M/S POOJA INDUSTRIES, BHARATPUR V. DEPUTY COMMISSIONER OF INCOME TAX, BHARATPUR

ITA 771/JPR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2224 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 16-10-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA JHA CIT DHK

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 HKKXPAN] YS[KK LNL; ] DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 771/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14 M/S POOJA INDUSTRIES, E-189, BRIJ INDUSTRIAL AREA, BHARATUPUR-321001 (RAJ). CUKE VS. D.C.I.T., CIRCLE- BHARATPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAHFP 5096 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJENDRA AGARWAL JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJENDRA JHA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 02/01/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 03/01/2018 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATES FR OM THE ORDER OF THE LD. CIT(A), ALWAR DATED 28/08/2017 FOR THE A.Y. 2 013-14. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFA CTURING OF MUSTERED OIL AND MUSTERED CAKE. THE RETURN OF INCOME WAS ELECTRONICALLY FILED ON 16/09/2013 DECLARING TOTAL INCOME AT RS. 2 0,04,730/-. THE ASSESSING OFFICER NOTED THAT THE GROSS PROFIT FOR T HE YEAR UNDER CONSIDERATION WAS LESS IN COMPARISON TO THE LAST THR EE YEARS AND HE ITA 771/JP/2017_ M/S POOJA INDUSTRIES VS DCIT 2 REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE AND M ADE AN ESTIMATED ADDITION OF RS. 2.00 LACS. THE LD. CIT(A) HAS SUSTAIN ED THE ACTION TAKEN BY THE ASSESSING OFFICER. 3. NOW THE ASSESSEE IS IN APPEAL BEFORE THE ITAT BY T AKING FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING: 1. THE REJECTION OF BOOKS OF ACCOUNT BY INVOKING PR OVISION OF SECTION 145(3) OF THE IT ACT. 2. MAKING AD HOC ADDITION OF RS. 2,00,000/-. 4. IN THE GROUND NO. 1 OF THE APPEAL, THE ASSESSEE HAS CHALLENGED INVOKING THE PROVISIONS OF SECTION 145(3) OF THE IN COME TAX ACT, 1961 (IN SHORT THE ACT). THE LD. CIT(A) HAS SUSTAINED THE REJECTION OF BOOKS OF ACCOUNT. 5. THE BENCH HAVE HEARD BOTH THE SIDES ON THIS ISSUE . ALTHOUGH, THE ASSESSEE CLAIMS THAT IT IS MAINTAINING EXHAUSTIVE B OOKS OF ACCOUNT, DAY TO DAY STOCK REGISTER AND DETAILS OF PURCHASE AND S ALES, HOWEVER, IT IS NOTED THAT THE GROSS PROFIT RATE OF THE ASSESSEE FO R THE YEAR HAS DECLINED FROM 2.29% TO 2.03% IN COMPARISON TO THE IMMEDIATE PRECEDING YEARS. THE AVERAGE G.P. OF PAST THREE PRECEDING YEARS ALSO COMES TO 2.29%. THE ASSESSING OFFICER POINTED OUT THAT THE SISTER CO NCERN OF THE ASSESSEE ITA 771/JP/2017_ M/S POOJA INDUSTRIES VS DCIT 3 M/S GARG OIL INDUSTRIES HAVING SIMILAR TURNOVER AND HAS DECLARED G.P. RATE OF 3.71%. THE ASSESSING OFFICER ALSO NOTED THAT SOME OF THE VOUCHERS WERE NOT HAVING SIGNATURES OF THE PERSON WHO HAS RECEIVED THE SUM AND SOME OF THE VOUCHERS WERE ALSO NOT HAVING TH E DATES. FURTHER THE ASSESSING OFFICER HAS ALSO OBSERVED THAT THERE IS NO INDEPENDENT MECHANISM TO VERIFY THE WEIGHT OF BARDANA, KHAD AND MOISTURE. THUS, THE VARIOUS DISCREPANCIES NOTED BY THE ASSESSING OF FICER COUPLED WITH DECLINE IN THE G.P. RATE IN COMPARISON OF THREE PRE CEDING YEARS, THE BENCH IS OF THE VIEW THAT THE LD. CIT(A) HAS RIGHTLY SUSTAINED THE REJECTION OF BOOKS OF ACCOUNT. HENCE, THIS GROUND O F ASSESSEES APPEAL IS DISMISSED. 