M/s Prahlad Rai Maheshwari, v. The DCIT 2 (1),

ITA 66/IND/2009 | 2001-2002
Pronouncement Date: 04-05-2010 | Result: Allowed

Appeal Details

RSA Number 6622714 RSA 2009
Bench Indore
Appeal Number ITA 66/IND/2009
Duration Of Justice 1 year(s) 2 month(s) 15 day(s)
Appellant M/s Prahlad Rai Maheshwari,
Respondent The DCIT 2 (1),
Appeal Type Income Tax Appeal
Pronouncement Date 04-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 04-05-2010
Date Of Final Hearing 27-04-2010
Next Hearing Date 27-04-2010
Assessment Year 2001-2002
Appeal Filed On 18-02-2009
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER ITA NO. 66/IND/09 A.YS. 2005-06 SHRI PRAHLADRAI MAHESHWARI PROP. M/S NR BROTHERS INDORE PAN AGBPM-3218-K APPELLANT VS DY. COMMISSIONER OF INCOME TAX 4(1) INDORE RESPONDENT APPELLANT BY : SHRI HP VERMA AND SHRI ASHISH GOYAL RESPONDENT BY : SMT. APARNA KARAN SR. DR O R D E R PER JOGINDER SINGH JM THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A) DATED 23RD JANUARY 2009 O THE GROUND THAT ON THE FACTS AND IN 2 THE CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSI ONER OF INCOME-TAX (APPEALS) ERRED IN SUSTAINING THE ADDITION OF RS.2 LACS FOR FALL OF GP RATE. 2. DURING HEARING OF THIS APPEAL WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE SIDES AND CONSIDERED TH E ARGUMENTS ADVANCED BY THEM. THE CRUX OF ARGUMENTS ON BEHALF O F THE ASSESSEE IS THAT THERE WAS SUBSTANTIAL INCREASE IN SALES OF THE ASSESSEE BEING OF PARA-MEDICAL BOOKS AND TO INCREASE THE SALE THE AS SESSEE GAVE HIGHER DISCOUNT TO CUSTOMERS THE COST OF PAPER USED IN P UBLISHING OF BOOKS INCREASED SUBSTANTIALLY DURING THE YEAR AND BOOKS O F ACCOUNTS WERE MAINTAINED ON CASH SYSTEM OF ACCOUNTING THEREFORE ALL THE PURCHASES AND SALES ARE ACCOUNTED FOR MAKING PAYMENT OR ON RE CEIPT OF PAYMENT. IT WAS ALSO PLEADED THAT BOOKS OF ACCOUNTS ARE REGU LARLY MAINTAINED IN WHICH NO DEFECT IS POINTED OUT BY THE ASSESSING OFF ICER. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE REVENUE STRONGLY DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT NECESSARY DETAILS WERE NOT FURNISHED BY THE ASSESSEE AT ANY STAGE. THE IMPUGNED ADDITION WAS STRONGLY DEFENDED. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. BRIEF FACTS ARE THAT THE ASSESSEE CARRIES O N BUSINESS OF PUBLISHING PURCHASING AND SELLING OF PARA-MEDICAL BOOKS MAINTAINS REGULAR BOOKS OF ACCOUNTS ON CASH SYSTEM OF ACCOUNT ING. DURING THE 3 YEAR THE SALES INCREASED SUBSTANTIALLY FROM RS. 1 0 5 29 994/- (A.Y. 2004- 05) TO RS. 1 51 97 874/- (IN ASSESSMENT YEAR 2005-0 6) WHEREAS THE GP RATE DECREASED TO 41.12% IN THE ASSESSMENT YEAR 200 5-06 FROM 47.45% DURING THE ASSESSMENT YEAR 2004-05. HOWEVER THE GR OSS PROFIT INCREASED FROM RS.49 96 378/- (A.Y. 2004-05) TO RS. 62 50 000/- (A.Y. 2005-06). THE ASSESSING OFFICER MADE ADDITION OF RS .2 LACS ON LOW GP WHICH WAS SUSTAINED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND IS UNDER CHALLENGED BEFORE THE TRIBUN AL. THE COMPARATIVE CHART IS REPRODUCED HEREUNDER :- ASSTT. YEAR 2003-04 2004-05 2005-06 2006-07 2007-08 SALES (IN RS.) 6 987 768 10 529 994 15 197 984 18 478 272 22 109 4 54 GP RATE 36.48% 47.45% 47.12% 38.87% 36.01% NP RATE 18.25% 35.70% 31.33% 28.02% 29.01% IF THE AFORESAID TABLE IS ANALYSED IT IS SEEN THAT FOR THE IMPUGNED ASSESSMENT YEAR THE SALE IS RS.1 51 97 874/- FROM R S.1 05 29 994/- (A.Y. 2004-05) AND RS.1 84 78 272/- (A.Y. 2006-07) AND RS .2 21 09 454/- (A.Y. 2007-08). ON A QUERY FROM BENCH WHETHER IDENT ICALLY ANY ADDITION WAS MADE IN PREVIOUS OR LATER ASSESSMENT YEARS IT W AS SPECIFICALLY DENIED. IF THE TOTALITY OF FACTS IS ANALYSED IT IS SEEN THAT THE SALES ARE SUBSTANTIALLY INCREASING FROM YEAR TO YEAR AND THE SALES ARE ACCOUNTED ONLY WHEN PAYMENT IS RECEIVED AND PURCHASES ARE ACC OUNTED WHEN 4 PAYMENTS ARE MADE BY FOLLOWING THE CASH SYSTEM OF A CCOUNTING. IT WAS ALSO EXPLAINED BY THE LD. COUNSEL FOR THE ASSESSEE THAT DUE TO INCREASE IN COST OF PAPERS IN COMPARISON TO PRECEDING YEARS THERE WAS DECREASE IN NET PROFIT. EVEN DISCOUNT TO CUSTOMERS WAS ALLO WED AT HIGHER RATES IN COMPARISON TO PRECEDING YEAR AS IS EVIDENT FROM PAG E 22 OF THE PAPER BOOK WHEREIN COMPARATIVE CHART OF DISCOUNT ALLOWED TO DEALERS HAS BEEN GIVEN. IT IS ALSO SEEN THAT THERE IS SUBSTANTIAL I NCREASE IN SALE FROM YEAR TO YEAR. EVEN OTHERWISE NO BASIS OF ADDITION HAS BEEN MENTIONED BY THE ASSESSING OFFICER. IT IS SEEN THAT EVEN DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE TRIED TO EXPLAIN THROUGH ITS SUBMISSIONS IN RESPONSE TO LETTER DATED 29.10.2007 WHICH ARE NOT BEING REPEATED BEING A MATTER OF RECORD AS MENTIONED AT PAGE 3 OF THE AS SESSMENT ORDER. THE ONLY BASIS OF ADDITION MENTIONED IN THE ASSESSMENT ORDER IS THAT THE ASSESSEE COULD NOT SATISFACTORILY EXPLAIN THE REASO N. HOWEVER WE HAVE FOUND THAT THE ASSESSEE HAS SATISFACTORILY EXPLAINE D THE REASON OF FALL IN GROSS PROFIT WITH THE HELP OF EVIDENCE AND FURTHER EXPLAINED THAT THERE IS A SUBSTANTIAL INCREASE IN SALE. THE REQUIRED DOCUM ENTS ALONG WITH VOUCHERS WERE DULY FILED BY THE ASSESSEE AND EVEN T HE BOOKS OF ACCOUNTS WERE NOT REJECTED. IN VIEW OF THESE FACTS SUCH ADDITION CANNOT BE SUSTAINED WHICH IS MERELY BASED ON PRESUMPTION A ND WITHOUT EVIDENCE THEREFORE THIS APPEAL OF THE ASSESSEE IS ALLOWED. FINALLY THE APPEAL OF THE ASSESSEE IS ALLOWED. 5 ORDER PRONOUNCED IN OPEN COURT IN THE PRESENCE OF L EARNED REPRESENTATIVES OF BOTH THE SIDES ON 27 TH APRIL 2010. SD SD (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MAY 4 TH 2010 COPY TO: APPELLANT RESPONDENT CIT CIT(A) DR G UARD FILE *DBN/