Jyotsanaben J. Tanna, Ahmedabad V. The Income Tax Officer, Circle-1(2)(2), Ahmedabad

ITA 510/AHD/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4576 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 01-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIVA SEWAK
• Assessee Lawyers: SNEHAL K THAKKAR
• Keywords: Gross profit estimation
• Section: 143(3); 145

Judgement Text

ITA NO.510/AHD/2017 ASSESSMENT YEAR: 2012-13 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD SMC BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM] ITA NO.510/AHD/2017 ASSESSMENT YEAR: 2012-13 JYOTSANABEN J. TANNA, ... ......... APPELLANT 12-A, ADITYA BUNGALOW, THALTEJ, OPP. SAL HOSPITAL, AHMEDABAD. [PAN: ACCPT 9794 J] VS. INCOME TAX OFFICER, WARD 1(2)(2), AHMEDABAD. ....................... RESPONDENT APPEARANCES BY: SNEHAL K. THAKKAR FOR THE APPELLANT SHIVASEWAK FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 09.10.2018 DATE OF PRONOUNCING THE ORDER : 09.10.2018 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HA S CHALLENGED CORRECTNESS OF THE ORDER DATED 08.12.2016, PASSED BY THE LEARNED CIT(A ), IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2012-13. 2. THE GRIEVANCES RAISED IN THE APPEAL ARE AS FOLLO WS :- (1) LEARNED A.O. ERRED IN MAKING ADDITION OF RS.3,6 1,005/- ON THE BASIS OF LOWER GROSS PROFIT MARGIN. (2) LEARNED A.O. ERRED IN DISALLOWING VARIOUS EXPEN SES FOR RS.1,19,275/- 3. SO FAR AS THE FIRST GRIEVANCE I.E. GRIEVANCE AGA INST LD. CIT(A) UPHOLDING ADDITION OF RS.3,61,005/- IN RESPECT OF LOWER GROSS PROFIT M ARGIN IS CONCERNED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE BEFORE ME IS THE SOLE PROPRIETOR OF A CONCERN ITA NO.510/AHD/2017 ASSESSMENT YEAR: 2012-13 PAGE 2 OF 4 WHICH IS ENGAGED IN THE BUSINESS OF ELECTRICAL GOOD S. DURING THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT IN TH E CURRENT YEAR THE GROSS PROFIT MARGIN OF THE ASSESSEE HAS FALLEN BY 0.32%. THE AS SESSEE WAS ASKED TO EXPLAIN THE REASON FOR THE SAME BUT THE ASSESSING OFFICER WAS N OT SATISFIED WITH THE REASONS ASSIGNED BY THE ASSESSEE. IT WAS NOTED THAT WHILE THE ASSESSEE MAINTAINED STOCK REGISTER THE SAME IS NOT PROPERLY MAINTAINED AND IT WAS FOR THIS REASON THE BOOK RESULTS WERE REJECTED BY INVOKING PROVISIONS OF SECTION 145 OF THE ACT AND GROSS PROFIT MARGIN OF THE ASSESSEE WAS ESTIMATED AT 4.22% AS AGAINST T HE GROSS PROFIT MARGIN OF 3.9% DISCLOSED BY THE ASSESSEE. AGGRIEVED, ASSESSEE CAR RIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). IT WAS SUBMITTED BY THE ASSESSEE T HAT THE FALL IN GROSS PROFIT MARGIN IS ONLY MARGINAL. IN ANY CASE, THE GROSS PROFIT RATE CAN NEVER REMAIN STATIC AS IT IS AFFECTED BY NUMBER OF FACTORS INCLUDING ECONOMY AND NON-ECON OMY FACTORS. IT WAS CONTENDED THAT SUCH MINOR FALL IN THE GROSS PROFIT CANNOT BE REASON ENOUGH FOR REJECTING THE BOOKS OF ACCOUNTS. THE ASSESSEE FURTHER POINTED OUT THAT ALTHOUGH THE ASSESSING OFFICER HAS INTER ALIA OBSERVED THAT THOUGH, THE ASSESSEE MAI NTAINS STOCK REGISTER, THE SAME WAS NOT FOUND TO BE PROPERLY MAINTAINED, THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC MISTAKES. THE ASSESSEE HAS ALSO ACCEPTED THAT AFTER SEVERAL HEARINGS, THE ASSESSING OFFICER OFFERED TO ACCEPT THE GROSS PROFI T DIFFERENCE AND ASSURED THAT THERE WILL BE NO FURTHER ADDITION OR PENALTY. IT WAS UND ER THESE CIRCUMSTANCES AND TIRED OF APPEARING BEFORE THE ASSESSING OFFICER AGAIN AND AG AIN THAT THE ASSESSEE ACCEPTED THE OFFER IN GOOD FAITH. THIS CONDUCT CANNOT BE, ACCOR DING TO THE LD. COUNSEL, BEFORE THE CIT(A) REASONS ENOUGH FOR IMPUGNED ADDITION. LD. C IT(A) DID NOT YIELD THESE SUBMISSIONS AND IN A VERY SCHOLARLY ANALYSIS OBSERV ED THAT WHEN THE ASSESSEE VOLUNTARILY ACCEPTED THE ADDITION, IT CANNOT GIVE R ISE TO FURTHER APPEAL. THE IMPUGNED ADDITION WAS THUS CONFIRMED BY THE LD. CIT(A). THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 5. I FIND SUBSTANCE IN THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE. AS HE RIGHTLY SUBMITS THAT THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC DEFECT IN THE BOOKS OF ACCOUNT EXCEPT MAKING SOME SWEEPING GENERALISATI ON AND VAGUE STATEMENT THAT THE ITA NO.510/AHD/2017 ASSESSMENT YEAR: 2012-13 PAGE 3 OF 4 STOCK REGISTER NOT HAVING BEEN PROPERLY MAINTAINED. IN ANY CASE, WHAT HAS BEEN STATED TO BE REASON FOR GROSS PROFIT ADDITION IS FALL IN T HE GROSS PROFIT RATE VIS-A-VIS PREVIOUS YEAR WITHOUT ANY OTHER SPECIFIC REASONS. THE VERY APPROACH SO ADOPTED BY THE ASSESSING OFFICER IS DEVOID OF LEGALLY SUSTAINABLE BASIS. THE BUSINESS HAS BEEN NEVER SO STATIC SO AS TO ENSURE SAME G.P. RATE FROM YEAR TO YEAR PARTICULARLY WHEN THE ASSESSEE IS DEALING IN SUCH PRODUCTS AS ELECTRIC GO ODS WHERE GROSS PROFIT MARGIN NOT ONLY VARIES FROM ITEM TO ITEM BUT FROM SEASON TO SE ASON. I AM, THEREFORE, OF THE CONSIDERED VIEW THAT THE IMPUGNED ADDITION THUS NOT DESERVES TO BE SUSTAINED ON MERITS. 6. AS REGARDS THE STAND OF THE DEPARTMENTAL REPRESE NTATIVE THAT THE ASSESSEE HIMSELF HAS AGREED TO THE IMPUGNED ADDITION AND THU S PREVENTED THE ASSESSING OFFICER FROM FURTHER ENQUIRIES, I DO NOT SEE ANY MERIT IN T HIS PLEA EITHER. THE MERE FACT THAT THE ASSESSEE HAS AGREED TO THE SUGGESTION OF THE ASSESS ING OFFICER CANNOT CONSTITUTE ESTOPPEL AGAINST HIS RIGHTS TO CHALLENGE THE SAME O N MERITS. IN ANY CASE, THE AMOUNT INVOLVED BEING SMALL AND IN VIEW OF THIS DISCUSSION AND BEARING IN MIND ENTIRETY OF THE CASE, I DEEM IT FIT AND PROPER TO DELETE THE IMPUGN ED ADDITION OF RS.3,61,005/- IN RESPECT OF LOW GROSS PROFIT MARGIN. 7. GROUND NO.1 IS THUS ALLOWED. 8. AS REGARDS SECOND GROUND OF APPEAL, IT IS SUFFIC IENT TO TAKE NOTE OF THE FACT THAT THE IMPUGNED DISALLOWANCE HAS BEEN MADE OUT OF SEVE RAL EXPENSES SUCH AS TELEPHONE EXPENSES, VEHICLE EXPENSES MISC. EXPENSES AND OFFIC E EXPENSES. AFTER SOME DISCUSSIONS, LD. COUNSEL FOR THE ASSESSEE FAIRLY SU BMITTED THAT HE DOES NOT WISH TO PURSUE THIS ISSUE FURTHER BUT PRAYED THAT THIS FACT SHOULD NOT BE PUT AGAINST HIM IN THE PENALTY PROCEEDINGS OR IN THE SUBSEQUENT PROCEEDING S. ITA NO.510/AHD/2017 ASSESSMENT YEAR: 2012-13 PAGE 4 OF 4 9. WHILE I TAKE ON RECORD THE STAND SO TAKEN BY THE LD. COUNSEL, I SEE NO NEED TO ADJUDICATE THIS MATTER ON MERITS. THIS GROUND OF A PPEAL IS THUS DISMISSED AS NOT PRESSED. 10. IN THE RESULT, APPEAL IS PARTLY ALLOWED. ORDER DICTATED AND PRONOUNCED IN THE OPEN COURT IMMEDIATELY AFTER HEARING ON THE 9 TH OCTOBER, 2018. SD/- PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: AHMEDABAD, THE 9 TH DAY OF OCTOBER, 2018. PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD