Asstt. C.I.T., Circle -3(1), Etah V. Sh. Pramod Kumar Yadav, Etah

ITA 91/AGR/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0271 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-01-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 29-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 91/AGRA/2011 ASSTT. YEAR : 2007-08 A.C.I.T. CIRCLE 3(1), VS. SHRI PRAMOD KUMAR YADA V, ETAH. ROP. M/S. R.S. FILLING STATION, ALIGANJ ROAD, ETAH. (PAN : AAAPY 6644 C) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.K. MISHRA, JR. D.R. RESPONDENT BY : NONE DATE OF HEARING : 16.01.2013 DATE OF PRONOUNCEMENT OF ORDER : 18.01.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE REVENUE HAS BEEN DIRECTED AGAIN ST THE ORDER OF LD. CIT(A), GHAZIABAD DATED 10.01.2011 FOR THE ASSESSME NT YEAR 2007-08 ON THE FOLLOWING GROUNDS : 1. THE LD. C.I.T. (APPEALS) ERRED IN LAW AND ON FA CTS IN REDUCING THE GROSS INCOME FROM 28.15% TO 20% ON ACCOUNT OF LIQUO R BUSINESS WITHOUT GIVING ANY REASON, WHEN THE A.O. ESTIMATED THE AVERAGE PROFIT ON THE BASIS OF INFORMATION OBTAINED FROM EXCISE OF FICE. 2. THE LD. C.I.T. (APPEALS) ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITION OF RS.6,28,775/- ON A/C OF SALE OF PETROL DIESEL OUT OF BOOKS, IGNORING THE YAWING GAP BETWEEN PURCHASES OF PETROL /DIESEL SHOWN IN TRADING ACCOUNT AND PAYMENT MADE FOR PURCHASES TO I NDIAN OIL CORPORATION AND ALSO IGNORING THE FACT THAT ASSESSE E HAD NOT SHOWN ITA NO. 91/AGRA/2011 2 BALANCE AMOUNT IN BALANCE SHEET AS ADVANCE TO INDIA N OIL CORPORATION. 3. THE LD. C.I.T. (APPEALS) ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITION OF RS.6,64,730/- ON ACCOUNT OF SECURITY DE POSIT BY NOT APPRECIATING THE FACT THAT ASSESSEE DID NOT COME FO RWARD WHEN THE ASSESSEE WAS CONFRONTED ON 30.11.2009, BY A.O. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS. 4. THE LD. C.I.T. (APPEALS) ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITIONS IN THIS CASE WHEN THE ASSESSEE DELIBERATE LY DID NOT BOTHER TO REPLY ON THE ABOVE ISSUES AND LD. CIT (A) HIMSELF O BSERVED AND STATED THAT THE ASSERTION OF THE APPELLANT IS NOT RELIABL E BECAUSE DESPITE OF SEVERAL OPPORTUNITIES THE ASSESSEE HAS NOT PRODUCED BOOKS OF ACCOUNT, VOUCHERS AND STOCK REGISTER AND HE ALSO DOUBTED TH E AUDIT REPORT OF ASSESSEE. 2. WE HAVE HEARD THE LD. DR AND PERUSED THE FINDING S OF THE AUTHORITIES BELOW. THE ASSESSEE IS SERVED THROUGH THE DEPARTMENT FOR T HE DATE OF HEARING. THE SERVICE REPORT IS FILED ON RECORD. HOWEVER, DESPITE SERVICE OF NOTICE UPON THE ASSESSEE, NONE APPEARED ON BEHALF OF THE ASSESSEE AT THE TIME OF HEARING OF APPEAL. THEREFORE, THE APPEAL OF THE DEPARTMENT IS HEARD EXPARTE. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME AT RS.5,26,410/- AND AGRICUL TURAL INCOME AT RS.3,67,155/-. THE ASSESSMENT ORDER WAS COMPLETED ON 10.12.2009 AN D INCOME OF THE ASSESSEE WAS COMPUTED AT RS.35,27,271/-. THE AO BRIEFLY, NOT ED THAT THE ASSESSEE WAS REQUIRED TO COMPLY WITH THE STATUTORY NOTICES ISSUE D FOR DIFFERENT DATES, BUT NEITHER THE BOOKS OF ACCOUNT NOR THE VOUCHERS WERE PRODUCED AT THE ASSESSMENT STAGE AND ITA NO. 91/AGRA/2011 3 EVEN STATUTORY NOTICES WERE NOT COMPLIED WITH. DURI NG THE YEAR UNDER CONSIDERATION, THE ASSESSEE ALSO STARTED BUSINESS O F PETROL PUMP AND CONTRACT OF LIQUOR AND INCOME IS FILED ACCORDINGLY. THE AO NOTI CED SEVERAL DISCREPANCIES AND ALSO FOUND THAT NO STOCK REGISTER HAS BEEN MAINTAIN ED AND EVEN THE AUDIT REPORT IS NOT RELIABLE. THE ASSESSEE HAS SHOWN TOTAL SALES AT RS.1,15,45,229/-, ON WHICH GROSS PROFIT OF RS.17,72,006/- HAVE BEEN SHOWN DECLARING PROFIT RATE OF 15.3% FROM TRADING IN LIQUOR BUSINESS. THE AO TOOK AVERAGE PRO FIT OF ALL THE THREE ITEMS OF SALES, I.E., LIQUOR BOTTLE, HALF BOTTLE AND QUARTER BOTTLE AND TOOK PROFIT RATE OF 28.15% AND APPLIED AGAINST THE SALES AND COMPUTED PROFIT A T RS.27,51,152/- AND AFTER DEDUCTING PROFIT DECLARED BY THE ASSESSEE AT RS.17, 72,006/-, ADDITION OF RS.9,79,165/- WAS MADE WHICH RELATES TO GROUND NO. 1 ABOVE. THE AO FURTHER EXAMINED THE DETAILS OF TRADING OF PETROL AND DIESE L. THE PURCHASES HAVE BEEN SHOWN AT RS.4,27,66,684/-. THE ASSESSEE, HOWEVER, M ADE PAYMENT OF RS.4,33,94,959/- OF THE PURCHASES. THEREFORE, DIFFE RENCE OF RS.6,28,775/- WAS CONSIDERED AS SALES OUT OF THE BOOKS, ON WHICH THE PROFIT RATE OF 25% WAS APPLIED AND ADDITION OF RS.15,738/- WAS MADE SEPARATELY AND FURTHER ADDITION WAS ALSO MADE OF RS.6,28,775/- WHICH RELATES TO GROUND NO. 2 ABOVE. THE AO FURTHER FOUND FROM THE BALANCE SHEET OF THE ASSESSEE THAT RS.12,7 3,000/- HAS BEEN SHOWN AS SECURITY DEPOSIT ON ASSET SIDE BUT FROM THE REPORT OF EXCISE OFFICER, SECURITY IS MADE OF RS.6,68,270/-. THEREFORE, BALANCE OF RS.6,6 4,730/- WAS CONSIDERED AS UNDISCLOSED INVESTMENT AND ADDITION OF SAME WAS MAD E. SAME ADDITION RELATES TO ITA NO. 91/AGRA/2011 4 GROUND NO. 3 ABOVE. THE ASSESSEE CHALLENGED ALL THE THREE ADDITIONS BEFORE THE LD. CIT(A) AND WRITTEN SUBMISSIONS OF THE ASSESSEE IS I NCORPORATED IN THE APPELLATE ORDER IN WHICH THE ASSESSEE EXPLAINED THAT G.P. ADD ITION IS EXCESSIVE. THE ASSESSEE HAS DECLARED BETTER PROFIT AS COMPARED TO OTHER PET ROL PUMPS. IT WAS ALSO EXPLAINED WITH REGARD TO THE SECURITY DEPOSIT THAT IT WAS A T YPING MISTAKE AND EARLIER YEARS SECURITY HAS BEEN WRONGLY TAKEN BUT IN FACT TOTAL S ECURITY DEPOSITED WAS RS.13,76,486/- OF THIS YEAR AS WELL AS OF EARLIER Y EAR. THEREFORE, THE ADDITION IS UNJUSTIFIED. 4. THE LD. CIT(A) CONSIDERING THE EXPLANATION OF TH E ASSESSEE FOUND THAT IN THE SALES OF QUARTER BOTTLE OF LIQUOR, PROFIT RATE IS V ERY LESSER AND EQUALLY THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNT BEFORE THE AO AND AUDIT REPORT IS ALSO DOUBTFUL AND NO EVIDENCE IS PRODUCED BEFORE HIM. TH EREFORE, THE REJECTION OF BOOKS OF ACCOUNT IS JUSTIFIED, BUT THE PROFIT RATE APPLIE D IS EXCESSIVE AND ACCORDINGLY, THE AO WAS DIRECTED TO APPLY THE PROFIT RATE OF 20% AS AGAINST 28.15% APPLIED BY THE AO. AS REGARDS THE ADDITION OF RS.6,28,775/-, THE A O MERELY ON THE BASIS OF PAYMENT MADE TO INDIAN OIL CORPORATION FOUND THAT T HE SALES HAVE BEEN MADE OUTSIDE THE BOOKS OF ACCOUNT, BUT WHEN PROFIT RATE IS APPLIED ON THE SALES MADE OUTSIDE THE BOOKS, FURTHER ADDITION OF SALES COULD NOT BE MADE AND ACCORDINGLY ADDITION OF RS.6,28,775/- WAS DELETED. THE ADDITION ON ACCOUNT OF PROFIT WAS MAINTAINED. AS REGARDS THE SECURITY DEPOSIT, THE LD . CIT(A) ON VERIFICATION OF ITA NO. 91/AGRA/2011 5 CERTIFICATE OF EXCISE OFFICER FOUND THAT IF THE TOT AL OF SECURITY FOR EARLIER YEAR AND THE ASSESSMENT YEAR UNDER APPEAL BE TAKEN TOGETHER, NO ADDITION IS JUSTIFIED ON THIS ISSUE. ACCORDINGLY, ADDITION OF RS.6,64,730/- WAS D ELETED. 5. ON CONSIDERATION OF SUBMISSIONS OF THE LD. DR IN THE LIGHT OF FINDINGS OF AUTHORITIES BELOW, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN DELETING THE ABOVE ADDITIONS ON WHICH THE ABOVE GROUNDS HAVE BEEN RAISED BY THE REVENUE. THE AO IN THE ASSESSMENT ORD ER NOTED THAT IN THE COUNTRY LIQUOR TRADING ACCOUNT, THE ASSESSEE HAS DECLARED P ROFIT OF 15.3%. SINCE NO BOOKS OF ACCOUNT OR VOUCHERS WERE PRODUCED BEFORE HIM, TH E AO TOOK AVERAGE OF THE PROFIT AT 28.15%, WHICH HAS BEEN RIGHTLY REDUCED TO 20% BY THE LD. CIT(A) BECAUSE IT WAS FOUND TO BE EXCESSIVE. STILL THE ADDITION IS MAINTAINED BY 5% OF THE G.P. THEREFORE, CONSIDERING THE EXPLANATION OF THE ASSES SEE, THE LD. CIT(A) RIGHTLY REDUCED THE APPLICATION OF HIGHER PROFIT RATE. FURT HER, IT IS WELL SETTLED LAW THAT ENTIRE SALES CAN NEVER BE THE PROFIT OF THE ASSESSE E AND ONLY PROFIT IS TO BE TAXED ON THE UNDISCLOSED SALES. THE LD. CIT(A), THEREFORE, R IGHTLY DELETED THE ADDITION OF RS.6,28,775/- ON ACCOUNT OF UNDISCLOSED SALES. WE A RE FORTIFIED IN OUR VIEW BY THE JUDGMENT OF HONBLE GUJRAT HIGH COURT IN THE CASES OF CIT VS. SAMIR SYNTHETICS MILL, 326 ITR 410 (GUJ.) AND CIT VS. PRESIDENT INDU STRIES, 258 ITR 654 (GUJ.). FURTHER, THE LD. CIT(A) MAINTAINED THE PROFIT ADDIT ION OF RS.15738/- ON UNDISCLOSED SALES. THEREFORE, THERE IS NO INFIRMITY IN THE ORDE R OF THE LD. CIT(A) IN DELETING THE ITA NO. 91/AGRA/2011 6 ADDITION. AS REGARDS THE SECURITY DEPOSIT, THE LD. CIT(A) VERIFIED THE FACT FROM THE CERTIFICATE OF EXCISE OFFICER THAT IF SECURITY DEPO SIT IS TAKEN OF THIS YEAR AND EARLIER YEAR, NO ADDITION IS JUSTIFIED. THE FINDING OF FACT RECORDED BY THE LD. CIT(A) HAVE NOT BEEN REBUTTED THROUGH ANY EVIDENCE OR MATERIAL ON RECORD BEFORE US, THEREFORE, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN DELETING ALL THE THREE ADDITIONS ABOVE. IN VIEW OF THE ABOVE DISCUSSION, THE DEPARTMENTAL APPEAL FAILS AND IS DISMISSED. 6. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY