ANIL KUMAR AGARWAL, Jaipur v. ITO, Jaipur

ITA 641/JPR/2016 | 2011-2012
Pronouncement Date: 06-10-2016 | Result: Allowed

Appeal Details

RSA Number 64123114 RSA 2016
Assessee PAN AAMPA9639B
Bench Jaipur
Appeal Number ITA 641/JPR/2016
Duration Of Justice 4 month(s)
Appellant ANIL KUMAR AGARWAL, Jaipur
Respondent ITO, Jaipur
Appeal Type Income Tax Appeal
Pronouncement Date 06-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted Not Allotted
Tribunal Order Date 06-10-2016
Assessment Year 2011-2012
Appeal Filed On 06-06-2016
Judgment Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCHES (SMC) JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 641/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 SHRI ANIL KUMAR AGARWAL PROP. M/S. AFFAIRS INDIA 31-B GEEJGARH VIHAR HAWA SARAK CIVIL LINES JAIPUR CUKE VS. THE ITO WARD- 1(3) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAMPA 9639 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI SHRAWAN KUMAR GUPTA ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY:SHRI R.A. VERMA ADDL.CIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 29/09/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 6 /10/2016 VKNS'K@ ORDER PER BHAGCHAND AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF THE LD. CIT(A)-1 JAIPUR DATED 19-04-2016 FOR THE ASSESS MENT YEAR 2011-12. WHEREIN THE ASSESSEE IS AGGRIEVED THAT THE LD. CIT( A) HAS ERRED IN CONFIRMING THE INVOCATION OF THE PROVISION OF SECT ION 145(3) AND SUSTAINING THE ADDITION OF RS. 2 20 944/-. ITA NO. 641/JP/2016 SHRI ANIL KUMAR AGARWAL VS. ITO WARD- 1(3) JAIPUR . 2 2.1 BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED ITS RETURN OF INCOME ON 27-09-2011 DECLARING TOTAL INCOME AT RS. 5 55 230/- . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND AN ASSESSMEN T ORDER U/S 143(3) OF THE ACT WAS PASSED ON 7-03-2014 DETERMINING TOTAL I NCOME AT RS. 11 29 040/-. IT IS NOTED FROM THE ASSESSMENT ORDER THAT THE ASSESSEE DERIVED INCOME FROM THE TRADING OF KAFTAN CLOTH AND PRINTED RUNNING CLOTH. THE DETAILS OF THE TRADING RESULTS OF THE AS SESSEE FOR THE YEAR UNDER CONSIDERATION AND PAST TWO YEARS ARE AS UNDER:- A.Y. SALES GROSS PROFIT PERCENTAGE 2009-10 6 04 07 173 30 14 582 4.99% 2010-11 7 17 69 756 35 57 192 4.96% 2011-12 6 68 59 759 41 24 941 6.17% THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE REJECTED BY THE AO BECAUSE OF THE FOLLOWING REASONS. (I) NON-MAINTENANCE OF STOCK REGISTER OF RAW MATERI AL AND FINISHED GOODS (II) NO LIST OF CLOSING AND OPENING STOCK. (III) NO RECORD OF DAY TO DAY PRINTING CLOTH. (IV) NO STOCK RECORD OF COLOUR AND CHEMICALS PURCHA SED AND USED. (V) NO SEPARATE DETAILS OF RAW MATERIAL WORK IN PR OGRESS AND FINISHED GOODS WERE MAINTAINED IN RESPECT OF O PENING ITA NO. 641/JP/2016 SHRI ANIL KUMAR AGARWAL VS. ITO WARD- 1(3) JAIPUR . 3 STOCK AND CLOSING STOCK AND NO QUANTITYWISE DETAIL S WERE MAINTAINED. THE AO OBSERVED THAT THE ASSESSEE HAD NOT MAINTAINE D STOCK REGISTER OF RAW MATERIAL AND FINISHED GOODS NO LIST OF OPENING AND CLOSING STOCK NO RECORD OF DAY TO DAY PRINTING CLOTH AND NO RECORD O F COLOUR AND CHEMICALS PURCHASED AND USED. IT IS NOTED FROM THE ASSESSMENT ORDER OF THE AO IN WHICH HE NOTICED THE ABOVE DEFECTS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR WHICH THE AO REQUIRED THE ASSESSEE TO EXPLAIN THE REASON FOR NON-MAINTENANCE OF BOOKS OF ACCOUNT BUT THE ASSESSE E DID NOT FILE ANY REPLY TO THIS EFFECT. HENCE THE AO REJECTED THE BO OKS OF ACCOUNT OF THE ASSESSEE AND INVOKED THE PROVISIONS OF SECTION 145( 3) OF THE I.T. ACT 1961. IT IS NOTED THAT THE AO HAD MADE ADDITION OF RS. 5 55 243/- ( RS. 46 80 184 MINUS RS. 41 24 941) IN TRADING RESULTS A FTER APPLYING GROSS PROFIT RATE OF 7% BY TAKING INTO CONSIDERATION THE DECISION OF LD. CIT(A) FOR THE ASSESSMENT YEAR 2009-10. 2.2 IN FIRST APPEAL THE LD. CIT(A) HAS CONFIRMED T HE ACTION OF THE AO IN INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT BUT RESTRICTED THE TRADING ADDITION TO THE EXTENT OF RS. 2 20 944/- B Y OBSERVING AS UNDER:- 3.1.2.. (III) IT IS TO BE NOTED THAT THE APPELLANT HAS NO T BEEN ABLE TO CONTROVERT THE FINDING OF THE AO WHILE REJE CTING THE BOOKS OF ACCOUNTS OF THE APPELLANT. IT MAY BE MENTI ONED THAT ITA NO. 641/JP/2016 SHRI ANIL KUMAR AGARWAL VS. ITO WARD- 1(3) JAIPUR . 4 IN THE ABSENCE OF QUALITATIVE DETAILS OF OPENING ST OCK AND CLOSING STOCK THEIR VALUATION IS NOT VERIFIABLE. F URTHER THE CONSUMPTION OF RAW MATERIAL CANNOT BE VERIFIED. IN THE ABSENCE OF BREAKUP OF OPENING AND CLOSING STOCK IN TERMS OF RAW MATERIAL WORK IN PROGRESS AND FINISHED GOODS NOTHING CAN BE VERIFIED AND IT IS A SERIOUS DEFECT AND THE TRUE INCOME OF THE APPELLANT CANNOT BE DETERMINED ON THE BASIS OF BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT. IT IS THER EFORE HELD THAT THE AO WAS JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT U/S 145(3) OF THE ACT. HENCE THIS GROUND OF APPEAL IS HEREBY REJECTED. 3.2.1 (I) THE APPELLANT HAS SHOWN GROSS PROFIT RATE OF 6.17% ON SALES OF RS. 6 68 59 769/- FOR THE YEAR UNDER CONSIDERATION WHEREAS FOR THE IMMEDIATE PRECEDING Y EAR IT HAD SHOWN GROSS PROFIT RATE OF 4.96% ON TOTAL SALES OF RS. 7 17 69 756/-. IT IS GENERALLY ACCEPTED THAT WITH I NCREASE IN TURNOVER THE GROSS PROFIT RATE DECREASES AND VICE VERSA. IN THE INSTANT CASE UNDER CONSIDERATION THOUGH THERE IS SLIGHT INCREASE IN GROSS PROFIT RATE BUT THERE IS SUBSTANT IAL DECREASE IN TURNOVER. THEREFORE LOOKING TO THE TOTALITY OF THE FACTS AND CIRCUMSTANCES IT WOULD BE APPROPRIATE TO APPLY GRO SS PROFIT RATE OF 6.5% TO THE TOTAL TURNOVER OF THE APPELLAN T DECLARED AT RS. 6 68 59 769/- I.E. THE GROSS PROFIT IS ESTIMATE D AT RS. 43 45 885/-. HENCE OUT OF TRADING ADDITION OF RS. 5 55 243/- MADE BY THE AO THE TRADING ADDITION IS RESTRICTED TO RS. 2 20 944/-. THUS THE APPELLANT GETS A RELIEF OF RS . 3 34 299/-. IN THE RESULT THIS GROUND OF APPEAL IS PARTLY ALLO WED. 2.3 DURING THE COURSE OF HEARING THE LD. AR OF THE ASSESSEE PRAYED THAT DURING ASSESSMENT PROCEEDINGS AUDITED BALANCE SHEET PROFIT AND LOSS ACCOUNT TRADING ACCOUNT ALONG WITH ALL ANNEXUE WER E PLACED BEFORE THE AO. THE AUDIT REPORT IN FORM NO. 3CD WERE ALSO FILE D BEFORE THE AO. THE ASSESSEE ALSO FILED THE BOOKS OF ACCOUNT NAMELY CAS H BOOK LEDGER ITA NO. 641/JP/2016 SHRI ANIL KUMAR AGARWAL VS. ITO WARD- 1(3) JAIPUR . 5 JOURNAL VOUCHERS AND BILLS OF EXPENSES AND PURCHAS ES FROM TIME TO TIME. THERE IS NO CHANGE IN METHOD OF ACCOUNTING AND NATU RE OF BUSINESS. NO DEFECT WAS FOUND BY THE AO EXCEPT MAINTENANCE OF ST OCK REGISTER. THE LD. AR FURTHER SUBMITTED THAT ACCOUNTS ARE AUDITED U/S 44AB OF THE ACT BY THE QUALIFIED PERSON AND HE DID NOT POINT OUT ANY D EFECTS. THE LD. AR OF THE ASSESSEE ALSO SUBMITTED THAT THE GROSS PROFIT R ATE OF THE ASSESSEE IS BETTER THAN OTHER PRECEDING YEARS. THE LD. AR OF TH E ASSESSEE ALSO RELIED ON THE ORDER OF ITAT JAIPUR BENCH IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2009-10 (ITA NO. 288/JP/2014) WHERE IN THE SIMILAR GROUND OF THE ASSESSEE WAS ALLOWED. HENCE THE GROS S PROFIT RATE SHOWN BY THE ASSESSEE AT 6.17% SHOULD BE ACCEPTED AND THE IN VOCATION OF PROVISION OF SECTION 145(3) IS NOT JUSTIFIED BY THE LOWER AUT HORITIES. THE LD. AR OF THE ASSESSEE RELIED ON VARIOUS CASE LAWS IN HIS WRI TTEN SUBMISSION. 2.4 THE LD. DR RELIED ON THE ORDER OF THE LOWER AUT HORITIES. 2.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN QUESTION IS ELUCI DATED HEREIN ABOVE WHICH IS NOT REQUIRED TO REPEAT IT AGAIN AS THE COO RDINATE BENCH VIDE ITS ORDER DATED 24-02-2016 IN ASSESSEE'S OWN CASE FOR T HE ASSESSMENT YEAR 2009-10 IN ITA NO.288/JP/2014 HAS DELIVERED THE VER DICT IN FAVOUR OF THE ASSESSEE WHICH IS REPRODUCED AS UNDER:- ITA NO. 641/JP/2016 SHRI ANIL KUMAR AGARWAL VS. ITO WARD- 1(3) JAIPUR . 6 4.3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. WE NOTICED THAT IT IS AN UNDI SPUTED POSITION THAT THE ASSESSEE HAS CHANGED THE BUSINESS FROM PRODUCTION O F RUNNING CLOTHS TO KAFTAN AND IT IS ALSO UNDISPUTED POSITION THAT MAJOR SALES OF THE ASSESSEE WERE MADE IN ANANTPUR (A.P). IT IS ALSO UNDISPUTED THAT PURCHASE S AND SALES OF THE GOODS WERE DULY SUPPORTED BY VOUCHERS AND THE PURCHASES W ERE MADE FROM REGISTERED DEALERS. THE PAYMENTS WERE MADE THROUGH ACCOUNT PAY EE CHEQUE. HOWEVER THE SOLE ALLEGATION ON THE BASIS OF WHICH THE AO HA S REJECTED THE BOOKS OF ACCOUNT WAS ON ACCOUNT OF THE ASSESSEES FAILURE TO PRODUCE THE CONFIRMATIONS OF THE ACCOUNTS FROM THE PURCHASERS OF THE GOODS FR OM THE ASSESSEE. IN OUR VIEW THE REJECTION OF BOOKS OF ACCOUNT BY THE AO W AS WITHOUT ANY RHYME AND REASON OR THE JUSTIFICATION. IN OUR VIEW ONCE THE ASSESSEE WAS MAINTAINING BOOKS OF ACCOUNT PURCHASES AND SALES WERE DULY VOU CHED THERE WAS SUFFICIENT COMPLIANCE IN MAINTAINING THE RECORDS AND THERE WAS NO JUSTIFICATION ON THE PART OF THE AO TO REJECT THE BOOKS OF ACCOUNT. ACCO RDINGLY GROUND NO. 1 OF APPEAL IS ALLOWED AND DECIDED IN FAVOUR OF THE ASSE SSEE AND AGAINST THE REVENUE. SINCE WE HAVE HELD THAT THE BOOKS OF ACCO UNTS WERE DULY MAINTAINED BY THE ASSESSEE AND NO SPECIFIC DEFECT HAS BEEN POI NTED OUT BY THE AO THEREFORE IN OUR VIEW THE AO HAS NO REASON TO EST IMATE THE INCOME OF THE ASSESSEE BY APPLYING THE GP RATE OF 8.54%. THE AUT HORITIES BELOW HAVE FAILED TO BRING ON RECORD THE BASIS OF ARRIVING AT THE GP RATE OF 8.54% WHICH IS CONTRARY TO THE GP SHOWN BY THE ASSESSEE TO THE EXT ENT OF 4.99%. SINCE WE HAVE HELD THAT THE BOOKS OF ACCOUNTS WERE DULY MAIN TAINED BY THE ASSESSEE THEREFORE THE ESTIMATION BROUGHT ON RECORD BY THE AO AND CONFIRMED BY LD. CIT (A) IS WITHOUT ANY BASIS. ACCORDINGLY THE ADDIT ION MADE BY THE AUTHORITIES BELOW IS HEREBY DIRECTED TO BE DELETED. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND THE RESPECTFULLY FOLLOWING ORDER OF THE ITAT JAIPUR BE NCH (SUPRA) I DIRECT TO ITA NO. 641/JP/2016 SHRI ANIL KUMAR AGARWAL VS. ITO WARD- 1(3) JAIPUR . 7 DELETE THE ADDITION OF RS. 2 20 944/- SUSTAINED BY THE LD. CIT(A). THUS THE APPEAL OF THE ASSESSEE IS ALLOWED. 3.0 IN THE RESULT THE APPEAL OF THE ASSESSEE IS A LLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 6 /10 /2016 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 6 /10/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI ANIL KUMAR AGARWAL JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO WARD- 1 (3) JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR ITAT JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 641/JP/2016) VKNS'KKUQLKJ@ BY ORDER LGK;D IATHDKJ @ ASSISTANT. REGISTRAR