Shri Rameshbhai F. Prajapati, Kapadwanj v. The Income tax Officer,Ward-3,, Nadiad

ITA 1175/AHD/2008 | 2003-2004
Pronouncement Date: 11-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 117520514 RSA 2008
Bench Ahmedabad
Appeal Number ITA 1175/AHD/2008
Duration Of Justice 2 year(s) 11 month(s) 7 day(s)
Appellant Shri Rameshbhai F. Prajapati, Kapadwanj
Respondent The Income tax Officer,Ward-3,, Nadiad
Appeal Type Income Tax Appeal
Pronouncement Date 11-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 11-03-2011
Date Of Final Hearing 03-03-2011
Next Hearing Date 03-03-2011
Assessment Year 2003-2004
Appeal Filed On 03-04-2008
Judgment Text
ITA. 1175/AHD/2008 . A.Y. 2003-04. 1 IN THE INCOME_TAX APPELLATE TRIBUNAL D BENCH AH MEDABAD BEFORE SHRI MUKUL KUMAR SHRAWAT AND SHRI A.N.PAHUJ A ITA NO. 1175 /AHD/2008 (ASSESSMENT YEAR:2003-04) SHRI RAMESHBHAI F. PRAJAPATI 31/32 SAI NAGAR RATNAGIRI ROAD BEHIND PARIKH ICE FACTORY KAPADWANJ (APPELLANT) VS. INCOME TAX OFFICER WARD -3 STATION ROAD NADIAD. (RESPONDENT) PAN: ADHPP 74277 J APPELLANT BY : SHRI SUNIL TALATI. RESPONDENT BY : SHRI ANIL KUMAR SR.D.R. ( )/ ORDER PER: SHRI MUKUL KUMAR SHRAWAT J.M. THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WHI CH HAS EMANATED FROM THE ORDER OF THE LD. C.I.T.(APPEALS)-IV BAROD A DATED 13-12-2008. 2. THE GROUNDS RAISED ARE HEREBY DECIDED AS FOLLOWS:- GROUND NO.1 . THE LD. CIT (A) ERRED BOTH IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.32 637/- WITH REGARD TO THE ELECTRIC ITY HOTEL AND FUEL EXPENSES. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE EXPENSES WERE DU LY INCURRED AND WERE ALLOWABLE TO BE DEDUCTED IN COMPUTING THE INCO ME. THE SAME BE ALLOWED NOW AND THE ADDITION OF RS.32 637/- BE DELE TED. 3. THE FACTS IN BRIEF AS EMERGED FROM THE CORRESPON DING ASSESSMENT ORDER PASSED UNDER SECTION 143(3) DATED 31-3-2006 W ERE THAT THE ASSESSEE IN INDIVIDUAL CAPACITY IS IN THE HOTEL BUSINESS KNO WN AS CHETNA DINING HALL ITA. 1175/AHD/2008 . A.Y. 2003-04. 2 AND HOTEL MILESTONE. A SURVEY UNDER SECTION 133A WA S CONDUCTED ON 4-9- 2002. THEREAFTER IN RESPONSE TO SUMMONS U/S. 131 A STATEMENT WAS RECORDED ON 19-9-2002 AND 22-10-2002 . THEREUPON AN INCOME OF RS.15 LACS WAS OFFERED AS UNDISCLOSED INCOME FOR THE YEAR UNDE R CONSIDERATION. IN RESPECT OF THE IMPUGNED ADDITION OF RS.32 637/- IT WAS FOUND THAT THE BILLS OF ELECTRICITY EXPENSES OF RS.16 524/- WERE PRODUCE D AS AGAINST THE CLAIM OF RS.25 470/-. IN RESPECT OF HOTEL EXPENSES ASSES SEE HAS FURNISHED BILLS OF RS.5 176/- AS AGAINST THE TOTAL CLAIM OF RS.16 634/ - AND IN RESPECT OF FUEL CHARGES OF RS.15 421/- AS PER THE ASSESSING OFFICE R NO BILLS WERE FURNISHED. ON ACCOUNT OF THE NON PRODUCTION OF BILL S THE AO HAS HELD THAT THIS EXPENDITURE HAS BEEN CLAIMED EXCESSIVELY AMOUN TING TO RS.9216 + RS.18 000 + RS.15 421 TOTALING RS.32 637/-. ACCORDI NGLY THE SAID ADDITION WAS MADE WHICH WAS CHALLENGED BEFORE THE LD. C.I.T. (A). 4. BEFORE THE LD. CIT (A) IT WAS ARGUED THAT THE SA ID OFFER OF RS.15 LACS HAS COVERED SUCH DISCREPANCY; THEREFORE THERE WAS NO REASON FOR FURTHER ADDITION OF THE SAID AMOUNT. HOWEVER THE LD. CIT ( A) WAS NOT CONVINCED AND HELD THAT SINCE THE ONUS WAS NOT DISCHARGED OF PRODUCING THE BILLS THEREFORE THE ADDITION WAS RIGHTLY MADE. 5. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES W E ARE ALSO OF THE VIEW THAT THE ASSESSEE HAS NOT FURNISHED THE NECESS ARY BILLS AND FAILED TO SUBSTANTIATE THE AFORESAID EXPENDITURE. PRIMARY ONU S HAS NOT BEEN DISCHARGED. IN THE LIGHT OF THE SAID ADMITTED POSIT ION WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE AUTHORITIES BELO W AND HEREBY CONFIRM THE SAME. THIS GROUND IS DISMISSED. 6. GROUND NO.2 . THE LD. CIT (A) ERRED BOTH IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF G.P. AMOUNTING TO RS.1 38 329/-. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ADDITION OF RS.1 38 3 29/- MADE BY THE ASSESSING OFFICER OUGHT TO HAVE BEEN DELETED. THE S AME BE DELETED NOW. ITA. 1175/AHD/2008 . A.Y. 2003-04. 3 7. IT WAS NOTED BY THE AO THAT THE TOTAL TURNOVER W AS DISCLOSED AT RS.5 87 601/- AND THE GROSS PROFIT WAS DISCLOSED AT RS.1 66 444/- AND THE PERCENTAGE OF PROFIT WAS ONLY 28.32%. AS AGAINST TH AT IN ASSESSEES CASE FOR ASSESSMENT YEAR 2001-02 AND 2002-03 GROSS PROFI T RATIO WAS 51.62% AND 51.98% RESPECTIVELY. APPLYING THE SAME RATIO T HE ASSESSING OFFICER HAS CALCULATED THE GROSS PROFIT AT RS.3 04 773/-AND SINCE THE ASSESSEE HAS ALREADY DISCLOSED RS.1 66 444/- THEREFORE THE BAL ANCE OF RS.1 38 329/- WAS TAXED IN THE HANDS OF THE ASSESSEE. THE SAID ADDITI ON WAS CHALLENGED. 8. THE LD. CIT (A) HAS AFFIRMED THE FINDING OF THE AO PRIMARILY ON THE GROUND THAT THE ASSESSEE HAD FAILED TO EXPLAIN THE SHARP DECLINE OF THE GROSS PROFIT. 9. IN RESPECT OF THIS GROUND THE VEHEMENT CONTENTI ON OF LD. A.R. SHRI SUNIL TALATI WAS THAT THE APPELLANT HAD VOLUNTARILY DISCLOSED A SUBSTANTIAL SUM OF RS.15 LACS WITH THE UNDERSTANDING THAT ANY D ISCREPANCY IN THE BOOKS OF ACCOUNTS WOULD BE COVERED BY THE SAID OFFE R. ACCORDING TO HIS ARGUMENT THERE WAS NO SCOPE LEFT FOR FURTHER ADDITI ON PARTICULARLY WHICH PERTAINED TO THE ACCURACY OF BOOK RESULT. WE FIND F ORCE IN THIS ARGUMENT OF THE LD. A.R. BECAUSE THE SAID OFFER WAS MADE KEEPIN G IN MIND THE CONDITIONS OF THE BOOKS OF ACCOUNTS WHICH WERE NOT FULLY MAINTAINED AND THAT DISCREPANCY WAS ACCEPTED BY THE ASSESSEE WHEN THE STATEMENT WAS MADE. IT IS ALSO NOT IN DISPUTE THAT THE SAID OFFE R WAS DULY HONOURED AND TAXES HAVE BEEN PAID BY THE ASSESSEE. THE ASSESSIN G OFFICER HAS SIMPLY FOLLOWED THE PERCENTAGE OF PROFIT OF THE PAST YEARS WITHOUT NARRATING ANY PARTICULAR DEFECT OR THE REASON FOR ADOPTING THE SA ID RATE OF PROFIT. THUS THE TOTALITY OF THE CIRCUMSTANCES WARRANTS TO REVER SE THE FINDINGS OF THE AUTHORITIES BELOW SO WE HEREBY DIRECT TO DELETE TH E SAID ADDITION. GROUND ALLOWED. ITA. 1175/AHD/2008 . A.Y. 2003-04. 4 10 . GROUND NO.3. THE LD. CIT (A) FURTHER ERRED BOTH IN LAW AND ON FA CTS IN CONFIRMING THE ADDITION OF RS.30 000/- ON ACCOUNT OF ESTIMATED POST- SURVEY PERIOD INCOME. THERE BEING NO JUSTIFICATION NOR ANY EVIDENCE REGARDING THE EARNING OF ANY SUCH INCOME THE ADDITI ON ON ESTIMATED BASIS NOT OUGHT TO HAVE BEEN MADE. THE SAME BEING W RONGLY MADE DESERVES TO BE DELETED. THE SAME BE DELETED NOW. 11. IN RESPECT OF CONSTRUCTION ACTIVITY IT WAS NOTE D BY THE ASSESSING OFFICER THAT ON THE TOTAL CONTRACT RECEIPTS OF RS. 17 35 000/- THE ASSESSEE HAS OFFERED 8% PROFIT AT RS.1 38 800/- BY APPLYING THE PROVISIONS OF SECTION 44AD OF THE INCOME TAX ACT. IT HAS ALSO BEEN NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE WAS CONSTRUCTING BHUMI AP ARTMENT NADIAD ROAD KAPADWANJ. THREE YEARS BEFORE THE SCHEME WAS LAUNCH ED BUT IT WAS NOT COMPLETED. IT HAS ALSO BEEN NOTED THAT THE PAYMENTS RECEIVED FROM THE MEMBERS FROM THE SAID SCHEME HAD ALREADY BEEN CREDI TED IN THE BOOKS OF ACCOUNTS WHICH WERE IMPOUNDED. THE ASSESSING OFFIC ER HAS RECOGNIZED THAT FACT HOWEVER HE HAS FOUND THAT THE SAID SUM O F RS.15 LACS WAS OFFERED ONLY UPTO THE DATE OF SURVEY BUT AFTER THE DATE OF SURVEY THE PROFIT WAS SHOWN ONLY AT RS. 21 120/-. SINCE THE BOOKS OF ACCO UNTS WERE NOT COMPLETE; THEREFORE AS PER THE ASSESSING OFFICER THE ASSESSE E HAD FAILED TO SUBSTANTIATE THE PROFIT AFTER THE SURVEY WAS DECLAR ED. IT WAS HELD THAT IN THE ABSENCE OF COMPLETE BOOKS OF ACCOUNTS THERE WAS NO ALTERNATIVE BUT TO ESTIMATE THE INCOME OF POST SURVEY ACTIVITY AT RS.3 0 000/-. ACCORDINGLY THE ADDITION WAS MADE WHICH WAS CHALLENGED. 12 . THE LD. C.IT (A) HAS AFFIRMED THE ACTION OF THE ASS ESSING OFFICER BY ASSIGNING THE REASON THAT THE IMPUGNED SMALL INCOME WAS RIGHTLY TAXED IN THE ABSENCE OF PROPER BOOKS OF ACCOUNTS. 13. AFTER HEARING THE SUBMISSIONS OF BOTH THE SIDES WE HAVE NOTICED THAT KEEPING IN MIND THE TOTALITY OF THE CIRCUMSTANCES THE ASSESSEE HAD OFFERED RS.15 LACS TO COVER UP ALL THE DISCREPANCIES OF THE BOOKS OF ACCOUNTS. ITA. 1175/AHD/2008 . A.Y. 2003-04. 5 THEREFORE CONSEQUENT THEREUPON THERE WAS NO REASON TO ESTIMATE AN ADDITIONAL INCOME FOR THE IMPUGNED CONSTRUCTION ACT IVITY. IN THE ABSENCE OF ANY SPECIFIC EVIDENCE OR INCRIMINATING MATERIAL FOU ND WE ARE OF THE VIEW THAT SUCH AN ESTIMATED ADDITION WAS UNCALLED FOR. W E HEREBY DIRECT TO DELETE THE SAME. THIS GROUND IS ALLOWED. 14. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 11 03- 2011. SD/- SD/- (A. N. PAHUJA) (MUKUL KUMAR SHRAWAT) ACCOUNTANT MEMBER. JUDICIAL MEMBER AHMEDABAD. DATED: 11/03/2011. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-IV BARODA. 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT AHMEDABAD.