ACIT Rg. iV, Lucknow V. M/S Mahesh Namkeen P Ltd in, Lucknow

ITA 487/LKW/2011

• Counselvise Citation: 48723714 RSA 2011
• Duration Of Justice: 2 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-11-2013
• Assessment Year: misc
• Appeal Filed On: 10-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Assessee Lawyers: H P SINGH
• Keywords: Rejection of books of accounts; Business income; Depreciation
• Section: 133A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.487 /LKW/201 1 A.Y.: 2007 - 08 A.C.I.T., RANGE - IV, LUCKNOW. VS. M/S MAHESH NAMKEEN (P) LTD., B - 16, AMAUSI INDUSTRIAL AREA, NADARGANJ,LUCKNOW. PAN:AAECM0548G (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ALOK MITRA, D.R. RESPONDENT BY SHRI H. P. SINGH, ADVOCATE DATE OF HEARING 2 9/11/2013 DATE OF PRONOUNCEMENT 2 3 /12/2013 O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER OF CIT(A) - II, LUCKNOW DATED 11/05/2011 FOR ASSESSMENT YEAR 2007 - 2009. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN FAILING TO APPRECIATE THAT THE ASSESSEE HAS SURRENDERED AN AMOUNT OF RS. 30 LACS DURING THE COURSE OF SURVEY U/S 133A. THE CIT(A) HAS OVERLOOKED THE FACT THAT THE ASSESSEE HAS HIMSELF ADMITTED THAT HIS BOOKS OF ACCOUNT ARE NOT CORRECT AS IS EVIDENCED BY TH E SURRENDERING OF INCOME. CONSIDERING THE ASSESSEE'S STATEMENT AT THE TIME OF SURVEY AND DISCREPANCIES POINTED OUT IN STOCK, THE A.O. HAS CORRECTLY REJECTED THE BOOKS OF ACCOUNTS AS PER THE PROVISIONS OF SECTION 145(3) AND ESTIMATED THE ASSESSEE'S INCOME. [ 2 ] 2. THE CIT(A) HAS ERRED IN LAW AND ON FACT IN FAILING TO APPRECIATE THAT THE SURRENDERED INCOME CLAIMED TO BE 'MISCELLANEOUS INCOME' HAS BEEN CORRECTLY ADDED TO THE BUSINESS INCOME OF THE ASSESSEE AS ESTIMATED BY THE A.O. 3. THE CIT(A) HAS ERRED IN LAW AN D ON FACT OF THE CASE IN FAILING TO APPRECIATE THAT THE ASSESSEE FAILED TO ESTABLISH BEFORE THE A.O. THAT THE BUILDING ON WHICH DEPRECIATION IS CLAIMED WAS USED FOR PURPOSE OF BUSINESS DURING THE YEAR UNDER CONSIDERATION. 4. APPELLANT CRAVE LEAVES TO ADD OR AMEND ANY ONE OR MORE OF THE GROUNDS OF APPEALS, AS STATED ABOVE, AS AND WHEN NEED TO DOING SO ARISES WITH THE PRIOR PERMISSION OF THE COURT. 3. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LEARNED A.R. OF THE ASSESSEE SUPPO RTED THE ORDER OF CIT(A). BRIEF FACTS ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 30/10/2007 DECLARING AN INCOME OF RS.7,86,887/ - . THE ASSESSING OFFICER HAS NOTED IN THE ASSESSMENT ORDER THAT A SURVEY U/S 133A OF THE ACT WAS CONDUCTED ON 16/03/2007 A ND ACCORDINGLY, THE CASE WAS SELECTED UNDER SCRUTINY. AS PER THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS ASSESSED THE INCOME OF THE ASSESSEE AT RS.39,52,140/ - WHICH INCLUDES THE NET PROFIT BEING INCOME FROM BUSINESS RS.5,98,876/ - AND ADDITION OF RS.1, 81,030/ - , 1,72,233/ - AND RS.30 LACS. AS PER GROUNDS RAISED BY THE REVENUE BEFORE US, THE REVENUE IS DISPUTING ABOUT THE ADDITION OF RS.30 LACS DELETED BY CIT(A). WITH REGARD TO THIS ADDITION, IT IS STATED BY THE ASSESSING OFFICER IN PARA 7 OF THE ASSESS MENT ORDER THAT IN THE TRADING AND PROFIT & LOSS ACCOUNT, THE ASSESSEE HAS SHOWN MISC. INCOME AT RS.30 LACS, WHICH IS BEING TREATED AS UNDISCLOSED INCOME FROM OTHER SOURCES IN VIEW OF THE DISCUSSION IN THE ASSESSMENT ORDER. THIS ADDITION WAS DELETED BY CI T(A). HE HAS GIVEN A FINDING IN PARA 5(8)(V) THAT THE STOCK OF SALT FOUND SHORT AT THE TIME OF [ 3 ] SURVEY HAS BEEN EXPLAINED BY SUBMITTING THAT THE PART OF STOCK WAS KEPT ELSEWHERE BECAUSE SALT IS A PERISHABLE COMMODITY AND IF IT GATHERS MOISTURE, IT LOSES IT S VALUE. HE HAS ALSO GIVEN A FINDING THAT THE STOCK OF FINISHED GOODS HAS BEEN EXPLAINED SUCCESSFULLY BY UPDATING THE BOOKS OF ACCOUNT, WHICH WERE NOT WRITTEN COMPLETELY AT THE TIME OF SURVEY. THE CIT(A) HAS WORKED OUT AND COMPARED THE YIELD PERCENTAGE FOR THE PRE SURVEY PERIOD I.E. UP TO 16/03/2007 AND FOR THE POS T SURVEY PERIOD I.E. FROM 17/03/2007 TO 31/03/2007 AND FOUND THE SAME AT 94.63% AND 94.79% RESPECTIVELY. REGARDING THE ACTION OF THE ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNT AND EST IMATING THE INCOME OF THE ASSESSEE, THE CIT(A) HAS GIVEN A FIND THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT, WHICH HAVE BEEN AUDITED AND IN WHICH NO DISCREPANCY HAS BEEN FOUND. HE HAS ALSO GIVEN A FIND ING THAT NOWHERE HA S THE ASSESSING OFFICER MENTIONED ANY REASON FOR ADOPTING THE FIGURE OF 5% AS NET PROFIT. THEREAFTER, HE HAS HELD THAT IN ABSENCE OF ANY REASONING GIVEN BY THE ASSESSING OFFICER, THE ACTION OF THE ASSESSING OFFICER IS ARBITRARY AND HE DIRECTED THE ASSESSI NG OFFICER TO ACCEPT THE PROFIT SHOWN BY THE ASSESSEE AS PER BOOKS OF ACCOUNT. REGARDING THE ADDITION OF RS.30 LACS, IT WAS STATED BY CIT(A) IN PARA 6(4) OF HIS ORDER THAT THIS INCOME OF RS.30 LACS, DECLARED BY THE ASSESSEE AT THE TIME OF SURVEY, WAS DULY INCLUDED BY THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT AS MISC. INCOME AND THEREFORE, NO SEPARATE ADDITION IS CALLED FOR. 4. LEARNED D.R. OF THE REVENUE COULD NOT CONTROVERT THE SPECIFIC FINDING OF CIT(A) AND HE MEREL Y SUPPORTED THE ASSESSMENT ORDER. 5. AS AGAINST THIS, LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED CIT (A) . [ 4 ] 6. IN VIEW OF THE ABOVE DISCUSSION, WE FIND THAT A CLEAR FINDING IS GIVEN BY CIT(A) THAT REJECTION OF BOOKS OF ACCOUNT BY THE ASSESSING OFFICER IS UNJUSTIFIED IN THE FACTS OF THE PRESENT CASE. THIS FINDING OF CIT(A) COULD NOT BE CONTROVERTED BY LEARNED D.R. UNDER THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 2 3 / 12/2013 *C.L.SINGH COPY OF THE O RDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A ) 5. DR, ITAT, LUCKNOW ASSTT. REGISTRAR