Shri Chirag J Agrawal, GANDHIDHAM v. The Income Tax Officer, Ward-1, GANDHIDHAM

CO 49/RJT/2010 | 2005-2006
Pronouncement Date: 30-09-2011 | Result: Dismissed

Appeal Details

RSA Number 4924923 RSA 2010
Assessee PAN ABTPA7726P
Bench Rajkot
Appeal Number CO 49/RJT/2010
Duration Of Justice 10 month(s) 13 day(s)
Appellant Shri Chirag J Agrawal, GANDHIDHAM
Respondent The Income Tax Officer, Ward-1, GANDHIDHAM
Appeal Type Cross Objection
Pronouncement Date 30-09-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 30-09-2011
Date Of Final Hearing 29-09-2011
Next Hearing Date 29-09-2011
Assessment Year 2005-2006
Appeal Filed On 16-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE SHRI D.K. TYAGI (JM) AND SHRI A.L. GEHLOT (A M) I.T.A. NO.1188/RJT/2010 (ASSESSMENT YEAR 2005-06) ITO WD.1 VS SHRI CHIRAG J AGRAWAL GANDHIDHAM DBZ-N-99 GANDHIDHAM (KUTCH) PAN : ABTPA7726P (APPELLANT) (RESPONDENT) C.O. NO.49/RJT/2010 (ARISING OUT OF I.T.A. NO.1188/RJT/2010) (ASSESSMENT YEAR 2005-06) SHRI CHIRAG J AGARWAL VS THE ITO WD.1 GANDHIDHAM GANDHIDHAM (CROSS OBJECTOR) (RESPONDENT) DATE OF HEARING : 29-09-2011 DATE OF PRONOUNCEMENT : 30-09-2011 REVENUE BY : SHRI MK SINGH ASSESSEE BY: SHRI JC RANPURA O R D E R PER BENCH THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF CIT(A)-II RAJKOT DAT ED 28-06-2010 FOR THE ASSESSMENT YEAR 2005-06. 2. EFFECTIVE GROUNDS RAISED BY THE REVENUE READS AS BELOW: ITA NO.1188/RJT/2010 2 1. THE LD.CIT(A)-II RAJKOT HAS ERRED IN LAW AND O N FACTS OF THE CASE IN DELETING THE ADDITION OF RS.9 00 000/- MADE BY THE AO ON ACCOUNT OF UNSECURED LOAN U/S 68 OF TH E ACT. 2. THE LD CIT(A)-II RAJKOT HAS ERRED IN LAW AND ON FACTS OF THE CASE IN RESTRICTING THE DISALLOWANCE OUT OF TRI P ADVANCES TO RS.1 92 670/- ON AS AGAINST ORIGINAL DISALLOWANCE OF RS.3 85 340/-. 3. THE LD CIT(A()-II RAJKOT HAS ERRED IN LAW AND O N FACTS OF THE CASE IN DELETING THE DISALLOWANCE OF DEPRECI ATION AMOUNTING TO RS.5 93 611/- MADE BY THE ASSESSING OFFICER. 4. THE LD CIT(A)-II RAJKOT HAS ERRED IN LAW AND ON FACTS OF THE CASE IN RESTRICTING THE DISALLOWANCE OUT OF TEL EPHONE EXPENSES OF RS.4 810/- MADE BY THE ASSESSING OFFICE R. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RUNNI NG A PETROL PUMP. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OF FICER NOTICED THAT THE ASSESSEE TOOK LOAN OF RS.9 LAKHS FROM ONE M/S ANAN D CARRIER AS PER THE ASSESSING OFFICER THE ASSESSEE FAILED TO FURNISH T HE RELEVANT INFORMATION. THEREFORE HE MADE THE ADDITION OF RS.9 LAKHS. THE CIT(A) AFTER CONSIDERING ASSESSEES SUIBMISSION DELETED THE ADD ITION ACCEPTING THE ASSESSEES CONTENTION THAT THE CHEQUE OF RS.9 LAKHS GOT BOUNCED. HOWEVER WHILE DEPOSITING THE CHEQUE WITH THE BANK THE BANK GIVEN CREDIT FACILITIES ON THE SAID CHEQUE. THE ASSESSEE PASSED NECESSARY ENTRY IN THE BOOKS OF ACCOUNT AS THE RECEIPT AMOUNT FROM THE CON CERNED PARTY AND SHOWED IT AS PAYABLE IN THE BALANCE-SHEET. HOWEVER AFTER A LAPSE OF ALMOST SIX MONTHS I.E. 03 RD JUNE 2005 THE SAID CHEQUE WAS BOUNCED AND ITA NO.1188/RJT/2010 3 THEREFORE THE BANK DEBITED THE ACCOUNT OF THE ASSE SSEE. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAID TRANSACTION W AS NOT GENUINE TRANSACTION. APART FROM THAT THE CIT(A) OBSERVED T HAT THE FUNDS WAS ADVANCED BY THE BANK AND THE BANK CERTIFIED THAT TH E SAME WAS RECOVERED BACK AFTER SIX MONTHS WITH INTEREST THEREFORE APP LICABILITY OF SECTION 68 DOES NOT ARISE. THE CIT(A) FURTHER OBSERVED THAT S INCE THE LENDER IS ASSESSED TO TAX IN SAME TOWN THE ASSESSING OFFICER COULD HAVE VERY WELL VERIFIED THE FACT AS TO WHETHER THE CREDITOR ISSUED CHEQUE; WHETHER THE SAME WAS DISHONOURED ETC. AND COULD HAVE COME TO A DEFINITE CONCLUSION. THE ASSESSING OFFICER DID NOT CARRY OUT SUCH CROSS VERIFICATION. THE ASSESSING OFFICER HIMSELF ACCEPTED THE FACT THAT TH E FUND WAS MADE AVAILABLE BY THE BANK BY WAY OF CREDIT FACILITY AND ASSESSEE PAID INTEREST THEREON. 4. AFTER HEARING LEARNED REPRESENTATIVES OF THE PAR TIES THE ADMITTED FACTS COME OUT FROM THE ORDER OF CIT(A) THAT THE CH EQUE OF RS. 9 LAKHS WAS BOUNCED AND THE AMOUNT WAS ADVANCED BY THE BANK AGA INST THE CHEQUE. THUS THE AMOUNT RECEIVED BY THE ASSESSEE FROM THE BANK AND NOT FROM THE CREDITOR. CONTRARY TO THIS FACT NOTHING IS PO INTED OUT AT THE TIME OF HEARING NOR THE ANYTHING IS AVAILABLE ON RECORD. IN THE LIGHT OF THE FACT AND IN THE LIGHT OF ABOVE DISCUSSION WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF CIT(A). THE ORDER OF CIT(A) IS CONFIRMED ON THE IS SUE. ITA NO.1188/RJT/2010 4 6. GROUND NO.2 IS IN RESPECT OF DISALLOWANCE OF RS. 3 85 340 OUT OF TRIP ADVANCES. THE ASSESSING OFFICER DISALLOWED THE SAI D AMOUNT OUT OF TRIP EXPENSES ON THE GROUND THAT THE ASSESSEE HAS FAILED TO FURNISH COMPUTERIZED SLIPS OF TOLL TAXES PAID BILLS FOR BR EAKDOWNS AND REPAIRS ETC. THE ASSESSING OFFICER DISALLOWED 20% OF SUCH EXPENS ES AMOUNTING TO RS. 3 85 340 OUT OF TOTAL ADVANCES OF RS.19 26 700. TH E CIT(A) RESTRICTED THE ADDITION TO THE EXTENT OF RS.1 92 670 OBSERVING THA T IT IS FAIR IF DISALLOWANCE IS ESTIMATED @10%. 7. AFTER HEARING LEARNED REPRESENTATIVES OF THE PAR TIES WE FIND THAT IN PRINCIPLE CIT(A) AGREED WITH THE ASSESSING OFFICER THAT THE EXPENSES CLAIMED BY THE ASSESSEE IS NOT SUPPORTED BY PROPER VOUCHERS AND TO COVER UP THE DEFICIENCIES A CERTAIN PERCENTAGE OF DISALL OWANCE WAS REQUIRED. THE ASSESSING OFFICER DISALLOWED THE SAME BY APPLYI NG A RATE OF 25% WHEREAS THE CIT(A) AFTER CONSIDERING THE FACTS OF THE CASE AND AFTER CONSIDERING ASSESSEES NATURE OF BUSINESS FOUND THA T THE DISALLOWANCE @10% IS REASONABLE. THE REVENUE DID NOT POINT OUT ANY MATERIAL BASED ON WHICH A DIFFERENT ESTIMATION CAN BE MADE AT THIS ST AGE. UNDER THE CIRCUMSTANCES WE CONFIRM THE ORDER OF CIT(A). 8. GROUND NO.3 IS IN RESPECT OF CLAIM OF DEPRECIATI ON ON TANKER. THE ASSESSEE CLAIMED 40% DEPRECIATION WHEREAS THE ASSES SING OFFICER HAS ITA NO.1188/RJT/2010 5 ALLOWED 25% ON THE GROUND THAT THE ASSESSEE HAS FAI LED TO JUSTIFY HOW THE SAID TANKER GIVEN TO IBP & CO WAS USED BY HIM TO CA RRY ON THE BUSINESS OF PETROLEUM PRODUCTS TRADED BY HIM. THE CIT(A) ALLOW ED THE CLAIM OF THE ASSESSEE BY OBSERVING THAT THE ASSESSEE RECEIVED TR ANSPORTATION RECEIPTS FROM DIFFERENT PARTIES WHICH WERE ON ACCOUNT OF HIR ING CHARGES RECEIVED FOR TRUCKS LET OUT ON HIRE. THE CIT(A) RELIED UPON THE ORDER OF ITAT KOLKATTA BENCH IN THE CASE OF DCIT VS MACHINO TECHNO SALES L TD (2001) 70 TTJ (CAL 340 AND THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS SCTHAKUR & BROS (2009) 221 CTR (BOM) 779 WHEREIN IT HAS BEEN HELD THAT AS PER CIRCULAR NO.652 DATED 14 TH JUNE 1993 HIGHER RATE OF DEPRECIATION IS ADMISSIBLE WHEN THE MOTOR LORRY IS USED BY THE ASSESSEE IN HIS OWN BUSINESS OF TRANSPORTATION OF GOODS ON HIRE . THE CIT(A) HAS ALSO RELIED UPON THE JUDGMENT OF THE APEX COURT IN THE C ASE OF CIT VS GUPTA GLOBAL EXIM (P) LTD (2008) 216 CTR (SC) 368. 9. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES RECORD PERUSED. WE NOTICE THAT THE ASSESSING OFFICER DISA LLOWED THE ASSESSEES CLAIM ON THE GROUND THAT THE TANKERS WERE USED BY T HE ASSESSEE FOR OWN BUSINESS. THEREFORE THE ASSESSEE IS ENTITLED FOR DEPRECIATION @25% INSTEAD OF 40% CLAIMED BY THE ASSESSEE. THE CONTEN TION OF THE ASSESSEE BEFORE THE CIT(A) IS THAT THE RECEIPT WAS ON ACCOUN T OF HIRING CHARGES RECEIVED FOR TRUCKS LET OUT ON HIRE. OTHERWISE ALS O WE FIND THAT THE CIT(A0 ITA NO.1188/RJT/2010 6 HAS RELIED UPON VARIOUS DECISIONS AND THE CBDT CIRC ULAR NO.652 DATED 14- 06-1993 WHICH HAS BEEN CONSIDERED BY BOMBAY HIGH CO URT IN THE CASE OF SC THAKUR & BROS (SUPRA) WHILE ALLOWING HIRER RATE OF DEPRECIATION . THE REVENUE HAS FAILED TO POINT OUT ANY CONTRARY MATERI AL TO THE FINDING OF CIT(A). WE THEREFORE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). THE ORDER OF CIT(A) ON THIS ISSUE IS UPHELD. 10. GROUND NO.4 IS IN RESPECT OF DISALLOWANCE OUT O F TELEPHONE EXPENSES. THE ASSESSING OFFICER DISALLOWED 10% OF THE TELEPHONE EXPENSES AT RS.4 810. THE CIT(A) IN PRINCIPLE AG REED WITH THE ASSESSING OFFICER THAT THE ELEMENT OF PERSONAL USE COULD NOT BE RULED OUT. HOWEVER AFTER CONSIDERING THE NATURE OF BUSINESS HE RESTRI CTED THE ADDITION TO THE EXTENT OF RS.2 000. 11. AFTER HEARING THE LEARNED REPRESENTATIVES OF TH E PARTIES WE NOTICE THAT IT IS A CASE OF ESTIMATION OF TELEPHONE EXPENS ES ON ACCOUNT OF PERSONAL USE. THE CIT(A) HAS RESTRICTED THE ADDITI ON TO THE EXTENT OF RS.2 000 AFTER CONSIDERING THE FACTS AND NATURE OF ASSESSEES BUSINESS AND THERE IS NO CONTRARY MATERIAL BROUGHT TO OUR NO TICE BY THE REVENUE. WE THEREFORE CONFIRM THE ORDER OF CIT(A). ITA NO.1188/RJT/2010 7 12. THE FIRST EFFECTIVE GROUND IN THE CROSS OBJECTI ON IS IN RESPECT OF CONFIRMATION OF ADDITION OF RS.1 92 670 OUT OF TRIP EXPENSES. THIS IS A COMMON WITH THE REVENUES APPEAL. WHILE DEALING WI TH THE REVENUES APPEAL GROUND NO.2 WE HAVE CONFIRMED THE ORDER OF CIT(A). THEREFORE FOR THE DETAILED REASONS GIVEN ELSEWHERE IN THIS OR DER WE DO NOT FIND ANY SUBSTANCE IN THE GROUND RAISED BY THE ASSESSEE. AC CORDINGLY THE SAME IS REJECTED. 13. THE SECOND EFFECTIVE GROUND IN THE CROSS OBJECT ION IS SUSTENANCE OF ADDITION OF RS.2 000 OUT OF TELEPHONE EXPENSES. TH IS IS ALSO A COMMON GROUND WITH THE REVENUES APPEAL GROUND NO.4 WHERE WE HAVE UPHELD THE ORDER OF CIT(A). THEREFORE FOR THE DETAILED REASO NS GIVEN ELSEWHERE IN THIS ORDER WE DO NOT FIND ANY SUBSTANCE IN THE GRO UND RAISED BY THE ASSESSEE. ACCORDINGLY THE SAME IS REJECTED. 14. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 30-09-2011. SD/- SD/- (D.K. TYAGI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT DT : 30 TH SEPTEMBER 2011 ITA NO.1188/RJT/2010 8 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-II RAJKOT 4. THE CIT-I RAJKOT 5. THE DR I.T.A.T. RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT RAJKOT