6. IN THE 2 ND GROUND OF THE APPEAL, THE ASSESSEE HAS CHALLENGED THE AD HOC DISALLOWANCE OF RS. 2,00,000/-. THE LD. CIT(A) HAS CONFIRMED THE DISALLOWANCE BY HOLDING AS UNDER: 4.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER AS W ELL AS SUBMISSIONS MADE BY THE APPELLANT. I HAVE CONSIDERED THE REASONS GIV EN BY THE A.O IN THE ASSESSMENT ORDER FOR REJECTING THE BOOKS OF ACCOUNT S AND CONSEQUENTLY ESTIMATING THE INCOME. THE REASONS GIVEN BY THE A.O ARE REPRODUCED AS UNDER; THE REPLY OF THE ASSESSEE WAS NOT FOUND CONVINCING WITH FOLLOWING REASONS: ITA 771/JP/2017_ M/S POOJA INDUSTRIES VS DCIT 4 1. IN THE SISTER CONCERN OF THE SAME PARTNERS NAMEL Y M/S GARG OIL INDUSTRIES HAVING SIMILAR TURNOVER AND BUSINESS HAS DECLARED GROSS PROFIT FOR CURRENT PERIOD @ 3.71% IN COMPARISON TO 3.63% OF PRECEDING YEAR WHICH IS AN INCREASING TREND. 2. BILLS/ VOUCHERS FOR EXPENSES ARE DEFECTIVE LIKE SOME OF THE VOUCHERS HAVE NO NAME NOR SIGNATURE OF THE PERSON RECEIVING THE AMOUNT, SOME OF THE VOUCHERS DID NOT HAVE DATES WHEREAS SOME OF THE BILLS WERE NOT FOUND ON RECORD. 3. THERE IS NO INDEPENDENT MECHANISM TO VERIFY THE WEIGHT OF BARDANA, KHAD (REJECTION), AND MOISTURE. NO THIRD PARTY CONF IRMATION OF THE SAME IS AVAILABLE. THE ASSESSEE CLAIMS TO HAVE CONDUCTED LAB TEST IN RESPECT OF MOISTURE CONTENT. NO TEST FROM OUTSIDE AGENCY IS DONE. THIS MEANS THIS MEANS THAT THE MOISTURE CONTENTS AS DECLARED B Y THE ASSESSEE IS BASED ON ITS OWN AND NOT BASED ON AN INDEPENDENT LA B TESTING AGENCY. THUS, THE MOISTURE CONTENT, DECLARED BY IT, IS NOT SUBJECT TO PROPER VERIFICATION. IN MY CONSIDERED VIEW, THE A.OS REASON IS JUSTIFI ED AND HAS RIGHTLY POINTED OUT THAT IN THE SISTER CONCERN AND IN THE S AME LINE OF BUSINESS THE TRADING RESULTS HAVE BEEN GIVEN DIFFERENTLY. TH EREFORE, THE ADDITION OF RS. 2 LAKHS AFTER REJECTING THE BOOKS OF ACCOUNT S U/S 145(3) OF THE ACT IS JUSTIFIED. ACCORDINGLY, THE ADDITION OF RS. 2 LAKHS IS SUSTAINED AND APPELLANTS GROUNDS OF APPEAL ON THE ISSUE ARE DISM ISSED. 7. THE BENCH HAVE HEARD BOTH THE SIDES ON THIS ISSUE . THE GP RATE FOR THE YEAR UNDER CONSIDERATION WAS 2.03% WHILE AVER AGE OF THE G.P. RATE FOR PAST THREE YEARS COMES TO 2.29%. ALTHOUGH, THERE IS AN INCREASE IN THE TURNOVER, HOWEVER, THE FALL IN THE GP CANNOT BE EXPLAINED ONLY FOR THE REASON THAT THERE WAS AN INCREASE IN THE GROSS T URNOVER. THE ASSESSING OFFICER NOTED THAT CERTAIN VOUCHERS WERE N OT HAVING NAMES AND SIGNATURES OF RECIPIENTS, THERE IS NO SATISFACT ORY EXPLANATION FOR FALL ITA 771/JP/2017_ M/S POOJA INDUSTRIES VS DCIT 5 IN G.P. IN COMPARISON TO THREE PRECEDING YEARS. CO NSIDERING ALL THESE FACTS, THE BENCH IS OF THE VIEW THAT THE ASSESSING O FFICER HAS TAKEN A VERY REASONABLE VIEW BY MAKING ADDITION ONLY OF RS. 2.00 LACS, WHICH HAS BEEN RIGHTLY SUSTAINED BY THE LD. CIT(A). THEREF ORE, THE APPEAL OF THE ASSESSEE HAS NO MERIT AND THE SAME IS DISMISSED . 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/01/2018. SD/- HKKXPAN (BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 03 RD JANUARY, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S POOJA INDUSTRIES, BHARATPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE DCIT, CIRCLE- BHARATPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 771/JP/2017) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR