The ITO, Ward-1(3),, RAJKOT-GUJARAT v. Shri Vallabhbhai N. Ganatra,, RAJKOT-GUJARAT

ITA 25/RJT/2010 | 2005-2006
Pronouncement Date: 03-12-2010 | Result: Dismissed

Appeal Details

RSA Number 2524914 RSA 2010
Assessee PAN ACCPG0485F
Bench Rajkot
Appeal Number ITA 25/RJT/2010
Duration Of Justice 10 month(s) 21 day(s)
Appellant The ITO, Ward-1(3),, RAJKOT-GUJARAT
Respondent Shri Vallabhbhai N. Ganatra,, RAJKOT-GUJARAT
Appeal Type Income Tax Appeal
Pronouncement Date 03-12-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 03-12-2010
Assessment Year 2005-2006
Appeal Filed On 13-01-2010
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. 25/RJT/2010 (ASSESSMENT YEAR 2005-06) ITO WD.1(3) VS SHRI VALLABHBHAI N GANATRA RAJKOT STAR LABORATORIES 628-STAR CHAMBERS HARIHAR CHOWK RAJKOT PAN : ACCPG0485F (APPELLANT) (RESPONDENT) I.T.A. NO. 26/RJT/2010 (ASSESSMENT YEAR 2005-06) ITO WD.1(3) VS SHRI MUKESH V GANATRA RAJKOT STAR LABORATORIES 628-STAR CHAMBERS HARIHAR CHOWK RAJKOT PAN : ACLPG4290P (APPELLANT) (RESPONDENT) REVENUE BY : SHRI JAI RAJ KUMAR ASSESSEE BY : SHRI JC RANPARA O R D E R A.L. GEHLOT : THESE APPEALS ARE FILED BY THE REVENU E. THEY ARISE OUT OF THE INDEPENDENT ORDERS OF THE CIT(A)-I RAJKOT BOTH DATED 15-10-200 9 FOR THE ASSESSMENT YEAR 2005-06. 2. THE EFFECTIVE GROUND RAISED IN ITA NO.25/RJT/201 0 IS AS FOLLOWS: 1. THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE FOLLOWING DISALLOWANCE / ADDITIONS:- (A) UNEXPLAINED CAPITAL / LOAN FROM PERSONA BALANCE SHEET RS. 22 96 932/- (B) UNEXPLAINED CAPITAL / LOAN FROM STAR CONSULTANCY BALANCE SHEET RS. 1 45 018/- (C) UNEXPLAINED SALES / PURCHASES RS. 3 73 814/ - 3. THE EFFECTIVE GROUND RAISED IN ITA NO.26/RJT/201 0 IS FOLLOWS: ITA NO.25/RJT/2010 ITA NO.26/RJT/2010 2 1. THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE FOLLOWING DISALLOWANCE / ADDITIONS:- (A) UNEXPLAINED CAPITAL / LOAN FROM PERSON BALANCE-SHEET RS.22 10 046/- (B) UNEXPLAINED CAPITAL / LOAN FROM STAR CONSULTANCY BALANCE SHEET RS. 9 80 578/- (C) UNEXPLAINED SALES / PURCHASES RS.10 78 752/- 4. THE LEARNED REPRESENTATIVE OF THE PARTIES SUBMIT TED THAT THE FACTS OF BOTH THE CASES ARE IDENTICAL. WE THEREFORE FOR THE SAKE O F CONVENIENCE DECIDE BOTH THE APPEAL BY THIS COMMON ORDER. 5. SINCE THE ISSUES ARE COMMON AND THE FACTS AND CI RCUMSTANCES OF THE CASES ARE IDENTICAL THE FACTS IN THE CASE OF SHRI VALLABHBHY AI N GANATRA ARE CONSIDERED FOR DECIDING THE ISSUES IN BOTH THE APPEALS. 6. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF REPACKING OF GLUCOSE. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. NOTICES WERE ISSUED. THE ASSESSEE DID NOT PRESENT HIMSELF BEFOR E THE ASSESSING OFFICER. THEREFORE THE ASSESSING OFFICER MADE THE ADDITION WHICH HAS B EEN CHALLENGED BEFORE THE CIT(A). THE CIT(A) DELETED THE ADDITION AFTER DETAILED DISC USSION ON EACH ISSUE. THE FINDINGS OF CIT(A) IS REPRODUCED BELOW: 5. I HAVE CAREFULLY CONSIDERED THE VARIOUS ISSUES I NVOLVED AND I HAVE ALSO GONE THROUGH THE DETAILS SUBMITTED IN THE PAPE R BOOK. IT IS TO BE POINTED OUT THAT WHAT HAS BEEN ADDED IS THE OPENING CAPITAL AND RS.73 251 BEING LOANS. IT IS SEEN THAT APPELLANT W AS HAVING SUFFICIENT CAPITAL SINCE SO MANY YEARS BEING 75 YEARS OF AGE AND HE WAS BEING ASSESSED TO TAX ALSO FOR WHICH COPY OF DEMAND NOTI CE FOR A.Y. 1991-92 HAS BEEN FILED. IT IS ALSO SEEN THAT VIDE LETTERS DTD. 5-11-07 AND 28-11-07 APPELLANT HAD FILED COPIES OF BALANCE-SHEET PROFIT & LOSS ACCOUNT CAPITAL ACCOUNTS AND CONTRA ACCOUNTS OF SUNDRY CREDITORS BE FORE THE AO. IN THESE CIRCUMSTANCES THERE WAS NO REASON FOR MAKING ANY SU CH ADDITION. IT IS SEEN THAT APPELLANTS MAIN SOURCE OF INCOME WAS FRO M DIVIDEND INTEREST FROM F.DS AND PROFIT FROM STAR LABORATORY. THE MAI N ADDITION IS ON ACCOUNT OF OPENING CAPITAL. IT IS SEEN THAT EVEN B ALANCE-SHEET FOR EARLIER YEAR WAS FILED IN WHICH THERE WAS CAPITAL OF RS.22 .01 LAKHS AND TOTAL LOANS WERE ABOUT RS.52 000. THE LOAN HAS ACTUALLY COME DOWN AND WHAT HAS BEEN ADDED IS SUNDRY CREDITORS WHOSE CONTRA ACC OUNTS WERE FILED ITA NO.25/RJT/2010 ITA NO.26/RJT/2010 3 BEFORE THE AO. THEREFORE THESE TWO ADDITIONS ON A CCOUNT OF OPENING CAPITAL AND ON ACCOUNT OF ADDITION OF SUNDRY CREDIT ORS HAS TO BE DELETED BECAUSE MAJOR PORTION OF THE CAPITAL IS COMING UP F ROM EARLIER YEARS AND THERE WAS NO NEED OF MAKING ANY ADDITION ON ACCOUNT OF OPENING CAPITAL. IF THE AO WAS NOT SATISFIED HE COULD HAVE OPENED T HE ASSESSMENTS OF EARLIER YEARS TO VERIFY THE ACQUISITION OF CAPITAL. THESE TWO ADDITIONS OF RS.22 23 681 AND RS.73 251 ON ACCOUNT OF ADDITION O F OPENING CAPITAL AND SUNDRY CREDITORS ARE DELETED. 6. NEXT ADDITION IS ON ACCOUNT OF CAPITAL OF RS.1 2 9 649 AND LOAN OF RS.15 369 APPEARING IN THE BALANCE-SHEET OF PROPRIE TARY CONCERN. IT IS NOTICED THAT SEPARATE ACCOUNTS WERE MAINTAINED IN R ESPECT OF THIS CONCERN NAMELY STAR CONSULTANCY WHICH WAS RUN IN THE NAME OF APPELLANTS SON SHRI M.V. GANATRA. IT IS TO BE PO INTED OUT THAT AS SEPARATE ACCOUNTS WERE MAINTAINED CAPITAL AT THE EN D OF THE YEAR HAS BEEN SHOWN IN THE MAIN BALANCE-SHEET IN THE ASSETS SIDE. IT MEANS THAT IN THE MAIN BALANCE-SHEET WHERE ADDITION ON ACCOUN T OF CAPITAL ETC. WAS MADE INCLUDED THIS AMOUNT ALSO. WHEN ADDITION IS MA DE ON THE BASIS OF MAIN BALANCE-SHEET THERE WOULD BE NO NEED TO MAKE ANY ADDITION IN RESPECT OF SUBSIDIARY ACCOUNTS THAT ALSO ON ACCOUNT OF CAPITAL. THEREFORE THESE TWO ADDITIONS ARE MERELY DUPLICATE ADDITIONS AND ARE DELETED. 7. NEXT ITEM ADDED IS ON ACCOUNT OF SALES AND CLOSI NG STOCK OF THE PROPRIETARY CONCERN NAMELY STAR LABORATORY. I FIN D THIS ADDITION TO BE TOTALLY UNJUSTIFIED BECAUSE PROFIT FROM THESE TRANS ACTIONS ARE ALREADY INCLUDED IN THE INCOME OF THE APPELLANT. THE AO HA S ADDED ENTIRE SALES AND CLOSING STOCK AS INCOME WITHOUT EVEN CARING TH AT NO CREDIT FOR OPENING STOCK PURCHASES AND OTHER EXPENSES HAS BEE N ALLOWED. AT BEST THERE COULD HAVE BEEN SOME DISALLOWANCES OUT OF EXP ENSES BUT THE AO CHOSE TO TREAT THE ENTIRE SALES AND CLOSING STOCK A S INCOME WITHOUT EVEN GIVING REBATE FOR COST OF MATERIAL AND OTHER EXPENS ES. SINCE PROFIT HAS ALREADY BEEN DECLARED IN THE RETURN THESE TWO ADDI TIONS ARE DIRECTED TO BE DELETED. 7. THE LD.DR SUBMITTED THAT THE ASSESSEE DID NOT PU T HIS PRESENCE BEFORE THE ASSESSING OFFICER. THE CIT(A) HAS DECIDED THE APPE AL IN FAVOUR OF THE ASSESSEE WITHOUT PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSI NG OFFICER. THE LD.DR IN SUPPORT OF HIS CONTENTION RELIED UPON THE DECISION IN THE CASE OF KAPURCHAND SHRIMAL VS CIT 131 ITR 451. THE LD.AR ON THE OTHER HAND RELIED UPON THE ORDER OF CIT(A) AND SUBMITTED THAT THE ASSESSING OFFICER IS NOT CORRECT IN RECORDING T HE FACT THAT THE ASSESSEE DID NOT PUT HIS PRESENCE BEFORE THE ASSESSING OFFICER. THE LD.AR R EFERRED TO VARIOUS PAGES OF THE PAPER BOOK (PAGES 11 & 12 IN PARTICULAR) AND SUBMITTED TH AT THE ASSESSEE HAS SUBMITTED THE DETAILS VIDE LETTER DATED 28-11-2007 TO THE ASSESSI NG OFFICER. THE LD.AR SUBMITTED THAT WITH REFERENCE TO EARLIER YEAR BALANCE-SHEET THAT T HE ASSESSING OFFICER IS NOT CORRECT IN MAKING ADDITION AS THERE ARE OPENING BALANCE OF CAP ITAL AND OTHERS. FOR THIS PURPOSE ITA NO.25/RJT/2010 ITA NO.26/RJT/2010 4 THE LD.AR REFERRED TO BALANCE-SHEET FOR THE YEAR EN DED 31 ST MARCH 2002. THE LD.AR FURTHER SUBMITTED THAT THE ASSESSEE IS A REGULAR AS SESSEE SINCE LONG. THEREFORE THE TOTAL AMOUNT OF CAPITAL CANNOT BE ADDED. IT IS ALS O THE SUBMISSION OF THE LD.AR THAT THE CIT(A) HAS EXAMINED THE FACTS HIMSELF AND THEREFORE THERE IS NO VIOLATION OF RULE 46A OF THE ACT. 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES RECORD PERUSED. ON PERUSAL OF GROUNDS WE FIND THAT THE REVENUE DID NOT TAKE SPECIFIC GROUND THAT THERE IS A VIOLATION OF RULE 46A OF THE I.T RULES. THE JUDGME NT IN THE CASE OF KAPURCHAND SHRIMAL VS CIT (SUPRA) RELIED UPON BY THE LD.DR IS DISTINGU ISHABLE ON FACTS AS THAT CASE RELATED TO INQUIRY INTO CLAIM OF PARTITION IN HUF. UNDER SECTI ON 25A OF THE INDIAN INCOME-TAX ACT 1922 THE AO IS BOUND TO HOLD INQUIRY. THE CASE WA S DECIDED BY THE TRIBUNAL WITHOUT CONSIDERING THE FACT THAT WHETHER THE AO HELD THE E NQUIRY OR NOT. UNDER THAT CIRCUMSTANCE THE COURT SET ASIDE THE MATTER AND DIR ECTED THE AO TO MAKE FRESH ASSESSMENT IN ACCORDANCE WITH LAW. WHEREAS IN THE CASE UNDER CONSIDERATION THE CIT(A) NOTED THE FACTS THAT ASSESSEE SUBMITTED DETA ILS BEFORE AO. THE CIT(A) REFERRED SOME LETTERS FILED BEFORE THE AO. THE LD.AR AT THE TIME OF HEARING BEFORE US HAS ALSO POINTED OUT SUCH LETTERS AND DOCUMENTS FILED BEFORE AO. SOME OF THE FACTS ARE APPARENT LIKE OPENING CAPITAL AND OTHERS ON RECORD WITH THE DEPARTMENT AS THE ASSESSEE IS A REGULAR ASSESSEE. IT APPEARS THAT THE AO DID NOT C HOOSE TO GO THROUGH THOSE DETAILS. WHEN THE AO DID NOT EXAMINE THE MATERIAL ON RECORD AND THE CIT(A) DECIDED THE ISSUE ON THE SAME MATERIAL IT CANNOT BE SAID THAT THERE I S VIOLATION OF RULE 46A OF IT RULES. EVEN OTHERWISE ALSO WE FIND THAT CIT(A) HAVE CO-TER MINUS POWER WITH THAT OF AO. HE CAN DO WHAT AO CAN DO AS HELD BY THE APEX COURT IN THE CASE OF CIT V KANPUR COAL SYNDICATE 53 ITR 225 (SC). IN THE CASE UNDER CDONS IDERATION THE CIT(A) HIMSELF EXAMINED THE FACTS BEFORE DECIDING THE ISSUE WE TH EREFORE DO NOT FIND THAT THERE IS VIOLATION OF RULE 46A OF THE I.T. RULES. 9. IN THE LIGHT OF OUR ABOVE DISCUSSION AND IN THE LIGHT OF THE FACTS RECORDED BY THE LD.CIT(A) WE FIND THAT FACTS HAVE BEEN VERIFIED BY THE CIT(A) HIMSELF. CERTAIN FACTS ARE CLEAR FROM THE FACTS ON RECORD AVAILABLE LIKE OPENI NG BALANCES IN THE CAPITAL ACCOUNT ETC. WITH THE DEPARTMENT. THERE CANNOT BE ANY DISPUTE THAT THE JURISDICTION OF THE CIT(A) IS CO-TERMINUS WITH THAT OF THE ASSESSING OFFICER. UN DER THE CIRCUMSTANCES WE DO NOT FIND ANY SUBSTANCE IN THE SUBMISSIONS OF THE LD.DR THAT THE CIT(A) HAS DECIDED THE ISSUE ITA NO.25/RJT/2010 ITA NO.26/RJT/2010 5 WITHOUT PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSING OFFICER. ON MERIT WE FOUND THAT THE AO IS NOT CORRECT IN MAKING ADDITIONS SIMP LY TAKING FIGURES FROM BALANCE-SHEET FILED BY THE ASSESSEE. WE DO NOT FIND ANY INFIRMIT Y IN THE ORDER OF CIT(A). THEREFORE THE SAME IS UPHELD. 10. AS STATED EARLIER THE FACTS IN THE CASE OF MUK ESH V GANATRA TOO ARE IDENTICAL THEREFORE HIS APPEAL IS ALSO DECIDED ACCORDINGLY IN FAVOUR OF THE ASSESSEE. 11. IN VIEW OF THE ABOVE DISCUSSION WE DO NOT FIND ANY INFIRMITY IN THE FACTUAL FINDINGS RECORDED BY THE LEARNED CIT(A). WE UPHOLD HIS ORDE RS. 12. IN THE RESULT THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03-12-2010 SD/- SD/- (D.T. GARASIA) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT DT : 03 RD DECEMBER 2010 PK/- 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