D.b. Income Tax Appeal v. M/S. Brijesh Woollen Industries Pvt. Ltd

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHANAT JAIPUR BENCH, JAIPUR D.B. Income Tax Appeal No.437/2009Commissioner of Income Tax, Jaipur-II, Jaipurvs. M/s. Brijesh Woollen Industries Pvt. Ltd. 11.05.2012 HON'BLE THE CHIEF JUSTICE MR. ARUN MISHRA'HONBLE 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 dated30.01.2009 passed by Division Bench of the Income TaxAppellate Tribunal, Jaipur Bench 'B', Jaipur (hereinafter referredto as the 'ITAT') in I.T.A. No.1223/JP/2008 for assessment year2005-06. The ground raised by the appellant in the appeal is thatAssessing Officer has rightly rejected the books of accounts byinvoking provisions of Section 145(3) of the Income Tax Act andhas rightly made trading addition of Rs.15,10,658/-. It hasbeen wrongly laid down by CIT(A) in its order dated 23.05.2008that the order of Assessing Officer is not justified, which hasbeen affirmed by the ITAT. Aggrieved by the same, the appealhas been preferred by the revenue. Mr. R.B. Mathur, learned counsel for the appellant-revenue has submitted that rejection of books of accounts hasrightly been made by the Assessing Officer as no separaterecord was maintained and no separate stock register wasmaintained quality and quantitywise. After hearing learned counsel for the appellant-revenuewe find no merit in the submission raised by the learned counselfor the appellant. From the copy of letter dated 17.10.2007,which has been relied upon, given to the Assessing Officer it isapparent that the date-wise stock particulars for raw wool andwoolen carpet yarn has been furnished; the finding of factrecorded by Assessing Officer has been found to be factuallyincorrect by the CIT(A). Assessee has also relied upon letterdated 30.04.2008 issued by the Krishi Upaj Mandi Samiti inwhich it was mentioned that since the wool was produced fromsheep in raw form and therefore, there is no grading orstandardization thereof. Thus, the other grounds employed bythe Assessing Officer has also been found untenable. It is alsofound that raw material was more or less of same quality.There was no question of maintaining any qualitywise stockdetails. It has also been found that the Assessing Officer wasnot justified in rejecting the books of accounts invokingprovisions of Section 145(3) of the Income Tax Act and anaddition of Rs.15,10,658/- has wrongly been made by adopting higher G.P. rate of 17%. It has also been found by CIT(A) thatthere was no evidence of any unaccounted sale of inflatedpurchases. Following reasons have been assigned by the CIT (A): higher G.P. rate of 17%. It has also been found by CIT(A) thatthere was no evidence of any unaccounted sale of inflatedpurchases. Following reasons have been assigned by the CIT (A): “(1.3) I have considered facts of the case andarguments taken by Sh. Jain quite carefully. It isseen that the predominant reason for rejection ofbooks of accounts by invoking provisions of S.145 ofthe I.T. Act by A.O. was that no separate recordwere maintained and no stock register wasmaintained quality and quantity wise. However,from the copy of letter dated 17.10.2007 given to theassessing officer alongwith which date wise stockparticulars for raw wool and woolen carpet yarn hasbeen furnished, the finding of particulars for rawwool and woolen carpet yarn has been furnished, thefinding of assessing officer is found factuallyincorrect. I have also gone through the copy of theletter dated 30.4.2008 issued by Krishi Upaj MandiSamiti Kekri in which it was clarified that since thewool is produced from sheep in raw form andtherefore there is no grading or standardizationthereof. From this certificate it is clear that as far ashis raw material is concerned, it is of more or lesssame quality. Further, I have also gone through afew sell bill wherein in the description of goodswoolen carpet yarn has been shown without anyspecific and separate quality thereof. Under thesecircumstances, there is no question of maintainingany qualitywise stock details. Since, the defectspointed out by A.O. does not survive at all and thereis no other serious deficiency in the books ofaccounts maintained by the appellant companytherefore, in my considered view the assessingofficer was not justified in rejecting books ofaccounts by invoking provisions of S.145 of I.T. Act.When books of accounts are upheld and rejection byA.O. is not approved then there is no question ofmaking any trading addition on adoption of higherG.P. rate since, there is no evidence of anyunaccounted sale of inflated purchases. Withoutprejudice to this in comparable case of M/s GanpatiWoolen Mills Pvt. Ltd. the trading sale was merely of Rs.7,52,114/- while there was job work received ofRs.28,90,165/- and therefore, that case cannot beheld as comparable case. Further, this is a first yearof the appellant and therefore, consideringcomparative better yield by the appellant vis-a-visfew other comparable cases given by Sh. Jain inappellate proceedings and considering variousjudicial decisions relied upon by Sh.Jain the tradingaddition made by A.O. of Rs.15,10,658/- by adoptinghigher G.P. rate of 17% is not sustainable and thesame is hereby deleted. On this account theappellant gets a relief of Rs.15,10,658/-.” The order of CIT(A) has been affirmed by the ITAT inview of the fact that date-wise stock particulars for raw wooland woolen carpet yarn has been submitted before theAssessing Officer and letter of Krishi Upaj Mandi Samiti has alsobeen relied upon, from which it is clear that there was nograding or standardization. The quality of raw material wasmore or less the same. The finding of fact which has beenrecorded concurrently by the CIT(A) as well as ITAT, is notshown to be perverse or could not have been reached in view ofthe documents on record. Thus, we find that no substantialquestion 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. MohitS/4All corrections made in the judgment/order have been incorporated in thejudgment/order being emailed./Mohit Tak, Jr. P.A.