Krishna Gupta v. Asst. Commissioner of Income T

V. B. GUPTA, J.

April 07, 2008

MADAN B. LOKUR, J. Bisht

* HIGH COURT OF DELHI : NEW DELHI ITA No.553 of 2004 % Judgment reserved on: 25th March, 2008 Judgment delivered on:7th April, 2008 MRS. KRISHNA GUPTA Prop.Studio Saket C-269, Hauz Rani Market, Malviya Nagar, New Delhi. .....Appellant. Through: Mr.A.K.Babbar with Mr.Surender Kumar, Advs. Vs. THE ASST.COMMISSIONER OF INCOME TAX Investigation Circle, 20(1), New Delhi. ..... Respondent Through: Mr.R.D.Jolly, Adv. Coram: HON'BLE MR. JUSTICE MADAN B. LOKUR HON'BLE MR. JUSTICE V.B. GUPTA 1. Whether the Reporters of local papers may be allowed to see the judgment? Yes 2. To be referred to Reporter or not? Yes 3. Whether the judgment should be reported in the Digest? Yes V.B.Gupta, J. Present appeal has been filed by the Assessee against the impugned order dated 12th February, 2004 passed by Income Tax Appellate Tribunal, Delhi Bench "C" (for short as "Tribunal") in ITA No.145/Del/1998 relevant for the assessment year 1992-93. 2. The short facts relevant for the disposal of this appeal may be summed up as under that the Assessee was running a Proprietary Business under the name and style Studio Saket dealing in photographic films and still photography. During the impugned assessment year, the Assessee had declared its gross profit at 1.5% on the sale of photographic films at Rs.8,98,56,016 to its registered dealers. 3. During the course of assessment proceedings, the Assessing Officer issued summons under Section 131 of the Income Tax Act, 1961 (for short as "Act") to the aforesaid registered dealers to whom the sales were made requiring them to appear along with the books of accounts, supporting bills, vouchers, bank pass books etc., but the summons received back unserved as the respective parties were not in existence at the given addresses. The Assessee was, therefore, asked to produce these parties and also to furnish copies of the ledger accounts of these parties, bank statements, month-wise purchase and sales. It was, however, contended that the Assessee made these sales to the registered dealers in cash. 4. The Assessing Officer observed that the large amount of cash advance had been taken on various occasions from these registered dealers and sales had also been effected on credit for which the payments were received later. He was, therefore, of the opinion that the registered dealers were well-known to the Assessee or to her sons, who were looking after the business. 5. The Assessing Officer also took cognizance of the assessment proceedings for the assessment year 1989-90 in which verification of registered dealers was done and the sales tax authorities had informed that the registered dealers were not in existence and their assessments had been completed ex-parte. 6. As the Assessee failed to produce the registered dealers and copies of their ledger accounts and quantitative details of the goods, the Assessing Officer proceeded to analyze the information whatever was available on record. 7. Thus, in the light of the available information, the Assessing Officer concluded that the Gross Profit declared at 1.5% was wholly unreliable and the registered dealers were either the bogus concerns of the Assessee"s or the goods were actually sold at a premium in the market. He accordingly rejected the books of accounts and estimated the Gross Profit rate of 10% of turnover resulting into an addition of Rs.75,32,104/-. 8. The Assessee preferred appeal before the Commissioner of Income Tax (Appeals) [for short as CIT(A)]. The CIT(A) re-examined the issue in the light of these facts and material available on record and arrived at a conclusion that the Assessee had declared the Gross Profit rate at 4.3% for the first 11 months of the accounting year and for the month of March, 1992 the gross profit was declared to 1.5% for which no justification was furnished. He, therefore, re-estimated the Gross Profit rate at 5% for the entire year and re-determined the Gross Profit at Rs.44,42,575/- resulting into an addition of Rs.30,80,502/-. 9. Thi