Anil Kumar Garg v. Dy Commissioner Of Income Tax

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 787 / 2008 Anil Kumar Garg ----Appellant Versus Dy Commissioner Of Income Tax ----Respondent _____________________________________________________ For Appellant(s) : Mr. Ajay Gupta For Respondent(s) : Mr. K.D. Mathur for Mr. R.B. Mathur _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE DR. JUSTICE VIRENDRA KUMAR MATHURJudgment 02/06/2017 1.By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal hasallowed the appeal of the Department and finding of the CIT(A)was reversed. 2.While admitting the appeal, this Court framed the following substantial question of law: “(1) Whether in the facts and circumstances of the case,the learned ITAT was justified in confirming the addition of Rs. 44,69,740/- in manufacturing and trading result? (2) Whether in the facts and circumstances of the case,the learned ITAT was justified in confirming the rejection ofbooks of accounts by invoking provisions of Section 145(3) of the Income Tax Act, 1961 and that too in thecircumstances when the maintenance of total weight stockregister is not under dispute?” 3.Counsel for the appellant Mr. Ajay Gupta, has taken as to the order of CIT (A) in Para 2.1 and 2.3, which reads as under: “02-1 bl laca/k esa fu-vk- dk voyksdu fd;k x;k ,oa ik;kfd vihykFkhZ ewY;oku iRFkjksa ¼tse LVksUl½ dh izkslsflax dj]fu;kZr djus dk O;kikj djrk gSA vihykFkhZ us rqyukRedO;kikfjd ifj.kke bl izdkj n’kkZ, gSa%& A.Y.TurnoverGPGP rateExport LocalTotal1998- 1545721380922 727738134.06%1999-0021914985 021914985 671365630.63%2000-0142323928 042323928 13672847 32.31%2001-0241970288 041970288 910045921.68% fu-v- us ;g ik;k fd vihykFkhZ ds ekeys esa fiNys o"kZ dhrqyuk esa ldy ykHknj esa 10-63 izfr’kr dh fxjkoV vkbZ gS]tks vlekU; gS ,oa mfpr ugha gSA bl ckjs esa vihykFkhZ uslaoh{kk ds nkSjku crk;k fd ldy ykHknj dks izHkkfor djusokys cgqr ls rF; O;kikj esa gksrs gSa] tks jktuSfrd o vkfFkZdnksuksa izdkj ds gksrs gSA blds vfrfjDr varjkZ"Vªh; cktkj esac<+rh izfr;ksfxrk] o phu o gkaxdkax dk eky de etnwjh dsdkj.k lLrk feyuk] ekuoh; dyk o n{krk ls eky rS;kjgksus ls fu’pr ewY; dk ugha gksus ls ykHk dh lhek dkfu/kkZj.k ugha fd;k tk ldrkA dPps eky ds nkeksa esa o`f)gksuk o rS;kj eky ds ewY; esa fxjkoV gksuk vkfnA fu-v- uscgh[kkrksa esa tkap esa ik;k fd fuekZ.k jftLVj ugha j[kk x;kgS] ftlls fd mi;ksx fd, x, eky dh ek=k dk lR;kiuugha gks ldrkA blfy, fu-v- us /kkjk 145¼3½ dk mi;ksxfd;kA fu-v- us bl laca/k esa fcfVª’k isaVl bafM;k fy-] 188vkbZVhvkj 44 ¼mPpre U;k;ky;½ rFkk fcØh dj vk;qDrcuke ,p- blq,Q- vyh, ,p- ,e- vCnqy vyh 90 vkbZVhvkj271 ¼mPpre U;k;ky;½ ds fu.kZ;ksa dk lgkjk fy;kA fu-v- us:- 4]20]00]000 dh fcØh vuqekfur djrs gq, 32-31 izfr’krldy ykHknj vkjksfir dj :-4469740 dh O;kikfjd vk; esao`f) dhA 02-3 eSaus nksuks ikfVZ;ksa ds rdksZa dk xgurkiwoZd v/;;ufd;k ,oa ik;k fd fu-v- us cgh[kkrksa dh tkap dh gS rFkk fu-v- us cgh[kkrksa esa ,slh dksbZ fo’ks"k folaxfr ntZ ugha dh gS]ftlls fd cgh[kkrksa dks fo’oluh; ugha ekuk tk lds] dsoyLVkWd jftLVj ugha j[ks tkus ds vk/kkj ij gh cgh[kkrksa dksfujLr fd;k tkuk mfpr ugha ekuk tk ldrkA bldsvfrfjDr ;g Hkh ,d fufoZokfnr rF; gS fd dsoy de ldyykHknj n’kkZ, tkus ds vk/kkj ij ;k LVkWd jftLVj ughaj[kkrs tkus ds vk/kkj ij gh /kkjk 145¼3½ ds izko/kkuksa dkmi;ksx ugha fd;k tk ldrk] tc rd cgh[kkrksa esa dksbZfof’k"V folaxfr ugha ikbZ tk,A blds vfrfjDr udn esaNksVh&NksVh [kjhn ds rF; ls Hkh O;kikj dh izd`fr dks ns[krsgq, loFkkZ vuqfpr ugha dgh tk ldrhA blfy, ekuuh;dydRrk mPp ds v’kksd fjQzsDVjht izk- fy- cuke vk;djvk;qDr] ¼2005½] 148 VsDlesu 635 ,oa ekuuh; vk;djvihyh; U;k;k/khdj.k] t;iqj csap ds vk;dj vf/kdkjh cukejktLFkku QhM feYl] ds fu.kZ; dk llEeku vuqlj.k djrsgq, rFkk ekuuh; jktLFkku mPp U;k;ky; ds vk;dj vk;qDrcuke xkSVu ykbe [kfut m?kksx] 256 vkbZVhvkj 243ftlesa /kkjk 145¼3½ ds mi;ksx djus dk rkRi;Z vk; esa o`f)djuk ugha ekuk x;k gS] dk llEeku vuqlj.k djrs gq, fu-v- }kjk /kkjk 145¼3½ ds mi;ksx fd, tkus dks vLohdkj fd;ktkrk gSA blds vfrfjDr fo-v- ds bl rdZ esa Hkh out gS fdjaxhu tse LVksu ds O;kikj esa fiNys o"kZ ds eqdkcys fxjkoVvkbZ gS tSlk fd vihy dh lquokbZ ds nkSjku is’k fd, x,tse ,aM Tosyjh bZ;j cqd 2000&01 esa izdkf’kr vkadMs] tseoYMZ esxthu okWY;w XXIX uacj 3 vizsy] 2001 esa izdkf’krfjiksVZ tks fd vihy dh lquokbZ ds nkSjku is’k fd, x, dsv/;;u ls tkfgj gksrk gS fd jaxhu tse LVksu ds O;kikj esadeh vkbZ gSA blds vfrfjDr fu-v- ds ikl ,slk dksbZ vk/kkjugha jgk gS] ftlds vk/kkj ij n’kkZbZ xbZ fcØh :- 41970289ds LFkku ij :-4]20]00]000 vkadh tk ldsA blfy, fu-v*fcØh esa dh xbZ o`f) dks vLohdkj fd;k tkrk gS ,oafcØh :-41970289 dh ekuh tkus dks mfpr ekuk tkrk gSAtgka rd vihykFkhZ ds ekeys esa dh xbZ o`f) :- 4469740 dkiz’u gS] fu-v- }kjk dh xbZ fcØh esa o`f) ,oa /kkjk 145¼3½ dsmi;ksx dks mfpr ugha ekuk x;k gS] blfy, vihykFkhZ dh vk; esa o`f) :-4469740 dks mfpr ugha ekuk tkrk ,oa gVk;ktkrk gSA 4.In view of the peculiar facts of that particular year when theprice of stone fall and after considering the CIT(A), the Tribunalhas observed as under: “fo-v- us ldy ykHknj esa fxjkoV ds ckjs esa rdZ fn;k fdfu-v- dks laoh{kk ds nkSjku mfpr Li"Vhdj.k fn;k x;k Fkk]ijUrq fu-v- us fu/kkZfjrh ds Li"Vhdj.k dks utjvankt djrsgq, ldy ykHknj esa o`f) dh gS] tks mfpr ugha gSA vihydh lquokbZ ds nkSjku fo-v- us tse ,aM Tosyjh bZ;j cqd2000&01 esa izdkf’kr vkadMs+ izLrqr djrs gq, crk;k fd o"kZ1999&00 ls 2000&01 dh vof/k esa jaxhu tse LVksu dsO;kikj esa fxjkoV vkbZ gS] tks fd ¼&½ 0-76 ls ¼&½ 10-16izfr’kr rd dh fxjkoV vkbZ gS rFkk vihykFkhZ Hkh jaxhu tseLVksu dk fu;kZr dk O;kikj djrk gS] blfy, vihykFkhZ dhldy ykHk nj esa fxjkoV vkuk LokHkkfod gSA fo-v- us blhizdkj tse oYMZ esxthu okWY;w XXIX uacj 3 vizsy] 2001 dhizfr is’k dj crk;k fd Hkkjr esa jaxhu jRuksa ds O;kikj esa 13-85 izfr’kr dh fxjkoV vkbZ gSA blh izdkj crk;k fd viszyls fnlacj 2001 dh vof/k esa Hkkjr ls 118-30 fefy;uvesjhdh Mkyj ds jaxhu jRuksa dk fu;kZr gqvk gS] tcfdfiNys lky blh vof/k esa 128-39 fefy;u vesjhdh Mkyj dsjaxhu jRuksa dk fu;kZr fd;k x;k FkkA” 5.He contended that without taking into considerationobservations of CIT(A), the Tribunal has reversed the finding ofCIT(A), therefore the matter deserves to be allowed and questionsare to be answered in favour of the assessee. 6.Counsel for the respondent Mr. K.D. Mathur, has taken us tothe order of Tribunal in paragraph 3, where it observed as under: “No comparable case has been brought on record forestimation of income. Therefore in such circumstancesand facts of the case the past year’s results inestimation of income. Therefore in such circumstancesand facts of the case the past year’s results in 5.He contended that without taking into considerationobservations of CIT(A), the Tribunal has reversed the finding ofCIT(A), therefore the matter deserves to be allowed and questionsare to be answered in favour of the assessee. 6.Counsel for the respondent Mr. K.D. Mathur, has taken us tothe order of Tribunal in paragraph 3, where it observed as under: “No comparable case has been brought on record forestimation of income. Therefore in such circumstancesand facts of the case the past year’s results inestimation of income. Therefore in such circumstancesand facts of the case the past year’s results in assessee’s own case are the best guide which hasrightly been followed by the AO. The ld. CIT(A) is notjustified in reversing the decision of the AO. Theapplication of decision of Hon’ble High Court ofRajasthan in the case of Gotan Lime Khaniz Udyog 256ITR 243 by the ld. CIT(A) is not applicable in thepresent circumstances and facts of the case where theld. CIT(A) on one hand does not uphold the applicationof section 145 (3) of the Act and on the other handapplies the decision of Hon’ble jurisdictional High Courtin the case of Gotan Lime Khaniz Udyog (supra) andthat too without any basis. The explanation given bythe assessee is general and no material or cogentexplanation has been brought on record for fall in thegross profit as compared to be immediate precedingyear and therefore the decision of the ld. CIT(A) isreversed on this issue and we find no infirmity in theorder of AO who has rightly estimated the income ofapplying the gross profit as in the preceding year andhas rightly made the trading addition of Rs.44,69,740/-. Thus ground No. 1,2 and 3 of the revenueare allowed.” 7.He has contended that the Tribunal while considering the case has reverted the matter back to AO and AO while consideringthe matter in detail and taking into consideration all the groundswhich are reproduced as under: “1) The level of competition in the International marketincreased severely particularly by development ofmanufacturing and marketing facilities in China andHong Kong associated with cheap and more efficientChinese labour. 2) Because of over all international recessionaryconditions, the export of coloured gem stones i.e. semiprecious gem stones from the country starteddownward during the year. 3) The assessee is a dealer of handicraft goods(processed semi precious gem stones) made by use ofhuman art and skill and thus no standard price andmargin can be assigned to it and therefore gross marginin bound to fluctuate. 4) During the year under consideration, inspite ofrecession in the global market the price of raw materialand finished, semi precious stones in the local marketdid not see any reduction either in terms of value or interms of labour rates largely due to demand created bythe new local small exporters. 5) The strength of the local currency vis-a-vis foreign currency is also an important factor in determining thesale value and gross margin”. 8. Thereafter the AO decided all the questions and observed as under: “In view of the above discussion and considering thetotal turnover & G.P. declared by the assessee during theproceedings F.Y., the sales are estimated at Rs.4,20,00,000/-. Since the total turnover of the Assesseeduring the year under consideration is similar toproceeding P.Y., as such G.P. rate of P.Y. i.e. 32.31% isapplied during the year under consideration forestimating the profits. Thus, on applying the G.P. rate of32.31% on estimated sales of Rs. 4,20,00,000/- theGross Profit has been worked out at Rs. 1,35,70,200/-thereby making a trading addition of Rs. 44,69,740(Rs.1,35,70,200-Rs. 91,00,460/-) to total income of theassessee. Since the assessee has concealed the trueparticulars of its income to this extent, as such penaltyu/s 271(1)(c) of the IT Act, 1961 are leviable in his case.” 9.In our considered opinion observations of CIT(A) is attractive but not according to law and view taken by the Tribunal is requiredto be accepted. 10.Both the issues are answered in favour of the Departmentand against the assessee. 11.The appeal stands dismissed. (VIRENDRA KUMAR MATHUR),J. (K.S. JHAVERI),J. Ashu/10