SHRI ARVIND CHATTER, KOTA V. INCOME TAX OFFICER, KOTA

ITA 93/JPR/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9802 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 25-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MAHLA JCIT DHK
• Section: 133(6); 234E; 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JUDICIAL MEMBER VK;DJ VIHY LA -@ ITA NO. 93/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2010-11 ARVIND CHATTER, PROP.- M/S BHAGMAL MARBLES, 1- A-5, MAHAVEER NAGAR-3, KOTA. CUKE VS. I.T.O., WARD-2(3) KOTA. LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: ABEPC 3611 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKS J LS @ ASSESSEE BY: SHRI SIDDARTH RANKA (ADV) JKTLO DH VKSJ LS @ REVENUE BY : SHRI A.K. MAHLA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 25/09/2019 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 26/09/2019 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 08/11/2017 OF LD. CIT(A), KOTA FOR THE A.Y. 2010-11. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS, IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ORDER PASSED BY THE LEARNED LOWER AUTHORITIES IS AGAINST THE LAW AND FACTS OF THE CASE AND DESERVES TO BE QUASHED. 2 THAT THE ID. ASSESSING OFFICER HAS ERRED IN MAKING TRADING ADDITION IN THE AMOUNT OF RS. 6,86,400/- AND THE LEARNED CIT (APPEALS), KOTA ALSO ERRED IN CONFIRMING THE SAME TO THE EXTENT OF RS. 2,00,000/- WHILE IGNORING THE FACT THAT THE ASSESSEE DIDN'T HAVE ANY NEGATIVE BALANCE OF FUNDS AT ANY TIME DURING ITA 93/JP/2018 ARVIND CHATTER VS ITO 2 THE ASSESSMENT YEAR AND IT IS NOT THE DUTY OF THE ASSESSEE TO BOTHER AS ON WHICH DATE THE RESPECTIVE PANICS HAVE BOOKED THEIR PAYMENTS MADE BY THEM. 3. THAT THE ID. ASSESSING OFFICER ALSO ERRED IN NOT APPRECIATING THE FACTS OF THE EASE AND THE CIRCUMSTANCES ON RECORD BY WRONGLY INVOKING SECTION 68 OF THE IT ACT, 1961 BY BRUSHING ASIDE ASSESSEE'S SUBMISSION AND EXPLANATION AND FURTHER ERRED IN IMPOSING THE THIRD PARTIES FAULTS ON THE ASSESSEE. 4. THAT THE ID. ASSESSING OFFICER ALSO ERRED IN CHARGING INTEREST U/S 234A, 234E AND 234C AND THE LEARNED CIT (APPEALS), KOTA ALSO ERRED IN CONFIRMING THE SAME. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY GROUND AT/BEFORE THE TIME OF HEARING OF APPEAL. 2. AT THE TIME OF HEARING, THE LD AR OF THE ASSESSEE HAS STATED AT BAR THAT THE ASSESSEE DOES NOT WANT TO PRESS GROUNDS NO. 1 AND 3 OF THE APPEAL AND THE SAME MAY BE DISMISSED AS NOT PRESSED. THE LD DR HAS RAISED NO OBJECTION IF GROUNDS NO. 1 AND 3 OF THE ASSESSEES APPEAL ARE DISMISSED AS NOT PRESSED. ACCORDINGLY, GROUNDS NO. 1 AND 3 OF THE ASSESSEES APPEAL ARE DISMISSED BEING NOT PRESSED. 3. GROUND NO. 2 OF THE ASSESSEES APPEAL IS REGARDING TRADING ADDITION MADE BY THE A.O. AND SUSTAINED BY THE LD. CIT(A) TO THE EXTENT OF RS. 2.00 LACS. THE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S BHAGMAL MARBLES AND ENGAGED IN THE BUSINESS OF MINES AND DEALER OF STONES. THE ASSESSEE FILES HIS RETURN OF INCOME ON 15/10/2010 DECLARING TOTAL INCOME OF RS. 10,51,040/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. ITA 93/JP/2018 ARVIND CHATTER VS ITO 3 EXAMINED BOOKS OF ACCOUNT AS WELL AS OTHER MATERIAL AND DOCUMENTS AND FOUND VARIOUS DEFECTS AND DISCREPANCIES INCLUDING NON-MAINTENANCE OF PROFIT STOCK REGISTER. CONSEQUENTLY, THE A.O. INVOKED THE PROVISIONS OF SECTION 145(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT) AND REJECTED BOOK RESULT OF THE ASSESSEE. THE A.O. ESTIMATED THE INCOME OF THE ASSESSEE BY ADOPTING G.P. RATE AT 25.64% WHICH WAS DECLARED BY THE ASSESSEE IN THE PRECEDING YEAR I.E. A.Y. 2009-10. CONSEQUENTLY, THE A.O. MADE A TRADING ADDITION OF RS. 6,86,400/-. THE ASSESSEE CHALLENGED THE ACTION OF THE A.O. BEFORE THE LD. CIT(A) AND THE LD. CIT(A) AFTER CONSIDERING THE PECULIAR FACT OF INCREASE IN THE TURNOVER OF THE ASSESSEE BY MORE THAN 57% DURING THE YEAR UNDER CONSIDERATION, HAS RESTRICTED THE TRADING ADDITION TO RS. 2.00 LACS AS AGAINST THE ADDITION OF RS. 6,86,400/- MADE BY THE A.O. 4. BEFORE THE TRIBUNAL, THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT ONCE THE LD. CIT(A) HAS ACCEPTED THE FACT OF INCREASE IN THE TURNOVER OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION BY 57% IN COMPARISON TO THE PRECEDING YEAR THEN NO TRADING ADDITION IS CALLED FOR DUE TO A MINOR DECLINE IN THE G.P. FOR THE YEAR UNDER CONSIDERATION IN COMPARISON TO THE EARLIER YEAR. THE LD AR HAS SUBMITTED THAT THE ASSESSEE HAS DECLARED A G.P. OF 22.23% ON A TURNOVER OF RS. 2,01,52,164/- WHICH IS 57% MORE THAN THE ITA 93/JP/2018 ARVIND CHATTER VS ITO 4 PRECEDING YEAR, THUS, THE MINOR DECLINE IN THE G.P. ON A SUBSTANTIAL INCREASE IN THE TURNOVER FOR THE YEAR UNDER CONSIDERATION IN COMPARISON TO THE PRECEDING YEAR WOULD NOT WARRANT ANY TRADING ADDITION. HE HAS FURTHER CONTENDED THAT THE ASSESSEE HAS OTHERWISE DECLARED NET PROFIT ON THE INCREASED TURNOVER WHICH IS 104% HIGHER THAN THE PRECEDING YEAR, THUS, IN VIEW OF THE FACTS AND CIRCUMSTANCES WHEN THE ASSESSEE HAS ACHIEVED A HIGHER TURNOVER AND HIGHER NET PROFIT, A MINOR DECLINE IN THE G.P. DOES NOT WARRANT ANY TRADING ADDITION. 5. ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT THE A.O. HAS POINTED OUT VARIOUS DEFECTS AND IRREGULARITIES IN THE BOOKS OF ACCOUNT AND OTHER SUPPORTING RECORD. THE A.O. HAS ALSO CONDUCTED ENQUIRY BY ISSUING NOTICE U/S 133(6) OF THE ACT FOR VARIOUS PARTIES AND FINALLY REJECTED BOOKS OF ACCOUNT OF THE ASSESSEE. THE ESTIMATION MADE BY THE A.O. IS BASED UPON THE G.P. DECLARED BY THE ASSESSEE IN THE IMMEDIATE PRECEDING, THEREFORE, THE BASIS ADOPTED BY THE A.O. IS PROPER AND REASONABLE. THE LD. CIT(A) HAS ALREADY GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE ON ACCOUNT OF INCREASE IN THE TURNOVER. HENCE, THE LD DR HAS SUBMITTED THAT NO FURTHER RELIEF IS WARRANTED IN THIS CASE. 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE A.O. HAS REJECTED BOOKS OF ACCOUNT BY INVOKING ITA 93/JP/2018 ARVIND CHATTER VS ITO 5 PROVISIONS OF SECTION 145(3) OF THE ACT AND CONSEQUENTLY ESTIMATED INCOME OF THE ASSESSEE BY ADOPTING G.P. @ 25.64% AS AGAINST 22.23% DECLARED BY THE ASSESSEE. THOUGH THE A.O. HAS ADOPTED G.P. DECLARED BY THE ASSESSEE IN THE IMMEDIATE PRECEDING YEAR, HOWEVER, A CRUCIAL AND MATERIAL FACT BEING INCREASE OF 57% IN THE TURNOVER OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IN COMPARISON TO THE PRECEDING YEAR HAS NOT BEEN TAKEN INTO ACCOUNT BY THE A.O. THE LD. CIT(A) HAS ACCEPTED THIS FACT AS A CRUCIAL FACTOR FOR ESTIMATING INCOME OF THE ASSESSEE AND THEREFORE, REDUCED THE TRADING ADDITION TO RS. 2.00 LACS AS AGAINST RS. 6,86,400/-. THERE IS NO QUARREL THAT PAST HISTORY OF THE ASSESSEE IS A REASONABLE AND PROPER BASIS FOR ESTIMATING THE INCOME AFTER REJECTING BOOKS OF ACCOUNT, HOWEVER, IT IS ONLY A GUIDANCE FOR ESTIMATION OF INCOME AND ALL OTHER SURROUNDING FACTS AND CIRCUMSTANCES WHICH ARE RELEVANT TO DETERMINE THE OUTCOME OF THE BUSINESS ACTIVITY ARE ALSO REQUIRED TO BE TAKEN INTO CONSIDERATION. IN THE CASE IN HAND THE FACT OF INCREASE OF TURNOVER BY 57% DURING THE YEAR UNDER CONSIDERATION IN COMPARISON TO THE PRECEDING YEAR IS NOT IN DISPUTE, THEREFORE, A MINOR DECLINE IN THE G.P. FROM 25.64% TO 22.23% CANNOT BE A REASON FOR TRADING ADDITION DESPITE THE REJECTION OF BOOKS OF ACCOUNT. IT IS ALSO SETTLED PROPOSITION OF LAW THAT THE REJECTION OF BOOKS OF ACCOUNT WOULD NOT IPSO FACTO LEAD TO TRADING ADDITION IF THE ASSESSEE HAS DECLARED ITS INCOME WHICH IS BETTER OR INLINE WITH THE PAST HISTORY OF THE ASSESSEE. ITA 93/JP/2018 ARVIND CHATTER VS ITO 6 THEREFORE, THE G.P. DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION COUPLED WITH THE INCREASE IN THE TURNOVER BY 57% WOULD LEAD TO THE INFERENCE THAT THE INCOME DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IS INLINE WITH THE PRECEDING YEAR. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION SUSTAINED BY THE LD. CIT(A) IS NOT JUSTIFIED AND THE SAME IS DELETED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH SEPTEMBER, 2019 SD/- FOT; IKY JKO (VIJAY PAL RAO) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 26 TH SEPTEMBER, 2019 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI ARVIND CHATTER, KOTA. 2. IZR;FKHZ @ THE RESPONDENT- THE I.T.O., WARD-2(3), 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. 93/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR