C I T JAIPUR vs. M/S CHOICE FASHION

ITA/287/2010HC RajasthanRJHC02048437201022 November 2010Author: ARUN MISHRA,DALIP SINGH3 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the ITAT had recorded a finding of fact after duly considering various aspects, including the assessee's declared gross profit rates in earlier years. The Court noted that the assessee maintained regular books of account, including cash book, ledger, and vouchers for purchases, sales, and expenses, and these books were audited without adverse remarks. The Assessing Officer had not detected any unaccounted purchases or sales, and the entire turnover was vouched. The Court found that the non-maintenance of a stock register was not vital given the facts. Considering the nature of the business, the ITAT's conclusion that rejection of books of account was not justified was upheld. The Court also took into account the doubling of turnover compared to the preceding year, the net profit rates for both years, and the admitted increase in raw material and stitching costs. The ITAT's finding to apply a GP rate of 16.67% was considered purely fact-based and not perverse, thus not warranting interference in appeal. Consequently, no substantial question of law arose. The appeal was dismissed.

What were the facts?

The Revenue, Commissioner of Income Tax, Jaipur-II, has appealed against an order of the Income Tax Appellate Tribunal (ITAT), Jaipur Bench. The ITAT's order, dated June 18, 2010, pertains to assessment year 2006-07 and modified an earlier order. The Assessing Officer had determined the gross profit (GP) rate at 19.44%. The Commissioner of Income Tax (Appeals) reduced this to 18%. The ITAT, however, further reduced the GP rate to 16.67%. The Revenue's appeal challenges the ITAT's reduction of the GP rate, arguing that the CIT(A)'s finding of 18% was appropriate and should not have been interfered with.

What were the issues?

1. Whether the ITAT was justified in reducing the gross profit rate to 16.67% for assessment year 2006-07, thereby interfering with the order of the Commissioner of Income Tax (Appeals) which had fixed it at 18%? Assessee's Contentions: The judgment does not record any specific contentions made by the assessee before the High Court. However, the ITAT's decision, which the High Court is upholding, implies that the assessee likely argued that the rejection of their books of account was not justified, that their books were maintained regularly and audited without adverse remarks, that sales were entirely export, that there was a significant increase in turnover, and that increased costs of raw materials and stitching charges were factors to consider. Revenue's Contentions: The Revenue argued that the order passed by the Commissioner of Income Tax (Appeals) was appropriate, as it had taken into consideration all relevant aspects and arrived at a GP rate of 18%. The Revenue contended that the CIT(A)'s finding, based on sound reasoning, could not have been legally interfered with by the ITAT.

Which sections of the Income-tax Act were involved?

None explicitly mentioned in the provided text.

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

1 ITA No.287 of 2010. IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH, JAIPUR

D.B. Income Tax Appeal No.287 of 2010. Commissioner of Income Tax, Jaipur-II VERSUS M/s. Choice Fashion (P) Ltd., Jaipur Date of Order :::: 22.11.2010 Hon'ble The Acting Chief Justice Mr. Arun Mishra Hon'ble Mr. Justice Dalip Singh Mr. R.B. Mathur, counsel for the appellant **** By the Court : Instant appeal has been preferred aggrieved by the order passed by the Income Tax Appellate Tribunal, Jaipur Bench `A' Jaipur (for short, hereinafter to be referred as 'ITAT') in ITA No.16/JP/2010 for the assessment year 2006-07 on 18.06.2010. The Assessing Officer had adjudged the gross profit rate as 19.44%. The Commissioner of Income Tax (Appeals) reduced it to 18%. On further appeal being preferred before the ITAT by the assessee, the ITAT upon due consideration of the facts and circumstances enumerated in paragraph-7 of the order has deemed it appropriate to assess the gross profit rate as 16.67% for the year in question. Aggrieved by the order, instant appeal has been preferred.

Shri R.B. Mathur learned counsel appearing on behalf of the Revenue has submitted that the order passed by the Commissioner, Income Tax (Appeals) was an appropriate one. The Commissioner, Income Tax (Appeals) has taken into consideration all the relevant aspects and had come to the conclusion that gross profit rate was in fact 18%. Thus, the finding recorded by the CIT (A) based on sound reasonings could not have been interfered with within the legal parameters by the ITAT. After hearing the learned counsel appearing for the Revenue and going through the orders available on record, we find that the ITAT has recorded a finding of fact in the instant case duly considering the various aspects of the matter and gross profit rates declared by the assessee in earlier years has also been taken into consideration. It has also clear that regular banks of account which consists of cash book, ledger, voucher of purchase, sales and expenses have been maintained regularly by the assessee. The books of account are also audited. The auditors have not made any adverse remarks on the maintenance of books of accounts neither any unaccounted purchase or sale has been detected by the A.O. and entire turnover is fully vouched. It is also a fact that entire sale is of export. Merely, non-maintenance of stock register or production of the stock register could not be said to be vital in the facts and circumstances of the case. Considering the nature of business, the ITAT has also in the instant case held that rejection of books of account was not justified. It has also been found that there was sufficient increase in the turnover of the assessee which was just double than the preceding year. Net profit rate for both the years has also been taken into consideration. It has also found that there was an increase in the costs of raw materials and this fact has also been admitted by the A.O. It has also been found that there was an increase in the cost of stitching charges. Considering the over all circumstances, the tribunal has given a finding to apply g.p. rate of 16.67%. The said finding is purely based on facts and by forming a different on such facts is not sufficient to interfere in appeal. Finding cannot be said to be perverse. No substantial question of law arises in the instant appeal. Consequently, the appeal being devoid of merits deserves to be dismissed and the same is, hereby, dismissed summarily as the finding cannot be said to be perverse which calls for any interference. (Dalip Singh) J. (Arun Mishra) Actg. C.J. Ashok/

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