOCK REGISTER FROM 01.04.2006 TILL 18.05.2006 BUT FULL RECORDS FROM 19 .05.2006 TO 31.03.2007 WERE FURNISHED BEFORE THE AO. THE CIT(A) RELYING ON THE DECISION OF HONBLE P&H HIGH COURT IN THE CASE OF PANDIT BROTHERS VS. CIT (1954) 26 ITR 159 (P&H) NOT ED THAT THE BOOKS OF ACCOUNT CANNOT BE REJECTED MERELY BECAUSE STOCK REGISTER IS NOT PRODU CED OR NOT MAINTAINED ONCE IT IS NOT POINTED OUT HOW IT IS RELEVANT FOR DEDUCING THE TRUE PROFIT S. WE FIND THAT THE BOOKS OF ACCOUNT REJECTED IN EARLIER YEAR I.E. AY 2006-07, WHICH WAS ACCEPTED BY CIT(A)AND IN SUCH CIRCUMSTANCES, WE FEEL THAT THERE IS NO REASON TO REJECT THE BOOKS OF ACCOUNT WITHOUT POINTING OUT ANY MISTAKE FROM THE SAME. HENCE, WE UPHOLD THE ORDER OF CIT(A) AND THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 6. ORDER PRONOUNCED IN OPEN COURT ON 01.08.2014 SD/- SD/- , . . . . , ' #!' ' #!' ' #!' ' #!' , (P. K. BANSAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 ST AUGUST, 2014 -. #/0 #1 JD.(SR.P.S.) 2 +##3 43&5- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT DCIT, CENTRAL CIRCLE-XX, KOLKATA. 2 +,)* / RESPONDENT M/S. TODAYS WRITING PRODUCTS LTD., 13, BRABOURNE ROAD, KOLKATA-700 001. 3 . # ( )/ THE CIT(A), KOLKATA 4. 5. # / CIT KOLKATA 3:#; +# / DR, KOLKATA BENCHES, KOLKATA ,3 +#/ TRUE COPY,