Bishnu Kumar Agarwal, V. DCIT,

ITA 71/RAN/2014

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72661 (ITAT-RANCHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 17-02-2014
• Court: TRIBUNAL
• Department Lawyers: RAKESH KR DAS JCITLD
• Assessee Lawyers: M K CHOUDHARY LD
• Section: 133A; 234B

Judgement Text

INCOME TAX APPELLATE TRIBUNAL, CIRCUIT BENCH, RANCHI BEFORE HON'BLE SHRI H.L. KARWA, PRESIDENT , AND HON'BLE SHRI B.R. BASKARAN, ACCOUNTANT M EMBER ITA NO . 71 /RAN/201 4 A.Y 200 7 - 08 BISHNU KUMAR AGARWAL VS. D Y. COM MISSIONER INCOME - TAX PAN: ABOPA9123B CIRCLE - 1, RANCHI ( APPELLAN T ) ( RESPONDENT ) FOR THE APPELLANT :SH RI M.K.CHOUDHARY, ADVOCATE, LD.AR FOR THE RESPONDENT : SHRI RAKESH KR. DAS , JCIT/LD.DR DATE OF HEARING : 2 8 - 11 - 2014 DATE OF PRON OUNCEMENT: 2 8 - 11 - 201 4 O R D E R SHRI B.R. BASKARAN, ACCOUNTANT MEMBER : THIS APPEAL F ILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 2 9 - 11 - 2013 PASSED BY LD. CIT(A) , RANCHI (JHARKHAND) AND IT RELATES TO THE ASSESSMENT YEAR 200 7 - 08 . 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LD. CIT(A) IN RESPECT OF THE FOLLOWING ISSUES : - A. ADDITION OF GROSS PROFIT ON SHORTAGE OF STOCK. B. ADHOC DISALLOWANCE OF RS.8000/ - OUT OF CLAIM OF EX PENSES C. CHARGING OF INTEREST U/S. 234B AND 234C OF THE ACT 3. THE FACTS RELATING TO THE SAID ISSUES ARE STATED IN BRIEF. THE ASSESSEE IS A WHOLESALE AND RETAIL TRADER OF FURNITURE AND FURNISHING GOODS. THE DEPARTMENT CARRIED OUT A SURVEY OPERATION U/S. 133A OF THE ACT IN THE BUSINESS PREMISES OF THE ASSESSEE ON 11 - 09 - 2007 . DURING THE COURSE OF SURVEY , THE PHYSICAL STOCK WAS INVENTORISE AND VALUED . IT WAS NOTICED THAT THERE WAS SHORTAGE OF STOCK. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSING OFFICER TREATED THE SHORTAGE OF STOCK AS 2 ITA NO 71 /RAN/1 4 - BISHNU KR. AGARWAL,RANCHI SUPPRESSION OF SALES AND ACCORDINGLY DETERMINED THE AMOUNT OF SUPPRESSION OF SALES AT RS. 45,36,125/ - AND ASSESSED THE SAME AS THE INCOME OF THE ASSESSEE . THE ASSESSING OFFICER ALSO DISALLOWED A SUM OF RS . 25,000/ - ON ADHOC BASIS OUT OF EXPENSES CLAIMED BY THE ASSESSEE . 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) HELD THAT THE ASSESSING OFFICER SHOULD HAVE ASSESSED THE GROSS PROFIT ARISING OUT OF SUPPRESSED SALES . THE LD. CIT(A) NOTICED THAT THE AS SESSEE HAS DECLARED THE GROSS PROFIT @2 5.91 % . HENCE, HE ADOPTED THE GROSS PROFIT @ 27% AND A CCORDINGLY RESTRICTED THE ADDITION TO RS. 11,53,173/ - . WITH REGARD TO THE DISALLOWANCE MADE OUT OF EXPENSES CLAIMED BY THE ASSESSEE, THE LD. CIT(A) RESTRICTED THE SAME AT RS.8,000/ - . STILL AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 5 . WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WITH REGARD TO THE FIRST ISSUE RELATING TO THE GROSS PROFIT DETERMINED BY LD CIT(A) ON SUPPRESSED SALES , TH E LD.AR SUBMITTED THAT THE LD CIT(A) SHOULD HAVE ADOPTED THE NET PROFIT RATE OF 2% DECLARED BY THE ASSESSEE FOR WORKING OUT THE ADDITION. ALTERNATIVELY, HE SUBMITTED THAT THE ASSESSEE HAD DECLARED THE GROSS PROFIT AT 25.91% AND H ENCE, THE LD. CIT(A) WAS N OT JUSTIFIED IN ADOPTING THE GP RATE AT 27%. WE HEARD LD D.R ALSO. HOWEVER, W E ARE UNABLE TO AGREE WITH THE SUBMISSION OF THE LD.AR THAT THE N ET P ROFIT RATE SHOULD BE ADOPTED FOR WORKING OUT THE ADDITION. THE QUESTION OF ADOPTION OF NET PROFIT RATE WOU LD ARISE ONLY IF WAS SHOWN THAT THE ASSESSEE HAS ALSO SUPPRESSED THE CORRESPONDING EXPENSES. FURTHER, THE RATE OF GROSS PROFIT RATE ADOPTED BY LD CIT(A) COMPARES WELL WITH THE RATE DECLARED BY THE ASSESSEE. HENCE, WE ARE OF THE VIEW THAT THE LD.CIT(A) WAS JUSTIFIED IN ESTIMATING THE GP FOR THE PURPOSE OF MAKING ADDITION. ACCORDINGLY, WE CONFIRM THE ORDER OF LD CIT(A) ON THIS ISSUE. 8. NEXT ISSUE RELATES TO ADHOC DISALLOWANCE MADE OUT OF EXPENSES INCURRED BY THE ASSESSEE. WE NOTICE THAT THE TAX AUTHO RITIES HAS MADE THE DISALLOWANCE WITHOUT POINTING OUT ANY SPECIFIC DEFECT. ACCORDINGLY , WE SET ASIDE THE ORDER OF THE LD.CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO DELE TE THE ADDITION OF RS.8,000/ - SUSTAINED BY THE LD.CIT(A). 3 ITA NO 71 /RAN/1 4 - BISHNU KR. AGARWAL,RANCHI 9. LAST IS SUE RELATES TO THE COMPUTATION OF INTEREST U/S. 234B/ 234 C OF THE ACT , WE DIRECT THE ASSESSING OFFICER TO COMPUTE THE SAME IN ACCORDANCE WITH THE BINDING DECISION LAID DOWN BY THE HON'BLE JURISDICTIONAL JHARKHAND HIGH COURT IN THE CASE OF AJAY PRAKASH VER MA VS. ITO IN TAX APPEAL NO.38 OF 2010. 10 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED . PRONOUNCED ACCORDINGLY ON 2 8 - 11 - 2014 SD/ - SD/ - [ H.L. KARWA ] [ B.R. BASKARAN ] PRESIDENT ACCOUNTANT MEMBER DT. 2 8 - 11 - 2014 PLACE : RANCHI PP, SR. PS COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT : SHRI BISHNU KUMAR AGAR WAL PROP M/S.SPACE, RANCHI 2 THE RESPONDENT: THE DCIT,CIR - 1, RANCHI 3. .THE CIT, 4.THE CIT(A), 5.DR, ITAT CIRCUIT BENCH, RANCHI 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT. REGISTRAR 4 ITA NO 71 /RAN/1 4 - BISHNU KR. AGARWAL,RANCHI 1. DATE OF DICTAT ION ............. 2 8 - 11 - 2014 ....................... 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ........................OTHER MEMBER ...... - 11 - 2014 ........................ 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./ P.S. ..................... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.................................. 2 7 - 11 - 2014 ................................................... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S ................ 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK ....................................... 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ......................................... 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................................................................................................. 9. DATE OF DESPATCH OF THE ORDER ..............................................................