D.b. Income Tax Appeal v. Connected With

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 190 / 2009 Commissioner of Income Tax-I,, New Central Revenue Building, Statue Circle, Jaipur Raj. ----Appellant Versus connected with M/s Kaizen Organics (P) Ltd., S-5, Windsor Plaza, S.C. Road, Jaipur. ----Respondent D.B. Income Tax Appeal No. 200 / 2009 C I T Japur ----Appellant Versus M/S Kaizens Organics Pvt Ltd ----Respondent D.B. Income Tax Appeal No. 204 / 2009 Commissioner of Income Tax-I,, New Central Revenue Building , Statue Circle, Jaipur Raj. ----Appellant Versus M/s Kaizen Organics (P) Ltd., S-5, Windsor Plaza, S.C. Road, Jaipur. ----Respondent D.B. Income Tax Appeal No. 508 / 2009 Commissioner of Income Tax-I,, New Central Revenue Building , Statue Circle, Jaipur(Raj). ----Appellant Versus M/s Kaizen Organics(P) Ltd.,, S-5, 2nd Floor, Windsor Plaza, S.C. Road, Jaipur. ----Respondent D.B. Income Tax Appeal No. 85 / 2010 Commissioner of Income Tax-I,, New Central Revenue Building , Statue Circle, Jaipur(Raj). ----Appellant Versus M/s Kaizen Organics (P) Ltd.,, S-5, 2nd Floor, Windsor Plaza, S.C. Road, Jaipur. ----Respondent _____________________________________________________ For Appellant(s) : Mr. Anuroop Singhi with Mr. Aditya VijayFor Respondent(s) : Mr. Gunjan Pathak with Ms. Ishita Rawat_____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGHJudgment Per Hon’ble Jhaveri, J. 18/05/2017 1.By way of these appeals, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal haspartly allowed the appeal filed by the assessee and dismissed theappeals preferred by the revenue. 2.This Court while admitting the appeal No.190/2009 on21.10.2009 has framed the following substantial question of law: “Whether the Tribunal was justified inmaking estimation over estimation byapplying gross profit rate of 6% on theturnover as against gross profit rate of6.5% applied by the CIT(A) and 10%applied by Assessing Officer?” 2.1. This Court while admitting the appeal No.200/2009 on 22.04.2009 has framed the following substantial question of law: “Whether the Tribunal was justified indeleting the entire addition of Rs.74,56,983made by the Assessing Officer afterapplying gross profit rate of 10% as against6.61% shown by the assessee, ignoring thefact that the books of accounts of theassessee were rejected considering the factthat the purchases made by the assesseefrom its related concern were inflated andcould not be proved?” 2.2. This Court while admitting the appeal No.204/2009 on 03.02.2010 has framed the following substantial question of law: “Whether the Tribunal was justified inmaking estimation over estimation byapplying gross profit rate of 6% on theturnover as against gross profit rate of6.5% applied by the CIT(A) and 10%applied by Assessing Officer?” 2.3. This Court while admitting the appeal No.508/2009 on 18.11.2009 has framed the following substantial questions of law: “(i)Whetherinthefactsandcircumstances of the case and in law, theTribunal was justified in on one handadmitting the deficiencies in the books ofaccounts with regard to purchases andstock and consequently upholding therejection of books of accounts underSection 145(3) of the Act and on the otherhand accepting the gross profit rate asshown by the assessee and resultantdeleting the entire trading addition ofRs.1,08,94,217/-? (ii)Whetherinthefactsandcircumstances of the case and in law, theTribunal was justified in scaling down therate of gross profit without assigning anycogent reason and ignoring the fact thatassessee has declared G.P. rate of 11.81%in assessment year 2002-2003?” 18.11.2009 has framed the following substantial questions of law: “(i)Whetherinthefactsandcircumstances of the case and in law, theTribunal was justified in on one handadmitting the deficiencies in the books ofaccounts with regard to purchases andstock and consequently upholding therejection of books of accounts underSection 145(3) of the Act and on the otherhand accepting the gross profit rate asshown by the assessee and resultantdeleting the entire trading addition ofRs.1,08,94,217/-? (ii)Whetherinthefactsandcircumstances of the case and in law, theTribunal was justified in scaling down therate of gross profit without assigning anycogent reason and ignoring the fact thatassessee has declared G.P. rate of 11.81%in assessment year 2002-2003?” 2.4. This Court while admitting the appeal No.85/2010 on 19.02.2010 has framed the following substantial questions of law: “(i)Whetherinthefactsandcircumstances of the case and in law, theTribunal was justified in on one handadmitting the deficiencies in the books ofaccounts with regard to purchases andstock and consequently upholding therejection of books of accounts underSection 145(3) of the Act and on the otherhand accepting the gross profit rate asshown by the assessee and resultantdeleting the entire trading addition ofRs.1,08,94,217/-? (ii)Whetherinthefactsandcircumstances of the case and in law, theTribunal was justified in scaling down therate of gross profit without assigning anycogent reason and ignoring the fact thatassessee has declared G.P. rate of 11.81%in assessment year 2002-2003?” 3.For the disposal of all these appeals the facts relevant aretaken from Appeal No.190/2009 and are that the assessee derivesincome from manufacture and trading of menthol crystal, papermint oil and other essential oil. The assessee declared the grossprofit rate of 5.83%. The assessee was asked to justify thepurchases made by it, day to-day stock record, production record,fall in gross profit rate, etc., which it failed to do and thus theAssessing Officer rejected the books of accounts and estimatedthe profit at 10% resulting into an addition of Rs.1,42,52,342/-.3.1. Being aggrieved by the assessment order dated 28/03/2006,the assessee preferred an appeal before the Commissioner ofIncome Tax (Appeals) hereinafter referred to as the CIT(A). TheCIT(A) upheld the rejection the books of accounts, however applied the gross profit rate of 6.5% as against 10% applied byAssessing Officer and consequently confirmed the addition ofRs.14,22,956/-. Against the said order dated 21/03/2007, thedepartment as well as assessee both preferred appeals before thelearned Tribunal. 3.2. The Tribunal decided both the appeal by a common orderand applied gross profit rate of 6%. The order under challenge inthe present appeal was registered as ITA No. 676/JP/07 passed indepartment’s appeal, which was dismissed by the Tribunal. 4.Taking into consideration the fact even prior to establishmentof the factory by the principal company at Assam, the gross profitof the assessee has been applied at 6%. 5.In our considered opinion, the view taken by the Tribunal inapplying 6% gross profit on the basis of the gross profit ofprevious year is just and proper and no interference in the orderof the Tribunal is called for. The earlier year also the same profitwas accepted by the Tribunal. 6.In that view of the matter, the appeals stand dismissed.7.A copy of this order be placed in each file.7.A copy of this order be placed in each file. (INDERJEET SINGH),J. (K.S. JHAVERI),J. Asheesh Kr. Yadav/57-61