OM PRAKASH GOYAL, Jaipur V. ITO, Jaipur

ITA 71/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99396 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 23-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA CIT DHK
• Assessee Lawyers: MANISH AGARWAL
• Keywords: Rule of consistency

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 IH-DS-CALY] YS[KK LNL; DS LE{K BEFORE: SHRI P.K. BANSAL, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 71/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09. SHRI OM PRAKASH GOYAL, PROP. M/S. ANIL TRADERS, KATLA PUROHIT JI, JAIPUR., CUKE VS. THE INCOME - TAX OFFICER WARD 1(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR/ NO.: ACIPG 2981 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL, CA JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BHATEJA, ADDL. CIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03/11/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 4/11/2015 VKNS'K@ ORDER PER P.K. BANSAL, A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT (A) DATED 20.11.2012. 2. THE GROUND NO. 1 RELATES TO THE APPLICATION OF P ROVISIONS OF SECTION 145(3) AND CONSEQUENTLY ESTIMATING OF THE NET PROFIT @ 2.3% AS SUSTAINED BY THE LD. CIT (A). 3. I HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONS IDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. I NOTED THAT THE AO HAS REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 145(3) BY GIVING THE PROPER AND SUFFICIENT REASONS. THIS IS AN UNDISPUT ED FACT THAT THE ASSESSEE HAS NOT MAINTAINED THE STOCK REGISTER AND NOT EVEN STOCK RE CONCILIATION, SO THAT IT MAY BE PROVED THAT THE ASSESSEE HAS DULY RECONCILED THE ST OCK WITH THE PURCHASE AND SALES AND THERE IS NO DEFICIENCY IN THE STOCK. THE METHOD AD OPTED BY THE ASSESSEE OF JUST 2 ITA NO. 71/JP/2013 A.Y. 2008-09. SHRI OM PRAKASH GOYAL VS. ITO, JAIPUR. PHYSICALLY VERIFYING THE STOCK WITHOUT RECONCILING THE SAME EVEN THOUGH ASSESSEE DID NOT MAINTAIN STOCK REGISTER, IN MY VIEW IS NOT PROP ER METHOD OF ACCOUNTING. THE ASSESSEE HAS EXPLAINED THE DEFICIENCY. EVEN THE ASSE SSEE COULD NOT PRODUCE THE BILLS AND GET VERIFIED TO THE AO THE RATE OR ITEM IN RESP ECT OF THE PURCHASE AND SALES. UNDER THESE FACTS, I DO NOT FIND ANY ILLEGALITY AND IN TH E ORDER THE AO INVOKING THE PROVISIONS OF SECTION 145(3). 4. NOW THE QUESTION ARISEN WHEN THE BOOKS OF ACCOUN TS STAND REJECTED, THE ASSESSMENT HAS TO BE MADE BY DETERMINING THE INCOME ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS DECLARED THE NET PROFIT @ 1.95% BUT THE LD. CIT (A) SUSTAINED THE SAME TO 2.3%, EVEN THOUGH THE ASS ESSEE HAS GIVEN COMPARATIVE DATA FOR THE LAST THREE PRECEDING YEARS. UNDER THE FACTS AND CIRCUMSTANCES, I AM OF THE VIEW THAT A NET PROFIT RATE @ 2.12% SHALL BE REASONABLE. I ACCORDINGLY DIRECT THE AO TO ESTIMATE THE NET PROFIT @ 2.12% AND ADDITION TO THI S EXTENT STANDS SUSTAINED. THUS THE GROUND NO. 1 IS PARTLY ALLOWED. 5. GROUND NO. 2 RELATES TO ASSESSING THE INTEREST I NCOME AMOUNTING TO RS. 5,95,911/- UNDER THE HEAD INCOME FROM OTHER SOURCES INSTEAD OF INCOME FROM BUSINESS OR PROFESSION. 6. I HEARD THE RIVAL SUBMISSIONS ON THIS ISSUE AND CAREFULLY CONSIDERED THE SAME ALONG WITH ORDERS OF THE TAX AUTHORITIES BELOW. I NOTED THAT SIMILAR ISSUE HAS ARISEN IN THE CASE OF THE ASSESSEE IN THE ASSESSMENT YEAR 201 0-11 IN WHICH THE LD. CIT (A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND DIR ECTED THE AO TO TREAT THE INTEREST INCOME EARNED AS PART OF THE NORMAL BUSINESS ACTIVI TIES OF THE ASSESSEE BY OBSERVING AS UNDER :- 3 ITA NO. 71/JP/2013 A.Y. 2008-09. SHRI OM PRAKASH GOYAL VS. ITO, JAIPUR. 3.4.2. I HAVE CAREFULLY PERUSED THE ASSESSEES SU BMISSION AND THE CASE RECORD OF THE ASSESSEE. FURTHER, I HAVE ALSO G ONE THROUGH THE ASSESSMENT ORDER AND ALSO TAKEN A NOTE OF FACTUAL M ATRIX OF THE CASE. IT IS SUBMITTED THAT DURING THE YEAR ASSESSEE IS NOT ENGA GED IN MONEY LENDING BUSINESS AS A FINANCER AND ONLY SURPLUS FUNDS AVAIL ABLE WERE GIVEN AS ADVANCE TO THE PARTIES HAVING BUSINESS RELATIONSHIP RELATED TO ITS TRADING OF SAREE BUSINESS UNDER BUSINESS EXPEDIENCY AND INT EREST INCOME EARNED ON THE SAME WAS DULY DISCLOSED IN THE PROFIT AND LO SS ACCOUNT. IN VIEW OF ABOVE FACTS, ASSESSEE HAS SUBMITTED THAT THE ASSESS EE HAS EARNED INTEREST INCOME ON LOANS AND ADVANCE GIVEN IN NORMAL COURSE OF BUSINESS ACTIVITIES THUS THE INTEREST INCOME BE TREATED UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION AS DECLARED BY THE ASSESSE E. IT IS ALSO SUBMITTED THAT IF INTEREST INCOME IS REMOVED FROM BUSINESS IN COME, THEN THERE WILL BE A LOSS AND AO DID NOT GIVE ANY SET OFF FOR SUCH LOSS. IN VIEW OF FACTS AND CIRCUMSTANCES OF THE CASE, INT EREST INCOME EARNED IS TO BE TREATED AS PART OF NORMAL BUSINESS ACTIVITIES OF THE ASSESSEE. ASSESSEES APPEAL IN GROUND NO. 5, IS ALLOWED. THE LD. A/R CATEGORICALLY STATED IN THE COURT THAT NO APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE SAID ORDER BEFORE THE TRIBUNAL. IN VIEW OF THIS FACT AND ONCE THE REVENUE HAS ACCEPTED THAT THE INCOME FROM INTEREST BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS, I SET ASIDE THE ORDER OF LD. CIT (A) BY APPLYING THE RULE OF CONSISTENCY AS THERE IS NO CHANGE IN THE FACTS OF T HE CASE AND DIRECT THE AO TO ASSESS INTEREST INCOME OF RS. 5,95,911/- UNDER THE HEAD IN COME FROM BUSINESS AND PROFESSION. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4/11/2015. SD/- IH-DS-CALY ( P.K. BANSAL ) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 4/11/ 2015 DAS/ 4 ITA NO. 71/JP/2013 A.Y. 2008-09. SHRI OM PRAKASH GOYAL VS. ITO, JAIPUR. VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI OM PRAKASH GOYAL, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- THE ITO WARD 1(2), 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. 71/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR