The DCIT, 3(1), v. Shri Vijay Kumar Chhabria,

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JM AND SHRI V.K. GUPTA AM ITA NO.1182/IND/2004 AY: 2001-02 VIJAY KUMAR CHHABRIA PROP. ASHOK AGENCIES JUMERATI BHOPAL (PAN AAMPC 1899 A) APPELLANT VS. ACIT-3(1) BHOPAL RESPONDENT ITA NO.28/IND/2005 AY: 2001-02 DY.CIT-3(1) BHOPAL APPELLANT VS. VIJAY KUMAR CHHABRIA PROP. ASHOK AGENCIES JUMERATI BHOPAL (PAN AAMPC 1899 A) RESPONDENT FOR ASSESSEE : SHRI S.S. DESHPANDE CA FOR DEPARTMENT : SMT. APARNA KARAN SR. DR ORDER PER V.K. GUPTA A.M. BOTH THESE CROSS-APPEALS FILED BY THE ASSESSEE AND DEPARTMENT RESPECTIVELY ARISE OUT OF ORDER OF THE LD. CIT(A)-I BHOPAL DAT ED 25.10.2004 FOR THE ASSESSMENT YEAR 2001-02. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PER USED THE MATERIAL AVAILABLE ON RECORD. 2 3. GROUND NOS.3 AND 4 RELATING TO REJECTION OF BOO KS OF ACCOUNT U/S 145 AND MINOR DISALLOWANCES MADE BY AO WERE NOT PRESSED H ENCE DISMISSED AS NOT PRESSED. 4. IN GROUND NO.2 THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD. CIT(A) IN CONFIRMING THE ESTIMATION OF SALES BY AO AT RS.8 90 00 000/- AND COMPUTING GROSS PROFIT @1.75%. 5. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS EN GAGED IN WHOLESALE TRADING OF CIGARETTES MATCHES ETC. DURING THE YEAR UNDER CON SIDERATION A SEARCH AND SEIZURE OPERATION HAD BEEN CARRIED OUT AND IN THE BLOCK ASS ESSMENT CERTAIN ADDITIONS WERE MADE IN REGARD TO UNDISCLOSED SALES UNRECORDED PUR CHASES ETC. THE AO IN THE RETURN FOR POST SEARCH PERIOD EXAMINED THE BOOKS OF ACCOU NT AND FOUND THAT SALES RECORDED IN THE BOOKS OF ACCOUNT WAS NOT VERIFIABLE AS NOT SUPP ORTING BILLS WERE AVAILABLE. THE AO FURTHER FOUND THAT TAX AUDITOR HAD ALSO POINTED OUT THAT SALES BILLS/STOCK RECORDS WERE NOT PRODUCED. IN THESE CIRCUMSTANCES THE AO ESTIMA TED THE TOTAL SALES AT RS.9 CRORES AND APPLIED THE G.P. RATE OF 2% THEREON TO WORK OUT THE G.P. AT RS.18 LACS AS AGAINST G.P. OF RS.1 13 40 652/- DECLARED BY THE ASSESSEE @ 1.52% ON THE SALES OF RS.8 78 28 700/-. ACCORDINGLY HE ADDED A SUM OF RS .4 59 348/- TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED BY THIS THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE LD. CIT(A) WHEREIN IT WAS CONTENDED THAT SINCE AS SHOWN BY TH E ASSESSEE WAS CORRECT IN VIEW OF FACT THAT THE SALES TAX ASSESSMENT ORDER DATED 28.8 .2003 THE SAME HAD BEEN ACCEPTED. THE LD. CIT(A) HOWEVER HELD THAT SINCE SUCH SALES TAX ASSESSMENT ORDER WAS AVAILABLE AT THE TIME OF ASSESSMENT PROCEEDINGS BEF ORE AO HENCE THERE WAS NO REASON FOR THE ASSESSEE TO PRODUCE THE SAME BEFORE THE AO. HE ALSO HELD THAT IN THE COURSE OF SEARCH SOME INCRIMINATING DOCUMENTS WERE FOUND IND ICATING ASSESSEES ENGAGEMENT 3 IN SALES OUTSIDE THE BOOKS. ACCORDINGLY HE CONFIRM ED THE ACTION OF THE AO AS REGARDS THE ESTIMATION OF SALES. HOWEVER HE REDUCED THE QU ANTUM OF SALES TO 8.90 CRORES AND ALSO REDUCED THE G.P. RATE TO 1.75% AND ACCORDINGLY WORKED OUT THE ADDITION AT RS.2 16 848/- WHICH COULD BE SUSTAINED. AGGRIEVED B Y THIS THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE NARRATED THE FA CTS ARGUED THE MATTER AT LENGTH BESIDES REITERATING THE SUBMISSIONS MADE BEFORE THE REVENUE AUTHORITIES. 7. THE LD. DR ON THE OTHER HAND PLACED STRONG RELI ANCE ON THE ORDERS OF THE REVENUE AUTHORITIES. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IT IS NOTED THAT THER E ARE CERTAIN DISCREPANCIES IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FOR THE PERIOD UNDER CONSIDERATION AND TAX AUDITOR HAS ALSO POINTED OUT CERTAIN SPECIFIC D EFECTS AND NON PRODUCTION OF SALES BILLS/STOCK RECORDS. IT IS FURTHER NOTED THAT SOME INCRIMINATING MATERIAL WERE ALSO FOUND DURING THE COURSE OF SEARCH INDICATING UNDISCLOSED SALES. ACCORDINGLY WE CONFIRM THE ACTION OF THE LD. CIT(A) IN REGARD TO ESTIMATION OF SALES AT RS.8.90 CRORES. AS REGARDS RATE OF G.P. IT IS NOTED THAT G.P. RATE IN THE AY 1999-00 WAS 1.51% AND IN THE YEAR 2000-01 WAS 1.24% HENCE IN OUR VIEW THE ESTIMATI ON OF G.P. RATE AT @1.75% IS LITTLE BIT ON HIGHER SIDE. ACCORDINGLY WE REDUCE THE G.P. RATE TO 1.65% WHICH IN OUR OPINION WOULD MEET THE END OF THE JUSTICE. THE AO IS ACCORDINGLY DIRECTED TO REWORK OUT THE QUANTUM OF ADDITION. THUS GROUND NO.2 STAN DS PARTLY ALLOWED. 9. IN THE RESULT APPEAL FILED BY THE ASSESSEE STAN DS PARTLY ALLOWED. 4 10. NOW WE SHALL TAKE UP REVENUES APPEAL IN ITA N O.28/IND/2005 IN RESPECT OF WHICH BOTH THE PARTIES AGREED THAT THE QUANTUM OF TAX INVOLVED IN THIS APPEAL WAS LESS THAN RS.2 LACS HENCE THIS APPEAL WAS NOT MAINTAIN ABLE IN VIEW OF CBDT INSTRUCTION NOT TO FILE APPEALS INVOLVING QUANTUM OF TAX OF LES S THAN RS.2 LACS. ACCORDINGLY APPEAL FILED BY THE REVENUE STANDS DISMISSED. 11. TO SUM UP THE ASSESSEES APPEAL IS PARTLY ALLO WED AND REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.1.2010. SD/- SD/- (JOGINDER SINGH) (V.K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 20.1.2010 !VYAS! COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR