M/s. Beat All Sports, Jalandhar V. The Addl. Commissioner of Income-tax, Jalandhar

ITA 621/ASR/2011

• Counselvise Citation: 62120914 RSA 2011
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-09-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 23-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: J S BHASIN
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.621 (ASR)/2011 ASSESSMENT YEAR:2006-07 PAN :AACFB9777H M/S. BEAT ALL SPORTS, VS. THE ADDL. COMMR. OF INCO ME-TAX, JALANDHAR. RANGE-II, JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. J.S. BHASIN, ADV. RESPONDENT BY: SH. TARSEM LAL, DR DATE OF HEARING:06/09/2012 DATE OF PRONOUNCEMENT:11/09/2012 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), JALANDHAR, DATED 05.10.2011 FOR THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN UPHOLDING THE TRADING ADDITION OF RS. 3 LACS, EVEN WHEN THE L D. AO HAD NEITHER INVOKED SECTION 145(3) NOR ASSESSED THE INC OME IN THE MANNER AS PRESCRIBED UNDER SECTION 144. ITA NO.621(ASR)/2011 2 2. THAT THE LD. CIT(A) WHILE CONFIRMING THE ADDITIO N OF RS. 3 LACS HAS ERRED IN LAW IN CONFIRMING THE REJECTION OF TRA DING RESULTS BY THE AO, WHICH IS NOT THE MANDATE OF SECTION 145(3). 3. THAT THE CIT(A) COULD NOT AVAIL OF THE ASSESSEE S CONDITIONAL OFFER MADE BEFORE AO OF RS. 3 LACS TO CONFIRM ADDIT ION TO THE EXTENT OF SAID AMOUNT, WHEN IT WAS NOT ACCEPTED BY THE AO. ALTERNATIVELY, THE LD. CIT(A) OUGHT TO HAVE ALLOWED IMMUNITY FROM PENALTY U/S 271(1)(C) AS SOUGHT FOR BEFORE THE AO. 4. THAT THE LD. CIT(A) WAS ALSO NOT JUSTIFIED IN SU STAINING THE DISALLOWANCE OF RS.22,250/- OUT OF FOREIGN TRAVELI NG, CONTRARY TO TWO DECISIONS OF JURISDICTIONAL HIGH COURT IN 29 6 ITR 324 (P&H) AND 302 ITR 246 (P&H), LAYING DOWN THAT NO FU RTHER DISALLOWANCES COULD BE MADE WHERE THE INCOME HAD BE EN ESTIMATED AFTER REJECTION OF BOOKS. 5. THAT THE IMPUGNED ORDER, TO THE EXTENT DISPUTED HEREINABOVE, IS AGAINST THE LAW AND FACTS OF THE CASE. 3. THE BRIEF FACTS IN GROUNDS NO. 1 TO 3 ARE THAT T HE ASSESSEE IS NOT MAINTAINING STOCK RECORD AND THEREFORE, THE AO AFTE R GIVING SHOW CAUSE NOTICE TO THE ASSESSEE AND AFTER CONSIDERING THE EX PLANATION OF THE ASSESSEE ADDED 0.5% OF THE TURNOVER I.E. RS.4.50 LAKHS TO TH E INCOME OF THE ASSESSEE AFTER REJECTING BOOKS OF ACCOUNT. 4. THE LD. CIT(A) SUSTAINED THE ADDITION OF RS. 3 L AKHS AND ALLOWED RELIEF OF RS.1.50 LAKHS. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE H AS NOT MAINTAINED STOCK ITA NO.621(ASR)/2011 3 RECORD AND HAS SUBMITTED BECAUSE OF NUMEROUS ITEMS , IT IS NOT POSSIBLE TO MAINTAIN STOCK RECORD. THE EXPLANATION OF THE ASSE SSEE CANNOT BE ACCEPTED IN THE ABSENCE OF ANY EVIDENCE ON RECORD THAT THE S TOCK REGISTER CANNOT BE MAINTAINED BECAUSE OF THE NUMEROUS ITEMS. THE DETAI LS OF OPENING STOCK WERE ALSO NOT BROUGHT ON RECORD, MAY BE THE EXPLANA TION GIVEN THAT THE SAME HAS BEEN MISPLACED. AS REGARDS THE CONSISTENCY, THE AO IS NOT BOUND TO ACCEPT THE SYSTEM OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE WHERE CORRECTNESS HAD NOT BEEN QUESTIONED IN THE PAST. T HERE IS NO ESTOPPEL IN THESE MATTERS AND VALUATION OF STOCK IS AN INTEGRAL PART OF THE METHOD OF ACCOUNTING. THESE VIEWS ARE SUPPORTED BY THE DECISI ON OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. BRITISH PAINTS INDIA LTD. (1991) 188 ITR 44,56 (SC). THEREFORE, THE CASES RELIED UPON BY THE LD. COUNSEL BEFORE THE AO AND THE LD. CIT(A) AND BEFORE US CAN NOT HEL P THE ASSESSEE. THEREFORE, THE BOOKS OF ACCOUNT HAS RIGHTLY BEEN R EJECTED BY THE AO. 5.1. AS REGARDS THE ESTIMATION OF INCOME, THE EXPLA NATION OF THE ASSESSEE IS FOUND TO BE SATISFACTORY THAT GP RATE DURING THE YE AR AND IN THE PRECEDING YEAR HAS LITTLE VARIATION AND ALSO IN THE IDENTICAL CASES, THE GP RATE IS ALMOST THE SAME. THE AO HAS NOT BROUGHT ANY COMPARABLE CA SE OR HAS NOT GIVEN ANY BASIS OF ESTIMATION OF INCOME. THE LD. CIT(A) H AS ALSO NOT BROUGHT ON ITA NO.621(ASR)/2011 4 RECORD ANY BASIS FOR SUSTENANCE OF TRADING ADDITION . THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, SINCE THE BOOKS OF A CCOUNT OF THE ASSESSEE HAVE BEEN REJECTED AND CLOSING STOCK IS BEING VALUE D ON ESTIMATION BASIS, THERE IS EVERY POSSIBILITY OF LEAKAGE OF THE REVENU E. IT WILL BE IN THE INTEREST OF JUSTICE, IF AN ADDITION OF RS. 1 LAKH IS SUSTAIN ED AND AN ADDITION OF RS. 2 LAKHS IS DELETED. THE AO IS DIRECTED ACCORDINGLY TO ALLOW RELIEF OF RS. 2 LAKHS FROM THE ORDER OF THE LD. CIT(A). THUS, GROUN DS NO. 1 TO 3 ARE PARTLY ALLOWED. 6. AS REGARDS GROUND NO.4 OF THE ASSESSEE, THE AO M ADE AN ADDITION OF RS.45,000/- ON ACCOUNT OF UNSUPPORTED VOUCHERS WITH RESPECT TO THE FOREIGN TRAVELING EXPENSES. THE LD. CIT(A) SUSTAINED THE AD DITION AT 10% OF THE EXPENDITURE CLAIMED BY THE ASSESSEE VIDE PARA 4.1 O F HIS ORDER. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE H AD NOT FURNISHED ANY SUPPORTING EVIDENCE IN RESPECT OF EXPENDITURE OF RS .1,22,445/- INCURRED IN FOREIGN CURRENCY. THE AO DISALLOWED 20% OF THE SAME . THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE G IVEN BEFORE THE A.O. AND BEFORE HIM HAS RIGHTLY DIRECTED THE A.O. TO LIMIT T HE DISALLOWANCE TO 10% OF ITA NO.621(ASR)/2011 5 THE EXPENDITURE CLAIMED AND WE FIND NO INFIRMITY IN HIS ORDER. THUS, GROUND NO.4 OF THE ASSESSEE IS DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.621(ASR)/2011 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH SEPTEMBER, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11TH SEPTEMBER, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. BEAT ALL SPORTS, JALANDHAR. 2. THE ADDL. CIT, R-II, JALANDHAR. 3. THE CIT(A), JLR 4. THE CIT, JLR 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.