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

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHANAT JAIPUR BENCH, JAIPUR D.B. Income Tax Appeal No.522/2009Commissioner of Income Tax, Jaipur-II, Jaipurvs. M/s. Brijesh Woollen Industries 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 dated20.03.2009 passed by Division Bench of the Income TaxAppellate Tribunal, Jaipur Bench, Jaipur (hereinafter referred toas the 'ITAT') in I.T.A. No.1446/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.27,19,832/-. It hasbeen wrongly laid down by CIT(A) in its order dated 06.08.2008that 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. ITA-522/2009 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 dated17.10.2007/14.12.2007, which has been relied upon, given tothe Assessing Officer it is apparent that the date-wise stockparticulars for raw wool and woolen carpet yarn has beenfurnished; the finding of fact recorded by Assessing Officer hasbeen found to be factually incorrect by the CIT(A). Assesseehas also relied upon letter dated 30.04.2008 issued by the KrishiUpaj Mandi Samiti in which it was mentioned that since thewool was produced from sheep in raw form and therefore, thereis no grading or standardization thereof. Thus, the othergrounds employed by the Assessing Officer has also been founduntenable. It is also found that raw material was more or lessof same quality. There was no question of maintaining anyqualitywise stock details. It has also been found that theAssessing Officer was not justified in rejecting the books ofaccounts invoking provisions of Section 145(3) of the IncomeTax Act and an addition of Rs.27,19,832/- has wrongly been made by adopting higher G.P. rate of 17%. It has also beenfound by CIT(A) that there was no evidence of any unaccountedsale of inflated purchases. Following reasons have beenassigned by the CIT(A): made by adopting higher G.P. rate of 17%. It has also beenfound by CIT(A) that there was no evidence of any unaccountedsale of inflated purchases. Following reasons have beenassigned by the CIT(A): “(1.3) I have considered facts of the case andarguments taken by Sh. Jain quite carefully. It isseen that the main reason to reject books ofaccounts was non maintenance of day to dayquantity details quality-wise. However, from thecopy of letter dated 17.10.2007/ 14.12.2007addressed to assessing officer it is clear that day today quantity details were produced before A.O. forverification and therefore, prima-facie the finding ofassessing officer is not factually correct. Further, itcould not be established by the A.O. that theappellant was dealing in different qualities andtherefore, it cannot be considered as defect thatquality wise quantity details were not maintained.Finished goods stock register maintained on day today basis was also produced before the A.O. on03.10.2007. Under these circumstances, there is noquestion of non maintenance of the quality detailsfor the raw material and furnished goods and thedefects pointed out by A.O. does not exist at all andtherefore, 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 rejectable then there isno question of making any trading addition byadopting higher G.P. rate particularly when there isno evidence of any unaccounted sale or inflatedpurchase. Further, Sh. Jain has clarified that howthe activities of the appellant were material differentfrom M/s Ganpati Woolen Mills Pvt. Ltd. andtherefore, that case cannot be held as comparablecase. Further, the various factors of income &expenditure with comparative analysis as given bySh.Jain proves that how G.P. shown by appellant waslower as compared cases quoted by A.O. and howsuch disclosed G.P. is reasonable and justified. Withthis discussion in my considered view the assessingofficer was not justified in making said tradingaddition of Rs.27,19,832/- which is hereby deleted.” 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. Thesame is hereby dismissed in limine. (NARENDRA KUMAR JAIN-I),J. (ARUN MISHRA),C.J. MohitS/3All corrections made in the judgment/order have been incorporated in thejudgment/order being emailed.Mohit Tak, Jr. P.A.S/3All corrections made in the judgment/order have been incorporated in thejudgment/order being emailed.Mohit Tak, Jr. P.A.