HITESH KUMAR GUPTA, Dausa V. ITO, Dausa

ITA 860/JPR/2013

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4486 (ITAT-JAIPUR)
• Duration Of Justice: 4 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 14-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI
• Keywords: Reopening of assessment; Unexplained cash credit; Corroborative evidences
• Section: 147; 28; 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S B, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 859 & 860/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2004-05 & 2005-06 SHRI HITESH KUMAR GUPTA S/O SHRI SATISH CHAND GUPTA NAYA KATLA, DAUSA. CUKE VS. THE ITO, DAUSA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AEOPG 2868 Q VIHYKFKHZ@ APPE LLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI ROHAN SOGANI (C.A) & SHRI RAJEEV SOGANI (C. A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 21/08/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 26/10/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINS T THE RESPECTIVE ORDERS OF THE LD CIT(A) FOR AY 2004-05 A ND AY 2005-06 RESPECTIVELY. AS THE SAME WERE HEARD TOGETHER AND INVOLVING COMMON GROUNDS OF APPEAL, THE SAME ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. 2. IN ITA NO. 859/JP/2013, THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER OF LD. CIT(A), ALWAR DATED 05.09.2013 FOR THE ASSESSMENT ITA NO. 859 & 860/JP/2013 SHRI HITESH KUMAR GUPTA VS. ITO 2 YEAR 2004-05 WHEREIN THE ASSESSEE HAS TAKEN THE FOL LOWING GROUNDS OF APPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD . AO IN REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE IT ACT, 1961. THE ACTION OF LD. CIT(A) IS ILLEGAL, UNJUSTIFIED, A RBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE RE-OPENING PROCEEDINGS. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD . AO IN CONFIRMING THE TRADING ADDITION OF RS. 43,341/- (1, 25,000-81,659) AFTER ADOPTING THE N.P. RATE OF 5% ON AN ESTIMATED SALES OF RS. 25,00,000/-. THE ACTION OF THE LD. CIT(A) IS ILLEGA L, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY DELETING THE SAID ADDITION AMOUNTING TO RS. 43,341/-. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD . AO REGARDING ADDITION OF A SUM OF RS. 3,00,000/- U/S 68 OF THE I T ACT, 1961. THE ACTION OF THE LD. CIT(A) IS ILLEGAL, UNJUSTIFIE D, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY DELETING THE SAID ADDITION OF RS. 3,00,000/- 3. DURING THE COURSE OF HEARING, THE LD. AR DID NOT PRESS GROUND NO. 1. HENCE, THE SAME IS DISMISSED AS NOT PRESSED. 4. IN GROUND NO. 2, THE ASSESSEE HAS CHALLENGED THE ACTION OF THE ASSESSING OFFICER IN CONFIRMING THE TRADING ADDITIO N OF RS. 43,341/- AFTER ADOPTING THE N.P. RATE OF 5% ON AN ESTIMATED SALES OF RS. 25,00,000/-. ITA NO. 859 & 860/JP/2013 SHRI HITESH KUMAR GUPTA VS. ITO 3 5. BRIEFLY, THE FACTS OF THE CASE ARE THAT DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER, ON T HE BASIS OF THE DIARY FOUND DURING THE COURSE OF SURVEY WHICH ADMITTEDLY BELONGS TO THE ASSESSEE, CONSIDERED THE AMOUNT OF RS. 13,20,574/- TO BE UNDISCLOSED BALANCE WITH DEBTORS AS ON 31 ST MARCH, 2004. HE FURTHER OBSERVED THAT THERE MUST HAVE BEEN SOME CASH SALES ALSO, AND ON A DHOC BASIS, ESTIMATED THE TURNOVER AT RS. 30,00,000/- FOR THE Y EAR, AND APPLIED 5% PRESUMPTIVE PROFIT RATE ON THE SAME RESULTING INTO A TRADING ADDITION OF RS. 68,341/-. 6. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE THE LD. CIT(A). IT WAS CONTENDED BEFORE THE ID. CIT (A) THAT THE LAW GIVES RELAXATION TO THE ASSESSEE FROM MAINTENANCE O F BOOKS OF ACCOUNTS. THE DIARY WAS MAINTAINED BY THE ASSESSEE ON MEMORANDUM BASIS AND WAS NOT AT ALL REGULARLY AND S YSTEMATICALLY MAINTAINED. IT WAS FURTHER SUBMITTED THAT ONCE PROV ISIONS OF SECTION 44AF HAS BEEN APPLIED, THERE IS NO SCOPE OF MAKING ESTIMATION OF THE SALES. SCHEME OF 44AF REQUIRES ACCEPTANCE, BY R EVENUE, OF THE DECLARED TURNOVER. IT WAS ACCORDINGLY CONTENDED THA T THE ESTIMATION OF TURNOVER IS POSSIBLE ONLY BY APPLYING THE PROVISIONS OF SECTION 145(3), WHERE THE BOOKS OF ACCOUNTS MUST BE REJECTED. IT WAS FURTHER SUBMITTED THAT BY APPLYING PAST HIST ORY, THE APPROXIMATE AVERAGE GROWTH RATE IS 13%, APPLYING TH E SAME TO THE TURNOVER OF AY 2003-04, THE TURNOVER OF A.Y. 2004-0 5 COMES OUT TO RS. 18,40,408/-. THE ASSESSING OFFICERS ESTIMATION OF RS. 30,00,000/- IS A WILD GUESS-WORK AND HAS NO COM PARISON WITH PAST HISTORY. ITA NO. 859 & 860/JP/2013 SHRI HITESH KUMAR GUPTA VS. ITO 4 7. THE LD. CIT(A) REJECTED ASSESSEES CLAIM FOR TH E REASON THAT THE ASSESSEE DID NOT DENY THE FACT THAT THE OPENING BAL ANCE OF THE DEBTORS IS RS. 13,20,574/- AS PER THE DIARY. FURTHER, THE P AST HISTORY DOES NOT HOLD GOOD FOR THE ESTIMATION OF TURNOVER OF THE CUR RENT YEAR BECAUSE THE ASSESSEE HAS NOT MAINTAINED REGULAR BOOKS OF AC COUNTS, PAST DATA IS TOO LESS TO APPLY THE STATISTICAL TECHNIQUE OF EXTR APOLATION, ITR FILED FOR THE PAST YEARS HAS NO RECORD/ ESTIMATE OF SALE WITH IN THE RETURN AND THE ASSESSEE IS A RETAILER AND PROBABILITY OF CASH SALE S CANNOT BE DENIED. THE LD. CIT(A) CONFIRMED THE ADDITION TO THE EXTENT OF RS. 43,341/- WITH THE SALES ESTIMATE OF RS. 25,00,000/- AGAINST THE E STIMATE OF RS. 30,00,000/- OF LD. AO. THUS, RELIEF OF RS. 25,000/- WAS GRANTED TO THE ASSESSEE AND IN RESPECT OF ADDITION OF RS 43,341, T HE ASSESSEE IS IN APPEAL BEFORE US. 8. DURING THE COURSE OF HEARING, THE LD. AR SUBMITT ED THAT THE PROVISIONS OF SECTION 44AF ARE SPECIAL PROVISIONS F OR COMPUTING PROFITS & GAINS OF RETAIL BUSINESS. THIS SECTION IS A CODE IN ITSELF. IF NET PROFIT OF 5% OR MORE IS DECLARED, THE ASSESSEE IS ABSOLVED FR OM MAINTAINING BOOKS OF ACCOUNTS. IF LESS THAN 5% NP IS DECLARED, BOOKS OF ACCOUNTS ARE TO BE MAINTAINED U/S 44AA AND THE SAME ARE ALSO TO BE GOT AUDITED U/S 44AB. THE SUB SECTION (1) MANDATES FOR ACCEPTAN CE OF TURNOVER AS DECLARED BY THE ASSESSEE. SUB SECTION (1) IS REPRO DUCED BELOW FOR READY REFERENCE: 44AF SPECIAL PROVISIONS FOR COMPUTING PROFITS AND GAINS OF RETAIL BUSINESS (1)NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAI NED IN SECTION 28 TO 43C, IN THE CASE OF AN ASSESSEE ENGAG ED IN RETAIL TRADE IN ANY GOODS OR MERCHANDISE, A SUM EQU AL TO FIVE PERCENT OF THE TOTAL TURNOVER IN THE PREVIOUS YEAR ON ACCOUNT OF SUCH BUSINESS OR, AS THE CASE MAY BE, A SUM ITA NO. 859 & 860/JP/2013 SHRI HITESH KUMAR GUPTA VS. ITO 5 HIGHER THAN THE AFORESAID SUM AS DECLARED BY THE AS SESSEE IN HIS RETURN OF INCOME SHALL BE DEEMED TO BE THE P ROFITS AND GAINS OF SUCH BUSINESS CHARGEABLE TO TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION 9. IN VIEW OF THE ABOVE LEGAL PROVISION, IT WAS SUB MITTED THAT THE. AO IS NOT GIVEN ANY AUTHORITY TO ESTIMATE THE TURNO VER. SINCE, BOOKS OF ACCOUNTS ARE NOT TO BE MAINTAINED, DECLARED TURNOVE R CANNOT BE REJECTED AND REPLACED BY THE LD. AOS ESTIMATION. N EEDLESS TO MENTION THAT EVEN PROVISIONS OF SECTION 145(3) ARE NOT APPL ICABLE, AS NO BOOKS OF ACCOUNTS ARE REQUIRED TO BE MAINTAINED. THUS, LO WER AUTHORITIES HAVE ERRED IN RESORTING TO ESTIMATION OF TURNOVER. IT WA S SUBMITTED THAT THE LD. CIT(A) FOR ESTIMATING THE TURNOVER HAS UPHELD T HE INVOKING OF THE PROVISIONS OF SECTION 145(3) WHICH IS NOT CORRECT. 10. WITHOUT PREJUDICE, IT WAS FURTHER SUBMITTED TH AT AGAINST THE DECLARED TURNOVER OF RS. 13,82,346/-, LD. AO HAD ES TIMATED THE TURNOVER AT RS. 30,00,000/- WHICH WAS REDUCED BY LD. CIT(A) AT RS. 25,00,000/-. IT WAS SUBMITTED THAT THE LD. CIT(A) HAS ERRED IN E STIMATING THE TURNOVER AT RS. 25,00,000/-. HE HAS NOT GIVEN ANY B ASIS FOR THE SAME. APPELLANTS CONTENTION BEFORE HIM IN RESPECT OF EXT RAPOLATED TURNOVER OF RS. 18,40,408/- IS REJECTED BY HIM WITHOUT GIVING A NY COGENT REASON. THE BASIS OF EXTRAPOLATION WAS DULY EXPLAINED TO HI M, WHICH IS REPRODUCED BELOW FOR READY REFERENCE: S.NO ASSESSMENT YEAR TURNOVER GROWTH RATE PB 1 1999 - 00 9,42,780/ - 98 - 99 2 2000-01 11,66,733/- 24% 100-101 3 2001-02 FIGURES NOT AVAILABLE WITH THE ASSESSEE ITA NO. 859 & 860/JP/2013 SHRI HITESH KUMAR GUPTA VS. ITO 6 4 2002-03 5 2003-04 16,28,680/- 102-103 6 2004-05 18,40,408/- ESTIMATED TURNOVER SEE NOTE 1 & 2 BELOW NOTE: SALES OF A.Y. 2004-05 IS INTERPOLATED AS UNDER: 1) AVERAGE GROWTH RATE OF A.Y. 2003-04: 16,28,680 11,66,733 = 1,53,982 *100 = 13% APPROX. 3 YEARS 11,66,733 2) TURNOVER OF A.Y. 2004-05 AFTER APPLYING GROWTH RATE COMPUTED IN POINT 1: 16,28,680*113% = 18,40,408/- 11. IT WAS SUBMITTED THAT THE LD. CIT(A) IN CONSONA NCE WITH LD. AO, BELIEVED THAT SINCE THE ASSESSEE IS A RETAILER AND PROBABILITY OF CASH SALES CANNOT BE DENIED. HOWEVER, THE ASSESSE AT THE TIME OF ASSESSMENT PROCEEDINGS SUBMITTED THAT THERE WERE NO CASH SALES AND ALL SALES WERE CREDIT SALES. LD. AO WITHOUT BRINGIN G ANYTHING ON RECORD TO SUBSTANTIATE THE SAME, AND WITHOUT PROVIDING A B ASIS MADE A GENERAL STATEMENT AND ESTIMATED THE SALES ON ADHOC BASIS. 12. THE LD DR IS HEARD WHO HAS VEHEMENTLY ARGUED TH E MATTER AND TOOK US THROUGH THE FINDINGS OF THE LOWER AUTHORITI ES WHICH WE HAVE ALREADY NOTED ABOVE. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LIMITED ISSUE UNDER CONSID ERATION IS WHAT SHOULD BE THE TURNOVER OF THE ASSESSEE FOR THE YEAR UNDER ITA NO. 859 & 860/JP/2013 SHRI HITESH KUMAR GUPTA VS. ITO 7 CONSIDERATION. THE ASSESSEE HAS REPORTED A TURNOVE R OF RS 13,82,346 AND THE UNDISCLOSED BALANCE WITH THE DEBTORS AS ON 31 MARCH 2004 COMES TO RS 13,20,574 BASIS THE DIARY FOUND DURING THE COURSE OF SURVEY WHICH HAS BEEN OWNED UP BY THE ASSESSEE. TH ERE IS NOTHING ON RECORD TO SHOW THAT CORRESPONDING SALES RELATING TO THE UNDISCLOSED BALANCE WITH THE DEBTORS AS ON 31 MARCH 2004 FORMS PART OF THE REPORTED TURNOVER AND THUS, THE SAME IS CLEARLY THE UNDISCLOSED TURNOVER OF THE ASSESSEE. GIVEN THAT THE REVENUE IS NOT IN A PPEAL, WE ARE OF THE VIEW THAT THE LD CIT(A) IS REASONABLE ENOUGH TO DET ERMINE THE TURNOVER OF THE ASSESSEE AT RS 25,00,000. IN THE RESULT, TH E GROUND OF APPEAL IS DISMISSED. 14. REGARDING GROUND NO. 3 WHEREIN THE ASSESSEE HAS CHALLENGED THE ADDITION OF A SUM OF RS. 3,00,000/- U/S 68 OF THE I .T. ACT, 1961. THE ASSESSING OFFICER MADE THE ADDITION OF CAPITAL EMPL OYED IN THE BUSINESS AT RS. 5,00,000/- U/S 68, ON THE GROUND THAT THE AS SESSEE MUST BE REQUIRING THE FUNDS TO RUN THE BUSINESS AS HE MAKES CREDIT SALES. 15. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE THE LD. CIT(A) WHEREIN IT WAS SUBMITTED THAT THE AS SESSEE REQUIRES NO CAPITAL OF HIS OWN FOR RUNNING BUSINESS. HE ALLOWS HIS CUSTOMER A CREDIT FOR A PERIOD LESS THAN THE CREDIT PERIOD HE ENJOYS. THE ASSESSEES FATHER IS INVOLVED IN THE SIMILAR BUSINESS SINCE LONG AND HAS A SHOP IN THE MAIN MARKET OF DAUSA. THE ASSESSMENT OF ASSESSEES FATHE R WAS ALSO COMPLETE BY LD. AO AND ANALYSIS OF THE AUDITED STAT EMENTS CONFIRMS THAT HE WAS ENJOYING CREDIT FROM HIS SUPPLIERS. THE ASSE SSING OFFICER IGNORED THAT THE ASSESSEE IS INVOLVED IN THE SAME BUSINESS FROM LAST SO MANY ITA NO. 859 & 860/JP/2013 SHRI HITESH KUMAR GUPTA VS. ITO 8 YEARS AND WHATEVER CAPITAL IS REQUIRED FOR THE BUSI NESS WAS ACCUMULATED OVER THE PERIOD OUT OF EARNINGS AND GIF TS. 16. THE LD. CIT(A) CONFIRMED THE ADDITION HOLDING T HAT NO RECORDS OF PURCHASE MADE ON CREDIT ARE AVAILABLE OR FOUND DURI NG THE COURSE OF SURVEY. NO SUPPORTING EVIDENCE IN FORM OF NAMES AND ADDRESSES OF THE CREDITORS, CONFIRMATIONS, ETC WERE FILED IN SUPPORT OF THE CONTENTIONS MADE BEFORE THE ASSESSING OFFICER AND CONSIDERING T HE NORMAL BUSINESS CONDUCT AT THIS LEVEL OF BUSINESS OPERATIONS, THE A SSESSEES ARGUMENT APPEARS TO LACK SUBSTANCE. 17. NOW, THE ASSESSEE IS IN APPEAL BEFORE US. DURIN G THE COURSE OF HEARING, THE LD. AR SUBMITTED THAT THE AO ON HIS OW N AND CONTRARY TO THE FACTS ON RECORD HELD THAT THE ASSESSEE STARTED A NEW BUSINESS. THE FACTS ON RECORD INFACT PROVES THAT THE ASSESSEE IS INVOLVED IN THE SAME BUSINESS FROM LAST 10 YEARS. ALSO, THE ASSESSEE HAS PROVIDED COPY OF HIS RETURN OF INCOME FOR A.Y. 1999-00, A.Y 2000-01 AND A.Y. 2003-04. 18. IT WAS FURTHER SUBMITTED THAT FROM THE AUDITED FINANCIAL STATEMENTS OF THE ASSESSEES FATHER, WHO IS INVOLVE D IN THE SAME LINE OF BUSINESS, IT IS ESTABLISHED THAT A PERSON, IN SUCH LINE OF BUSINESS ENJOYS THE CREDIT LIMITS FROM THE SUPPLIERS. THUS, THE ASS ESSEE ALSO ENJOYS THE CREDIT PERIOD FROM HIS SUPPLIERS. ALSO, THERE IS NO THING ON RECORD TO PROVE THAT THE ASSESSEE PURCHASES GOODS IN CASH WHE REAS ALL EVIDENCES AND CIRCUMSTANCES SUBSTANTIATE THAT PURCHASES WERE MADE IN CREDIT. DURING THE ASSESSMENT PROCEEDINGS IT WAS SUBMITTED THAT ASSESSEE IS ENJOYING THE CREDIT FROM ITS SUPPLIERS AND HE ALLOW S TO HIS CUSTOMERS A ITA NO. 859 & 860/JP/2013 SHRI HITESH KUMAR GUPTA VS. ITO 9 PERIOD LESS THAN THE CREDIT HE ENJOYS. THUS, IN ASS ESSEES BUSINESS MODEL, THE REQUIREMENT OF CAPITAL WAS VERY MEAGER. THE MEAGER CAPITAL REQUIRED WAS ACCUMULATED OVER THE YEARS AND THEREFO RE NO ADDITIONAL CAPITAL IS REQUIRED FOR RUNNING THE BUSINESS. 19. WITHOUT PREJUDICE TO ABOVE, IT IS SUBMITTED THA T LD. CIT(A) HAS UPHELD THE REJECTION OF BOOKS. ONCE THE BOOKS ARE R EJECTED, NO FURTHER ADDITION CAN BE MADE U/S 68. THE ISSUE IS COVERED B Y THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. G. K. CONTRACTOR [2009] 19 DTR 305 (RAJ) WHEREIN IT WAS HELD AS UNDER: HOWEVER, IN OUR CONSIDERED OPINION, EVEN IF THE A SSESSEE HAS FAILED TO DISCHARGE HIS ONUS OF PROOF IN EXPLAINING THE CASH CREDITS SHOWN IN THE BOOKS OF ACCOUNT AS 'MARKET OUTSTANDING', THE AO HA VING ESTIMATED THE HIGHER PROFIT RATE ON TOTAL CONTRACT RECEIPTS AFTER REJECTION OF THE BOOKS OF ACCOUNT INVOKING THE PROVISIONS OF S. 145(3), NO SEPARATE ADDITIONS CAN BE MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT U NDER S. 68 OF THE ACT OF 1961 IT WAS SUBMITTED THAT THE TRIBUNAL IN CASE OF ELCON DRUGS & FORMULATION LTD VS. ITO - ITA NO. 995/JP/2013 HAS ALSO FOLLOWED THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF G.K. CO NTRACTORS ( SUPRA). IN VIEW OF ABOVE SUBMISSIONS, ADDITION MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) MAY PLEASE BE DELETED. 20. THE LD. DR IS HEARD WHO HAS RELIED ON THE LOWER AUTHORITIES. ITA NO. 859 & 860/JP/2013 SHRI HITESH KUMAR GUPTA VS. ITO 10 21. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER MADE TH E ADDITION OF RS. 5,00,000/- U/S 68 ON THE GROUND THAT SALES ARE MADE ON CREDIT BASIS AND FUNDS WOULD BE REQUIRED/TIED UP IN SUNDRY DEBTO RS AND ALSO FOR PURCHASE OF MATERIAL WHICH HAS BEEN REDUCED TO RS 3 ,00,000 BY THE LD CIT(A). IN OUR VIEW, SUCH AN ADDITION CANNOT BE SU STAINED BY INVOKING THE PROVISIONS OF SECTION 68 WHICH TALKS ABOUT ANY SUM FOUND DURING THE BOOKS OF ACCOUNTS AND IN RESPECT OF WHICH THE ASSES SEE OFFERS NO EXPLANATION OR THE EXPLANATION SO OFFERED IS NOT FO UND SATISFACTORY. IN THE INSTANT CASE, THERE IS NO SUM WHICH IS FOUND CR EDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND HENCE, ON THIS GROUND ITSELF, THE ASSESSEE DESERVE THE RELIEF AND THE ADDITION SO MADE IS HERE BY DELETED. IN VIEW OF THE SAME, WE HAVE NOT DEALT WITH OTHER CONTENTIO NS SO RAISED BY THE LD AR. IN THE RESULT, THE GROUND OF APPEAL IS ALLO WED. 22. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. 23. IN ITA NO. 860/JP/2013 FOR AY 2005-06, THE ASS ESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD . AO IN REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE IT ACT, 1961. THE ACTION OF LD. CIT(A) IS ILLEGAL, UNJUSTIFIED, A RBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE RE-OPENING PROCEEDINGS. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD . AO IN CONFIRMING THE TRADING ADDITION OF RS. 66,513/- (1, 75,000- ITA NO. 859 & 860/JP/2013 SHRI HITESH KUMAR GUPTA VS. ITO 11 1,08,487) AFTER ADOPTING THE N.P. RATE OF 5% ON AN ESTIMATED SALES OF RS. 35,00,000/-. THE ACTION OF THE LD. CIT (A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY DELETING THE SAID ADDITION AMO UNTING TO RS. 66,513/-. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD . AO REGARDING ADDITION OF A SUM OF RS. 3,00,000/- U/S 68 OF THE I T ACT, 1961. THE ACTION OF THE LD. CIT(A) IS ILLEGAL, UNJUSTIFIE D, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY DELETING THE SAID ADDITION OF RS. 3,00,000/-. 24. THE GROUND NO. 1 WAS NOT PRESSED DURING THE COU RSE OF HEARING, HENCE THE SAME IS DISMISSED. 25. IN GROUND NO. 2, SIMILAR CONTENTIONS HAVE BEEN RAISED BY THE LD AR AS WE HAVE NOTED ABOVE IN CONTEXT OF AY 2004-05. IT WAS SUBMITTED THAT BASED ON PAST HISTORY AND AVERAGE GROWTH RATE OF 13%, THE ESTIMATED TURNOVER OF THE ASSSESSEE COMES TO RS 20, 79,661 AS AGAINST RS 35,00,000 ESTIMATED BY THE AO AND WHICH HAS BEEN CONFIRMED BY THE LD CIT(A). 26. IT WAS FURTHER SUBMITTED BY THE LD AR THAT TH E LD. CIT(A) HAS ERRED IN ESTIMATING THE TURNOVER AT RS. 35,00,000/- , ON THE OBSERVATION THAT THE ASSESSEE HIMSELF HAS ADMITTED BEFORE LD. AO THAT THE TOTAL OF CREDIT SALES AS PER ANNEXURE A-4 COMES TO RS. 27,66 ,751/-. IN THIS REGARD IT IS SUBMITTED THAT LD. CIT(A) HAS NOT CONS IDERED THE SALES ITA NO. 859 & 860/JP/2013 SHRI HITESH KUMAR GUPTA VS. ITO 12 RETURN OF RS. 5,62,504/- WHICH IS EVIDENT FROM THE DETAILS PLACED AT PB 98-99 . THE AMOUNT ADMITTED BY THE ASSESSEE IS THE TOTAL A MOUNT OF THE CREDIT SALES, EXCLUDING THE AMOUNT OF SALES RETURN. HENCE, THE ASSESSEE HAS NOT INFLATED THE AMOUNT OF SALES IN THE ASSESSM ENT PROCEEDINGS. LD. CIT(A) HAS NOT CONTROVERTED THE FACT OF SALES RETUR NS SUBMITTED BEFORE HIM. THE LD. CIT(A) IN CONSONANCE WITH LD. AO, BELI EVED THAT SINCE THE ASSESSEE IS A RETAILER AND PROBABILITY OF CASH SALE S CANNOT BE DENIED. HOWEVER, THE ASSESSEE AT THE TIME OF ASSESSMENT PRO CEEDINGS SUBMITTED THAT THERE WERE NO CASH SALES AND ALL SAL ES WERE CREDIT SALES. LD. AO WITHOUT BRINGING ANYTHING ON RECORD TO SUBST ANTIATE THE SAME, AND WITHOUT PROVIDING A BASIS MADE A GENERAL STATEM ENT AND ESTIMATED THE SALES ON ADHOC BASIS. FURTHER IT WAS SUBMITTED THAT THE LD. CIT(A) FOR THE A.Y. 2004-05, IN THE ASSESSEES OWN CASE HA VING IDENTICAL ISSUE, HAS HIMSELF UPHELD THE ESTIMATION OF SALES TO THE T UNE OF RS. 25,00,000/- AGAINST THE ESTIMATION OF LD. AO AT RS. 30,00,000/-. IN THE YEAR UNDER CONSIDERATION THE ESTIMATION OF SALES BY LD. CIT(A) IS OF RS. 35,00,000/-. HENCE, AS PER CIT(A) THERE IS A GROWTH OF 40% IN THE TURNOVER OF THE ASSESSEE IN THE CURRENT YEAR AS COM PARED TO LAST YEAR. ATTENTION IS DRAWN TO PARA 3.4 OF THE SUBMISSION, W HEREIN THE PAST HISTORY OF THE ASSESSEE IS REPRODUCED. CONSIDERING THE SAME AND THE ITA NO. 859 & 860/JP/2013 SHRI HITESH KUMAR GUPTA VS. ITO 13 LEVEL OF THE BUSINESS AT WHICH ASSESSEE OPERATES, G ROWTH OF 40% UPHELD BY LD. CIT(A) IS UNIMAGINABLE AND UNJUSTIFIED. NOTE 1: CALCULATION OF GROWTH % = ESTIMATE OF A.Y. 2005-06 ESTIMATE OF A.Y. 2004-05 *100 ADOPTED BY LD. CIT(A) ESTIMATE OF A.Y. 2004 -05 (35,00,000 25,00,000) * 100 = 40% 25,00,000 27. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUE D THE MATERIAL AVAILABLE ON RECORD. THE AO BASIS THE DAIRY FOUND DURING THE COURSE OF SURVEY WHICH HAS BEEN OWNED UP BY THE ASSESSEE HAS DETERMINED THE UNDISCLOSED SALES FOR THE YEAR AMOUNTING TO RS 29,9 1,458 AS AGAINST THE REPORTED TURNOVER OF RS 21,69,740 IN THE RETURN OF INCOME. THE MATTER RELATING TO SALES RETURN ARE CONSIDERED BUT NOT FOU ND ESTABLISHED AND HENCE, NOT ACCEPTABLE. THEREFORE, THE TURNOVER IS DETERMINED AT RS 29,91,458 AS AGAINST THE FIGURE OF RS 35,00,000 SUS TAINED BY THE LD CIT(A). THE ASSESSEE THUS GETS THE CONSEQUENT REL IEF ON PROFIT DETERMINATION ON THE TURNOVER OF RS 29,91,458 AND T HE GROUND IS THUS PARTLY ALLOWED. 28. REGARDING GROUND NO. 3, BOTH THE PARTIES FAIRL Y SUBMITTED THAT THE FACTS AND CIRCUMSTANCES ARE EXACTLY IDENTICAL A S IN ITA NO. 859/JP/2013. THEREFORE, OUR FINDINGS AND DIRECTION S CONTAINED IN ITA ITA NO. 859 & 860/JP/2013 SHRI HITESH KUMAR GUPTA VS. ITO 14 NO. 859/JP/2013 SHALL APPLY MUTATIS MUTANDIS TO THIS GROUND OF APPEAL WHICH IS ACCORDINGLY ALLOWED. 29. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/10/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 26/10/2018. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI HITESH KUMAR GUPTA, DAUSA. 2. IZR;FKHZ@ THE RESPONDENT- ITO, DAUSA. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 859 & 860/JP/2013} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR