ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, KOTA V. M/S KRITIKA VEGITABLE OIL PVT. LTD., KOTA

ITA 752/JPR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2059 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 06-10-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Rejection of books of accounts; 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 BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK L NL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA- @ ITA NO. 752 & 753/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2013-14 & 2014-15 THE ACIT, CIRCLE-2, KITA. CUKE VS. M/S KRITIKA VEGETABLE OIL PVT. LTD. NH-12, VILLAGE KASAR, THE. LADPURA, DIST. KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCK 5841 Q VIHYKFKHZ@ APP ELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : NONE JKTLO DH VKSJ LS @ REVENUE BY : SHRI R.A. VERMA (ADDL. CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 20/12/2017 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 27/02/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST T WO SEPARATE ORDERS OF LD. CIT(A), KOTA DATED 03.07.2017 & 21.07 .2017 FOR THE ASSESSMENT YEARS 2013-14 & 2014-15. SINCE, NONE HAS APPEARED ON BEHALF OF THE ASSESSEE DESPITE NOTICES ISSUED TO TH E ASSESSEE THROUGH RPAD ON TWO OCCASIONS AND NEITHER THE NOTICES WERE RECEIVED BACK UN- SERVED NOR THE ACKNOWLEDGEMENT WERE RECEIVED ON BOT H OCCASIONS ITA NO. 752 & 753/JP/2017 ACIT V M/S KRITIKA VEGETABLE OIL PVT. LTD. 2 THEREFORE, WE PROPOSED TO HEAR AND DISPOSED OFF THE SE TWO APPEALS OF THE REVENUE EX-PARTE. THE REVENUE HAS RAISED THE FO LLOWING GROUNDS:- (A.Y. 2013-14) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN :- (III) WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE TRADING ADDITI ON OF RS. 40,10,037/- AS THE ASSESSEE HAS DECLARED MORE G.P. & N.P. RATE IN THE PREVIOUS YEAR IN COMPARISON TO THIS YEAR. (IV) THE APPELLANT CRAVES LIBERTY TO RAISE ADDITION AL GROUND AND TO MODIFY/AMEND THE GROUND OF APPEAL AT THE TIME OF HE ARING. (A.Y. 2014-15) I) WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE TRADING ADDITION O F RS. 54,77,768/- AS THE ASSESSEE HAS DECLARED MORE G.P. & N.P. RATE IN THE PREVIOUS YEAR IN COMPARISON TO THIS YEAR. II) THE APPELLANT CRAVES LIBERTY TO RAISE ADDITIONA L GROUND AND TO MODIFY/AMEND THE GROUND OF APPEAL AT THE TIME OF HE ARING. 2. FOR THE A.Y. 2013-14:- THE ASSESSING OFFICER REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE BECAUSE OF NOT MAI NTAINING ANY STOCK REGISTER CONTAINING QUANTITATIVE DETAILS OF DAY TO DAY PURCHASES & CONSUMPTION OF RAW MATERIAL, PRODUCTION OF FINISHED GOODS/BYE-PRODUCTS AND PURCHASE AND SALE OF QUALITY-WISE & VARIETY-WI SE VARIOUS RAW MATERIALS, INTERMEDIATE GOODS, FINISHED PRODUCTS AN D BYE-PRODUCTS. THE ITA NO. 752 & 753/JP/2017 ACIT V M/S KRITIKA VEGETABLE OIL PVT. LTD. 3 AO PROCEEDED TO ASSESSEE INCOME OF THE ASSESSEE ON ESTIMATED BASIS BY APPLYING GP @ 1.373% AS AGAINST THE GP DECLARED BY THE ASSESSEE @ 1.23 AND CONSEQUENTLY AO MADE AN ADDITION OF RS. 48,10,037/-. ON APPEAL, THE LD. CIT(A) THOUGH CONFIRMED THE REJECTI ON OF BOOKS OF ACCOUNTS U/S 145(3) HOWEVER, THE LD. CIT(A) HAS RES TRICTED THE ADDITION MADE BY THE AO BY ADOPTING THE GP 1.25% AS AGAINST G.P. @ 1.373% ALLOWED BY THE AO. ACCORDINGLY THE LD. CIT(A) HAS C ONFIRMED THE ADDITION TO THE EXTENT OF RS. 8 LACS AS AGAINST RS. 48,10,037/- BY THE AO. 3. WE HAVE HEARD LD. DR AND CAREFULLY PERUSED THE R ELEVANT MATERIAL ON RECORD. NONE HAS APPEARED ON BEHALF OF THE ASSES SEE THEREFORE, WE HAVE NO PRIVILEGE TO HEAR THE ASSESSEE. THE LIMITED GRIEVANCE OF THE REVENUE IS ONLY TO THE EXTENT OF THE GP RATE APPLIE D BY THE LD. CIT(A)AT 1.25 AS AGAINST 1.373% APPLIED BY THE AO. WE FIND T HAT THE ASSESSING OFFICER HAS WORKED OUT THE GP RATE BY CONSIDERING T HE PAST HISTORY OF THE GP RATE DECLARED BY THE ASSESSEE INCLUDING THE CURRENT YEAR. THE RELEVANT FINDING OF THE ASSESSEE ON THIS ISSUE AS U NDER:- CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES OF T HE CASE, AFTER REJECTION OF THE BOOKS OF ACCOUNTS, IT IS CONSIDERE D APPROPRIATE TO APPLY THE G.P. RATE OF 1.373% INSTEAD OF G.P. RATE DECLARED BY THE @ 1.23% ON THE GROSS RECEIPTS OF THE ASSESSEE. IN CASE OF ITA NO. 752 & 753/JP/2017 ACIT V M/S KRITIKA VEGETABLE OIL PVT. LTD. 4 SUMATI DAYAL & OTHER, THE HONBLE SUPREME COURT HAS HELD THAT ASSESSEES OWN CASE IS THE BEST CASE FOR COMPARISON . IN THIS CASE, IN VIEW OF THE ABOVE FACTS, THE ASSESSEE HAS FAILED TO EXPLAIN REASONS FOR FALL IN G.P. AS WELL AS N.P. THEREFORE, AFTER REJECTION OF BOOKS OF ACCOUNTS AS MENTIONED ABOVE, THE AVERAGE O F G.P. RATE OF THIS YEAR AND LAST TWO YEARS IS TAKEN TO TAKE CA RE OF ANY CYCLIC TRENDS IN THIS LINE OF BUSINESS (1.57%+1.32%+1.23%/ = 1373%, FURTHER, IN COMPARABLE CASES IN THIS LINE OF BUSINE SS, NAMELY M/S GOYAL PROTEINS LTD., M/S GOYAL VEG. OIL LTD & M/S S HIV AGREVO LTD. ASSESSED WITH THE UNDERSIGNED HAVE SHOWN BETTE R G.P. & N.P. RESULTS FOR A.Y. THE ASSESSEE HAS NOT GIVEN AN Y PROPER BELIEVABLE REASONS FOR FALL IN G.P. & N.P. AND THE ABOVE MENTIONED DEFECTS WERE THERE IS ITS BOOKS OF ACCOUN T. THE ASSESSEE HAS FAILED TO BRING ANY EVIDENCE TO REBUT THE DEFECTS POINTED OUT TO HIM DURING THE EXAMINATION OF BOOKS OF ACCOUNTS. THE ONUS OF PROVING AND MAINTAINING PROPER BOOKS OF ACCOUNTS ARE UPON THE ASESSEE IF HE INSIST THAT HE IS SHOWIN G THE ACTUAL PROFIT THAN HE IS REQUIRED TO COMPLY WITH PROVISION S AND MAINTAIN PROPER RECORDS AND BOOKS OF ACCOUNTS. THE ONE WHO S EEKS EQUITY MUST DO EQUITY HIMSELF. THUS, IT IS CLEAR THAT THE AO HAS TAKEN THE AVERAGE GP BY TAKING INTO CONSIDERATION THE PAST G.P. RATE DECLARED BY THE AS SESSEE INCLUDING THE GP OF THE CURRENT YEAR. ON THE OTHER HAND, LD. CIT( A) HAS RESTRICTED THE ADDITION ONLY ON ADHOC BASIS AS UNDER:- THUS IN A TOTALITY OF THE FACTS INVOLVED, I AM OF THE OPINION THAT THE ESTIMATION OF GP @ 1.373% BY THE A.O. INSTEAD O F 1.23% SHOWN BY THE APPELLANT WAS BOTH ON THE HIGHER SIDE & ALSO UNSUSTAINABLE. TO SERVE THE BEST INTEREST OF JUSTIC E AND TO ADDRESS THE CONCERNS RAISED BY THE A.O., I DIRECT THAT AN I NCREASE OF RS. 8,00,000/- TOWARDS THE GROSS PROFIT WOULD SERVED TH E PURCHASE. ITA NO. 752 & 753/JP/2017 ACIT V M/S KRITIKA VEGETABLE OIL PVT. LTD. 5 THIS WOULD TAKEN THE G.P. TO 1.25% WHICH IS CONSIDE RED REASONABLE. FROM THE COMPARATIVE FINDING OF AO AND LD. CIT(A) IT IS DISCERNABLE THAT THE AO APPLIED G.P. RATE ON THE BASIS OF AVERA GE RATE DECLARED BY THE ASSESSEE IN THE PAST TWO YEARS AND IN THE YEAR UNDER CONSIDERATION. ON THE CONTRARY, THE LD. CIT(A) HAS RESTRICTED THE ADDITION BY TAKING AN ADHOC DISALLOWANCE/ ADDITION WITHOUT ANY BASIS MUCH LESS THE PROPER AND REASONABLE BASIS. ACCORDINGLY, WE ARE OF THE CO NSIDERED VIEW THAT WHEN THE AO HAS TAKEN THE GP ON THE BASIS OF A PROP ER AND REASONABLE BASIS AND THEREFORE, THE AVERAGE GROSS PROFIT DECLA RED BY THE ASSESSEE IN PAST WAS TAKEN BY THE AO FOR ESTIMATION OF INCOM E FOR THE YEAR UNDER CONSIDERATION. SINCE, THE ASSESSEE HAS NOT CHALLENG ED THE ORDER OF THE LD. CIT(A) THEREFORE, THE ISSUE OF REJECTING THE BO OKS OF ACCOUNT HAS ATTAINED FINALITY AND CONSEQUENTLY THE INCOME OF TH E ASSESSEE HAS TO BE COMPUTED ON SOME REASONABLE AND PROPER ESTIMATE BAS IS. WE FIND THAT THE BASIS ADOPTED BY THE AO FOR ESTIMATION OF INCOM E IS PROPER AND REASONABLE AND ACCORDINGLY, CANNOT BE FAULTED WITH. HENCE, WE SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) QUA THIS ISSUE AND RESTORE THE ORDER OF THE ASSESSING OFFICER. ITA NO. 752 & 753/JP/2017 ACIT V M/S KRITIKA VEGETABLE OIL PVT. LTD. 6 4. FOR THE A.Y. 2014-15:- THE ASSESSING OFFICER AFTER REJECTING OF BOOKS OF ACCOUNTS ESTIMATED THE INCOME OF THE ASSES SEE BY APPLYING THE NET PROFIT RATE 0.19%. THE LD. CIT(A) THOUGH CO NFIRMED THE ACTION OF THE AO REJECTING THE BOOKS OF ACCOUNTS U/S 145(3 ) OF THE ACT HOWEVER, THE LD. CIT(A) RESTRICTED THE ESTIMATE OF PROFIT BY TAKING THE LOSS OF THE ASSESSEE @ 1% INSTEAD OF 5.5% DECLARED BY THE ASSESSEE. SINCE, IN THE EARLIER ASSESSMENT YEAR 2013-14 THE A O AS WELL AS LD. CIT(A) HAS APPLIED THE GROSS PROFIT RATE TO ESTIMAT E THE INCOME THEREFORE, TO MAINTAIN THE RULE OF CONSISTENCY THE INCOME OF THE ASSESSEE WAS REQUIRED TO BE ESTIMATED BY ADOPTING T HE PROPER AND REASONABLE ESTIMATE BASED ON THE PAST HISTORY OF TH E G.P. RATE DECLARED BY THE ASSESSEE. THERE IS NO DISPUTE THAT THE AO HA S GIVEN THE PAST HISTORY OF G.P. RATE DECLARED BY THE ASSESSEE HOWEV ER, WHILE ESTIMATING THE INCOME THE AO APPLIED THE NET PROFIT RATE INSTE AD OF G.P. RATE. HENCE, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF TH E CASE AND TO MAINTAIN THE CONSISTENCY OF VIEW WE SET ASIDE THIS ISSUE TO THE RECORD OF THE ASSESSING OFFICER FOR RE-COMPUTING THE INCOME O F THE ASSESSEE BY TAKING THE AVERAGE GP BASED ON PAST HISTORY OF GP D ECLARED BY THE ASSESSEE. ITA NO. 752 & 753/JP/2017 ACIT V M/S KRITIKA VEGETABLE OIL PVT. LTD. 7 IN THE RESULT, THE APPEAL OF THE REVENUE FOR THE A .Y. 2013-14 IS ALLOWED AND FOR THE A.Y. 2014-15 IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27/02/2018 SD/- SD/- HKKXPAN FOT; IKY JKO (BHAGCHAND) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27/02/2018. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- ACIT, CIRCLE-2, KOTA. 2. IZR;FKHZ@ THE RESPONDENT- M/S KRITIKA VEGETABLE OIL PVT. LTD. , KOTAK. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 752 & 753/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR