Addl.CIT, Gwalior v. M/s A.K.Shivhare & Co, Guna

1 ITA 03-09 IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH : AGRA. ( BEFORE SHRI R.K. GUPTA AND SHRI P.K. BANSAL ) ITA NO. 03/AG./2009 ASSTT. YEAR : 2003-04. THE ADDL. CIT RANGE-3 VS. M/S. A.K. SHIVHARE & CO. GWALIOR. C/O SHRI BABULAL SHIVHARE HAT ROAD GUNA. (MP) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.C. SHARMA JR. D/R RESPONDENT BY : SHRI R.C. TOMAR ITP ORDER PER R.K. GUPTA J.M. THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE OR DER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2003-04. 2. THE DEPARTMENT IS OBJECTING THE DELETION OF ADDI TION OF RS.6 13 990/- AS AGAINST THE ADDITION OF RS. 6 63 990/- MADE BY THE ASSESSIN G OFFICER. 3. THE ASSESSEE IS DOING BUSINESS OF CONTRACT WORK OF ROADS AND MAINTAINING REGULAR BOOKS OF ACCOUNT. HOWEVER THE ASSESSING OFFICER RE JECTED THE BOOKS OF ACCOUNT AND APPLIED A NET PROFIT RATE OF 8% IN VIEW OF PROVISIO NS OF SECTION 44AD WHICH RESULTED IN AN ADDITION OF RS. 6 63 990/-. THE LD. CIT (A) ALLOWED THE APPEAL OF THE ASSESSEE IN PART BY OBSERVING THAT NO ANY MAJOR DISCREPANCY IN MAINTENA NCE OF BOOKS OF ACCOUNT WERE NOTED 2 OR POINTED OUT WHEREAS THE EXCESSIVE BOOKING OF EXP ENSES IN THE LAST MONTH IS FAIRLY EXPLAINED BY THE ASSESSEE. THE LD. CIT (A) FURTHER OBSERVED THAT HOWEVER CONSIDERING THE NON BUSINESS OR PERSONAL USE OF CAR TELEPHONE ETC. PARTICULARLY IN ABSENCE OF LOG BOOK AS ALSO TO TAKE OF SOME INADMISSIBLE UNVOUCHED EXPE NSES IT WOULD BE REASONABLE TO CONFIRM AN ADDITION OF RS. 50 000/- OUT OF THE TOTA L ADDITION OF RS. 6 60 990/-. AGAINST THIS FINDING OF LD. CIT (A) NOW THE DEPARTMENT IS IN APPEAL HERE BEFORE THE TRIBUNAL. 4. THE LD. D/R PLACED RELIANCE ON THE ORDER OF ASSE SSING OFFICER. 5. THE LD. COUNSEL OF THE ASSESSEE FIRSTLY PLACED R ELIANCE ON THE ORDER OF LD. CIT (A). IT WAS FURTHER SUBMITTED THAT THE TAX EFFECT IN THE APPEAL IS LESS THAN RS. 2 LACS AND IN VIEW OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COUR T THE APPEAL OF THE DEPARTMENT IS LIABLE TO BE DISMISSED IN LIMINI. 6. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD WE SEE NO REASON TO INTERFERE WITH THE FINDING OF THE LD. CIT (A). THE LD. CIT (A) HAS GIVEN A CATEGORICAL FINDING THAT NO MAJOR DEFECT WAS POINTE D OUT IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. THEREFORE APPLICATION OF PROVISIONS OF SECTION 44AD WAS NOT JUSTIFIED. THE HONBLE SUPREME COURT IN THE CAS E OF A. SANYASI RAO HAS HELD THAT WHERE BOOKS OF ACCOUNT ARE MAINTAINED THE PROFIT OF THE ASSESSEE HAS TO BE DEDUCED IN VIEW OF THE PROVISIONS OF SECTIONS 28 TO 43. IN THE PRESENT CASE THE REGULAR BOOKS OF ACCOUNT HAVE BEEN MAINTAINED THEREFORE THE LD. CI T (A) WAS JUSTIFIED IN HOLDING THAT ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING TH E BOOKS OF ACCOUNT. ACCORDINGLY WE CONFIRM THE ORDER OF LD. CIT (A). 7. EVEN OTHERWISE THE DEPARTMENTS APPEAL IS LIABLE TO BE DISMISSED IN VIEW OF THE DECISION OF HONBLE ALLAHBAD HIGH COURT IN THE CASE OF CIT VS. OBEETEE P. LTD. WHEREBY 3 THE DECISION OF TRIBUNAL WAS CONFIRMED BEING TAX EF FECT IS LESS THAN RS. 4 LACS OR RS. 5 LACS AS PROVIDED BY CIRCULAR DATED 24.10.2005 ISSUE D BY CBDT. 8. THERE IS ANOTHER BOARD CIRCULAR BY WHICH THE DEP ARTMENTAL AUTHORITIES ARE DIRECTED NOT TO PURSUE ANY APPEAL BEFORE THE TRIBUNAL WHERE TAX EFFECT IS LESS THAN RS. 2 LACS. THE CIRCULAR CONSIDERED BY THE HONBLE JURISDICTIONAL H IGH COURT AND THE OTHER CIRCULAR ISSUED BY THE DEPARTMENT ARE WITHOUT ANY AMBIGUITY AND APP LICABLE ON THE DEPARTMENTAL AUTHORITIES. THE HONBLE JURISDICTIONAL HIGH COURT HAS ALSO OBSERVED THAT WHERE NO LEGAL ISSUE IS INVOLVED THEN THE DEPARTMENT IS NOT EXPECT ED TO PURSUE THE APPEAL BEFORE THE RESPECTIVE COURT I.E. THE TRIBUNAL AND THE HONBLE HIGH COURT. 9. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES WE DISMISS THE APPEAL OF THE DEPARTMENT. 10. IN THE RESULT APPEAL OF THE DEPARTMENT IS DISM ISSED. 11. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19 .04.2010 SD/- SD/- ( P.K. BANSAL ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AGRA DATED : 23/04/2010. D/- COPY FORWARDED TO :- THE APPELLANT THE RESPONDENT THE CIT THE CIT (A) CONCERNED. THE D/R ITAT AGRA. GUARD FILE (ITA 03/AG/2009) BY ORDER AR ITAT AGRA. 4