The ITO, Ward-6(4),, Surat v. Shri Vikram Kishorbhai Gajiwala, Surat

ITA 1833/AHD/2010 | 2007-2008
Pronouncement Date: 25-10-2013 | Result: Dismissed

Appeal Details

RSA Number 183320514 RSA 2010
Assessee PAN AAAAU0788N
Bench Ahmedabad
Appeal Number ITA 1833/AHD/2010
Duration Of Justice 3 year(s) 4 month(s) 28 day(s)
Appellant The ITO, Ward-6(4),, Surat
Respondent Shri Vikram Kishorbhai Gajiwala, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 25-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 25-10-2013
Date Of Final Hearing 09-10-2013
Next Hearing Date 09-10-2013
Assessment Year 2007-2008
Appeal Filed On 28-05-2010
Judgment Text
C IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD C BENCH . .. . . . . . ! ! ! ! '# ' '# ' '# ' '# ' $ $ $ $ BEFORE S/SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER AN D N.S. SAINI ACCOUNTANT MEMBER) ITA NO.1833/AHD/2010 [ASSTT.YEAR : 2007-2008] ITO WARD-6(4) SURAT. /VS. SHRI VIKRAM KISHORBHAI GAJIWALA 5/1955 THE KANTA ROAD HARIPURA SURAT. PAN : AAAAU 0788 N ( (( (&' &' &' &' / APPELLANT) ( (( (()&' ()&' ()&' ()&' / RESPONDENT) * + '/ REVENUE BY : SHRI J.P. JHANGID SR.DR . + '/ ASSESSEE BY : SHRI TUSHAR HEMANI / + 0#/ DATE OF HEARING : 9 TH OCTOBER 2013 123 + 0#/ DATE OF PRONOUNCEMENT : 25-10-2013 '4 / O R D E R PER N.S. SAINI ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMI SSIONER OF INCOME TAX (APPEALS)-IV SURAT DATED 29.3.2010. ITA NO.1833/AHD/2010 -2- 2. THE GROUND NO.1 OF THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A) IN DELETING THE ADDITION OF RS.6 26 940/- MADE UNDER SECTION 68 OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE RECEIVED UNSECURED LOAN OF RS.3 00 000/- FROM ONE SHRI SHANTILAL D. JAIN (HUF) AND RS.3 26 940/- FROM ONE SHRI SHANTILAL D. JAIN (INDI VIDUAL). ON VERIFICATION OF THE CONFIRMATION FILED BY THE ASSES SEE THE AO NOTICED THAT THE SAME WAS NOT SIGNED BY SHRI SHANTI LAL. SIGNATURE MADE BY HIM IN THE RETURN WAS FOUND TO BE DIFFERENT AND THE ADDRESS OF THE SAID PERSON WAS GIVEN AS ABHINANDAN MARKET RING ROAD SURAT WHICH WAS NOT CORRECT AND DURING THE SPOT INQUIRY IT WAS FOUND THAT NO SUCH PERSON NAMED SHR I SHANTILAL D. JAIN RESIDES THEREFORE AS THE IDENTITY OF CREDITO R WAS NOT ESTABLISHED THE AO TREATED THE AMOUNT OF RS.3 00 0 00/- AND RS.3 26 940/- RECEIVED FROM HUF AND INVIDIDUAL OF S HRI SHANTILAL D. JAIN DURING THE YEAR AS BOGUS AND THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE. 4. ON APPEAL BEFORE THE CIT(A) THE ASSESSEE SUBMIT TED THAT THE SIGNATURES OF THE LOAN CREDITORS AS MENTIONED IN THE CONFIRMATIONS ARE VERIFIABLE FROM THEIR PAN CARD WHICH WERE ALSO SUBMITTED TO THE AO DURING THE ASSESSMENT PROC EEDINGS AND THE AO HAS ERRONEOUSLY ALLEGED THAT THE CONFIRMATIO NS WERE NOT SIGNED BY THE DEPOSITORS. THE ASSESSEE FURNISHED C OPIES OF THE CONFIRMATIONS AND PAN CARD IN SUPPORT OF CONTENTION AS ITA NO.1833/AHD/2010 -3- SUBMITTED BEFORE THE AO. AS REGARDS THE ADDRESSES OF THE DEPOSITORS IT WAS EXPLAINED THAT THE ADDRESS MENTI ONED IN THE CONFIRMATIONS WERE THE OLD ADDRESS AND THEREAFTER THE DEPOSITORS HAD SHIFTED TO A NEW ADDRESS AND THE SAME WAS EVIDE NT FROM THE PAN ALLOTMENT LETTER I.T. ACKNOWLEDGEMENT COMPUTA TION OF INCOME AND BANK STATEMENTS OF THE DEPOSITORS AS W ERE SUBMITTED BEFORE THE AO. IT WAS FURTHER EXPLAINED THAT THE CORRECT ADDRESS OF THE DEPOSITORS WAS FURNISHED TO THE AO HOWEVER THE AO COMPLETELY IGNORED THE SAME AND HAD CONDUCTED INQU IRIES AT A WRONG ADDRESS. IT WAS THEREFORE ARGUED THAT THE AO HAS NOT CAREFULLY VERIFIED THE DOCUMENTARY EVIDENCES SUBMIT TED BY THE ASSESSEE TO ESTABLISH IDENTITY GENUINENESS AND CRE DITWORTHINESS OF THE CREDITORS AND WRONGLY MADE ADDITION AND PL EADED THAT THE SAME BE DELETED. 5. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISS IONS OF THE ASSESSEE DELETED THE ADDITION BY OBSERVING AS UNDER: I HAVE CONSIDERED THE FACTS OF THE CASE THE ORDE R OF THE AO AND THE SUBMISSIONS OF THE APPELLANT. THE AO HAS MADE THE IMPUGNED ADDITIONS ONLY ON THE ALLEGATION THAT THE IDENTITY OF THE DEPOSITORS IS NOT PROVED. IN TH IS REGARD IT IS SEEN THAT THE APPELLANT HAD FURNISHED CONFIRMATI ON; COPY OF PAN CARD; COPY OF PAN ALLOTMENT LETTER; COP Y OF ELECTION CARD; COPY OF I.T. RETURN ACKNOWLEDGEMENT; COPY OF COMPUTATION OF INCOME BALANCE SHEET CAPIT AL ACCOUNT AND P&L A/C.; AND COPY OF BANK STATEMENT OF THE DEPOSITORS AND THUS IT IS EVIDENT THAT THE APPELL ANT HAD FURNISHED COMPLETE DETAILS TO PROVE THE LOANS. FURT HER IT IS ALSO SEEN THAT THE SIGNATURES OF THE DEPOSITORS ARE CLEARLY VERIFIABLE FROM THEIR PAN CARDS AND MOREOVER THE A DDRESS ITA NO.1833/AHD/2010 -4- OF THE DEPOSITORS IS ALSO VERIFIABLE LOOM THEIR PAN ALLOTMENT LETTER I.T. RETURN BANK STATEMENT ETC. THUS I DON'T AGREE WITH THE AO THAT THE APPELLANT HAS FAIL ED TO ESTABLISH THE IDENTITY OF THE DEPOSITORS. THEREFORE I HOLD THAT THE AO IS NOT JUSTIFIED IN MAKING THE IMPUGNED ADDITION AND HENCE. I HEREBY DELETE THE ADDITION OF RS.6 26 940/- (I.E. RS. 3 00 000 +- RS.3 26 940) MADE U/S. 68 OF THE ACT IN RESPECT OF UNSECURED LOANS RECEIVED FROM SHRI SHANT ILAL D. JAIN (HIJF) AND SHRI SHANTILAL D. JAIN (INDIVIDUAL) . AS A RESULT THIS GROUND OF APPEAL STANDS ALLOWED. 6. THE LEARNED DR VEHEMENTLY ARGUED AND SUBMITTED T HAT THE ASSESSEE FILED NEW EVIDENCES BEFORE THE LEARNED CIT (A) IN THE FORM OF PAN ALLOTMENT LETTER I.T. ACKNOWLEDGEMENT BANK STATEMENTS ETC. WHICH WERE NOT FILED BEFORE THE AO AND PRAYED THAT THE ORDER OF THE CIT(A) SHOULD BE REVERSED AND THAT OF THE AO SHOULD BE RESTORED. 7. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE A SSESSEE FULLY JUSTIFIED THE ORDER OF THE LEARNED CIT(A). 8. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON REC ORD. IN THE INSTANT CASE THE AO FOUND THAT THE ASSESSEE HAS RE CEIVED DEPOSIT OF ` 3 00 000/- FROM ONE SHRI SHANTILAL D. JAIN AND ` 3 26 940/- FROM SHANTILAL D. JAIN (INDIVIDUAL). THE AO HELD T HE SAME TO BE UNEXPLAINED CASH CREDIT OF THE ASSESSEE AND ADDED T HE SAME TO THE INCOME ON THE GROUND THAT SIGNATURES IN THE LOAN CO NFIRMATION DID NOT TALLY WITH THE SIGNATURE IN THE INCOME TAX RETU RN OF THE LOAN CREDITOR AND THAT ON SPOT INQUIRY MADE AT THE ADDR ESS GIVEN IN THE LOAN CONFIRMATION IT WAS FOUND THAT NO PERSON BY T HE NAME OF ITA NO.1833/AHD/2010 -5- SHRI SHANTILAL D. JAIN RESIDES AT THE GIVEN ADDRESS AND THEREFORE HE CAME TO THE CONCLUSION THAT IDENTITY OF THE CRED ITOR WAS NOT ESTABLISHED. ON APPEAL THE CIT(A) HAS DELETED THE ADDITION ON THE GROUND THAT THE ASSESSEE HAS FURNISHED COPIES O F CONFIRMATION AND PAN CARD IN SUPPORT OF THE CONTENTIONS THAT THE SIGNATURE OF THE LOAN CREDIT WAS VERIFIABLE FROM THE PAN CARD. HE ALSO OBSERVED THAT THE ADDRESS OF THE LOAN CREDITOR MENT IONED IN THE LOAN CONFIRMATION WAS OLD ADDRESS AND THE LOAN CRED ITORS HAVE SHIFTED TO NEW ADDRESS WHICH WAS VERIFIABLE FROM TH E PAN LETTER IT RETURN ACKNOWLEDGEMENT COPY OF COMPUTATION OF I NCOME BANK STATEMENTS OF THE DEPOSITORS WHICH WERE ALSO SUBMITTED BEFORE THE AO. THE LEARNED DR HAS CONTENDED BEFORE US THAT THESE DOCUMENTS WERE NOT BEFORE THE AO AND THEREFO RE THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION B Y RELYING ON THE SAID DOCUMENTS. WE FIND THAT IN THE PAPER BOOK FILED BEFORE US AT PAGE NOS.15-26 THE ASSESSEE HAS PLACED COPY OF THE LETTER ADDRESSED TO THE ITO RANGE-6(4) WHEREIN IT WAS ST ATED THAT ACCOUNT CONFIRMATION OF SHRI SHANTILAL D. JAIN (HU F) PAN ALLOTMENT LETTER OF SHRI SHANTILAL D. JAIN (HUF) A ND COPY OF THE IT ACKNOWLEDGEMENT COMPUTATION OF INCOME AND COPY OF BANK PASS BOOK OF SB ACCOUNT NO.597431 OF SHRI SHANTILAL D. JAIN (HUF) ARE PLACED. THUS IT EVIDENCES THAT THESE DO CUMENTS WERE ALSO FILED BEFORE THE AO AND THE CONTENTION OF THE LEARNED DR IS NOT ACCEPTABLE IN VIEW OF SUCH EVIDENCE PLACED IN T HE PAPER BOOK FILED BEFORE US. NO MATERIAL HAS BEEN BROUGHT ON R ECORD BY THE LEARNED DR TO SHOW THAT THEY WERE NOT FILED BEFORE THE AO. IN ITA NO.1833/AHD/2010 -6- THE ABSENCE OF ANY SUCH EVIDENCE OR EVIDENCE BEING PLACED ON RECORD WE FIND NO GOOD AND JUSTIFIABLE REASONS TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS ISSUE. THE SAME IS CONFIRMED AND THE GROUND OF THE APPEAL OF THE REVENUE IS DISMISSE D. 9. THE GROUND NO.2 IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A) IN DELETING THE ADDITION OF RS.2 00 000/- MA DE BY THE AO AS BOGUS GIFT. 10. THE BRIEF FACTS OF THE CASE ARE THAT THE AO OBS ERVED THAT THE ASSESSEE RECEIVED GIFT FROM HIS WIFE OF RS.2 00 000 /- IN CASH. THE ASSESSEE WAS ASKED TO FURNISH THE COPY OF GIFT DEED AND OTHER DOCUMENTARY EVIDENCES AND ALSO CREDITWORTHINESS OF THE DONOR. THE ASSESSEE DID NOT FURNISH ANY DETAILS. THEREFOR E THE AO ISSUED SUMMONS UNDER SECTION 131 OF THE ACT TO THE DONOR SMT. SWEETY V. GAJIWALA. IN RESPONSE TO THE NOTICE SMT . SWEETY V. GAJIWALA APPEARED ON 14.12.2009 AND HER STATEMENT WAS RECORDED WHEREIN SHE STATED THAT SHE DID NOT KNOW ON WHICH OCCASION SHE HAS GIVEN THE GIFT TO HER HUSBAND AND SHE HAS NOT KNOWN THE VALUE OF THE AMOUNT OF GIFT. SHE ALSO RE PLIED THAT SHE HAS NOT KNOWN THE SOURCE OF THE GIFT. IN VIEW OF THIS STATEMENT THE AO OBSERVED THAT THE ASSESSEE HAS MADE A FABRIC ATED STORY AND TREATED THE AMOUNT OF RS.2 00 000/- AS INCOME O F THE ASSESSEE. 11. ON APPEAL BEFORE THE LEARNED CIT(A) THE ASSESS EE ARGUED THAT GIFT OF RS.2 LAKHS IN CASH RECEIVED FROM HIS W IFE AND NOT FROM ITA NO.1833/AHD/2010 -7- ANY OUTSIDE PERSON OR A DISTANT RELATIVE AND HENCE ITS GENUINENESS CANNOT BE DOUBTED. FURTHER IT WAS SUB MITTED THAT THE CREDITWORTHINESS OF THE DONOR WAS ALSO NOT IN D OUBT SINCE HER PAN CARD IT RETURN AND EVEN THE AUDIT REPORT REFLE CTING THE SAID GIFT IN HER CAPITAL ACCOUNT HAVE BEEN FURNISHED TO THE AO. IT WAS ALSO EXPLAINED THAT THE DONOR WAS A YOUNG LADY AGED AROUND 27 YEARS AND SHE HAD NEVER APPEARED BEFORE ANY GOVERNM ENT AUTHORITY FOR RECORDING HER STATEMENT AND THUS WH EN HER STATEMENT WAS BEING RECORDED BY THE AO SHE GOT NER VOUS AND OUT OF SHEER NERVOUSNESS AND FEAR-FACTOR SHE COULD NOT PROPERLY RESPOND TO THE QUESTIONS OF THE AO. HOWEVER SHE C ONFIRMED THE FACT OF HAVING GIVEN THE GIFT TO HER HUSBAND. THER EFORE IT WAS PLEADED THAT THE ADDITION MADE UNDER SECTION 68 OF THE ACT BY THE AO BE DELETED. 12. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION. 13. THE LEARNED DR VEHEMENTLY ARGUED AND SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT WIFE OF THE ASSESSEE WHO APPEARED BEFORE THE AO DID NOT REMEMBER THE OCCASION OF GIVI NG THE GIFT AND THE VALUE OF THE GIFT GIVEN TO HER HUSBAND THE REFORE THE AO HAS RIGHTLY TREATED THE GIFT AS BOGUS AND MADE ADDI TION OF THE SAME TO THE INCOME OF THE ASSESSEE. 14. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OT HER HAND ARGUED THAT THE GIFT WAS REFLECTED IN THE RETURN OF INCOME FILED BY ITA NO.1833/AHD/2010 -8- HER AND ALSO THE ACCOUNTS OF THE ASSESSEES WIFE WE RE AUDITED AND THAT PAN ACCOUNT AND THE COPY OF THE RETURN WAS ALS O FILED BEFORE THE AO. IN VIEW OF THE ABOVE DOCUMENTS EVIDENCING THE GIVING OF THE GIFT TO THE ASSESSEE IDENTITY AND CREDITWOR THINESS OF THE DONOR BEING NOT IN DOUBT THE ADDITION MADE BY THE AO WAS RIGHTLY DELETED BY THE LEARNED CIT(A). 15. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED GIFT OF ` 2 00 000/- FROM HIS WIFE SMT. SWEETY V. GAJIWALA WHICH WAS NOT ACCEPTED BY THE AO AND ADDED TO THE INCOME OF T HE ASSESSEE ON THE GROUND THAT AT THE TIME OF RECORDING OF THE STATEMENT OF THE SAID DONOR ON 14.12.2009 SHE STATED THAT SHE COULD NOT REMEMBER THE OCCASION ON WHICH GIFT WAS GIVEN BY HER TO HER HUSBAND AND THE AMOUNT OF THE GIFT. ON APPEAL THE LEARNED CIT (A) DELETED THE ADDITION BY OBSERVING AS UNDER: I HAVE CONSIDERED THE FACTS OF THE CASE THE ORDER OF THE AO AND THE SUBMISSIONS OF THE APPELLANT. IN THIS RE GARD IT IS SEEN THAT THE GIFT HAS BEEN RECEIVED BY THE APPE LLANT FROM HIS WIFE VIZ. MRS. SWEETY V. GAJIWALA WHO HAD EVEN APPEARED BEFORE THE AO AND HENCE THE IDENTITY OF T HE DONOR STANDS ESTABLISHED AND MOREOVER THE CREDITWORTHINESS OF THE DONOR HAS ALSO NOT BEEN DOU BTED BY THE AO SINCE THE PAN CARD I T RETURN AND EVEN THE AUDIT REPORT OF THE DONOR HAS BEEN SUBMITTED BEFORE THE A O. AS REGARDS GENUINENESS OF THE GIFT IT IS SEEN THAT TH E ONLY ALLEGATION OF THE AO IS THAT WHEN HE RECORDED THE S TATEMENT OF THE DONOR SHE COULD NOT FURNISH THE OCCASION AN D EXACT DATES ON WHICH THE SAID GIFT WAS GIVEN BY HER TO TH E APPELLANT AND ACCORDINGLY THE GENUINENESS OF THE G IFT WAS ITA NO.1833/AHD/2010 -9- NOT ACCEPTED BY THE AO. IN THIS REGARD I AM OF THE OPINION THAT GENUINENESS OF A GIFT BETWEEN A HUSBAND AND WI FE CANNOT BE DOUBTED WHEN THE WIFE CONFIRMS THE GIFT O NLY ON THE GROUND THAT SHE COULD NOT GIVE THE OCCASION OR THE DATE ON WHICH THE GIFT WAS MADE. THEREFORE I AM OF THE OPINION THAT THE AO IS NOT JUSTIFIED IN DOUBTING THE GENUIN ENESS OF THE GIFT OF RS. 2 LACS RECEIVED BY THE APPELLANT FR OM HIS WIFE MRS. SWEETY V. GAJIWALU AND THEREFORE I DELETE THE ADDITION OF RS. 2 LACS MADE BY THE AO U/S. 68 OF TH E ACT FOR THE SAME. AS A RESULT THIS GROUND OF' APPEAL STAND S ALLOWED. WE FIND THAT IS NOT IN DISPUTE THAT WIFE OF THE AS SESSEE SMT. SWEETY V. GAJIWALA IS CARRYING ON BUSINESS UNDER T HE NAME AND STYLE OF M/S.SWEETY SAREES. FURTHER IT IS ALSO NO T IN DISPUTE THAT THE DONOR HAS MAINTAINED REGULAR BOOKS OF ACCOUNTS OF HER BUSINESS WHICH WAS ALSO AUDITED BY A QUALIFIED CHA RTERED ACCOUNTANT AND IN SUCH BOOKS OF ACCOUNTS THE FACT OF MAKING GIFT TO THE ASSESSEE WAS DULY RECORDED. NO MATERIAL WAS BROUGHT ON RECORD TO SHOW THAT SUCH AUDITED BOOKS OF ACCOUNTS WERE NOT COMPLETE AND UNRELIABLE. WE FIND THAT THE STATEME NT OF DONOR UNDER SECTION 131 OF THE ACT WAS RECORDED ON 14.12. 2009 WHICH IS MORE THAN TWO AND HALF YEARS AFTER THE DATE OF G IFT. IN THE ABOVE CIRCUMSTANCES SIMPLY BECAUSE THE DONOR COULD NOT REMEMBER THE EXACT AMOUNT OF GIFT OR COULD NOT PRO PERLY EXPLAIN THE OCCASION OF THE GIFT WHICH WAS MADE BY HER TO H ER HUSBAND IT COULD NOT BE CONCLUDED THAT THE GIFT WAS NON-GENUIN E OR BOGUS. WE FIND FORCE IN THE ARGUMENTS OF THE LEARNED AR OF THE ASSESSEE THAT IN BETWEEN THE GIFT FROM HUSBAND TO WIFE AND V ICE-A-VERSA IT IS NOT NECESSARY THAT THERE MUST BE AN OCCASION AND GIFT COULD BE ITA NO.1833/AHD/2010 -10- MADE EVEN WITHOUT ANY OCCASION ALSO. FURTHER THE SUM OF THE GIFT IS DULY RECORDED IN THE AUDITED BOOKS OF ACCOU NTS OF THE DONOR AND THEREFORE THE SAME IS NOT IN DISPUTE A ND SIMPLY BECAUSE THE LADY DONOR COULD NOT PROPERLY EXPLAIN T O THE AO UNDER NERVOUSNESS ADVERSE INFERENCE CANNOT BE DRAW N THEREFROM. NON-REMEMBERING OF THE EXACT VALUE OF THE GIFT AFTE R LAPSE OF MORE THAN TWO AND HALF YEARS FROM THE DATE OF GIFT IS ALSO NOT A SITUATION FROM WHICH IT CAN BE CONCLUDED THAT GIFT WAS NOT GENUINE. WE FIND THAT THE IDENTITY OF THE DONOR W HO IS WIFE OF THE ASSESSEE IN HER STATEMENT UNDER SECTION 131 OF THE ACT OF HAVING MADE GIFT TO HER HUSBAND AND HER AUDITED BOO KS OF ACCOUNTS OF HER PROPRIETARY BUSINESS ESTABLISHES TH E GENUINENESS OF GIFT AND THE CAPACITY OF THE DONOR OF THE GIFT. NO DEFECT IN THE AUDITED ACCOUNTS OF THE DONOR WAS POINTED OUT BY TH E REVENUE. IN THESE CIRCUMSTANCES WE DO NOT FIND ANY REASON T O INTERFERE WITH THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE WHICH IS CONFIRMED AND THE GROUND OF THE REVENUE IS DISMISSE D. 16. THE GROUND NO.3 OF THE APPEAL OF THE ASSESSEE I S DIRECTED AGAINST THE ORDER OF THE CIT(A) RESTRICTING THE ADD ITION AT RS.1 00 000/- INSTEAD OF RS.2 91 509/- MADE BY THE AO ON ACCOUNT OF LOW GP. 17. BRIEF FACTS OF THE CASE ARE THAT THE AO OBSERVE D THAT THERE WAS FALL IN THE GP DURING THE YEAR UNDER CONSIDERAT ION AS COMPARED TO THE LAST YEAR TO THE TUNE OF 11.50% IN THE CASE OF GURUKRUPA TEXTILES ASSESSEES PROPRIETORY CONCERN. HE ITA NO.1833/AHD/2010 -11- OBSERVED THAT THE ASSESSEE HAS SHOWN GP RATE OF 12. 58% ON TOTAL TURNOVER OF RS.25 34 867/- AS AGAINST GP RATE OF 24 .08% ON TOTAL TURNOVER OF RS.17 23 794/-. HE ALSO OBSERVED THAT THE ASSESSEE HAS NOT FURNISHED ANY REASON FOR FALL IN GP RATE AL ONG WITH DOCUMENTARY EVIDENCES. THE ASSESSEE HAS ALSO NOT P RODUCED MAIN RECORDS SUCH AS PRODUCTION REGISTER STOCK REG ISTER SALES REGISTER AND PURCHASE REGISTER FOR VERIFICATION. I N THE ABSENCE OF THE SAME THE CORRECT PROFIT EARNED BY THE ASSESSEE WAS NOT VERIFIABLE. THUS THE AO REJECTED BOOK RESULTS OF THE ASSESSEE INVOKING THE PROVISIONS OF SECTION 145 OF THE IT AC T AND MADE ADDITION OF RS.2 91 509/- BEING 11.5% OF RS.25 34 8 67/-. 18. ON APPEAL BEFORE THE LEARNED CIT(A) THE ASSESS EE SUBMITTED THAT THE MAIN REASON FOR FALL IN GP WAS D UE TO CHANGE IN THE BUSINESS CARRIED OUT IN THE CURRENT YEAR AS COMPARED TO THE EARLIER YEAR WHICH IS EVIDENT FROM THE FACT THAT T HE TRADING OF YARN WAS DISCONTINUED YARN TEXTURISING JOB WORK WA S DISCONTINUED DURING THE YEAR AND THE ASSESSEE WAS CARRYING ON MANUFACTURING AND SALES OF GREY CLOTH. IT WAS SUBM ITTED THAT THIS FACT WAS EVIDENT FROM THE AUDIT REPORT ITSELF OF TH E PROPRIETARY CONCERN WHICH CONTAINS THE FIGURES FOR BOTH THE CU RRENT YEAR AS WELL AS THE EARLIER YEAR. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS MAINTAINED COMPLETE QUANTITATIVE DETAILS OF RAW MATERIALS AND FINISHED GOODS WHICH WERE VERIFIED BY THE AUDITORS AND REPORTED IN THE TAX AUDIT REPORT FOR THE YEAR UNDER CONSIDER ATION AND THE SAID QUANTITATIVE DETAILS WERE FURNISHED TO THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS EXPLAINED THAT THE ITA NO.1833/AHD/2010 -12- ENTIRE SALES PURCHASES AND EXPENSES OF THE ASSESSE E WERE JUSTIFIED SINCE THE AO HAS NOT DOUBTED THE SAME AND HAS NOT POINTED OUT ANY DEFECT IN THE REGULARLY MAINTAINED BOOKS OF ACC OUNTS. THEREFORE IT WAS PLEADED THAT THE ADDITION MADE ON ACCOUNT OF LOW GP MARGIN MAY BE DELETED. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE REDUCE D THE ADDITION BY OBSERVING AS UNDER: I HAVE CONSIDERED THE FACTS OF THE CASE THE ORDER OF THE AO AND THE SUBMISSIONS OF THE APPELLANT. IT IS SEEN THAT THE AO HAS MADE THE IMPUGNED ADDITION SOLELY ON THE GRO UND THAT THE GP MARGIN HAS DECREASED IN THE CURRENT YEA R AS COMPARED TO THE EARLIER YEAR AND HAD REJECTED THE B OOK RESULTS BY INVOKING THE PROVISIONS OF SECTION 145 O F THE ACT WITHOUT POINTING OUT ANY SPECIFIC DEFECT IN THE BOO KS OF ACCOUNTS. ON THE OTHER HAND THE APPELLANT HAS MAIN TAINED COMPLETE QUANTITY RECORDS AND THE SAME HAVE BEEN SUBMITTED TO THE AO. MOREOVER THE GENUINENESS OF T HE SALES PURCHASES AND EXPENSES OF THE APPELLANT HAV E ALSO NOT BEEN DOUBTED BY THE AO. THEREFORE IN VIEW OF T HE FACT THAT NO DEFECTS ARE POINTED OUT IN THE BOOKS OF ACC OUNTS AND THE PURCHASES AND SALES BEING ACCEPTED AS GENUINE AND COMPLETE QUANTITATIVE DETAILS HAVE BEEN SUBMITTED B Y THE AO. I AM OF THE OPINION THAT THE AO IS NOT JUSTIFIE D IN REJECTING THE BOOK RESULTS BY INVOKING SECTION 145. HOWEVER THE APPELLANT HAS FAILED TO EXPLAIN AS TO HOW THE CHANGE IN THE BUSINESS ACTIVITY IN THE CURRENT YEAR AS COMPARED TO THE EARLIER YEAR HAS EFFECTED THE GP IN SUCH AN ADVERSE MANNER. THEREFORE CONSIDERING THE FACT THA T THE AO HAS NOT BEEN ABLE TO POINT OUT ANY DEFECTS IN TH E BOOKS OF ACCOUNTS AND THE APPELLANT HAS MAINTAINED COMPLE TE QUANTITATIVE DETAILS. I HEREBY RESTRICT THE ADDITIO N FOR LOW GP MARGIN TO THE EXTENT OF RS.1 00 000/- AS AGAINST RS.2 91 509/- AS MADE BY THE AO SINCE THE APPELLANT HAS FAILED TO SATISFACTORILY EXPLAIN THE REASONS FOR TA LL IN GP MARGIN. ACCORDINGLY THE APPELLANT GETS A RELIEF OF ITA NO.1833/AHD/2010 -13- RS.1 91 509/- ON THIS COUNT. AS A RESULT THIS GROU ND OF APPEAL IS PARTLY ALLOWED. 20. THE LEARNED DR RELIED ON THE ORDER OF THE AO W HILE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDE R OF THE CIT(A). 21. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. WE FIND NO SPECIF IC DEFECT IN THE FINDING OF THE LEARNED CIT(A) COULD BE POINTED OUT BY THE LEARNED DR. WE FIND THAT THE DR COULD NOT DISPUTE THE FIND INGS OF THE LEARNED CIT(A) WHICH IS TO THE EFFECT THAT BECAUSE OF CHANGE IN LINE OF BUSINESS OF THE ASSESSEE DURING THE YEAR U NDER CONSIDERATION FROM ITS IMMEDIATELY PRECEDING YEAR THE GP RATE OF THE PRECEDING YEAR IS NOT COMPARABLE WITH THE GP RA TE OF THE YEAR UNDER CONSIDERATION. IN THE ABSENCE OF ANY MATERIA L PROVIDED BEFORE US TO CONTROVERT THE FINDINGS OF THE LEARNED CIT(A) WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDE R OF THE CIT(A) WHICH IS CONFIRMED AND THE GROUND OF THE R EVENUE IS DISMISSED. 22. IN THE RESULT APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- (( /MUKUL KR. SHRAWAT) /JUDICIAL MEMBER . .. . . . . . ! ! ! ! /N.S. SAINI '# '# '# '# /ACCOUNTANT MEMBER