NOVELTY GARMENTS, Jaipur V. ACIT, Jaipur

ITA 774/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5570 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 10-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL

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 NOS. 774/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2009-10 . NOVELTY GARMENTS, BEHIND GOLIMAR GARDEN, AMER ROAD, JAIPUR. CUKE VS. THE ACIT, CIRCLE-5, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAAFN 9881 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY S BY : SHRI P.C. PARWAL (C.A) JKTLO DH VKSJ LS@ REVENUE BY : SHRI KAILASH MANGAL (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 01.12.2015. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 01/01/2016. VKNS'K@ ORDER PER SHRI LALIET KUMAR, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT (A)-II, JAIPUR DATED 27.08.2013 FOR THE A.Y. 2009-10. THE GROUNDS OF APPEAL STATES AS UNDER :- 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED ON FACTS AND IN LAW IN CONFIRMING THE TRADING ADDITION OF RS. 2, 00,000/-. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCES @ 10% OUT OF FOLLOWING EXPENSES ; 2 ITA NO. 774/JP/2013 A.Y. 2009-10. NOVELTY GARMENTS VS. ACIT, JAIPUR. CONVEYANCE, REPAIR AND MAINTENANCE EXPENSES RS. 17, 555/- TELEPHONE EXPENSES RS. 29,309/- STAFF WELFARE AND OFFICE EXPENSES RS. 37,607/- 2. REGARDING GROUND NO. 1, THE FACTS AS MENTIONED I N THE ASSESSMENT ORDER ARE THAT THE ASSESSEE DERIVES INCOME FROM MANUFACTURING AND EXPORT OF READYMADE GARMENTS. THE SALES, GROSS PROFIT AND GP RATIO FOR THE LAST T HREE YEARS I.E. A.Y. 2007-08, 2008-09 AND 2009-10 ARE MENTIONED IN THE ASSESSMENT ORDER A RE AS UNDER :- A.Y TURNOVER GROSS PROFIT G.P. RTE 2007-08 4,91,45,123/- 78,30,794/- 15.93% 2008-09 4,41,94,694/- 92,08,950/- 20.84% 2009-10 5,16,49,095/- 1,34,49,088/- 26.04% IN THE ASSESSMENT ORDER, THE AO MENTIONED THAT THE ASSESSEE HAS NOT MAINTAINED DAY TO DAY STOCK REGISTER AND CONSUMPTION REGISTER FOR RAW MATERIAL. HE FURTHER MENTIONED THAT IN THE ABSENCE OF QUANTITATIVE DETAILS, THE VA LUE OF OPENING AND CLOSING STOCKS CANNOT BE VERIFIED AS A RESULT, THE AO HAD ISSUED N OTICE DATED 05.12.2011 FOR INVOKING THE PROVISIONS OF SECTION 145(3). NO SPECIFIC REPL Y TO THIS NOTICE WAS RECEIVED, AS A RESULT THEREOF THE BOOKS OF ACCOUNTS WERE REJECTED BY THE AO AND A LUMP SUM TRADING ADDITION OF RS. 2,00,000/- WAS MADE IN THE HANDS OF THE ASSESSEE. 3. AGGRIEVED BY THE ORDER PASSED BY THE AO, THE ASS ESSEE PREFERRED APPEAL BEFORE LD. CIT (A) AND HAS SUBMITTED THAT THE GP RATE FOR A.Y. 2009-10 IS BETTER AND IT WAS 3 ITA NO. 774/JP/2013 A.Y. 2009-10. NOVELTY GARMENTS VS. ACIT, JAIPUR. FURTHER CONTENDED THAT THE AO HAS CONDUCTED TEST CH ECK OF BOOKS OF ACCOUNTS ON VARIOUS DATES OF ASSESSMENT PROCEEDINGS. IT WAS FU RTHER SUBMITTED THAT ALL STITCHING CHARGES AND TOTAL WAGES EXPENSES WERE PAID THROUGH CROSSED CHEQUE AND TDS WERE DEDUCTED ON EACH AND EVERY BILL AND VOUCHERS. THE LD. A/R HAS ALSO MENTIONED THAT THE ASSESSEE RELIED UPON THE JUDGMENTS OF HONBLE JURIS DICTIONAL HIGH COURT IN THE CASES OF MALANI RAMJIVAN JAGANNATH VS. ACIT, 207 CTR 19 (RAJ .), CIT VS. GOTAN LIME KHANIZ UDYOG, 256 ITR 243 (RAJ.) AND TRIBUNALS ORDER IN D CIT VS. ASSOCIATED STONE INDUSTRIES LTD. 22 TAX WORLD 155 (JP) AND ON THE ASSESSEES OW N CASE IN ITA NO. 637/JP/2008 FOR THE A.Y. 2004-05. HOWEVER, DESPITE THAT THE BOOKS W ERE REJECTED BY THE LD. CIT (A) AND CONFIRMED THE ADDITION OF RS. 2,00,000/-. 4. NOW THE ASSESSEE IS BEFORE US. THE LD. A/R OF T HE ASSESSEE HAS TAKEN US TO THE ORDER PASSED BY LD. CIT (A) FOR THE A.Y. 2008-09 TO SHOW THAT THE LD. CIT (A) ON THE SIMILAR FACTS AND CIRCUMSTANCES HAS DELETED THE TRA DING ADDITION OF RS. 4,00,000/- MADE BY THE AO. THE LD. A/R FURTHER RELIED UPON THE JUDG MENTS REFERRED HEREIN ABOVE TO CONTEND THAT THE TRADING ADDITION CONFIRMED BY LD. CIT (A) IS UNJUSTIFIED. 4.1. PER CONTRA, THE LD. D/R FOR THE REVENUE RELIED UPON THE ORDERS PASSED BY THE AUTHORITIES BELOW. 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT LD. CIT (A) IN THE CASE OF THE ASSESSE E FOR THE ASSESSMENT YEAR 2008-09 HAD DELETED THE TRADING ADDITION OF RS. 4,00,000/- ON THE GROUND THAT THE GP RATES ARE 4 ITA NO. 774/JP/2013 A.Y. 2009-10. NOVELTY GARMENTS VS. ACIT, JAIPUR. BETTER THAN THE PREVIOUS YEAR. IN THE ASSESSMENT YE AR 2008-09 THE GP RATE WAS 20.84% WHEREAS IN THE ASSESSMENT YEAR 2009-10 THE GP RATE IS 26.04%. IN OUR VIEW, THERE IS SIGNIFICANT INCREASE IN THE GP RATE IN THE YEAR UND ER CONSIDERATION, IN VIEW THEREOF THERE IS NO JUSTIFICATION FOR ADDING THE ADHOC TRADING AD DITION OF RS. 2,00,000/-. MOREOVER, THE LAW LAID DOWN BY HONBLE JURISDICTIONAL HIGH CO URT THAT IT IS NOT NECESSARY THAT IN EVERY CASE OF REJECTION OF BOOKS THE TRADING ADDITI ON SHOULD BE MADE. THE PAST HISTORY OF THE ASSESSEE IS THE BEST GUIDING FACTOR FOR DETE RMINING THE GP RATE. IN THE PRESENT CASE THE GP RATE IS MUCH HIGHER THAN THE PREVIOUS Y EAR. THEREFORE, WE DO NOT FIND ANY JUSTIFICATION FOR MAKING THE ADHOC TRADING ADDITION OF RS. 2,00,000/-. ACCORDINGLY, THE ADDITION OF RS. 2,00,000/- IS DELETED. 6. IN RESPECT OF GROUND NO. 2, THE AO HAS DISALLOWE D 1/10 TH OF THE CONVEYANCE, REPAIR & MAINTENANCE EXPENSES, TELEPHONE EXPENSES, STAFF & WELFARE AND OFFICE EXPENSES ON THE GROUND THAT SOME OF THE EXPENSES AR E SUPPORTED BY SELF MADE VOUCHERS AND IN SOME CASES VOUCHERS ARE ALSO NOT FO UND. AS THE EXPENSES WERE NOT PROPERLY VERIFIABLE, THEREFORE, THE AO HAS DISALLOW ED 1/10 TH OF THE EXPENSES. ON APPEAL BEFORE LD. CIT (A), HE HAS CONFIRMED THE ACTION OF THE AO. 7. NOW THE ASSESSEE IS BEFORE US. WE HAVE NOTICED THAT IN THE PAST VIDE ITAT ORDERS FOR THE ASSESSMENT YEARS 2004-05 AND 2001-02 , THE TRIBUNAL HAS UPHOLD THE DISALLOWANCE OF CONVEYANCE, REPAIR AND MAINTENANCE EXPENSES, TELEPHONE EXPENSES, STAFF WELFARE EXPENSES AND OFFICE EXPENSES TO THE E XTENT OF 1/10 TH . RESPECTFULLY 5 ITA NO. 774/JP/2013 A.Y. 2009-10. NOVELTY GARMENTS VS. ACIT, JAIPUR. FOLLOWING THE ORDER PASSED BY THE TRIBUNAL, WE UPHO LD THE ORDER PASSED BY LD. CIT (A) AND DISMISS THE GROUND NO. 2. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/01/2016. SD/- SD/- VH-VKJ-EHUK YFYR DQEKJ (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 01/01/2016. DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- NOVELTY GARMENTS, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE-5, JAIUPR. 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. 774/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR 6 ITA NO. 774/JP/2013 A.Y. 2009-10. NOVELTY GARMENTS VS. ACIT, JAIPUR.