SMT. PUSHPA GUPTA, Jaipur V. ACIT, Jaipur

ITA 736/JPR/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5315 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 28-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJAY MALIK CIT DHK
• Assessee Lawyers: BL GUPTA
• Keywords: Condonation of delay

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE:SHRI T.R. MEENA,AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 736/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SMT. PUSHPA GUPTA S-7, SHYAM NAGAR, AJMER ROAD, JAIPUR CUKE VS. THE ACIT CIRCLE- 2 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ACCPG 2285 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI B.L. GUPTA, CA JKTLO DH VKSJ LS@ REVENUE BY : SHRI AJAY MALIK, ADDL. CIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 17/03/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 31/03/2016 VKNS'K@ ORDER PER LALIET KUMAR, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-1, JAIPUR DATED 11-05-2012 FOR THE ASSESSME NT YEAR 2009-10 WHEREIN THE SOLITARY ISSUE OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 7,90,335/- INSTEA D OF DELETING FULLY WITHOUT ANY BASIS OF JUSTIFICATION WHICH IS ON ACCO UNT OF APPLYING HIGHER GROSS PROFIT RATE OF 8.95% AS AGAINST DECLARED GROS S PROFIT RATE OF 8.80%. 2.1 AT THE OUTSET OF THE HEARING, THE BENCH OBSERVE D THAT THE APPEAL OF THE ASSESSEE IS TIME BARRED BY LIMITATION OF 40 DAY S FOR WHICH THE ASSESSEE ITA NO.736//JP/2012 . SMT. PUSHPA GUPTA VS. ACIT, CIRCLE- 2, JAIPUR . 2 HAS FILED AN APPLICATION FOR CONDONATION OF DELAY I N FILING THE APPEAL IN TIME PRAYING THEREIN THAT DUE TO HIS CONTINUOUS ILL NESS FOR A PERIOD OF LAST TWO MONTHS, HE COULD NOT CONTACT HIS LD. AR SHRI B. L. GUPTA. TO THIS EFFECT, THE ASSESSEE HAS FILED THE DOCTOR CERTIFICA TE ALONGWITH AN AFFIDAVIT THAT DUE TO HIS CONTINUOUS ILLNESS FOR THE LAST TWO MONTHS, HE COULD NOT CONTACT HIS LD. AR FOR FILING THE APPEAL IN TIME. T HUS THE DELAY MADE IN FILING THE APPEAL MAY BE CONDONED. 2.2 THE LD. DR VEHEMENTLY OPPOSED THE CONDONATION A PPLICATION OF THE ASSESSEE AS TO DELAY IN FILING THE APPEAL IN TIME. 2.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT APPEARS FROM THE RECORDS TH AT THE DELAY OF 40 DAYS IN FILING THE APPEAL IS ON ACCOUNT OF CONTINUOUS IL LNESS OF THE ASSESSEE WHICH WAS BEYOND THE CONTROL OF THE ASSESSEE. THE A SSESSEE COULD NOT CONTACT HIS LD. AR FOR FILING THE APPEAL IN TIME FO R WHICH THE ASSESSEE HAS FILED AN APPLICATION ALONGWITH AN AFFIDAVIT. IN VIE W OF THE REASONS EXPLAINED BY THE ASSESSEE IN HIS APPLICATION FOR CO NDONATION OF DELAY IN FILING THE APPEAL ALONGWITH AN AFFIDAVIT, THE DELAY OF 40 DAYS IS CONDONED CONSIDERING THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST. KATIJI AND OTH ERS, 167 ITR 471 WHEREIN THE HON'BLE COURT HAS OBSERVED AS UNDER:- ITA NO.736//JP/2012 . SMT. PUSHPA GUPTA VS. ACIT, CIRCLE- 2, JAIPUR . 3 THE LEGISLATURE HAS CONFERRED POWER TO CONDONE DELA Y BY ENACTING SECTION 5 OF THE LIMITATION ACT, 1963, IN ORDER TO ENABLE THE COURTS TO DO SUBSTANTIAL JUSTICE TO PARTIES BY DISPOSING OF MATTERS ON MERITS. THE EXPRESSION ' SUFFICIENT CAUS E ' IN SECTION 5 IS ADEQUATELY ELASTIC TO ENABLE THE COURTS TO APPLY TH E LAW IN A MEANINGFUL MANNER WHICH SUBSERVES THE ENDS OF JUSTI CE--THAT BEING THE LIFE-PURPOSE OF THE EXISTENCE OF THE INSTITUTIO N OF COURTS. A JUSTIFIABLY LIBERAL APPROACH HAS TO BE ADOPTED ON P RINCIPLE. 'EVERY DAY'S DELAY MUST BE EXPLAINED' DOES NOT IMPL Y A PEDANTIC APPROACH. THE DOCTRINE MUST BE APPLIED IN A RATIONAL, COMMON SENSE AND PRAGMATIC MANNER. THE DOCTRINE OF EQUALITY BEFORE LAW DEMANDS THAT AL L LITIGANTS, INCLUDING THE STATE AS A LITIGANT, ARE A CCORDED THE SAME TREATMENT AND THE LAW IS ADMINISTERED IN AN EVENHAN DED MANNER. THERE IS NO WARRANT FOR ACCORDING A STEP-MOTHERLY T REATMENT WHEN THE STATE IS THE APPLICANT PRAYING FOR CONDONATION OF DELAY. 'WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATI ONS ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED, FOR THE OTHER SIDE CANNOT CLAIM TO HAVE A VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A NON-DELI BERATE DELAY.' THUS, IN VIEW OF THE DELIBERATIONS OF HON'BLE AP EX COURT IN THE CASE OF COLLECTOR , LAND ACQUISITION VS. MST. KATIJI AND OT HERS (SUPRA), THE DELAY IS CONDONED 3.1 NOW WE TAKE UP THE APPEAL OF THE ASSESSEE WHERE IN BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HER RETURN OF INCOME DECLARING INCOME OF RS. 1,74,16,710/- FOR THE ASSESSMENT YEAR 2009-1 0 ON 29-09-2009 WHICH WAS SELECTED FOR SCRUTINY. THE AO OBSERVED TH AT THE ASSESSEE IS PROP. OF M/S. VIKAS ENTERPRISES AND IS ENGAGED IN T HE BUSINESS OF ITA NO.736//JP/2012 . SMT. PUSHPA GUPTA VS. ACIT, CIRCLE- 2, JAIPUR . 4 MANUFACTURING AND TRADING OF TRANSFORMERS. THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS SHOWN GROSS PROFIT OF RS. 4,44 75,016.65 AGAINST TOTAL SALE OF RS. 50,57,58,331.04 WITH GROSS PROFIT RATE OF 8.80% IN COMPARISON TO GROSS PROFIT OF RS. 3,17,94,415.69 AGAINST TOTAL SALE OF RS. 36,04,94,486.10 WITH GROSS PROFIT RATE OF 8.81% SHO WN IN THE PRECEDING YEAR I.E. A.Y. 2008-09. THE AO CONSIDERED THE RETUR N OF INCOME FILED BY THE ASSESSEE; DETAILS FILED DURING ASSESSMENT PROCE EDINGS AND EXAMINED THE BOOKS OF ACCOUNT PRODUCED BY THE ASSESSEE WITH THE FOLLOWING BIFURCATION OF THREE ASSESSMENT YEARS OF THE ASSESS EE. A.Y. SALES G.P. PERCENTAGE 2009-10 50,57,58,331.04 4,44,75,016.95 8.80 2008-09 36,04,94,486.10 3,17,94,415.69 8.81 2007-08 20,21,97,815.87 2,04,67,562.69 10.13 THE AO OBSERVED THAT THE ASSESSEE NEITHER MAINTAIN ED QUANTITATIVE DETAILS OF GOODS AS PER PARA 28(A) OF THE AUDIT REP ORT IN FORM 3CD NOR THE STOCK REGISTER INCLUDING THE INVENTORY OF OPENING A ND CLOSING STOCK. THE AO OBSERVED THAT THE ASSESSEE HAD FURNISHED A STATE MENT OF STOCK AND BOOK DEBTS FILED BEFORE THE STATE BANK OF INDIA WHE REIN THE COST SHOWN TO THE BANK OF THE INPUTS/RAW MATERIAL WAS SHOWN CONSI DERABLY LESS THAN THE COST CLAIMED BY THE ASSESSEE BEFORE THE DEPARTMENT. THE AO OBSERVED THAT THE ASSESSEE IS NOT REGULARLY MAINTAINING THE STOCK REGISTER ITA NO.736//JP/2012 . SMT. PUSHPA GUPTA VS. ACIT, CIRCLE- 2, JAIPUR . 5 PARTICULARLY OF PRINCIPAL RAW MATERIAL IN ORDER TO AVOID PROPER VERIFICATION OF THE RECORDS. IN VIEW OF THESE FACTS, THE AO REJE CTED THE BOOKS OF ACCOUNT OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT AND ESTIMATED THE GROSS PROFIT RATE AT 10% WHICH RESULTED INTO A TRADING ADDITION OF RS. 61,00,817/-. 3.2 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R BEFORE THE LD. CIT(A) WHO CONFIRMED THE TRADING ADDITION OF RS. 7, 90,355/- BY OBSERVING AS UNDER:- 4.3 I HAVE CAREFULLY PERUSED THE ORDER OF THE AO AND SUBMISSIONS OF THE A.R. AND DO NOT COMPLETELY CONCU R WITH THE SUBMISSIONS OF THE A.R. FOR THE FOLLOWING REASO NS. (AT PAGE 6).AS PER THE APPELLANTS OWN SUBMISSION THAT THE PAST HISTORY OF THE APPELLANT S HOULD BE CONSIDERED WHILE ESTIMATING THE GROSS PROFIT, IT IS SEEN THAT THE HON'BLE ITAT JAIPUR BENCH CONFIRMED A TRADING ADDITION OF RS. 5 LAKHS WHICH RESULTS IN CONFIRMATI ON OF A GROSS PROFIT RATE OF 8.95% IN THE PREVIOUS A.Y. AS THE MATTER IS COVERED BY THE FINDING OF THE HON'BLE ITAT THE G.P. RATE IS ESTIMATED AT 8.95% DURING THIS A.Y. WHICH RESULT S IN A G.P. OF RS. 4,52,65,371/- AGAINST THE G.P. SHOWN BY THE ASSESSEE OF RS. 4,44,75,016/-. AFTER GIVING A SET OFF OF THE G.P. ALREADY SHOWN BY THE APPELLANT A TRADING ADDITION OF RS. 7, 90,355/- IS CONFIRMED. 3.3 NOW THE ASSESSEE IS BEFORE US PRAYING THAT THE COORDINATE BENCH OF ITAT VIDE ITS ORDER DATED 09-01-2012 IN ASSESSEE 'S OWN CASE IN ITA NO. 693/JP/2011 FOR THE ASSESSMENT YEAR 2008-09 HAD MADE A GP ITA NO.736//JP/2012 . SMT. PUSHPA GUPTA VS. ACIT, CIRCLE- 2, JAIPUR . 6 ADDITION AT RS. 5,00,000/- AGAINST GROSS PROFIT RAT E OF 8.81% SHOWN BY ASSESSEE BY FOLLOWING OBSERVATIONS. 9. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT THERE IS NO SUBSTA NCE IN THE APPEAL OF THE DEPARTMENT. HOWEVER, ASSESSEE DESERVES TO SUCCE ED IN PART. WE NOTED THAT THE LD. CIT (A) HAS GIVEN A FINDING THAT STOCK REGISTER WAS NOT MAINTAINED AND, THEREFORE, VALUATION OF CLOSING STOCK REMAINED UNVERIFIABLE. SINCE THIS IS AN IMPORTANT FACTOR FOR DEDUCING THE VALUATION OF CLOSING STOCK, THEREFORE, IN OUR VIEW , THE INVOCATION OF PROVISIONS OF SECTION 145(3) WAS CORRECT. NOW THE Q UESTION ARISES IS DECLINE IN GP RATE. IT IS SEEN THAT TURNOVER OF TH E ASSESSEE HAS BEEN INCREASED SUBSTANTIALLY. IN IMMEDIATELY PRECEDING YEAR, THE TURNOVER OF THE ASSESSEE WAS RS. 20.21 CRORES WHEREAS IN THIS Y EAR TURNOVER IS RS. 36.04 CRORES. THE LINE OF BUSINESS OF THE ASSESSEE IS PRODUCTION OF TRANSFORMERS. IT IS FURTHER SEEN THAT MAJOR COMPON ENT OF PRODUCTION OF TRANSFORMERS WERE ALUMINUM WHICH IS 25% AND CRGO LI MINATION WHICH IS 38% OF THE TOTAL RAW MATERIAL, AND THIS WA S THE MAJOR FACTOR FOR INCREASE IN RAW MATERIAL COST. THE PRICE INCRE ASE IN CRGO WAS 79.66% AND IN ALUMINUM THERE WAS INCREASE OF 25.22% WHEREAS THE INCREASE IN SALE PRICE IS ONLY 22%. IF ALL THESE F ACTS ARE TAKEN INTO CONSIDERATION, THEN IT IS SEEN THAT THERE WAS A REA SONABLE CAUSE FOR FALL IN GP RATE. IT IS FURTHER SEEN THAT COMPLETE PURCH ASE VOUCHERS AND SALE VOUCHERS ARE MAINTAINED. THE SALES MADE BY ASSESSEE ARE MAINLY MADE TO ELECTRICITY BOARD. THIS IS NOT THE CASE OF THE DEPARTMENT THAT ASSESSEE HAS NOT MAINTAINED PURCHASE /SALE VOUCHERS . ALL OTHER EXPENSES ARE ALSO VOUCHED. THE JOB CHARGES PAID BY ASSESSEE ARE ALSO VOUCHED. A SMALL PORTION OF JOB CHARGES IS PAID TH ROUGH SELF MADE VOUCHERS. IT IS NOT THE CASE THAT THEY WERE NOT GEN UINE OR NOT CORRECTLY MADE. KEEPING ALL THESE FACTS IN MIND, WE ARE OF T HE CONSIDERED VIEW THAT AO WAS NOT JUSTIFIED IN APPLYING 12% GP RATE A GAINST 8.81% ITA NO.736//JP/2012 . SMT. PUSHPA GUPTA VS. ACIT, CIRCLE- 2, JAIPUR . 7 SHOWN BY ASSESSEE. THERE IS A SUBSTANTIAL INCREASE IN SALES AND IT IS BOUND TO BE DECLINED SOME GP RATIO ON THIS ACCOUNT ALSO. KEEPING IN MIND ALL THESE FACTS, WE ARE OF THE VIEW THAT IF A LUMP SUM GP ADDITION AT RS. 5,00,000/- IS MADE AGAINST 8.81% SHOWN BY AS SESSEE, THAT WILL MEET THE ENDS OF JUSTICE TO BOTH THE PARTIES. WE OR DER ACCORDINGLY. 3.4 DURING THE COURSE OF HEARING, THE LD. DR RELIED ON THE ORDER OF THE LD. CIT(A). 3.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAS NOT MAINTAINED THE STOCK REGISTER AS TO PRODUCTION OF THE ITEMS BEING MANUFACTURED BY THE ASSESSEE. HENCE, THE LOWER AUTHORITIES HAVE RIGHTLY INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT. WE FURTHER FIND FROM THE RECORD THAT COORDINATE BENCH VIDE ITS ORDER DATED 9-01-2012 IN ASSESSEE'S OWN CASE HAD MADE A LUMP SUM ADDITION OF RS. 5.00 LACS AGAIN ST GROSS PROFIT RATE OF 8.81% SHOWN BY THE ASSESSEE IN THE ASSESSMENT YEAR 2008-09. BY RESPECTFULLY, FOLLOWING THE DECISION OF COORDINATE BENCH IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2008-09 (SUPRA) , A LUMP SUM ADDITION OF RS.5.00 LACS IS DIRECTED TO BE MADE WHICH WILL M EET THE ENDS OF JUSTICE TO BOTH THE PARTIES. THUS THE APPEAL OF THE ASSESSE E IS PARTLY ALLOWED, ITA NO.736//JP/2012 . SMT. PUSHPA GUPTA VS. ACIT, CIRCLE- 2, JAIPUR . 8 4.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 /03/2 016. SD/- SD/- (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 31/03/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT SMT. PUSHPA GUPTA, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE- 2 JAIPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A) 3. VK;DJ VK;QDR@ CIT 4. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 5. XKMZ QKBZY@ GUARD FILE (ITA NO.736/JP/2012) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR