Income Tax Appellate Tribunal - Indore
Jatinder Singh Chadda, Bhopal vs Assessee on 2 July, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARMA, A.M.
PAN NO. : AAVPC2209E
I.T.A.No. 40/Ind/2012
A.Y. : 2002-03
Shri Jatinder Singh ITO,
Chadda, vs 3(2),
Bhopal Bhopal.
Appellant Respondent
Appellant by : Shri Anil Khabya, C. A.
Respondent by : Shri R. A. Verma, Sr. DR
Date of Hearing : 02.07.2012
Date of : 05.07.2012
pronouncement
ORDER
PER R. C. SHARMA, A.M.
This is an appeal filed by the assessee against the order of CIT(A) dated 1st November, 2011, for the assessment year 2002-03, in the matter of order passed u/s 148 read with Section 144 of the Income-tax Act, 1961.
2. The assessee is aggrieved for reopening of assessment u/s 147 as well as for addition made on account of alleged
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suppression of sales and purchases amounting to Rs. 96,524/- and Rs. 1,01,700/- respectively.
3. Rival contentions have been heard and records perused. Assessment framed u/s 143(3) for the relevant assessment year under consideration was reopened by the Assessing Officer on the plea that as per the purchase and sales ledger, there is suppression of purchases and sales. The plea of ld. Authorized Representative was that the original assessment was framed u/s 143(3), therefore, reopening of assessment after completion of four years from the end of relevant assessment year, is not justified in view of proviso to Section 147.
4. We have considered the rival submissions and have gone through the orders of the authorities below and found from record that the assessee is engaged in trading of tyre and tubes. Original assessment was framed u/s 143(3) on 14.12.2004. Thereafter, the Assessing Officer found that the sales ledger showed total sales at Rs. 37,85,967/- while the sales in profit and loss account was shown at Rs. 36,89,096/-. Due to this reason profit was suppressed by Rs. 96,524/-. The 2
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purchase ledger shows purchase of Rs. 27,77,661/- while purchase in profit and loss account are shown at Rs. 28,79,361/-. Due to this reason purchases have been inflated by Rs. 1,01,700/- decreasing profit to that extent. On the basis of above information, the Assessing Officer had valid reason to believe that income has escaped assessment within the meaning of Section 147 and the Assessing Officer was justified in issuing the notice u/s 148.
5. In view of the reasons recorded by the Assessing Officer for reopening the assessment, we do not find any infirmity in the order of CIT(A) for confirming the action of the Assessing Officer for reopening of the assessment, since there was suppression of profits by the assessee on account of discrepancies in the purchase and sales found after completion of assessment. As there was failure on the part of the assessee to furnish true and correct statement of income, proviso to Section 147 as not applicable, therefore, the Assessing Officer was justified in reopening the assessment by issuing notice u/s 148.
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6. In the result, the ground taken by the assessee with regard to validity of reopening is dismissed.
7. On merit of the addition, we found that the assessee is engaged in retail trading of tyre and tubes. In the re-
assessment proceedings, the Assessing Officer made addition of Rs. 96,524/- and Rs. 1,01,700/- on account of suppression of sales and purchase. During the year, the assessee had shown sales of Rs. 37,85,622/-, which was below Rs. 40 lakhs, accordingly, income of the assessee can be assessed u/s 44AF by taking income at 5 % of the turnover. In the instant case, as per the discrepancies pointed out by the Assessing Officer in the purchase and sales, the books of account are liable to be rejected. Once the books are rejected, the maximum profit which can be assessed u/s 44AF, since turnover of the assessee was below Rs. 40 lakhs, will be at 5 % of the turnover. In the instant case, the assessee has claimed total income of business at Rs. 95,587/- according to the audited books of account. Even if presumptive rate is applied, the income will be worked out at Rs. 1,89,281/- ( i.e. Rs. 4
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37,85,622/- @ 5% = Rs. 1,89,281/-). Accordingly, we direct the Assessing Officer to restrict the addition to the extent of Rs. 96,694/- (Rs. 1,89,281/- (-) Rs. 92,587/-.
8. In the result, the appeal of the assessee is allowed in part.
This order has been pronounced in the open court on 5th July, 2012.
sd/- sd/-
(JOGINDER SINGH) (R. C. SHARMA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 5th July, 2012.
CPU*
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