C I T vs. M/S BRIJESH WOOLEN

ITA-522/2009 1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH, JAIPUR D.B. Income Tax Appeal No.522/2009 Commissioner of Income Tax, Jaipur-II, Jaipur vs. M/s. Brijesh Woollen Industries 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 20.03.2009 passed by Division Bench of the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur (hereinafter referred to as the 'ITAT') in I.T.A. No.1446/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.27,19,832/-. It has been wrongly laid down by CIT(A) in its order dated 06.08.2008 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-522/2009 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 17.10.2007/14.12.2007, 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.27,19,832/- has wrongly been

ITA-522/2009 3 made by adopting 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 main reason to reject books of accounts was non maintenance of day to day quantity details quality-wise. However, from the copy of letter dated 17.10.2007/ 14.12.2007 addressed to assessing officer it is clear that day tod ay quantity details were produced before A.O. for verification and therefore, prima-facie the finding of assessing officer is not factually correct. Further, it could not be established by the A.O. that the appellant was dealing in different qualities and therefore, it cannot be considered as defect that quality wise quantity details were not maintained. Finished goods stock register maintained on day to day basis was also produced before the A.O. on 03.10.2007. Under these circumstances, there is no question of non maintenance of the quality details for the raw material and furnished goods and the defects pointed out by A.O. does not exist at all and 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 rejectable then there is no question of making any trading addition by adopting higher G.P. rate particularly when there is no evidence of any unaccounted sale or inflated purchase. Further, Sh. Jain has clarified that how the activities of the appellant were material different from M/s Ganpati Woolen Mills Pvt. Ltd. and therefore, that case cannot be held as comparable case. Further, the various factors of income & expenditure with comparative analysis as given by Sh.Jain proves that how G.P. shown by appellant was lower as compared cases quoted by A.O. and how such disclosed G.P. is reasonable and justified. With this discussion in my considered view the assessing officer was not justified in making said trading addition of Rs.27,19,832/- which is hereby deleted.”

ITA-522/2009 4 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/3 All corrections made in the judgment/order have been incorporated in the judgment/order being emailed. Mohit Tak, Jr. P.A.