M/s Laxmi Automobiles Agencies, Kanpur V. Income Tax Officer-1(2), Kanpur

ITA 819/LKW/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100492 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 03-11-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 13-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Depreciation

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.819/LKW/2014 ASSESSMENT YEAR 2010-11 THE ITO - 1(2), KANPUR-208 001 M/S LAXMI AUTOMOBILES AGENCIES, 16/103, THE MALL, KANPUR-208001 PAN AABFL 6839 P (RESPONDENT) (APPELLANT) SHRI RAKESH GARG, ADVOCATE APPELLANT BY SHRI AMIT NIGAM, DR RESPONDENT BY 03.11.2015 DATE OF HEARING 18.12.2015 DATE OF PRONOUNCEMENT O R D E R PER SUNIL KUMAR YADAV, JM. 1. THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-II, KANPUR MAINLY ON TWO GROUNDS, ONE IS WIT H REGARD TO ESTIMATION OF TRADING RESULTS AND THE OTHER IS WITH REGARD TO THE ESTIMATION OF TELEPHONE EXPENSES, DEPRECIATION AND VEHICLE EXPENSES ON ACCOUNT OF PERSONAL USE. 2. SO FAR AS ESTIMATION OF TRADING RESULTS ARE CONC ERNED, IT IS NOTICED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSING OFFICER HAS NOTED THAT THE GROSS PROFIT RATE DECLARED IN TH E IMPUGNED ASSESSMENT YEAR IS LESS THAN THE RATE DECLARED IN E ARLIER YEARS. IN AY 2008-09, G.P. RATE WAS DECLARED AS 4.08% AND AY 200 9-10 IT WAS AT 2 3.64% IN COMPARISON TO THE GP RATE DECLARED IN THE INSTANT YEAR AS 2.34%. THE JUSTIFICATION FOR THE REDUCTION IN G.P. RATE WAS STATED TO BE INCREASE IN SALES, WHICH WERE NOT FOUND TO BE SATIS FACTORY. IN THE LIGHT OF THE FACT THAT THE ASSESSEE HAS NOT MAINTAINED TH E PROPER BOOKS OF ACCOUNTS, THE RESULT DECLARED BY THE ASSESSEE WAS N OT ACCEPTED BY THE AO. THE ASSESSING OFFICER ACCORDINGLY REJECTED THE BOOKS OF ACCOUNTS AND ESTIMATED THE NET PROFIT AT 3.56%, AGAINST WHIC H AN APPEAL WAS FILED BEFORE THE CIT(A) AND THE CIT(A) HAS CONFIRME D THE ESTIMATION MADE BY THE ASSESSING OFFICER. NOW, THE ASSESSEE HA S PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT HE HAS MAINTAINED THE PROPER BOOKS OF ACCOUNTS, THEREFORE, THE SAME S HOULD NOT HAVE BEEN REJECTED. 3. FROM PERUSAL OF THE RECORD, WE FIND THAT ON ACCO UNT OF NON MAINTENANCE OF STOCK REGISTER AND OTHER RECORDS FOR MAINTENANCE, THE ASSESSING OFFICER HAS RIGHTLY REJECTED THE BOOKS OF ACCOUNTS AS NET PROFIT IS NOT CORRECTLY WORKOUT. WE ACCORDINGLY CON FIRM THE REJECTION OF BOOKS OF ACCOUNTS AND SO FAR AS THE ESTIMATION OF N ET PROFIT RATE IS CONCERNED, WE FIND THAT ON ACCOUNT OF INCREASED IN SALES, THE NET PROFIT RATE IS BOUND TO COME DOWN BUT IN ANY CASE IT CANNO T BE 2.34% AS STATED BY THE ASSESSEE. KEEPING IN VIEW, THE PAST R ECORD OF THE ASSESSEE, WE ESTIMATE THE NET PROFIT RATE AT 3.4% O F THE TOTAL TURNOVER. ACCORDINGLY, THE ORDER OF THE CIT(A) IS MODIFIED AN D THE ASSESSING OFFICER IS DIRECTED TO ESTIMATE THE NET PROFIT RATE AT 3.4%. 4. SO FAR AS OTHER ADDITION ON ACCOUNT OF DISALLOWA NCE OF TELEPHONE EXPENSES, VEHICLE EXPENSES AND DEPRECIATION ARE CON CERNED, WE FIND THAT THE ASSESSING OFFICER HAS MADE THE DISALLOWANC ES UPTO 15% ON ACCOUNT OF PERSONAL USE, WHICH APPEARS TO BE ON HIG HER SIDE. WE 3 ACCORDINGLY, REDUCE THE SAME TO 10%. ACCORDINGLY, T HIS GROUND IS PARTLY ALLOWED. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DAT E MENTIONED ON THE CAPTION PAGE) SD/- SD/- (A.K. GARODIA ) (SUNIL KUMAR YAD AV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18/12/2015 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGIST RAR