ITO, Meerut V. M/s. Jain Marble Home Pvt. Ltd., Meerut

ITA 6670/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7035 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 08-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S KASHSYAP
• Assessee Lawyers: SHEODAN SINGH BHADDORIA
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCHES, NEW DELHI (CIRCUIT BENCH AT MEERUT) BEFORE : SHRII.C. SUDHIR, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 6670 /DEL./2014 ASSTT. YEAR:2009 - 10 ITO, WARD - 1(3), MEERUT VS. JAIN MARBLE HOME PVT. LTD., 47, SADAR, KABARI BAZAR, MEERUT PAN:AACCJ1631K (APPELLANT) (RESPONDENT) DATE OF HEARING 16 / 12 /201 5 DATE OF PRONOUNCEMENT 17 /02/2016 ASSESSEE BY: SH. SHEODAN SINGH BHADDORIA, SR. DR REVENUE BY : SH. P. S. KASHSYAP, FCA O R D E R PER PRASHANT MAHARISHI, A. M. 01 . THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A), MEERUT DATED 26.09.2014 ON THE FOLLOWING GROUNDS : 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) WAS JUSTIFIED IN ALLOWING THE APPEAL OF THE ASSESSEE IGNORING THE FACT THAT THE BOOKS OF ACCOUNT HAD BEEN REJECTED BY THE A.O. CONSIDERING THE ADMISSION OF THE ASSESSEE THAT ST OCK REGISTER COULD NOT BE MAINTAINED AND THE ASSESSEE FAILED TO PRODUCE THE WORKING OF VERIFICATION ON THE BASIS OF WHICH THE CLOSING STOCK WAS ARRIVED AT AND DECLARED. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTI FIED IN DELETING THE ADDITION OF RS. 39,59,1337 - THAT HAD BEEN MADE BY THE A.O. BY VIRTUE OF ADOPTION OF A G.P. RATE OF 30% AFTER REJECTING THE BOOKS OF ACCOUNT AS THIS RATE OF G.P. IS HELD TO BE REASONABLE IN THIS TRADE OF THE ASSESSEE, WITHOUT MAKING FUR THER INQUIRES IN THE MATTER AND MECHANICALLY ACCEPTING THE ARGUMENTS OF THE ASSESSEE AND IGNORING THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT RELIED UPON BY THE A.O. 3. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS JUSTIFIED IN DELE TING THE ADDITION OF RS. 4,84,754/ - ON ACCOUNT OF UNVERIFIABLE EXPENSES AS THESE EXPENSES WERE NOT SUPPORTED BY BILLS AND VOUCHERS IN THE ABSENCE OF WHICH THE VERACITY AND CORRECTNESS OF THESE EXPENSES COULD NOT BE ASCERTAINED. 4. THAT THE APPELLANT CRAVE S LEAVE TO ADD, MODIFY AND /OR DELETE ANY GROUND (S) OF APPEAL. 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE CIT(A), MEERUT, MAY BE SET ASIDE AND THAT OF THE AO RESTORED. 2. BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS ENGAGED IN T HE BUSINESS OF TRADING IN MARBLE STONES AND THIS IS THE FIRST YEAR OF ITS BUSINESS. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE FILED ITS RETURN OF INCOME ON 23 RD AUGUST 2010 SHOWING TOTAL INCOME OF RS.3,65,440/ - . DURING THE COURSE OF THE ASSESSMENT PROC EEDINGS THE ASSESSEE WAS ASKED TO PRODUCE BOOKS OF ACCOUNT BEFORE THE AO ALONG WITH STOCK REGISTER. IN RESPONSE IT WAS NOT FILED THE SAME AND ADMITTED THAT IT IS NOT PREPARED IN VIEW OF THE NUMBER OF THE VARIETIES OF STONES DEALT WITH. THE ASSESSEE ALSO DI D NOT FILE THE DETAILS OF VALUATION OF THE CLOSING STOCK SHOWING ITEM AND THE RATES ADOPTED THEREOF. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE BOOKS OF ACCOUNT WERE VERIFIED AND SOME OF THE EXPENSES FOR CHECK ON RANDOM BASIS. ACCORDING TO THE AO THE ASSESSEE COULD NOT PRODUCE SOME OF THE BILLS AND VOUCHERS. DURING THE YEAR THE ASSESSEE HAS TURN OVER OF RS.1.98 CRORES ON WHICH GROSS PROFIT OF RS.19.93 LACS HAS BEEN EARNED AND PROFIT OF RS.3.73 LACS IS SHOWN AND ACCORDINGLY THERE IS MEAGER NET PRFIT OF 1.8% OF THE TURNOVER. FURTHER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS SUMMONS U/S 131 WAS ISSUED TO THE PRINCIPAL OFFICER OF THE COMPANY WHICH REMAINED UNATTENDED. SALES TO THE EXTENT OF MORE THAN 50% IS IN CASH AND THEREFORE THE AO REJECTED THE BOOK S OF ACCOUNTS U/S 145(3) OF THE ACT AND ASSUMED THE GP RATE @ 30% AND THEN THUS THE ADDITION OF RS.3959133/ - WAS MADE. FURTHER AN ADDITION OF RS.484755/ - WAS ALSO MADE ON ACCOUNT OF UNVERIFIABLE EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT. AGAINST THIS THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS). THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) VIDE HIS ORDER DATED 26.09.2014 CONFIRMED THE ACTION OF THE AO IN REJECTING THE BOOKS OF ACCOUNT AND ALSO DELETED TH E ADDITION GP RATE OF 30% OF THE TURNOVER. