Shri Champaklal V.Patel L/h of late Vallabhbhai Laxmanbhai Patel, Surat v. The Ito Wd-1(3), Surat

ITA 2100/AHD/2000 | 1997-1998
Pronouncement Date: 27-08-2010 | Result: Partly Allowed

Appeal Details

RSA Number 210020514 RSA 2000
Assessee PAN AAMPP2784N
Bench Ahmedabad
Appeal Number ITA 2100/AHD/2000
Duration Of Justice 9 year(s) 10 month(s) 21 day(s)
Appellant Shri Champaklal V.Patel L/h of late Vallabhbhai Laxmanbhai Patel, Surat
Respondent The Ito Wd-1(3), Surat
Appeal Type Income Tax Appeal
Pronouncement Date 27-08-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 27-08-2010
Date Of Final Hearing 10-08-2010
Next Hearing Date 10-08-2010
Assessment Year 1997-1998
Appeal Filed On 06-10-2000
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI T K SHARMA JM & SHRI A N PAHUJA AM ITA NO.2100/AHD/2000 (ASSESSMENT YEAR:-1997-98) SHRI CHAMPAKLAL V PATEL & SMT. AMBABEN V PATEL LEGAL HEIRS OF LATE SHRI VALLABHBHAI LAXMANBHAI PATEL 28 HAREKRISHNA MASKATI PLOTS PARLE POINT ATHWALINES SURAT-395007 [PAN: AAMPP 2784 N] V/S INCOME-TAX OFFICER WARD- 1(3) AAYAKAR BHAVAN MAJURA GATE SURAT [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI M K PATEL AR REVENUE BY:- SHRI BHUVNESH KULSHRESHTHA DR O R D E R A N PAHUJA: THIS APPEAL BY THE ASSESSEE AGAINST AN ORDER DATE D 26-06-2000 OF THE LD. CIT(APPEALS)-I SURAT RAISES THE FOLLOWING GROUNDS :- [1] THE LEARNED ITO WARD-1(3) SURAT ERRED IN MAKING ADDITION OF RS.2 81 500/- IN ALL FOR THE REASONS CITED IN PARA 4 AND 6 OF HIS ORDER. [2] HE ALSO ERRED IN MAKING ADDITIONS OF RS.1 00 68 7/- AS PER PARA 7 TO 9 OF HIS ORDER. [3] THE ADDITION MADE ARE WITHOUT ANY COGENT EVIDEN CE AND MERELY ON PRESUMPTION BASIS IS REQUIRED TO BE DELETED. [4] HE OUGHT TO HAVE CONSIDERED THE SUBMISSIONS GIV EN TIME TO TIME. [5] THE INTEREST CHARGED U/S 234B IS ERRONEOUS WHIC H IS REQUIRED TO BE DELETED. [6] THE LEARNED ITO WAS WRONG IN DISALLOWING 1/5 TH DEPRECIATION WITHOUT GIVING OPPORTUNITY OF BEING HEARD FOR THE SAME. ITA NO.2100/AHD/2000 2 [7] HE OUGHT TO HAVE ACCEPTED THE BOOK RESULT AND W AS WRONG IN MAKING LUMP-SUM ADDITION OF RS.48 000/-. [8] THE CIT(A)-I SURAT ERRED IN GIVING DIRECTION T O DELETE OR REDUCE THE ADDITION AS MAY BE WARRANTED AFTER THE RECEIPT OF THE DECISION OF THE HONOURABLE SETTLEMENT COMMISSION. [9] THE CIT(A)-I SURAT OUGHT TO HAVE CONSIDERED TH E STATEMENT OF FACTS PLACED BEFORE HIM. [10] HE FURTHER OUGHT TO HAVE CONSIDERED THAT THE Y EAR UNDER CONSIDERATION IS NOT PENDING WITH THE SETTLEMENT CO MMISSION. [11] HE OUGHT TO HAVE CONSIDERED THE APPLICATION FO R ADDITIONAL GROUNDS TAKEN IN WRITING AND FILED IN HIS OFFICE ON 16-6-20 00. (MENTIONED AS SR. NO. 6 AND 7 IN THIS MEMO) 2 ADVERTING FIRST TO GROUND NO.1 IN THE APPEAL FAC TS IN BRIEF AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCO ME OF RS.2 84 140/- FILED ON 27-08-97 BY THE ASSESSEE EN GAGED IN BUSINESS OF BILL DISCOUNTING AND MANUFACTURE/ SALE OF ART SILK CLOTH IN THE NAME AND STYLE OF M/S. VASUDEV TEXTILES AFTER BEING PROCESSED ON 22-09-97 U/S 143(1)(A) OF THE INCOME-TAX ACT 19 61 [ HEREINAFTER REFERRED TO AS THE ACT] WAS SELECTED FOR SCRUTIN Y WITH THE ISSUE OF NOTICE U/S 143(2) OF THE ACT . THE AO NOTICED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE A.Y. 1991-92 THE UNACCOUNTED ADVANCES OF RS.16 LACS (RS. 4 LAKHS IN CHEQUES AND RS.12 LAKHS IN CASH) GIVEN TO SHIVRAMBHAI OF SHIV TRADING CO. WERE FOUND TO BE OUTSTANDING AS ON 31-03-91. SINCE THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE TO SHOW THAT THE SAID ADVANCES WERE RECEIV ED BACK INTEREST ON THE AMOUNT OF ADVANCES WAS ADDED TO THE TOTAL INCOME FOR THE AYS 1991-92 TO 1995-96. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y. 1996-97 THE ASSESSEE ADMITTED THAT OUT OF THE TOTAL ADVANCE OF RS. 16 LAKHS HE HAD RECEIVED BACK RS.6.82 LAKHS DURING THE F.Y. 1995-96 AND THE SAME HAD BEEN DEPOS ITED IN HIS BANK ACCOUNT AND THEREFORE THE INTEREST INCOME EA RNED ON THAT HAD BEEN SHOWN IN THE REGULAR BOOKS OF ACCOUNT. THE AS SESSEE ITA NO.2100/AHD/2000 3 HOWEVER DID NOT SHOW THE INTEREST EARNED DURING TH E F.Y. 1995-96 ON THE BALANCE UNACCOUNTED ADVANCE OF RS.9.18 LACS (I.E. RS.16 LACS - RS. 6.82 LACS). ACCORDINGLY THE INTEREST ON SUCH BALANCE UNACCOUNTED ADVANCE WAS ESTIMATED AT RS.1 65 240/- ( @ 18% P.A.) AND ADDED TO THE ASSESSEE'S TOTAL INCOME FOR THE A Y 1996-97. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSES SEE NEITHER SHOWED INTEREST EARNED DURING THE FINANCIAL YEAR 1 996-97 ON THE BALANCE UNACCOUNTED ADVANCE OF RS.9.18 LACS NOR PR ODUCED ANY EVIDENCE THAT THE SAID ADVANCE OF RS.9.18 LAKHS ( R S. 16 LAKHS - RS.6.82 LAKHS) WAS RECEIVED BACK FROM SHRI SHIVRAMB HAI. AFTER CONSIDERING REPLY OF THE ASSESSEE RELYING UPON HI S OWN FINDINGS FOR THE EARLIER ASSESSMENT YEARS THE ASSESSING OFFICER [AO IN SHORT] ADDED AN AMOUNT OF RS.1 65 240/- ON ACCOUNT OF INTE REST AS UNACCOUNTED INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDER ATION BESIDES INTEREST OF RS.1 16 260/- ON THE EARLIER YEARS UNACCOUNTED IN TEREST INCOME RESULTING IN AN ADDITION OF RS.2 81 500/-. 2.1 GROUND NO.2 RELATES TO DISALLOWANCE OF INTER EST OF RS.1 00 687/-. THE AO FOUND THAT IN THE ASSESSMENT ORDER DATED 29- 03-95 FOR THE A.Y. 1992-93 AN AMOUNT OF RS.72 706/ - BY WAY OF INTEREST WAS ADDED ON FIXED DEPOSITS OF RS.2 40 00 0/- ENCASHED BY THE ASSESSEE ON 26-09-91. THESE FIXED DEPOSITS WERE HELD TO BE UNEXPLAINED IN THE A.Y. 1990-91 FOR THE REASONS DIS CUSSED IN DETAIL IN PARA 6 OF THE SAID ORDER. SINCE THE ASSESSEE DI D NOT SHOW ANY INTEREST ON THE ENCASHED AMOUNT OF RS.2 40 000/- OR ON INTEREST EARNED DURING THE FYS 1991-92 TO 96-97 THE AO WORK ED OUT INTEREST EARNED DURING A.Y. 1992-93 TO 1996-97 AS UNDER:- INTEREST EARNED ON FD ENCASHED AMOUNT OF RS.2 40 000/- DURING AY 1992-92 RS.43 200/- INTEREST EARNED ON INTEREST INCOME OF RS.43 200/- DURING AY 1992-93 AS PER ORDER DATED 29-03-95 RS.7 776/- INTEREST EARNED ON INTEREST INCOME OF RS.50 976/- (I.E. RS.43 200/- + RS.7 776/-) DURING AY 1993-94 A S RS.9 175/- ITA NO.2100/AHD/2000 4 PER ORDER DATED 29-12-96 INTEREST EARED ON INTEREST INCOME OF RS.60 151/- (I.E. 50 976 + RS.9 175/-) DURING AY 1994-95 RS.10 827/- INTEREST EARNED ON INTEREST INCOME OF RS.70 978 (I. E. RS.60151 + 10827) DURING AY 1995-96 RS.12 767/- INTEREST EARNED ON INTEREST INCOME OF RS.83 745/- (I.E. RS.70 978 + RS.12 767/-) DURING AY 1996-97 RS.15 074/- AND ACCORDINGLY ADDED AN AMOUNT OF RS.1 00 687 IN THE YEAR UNDER CONSIDERATION . 3. ON APPEAL THE LD. CIT(A) UPHELD THE ADDITION OF RS.2 81 500 & RS.1 00 687 IN THE FOLLOWING TERMS: AT THE TIME OF HEARING THE APPELLANT'S REPRESENTA TIVE SUBMITTED THAT THE ADDITIONS MADE IN RESPECT OF INTEREST INCOME FOR CE RTAIN YEARS HAVE BEEN CONFIRMED IN APPEAL AND SUCH ADDITIONS MADE IN RESP ECT OF INTEREST INCOME HAVE BEEN DELETED IN APPEAL FOR SOME OTHER YEARS. I T WAS FURTHER SUBMITTED THAT THE ADDITION IN RESPECT OF INTEREST INCOME IS SUBJECT TO THE ADDITION MADE IN RESPECT OF UNACCOUNTED INCOME/AMOUNT IN THE YEAR 1991. THE APPELLANT IS BEFORE THE SETTLEMENT COMMISSION AGAIN ST THE ADDITION MADE IN THE YEAR 1991. IT WAS FURTHER SUBMITTED THAT THE ADDITION IN RESPECT OF INTEREST INCOME IS ON ACCOUNT OF ADDITION MADE IN R ESPECT OF UNEXPLAINED INCOME IN THE YEAR 1991. IT WAS REQUESTED THAT THE ASSESSING OFFICER MAY BE DIRECTED TO DELETE THE ADDITION IN RESPECT OF IN TEREST INCOME ON THE DELETION OF ADDITION IN RESPECT OF UNACCOUNTED AMOU NTS BY THE HONOURABLE SETTLEMENT COMMISSION. . I HAVE CONSIDERED THE FACTS AND MERITS OF THE CASE. THE ADDITION IN RESPECT OF INTEREST INCOME IS CLEARLY ON ACCOUNT OF ADDITIO N MADE IN RESPECT OF UNACCOUNTED AMOUNTS IN THE EARLIER YEAR. IN CAS E THE ADDITION MADE IN RESPECT OF UNACCOUNTED AMOUNT IN THE EARLIER YEA R IS DELETED BY THE HONOURABLE SETTLEMENT COMMISSION THE ADDIT ION MADE IN RESPECT OF INTEREST INCOME WILL NOT SURVIVE. CO NSIDERING THE FACTS OF THE CASE I WOULD DIRECT THE ASSESSING OFFICER TO DE LETE OR REDUCE THIS ADDITION AS MAY BE WARRANTED AFTER THE RECE IPT OF THE DECISION OF THE HONOURABLE SETTLEMENT COMMISSION. 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINS T THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LEARNED AR ON BEHA LF OF THE ASSESSEE SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF TH E ASSESSEE BY THE ITA NO.2100/AHD/2000 5 ORDER DATED 25-04-2005 OF THE ITAT IN ASSESSEES O WN CASE FOR AYS 1994-95 TO 1996-97 IN ITA NOS.844 TO 846/AHD/2000 FOLLOWED IN THE ORDER DATED 02-12-2005 IN ITA NO.1205/AHD/2003 FOR THE AY 1998- 99. THE LEARNED DR DID NOT OPPOSE THESE SUBMISSIONS ON BEHALF OF THE ASSESSEE. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE DECISIONS RELIED UPON. WE FIND THAT THE ITAT IN THEIR AFORESAID ORDER DATED 25.4.2005 IN ITA NOS.84 4 TO 846/AHD/2000 WHILE ADJUDICATING A SIMILAR ISSUE CON CLUDED AS UNDER: 2 THE SOLE GROUND RAISED IN THESE APPEALS IS AS UN DER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) BARODA HAS ERRED IN DELETING THE ADDITION O F INTEREST OF RS.370277- BY GIVING NEGATIVE FINDINGS THAT ASSESSING OFFICER SHOULD ESTABLISH THAT ASSESSEE HAS EARNED INTEREST INCOME CONTRARY TO TH E FACT THAT ASSESSEE DID NOT PRODUCE ANY EVIDENCE OF HAVING RECEIVED BAC K THE LOAN AMOUNT IN THIS YEAR OR AN EARLIER YEAR. THE FINDING GIVEN BY THE LEARNED CIT(A) ARE ALSO CONTRARY TO THE DECISIONS OF THE TEAMED CIT(A) IN EARLIER YEARS.' 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CITA) BARODA HAS ERRED IN DELETING THE ADDITION OF INTEREST OF RS.370277/- BY GIVING NEGATIVE FINDINGS THAT ASSESSING OFFICER SHOULD ESTABLISH THAT ASSESSEE HAS EARNED INTEREST INCOME CONTRARY TO THE FACT THAT ASSESSES DID NOT PRODUCE ANY EVIDENCE OF HAVING RECEIVED BACK TH E LOAN AMOUNT IN THIS YEAR OF AN EARLIER YEAR. THE FINDING GIVEN BY THE { EARNED CIT(A) ARE ALSO CONTRARY LO THE DECISIONS OF THE LEARNED CIT(A) IN EARLIER YEARS.' 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE EASE AND IN LAW THE {EARNED CIT(A) BARODA HAS ERRED IN DELETING THE ADDITION O F INTEREST OF RS.370884/'- BY GIVING NEGATIVE FINDINGS THAT ASSES SING OFFICER SHOULD ESTABLISH THAT ASSESSEE. HAS EARNED INTEREST INCOME CONTRARY LO THE FACT THAT ASSESSEE DID NOT PRODUCE ANY EVIDENCE OF HAVIN G RECEIVED BACK THE LOAN AMOUNT IN THIS YEAR OR AN EARLIER YEAR. THE FI LING GIVEN BY THE LEARNED CIT(A) ARE ALSO CONTRARY TO OF THE LEARNED CIT(A) I N EARLIER YEARS.' 2A. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF CIT(A). THE LD. COUNSEL FOR THE ASSESSEES DREW OUR ATTENTION TO PARA 4 OF THE ORDER OF CIT(A} WHICH NARRATES THE FACTS AND RE ASONS FOR DELETING THE ADDITION. FOR THE SAKE OF CONVENIENCE IT IS REPROD UCED AS UNDER:- ITA NO.2100/AHD/2000 6 '4. THE CONTENTIONS OF THE APPELLANT THE ASSESSING OFFICER AND FACTS ON RECORD ARE CONSIDERED CAREFULLY. THE ORDER OF THE CIT (APPEALS) FOR A.Y.90-91 AND 91-92 ARE PERUSED IT I S SEEN THAT THE APPELLANT CLAIMED THAT THE ADVANCES WERE MADE BY C. V. PATEL(HUF) AND NOT BY HIM IN INDIVIDUAL CAPACITY AN D THESE ADVANCES WERE RETURNED BY THE DEBTORS IN APRIL 199 0 AND THE CASH RECEIVED ON SUCH ADVANCES WERE KEPT LYING IDLE TILL F.Y.1995-95 WHEN THE SAME WAS DEPOSITED IN THE BANK ACCOUNT BY C.V. PATEL HUF ON RECEIPT OF THE ORDER OF THE SETTLEMENT COMMISSION A DMITTING THE PETITION FILED BY THE HUF. THE APPELLANT CONTENDED THAT THE HUF DID NOT BRING THIS CASH INTO THE BOOKS ON THE ADVICE GI VEN BY THE COUNSEL. THE ADVANCES WERE RECEIVED BACK IMMEDIATEL Y AS THE DEBTORS FEARED ACTION BY THE DEPARTMENT AGAINST THE M AND THERE WAS FEAR IN THE MINDS OF BOTH APPELLANT AND THE DEB TORS FOR ACTION U/S 269SS AND 269T OF THE ACT. AFTER PASSING OF THE ORDER BY THE SETTLEMENT COMMISSION THE MONEY WAS DEPOSITED IN T HE BANK AT THE ADVICE OF THE COUNSEL AND AS HUF FELT PROTECTED BY SUCH ORDER. THE ASSESSING OFFICER HAS NOT ACCEPTED THE CONTENTI ONS OF THE APPELLANT AND PRESUMED THAT THE ADVANCES WERE GIVEN BY THE APPELLANT IN INDIVIDUAL CAPACITY AND CONTINUED WITH THE DEBTORS. IT WAS FURTHER PRESUMED THAT THE APPELLANT HAD RECEIVE D INTEREST ON SUCH ADVANCES AND ALSO EARNED INTEREST ON SUCH INTE REST. THUS THE ASSESSING OFFICER MADE A SERIES OF PRESUMPTIONS IN CONCLUDING THAT THE APPELLANT EARNED INTEREST INCOME FROM ADVANCES AND ITS INTEREST. IT IS OBSERVED THAT THE ASSESSING OFFICER HAS ESTIMATED INTEREST ON ADVANCES AND INTEREST ON INTEREST WITHO UT MAKING ANY ENQUIRY IN RESPECT OF SUCH ADVANCES AND WITHOUT MAK ING ANY EVIDENCES / MATERIAL ON RECORD WHICH MAY SHOW THAT THE ADVANCES CONTINUED TO REMAIN WITH THOSE DEBTORS. HE WORKED O UT THE INCOME ON SUCH ADVANCES AND INTEREST. IT IS WELL SETTLED L AW THAT ONUS IS ON THE ASSESSING OFFICER TO SHOW THAT THE ASSESSEE HAS EARNED INCOME. HE CANNOT MAKE PRESUMPTION ON PRESUMPTIONS WITHOUT ANY EVIDENCE OR MATERIAL THAT ASSESSEE HAS EARNED INCOM E. THOUGH THE APPELLANTS EXPLANATION FOR KEEPING THE CASH IDLE A RE NOT CONVINCING YET THE BURDEN IS ON THE ASSESSING OFFI CER TO BRING OUT SOME MATERIAL / EVIDENCE WHICH MAY POINT OUT EARNIN G OF INTEREST INCOME. THE ASSESSING OFFICER HAS ALSO NOT BROUGHT OUT ANY MATERIAL / EVIDENCE WHICH MAY INDICATE THAT THE MONEY GIVEN AS 'ADVANCES' BELONG TO INDIVIDUAL AND NOT HUF. IN THE PRESENT CA SE THERE IS NO EVIDENCE OR MATERIAL WHICH MAY JUSTIFY ESTIMATION OF EARNING OF NOTIONAL INCOME ON ACCOUNT OF INTEREST EITHER BY IN DIVIDUAL OR BY HUF. BESIDES IN THE PRESENT CASE C.V. PATEL HUF WA S THE OWNER OF THE LOANS AFTER RECEIVING THE SAME FROM PARTITION O F HUF. THIS PARTITION WAS ACCEPTED BY ITO AND ORDER U/S 171 WAS PASSED. T HUS THE HUF IS THE OWNER OF THE ADVANCES AND NOT THE APPELLANT IN INDIVIDUAL ITA NO.2100/AHD/2000 7 CAPACITY AND THEREFORE ANY INCOME ARISING FROM SUCH ADVANCES CANNOT BE TAXED IN THE HANDS OF APPELLANT IN THE IN DIVIDUAL CAPACITY. AFTER EXAMINING THE FACTS OF THE CASE I HOLD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDIT ION OF RS.3 70 277/- ON ACCOUNT OF INTEREST INCOME ON NOTIONAL BASIS WH ICH IS DIRECTED TO BE DELETED. 3. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ADDITION HAS BEEN MADE ON PURE SURMISES AND CONJECTURES. THE DEP ARTMENT HAS NOT CONTROVERTED THE FINDING OF THE CIT(A) THAT THE AMO UNT OF ADVANCES WAS MADE BY HUF. IN THESE CIRCUMSTANCES THE ORDER PASS ED BY THE C!T(A) CANNOT BE FOUND FAULT WITH. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE FIND MERIT IN THE ARGUMENT OF THE LD. COUNSEL THAT THE AO HAS MADE THE ADDITION OF INCOME ON NOTIONAL BASIS WITHOUT BRINGI NG ON RECORD ANY MATERIAL TO SUGGEST THAT THE ASSESSEE HAS IN FACT E ARNED THE INCOME. BESIDES THE FINDING THAT THE AMOUNT ADVANCES WAS M ADE BY HUF ALSO HAS NOT BEEN CONTROVERTED. IN THESE CIRCUMSTANCES WE F IND NO INFIRMITY IN THE ORDERS OF CIT(A). WE ACCORDINGLY UPHOLD THE ORDER OF THE CIT(A). 5.1 FOLLOWING THEIR AFORESAID DECISION THE ITAT IN THEIR ORDER DATED 2.12.2005 FOR THE AY 1998-99 ALSO DELETED THE ADDIT ION. 5.2 IN THE LIGHT OF VIEW TAKEN BY THE ITAT IN TH EIR AFORESAID DECISIONS FOR THE AYS 1994-95 TO 1996-97 & 1998-99 AND THE REVENUE HAVING NOT BROUGHT TO OUR NOTICE ANY MATERI AL OR CONTRARY DECISION SO AS TO ENABLE US TO TAKE DIFFERENT VIEW IN THE MATTER WE HAVE NO HESITATION IN DELETING THE ADDITIONS OF RS. 2 81 500/- & RS. 1 00 687 UPHELD BY THE LD. CIT(A).THEREFORE GROUND NOS.1 & 2 IN THE APPEAL ARE ALLOWED. 6. GROUND NO.5 PERTAINS TO LEVY OF INTEREST U/S 2 34B OF THE ACT. THE LD. AR DID NOT MAKE ANY SUBMISSIONS ON THIS GROUND. THE L EVY OF INTEREST U/S 234B OF THE ACT BEING MANDATORY [COMMISSIONER OF INCOME TAX .VS ANJUM M. H. GHASWALA AND OTHERS 252 ITR 1(SC) AFFIRMED BY HON' BLE APEX COURT IN THE CASE OF CIT V. HINDUSTAN BULK CARRIERS [2003] 259 ITR 449 (SC) AND IN THE CASE OF CIT ITA NO.2100/AHD/2000 8 V. SANT RAM MANGAT RAM JEWELLERS [2003] 264 ITR 564 (SC) ] THIS GROUND IS DISMISSED. 7. GROUND NO.6 RELATES TO DISALLOWANCE OF 1/5 TH DEPRECIATION ON CAR. SINCE THE ASSESSEE SUO MOTU DISALLOWED 1/5 TH OF THE VEHICLE EXPENSES WHILE COMPUTING RETURNED INCOME THE AO D ISALLOWED 1/5 TH DEPRECIATION ON CARS PERSONAL USE OF THE VEHICLE S I.E. MOTOR CARS BY THE ASSESSEE AND HIS FAMILY MEMBERS HAVING NOT BEEN DENIED. 8. ON APPEAL THE LEARNED CIT(A) UPHELD THE DISALLO WANCE FOLLOWING THE DECISION OF THE ITAT CHANDIGARH BENCH IN THE CASE OF M/S SINGLA AGENCIES 60 ITD 410. 9. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LEARNED AR ON BEHAL F OF THE ASSESSEE REITERATED THEIR SUBMISSIONS BEFORE THE LD. CIT(A) WHILE THE LD. DR SUPPORTED THE IMPUGNED ORDER. 10. AFTER HEARING BOTH THE PARTIES AND CONSIDERIN G THE FACTS OF THE CASE WE FIND THAT THE ASSESSEE HAS NOT REFERRED US TO A NY MATERIAL WARRANTING INTERFERENCE WITH THE FINDINGS OF THE LD. CIT(A). S INCE PERSONAL USE OF CARS BY THE ASSESSEE AND HIS FAMILY MEMBERS OR STAFF HAS NOT BEEN DENIED NOR IT WAS CLAIMED THAT THE ASSESSEE OR HIS FAMILY HAD ANY IN DEPENDENT VEHICLES FOR THEIR PERSONAL USE IN OUR OPINION DISALLOWANCE OF 1/5 TH OF DEPRECIATION ON CAR IN THE LIGHT OF PROVISIONS OF SEC. 38(2) OF THE ACT IS R EASONABLE . THEREBEING NO MATERIAL BEFORE US WE ARE NOT INCLINED TO INTERFERE WITH TH E FINDINGS OF THE LEARNED CIT(A) . ACCORDINGLY GROUND NO. 6 IN THE APPEAL IS DISMISS ED. 11. GROUND NO.7 RELATES TO REJECTION OF BOOK RESULT S AND LUMP-SUM ADDITION OF RS.48 000/-. THE AO NOTICED THAT ON TH E TOTAL SALES OF RS.33.40 LACS IN THE YEAR UNDER CONSIDERATION THE ASSESSEE ITA NO.2100/AHD/2000 9 REFLECTED GP @ 2% AS AGAINST THE GP OF 3.4 % FOR THE IMMEDIATELY PRECEDING YEAR ON THE SALES OF RS.41.26 LACS. TO A QUERY BY THE AO SEEKING REASONS FOR THE FALL IN THE GP ALONG WITH Q UANTITATIVE DETAILS REGARDING OPENING STOCK PURCHASES CONSUMPTION PR ODUCTION SALES AND CLOSING STOCK THE ASSESSEE REPLIED VIDE HIS LE TTER DATED 24-02- 2000 THAT DUE TO PRODUCTION OF CLOTH APPLYING NEW TECHNOLOGY BY THE OTHER COUNTRIES AND IMPORTS HAVING BEEN LIBERALIZED BY T HE GOVERNMENT THE TEXTILE BUSINESS IN THE CITY OF SURAT WAS FACING HEAVY CRIS IS AND SINCE THE COST OF YARN WAS MUCH LESS THAN IN THE URBAN AREA GP DECLINED DURING THE YEAR. HOWEVER THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESS EE SINCE THE ASSESSEE DID NOT ATTRIBUTE ANY SPECIFIC REASON FOR FALL IN GP N OR FURNISHED THE DESIRED QUANTITATIVE DETAILS REGARDING PURCHASE AND CONSUMP TION OF YARN AND PRODUCTION & SALE OF CLOTH. IN THESE CIRCUMSTANCES THE BOOK R ESULTS SHOWN BY THE ASSESSEE BEING NOT VERIFIABLE IN THE ABSENCE OF SOURCE-RECO RDS SUCH AS STOCK REGISTER DAY-TO-DAY CONSUMPTION AND PRODUCTION REGISTERS ETC . THE AO ADDED A LUMP SUM AMOUNT OF RS.48 000/- TO THE TOTAL INCOME. 12. ON APPEAL THE ASSESSEE DID NOT RAISE ANY GRO UND IN APPEAL MEMO FILED BEFORE THE LD. CIT(A) AND INSTEAD REQUES TED FOR ADMISSION OF AN ADDITIONAL GROUND VIDE LETTER DATED 16.6.2000. THE IMPUGNED ORDER REVEALS THAT LD. CIT(A) DID NOT R ECORD ANY FINDINGS ON THE PRAYER FOR ADMISSION OF THE ADDITIONAL GR OUND IN TERMS OF PROVISIONS OF SEC. 250(5) OF THE ACT. THE LEARNED A R ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE LEARNED CIT(A) HAVING N OT DECIDED THE ADMISSION OF ADDITIONAL GROUND ISSUE MAY BE RESTO RED TO THE FILE OF CIT(A) . ON THE OTHER HAND THE LD. DR DID NOT OPP OSE THESE SUBMISSIONS ON BEHALF OF THE ASSESSEE. 13. AFTER HEARING BOTH THE PARTIES WE FIND TH AT THE LEARNED CIT(A) HAVE NOT RECORDED ANY FINDINGS ON THE PRAYER FOR ADMISSION OF THE ADDITIONAL GROUND IN TERMS OF PROVISIONS OF SEC. 2 50(5) OF THE ACT. WE THEREFORE RESTORE THE ISSUE TO THE FILE OF THE LEARNED CIT(A) WITH ITA NO.2100/AHD/2000 10 THE DIRECTIONS TO RECORD HIS SPECIFIC FINDINGS ON THE PRAYER FOR ADMISSION OF ADDITIONAL GROUND AFTER ALLOWING SUFF ICIENT OPPORTUNITY TO THE ASSESSEE AND THEREAFTER DISPOSE OF THE MATTE R IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT WHILE ADJUDICATING ON THE ISSUE THE LEARNED CIT(A) SHALL PASS A SPEAKING ORDER KEEPING IN MIND INTER ALIA THE MANDATE OF PROVISIONS OF SEC. 250(6) OF THE ACT. WITH THESE O BSERVATIONS GROUND NO. 7 IS DISPOSED OF. 14. GROUND NOS. 3 4 & 8 TO 11 BEING GENERAL IN NATU RE NOR ANY SUBMISSIONS HAVING BEEN MADE BY THE LD. AR ON THESE GROUNDS DO NOT REQUIRE ANY SEPARATE ADJUDICATION WHILE NO ADDI TIONAL GROUND HAVING BEEN RAISED IN TERMS OF THE RESIDUARY GROUND THESE GROUNDS HAVING NOT BEEN PRESSED BEFORE US ARE THEREFORE DISMISSED. 15. IN THE RESULT APPEAL IS PARTLY ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT TODAY ON 27 -08-2010 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 27-08-2010 COPY OF THE ORDER FORWARDED TO: 1. SHRI CHAMPAKLAL V PATEL & SMT. AMBABEN V PATEL L/H OF LATE SHRI VALLABHBHAI LAXMANBHAI PATEL 28 HAREKRISHNA MASKATI PLOTS PARLE POINT ATHWALINES SURAT- 395 007 2. ITO WARD-1(3) SURAT 3. CIT CONCERNED 4. CIT(A)-I SURAT 5. DR BENCH-D ITAT AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR/ ASSISTANT REGISTRAR