HARISH SEJWANI, Kota V. ACIT, Kota

ITA 961/JPR/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74883 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 31-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH OJHA JCIT DHK

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. 961/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 SHRI HARISH SEJWANI 627, DADABARI MAIN ROAD KOTA CUKE VS. THE ACIT CIRCLE- 1 KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AJXPK 1708 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SIDDHARTH RANKA & SHRI MUZAFFAR IQBAL, ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJESH OJHA, JCIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 18/02/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 04 /03/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), AJMER DATED 30-11-2012 FOR THE ASSESSMENT YEAR 2008-09 WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS. 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. LOWER AUTHORITIES GROSSLY ERRED IN REJECT ING THE BOOKS OF ACCOUNT, IN INVOKING PROVISIONS OF SECTION 145(3) OF THE I.T. ACT, WHICH IS UNJUSTIFIED, BAD IN LAW A ND WITHOUT MATERIAL. . 2 1.1 THAT ALL PURCHASES BEING VOUCHED DETAILED VERIFIABLE AND IN ACCORDANCE WITH THE STATE EXCISE POLICIES, COMPLETE RECORDS OF PURCHASES AND SALES HAVING BEEN MAINTAINED, BOOKS BEING AUDITED, THE INVOKING OF PR OVISIONS OF SECTION 145(3) IS UNJUSTIFIED. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) GROSSLY ERRED IN UPHOLDING GRO SS PROFIT RATE OF 16.68% AGAINST DECLARED GROSS PROFIT RATE O F 14.53%. 2.1 THAT THE BUSINESS OF THE APPELLANT DURING THE PREVIOUS YEAR RELEVANT TO THE YEAR UNDER APPEAL BEI NG NOT SIMILAR TO ASSESSMENT YEAR 2006-07 IT BEING ENTIREL Y DIFFERENT INASMUCH AS THE APPELLANT DURING THE YEAR HAD ONLY 2 SHOPS OF IMFL AS AGAINST IN ASSESSMENT YEAR 2006-07 WHEN IT WAS AT LARGE LEVEL IN 2 DISTRICTS (BOTH WHOLESALE & RET AIL) 2.2 THAT THE TRADING ADDITION OF RS. 6,34,239/- SUSTAINED BY THE LD. CIT(A) IS UNJUSTIFIED WITHOUT ANY BASIS AND DESERVES TO BE DELETED. 2.1 BRIEF FACTS OF THE CASE ARE - THE ASSESSEE IS A DEALER OF IMFL AND BEER, A TRADE GOVERNED THE EXCISE LAWS OF RAJASTH AN STATE. RETURN OF INCOME WAS FILED ON THE BASIS OF AUDITED ACCOUNT U/ S 44AB. ACCORDING TO AO, DURING THE COURSE OF ASSESSMENT ASSESSEE DID NO T PRODUCE SALE REGISTER, SALES BILLS, STOCK REGISTER AND FREIGHT C HARGES BILLS. BESIDES BRAND WISE AND DATE WISE DETAILS RELATING TO LEAKAGE IN I MFL/BEER WERE ALSO NOT PRODUCED. CONSEQUENTLY BOOKS OF ACCOUNT OF THE ASSE SSEE WERE REJECTED. TRADING ADDITION IS CLAIMED TO BE MADE BY AO FOLLOW ING EARLIER ITAT . 3 ORDER BY ADOPTING THE GP RATE AT 19.7% AS AGAINST 1 4.53% DECLARED BY THE ASSESSEE. 2.2 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL WHERE THE FACTS ABOUT BUSINESS MODEL AND LOWER GP WERE REITERATED. IT WAS EXPLAINED THAT LOOKING AT CHANGE IN WHOLESALE AND RETAIL SALES, NO COMPARISON WAS POSSIBLE IN THE GROSS PROFIT RATE OF ASSESSMENT YEA RS 2006-07 AND 2008-09 AS THE NATURE OF TRADE ACTIVITIES WERE ALTOGETHER D IFFERENT. THE ITAT ORDER HAS BEEN WRONGLY APPLIED BY AO IN AS MUCH AS THE IT AT IN THE LIGHT OF FACTS OF THAT YEAR INCREASED GROSS PROFIT TO 19.7% AS AGAINST 19.05% DECLARED BY THE ASSESSEE. THUS IN EFFECTIVE TERMS, THE INCREASE IN GROSS PROFIT WAS TO THE MINOR EFFECT AT 0.65%; IT IS UNTH INKABLE THAT ITAT HAS HELD THAT FOR ALL THE SUBSEQUENT YEARS GP OF 19.7%. THE AO IN WITHOUT APPRECIATING THE CORRECT EFFECT OF ITAT ORDER HAS T AKEN GROSS PROFIT AT 19.7% AS BENCH MARK FOR ALL THE YEARS WHICH IS NEIT HER INTENDED BY ITAT NOR POSSIBLE IN THIS TRADE. THE AO MADE SIMILAR TY PE OF ADDITION IN GP FOR AY 2007-08, LD. CIT(A) RESTRICTED IT TO GROSS P ROFIT DECLARED BY THE ASSESSEE AT 16.68% WHICH IS NOT CHALLENGED BY THE R EVENUE. THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO THE ORDER OF S AME LD. CIT(A) PASSED ON THE SAME DATE I.E. 30-11-2012 IN THE CASE OF SHR I CHANDAN SINGH SHEKHAWAT FOR THE AY 2008-09. IN THIS CASE THE BOOK S OF ACCOUNT WERE . 4 ALSO REJECTED. BOTH THE SHOPS WERE CLAIMED TO BE I N NEARLY SIMILAR LOCALITIES AND LD. CIT(A) INCREASED THE GP ONLY BY 1%. BY FOLLOWING OBSERVATION:- IT IS SEEN THAT IN THE ASSESSMENT YEAR 2007-08, THE ASSESSEE WAS HAVING SIMILAR RETAIL BUSINESS OF IMFL THROUGH TWO SHOPS AT KOTA. THE LD. CIT(A) VIDE APPEAL NO. 196/09-10/721 ORDER DATED 30-08-2012 HAS ACCEPTED THE GROSS PROFIT RATE OF 16 .68% SHOWN BY THE ASSESSEE KEEPING IN VIEW THE FACT THAT AS PER T HE STATE GOVT. POLICY MAXIMUM PROFIT ON PURCHASE PRICE WAS 20% I.E . 16.66% ON THE SALES IN THE RETAIL LIQUOR TRADE. AS THE ASSESS EE IN THE SIMILAR TRADE DURING THE YEAR UNDER CONSIDERATION, IT IS RE ASONABLE TO ESTIMATE THE GROSS PROFIT RATE OF 16.68% ON TURNOVE R OF RS. 2,95,47,348/- WHILE THE AO HAS ADOPTED GROSS PROFIT RATE OF 19.7%. ACCORDINGLY, THE AO IS DIRECTED TO ADOPT THE GROSS PROFIT RATE OF 16.68% AS IN THE LAST YEAR. BALANCE ADDITION IS DEL ETED. THE AO IS DIRECTED TO RE-COMPUTE THE ADDITION AFTER GIVING TH E CREDIT FOR THE GROSS PROFIT SHOWN BY THE ASSESSEE. THIS ISSUE IS D ECIDED ACCORDINGLY. 2.3 THE LD. DR SUPPORTED THE ORDER OF THE LD. CIT(A ). 2.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE AO WHILE APPLYING THE ITAT JUDGMENT FOR AY 2006-07, FAILED TO APPRECIATE THAT ITAT ENHANCED TH E GROSS PROFIT DECLARED BY THE ASSESSEE BY 0.65%. THE ITAT DID N OT ISSUE ANY DIRECTION TO ADOPT THE GROSS PROFIT RATE OF 19.75% FOR ALL THE SUBSEQUENT YEARS. THE LD. CIT(A) HAS FOLLOWED THE GROSS PROFIT OF PRECEDI NG YEAR WITHOUT APPRECIATING THE CHANGES IN THE METHODOLOGY OF ASSE SSEES BUSINESS WHICH ARE ENUMERATED BY THE LD. CIT(A) IN HIS ORDER. THE LD. CIT(A) IN THE CASE . 5 OF SHRI SHEKHAWAT, DEALING IN SIMILAR TYPE OF IMF A ND BEER TRADE AT KOTA INCREASED GP BY ABOUT 1%; DATE OF BOTH ORDERS IS S AME. THUS IN OUR CONSIDERED VIEW, IT WILL BE A FAIR ESTIMATE TO MAKE RESTRICT THE GP ADDITION BY 1% IN THIS CASE ALSO. CONSEQUENTLY, WE DIRECT TH E AO TO MAKE THE GP ADDITION BY INCREASING THE GROSS PROFIT DECLARED BY THE ASSESSEE BY 1%. THUS THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/03/201 5. SD/- SD/- VH-VKJ-EHUK VKJ-IH-RKSYKUH (T.R. MEENA) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 4 TH MARCH, 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI HARISH SEJWANI, KOTA 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE- 1, KOTA 3. VK;DJ VK;QDRVIHY ) @ CIT(A), JAIPUR 4. VK;DJ VK;QDR@ CIT, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.961/JP/2012) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR . 6