ANSHU JAIN, Jaipur V. JCIT, Jaipur

ITA 49/JPR/2013

• Counselvise Citation: 4923114 RSA 2013
• Duration Of Justice: 2 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 07-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Depreciation
• Section: 143(3)

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 VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 49/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2008-09 ANSHU JAIN, 1966, PANDIT SHIVDEEN KA RASTA, KISHANPOLE BAZAR, JAIPUR. CUKE VS. A.C.I.T., CIRCLE-1, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: ADGPJ 3769 G VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI MUKESH KHANDELWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SMT. NEENA JEPH (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 25/03/2015 ?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 17/04/2015 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 15/11/2012 PASSED BY THE LEARNED CIT (A)-I, JAIPUR FOR A.Y. 2008-09 THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1 THAT THE LD. CIT(A) ERRED ON FACTS IN SUSTAINING THE APPLICATION OF PROVISIONS OF SECTION 145(3) OF THE INCOME TAX ACT, 1961. ITA 49/JP/2013_ ANSHU JAIN VS. ACIT 2 2. THAT THE LD. CIT(A) ERRED ON FACTS IN SUSTAINING AN NP RATE OF 18% IN THE CASE AS AGAINST DECLARED NP RATE OF 14.70% BY THE APPELLANT. 2. FIRST GROUND OF APPEAL IS NOT PRESSED, THEREFORE , WE DISMISS THIS GROUND OF APPEAL AS NOT PRESSED. 3. THE SECOND GROUND OF APPEAL IS AGAINST SUSTAINING THE NP RATE OF 18% AGAINST THE DECLARED NP RATE OF 14.70%. THE ASS ESSEE DERIVED INCOME FROM BUSINESS OF TRANSPORTATION, CAPITAL GAI N AND OTHER SOURCES. SHE FILED RETURN ON 31/10/2008 AT RS. 9,56,930/-. TH E CASE WAS SCRUTINIZED U/S 143(3) OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED AS THE ACT) BY THE ASSESSING OFFICER. THE L D. A.O. COMPARED THE G.P., N.P. RATE FROM A.Y. 2005-06 TO 2007-08. THE LD ASSESSING OFFICER OBSERVED THAT DURING THE ASSESSMENT PROCEEDINGS, HE NOTICED THAT NO RECORD OF TRUCK WISE RECEIPTS OF FREIGHT HAD BEEN MA INTAINED, NO LOG BOOK WAS MAINTAINED FOR PLYING OF TRUCK, MANY EXPENS ES SUPPORTED BY INTERNAL VOUCHER PAID IN CASH AND NO RECORD OF TRUC K WISE PAYMENT WAS MAINTAINED. THE LD ASSESSING OFFICER GAVE SHOW CAUSE NOTICE ON THESE DEFICIENCIES FOR REJECTION OF BOOKS U/S 145(3) OF T HE ACT, WHICH WAS REPLIED BY THE ASSESSEE VIDE LETTER DATED 13/12/201 0, WHICH HAS BEEN REPRODUCED BY THE ASSESSING OFFICER ON PAGES 2,3, A ND 4 OF THE ITA 49/JP/2013_ ANSHU JAIN VS. ACIT 3 ASSESSMENT ORDER. AFTER CONSIDERING THE ASSESSEES REPLY, HE FURTHER SUMMARIZED THE DEFECTS FOUND IN THE BOOKS OF ACCOUN T AS UNDER:- A. NO RECORD FOR TRUCK WISE RECEIPT OF FREIGHT AND P AYMENTS WERE MAINTAINED. HENCE IT WAS NOT POSSIBLE FOR CORREL ATING THE PROFIT OR LOSS ON A SPECIFIC TRUCK. THE RECORD MAINTAINED BY THE ASSESSEE IS INADEQUATE AND IS NOT A CORRECT METHOD OF DETERMINING THE TRUE PROFITS OF T HE ASSESSEE. B. AS ADMITTED BY THE ASSESSEE HIMSELF, NO LOG BOOK WAS MAINTAINED FOR THE VEHICLES AND WAS HELD TO BE IMPRACTICABLE. THUS, THERE WAS NO WAY TO VERIFY THE DISTANCE TRAVELED BY THE VEHICLES, CONSUMPTION OF D IESEL AND REPAIRING EXPENSES. C. THE ASSESSEE DID NOT PRODUCE ANY RECORD RELATING TO THE DAY TO DAY TRANSPORT ACTIVITY INCLUDING THE VEHICLE S LOADED, UNLOADED AND BOOKED FOR TRANSPORTATION EACH DAY. D. AN AMOUNT OF RS. 2,49,53,835/- WAS DEBITED AS TRI P EXPENSES IN THE P&L ACCOUNT. BUT FOR THE SAID EXPEN SES PROPER VOUCHERS WERE NOT MAINTAINED. THEREFORE, THESE EXPENSES WERE NOT SUBJECT TO VERIFICATION SATISFACTO RILY. E. MANY OTHER EXPENSES WERE PAID IN CASH AND WERE SUPPORTED BY SELF MADE VOUCHERS ONLY AND HENCE NOT AMENABLE FOR VERIFICATION. F. THE RATES FOR SPECIFIC ROUTES WERE NOT FIXED AND IDENTIFIABLE DETAILS WERE NOT RECORDED. ITA 49/JP/2013_ ANSHU JAIN VS. ACIT 4 G. RECORD OF TRUCK WISE ONWARD JOURNEY AND FREIGHT RE CEIVED ON RETURN JOURNEY WERE NOT MAINTAINED. ON THE BASIS OF ABOVE DEFECTS, THE LD ASSESSING OFF ICER REJECTED THE BOOK RESULT U/S 145(3) OF THE ACT. THEREAFTER, HE ES TIMATED THE PROFIT. IT IS HELD THAT NP RATE OF 20.19% IS REASONABLE AS AGA INST 14.70% SHOWN BY THE ASSESSEE ON THE RECEIPT OF RS. 2,79,12,589/- SUBJECT TO ALLOWABILITY OF DEPRECIATION ON THE BASIS OF PAST HI STORY OF THE ASSESSEES CASE. IN PREVIOUS YEAR ALSO, REJECTION OF BOOKS OF ACCOUNT HAD BEEN CONTINUOUSLY UPHELD BY THE APPELLATE AUTHORITY AND THE HONBLE ITAT, ACCEPTED THE NP RATE OF 20.19% AS DECLARED BY THE A SSESSEE FOR A.Y. 2005-06 ON TOTAL RECEIPT OF RS. 2,61,45,250/-. BY R ELYING ON THE ORDER OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE KANSAR A BEARING PVT. LTD. VS ACIT 270 ITR 235 (RAJ. HC), THE ASSESSING OFFICER ESTIMATED THE INCOME BY APPLYING NP RATE OF 20.19% AT RS. 2,79,12 ,589/- 4. BEING AGGRIEVED BY THE ORDER OF THE LEARNED ASSE SSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A), WHO HAD ALLOWED THE APPEAL PARTLY BY OBSERVING AS UNDER:- I HAVE CAREFULLY PERUSED THE ORDER OF THE A.O., TH E SUBMISSIONS OF THE AR AND THE ORDERS OF THE HONBLE ITAT JAIPUR FILED BY THE AR OF THE APPELLANT. IN ASSESSM ENT YEAR ITA 49/JP/2013_ ANSHU JAIN VS. ACIT 5 2007-08, THE HONBLE ITAT JAIPUR VIDE ITS ORDER ITA NO. 237/JP/2007 DATED 03/09/2010 HAS UPHELD THE ORDER O F THE LD. CIT(A) WHEREIN THE REJECTION OF BOOKS OF ACCOUNTS IN THE CASE OF THE ASSESSEE ON SIMILAR DEFECTS HAS BEEN SUSTAIN ED AND A LUMP SUM ADDITION OF RS. 1 LAC HAS BEEN CONFIRMED. THUS, THE FACTS OF THE CASE OF THE APPELLANT ARE COVERED BY T HE FINDING OF THE HONBLE ITAT JAIPUR IN HIS OWN CASE IN THE PREVI OUS ASSESSMENT YEAR. AS THE AR HAS NOT BEEN ABLE TO CON TROVERT THE FINDING OF THE HONBLE ITAT JAIPUR REGARDING TH E REJECTION OF BOOKS OF ACCOUNTS BY BRINGING ANY NEW EVIDENCE OR ARGUMENT, THE REJECTION OF BOOKS OF ACCOUNTS BY INV OKING PROVISIONS OF SECTION U/S 145(3) IS SUSTAINED. REGARDING ESTIMATION OF INCOME, THE HONBLE ITAT JA IPUR HAS HELD THAT THE ASSESSEES OWN CASE IS THE BEST G UIDE FOR ESTIMATING THE INCOME AFTER REJECTION OF THE BOOKS OF ACCOUNTS BY PLACING RELIANCE ON THE HONBLE JURISDICTIONAL H IGH COURT IN THE CASE OF GOTAN LIME KHANIJ UDYOG VS. CIT 256 ITR 2 53. AS PER THE N.P. RATE CHART SUBMITTED BY THE APPELLANT, IT IS SEEN THAT THE TURNOVER HAS DECREASED FROM RS. 3,53,30,51 6/- IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR TO RS. 2,79,1 2,589/- IN THIS ASSESSMENT YEAR WHEREAS THE N.P. RATE SUBJEC T TO DEPRECIATION HAS BEEN CONFIRMED BY THE HONLBE ITAT JAIPUR AT 13.93% HAS INCREASED TO 14.70%. IT IS A GENERALLY A CCEPTED FACT THAT THE NET PROFIT RATE IMPROVES WITH DECLINE IN TURNOVER. THEREFORE, THE N.P. RATE SUBJECT OF DEPRECIATION IS ESTIMATED AT ITA 49/JP/2013_ ANSHU JAIN VS. ACIT 6 18% AS THE TURNOVER HAS DECLINED SUBSTANTIALLY. THUS , THE TRADING ADDITION OF RS. 9,21,045/- IS CONFIRMED. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD A R FOR THE ASSESSEE HAS SUBMITTED THAT THE LD CIT(A) REDUCED TH E N.P. RATE APPLIED BY THE ASSESSING OFFICER @ 20.19% TO 18% WITHOUT ASSI GNING ANY COGENT REASON. ADMITTEDLY FEW DEFECTS ARE THERE IN T HE BOOKS OF THE APPELLANT WHICH ARE BEYOND THE CONTROL OF THE APPELL ANT. THERE ARE VAST VARIATIONS IN THE NP RATE DECLARED BY THE APPELLANT FOR WHICH THERE ARE A LARGE NUMBER OF FACTORS SUCH AS INCREASE IN DIESEL PRICE WITHOUT ANY CORRESPONDING INCREASE IN FREIGHT CHARGES, INCREASE D IN REPAIRING OF THE VEHICLES DUE TO SOME ACCIDENTS AND TIMELY RECESSION IN THE TRANSPORTATION BUSINESS. IN THE YEAR UNDER APPEAL T HE APPELLANT HAD DECLARED A NP RATE OF 14.70% ON A TURNOVER OF RS. 2 .79 CRORES WHICH IS BETTER THAN A RATE OF 13.64% ON A TURNOVER OF RS. 3 .53 CRORES. IN SUCH CIRCUMSTANCES NO ADDITION WAS REQUIRED TO BE MADE. H OWEVER, THE LD CIT(A) REDUCED THE RATE OF 18% MERELY USING HER ESTI MATIONS AND OBSERVING THAT SINCE THE TURNOVER HAS DECREASED THE PROFIT WAS REQUIRED TO BE INCREASED. HE ALSO SUBMITTED THAT IT HAS BEEN HELD BY THE HON BLE RAJASTHAN HIGH COURT IN THE CASE OF KANSARA BEARING P. LTD. V S. ACIT (SUPRA) THAT ITA 49/JP/2013_ ANSHU JAIN VS. ACIT 7 PAST HISTORY IS THE BEST GUIDE FOR ASSESSING INCOME OF THE ASSESSEE. FOR THIS PURPOSE PAST HISTORY MEANS IMMEDIATELY PRECEDI NG YEAR AS ONLY IMMEDIATELY PRECEDING YEAR CAN GIVEN FAIR IDEA ABOU T EXISTING FACTS AND CIRCUMSTANCES. THEREFORE, THE LD A.O. ERRED SERIOUSL Y IN APPLYING PROFIT RATE FOR A.Y. 2005-06 WHILE ASSESSING A CASE FOR THE A.Y. 2008-09 WHEN THE RESULTS FOR NEXT YEAR DECIDED BY THE HIGHER AUT HORITIES WERE AVAILABLE. FURTHER THE LD CIT(A) ALSO ERRED IN APPLY ING A PROFIT RATE OF 18% WHEN IN THE IMMEDIATELY PRECEDING YEAR THE RATE APPLIED BY THIS HONBLE BENCH WAS MERELY 13.93%. SINCE THERE WAS NO C HANGE IN THE FACTS AND CIRCUMSTANCES FOR THE YEAR UNDER APPEAL A S COMPARED TO IMMEDIATELY PRECEDING YEAR NO ADDITION WAS REQUIRED TO BE MADE IN VIEW OF THE FACT THAT THE ASSESSEE HERSELF HAS DECLA RED BETTER PROFIT RATE. HE FURTHER ARGUED THAT IN PAST ALSO, SIMILAR ADDIT IONS WERE MADE BY THE ASSESSING OFFICER, WHICH HAS BEEN DELETED BY THE HONBLE ITAT. IN A.Y. 2005-06, THE ASSESSING OFFICER MADE ADDITIO N OF RS. 12,47,315/- , WHICH HAS BEEN REDUCED BY THE LD CIT(A) AT RS. 5,36 ,905/- AND FINALLY THE HONBLE ITAT HAS DELETED THE ADDITION CONFIRMED BY THE CIT(A). IN A.Y. 2006-07, THE ASSESSING OFFICER APPLIED NP RATE OF 22% WHICH HAS BEEN REDUCED BY THE LD CIT(A) TO 11.89%, WHICH HAS BE EN CONFIRMED BY THE HONBLE ITAT. IN A.Y. 2007-08, THE LD CIT(A) CONF IRMED THE ADDITION ITA 49/JP/2013_ ANSHU JAIN VS. ACIT 8 OF RS. 1 LAC ONLY AS AGAINST THE ADDITION MADE BY T HE ASSESSING OFFICER AT RS. 28,63,325/-, WHICH HAS BEEN CONFIRMED BY THE HONBLE ITAT. THEREFORE, HE PRAYED TO DELETE THE ADDITION CONFIRME D BY THE LD CIT(A). 6. AT THE OUTSET, THE LD. DR SUPPORTED THE ORDER OF THE LEARNED CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE AS SESSEE HIMSELF HAS ACCEPTED THE REJECTION OF BOOK RESULT U/S 145(3) OF THE ACT. IN PAST ALSO, THESE BOOKS RESULTS WERE NOT ACCEPTED BY THE APPELLA TE AUTHORITIES. THE CIT(A) HAS ESTIMATED THE NP RATE @ 18% AFTER CONSID ERING THE HONBLE JURISDICTIONAL HIGH COURTS DECISIONS IN THE CASE O F GOTAN LIME KHANIJ UDYOG VS. CIT (SUPRA), THE ASSESSEES TURNOVER HAVE COME DOME HEAVILY AND THE NP HAS NOT INCREASED IN PROPORTION. THE ASSE SSEE HAS NOT CONTROVERTED THE DEFECTS POINTED OUT BY THE ASSESSI NG OFFICER IN ASSESSMENT ORDER. IT IS A FACT THAT SOME OF THE EXP ENSES WERE NOT VOUCHED FULLY AND PAID IN CASH, ARE NOT VERIFIABLE. IN PAST ALSO, SIMILAR ADDITIONS WERE MADE BY THE ASSESSING OFFICER, WHICH HAS BEEN CONFIRMED BY THE ITAT. THE LD CIT(A) ALSO CONFIRMED TH E ADDITIONS ON THE BASIS OF ITAT BENCH DECISION IN ASSESSEES OWN CA SE, BUT IT IS CLEAR FROM THE COORDINATE BENCH DECISION THAT NOMINAL ADD ITION HAS BEEN ITA 49/JP/2013_ ANSHU JAIN VS. ACIT 9 CONFIRMED BY THE ITAT WHEREAS LD CIT(A) CONFIRMED THE ADDITION AT RS. 9,21,045/- IN THE YEAR UNDER CONSIDERATION ON SAME TURNOVER. THEREFORE, THE ESTIMATION OF INCOME IS HIGHER SIDE. KEEPING IN VIEW THE DEFECTS IN THE BOOKS OF ACCOUNT AND LINE OF BUSINES S, WE CONFIRM THE ADDITION OF RS. 2 LACS IN THE INTEREST OF JUSTICE. 8. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/04/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 17 TH APRIL, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- MANSHU JAIN, JAIPUR 2. IZR;FKHZ @ THE RESPONDENT- ACIT, CIRCLE-1, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 49/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR