Dy. C. I.T.-4(1), Agra v. M/s V.K. Bartan Bhandar, Agra

ITA 109/AGR/2010 | 2006-2007
Pronouncement Date: 25-11-2011 | Result: Dismissed

Appeal Details

RSA Number 10920314 RSA 2010
Assessee PAN AADFB3661K
Bench Agra
Appeal Number ITA 109/AGR/2010
Duration Of Justice 1 year(s) 7 month(s) 4 day(s)
Appellant Dy. C. I.T.-4(1), Agra
Respondent M/s V.K. Bartan Bhandar, Agra
Appeal Type Income Tax Appeal
Pronouncement Date 25-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 25-11-2011
Date Of Final Hearing 23-11-2011
Next Hearing Date 23-11-2011
Assessment Year 2006-2007
Appeal Filed On 20-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI H.S. SIDHU JUDICIAL MEMBER AND SHRI B.P. JAIN ACCOUNTANT MEMBER ITA NO.109/AGR/2010 ASSESSMENT YEAR: 2006-07 DY. COMMISSIONER OF INCOME TAX 4(1) VS. M/S V.K. B ARTAN BHANDAR AGRA. DAULAT RAM MARKET JOHRI BAZAR AGRA. (PAN: AADFB 3661 K) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. SHARMA JR. D.R. RESPONDENT BY : SHRI K.C. AGARWAL ADVOCATE DATE OF HEARING : 23.11.2011 DATE OF PRONOUNCEMENT : 25.11.2011 ORDER PER BENCH : THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER OF LD. CIT(A)-II AGRA DATED 27.01.2010 FOR THE ASSESSMENT YEAR 2006-07. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUND OF A PPEAL :- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITION OF RS.15 71 746/- MADE BY THE A.O. BY ADOPTING THE G.P. RATE 24.13% WORKED BY HIM ON THE BASIS OF FIGURES O F SALES PURCHASED AND ALSO THE G.P. RATE OF 20% UPTO THE DATE OF SURV EY FURNISHED BY THE ITA NO.109/AGR/2010 A.Y. 2006-07 2 ASSESSEE THOUGH THE SAME SHOULD HAVE BEEN CONFIRMED IN VIEW OF THE FACTS DISCUSSED IN THE ASSESSMENT ORDER AND REMAND REPORT. 2. THAT THE LD. CIT(A) HAS ERRED IN DELETING THE AD DITION OF RS.1 00 000/- MADE B THE A.O. ON ACCOUNT OF UNEXPLA INED INVESTMENT WITHOUT APPRECIATING THE FACTS OF THE CASE. 3. THAT THE LD. CIT(A) HAS ERRED IN NOT ACCEPTING T HE REQUEST FOR THE ENHANCEMENT OF THE INCOME BY AN AMOUNT OF RS.5 32 614/- MADE THROUGH THE REMAND REPORT DATED 27.07.2009 THOUGH T HE REQUEST WAS BASED ON THE LOGICAL BASIS OF STOCK TURN OVER RATIO . 4. THE ORDER OF THE LEARNED CIT(A) DESERVES TO BE V ACATED AND THAT OF THE ASSESSING OFFICERS BE RESTORED. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR ALTER ANY OR MORE GROUND OR GROUNDS OF APPEAL S MAY BE DEEMED FIT AT THE TIME OF HEARING OF APPEAL. 3. THE BRIEF FACTS IN GROUND NO.1 OF THE REVENUE AR E THAT THERE WAS A SURVEY AT THE BUSINESS PREMISES OF THE ASSESSEE UNDER SECTION 133A OF THE INCOME TAX ACT 1961 ON 22.12.2005 WHERE LOOSE PAPERS AS PER ANNEXU RE EA-6 EA-12 AND EA-11 WERE FOUND. THESE PAPERS WERE THE LOOSE SHEETS REL ATING TO SALES AMOUNTING TO RS.13 70 242/- THOUGH THE ASSESSEE CLAIMED THAT THE SE SALES ARE INCLUDED IN THE TOTAL SALES BUT THERE IS NO VERIFICATION PROVIDED BY THE ASSESSEE TO CORRELATE THESE SALES IN THE ACCOUNT. THE A.O. ACCORDINGLY INVOKED THE PROV ISIONS OF SECTION 145(3) OF THE ACT SINCE THE ASSESSEE COULD NOT EXPLAIN THE SAID L OOSE PAPERS. THE A.O. ACCORDINGLY ESTIMATED THE SALES AT RS.3 25 00 000/- AS AGAINST RS.3 01 55 938/- DECLARED BY THE ASSESSEE. THE A.O. ADOPTED THE G.P . RATE OF 24.13 % ON ACCOUNT OF ITA NO.109/AGR/2010 A.Y. 2006-07 3 TRADING ACCOUNT PREPARED BY APPLYING THE G.P. RATE @ 20% IN THE PERIOD UPTO THE DATE OF SURVEY AND ACCORDINGLY MADE THE ADDITION TO THE INCOME OF THE ASSESSEE. THE LD. CIT(A) AFTER APPRECIATING THE FACTS AND EXP LANATION GIVEN BEFORE THE A.O. AND BEFORE HIM WHERE THE ASSESSEE ALSO FILED CERTAI N DOCUMENTS AND THE LD. CIT(A) AFTER TAKING THE REMAND REPORT FROM THE A.O. WAS OF HE VIEW THAT THERE IS NO ERROR IN REJECTING THE BOOKS OF ACCOUNT BY THE A.O. THE LD. CIT(A) ESTIMATED THE SALE AT RS.3 20 00 000/- AND APPLIED A G.P. RATE OF 20.79%. FOR THE WHOLE YEAR AND ACCORDINGLY ALLOWED THE RELIEF TO THE ASSESSEE. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE ON THE INVOKING OF SECTION 145(3) OF THE ACT SINCE THE ASSESSEE IS NOT IN APPEAL BEFORE US. AS REGARDS THE ESTIMATION OF THE SALES BY THE LD. CIT(A) AT RS.3 20 00 000/- THE SAME IS APPEARS TO BE REASONE D ONE. AS REGARDS ADOPTION OF G.P. RATE OF 24.13% ON THE BASIS OF THE POST-SURVEY PERIOD IS WITHOUT ANY BASIS SINCE THE G.P. EARNED FOR THE PART OF THE PERIOD CA NNOT BE APPLIED ON WHOLE OF THE YEAR. IT IS A WELL SETTLED PRINCIPLE THAT PROFIT M AY INCREASE OR DECREASE EVERY DAY BUT TAX IS PAID ONLY ON THE INCOME OF THE WHOLE OF THE YEAR. THEREFORE IT IS THE G.P. OF WHOLE OF THE YEAR WHICH HAS TO BE SEEN AND ACCORDINGLY THE COMPUTATION OF INCOME HAS TO BE MADE WHICH PART THE A.O. HAS IGN ORED. THOUGH THE A.O. WAS WRONG IN APPLYING THE G.P. RATE OF 20% FOR THE PRE- SURVEY PERIOD BECAUSE THE ITA NO.109/AGR/2010 A.Y. 2006-07 4 ASSESSEE HIMSELF WAS DECLARING A G.P. RATE OF 20.79 %. THE LD. COUNSEL FOR THE ASSESSEE SHRI K.C. AGARWAL ADVOCATE INVITED OUR AT TENTION TO PAGE NO.14 OF PAPER BOOK WHERE THE SALES G.P. AND PERCENTAGE OF G.P. F OR THE YEAR THE PRECEDING YEAR AND FOLLOWING YEARS HAVE BEEN MENTIONED AS UNDER :- ASST. YEAR SALE AMOUNT GROSS PROFIT AMOUNT % OF GROSS PROFIT 2005-06 1 96 98 700 38 51 857/- 19.55% 2006-07 3 01 55 938/- 62 70 504/- 20.79% 2007-08 3 76 17 295/- 81 82 058/- 21.75% 2008-09 3 99 83 815/- 92 47 740/- 23.12% 5. THE ASSESSEE DURING THE YEAR HAS DECLARED A BETT ER G.P. OF 20.79% AS COMPARED TO 19.55% IN THE IMMEDIATELY PRECEDING YEA R. THE TURNOVER IS ALSO ON THE HIGHER SIDE AT RS.3 01 55 938/- AS COMPARED TO THE TURNOVER IN THE IMMEDIATELY PRECEDING YEAR AT RS.1 96 98 700/-. THEREFORE IN THE CIRCUMSTANCES AND FACTS OF THE CASE WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY APPLIED THE PERCENTAGE OF G.P. OF 20.79% ON THE ESTIMATED T URNOVER OF RS.3 20 00 000/-. MOREOVER THE ASSESSEE HAD SURRENDERED RS.5 00 000/ - DURING THE YEAR AS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE SHRI K.C. A GARWAL ADVOCATE WHICH IS MUCH MORE THAN THE INCOME ESTIMATED BY THE LD. CIT( A) ON THE ENHANCED SALES. THE ENHANCED PROFIT RETAINED BY THE LD. CIT(A) IS L ESSER THAN THE SURRENDERED INCOME WHICH IS PART OF THE SURRENDERED AMOUNT OF R S.5 00 000/-. IN SUCH CIRCUMSTANCES AND FACTS OF THE CASE WE FIND NO ER ROR IN THE ORDER OF THE LD. CIT(A) ITA NO.109/AGR/2010 A.Y. 2006-07 5 WHO HAS RIGHTLY DELETED THE ADDITION MADE BY THE A. O. THUS GROUND NO.1 OF THE REVENUE IS DISMISSED. 6. AS REGARDS GROUND NO.2 THE A.O. MADE AN ADDITIO N OF RS.1 00 000/- AS UNEXPLAINED INVESTMENT WHICH HAS BEEN ADDED AS UNDI SCLOSED INCOME. THE LD. CIT(A) DELETED THE ADDITION VIDE PARAGRAPH NO.9.1 O F HIS ORDER FOR THE REASONS MENTIONED THEREIN. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ADDITION MADE BY THE A.O. IS WITHOUT ANY MATERIAL O N RECORD OR ANY EVIDENCE EXCEPT THE LOOSE PAPERS OF SALES WHICH HAVE BEEN CO VERED IN GROUND NO.1 HEREINABOVE. THEREFORE AT THE OUTSET THE A.O. IS NOT JUSTIFIED IN MAKING SUCH ADDITION WHICH IS MADE ON CONJECTURES AND SURMISES ONLY. EVEN THE SAID ADDITION OF RS.1 00 000/- IS COVERED UNDER THE SURRENDER OF RS.5 00 000/- MADE BY THE ASSESSEE. THEREFORE WE FIND NO INFIRMITY IN THE O RDER OF THE LD. CIT(A) WHO HAS RIGHTLY DELETED THE ADDITION MADE BY THE A.O. THUS GROUND NO.2 OF THE REVENUE IS DISMISSED. 8. AS REGARDS GROUND NO.3 THE GROUND OF THE REVENU E HAS NO BASIS IF THE REQUEST OF THE A.O. IN THE REMAND REPORT IS NOT ACC EPTED WHICH ITSELF HAS NO BASIS. THEREFORE IN SUCH CIRCUMSTANCES THE SAID GROUND O F THE REVENUE IS DISMISSED. ITA NO.109/AGR/2010 A.Y. 2006-07 6 9. GROUND NOS.4 & 5 OF THE REVENUE ARE GENERAL IN N ATURE THEREFORE DO NOT REQUIRE ANY ADJUDICATION. 10. IN THE RESULT APPEAL OF THE REVENUE IN ITA NO. 109/AGR/2010 IS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 25.11.2011). SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 25 TH NOVEMBER 2011 PBN/* COPY OF THE ORDER FORWARDED TO: APPELLANT/RESPONDENT/CIT CONCERNED/CIT(APPEALS) CO NCERNED/D.R. ITAT AGRA BENCH AGRA/GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY