The Income Tax Officer, Hoshiarpur V. Sh. Gulshan Batra, Prop., Hoshiarpur

ITA 65/ASR/2014

• Counselvise Citation: 6520914 RSA 2014
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 05-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.65(ASR)/2014 ASSESSMENT YEAR:2007-08 PAN :AANPB6454C INCOME TAX OFFICER, VS. SH.GULSHAN BATRA, PROP. WARD-1, HOSHIARPUR. M/S. BATRA BROTHERS, HOSHIARPUR. (APPELLANT) (RESPONDENT) APPELLANT BY:SMT. RATINDER KAUR, DR RESPONDENT BY: SH.SURINDER MAHAJAN, CA DATE OF HEARING:10/03/2015 DATE OF PRONOUNCEMENT: 17/03/2015 ORDER PER B.P. JAIN, AM: THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER O F THE CIT(A), JALANDHAR, DATED 29.11.2013 FOR THE ASSESSMENT YEAR 2007-08. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE TRADING AD DITION OF RS.15,41,409/-. THE LD. CIT(A) FAILED TO APPRECIAT E THAT IN ADDITION TO THE FACT OF NON MAINTENANCE OF STOCK RE GISTER, THE AO HAS ALSO NOTICED SPECIFIC DISCREPANCIES IN TRADI NG ACCOUNT ITA NO.65(ASR)/2014 2 WITH REGARD TO THE REMITTANCE/CESSATION OF CREDIT L IABILITIES OUTSTANDING AGAINST THE PARTIES WHICH WERE REMITTED DURING THE YEAR AND THE SAME BEING PROFIT U/S 41(1) OF THE INC OME TAX ACT, 1961 WERE ALSO INCLUDED IN THE AMOUNT OF TOTAL DISC OUNT. 2. THAT, IT IS PRAYED THAT THE ORDER OF THE LD. CIT (A) BE SET-ASIDE AND THAT OF THE AO RESTORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PROPRIETORY CONCERN UNDER THE NAME AND STYLE OF M/S. BATRA BROT HERS WHICH DEALS IN THE TRADING OF ELECTRONIC ITEMS SUCH AS TV, WASHING MAC HINE AND REFRIGERATOR ETC., ON WHOLESALE AND RETAIL BASIS. THE AO COMPARE D THE TRADING RESULTS OF THE IMPUGNED YEAR WITH THAT OF IMMEDIATE PRECEDING YEAR AND OBSERVED THAT THE ASSESSEE IS NOT MAINTAINING PROPER RECORDS AS W ELL AS QUANTITATIVE AND QUALITATIVE DETAILS IN RESPECT OF OPENING STOCK AN D CLOSING STOCK AND OBSERVED THAT THE GROSS PROFIT DECLARED BY THE ASS ESSEE IS ON THE LOWER SIDE AS COMPARED TO THE PRECEDING YEAR. ACCORDINGLY, THE AO REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE BY INVOKING THE PROVISIO NS OF SECTION 145(3) OF THE ACT. THE AO APPLIED GROSS PROFIT RATE OF 1.5% LOSS ON WHOLESALES AND 9.80% ON RETAIL SALES IN ADDITION TO THE TRADE DIS COUNT AND PROFIT U/S 41(1) OF THE ACT, KEEPING INTO CONSIDERATION, THE AVERAGE RA TE OF PROFIT OR LOSS DECLARED BY THE ASSESSEE AT 1.41% (LOSS ON WHOLESAL ES) AND PROFIT AT 9.86% ( ON RETAIL SALES). ITA NO.65(ASR)/2014 3 3. THE LD. CIT(A) DELETED THE ADDITION. 4. THE LD. DR RELIED UPON THE ORDER OF THE ASSESSIN G OFFICER. 5. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, RELIED UPON THE SUBMISSIONS MADE BEFORE THE AO AND THE LD. CIT(A) A ND THE ORDER OF THE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE AO APPLIED PROVISIONS OF SECTION 145(3) OF THE ACT, ON SPECIFIC DISCREPANCIES IN THE TRADING ACCOUNT, WITH REGARD T O THE REMITTANCE/CESSATION OF CREDIT LIABILITIES OUTSTANDING AGAINST THE PART IES, WHICH WERE REMITTED DURING THE YEAR AND THE SAME WERE TREATED AS PROFIT U/S 41(1) WHICH WAS INCLUDED IN THE AMOUNT OF TOTAL DISCOUNT. IN FACT, CESSATION OF LIABILITY CANNOT BE TERMED AS A SPECIFIC DISCREPANCY IN THE BOOKS OF ACCOUNT, WHEREAS, THE ASSESSEE HAS PASSED ENTRY OF THE CREDIT LIABILITY S TANDING IN THE BOOKS OF ACCOUNT AND TAKEN TO THE TRADING AND PROFIT & LOSS ACCOUNT. THEREFORE, REJECTING THE BOOKS OF ACCOUNT ON THIS ACCOUNT IS M IS-CONCEIVED AND THEREFORE, GROUND OF THE REVENUE TO THAT EXTENT IS REJECTED. 7. AS REGARDS, NON-MAINTENANCE OF STOCK REGISTER, T HOUGH THE ASSESSEE HAS NOT MAINTAINED DAY TO DAY STOCK REGISTER BUT AT THE SAME TIME, THE ASSESSEE HAS SUBMITTED QUANTITATIVE DETAILS OF THE OPENING STOCK , PURCHASE, ITA NO.65(ASR)/2014 4 SALE AND CLOSING STOCK ALONGWITH VALUATION AND NO D EFECT HAS BEEN POINTED OUT BY THE AO AND THE PURCHASE AND SALE BILLS WERE ON RECORD AND NO DEFECTS IN THE PURCHASES OR SALES, OPENING STOCK OR CLOSING STOCK HAS BEEN POINTED OUT. ACCORDINGLY, THE AO IS ALSO NOT JUSTIFIED IN R EJECTING THE BOOKS OF ACCOUNT ON ACCOUNT OF NON-MAINTENANCE OF STOCK REG ISTER WHEN THE ASSESSEE SUBMITTED THE QUALITATIVE DETAILS IN WHICH NO DEFEC T HAS BEEN POINTED OUT. 8. AS REGARDS THE ESTIMATION OF NET PROFIT, THE ASS ESSEE HIMSELF HAS DECLARED AVERAGE RATE OF PROFIT & LOSS AT 1.41% (L OSS ON WHOLESALES) & 9.86% ( ON RETAIL SALES) AND THE AO HIMSELF HAS APP LIED G.P. RATE OF 1.50% (LOSS ON WHOLESALES) AND 9.80 ( ON RETAIL SALES). BUT IN ADDITION, THE AO HAS INCLUDED TRADE DISCOUNT AND TREATED PROFIT U/S 41( 1), WHICH IN FACT, IS NOT A MISTAKE BY THE ASSESSEE AND CANNOT BE INCLUDED AS PART OF THE PROFIT & LOSS ACCOUNT. IN THE FACTS AND CIRCUMSTANCES, IF TRADE DISCOUNT IS TAKEN OUT OF CALCULATIONS MADE BY THE AO, THE RESULT DECLARED BY THE ASSESSEE ALMOST MATCH WITH THE GP RATE COMPUTED BY THE AO. IN THE F ACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION SO MADE BY THE AO HAS RI GHTLY BEEN DELETED BY THE LD. CIT(A) AND WE FIND NO INFIRMITY IN HIS ORDER. ACCORDINGLY, GROUNDS NO. 1, 2 & 3 OF THE REVENUE ARE DISMISSED. ITA NO.65(ASR)/2014 5 9. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.65(ASR)/2014 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17TH MARCH, 2015. SD/- SD/- (A.D.JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17TH MARCH, 2015 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH.GULSHAN BATRA, PROP. M/S. BATRA BRO THERS, JALANDHAR ROAD, HOSHIARPUR. 2. THE ITO WARD-1, HOSHIARPUR. 3. THE CIT(A), JALANDHAR. 4. THE CIT, JALANDHAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.