IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: `F', NEW DELHI
BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER
AND
SH. O.P. KANT, ACCOUNTANT MEMBER
ITA No.2323/Del/2018
Assessment Year: 2013-14
Sh. Rajeev Kumar Jain, Vs. Pr. CIT,
M/s. Parasmani Marketing Muzaffarnagar, Saharnpur
Company, More Ganj,
Saharanpur, UP
PAN :ABQPJ2955G
(Appellant) (Respondent)
Appellant by Sh. Anil Kumar Jain, Adv.
Respondent by Sh. Surender Pal, Sr.DR
Date of hearing 22.10.2018
Date of pronouncement 28.11.2018
ORDER
PER O.P. KANT, AM:
This appeal by the assessee is directed against order dated
13/03/2018 passed by the Ld. Principal Commissioner of Income
Tax, Meerut [in short the `Ld. PCIT' ] for assessment year 2013-14
under section 263 of the Income-tax Act, 1961 (in short `the Act')
holding the order passed by the Assessing Officer under section
143(3) of the Act as an erroneous insofar as prejudicial to the
interest of the Revenue. The grounds of appeal raised by the
assessee are reproduced as under:
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1. The Ld. Pr. CIT has erred in cancelling the assessment order
u/s 143(3) dated 30.10.2015 passed by Assessing Officer
and thereby ordering fresh assessment and has erred in
holding that the order of the AO is erroneous and prejudicial
to the interest of revenue ignoring the fact that all the issues
has duly been replied and considered during the assessment
state.
2. The order of the Ld. CIT is against law and facts of the case.
3. The appellant craves the right to add, amend or withdraw
any grounds of appeal at the time of hearing.
2. Briefly stated facts of the case are that the assessee, an
individual derives income from trading of edible oils and for the
year under consideration, filed return of income on 21/09/2013
declaring total income of Rs.11,87,210/-. The assessment under
section 143(3) of the Act was completed on 30/10/2015 after
making trading addition of Rs.1,41,657/- and disallowance of
Rs.1,50,000/- out of various expenses like conveyance, travelling,
repair and maintenance, telephone etc. Subsequently, the Ld.
PCIT called for the record and after examination of the records of
observed that the assessment was completed without examining
the case properly. According to the PCIT the Assessing Officer
should have completed the assessment after examining the
quantitative details of the items traded by the assessee and he
should have applied the gross profit rate after rejecting the books
of accounts of the assessee. Accordingly, invoking the section 263
of the Act, he held the assessment order passed as erroneous
insofar as the judicial to the interest of the Revenue. Aggrieved,
the assessees is in appeal before the Tribunal, raising the
grounds as reproduced above.
3. Before us, the Ld. counsel of the assessee filed a paper book
containing pages 1 to 22, which included details of purchases,
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sales and VAT annual assessment order. He Submitted that the
quantitative details of items traded was asked by the Assessing
Officer in the notice dated 27/01/2015 at point No.16 and same
was filed before the Assessing Officer alongwith VAT order.
According to Ld. Counsel, reply in this respect was submitted
before the ld. PCIT, however he ignored the submission of the
assessee. Further, on the issue of gross profit rate, the Ld.
counsel submitted that the gross profit rate of 1.03 % declared by
the assessee was found on lower side by the Assessing Officer,
and he applied the gross profit rate of 1.062%, which was applied
by the Assessing Officer in the immediately preceding assessment
year 2012-13. In view of the submission, the Ld. counsel
submitted that there might be error in not rejecting books of
accounts, however there is no Revenue loss and thus order is not
prejudicial to the interest of the Revenue. He submitted that twin
conditions of erroneous insofar as prejudicial to the interest of the
revenue are not fulfilled simultaneously and thus the Ld. P CIT is
not correct in setting aside the assessment order passed by the
Assessing Officer.
4. On the other hand, Ld. DR relied on the order of the PCIT
and submitted that the action of the Assessing Officer rejecting
the gross profit rate of the assessee and applying the gross profit
rate adopted in immediately preceding year, without rejecting
books of accounts is clearly erroneous. According to him, the Ld.
PCIT is justified in setting aside the assessment order.
5. We have heard the rival submissions and perused the
relevant material on record. For invoking jurisdiction under
section 263 of the Act, the Ld. PCIT was required to insure
existence of the twin conditions of the order to be erroneous as
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well as prejudicial to the interests of the revenue. In the instant
case, the assessee declared gross profit of Rs.39,64,769/- on the
sales of Rs.38,66,69,918/- which resulted into gross profit rate of
1.03%. The Assessing Officer found this gross profit rate being
lower than the gross profit rate of 1.10% declared in assessment
year 2011-12. The Assessing Officer noticed that in the
immediately preceding assessment year also the gross profit rate
declared by the assessee was found to be 1.01% and the
Assessing Officer applied gross profit rate of 1.062%. Accordingly,
for the year under consideration, also the Assessing Officer
applied the gross profit rate of 1.062% on the sales declared
during the year into consideration and made the addition of
Rs.1,41,657/-. Though the Assessing Officer missed to reject the
books of accounts, but even had Assessing Officer rejected the
books of accounts and thereafter applied the gross profit rate of
1.062%, the net addition would have remained the same and thus
as far as the Revenue is concerned, no prejudice has been
caused. The order cannot be the said as prejudicial to the interest
of the Revenue.
6. Further, the contention of the PCIT that the Assessing
Officer has not examined the quantitative details of the items
traded, is concerned, we find that this finding of the Ld. PCIT is
not correct. In para 4 of the impugned order, the PCIT has
reproduced the submission of the assessee. According to the
submission, it is clear that the Assessing Officer called for the
quantitative details of the items traded vide point No. 16 of his
notice dated 27/01/2015 and the assessee also submitted said
details along with order of value added tax (VAT) authorities. The
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assessee has filed copy of details of purchase and sales before us
also.
7. In view of the aforesaid discussion, we are of the opinion
that the twin conditions of order being erroneous as well as
prejudicial to the interest of the Revenue have not been satisfied
simultaneously and, thus, the action of the Ld. PCIT in setting
aside the order of the Assessing Officer is not justified and
accordingly we cancel the same. The ground of the appeal of the
assessees are accordingly allowed.
8. In the result, the appeal of the assessees allowed.
Order is pronounced in the open court on 28th November, 2018.
Sd/- Sd/-
AMIT SHUKLA O.P. KANT
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 28th November, 2018.
RK/-(D.T.D.)
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar, ITAT, New Delhi
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