Income Tax Appellate Tribunal - Agra
V.K. Bartan Bhandar, Agra vs Department Of Income Tax on 23 November, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
AGRA BENCH, AGRA
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND
SHRI B.P. JAIN, ACCOUNTANT MEMBER
ITA No.109/Agr/2010
Assessment Year: 2006-07
Dy. Commissioner of Income Tax 4(1), vs. M/s V.K. Bartan Bhandar,
Agra. Daulat Ram Market,
Johri Bazar, Agra.
(PAN: AADFB 3661 K)
(Appellant) (Respondent)
Appellant by : Shri A.K. Sharma, Jr. D.R.
Respondent by : Shri K.C. Agarwal, Advocate
Date of Hearing : 23.11.2011
Date of Pronouncement : 25.11.2011
ORDER
PER BENCH :
This appeal of the Revenue arises from the order of ld. CIT(A)-II, Agra dated 27.01.2010 for the Assessment Year 2006-07.
2. The Revenue has raised the following ground of appeal :-
"1. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.15,71,746/- made by the A.O. by adopting the G.P. rate 24.13% worked by him on the basis of figures of sales, purchased and also the G.P. rate of 20% upto the date of survey furnished by the 2 ITA No.109/Agr/2010 A.Y. 2006-07 assessee though the same should have been confirmed in view of the facts discussed in the assessment order and Remand Report.
2. That the Ld. CIT(A) has erred in deleting the addition of Rs.1,00,000/- made b the A.O. on account of unexplained investment without appreciating the facts of the case.
3. That the ld. CIT(A) has erred in not accepting the request for the enhancement of the income by an amount of Rs.5,32,614/- made through the remand report dated 27.07.2009 though the request was based on the logical basis of stock turn over ratio.
4. The order of the learned CIT(A) deserves to be vacated and that of the Assessing Officer's be restored.
5. That the appellant craves leave to add or alter any or more ground or grounds of appeal s may be deemed fit at the time of hearing of appeal."
3. The brief facts in ground no.1 of the Revenue are that there was a survey at the business premises of the assessee under section 133A of the Income Tax Act, 1961 on 22.12.2005 where loose papers as per Annexure EA-6, EA-12 and EA-11 were found. These papers were the loose sheets relating to sales amounting to Rs.13,70,242/- though the assessee claimed that these sales are included in the total sales but there is no verification provided by the assessee to correlate these sales in the account. The A.O. accordingly invoked the provisions of section 145(3) of the Act since the assessee could not explain the said loose papers. The A.O. accordingly estimated the sales at Rs.3,25,00,000/- as against Rs.3,01,55,938/- declared by the assessee. The A.O. adopted the G.P. rate of 24.13 % on account of 3 ITA No.109/Agr/2010 A.Y. 2006-07 trading account prepared by applying the G.P. rate @ 20% in the period upto the date of survey and accordingly made the addition to the income of the assessee. The ld. CIT(A) after appreciating the facts and explanation given before the A.O. and before him where the assessee also filed certain documents and the ld. CIT(A) after taking the remand report from the A.O. was of he view that there is no error in rejecting the books of account by the A.O. The ld. CIT(A) estimated the sale at Rs.3,20,00,000/- and applied a G.P. rate of 20.79%. for the whole year and accordingly allowed the relief to the assessee.
4. We have heard the rival contentions and perused the facts of the case. There is no dispute on the invoking of section 145(3) of the Act since the assessee is not in appeal before us. As regards the estimation of the sales by the ld. CIT(A) at Rs.3,20,00,000/-, the same is appears to be reasoned one. As regards adoption of G.P. rate of 24.13% on the basis of the post-survey period is without any basis since the G.P. earned for the part of the period cannot be applied on whole of the year. It is a well settled principle that profit may increase or decrease every day but tax is paid only on the income of the whole of the year. Therefore, it is the G.P. of whole of the year which has to be seen and accordingly the computation of income has to be made, which part, the A.O. has ignored. Though the A.O. was wrong in applying the G.P. rate of 20% for the pre-survey period because the 4 ITA No.109/Agr/2010 A.Y. 2006-07 assessee himself was declaring a G.P. rate of 20.79%. The ld. Counsel for the assessee Shri K.C. Agarwal, Advocate invited our attention to page no.14 of Paper Book where the sales, G.P. and percentage of G.P. for the year, the preceding year and following years have been mentioned as under :-
Asst. Year Sale Amount Gross Profit amount % of gross profit 2005-06 1,96,98,700 38,51,857/- 19.55% 2006-07 3,01,55,938/- 62,70,504/- 20.79% 2007-08 3,76,17,295/- 81,82,058/- 21.75% 2008-09 3,99,83,815/- 92,47,740/- 23.12%
5. The assessee during the year has declared a better G.P. of 20.79% as compared to 19.55% in the immediately preceding year. The turnover is also on the higher side at Rs.3,01,55,938/- as compared to the turnover in the immediately preceding year at Rs.1,96,98,700/-. Therefore, in the circumstances and facts of the case, we find no infirmity in the order of the ld. CIT(A) who has rightly applied the percentage of G.P. of 20.79% on the estimated turnover of Rs.3,20,00,000/-. Moreover, the assessee had surrendered Rs.5,00,000/- during the year as pointed out by the ld. Counsel for the assessee Shri K.C. Agarwal, Advocate which is much more than the income estimated by the ld. CIT(A) on the enhanced sales. The enhanced profit retained by the ld. CIT(A) is lesser than the surrendered income which is part of the surrendered amount of Rs.5,00,000/-. In such circumstances, and facts of the case, we find no error in the order of the ld. CIT(A) 5 ITA No.109/Agr/2010 A.Y. 2006-07 who has rightly deleted the addition made by the A.O. Thus, ground no.1 of the Revenue is dismissed.
6. As regards ground no.2, the A.O. made an addition of Rs.1,00,000/- as unexplained investment which has been added as undisclosed income. The ld. CIT(A) deleted the addition vide paragraph no.9.1 of his order for the reasons mentioned therein.
7. We have heard the rival contentions and perused the facts of the case. The addition made by the A.O. is without any material on record or any evidence except the loose papers of sales which have been covered in ground no.1 hereinabove. Therefore, at the outset, the A.O. is not justified in making such addition which is made on conjectures and surmises only. Even the said addition of Rs.1,00,000/- is covered under the surrender of Rs.5,00,000/- made by the assessee. Therefore, we find no infirmity in the order of the ld. CIT(A) who has rightly deleted the addition made by the A.O. Thus, ground no.2 of the Revenue is dismissed.
8. As regards ground no.3, the ground of the Revenue has no basis if the request of the A.O. in the remand report is not accepted which itself has no basis. Therefore, in such circumstances, the said ground of the Revenue is dismissed. 6 ITA No.109/Agr/2010
A.Y. 2006-07
9. Ground nos.4 & 5 of the Revenue are general in nature, therefore, do not require any adjudication.
10. In the result, appeal of the Revenue in ITA No.109/Agr/2010 is dismissed.
(Order pronounced in the open Court on 25.11.2011).
Sd/- Sd/-
(H.S. SIDHU) (B.P. JAIN)
Judicial Member Accountant Member
Date: 25th November, 2011
PBN/*
Copy of the order forwarded to:
Appellant/Respondent/CIT concerned/CIT(Appeals) concerned/D.R., ITAT, Agra Bench, Agra/Guard File.
By Order Assistant Registrar Income-tax Appellate Tribunal, Agra True Copy