ITO- 1(4), RUDRAPUR vs. JAI MAHALAXMI TRADERS, UDHAM SINGH NAGAR

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ITA 466/DEL/2018Status: DisposedITAT Delhi14 November 2018AY 2013-145 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order, finding that the AO's rejection of books of accounts was unjustifiable as the trading results were found to be prima facie verifiable during remand proceedings. However, a disallowance of Rs. 3 Lacs for un-supported expenses was upheld.

What were the facts?

The Assessing Officer (AO) rejected the assessee's books of accounts for the assessment year 2013-14 due to non-production of satisfactory supporting documents and estimated net profit at 2% of the turnover. The CIT(A) deleted the addition, which was upheld by the Tribunal.

What were the issues?

Whether the rejection of books of accounts by the AO was justified and whether the estimation of net profit was appropriate.

Which sections of the Income-tax Act were involved?

Section 145(3),Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES: ‘F’, NEW DELHI

Before: SMT. BEENA A PILLAI & SHRI PRASHANT MAHARISHI

For Respondent: DR Assessee by : None
Hearing: 06/11/2018Pronounced: 14/11/2018

ORDER PER BEENA A PILLAI, JUDICIAL MEMBER Present appeal has been filed by revenue against order dated 16/10/17 passed by Ld. CIT (A) Haldwani for assessment year 2013-14 on following grounds of appeal: 1. “That the undersigned examined the books of accounts during the remand proceedings and submitted remand report stating that the assessee could not produce complete bills and vouchers, trading results declared by the assessee were not verifiable and Ld. CIT(A) has not considered the whole remand and accepted the part of the remand report. Therefore, the Ld. CIT(A) has erred in the eyes of law in deleting the addition to the tune of Rs. 68,65,399/-. 1

Jai Mahalaxmi Traders 2. That the appellant craves, leaves to add, alter, amend or vary from the above grounds of appeal.”

2.

Brief facts of the case are as under: Assessee filed its return of income on 01/10/13 is declaring total income of Rs. 1,17,950/-. The case was selected for scrutiny and notice under section 143 (2) of the Act was issued. In response to statutory notices, representative of assessee appeared before Ld. AO and filed requisite details as called for.

2.1 Ld. AO observed that assessee is engaged in business of trading of wheat, Madua Ragi, Maize, Soyabean and Bran. Ld. AO during course of assessment proceedings called for Ledger, cashbook, watchers etc. for verification of trading result. It has been observed by Ld. AO that ample opportunities were provided, and assessee could not produce documents to satisfaction of Ld. AO. Ld. AO rejected books of accounts as per provisions of section 145 (3) of the Act and completed assessment under section 144 of Act. Ld.AO observed that assessee has shown total turnover of Rs.36,41,67,314/- from his trading business. In the absence of verification of books of accounts he estimated rate of net profits of turnover and applied 2%. He, thus, computed an additional profit of Rs.71,65,399/- and added it in the hands of assessee.

2.2 Aggrieved by order of Ld.AO, assessee preferred appeal before Ld.CIT (A), who deleted the addition.

2.3 Aggrieved by order of Ld. CIT (A) revenue is in appeal before us now.

Jai Mahalaxmi Traders 3. None has appeared on behalf of assessee before us today. Considering smallness of case, we do not deem it fit to keep it pending. We are, therefore, inclined to dispose of this appeal based upon documents available with us on record, ex parte assessee.

4.

Ld. Sr. DR placed reliance upon the order of Ld.AO.

5.

We have gone through order passed by authorities below.

6.

On perusal of order passed by Ld. CIT (A), it is observed that assessee had alleged of not having received sufficient opportunity to produce books of accounts during assessment proceedings. Assessee has accordingly filed various details which was sent to Ld.AO for remand report. Ld.CIT (A) received remand report from assessing officer on 10/10/17.

7.

The issue that arises is in respect of rejection of books of account and estimation of net profit of assessee at 2% by Ld.AO. It is observed by Ld.CIT (A) that Ld.AO has made addition on the ground of non-production of books of account during course of assessment proceedings because of which trading results could not be verified. Ld.AO, thereafter, during remand proceedings on perusal of various details filed by assessee observed that assessee had done trading through Mandi Samiti. Ld. AO thereafter written letters to Mandi Samiti, who has confirmed submissions advanced by assessee. Ld.CIT (A), thus, observed that trading results declared by assessee were prima facie verifiable. Ld. CIT (A) further observed that assessee has maintained its account in view of increasing its turnover the net profit declared in year

Jai Mahalaxmi Traders under consideration was at .16% as against .2% in earlier year. He, thus, held that rejection of books of accounts by Ld. AO was unjustifiable.

8.

Ld. CIT (A) further observes from remand report of Ld. AO that appellant could not produce bills supporting the bardana expenses, loading and unloading charges which was estimated at Rs. 3 Lacs. Ld. CIT (A) thus, upheld disallowance to extent of Rs. 3 Lacs.

9.

We do not find any infirmity in the observations of Ld. CIT (A) which is supported by prima facie acceptance of the books by Ld.AO during remand proceedings. No fault has been pointed by Ld. AO in the details filed by assessee during remand proceedings. Accordingly, we uphold order of Ld. CIT (A) and dismiss the ground raised by revenue.

In the result appeal filed by revenue stands dismissed.

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