ACIT, Jaipur V. M/S OM PRAKASH RAJESH KUMAR & PARTY, JHALAWAR

ITA 782/JPR/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62016 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 05-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K MEENA

Judgement Text

1 ITA 782-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI SANJAY ARORA ) ITA NO. 782/JP/2011 ASSTT. YEAR : 2005-06. THE ACIT, CIRCLE-1, VS. M/S. OM PRAKASH RAJESH K UMAR & KOTA. PARTY, INDRAJEET VILLA, STATION ROAD, JHALAWAR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D.K. MEENA RESPONDENT BY : SHRI P.C. PARWAL DATE OF HEARING : 19.4.2012. DATE OF PRONOUNCEMENT : 16.5.2012. ORDER DATED : 16/5/2012. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY DEPARTMENT AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR . 2. THE ONLY ISSUE IS AGAINST SUSTAINING THE TRADING ADDITION OF RS. 50,000/- AGAINST TRADING ADDITION OF RS. 11,88,746/- MADE BY AO WHIL E UPHOLDING THE APPLICATION OF PROVISIONS OF SECTION 145(3) OF THE ACT. 3. THE ASSESSEE FILED ITS RETURN DECLARING INCOME O F RS. 18,58,184/-. THE ASSESSEE IS AN AOP WHICH WAS FORMED TO CONDUCT THE BUSINESS OF SALE AND PURCHASE OF LIQUOR, MAINLY, COUNTRY LIQUOR, IMFL. THE AO INVOKED PROVI SIONS OF SECTION 145(3) BY OBSERVING THAT NP RATE SHOWN BY ASSESSEE ARE LOWER AS COMPARED TO OTHER CASES I.E. IN 2 CASE OF VIRENDRA SINGH BHUPENDRA KUMAR SMT. MAFIA B ANO AND PARTY, JHALAWAR WHERE NP RATE HAS BEEN SHOWN AT 0.88%. THE AO FURTHER NO TED THAT NO SALE VOUCHERS HAVE BEEN MAINTAINED AND, THEREFORE, TRUE PROFIT CANNOT BE DE DUCED ON THE BASIS OF BOOKS OF ACCOUNT MAINTAINED BY ASSESSEE. ACCORDINGLY, HE INVOKED PR OVISIONS OF SECTION 145(3) AND APPLIED NP RATE OF 0.83% ON ESTIMATED SALE OF RS. 3 6,71,00,000/- WHICH RESULTED IN A TRADING ADDITION OF RS. 11,88,746/-. DETAILED WRIT TEN SUBMISSIONS WERE FILED BEFORE LD. CIT (A) WHICH HAS BEEN REPRODUCED IN THE ORDER OF L D. CIT (A) AT PAGES 2 TO 19. AFTER CONSIDERING THE DETAILED WRITTEN SUBMISSIONS AND EX PLANATION OF THE ASSESSEE, THE LD. CIT (A) FOUND THAT CERTAIN SALE VOUCHERS WERE NOT MAINT AINED AND, THEREFORE, TRUE PROFIT CANNOT BE DEDUCED. HOWEVER, IT WAS OBSERVED THAT T HIS IS THE FIRST YEAR OF THE ASSESSEES BUSINESS AND ASSESSEE HAS MAINTAINED THE RECORDS, W HICH IS AUDITED ALSO. IT WAS ALSO OBSERVED THAT IF LICENSE FEE ON ACCOUNT OF SHORT FA LL OF LIFTING OF QUANTITY OF LIQUOR IS TAKEN INTO ACCOUNT WHICH IS RS. 86,26,937- THEN NET PROFI T SHOWN BY ASSESSEE COMES TO 12.85% WHICH WAS HELD AS REASONABLE. HOWEVER, SINCE CERTA IN DEFECTS WERE THERE, THEREFORE, TO COVER ANY LEAKAGE, A TOKEN ADDITION OF RS. 50,000/- WAS SUSTAINED BY LD. CIT (A). 4. NOW THE DEPARTMENT IS IN APPEAL HERE BEFORE THE TRIBUNAL. 5. THE LD. D/R PLACED RELIANCE ON THE ORDER OF AO. 6. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESS EE PLACED RELIANCE ON THE ORDER OF LD. CIT (A). 7. AFTER CONSIDERING THE ORDERS OF AO AND LD. CIT ( A) AND SUBMISSIONS OF THE LD. COUNSEL, WE FIND THAT LD. CIT (A) WAS REASONABLE IN RESTRICTING THE TRADING ADDITION TO RS. 50,000/- ON LUMP SUM BASIS. IN FACT, THERE WAS A C ONDITION TO LIFT THE LIQUOR IN A SPECIFIC QUANTITY. HOWEVER, ASSESSEE COULD NOT LIFT THE SAME AND, THEREFORE, ASSESSEE WAS FORCED TO 3 PAY A SHORT FALL AMOUNT IN THE SHAPE OF LICENSE FEE TOTALING TO RS. 86,26,937/-. IF THIS AMOUNT IS TAKEN INTO CONSIDERATION, THEN THE NET PR OFIT COMES TO ABOUT 2.85% WHICH IS MUCH HIGHER THEN COMPARATIVE CASES NOTED BY AO. IT WAS FURTHER NOTED BY LD. CIT (A) THAT THE COMPARABLE CASES NOTED BY AO WERE NOT RELA TED TO THE YEAR UNDER CONSIDERATION BUT TO THE EARLIER YEARS. THE LD. CIT (A) HAS ALSO TAKEN INTO CONSIDERATION VARIOUS CASE LAWS OF THE TRIBUNAL WHERE A NOMINAL ADDITION WAS S USTAINED IN SIMILAR CIRCUMSTANCES. ALL THESE DETAILS HAVE BEEN MENTIONED IN THE WRITTE N SUBMISSIONS WHICH WERE REPRODUCED BY LD. CIT (A) IN HIS ORDER, THEREFORE, THEY WERE N OT REPEATED IN THE OPERATIVE PORTION OF THE ORDER. HOWEVER, EXPLANATION OF THE ASSESSEE WAS FOUND SATISFACTORY WHICH REMAINED UNCONTROVERTED. THEREFORE, IN VIEW OF THESE FACTS A ND CIRCUMSTANCES, WE SEE NO REASON TO INTERFERE WITH THE FINDING OF LD. CIT (A). ACCORDI NGLY, WE CONFIRM HIS ORDER. 8. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMI SSED. 9. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 16. 5.2012. SD/- SD/- ( SANJAY ARORA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/ COPY FORWARDED TO :- THE ACIT, CIRCLE-1, KOTA. M/S. OM PRAKASH RAJESH KUMAR & PARTY, JHALAWAR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 782/JP/2011) BY ORDER, AR ITAT JAIPUR. 4