The ACIT, Circle-5,, Surat v. Shri Chhanabhai K.Patel, Surat

ITA 304/AHD/2009 | 2005-2006
Pronouncement Date: 04-10-2013 | Result: Partly Allowed

Appeal Details

RSA Number 30420514 RSA 2009
Assessee PAN ABGPP5337C
Bench Ahmedabad
Appeal Number ITA 304/AHD/2009
Duration Of Justice 4 year(s) 8 month(s) 5 day(s)
Appellant The ACIT, Circle-5,, Surat
Respondent Shri Chhanabhai K.Patel, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 04-10-2013
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 04-10-2013
Date Of Final Hearing 03-09-2013
Next Hearing Date 03-09-2013
Assessment Year 2005-2006
Appeal Filed On 30-01-2009
Judgment Text
D IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD D BENCH . .. . . .. . !' !' !' !' #$ #$ #$ #$ %& %& %& %& &' &' &' &' ( & ' ( & ' ( & ' ( & ' BEFORE S/SHRI G.C. GUPTA VICE-PRESIDENT AND TEJ RAM MEENA ACCOUNTANT MEMBER) ITA NO.4138/AHD/2008 [ASSTT.YEAR : 2005-2006] SHRI CHHANABHAI PATEL PROP. OF M/S.RAJKUMAR STONE QUARRY AT & POST : KATHOR TAL. : KAMREJ DIST. SURAT. PAN : ABGPP 5337 C /VS. ACIT RANGE-5 SURAT. ITA NO.304/AHD/2009 [ASSTT.YEAR : 2005-2006] ACIT RANGE-5 SURAT. /VS. SHRI CHHANABHAI PATEL PROP. OF M/S.RAJKUMAR STONE QUARRY AT & POST : KATHOR TAL. : KAMREJ DIST. SURAT. ( (( (*+ *+ *+ *+ / APPELLANT) ( (( ( -*+ -*+ -*+ -*+ / RESPONDENT) .% / 0 &/ ASSESSEE BY : SHRI SAPNESH SHETH ( / 0 &/ REVENUE BY : SHRI K.C. MATHEWS SR-DR 2 / %3'/ DATE OF HEARING : 3 RD SEPTEMBER 2013. 456 / %3'/ DATE OF PRONOUNCEMENT : 04/10/2013 &7 / O R D E R PER G.C. GUPTA VICE-PRESIDENT: THESE CROSS APPEALS BY THE REVENUE AND THE ASSESSEE FOR THE ASSESSMENT YEAR 20 05-2006 ARE DIRECTED ITA NO.4138/AHD/2008 AND ITA NO.304/AHD/2009 -2 AGAINST THE ORDER OF THE CIT(A). THESE ARE BEING DI SPOSED OF WITH THIS CONSOLIDATED ORDER. 2. IN THE REVENUES APPEAL THE FOLLOWING GROUNDS A RE RAISED: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD.CIT(A)-III SURAT HAS ERRED IN DELETING THE ADDITION OF RS.50 84 982/- MADE BY THE A.O. ON ACCOUNT OF NON-G ENUINE PURCHASE OF DIESEL. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD.CII(A)-III SURAT LEIS ERRED IN DELETING THE ADDITION OF RS.1 10 882/ MADE BY THE A.O. ON ACCOUNT OF PURCHAS E OF SPARE- PARTS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD.CIT(A)-III SURAT HAS ERRED IN DELETING THE ADDITION OF RS.45006/ MADE BY THE A.O. ON ACCOUNT OF NON-GENUIN E PURCHASE OF MATERIALS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD.CIT(A) III SURAT HAS ERRED IN DELETING THE ADDITION OF RS.8 79 909/- MADE BY THE A.O. ON ACCOUNT OF BOGUS CREDITORS APPEARING IN THE BALANCE SHEET OF THE ASSESSES. 5. ON THE FACTS AND IN 11W CIRCUMSTANCES OF THE CAS E AND IN LAW THE CIT(A) SURAT HAS ERRED IN DELETING THE ADDITIO N OF RS 1 00 000/ - MADE BY THE A.O ON ACCOUNT OF NON-GENUINE EXPENSES. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD.CIT(A)-III SURAT LAIN ERRED IN DELETING THE ADDITION OF RS.16 00 L51 /- MADE BY THE A.O. ON ACCOUNT OF BOGU S EXPENSES CLAIMED ON SUB-CONTRACT EXPENSES. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A)-III SURAT HITS ERRED IN DELETING TH E ADDITION OF RS.5 08 311/ MADE BY THE AO. ON ACCOUNT OF LABOUR A ND SALARY EXPENSES. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE ID.CIT(A)-III SURAT HAS ERRED IN DELETING THE ADDITION OF ITA NO.4138/AHD/2008 AND ITA NO.304/AHD/2009 -3 RS.9 92 060/- MADE BY THE A.O. ON ACCOUNT OF SPARE- PARTS EXPENSES. 9. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD.CIT(A)-III SURAT HAS ERRED IN DELETING THE ADDITION OF RS.12 80 355/- MADE BY THE A.O. ON ACCOUNT OF UNDER VALUATION OF WORK IN PROGRESS. 10. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD.CIT(A)-III SURAT HIM ERRED IN DELETING THE ADDITION OF RS.4924/- MADE BY THE A.O. ON ACCOUNT OF MOTOR CYCL E AND MOTOR CAR EXPENSES. 11. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A)-III SURAT HAS ERRED IN DELETING THE ADD ITION OF RS.65400 MADE BY THE A.O. ON ACCOUNT OF HOUSEHOLD AND PERSON AL EXPENSES. 3. THE GROUNDS OF THE ASSESSEES APPEAL READ AS UND ER: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN PARTLY CONFIRMING THE ADDITION OF RS.5 5 110/- OUT OF TOTAL ADDITION OF RS.1 55 110/- MADE BY ASSESSING OFFICER ON ACCOUNT OF BOGUS/NON-GENUINE EXPENSES. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.1 50 000/- ON ACCOUNT OF BOGUS EXPEN SES IN THE NAME OF M/S. SHREE JALARAM OIL CENTER. 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.76 630/- ON ACCOUNT OF DIFFERENCE IN THE ACCOUNTS OF VARIOUS PARTIES. 4. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN PARTLY CONFIRMING THE DISALLOWANCE OF RS.1 00 000/- OUT OF TOTAL DISALLOWANCE OF RS.6 68 311/- MADE BY ASSE SSING OFFICER BEING LABOUR & SALARY EXPENSES. 5. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ITA NO.4138/AHD/2008 AND ITA NO.304/AHD/2009 -4 ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN PARTLY CONFIRMING THE DISALLOWANCE OF RS.19 696/- OUT OF TOTAL DISALLOWANCE OF RS.24 620/- MADE BY ASSESSING OFFICER BEING MOTORCAR AND MOTORCYCLE EXPENSES. 6. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN PARTLY CONFIRMING THE ADDITION OF RS.4 7 000/- OUT OF TOTAL ADDITION OF RS.1 12 400/- MADE BY ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S. 69C OF THE ACT. 4. THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAS N OT PRODUCED ITS ACCOUNT BOOKS AND OTHER DETAILS BEFORE THE AO OR TH E CIT(A). HE SUBMITTED THAT THERE ARE NUMBER OF DEFECTS IN THE A CCOUNT STATEMENT PRODUCED BY THE ASSESSEE WHICH JUSTIFIES THE REJEC TION OF THE ACCOUNTS BY THE AO. HE REFERRED TO THE RELEVANT PORTIONS OF TH E ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE. HE SUBMITTED T HAT THE ASSESSEE WAS PROVIDED A NUMBER OF OPPORTUNITIES AND SPECIFICALL Y MENTIONED THEREIN THAT IT WAS THE LAST OPPORTUNITY BEING GRANTED TO THE AS SESSEE BUT STILL NO DETAILS/EXPLANATIONS/EVIDENCES WERE FILED NOR ACCOU NT BOOKS OR BILLS FOR EXPENDITURE CLAIMED TO HAVE BEEN INCURRED BY THE AS SESSEE WERE PRODUCED. IN THESE CIRCUMSTANCES THE AO COMPLETED THE ASSESS MENT ON THE BASIS OF THE INFORMATION GATHERED UNDER SECTION 133(6) OF TH E ACT FROM VARIOUS PARTIES. THE LEARNED DR HAS SUBMITTED THAT THE ASS ESSEE HAS SUBMITTED NON- GENUINE AND BOGUS DETAILS OF VARIOUS EXPENSES INCLU DING THE CLAIM OF DIESEL PURCHASE OF RS.50 84 982/- AND LIKEWISE ON OTHER H EADS OF THE EXPENSES ALSO. HE SUBMITTED THAT THE ASSESSEE HAS DEBITED A SUM OF RS.16 LAKHS ON ACCOUNT OF BOGUS SUB-CONTRACT EXPENSES AND HAS DEBI TED RS.9.92 LAKHS ON ACCOUNT OF SPARE PART EXPENSES ETC. HE RELIED ON T HE ORDER OF THE AO. HE SUBMITTED ONLY COURSE AVAILABLE IS TO APPLY A FLAT RATE OF NET PROFIT TO THE TURNOVER OF THE ASSESSEE IN SUCH TYPE OF CASES WH ERE THE ASSESSEE COULD NOT PRODUCE ITS ACCOUNT BOOKS AND HAS NO SUPPORTING EVI DENCES. ITA NO.4138/AHD/2008 AND ITA NO.304/AHD/2009 -5 5. THE LEARNED COUNSEL FOR THE ASSESSEE HAS OPPOSED THE SUBMISSIONS OF THE LEARNED DR. HE SUBMITTED THAT THE ASSESSEE HAS MAINTAINED ITS ACCOUNT BOOKS REGULARLY AND THE CIT(A) HAS ALREADY SUSTAIN ED SOME OF THE ADDITIONS AND THE ASSESSED INCOME HAS BEEN INFLATE D TO RS.8.67 LAKHS AFTER THE APPEAL EFFECT ALLOWED BY THE CIT(A) AS AGAINST THE TOTAL INCOME OF RS.3.66 LAKHS RETURNED BY THE ASSESSEE. HE SUBMITT ED THAT THE CIT(A) HAS PASSED A WELL REASONED SPEAKING ORDER ON THESE ISSU ES. HE SUBMITTED THAT THE ASSESSEE IS IN THE BUSINESS OF GOVERNMENT CONTR ACTOR ENGAGED IN CONSTRUCTION OF ROAD WORK BRIDGE ETC. AND ALSO HAV ING A QUARRY AND IN THE LINE OF BUSINESS DIESEL EXPENSES OF RS.50 84 982/- ARE GENUINE AND DIESEL WAS PURCHASED FROM M/S.MILLAN AUTO CARE. HE SUBMIT TED THAT THIS EXPLANATION OF THE ASSESSEE SHOULD HAVE BEEN ACCEPT ED AND NO ADDITION SHOULD BE SUSTAINED IN THIS CASE. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE PE RUSED THE ORDERS OF THE AO AND THE CIT(A) AND ALSO COPIES OF VARIOUS DOCUMENTS FILED BY THE ASSESSEE IN ITS COMPILATION BEFORE US. WE FIND THA T THE ASSESSEE WAS GIVEN NUMBER OF OPPORTUNITIES BY THE AO AND IN SOME OF T HEM IT WAS SPECIFICALLY MENTIONED THAT THIS WAS THE LAST OPPORTUNITY BEING GRANTED TO THE ASSESSEE. IN SPITE OF THAT THE ASSESSEE HAS NOT COOPERATED W ITH THE DEPARTMENT. THE AO HAS SPECIFICALLY RECORDED THAT THE ASSESSEE HAS NOT PRODUCED THE BOOKS OF ACCOUNTS AND NOR ANY OTHER DETAILS/EXPLANATION/E VIDENCES WERE FILED NOR ANY BILLS FOR EXPENSES CLAIMED TO HAVE BEEN INCURRE D BY THE ASSESSEE WERE PRODUCED. THE AO HAS FURTHER RECORDED THAT THE ASS ESSMENT WAS COMPLETED ON THE BASIS OF THE INFORMATION FILED BY THE ASSESS EE AND THE INFORMATION GATHERED UNDER SECTION 133(6) OF THE ACT FROM VARIO US PARTIES TILL THE DATE. THE ASSESSEE COULD NOT CONTROVERT THESE FINDINGS RE CORDED BY THE AO BEFORE US. IN THESE FACTS WE HOLD THAT IT IS A FIT CASE FOR REJECTION OF ACCOUNTS OF THE ASSESSEE. THE LEARNED DR WAS JUSTIFIED IN SUBMITTI NG THAT IN SUCH TYPE OF ITA NO.4138/AHD/2008 AND ITA NO.304/AHD/2009 -6 CASE A FLAT RATE OF NET PROFIT SHOULD BE APPLIED ON THE TURNOVER OF THE ASSESSEE. 7. WE FIND THAT THE ASSESSEE HAS INFLATED ITS EXPEN SES TO A GREAT EXTENT UNDER VARIOUS HEADS OF THE EXPENSES AND HAS CLAIME D AT RS.50 84 982/- AS DIESEL EXPENSES AND HAS CLAIMED THAT IT WAS PURCHA SED FROM M/S.MILLAN AUTO CARE. THE AO HAS ISSUED NOTICED UNDER SECTION 133(6) AT THE ADDRESS GIVEN BY THE ASSESSEE BUT THE NOTICE COULD NOT BE SERVED AS THE PARTY IS NOT AVAILABLE AT THE ADDRESS GIVEN BY THE ASSESSEE. TH E ASSESSEE WAS SPECIFICALLY REQUESTED TO PRODUCE PARTY OR FURNISH ITS NEW ADDRESS ON WHICH THE NOTICE COULD BE SERVED BUT THERE WAS NO COMPLI ANCE. THE AO HAS RECORDED THAT AT THE ADDRESS GIVEN BY THE ASSESSEE THERE IS NO CONCERN IN THE NAME AND STYLE OF M/S.MILLAN AUTO CARE. THE ASSESS EE HAS CLAIMED TO HAVE PURCHASED DIESEL AMOUNTING TO RS.50.84 LAKHS. IN T HESE FACTS THE AO HAS DISALLOWED ENTIRE DIESEL EXPENSES CLAIMED TO HAVE B EEN INCURRED BY THE ASSESSEE. WE FIND SOME SIMILAR DEFECTS IN OTHER CL AIMS OF EXPENSES OF THE ASSESSEE UNDER VARIOUS HEADS OF EXPENSES. IN THESE FACTS WE ARE OF THE VIEW THAT THERE IS NO JUSTIFICATION FOR THE CIT(A) TO DE LETE EITHER WHOLLY OR SUBSTANTIALLY VARIOUS ADDITIONS/DISALLOWANCES MADE BY THE AO UNDER VARIOUS HEADS OF THE EXPENSES. WE FIND THAT THE PR OFIT & LOSS ACCOUNT OF THE ASSESSEE SHOWS THE GROSS CONTRACT RECEIPT OF RS.3.8 5 CRORES DURING THE RELEVANT YEAR. THE NATURE OF THE BUSINESS OF THE A SSESSEE IS THAT OF GOVERNMENT CONTRACTOR ENGAGED IN ROAD CONSTRUCTION BRIDGE ETC. AND ALSO A QUARRY OWNED BY THE ASSESSEE. THE LEARNED DR BEFO RE US HAS SUBMITTED THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR THE ASSESSEE HAS DECLARED A NET PROFIT OF 8.8%. CONSIDERING THE ENT IRE FACTUAL MATRIX OF THE CASE INCLUDING THE FACT THAT THE ASSESSEE HAS CLAI MED EXPENSES ON THE HIGHER SIDE UNDER VARIOUS HEADS OF THE EXPENSES AND NOT S UPPORTED BY EVIDENCES/VOUCHERS DURING THE YEAR WE HOLD THAT E NDS OF JUSTICE SHALL BE ITA NO.4138/AHD/2008 AND ITA NO.304/AHD/2009 -7 MET IF FLAT RATE OF 6% NET PROFIT IS APPLIED TO TH E GROSS CONTRACT RECEIPT OF RS.3.85 CRORES WITHOUT ALLOWING ANY FURTHER DEDUCT ION ON ACCOUNT OF DEPRECIATION ETC. TO THE ASSESSEE AND THE ASSESSEE BE ASSESSED ACCORDINGLY AND THE GROUNDS OF THE APPEALS OF BOTH THE REVENUE AND ASSESSEE ARE DISPOSED OF ACCORDINGLY. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS PART LY ALLOWED AND THE APPEAL OF THE ASSESSEE BECAME INFRUCTOUS. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %& %& %& %& / TEJ RAM MEENA) &' ( &' ( &' ( &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR/AR ITAT AHMEDABAD