Shri Swatantra Jain Central Trading Co., New Delhi V. ITO, New Delhi

ITA 561/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58643 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 31-01-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 02-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S MOHANTY
• Keywords: Rejection of books of accounts

Judgement Text

ITA NO. 561/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 561/DEL/2011 A.Y. : 2004-05 SHRI SWATANTRA JAIN CENTRAL TRADING CO., D-138, 1 ST FLOOR, EAST OF KAILASH, NEW DELHI (PAN : VS. INCOME TAX OFFICER, WARD 29(1), NEW DELHI (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSESSEE BY : SH. K. SAMPATH, ADVOCATE DEPARTMENT BY : S. MOHANTY, D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 26.12. 2010 PERTAINING TO ASSESSMENT YEAR 2004-05. 2. THE GROUNDS RAISED READ AS UNDER:- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE AUTHORITIES BELOW ERRED IN : (I) ESTIMATING THE GROSS PROFIT FROM BUSINESS AT ` 5,29,500/- AGAINST THE GROSS LOSS AMOUNTING TO ` 84,79,962/-; (II) TREATING THE NET AGRICULTURAL INCOME IN A SUM OF ` 4,09,271/- AS INCOME FROM OTHER SOURCES ITA NO. 561/DEL/2011 2 AS AGAINST AGRICULTURAL INCOME DECLARED BY THE ASSESSEE; IT IS PRAYED THAT ALL THE ABOVE ACTIONS BEING MOST ARBITRARY, ERRONEOUS AND UNLAWFUL, MUST BE QUASHED. 3. APROPOS GROUND OF ESTIMATION OF GROSS PROFIT:- THE ASSESSING OFFICER NOTED IN HIS ORDER THERE W AS ALLEGATIONS AGAINST THE ASSESSEE OF UNDER INVOICING AND AFTER E XAMINING THE ACCOUNTS OF THE ASSESSEE, THE ASSESSING OFFICER HA S REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND HAS ESTIMATED THE TO TAL SALES TURNOVER OF ` 1,50,00,000/- AS AGAINST THE DECLARED SALE TU RNOVER OF THE ASSESSEE OF ` 89,94,640/-. THE ASSESSING OFFICER HAS ESTIMATED THE GP OF THE LAST YEAR @ 3.53% AND THUS ESTIMATED THE INCOME OF ` 5,29,500/- ON THE ESTIMATED TURNOVER OF ` 1,50,00 ,000/-. SO THE ASSESSING OFFICER HAS REJECTED THE CLAIM OF LOSS OF (-) ` 84,79,960/- AND HAS IN ITS PLACE ESTIMATED THE INCOME OF ` 5,29,500 /-. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE ISSUE. HE OBSERVED THAT THERE WAS CONSIDERABLE MERIT IN THE SUBMISSION OF THE ASSESSEE THAT THE ASSESSING OFFICER HAS IGNORED THE AUDITED BOOKS OF ACCOUNTS AND HAS MADE THE ESTIMATE OF SALES TURNOVER OF ` 1,50,00,000/ - AS AGAINST THE SALES TURNOVER OF ` 89,94,640/- AS DECLARED BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS. LD. COMMISSIONER OF INCOME TAX (A PPEALS) OBSERVED THAT IT HAS BEEN IGNORED BY THE ASSESSING OFFICER THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE AUDITED U/S. 44AB AND NO ASSESSEE, BEING A PRUDENT BUSINESSMAN WOULD VOLUNTA RILY SUFFER SUCH A HUGE BUSINESS LOSS WHICH ACTUALLY ERODES THE CAPI TAL OF THE ASSESSEE WHICH IS THE BACKBONE OF ANY BUSINESSMAN. LD. COM MISSIONER OF ITA NO. 561/DEL/2011 3 INCOME TAX (APPEALS) FURTHER OBSERVED THAT IN THE REMAND REPORT ALSO ASSESSING OFFICER HAS TRIED TO DEFEND THE ORDER OF THE ASSESSING OFFICER WITHOUT BRINGING ANY MATERIAL TO SUPPORT THE WILD E STIMATE OF SALES OF ` 1,50,00,000/- AGAINST THE DECLARED SALES OF THE ASS ESSEE OF ` 89,94,640/- AND ALSO FOR IGNORING THE CLAIM OF EXP ENDITURE OF ` 5,32,194/- UNDER THE HEAD INTEREST PAYMENT AND ` 4, 15,655/- UNDER THE HEAD ADMINISTRATIVE EXPENSES. LD. COMMISSIONER OF INC OME TAX (APPEALS) FURTHER OBSERVED THAT HE WAS OF THE VIEW THAT THERE IS NO BASIS FOR THE ESTIMATE OF SALES TURNOVER OF ` 1,50, 00,000/- MADE BY THE ASSESSING OFFICER. HOWEVER, LD. COMMISSIONER OF INC OME TAX (APPEALS) CONFIRMED THE ESTIMATE OF GP INCOME @3.53% AT ` 5,29,500/-. BUT AT THE SAME TIME HE HELD THA T THE LEGITIMATE CLAIM OF EXPENSES OF THE ASSESSEE IS TO BE ALLOWED. HENC E, HE DIRECTED TO ALLOW THE LEGITIMATE CLAIM OF EXPENDITURE OF ` 5,32, 194/- UNDER THE HEAD INTEREST AND THE ADMINISTRATIVE EXPENSES OF ` 4 ,15,655/- AGAINST THE ESTIMATED INCOME OF ` 5,29,500/-. 5. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT ASSESSING OFFICER HAS REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE. ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY COGENT MATERIAL ON THE BASIS OF WHICH THE BOOKS WERE LIABLE TO BE REJECTED. THE BOOKS WERE DULY AUDITED U/S 44AB AND NO MATERIAL DISCREPANCY WAS NOTED BY T HE ASSESSING OFFICER. JUST BECAUSE THE ASSESSEE HAS SUFFERED LO SS, THIS CANNOT BECOME THE REASON FOR REJECTION OF BOOKS OF ACCOUNT. LD. COMMISSIONER OF INCOME TAX (APPEALS) DESPITE ACCEPTIN G THAT ASSESSING OFFICER HAS WRONGLY ESTIMATED THE SALES T URNOVER, HAS ITA NO. 561/DEL/2011 4 CONFIRMED THE ESTIMATE PROFIT BY THE ASSESSING OFFICER. IN OUR CONSIDERED OPINION, ON THE FACTS OF THE CIRCUMSTANC ES OF THE CASE, THERE WAS NO REASON TO REJECT THE ASSESSEES BOOKS O F ACCOUNTS. UNDER THE CIRCUMSTANCES, WE SET ASIDE THE ORDERS OF THE A UTHORITIES BELOW AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 7. APROPOS AGRICULTURE INCOME :- ASSESSEE HAD DECLARED GROSS AGRICULTURE INCOME OF ` 6,85,370/- AND AFTER CLAIMING THE EXPENDITURE OF ` 2,76,099/-, THE ASSESSEE HAD DECLARED THE NET AGRICULTURE INCOME OF ` 4,09,271/- . THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF THE ASSESSEE AN D HAS ASSESSED THE ENTIRE GROSS AMOUNT OF ` 6,85,370/- WITHOUT ALLOWING THE CLAIM OF THE EXPENDITURE OF ` 2,76,099/-. ASSESSING OFFICER HA S MADE THE ADDITION ON THE GROUND THAT THE ASSESSEE IN THE A.Y. 2003- 04 HAD SURRENDERED THE AGRICULTURE INCOME OF ` 9,14,706/-. 8. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE ASSESSING OFFICER IS NOT JU STIFIED TO ASSESS THE GROSS AGRICULTURE INCOME OF THE ASSESSEE, WHICH THE ASSESSEE IS ACTUALLY CLAIMED OF ` 4,09,271/-. ACCORDINGLY, HE CONFIRMED THE ADDITION TO THE EXTENT OF ` 4,09,271/-. 9. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE US. 10. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT THERE IS NO REASON GIVEN BY THE AUTHORITIES BELOW TO REJECT THE ASSESSE ES CLAIM OF AGRICULTURE INCOME. LD. COUNSEL OF THE ASSESSEE H AS SUBMITTED BEFORE US THE FARD GIRDWARI AND JAMA BANDI IN THIS REGARD, WHICH SUPPORT THE ASSESSEES CLAIM. JUST BECAUSE THE ASSESSEE HAS SU RRENDERED CERTAIN ITA NO. 561/DEL/2011 5 INCOME IN THE PREVIOUS YEAR IT SHALL NOT BECOME THE REASON FOR REJECTION OF CLAIM OF AGRICULTURE INCOME IN THE CURRENT YEAR. THE CLAIM OF THE AGRICULTURE INCOME HAS BEEN REJECTED WITHOUT BRING ING ANY COGENT MATERIAL ON RECORD. HENCE, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSE E. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/2/2012. SD/- SD/- [ [[ [RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 10/2/2012 SRB SRB SRB SRBHAT HAT HAT HATNAGAR NAGAR NAGAR NAGAR COPY COPY COPY COPY FORWARDED TO: FORWARDED TO: FORWARDED TO: FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES