Shri Gopal Sharan Gupta, Jaipur V. Income Tax Officer, Behror

ITA 863/JPR/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1598 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 03-07-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI JCIT DHK
• Assessee Lawyers: SUHANI MAMODIA

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S A, 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. 863/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2014-15 GOPAL SARAN GUPTA, PROP.- M/S GOPAL LAL VINOD KUMAR, MAIN MARKET, MANOHARPUR, SHAHPURA, JAIPUR (RAJ)-303104. CUKE VS. INCOME TAX OFFICER, WARD- BEHROR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABOPG 3955 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : MS. SUHANI MAMODIA (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 15/11/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 26/11/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 27/04/2018 OF LD. CIT(A), ALWAR FOR THE A.Y. 2014-1 5. THE ASSESSEE HAS RAISED THE SOLITARY GROUND AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE A.O. ERRED IN MAKING ADDITION BY ESTIMATING NP RATE @ 5% ON TURNOVER OUT OF BOOKS AND SIMULTANEOUSLY LD. CIT(A) ERRED IN SUSTAINING THE A DDITION WITHOUT APPRECIATING PROFIT RATE IN ACCOUNTING BUSINESS, WH ICH IS UNJUST AND LIABLE TO BE SET ASIDE. ITA 863/JP/2018_ GOPAL SARAN GUPTA VS ITO 2 2. THE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M /S GOPAL LAL VINOD KUMAR AND ENGAGED IN TRADING OF CATTLE FEED, OILSEE D, AND CEREALS IN WHOLESALE. THE ASSESSEE FILED RETURN OF INCOME ON 22 ND SEPTEMBER 2014 DECLARING TOTAL INCOME OF RS. 1,96,639/-. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT THE AS SESSEE HAS DEPOSITED A SUM OF RS. 82,74,500-/- IN CASH IN HIS SAVINGS BA NK ACCOUNT MAINTAINED WITH INDUSIND BANK, SHAHPURA. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE HAS NOT DISCLOSED THIS ACCOUNT IN HIS BOOKS OF ACCOUNT OR IN THE RETURN OF INCOME. FURTHER IT WAS NOTED THAT FOR THE ASSESSMENT YEAR 2011-12 THE ASSESSEE HAS ALSO NOT DISCLOSED THE SAI D SAVINGS BANK ACCOUNT AND CONSEQUENTLY THE ASSESSING OFFICER MADE AN ADDITION BY APPLYING 8% NET PROFIT ON THE AMOUNT FOUND DEPOSITE D IN THE BANK ACCOUNT TREATING THE SAME AS SALES OUT OF BOOKS. THE LD. CIT (A) FOR THE ASSESSMENT YEAR 2011-12 RESTRICTED THE ADDITION TO 5% NET PROFIT OF THE SALES OUTSIDE THE BOOKS. ACCORDINGLY THE ASSESSING OFFICER APPLIED THE NET PROFIT AT 5% ON THE AMOUNT DEPOSITED IN THE BANK AC COUNT NOT DISCLOSED IN THE BOOKS AND CONSEQUENTLY MADE AN ADDITION OF R S. 4,13,755/-. 3. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFO RE THE LD. CIT (APPEALS) BUT COULD NOT SUCCEED. ITA 863/JP/2018_ GOPAL SARAN GUPTA VS ITO 3 4. BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT ONCE THE CASH DEPOSITED IN THE BANK ACCOUNT WAS TREATED AS U NACCOUNTED SALES THEN THE RATE OF PROFIT DECLARED BY THE ASSESSEE ON ACCOUNTED SALES CAN BE ESTIMATED AS INCOME ON UNACCOUNTED SALES. THE LD AR HAS POINTED OUT THAT THE GROSS PROFIT DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IS AT 3.39% AND THE NET PROFIT AT 2.1 0% AND PLEADED THAT THE NET PROFIT AT THE RATE OF 2.10% CAN BE APPLIED ON THE UNACCOUNTED SALES. THUS THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE NET PROFIT AT 5% APPLIED BY THE AO AS WELL AS CIT (APPEALS) IS WITHO UT ANY BASIS. HENCE THE LD AR HAS SUBMITTED THAT THE INCOME ON TH E UNACCOUNTED SALES CAN BE ESTIMATED BY APPLYING THE NET PROFIT AS DECL ARED BY THE ASSESSEE ON THE ACCOUNTED SALES. 5. ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT FOR THE ASSESSMENT YEAR 2011-12 THE ASSESSING OFFICER MADE THE ADDITION BY APPLYING NET PROFIT AT 8% WHICH WAS RESTRICTED BY TH E CIT (APPEALS) TO NET PROFIT AT 5%. THE ASSESSEE ACCEPTED THE ADDITION SUS TAINED BY THE CIT(APPEALS) FOR THE ASSESSMENT YEAR 2011-12 AND TH EREFORE THE ASSESSING OFFICER IS JUSTIFIED IN APPLYING THE NET PROFIT OF 5% AS ACCEPTED BY THE ASSESSEE IN THE EARLIER YEARS. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. ITA 863/JP/2018_ GOPAL SARAN GUPTA VS ITO 4 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE ASS ESSEE HAS NOT DISCLOSED THE BANK ACCOUNT MAINTAINED WITH THE INDU SIND BANK IN WHICH AN AMOUNT OF RS.82,74,500/- WAS DEPOSITED IN CASH. TH E ASSESSING OFFICER TREATED THE SAID CASH DEPOSITED IN THE BANK ACCOUNT AS SALES OUT OF BOOKS OF ACCOUNTS AND APPLIED NET PROFIT OF 5% TO ESTIMAT E THE INCOME FROM UNACCOUNTED SALES. THE ONLY GRIEVANCE OF THE ASSESSE E IS THE NET PROFIT RATE APPLIED BY THE ASSESSING OFFICER AT 5% INSTEAD OF ADOPTING THE NET PROFIT DECLARED BY THE ASSESSEE ON THE ACCOUNTED SA LES. IT IS PERTAINING TO NOTE THAT THE NET PROFIT DECLARED BY THE ASSESSEE O N THE ACCOUNTED SALES CANNOT BE ADOPTED AS INCOME FROM UNACCOUNTED SALES DUE TO THE REASON THAT THE EXPENDITURE INCURRED BY THE ASSESSEE HAS A LREADY BEEN BOOKED AGAINST THE ACCOUNTED SALES AND THEREFORE THE INCOM E FROM UNACCOUNTED SALES CAN BE ESTIMATED ONLY BY REDUCING THE PURCHAS E COST FROM THE SALES. HENCE, INSTEAD OF APPLYING NET PROFIT, THE INCOME O N THE UNACCOUNTED SALES CAN BE ESTIMATED BY APPLYING GROSS PROFIT RAT E AS DECLARED BY THE ASSESSEE AND FURTHER MAKING SOME ADJUSTMENT ON ACCO UNT OF THE DIRECT EXPENDITURES INCURRED IN RESPECT OF THE TRANSPORTAT ION, LOADING AND UNLOADING ETC. WE FIND THAT THE ASSESSING OFFICER A S WELL AS CIT (APPEALS) HAS ADOPTED NET PROFIT RATE OF 5% AS IT WAS APPLIED FOR THE ASSESSMENT YEAR 2011-12. THOUGH THE ASSESSEE DID NOT CHALLENGE THE SAID ORDER OF ITA 863/JP/2018_ GOPAL SARAN GUPTA VS ITO 5 THE CIT (APPEALS) FOR THE ASSESSMENT YEAR 2011-12 HO WEVER, THE SAID ORDER OF THE CIT (APPEALS) WOULD NOT OPERATE AS RES-J UDICATA BECAUSE IT WAS ONLY AN ESTIMATION MADE ON THE BASIS OF THE FACT S OF THE SAID YEAR. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS D ECLARED GROSS PROFIT RATE AT 3.39% ON THE ACCOUNTED SALES WHICH IS ACCEP TED BY THE ASSESSING OFFICER THEREFORE, CONSIDERING THE GROSS PROFIT DEC LARED BY THE ASSESSEE AND ALSO CONSIDERING CERTAIN DIRECT EXPENDITURE WE A RE OF THE CONSIDERED OPINION THAT IT IS REASONABLE AND PROPER TO APPLY N ET PROFIT AT THE RATE OF 4% ON THE UNACCOUNTED SALES TO ESTIMATE THE INCOME ON SUCH SALES. ACCORDINGLY WE MODIFY THE ORDERS OF THE AUTHORITIES BELOW AND DIRECT THE ASSESSING OFFICER TO APPLY NET PROFIT OF 4% ON THE UNACCOUNTED SALES TO ESTIMATE THE INCOME ON SUCH SALES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A P ARTY ALLOWED. ORDER IS PRONOUNCED IN OPEN COURT ON 26 TH NOVEMBER, 2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 26 TH NOVEMBER, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI GOPAL SARAN GUPTA, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO- BEHROR. ITA 863/JP/2018_ GOPAL SARAN GUPTA VS ITO 6 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. 863/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR