ITO, RAJSAMAND V. M/s. Chirag Marbles Pvt. Ltd., RAJSAMAND

ITA 413/JODH/2013

• Counselvise Citation: 41323314 RSA 2013
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 27-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER ITA NO.413/JODH/2013 ASST. YEAR: 2008-09 INCOME TAX OFFICER, VS. M/S. CHIRAG MARBLES PVT. LTD., WARD-1, RAJSAMAND. KARZIA GHATI, NATHDWARA, RAJSAMAND. (PAN: AAACC 6560 E) (APPELLANT) (RESPONDENT) APPELLANT BY : N.A. JOSHI, D.R. RESPONDENT BY : NONE DATE OF HEARING : 27.11.2013 DATE OF PRONOUNCEMENT : 28.11.2013 ORDER PER HARI OM MARATHA, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE FOR A.Y. 2008-09 IS DIR ECTED AGAINST THE ORDER OF LD. CIT(A, UDAIPUR DATED 30.04.2013. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE COMPANY IS ENGAGED IN MANUFACTURING AND TRADING OF MARBLE SLABS/TILES. FOR A.Y. 2008-09 THE COMPANY FILED ITS E-RETURN ON 24.09.2008 DECLARING ITS TOTA L INCOME AS NIL. THE ASSESSEE COMPANY IS ALSO PURSUING JOB WORK OF OTHER PARTIES. IN THIS YEAR, G.P. HAS BEEN 2 ITA NO.413/JODH/2013 A.Y. 2008-09 SHOWN AT RS.6,38,860 ON TOTAL TURNOVER OF RS.76,66, 665/- GIVING A G.P. RATE OF 8.33%. IN THE ASSESSMENT YEAR 2007-08, THE G.P. RA TE OF THE ASSESSEE WAS 0.79% ON TOTAL TURNOVER OF RS.82,90,129/- BUT IN A.Y. 2006-0 7 THIS RATE WAS 22.74%. THE A.O. COMPARED THE G.P. RATE OF A.Y. 2006-07 AND FUR THER OBSERVING THAT VOUCHER IN RESPECT OF PURCHASE OF MARBLE BLOCKS DID NOT CONTAI N QUALITY/QUANTITY IN SQUIRE FEET/ SQUIRE METER. HE ALSO FOUND THAT STOCK REGISTER WA S NOT PROPERTY MAINTAINED BUT SPECIFICALLY BECAUSE THE G.P. RATE IN THIS YEAR IS LESS THAN THE G.P. RATE SHOWN IN THIS A.Y. HOWEVER, IT WAS MUCH BETTER THAN THE LAST YEAR. A.O. HAS REJECTED THE BOOKS OF ACCOUNT AND INVOKED PROVISIONS OF SECTION 145(3) OF THE ACT AND BY ADOPTING G.P. RATE OF 22.74% MADE ADDITION OF RS.11 ,04,540/-. THE ASSESSEE CHALLENGED THIS ADDITION AND LD. CIT(A) HAS DELETED THIS ADDITION BY OBSERVING THAT EVEN AFTER REJECTION OF BOOKS, THE SETTLED LAW IS O N THE BASIS OF PAST HISTORY OF THE ASSESSEE WHICH IS MORE RELEVANT THAN OTHER THINGS. 3. BEFORE US SIMILAR ARGUMENTS WERE RAISED FROM REV ENUES SIDE. HOWEVER, NOBODY WAS PRESENT AT THE TIME OF HEARING TO REPRES ENT THE CASE OF THE ASSESSEE RESPONDENT DESPITE NOTICE BEING DULY SERVED. THERE FORE, THIS APPEAL WAS HEARD EX- PARTE. 3 ITA NO.413/JODH/2013 A.Y. 2008-09 4. AFTER GOING THROUGH THE ENTIRE RECORDS IN THE LI GHT OF LD. DEPARTMENTAL REPRESENTATIVES SUBMISSIONS WHO HAS SUPPORTED THE ORDER OF A.O., WE ARE OF THE CONSIDERED OPINION THAT THE LAW REGARDING REJECTION OF BOOKS AND APPLICATION OF A MAGIC FIGURE OF G.P. RATE IS VERY WELL SETTLED. IN CASE BOOKS ARE REJECTED, THE PAST HISTORY THE ASSESSEE, IF AVAILABLE, IS THE BEST GUI DE AND GIVES LOGICAL APPLICATION THEREOF IN THE PRESENT YEAR ALSO. MOREOVER, BECAUS E THE G.P. RATE OF THE ASSESSEE IS ON LOWER SIDE THAN THE A.Y. BEFORE THE LAST A.Y., I T WOULD NOT BE A GOOD REASON TO REJECT THE BOOKS OF ACCOUNT. FURTHERMORE, IN THIS CASE, THE G.P. RATE IN THE EARLIER YEAR I.E. IMMEDIATELY PASSED A.Y. WAS 0.79% WHEREAS IN THIS YEAR IT IS 8.33%. OBVIOUSLY, THE G.P. RATE DECLARED IN THIS YEAR AS C OMPARED TO IMMEDIATELY PASSED A.Y. IS MUCH MORE BETTER. THE COMPARISON OF THE G. P. RATE FROM THE PAST TO PAST A.Y. IS NOT TENABLE IN THE EYES OF LAW. WE MAY FUR THER ADD THAT ONLY ON THE BASIS THAT THE G.P. RATE OF ANY ASSESSEE IS LOWER THAT OF IMMEDIATELY PASSED A.Y. CANNOT ALONE BE MADE AS A REASON TO REJECT THE BOOKS OF AC COUNT. APART FROM G.P. RATE DESCRIPTION THERE IS NO OTHER DISCREPANCY WHICH CAN BE STATED TO BE MATERIAL HAS BEEN FOND IN THE BOOKS OF ACCOUNT. THEREFORE, WE CONFIRM THE FINDING OF THE LD. CIT(A) IN THIS REGARD AND DISMISS GROUND NO.1 OF RE VENUES APPEAL. 4 ITA NO.413/JODH/2013 A.Y. 2008-09 5. THE FACTS APROPOS GROUND NO.2 WHICH RELATES TO D ELETION OF DISALLOWANCE OF RS.96,000/- MADE ON ACCOUNT OF DIRECTORS REMUNERAT ION, ARE THAT THE ASSESSEE COMPANY PAID REMUNERATION OF RS.96,000/- TO ONE OF ITS DIRECTORS NAMELY SMT. SHASHI DEVI CHOUDHARY. THIS DIRECTOR WAS POINTED I N THE MEMORANDUM OF ARTICLE OF ASSOCIATION WHICH IS DULY APPROVED BY THE BOARD OF DIRECTORS. SHE IS A GRADUATE AND HAS BEEN LOOKING AFTER THE BUSINESS OF THE COMP ANY BY MAKING SUPERVISION. SHE HAS BEEN PAID REMUNERATION YEAR AFTER YEAR AND THE SAME HAS BEEN CLAIMED IN THE P&L ACCOUNT. THE REVENUE HAS BEEN ALLOWING THE REMUNERATION. EVEN ASSESSMENT ORDERS HAVE BEEN PASSED UNDER SECTION 14 3(3) YEAR AFTER YEAR. IN THIS YEAR, HOWEVER, THE A.O. HAS DISALLOWED WHICH IS DEL ETED BY LD. CIT(A). 6. AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIV E, WE ARE NOT CONVINCED THAT THE CONSISTENT VIEW TAKEN BY THE REVENUE CAN BE SO DEVIATED IN THE NAME OF THE STATEMENT THAT EACH A.Y. IS SEPARATE AND DISTINCT. THE FACTS OF THIS ISSUE THAT SHE WAS APPOINTED AS DIRECTOR AND HAS BEEN PAID SIMILAR SALARY YEAR AFTER YEAR AND THE SAME HAVE BEEN ALLOWED BY THE DEPARTMENT HAS NOT BE EN DISPUTED BY THE LD. DEPARTMENTAL REPRESENTATIVE. THEREFORE, IN THESE F ACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY REASON TO DEVIATE FROM THE FINDING OF THE LD. CIT(A). HENCE, GROUND NO.2 OF REVENUES APPEAL ALSO STANDS DISMISSED. 5 ITA NO.413/JODH/2013 A.Y. 2008-09 7. THE THIRD GROUND PERTAINS TO DELETION OF ADDITIO N OF RS.3,89,582/- MADE UNDER SECTION 41(1) OF THE ACT. 8. THE FACTS APROPOS THIS GROUND ARE THAT IN THE BO OKS OF THE ASSESSEE, UNDER THE HEAD CURRENT LIABILITIES SUNDRY CREDITORS NAMELY GRAPCO INDUSTRIES LIMITED OF RS.3,17,331/- AND ADVANCE FROM CUSTOMERS NAMELY J.B . HOSPITAL & MEDICAL PVT. LTD. OF RS.72,251/- ARE FOUND RECORDED. THE A.O. S OUGHT EXPLANATION FROM THE ASSESSEE. IT WAS EXPLAINED THAT DUE TO DISPUTE REG ARDING QUALITY AND RATES WITH GRAPCO INDUSTRIES, PAYMENTS WERE NOT MADE AND AS SO ON AS SETTLEMENT WOULD TAKE PLACE, THE PAYMENT SHALL BE MADE. THE ASSESSEE FIL ED COPY OF LEDGER ACCOUNT ALONG WITH INVOICE IN GRAPCO INDUSTRIES. THE ASSESSEE AL SO MADE REQUEST TO THE A.O. TO DIRECTLY VERIFY THIS BY ISSUING SUMMONS TO THE PART Y UNDER SECTION 131 OF THE ACT. THE ASSESSEE SUPPLIED COMPLETE ADDRESSES OF THAT PA RTY. SIMILARLY WAS STATED TO BE THE CASE IN CASE J.B. HOSPITAL & MEDICAL PVT. LTD. THE A.O. WAS NOT SATISFIED AND HENCE MADE THE IMPUGNED ADDITION. AS AGAINST THIS, THE LD. CIT(A) DELETED THIS ADDITION BY HOLDING THAT PROVISIONS OF SECTION 41(1 ) OF THE ACT ARE NOT APPLICABLE. 9. BEFORE US, SIMILAR ARGUMENTS WERE PLACED BY LD. DEPARTMENTAL REPRESENTATIVE AND FROM THE RECORDS WE HAVE FOUND T HAT THE CASE OF THE ASSESSEE STANDS EXPLAINED. THE ASSESSEE HAS FURNISHED EVERY REQUIRED DETAILS WHICH ARE NECESSARY TO ASCERTAIN THE FACTS OF BOTH THESE PART IES. ASSESSEE HAD ALSO REQUESTED 6 ITA NO.413/JODH/2013 A.Y. 2008-09 THE A.O. TO DIRECTLY SEND SUMMONS TO THE PARTIES FO R THEIR VERIFICATION. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE TH IS FINDING OF THE LD. CIT(A) AND DISMISS THE GROUND NO.3 OF THE REVENUE. 10. IN THE RESULT, APPEAL OF THE REVENUE STANDS DIS MISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 28.11.201 3) SD/- SD/- (N.K. SAINI) (HARI OM MARATHA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28 TH NOVEMBER, 2013 PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, JODHPUR BENCH, JODHPUR 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE T RIBUNAL, JODHPUR