Shri Mukesh Agrawal, Indore V. The ACIT 3(1), Indore

ITA 479/IND/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6305 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-03-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 14-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: C P RAWKA
• Keywords: Gross profit estimation; Cost of acquisition
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NO. 479/IND/2013 A.Y. : 2006-07. SHRI MUKESH AGRAWAL, ACIT, 3(1), PROP.M/S. AGRAWAL ASSOCIATES, VS INDORE. INDORE. APPELLANT RESPONDENT PAN NO. ABTPA2081K APPELLANTS BY : SHRI C.P. RAWKA, CA RESPONDENT BY : SHRI R. A. VERMA, DR O R D E R PER D.T.GARASIA, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-II, BARODA (CONCURRENT JURISDICTION OVER THE CHARGE OF DATE OF HEARING : 1 7 . 0 3 .2016 DATE OF PRONOUNCEMENT : 08 .0 4 .2016 SHRI MUKESH AGRAWAL, INDORE VS. ACIT, 3(1), INDROE I.T.A.NO. 479/IND/2013 A.Y. 2006-07. 2 2 CIT(A)-I, INDORE) DATED 15.03.2013 FOR THE ASSESSM ENT YEAR 2006-07. 2. GROUND NOS. 1, 2 & 3 ARE NOT PRESSED. HENCE, THE SA ME ARE DISMISSED AS NOT PRESSED. THE ONLY EFFECTIVE GR OUND OF APPEAL IS GROUND NO. 4, WHICH READS AS UNDER :- FOR THAT THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING AND APPRECIATING THE SUBMISSIONS MADE & MATERIAL ON RECORD AND HAS THUS ERRED IN CONFIRMING THE RS. 5,51,672/- ADDITION FOR THE ALLEGED LOW GROSS PROFIT AND APPLYING THE PROVISIONS OF SECTION 145(3) OF THE INCOME-TAX ACT, 1961. 3. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 6,17,780/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCO ME-TAX ACT, 1961, DETERMINING TOTAL INCOME AT RS. 12,81,05 0/-. THE AO FOUND THAT THE ASSESSEE DURING THE PREVIOUS YEAR HAD SHOWN GROSS PROFIT OF RS. 31,17,942/- ON THE GROSS SALES OF RS. SHRI MUKESH AGRAWAL, INDORE VS. ACIT, 3(1), INDROE I.T.A.NO. 479/IND/2013 A.Y. 2006-07. 3 3 6,28,65,657/- @ 4.95% AS COMPARED TO GROSS PROFIT O F RS. 35,86,305/- ON THE GROSS SALES OF RS. 6,28,65,657/- @ 4.95% AS COMPARED TO GROSS PROFIT OF RS. 35,86,305/- ON T HE GROSS SALES OF RS. 4,68,03,187/- @ 7.66% IN THE IMMEDIATE LY PRECEDING PREVIOUS YEAR 2004-05 RELEVANT TO ASSESSM ENT YEAR 2005-06. THUS, THERE WAS A FALL IN GROSS PROFIT OF 2.71 % ( I.E. 7.66 % - 4.95% ). THE AO ASKED THE ASSESSEE TO EXPL AIN AS TO WHY THE BOOKS OF ACCOUNTS MAINTAINED BY HIM SHOULD NOT BE REJECTED U/S 145(3) OF THE INCOME-TAX ACT, 1961, A ND GROSS PROFIT SHOULD BE ESTIMATED @ 7.66% DECLARED IN THE IMMEDIATELY PRECEDING PREVIOUS YEAR. 4. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) HAS CONFIRMED THE ADDITION OF RS. 5,51,672/- MADE B Y THE ASSESSING OFFICER FOR THE ALLEGED LOW GROSS PROFIT BY APPLYING THE PROVISIONS OF SECTION 145(3) OF THE INCOME-TAX ACT, 1961. 5. THE LD. AUTHORIZED REPRESENTATIVE CONTENDED THAT TH E ASSESSEE SUBMITTED THE WRITTEN SUBMISSION BEFORE TH E AO ON 18.12.2008. THE LD. AUTHORIZED REPRESENTATIVE FURTH ER CONTENDED THAT THERE IS ALWAYS FLUCTUATION IN THE T RADING BUSINESS IN THE PURCHASE COST AS WELL AS IN THE VAL UE OF SALES. SHRI MUKESH AGRAWAL, INDORE VS. ACIT, 3(1), INDROE I.T.A.NO. 479/IND/2013 A.Y. 2006-07. 4 4 THE ASSESSEE HAD ALSO FURNISHED BEFORE THE AO THE P URCHASE AND SALES VOUCHERS SHOWING THE VARIATION IN PURCHAS E COST AND SALE VALUE. THE LD. AUTHORIZED REPRESENTATIVE FURTH ER CONTENDED THAT THE GROSS PROFIT RATIO CANNOT REMAIN STATIC. THE LD. AUTHORIZED REPRESENTATIVE FURTHER CONTENDED THA T THE SHORTAGE IN CHANNA WAS MAINLY ON ACCOUNT OF THE FAC T THAT SOMETIMES DUE TO CHANGE OF WEATHER MAINLY IN THE RA INY SEASON THE CHANNA GETS ROTTEN. THE ASSESSEE FURTHER CLAIMED THAT WHEN THE CHANNA WAS PURCHASED IN BULK, WHICH I NCLUDED THE WASTE MATERIAL LIKE MUD ETC. THEREFORE, THE ASS ESSEE CLAIMED THAT THERE WAS A SHORT FALL IN THE QUANTITY OF CHANNA AS POINTED OUT. THE LD. AUTHORIZED REPRESENTATIVE F URTHER CONTENDED THAT THE BOOKS OF ACCOUNTS DESERVE TO BE ACCEPTED AND THE GROSS PROFIT RATIO DECLARED SHOULD ALSO BE ACCEPTED. THE LD. AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED A COMPARATIVE TRADING ACCOUNT, WHICH IS ON RECORD AND READS AS UNDER :- SHRI MUKESH AGRAWAL, INDORE VS. ACIT, 3(1), INDROE I.T.A.NO. 479/IND/2013 A.Y. 2006-07. 5 5 COMPARATIVE TRADING ACCOUNT PARTICULARS 31.03.05 31.03.06 31.03.07 PARTICULAR 31.03.05 31.03.06 31.03.07 OP.STOCK 10463490.00 4008482.50 1084025.00 SALES 46803187.00 62865657.00 87339492.35 PURCHASES 35997090.25 55736537.50 89541712.54 CLOSI NG STOCK 4008482.50 1084025.00 9383770.00 DISCOUNT, MUDDAT, RATE DIFFERENCE 0.00 456051.50 1152004.84 ADAT COMMISSION RECEIVED 0.00 0.00 10146.00 PACKING MATERIAL 0.00 252376.00 496092.00 FREIGHT A/C 0.00 100.00 0. 00 SULTILI CONSUMED 87872.00 0.00 0.00 INTEREST RECEIVED BARDANA SILAI MAJDURI 103252 0.00 0.00 CHANA EXPENSES 0.00 0.00 464770.00 MOTOR BHADA 477446.00 378392 0.00 HAMMALI 96214.24 0.00 116517.08 CHANA SETTLEMENT EXPENSES 0.00 0.00 67632.07 GROSS PROFIT TRANSFERRED TO PROFIT AND LOSS ACCOUNT 3586305 3117942.50 3827956.82 GROSS PROFIT RATE 3586305.01 63949782.00 96750710.35 50811669.50 63949782.00 96750710.35 50811669.50 63949782.00 96750710.35 GROSS PROFIT RATE 7.66% 4.95% 4.38% AVERAGE RATE FOR 3 YEARS 5.66 % 6. THE LD. DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE HAVE GONE THROUGH THE EXPLANATION GIVE N BY THE ASSESSEE REGARDING FALL IN GROSS PROFIT OF 2.71 % I N CHANA ACCOUNT. WE FOUND FROM THE COMPARATIVE TRADING ACCO UNT CHART THAT THE ASSESSEE HAD SHOWN GROSS PROFIT OF R S. 31,17,942/- DURING THE PREVIOUS YEAR ON THE GROSS S ALES OF RS. SHRI MUKESH AGRAWAL, INDORE VS. ACIT, 3(1), INDROE I.T.A.NO. 479/IND/2013 A.Y. 2006-07. 6 6 6,28,65,657/- @ 4.95% AS COMPARED TO GROSS PROFIT O F RS. 35,86,305/- ON THE GROSS SALES OF RS. 6,28,65,657/- @ 4.95% AS COMPARED TO GROSS PROFIT OF RS. 35,86,305/- ON T HE GROSS SALES OF RS. 4,68,03,187/- @ 7.66% IN THE IMMEDIATE LY PRECEDING PREVIOUS YEAR 2004-05 RELEVANT TO ASSESSM ENT YEAR 2005-06. THUS, THERE WAS A FALL IN GROSS PROFIT OF 2.71 %. WE HAVE PERUSED THE CHART WHICH IS SUBMITTED BY THE AS SESSEE AND REPRODUCED ABOVE. IT WOULD MEET THE ENDS OF JUS TICE IF THE AVERAGE RATE FOR 3 YEARS I.E. 5.66 % IS TAKEN AS AG AINST 7.6 % TAKEN BY THE ASSESSING OFFICER AND CIT(A). WE ORDER ACCORDINGLY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 08 TH APRIL, 2016. SD/- (B.C.MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 8 TH APRIL, 2016. SHRI MUKESH AGRAWAL, INDORE VS. ACIT, 3(1), INDROE I.T.A.NO. 479/IND/2013 A.Y. 2006-07. 7 7 CPU*