DY COMMISSIONER OF INCOME TAX, Sikar v. RAM GOPAL SHARMA, Sikar

ITA 922/JPR/2010 | 2007-2008
Pronouncement Date: 14-07-2011 | Result: Dismissed

Appeal Details

RSA Number 92223114 RSA 2010
Bench Jaipur
Appeal Number ITA 922/JPR/2010
Duration Of Justice 1 year(s)
Appellant DY COMMISSIONER OF INCOME TAX, Sikar
Respondent RAM GOPAL SHARMA, Sikar
Appeal Type Income Tax Appeal
Pronouncement Date 14-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 14-07-2011
Assessment Year 2007-2008
Appeal Filed On 14-07-2010
Judgment Text
1 ITA 922-10 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 922/JP/2010 ASSTT. YEAR : 2007-08. THE DCIT CIRCLE VS. SHRI RAM GOPAL SHARMA SIKAR. PROP. M/S. INDIA ENGINEERS & SUPPLIERS STATION ROAD SIKAR. (APPELLANT) (RESPONDENT) APPELLANT BY : MS. ROSHANTA MEENA RESPONDENT BY : SHRI SATISH GUPTA ORDER DATE OF ORDER : 14/07/2011. PER R.K. GUPTA J.M. THIS IS AN APPEAL BY DEPARTMENT AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2007-08. 2. THE DEPARTMENT IS OBJECTING IN NOT UPHOLDING THE REJECTION OF BOOKS OF ACCOUNT UNDER SECTION 145(3) AND DELETING TRADING ADDITION OF RS. 9 86 380/- AND ALSO DELETING TRADING ADDITION OF RS. 3 50 000/- MADE BY THE AO U NDER SECTION 68. 3. THE LD. D/R WHO APPEARED BEFORE THE TRIBUNAL PLA CED RELIANCE ON THE ORDER OF AO. 4. ON THE OTHER HAND LD. COUNSEL OF THE ASSESSEE P LACED RELIANCE ON THE ORDER OF LD. CIT (A). 5. THE ASSESSEE DEALS IN SUBMERSIBLE PUMPS AND OTHE R IRRIGATION APPLIANCES. TRADING ACTIVITIES ARE CARRIED OUT AT SIKAR AND JAIPUR BRAN CHES. AT SIKAR BRANCH GROSS PROFIT HAS BEEN SHOWN AT RS. 6 62 273/- ON TURNOVER OF RS. 86 12 777/- DECLARING A G.P. RATE OF 7.6%. 2 IN JAIPUR BRANCH ON TOTAL TURNOVER GROSS PROFIT DE CLARED BY ASSESSEE IS RS. 24 99 997/- DECLARING A G.P. RATE OF 10.2%. ON BEING ASKED AS SESSEE FILED G.P./N.P. RATE CHART FOR THE YEAR AND EARLIER TWO YEARS PERUSAL OF WHICH SHOWS THAT GROSS PROFIT OF JAIPUR BRANCH HAS BEEN DECREASED FROM 12.57% TO 10.25% AND IN SIKAR B RANCH GROSS PROFIT IS ALSO SHOWN AT LOWER SIDE. THE ASSESSEE HAS DECLARED NET LOSS IN THE SIKAR BRANCH. THE REASON FOR LOSS IN SIKAR BRANCH WAS EXPLAINED. SUPPORTING EVIDENCES WE RE ALSO FILED. IT WAS ALSO SUBMITTED THAT DUE TO TOUGH COMPETITION THERE WAS A SMALL FAL L IN G.P. RATE IN JAIPUR BRANCH. IT WAS FURTHER SUBMITTED THAT ON SIMILAR FACTS ADDITION MA DE IN THE A.Y. 2005-06 WAS ALSO DELETED. HOWEVER THE AO WAS NOT SATISFIED. ACCORDI NGLY HE REJECTED THE BOOKS OF ACCOUNT AND APPLIED A G.P. RATE OF 12.57% IN JAIPUR BRANCH WHICH RESULTED IN A TRADING ADDITION OF RS. 5 66 027/-. SIMILARLY IN CASE OF S IKAR BRANCH THE G.P. RATE ESTIMATED AT 12.57% WHICH RESULTED IN A TRADING ADDITION OF RS. 4 20 353/-. IN THIS WAY TOTAL TRADING ADDITION WAS MADE OF RS. 9 86 380/-. DETAILED SUBM ISSIONS WERE FILED BEFORE LD. CIT (A). CHART OF GROSS PROFIT RATE OF SIKAR BRANCH AND JAIP UR BRANCH OF LAST THREE YEARS WERE ALSO FILED. CONSOLIDATED CHART OF GROSS PROFIT RATE OF B OTH THE BRANCHES WERE ALSO FILED. IT WAS FURTHER SUBMITTED THAT COMPLETE BOOKS OF ACCOUNT AR E MAINTAINED WHICH ARE AUDITED UNDER SECTION 44AB OF THE ACT. AUDITOR HAS NOT POINTED OU T ANY DEFECT IN MAINTENANCE OF BOOKS OF ACCOUNT. IT WAS FURTHER SUBMITTED THAT THERE IS AN INCREASE IN G.P. IN SIKAR BRANCH. HOWEVER THERE IS LOSS BECAUSE OF CERTAIN UNFORESEE N CIRCUMSTANCES. IT WAS FURTHER SUBMITTED THAT THE AO HAS STATED THAT THERE WAS A D IFFERENCE IN TRANSPORTATION EXPENSES WHICH IS NOT CORRECT. IT WAS SUBMITTED THAT IN SI KAR BRANCH THE TRANSPORTATION EXPENSES ARE SHOWN IN STOCK. THEREFORE NO TRANSPORTATION EX PENSES WERE SHOWN BY ASSESSEE IN SIKAR BRANCH AND ACCORDINGLY THE AOS VIEW IS NOT C ORRECT. SIMILARLY IN CASE OF JAIPUR 3 BRANCH THE TRANSPORTATION EXPENSES ARE SHOWN IN PU RCHASE AND THEREFORE NO SEPARATE TRANSPORTATION EXPENSES WERE SHOWN. ACCORDINGLY AO S OBSERVATION THAT THERE IS TRANSACTION EXPENSES BUT NOT SHOWN IS CORRECT. ACC ORDINGLY IT WAS SUBMITTED THAT REJECTION OF BOOKS OF ACCOUNT ON THESE FACTS ARE NO T CORRECT. REGARDING THE MARGINAL DECLINE IN G.P. THERE IS A TOUGH COMPETITION IN TH E MARKET AND DECLINE IN G.P. DOES NOT ATTRACT REJECTION OF BOOKS OF ACCOUNT. COMPLETE DE TAILS OF PURCHASE AND SALES WERE FILED BEFORE LD. CIT (A) WHICH WERE FILED BEFORE AO ALSO. AFTER CONSIDERING THE SUBMISSIONS AND PERUSAL OF MATERIAL ON RECORD THE LD. CIT (A) NOTED THAT THERE IS NO DEFECT IN THE MAINTENANCE OF BOOKS OF ACCOUNT AS ALL THE PURCHASE S AND SALES WERE VOUCHED. NOTHING HAS BEEN BROUGHT ON RECORD THAT ASSESSEE HAS SEPARA TED THE SALES OR PURCHASES. THE DISCREPANCY POINTED OUT BY THE AO IN RESPECT TO TRA NSPORTATION EXPENSES WAS ALSO FOUND INCORRECT AS THE SAME HAS BEEN INCLUDED IN THE PURC HASE ITSELF. THEREFORE NO SEPARATE TRANSPORTATION EXPENSES WERE SHOWN. IN VIEW OF THES E FACTS AND CIRCUMSTANCES REJECTION OF BOOKS OF ACCOUNT WAS HELD AS NOT JUSTIFIED. ACC ORDINGLY THIS GROUND OF THE ASSESSEE WAS ALLOWED. THEREFORE THE LD. CIT (A) HELD THAT WITHOUT POINTING OUT ANY DEFECTS IN THE BOOKS OF ACCOUNT DISTURBING THE TRADING RESULT SHOW N WAS ALSO NOT JUSTIFIED. COMPLETE SALES AND PURCHASES WERE VOUCHED. THERE WAS ONLY M ARGINAL DECLINE IN G.P. OF JAIPUR BRANCH WHEREAS THERE WAS NO DIFFERENCE IN GROSS PRO FIT IN SIKAR BRANCH. IN VIEW OF THESE FACTS AND CIRCUMSTANCES THE LD. CIT (A) DELETED TH E ENTIRE TRADING ADDITION. 6. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. C IT (A) WE FIND NO INFIRMITY IN THE FINDING OF LD. CIT (A). THE LD. CIT (A) HAS GI VEN A FINDING OF FACT THAT THERE WAS NO DEFECT IN THE BOOKS OF ACCOUNT AND THEREFORE THER E WAS NO REASON TO DISTURB THE TRADING RESULT. ALL THE PURCHASES AND SALES ARE VOUCHED. NO THING WAS BROUGHT ON RECORD TO HOLD 4 THAT ANY SALES HAVE BEEN MADE OUTSIDE THE BOOKS OF ACCOUNT OR SALES HAVE BEEN SUPPRESSED OR PURCHASE PURCHASES HAVE BEEN SHOWN INFLATED. TH EREFORE WE SEE NO REASON TO INTERFERE WITH THE FINDING OF LD. CIT (A) IN RESPECT TO GROUN D NO. 1 OF THE DEPARTMENT. ACCORDINGLY WE CONFIRM THE FINDING OF LD. CIT (A). 7. REGARDING DELETION OF ADDITION OF RS. 3 50 000/- THE BRIEF FACTS ARE THAT AO NOTICED THAT THERE IS A CASH LOAN OF RS. 3.50 LACS. THE ASSESSEE WAS ASKED TO FILE CONFIRMATION COPY OF ACCOUNTS OF PERSONS FROM WHOM CASH DEPOSITS WERE ACCEPTED. THE ASSESSEE VIDE LETTER DATED 26.11.2009 STATED TO HAV E FILED CONFIRMATION FROM SEVEN PARTIES WHEREAS ACTUALLY CONFIRMATIONS WERE FILED FROM SIX PARTIES. CONFIRMATION FROM M/S.BHAGWATI ENTRPRISES FOR DEPOSIT OF RS. 3 50 000 /- WAS NOT FILED ALONG WITH THE LETTER MENTIONED ABOVE. ACCORDINGLY THE AO ALLOWED ANOTH ER OPPORTUNITY TO THE ASSESSEE TO FILE CONFIRMATION FROM M/S.BHAGWATI ENTERPRISES. H OWEVER NO CONFIRMATION WAS FILED. THEREFORE AO MADE AN ADDITION OF RS. 3.50 LACS UND ER SECTION 68. IT WAS SUBMITTED BEFORE LD. CIT (A) THAT CONFIRMATION FROM M/S. BHAG WATI ENTERPRISES WAS FILED. HOWEVER IN THE CONFIRMATION LETTER THE NAME OF THE PARTY WA S MENTIONED AS M/S. DEWAS ENTERPRISES WHO IS PROPRIETOR OF M/S. BHAGWATI ENTERPRISES. COP Y OF THE SAME WAS ALSO FILED. THEREFORE IT WAS SUBMITTED THAT IT IS WRONG TO HOL D THAT NO CONFIRMATION WAS FILED. IN FACT THE LOAN OF RS. 3.50 LACS WAS TAKEN FROM M/S. BHAGW ATI ENTERPRISES. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD THE LD. CIT (A) NOTED THAT ASSESSEE HAD FILED CONFIRMATION IN RESPECT OF M/S. BHAGWATI ENTERPRISES ALSO. THE LD. CIT (A) NOTED THAT IN CONFIRMATION LETTER THE NAME OF M/S. DEWAS ENTERPRISES WAS WRITTEN WHO IS PROPRIETOR OF M/S. BHAGWATI ENTERPRISES. THE AO OVE R LOOKED THIS FACT AND THEREFORE THE 5 IMPUGNED ADDITION WAS MADE. SINCE ASSESSEE HAS FIL ED CONFIRMATION ACCORDINGLY THE LD. CIT (A) DELETED THE ADDITION MADE BY AO. 8. THE ABOVE FINDING OF LD. CIT (A) ARE FINDING OF FACT WHICH DOES NOT REQUIRE ANY INTERFERENCE. THEREFORE WE CONFIRM THE FINDING OF LD. CIT (A) IN THIS RESPECT ALSO. 9. IN THE RESULT APPEAL OF THE DEPARTMENT IS DISMI SSED. 10. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 14 .07.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR D/- COPY FORWARDED TO :- THE DCIT CIRCLE SIKAR. SHRI RAM GOPAL SHARMA SIKAR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 922/JP/2010) BY ORDER AR ITAT JAIPUR.