ITO 22(2)-3, NAVI MUMBAI V. MANOJ P NAGI, MUMBAI

ITA 4446/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55154 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 24-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P C MAURYA

Judgement Text

IN THE INCOME TAX APPELLATE TRIB UNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI VIJAY PAL RAO, JM ITA NO.4446/MUM/2009 : ASST.YEAR 2006-2007 THE INCOME TAX OFFICER WARD 22(2)-3 MUMBAI. VS. SHRI MANOJ P.NAGI ROOM NO.1, VANDANA CHS PESTOMSAGAR ROAD, CHEMBUR MUMBAI 400 074. PAN :AAAPN7114Q. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.C.MAURYA RESPONDENT BY : SHRI NILESH JOSHI DATE OF HEARING : 08.09.2011 DATE OF PRONOUNCEMENT : 14.09.2011 O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 26.05.2009 IN RELATION TO THE ASSESSMENT YEAR 2006-2007. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE DELETION OF ADDITION OF RS.35,17,693. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE TRADING OF IRON AND SCRAP. DURING THE YEAR GROS S PROFIT AT THE RATE OF 3% WAS DECLARED. THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ISSUED NOTICES U/S.133(6) ON CERTAIN PARTIES FROM W HOM THE ASSESSEE HAD CLAIMED TO HAVE MADE PURCHASES. THESE NOTICES REMAINED UNSERVE D. WHEN CONFRONTED, THE ASSESSEE REPLIED THAT THE CREDITORS WERE NOT COOPER ATING IN FURNISHING THE DETAILS. THE ASSESSING OFFICER HELD THE GP RATE AT 3% IS ON LOWER SIDE. BY ESTIMATING SUCH PROFIT AT 6% OF THE TURNOVER, HE MADE ADDITION OF R S.35,17,693. THE LEARNED CIT(A) DELETED THIS ADDITION. ITA NO.4446/MUM/2009 SHRI MANOJ P.NAGI. 2 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS OBSERVED THAT THE ASSESSEE DECLARED GP RATE AT 3% OF TURNOVER. WHEN THE CREDITORS REFUSED TO RESPOND TO THE NOTICES ISS UED BY THE ASSESSING OFFICER, THE ASSESSING OFFICER IMPLIEDLY REJECTED THE BOOKS OF A CCOUNT AND PROCEEDED TO MAKE ASSESSMENT BY TAKING GP RATE AT 6%. THERE IS NO DOU BT ON THE FACT THAT IF THE DETAILS IN SUPPORT OF THE BOOK RESULTS ARE NOT COMING UP TH E ASSESSING OFFICER, AFTER EXHAUSTING OTHER REMEDIES, CAN VALIDLY REJECT THIS BOOKS OF ACCOUNT. HOWEVER IT IS IMPORTANT TO NOTE THAT AFTER REJECTING THE BOOKS IT IS NOT OPEN TO HIM TO MAKE ARBITRARY ADDITIONS. THE ASSESSING OFFICER IS SUPPO SED TO BE GUIDED BY STANDARD NORMS FOR ESTIMATING THE INCOME. HERE IT IS A CASE IN WHICH THE ASSESSEE HAD DECLARED 3% GP RATE. THE LEARNED A.R. SUBMITTED THA T THE SAME GP RATE OF 3% WAS OFFERED BY THE ASSESSEE IN LAST 7-8 YEARS WHICH HAD NEVER BEEN DISPUTED BY THE A.O. IN ANY MANNER. THE LD. DR FAILED TO CONTROVERT SUCH SUBMISSION. ONCE A PARTICULAR RATE OF GP HAS BEEN ACCEPTED BY THE REVENUE, IT IS NOT OPEN TO DISREGARD THE SAME UNLESS THE FACTS AND CIRCUMSTANCES JUSTIFY DEPARTUR E THERE FROM. THE ASSESSING OFFICER IN APPLYING AD HOC 6% GROSS PROFIT RATE HAS NOT GIVEN ANY COMPARABLE CASE. SINCE GP RATE AT 3% DECLARED BY THE ASSESSEE IN THE INSTANT YEAR IS AT PAR WITH SIMILAR GP RATE DECLARED IN PRECEDING YEAR, WE ARE OF THE CONSIDERED OPINION THAT THE LEARNED CIT(A) WAS JUSTIFIED IN DELETING THIS A DDITION. WE, THEREFORE, UPHOLD THE IMPUGNED ORDER. 4. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF SEPTEMBER, 2011. SD/- SD/- (VIJAY PAL RAO) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 14 TH SEPTEMBER, 2011. DEVDAS*` ITA NO.4446/MUM/2009 SHRI MANOJ P.NAGI. 3 COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - XXII, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.