BHAWANI SILICATE INDUSTRIES, Jaipur V. ITO, Jaipur

ITA 48/JPR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5482 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 16-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P R MEENA JCIT DHK

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. 48/JP/15 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 M/S BHAWANI SILICATE INDUSTRIES, F-143, UDHYOG VIHAR, CHOMMU ROAD, JETPURA, JAIPUR CUKE VS. THE INCOME TAX OFFICER, WARD 7(3), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABFB 8373 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (C.A.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI P.R. MEENA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 21.12.2015 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 12/02/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A)-II, JAIPUR DATED 11.11.2014 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING THREE GROUNDS OF APPEAL:- (1) THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN REJECTING THE BOOKS OF ACCOUNTS BY APPLYING THE PROVISIONS OF SECTION 145(3). ITA NO. 48/JP/15 M/S BHAWANI SILICATE INDUSTRIES, JAIPUR VS. ITO WAR D 7(3), JAIPUR 2 (2) THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED ON FACTS AND IN LAW IN CONFIRMING THE TRADING ADDITION OF RS. 9,00,882/ - BY APPLYING THE G.P. RATE OF 1.60% AS AGAINST THE G.P. RATE OF 1.53% DECLAR ED BY THE ASSESSEE. (3) THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF RS. 19,540/- OUT OF TELEPHONE EXPENSES. 2. REGARDING GROUND NO.1 & 2 THE LD. AR SUBMITTED T HAT BOOKS OF ACCOUNTS HAVE BEEN REJECTED IN THE PAST ON SIMILAR GROUNDS A ND G.P. ADDITIONS HAVE BEEN MADE, AND THE MATTER HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN ITA NO. 750/JP/2012 FOR A.Y. 2008-09 AND ITA NO. 751/JP/201 2 FOR A.Y. 2009-10 WHEREIN THE HONBLE ITAT HAS UPHELD THE BOOKS OF ACCOUNTS A ND THE ADDITIONS ON ACCOUNT OF LOW G.P. WAS DELETED. 2.1 THE LD. CIT(A) HAS ALSO STATED IN HIS ORDER THA T UNDER THE SAME FACTS AND CIRCUMSTANCES IN A.Y. 2008-09, 2009-10 AND 2010-11, THE BOOKS OF ACCOUNTS WERE REJECTED AND PROVISIONS OF SECTION 145(3) HAVE BEEN APPLIED BY THE AO AND IN VIEW OF THAT HE HAS CONFIRMED THE REJECTION OF BOOKS OF A CCOUNTS U/S 145(3) OF THE ACT. 2.2 THE RELEVANT FINDINGS OF THE CO-ORDINATE BENCH IN ITA NO. 750/JP/12, JP/12 , 751/JP/2012 , 733/JP/12 AND CO NO. 67/JP/2012 DATE D 13.02.2015 IS AS UNDER: WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES AN PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE FACTS ON TH E RECORD, IT CLEARLY EMERGES THAT: ITA NO. 48/JP/15 M/S BHAWANI SILICATE INDUSTRIES, JAIPUR VS. ITO WAR D 7(3), JAIPUR 3 (I) BOOKS OF ACCOUNT OF THE ASSESSEE ARE MAINTAINED IN THE SAME POLICIES AND METHODS OF ACCOUNTS AS IN EARLIER AND SUBSEQUEN T YEARS WHEN THE ASSESSEES BOOKS OF ACCOUNT HAVE BEEN UPHELD. (II) THE ASSESSEES BUSINESS MODEL CONSISTS OF 80% OF TR ADING OF I.E. PURCHASE AND SALE OIL AND 20% OF MANUFACTURING OF OIL. THES E FACTS HAVE BEEN DISPUTED BY THE LD. DR. (III) BEING A SINGLE COMMODITY MANUFACTURER, THE ASSESSE E CANNOT BE EXPECTED TO STOP THE PLANT AS AND WHEN A NEW LOT OF MUSTARD SEED IS SUBJECTED TO CRUSHING AS THE MANUFACTURING OF MUSTA RD OIL AS A CONTINUOUS PROCESS, THIS IS ALSO NOT DISPUTED BY TH E DEPARTMENT. IN THESE CIRCUMSTANCES, IT IS UNREASONABLE TO EXPECT FROM TH E ASSESSEE TO SHUT THE PLANT FOR CRUSHING OF VERY LOT OF MUSTARD SEED, THE YIELD AND MAINTAIN IMPOSSIBLE DAY TO DAY, LOT WISE STOCK IN THIS BEHAL F. THUS THE CORRESPONDING COMPLIANCE INSISTED BY THE LD. A.O. I