ITO, Karnal V. Sh. Vijay Kumar Prop., Karnal

ITA 478/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97256 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 03-08-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 31-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P CHANDREKAR; RITU SHARMA SR DRS
• Assessee Lawyers: PERMIL GOEL
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH H HH H : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA, VICE , VICE , VICE , VICE PRESIDENT AND PRESIDENT AND PRESIDENT AND PRESIDENT AND SHRI SHRI SHRI SHRI J. SUDHAKAR REDDY J. SUDHAKAR REDDY J. SUDHAKAR REDDY J. SUDHAKAR REDDY, , , , ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER ITA NO ITA NO ITA NO ITA NO . .. . 478/DEL/2012 478/DEL/2012 478/DEL/2012 478/DEL/2012 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2007 2007 2007 2007 - -- - 08 0808 08 INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -1, KARNAL. 1, KARNAL. 1, KARNAL. 1, KARNAL. VS. VS. VS. VS. SHRI VIJAY KU SHRI VIJAY KU SHRI VIJAY KU SHRI VIJAY KU MAR, MAR, MAR, MAR, PROP. M/S GOEL TIMBER STORE, PROP. M/S GOEL TIMBER STORE, PROP. M/S GOEL TIMBER STORE, PROP. M/S GOEL TIMBER STORE, TIMBER MARKET, TIMBER MARKET, TIMBER MARKET, TIMBER MARKET, KARNAL. KARNAL. KARNAL. KARNAL. PAN : AESPK1066J. PAN : AESPK1066J. PAN : AESPK1066J. PAN : AESPK1066J. (APPELLANT) (RESPONDENT) CROSS OBJECTION CROSS OBJECTION CROSS OBJECTION CROSS OBJECTION NO NONO NO .292/DEL/2012 .292/DEL/2012 .292/DEL/2012 .292/DEL/2012 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2007 2007 2007 2007 - -- - 08 0808 08 SHRI VIJAY KUMAR, SHRI VIJAY KUMAR, SHRI VIJAY KUMAR, SHRI VIJAY KUMAR, PROP. M/S GOEL TIMBER STORE, PROP. M/S GOEL TIMBER STORE, PROP. M/S GOEL TIMBER STORE, PROP. M/S GOEL TIMBER STORE, TIMBER MARKET, TIMBER MARKET, TIMBER MARKET, TIMBER MARKET, KARNAL. KARNAL. KARNAL. KARNAL. PAN : PAN : PAN : PAN : AESPK1066J. AESPK1066J. AESPK1066J. AESPK1066J. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -1, KARNAL. 1, KARNAL. 1, KARNAL. 1, KARNAL. (APPELLANT) (RESPONDENT) ITA ITAITA ITA NO NONO NO .719/DEL/2012 .719/DEL/2012 .719/DEL/2012 .719/DEL/2012 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2007 2007 2007 2007 - -- - 08 0808 08 SHRI VIJAY KUMAR, SHRI VIJAY KUMAR, SHRI VIJAY KUMAR, SHRI VIJAY KUMAR, PROP. M/S GOEL TIMBER STORE, PROP. M/S GOEL TIMBER STORE, PROP. M/S GOEL TIMBER STORE, PROP. M/S GOEL TIMBER STORE, TIMBER MARKET, TIMBER MARKET, TIMBER MARKET, TIMBER MARKET, KARNAL. KARNAL. KARNAL. KARNAL. PAN : AESPK1066J. PAN : AESPK1066J. PAN : AESPK1066J. PAN : AESPK1066J. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -1, KARNAL. 1, KARNAL. 1, KARNAL. 1, KARNAL. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI J.P. CHANDREKAR AND SMT. RITU SHARMA, SR.DRS. ASSESSEE BY : SHRI PERMIL GOEL, ADVOCATE. DATE OF HEARING : 03.08.2015 03.08.2015 03.08.2015 03.08.2015 DATE OF PRONOUNCEMENT : 08.09.2015 08.09.2015 08.09.2015 08.09.2015 ITA-478/DEL/2012 & 2 OTHERS 2 ORDER ORDER ORDER ORDER PER G.C. GUPTA PER G.C. GUPTA PER G.C. GUPTA PER G.C. GUPTA, VP , VP , VP , VP : :: : THESE CROSS-APPEALS BY THE REVENUE AND THE ASSESSEE AND T HE CROSS-OBJECTION BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2007 -08 ARE DIRECTED AGAINST THE ORDER OF LEARNED CIT(A), KARNAL DATED 3 RD NOVEMBER, 2011. THESE ARE BEING DISPOSED OF WITH THIS CONSOLIDATED ORDER. ITA NO.719/DEL/2012 ITA NO.719/DEL/2012 ITA NO.719/DEL/2012 ITA NO.719/DEL/2012 ASSESSEES APPEAL : ASSESSEES APPEAL : ASSESSEES APPEAL : ASSESSEES APPEAL :- -- - 2. THE EFFECTIVE GROUNDS OF APPEAL OF THE ASSESSEE ARE G ROUND NOS.1, 5 & 6 WHICH ARE REPRODUCED HEREUNDER:- 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS NOT APPRECIATED THAT THE G.P. RATE APPLIED BY A.O. @ 4.9% AND THUS ADDITION MADE AT RS.3942670/- IS NOT SUSTAINABLE, ON FACTS AS THE ASSESSEE HAS MAINTAINED ALL THE STOCK REGISTERS 4 IN NUMBER INCLUDING DAILY STO CK TALLY, AS REQUIRED BY CUSTOMS, FOREST DEPARTMENT AND AL L OTHER DEPT. AND INTERNATIONAL LAW. BUT THE LD.CIT( A) HAS DETERMINED THE SAME @ 4% AS AGAINST 2.17 SHOWN BY THE ASSESSEE. THE ADDITION MADE AND RETAINED IS ILLEGAL & FACTUALLY WRONG. 5. THAT THE LD. ITO HAS FORMALLY USED 145(3) OF I.T. ACT AND REJECTED THE BOOKS. THE A.O. HAS NOT POINTED OUT ANY CONTRAVENTION OF SECTION 145(3) OR 44AA. THUS THE REJECTION OF ACCOUNT BOOKS IS ILLEGAL & WRONG. 6. THAT THE A.O. HAS WRONGLY TRAVELLED BEYOND KEN OF SECTION 145(3) ARBITRARILY, REJECTED THE BOOKS. THE BOOKS CAN BE REJECTED ONLY AND ONLY IF SECTION 44AA IF APP LICABLE AND 145(3) IS NOT STRICTLY ADHERED. 3. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASS ESSEE HAS MAINTAINED COMPLETE BOOKS OF ACCOUNT AND ALSO SUPP ORTING VOUCHERS ALONG WITH FOUR STOCK REGISTERS INCLUDING DAI LY STOCK TALLY AS REQUIRED BY THE CUSTOMS, FOREST DEPARTMENT AND OTHER G OVERNMENT ITA-478/DEL/2012 & 2 OTHERS 3 DEPARTMENTS AND ALSO THE INTERNATIONAL LAW. HE SUBMIT TED THAT THE ASSESSING OFFICER COULD NOT POINT OUT A SINGLE MISTAKE OR DISCREPANCY IN THE ACCOUNT BOOKS REGULARLY MAINTAINED BY THE ASSESSEE. THE ASSESSEE HAS DECLARED A BETTER SALES AND GROSS PROFIT RATE AS CO MPARED TO THE EARLIER YEAR AND THE LEARNED CIT(A) HAS ERRED IN PAR TLY CONFIRMING THE ACTION OF THE ASSESSING OFFICER BY SUSTAINING THE GP RATE AT 4% AS AGAINST THE GP RATE OF 4.9% APPLIED BY THE ASSESSING OF FICER AND AS AGAINST 2.17% SHOWN BY THE ASSESSEE. HE SUBMITTED THAT A HIGH- PITCHED ASSESSMENT WAS FRAMED BY THE ASSESSING OFFICER AND T HE ASSESSEE HAS FILED THE RETURN OF INCOME DECLARING INCOME OF `3,91,460/- AND WAS ASSESSED AT `43,34,130/-. HE SUBMITTED THAT THE ONLY REASON GIVEN BY THE ASSESSING OFFICER FOR REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE WAS THAT THE ASSESSEE HAS NOT MAINTAINED THE STOCK RE GISTER OF TIMBER QUALITY-WISE. HE SUBMITTED THAT IN THE LIN E OF TRADE WHERE THE PURCHASE OF TIMBER IN LOGS WAS MADE FROM SINGAPORE EXC EPT A FEW LOCAL PURCHASES AND WERE OF DIFFERENT TYPES, KIND AND QUALIT Y AND OF DIFFERENT RATES, IT IS NOT POSSIBLE TO MAINTAIN THE QUALITY-WISE STOCK REGISTER OF THE TIMBER. HE SUBMITTED THAT COMPLETE DETAILS WERE SUBMITTED TO THE DEPARTMENT AND SINCE NO DEFECTS COULD BE POINTED OUT BY THE REVENUE, THE PROVISION OF SECTION 145(3) HAS BEEN WRONGLY INVOK ED IN THIS CASE AND THE ACCOUNT VERSION OF THE ASSESSEE SHOULD HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER AS WELL AS BY THE CIT(A). HE SUBMIT TED THAT THE OTHER REASON GIVEN BY THE ASSESSING OFFICER FOR REJECTIN G THE ACCOUNT BOOKS OF THE ASSESSEE WAS THAT THE QUALITY OF TIMBER WAS GIVEN ON THE PURCHASE BILLS BUT NO SUCH DESCRIPTION WAS GIVEN ON THE SALES BILLS OR IN THE OPENING STOCK OR IN THE CLOSING STOCK. THE LEARNE D COUNSEL FOR THE ASSESSEE REFERRED TO COPIES OF THE STOCK REGISTER AND ALSO THE COPY OF FOREST DEPARTMENT STATUTORY STOCK REGISTER FILED IN TH E COMPILATION BEFORE THE TRIBUNAL. HE RELIED ON THE DECISION OF H ON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SMT. POONAM RANI [2010 ] 326 ITR 223 (DELHI). ITA-478/DEL/2012 & 2 OTHERS 4 4. LEARNED DR HAS OPPOSED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. HE SUBMITTED THAT THERE WERE DEFECTS I N THE ACCOUNT BOOKS AND SUPPORTING EVIDENCE MAINTAINED BY THE ASSESSEE . HE SUBMITTED THAT THE PRICE OF THE TIMBER VARIES WITH TH E QUALITY OF TIMBER TRADED BY THE ASSESSEE. THE ASSESSEE HAS FAILED TO MAINTA IN ANY QUALITY-WISE STOCK REGISTER OF VARIOUS TYPES OF TIMBER T RADED BY IT AND, THEREFORE, THE ACCOUNT BOOKS OF THE ASSESSEE WERE RIGHT LY REJECTED BY THE ASSESSING OFFICER. HE SUBMITTED THAT THE TAX AUDIT REPORT WAS INCOMPLETE AS THERE WAS NO INFORMATION GIVEN IN COLUM N 28 BY THE AUDITORS. HE SUBMITTED THAT THE AUDITORS, INSTEAD OF S PECIFYING THE QUANTITATIVE DETAILS IN COLUMN 28, STATED NA. HE R ELIED ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF KACHWAL A GEMS VS. JCIT [2007] 288 ITR 10 (SC) IN SUPPORT OF THE CASE OF THE REVENUE. HE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PER USED THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED CIT(A). WE FIND THAT NO DEFECT IN THE ACCOUNT BOOKS AND SUPPORTING VOUCHERS C OULD BE POINTED OUT BY THE REVENUE AUTHORITIES EXCEPT THAT THE ASSESSEE COULD NOT PRODUCE QUANTITY AND QUALITY-WISE DETAILS OF VARIOUS TYPES OF TIMBER TRADED DURING THE YEAR. IN THE LINE OF TRADE OF TH E ASSESSEE WHEREIN VARIOUS TYPES OF TIMBER WAS IMPORTED FROM SINGAPORE IN LOGS EXCEPT A FEW LOCAL PURCHASES, IT IS VERY DIFFICULT TO MAINTAIN DIFFERENT STOCK REGISTERS ON THE BASIS OF QUALITY OF THE TIMBER TRADED BY THE ASSESSEE. WE FIND THAT NO DISCREPANCY WITH REGARD TO TOTAL CU BIC FEET OF TIMBER PURCHASED AND SOLD BY THE ASSESSEE COULD BE POINTED OUT B Y THE REVENUE. THE ASSESSEE HAS SHOWN BETTER TRADING RESULTS DU RING THE RELEVANT YEAR AS COMPARED TO THE IMMEDIATELY PRECEDI NG ASSESSMENT YEAR. WE FIND THAT THE ASSESSEE HAS SHOWN A SALES OF `14,2 6,68,406/- AND A GP RATE OF 2.14% DURING THE RELEVANT YEAR AS A GAINST THE GP RATE ITA-478/DEL/2012 & 2 OTHERS 5 OF 2.13% ON LESSER SALES OF `9,85,76,720/- IN THE IMMED IATELY PRECEDING ASSESSMENT YEAR 2006-07. THE ASSESSEE HAS FILED T HE COPIES OF STOCK REGISTER MAINTAINED AT GANDHIDHAM (GUJARAT) AND ALSO COPIES OF VARIOUS DEPARTMENTS STATUTORY STOCK REGISTERS BEFORE T HE REVENUE AUTHORITIES AND COPIES THEREOF HAVE BEEN FILED IN THE COMPILATION FILED BEFORE THE TRIBUNAL. WE FIND THAT IN REPLY TO A SPE CIFIC QUESTION FROM THE BENCH, THE ASSESSEE HAS SHOWN THE SALES OF FIREWOOD AL SO IN ITS TRADING AND PROFIT & LOSS ACCOUNT. THE FACT THAT IN THE TAX AUDIT REPORT THE AUDITORS HAVE GIVEN NO INFORMATION IN COLUMN 28 REGARDING QUANTITATIVE DETAILS SEPARATELY, IS NOT DECISIVE OF THE ISSUE BEFORE US. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF T HE VIEW THAT THE APPLICATION OF A FLAT GP RATE OF 4% AS DIRECTED BY T HE CIT(A) AS AGAINST 2.17% ON SALES OF `14,26,68,406/- WAS NOT JUSTIFIED, AN D IS ACCORDINGLY NOT SUSTAINED. HOWEVER, KEEPING IN VIEW THE FACT THA T IN THE LINE OF TRADE OF TIMBER WHERE THE COMPLETE STOCK REGISTER QUA NTITY AS WELL AS QUALITY-WISE OF THE VARIOUS VARIETIES AND RATES OF TIMB ER WAS NOT POSSIBLE TO MAINTAIN AND, THEREFORE, SOME LEAKAGES WERE POSSIBLE AND, ACCORDINGLY, WE ARE OF THE CONSIDERED VIEW THAT THE ENDS OF JUSTICE SHALL BE MET IF AN ADDITION/DISALLOWANCE OF `2,00,000 /- IS SUSTAINED TO THE DECLARED PROFIT OF THE ASSESSEE ON ACCOUNT OF POSSIB LE LEAKAGES ON PREPONDERANCE OF PROBABILITIES BY WAY OF ESTIMATE OUT OF THE TOTAL ADDITION OF `39,42,670/- MADE BY THE ASSESSING OFFICER TO THE TRADING RESULTS OF THE ASSESSEE AND THE BALANCE ADDITION IS DELET ED. ACCORDINGLY, GROUND NOS.1, 5 & 6 OF THE ASSESSEE ARE PAR TLY ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY AL LOWED. ITA NO. ITA NO. ITA NO. ITA NO.478/DEL/2012 478/DEL/2012 478/DEL/2012 478/DEL/2012 REVENUES APPEAL : REVENUES APPEAL : REVENUES APPEAL : REVENUES APPEAL :- -- - 7. THE ONLY GROUND OF APPEAL OF THE REVENUE READS AS UNDER:- ITA-478/DEL/2012 & 2 OTHERS 6 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN DIRECTING TO WORK OUT PROFIT BY APPLYING A G.P. RATE OF 4% AS AGAINST 4.9% APPLIED BY THE AO WITHOUT APPRECIATING THAT G.P. RATE IN THE COMPA RABLE CASES OF THE LINE RELIED UPON BY THE AO HAD SHOWN BETT ER RESULTS AND THE ACCOUNT BOOKS MAINTAINED BY THE ASSESSEE SUFFERED FROM DEFECTS SO AS TO WARRANT INVOKING OF SECTI ON 145(3) OF THE INCOME TAX. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED CIT(A). IN VI EW OF OUR DECISION WHILE DECIDING THE ASSESSEES APPEAL FOR THE RELEVANT ASSE SSMENT YEAR 2007-08 IN ITA NO.719/DEL/2012 IN THE FOREGOING PAR AGRAPHS OF THIS ORDER WHEREIN THE GP RATE SUSTAINED AT 4% BY THE CIT( A) WAS NOT UPHELD AND THE ASSESSEES APPEAL WAS PARTLY ALLOWED, WE HOLD THAT THERE IS NO MERIT IN THE GROUND OF APPEAL OF THE REV ENUE, WHICH IS ACCORDINGLY, DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . ASSESSEES C ASSESSEES C ASSESSEES C ASSESSEES CROSS ROSS ROSS ROSS- -- -OBJECTION NO. OBJECTION NO. OBJECTION NO. OBJECTION NO.292/DEL/2012 : 292/DEL/2012 : 292/DEL/2012 : 292/DEL/2012 :- -- - 10. THE GROUNDS OF THE CROSS-OBJECTION OF THE ASSESSEE ARE AS UNDER:- 1. THAT THE CIT(A) HAS ERRED IN DETERMINING G.P. R ATE OF 4% IS WRONG. THE BOOK VERSION NEEDS TO BE ACCEPTED WHICH IS 2.18%. 2. THAT SECTION 145(3) HAS NOT BEEN INVOKED BY THE I.T.O. COMPLETE STOCK REGISTERS IN COMPLIANCE WITH CUSTOMS, FOREST, COMMERCIAL LAW, INCOME TAX & ALL OTHE R LAWS ARE MAINTAINED. CONDITIONS OF 145(3) ARE ALSO COMPLIED WITH. THE A.O. HAS NOT CONTRADICTED THE FA CTS HENCE THE ADDITION MADE BE DELETED. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED CIT(A). WE FI ND THAT THE GROUNDS OF THE CROSS-OBJECTION OF THE ASSESSEE ARE SAME AS RAISED IN ITA-478/DEL/2012 & 2 OTHERS 7 THE REGULAR APPEAL PREFERRED BY THE ASSESSEE. IN VIEW OF OUR DECISION PARTLY ALLOWING THE APPEAL OF THE ASSESSEE FOR THE RELE VANT ASSESSMENT YEAR 2007-08 WHILE DECIDING THE ASSESSEES APPEAL IN ITA NO.719/DEL/2012 IN THE FOREGOING PARAGRAPHS OF THIS O RDER, THE CROSS- OBJECTION OF THE ASSESSEE HAS BECOME INFRUCTUOUS AND IS D ISMISSED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY A LLOWED AND THE APPEAL OF THE REVENUE AND THE CROSS-OBJECTION OF THE ASSESSEE ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 8 TH SEPTEMBER, 2015. SD/- SD/- ( (( ( J. SUDHAKAR REDDY J. SUDHAKAR REDDY J. SUDHAKAR REDDY J. SUDHAKAR REDDY ) )) ) (G. (G. (G. (G. C. GUPTA C. GUPTA C. GUPTA C. GUPTA ) )) ) ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. COPY FORWARDED TO: - 1. REVENUE : INCOME INCOME INCOME INCOME TAX OFFICER, WARD TAX OFFICER, WARD TAX OFFICER, WARD TAX OFFICER, WARD- -- -1, KARNAL. 1, KARNAL. 1, KARNAL. 1, KARNAL. 2. ASSESSEE : SHRI VIJAY KUMAR, PROP. M/S GOEL TIMB ER STORE, SHRI VIJAY KUMAR, PROP. M/S GOEL TIMBER STORE, SHRI VIJAY KUMAR, PROP. M/S GOEL TIMBER STORE, SHRI VIJAY KUMAR, PROP. M/S GOEL TIMBER STORE, TIMBER MARKET, KARNAL. TIMBER MARKET, KARNAL. TIMBER MARKET, KARNAL. TIMBER MARKET, KARNAL. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR