JAIPUR BOTIQUE CARPET, Jaipur V. ACIT, Jaipur

ITA 642/JPR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5455 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 07-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PURSHOTTAM KASHYAP CIT DR DHK
• Assessee Lawyers: H M SINGHVI
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 642/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 M/S. JAIPUR BOTIQUE CARPET BEHIND GOLIMAR GARDEN AMER ROAD, JAIPUR CUKE VS. THE ACIT CIRCLE- 5 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAAFJ 9988 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI H.M. SINGHVI JKTLO DH VKSJ LS@ REVENUE BY:SHRI PURSHOTTAM KASHYAP, ADDL CIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 10/02/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 17 /02/2016 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LD. CIT(A)-2, JAIPUR DATED 18-05-2015 FOR THE ASSESSME NT YEAR 2007-08 RAISING THEREIN FOLLOWING GROUND:- THAT THE LD. CIT(A) ERRED IN CONFIRMING THE APPLI CATION OF PROVISION OF SECTION 145(3) AND THEREBY SUSTAINING THE GROSS PROFIT RATE OF 35% AS AGAINST 33.35% WITHOUT POINTING OUT ANY DEFECT. THE ADDITION SUSTAINED BY LD. CIT(A) BE DELETED. ITA NO. 642/JP/2015 M/S. JAIPUR BOTIQUE CARPET VS. ACIT , CIRCLE- 5, JA IPUR . 2 2.1 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE HAS NOT PRESSED THE ISSUE AS TO REJECTION OF BOOKS OF ACCO UNT U/S 145(3) OF THE ACT WHICH IS DISMISSED BEING NOT PRESSED. 3.1 THE OTHER LIMB OF THE ISSUE IS REGARDING SUSTAI NING THE GROSS PROFIT RATE OF 35% AS AGAINST 33.35% SHOWN BY THE ASSESSEE WHEREIN THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE AO HAS G IVEN CONTRADICTORY OBSERVATION ABOUT THE STOCK REGISTER INASMUCH AS AT ONE PLACE IT IS MENTIONED THAT THE ASSESSEE IS NOT MAINTAINING ANY STOCK REGISTER WHEREAS IT HAS BEEN HELD THAT QUANTITATIVE AND QUALITATIVE STOCK REGISTER IS NOT MAINTAINED. THE LD. AR OF THE ASSESSEE CONTENDS THA T IT IS IMPOSSIBLE TO MAINTAIN QUALITATIVE AND QUANTITATIVE STOCK REGISTE R IN ASSESSEE'S INDUSTRY AS THERE ARE VARIOUS COMPONENTS AND EVERY CARPET DI FFERS FROM OTHER CARPETS AND THERE CANNOT BE UNIFORM PRICING OF HAND MADE ITEM. HOWEVER, THE AO APPLIED THE GROSS PROFIT RATE OF 38.90% AS A GAINST 33.38% SHOWN BY THE ASSESSEE. 3.2 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL BEFORE THE LD. CIT(A) WHO ESTIMATED THE GROSS PROFIT RATE AT 35%. 3.3 THE LD. AR OF THE ASSESSEE FURTHER CONTENDS THA T THE LD. CIT(A) HAS HIMSELF OBSERVED AS UNDER:- 2.3 (A). THE APPELLANT HAS FURNISHED QUANTITATIVE TALLY OF WOOLEN CARPETS AND SILK CARPE TS, ITA NO. 642/JP/2015 M/S. JAIPUR BOTIQUE CARPET VS. ACIT , CIRCLE- 5, JA IPUR . 3 SIZEWISE, FOR THE ENTIRE YEAR AND A SIZEWISE, QUANT ITATIVE BREAK UP OF OPENING STOCK AND CLOSING STOCK. THIS DOES NOT CONTAIN QUALITATIVE DETAILS. THE APPELLANT HAS DENI ED HAVING EVER ADMITTED TO NOT MAINTAINING STOCK REGISTER. IN FACT, THE SUBMISSION OF THE ASSESSEE (REPRODUCED ON PAGE 2 OF THE ORDER U/S 143(3) STATES THAT STOCK RECORDS HAVE BEE N MAINTAINED, ON A DAY TO DAY BASIS. THEREFORE, IT IS SEEN THAT WHILE QUANTITATIVE RECORDS HAVE BEEN MAINTAINED, TH EY DO NOT CONTAIN ANY DETAILS OF QUALITY (EXCEPT SIZE) LIKE K NOTS PER SQUARE INCH WHICH IS THE MAIN DETERMINANT OF THE PR ICE OF CARPETS. THUS THE TRADING RESULTS OF THE ASSESSEE ARE NEARLY MATCHING AND EXACT EARNING OF GROSS PROFIT RATE IS NOT PRESCRIBED BY L AW. THE ASSESSEE IS AN EXPORTER WHICH IS BASED ON VARIOUS REGULATORY PROVI SIONS. THE ADDITION CONFIRMED BY THE LD. CIT(A) IS UNJUSTIFIED WHICH MA Y BE DELETED. 3.4 THE LD. DR RELIED ON THE ORDER OF THE LD. CIT(A ). 3.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. I FIND MERIT IN THE ARGUMENTS OF THE LD. AR THAT THE LD. CIT(A) HIMSELF HAS ADMITTED THAT DETAILS OF STO CKS ARE MAINTAINED AND PRODUCED BY THE ASSESSEE. IN MY CONSIDERED VIEW THE EXACT EARNING OF GROSS PROFIT AND MAINTENANCE OF QUALITATIVE AND QUA NTITATIVE STOCK OF EACH AND EVERY ITEM OF CARPET IS IMPOSSIBLE TO BE MAINTA INED. THE ASSESSEE CANNOT BE ASKED TO MAINTAIN THE DETAILS WHICH ARE I MPOSSIBLE TO MAINTAIN. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, THERE IS NO JUSTIFICATION IN ITA NO. 642/JP/2015 M/S. JAIPUR BOTIQUE CARPET VS. ACIT , CIRCLE- 5, JA IPUR . 4 RETAINING THE PART OF THE ADDITION BY THE LD. CIT(A ) WHICH IS DELETED. THUS THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 4.0 IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 / 02/ 2016 SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 17/02/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. JAIPUR BOTIQUE CARPET, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE-5, JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 642/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR