M/s. Mastermind Publication (India) Pvt. Ltd., Meerut V. DCIT, Meerut

ITA 721/DEL/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7422 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 07-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGESH SHARMA
• Assessee Lawyers: S K JAIN
• Keywords: Gross profit estimation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES CAMP AT MEERUT BEFORE SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.721/DEL/2017 ASSESSMENT YEAR 2013-14 MASTERMIND PUBLICATION (INDIA) PVT. LTD., C/O M.L. DHAWAN & CO., 326, THAPAR NAGAR, MEERUT. PAN: AADCM 3466G VS DCIT, CIRCLE-1, MEERUT. (APPELLANT) (RESPONDENT) ITA NO.734/DEL/2017 ASSESSMENT YEAR 2013-14 DCIT, CIRCLE-1, MEERUT. VS MASTERMIND PUBLICATION (INDIA) PVT. LTD., C/O M.L. DHAWAN & CO., 326, THAPAR NAGAR, MEERUT. PAN: AADCM 3466G (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI S.K. JAIN, ADV. RESPONDENT BY : SHRI YOGESH SHARMA, SR.D.R. / DATE OF HEARING : 09/01/2019 / DATE OF PRONOUNCEMENT: 16/01/2019 ORDER PER N.S. SAINI, A. M. THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE A S WELL AS BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT( A), MEERUT, DATED 30.11.2016 FOR THE ASSESSMENT YEARS 2013-14. IN THE ITA NO.721/DEL/2017 & 734/DEL/2017 2 GROUNDS OF APPEAL OF THE ASSESSEE, ASSESSEE HAS RAI SED THE FOLLOWING GROUNDS AS UNDER: 1. THAT THE LEARNED LOWER AUTHORITIES ERRED IN REJ ECTION THE TRADING RESULTS DECLARED BY THE WHICH ARE AS PER AU DITED BOOKS OF ACCOUNTS. 2. THAT THE REJECTION OF TRADING RESULTS AS DECLARE D BY THE ASSESSEE BY THE LOWER AUTHORITY IS ARBITRARY, UNCAL LED FAR AND ILLEGAL. 3. THAT THE LEARNED LOWER AUTHORITIES ERRED IN ESTIMATING/APPLYING GROSS PROFIT RATE OF 12.05% AS AGAINST GROSS PROFIT DECLARED AT 10.34 BY THE ASSESSEE. 4. THAT THE ADDITION IN THE TRADING RESULTS AS SUST AINED BY THE LEARNED CIT(A) MEERUT AT RS.535248/- IS ARBITRA RY AND UNCALLED FOR AND KINDLY BE DELETED. 2. IN THE GROUNDS OF APPEAL OF THE REVENUE, REVENUE HAS RAISED THE FOLLOWING GROUNDS AS UNDER: 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN L AW AND FACTS IN ADOPTING THE GROSS PROFIT RATE OF 12.5% IN PLACE OF 15% ESTIMATED BY THE ASSESSING OFFICER, DESPITE BEING I N AGREEMENT WITH THE ASSESSING OFFICER, IN PRINCIPLE, FOR REJEC TION OF TRADING RESULTS IN ABSENCE OF ANY STOCK REGISTER BUT RESTRI CTING THE ITA NO.721/DEL/2017 & 734/DEL/2017 3 ESTIMATION OF GP FROM 15% TO 12.5% WITHOUT ASSIGNIN G ANY REASON FOR DOING SO AND WITHOUT ESTABLISHING HOW THE ESTIM ATION MADE BY THE ASSESSING OFFICER WAS DEFECTIVE. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) MAY BE SET ASI DE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE FACTS AND ISSUES INVOLVED IN BOTH THE APPEAL S ARE IDENTICAL; THEREFORE, THEY ARE BEING DISPOSED OF TO GETHER. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER OBSERVED THAT THE ASSESSEE IS ENGAGED IN PUBLICATIO N OF BOOKS (MONTESSORI & GOVERNMENT ALLOTTED TEXT BOOKS). THE ASSESSEE COMPANY MAINTAINS REGULAR BOOKS OF ACCOUNT AND FILE D TAX AUDIT REPORT AS PER PROVISIONS OF SECTION 44AB ALON G WITH THE BALANCE SHEET, PROFIT AND LOSS ACCOUNT, TRADING ACC OUNT WHICH WAS EXAMINED IN THE LIGHT OF THE DOCUMENTS FILED/PR ODUCED BY THE ASSESSEE. THE ASSESSING OFFICER OBSERVED THAT I N ABSENCE OF STOCK REGISTER, THE GROSS PROFIT SHOWN BY THE AS SESSEE @ 10.34% CANNOT BE ACCEPTED, THEREFORE, HE ESTIMATED THE GROSS PROFIT @15% ON THE TURNOVER OF RS.24,27,60,552/- AN D ARRIVED AT A FIGURE OF RS.3,64,14,083/-. THE ASSESSEE HAD S HOWN GROSS ITA NO.721/DEL/2017 & 734/DEL/2017 4 PROFIT OF RS.2,51,09,821/-, THEREFORE, HE MADE AN A DDITION OF DIFFERENCE AMOUNT OF RS.1,13,04,262/- TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF LOW GROSS PROFIT. 5. ON APPEAL, THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO COMPUTE THE GROSS PROFIT BY APPLYING THE RATE OF 12.5% IN PLACE OF 15% APPLIED BY THE ASSESSING OFFICER AND A LLOWED PARTIAL RELIEF TO THE ASSESSEE. 6. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) B OTH THE ASSESSEE AND REVENUE ARE IN APPEAL BEFORE US. AT TH E TIME OF HEARING BEFORE US, LEARNED AR OF THE ASSESSEE HAS F ILED THE COPY OF ORDER OF THE DELHI C BENCH OF THE TRIBUNA L IN THE CASE OF THE ASSESSEE ITSELF FOR ASSESSMENT YEAR 2012-13 WHICH IS PLACED AT PAGES 12 TO 15 OF THE PAPER BOOK FILED BE FORE US AND SUBMITTED THAT THE TRIBUNAL HAS HELD THAT BOOKS OF ACCOUNT OF THE ASSESSEE CANNOT BE REJECTED MERELY ON THE GROUN D OF NON MAINTAINING OF STOCK REGISTER AND CONSEQUENTLY DIRE CTED THE ASSESSING OFFICER TO ACCEPT THE RETURNED INCOME OF THE ASSESSEE. HE SUBMITTED THAT FOLLOWING THE ABOVESTAT ED ITA NO.721/DEL/2017 & 734/DEL/2017 5 TRIBUNAL ORDER IN THE YEAR UNDER APPEAL, THE ADDITI ON MADE SHOULD BE DELETED. 7. LD. DR ALSO AGREED WITH THE ABOVE SUBMISSION OF THE AR OF THE ASSESSEE. 8. WE FIND THAT THE TRIBUNAL IN THE ASSESSMENT YEAR 2012- 13 HAS HELD AS UNDER: 3. THE TRIBUNAL HAS CATEGORICALLY HELD THAT IN T HE NATURE OF ASSESSEES BUSINESS WHICH IS PUBLICATION OF BOOKS I T IS NOT PHYSICAL FOR MAINTAINING STOCK REGISTER ACCOUNT AND MERELY NON MAINTAINING OF STOCK REGISTER CANNOT LEAD TO RE JECTION OF BOOKS OF ACCOUNTS. THUS FOLLOWING THE SAME JUDICIAL PRECEDENTS, WE HOLD THAT FOR THIS YEAR ALSO THE TRA DING RESULT CANNOT BE DISTURBED ON THE GROUND THAT STOCK REGIST ER HAS NOT BEEN MAINTAINED. ACCORDINGLY THE ADDITION MADE BY T HE AO AND SUSTAINED BY THE LD. CIT(A) IS DELETED. CONSEQU ENTLY APPEAL FILED BY THE ASSESSEE IS ALLOWED AND REVENUE S APPEAL IS DISMISSED. 9. FACTS BEING IDENTICAL, RESPECTFULLY FOLLOWING TH E PRECEDENT, WE DELETE THE ADDITION MADE BY THE ASSES SING ITA NO.721/DEL/2017 & 734/DEL/2017 6 OFFICER AND SUSTAINED BY THE LD. CIT(A). CONSEQUENT LY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED AND REVENUE S APPEAL IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED AND THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON THIS DAY, THE 16/0 1/2019. SD/- SD/- (KULDIP SINGH) (N. S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 16/01/2019 PRABHAT KUMAR KESARWANI, SR.P.S.