Income Tax Appellate Tribunal - Lucknow
M/S Maa Industries, Kanpur vs Inocme Tax Officer-2(2), Kanpur on 22 May, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
LUCKNOW BENCH"B", LUCKNOW
BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER
AND SHRI PARTHA SARATHI CHAUDHURY,JUDICIAL MEMBER
ITA No.136/LKW/2015
Assessment Year:2008-09
M/s Maa Industries v. Income Tax Officer 2(2)
G-90 D, Panki Site-3 Kanpur
Kanpur
TAN/PAN:AALFM9678B
(Appellant) (Respondent)
Appellant by: Shri Rakesh Garg, Advocate
Respondent by: Shri Rajesh Tiwari, D.R.
Date of hearing: 21 05 2018
Date of pronouncement: 22 05 2018
ORDER
PER PARTHA SARATHI CHAUDHURY, J.M:
This appeal was earlier decided by this Bench of the Tribunal vide order dated 28/8/2015 in ITA No.136/LKW/2015 for assessment year 2008-09. However, in that order specific grounds No.3 to 6 of the grounds of appeal were not adjudicated and accordingly a Miscellaneous Application was moved by the assessee being M.A. No.119/LKW/2015 requesting the Tribunal to recall the order dated 28/8/2015 to adjudicate grounds No.3 to 6 of the grounds of appeal. The Tribunal vide its order dated 12/3/2018 in M.A. No. 119/LKW/2015 recalled the order of the Tribunal dated 28/8/2015 for limited purpose of deciding grounds No. 3 to 6 of the grounds of appeal.
2. The issue pertaining to these grounds are as under:-
ITA No.136/LKW/2015Page 2 of 5(1) Because the CIT(A) has erred in upholding the rejection of books of account and the addition of Rs.4,45,668/- in trading account, which addition is contrary to facts, bad in law and be deleted (2) Because the C!T(A) has failed to appreciate that there being no change in the method of accounting regularly employed by the assessee, question of rejecting the books of account and estimating the profit does not arise, the addition of Rs.4,45,668/- be deleted.
3. The facts emerging from record are that the assessee-firm is engaged in the processing and trading of pulses and has shown income from this business as well as income from interest and insurance claim during the year under consideration. The books of account along with bills and vouchers maintained by the assessee-firm were produced which were examined by way of test check basis and the assessment was completed under section 143(3) of the Act wherein as against the returned income of Rs.2,68,650/- assessed income arrived was Rs.8,47,618/-. The Assessing Officer has made addition on account of gross profit rate of Rs.4,45,668/- and added to the total income of the assessee. The Assessing Officer was of the view that for assessment year 2009-10 assessee has offered 2.96% on its receipts as gross profit while for assessment year 2007-08 the G.P. rate was 2.82%. Going by this benchmark, the Assessing Officer applied an average of the two G.P. rates at 2.89% to the trading result for the year under consideration. We further observe that in the earlier order of the Tribunal dated 28/8/2015, the G.P. rate of 2.79% was decided to be applied on the issue. It is the case of the assessee that since the turnover has increased in the present year, therefore, G.P. rate has ITA No.136/LKW/2015Page 3 of 5 gone down and that G.P. rate for the year under consideration which is declared by the assessee at 2.58% was even accepted by the Sales Tax Department and assessee has placed on record copy of Sales Tax Order passed by the Dy. commissioner of Sales Tax. The assessee before the ld. CIT(A) has stated that purchase and sales have been accepted by the Assessing Officer and the gross profit of the year has decreased to 2.58% from 2.82% while turnover has increased by 72.95% as compared to preceding year. The Assessing Officer on the other hand compared this result with the similar trade in the same locality of M/s Jai Ram Das Chandra Prakash and found that they were showing higher gross profit rate of 3.58% during the year. The ld. CIT(A) in his order has mentioned that Assessing Officer has given a detailed observation regarding the difference in the position of closing stock of matar processes and matar dal and has observed that the sale book did not shown any sales upto 15/3/2010.
4. Also the closing stock of finished goods was shown as NIL in the Audit Report and that the auditor qualified the valuation as to be an estimation for goods under process. The Assessing Officer has rejected the trading results under section 145 of the Act and applied the average of the GP rate at @ 2.89%. It is stated by the ld. CIT(A) that the assessee has not produced any evidence to present a different picture than that before the Assessing Officer. No stock register has been produced by the assessee, hence there was no basis with assessee to establish the correctness of valuation of closing stock. This is coupled with the facts that the comparison of the results of different years of assessee's business has shown the gross profit rate for preceding and succeeding years to be higher than in the year under consideration. In the absence of stock register or in the absence of substantive proof for increase in freight, there is doubt cast on the books of account ITA No.136/LKW/2015Page 4 of 5 maintained by the assessee. Further the ld. CIT(A) held that reliance placed by the assessee in the case of CIT Vs H. Dasappa & Sons (Kar) 49 DTR 119 wherein it was held that "no mistake was found by excise authorities, is not a sufficient ground to argue that there was no suppression of sales". The ld. CIT(A) observes that there is no check of veracity of the quantitative tally, as the assessee has not discharged his onus to explain the fall in G.P. during the year. In view of these observations, the ld. CIT(A) upheld the order of the Assessing Officer in applying the G.P. rate of 2.89% in the case of the assessee and sustained the addition of Rs.4,45,668/- on this account.
5. At the time of hearing, the ld. A.R. of the assessee prayed that an opportunity to produce the stock register and to discharge its onus for the fall of G.P. rate despite increase in the turnover and therefore the matter may be restored to the file of the Assessing Officer.
6. The ld. D.R. conceded for restoring the matter to the file of the Assessing Officer.
7. We have perused the case record and we find that for the year under consideration the G.P. rate shown is 2.58% as against an increase in the turnover whereas in the present year the G.P. rate was 2.82% and in the succeeding year it was 2.96%. On the average, the Assessing Officer has applied the G.P. rate of 2.89%. The ld. CIT(A)'s observation is that no stock register was filed before the Department and assessee was unable to discharge its onus and explain why G.P. rate has gone down inspite of increase in the sales turnover. We observe that in earlier occasion the Tribunal order which was recalled has stated that Assessing Officer should apply G.P. rate of 2.79% comparing the preceding and succeeding G.P. rate results, however, it did not adjudicate certain grounds therein. The totality of the facts also ITA No.136/LKW/2015Page 5 of 5 disclose that the Sales Tax Authorities have accepted the current G.P. rate figure shown by the assessee which was per se not accepted as a ground by the ld. CIT(A). The onus still remains on the assessee to produce the stock register and explain the veracity of the quantitative tally and discharge the onus and explain the fall in G.P. rate during the year. In the interest of justice, with these observations, we set aside the order of the ld. CIT(A) and restore the matter back to the file of the Assessing Officer to adjudicate the issue afresh after providing an opportunity of hearing to both the sides. Accordingly, grounds No.3 to 6 of the appeal of the assessee is allowed for statistical purposes
8. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 22/05/2018.
Sd/- Sd/-
[T.S. KAPOOR] [PARTHA SARATHI CHAUDHURY]
ACCOUNTANT MEMBER JUDICIAL MEMBER
DATED: 22nd May, 2018
JJ:2105
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT(A)
4. CIT
5. DR