C I T vs. M/S BRIJESH WOOLEN INDUSTRIES LTD

ITA-437/2009 1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH, JAIPUR D.B. Income Tax Appeal No.437/2009 Commissioner of Income Tax, Jaipur-II, Jaipur vs. M/s. Brijesh Woollen Industries Pvt. Ltd. 11.05.2012 HON'BLE THE CHIEF JUSTICE MR. ARUN MISHRA HON'BLE MR. JUSTICE NARENDRA KUMAR JAIN-I Mr. R.B. Mathur, for appellant. Heard on the question of admission. The appeal has been preferred by the revenue under Section 260A of the Income Tax Act against order dated 30.01.2009 passed by Division Bench of the Income Tax Appellate Tribunal, Jaipur Bench 'B', Jaipur (hereinafter referred to as the 'ITAT') in I.T.A. No.1223/JP/2008 for assessment year 2005-06. The ground raised by the appellant in the appeal is that Assessing Officer has rightly rejected the books of accounts by invoking provisions of Section 145(3) of the Income Tax Act and has rightly made trading addition of Rs.15,10,658/-. It has been wrongly laid down by CIT(A) in its order dated 23.05.2008 that the order of Assessing Officer is not justified, which has been affirmed by the ITAT. Aggrieved by the same, the appeal has been preferred by the revenue.

ITA-437/2009 2 Mr. R.B. Mathur, learned counsel for the appellant- revenue has submitted that rejection of books of accounts has rightly been made by the Assessing Officer as no separate record was maintained and no separate stock register was maintained quality and quantitywise. After hearing learned counsel for the appellant-revenue we find no merit in the submission raised by the learned counsel for the appellant. From the copy of letter dated 17.10.2007, which has been relied upon, given to the Assessing Officer it is apparent that the date-wise stock particulars for raw wool and woolen carpet yarn has been furnished; the finding of fact recorded by Assessing Officer has been found to be factually incorrect by the CIT(A). Assessee has also relied upon letter dated 30.04.2008 issued by the Krishi Upaj Mandi Samiti in which it was mentioned that since the wool was produced from sheep in raw form and therefore, there is no grading or standardization thereof. Thus, the other grounds employed by the Assessing Officer has also been found untenable. It is also found that raw material was more or less of same quality. There was no question of maintaining any qualitywise stock details. It has also been found that the Assessing Officer was not justified in rejecting the books of accounts invoking provisions of Section 145(3) of the Income Tax Act and an addition of Rs.15,10,658/- has wrongly been made by adopting

ITA-437/2009 3 higher G.P. rate of 17%. It has also been found by CIT(A) that there was no evidence of any unaccounted sale of inflated purchases. Following reasons have been assigned by the CIT (A): “(1.3) I have considered facts of the case and arguments taken by Sh. Jain quite carefully. It is seen that the predominant reason for rejection of books of accounts by invoking provisions of S.145 of the I.T. Act by A.O. was that no separate record were maintained and no stock register was maintained quality and quantity wise. However, from the copy of letter dated 17.10.2007 given to the assessing officer alongwith which date wise stock particulars for raw wool and woolen carpet yarn has been furnished, the finding of particulars for raw wool and woolen carpet yarn has been furnished, the finding of assessing officer is found factually incorrect. I have also gone through the copy of the letter dated 30.4.2008 issued by Krishi Upaj Mandi Samiti Kekri in which it was clarified that since the wool is produced from sheep in raw form and therefore there is no grading or standardization thereof. From this certificate it is clear that as far as his raw material is concerned, it is of more or less same quality. Further, I have also gone through a few sell bill wherein in the description of goods woolen carpet yarn has been shown without any specific and separate quality thereof. Under these circumstances, there is no question of maintaining any qualitywise stock details. Since, the defects pointed out by A.O. does not survive at all and there is no other serious deficiency in the books of accounts maintained by the appellant company therefore, in my considered view the assessing officer was not justified in rejecting books of accounts by invoking provisions of S.145 of I.T. Act. When books of accounts are upheld and rejection by A.O. is not approved then there is no question of making any trading addition on adoption of higher G.P. rate since, there is no evidence of any unaccounted sale of inflated purchases. Without prejudice to this in comparable case of M/s Ganpati Woolen Mills Pvt. Ltd. the trading sale was merely of

ITA-437/2009 4 Rs.7,52,114/- while there was job work received of Rs.28,90,165/- and therefore, that case cannot be held as comparable case. Further, this is a first year of the appellant and therefore, considering comparative better yield by the appellant vis-a-vis few other comparable cases given by Sh. Jain in appellate proceedings and considering various judicial decisions relied upon by Sh.Jain the trading addition made by A.O. of Rs.15,10,658/- by adopting higher G.P. rate of 17% is not sustainable and the same is hereby deleted. On this account the appellant gets a relief of Rs.15,10,658/-.” The order of CIT(A) has been affirmed by the ITAT in view of the fact that date-wise stock particulars for raw wool and woolen carpet yarn has been submitted before the Assessing Officer and letter of Krishi Upaj Mandi Samiti has also been relied upon, from which it is clear that there was no grading or standardization. The quality of raw material was more or less the same. The finding of fact which has been recorded concurrently by the CIT(A) as well as ITAT, is not shown to be perverse or could not have been reached in view of the documents on record. Thus, we find that no substantial question of law arises in the appeal. Consequently, the appeal deserves to be dismissed. The same is hereby dismissed in limine.

(NARENDRA KUMAR JAIN-I),J.

(ARUN MISHRA),C.J. Mohit S/4 All corrections made in the judgment/order have been incorporated in the judgment/order being emailed./Mohit Tak, Jr. P.A.