SHRI ASHOK KUMAR LOHIYA, RAJNANDGAON v. CIT, RAIPUR (CG)

ITA 260/BIL/2010 | 2005-2006
Pronouncement Date: 10-02-2012 | Result: Allowed

Appeal Details

RSA Number 26024714 RSA 2010
Assessee PAN AAGPL5763R
Bench Raipur
Appeal Number ITA 260/BIL/2010
Duration Of Justice 1 year(s) 1 month(s) 13 day(s)
Appellant SHRI ASHOK KUMAR LOHIYA, RAJNANDGAON
Respondent CIT, RAIPUR (CG)
Appeal Type Income Tax Appeal
Pronouncement Date 10-02-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 10-02-2012
Assessment Year 2005-2006
Appeal Filed On 27-12-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BILASPUR BENCH SMC BILASPUR BEFORE SHRI SHAILENDRA KUMAR YADAV (J.M) ITA NO. 260/BLPR/2010(A.Y.2005-06) ASHOK KUMAR LOHIYA PROP. M/S. ASHOK POHA MILL BASANTPUR ROAD RAJNANDGAON 492 441(CG) PAN:AAGPL 5763R (APPELLANT) VS. INCOME TAX OFFIER -1 RAJNANDGAON (CG) (RESPONDENT) APPELLANT BY : SHRI R.B.DOSHI RESPONDENT BY : SHRI P.W. ATHLAYE DATE OF HEARING : 02/02 /2012 DATE OF PRONOUNCEMENT : 10/0 2/2012 ORDER THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 6/10/2010 OF CIT(A) RAIPUR (CG) FOR THE ASSESSMENT YEAR 2005- 06. THE GROUND OF APPEAL RAISED BY THE ASSESSEE READS AS FOLLOWS: ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD . CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 1 66 860/- MADE BY AO REJECTING THE BOOK RESULT AND ESTIMATING THE G.P. AT 6.25% IN PLACE OF 5.17 DECLA RED BY THE APPELLANT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE DERIVES INCOME FROM RUNNING OF POHA MILL. THE RETURN OF INCOME WAS FILED DECLARI NG TOTAL INCOME AT RS. 10 228/-. IN ASSESSMENT THE TOTAL INCOME WAS DETERMINED AT RS. 2 55 090/-. THE MAIN ADDITIONS RELATE TO LOW G.P ON ACCOUNT OF DISALLOWANCE OF SOM E EXPENSES. THE AO OBSERVED THAT THE PROFIT SHOWN THIS YEAR IS LESS IN COMPARISON TO THE PRECEDING YEAR. THE ASSESSEE DID NOT PRODUCE VOUCHERS IN RESPECT OF WAGES EXPENS ES TRANSPORTATION EXPENSES ETC. ITA NO. 260/BLPR/2010(A.Y.2005-06) 2 IN RESPECT OF OFFICE EXPENSES FACTORY SHED EXPEN SES SCOOTER EXPENSES TRAVELING EXPENSES THE VOUCHERS WERE FOUND TO BE S ELF MADE. THEREFORE THE BOOKS OF ACCOUNT WERE REJECTED AND THE G.P. WAS ES TIMATED AT 6.32% TAKING AN AVERAGE OF PRECEDING TWO ASSESSMENT YEARS. THE MAT TER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY WHO CONFIRMED THE ADDITI ON IN QUESTION BY UPHOLDING THE ACTION OF AO. 3. BEING AGGRIEVED THE ASSESSEE IS IN APPEAL BEFOR E THE TRIBUNAL AND SUBMITTED THAT LOW GP CANNOT BE THE BASIS FOR REJE CTION OF BOOKS OF ACCOUNTS. WITHOUT PREJUDICE TO THE ABOVE LOW GP IS ATTRIBUTAB LE TO CHANGE IN BUSINESS ACTIVITY. IN FACT ASSESSEE HAS TO MAKE DISTRESS SA LE OF ITS PRODUCTS BECAUSE OF MARKETING CONDITIONS WHICH IS RESPONSIBLE FOR LAW GP IN THE YEAR UNDER CONSIDERATION. ON THE OTHER HAND LD. D.R POINTED OUT THAT NEW BUSINESS WAS DONE ONLY FOR TWO MONTHS WHICH CANNOT BE THE BASIS FOR LAW G.P. THE LD. D.R SUPPORTED THE ORDER OF AO AS WELL AS CIT(A) ON THE POINT OF REJECTION OF BOOKS OF ACCOUNTS AND FOR SUBSTITUTION OF GP AND MAKING ADD ITION ON ACCOUNT OF THE SAME. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE RECORDS I FIND THAT THE ASSESSEE IS IN THE BUSINESS OF RUNNI NG POHA MILL. THE A.O REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND MADE THE AN ADDITION OF RS. 1 66 860/- ON THE REASON OF DECLINE IN G.P. IT IS NOT THE CASE OF THE AO THAT LOW G.P IS RESPONSIBLE FOR ADDITION IN QUESTIO N BUT IT IS COUPLED WITH DISALLOWANCE OF SOME EXPENSES WHICH WERE NOT SUPP ORTED BY PROPER VOUCHERS. IT IS THE SETTLED LEGAL POSITION THAT LOW GP CANNOT BE THE BASIS FOR REJECTION OF BOOKS OF ACCOUNTS AS HELD BY ITAT INDORE BENCH IN THE CASE OF JAGDISH OIL MILLS VS. ITO 52 TTJ 102 WHEREIN IT IS HELD THAT REJECTION OF BOOKS OF ACCOUNT OF LOW G.P RATE WITHOUT DISCLOSING ANY DEFECT IN T HE BOOKS IS NOT JUSTIFIED. BUT IN CASE BEFORE US THE REJECTION OF BOOKS OF ACC OUNT IS NOT BASED ON LAW G.P BUT IT IS COUPLED WITH REJECTION OF EXPENSES WHICH WERE NOT SUPPORTED BY PROPER DOCUMENTS. SO REJECTION OF BOOKS OF ACCOUNTS IS JUSTIFIED. GOING TO THE ISSUE ITA NO. 260/BLPR/2010(A.Y.2005-06) 3 OF LOW G.P IN LAST TWO PRECEDING YEARS ASSESSEE H AS SHOWN G.P. OF 6.4 AND 6.44. THE STAND OF THE ASSESSEE IS THAT HE CHANGED THE LINE OF ACTIVITY OF MANUFACTURING OF POHA AND HE HAS TO MAKE DISTRESS S ALE OF ITS PRODUCTS BECAUSE OF THE MARKET CONDITIONS. THOUGH THE CHANG E IN ACTIVITY WAS ONLY FOR TWO MONTHS EVEN IT MAY EFFECT THE G.P OF THE ASSE SSEE AND THIS IS NOT A THUMP RULE THAT ASSESSEE WILL HAVE THE SAME G.P EVE RY YEAR AND G.P DEPEND ON VARIOUS FACTS AND CIRCUMSTANCES. THE AO HAS NOT GI VEN COGENT REASON FOR DECLINING THE G.P DECLARED ASSESSEE. IN THE FACT S AND CIRCUMSTANCES I AM NOT INCLINED TO CONCUR WITH THE FINDING OF CIT(A) AND THE ADDITION ON ACCOUNT OF LOW G.P IS DIRECTED TO BE DELETED. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 10 TH DAY OF FEB. 2012. SD/- (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER BILASPUR DATED. 10 TH FEB. 2012 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.R BILASPUR BENCH. (TRUE COPY) BY ORDER SR. PRIVATE SECRETARY ITAT BILASP UR BENCH BILASPUR VM. ITA NO. 260/BLPR/2010(A.Y.2005-06) 4 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 2/2/2012 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 3/2/2012 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER