SHRI PREM CHAND JAIN, JAIPUR V. INCOME TAX OFFICER, JAIPUR

MA 154/JPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3799 (ITAT-JAIPUR)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 12-12-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAI SINGH JCIT DHK
• Section: 145

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,O A JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM M A NO. 154/JP/2018 (ARISING OUT OF ITA NO. 86/JP/2018) FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2014-15 SHRI PREM CHAND JAIN, 8/314, VIDHYADHAR NAGAR, JAIPUR. CUKE VS. THE INCOME TAX OFFICER WARD 4(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. ADSPJ 9255 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P. C. PARWAL (C.A.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI JAI SINGH (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 01/03/2019 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 05/03/2019. VKNS'K@ ORDER PER VIJAY PAL RAO, J.M. BY WAY OF THIS MISCELLANEOUS APPLICATION THE ASSESS EE IS SEEKING RECTIFICATION IN THE ORDER OF TRIBUNAL DATED 26.11. 2018 FOR THE ASSESSMENT YEAR 2014-15. 2. WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND C ONSIDERED THE RELEVANT MATERIAL ON RECORD. THE GRIEVANCE OF THE ASSESSEE A S RAISED IN THIS MISC. APPLICATION IS SUMMARIZED IN PARA 2 AS UNDER:- IN THIS APPEAL, ASSESSEE HAS CHALLENGED THE TRADING ADDITION OF RS. 19,98,043/- CONFIRMED BY CIT(A) BY APPLYING THE G.P . RATE OF 1.67% AS AGAINST G.P. RATE OF 0.93% DECLARED BY THE ASSESSEE . THE HONBLE ITAT 2 MA NO. 154/JP/2018 SHRI PREM CHAND JAIN VS. ITO. CONFIRMED THE TRADING ADDITION BY HOLDING THAT ONCE THE BOOKS OF ACCOUNTS WERE REJECTED BY THE AO U/S 145(3) OF THE ACT AND THE SAID DECISION OF THE AO IS NOT UNDER CHALLENGED, THE AO IS DUTY BOUND TO ESTIMATE THE INCOME OF ASSESSEE AND PASS THE ORDER ON BEST JUDGMENT BASIS. HOWEVER, IN GIVING THIS FINDING IT IS IGNORE D THAT NEITHER THE AO NOR THE LD. CIT(A0 HAS INVOKED PROVISIONS OF SECTIO N 145(3). IN FACT BOOKS OF ACCOUNT, BILLS & VOUCHERS COULD NOT BE PRO DUCED BY THE ASSESSEE AS THEY WERE LOST IN TRANSIT FOR WHICH AN FIR WAS LODGED BUT THE COMPUTERIZED BOOKS OF ACCOUNT WERE PRODUCED BEF ORE THE LOWER AUTHORITIES AND ALSO BEFORE THE HONBLE BENCH. THE FURTHER FINDING THAT ONCE SECTION 145(3) IS INVOKED WHICH IS NOT UNDER C HALLENGED, AO IS DUTY BOUND TO ESTIMATE THE INCOME OF ASSESSEE AND P ASS THE ORDER ON BEST JUDGMENT BASIS IS ALSO BY NOT CONSIDERING THE DECISION OF RAJASTHAN HIGH COURT IN CASE OF CIT VS. GOTAN LINE KHANIZ UDY OG 256 ITR 243 WHERE IT IS HELD THAT MERE REJECTION OF BOOKED OF A CCOUNTS BY RESORTING TO SECTION 145 DID NOT NECESSARILY LEAD TO THE ADDI TION TO THE RETURN INCOME OR A DIFFERENT FIGURE OF INCOME. THE LD. AR HAS SUBMITTED THAT THOUGH THE ASSESSEE C OULD NOT PRODUCE BOOKS OF ACCOUNTS DUE TO THE REASONS THAT THE SAME WERE L OST IN TRANSIT AND THE ASSESSEE DULY PRODUCED AN FIR IN THIS RESPECT HOWEV ER, WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE HAS PRODUCED QUANTITY DE TAILS AND OTHER RECORDS THE ADDITION SUSTAINED BY THE LD. CIT(A) IS NOT JUSTIFI ED. THE LD. AR HAS SUBMITTED THAT THE ASSESSEES ARGUMENTS HAS BEEN RECORDED BY THE TRIBUNAL IN PARA 3 OF THE IMPUGNED ORDER BUT IN THE FINDINGS IN PARA 5 OF THE IMPUGNED ORDER THESE ARGUMENTS WERE NOT CONSIDERED AND FURTHER THERE IS NO SPECIFIC FINDING OF THE 3 MA NO. 154/JP/2018 SHRI PREM CHAND JAIN VS. ITO. AO OR LD. CIT(A) FOR REJECTING THE BOOKS OF ACCOUNT S AND TO THAT EXTENT THAT FINDINGS OF THIS TRIBUNAL IN PARA 5 SUFFERS FROM MI STAKE WHERE THE TRIBUNAL HAS STATED THAT THE AO INVOKED THE PROVISIONS OF SECTI ON 145(3) OF THE ACT. THE LD. AR HAS FURTHER SUBMITTED THAT MERE DECLINE IN T HE G.P. RATE CANNOT BE A REASONS FOR REJECTING THE BOOKS OF ACCOUNT AND ADDI TION TO THE INCOME OF THE ASSESSEE. THUS, THE LD. AR HAS SUBMITTED THAT ONCE THE ASSESSEE HAS PRODUCED ALL THE RELEVANT DETAILS AND BOOKS ACCOUNT S COULD NOT PRODUCE DUE TO THAT THE REASONS OF LOST THE ADDITION MADE BY THE A O AND CONFIRMED BY THE LD. CIT(A) IS LIABLE TO BE DELETED. 3. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THA T THE TRIBUNAL HAS DECIDED THIS ISSUE ON MERITS AFTER ANALYZING THE FA CTS AS WELL AS EVIDENCE. THEREFORE, MISC. APPLICATION OF THE ASSESSEE IS SEE KING REVIEW OF THE DECISION OF THE TRIBUNAL WHICH IS BEYOND THE SCOPE OF PROVIS IONS OF SECTION 254(2) OF THE ACT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THOUGH THE AO HAS NOT MENTIONED THE PROVISIONS OF SECTION 145(3) OF THE ACT IN THE ASSE SSMENT ORDER HOWEVER, THE ENTIRE DECISION OF THE AO IS NOTHING BUT AS PER PRO VISIONS OF SECTION 145(3) R.W.S. 144 OF THE INCOME-TAX ACT. IT IS UNDISPUTED THAT THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS B EFORE THE AO AND EXPLAINED THE REASONS THAT THE ORIGINAL BOOKS OF AC COUNTS WERE LOST IN TRANSIT 4 MA NO. 154/JP/2018 SHRI PREM CHAND JAIN VS. ITO. AND THE ASSESSEE HAS LODGED FIR ON 03.06.2015. AFTE R CONSIDERING THESE EXPLANATIONS THE AO HELD THAT THE TRADING RESULTS I NCLUDING VALUATION OF OPENING STOCK ARE NOT SUBJECT TO VERIFICATION. FURT HER, THE AO AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE HAS HELD TH AT THE BEST AVAILABLE METHOD IS TO ESTIMATE G.P. ON THE BASIS OF PREVIOUS HISTORY OF THE CASE. THESE FINDINGS OF THE AO AT PAGE 3 OF THE ASSESSMENT CLEA RLY MANIFEST THE DECISION OF THE AO TO REJECT THE BOOK RESULTS THOUGH THE SPE CIFIC PROVISIONS OF SECTION 145(3) OF THE ACT ARE NOT MENTIONED. THE AO THEN CA LCULATED THE AVERAGE RATE OF GROSS PROFIT DECLARED BY THE ASSESSEE IN THE PRE CEDING YEARS AND APPLIED THE SAME FOR ESTIMATION OF INCOME FOR THE YEAR UNDE R CONSIDERATION. THIS TRIBUNAL AFTER CONSIDERING ALL THESE FACTS HAS ADJU DICATED THIS ISSUE IN PARA 5 OF THE IMPUGNED ORDER AS UNDER:- 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. THE MAIN CONTENTION OF THE ASSESSEE IS THAT WHEN THE ASSESSEE HAS EXPLAINED THE REASONS FOR DECLINE IN G.P. FOR THE YEAR UNDER CONSIDERATION THEN MEREL Y BECAUSE THE BOOKS WERE REJECTED DUD TO UNAVOIDABLE REASONS, THE ADDITION IS NOT JUSTIFIED. WE DO NOT AGREEMENT WITH THE CONTENT ION OF THE LD. AR SIMPLY BECAUSE OF THE REASON THAT FOR THE A.Y. 2 013-14, THE ASSESSEE PRODUCED BOOKS OF ACCOUNT FOR VERIFICATION AND THE ASSESSING OFFICER DID NOT FIND ANY MAJOR DEFECT IN THE BOOKS AND CONSEQUENTLY THE BOOKS RESULTS WERE ACCEPTED BY THE ASSESSING OFFICER EXCEPT THE DISALLOWANCE OF CERTAIN EXPENSES ON THE GROUND OF PERSONAL ELEMENT BUT THOSE EXPENSES WERE BEYOND THE 5 MA NO. 154/JP/2018 SHRI PREM CHAND JAIN VS. ITO. TRADING ACCOUNT. THEREFORE, THE SAID DECISION OF TH E ASSESSING OFFICER FOR THE A.Y. 2013-14 CANNOT BE APPLIED AS R ES JUDICATA WHEN THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF AC COUNT AND THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SEC TION 145(3) OF THE ACT FOR THE YEAR UNDER CONSIDERATION. IT IS A S UBSTANTIAL DISTINGUISHING FACTS FOR THE YEAR UNDER CONSIDERATI ON AS THE BOOKS RESULTS WERE REJECTED BY THE ASSESSING OFFICER U/S 145(3) OF THE ACT AND THE SAID DECISION OF THE ASSESSING OFFICER IS NOT UNDER CHALLENGED, HENCE, ONCE THE BOOKS OF ACCOUNT WERE R EJECTED U/S 145(3) OF THE ACT, THE ASSESSING OFFICER IS DUTY BO UND TO ESTIMATE THE INCOME OF THE ASSESSEE AND PASS THE ORDER ON BE ST JUDGMENT BASIS. IT IS SETTLED PROPOSITION OF LAW THAT THE PA ST HISTORY OF G.P. DECLARED BY THE ASSESSEE IS A PROPER AND REASONABLE GUIDANCE FOR ESTIMATION OF INCOME FOR THE YEAR UNDER CONSIDERATI ON AFTER REJECTION OF BOOKS OF ACCOUNT. THE AVERAGE OF G.P. DECLARED BY THE ASSESSEE IN THE PAST YEARS WHICH IS ACCEPTED OR ATTEND THE FINALITY WILL BE A REASONABLE AND PROPER BASIS FOR ESTIMATION OF INCOME. HENCE, WE FIND THAT THE ASSESSING OFFICER W AS VERY REASONABLE AND JUST IN ESTIMATING THE INCOME ON THE BASIS OF THE AVERAGE OF THE G.P. DECLARED BY THE ASSESSEE FOR LA ST THREE YEARS. THE LD. CIT(A) HAS RESTRICTED THE ADDITION BY APPLY ING THE G.P. FOR THE IMMEDIATE PRECEDING YEAR AND THE REVENUE HAS NO T CHALLENGED THE SAME, THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE LD. CIT(A) QUA THIS ISSUE. THE EXPLANATION OF THE ASSESSEE FOR DECLINING OF G. P. DUE TO THE MARKET CONDITION CAN BE CONSIDERED ONLY WHEN IT IS SUPPORTED BY THE BOOKS OF ACCOUNT. THEREFORE, ONCE THE BOOKS OF ACCOUNT ARE 6 MA NO. 154/JP/2018 SHRI PREM CHAND JAIN VS. ITO. REJECTED THEN THIS CONTENTION OF THE ASSESSEE CANNO T BE ACCEPTED. THEREFORE, EVEN IF THE AO HAS NOT MENTIONED THE PRO VISIONS OF SECTION 145(3) OF THE ACT IN THE ASSESSMENT ORDER THE SUB AND SUBS TANCE OF THE FINDING OF THE AO IS THAT THE BOOK RESULTS OF THE ASSESSEE WERE RE JECTED AND HE PROCEEDED TO ESTIMATE THE INCOME OF THE ASSESSEE ON BEST JUDGMEN T. THEREFORE, WE DO NOT FIND ANY MISTAKE IN THE IMPUGNED ORDER SO FAR AS, T HE OBSERVATION OF THE TRIBUNAL THAT THE AO HAS INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT. 5. THE SECOND GRIEVANCE OF THE ASSESSEE IS REGARDIN G SUSTAINING THE ADDITION AS CONFIRMED BY THE LD. CIT(A). ONCE THE I NCOME OF THE ASSESSEE WAS TO BE ESTIMATED BASED ON BEST JUDGMENT THEN IT IS S ETTLED PROPOSITION OF LAW THAT THE AVERAGE OF THE PAST HISTORY OF THE G.P. RA TE DECLARED BY THE ASSESSEE WHICH HAS ATTAINED FINALITY IS A REASONABLE AND PRO PER BASIS FOR ESTIMATION OF INCOME OF THE CURRENT YEAR. THEREFORE, THE ASSESSEE IS NOW SEEKING REVIEW OF THE DECISION TAKEN BY THE TRIBUNAL ON THIS ISSUE WH ICH IS NOT PERMISSIBLE UNDER THE PROVISIONS OF SECTION 254(2) OF THE ACT. THE JU RISDICTION OF THE TRIBUNAL IN THE PROCEEDING OF SECTION 254(2) OF THE ACT IS VERY LIMIT AND CIRCUMSCRIBED TO RECTIFY THE MISTAKE APPARENT ON RECORD AND NOT TO R EVIEW OF THE EARLIER DECISION TAKEN ON MERITS. THE ASSESSEE IN THE MISC. APPLICATION IS SEEKING RE- APPRECIATION OF THE FACTS AND EVIDENCE WHICH IS NOT WITHIN PURVIEW OF THE 7 MA NO. 154/JP/2018 SHRI PREM CHAND JAIN VS. ITO. PROVISIONS OF SECTION 254(2) OF THE ACT. ACCORDINGL Y, WE DO NOT FIND ANY SUBSTANCE OR MERIT IN THE MISC. APPLICATION FILED B Y THE ASSESSEE. IN THE RESULT, THE MISCELLANEOUS APPLICATION IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/03/2019. 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:- 05/03/2019. SANTOSH/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI PREM CHAND JAIN, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- THE ITO WARD 4(2), 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 {MA NO. 154/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. 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