Ita/411/2011 Of Commissioner Of Income Tax Jaipur v. M/S Relaxe Rubber Products Neem K

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJAIPUR BENCH, JAIPUR. D.B.CIVIL INCOME TAX APPEAL NO. 411/2011COMMISSIONER OF INCOME TAX, JAIPUR-III,JAIPUR ...APPELLANT V E R S U S M/S RELAXE RUBBER PRODUCTS NEEM KA THANA, SIKAR...RESPONDENT Date of Judgment:- 11.11.2011 '-HONBLE MR.JUSTICE NARENDRA KUMAR JAINIHON'BLE MS.JUSTICE BELA M.TRIVEDI Mr.Sameer Jain, for the appellant BY THE COURT (PER HON. TRIVEDI J.) The present appeal has been filed bythe Revenue under Section 260A of theIncome Tax Act (hereinafter referred to asthe said 'Act') against the order dated31.10.2008, passed by the Income TaxAppellate Tribunal, Jaipur Bench 'A'Jaipur (hereinafter referred to as the'Tribunal) in ITA No. 305/JP/2008 and C.O.No. 26/JP/2008. D.B.CIVIL INCOME TAX APPEAL NO. 411/2011 2 2. The facts giving rise to the presentappeal are that the respondent Assesseefirm was engaged in the business ofmanufacturing and trading of HawaiChappals, Canvas shoes etc. The said firmwas assessed for the Asstt. Year 2004-05by the Assessing Authority, who videorder dated 28.9.2006 rejected the booksof accounts of the Assessee and made atrading addition of Rs. 14,91,017 and ofRs. 3,86,552/- in respect of Delhi Branchoffice. Assessing Officer also disallowedRs.11,27,898/-, out of the salescommission/discount and also disallowedcertain other expenses on lump sum basis.Being aggrieved by the said order, therespondent had preferred an appeal beforethe Commissioner of Income Tax(Appeals)-III, Jaipur, who vide the order dated26.11.2007 partly allowed the saidappeal. The Revenue therefore, preferredthe ITA being No. 305/JP/2008 and therespondentassesseefiledcross-objections against the said order passedby the CIT(A) before the Tribunal. TheTribunal vide order dated 31.10.2008 ,dismissed the appeal of the Revenue and partly allowed the cross-objection of therespondent assessee . The Department,therefore, has preferred the presentappeal before this Court under Section260A of the said Act. 3. It has been submitted by learnedcounsel Mr. Sameer Jain for the appellantthat CIT(A) as well as the Tribunal hadmaterially erred in law in not confirmingthe order passed by the Assessing Officerinvoking the provisions contained inSection 145(3) of the said Act, moreparticularly, when the books of accountsof the assessee were found to bedefective. Pressing into service theprovisions of Section 145(3) of the saidAct, the learned counsel submitted thatwhere the assessing officer was notsatisfied about the correctness of theaccounts of the assessee, the AssessingOfficer was required to make anassessment in the manner provided inSection 144 and that in the instant casethe Assessing Officer having invokedSection 145(3) of the said Act, on hehaving not been satisfied with the D.B.CIVIL INCOME TAX APPEAL NO. 411/2011 4 correctness of the books of accounts ofthe assessee, the CIT(Appeals) and theTribunal ought to have confirmed the saidorder of A.O. He also submitted that theTribunal had also erred in law inallowing the deduction on personal usesof various assets claimed by therespondent in its books of accounts. 4. Having considered the submissionsmade by the learned counsel for theappellant and the provisions contained inSection 145, more particularly Section145(3) of the said Act, this Court is ofthe opinion that there is no question oflaw, much less substantial question oflaw involved in the instant case. 5. It is pertinent to note that theCIT(A) while setting aside the order ofA.O. had held interalia that the turnover of the assessee had increased toover Rs. 23.10 crores in comparison tothe turnover of Rs. 19.67 crores in theprevious year and that the g.p. rate of14.99% of the relevant assessment yearwas better than the g.p. rate of 14.93% D.B.CIVIL INCOME TAX APPEAL NO. 411/20115 4. Having considered the submissionsmade by the learned counsel for theappellant and the provisions contained inSection 145, more particularly Section145(3) of the said Act, this Court is ofthe opinion that there is no question oflaw, much less substantial question oflaw involved in the instant case. 5. It is pertinent to note that theCIT(A) while setting aside the order ofA.O. had held interalia that the turnover of the assessee had increased toover Rs. 23.10 crores in comparison tothe turnover of Rs. 19.67 crores in theprevious year and that the g.p. rate of14.99% of the relevant assessment yearwas better than the g.p. rate of 14.93% D.B.CIVIL INCOME TAX APPEAL NO. 411/20115 in the previous year. It was also foundby the CIT(A) that the A.O. had notbrought any material or evidence onrecord to indicate any instance ofundisclosed purchases/sales or expensesby the assessee. The CIT(A) had alsofound that the defects pointed out byA.O. were due to the incorrectappreciation of the evidence and that theA.O. was not justified in rejecting thebooks of accounts of the assessee. TheTribunal also while confirming the orderof CIT(A) had held as under:- “Even there is no anyinstance of any undisclosedpurchase/sales/expensesmentioned in the assessmentorder .Besides above, it wasalso contended that theassessee has shown betterturnover and gross profit,hence there was no reason forthe AO to ignore the same.Considering these materialaspect of the case, we are ofthe view that even if it isaccepted for the moment thatthere was defect in the booksof account as the AO triedto, it is well establishedposition of law that pastresult of assessee is thebest guide to estimate theincome. Undisputedly, theassessee had shown betterturnover and better g.p. rateduring the year in comparisonto immediately preceding yearas discussed above. Theassessee has also met out thedefects pointed out by the A.O. Considering all thesefacts and circumstances ofthe case especially the pastresult, we are of the viewthat the ld. CIT(A) hasrightly deleted the tradingaddition and the additionmade in the income of BranchOffice against the declaredloss.” 6.The CIT(A) and the Tribunal havingconsidered the issues raised by thedepartment in detail and not foundsubstance therein, this Court is notinclined to interfere with the concurrentfinding of facts recorded by the said twoauthorities. Even otherwise there being nosubstantial question of law involved, thepresent appeal being devoid of meritsdeserves to be dismissed and isaccordingly , dismissed. (Bela M.Trivedi)J.(Narendra Kumar Jain-I)J. ij