S BEYOND THE BUSINESS REALITY AND NOT A PREVALENT TRADE PRACTICE. (IV) OTHERWISE, THE ASSESSEE HAS MAINTAINED PROPER DAY TO DAY STOCK REGISTER OF THE INWARD AND OUTWARD DAY TO DAY STOCK OF MUSTA RD SEED, AND MUSTARD OIL, TRADED AS WELL AS MANUFACTURED. WE AR E UNABLE TO SEE ANY INFIRMITY IN THE RECORD AND BOOK KEEPING OF THE ASS ESSEE IN BOTH THESE YEARS. IN VIEW THEREOF, WE ARE INCLINED TO HOLD TH AT THE ASSESSEES BOOKS OF ACCOUNTS HAVE BEEN UNJUSTIFIABLY REJECTED; OUR VIE W IS SUPPORTED BY THE PLETHORA OF CASE LAWS CITED ABOVE. THEREFORE, WE REVERSE THE ACTION OF THE LOWER AUTHORITIES IN THIS BEHALF. 7.1 SINCE WE HAVE UPHELD THE BOOKS OF ACCOUNT , THE NEXT QUESTION WHICH ARISES IS WHETHER LOW YIELD OF G.P. CAN BE A FACTOR TO MAKE THE TRADING ADDITION WHEN THE ASSESSEE OTHERWISE MAINTAINS PROPER BOOKS OF ACCOUNTS AND QUANTITY WISE DETAILS. IN OUR CONSIDERED VIEW, WHEN THE BOO KS OF ACCOUNT OF THE ASSESSEE ARE UPHELD MERE LOW YIELD OR LOW G.P. CANN OT BE GROUND FOR ADDITION ON ACCOUNT OF TRADING RESULTS. THIS IS MORE SO AS THE EDIBLE OIL BUSINESS PROFITABILITY IS VOLATILE AND DEPENDS ON VARIOUS FA CTORS I.E. THE ABUNDANCE OF CROPS, DEMAND AND SUPPLY RATIO, MARKET TRENDS AND I MPORT POLICY OF EDIBLE MUSTARD OIL. IT CANNOT BE EXPECTED AS A UNIVERSAL POLICY THAT THE ASSESSEE WILL EARN FIXED RATE OF INCREASING RATES OF G.P. YEAR T O AFTER YEAR. IN VIEW OF THE FORGOING WE SEE NO JUSTIFICATION IN MAKING ANY TRADING ADDITION IN THE CASE OF THE ASSESSEE. THE SAME IS D ELETED. ITA NO. 48/JP/15 M/S BHAWANI SILICATE INDUSTRIES, JAIPUR VS. ITO WAR D 7(3), JAIPUR 4 2.2 SINCE THERE IS NO CHANGE IN THE FACTS AND CIRC UMSTANCES OF THE CASE, RESPECTFULLY FOLLOWING THE DECISION OF COORDINATE B ENCH AS REFERRED SUPRA, THE BOOKS OF ACCOUNTS ARE UPHELD. FURTHER WE AGREE WIT H THE COORDINATE BENCH THAT WHERE THE BOOKS OF ACCOUNT OF THE ASSESSEE AR E UPHELD, MERE LOW YIELD AND LOW G.P. CANNOT BE THE SOLE BASIS FOR ADDI TION ON ACCOUNT OF TRADING RESULTS IN THE FACTS AND CIRCUMSTANCES OF INSTANT CASE. HENCE, WE SEE NO JUSTIFICATION IN SUSTAINING TRADING ADDITION WHICH I S HEREBY DELETED. HENCE THE GROUND NO. 1 & 2 ARE UPHELD. 3. REGARDING GROUND NO.3, THE AO HAS DISALLOWED 1 5% OF THE TELEPHONE EXPENSES WHICH HAVE BEEN REDUCED TO 10% BY THE LD . CIT(A). GIVEN ADHOC NATURE OF DISALLOWANCE WHICH CANNOT BE SUSTAINED IN THE EYE OF LAW, WE HEREBY DELETE THE DISALLOWANCE OF RS. 19540/-. HEN CE GROUND NO.3 OF THE ASSESSEE IS ALLOWED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ITA NO. 48/JP/15 M/S BHAWANI SILICATE INDUSTRIES, JAIPUR VS. ITO WAR D 7(3), JAIPUR 5 ORDER PRONOUNCED IN THE OPEN COURT ON 12/02/2016 SD/- SD/- VKJ-IH-RKSYKUH FOE FLAG ;KNO (R.P.TOLANI) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 12/ 02 /2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S BHAWANI SILICATE INDUSTRIES, JA IPUR 2. THE RESPONDENT- ITO, WARD 7(3), JAIPUR 3. THE CIT(A)-III, JAIPUR 4. THE CIT-III, JAIPUR 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO 48/JP/15) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSTT. REGISTRAR ITA NO. 48/JP/15 M/S BHAWANI SILICATE INDUSTRIES, JAIPUR VS. ITO WAR D 7(3), JAIPUR 6 SL. NO. DATE INITIAL 1 DATE OF DICTATION 2 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER OTHER MEMBER 3 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S 4 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 5 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S. 6 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 8 THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER 9 DATE OF DISPATCH OF THE ORDER