The ITO, Ward-1(1),, RAJKOT-GUJARAT v. M/s Jalaram Estate Developers Pvt. Ltd.,, RAJKOT-GUJARAT

ITA 1102/RJT/2009 | 1997-1998
Pronouncement Date: 16-12-2010 | Result: Dismissed

Appeal Details

RSA Number 110224914 RSA 2009
Bench Rajkot
Appeal Number ITA 1102/RJT/2009
Duration Of Justice 1 year(s) 26 day(s)
Appellant The ITO, Ward-1(1),, RAJKOT-GUJARAT
Respondent M/s Jalaram Estate Developers Pvt. Ltd.,, RAJKOT-GUJARAT
Appeal Type Income Tax Appeal
Pronouncement Date 16-12-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted SMC
Tribunal Order Date 16-12-2010
Date Of Final Hearing 13-12-2010
Next Hearing Date 13-12-2010
Assessment Year 1997-1998
Appeal Filed On 20-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI D.T. GARASIA (JM) I.T.A. NO. 1102/RJT/2009 (ASSESSMENT YEAR 1997-98) ITO WD.1(1) VS M/S. JALARAM ESTATE DEVELOPERS RAJKOT LTD SARKAR 3 RD FLOOR NR.KATHIAWAR GYMKHANA RAJKOT PAN : NOT AVAILABLE (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AVINASH KUMAR REVENUE BY : SHRI VIMAL DESAI O R D E R A.L. GEHLOT : THIS APPEAL FOR ASSESSMENT YEAR 1997- 98 FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-I RAJKOT DATED 19-08-2009. 2. THE EFFECTIVE GROUND RAISED IN THE APPEAL IS THA T THE CIT(A) ERRED IN DELETING HE ADDITION OF RS.7 50 000 MADE ON ACCOUNT OF ESTIMATED NET PROFIT. THE ASSESSEE IS A BUILDER. A SURVEY U/S 133A WAS CARRI ED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE KNOWN AS SAKAR PROJECT O N 16-03-2000. DURING THE COURSE OF SURVEY MANY IRREGULARITIES WERE FOUND. TH E ASSESSING OFFICER DISCUSSED THESE IRREGULARITIES AT PARAGRAPH 4 ON PAGE 3 OF TH E ASSESSMENT ORDER. THE ASSESSING OFFICER HAS ALSO FOUND THAT THE ASSESSEE FAILED TO DISCHARGE ITS BURDEN IN RESPECT OF CASH CREDIT IN THE NAME OF DILIP TANK AMOUNTING TO RS.40 000. THE ASSESSING OFFICER ESTIMATED NET PROFIT APPLYING 15% RATE. THE ASSESSING OFFICER ALSO MADE ADDITION U/S 68 OF THE ACT OF RS.40 000 S TANDING IN THE NAME OF SHRI DILIP TANK. THE FINDING OF THE ASSESSING OFFICER IS REPRODUCED BELOW: 3. SIN THE LIGHT OF THE ABOVE POSITION I.E. ON THE BASIS OF THE ABOVE MATERIAL WHICH IS AVAILABLE ON RECORD TOTAL INCOME IS REQUIRED TO BE COMPUTED. DURING THE YEAR SALE PROC EEDINGS OF RS.27 71 000/- AND COST OF CONSTRUCTION AT RS.24 88 603/- ARE CONSIDERED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AS THEY ARE. ITA NO.1102/RJT/2009 2 THIS GIVES A GROSS PROFIT OF 1`0.19% OF THE DISCLOS ED SALES. WORK IN PROGRESS WISE THE SAKAR PROJECT INVOLVED AN E XPENDITURE OF RS.17 47 028/- (LAND RS. 12 04 480/- AND WORK AS T HE ASSESSEE TREATS IT RS.5 42 548/-). AGAINST THIS WORK IN PROG RESS ADVANCE OF RS.25 16 000/- HAVE BEEN ACCOUNTED FOR. THE SHIVAL I PROJECT INVOLVES THE COST OF CONSTRUCTION OF RS.4 37 566/- WITHOUT ANY ADVANCES. ON THESE FACTS THE TOTAL INCOME OF THE ASSESSEE IS COMPUTED AS BELOW: ESTIMATED REVENUE RECOGNITIONS DURING THE YEAR IS T AKEN AT RS.50 00 000/-. NQET PROFIT ESTIMATED AT THE RATE OF 15% OF THE ABO VE RS. 7 50 000 SINCE THE ABOVE IS OF NET PROFIT NO FURTHER DISALLOWANCE ON ACCOUNT OF INTEREST OR OTHER EXPENSES IS MADE. HOWEVER SINCE THE UNEXPLAINED CASH CREDITS ARE ASSESSABLE U/S 68 AND HAVE NOTHING TO DO WITH THE PROFIT AND LOSS ACCOUNT CASH CREDITS IN THE NAME OF SHRI DILIP TANK ARE ASSESSED U/S 68 OVER AND ABOVE THE NET PROFIT ESTIMATED ABOVE RS. 40 000 ----------------- TOTAL INCOME RS. 7 90 000 ========== ON APPEAL THE CIT(A) DELETED THE ADDITION OF RS.7 50 000 ESTIMATED BY THE ASSESSING OFFICER BY OBSERVING AS UNDER: (CC) I ALSO FOUND THAT THE A.O. REJECTED THE BOOK RESULTS WITHOUT ANY COGENT REASONS WITHOUT PINPOINTING ANY SPECIFIC DEFECTS. THE ACCOUNTING METHOD OF RECORDING SALE AND WORK IN PRO GRESS IN THE APPELLANTS CASE WAS ACCEPTED BY THE DEPARTMENT IN PAT. THE A.O. ESTIMATED THE REVENUE AT AN AD HOC FIGURE OF RS.50 LAKH WITHOUT AY BASIS WHATSOEVER. THERE WAS NO EVIDENCE OF UNDER-S TATEMENT OF SALES OR THAT THE APPELLANT RECEIVED ANYTHING IN EX CESS OF WHAT WAS DECLARED. THERE WAS NO MATERIAL ON RECORD IN SUPPO RT OF SUCH BASELESS ASSUMPTION. I FOUND THAT A.O. FURTHER EST IMATED THE NET PROFIT AT 15% AND NO BASIS WAS GIVEN FOR TAKING NET PROFIT AT THAT PERCENTAGE. NO COMPARABLE CASE WAS ALSO QUOTED BY THE A.O. AND NO PAST RESULTS SHOWN BY THE APPELLANT WERE REFERRE D TO. I FEEL THAT A.O. ESTIMATED THE TOTAL REVENUE AND INCOME AT AN A DHOC FIGURE WITHOUT ANY BASIS. IT IS WELL SETTLED THAT REJECTI ON OF BOOK RESULTS ITA NO.1102/RJT/2009 3 SHOULD BE RESORTED ONLY ON POINTING OUT SPECIFIC DE FECTS IN THE BOOKS AND IT SHOULD BE BASED ON COGENT REASONING. EVEN WHEN THE BOOKS ARE REJECTED THE INCOME SHOULD BE ESTIMATED ON SOME REASONABLE BASIS AND WELL GROUNDED. THE ESTIMATION SHOULD NOT BE ARBITRARY OR WILD ONE. IT SHOULD BE BASED ON SOME MATERIAL ON RECORD AND THE SAME SHOULD ALSO BE DISCLOSED. IN VIEW OF THIS I DELETE THE ADDITION MADE BY REJECTION OF BOOKS AND ESTIMATION OF INCOME AS THIS PROCESS WAS NOT IN ACCORDANCE WITH LAW. 3. THE CIT(A) CONFIRMED THE ADDITION OF RS.40 000 M ADE BY THE ASSESSING OFFICER U/S 68 IN THE NAME OF SHRI DILIP TANK. 4. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES RECORD PERUSED. THE ADMITTED FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSING OFFICER DID NOT POINT OUT ANY DEFECTS IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. HE DISCUSSED ALTOGETHER THE MATER IAL FOUND DURING THE COURSE OF SURVEY WHICH IS PERTINENT TO ASSESSMENT YEAR 200 0-01 AND NOT IN THE YEAR UNDER CONSIDERATION. WHEN THE ASSESSING OFFICER DI D NOT FIND ANY DEFECT IN THE BOOKS OF ACCOUNT THE BOOKS OF ACCOUNT MAINTAINED B Y THE ASSESSEE CANNOT BE REJECTED. THEREFORE ESTIMATION CANNOT BE MADE WITHO UT REJECTING THE BOOKS OF ACCOUNT. THE REVENUE DID NOT POINT OUT ANY MATERIA L PINPOINTING ANY SPECIFIC DEFECT IN THE BOOKS OF ACCOUNT MAINTAINED BY THE AS SESSEE FOR THE YEAR UNDER CONSIDERATION. AFTER CONSIDERING THE TOTALITY OF T HE FACTS OF THE CASE WE DO NOT FIND ANY ERROR IN THE ORDER OF THE CIT(A). WE THEREFOR E CONFIRM THE ORDER OF CIT(A). 5. INA THE RESULT APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16-12-2010 . SD/- SD/- (D.T. GARASIA) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT DT : 16 TH DECEMBER 2010 PK/- ITA NO.1102/RJT/2009 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-I RAJKOT 4. THE CIT-I RAJKOT 5. THE DR (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT RAJKOT