M/s M.R. Kalia Industries, Jalandhar V. The Addl. Commissioner of Income Tax, Jalandhar

ITA 641/ASR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9595 (ITAT-AMRITSAR)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 11-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKAR
• Assessee Lawyers: NAVNEET SETHI
• Keywords: Rejection of books of accounts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR (CAMP AT JALANDHAR) BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO.641(ASR)/2015 ASSESSMENT YEAR: 2008-09 M/S M.R. KALIA INDUSTRIES CHAW IMAN NASIR, JALANDHAR. PAN:AABFM2484M VS. ADDL. CIT RANGE-III, JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. NAVNEET SETHI (CA) RESPONDENT BY: SH. BHAWANI SHANKAR (DR) DATE OF HEARING: 27.06.2016 DATE OF PRONO UNCEMENT: 12.08.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORD ER OF LEARNED CIT(A), JALANDHAR DATED 27.10.2015 FOR ASST. YEAR:2 008-09. 2. THE ASSESSEE HAS TAKEN SEVER GROUNDS OF APPEAL, HOWEVER, CRUX OF GRIEVANCE OF ASSESSEE IS THE ACTION OF LEARNED CIT( A), BY WHICH HE HAD CONFIRMED THE TRADING ADDITION OF RS.10,00,000/- M ADE BY ASSESSING OFFICER AFTER REJECTION OF BOOKS OF ACCOUNTS OF THE ASSESSEE. 3. THE BRIEF FACTS OF THE CASE AS NOTED IN THE ASSE SSMENT ORDER ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFAC TURING OF INDUSTRIAL CHAINS, SPARES AND ENGINEERING GOODS. THE CASE OF T HE ASSESSEE WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE ITA NO.641 (ASR)/2015 ASST. YEA R: 2008-09 2 ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD DE CLARED A GROSS PROFIT RATE OF 16.12% AS COMPARED TO GROSS PROFIT RATE OF 16.10% DECLARED IN THE PRECEDING YEAR. HE FURTHER OBSERVED THAT ASSESS EE WAS NOT MAINTAINING STOCK DETAILS REGARDING CONSUMPTION OF MATERIAL AND FINISHED PRODUCTS AND IN VIEW OF THE ABOVE, THE ASSESSEE WAS CONFRONTED TO FURNISH MONTH WISE OPENING STOCK, PURCHASE SALE ETC . 4. IN REPLY THE ASSESSEE SUBMITTED THAT VALUE OF CL OSING STOCK IS DETERMINING AS PER THE GROSS PROFIT RATE FIXED BY T HE PARTNERS. IN VIEW OF THE ABOVE AND IN VIEW OF THE COMPARISON OF TRADING RESULTS OF M/S SATISH STEEL WORKS WHICH HAD DECLARED THE G.P RATE 17.34%, THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE REJECTED AND ADHOC ADD ITION OF RS.10,00,000/- WAS MADE. 5. THE ASSESSEE FILED APPEAL BEFORE LEARNED CIT(A). THE LEARNED CIT(A) ALSO DISMISSED THE APPEAL OF THE ASSESSEE HOLDING T HAT ASSESSING OFFICER HAD RIGHTLY REJECTED THE BOOKS OF ACCOUNT AND BY FU RTHER HOLDING THAT ASSESSING OFFICER HAD MADE THE ADDITION AFTER COMPA RING THE BOOK RESULT OF THE ASSESSEE WITH THAT OF COMPARABLE CASE AND AS SESSEE HAD FAILED TO DISTINGUISH THE NATURE OF TRADE OF THE CONCERN WITH WHOM TRADING RESULTS WERE COMPARED. 6. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 7. AT THE OUTSET, IT WAS SUBMITTED THAT ASSESSING O FFICER HAD MADE THE ADDITION ARBITRARILY WITHOUT POINTING OUT ANY S PECIFIC DEFECT IN THE ITA NO.641 (ASR)/2015 ASST. YEA R: 2008-09 3 BOOKS OF ACCOUNTS OF THE ASSESSEE. IT WAS FURTHER S UBMITTED THAT TRADING RESULTS OF M/S SATISH STEEL WORKS WERE NOT CONFRONT ED TO ASSESSEE. FURTHER IT WAS ARGUED THAT THE TRADING RESULTS OF T HE ASSESSEE WERE COMPARABLE WITH THE PRECEDING YEARS RESULTS IN WHIC H G.P RATE OF 16.10% WAS DECLARED. THE LEARNED AR FURTHER SUBMITTED THAT ASSESSEE WAS MAINTAINING ALL THE BOOKS OF ACCOUNT AND WAS CONSIS TENTLY FOLLOWING THE METHOD OF ACCOUNTING AND THERE IS NO ADVERSE FINDIN G REGARDING METHOD OF ACCOUNTING AND NO IRREGULARITY IN THE ACCOUNTS W AS POINTED OUT. 8. THE LEARNED DR, ON THE OTHER HAND, HEAVILY PLACE D HIS RELIANCE ON THE ORDER OF AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSING O FFICER HAD NOT FOUND ANY DISCREPANCY IN THE BOOKS OF ACCOUNT OTHER THAN NON MAINTAINING OF STOCK RECORDS. FROM THE NATURE OF ACTIVITIES OF THE ASSESSEE, WE FIND THAT MAINTENANCE OF DAY TO DAY STOCK RECORDS IS QUITE DI FFERENT IN THIS CASE AND SIMILARLY IT IS NOT POSSIBLE TO MAINTAIN CONSUM PTION RECORDS ON DAY TO DAY BASIS DUE TO THE NATURE OF BUSINESS. THE ASS ESSEE HAS DECLARED G.P RATE OF 16.12% AS COMPARED TO G.P RATE 16.10%. WE FURTHER FIND THAT ASSESSEE DURING THE PROCEEDINGS BEFORE LEARNED CIT( A) HAD SUBMITTED THAT ASSESSEE WAS FOLLOWING SAME SYSTEM OF ACCOUNTI NG AS WAS BEING FOLLOWED IN EARLIER YEAR AND WE FURTHER FIND THAT T HERE WAS NO SPECIFIC DEFECT POINTED OUT BY ASSESSING OFFICER IN THE BOOK S OF ACCOUNT. ITA NO.641 (ASR)/2015 ASST. YEA R: 2008-09 4 MOREOVER, WE FIND THAT THE TRADING RESULTS OF M/S S ATISH STEEL WORKS WERE NOT CONFRONTED TO THE ASSESSEE AND ASSESSEE WA S NOT PROVIDED OPPORTUNITY TO REBUT THE SAME. THE FINDINGS OF LEAR NED CIT(A) THAT TRADING RESULTS OF M/S SATISH STEEL WORKS WERE CONF RONTED TO ASSESSEE IS NOT CORRECT. IN VIEW OF THE ABOVE, WE HOLD THAT THE ADDITION SUSTAINED BY LEARNED CIT(A) IS NOT JUSTIFIED, THEREFORE, WE DELE TE THE SAME. 10. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE A SSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 .08.2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCO UNTANT MEMBER DATED:12.08.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER