ITO, Kota V. SHRI HITESH SHARMA, Kota

ITA 840/JPR/2012

• Counselvise Citation: 84023114 RSA 2012
• Duration Of Justice: 2 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 30-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G G MUNDRA
• Keywords: Business income; Additional evidence
• Section: 142(1); 144

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 VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 840/JP/2012 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2009-10 INCOME TAX OFFICER, WARD 1(1), KOTA. CUKE VS. HITESH SHARMA H.NO. 398, SHOPPING CENTRE, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: ADPPS 5539 N VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI KAILASH MANGAL (JCIT) FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI G.G. MUNDRA (C.A.) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 15/06/2015 MN?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 11/08/2015 VKNS'K @ ORDER PER: BENCH THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 31/08/2012 PASSED BY THE LEARNED CIT (A), KOTA FOR A.Y. 2009-10. THE RESPECTIVE GROUNDS OF APPEAL ARE AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN - ITA 840/JP/2012_ ITO VS. HITESH SHARMA 2 (I) REDUCING THE G.P. RATE ON THE TURNOVER WITHOUT A NY VALID AND GENUINE BASIS THEREBY DELETING ADDITION O F RS. 4,85,625/-; (II) DELETING ADDITION OF RS. 14,39,589/- ON ACCOUN T OF UNEXPLAINED LOANS. 2. THE FIRST GROUND OF REVENUES APPEAL IS AGAINST R EDUCING THE G.P. RATE ON THE TURNOVER WITHOUT ANY VALID AND GENUINE B ASIS AND DELETED THE ADDITION OF RS. 4,85,625/-. THE ASSESSEE DERIVES INCOME FROM BUSINESS OF RETAIL SAREE SHOP AND OTHER SOURCES OF HOUSE PROPERTY. HE FILED HIS RETURN ON 30/09/2009 DECLARING INCOME OF RS. 4,42,210/-. THE EX PARTE ORDER U/S 144 OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) WAS PASSED BY THE ASSESSING OFFICER. THE LD ASSESSIN G OFFICER ISSUED NOTICE U/S 143(2) OF THE ACT ON 28/09/2010 AND FIXI NG THE CASE FOR HEARING ON 18/10/2010. THE ASSESSEE SOUGHT ADJOURNME NT ON THAT DATE. THE ASSESSING OFFICER AGAIN ISSUED NOTICE U/S 142(1) ALONGWITH QUESTIONNAIRE DATED 16/5/2011 AND CASE WAS FIXED FOR 02/6/2011. AGAIN THE ASSESSEE SOUGHT ADJOURNMENT AND CASE WAS ADJOURN ED FOR 16/6/2011. ON 16/6/2011, SHRI R.C. SHARMA, ADVOCATE ATTENDED AND FILED WRITTEN SUBMISSION BEFORE THE ASSESSING OFFICE R, WHICH HAS BEEN REPRODUCED BY THE ASSESSING OFFICER ON PAGE NO. 2 O F THE ASSESSMENT ORDER. IT IS FURTHER OBSERVED THAT THE COUNSEL OF T HE ASSESSEE HAD NOT ITA 840/JP/2012_ ITO VS. HITESH SHARMA 3 PRODUCED THE BOOKS OF ACCOUNT STATING THAT THE ACCO UNTANT WITH WHOM THE BOOKS ARE LYING COULD NOT BE LOCATED. AGAIN THE ASSESSEE WAS ASKED TO PRODUCE COMPLETE BOOKS OF ACCOUNT. THE ASSESSEES SON MASTER VAIDIK SHARMA DEPOSITED RS. 7,15,428/- WITH THE ASSE SSEE BUT NO CONFIRMATION HAD BEEN FILED BY MASTER VAIDIK SHARMA TO ASSESSEE THE TAX OR NOT. THERE WAS ANOTHER UNSECURED LOAN IN THE NAME OF SMT. LALITA SHARMA, FOR WHICH CONFIRMATION WAS ASKED TO FI LE BY THE ASSESSING OFFICER. OTHER QUERIES ON ACCOUNT OF INCOME FROM HO USE PROPERTY AND HOUSE PURCHASED AT ADITYA AWAS AT RS. 23,66,600/- WAS ASKED TO EXPLAIN WITH ACQUISITION OF PLOT, CONSTRUCTION AND A MOUNT INVESTED. THIS CASE WAS FIXED FOR 01/7/2011 BUT AGAIN SOUGHT ADJOUR NMENT. THE CASE WAS ADJOURNED TO 13/7/2011. ON 13/7/2011, NONE ATTEN DED NOR ANY ADJOURNMENT SOUGHT OR FILED THE DOCUMENTARY SUPPORT ING EVIDENCE WITH REGARD TO REQUIREMENT MADE VIDE ORDERSHEET ENTRIES DATED 16/6/2011. THE ASSESSEES CASE WAS REFIXED FOR 05/9/2011 AND WAS ASKED TO PRODUCE COMPLETE BOOKS OF ACCOUNT AND OTHER DETAILS REQUIRED FROM TIME TO TIME. FINALLY, THE ASSESSING OFFICER PASSED ORDER U/S 144 OF THE ACT ON THE BASIS OF EVIDENCE AVAILABLE WITH HIM. AS PER TRADING ACCOUNT, THE ASSESSEE HAD SHOWN G.P. RATE @ 18.07% COMPARED TO G.P. RATE @ 18.08% IN PRECEDING YEAR. THE ASSESSEE HAD NOT PROD UCED THE BOOKS ITA 840/JP/2012_ ITO VS. HITESH SHARMA 4 OF ACCOUNT, PURCHASE BILLS, SALES BILLS, VOUCHERS O F EXPENDITURE ETC. FOR VERIFICATION. FURTHER THE ASSESSEE HAD SHOWN CLOSIN G STOCK OF RS. 38,23,004/- BUT NO STOCK INVENTORY OF CLOSING STOCK FILED OR PRODUCED FOR VERIFICATION, WHICH WAS ALSO NOT SUBJECT TO VERIFICA TION. IN ABSENCE OF COMPLETE BOOKS AND VOUCHERS, THE SALE OF THE ASSESS EE WAS ESTIMATED AT RS. 1.05 CRORES AS SALE DISCLOSED BY THE ASSESSE E AT RS. 1,02,15,340/- AND APPLIED THE GP RATE @ 25.35% AS DECLARED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08. ACCORDINGLY, ADDITION OF R S. 12,15,775/- WAS MADE BY THE ASSESSING OFFICER IN THE TRADING RESULT . 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A), WH O HAD ALLOWED THE APPEAL PARTLY BY OBSERVING THAT PROFIT HAD TO BE WOR KED OUT ON SALE VALUE. IN THE BILLS ATTACHED WITH THE ASSESSING OFFI CERS REPORT AND ALSO WITH THE ASSESSEES SUBMISSION, THERE WERE BILLS WITH DISCOUNT OF 20% AND THE PROFIT ON SUCH SALES WAS LESS THAN 5%. THE LD CIT(A) HAD CALCULATED THE G.P. ON NORMAL SALE @ 23.50% IN PLACE OF 25.35% APPLIED BY THE ASSESSING OFFICER. HE FURTHER HELD T HAT THE ASSESSEE SOLD GOODS IN SALE ON TWO OCCASIONS AND IT CAN BE REASO NABLE ESTIMATED THAT 15% OF GOODS WERE SOLD IN SUCH SALES AND THE G. P. ON SUCH SALES WAS 5%. BASED ON G.P. CALCULATED BY THE LD CIT(A), TH E AVERAGE G.P. ITA 840/JP/2012_ ITO VS. HITESH SHARMA 5 HAS BEEN WORKED OUT @ 20.72% AND GROSS PROFIT OF RS. 21,76,125/- ON ESTIMATED SALE OF RS. 1.05 CRORES. THUS, RESULTING ADDITION OF RS. 3,25,950/- WAS CONFIRMED AND REMAINING ADDITION OF R S. 8,85,625/- WAS DELETED. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LEARNE D D.R. VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFF ICER. 5. AT THE OUTSET, THE LD AR OF THE ASSESSEE HAS SUB MITTED THAT ASSESSEE MAINTAINED COMPLETE DETAIL OF SALE, PURCHA SE AND STOCK IN SOFT FORM ON DEDICATED COMPUTER SOFTWARE PREPARED FOR ASS ESSEE AND THUS COMPLETE DETAILS OF SALE, PURCHASE & STOCK WERE MAIN TAINED ON COMPUTER. THE ASSESSEE THUS MAINTAINED RECORD AT THE BEST IT COULD DO, THOUGH ASSESSEE DID NOT MAINTAINED DAY TO DAY STOCK REGISTER IN A STOCK BOOK FORM AS IT IS NOT PRACTICABLE TO MAINTAI N SUCH DETAILS. IN THE CASE OF ASHOKA REFRACTORIES P. LTD. VS. CIT (2005) 2 79 ITR 457 IT IS HELD THAT THE ABSENCE OF STOCK REGISTER OR FAILURE TO MA INTAIN ITEMWISE STOCK REGISTER, BOOKS OF ACCOUNTS CANNOT BE REJECTED UNLE SS THERE IS A FINDING OR OPINION EITHER THAT RECORD WERE INCOMPLETE OR TH AT METHOD OF ACCOUNTING EMPLOYED WAS SUCH THAT INCOME COULD NOT B E DEDUCED FROM ACCOUNTS MAINTAINED BY ASSESSEE. THE ASSESSEE IN IMM EDIATELY ITA 840/JP/2012_ ITO VS. HITESH SHARMA 6 PRECEDING YEAR DECLARED TOTAL SALES OF RS. 89,12,36 0/- WHEREIN GROSS PROFIT WAS RS. 16,11,415/- GIVING G.P. RATE OF 18.08 % WHILE IN THIS YEAR THE ASSESSEE DECLARED TOTAL SALES OF RS. 1,02,15,34 0/- ON WHICH GROSS PROFIT IS RS. 18,46,175/- GIVING G.P. RATE OF 18.07 %. THUS THE ASSESSEE ON ENHANCED SALE DECLARED SAME G.P. RATE AS OF LAST YEAR. THE HON'BLE RAJASTHAN HIGH COURT IN THE SAME CASE OF KANSARA BE ARING PVT. LTD. VS. ACIT 270 ITR 235 HAS HELD THAT LAST YEARS PROFIT DEC LARED IS THE BEST GUIDE TO ESTIMATE THE PROFIT RATE. SIMILAR VIEW HAS BEEN TAKEN BY HON'BLE ITAT JAIPUR BENCH IN THE CASE OF CIT VS. LAK HANI SHOES LTD. 34 TW 32 AND IN THE CASE OF J.C. SHARMA VS. ITO 33 TW 80 . THUS THE ASSESSING OFFICER SHOULD HAVE ACCEPTED DECLARED RES ULTS INSTEAD OFF APPLYING A G.P. RATE OF 25.35% DECLARED BY ASSESSEE IN A.Y. 2007-08 WHEREIN TOTAL SALES WERE LOWER I.E. ABOUT 47% OF THIS YEAR TURNOVER. THE ASSESSEE ALSO HAS TO RESORT DISCOUNT SALES IN THE Y EAR FROM TIME TO TIME TO CLEAR SLOW MOVING/OBSOLETE STOCK. IN THIS YEAR AS SESSEE MADE DISCOUNT SALES OF 27,91,246/- ON WHICH DISCOUNT ALL OWED WAS RS. 7,61,031/- WHICH WORKS AS MUCH AS TO 27.26% IN COMPAR ISON TO LAST YEAR DISCOUNT SALES OF RS. 21,00,000/- ALLOWING DISC OUNT OF RS. 510000/- I.E. @ 24.25%. THE LD. A.O. IN REMAND PROCEEDINGS IN HIS REPORT WORKED G.P. RATE TAKING CERTAIN TRANSACTIONS AND WORK ED OUT G.P. @ ITA 840/JP/2012_ ITO VS. HITESH SHARMA 7 30% - 33% ON THESE BILLS BUT THE SAME WAS WRONG AS I T WAS CALCULATED ON PURCHASE PRICE INSTEAD OF SALE PRICE AS DECLARED G.P. IS BEING COMPARED ON SALE PRICE. THE LD. CIT (A) HELD SUCH G.P . WORKS OUT @ 23.50% ON SALES AS PER REPORT OF LD. A.O. AND ALSO TOOK INTO CONSIDERATION THE DISCOUNT SALES. THEREFORE, THE LD CIT(A) FINALLY CALCULATED THE G.P. @ 20.725%, WHICH COMES TO RS. 3,2 9,950/- AND REMAINING BALANCE ADDITION OF RS. 8,85,625/- IS DEL ETED. THEREFORE, HE PRAYED TO CONFIRM THE ORDER OF THE LD CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS UND ISPUTED FACT THAT THE ASSESSEE DID NOT PRODUCE COMPLETE BOOKS OF ACCOUNT WITH VOUCHERS FOR VERIFICATION BY THE ASSESSEE AS THE ASSESSMENT WAS M ADE U/S 144 OF THE ACT. HOWEVER, THE LD CIT(A) HAD CALLED FOR REMAND REP ORT FROM THE ASSESSING OFFICER, WHO HAS PROPOSED THE G.P. RATE A FTER VERIFICATION OF THE CERTAIN BILLS @ 30.73% AS AGAINST 25.35% APPLIED BY THE ASSESSING OFFICER. HOWEVER, THE LD CIT(A) FOUND DEFECT IN THE C OMPUTATION OF G.P. RATE, WHICH WAS CALCULATED ON PURCHASES BILL BUT AS P ER ACCOUNTANCY, THE G.P. RATE IS ALWAYS CALCULATED ON SALE, WHICH HAS RI GHTLY BEEN APPLIED BY THE LD CIT(A). AFTER EXAMINING THE DEFECT, THE LD C IT(A) CAME TO ITA 840/JP/2012_ ITO VS. HITESH SHARMA 8 CONCLUSION THAT 20.72% G.P. RATE IS APPLICABLE IN A SSESSEES CASE ON ENHANCED SALE. THEREFORE, THE LD CIT(A) HAS THOROUGH LY ANALYSED THE REMAND REPORT AND ASSESSEES SUBMISSIONS, WHICH HAS NOT BEEN CONTROVERTED BY THE LD DR. THEREFORE, WE UPHOLD THE O RDER OF THE LD CIT(A). ACCORDINGLY THIS GROUND OF REVENUES APPEAL IS DISMISSED. 7. THE SECOND GROUND OF REVENUES APPEAL IS AGAINST DELETING THE ADDITION OF RS. 14,39,589/- ON ACCOUNT OF UNEXPLAIN ED LOAN. THE ASSESSEE HAD SHOWN UNSECURED LOAN OF RS. 7,24,161/- IN THE NAME OF SMT. LALITA SHARMA AND RS. 7,14,428/- IN THE NAME O F MASTER VAIDIK SHARMA. THE ASSESSEE WAS ASKED TO EXPLAIN VIDE LETTER DATED 16/5/2011 TO EXPLAIN THE SOURCE OF THE LOAN WITH CONFIRMATION BUT THE ASSESSEE DID NOT FILE ANY CONFIRMATION. THEREFORE, TOTAL ADDITION OF RS. 14,39,589/- WAS MADE U/S 68 OF THE ACT. 8. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A), WH O HAD ALLOWED THE APPEAL BY OBSERVING THAT SMT. LALITA SHARMA IS MOTH ER OF THE ASSESSEE, SHE HAD OPENING BALANCE OF RS. 2,24,161/- AND DURIN G THE YEAR, SHE HAD RECEIVED LOAN OF RS. 8 LACS FROM THE BANK AND GIVEN THE SAME TO THE ASSESSEE. SHE WAS ASSESSED TO TAX AND FILED HER RETU RN WITH ITO WARD ITA 840/JP/2012_ ITO VS. HITESH SHARMA 9 1(1), KOTA. SHE HAD FILED HER RETURN FOR A.Y. 2009- 10 ON 30/09/2009 DECLARING INCOME OF RS. 4,36,950/-. THE ASSESSING O FFICER OF BOTH THE ASSESSEES AND CREDITORS WAS SAME. THE DETAILS COULD HAVE BEEN EASILY VERIFIED BY THE ASSESSING OFFICER HIMSELF. MASTER V AIDIK SHARMA IS MINOR SON OF THE ASSESSEE, WHO HAD OPENING BALANCE OF RS. 4,04,015/- AND RECEIVED RENTAL INCOME AT RS. 3,15,013/- DURING THE YEAR UNDER CONSIDERATION. BEING MINOR, THE INCOME OF MASTER VA IDIK SHARMA HAS BEEN CLUBBED IN THE ASSESSEES INCOME AND SAME HAS BEEN OFFERED FOR TAXATION. THEREFORE, HE ALLOWED THE APPEAL. 9. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFF ICER AND ARGUED THAT THE LD CIT(A) HAD NOT PROVIDED OPPORTUNITY TO THE ASSESSING OFFICER BUT ACCEPTED ALL THE EVIDENCES FURNISHED BY THE ASS ESSEE. THEREFORE, HE PRAYED TO CONFIRM THE ADDITION MADE BY THE ASSESSIN G OFFICER. 10. AT THE OUTSET, THE LD AR OF THE ASSESSEE HAS RE ITERATED THE ARGUMENTS MADE BEFORE THE LD CIT(A) AND PRAYED TO CO NFIRM THE ORDER OF THE LD CIT(A). 11. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE LD CIT(A) ADMITTED THE ADDITIONAL EVIDENCE EVEN WITHOUT PASSING ORDER O N ADMITTING THE ITA 840/JP/2012_ ITO VS. HITESH SHARMA 10 ADDITIONAL EVIDENCE IN HIS ORDER. THE ASSESSEE HAD N OT FURNISHED ANY EVIDENCE BEFORE THE ASSESSING OFFICER AS HE WAS NON- COOPERATIVE AT THE TIME OF ASSESSMENT PROCEEDINGS. EVEN CREDITORS ARE ASSESSED WITH THE SAME ASSESSING OFFICER. IT IS SETTLED LAW THAT THE A SSESSEE HAS TO FURNISH THE REQUIRED DETAILS WITH CONFIRMATION BEFORE THE AS SESSING OFFICER FOR ANY CLAIM. HOWEVER, THE TECHNICAL DEFECTS FOUND IN T HE ORDER OF THE LD CIT(A) IS WAIVED AS MINOR SONS INCOME IS CLUBBED IN THE HANDS OF ASSESSEE HIMSELF AND EXPLANATION FOR ASSESSEES MOT HER LOAN HAD BEEN FILED, THEREFORE, WE DO NOT INTERVENE IN THE ORDER O F THE LD CIT(A) ON TECHNILITIES. ACCORDINGLY, WE UPHOLD THE ORDER OF TH E LD CIT(A). 12. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 11/08/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 11 TH AUGUST, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- ITO, WARD 1(1), KOTA. ITA 840/JP/2012_ ITO VS. HITESH SHARMA 11 2. IZR;FKHZ @ THE RESPONDENT- SHRI HITESH SHARMA, KOTA 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. 840/JP/2012) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR