SHRI RAJESH BHARGAVA, Jaipur V. INCOME TAX OFFICER, Jaipur

ITA 962/JPR/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6355 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 08-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI
• Keywords: Corroborative evidences
• Section: 143(3); 144

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 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. 962/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2005-06 RAJESH BHARGAV, B-35, GANESH MARG, BAPU NAGAR, JAIPUR. CUKE VS. I.T.O., WARD 5(4), JAIPUR. PAN NO. ABFPB 2369 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI J.C. KULHARI (ADDL.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 09/07/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 25/07/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A)-2, JAIPUR DATED 20/09/2017 FOR A.Y.2005-0 6, WHEREIN THE ASSESSEE HAS TAKEN FOLLOWING GROUND OF APPEAL: THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CO NFIRMING THE TRADING ADDITION OF RS. 18,00,300/- MADE BY A.O. BY APPLYIN G G.P. RATE @ 30% ON THE ESTIMATED TURNOVER OF RS. 1,25,00,000/- SOLE LY ON THE GROUND THAT ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNT AND OTHER DETAILS AS PER THE DIRECTION GIVEN BY THE HONBLE ITAT IN ITAT NO. 585/JP/2011 DATED 10/04/2015. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS ENGAGED IN TRADING OF OPTICS, FRAMES, LENSES, ETC. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE DECLARED GROSS PROFIT OF RS.19,49,700/- ON TURNOVER OF RS.97,48,503/- ITA 962/JP/2017_ RAJESH BHARGAV VS ITO 2 GIVING A GROSS PROFIT RATE OF 20% AS AGAINST GROSS PROFIT OF RS. 16,68,620/- ON SALES OF RS.96,74,643/- GIVING A G.P. RATE OF 20 .35% IN THE LAST YEAR. THE AO IN ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3) OB SERVED THAT ASSESSEE HAD FAILED TO PRODUCE BOOKS OF ACCOUNT AND OTHER RECORD S AND HELD THAT THE TRADING RESULT DECLARED BY THE ASSESSEE COULD NOT BE VERIFI ED. ACCORDINGLY, IN THE ASSESSMENT ORDER DATED 30.11.2007, HE MADE TRADING ADDITION OF RS.18,00,300/- BY ESTIMATING SALES AT RS.1,25,00,00 0/- AFTER APPLYING G.P. RATE OF 30%. THE LD. CIT(A) VIDE ORDER DATED 30.03.2011 SUSTAINED THE TRADING ADDITION AT RS.50,000/-. AGAINST THIS ORDER, THE DE PARTMENT FILED AN APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL VIDE ITS ORDER DA TED 10.04.2015 OBSERVED THAT NO REMAND REPORT WAS CALLED FOR BY THE LD. CIT (A) ON THE ASSESSEES SUBMISSION AND THUS, SET ASIDE THE ORDER TO THE AO AND DIRECTED THE ASSESSEE TO PRODUCE THE COMPLETE BOOKS OF ACCOUNTS. 3. IN THE SET ASIDE IMPUGNED PROCEEDINGS, THE ASSES SEE COULD NOT PRODUCE THE BOOKS OF ACCOUNTS AS THEY WERE MISPLACED AS WAS SUBMITTED BY THE REPLY DATED 21.12.2015. THE AO STATED THAT THE ASSESSEE H AS NOT PRODUCED THE BOOKS OF ACCOUNT BUT HAS ONLY PRODUCED THE LEDGER A CCOUNT OF PURCHASE, SALES MANUFACTURING EXPENSES, INSURANCE EXPENSES, ELECTRI CITY AND WATER EXPENSES. THUS, HE HELD THAT IT IS NOT POSSIBLE TO ASCERTAIN THE TRUE PICTURE OF TRADING RESULTS AND ACCORDINGLY, HE AGAIN DETERMINED THE SA LES AT RS.1,25,00,000/- AS ORIGINAL ESTIMATED BY APPLYING G.P. RATE OF 30% AND MADE A TRADING ADDITION OF RS.18,00,300/-. THE LD. CIT(A) HELD THAT THE ASSESS MENT HAD BEEN SET ASIDE WITH THE DIRECTION TO EXAMINE THE BOOKS OF ACCOUNTS BUT THE SAME WERE NOT PRODUCED BY THE ASSESSEE AND THEREFORE, SHE CONFIRM ED THE ADDITION MADE BY THE AO. NOW, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT ONL Y ISSUE IN THIS CASE IS THE ESTIMATION OF TRADING RESULTS AS THE BOOKS OF A CCOUNTS WERE NOT PRODUCED. IT IS SUBMITTED THAT THE MATTER IN QUESTION IS OLD AND BOOKS OF ACCOUNTS WERE MISPLACED / LOST BY THE ASSESSEE. THE ONLY DOCUMENT S THAT COULD BE PRODUCED ITA 962/JP/2017_ RAJESH BHARGAV VS ITO 3 WERE THE PRINTOUTS OF LEDGER ACCOUNTS OF PURCHASE, SALES AND EXPENSES TAKEN FROM THE COMPUTER. THE SUPPORTING EVIDENCES COULD N OT BE PRODUCED DUE TO NON-AVAILABILITY OF THE SAME. ACCORDINGLY, THE AO C OMPLETED THE ASSESSMENT U/S 144 OF THE ACT. AS PER THIS SECTION, ASSESSMENT IS TO BE COMPLETED BY MAKING BEST JUDGMENT. WHILE MAKING A BEST JUDGMENT ASSESSMENT, AO SHOULD CONSIDER THE DOCUMENTS AVAILABLE ON THE RECORDS IN THE BEST MANNER AS POSSIBLE. HE RELIED ON THE FOLLOWING CASE LAWS:- (I) KACHWALA GEMS VS. JT. CIT (2007) 288 ITR 10 (SC ) (II) SANGRUR VANASPATI MILLS LTD. VS. CIT (2006) 28 3 ITR 267 (P&H) (III) CIT VS. CHOPRA BROSS. INDIA (P.) LTD. (2001) 252 ITR 412 (P&H) (IV) ITO VS. VIJAYA AUTOMOBILES (2000) 108 TAXMAN 5 84 (KER.) 5. IT WAS FURTHER SUBMITTED THAT EVEN IN BEST JUDGM ENT ASSESSMENT, THE AO MUST ACT FAIRLY. IT MAY BE NOTED THAT BOOKS OF A CCOUNTS OF THE ASSESSEE WERE AUDITED. THERE IS NO ADVERSE QUALIFICATION. TH E AUDIT REPORT, BALANCE SHEET AND P&L ACCOUNT IS AT APB 3-6. THEREFORE, EVE N IF THE BOOKS OF ACCOUNTS ARE NOT PRODUCED, THE G.P. RATE SHOULD HAVE BEEN AP PLIED BY THE AO AFTER CONSIDERING THE PAST HISTORY OF THE CASE AND OTHER SURROUNDING CIRCUMSTANCES. THE AO HAS NOT FOUND ANY EVIDENCE ON RECORD TO SUGG EST THAT SALES WERE MADE OUTSIDE THE BOOKS OF ACCOUNTS AS IS NOTED BY THE LD . CIT(A) IN FIRST ROUND OF APPEAL. THE POSITION OF THE G.P. RATE DECLARED BY T HE ASSESSEE AS COMPARED TO EARLIER YEAR IS AS UNDER:- AY GROSS TURNOVER GROSS PROFIT GP 2004 - 05 RS.96,74,643/ - RS.19,68,620/ 20.35% 2005-06 RS.97,48,503/- RS.19,49,700/ 20.00% FROM THE ABOVE TABLE, IT CAN BE NOTED THAT THE ASSE SSEE'S RESULT IS COMPARABLE WITH PREVIOUS YEAR. THE AO HAVE NOT GIVEN ANY COMPA RABLE CASE FOR APPLYING G.P. RATE OF 30%. THUS, THE GP RATE APPLIED BY AO A ND CONFIRMED BY THE LD. CIT(A) IS UNREASONABLE AND THEREFORE, THE G.P. RATE DECLARED BY ASSESSEE BE ACCEPTED. ITA 962/JP/2017_ RAJESH BHARGAV VS ITO 4 6. IT WAS FURTHER SUBMITTED THAT THE AO HAS ESTIMAT ED SALES AT RS.1,25,00,000/- AS AGAINST RS.97,48,503/- DECLARED BY THE ASSESSEE. HOWEVER, HE HAS NOT POINTED ANY SALES OR PURCHASE M ADE OUT OF BOOKS. THE ASSESSING OFFICER HAS ALSO NOT GIVEN ANY COMPARABLE CASE TO ESTIMATE THE SALES AT RS.1,25,00,000/-. THUS, THE SALES DECLARED BY AS SESSEE AT RS.97,48,503/- SHOULD BE ACCEPTED. 7. IT WAS FURTHER SUBMITTED THAT THE LD. CIT(A) VI DE ITS ORDER DATED 30.03.2011 HAS CONFIRMED ADDITION OF RS.4,33,000/- U/S 68. THEREFORE, IF ANY TRADING ADDITION IS CONFIRMED, THE SAME BE SET OFF AGAINST THE ADDITION OF RS.4,33,000/- CONFIRMED U/S 68. FOR THIS PURPOSE, R ELIANCE IS PLACED ON FOLLOWING CASES:- (I) CIT VS. TYARYAMAL BAL CHAND 165 ITR 453 (RAJ.) (HC) (II) CIT VS. G.K CONTRACTOR 19 DTR 305 (RAJ.) (III) CIT VS. KSM GURUSWAMY NADAR & SONS 149 ITR 12 7 (MAD.) (IV) ANANTHARAM VEERASINGHAIAH & CO. VS. CIT 123 IT R 457(SC) 8. ON THE OTHER HAND, THE LD DR HAS RELIED ON THE O RDERS OF THE AUTHORITIES BELOW. IT WAS SUBMITTED BY THE LD DR THAT WHERE THE COMPLETE BOOKS OF ACCOUNTS WERE NOT PRODUCED, THE AO WAS JUSTIFIED IN ESTIMATING THE SALES AND THE GROSS PROFIT IN THE HANDS OF THE ASSESSEE AND M AKING THE BEST JUDGEMENT ASSESSMENT. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS A CASE OF BEST JUDGEMENT ASSES SMENT UNDER SECTION 144 OF THE ACT WHEREIN THE AO HAS DISBELIEVED THE TURNOVER AND GROSS PROFIT DECLARED BY THE ASSESSEE AND HAS ESTIMATED THE TURNOVER AND GROSS PROFIT ON HIS OWN. THERE IS HOWEVER NO BASIS FOR ESTIMATION OF TURNOVE R AT RS RS.1,25,00,000/- AS AGAINST REPORTED TURNOVER OF RS.97,48,503/-. THERE IS NO EVIDENCE AND NO FINDING WHICH HAS BEEN RECORDED REGARDING UNRECORDE D AND UNREPORTED SALES ITA 962/JP/2017_ RAJESH BHARGAV VS ITO 5 MADE OUT OF BOOKS OF ACCOUNTS. FURTHER, THE GROSS PROFIT HAS BEEN ESTIMATED AT 30% AS AGAINST REPORTED GROSS PROFIT O F 20% WITHOUT BRINGING ON RECORD ANY COMPARABLE THIRD PARTY DATA IN SIMILAR L INE OF BUSINESS OR EVEN LOOKING AT THE ASSESSEES OWN PAST HISTORY. AS AGA INST THE SAME, THE REPORTED TURNOVER AND GROSS PROFIT IS IN LINE WITH THE PAST HISTORY OF THE ASSESSEE AND WE THEREFORE DO NOT SEE ANY BASIS TO INTERFERE WITH TH E REPORTED TURNOVER AND GROSS PROFIT AS DECLARED BY THE ASSESSEE. IN THE R ESULT, THE TRADING ADDITION MADE BY THE AO IS HEREBY DELETED AND THE SOLE GROUN D OF APPEAL IS ALLOWED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 25/07/2018. 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:- 25 TH JULY, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI RAJESH BHARGAV, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD 5(4), JAIPUR. 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. 962/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR