Shri Mitesh Valjibhai B. Khunt,, RAJKOT-GUJARAT v. The Deputy Commissioner of Income Tax, Central Circle-1,, RAJKOT-GUJARAT

ITA 1011/RJT/2009 | 2006-2007
Pronouncement Date: 18-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 101124914 RSA 2009
Assessee PAN ACSPK7446C
Bench Rajkot
Appeal Number ITA 1011/RJT/2009
Duration Of Justice 1 year(s) 5 month(s) 17 day(s)
Appellant Shri Mitesh Valjibhai B. Khunt,, RAJKOT-GUJARAT
Respondent The Deputy Commissioner of Income Tax, Central Circle-1,, RAJKOT-GUJARAT
Appeal Type Income Tax Appeal
Pronouncement Date 18-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 18-03-2011
Assessment Year 2006-2007
Appeal Filed On 01-10-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI N.R.S. GANESA N (JM) I.T.A. NO.1011/RJT/2009 (ASSESSMENT YEAR 2006-07) SHRI MITESH VALJIBHAI KHUNT VS DY.CIT CENT.CIR.1 C/O M/S DALESHWAR INDUSTRY RAJKOT 32-MEERA INDUSTRIAL SOCIETY AJI INDUSTRIAL ESTATE RAJKOT PAN : ACSPK7446C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI JC RANPURA RESPONDENT BY : SHRI PK VATSYAYAN O R D E R PER AL GEHLOT AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)- IV AHMEDABAD DATED 17-03-2009 FOR THE ASSESSMENT Y EAR 2006-07. THE FOLLOWING EFFECTIVE GROUND IS RAISED IN THE APPEAL: 2.0 THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S)-IV AHMEDABAD ERRED ON FACTS AS ALSO IN LAW IN SUSTAINI NG THE ADDITION OF RS.2 98 228/- MADE BY THE AO ON THE BASIS ANNEXU RE A-11 FOUND DURING THE COURSE OF SEARCH. THE ADDITION MA DE WITHOUT CONSIDERING THE FACTS ON RECORD IS TOTALLY UNJUSTIF IED AND MAY KINDLY BE DELETED. 2. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH U/ S 132 OF THE I.T. ACT 1961 WAS CARRIED OUT ON 22-03-2006. DURING THE ASSESSME NT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT OUT OF SEIZED MATERI ALS AS PER ANNEXURE A-11 SOME OF THE SEIZED MATERIALS SOME OF THEM PERTAINED TO THE ASSESSEE. THEREFORE THE ASSESSEE WAS ASKED TO SUBMIT HIS EXPLANATION FOR EA CH OF THEM. IN REPLY THE ASSESSEE SUBMITTED THAT HE HAD ALREADY DISCLOSED AN AMOUNT OF RS.1 LAKH IN RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2006-07. THE ASSESSING OFFICER WAS ITA NO.1011/RJT/2009 2 NOT SATISFIED WITH THE EXPLANATION THAT THE ASSESSE E COULD NOT EXPLAIN THE SOURCE OF CERTAIN PURCHASES. THEREFORE THE ASSESSING OFF ICER TREATED THE ENTIRE PURCHASES AS UNEXPLAINED INVESTMENT U/S 69 OF THE A CT AMOUNTING TO RS. 3 35 953. THE ASSESSING OFFICER MADE THE ADDITION OF THIS AMOUNT AS UNEXPLAINED UNACCOUNTED PURCHASES. THE ASSESSING OFFICER HAS A LSO MADE ADDITION OF RS.35 996 BEING 15% ON AMOUNT OF SALE OF THAT UNACC OUNTED PURCHASES WHICH HE CALCULATED AT RS. 2 39 974 (RS.3 23 874 RS.83 900 ) AND MADE ADDITION OF RS.35 996. THE ASSESSING OFFICER HAS ALSO MADE ADD ITION OF RS. 26 279 BEING 15% OF PROFIT ON THE SALE OF UNACCOUNTED SALE OF RS . 1 75 198. THE TOTAL ADDITION SO MADE THUS CAME TO RS. 3 98 228 (RS.3 35 953 + RS .35 996 + RS. 26 279). THE ASSESSING OFFICER AFTER DEDUCTING RS.1 LAKH DI SCLOSED IN THE RETURN FOR ASSESSMENT 2006-07 HAS MADE ADDITION OF RS.2 98 228 IN EFFECT AFTER REDUCING RS.1 LAKH DISCLOSURE AMOUNT. THE CIT(A) GRANTED PA RT RELIEF BY DIRECTING THE ASSESSING OFFICER TO APPLY THE GROSS PROFIT RATE AT 13% INSTEAD OF 15% ADOPTED BY THE ASSESSING OFFICER IN RESPECT OF UNACCOUNTED SAL ES / PURCHASES. 3. THE LD.AR SUBMITTED THAT THE ASSESSING OFFICER I S ERRED IN MAKING ADDITION OF THE GROSS AMOUNT OF UNACCOUNTED PURCHASES. HE S UBMITTED THAT AS REGARDS THE ADOPTION OF GROSS PROFIT THE ASSESSEE HAS NO GR IEVANCE AGAINST THE ORDER OF CIT(A). THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT THE ASSESSEE HAS ALREADY ADMITTED AND DISCLOSED THE INITIAL INVESTMENT IN TH E UNACCOUNTED PURCHASES. THE LD.AR SUBMITTED THAT IN THE BUSINESS TRANSACTION ON CE AN AMOUNT IS INVESTED AN FURTHER INVESTMENT IS OUT OF THE RETURNS FROM THE I NITIAL INVESTMENT. AT THE MOST THE INITIAL INVESTMENT COULD BE CONSIDERED AS THE I NVESTMENT IN THE UNACCOUNTED PURCHASES. 4. THE LD.DR ON THE OTHER HAND RELIED UPON THE OR DER OF CIT(A) AND SUBMITTED THAT THE ASSESSING OFFICER MADE THE ADDIT ION ON THE BASIS OF MATERIAL FOUND AT THE TIME OF SEARCH. THEREFORE THE ORDER OF CIT(A) MAY BE SUSTAINED. ITA NO.1011/RJT/2009 3 5. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES RECORD PERUSED. THE ADMITTED FACTS OF THE CASE ARE THAT THERE FOUND INVESTMENT IN THE UNACCOUNTED PURCHASES TO THE EXTENT OF RS.3 35 953 OUT OF WHICH THE ASSESSEE HAS ADMITTED AND DECLARED AN AMOUNT OF RS.1 LAKHS F OR TAXATION. IN THE GIVEN FACTS AND CIRCUMSTANCES THE NORMAL COURSE THE ADD ITION IS CONSIDERED OF THE INITIAL INVESTMENT IN SUCH UNACCOUNTED PURCHASES PL US GROSS PROFIT ELEMENT ON THE TURNOVER ACHIEVED THEREFORM . IN THE CASE UNDER CO NSIDERATION THE ASSESSEE HAS DECLARED RS.1 LAKH CLAIMED TO BE THE INITIAL INVEST MENT IN THE UNACCOUNTED PURCHASES FOUND IN THE SEIZURE PAPERS ANNEXURE A-1 AGGREGATING TO RS.3 35 953. THE ASSESSEE HAS NO OBJECTION IN ADDING THE GROSS P ROFIT OF THE TURNOVER PLUS THE AMOUNT OF INITIAL INVESTMENT CLAIMED TO BE RS.1 LAK H. THE REVENUE HAS NOT DISPUTED THE VERACITY / EXTENT OF THIS INITIAL INVE STMENT. IN THE CIRCUMSTANCES WE ARE OF THE VIEW THAT OTHER THAN THE GROSS PROFIT ON UNACCOUNTED SALES OF RS.3 35 953 NO OTHER ADDITION IS WARRANTED IN THE C ASE OF ASSESSEE. THE ASSESSEE HAS NO OBJECTION ON THE GROSS PROFIT ESTIM ATED BY THE CIT(A) AT 13%. ACCORDINGLY WE SET ASIDE THE ORDER OF CIT(A) AND DI RECT THE ASSESSING OFFICER TO MAKE ADDITION @13% OF THE UNACCOUNTED SALES OF RS. 3 35 953. 6. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 18-03-2011. SD/- SD/- (N.R.S. GANESAN) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT DT : 18 TH MARCH 2011 PK/- ITA NO.1011/RJT/2009 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-IV AHMEDABAD 4. THE CIT CENTRAL-II AHMEDABAD 5. THE DR (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT RAJKOT