SHRI SHYAM AGARWAL, Jaipur v. DCIT, Jaipur

ITA 179/JPR/2012 | 2008-2009
Pronouncement Date: 14-11-2014 | Result: Partly Allowed

Appeal Details

RSA Number 17923114 RSA 2012
Assessee PAN ADIPA5475E
Bench Jaipur
Appeal Number ITA 179/JPR/2012
Duration Of Justice 2 year(s) 8 month(s) 17 day(s)
Appellant SHRI SHYAM AGARWAL, Jaipur
Respondent DCIT, Jaipur
Appeal Type Income Tax Appeal
Pronouncement Date 14-11-2014
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 14-11-2014
Date Of Final Hearing 23-11-2012
Next Hearing Date 23-11-2012
Assessment Year 2008-2009
Appeal Filed On 27-02-2012
Judgment Text
IN THE INCOMETAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. MEENA) I.T.A. NO. 179/JP/2012 ASSTT. YEAR- 2008-09 PAN NO. ADIPA 5475 E SHRI SHYAM AGARWAL THE D.C.I.T. CENTRAL S/O- SHRI RAM AGARWAL VRS. CIRCLE-3 JAIPUR. 129-E GOVIND NAGAR DUSHERRA KOTHI AMBER ROAD JAIPUR. (APPELLANT) (RESPONDENT) ASSESSEE BY :- SHRI S.L. PODDAR. DEPARTMENT BY :- SHRI A.K. KHANDELWAL. DATE OF HEARING : 25/09/2014 DATE OF PRONOUNCEMENT : 14/11/2014 O R D E R PER: T.R. MEENA A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 10/01/2012 OF THE LEARNED CIT(A)-CENTRAL JAIPUR FOR THE A.Y. 2008-09. THE SOLE GROUND OF APPEAL IS AS UNDER:- (1) THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LEARNED CIT(A) HAS ERRED IN SUSTAINING THE TRADING ADDITION OF RS. 2 23 150/- BY APPLYING G.P. RATE OF 19% AS AGAI NST 11.87% DECLARED BY THE ASSESSEE BY INVOKING THE PRO VISIONS OF SECTION 145(3) OF THE IT ACT 1961. 2. THE ASSESSEE DERIVED INCOME FROM BUSINESS CAPITA L GAIN AND OTHER SOURCES. IN THIS CASE SEARCH WAS CONDUCTED ON 27/8/ 2008 IN THE CASE OF ITA 179/JP/2012 SHYAM AGARWAL VS. DCIT 2 AGARWAL (CARPET) GROUP TO WHICH THE ASSESSEE BELONGED . AS OBSERVED BY THE ASSESSING OFFICER THE VARIOUS ASSETS/BOOKS OF ACCOUNT AND DOCUMENTS HAD BEEN FOUND AND SEIZED AS PER THE ANNEXURES FRAM ED DURING THE COURSE OF SEARCH. THE ASSESSEE HAD FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 28/10/2009 DECLARING TOTAL I NCOME OF RS. 22 59 534/-. THIS CASE WAS SCRUTINIZED U/S 153A/143( 3) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT). THE ASSESSEE DERIV ED INCOME FROM BUSINESS FROM M/S ROYAL RUGS A PROPRIETARY CONCERN OF THE ASSESSEE STARTED BUSINESS FROM THE CURRENT YEAR. THE ASSESSEE HAD SHOWN G.P. @ 11.87% ON SALE OF RS. 31 29 991/- DURING THE YEAR U NDER CONSIDERATION WHICH WAS 13.6% IN IMMEDIATE PRECEDING YEAR ON SALE O F RS. 70 19 427/-. THE ASSESSEE SUBMITTED THAT DECLINING OF G.P. WAS DUE TO LESSER EXPORT TURNOVER BUT THE LEARNED ASSESSING OFFICER ANALYSE D THE MATERIAL CONSUMED FINISHED GOODS PRODUCED MANUFACTURING EX PENSES ADMINISTRATIVE EXPENSES AND ALSO COMPARED THE ASSES SEES CASE WITH SUNRISE CARPET A PROPRIETARY CONCERN OF AUNT OF TH E ASSESSEE WORKING FROM THE NEARBY PREMISES AND IN ITS SECOND YEAR OF OPERATION AS THE CASE OF THE ASSESSEE HAD DECLARED G.P. @25.81% ON SALE OF RS. 1.2 CRORES. FURTHER IN CASE OF SUNRISE CARPET THERE ARE OVERHE AD EXPENSES IN THE FORM OF RENT PAID SALARY WHICH IS NOT THE CASE OF THE ASSESSEE EXCEPT ITA 179/JP/2012 SHYAM AGARWAL VS. DCIT 3 NOMINAL SALARY. QUANTITATIVE DETAILS HAD NOT BEEN M AINTAINED IN BOTH THE CASES BUT BASIS FOR PAYMENT ON VARIOUS TYPES OF JO BS WITH RATE AND QUANTITY/SERVICES PROVIDED WERE NOT AVAILABLE. IT I S A FACT THAT TURNOVER IS LESS THE G.P. IS HIGH VICE VERSA TURNOVER IS HIGH G.P. IS LESS. HE ALSO FOUND EXPENSES CLAIMED BY THE ASSESSEE PROPORTIONATE TO S ALE IS HIGHER SIDE. HE ON THE BASIS OF DEFECTS POINTED OUT ABOVE HAD INVOK ED SECTION 145(3) OF THE ACT AND REJECTED THE BOOK RESULT AND APPLIED G. P. RATE @ 25.81% WHICH WAS AS PER G.P. RATE SHOWN BY THE SUNRISE CARPET A FAMILY CONCERN WHICH DEALS IN SAME TYPE OF BUSINESS UNDER MANAGEMEN T OF COMMON FAMILY MEMBERS. THUS THE ASSESSING OFFICER MADE AD DITION OF RS. 4 36 302/- UNDER THE HEAD TRADING ADDITION. 3. BEING AGGRIEVED BY THE ORDER OF THE LEARNED ASSE SSING OFFICER THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A) WHO HAD JUSTIFIED THE REJECTION OF BOOKS OF ACCOUNT AND THE ASSESSEE S SUBMISSION WAS NOT FOUND ACCEPTABLE ON JOB CHARGES PAYMENT MADE WITHOUT QUOTING ANY RATE AND QUANTITY. EVEN IN APPELLATE PROCEEDINGS THE LE ARNED AR OF THE ASSESSEE HAS NOT GIVEN SUCH WORKING JUSTIFYING THE J OB CHARGES PAID TO VARIOUS LABOURS. THE ASSESSING OFFICER HAD TAKEN COM PARABLE CASE TO DECIDE THE INCOME WHO WAS DEALING IN THE SAME BUSINES S UNDER THE MANAGEMENT OF COMMON FAMILY MEMBERS. THE AR AS WELL A S THE APPELLANT ITA 179/JP/2012 SHYAM AGARWAL VS. DCIT 4 WERE VERY MUCH KNOWLEDGE OF BUSINESS OF SUNRISE CARPE T BUT BEING THE ASSESSEES BUSINESS NEW HE APPLIED G.P. RATE @ 19%. ACCORDINGLY HE ALLOWED THE APPEAL PARTLY BY CONFIRMING THE TRADING ADDITION OF RS. 2 23 150/- AND DELETING THE ADDITION OF RS. 2 13 15 2/-. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LEARNED A.R. FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD STARTED HIS BUSINESS IN A.Y. 2007-08 AND THIS WAS A NEW BUSINESS FOR THE ASSESSEE. THE ASSESSMENT YEAR UNDER CONSIDERATION T HE ASSESSEE HAS SUFFERED LOSS OF RS. 12 59 534/- IT WAS AFTER GETTI NG OF INCOME FROM CAPITAL GAIN AND INCOME OTHER SOURCES THAT LOSS WAS RETURNED AT RS. 2 31 109/-. THE ASSESSEE COULD SURVIVE BECAUSE OF HI S OTHER INCOME AND CAPITAL GAIN. DESPITE THE NEW BUSINESS THE ASSESSE E HAD DISCLOSED G.P. RATE @ 11.87% EVEN THEN LEARNED ASSESSING OFFICER AF TER REJECTING THE BOOKS OF ACCOUNT HAD APPLIED 25.18% WHICH HAS BEEN R EDUCED BY THE LEARNED CIT(A) AT 19% WITHOUT ANY COMPARABLE CASE. THE ASSESSEE HAD MAINTAINED COMPLETE BOOKS OF ACCOUNT CONSISTING OF ROKAD KHATA QUANTITATIVE DETAILS OF GOODS MANUFACTURED PURCHAS ES AND SALES VOUCHERS AND VOUCHERS OF EXPENSES. THE SAME WAS PRODUCED BEFOR E THE LEARNED ASSESSING OFFICER AND NO SERIOUS DEFECTS WERE POINTE D OUT IN THE MAINTENANCE OF THE SAME. IN ORDER HE HIMSELF HAD M ENTIONED THAT ITA 179/JP/2012 SHYAM AGARWAL VS. DCIT 5 QUANTITATIVE DETAILS HAVE BEEN MAINTAINED EVEN THOU GH HE INVOKED PROVISIONS OF SECTION 145(3) OF THE ACT. HE RELIED UPON VARIOUS DECISIONS FOR REJECTION OF BOOKS OF ACCOUNT. IT IS SUBMITTED THAT FACTS OF THE COMPARABLE CASE NAMELY SUNRISE CARPET HAD NOT BEEN PROVIDED BY THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT. THE ADD ITION HAD BEEN MADE IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. IT I S SETTLED POSITION OF LAW THAT THE BEST GUIDE OF THE G.P. RATE IS THE HISTORY OF T HE ASSESSEE HIMSELF. IN A.Y. 2007-08 THE ASSESSING OFFICER ACCEPTED THE DE CLARED G.P. I.E. 13.6%. THE NATURE OF BUSINESS MAINTENANCE OF ACCOUNT AND T HE FACTS AND CIRCUMSTANCES OF THE CASE ARE IDENTICAL WITH THE A.Y . 2007-08 AS SUCH THERE WAS ABSOLUTELY NO CASE FOR DEVIATING THE HISTO RY OF THE ASSESSEE AND MAKING ADDITION ON THE BASIS OF COMPARABLE CASE. THE ASSESSEE BUSINESS WAS NEW WHEREAS SUNRISE CARPET WAS OLD IN THIS LINE OF BUSINESS EVEN IT IS NOT KNOWN TO THEM WHETHER SUNRISE CARPET WAS DEALING IN WOOLEN OR COTTON CARPET. THEREFORE HE COMPARED THE CASE WITH N ON-COMPARABLE CASE. THE ASSESSEES EXPORT DECLINED DURING THE YEAR DUE TO FALLEN IN THE EXPORT PRICES. COST OF MANUFACTURING HAD GONE UP T HEREFORE G.P. HAS BEEN DECLINED DURING THE YEAR COMPARED TO PRECEDING YEAR. HE RELIED ON THE DECISION IN THE CASE OF CIT VS. INANI MARBLES (P ) LTD. (2009) 316 ITR 125 (RAJ.). THE FACTS OF THE CASE WERE TAKEN BY THE A SSESSING OFFICER ON ITA 179/JP/2012 SHYAM AGARWAL VS. DCIT 6 WRONG APPRECIATION. THE SALE OF FINISHED GOODS DURING THE YEAR WAS RS. 8 28 648/- NOT RS. 26 34 157/- AS MENTIONED BY THE ASSESSING OFFICER IN HIS ORDER. THE LEARNED CIT(A) HAVE ALSO FAILED TO APP RECIATE THESE FACTS WHILE DEALING THE ISSUE. THEREFORE G.P. CONFIRMED BY THE LEARNED CIT(A) IS REQUIRED TO BE REDUCED AND THE G.P. DISCLOSED BY TH E ASSESSEE DESERVED TO BE ACCEPTED. 6. AT THE OUTSET THE LEARNED D.R. SUPPORTED THE OR DER OF THE LEARNED CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE ASSESSEE H AS NOT CHALLENGED THE REJECTION OF BOOKS OF ACCOUNT U/S 145(3) OF THE ACT WHICH HAS BEEN CONFIRMED BY THE LEARNED CIT(A). HOWEVER HE CHALLEN GED THE G.P. ADDITION CONFIRMED BY THE LEARNED CIT(A). THE ASSESS EES BUSINESS IN THIS LINE WAS NEW AND THE YEAR UNDER CONSIDERATION WAS SECO ND YEAR. IN PRECEDING YEAR HE HAD SHOWN G.P. RATE @ 13.6%. THE AS SESSEE HAD NOT MAINTAINED THE QUANTITATIVE DETAILS AND PAYMENTS MA DE TO THE LABOURERS WITHOUT QUOTING RATE AND QUANTITATIVE DETAILS SHOWS THAT THE ASSESSEE HAS NOT DISCLOSED TRUE AND CORRECT INCOME OF THE BUSINE SS. LEARNED CIT(A) APPLIED G.P. @ 19% ON THE BASIS OF COMPARABLE CASE O F SUNRISE CARPET IN WHICH G.P. RATE WAS 25.8%. THE LEARNED CIT(A) HAD NOT B ROUGHT ON ITA 179/JP/2012 SHYAM AGARWAL VS. DCIT 7 RECORD WHETHER BOTH THE PARTIES ARE IN THE SAME LINE OF BUSINESS AS CLAIMED BY THE ASSESSING OFFICER WHICH WAS CHALLENGE D BY THE APPELLANT. THE A.R. OF THE ASSESSEE MADE WRONG ARGUMENT THAT RET URNED INCOME AFTER ADJUSTING THE LOSS WAS AT RS. 2 31 109/- AS TH E ASSESSING OFFICER NOTED RETURNED INCOME IN ASSESSMENT ORDER AT RS. 12 59 534/-. FURTHER COMPUTATION IN ORDER STARTED FROM RS. 12 59 534/- P OSITIVE INCOME. THEREFORE WE FEEL IN THE INTEREST OF JUSTICE THE AD DITION OF RS. 1 00 000/- IS JUSTIFIED. ACCORDINGLY THE ASSESSEES APPEAL IS PARTLY ALLOWED. 8. IN THE RESULT THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/11/2014. SD/- SD/- (R.P. TOLANI) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED :14 TH NOVEMBER 2014 * RANJAN COPY FORWARDED TO :- 1. SHRI SHYAM AGARWAL JAIPUR. 2. THE DCIT CENTRAL CIRCLE-3 JAIPUR. 3. THE CIT (A) 4. THE CIT 5. THE D/R GUARD FILE (I.T.A. NO. 179/JP/2012) BY ORDER AR ITAT JAIPUR.