Late Poonam Lal Chandani through legal heir H.P Lalchandani (Husband), Kanpur V. Income Tax Officer- 2(3), Kanpur

ITA 483/LKW/2015

• Counselvise Citation: 48323714 RSA 2015
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 10-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NARPAT JAIN
• Keywords: Depreciation; Principle of natural justice
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.483&484/LKW/2015 ASSESSMENT YEAR:2005-06 & 2006-07 LATE POONAM LAL CHANDANI THROUGH LEGAL HEIR H.P. LALCHANDANI (HUSBAND) 84/68, G. T. ROAD KANPUR V. INCOME TAX OFFICER 2(3) KANPUR TAN/PAN:AABPL5726A (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. NARPAT JAIN, ADVOCATE RESPONDENT BY: SHRI. AMIT NIGAM, D.R. DATE OF HEARING: 05 11 2015 DATE OF PRONOUNCEMENT: 18 11 2015 O R D E R PER SUNIL KUMAR YADAV: THESE APPEALS ARE PREFERRED BY THE ASSESSEE AGAINST THE RESPECTIVE ORDERS OF THE LD. CIT(A). 2. SINCE COMMON ISSUES ARE INVOLVED THEREIN, THESE APPEALS ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER. HOWEVER, THESE APPEALS ARE BEING DISPOSED OF ONE AFTER THE OTHER. I.T.A. NO. 483/LKW/2015: 3. IN THIS APPEAL, THE ASSESSEE HAS ASSAILED THE ORDER OF THE LD. CIT(A), INTER ALIA, ON THE FOLLOWING GROUNDS:- 1. THE LEARNED CIT(A) WAS WRONG IN LAW AND ON FACTS IN CONFIRMING/SUSTAINING THE FOLLOWING ADDITIONS MADE BY A.O IN THE ASSESSMENT ORDER OF THE APPELLANT FOR A.Y. 2005-06:- :- 2 -: (I) RS.84841/- SUSTAINING THE ADDITION OUT OF RS.152841/- MADE BY AO IN RESPECT OF TRADING RESULT. (II) RS.9850/- ADDITION FOR ALLEGED EXTRA PROFIT IN M/S ANKISH CORP. (III) RS. 9800/- DISALLOWANCE OUT OF CAR EXPENSES & DEP ON CAR. (IV) RS.2000/- DISALLOWANCE OUT OF TELEPHONE EXPENSES. 2. THE LEARNED CIT(A) WHILE SUSTAINING THE ADDITION OF RS.84841/- BY APPLYING G.P. RATE OF 13% AS AGAINST 11.52%, SHOWN BY THE APPELLANT HAS FAILED TO APPRECIATE THAT THE TRADING RESULTS SHOWN BY THE APPELLANT WERE QUITE REASONABLE & NO ADDITION IS CALLED FOR. 3. THAT IN ANY CASE & WITHOUT PREJUDICE THE OTHER ADDITIONS/DISALLOWANCES MADE/ SUSTAINED ARE ALSO UNJUSTIFIED & IN ANY CASE HIGH & EXCESSIVE. 4. THAT THE ORDER OF THE LEARNED A.O & CIT (A) IS AGAINST LAW, FACTS AND PRINCIPLES OF NATURAL JSTICE. 4. DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS OPTED NOT TO PRESS GROUNDS NO. 1(I), 1(II), 1(III) AND 1(IV), THEREFORE, THESE GROUNDS ARE DISMISSED BEING NOT PRESSED. 5. NOW THE SOLITARY GROUND LEFT OUT IS WITH REGARD TO THE ADDITION OF RS.84,841/- MADE BY THE LD. CIT(A) AGAINST THE ADDITION OF RS.1,52,841/. 6. DURING THE COURSE OF HEARING, OUR ATTENTION WAS INVITED TO THE FACT THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE WAS REJECTED FINDING VARIOUS DEFECTS IN ITS MAINTENANCE BY THE ASSESSING OFFICER HAVING INVOKED THE PROVISIONS OF SECTION 145 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT'). BEING NOT CONVINCED WITH THE BOOK RESULTS DECLARED BY THE ASSESSEE, THE ASSESSING OFFICER HAS ENHANCED THE TURNOVER OF THE :- 3 -: ASSESSEE AT RS.34 LAKHS AS AGAINST DECLARED TURNOVER OF RS.30,99,787.45 DURING THE YEAR AND APPLIED GROSS PROFIT RATE AT 15% AGAINST THE DECLARED PROFIT RATE OF 11.52%. 7. IN APPEAL, THE LD. CIT(A) REDUCED THE GROSS PROFIT RATE FROM 15% TO 13% BUT CONFIRMED THE ESTIMATION OF TURNOVER, RESULTING INTO AN ADDITION OF RS.84,841/- AGAINST THE ADDITION OF RS.1,52,841/- MADE BY THE ASSESSING OFFICER. 8. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT THE BOOK RESULT DECLARED BY THE ASSESSEE SHOULD BE ACCEPTED. IN THE GROUNDS OF APPEAL THE ASSESSEE HAS NOT RAISED ANY GROUND RELATING TO THE VALIDITY OF REJECTION OF THE BOOKS OF ACCOUNT. MOREOVER, THE ASSESSEE COULD NOT ADVANCE ANY CONVINCING ARGUMENT IN THIS REGARD WHEREAS THE ASSESSING OFFICER HAS REJECTED THE BOOKS OF ACCOUNT FINDING VARIOUS DEFECTS THEREIN. THEREFORE, WE FIND THAT THE BOOKS OF ACCOUNT WERE RIGHTLY REJECTED AND ONCE THE BOOKS OF ACCOUNT ARE REJECTED, THE GROSS PROFIT RATE IS TO BE ESTIMATED. THE ASSESSING OFFICER HAS ESTIMATED THE TURNOVER AT RS.34 LAKHS AS AGAINST RS.30,99,787.45 DECLARED BY THE ASSESSEE IN THE ABSENCE OF COMPLETE BOOKS OF ACCOUNT. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER CONTENDED THAT THE ENHANCEMENT OF TURNOVER IS WITHOUT ANY BASIS. THEREFORE, THE DECLARED TURNOVER SHOULD BE ACCEPTED. 9. THE LD. D.R., ON THE OTHER HAND, HAS PLACED RELIANCE UPON THE ORDER OF THE LD. CIT(A) WITH THE SUBMISSION THAT THE ASSESSEE HAS NOT PRODUCED COMPLETE BOOKS OF ACCOUNT. THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY REJECTED THE BOOKS OF ACCOUNT. ESTIMATION OF TURNOVER MADE BY THE ASSESSING OFFICER IS ALSO PERFECT UNDER THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE. THEREFORE, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD. CIT(A). :- 4 -: 10. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT THE REJECTION OF THE BOOKS OF ACCOUNT IS PROPER AND ONCE THE BOOKS OF ACCOUNT ARE REJECTED, THE GROSS PROFIT IS TO BE ESTIMATED. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ESTIMATION OF TURNOVER AT RS.34 LAKHS IS ALSO CORRECT, BUT THE GROSS PROFIT RATE ESTIMATED BY THE REVENUE IS ON HIGHER SIDE. WE, THEREFORE, DIRECT THE ASSESSING OFFICER TO ESTIMATE THE GROSS PROFIT RATE AT 11.52% DECLARED BY THE ASSESSEE ON THE ENHANCED TURNOVER OF RS.34 LAKHS. THE ASSESSING OFFICER IS ACCORDINGLY DIRECTED TO RE-CALCULATE THE ADDITION. I.T.A. NO. 484/LKW/2015: 11. IN THIS APPEAL, THE ASSESSEE HAS ASSAILED THE ORDER OF THE LD. CIT(A), INTER ALIA, ON THE FOLLOWING GROUNDS:- 1. THAT THE LEARNED CIT(A) WAS WRONG IN LAW AND ON FACTS IN CONFIRMING/SUSTAINING THE FOLLOWING ADDITIONS MADE BY A.O IN THE ASSTT ORDER OF THE APPELLANT FOR A.Y. 2006-07:- (I) RS.100254/-ADDITION FOR ALLEGED EXTRA PROFIT ON THE DISCLOSED TURNOVER, (II) RS.89554/- ALLEGED EXTRA PROFIT ON ALLEGED STOCK NOT FOUND ON THE DATE OF SURVEY, (III) RS.2554/- DISALLOWANCE OUT OF INTEREST PAID, (IV) RS.9523/- DISALLOWANCE OUT OF CONVEYANCE & DEPRECIATION ON CAR. (V) RS.1000/- DISALLOWANCE OUT OF TELEPHONE EXP. 2. THAT THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT LOOKING TO THE EXPLANATION FURNISHED BY THE APPELLANT, ADDITION FURNISHED BY THE APPELLANT NO ADDITION OF RS. 100254/- IN TRADING :- 5 -: RESULT & ADDITION OF RS. 89554/- FOR ALLEGED EXTRA PAGES ON ALLEGED STOCK NOT FOUND WAS NOT JUSTIFIED. 3. THAT IN ANY CASE & WITHOUT PREJUDICE THE APPLICATION OF G.P. RATE OF 15% WAS NOT JUSTIFIED PARTICULARLY WHEN ON THE SAME FACTS THE G.P. RATE OF 13% WAS APPLIED BY CIT(A) IN A.Y. 2005-06. 4. THAT THE ADDITION OF RS. 89554/- IS WHOLLY UNJUSTIFIED BECAUSE THERE WAS NO VARIATION IN STOCK & IN ANY CASE SUCH ADDITION WAS HIGHLY EXCESSIVE. 5. THAT THE DISALLOWANCES OF RS. 2554/-, 9523/- & 1000/- AS SUSTAINED BY CIT(A) ARE ALSO UNJUSTIFIED AND IN ANY CASE HIGH & EXCESSIVE. 6. THAT IN ANY CASE & WITHOUT PREJUDICE TO THE ABOVE GROUNDS THE QUANTUM OF ADDITIONS/DISALLOWANCES MADE/SUSTAINED ARE MUCH TOO HIGH & EXCESSIVE. 7. THAT THE ORDERS OF LOWER AUTHORITIES ARE AGAINST LAW, FACTS & PRINCIPLE OF NATURAL JUSTICE. 12. DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS OPTED NOT TO PRESS GROUNDS NO. 1(III), 1(IV) AND 1(V), THEREFORE, THESE GROUNDS ARE DISMISSED BEING NOT PRESSED. 13. GROUNDS NO.1(1) AND 1(II) RELATE TO THE ADDITION MADE ON ACCOUNT OF GROSS PROFIT RATE AFTER REJECTING THE BOOKS OF ACCOUNT AND ALSO WITH REGARD TO THE PROFIT ESTIMATED ON THE SALE OF STOCK OUTSIDE THE BOOKS OF ACCOUNT. 14. SO FAR AS ADDITION ON ACCOUNT OF GROSS PROFIT IS CONCERNED, WE FIND THAT IN THIS CASE THE ASSESSING OFFICER HAS NOT ENHANCED THE TURNOVER, BUT HE HAS APPLIED THE GROSS PROFIT RATE AT 15% FOLLOWING THE GROSS PROFIT RATE APPLIED IN ASSESSMENT YEAR 2005-06 AND ESTIMATED THE PROFIT AT RS.5,44,943/- AGAINST THE DECLARED PROFIT OF RS.4,43,689/- RESULTING INTO :- 6 -: AN ADDITION OF RS.1,00,254/-, AGAINST WHICH AN APPEAL WAS FILED BEFORE THE LD. CIT(A), BUT THE ASSESSEE DID NOT FIND FAVOUR WITH HIM. 15. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AND ON A CAREFUL PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES, WE FIND THAT IN ASSESSMENT YEAR 2005-06, WE HAVE APPLIED GROSS PROFIT RATE AT 11.52%, BUT IN THIS YEAR THE ASSESSEE HERSELF HAS DECLARED GROSS PROFIT RATE AT 12.24% WHICH IS HIGHER THAN THE GROSS PROFIT RATE ESTIMATED BY THE TRIBUNAL. UNDER THESE CIRCUMSTANCES, WE FIND THAT NO ADDITION IS CALLED FOR IN THIS REGARD. WE ACCORDINGLY SET ASIDE THE ORDER OF THE LD. CIT(A) AND DELETE THE ADDITION. 16. SO FAR AS OTHER GROUND ON EXTRA PROFIT ON ALLEGED STOCK IS CONCERNED, WE FIND THAT DURING THE COURSE OF SURVEY, THE STOCK WAS FOUND SHORT WHICH MEANS THAT THE STOCK WAS SOLD OUTSIDE THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER HAS APPLIED THE NET PROFIT RATE AT 15% ON THE EXTRA SALES OF STOCK OUTSIDE THE BOOKS OF ACCOUNT. SINCE WE HAVE RESTRICTED THE GROSS PROFIT RATE FROM 15% TO 12.24% AS DECLARED BY THE ASSESSEE, WE DIRECT THE ASSESSING OFFICER TO ESTIMATE THE GROSS PROFIT RATE AT 12.25% ON THIS EXTRA SALE OF STOCK AT RS.5,97,026/-. ACCORDINGLY WE DIRECT THE ASSESSING OFFICER TO REDUCE THE ADDITION. 17. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIONED PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18 TH NOVEMBER, 2015 :- 7 -: JJ:0611 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR