Income Tax Appellate Tribunal - Jaipur
Shri Rajendra Goyal , New Delhi vs Income Tax Officer, Ward-2, Jhunjhunu on 13 December, 2017
vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj
IN THE INCOME TAX APPELLATE TRIBUNAL,
JAIPUR BENCHES (SMC), JAIPUR
Jh Hkkxpan] ys[kk lnL;] ds le{k
BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER
vk;dj vihy la-@ITA No. 744/JP/2017
fu/kZkj.k o"kZ@Assessment Year : 2011-12
Rajendra Goyal, cuke Income Tax Officer,
Prop.- M/s Shyam Traders, 108, Vs. Ward-2,
Bhagirathi Apartments, Sector- Jhunjhunu.
9, Rohini, New Delhi.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAPPA 4567 M
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@ Assessee by : Siddarth Mittal (CA).
jktLo dh vksj ls@ Revenue by : Smt. Poonam Roy (DCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 12/12/2017
mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 13/12/2017
vkns'k@ ORDER
PER: BHAGCHAND, A.M. This is an appeal filed by the assessee emanates from the order of the ld. CIT(A)-3, Jaipur dated 03/08/2017 for the A.Y. 2011-12, wherein the assessee has raised following grounds of appeal:
"1. That on the facts, in the circumstances of the case and in view of the detailed written and oral submissions made and the evidence already available on AO's own record and further evidences adduced by the assessee the orders of the learned Lower Authorities are against the law and facts of the case.
2 ITA 744/JP/2017_ Rajendra Goyal Vs ITO
2. That the ld. AO grossly erred in invoking the provisions of section 145(3) of the I T Act, 1961 and the ld. CIT (Appeals)-3, Jaipur also erred in confirming the same without considering and appreciating the facts of the case.
3. That the ld. AO grossly erred in applying Net Profit Rate @0.67% and estimating the Net Profit in the amount of Rs.20,51,429/- by making addition of Rs.3,04,903/- thereof without there being any basis and the ld. CIT (Appeals)-3, Jaipur also erred in confirming the trading addition of Rs. 1,51,811/- without properly considering the facts and circumstances of the case.
4. That the ld. AO erred in making adhoc disallowance of Rs.9,338/- i.e. 20% of total Shop Expenses of Rs.46,690/- without there being any basis and without appreciating the facts of the case and the ld. CIT (Appeals)-3, Jaipur also erred in confirming the same.
5. That the ld. AO further erred in disallowing telephone expenses in the amount of Rs.4,077/- i.e. 20% of total Telephone Expenses of Rs.20,387/- merely on probability of personal use and without considering the facts of the case and the ld. CIT (Appeals)-3, Jaipur also erred in confirming the same without considering the submissions made by assessee.
6. That the ld. AO grossly erred in making addition of Rs.58,500/-
on account of low household withdrawals by allegedly estimating household expenses at Rs.15,000/- per month i.e. Rs.1,80,000/- for the year without there being any basis and without considering assessee's contention and the ld. CIT (Appeals)-3, Jaipur also erred in confirming the same without considering the submissions made by assessee."
2. The assessee was engaged in the business of trading of food grains on wholesale basis in the name and style of M/s Shyam Traders. The return declaring total income of Rs. 11,91,000/- was filed by the assessee on 3 ITA 744/JP/2017_ Rajendra Goyal Vs ITO 24/09/2011. The Assessing Officer completed the assessment U/s 143(3) of the Income Tax Act, 1961 (in short the Act) after making various additions at total income of Rs. 15,67,820/-. The ld CIT(A) has given part relief to the assessee.
3. Now the assessee is in appeal before the ITAT. The ground No. 1 of the appeal is general in nature and does not require any adjudication. Hence, the same stands dismissed.
4. In the grounds No. 2 and 3 of the appeal, the issue involved is sustaining the addition of Rs. 1,51,811/- made by invoking the provisions of Section 145(3) of the Act. The ld. CIT(A) has decided the issue by holding as under:
I have considered the observation made by the AO in the assessment order as well as submission filed by the A/R of the appellant. I find that the appellant not maintained quality-wise details of commodities traded. The trading expenses are not fully vouched. The A/R of the appellant did not make any argument in his submissions about the defects pointed out by the A.O. in the assessment order. Therefore the action of the Assessing Officer for application of provision u/s 145(3) is justified and as per law. Next issue regarding the estimation of Gross Profit and making the addition on account of low Gross Profit rate. The A/R of the appellant argued that no basis of estimation by the AO. There is force in the argument of the A/R of the appellant that the AO made the addition of Rs. 3,04,903/- without any basis. The A/R of the appellant taken the argument that his turnover increase 3.5 times in this year compare to the last year. The Gross Profit 4 ITA 744/JP/2017_ Rajendra Goyal Vs ITO decreased due to the increase of sales and competition in the market. There is force in the submission of the A/R of the appellant that AO made addition without any comparable case and without any evidences. The sales of the appellant also increase. Therefore considering the above facts and increase of sales. I have adopt the average Gross Profit rate of last two years i.e. 0.67%, 0.57% the average comes 0.62% thus gross profit come Rs. 18,98,337/-. The appellant shown gross profit Rs. 17,46,526/-. Accordingly, I confirm the trading addition of Rs. 1,51,811/- (18,98,337-17,46,526/-) and balance amount of Rs. 1,53,092/- is deleted. These grounds are partly allowed."
5. While pleading on behalf of the assessee, the ld AR has relied on the pleadings made before the lower authorities and submitted that the lower authorities were not justified in rejecting the books of account and invoking the provisions of Section 145(3) of the Act and also estimating the income.
6. On the other hand, the ld DR has relied on the orders of the authorities below.
7. Bench have heard both the sides on this issue. This is a fact that the assessee was not maintaining quality wise details of the commodities traded, therefore, it shall not be possible to verify the correctness of the valuation of the closing stock. Therefore, the Bench is of the view that the books of account were rightly rejected by invoking the provisions of Section 145(3) of the Act. Further the Assessing Officer made the addition of Rs.
3,04,903/- lacs and the ld. CIT(A) restricted it to Rs. 1,51,811/- lacs. After considering both the sides and the various other aspects of the case 5 ITA 744/JP/2017_ Rajendra Goyal Vs ITO including the increase in the sales turnover by 3.5 times in the year under consideration in comparison to immediate preceding year, the estimate of G.P. at Rs. 1,51,811/- lacs is justified, therefore, the Bench uphold the order of the ld. CIT(A) on this ground. Accordingly, grounds No. 2 and 3 are dismissed.
8. In the grounds No. 4 to 6 the issues involved are sustaining the disallowances out of shops expenses, telephone expenses and low household withdrawals respectively. The ld. CIT(A) has dealt these issues by holding as under:
(i) I have carefully considered the material before me. I find that all shop expenses are not fully vouched. Therefore I confirm the addition made by the AO of Rs. 9,338/- out of shop expenses.
Regarding the telephone expenses the AO in his order made detailed finding that the use of telephone and for personal purpose, the appellant did not file any submission which established that the telephone was not use for non business purpose. Therefore I am agree with the views of the Assessing Officer that he rightly disallowance 20% of telephone expenses as non business purpose. Hence, I confirm the addition made by the AO of Rs. 2,246/- out of telephone expenses. These grounds are not allowed.
(ii) I have carefully considered the material before me. I find that the AO estimated house hold expenses Rs. 15,000/- per month. In view of the present rising price, mobile phone, satellite T.V., Motor Car and keeping in view the status of assessee and the community to which he belongs. The A/R of the appellant not filed any details and supporting evidences which prove that his withdrawals are sufficient for his house hold expenses. Therefore I am the view 6 ITA 744/JP/2017_ Rajendra Goyal Vs ITO that AO rightly estimated house hold expenses Rs. 15,000/- per month. Hence, I confirm the addition made by the AO of Rs. 58,500/-. This ground is not allowed."
9. Now the assessee is in appeal before the ITAT. The ld AR of the assessee has reiterated the submissions as made before the lower authorities and prayed to delete the additions.
10. On the other hand, the ld DR has relied on the orders of the authorities below.
11. The Bench have heard both the sides on these issues. Since, the addition on account of estimating of gross profit and rejection of books of account has been sustained, therefore, in view of the various decisions of the Hon'ble Jurisdictional High Court on this issue, no specific additions out of expenses debited in P&L account can be sustained. Therefore, the same are directed to be deleted.
12. In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 13/12/2017.
Sd/-
¼Hkkxpan½ (BHAGCHAND) ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 13th December, 2017 7 ITA 744/JP/2017_ Rajendra Goyal Vs ITO *Ranjan vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Shri Rajendra Goyal, New Delhi.
2. izR;FkhZ@ The Respondent- The ITO, Ward-2, Jhunjhunu.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr¼vihy½@The CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 744/JP/2017) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar