C.I.T. CENTRAL, JAIPUR vs. M/S JANTA SWEET HOME PVT. LTD.

ITA/156/2013HC RajasthanRJHC01027116201309 May 2018Bench: GOPAL KRISHAN VYAS,RAMCHANDRA SINGH JHALA3 pages

AI SummaryDismissed

What did the High Court hold?

The High Court, by following a co-ordinate bench's decision in IT Appeal No. 81/2007, held that the CIT(A) and the Tribunal had not committed any error in their adjudication. The Court found that the AO was in error in estimating sales at more than one and a half times the declared sales when the sales-tax authorities had accepted the declared sales and the AO failed to produce cogent material to show sales outside the books. The CIT(A) and Tribunal's decision to take sales at Rs. 26 lakhs was considered reasonable. Regarding the GP rate, the Court agreed that the AO erred in using Anil Marbles (P) Ltd. as a comparable without considering that the assessee had worked only for about 9 months. The Court found no fault with the CIT(A) applying a GP rate of 25% as against the 20.6% declared by the assessee, while not approving the AO's rate of 32.42%. The Court concluded that the orders of the CIT(A) and Tribunal were not perverse and were based on cogent reasons and relevant considerations, involving a reasonable estimate of sales and GP rate. Therefore, the High Court found no reason to interfere.

What were the facts?

The appeals were filed by the Commissioner of Income Tax (Central), Jaipur, against M/s Janta Sweet Home Pvt. Ltd., Nai Sarak, Jodhpur. The assessment years are not explicitly stated in the provided text. The appeals challenge orders passed by lower authorities, presumably the Income Tax Appellate Tribunal (ITAT) and the Commissioner of Income Tax (Appeals) (CIT(A)), which were in favour of the assessee. The procedural history involves the revenue filing these appeals before the High Court. The High Court noted that the issue involved had already been adjudicated by a co-ordinate bench in IT Appeal No. 81/2007 decided on 09.01.2013.

What were the issues?

The primary issue before the High Court was whether the findings of the CIT(A) and the Tribunal regarding the quantum of sales and the Gross Profit (GP) rate were justified. The High Court had to decide if the lower authorities erred in their estimation of sales and GP rate. Assessee's Arguments (as inferred from the previous judgment cited): The assessee contended that its declared sales were accepted by sales-tax authorities, and the Assessing Officer (AO) lacked cogent material to prove sales outside the books. The assessee argued that the AO's estimate of sales was excessive. Regarding the GP rate, the assessee argued that the AO wrongly used a comparable case (Anil Marbles (P) Ltd.) without considering the difference in operational periods, as the assessee had only worked for about 9 months. The assessee's declared GP rate was 20.6%. Revenue's Arguments (as inferred from the previous judgment cited): The revenue, through the AO, had estimated sales at more than one and a half times the declared sales and applied a GP rate of 32.42%. The revenue likely argued that the assessee's declared figures were understated and that the GP rate applied by the AO was appropriate, possibly based on comparable cases.

AI-generated summary — verify with the full judgment below

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Income Tax Appeal No. 153 / 2013 Commissioner of Income Tax (Central), Jaipur ----Appellant Versus M/S Janta Sweet Home Pvt. Ltd., Nai Sarak, Jodhpur (Rajasthan.) ----Respondent Connected With D.B. Income Tax Appeal No. 150 / 2013 Commissioner of Income Tax (Central), Jaipur ----Appellant Versus M/S Janta Sweet Home Pvt. Ltd., Nai Sarak, Jodhpur (Rajasthan.) Respondent D.B. Income Tax Appeal No. 151 / 2013 Commissioner of Income Tax (Central), Jaipur ----Appellant Versus M/S Janta Sweet Home Pvt. Ltd., Nai Sarak, Jodhpur (Rajasthan.) ----Respondent D.B. Income Tax Appeal No. 152 / 2013 Commissioner of Income Tax (Central), Jaipur ----Appellant Versus M/S Janta Sweet Home Pvt. Ltd., Nai Sarak, Jodhpur (Rajasthan.) ----Respondent D.B. Income Tax Appeal No. 155 / 2013 Commissioner of Income Tax (Central), Jaipur ----Appellant Versus M/S Janta Sweet Home Pvt. Ltd., Nai Sarak, Jodhpur (Rajasthan.) ----Respondent

(2 of 3) [ITA-153/2013]

D.B. Income Tax Appeal No. 156 / 2013 Commissioner of Income Tax (Central), Jaipur ----Appellant Versus M/S Janta Sweet Home Pvt. Ltd., Nai Sarak, Jodhpur (Rajasthan.) ----Respondent _____________________________________________________ For Appellant(s) : Mr. K.K. Bissa. For Respondent(s) : Mr. Anjay Kothari. _____________________________________________________ HON'BLE MR. JUSTICE GOPAL KRISHAN VYAS HON'BLE MR. JUSTICE RAMCHANDRA SINGH JHALA Order 09/05/2018 It is submitted by the learned counsel for the respondent that issue involved in this case has already been adjudicated by this Court in IT Appeal No.81/2007 decided on 09.01.2013 reported in (2013) 354 ITR 238 (Raj.). We have perused the aforesaid judgment in which following adjudication was made by the Co-ordinate bench of this Court in para No.10 to 14, which reads as under:- “10. When the sales declared by the assessee had been accepted by the sales-tax authorities and the AO failed to bring on record any cogent material to show the quantum of sales out of books of accounts, his estimate more than one and half time the sales declared by the assessee could not have been considered justified. On a reasonable estimate, the CIT(A) and the Tribunal have, in our opinion, not committed any error in taking the figure of sales at Rs.26 lakhs and not beyond.

(3 of 3) [ITA-153/2013]

11.

So far GP rate was concerned, the AO was obviously in error in taking the case of Anil Marbles (P) Ltd. As a comparable one, while omitting to consider the basic difference that the said company had worked for whole of the year whereas the respondent- assessee had worked only for a period of about 9 months during the year in question, as the commercial production of the assessee started only from the third week of June, 1995, and the assessee had been in the first year of its functioning. 12. In the totality of circumstances, the CIT(A) could not have been faulted in applying the GP rate of 25 per cent as against 20.6 per cent declared by the assessee but while not approving the rate of 32.42 per cent as applied by the AO. 13. The orders as passed by the CIT(A) and the Tribunal do not appear suffering from any perversity or from application of any wrong principle. In our view, ultimately, the matter had been of putting a reasonable estimate on the quantum of sales and on the GP rate while recording the findings on facts. When the authorities have recorded such findings with cogent reasons and on relevant considerations, we find no reason to interfere. 14. Accordingly and in view of the above, the answer to the question formulated in the present case in the affirmative i.e., against the Revenue and in favour of the assessee.” While following aforesaid judgment, all these income tax appeals are hereby dismissed. (RAMCHANDRA SINGH JHALA)J. (GOPAL KRISHAN VYAS) J. Ishan(62-67) Powered by TCPDF (www.tcpdf.org)

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