Shri Manoj Mantri, Indore v. The ITO, Indore

ITA 314/IND/2010 | 2007-2008
Pronouncement Date: 28-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 31422714 RSA 2010
Assessee PAN AJEPM0426H
Bench Indore
Appeal Number ITA 314/IND/2010
Duration Of Justice 1 year(s) 2 month(s) 10 day(s)
Appellant Shri Manoj Mantri, Indore
Respondent The ITO, Indore
Appeal Type Income Tax Appeal
Pronouncement Date 28-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 28-07-2011
Assessment Year 2007-2008
Appeal Filed On 18-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH J.M. AND SHRI R.C.SHARMA A.M. PAN NO. : AJEPM0426H I.T.A.NO. 463 / IND /20 10 A.Y. : 2007 - 08 INCOME - TAX OFFICER SMT. SUNITA MANTRI WARD 2(3) VS INDORE. IND ORE. APPELLANT RESPONDENT I.T.A.NO.315/IND/2010 A.Y. : 2007 - 08 SMT. SUNITA MANTRI INCOME - TAX OFFICER INDORE. VS WARD 2(3) INDORE. APPELLANT RESPONDENT PAN NO. : AJEPM0428K I.T.A.NO.314/IND/2010 A.Y. : 2007 - 08 SHRI MANOJ M ANTRI INCOME - TAX OFFICER INDORE. VS WARD 2(3) INDORE. APPELLANT RESPONDENT - : 2 : - 2 DEPARTMENT BY : SHRI ARUN DEWAN SR. DR ASSESSEE BY : SHRI SANJAY SODANI C. A. O R D E R PER R. C. SHARMA A.M. TH ESE ARE THE CROSS APPEAL FILED B Y THE ASSESSEE AND REVENUE AGAINST THE ORDER OF CIT(A) DATED 24.3.2010 FOR THE ASSESSMENT YEAR 2007 - 08. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE TRADING OF CHANA AND PEAS. A SURVEY U/S 133A OF THE INCOME - TAX ACT 1961 CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE AND ITS SISTER CONCERN M/S. YASH ENTERPRISES PROP. SHRI MANOJ MANTRI ON 20.02.2008. DURING THE SURVEY TRIAL BALANCE OF CURRENT YEAR AND OF EARLIER YEAR ALONG WITH THE TRADING PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF THE YEAR UNDER CONSIDERATION WERE OBTAINED FROM THE COMPUTER MAINTAINED AT THE RESIDENCE OF THE ACCOUNTANT SHRI RAJENDRA AGGARWAL. THE AO ON COMPARISON THEREOF WITH THE AUDITED TRADING PROFIT AN D LOSS ACCOUNT AND BALANCE SHEET NOTED CERTAIN DISCREPANCIES AND MADE ADDITION ACCORDINGLY. ADDITION MADE ON ACCOUNT OF UNEXPLAINED CREDITS AND BOGUS DEBITS WERE DELETED BY THE LD. CIT(A) - : 3 : - 3 AGAINST WHICH REVENUE IS IN FURTHER APPEAL BEFORE US. IN RESPECT OF THE ADDITION MADE AND CONFIRMED ON ACCOUNT OF APPLICATION OF NET PROFIT RATE DIFFERENCE IN CASH PAYMENT TO CONTRACTOR ETC. IN RESPECT OF WHICH ADDITIONS WERE MADE THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUN D THAT THE ASSESSEE HAS DECLARED PROFIT RATE OF .074 %. THE AO REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED NET PROFIT RATE OF 1.5 %. WE FOUND THAT THE SIMILAR SURVEY WAS CONDUCTED AT TH E BUSINESS PREMISES OF MANOJ MANTRI WHEREIN ON SIMILAR FACTS THE AO HAS REJECTED THE BOOKS OF ACCOUNT. THE AO HAS ESTIMATED NET PROFIT AT 1 %. WE FOUND THAT NO DEFECT WAS POINTED OUT IN THE BOOKS OF ACCOUNT AND THE ASSESSEE HAS FURNISHED ALL THE QUANTITATIVE DETAILS OF SALES PURCHASE S AND EXPENSES . KEEPING IN VIEW THE TOT ALITY OF FACTS AND CIRCUMSTANCES OF THE CASE ESTIMATION OF NET PROFIT AT 1 % IN ASSESSEE S CASE WILL SERVE THE END OF JUSTICE. WE DIRECT ACCORDINGLY. 3. NEXT GRIEVANCE RELATES TO THE ADDITION ON ACCOUNT OF INVESTMENT IN STOCK. 4. WE FOUND THAT THE ADDITION W AS MADE ON THE BASIS OF TRIAL BALANCE FOUND IN ACCOUNTANT S COMPUTER AT HIS RESIDENCE. HOWEVER THE AO WAS ALREADY HAVING AUDITED PROFIT AND LOSS ACCOUNT WHEREIN CORRECT STOCK WAS DULY - : 4 : - 4 DEPICTED. THE ADDITION MADE BY THE ASSESSING OFFICER WAS CONFIRMED BY THE LD. CIT(A) BY OBSERVING THAT THERE IS DIFFERENCE IN THE QUANTITY OF PURCHASE AND SALE AND THE ASSESSEE HAS NEITHER FURNISHED DETAILS OF ITEMS PURCHASED AND SOLD NOR THE COPY OF DEBIT NOTE FILED BY THE ASSESSEE TO EXPLAIN THE DIFFERENCE AND THE NAME OF THE PARTY TO WHOM THE DEBIT NOTE WAS ISSUED HAS BEEN GIVEN. THE LD. CIT(A) ALSO OBSERVED THAT NORMAL AUDIT IS DONE ON THE BASIS OF BOOKS OF ACCOUNT AND RELATED DOCUMENTS PRODUCED BY THE PARTY. HE ALSO RAISED DOUBT THAT ALLEGED TRANSACTION WAS CLAIMED TO BE CARRIED OUT AT JHANSI. THUS THE GENUINENESS OF TRANSACTION WAS DOUBTED. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT APPEARS THAT TO SUBSTANTIATE THE DIFFERENCE IN QUANTITY OF CHANA AND PEAS PURCHASE S AND SALE WERE FURNISHED BY THE ASSESSEE BEFORE THE AO BUT THE SAME WAS NOT PROPERLY APPRECIATED. AS PER THE AUDIT REPORT THE ASSESSEE PURCHASED CHANA AT 933 1 .74 QTLS. WHEREAS DURING THE ASSESSMENT PROCEEDINGS IT WAS SHOWN AT 8949.64 QTLS. - : 5 : - 5 SIM ILARLY PEAS WERE PURCHASED AS PER AUDIT REPORT AT 1883.20 QTLS. WHEREAS THE SAME WERE SHOWN AT 184.28 QTLS. AS PER THE REPLY FURNISHED DURING APPELLATE PROCEEDINGS. WE FOUND THAT EXPLANATION FURNISHED BY THE ASSESSEE TO RECONCILE THE DIFFERENCE IN STOCK HAS NOT BEEN JUDICIOUSLY CONSIDERED BY LOWER AUTHORITIES NOR ANY JUSTIFICATION WAS GIVEN FOR REJECTING THE SAME. IN THE INTEREST OF JUSTICE WE RESTORE THIS GROUND BACK TO THE FILE OF THE AO FOR DECIDING AFRESH THE DIFFERENCE IN STOCK IF ANY AS PER RECONC ILIATION/JUSTIFICATION FURNISHED BY ASSESSEE. N EEDLESS TO SAY THAT THE ASSESSEE SHOULD BE GIVEN FULL OPPORTUNITY TO PRODUCE EXPLANATION ALONGWITH DOCUMENTARY EVIDENCE TO SUBSTANTIATE ITS CLAIM OF NO DIFFERENCE IN STOCK. 6. GROUND RAISED WITH REGARD TO ADDITIO N MADE ON ACCOUNT OF DIFFERENCE IN CASH AMOUNTING TO RS. 20 003/ - PAYMENT TO CONTRACTOR RS. 21 000/ - WERE FAIRLY CONCEDED BY THE LD. AUTHORIZED REPRESENTATIVE. ACCORDINGLY THESE ADDITIONS ARE BEING CONFIRMED. - : 6 : - 6 7. WITH REGARD TO ADDITION MADE ON ACCOUNT OF E STIMATION OF SALARY OF ACCOUNTANT KEEPING IN VIEW NATURE AND VOLUME OF ASSESSEE S BUSINESS IT WOULD BE REASONABLE TO ESTIMATE SALARY AT RS. 18 000/ - PER ANNUM TO THE PART TIME ACCOUNTANT. AO IS TO REWORK OUT THE ADDITION. WE DIRECT ACCORDINGLY. 8. NEXT GRIEV ANCE OF THE ASSESSEE RELATES TO ADDITION MADE ON ACCOUNT OF BILL OF MACHINERY WHICH COULD NOT BE PRODUCED. 9. THE FACTS IN BRIEF ARE THAT THE ASSESSEE HAD SHOWN FIXED INVESTMENT IN PLANT AND MACHINERY AT RS. 84 800/ BUT NO EVIDENCE IN THE FORM OF BILLS WE RE FILED TO VERIFY WHEN IT WAS PURCHASED AND HOW THE PAYMENT WAS MADE. ACCORDINGLY THE AO MADE ADDITION OF RS. 56 865/ - U/S 69 OF THE ACT. THE ADDITION SO MADE WAS CONFIRMED BY THE LD. CIT(A). 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. NO WHERE I NVESTMENT IN PLANT AND MACHINERY HAS BEEN DOUBTED MERELY BECAUSE THE ASSESSEE COULD NOT PRODUCE THE BILL OF PLANT AND MACHINERY NO ADDITION CAN - : 7 : - 7 BE MADE U/S 69 IN SO FAR AS EXPENDITURE WERE ALREADY RECORDED IN THE BOOKS OF ACCOUNT. IN THE ABSENCE OF BILL O F PLANT AND MACHINERY AT THE MOST DEPRECIATION CLAIMED THEREON CAN BE DISALLOWED. WE DIRECT ACCORDINGLY. 11. NEXT GRIEVANCE OF THE ASSESSEE RELATES TO ADDITION ON ACCOUNT HOUSE HOLD EXPENSES. 12. DURING THE YEAR THE ASSESSEE HAS SHOWN WITHDRAWAL OF RS. 48 940/ - . HOWEVER THE AO FOUND THE SAME TO BE VERY LOW. THEREFORE HE ESTIMATED MONTHLY EXPENDITURE OF RS. 8000/ - AND MADE ADDITION ACCORDINGLY WHICH WAS CONFIRMED BY THE LD. CIT(A). THE CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE WAS THAT THE ASSESSEE IS A WIDOW AND BUSINESS WAS TRANSFERRED TO HER AFTER DEATH OF HER HUSBAND. AS SHE WAS LIVING IN THE JOINT FAMILY HER CONTRIBUTION TOWARDS HOUSE HOLD EXPENSES WAS TO THE TUNE OF RS. 4 000/ - - RS. 5 000/ - . KEEPING IN VIEW THE TOTALITY OF FACTS IT WILL SERV E THE END OF JUSTICE IF WE TAKE THE MONTHLY EXPENDITURE AT RS. 6000/ - PER MONTH. ACCORDINGLY THE AO IS DIRECTED TO REWORK OUT THE ADDITION MADE ON ACCOUNT OF HOUSE HOLD EXPENSES. - : 8 : - 8 13. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART. 14. IN THE APPEAL FILED BY THE REVENUE THE TAX EFFECT WORKS OUT TO LESS THAN RS. 3 LAKHS THEREFORE IN VIEW OF THE C. B. D. T. VIDE INSTRUCTION NO. 3/2011 DATED 9.2.2011 REVISED/RAISED THE MONETARY LIMIT FOR FILING THE APPEAL BY THE DEPARTMENT THEREFORE APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE. 15. WE HAVE DECIDED THE SIMILAR ISSUE IN THE CASE OF ACIT VS. VANDANA MITTAL AND OTHERS IN I.T.A.NOS. ITA NO.78/IND/2011 ETC. DATED 21.7.2011 IN WHICH WE HAVE OBSERVED AND HELD AS UNDER : - DURING HEARING OF THIS APPEAL T HE LD. COUNSEL FOR THE ASSESSEES CONTENDED THAT THE REVENUE HAS CHALLENGED THE ADDITIONS OF RS.3 03 851/ - RS.81 849/ - (RS.18 180 + RS.55 000) (RS.2 00 000+ RS.2 795+ RS.10 000) RS.92 762/ - AND RS.69 967/ - RESPECTIVELY AND AS SUCH THE TAX EFFECT IN E VERY APPEAL IS BELOW THE PRESCRIBED LIMIT THEREFORE THE EVERY APPEAL OF REVENUE DESERVES TO BE DISMISSED ON THIS COUNT ITSELF BY FURTHER - : 9 : - 9 SUBMITTING THAT NO APPEAL CAN BE FILED BEFORE THE TRIBUNAL WHICH IS HAVING THE TAX EFFECT LESS THAN RS. 3 LACS. THIS FACTUAL MATRIX WAS FAIRLY CONSENTED BY THE LEARNED CIT(DR)/SR. DR BUT SUBMITTED THAT THE CIRCULAR OF CBDT IS EFFECTIVE ONLY IN RESPECT OF APPEALS FILED AFTER 9.2.2011 THEREFORE THE SUBMISSION OF THE ASSESSEES IS NOT TENABLE IN RESPECT OF THE APPEALS WHER EIN THE TAX EFFECT IS MORE THAN RS.2 LACS AND WHICH HAVE BEEN FILED PRIOR TO 9.2.2011. IN REPLY THE LD. COUNSEL FOR THE ASSESSEES CONTENDED THAT IDENTICALLY THE HON BLE JURISDICTIONAL HIGH COURT HAS HELD THAT IT IS APPLICABLE TO THE APPEALS WHICH ARE PEND ING BEFORE THE TRIBUNAL AND PLACED RELIANCE UPON THE DECISION IN CIT V. ASHOK KUMAR MANIBHAI PATEL & COMPANY (2009) 317 ITR 386 (MP) ITO VS. M/S LAXMI JEWELS PRIVATE LIMITED (ITA NO. 2165/MUM/2010). ITAT INDORE BENCH HAS ALSO FOLLOWED THE ABOVE DECISIONS IN CASE OF CASE OF ACIT VS. M.S. SIDDIQUI & OTHERS (ITA NO. 480/IND/2010) ORDER DATED 30.6.2011. THE TRIBUNAL IN THIS ORDER HAS DELIBERATED UPON THE ISSUE OF TAX EFFECT IN DETAIL IN WHICH THE APPEALS OF THE REVENUE WERE DISMISSED BEING TAX EFFECT BELO W PRESCRIBED LIMIT. THE RELEVANT PORTION OF THE SAME IS REPRODUCED HEREUNDER: THE ABOVE APPEALS ARE FILED BY THE REVENUE AGAINST THE DIFFERENT ORDERS OF THE LD. CIT(A) FOR THE DIFFERENT ASSESSMENT YEARS AS MENTIONED ABOVE. - : 10 : - 10 2. DURING HEARING OF THESE AP PEALS THE LD. COUNSELS FOR RESPECTIVE ASSESSEES CONTENDED THAT THE TAX EFFECT IN THE PRESENT APPEALS IS BELOW THE PRESCRIBED LIMIT THEREFORE THE THESE APPEALS OF THE REVENUE DESERVES TO BE DISMISSED ON THIS COUNT ITSELF BY FURTHER SUBMITTING THAT NO APP EAL CAN BE FILED BEFORE THE TRIBUNAL WHICH IS HAVING THE TAX EFFECT LESS THAN RS. 3 LACS. THIS FACTUAL MATRIX WAS FAIRLY CONSENTED BY THE LEARNED SR. DR BUT SUBMITTED THAT THE CIRCULAR OF CBDT IS EFFECTIVE ONLY IN RESPECT OF APPEALS FILED AFTER 9.2.2011 T HEREFORE THE SUBMISSION OF THE ASSESSEES IS NOT TENABLE IN RESPECT OF THE APPEALS WHEREIN THE TAX EFFECT IS MORE THAN RS.2 LACS AND WHICH HAVE BEEN FILED PRIOR TO 9.2.2011. IN REPLY THE LD. COUNSELS FOR RESPECTIVE ASSESSEE CONTENDED THAT IDENTICALLY THE HON BLE JURISDICTIONAL HIGH COURT HAS HELD THAT IT IS APPLICABLE TO THE APPEALS WHICH ARE PENDING BEFORE THE TRIBUNAL AND PLACED RELIANCE UPON THE DECISION IN CIT V. ASHOK KUMAR MANIBHAI PATEL & COMPANY (2009) 317 ITR 386 (MP) ITO VS. M/S LAXMI JEWELS PRI VATE LIMITED (ITA NO. 2165/MUM/2010). ITAT INDORE BENCH HAS ALSO FOLLOWED THE ABOVE DECISIONS IN CASE OF CASE OF ACIT VS. NATHULAL JAIN (ITA NO. 475/IND/2010) - : 11 : - 11 ORDER DATED 29.6.2011. THE TRIBUNAL IN THIS ORDER HAS DELIBERATED UPON THE ISSUE OF TAX EFFECT IN DETAIL IN WHICH THE APPEAL OF THE REVENUE WAS DISMISSED BEING TAX EFFECT BELOW PRESCRIBED LIMIT. THE RELEVANT PORTION OF THE SAME IS REPRODUCED HEREUNDER: AGGRIEVED BY THE ORDER DATED 3 RD MARCH 2010 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) THE REVENUE IS IN APPEAL ON THE GROUND THAT LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 7 85 000/ - OUT OF TOTAL ADDITION OF RS. 8 85 000/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED LOAN CREDIT U/S 6 8 OF THE ACT WHEREAS THE ASSESSEE HAS FILED THE CROSS OBJECTION ON THE GROUND THAT LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN RESPECT OF THE ADDITION OF RS. 1 LAC MADE U/S 68 OF THE A CT WITHOUT CONSIDERING THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE HIM. 2. DURING HEARING OF THIS APPEAL THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT THE TAX EFFECT IN THE PRESENT APPEAL IS BELOW THE PRESCRIBED LIMIT THEREFORE THE APPEAL OF THE RE VENUE DESERVES TO BE DISMISSED ON THIS COUNT ITSELF BY FURTHER SUBMITTING THAT THE TAX EFFECT IS RS. 2 52 450/ - AND NO APPEAL CAN BE FILED BEFORE THE TRIBUNAL WHICH IS - : 12 : - 12 HAVING THE TAX EFFECT LESS THAN RS. 3 LACS. THIS FACTUAL MATRIX WAS FAIRLY CONSENTED BY THE LEARNED SR. DR BUT SUBMITTED THAT THE CIRCULAR OF CBDT IS EFFECTIVE FROM A PARTICULAR DATE THEREFORE THE SUBMISSION OF THE ASSESSEE IS NOT TENABLE. IN REPLY THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT IDENTICALLY THE HON BLE JURISDICTIONAL HIGH COUR T HAS HELD THAT IT IS APPLICABLE TO THE APPEALS WHICH ARE PENDING BEFORE THE TRIBUNAL AND PLACED RELIANCE UPON THE DECISION IN CIT V. ASHOK KUMAR MANIBHAI PATEL & COMPANY (2009) 317 ITR 386 (MP) ITO VS. M/S LAXMI JEWELS PRIVATE LIMITED (ITA NO. 2165/MUM/2 010). 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON FILE. UNDISPUTEDLY THE TAX EFFECT IN THE PRESENT APPEAL IS BELOW THE PRESCRIBED MONETARY LIMIT IN FILING THE APPEAL BEFORE THE TRIBUNAL. THEREFORE WE ARE REPR ODUCING HEREUNDER THE DECISION OF THE TRIBUNAL IN THE CASE OF RAJAN CLOTH STORES (ITA NO. 365/IND/2010) ORDER DATED 31.5.2011 : - THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A) - I INDORE DATED 4.3.2010 ON THE GROUND THAT THE LD. CIT (A) ERRED IN OVERLOOKING THE PROVISION OF SEC. 275(1A) OF I.T. ACT AND DELETING PENALTY U/S 271(1)(C) FOR RS.2 32 780/ - . 2. DURING HEARING OF THIS APPEAL WE HAVE HEARD SHRI PRADEEP KUAMR MITRA LD. SR. DR FOR THE REVENUE AND SHRI S.S. DESHPANDE LD. COUN SEL FOR THE ASSESSEE. AT THE OUTSET THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TAX EFFECT IN THE PRESENT APPEAL IS BELOW PRESCRIBED - : 13 : - 13 MONETARY LIMIT THEREFORE STRAIGHT WAY THE APPEAL OF THE REVENUE MAY BE DISMISSED. THE LD. SR. DR FAIRLY ADMITTE D THAT THE TAX EFFECT IS BELOW PRESCRIBED MONETARY LIMIT. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE COMING TO ANY CONCLUSION ON THE ISSUE OF TAX EFFECT THE BENCH IN THE CASE OF ACIT VS. M/S. SHRIRAM NUTRIENTS LTD. IN ITA NO.123/IND/2010 (A.Y. 2002 - 03) VIDE ORDER DATED 28.10.2010 HELD AS UNDER: THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A) - UJJAIN DATED 16.12.2009 ON THE GROUND WHETHER I N THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) ERRED IN TREATING THE ASSESSMENT MADE BY THE A.O. AS INFRUCTUOUS WITHOUT APPRECIATING THE FACT THAT OTHERWISE ON 6.3.2006 (THE DATE OF ISSUE OF NOTICE) THE A.O. WAS EMPOWERED TO ISSUE NOTICE U/S 148 FO R THE A.Y. 2002 - 03 IN VIEW OF THE PROVISIONS OF SECTION 149(1)(A) READ WITH SECTION 151(1) OF THE IT ACT 1961? 2. DURING HEARING OF THIS APPEAL WE HAVE HEARD SHRI S.S. DESHPANDE LD. COUNSEL FOR THE ASSESSEE AND SHRI P.K. MITRA LEARNED SENIOR DR. THE C RUX OF ARGUMENT IS THAT THE TAX EFFECT IN THE PRESENT APPEAL IS BELOW MONETARY PRESCRIBED LIMIT THEREFORE STRAIGHT WAY THE APPEAL OF THE REVENUE MAY BE DISMISSED. THE LD. SR. DR SHRI P.K. MITRA FAIRLY ADMITTED THAT THE TAX EFFECT IS BELOW PRESCRIBED MONE TARY LIMIT. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT APPEAL THE INCOME ASSESSED IS RS.1 37 880/ - AND THE TAX INVOLVED IS RS.40 611/ - ONLY THEREFORE WIT HOUT GOING INTO MERITS OF THE CASE ON THE PRIMARY OBJECTION OF MONETARY LIMIT THE APPEAL OF THE REVENUE DESERVES TO BE DISMISSED. OUR VIEW IS SUPPORTED BY THE DECISION OF THE TRIBUNAL IN HIMANSHU FLOUR MILLS (ITA NO.506/IND/2009 ORDER DATED 26.5.2010). T HE RELEVANT PORTION OF THE SAME IS REPRODUCED HEREUNDER: - : 14 : - 14 THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A) DATED 26.8.2009 ON THE GROUND THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS. 5 46 831/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON FIXED ASSETS AND ALSO IN DIRECTING THE ASSESSING OFFICER TO ALLOW CARRY FORWARD OF BROUGHT FORWARD LOSSES OF EARLIER YEARS. 2. DURING HEARING OF THIS APPEAL WE HAVE HEARD THE LEARNED COUNSELS FROM BOTH THE SIDES AND CONSIDERED THE ARGUMENTS ADVANCED BY THEM. AT THE OUTSET THE LD. COUNSEL FOR THE ASSESSEE RAISED A PRELIMINARY OBJECTION THAT SINCE THE TAX EFFECT IS BELOW THE PRESCRIBED MONETARY LIMIT THEREFORE THE DEPARTMENT IS NOT PERMITTED TO FILE THIS APPEAL AND THE SAME DESERVES TO BE DISMISSED ON THIS SHORT GROUND ITSELF. HOWEVER THE LEARNED SR. DR FAIRLY AGREED THAT THE TAX EFFECT IS BELOW PRESCRIBED MONETARY LIMIT. 3. WE HAVE CONSIDERED THE RIVAL SUBMIS SIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW OF THE ABOVE ASSERTION OF THE LEARNED RESPECTIVE COUNSELS WE ARE OF THE CONSIDERED OPINION THAT THIS APPEAL OF THE REVENUE DESERVES TO BE DISMISSED. OUR VIE W FINDS SUPPORT FROM THE DECISION DATED 2 ND DECEMBER 2009 OF THE TRIBUNAL IN THE CASE OF HIMANSHU FLOOR MILLS (ITA NO. 507/IND/2009). THE RELEVANT PORTION OF THE SAME IS REPRODUCED HEREUNDER : - THIS APPEAL IS BY THE REVENUE CHALLENGING THE ORDER OF THE CIT(A) DATED 26.8.2009. DURING HEARING OF THIS APPEAL I HAVE HEARD SMT. APARNA KARAN LEARNED SENIOR DR AND NO - BODY WAS PRESENT FOR THE ASSESSEE. REGISTERED NOTICE OF HEARING WAS SENT TO THE ASSESSEE ON 11.11.2009. THE ASSESSEE NEITHER PRESENTED ITSE LF NOR MOVED ANY APPLICATION FOR ADJOURNMENT THEREFORE I HAVE NO OPTION BUT TO PROCEED EX - PARTE QUA THE ASSESSEE AND DISPOSE OF THIS APPEAL ON THE BASIS OF MATERIAL AVAILABLE IN THE FILE. 2. THE FIRST GROUND RAISED IS THAT THE LEARNED FIRST APPELLATE AUT HORITY ERRED IN DELETING THE ADDITION OF RS.4 26 936/ - MADE ON ACCOUNT OF DISALLOWANCE OF - : 15 : - 15 DEPRECIATION ON THE FIXED ASSETS. ON QUESTIONING FROM THE BENCH ABOUT THE TAX EFFECT IT WAS FAIRLY POINTED OUT THAT THE TAX EFFECT IS BELOW THE PRESCRIBED MONETARY LIMIT. I HAVE CONSIDERED THE SUBMISSIONS PUT - FORTH BY THE LEARNED SENIOR DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 3. BRIEF FACTS ARE THAT THE ASSESSEE CLAIMED DEPRECIATION OF RS. 8 53 871/ - ON THE FIXED ASSETS. THE LEARNED ASSESSING OFFICER BASED UPON THE COMMENTS OF THE AUDITORS IN THE NOTES TO ACCOUNTS AND THE NATURE OF THE BUSINESS DISALLOWED 50% OF THE DEPRECIATION CLAIMED BY THE ASSESSEE WHICH WAS WORKED OUT AT RS.4 26 936/ - . BEFORE THE LEARNED FIRST APPELLATE AUTHORITY THE SUBMISSION OF TH E ASSESSEE WAS THAT THE FIXED ASSETS WERE DULY REFLECTED IN THE BALANCE SHEET DURING THE RELEVANT PERIOD AND THERE WAS NO NEW ADDITION IN THE ASSETS. THE DEPRECIATION ON ALL THE ASSETS WAS REGULARLY ALLOWED SINCE THE DATE OF INCLUSION IN THE BALANCE SHEET . EVEN IN THE IMPUGNED ORDER THERE IS A FACTUAL FINDING THAT THE ASSESSEE FROM THE DATE OF INCLUSION HAS NOT SHOWN IN ADDITION TO THE BLOCK OF ASSETS AS THE WDV AS ON 31.3.2002 WAS TAKEN AS BASIS AFTER REDUCING THE SALE OF SOME ASSETS FOR THE CALCULATION OF ALLOWABLE DEPRECIATION FOR THE ASSESSMENT YEAR 2003 - 04 AND THE ASSESSEE WAS ALLOWED DEPRECIATION FOR THE ASSESSMENT YEAR 2002 - 03. THE REVENUE HAS NOT ADDUCED ANY EVIDENCE CONTROVERTING THE FACTUAL FINDING MENTIONED IN THE IMPUGNED ORDER THEREFORE THE DISALLOWANCE IS DESIRABLE IN THE IMPUGNED APPEAL. EVEN OTHERWISE ON THE TAX EFFECT THIS APPEAL OF THE REVENUE IS LIABLE TO BE DISMISSED. THIS VIEW FINDS SUPPORT FROM THE DECISION OF THE TRIBUNAL IN THE CASE OF R.K. HOTELS (ITA NO.383/IND/09). THE RELEVAN T PORTION OF THE ORDER IS REPRODUCED HEREUNDER : - THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER OF LD. CIT - (A) - II BHOPAL DATED 31.3.2009 FOR THE AY 2005 - 06 ON THE GROUND THAT THE LD. FIRST APPELLATE AUTHORITY ERRED IN DELETING THE ADDITION OF 6 37 20 6/ - MADE BY THE AO BY APPLYING THE PROVISIONS OF SEC. 154(3) ON ACCOUNT OF INCORRECTNESS AND INCOMPLETENESS OF BOOKS OF ACCOUNT. . 2. DURING HEARING OF THE APPEAL WE HAVE HEARD SMT. APARNA KARAN LD. SR. DR AND SHRI H.P. VERMA ALONG WITH SHRI ASHISH GOYA L LD. COUNSEL FOR ASSESSEE. AT THE OUTSET IT WAS - : 16 : - 16 POINTED OUT THAT THERE IS TYPOGRAPHICAL ERROR IN MENTIONING THE FIGURE OF RS.6 37 206/ - IN THE GROUND OF APPEAL AS THE CORRECT FIGURE IS RS.3 94 732/ - . THE ASSERTION OF THE ASSESSEE WAS CONSENTED TO BE CO RRECT BY THE LD. SR. DR. FURTHER IT WAS POINTED OUT THAT THE TAX EFFECT IS ALSO BELOW MONETARY LIMIT THEREFORE THE APPEAL OF THE REVENUE MAY BE DISMISSED. THE LD. SR. DR FAIRLY AGREED TO THE SUBMISSION OF THE ASSESSEE TO THE EXTENT THAT THE TAX EFFECT I S BELOW PRESCRIBED MONETARY LIMIT FOR FILING THE APPEAL BEFORE THE TRIBUNAL. S.NO. AUTHORITY MONETARY LIMIT (IN RS.) 1 ITAT 2 00 000/ - 2 APPEAL UNDER SECTION 260A BEFORE HIGH COURT 4 00 000/ - 3 SUPREME COURT 10 00 000/ - THE BOARD FURTHER CLARIFIED THE TAX EFFECT WHICH MEANS THE DIFFERENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUE AGAINST WHICH APPEAL IS INTENDED TO BE F ILED. HOWEVER THE TAX WILL NOT INCLUDE ANY INTEREST THEREON. IN CASES OF PENALTY ORDERS THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALED AGAINST. IN THE PRESENT APPEAL THE TOTAL DISPUTED ADDITION IS RS.3 9 4 732/ - THEREFORE AS AGREED/CANVASSED BY LD. REPRESENTATIVES FROM BOTH SIDES THE TAX EFFECT IS BELOW RS.2 LAKHS THE LIMIT PRESCRIBED FOR FILING APPEAL BEFORE THE TRIBUNAL THEREFORE APPEAL OF THE REVENUE DESERVES TO BE DISMISSED. OUR VIEW FINDS SUPPO RT FROM THE DECISION OF THE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASES OF SHRI J.S. LUTHRA (ITA NO.712 TO 715/CHD/2009) AND ITO WARD 2(2) ROPAR VS. THE JHALLIAN KALAN PRI. COOP MILK PRODUCE SOCIETY LTD. JHALLIAN - : 17 : - 17 KALAN DISTT. ROPAR (ITA NO.721/CHD/200 9). THEREFORE WITHOUT GOING INTO THE MERITS OF THE CASE FACTS AND THE JUDICIAL PRONOUNCEMENTS (SUPRA) THIS APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH SIDES ON 6.10.2009. IN T HE LIGHT OF THE ABOVE THIS GROUND OF THE REVENUE IS HAVING NO MERIT THEREFORE THE STAND OF THE LEARNED CIT(A) IS AFFIRMED CONSEQENTLY THIS GROUND OF THE REVENUE IS DISMISSED. 4. THE NEXT GROUND RAISED IS THAT THE LEARNED FIRST APPELLATE AUTHORITY ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW CARRY FORWARD OF BROUGHT FORWARD LOSSES OF EARLIER YEARS WITHOUT ANY BASIS. THE CONTENTION RAISED ON BEHALF OF THE REVENUE IS THAT IN COMING TO A PARTICULAR CONCLUSION NO BASIS HAS BEEN ADDUCED BY THE LEARNED FIRST APPELLATE AUTHORITY AND IT WAS RIGHTLY DISALLOWED BY THE ASSESSING OFFICER IN THE ABSENCE OF PROOF FURNISHED BY THE ASSESSEE. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE STAND OF THE REVENUE IS THAT P ROOF OF LAST YEARS LOSSES WAS NOT FURNISHED BY THE ASSESSEE CONSEQUENTLY THESE ARE NOT ALLOWABLE WHEREAS BEFORE THE LEARNED FIRST APPELLATE AUTHORITY THERE IS A FACTUAL FINDING THAT IN ALL PREVIOUS YEARS RETURNS WERE DULY FILED BY THE ASSESSEE AND THE SA ME WERE AVAILABLE ON RECORD OF THE ASSESSING OFFICER. IN THE IMPUGNED ORDER THE LEARNED FIRST APPELLATE AUTHORITY HAS DIRECTED THE ASSESSING OFFICER TO ALLOW CARRY FORWARD OF BROUGHT FORWARD LOSSES OF EARLIER YEARS WHICH WERE NOT SET OFF AFTER VERIFICATION OF RECORDS OF EARLIER YEARS. EVEN OTHERWISE IT IS A CASE OF ASSESSED LOSS WHICH HAS NOT BEEN SET OFF. CONSEQUENTLY WE ARE IN AGREEMENT THAT IN VIEW OF THE PROVISIONS OF SECTION 72 IT SHOULD BE ALLOWED. CONSEQUENTLY THERE IS NO GRIEVANCE TO THE REVEN UE SINCE IT HAS BEEN REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER TO DO THE NEEDFUL AFTER VERIFICATION OF RECORDS OF EARLIER YEARS. MY VIEW FINDS SUPPORT FROM THE RATIO LAID DOWN IN CIT V. J.H. GOTLA; 156 ITR 323 (SC); TARA DEVI BEHL V. CIT; 218 I TR 541 (P&H). THE HON BLE APEX COURT IN THE CASE OF CIT V. MAHALAXMI SUGAR MILLS CO. LTD.; 160 ITR 920 EVEN WENT TO THE EXTENT THAT ITO MUST ALLOW SET OFF EVEN IF IT IS NOT CLAIMED BY THE ASSESSEE - : 18 : - 18 BECAUSE A DUTY IS CAST UPON THE ITO TO APPLY THE RELEVANT PROVISIONS OF THE INDIAN INCOMETAX ACT FOR THE PURPOSE OF DETERMINING THE TRUE FIGURE OF ASSESSEE S TAXABLE INCOME AND THE CONSEQUENTIAL TAX LIABILITY. MERELY BECAUSE THE ASSESSEE FAILS TO CLAIM THE BENEFIT OF SET OFF CANNOT RELIEVE THE ITO OF HIS DUTY TO APPLY SECTION 72 IN AN APPROPRIATE CASE. IN VIEW OF THESE FACTS AND JUDICIAL PRONOUNCEMENTS I HAVE FOUND NO INFIRMITY IN THE IMPUGNED ORDER CONSEQUENTLY THIS GROUND OF THE REVENUE ALSO FAILS. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT IN THE PRESENCE OF BOTH THE PARTIES AT THE CONCLUSION OF HEARING ON 1.12.2009. IN THE AFORESAID CASE THE TRIBUNAL HAS PASSED A DETAILED ORDER THEREFORE WITHOUT GOING INTO THE MERITS OF THE CASE AND RESPECTFULLY FOLLOWING THE AFORESAID DECISION THIS APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT IN THE PRESENCE OF LEARNED REPRESENTATIVES OF BOTH THE SIDES AT THE CONCLUSION OF HEARING ON 26 TH MAY 2010. IN VIEW OF THE ABOVE THE APPEAL OF THE REVEN UE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH THE SIDES AT THE CONCLUSION OF THE HEARING ON 28.10.2010. 4. HOWEVER THE CBDT VIDE INSTRUCTION NO. 3/2011 DATED 9.2.2011 REVISED/RAISED THE MONETARY LIM IT FOR FILING THE APPEAL BY THE DEPARTMENT AS UNDER: S.NO. AUTHORITY MONETARY LIMIT (IN RS.) 1 ITAT 3 00 000/ - 2 APPEAL UNDER SECTION 260A BEFORE HIGH COURT 10 00 000/ - 3 SUPREME COURT 25 00 000/ - THE ABOVE INSTRUCTIONS ARE APPLICABLE TO THE APPEALS FILED ON OR AFTER 9.2.2011 ISSUED U/S 268A(1) OF THE I.T. ACT 1961. AS FAR AS THE MERIT OF THE CASE IS CONCERNED IT HAS ALREADY BEEN EXAMINED BY THE LD. CIT(A) BY KEEPING THE - : 19 : - 19 PROVISIONS OF SEC. 275(1)(A) OF THE ACT. SINCE THE APPEAL OF THE ASSESSEE WAS DECIDED BY THE LD. CIT(A) VIDE ORDER DATED 4.11.2004 CONSEQUENTLY THE PENALTY PROCEEDINGS WERE SUPPOSED TO BE DISPOSED OF BY 31.3.2006 WHEREAS THE SAME WAS DECIDED VIDE ORDER DATED 22.4.2009. IN VIEW OF THIS FACT THE ORDER WAS RIGHTLY QUASHED CONSEQUE NTLY WE FIND NO INFIRMITY IN THE STAND OF THE LD. CIT(A). THE SAME IS UPHELD. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH THE SIDES AT THE CONCLUSION OF THE HEARING ON 31.5.2011. IDENTICALLY THE BENCH IN THE CASE OF VINOD BANSAL ITA NO. 275/IND/2010 VIDE ORDER DATED 22.6.2011 DISMISSED THE APPEAL OF THE REVENUE ON THE ISSUE OF TAX EFFECT. THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. ASHOK KUMAR MANIBHAI & COMPANY (2009) 317 ITR 386 HELD AS UNDER : - THIS COURT CAN VERY WELL TAKE JUDICIAL NOTICE OF THE FACT THAT BY PASSAGE OF TIME MONEY VALUE HAS GONE DOWN THE COST OF LITIGATION EXPENSES HAS GONE UP THE ASSESSEE ON THE FILE OF THE DEPARTMENT HAVE BEEN INCREASED CONSEQUENTLY THE BURDEN ON THE DEPAR TMENT HAS ALSO INCREASED TO A TREMENDOUS EXTENT. THE CORRIDORS OF THE SUPERIOR COURTS ARE CHOKED WITH HUGE PENDENCY OF CASES. IN THIS VIEW OF THE MATTER THE BOARD HAS RIGHTLY TAKEN A DECISION NOT TO FILE REFERENCES IF THE TAX EFFECT LESS THAN RS. 2 LAKHS . THE SAME POLICY FOR OLD MATTERS NEEDS TO BE ADOPTED BY THE DEPARTMENT. IN OUR VIEW THE BOARD S CIRCULAR DATED MARCH 27 2000 IS VERY MUCH APPLICABLE EVEN TO THE OLD REFERENCES WHICH ARE STILL UNDECIDED. THE DEPARTMENT IS NOT JUSTIFIED IN PROCEEDING WI TH THE OLD REFERENCE WHEREIN THE TAX IMPACT IS MINIMAL. THUS THERE IS NO - : 20 : - 20 JUSTIFICATION TO PROCEED WITH DECADES OLD REFERENCES HAVING NEGLIGIBLE TAX EFFECT. 4. VIDE BOARD INSTRUCTION NO. 5/2008 DATED 15.5.2008 THE MONETARY LIMIT AND OTHER CONDITIONS FOR FILING THE APPEAL OF THE DEPARTMENT (IN INCOME TAX MATTERS) BEFORE THE APPELLATE TRIBUNAL HIGH COURT AND SUPREME COURT WAS SPECIFIED. HOWEVER IN SUPPRESSION OF THESE INSTRUCTIONS VIDE INSTRUCTION NO. 3/2011 DATED 9.2.2011 THE BOARD INCREASED THE MON ETARY LIMIT AS DISCUSSED ABOVE (TABLE). THE TRIBUNAL (MUMBAI BENCH) IN THE CASE OF M/S LAXMI J. JEWEL PRIVATE LIMITED (ITA NO. 2165/MUM/2010) BY FOLLOWING THE DECISION IN THE CASE OF HON BLE BOMBAY HIGH COURT IN CIT V. MADHUKAR K. INAMDAR (HUF) WHEREIN IT WAS HELD THAT THE CIRCULAR WILL BE APPLICABLE TO THE CASES PENDING BEFORE THE COURT EITHER FOR ADMISSION OR FOR FINAL DISPOSAL AND HELD THAT INSTRUCTION NO. 3 DATED 9.2.2011 IS APPLICABLE FOR THE APPEAL PREFERRED BY THE REVENUE AND DISMISSED THE SAME ON T AX EFFECT BY FURTHER CONSIDERING THE DECISION IN THE CASE OF LIVING STONES JEWELLERY PRIVATE LIMITED VS. DCIT; 31 SOT 323. RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS WE DISMISS THE APPEAL OF THE REVENUE ON THE ISSUE OF TAX EFFECT/MONETARY LIMIT. ORD ER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF - : 21 : - 21 LEARNED REPRESENTATIVES OF BOTH THE SIDES AT THE CONCLUSION OF THE HEARING ON 30 TH JUNE 2011 . WE FIND FROM THE RECORD THAT ITA NO.87/IND/2011 88/IND/2011 617/IND/ 2010 104/IND/2011 524/IND/2010 598/ IND/201 0 599/IND/2010 620/IND/2010 556/IND/2010 & IT(SS)A NO.26/IND/2011 ARE HAVING TAX EFFECT BELOW RS.2 LACS AND REMAINING THREE APPEALS I.E. ITA NO.480/IND/2010 102/IND/2011 & 571/IND/2010 ARE HAVING TAX EFFECT MORE THAN RS.2 LACS BUT BELOW RS.3 LACS. SO FAR AS THE APPEALS HAVING TAX EFFECT BELOW RS.2 LACS ARE CONCERNED SAME ARE DISMISSED BEING NOT MAINTAINABLE AS PER EARLIER CIRCULAR NO.5/2008 DATED 15.5.2008 OF CBDT WHEREAS WITH REGARD TO THREE APPEALS HAVING TAX EFFECT MORE THAN RS.2 LACS BUT LESS THAN RS .3 LACS ARE CONCERNED WE FIND THAT THESE APPEALS ARE ALSO LIABLE TO BE DISMISSED BEING NOT MAINTAINABLE BY FOLLOWING THE DECISION OF MUMBAI BENCH IN THE CASE OF LAXMI JEWELS P. LTD. ORDER DATED 12.4.2011 ITA NO.2165/MUM/2010. THIS ORDER OF THE MUMBAI BENC H HAS BEEN SUBSEQUENTLY FOLLOWED IN THE CASE OF M/S. INDIA SAFETY VAULTS LTD. ORDER DATED 29.4.2011 IN ITA NO.648 TO 651/MUM/2010. WE HAVE CAREFULLY GONE THROUGH THE DECISION OF THE COORDINATE BENCH WHEREIN AFTER FOLLOWING THE DECISION OF HON BLE BOMBAY H IGH COURT IN THE CASE OF - : 22 : - 22 MADHUKAR K. INAMDAR HUF IT WAS HELD THAT CIRCULAR WILL BE APPLICABLE TO THE CASE PENDING BEFORE COURT EITHER FOR ADMISSION OR FOR FINAL DISPOSAL. IN THE CASE OF NATHULAL JAIN (SUPRA) THE TRIBUNAL HAS PASSED A DETAILED ORDER THER EFORE WITHOUT GOING INTO THE MERITS OF THE RESPECTIVE CASES AND RESPECTFULLY FOLLOWING THE AFORESAID DECISION ALL THE PRESENT APPEALS OF THE REVENUE ARE DISMISSED BEING TAX EFFECT BELOW PRESCRIBED LIMIT. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRES ENCE OF LD. REPRESENTATIVES OF BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 30.6.2011. THE NEXT ARGUMENT OF THE LEARNED CIT DR WAS THAT THE ISSUE INVOLVED IN THE APPEALS FILED BY THE REVENUE IS PURELY A QUESTION OF LAW THEREFORE FALLING IN THE EXCEPT IONS AS PROVIDED IN THE CIRCULAR FOR NOT FILING THE APPEAL IN CASE OF LOW TAX EFFECT. WE HAVE GONE THROUGH THE ISSUE RAISED IN THESE APPEALS AND FIND THAT THEY PERTAIN TO CASH CREDIT AND INTEREST PAID THEREON WHICH IS PURELY A QUESTION OF FACT. THEREFORE THE OBJECTION OF THE LEARNED CIT DR IS NOT TENABLE. SINCE THE GROUND RAISED IN THE APPEALS RELATES TO QUESTION OF FACT THEREFORE THE SAME DOES NOT FALL IN THE EXCEPTION CLAUSE OF THE CIRCULAR WHICH EXCLUDES THE ISSUE INVOLVING THE QUESTION OF LAW. IN THE PRESENT APPEALS SINCE THE TAX EFFECT IS BELOW PRESCRIBED LIMIT AND NOT CONTROVERTED BY THE REVENUE CONSEQUENTLY RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF TRIBUNAL WHEREIN VARIOUS JUDICIAL - : 23 : - 23 DECISIONS HAVE BEEN DELIBERATED UPON THE APPEALS OF THE REVENUE ARE DISMISSED AS NON - MAINTAINABLE. FINALLY THE APPEALS OF THE REVENUE ARE DISMISSED. 16. IN VIEW OF THE ABOVE SINCE THE TAX EFFECT IS BELOW RS. 3 LAKHS WE DISMISS THE APPEAL FILED BY THE REVENUE . I.T.A.NO. 314/IND/2010 : 17. MOST OF THE GROUN DS IN THE APPEAL FILED BY THE ASSESSEE ARE SIMILAR TO THE GROUND TAKEN IN CASE OF SUNITA MANTRI AS DISCUSSED HEREINABOVE. WITH REGARD TO APPLICATION OF NET PROFIT OF 1 % IN PLACE OF NET PROFIT DECLARED BY THE ASSESSEE AT 0.67 % AS PER AUDITED BOOKS OF ACCO UNT AS DISCUSSED HEREINABOVE NET PROFIT RATE OF 1 % IS VERY REASONABLE. ACCORDINGLY WE CONFIRM THE ACTION OF THE AO FOR APPLYING NET PROFIT RATE OF 1 % AFTER REJECTING BOOKS OF ACCOUNT. 18. WITH REGARD TO ESTIMATION OF SALARY PAID TO PART TIME ACCOUNTANT AS DISCUSSED IN SMT. SUNITA MANTRI WE DIRECT THE AO TO TAKE THE SALARY OF PART TIME ACCOUNTANT AT RS. 18 000/ - PER MONTH. WE DIRECT ACCORDINGLY. - : 24 : - 24 19. ADDITION ON ACCOUNT OF SUNDRY CREDITORS AMOUNTING TO RS. 27552/ - AND SUNDRY DEBTORS RS. 48 774/ - WAS ON ACCOU NT OF DIFFERENCE BETWEEN CORRUPTED COPY OF TRIAL BALANCE VIS - - VIS AUDITED BOOKS OF ACCOUNT. IT APPEARS THAT RECONCILIATION STATEMENT FILED BY THE ASSESSEE HAVE NOT BEEN PROPERLY APPRECIATED BY THE ASSESSING OFFICER. WE THEREFORE RESTORE BOTH THESE GROUN DS TO THE FILE OF AO FOR VERIFYING THE CORRECT FIGURE OF SUNDRY DEBTORS AND CREDITORS AFTER CALLING FOR CONFI RMATION FROM THEM AND ALSO FINAL ENTRIES MADE IN THE AUDITED BOOKS OF ACCOUNT. THE AO IS TO DECIDE THE ISSUE AFRESH. 20. WITH REGARD TO ADDITION MADE O N ACCOUNT OF BUILDING CONSTRUCTION WE FOUND THAT THE ADDITION WAS MADE ON THE BASIS OF STATEMENT GIVEN BY THE ASSESSEE DURING THE COURSE OF SURVEY WITH REGARD TO INVESTMENT IN BUILDING ACCOUNT . T HE ASSESSEE HAS GIVEN STATEMENT ON 20 TH FEBRUARY 2008 THAT PAYMENT MADE TO CONTRACTOR WAS RS. 3 LAKHS. THEREFORE THE AO ADDED THE SAME WITHOUT VERIFYING FIGURE OF BUILDING ACCOUNT AS ON 31 ST MARCH 2007 IN WHICH ASSESSEE HAD SHOWN RS. 2 LAKHS HAVING BEEN PAID TO SHRI PATIDAR ON ACCOUNT OF BUILDING. AS PER LD. A UTHORIZED REPRESENTATIVE BALANCE - : 25 : - 25 AMOUNT OF RS. 1 LAKH WAS PAID DURING THE YEAR FROM 1.4.2007 TO 20.2.2008. IT APPEARS THAT AFTER THE ASSESSMENT OF THE YEAR 2007 - 08 THE AO HAS REFERRED THE CASE TO THE VALUATION OFFICER FOR VALUATION OF THE ADDITION UNDERT AKEN IN RESPECT OF BUILDING. IN VIEW OF ALL THESE FACTS T HIS MATTER IS ALSO RESTORED BACK TO THE FILE OF AO TO RECONCILE THE STATEMENT OF THE ASSESSEE AS MADE DURING COURSE OF SURVEY WITH THE VALUATION REPORT RECEIVED FROM THE DVO IN THE YEAR 2007 - 08 RELE VANT TO ASSESSMENT YEAR 2008 - 09. THE AO IS DIRECTED TO GIVE OPPORTUNITY TO THE ASSESSEE TO RECONCILE THE F IGURE GIVEN IN VALUATION REPORT AND THEN TO DECIDE THE ADDITION A FRESH . 21. WITH REGARD TO THE ADDITION SUSTAINED BY THE LD. CIT(A) ON ACCOUNT OF INVESTME NT IN PLANT AND MACHINERY ON THE BASIS OF STATEMENT GIVEN BY THE ASSESSEE ON THE DATE OF SURVEY WE FOUND THAT STATEMENT FOR INVESTMENT IN PLANT AND MACHINERY AT RS. 3 LACS WAS GIVEN ON 20.2.2008 . THE AO COMPARED THE VALUE OF MACHINERY AS ON 31 ST MARCH 20 07 WHICH WAS AT RS. 84 400/ - AND DIFFERENCE WAS ADDED IN ASSESSEE S INCOME. WE DO NOT FIND ANY JUSTIFICATION FOR SUCH ADDITION IN SO FAR AS ASSESSEE HAS MADE FURTHER INVESTMENT IN - : 26 : - 26 THE PLANT AND MACHINERY DURING 1 ST APRIL 2007 TO 20 TH FEBRUARY 2008. IN T HE INTEREST OF JUSTICE THIS GROUND IS ALSO RESTORED TO THE FILE OF AO TO RE - VERIFY THE INVESTMENT MADE DURING THE YEAR IN PLANT AND MACHINERY AND ALSO VERIFY THE BILLS FOR SUCH PLANT AND MACHINERY AND TO DECIDE THE ISSUE AFRESH. 22. WITH REGARD TO ADDITION MA DE ON ACCOUNT OF LOW WITHDRAWALS KEEPING IN VIEW THE STANDARD OF LIVING ESTIMATION OF HOUSE HOLD EXPENDITURE AT RS. 60 000/ - PER ANNUM WILL BE SUFFICIENT. ACCORDINGLY THE AO IS DIRECTED TO RE - WORK OUT THE ADDITION ON ACCOUNT OF HOUSE HOLD WITHDRAWALS. W E DIRECT ACCORDINGLY. 23. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 28 TH JU LY 2011. SD/ - SD/ - (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28 TH JU LY 2011 . CPU* 22.2 8 7