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HE REJECTED THE STAND OF THE AO IN REJECTION OF THE BOOKS OF ACCOUNT AND CONSEQUENT ESTIMATION OF PROFIT. AGAINST THIS ORDER OF LEARNED COMMISSIONE R OF INCOME - TAX (APPEALS) THE REVENUE IS IN APPEAL BEFORE US. 3. BEFORE US THE LD DR RELIED ON THE ORDER OF THE AO ON BOTH THE GROUNDS OF APPEAL. HE VEHEMENTLY SAID THAT IN ABSENCE OF STOCK REGISTER IT IS NOT SHOWN A CORRECT PICTURE AND THEREFORE THE ADDI TION IS REQUIRED TO BE SUSTAINED. HE FURTHER SUBMITTED THAT THE EXPENSES ARE NOT PROPERLY MAINTAINED WHICH IS DUTY OF THE COMPANY AND THEREFORE DISALLOWANCE HAS BEEN MADE. 4.. THE LD AR SUBMITTED A. MERELY NONE - MAINTAINING OF THE STOCK REGISTER RESULT INTO REJECTION OF THE BOOKS OF ACCOUNT UNLESS THERE IS PATEN DEFECT POINTED OUT BY THE AO. HE FURTHER STATED THAT MERE NONE - MAINTAINING OF STOCK REGISTER THE ASSESSEE IS DEALING WITH ANY NUMEROUS ITEM CA NNOT BE SAID THAT THE BOOKS OF ACCOUNT ARE NOT COMPLETE AND NO PROPER PROFIT DEDUCED THEREOF. HE SUBMITTED THAT THERE IS NO DEFECT IN THE BOOKS OF ACCOUNT. HE FURTHER STATED THAT THE BOOKS OF ACCOUNT OF THE COMPANY ARE AUDITED FROM TIME TO TIME AND ARE MAI NTAINED ON DAY TO DAY BASIS AND NO DEFECT BY THE AUDITORS HAVE BEEN POINTED OUT. HE FURTHER STATED THAT PURCHASE AND SALES OF THE GOODS ARE PROPERLY VOUCHED SUPPORTED BY INDEPENDENT 3 RD PARTY EVIDENCE. HE FURTHER RELIED ON THE PLETHORA CASE LAWS AND SUPPOR TED THE ORDER OF LEARNED COMMISSIONER OF INCOME - TAX (APPEALS). 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS), AND FIND THAT THE ASSESSEE HAS MAINTAINED CASH BOOK LEDGER AND VOUCHERS FOR PURCHASE AND SALES AND EXPENSES AND THIS BEING THE FIRST YEAR EARNED GP RATE OF 10%. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) RELYING ON THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF AWADHESH PRATAP SINGH ABDUL VS. CIT 210 ITR 406 HAS HELD THAT IN ABSENCE OF STOCK REGISTER IN A GIVEN SITUATION MAY NOT BE PER SE LEAD TO THE FACT THAT BOOKS OF ACCOUNT ARE INCOMPLETE. IN ABSENCE OF STOCK REGISTER THE AO IS BOUND TO FIRST DETECT LATENT, PATENT, GLARING DEFECT IN THE BOOKS OF ACCOUN T. IN ABSENCE OF THIS THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HELD THAT AO WAS UNJUSTIFIED IN REJECTING THE BOOKS OF THE ACCOUNT OF THE ASSESSEE AND FURTHER ESTIMATING THE GROSS PROFIT @30%. FURTHERMORE THE LEARNED COMMISSIONER OF INCOME - TAX (APPE ALS) HAS ALSO HELD THAT IN ADOPTING GP RATE AT 30% AO HAS NOT COMPARABLE CASES AND THEREFORE IN ABSENCE OF ANY COMPARABLE CASE AS WELL AS THE SUBSEQUENT ASSESSMENT IN CASE OF THE ASSESSEE RATE OF 30% CANNOT BE UPHELD. FURTHERMORE THE LD AO HAS ACCEPTED THE SALE OF THE ASSESSEE AS WELL AS THE PURCHASE OF THE ASSESSEE WHICH ARE ALSO CORROBORATED WITH THE FACTS OF SALES TAX RETURN OF THE ASSESSEE AND SALES TAX DEPARTMENT HAS ACCEPTED THE PURCHASE AND SALES OF THE ASSESSEE. IN VIEW OF THIS FINDING OF THE LD DR COULD NOT DRAW US TO ANY INFIRMITY IN THE ORDER OF LEARNED COMMISSIONER OF INCOME - TAX (APPEALS). 6. THEREFORE WE ARE OF THE VIEW THAT LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS RIGHTLY DELETED THE ADDITION OF RS.3959133/ - ON REJECTION OF THE BOOKS OF ACCOUNT AND DELETION OF ADDITION OF RS.484754 ON ACCOUNT OF UNVERIFIABLE EXPENSES. WE CONFIRM THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS). 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 .02.2016 . - SD/ - - SD/ - ( I.C. SUDHIR ) ( PRASHANT MAHARISHI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17 . 02 .2015 * AJAY KUMAR KEOT COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT (A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI