Rama Dairy, Bulandshahr V. ACIT, circle, Bulandshahr

ITA 5309/DEL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3823 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 08-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts
• Section: 143(3); 142(1); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC, NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER ITA NO. 5309/DEL/2018 ASSESSMENT YEAR: 2012-13 RAMA DAIRY, BULANDSHAHR, SIYANA ROAD, C/O RAJ KUMAR & ASSOCIATES, CAS, L-7A (LGF), SOUTH EXTENSION, PART-2, NEW DELHI 49 (PAN: AABFR0404Q) VS. ACIT, CIRCLE BULANDSHAHR UTTAR PRADESH (APPELLANT) (RESPONDENT) ORDER THE ASSESSEE HAS FILED THE APPEAL AGAINST THE IMP UGNED ORDER DATED 24.5.2016 PASSED BY LD. CIT(A), GHAZIABAD RE LEVANT TO ASSESSMENT YEAR 2012-13 ON THE FOLLOWING GROUNDS:- 1. THAT UNDER THE FACTS AND CIRCUMSTANCES REJECTION OF BOOKS OF ACCOUNTS, ESTIMATION OF NP RATE AS 1.13% AGAINST DECLARED AT 0.70% AND CONSEQUENTIALLY TRADING ADDITION OF RS. 11,58,540/- IS ILLEGAL, UNWARRANTED AND UNSUSTAINABLE IN LAW AS WELL AS ON MERITS. 2. THAT WITHOUT POINTING OUT ANY DEFECT IN THE AUDITE D BOOKS OF ACCOUNTS MAINTAINED IN THE NORMAL COURSE OF BUSINESS, WHICH ARE SUPPORTED BY PROPER EVIDENCES, THE ACT OF REJECTION OF BOOKS OF ACCOUN TS AND ESTIMATION OF NP IS ILLEGAL AND UNWARRANTED. ASSESSEE BY SH. RAJ KUMAR, CA DEPARTMENT BY SH. S.L. ANURAGI, SR. DR. 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE FILED ITS E-RETURN OF INCOME DECLARING INCOME OF RS. 18,97,310/- AND THE SAME WAS PROCESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961 ( IN SHORT ACT). SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY THROUGH CASS AND NOTICE U/S. 143(2) OF THE ACT WAS ISSUED ON 5.9.2014. FURTHER NOTICE U/S. 142(1) OF THE ACT ALONGWITH QUE STIONNAIRE WAS ISSUED ON 23.1.2015 AND IN RESPONSE TO THE SAME, THE AR OF THE ASSESSEE ATTENDED THE PROCEEDINGS FROM TIME TO TIME AND FILE D THE WRITTEN SUBMISSIONS, SUPPORTING DOCUMENTS, DETAILS AND EXPL ANATIONS. THE ASSESSEE IS A PARTNERSHIP FIRM AND DERIVES INCOME F ROM BUSINESS OF WHOLE SALE TRADING OF MILK, AND THE ASSESSEE FIRM I S NOT MANUFACTURING ANY TIME. DURING THE YEAR UNDER CONSIDERATION. GRO SS RECEIPT WAS DECLARED AT RS. 27,04,28,953/-, GROSS PROFIT AT RS. 52,90,988/- AND NET PROFIT WAS SHOWN AT RS. 18,97,307/-. THE NET INCOME WAS SHOWN AT RS. 18,97,310/-. THE BALANCE SHEET TALLIES AT RS. 5,91, 98,712.51 AND THE BOOKS OF ACCOUNTS WERE AUDITED AS PER PROVISIONS OF SECTION 44AB OF THE ACT AND COPY OF AUDIT REPORT ALONGWITH BALANCE AND P&L ACCOUNT WAS FURNISHED DURING ASSESSMENT PROCEEDINGS AND BOOKS W ERE PRODUCED BEFORE THE AO. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS THE ASSESSEE WAS REQUIRED TO FILE THE DETAILS AND JUSTI FICATION OF LOW NP AND IN COMPLIANCE OF THE SAME THE COUNSEL OF THE ASSESS EE FILED THE DETAILS OF GROSS RECEIPT / TURNOVER, GROSS PROFIT ALOGNWITH CO MPARISON OF THE SME WITH RESULT OF LAST TWO YEARS, DETAILS THEREOF ARE MENTIONED VIDE PARA NO. 3 AT PAGE NO. 2 OF THE IMPUGNED ORDER. AFTER CONSI DERING THE SAME, THE 3 AO OBSERVED THAT SINCE THE NP RATE IN THE YEAR UNDE R CONSIDERATION WAS 0.70% AGAINST 1.11% IN AY 2011-12 AND 1.13% IN AY 2 010-11, SO THE AO ADOPTED NP RATE OF 1.13% OF AY 2010-11, WHICH BR OUGHT AN ADDITION OF RS. 11,58,540/- IN NET PROFIT AND ASSESSED THE INCOME OF THE ASSESSEE AT RS. 30,55,850/-, VIDE ORDER DATED 30. 3.2015 PASSED U/S. 143(3) OF THE ACT. AGAINST THE AFOREMENTIONED ASSE SSMENT ORDER DATED 30.3.2015, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 24.05.2016 HAS DISMISSED THE APPEAL OF THE ASSESSEE BY UPHOLDING THE ACTION OF THE AO. AGGRIEV ED WITH THE IMPUGNED ORDER THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. LD. A.R. FOR THE ASSESSEE HAS STATED THAT LOWER AUTHORITIES ERRED IN REJECTION OF BOOKS OF ACCOUNTS, ESTIMATION OF NP RA TE AS 1.13% AGAINST DECLARED AT 0.70% AND CONSEQUENTIALLY TRADING ADDIT ION OF RS.11,58,540/-. HE FURTHER SUBMITTED THAT AO HAS NOT POINTED OUT AN Y DEFECT IN THE AUDITED BOOKS OF ACCOUNTS MAINTAINED IN THE NORMAL COURSE OF BUSINESS, WHICH ARE SUPPORTED BY PROPER EVIDENCES, THE ACT OF REJECTION OF BOOKS OF ACCOUNTS AND ESTIMATION OF NP IS ILLEGAL AND UNWARR ANTED. IT WAS FURTHER SUBMITTED THAT PROPER BOOKS MAINTAINED, EXAMINED AN D NO DISCREPANCY FOUND AND THE ACCOUNTS ARE AUDITED WITH CLEAN REPOR T. HE FURTHER SUBMITTED THAT LESSER NP RATE THAN EARLIER YEARS CA NNOT BE A REASON FOR REJECTION OF BOOKS AND FOR ESTIMATION. HE FURTHER S UBMITTED THAT EVERY HEAR IS INDEPENDENT. HE FURTHER SUBMITTED THAT AO W AS NOT JUSTIFIED IN 4 ADOPTING THE RESULT OF AY 2010-11 ALSO. IN VIEW OF ABOVE CONTENTIONS, HE RELIED UPON THE FOLLOWING CASE LAWS:- - CIT VS. POONAM RANI 326 ITR 223 (DEL.) - CIT VS. OM OVERSEAS 315 ITR 185 (P&H). - ACIT VS. BUDHALAL & CO. 47 SOT 27 (AHD.) - DCIT VS. VISHWANATH PRASAD GUPTA 137 TTJ 385 TM JABALPUR - CIT VS. LUDHIANA STEEL ROLL MILLS 295 ITR 111 ( P&H) - ALUMINIUM INDUSTRIES (P) LTD. VS. CIT 80 TAXMAN 184 (GAU.) 4. ON THE CONTRARY, LD. DR HEAVILY SUPPORTED THE OR DER OF THE LD. CIT(A) AND SUBMITTED THAT AO HAS REASONABLY ESTIMAT ED THE NP RATE, WHICH DOES NOT NEED ANY INTERFERENCE. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GO NE THROUGH THE ORDERS OF LOWER AUTHORITIES AS WELL AS THE CASE LAWS AND A SSESSEES PAPER BOOK CONTAINING PAGES 1-72 IN WHICH HE HAS ATTACHED THE AUDITED FINANCIAL STATEMENT (AY 2012-13); COMPARATIVE CHART OF GROSS PROFIT & NET PROFIT; REPLY TO AO DATED 23.2.2015; SUBMISSION TO CIT(A) D ATED 13.5.2016; AUDITED FINANCIAL STATEMENT (AY 2010-11) AND AUDITE D FINANCIAL STATEMENT (AY 2011-12). I NOTE THAT AO OBSERVED TH AT SINCE THE NP RATE IN THIS YEAR WAS 0.70% AGAINST 1.11% IN AY 20 11-12 AND 1.13% IN AY 2010-11, HENCE, HE ADOPTED THE NP RATE OF 1.13% OF AY 2010-11, RESULTING ADDITION OF RS. 11,58,540/- IN NET PROFIT AND ALSO REJECTED THE 5 BOOKS OF ACCOUNT. I FIND THAT ASSESSEE HAS MAINTAIN ED PROPER BOOKS AND THE SAME WERE EXAMINED AND NO DISCREPANCY WAS POINT ED OUT BY THE AO. THEREFORE, I FIND CONSIDERABLE COGENCY IN THE CONTE NTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT LESSER NP RATE THAN E ARLIER YEARS CANNOT BE A REASON FOR REJECTION OF BOOKS AND FOR ESTIMATI ON OF NP WITHOUT POINTING OUT ANY DISCREPANCY IN BOOKS AND SUPPORTIN G DOCUMENTS, THEREFORE, THE ESTIMATION ADOPTED BY THE AO IS NOT TENABLE. 5.1 I NOTE THAT HONBLE PUNJAB & HARYANA HIGH COU RT IN THE CASE OF CIT VS. OM OVERSEAS 315 ITR 185 (P&H) HAS OBSERVED THAT WHEN THE BOOKS OF ACCOUNT ARE REGULARLY MAINTAINED AND NO S PECIFIC DEFECT IN THE BOOKS OF ACCOUNT, IS POINTED OUT BY THE AO, THE BOO KS RESULT CANNOT BE REJECTED SIMPLY THERE IS FALL IN GP. 5.2 IT IS ALSO NOTED THAT THE ITAT, JABALPUR IN TH E CASE OF DCIT VS. VISHWANATH PRASAD GUPTA 137 TTJ 385 TM JABALPUR HAS HELD THAT MERE LOW PROFIT, BY ITSELF, CANNOT JUSTIFY AN ADDITION GP RATE DEPENDS ON MANY FACTORS AND SAME CANNOT BE CONSTANT FROM YEAR TO YEAR AO HAS NOT POINTED OUT ANY MISTAKE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE- THUS, THERE WAS NO JUSTIFICATION FOR MAKING THE IMP UGNED ADDITION. 5.3 KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE PRECEDENTS, AS AFORESAID , I AM OF THE CONSIDERED VIEW THAT WITHOUT POINTING OUT ANY DEFEC T IN THE AUDITED BOOKS OF ACCOUNTS MAINTAINED IN THE NORMAL COURSE O F BUSINESS, WHICH 6 ARE SUPPORTED BY PROPER EVIDENCES, THE ACTION OF R EJECTION OF BOOKS OF ACCOUNTS AND ESTIMATION OF NP IS NOT SUSTAINABLE IN THE EYES OF LAW, HENCE, I DIRECT THE AO TO ADOPT NP RATE FOR THE YEA R IN DISPUTE AS DECLARED BY THE ASSESSEE I.E. @0.70% AND RE-COMPUT E THE INCOME OF THE ASSESSEE ACCORDINGLY. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWE D IN THE AFORESAID MANNER. THE DECISION IS PRONOUNCED ON 31-01-2019. SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED: 31-01-2019 SRBHATNAGAR COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI