Jcit Ghaziabad v. M S Transfulf Frozen Food Containers Pvt Ltd Ghaziabad

In The Income Tax Appellate Tribunal Delhi Benches D New Delhi Before Shri R S Syal Vice President And Shri Kuldip Singh Judicial Member Ita No 4081 Del 2013 Assessment Year 2009 10 Jcit Range 2 Ghaziabad Vs Transgulf Frozen Food Containers Pvt Ltd R 2 209 Raj Nagar Ghaziabad Pan Aacct 2067 R Co No 151 Del 2014 Ita No 4081 Del 2013 Assessment Years 2009 10 Transgulf Frozen Food Containers Pvt Ltd R 2 209 Raj Nagar Ghaziabad Pan Aacct 2067 R Vs Jcit Range 2 Ghaziabad Assessee By Shri Akhilesh Kumar Advocate Shri Vipin Garg Ca Deptt By Shri Amit Jain Sr Dr Date Of Hearing 14 12 2017 Date Of Pronouncement 14 12 2017 Ita No 4081 Del 2013 Co No 151 Del 2014 2 Order Per R S Syal Vp This Appeal By The Revenue And The Cross Objection By The Assessee Arise Out Of The Order Passed By The C It A On 20 04 2013 In Relation To The Assessment Year 2009 10 2 The Only Issue Raised By The Department In Its A Ppeal Is Against Reduction In The Amount Of Addition From Go Ods Carriage Made By The Assessing Officer The Assess Ee In Its Cross Objection Is Against The Sustenance Of Additi On To A Certain Level 3 Briefly Stated The Facts Of The Case Are That T He Assessee Is Engaged In The Business Of Transportation Of Frozen Foods Milk Milk Products Fruits And Vegetables In Canned Bo Ttles Etc The Return Was Filed Declaring A Loss Of Rs 2 09 04 537 Thereafter A Revised Return Was Filed Claiming Cer Tain Amount Of Refund During The Course Of Assessment Proceed Ings The Assessing Officer Observed That Net Loss Of Rs 2 60 Crore Was Ita No 4081 Del 2013 Co No 151 Del 2014 3 Declared By The Assessee On Gross Receipts Of Rs 8 59 Crore This Was Contrasted With The Corresponding Figures For The Assessment Year 2007 08 In Which The Turnover Was R S 12 63 Crore And Net Profit Of Rs 8 60 Lac On Being Call Ed Upon To Explain As To Why The Books Of Account Be Not Rejec Ted The Assessee Tendered Its Reply Which Has Been Incorpor Ated In The Assessment Order The Assessing Officer Observed T Hat Some Of The Expenses Namely Trip Transit Expenses Wer E Not Properly Supported By Vouchers It Was Seen That Si Milar Issue Arose In The Proceedings For The Assessment Year 20 08 09 In Which A Voluntary Disclosure Of Rs 35 Lac Was Made By The Assessee On This Score It Was Further Noticed Tha T Some Of The Sundry Creditors Were Lying For Many Years And No C Onvincing Reply Was Given Except That The Same Were Paid In L Ater Years It Was Still Further Noticed That The Assessee Was Not Maintaining Stock Of Tyres And Material Etc Consi Dering The Above Factors The Assessing Officer Invoked The Pr Ovisions Of Ita No 4081 Del 2013 Co No 151 Del 2014 4 Section 145 3 Of The Act And Rejected The Books Of Account Placing Reliance On The Provisions Of Section 44 Ae The Assessing Officer Computed Income Rs 3 500 Per Month Per Truck Which Resulted Into Determination Of Inco Me At Rs 37 38 Lac The Ld Cit A Did Not Approve The R Ejection Of Books Of Account Following The Order For The Asse Ssment Year 2008 09 The Ld Cit A Sustained The Addition At R S 23 50 Lac To The Income Declared This Is How Both The Side S Have Come Up In Appeal Before The Tribunal In Support Of Thei R Respective Stands 4 We Have Heard The Parties And Perused The Releva Nt Material On Record The Figures Of Sales Gross Pro Fit Gross Profit Rate Net Profit And Net Profit Rate Etc Re Lating To Assessment Years 2007 08 To 2010 11 Have Been Tabul Ated By The Assessing Officer On Page 7 Of His Assessment O Rder Which Is Reproduced As Under Ita No 4081 Del 2013 Co No 151 Del 2014 5 A Y 2007 08 2008 09 2009 10 2010 11 Turn Over Rs 126395653 137345084 85974925 126431540 Gross Profit Rs 23662999 12375305 6489940 17648754 Gp Rate 18 72 9 01 9 5 13 95 Net Profit Rs 860411 31932501 26002619 2130629 N P Rate 0 68 23 25 30 25 1 68 Due To Depreciation Adjustment As Per Company Law As Per It Act Returned Inc 13146 26851032 20904537 61218668 5 It Is Discernible From The Above Table That The Assessees Gross Profit Rate For The Current Year Stood At 9 5 As Against 9 01 For The Immediately Preceding Year The Asse Ssee Maintained Proper Books Of Account Along With Vouch Ers Which Were Produced Before The Assessing Officer As Has B Een Recorded In Para 2 Of The Assessment Order The Me Re Fact That The Assessee Suffered Net Loss Cannot Be A Reason T O Reject The Books Of Account More Specifically When It Was Con Tended Before The Assessing Officer That The Loss Occurred Due To Heavy Amount Of Depreciation During The Year Under Consideration Which Fact Has Not Been Controverted By The Ao The Other Reasons Recorded By The Assessing Officer Such As Ita No 4081 Del 2013 Co No 151 Del 2014 6 Non Maintenance Of Stock Of Tyres And Materials Etc And Sundry Creditors Lying For Many Years Etc Cannot Give Rise To The Rejection Of Books Of Account When The Assess Ee Returned Gross Profit Rate Of 9 5 Which Is Higher Than Tha T Of Preceding Year At 9 01 We Hold The Books Of Accou Nt Even If Rightly Rejected Cannot Call For A Trading Additio N Be That As It May We Find That No Convincing Or Legally Sustaina Ble Reasons Have Been Given For The Rejection Of Books Of Accou Nt We Thus Countenance The View Point Of The Ld Cit A On Thi S Issue 6 It Is Further Seen That The Provisions Of Se Ction 44 Ae As Invoked By The Ao For Determining The Income Are N Ot Attracted As The Assessee Admittedly Owns More Than Ten Goods Carriages Etc As Such The Application Of Section 44 Ae Cannot Be Magnetized 7 To Sum Up It Is Held That The Books Of Acco Unt Were Properly Maintained By The Assessee And Their Rejec Tion Has Been Rightly Overturned In The First Appeal Ita No 4081 Del 2013 Co No 151 Del 2014 7 8 However It Is Clear From The Assessment Order T Hat Certain Expenses Were Not Properly Supported And Were Based On Self Made Vouchers This Certainly Requires Disallowanc E Of Some Expenses Similar Position Was Prevailing During T He Course Of Proceedings For The Assessment Year 2008 09 In Whic H The Assessee Agreed For 4 Disallowance Of Trip Transi T Expenses And Certain Other Expenses The Ld Cit A Has Appl Ied The Same Yardstick For Sustaining The Disallowance 4 Of Trip Transit Expenses And Certain Amount Of Other Expe Nses Which In Total Comes To Rs 23 50 Lac We Therefor E Uphold The Impugned Order Sustaining The Disallowance To T His Extent 9 In The Result Both The Appeal As Well As The Cr Oss Objection Stand Dismissed Order Pronounced In The Open Court On 14 12 2017 Sd Sd Kuldip Singh R S Syal Judicial Member Vice President Dated 14 Th December 2017 Ita No 4081 Del 2013 Co No 151 Del 2014 8 Dk Copy Forwarded To 1 Appellant 2 Respondent 3 Cit 4 Cit A 5 Dr Itat Ar Itat New Delhi