Parveen Mittal, Patiala V. JCIT, Patiala

ITA 497/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77180 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 30-06-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 03-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gross profit estimation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.497 /CHD/2013 ASSESSMENT YEAR : 2008-09 PARVEEN MITTAL, VS. THE J.C.I.T., PROP. PATIALA TIMBER STORE, PATIALA RANGE, GALI NO.4, HIRA BAGH, PATIALA. PATIALA. PAN: ADWPM8883C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAKESH CAJLA RESPONDENT BY : SHRI AKHILESH GUPTA, DR DATE OF HEARING : 30.06.2014 DATE OF PRONOUNCEMENT : 15.07.2014 O R D E R PER SUSHMA CHOWLA, J.M. : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX(APPEALS), PATIALA DATED 20.03.2013 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL : 1. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOM E TAX APPEAL (S) PATIALA IS BAD IN LAW AND AGAINST FACTS OF THE CASE . 2. THAT THE LD. COMMISSIONER OF INCOME TAX APPEAL ( S) PATIALA IS NOT JUSTIFIED IN UPHOLDING THE REDETECTION O F BOOKS OF ACCOUNTS OF THE APPELLANT. 3. THAT THE LD. COMMISSIONER OF INCOME TAX APPEAL ( S) PATIALA IS NOT JUSTIFIED IN UPHOLDING THE G.P. RATE @ 10% A GAINST THE G.P. RATE OF 7% DECLARED BY THE APPELLANT. 4. THAT THE LD. COMMISSIONER OF INCOME TAX APPEAL ( S) PATIALA IS NOT JUSTIFIED IN DETERMINING THE HOUSEHOLD EXPENDITURE @ RS.20000 /- PER MONTH 2 AGGREGATING TO RS.240000/- AGAINST THE HOUSEHOLD EX PENDITURE OF RS.132000/- SHOWN BY THE APPELLANT. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR DELE TE ANY OF THE GROUND (S) OF APPEAL BEFORE IT IS FINALLY HEARD. 3. THE FIRST ISSUE RAISED BY THE ASSESSEE VIDE GROU ND NOS.1 TO 3 IS AGAINST REJECTION OF BOOKS OF ACCOUNT AND ESTIMATIO N OF GP RATE @ 10% AS AGAINST 7% DECLARED BY THE ASSESSEE. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E DURING THE ASSESSMENT PROCEEDINGS PRODUCED CASH BOOK, LEDGER, PURCHASE & SALE BILLS. HOWEVER, THE ASSESSEE FAILED TO PRODUCE ST OCK REGISTER STATING THAT THE SAME WAS NOT MAINTAINED. FURTHER NO QUAN TITATIVE DETAILS OF OPENING AND CLOSING STOCK WERE FURNISHED. THE ASS ESSEE WAS SHOW CAUSED AS TO WHY HIS BOOKS OF ACCOUNT SHOULD NOT BE REJECTED, IN VIEW OF THE FACTS THAT THE ASSESSEE HAD FAILED TO FURNIS H QUANTITATIVE DETAILS OF OPENING & CLOSING STOCK AND ALSO NON PRODUCTION OF STOCK REGISTER. IN REPLY IT WAS SUBMITTED BY THE ASSESSEE THAT HE D ID NOT MAINTAIN ANY STOCK REGISTER AND VALUATION OF CLOSING STOCK WAS D ONE ON MEASUREMENT BASIS WHICH WAS FOR INTERNAL PURPOSES AND NO SEPARA TE INVENTORY WAS PREPARED. IN VIEW THEREOF, THE BOOKS OF ACCOUNT O F THE ASSESSEE WERE REJECTED. THE ASSESSING OFFICER FURTHER NOTED THA T THE PURCHASE RATE OF THE TIMBER PURCHASED FROM VARIOUS PARTIES VARIED F ROM RS.215/- TO 385/- PER CFT, WHEREAS THE SALE RATES VARIED FROM RS.270/ - TO RS.525/-, AS AGAINST WHICH THE ASSESSEE HAD SHOWN GP RATE OF 7%. THE ASSESSEE HAD FAILED TO FURNISH ANY REASON FOR CHARGING DIFFERENT RATES ON THE SALE OF TIMBER. THE ASSESSING OFFICER IN VIEW OF UNVERIFIA BLE SALES AND NON FURNISHING OF STOCK DETAILS REJECTED THE BOOKS OF A CCOUNT AND APPLIED NET PROFIT RATE OF 15% AND MADE ADDITION OF RS.8,08,835 /-. FURTHER ADDITION WAS MADE ON ACCOUNT OF LOW HOUSEHOLD EXPEN SES AT RS.2,20,700/-. HOWEVER, NO SEPARATE ADDITION WAS M ADE ON THIS ACCOUNT 3 AS THE SAME WAS TELESCOPICALLY COVERED IN THE ADDIT ION MADE ON ACCOUNT OF UNDISCLOSED GROSS PROFIT. 5. THE CIT (APPEALS) DIRECTED THE ASSESSING OFFICER TO COMPUTE THE INCOME BY ESTIMATING GROSS PROFIT @ 10%. THE CIT (APPEALS) UPHELD THE ASSESSMENT OF HOUSEHOLD EXPENSES IN THE HANDS O F THE ASSESSEE @ 20,000/- PER MONTH. HOWEVER, NO SEPARATE ADDITION WAS DIRECTED TO BE MADE AS THE SAME WAS TELESCOPICALLY COVERED BY THE ADDITION MADE ON ACCOUNT OF GROSS PROFIT. 6. THE ASSESSEE BY WAY OF GROUND NOS.1 TO 3 IS IN A PPEAL AGAINST ESTIMATION OF GP RATE @ 10%. THE ASSESSEE IS ALS O AGGRIEVED BY DETERMINATION OF HOUSEHOLD EXPENSES AT RS.20,000/- PER MONTH I.E. RS.2,40,000/-, AS AGAINST HOUSEHOLD EXPENSES OF RS. 1,20,000/- SHOWN BY THE ASSESSEE. 7. SHRI RAKESH CAJLA APPEARED FOR THE ASSESSEE AND SHRI AKHILESH GUPTA PUT IN APPEARANCE ON BEHALF OF THE REVENUE AN D PUT FORWARD THEIR CONTENTIONS. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE FIRST ISSUE RAISED IS AGAINST THE REJECTION OF BOOK S OF ACCOUNT AND ESTIMATION OF GROSS PROFIT IN THE HANDS OF THE ASSE SSEE. IN THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES, THOUGH THE ASSESSEE HAD PRODUCED BOOKS OF ACCOUNT ALONGWITH PURCHASE & SALE VOUCHERS BUT H AD FAILED TO PRODUCE EVEN BASIC DETAILS OF THE STOCK I.E. THE QU ANTITATIVE DETAILS OF BOTH OPENING AND CLOSING STOCK. THE EXPLANATION O F THE ASSESSEE IN THIS REGARD CANNOT BE RELIED UPON AND WE UPHOLD THE ORDE RS OF THE AUTHORITIES BELOW IN REJECTING THE BOOKS OF ACCOUNT FOR THE YEA R UNDER CONSIDERATION. AFTER REJECTION OF BOOKS OF ACCOU NT THE NEXT STEP IS TO ESTIMATE GP RATE TO BE APPLIED TO THE SALES IN ORDE R TO DETERMINE THE 4 INCOME OF THE ASSESSEE. THE ASSESSEE DURING THE Y EAR UNDER CONSIDERATION HAD DECLARED GP RATE OF 7% AGAINST WH ICH THE ASSESSING OFFICER HAD APPLIED GP RATE OF 15% TO DETERMINE THE INCOME OF THE ASSESSEE AND THE CIT (APPEALS) HAD REDUCED THE SAME TO 10%. IN THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES WHERE THE A SSESSEE WAS ENGAGED IN THE OF DIFFERENT SIZES AND QUALITIES, WE ESTIMAT E THE GP RATE @ 9% TO BE APPLIED IN ORDER TO COMPUTE THE INCOME OF THE AS SESSEE. 9. IN RESPECT OF OTHER ADDITION ON ACCOUNT OF HOUSE HOLD EXPENSES WHEREIN THE EXPENDITURE HAD BEEN ESTIMATED AT RS.20 ,000/-, WE ARE IN CONFORMITY WITH THE ORDERS OF THE AUTHORITIES BELOW . KEEPING IN MIND THE CONSTITUTION OF THE FAMILY OF THE ASSESSEE I.E. SELF, HIS WIFE, HIS PARENTS AND ONE FIVE YEARS OLD SON, THE HOUSEHOLD E XPENSES MADE BY ALL THE FAMILY MEMBERS AT RS.1,30,000/- IS ON THE LOWER SIDE AND IN THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES WE UPHOLD T HE ESTIMATION OF HOUSEHOLD EXPENSES @ RS.20,000/- PER MONTH. HOWEV ER, NO SEPARATE ADDITION IS BEING MADE IN VIEW OF OUR UPHOLDING THE ADDITION ON ACCOUNT OF LOW GROSS PROFIT IN THE HANDS OF THE ASSESSEE AN D THE ADDITION ON ACCOUNT OF LOW HOUSEHOLD EXPENSES IS TELESCOPED WIT H THE ADDITION MADE OF GP RATE. THE GROUND OF APPEAL NOS.1 TO 3 ARE P ARTLY ALLOWED. AND GROUND NO.4 IS DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF JULY, 2014. (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 15 TH JULY, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 5