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Income Tax Appellate Tribunal - Delhi

Rajeev Kumar Jain, Saharnapur vs Pr. Cit, Muzaffarnagar on 28 November, 2018

         IN THE INCOME TAX APPELLATE TRIBUNAL
               DELHI BENCH: 'F', NEW DELHI

       BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER
                          AND
          SH. O.P. KANT, ACCOUNTANT MEMBER

                    ITA No.2323/Del/2018
                   Assessment Year: 2013-14

Sh. Rajeev Kumar Jain,       Vs. Pr. CIT,
M/s. Parasmani Marketing         Muzaffarnagar, Saharnpur
Company,      More     Ganj,
Saharanpur, UP
PAN :ABQPJ2955G
         (Appellant)                      (Respondent)

            Appellant by     Sh. Anil Kumar Jain, Adv.
            Respondent by    Sh. Surender Pal, Sr.DR

                       Date of hearing             22.10.2018
                       Date of pronouncement       28.11.2018

                             ORDER

PER O.P. KANT, AM:

This appeal by the assessee is directed against order dated 13/03/2018 passed by the Ld. Principal Commissioner of Income Tax, Meerut [in short the 'Ld. PCIT' ] for assessment year 2013-14 under section 263 of the Income-tax Act, 1961 (in short 'the Act') holding the order passed by the Assessing Officer under section 143(3) of the Act as an erroneous insofar as prejudicial to the interest of the Revenue. The grounds of appeal raised by the assessee are reproduced as under:

1. The Ld. Pr. CIT has erred in cancelling the assessment order u/s 143(3) dated 30.10.2015 passed by Assessing Officer and thereby ordering fresh assessment and has erred in holding that the order of the AO is erroneous and prejudicial to the interest of revenue ignoring the fact that all the issues has duly been replied and considered during the assessment state.

2. The order of the Ld. CIT is against law and facts of the case.

3. The appellant craves the right to add, amend or withdraw any grounds of appeal at the time of hearing.

2. Briefly stated facts of the case are that the assessee, an individual derives income from trading of edible oils and for the year under consideration, filed return of income on 21/09/2013 declaring total income of Rs.11,87,210/-. The assessment under section 143(3) of the Act was completed on 30/10/2015 after making trading addition of Rs.1,41,657/- and disallowance of Rs.1,50,000/- out of various expenses like conveyance, travelling, repair and maintenance, telephone etc. Subsequently, the Ld. PCIT called for the record and after examination of the records of observed that the assessment was completed without examining the case properly. According to the PCIT the Assessing Officer should have completed the assessment after examining the quantitative details of the items traded by the assessee and he should have applied the gross profit rate after rejecting the books of accounts of the assessee. Accordingly, invoking the section 263 of the Act, he held the assessment order passed as erroneous insofar as the judicial to the interest of the Revenue. Aggrieved, the assessees is in appeal before the Tribunal, raising the grounds as reproduced above.

3. Before us, the Ld. counsel of the assessee filed a paper book containing pages 1 to 22, which included details of purchases, 3 ITA No.2323/Del/2018 sales and VAT annual assessment order. He Submitted that the quantitative details of items traded was asked by the Assessing Officer in the notice dated 27/01/2015 at point No.16 and same was filed before the Assessing Officer alongwith VAT order. According to Ld. Counsel, reply in this respect was submitted before the ld. PCIT, however he ignored the submission of the assessee. Further, on the issue of gross profit rate, the Ld. counsel submitted that the gross profit rate of 1.03 % declared by the assessee was found on lower side by the Assessing Officer, and he applied the gross profit rate of 1.062%, which was applied by the Assessing Officer in the immediately preceding assessment year 2012-13. In view of the submission, the Ld. counsel submitted that there might be error in not rejecting books of accounts, however there is no Revenue loss and thus order is not prejudicial to the interest of the Revenue. He submitted that twin conditions of erroneous insofar as prejudicial to the interest of the revenue are not fulfilled simultaneously and thus the Ld. P CIT is not correct in setting aside the assessment order passed by the Assessing Officer.

4. On the other hand, Ld. DR relied on the order of the PCIT and submitted that the action of the Assessing Officer rejecting the gross profit rate of the assessee and applying the gross profit rate adopted in immediately preceding year, without rejecting books of accounts is clearly erroneous. According to him, the Ld. PCIT is justified in setting aside the assessment order.

5. We have heard the rival submissions and perused the relevant material on record. For invoking jurisdiction under section 263 of the Act, the Ld. PCIT was required to insure existence of the twin conditions of the order to be erroneous as 4 ITA No.2323/Del/2018 well as prejudicial to the interests of the revenue. In the instant case, the assessee declared gross profit of Rs.39,64,769/- on the sales of Rs.38,66,69,918/- which resulted into gross profit rate of 1.03%. The Assessing Officer found this gross profit rate being lower than the gross profit rate of 1.10% declared in assessment year 2011-12. The Assessing Officer noticed that in the immediately preceding assessment year also the gross profit rate declared by the assessee was found to be 1.01% and the Assessing Officer applied gross profit rate of 1.062%. Accordingly, for the year under consideration, also the Assessing Officer applied the gross profit rate of 1.062% on the sales declared during the year into consideration and made the addition of Rs.1,41,657/-. Though the Assessing Officer missed to reject the books of accounts, but even had Assessing Officer rejected the books of accounts and thereafter applied the gross profit rate of 1.062%, the net addition would have remained the same and thus as far as the Revenue is concerned, no prejudice has been caused. The order cannot be the said as prejudicial to the interest of the Revenue.

6. Further, the contention of the PCIT that the Assessing Officer has not examined the quantitative details of the items traded, is concerned, we find that this finding of the Ld. PCIT is not correct. In para 4 of the impugned order, the PCIT has reproduced the submission of the assessee. According to the submission, it is clear that the Assessing Officer called for the quantitative details of the items traded vide point No. 16 of his notice dated 27/01/2015 and the assessee also submitted said details along with order of value added tax (VAT) authorities. The 5 ITA No.2323/Del/2018 assessee has filed copy of details of purchase and sales before us also.

7. In view of the aforesaid discussion, we are of the opinion that the twin conditions of order being erroneous as well as prejudicial to the interest of the Revenue have not been satisfied simultaneously and, thus, the action of the Ld. PCIT in setting aside the order of the Assessing Officer is not justified and accordingly we cancel the same. The ground of the appeal of the assessees are accordingly allowed.

8. In the result, the appeal of the assessees allowed.

Order is pronounced in the open court on 28th November, 2018.

               Sd/-                              Sd/-
           AMIT SHUKLA                        O.P. KANT
         JUDICIAL MEMBER                 ACCOUNTANT MEMBER

Dated: 28th November, 2018.
RK/-(D.T.D.)
Copy forwarded to:
1.     Appellant
2.     Respondent
3.     CIT
4.     CIT(A)
5.     DR


                                               Asst. Registrar, ITAT, New Delhi