ACIT, Jaipur V. LAXMI NARAIN AGARWAL, Jaipur

ITA 44/JPR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99399 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 22-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA
• Assessee Lawyers: MANISH AGARWAL CA DHK
• Keywords: Business income

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO. 44/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 THE ACIT CIRCLE- 3 JAIPUR CUKE VS. SHRI LAXMI NARAIN AGARWAL 104, RIDHI SIDHI APARTMENT AHINSA CIRCLE, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ABSPA 1338 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT C.O. NO.9/JP/2014 (ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 44/JP/2014) FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 SHRI LAXMI NARAIN AGARWAL 104, RIDHI SIDHI APARTMENT AHINSA CIRCLE, JAIPUR CUKE VS. THE ADDL. CIT RANGE-6 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ABSPA 1338 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJ MEHRA, JCIT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL , CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 21/10/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 26/10/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM:- THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-II, JAIPUR DATED 30-10-2013 FOR THE ASSESSM ENT YEAR 2008-09. THE ASSESSEE HAS FILED THE CROSS OBJECTION. ITA NO. 44/JP/2014 ACIT , CENTRAL ,CIRCLE-3,JAIPUR VS. SHRI LAXMI NAR AIN AGARWAL 2 2. THE SOLITARY GROUND OF THE REVENUE IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A), BIKANER HAS ERRED IN DELETING THE TRADI NG ADDITION OF RS. 25,13,320/- MADE BY THE AO DESPITE UPHOLDING REJECTION OF BOOKS OF ACCOUNT. 3. DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE HAS NOT PRESSED GROUND NO. 1 OF THE ASSESSEE REGARDING UPHO LDING THE REJECTION OF BOOKS OF ACCOUNT U/S 145(3) OF THE ACT BY THE LD. C IT(A). THE SAME IS DISMISSED BEING NOT PRESSED. 4. THE GROUND NO. 2 OF THE ASSESSEE IS AS UNDER:- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE ACTION OF THE AO IN TREATING THE FOLLOWING INCOME OF RS. 37,41,021/- AS INCOME FROM OTHER SOURCES WITHOU T APPRECIATING THE FACT THAT INTEREST HAS BEEN EARNED ON THE FUNDS INVESTED UNDER BUSINESS COMPULSIONS AS PER TH E TERMS OF THE CONTRACT AND HAS DIRECT NEXUS WITH BUSINESS AND SALES TAX REFUND IS DERIVED FROM BUSINESS ACTIVITIES THUS THE SAME BEING BUSINESS INCOME DESERVES TO BE INCLUDED IN TH E NET PROFITS DECLARED FROM THE BUSINESS ACTIVITY OF THE ASSESSEE S.N. PARTICULARS AMOUNT 1. INTEREST INCOME 34,00,483/- 2. SALES TAX REFUND 1,67,190/- 3. INTEREST ON NSC 1,73,348/- 5. APROPOS GROUND NO. 2, IT IS CONCEDED BY THE ASSE SSEE THAT IT IS COVERED AGAINST THE ORDER OF THE ITAT IN ASSESSEE' S OWN CASE IN ITA NO. ITA NO. 44/JP/2014 ACIT , CENTRAL ,CIRCLE-3,JAIPUR VS. SHRI LAXMI NAR AIN AGARWAL 3 845/JP/2008 DATED 16-09-2010 FOR THE ASSESSMENT YE AR 2005-06. CONSEQUENTLY, THE GROUND NO. 2 OF THE ASSESSEE IS D ISMISSED. 6.1 APROPOS REVENUES APPEAL, THE LD. DR RELIED ON THE ORDER OF THE AO. 6.2 ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE R EFERRED TO THE OBSERVATION OF THE LD. CIT(A) WHICH IS REPRODUCED A S UNDER:- DURING THE COURSE OF APPEAL HEARING THE A.R. FOR THE APPELLANT SUBMITTED THAT THE APPELLANT WAS MAINTAIN ING DAY TODAY BOOKS OF ACCOUNT WHICH WERE PRODUCED BEFORE THE AO. THE AO WAS SATISFIED ABOUT THE SALES AND PURCHASES AND NO SIGNIFICANT DEFECT COULD BE POINTED OUT BY HIM. IN VIEW OF THIS , IT WAS SUBMITTED THAT THE REJECTION OF BOOKS OF ACCOUNT AN D CONSEQUENT ADDITION WAS NOT JUSTIFIED. IN THIS REGARD, THE A.R . PLACED RELIANCE ON SEVERAL JUDICIAL DECISIONS. IT WAS SUBMITTED THA T THE TRADING RESULT DECLARED BY THE ASSESSEE ARE AS UNDER:- A.Y. TURNOVER NET PROFIT % 2005-06 13,47,58,070 85,21,138 6.32% 2006-07 25,43,17,713 1,58,25,331 6.22% 2007-08 45,58,00,906 2,75,99,856 6.06% 2008-09 70,72,99,853 4,15,35,325 5.87% FROM THE PERUSAL OF THE AFORESAID TABLE IT WOULD BE EVIDENT THAT THE TURNOVER HAD BEEN INCREASED BY MO RE THAN 80% AS COMPARED TO THE IMMEDIATELY PRECEDING YEAR, HOWEVER , THE ASSESSEE HAS BEEN ABLE TO ACHIEVE THE PROFIT RATE AT ALMOST SIMILAR LEVEL WHICH WAS DECLARED IN PRECEDING YEAR. IT IS AN ESTA BLISHED FACT THAT THE BETTER TURNOVER COULD ONLY BE ACHIEVED BY REDU CING THE PROFIT MARGIN AND DUE TO THE STIFF COMPETITION THE CONTRAC TS WERE SECURED AT THE RATES LOWER THAN THE PRESCRIBED STATE PWD IN BASIS CRATE SCHEDULE COMMONLY KNOWN AS BSR. THE LD. AR PRAYED T HAT THE ADDITION MADE BY THE AO BE DELETED. ITA NO. 44/JP/2014 ACIT , CENTRAL ,CIRCLE-3,JAIPUR VS. SHRI LAXMI NAR AIN AGARWAL 4 I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS MADE. THE GROUNDS ON WHICH THE AO REJEC TED THE BOOKS OF ACCOUNT COULD NOT BE FULLY CONTROVERTED BY THE A.R.. THE DISCREPANCIES POINTED OUT BY THE AO, ALTHOUGH GENER AL IN NATURE, COULD ONLY BE FULLY REBUTTED BY THE A.R.. IN VIEW O F THIS, THE REJECTION OF BOOKS OF ACCOUNT BY THE AO IS HELD TO BE JUSTIFIED. AS REGARDS TRADING ADDITION IS CONCERNED, THE ITAT JOD HPUR IN THE CASE OF AJAY GOYAL VS. ITO (99 TTJ 164) HAD HELD THAT TH E POSITION OF LAW IS WELL SETTLED THAT THE BEST GUIDE FOR ESTIMAT ION OF THE TRADING RESULTS AFTER REJECTING THE BOOKS IS EITHER THE PAS T HISTORY OF THE ASSESSEE OR ANY OTHER COMPARABLE CASE. THE PAST HIS TORY OF THE ASSESSEE TAKES PREFERENCE OVER A COMPARABLE CASE. T HE PAST HISTORY OF THE APPELLANT IS AVAILABLE IN THE INSTANT CASE. THE APPELLANT HAD SOWN NET PROFIT OF 6.06% IN A.Y. 2007-08 AND 5.87% IN CURRENT YEAR. AS COMPARED TO THIS, THE NET PROFIT IN CURREN T YEARS WAS 5.87%, IT IS ALSO SEEN THAT ALTHOUGH THE TURNOVER OF THE APPELLANT HAD HIGHLY INCREASED (MORE THAN 80%), THE ESTIMATIO N OF NET PROFIT BY THE AO IS FOUND TO BE WITHOUT CONSIDERING THE PA ST HISTORY OF THE APPELLANT. KEEPING IN VIEW THE RATION OF THE ABOVE SAID DECISION, IT IS HELD THAT THE TRADING ADDITION MADE BY THE AO, W HEN THE TURNOVER OF THE APPELLANT IS INCREASED MORE THAN 80% WHEREAS THE PROFIT IS DECLINE ONLY 0.25% IN COMPARISON TO IMMEDIATELY PR ECEDING YEAR. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF T HE CASE, THE ADDITION MADE BY THE AO IS DELETED. THE APPELLANT S UCCEEDS ON THIS GROUND. IT IS CONTENDED THAT THE ORDER OF THE LD. CIT(A) WI LL REVEAL THAT NO SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNT WERE FOUND BY THE A O. THE ASSESSEE'S WORKING SITE BEING AT REMOTE PLACE, CASH PAYMENT TO LABOURER THROUGH SELF MADE VOUCHERS BECOMES A NECESSARY PART OF ASSESSEE' S BUSINESS FROM YEAR TO YEAR. THE LD. CIT(A) HAS HIMSELF HELD THAT DEFEC TS POINTED OUT BY THE AO ARE GENERAL IN NATURE. IT IS A SETTLED LAW THAT BOOKS OF ACCOUNT CANNOT BE REJECTED ON THE BASIS OF GENERAL FINDINGS. IT IS INCUMBENT UPON THE AO ITA NO. 44/JP/2014 ACIT , CENTRAL ,CIRCLE-3,JAIPUR VS. SHRI LAXMI NAR AIN AGARWAL 5 TO ESTABLISH THE SPECIFIC DEFECTS AS TO NON-ASCERTA INMENT OF CORRECT TAXABLE INCOME. THOUGH THE ASSESSEE HAS NOT PRESSED THIS GR OUND BUT RELIEF GIVEN BY THE LD. CIT(A) IS BASED ON PROPER CONSIDERATION AND FIND SUPPORT FROM THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN TH E CASE OF CIT VS. GOTAN LIME KHANIJ UDYOG, 256 ITR 243 (RAJ.). THEREF ORE, THE ORDER OF THE LD. CIT(A) MAY BE UPHELD. 6.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE FINDINGS OF THE LD. CIT(A) ARE THAT DEFECTS IN THE BOOKS OF ACCOUNT ARE GENERAL IN NATURE WHICH COULD NOT BE CONTROVERTED BY THE LD. DR . THERE IS NO SPECIFIC DEFECT AS POIN TED OUT BY THE AO. IN CASE OF ESTIMATION OF PROFIT, HON'BLE RAJASTHAN HI GH COURT IN THE CASE OF CIT VS. GOTAN LIME KHANIJ UDYOG (SUPRA) HAS HELD TH AT PAST HISTORY OF THE ASSESSEE IS A BEST SOURCE FOR ESTIMATION. IT IS A SETTLED LAW THAT AN ESTIMATE ARRIVED AT BY THE LOWER AUTHORITIES CANNOT BE INTERFERED WITH UNLESS THE ESTIMATE IS DEMONSTRATED TO BE ARBITRARY OR UNJUSTIFIED. THE LD. DR COULD NOT DEMONSTRATE THIS ASPECT. IN VIEW THERE OF AND RESPECTFULLY THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN TH E CASE OF CIT VS. GOTAN LIME KHANIJ UDYOG (SUPRA) AND ALSO ITAT JODHP UR DECISION IN THE CASE OF AJAY GOYAL VS. ITO, 99 TTJ 164, THE ORDER O F THE LD. CIT(A) ON THE ISSUE OF ESTIMATION IS UPHELD. THUS THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 44/JP/2014 ACIT , CENTRAL ,CIRCLE-3,JAIPUR VS. SHRI LAXMI NAR AIN AGARWAL 6 7.0 IN THE RESULT, THE APPEAL OF THE REVENUE AS WEL L C.O. OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/10/2015. SD/- SD/- FOE FLAG ;KNO VKJ-IH-RKSYKUH (VIKRAM SINGH YADAV) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 26 /10/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT, CENTRAL CIRCLE- 3, JAIPUR / ADDL. CIT ,RANGE, 6, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- SHRI LAXMI NARAIN AGARWAL, JAIPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A) 4. VK;DJ VK;QDR@ CIT 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.44/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR