EXIM KARGO KARE, MUMBAI V. ITO 12(1)(1), MUMBAI

ITA 5134/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70652 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 26-06-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 04-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS JOTHILAKSHMI NAYAK
• Keywords: Rejection of books of accounts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH, MUMBAI , BEFORE SHRI R.K.GUPTA, JM & SHRI N.K.BILLAIYA , AM ITA NO. 5134 / MUM/ 20 1 1 ( ASSESSMENT YEAR S : 200 7 - 0 8 ) M/S EXIM KARGO KARE, IDEAL TRADE CENTRE, 138, 2 ND FLOOR, PLOT NO. 64, SECTOR 11, CBD BELAPUR, NAVI MUMBAI - 400 614 VS. ITO 12(1)(1) , MUMBAI PAN/GIR NO. : A A VFE 0787 F ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. BHUPENDRA SHAH /REVENUE BY : MRS. JOTHILAKSHMI NAYAK DATE OF HEARING : 26 TH JUNE, 201 3 DATE OF PR ONOUNCEMENT : 7 TH AUGUST ,2013 O R D E R PER SHRI R.K. GUPTA J.M. : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LEARNED CIT(A) - 23 , MUMBAI FOR ASSESSMENT YEAR 2007 - 0 8 . 2 . THE ASSESSEE IS OBJECTING IN CONFIRMING THE ESTIM ATED INCOME OF RS. 6,96,448/ - COMPUTED BY THE AO AT THE RATE OF 5% NET PROFIT ON GROSS RECEIPT OF RS.2, 39,20,840/ - AND CONFIRMING THE ADDITION OF RS. 94,84,133/ - UNDER SECTION 41(1) OF THE ACT. 3 . AS PER THE ORDER OF THE CIT(A) , THE ASSESSEE WAS REQUIRED T O FILE COPY OF THE PARTNERSHIP DEED, COPY OF BANK STATEMENT OF BHARAT CO - OP. BANK AND DEUSTCHE BANK, LOAN ACCOUNT STATEMENT OF ICICI AND KOTAK ITA NO. 5134 / 11 2 MAHINDRA CAR LOAN, COPY OF BALANCE AND PROFIT & LOSS ACCOUNT FOR THE ASSESSMENT YEARS 2004 - 05, 2005 - 06 & 2006 - 07 . HOWEVER, THE ASSESSEE DID NOT FURNISH COPY OF PROFIT AND LOSS ACCOUNT, BALANCE SHEET AND COMPUTATION OF INCOME FOR THE RELEVANT ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2007 - 08. THEREFORE, THE AO REJECTED THE BOOKS OF ACCOUNTS AND ESTIMATED THE PROFIT AT THE RATE OF 5% NET PROFIT ON GROSS RECEIPTS BY WHICH THE INCOME OF THE ASSESSEE WAS ARRIVED AT RS. 6,96,448/ - .THEREAFTER THE AO FOUND THAT THE ASSESSEE HAS NOT PRODUCED ITS BOOKS OF ACCOUNT, NOR FURNISHED ITS AUDIT REPORT, NOR ANY LIST OF SUNDRY CREDITO RS, SUNDRY DEBTORS, ETC. THEREFORE RESORTING THE SECTION 41(1), THE AO MADE AN ADDITION OF RS. 94,84,133/ - BY FINDING OUT THAT THIS MUCH AMOUNT IS OUTSTANDING ON ACCOUNT OF SUNDRY CREDITORS. 4 . LEARNED CIT(A) HAS CONFIRMED THE ACTION OF THE AO. N OW, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 5 . LEARNED COUNSEL OF THE ASSESSEE STATED THAT THOUGH THE PROPER BOOKS AND ACCOUNTS WERE NOT MAINTAINED, THEREFORE, BOOKS OF ACCOUNTS REJECTED BY THE AO CAN BE UPHELD, HOWEVER, N ET PROFIT APPLIED BY THE AO, IS NOT JUSTIFIED. 6 . ON THE OTHER HAND, LEARNED DR PLACED RELIANCE ON THE ORDER OF AO AND CIT(A) . ITA NO. 5134 / 11 3 7 . AFTER CONSIDERING THE ORDER OF THE AO AND CIT(A) , WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE AO IN REJECTING THE BOOKS OF ACCOUNT. THEREFORE, T HE REJECTION OF BOOKS OF ACCOUNTS IS UPHELD. WE FURTHER NOTED THAT THE ASSESSEE DID NOT MAINTAIN PROPER VOUCHERS ETC. AND, THEREFORE, NO RECOURSE WAS LEFT WITH THE AO EXCEPT APPLYING THE PROFIT ON THE BASIS OF BEST JUDGMENT. IN IMMEDIATELY PRECEDING YEAR, THE TURN OVER OF THE ASSESSEE ON WHICH THE PROFIT WAS SHOWN AT 3.37% , WHEREAS IN THE YEAR UNDER CONSIDERATION THE AO APPLIED 5%. IN OUR VIEW, THE NET PROFIT RATE APPLIED BY THE AO IS NOT EXORBITANT. THEREFORE, WE CONFIRM THE APPLICATION OF NP RATE OF 5% ON THE FACTS OF THE PRESENT CASE. THIS GROUND OF THE ASSESSEE FAILS. 8 . IN RESPECT TO ADDITION MADE UNDER SECTION 41(1), IT WAS STATED THAT ONCE THE NET PROFIT HAS BEEN APPLIED THEN NO FURTHER ADDITION CAN BE MADE ON ACCOUNT OF ANY EXPENSES OR ON ACCOUNT OF TRADE CREDITOR ETC. IT WAS FURTHER SUBMITTED THAT EVEN ON MERIT THE PROVISION S OF SECTION 41(1) ARE NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE AS THE LIABILITY SHOWN BY THE ASSESSEE IS NOT CEASED TO EXIST. 9 . ON THE OTHER HAND, LEARNED DR PLACED RE LIANCE ON THE ORDER OF AO & CIT(A) . 10 . AFTER CONSIDERING THE ORDER OF AO AND SUBMISSION OF THE COUNSEL OF THE ASSESSEE, WE FOUND THAT THE ASSESSEE DESERVES TO SUCCEED IN THIS GROUND. FIRSTLY, ONCE THE AO HAS APPLIED THE NET PROFIT RATE THEN NO ITA NO. 5134 / 11 4 FURTHER ADDITION CAN BE MADE AS HELD BY THE HON BLE ALLAHABAD HIGH COURT IN THE CASE OF C IT VS. BANWARI LAL BANSHIDHAR , REPORTED IN (1998) 229 I TR 229 (ALL) . EVEN ON MERIT, WE NOTED THAT HOW THE LIABILITY ON ACCOUNT OF SUNDRY CREDITOR IS CEASED TO EXIST IS NOT B ORNE OUT FROM THE FACTS OF THE CASE. THEREFORE, FOR THIS REASON ALSO, THE APPLICATION OF PROVISION OF SECTION 41 (1) WERE NOT JUSTIFIED. IN VIEW THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE ALLOW THIS GROUND OF THE ASSESSEE BY DELETING THE IMPUGNED AD DITION MADE. 11 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF AUG. 2013 . SD/ - ( ) ( N.K.BILLAIYA ) SD/ - ( ) ( R.K.GUPTA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 07/08 /2013 . /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( ASSTT. REGISTRA R) / ITAT, MUMBAI