Lodhia Hasmukh Shantibhai (HUF), RAJKOT-GUJARAT V. The Income Tax Officer, Ward-2(1)(2), RAJKOT-GUJARAT

ITA 46/RJT/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8231 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 13-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVEEN KUMAR VERMA
• Assessee Lawyers: RD LALCHANDANI
• Keywords: Rejection of books of accounts

Judgement Text

LODHIAHASMUKHSHANTIBHAI (HUF) VS. ITO WARD- 2(1)(2) /I.T.A. NO. 46/RJT/2017/A.Y.2012-13 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT RAJKOT BENCH BEFORE SHRIO. P. MEENA, ACCOUNTANT MEMBER AND MRS. MADUMITA ROY, JUDICIAL MEMBER I.T.A. NO. 46/RJT/2017:ASSESSMENT YEAR: 2012-13 LODHIAHASMUKHSHANTIBHAI (HUF) C/O. R. K. SHUKLA& CO. 201, 2 ND FLOOR, OPERA TOWER, JAWAHAR ROAD, RAJKOT- 360 001 PAN: AABHL2119N VS. ITO, WARD 2(1)(2), RAJKOT APPELLANT RESPONDENT ASSESSEE BY SHRI R. D. LALCHANDANI, ADVOCATE REVENUE BY SHRI PRAVEEN KUMAR VERMA, SR. DR DATE OF HEARING 11.04.2019 DATE OF PRONOUNCEMENT 12.04.2019 ORDER PER O. P. MEENA, AM 1. THIS APPEAL BY THE ASSESSEEIS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-2,RAJKOT(IN SHORT THE CIT (A)) DATED 05.12.2016PERTAINING TO ASSESSMENT YEAR 2012-13, WHICH IN TURN HAS ARISEN F ROM THE ASSESSMENT ORDER PASSED UNDER SECTION 143 (3) DATED 25.03.2015 OF INCOME TA X ACT,1961 (IN SHORT THE ACT) BY THE WARD 2(1)(2) RAJKOT(IN SHORT THE AO). 2. THE GROUNDS NO. 1 RELATES TO CONFIRMING THE ADDITIO N OF RS. 1,41,251/- ON ACCOUNT OF DIFFERENCE IN CLOSING STOCK. 3. THE AO NOTED THAT THE ASSESSEE HAS SHOWN THE CLOSIN G STOCK IN THE RETURN OF INCOME AT RS. 1,20,34,709/- WHEREAS THE BALANCE SHE ET OF THE ASSESSEE HAS SHOWN THE CLOSING STOCK AT RS. 1,18,93,458/-. THEREFORE, THE ASSESSEE WAS ASKED TO EXPLAIN THE DIFFERENCE IN CLOSING STOCK OF RS. 1,41,251/-. IT WAS EXPLAINED BY THE ASSESSEE, THAT THE LODHIAHASMUKHSHANTIBHAI (HUF) VS. ITO WARD- 2(1)(2) /I.T.A. NO. 46/RJT/2017/A.Y.2012-13 PAGE 2 OF 6 STOCK OF RS. 1,41,251/- IS PERTAINS TO PERSONAL BUS INESS OF SHARES WHICH HAS BEEN SHOWN IN THE PERSONAL BALANCE SHEET AND CAPITAL ACCOUNT. HO WEVER, THE AO HAS NOT ACCEPTED THE SAME AND MADE ADDITION ACCORDINGLY. 4. IN APPEAL, THE CIT(A) OBSERVED THAT THE CONTENTION OF THE ASSESSEE THAT THE STOCK OF RS. 1,41,251/- PERTAINS TO PERSONAL TRADINGIS NOT A CCEPTABLE AS THE ACCOUNTS AND BALANCE SHEET WHICH ARE AUDITED WHICH HAS SHOWN THE CLOSING STOCK AT 1,18,93,458/-. THEREFORE, THE ADDITION WAS SUSTAINED. 5. BEING AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEF ORE US. 6. THE LD. COUNSEL SUBMITTED THAT THE STOCK OF RS. 1, 41,251 PERTAINS TO PERSONAL TRADING OF SHARES AS THE ASSESSEE HAS MAINTAINED TW O SETS OF BOOKS OF ACCOUNTS. THE FIRST SET & BOOKS OF ACCOUNTS IS IN RESPECT OF MANAS BULL ION AND SECOND SET IS IN RESPECT OF PERSONAL BOOKS OF ACCOUNTS. THE CLOSING STOCK OF S HARES AND SECURITIES OF RS. 1,41,251/- HAS BEEN DULY REFLECTED IN THE BALANCE SHEET FILED WITH THE RETURN OF INCOME WHICH HAS ALSO SUBMITTED BEFORE AO ON 23.04.2015, AND THE SAME HAS BEEN DULY RECEIVED BY THE LD. AO. A COPY OF THE SAME IS PLACED ON PAPER BOOK PAGE 44. 7. PER CONTRA THE LD. SENIOR DR RELIED ON THE ORDER O F THE AUTHORITIES. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND FIND THAT THE ASSESSEE IS CARRYING ON BUSINESS IN THE NAME OF MANAS BULLION OF WHICH CLOS ING STOCK IS SHOWN AT RS. 1,18,93,458/- IN THE BALANCE SHEET OF THE SAID CONC ERN, WHEREAS THE ASSESSEE HAS ALSO DEALING SHARES AND SECURITIES IN HIS PERSONAL CAPAC ITY OF WHICH ITS STOCK OF RS. 1,41,251/- IS SHOWN IN THE PERSONAL BALANCE SHEET AND CAPITAL ACCOUNT PLACE AT PAPER BOOK PAGE NO. LODHIAHASMUKHSHANTIBHAI (HUF) VS. ITO WARD- 2(1)(2) /I.T.A. NO. 46/RJT/2017/A.Y.2012-13 PAGE 3 OF 6 20-21. THE PERSONAL COPY OF BALANCE SHEET PLACE AT PAPER BOOK 27 WERE ALSO FILED BEFORE THE AO SHOW IN THE CLOSING STOCK OF ASSESSEES INVE STMENT AT RS. 1,41,251/-. THE PERUSAL OF THIS ACCOUNTS SHOWS THAT THE ASSESSEE HAS DULY D ISCLOSED THE CLOSING OF STOCK SHARES.THEREFORE, THE LOWER AUTHORITIES ARE NOT JUS TIFIED IN THEIR ACTION IN MAKING ADDITION ON ACCOUNT OF DIFFERENCE IN STOCK OF RS. 1,41,251/- . ACCORDINGLY, THE SAID ADDITION IS THEREFORE DIRECTED TO BE DELETED. THIS GROUND IS A LLOWED. 9. GROUND NO. 2 RELATES TO CONFIRMING THE ADDITION OF RS. 15,71,270/- ON ACCOUNT OF GROSS PROFIT CALCULATED @ 0.43% OF TOTAL TURNOVER. 10. FACTS APPROSED OF THIS GROUND ARE THAT THE AO NOTI CED THAT THE ASSESSEE HAS SHOWN SALES OF RS. 39,09,06,724/- FOR THE PERIOD FROM 01. 04.2011 TO 11.05.2011 I.E. ONLY FOR 40 DAYS. WHEREAS THE ASSESSEE HAS NOT FURNISHED SALES REGISTER, SALE BILL, NAME, ADDRESS AND PAN OF THE SALE PARTIES. FURTHER THE ASSESSEE HAS S HOWN GROSS GROSS PROFIT AT RS. 1,09,626/- WHICH COMES TO 0.03 PER CENT ONLY WHEREA S M/S. JAGANI BROTHERS WHO IS DEALING IN SAME LINE OF BUSINESS HAS SHOWN GP @ 0.4 3 PER CENT DURING THE YEAR UNDER CONSIDERATION. IN VIEW OF THESE FACTS, THE AO CALC ULATED GP @ 0.43 PER CENT ON TOTAL TURNOVER OF RS. 39,09,06,274/- WHICH COMES TO RS. 1 6,80,896/- AS AGAINST THE AMOUNT OF RS. 1,09,626/- SHOWN BY THE ASSESSEE. ACCORDINGLY THE DIFFERENCE OF RS. 15,71,270/- WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 11. BEING AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEA L BEFORE THE TRIBUNAL. LODHIAHASMUKHSHANTIBHAI (HUF) VS. ITO WARD- 2(1)(2) /I.T.A. NO. 46/RJT/2017/A.Y.2012-13 PAGE 4 OF 6 12. THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE IS DEALING IN GOLD AND SILVER BULLION WHERE AS M/S. JAGANI BROTHERS ARE DEALING ONLY IN S ILVER BULLION. THEREFORE, CONSIDERING THE DIFFERENCE IN THE BUSINESS THE GP OF SAID FIRM CANNOT BE APPLIED IN THE CASE OF THE ASSESSEE. IT WAS FURTHER CONTENDED THAT THIS IS TH E FIRST YEAR OF BUSINESS OF THE ASSESSEE AND THAT TO ONLY FOR 40 DAYS. THEREFORE, THE GP DI SCLOSED BY M/S. JAGANI BROTHERS CANNOT BE APPLIED TO THE FACTS OF THE CASE OF THE ASSESSEE . THE CONTENTION OF THE AO IS NOT CORRECT AS THE ASSESSEE HAS DULY FILED SALES BILLS AND OTHER DETAILS AS COULD BE EVIDENCE FROM PAPER BOOK PAGE 43 WHICH IS LETTER DATED23.03. 2015 FILED BEFORE THE AO IN WHICH THE DETAILS OF SALES BILL PRODUCED BEFORE THE AO AR E RETURNED. 13. PER CONTRA THE LD. SENIOR DR RELIED ON THE ORDER O F THE CIT(A). 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD.WE FIND THAT THE ASSESSEE HAS CARRIED ON BUS INESS AS A PROPRIETARY CONCERN UNDER THE NAME AND STYLE OF M/S MANAS BULLION IN GOLD BUL LION FROM THE PERIOD FROM 01.04.2011 TO 11.05.2011. THE BOOKS OF ACCOUNTS OF SAID CONCERN WERE DULY AUDITED. THE GP OF THE SAME HAS BEEN DISCLOSED BY THE ASSESS EE AT 1,09,2626/- OF TOTAL TURNOVER OF RS. 39,09,06,274/- WHICH COMES TO 0.03 PER CENT. H OWEVER, THE AO APPLIED THE GP RATE OF 0.43 PER CENT DISCLOSED BY M/S. JAGANI BROTHERS WHO IS DEALING IN SILVER BULLION. THEREFORE, THE NATURE OF BUSINESS CARRIED OUT BY TH E ASSESSEE AND M/S. JAGANI BROTHERS IS NOT THE SAME. THEREFORE, THE GP OF THE SAME CANNOT BE COMPARED WITH THE GP OF THE ASSESSEE. FURTHER THIS IS THE FIRST YEAR OF THE BUS INESS OF THE ASSESSEE, WHICH HAS BEEN CARRIED ON ONLY FOR 40 DAYS, THEREFORE THE SAID GP OF ANOTHER CONCERN CANNOT BE MADE LODHIAHASMUKHSHANTIBHAI (HUF) VS. ITO WARD- 2(1)(2) /I.T.A. NO. 46/RJT/2017/A.Y.2012-13 PAGE 5 OF 6 APPLICABLE TO THE ASSESSEES TURNOVER. THE AO HAS NOT POINTED OUT ANY DEFECTS IN THE BOOK OF ACCOUNTS,NOR THEBOOKS OF ACCOUNTS HAS BEEN REJEC TED U/S. 145(3) OF THE ACT. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE ADDITION MADE ON ACCOUNT OF GP IS WITHOUT ANY BASIS WRONGLY COMPARING ANOTHER CONCERN WHO IS NOT DEALING SAME LINE OF BUSINESS AND WITHOUT REJECTION OF BOOKS OF ACCOUNTS IS NOT IN AC CORDANCE WITH LAW. ACCORDINGLY, THE ADDITION MADE BY THE AO AT RS. 17,51,250 IS THEREFO RE DELETED. THIS GROUND IS ALLOWED. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. 16. THE ORDER PRONOUNCED IN THE OPEN COURT ON 12.0 4.2019 SD/- SD/- (MADHUMITA ROY) ( O.P.MEENA) JUDICIAL MEMBER ACCOUNTA NT MEMBER TRUE COPY AHMEDABAD: DATED: 12 TH APRIL, 2019/OPM COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A) / ITAT (DR)/GUARD FILE OF ITAT. TANMAY BY ORDER ASSISTANT REGISTRAR, AHMEDABAD