The ITO, Ward-9(2),, Surat v. Shri Hasmukhlal Mohanlal Telwala,HUF, Surat

ITA 3540/AHD/2008 | 2005-2006
Pronouncement Date: 11-03-2011 | Result: Dismissed

Appeal Details

RSA Number 354020514 RSA 2008
Bench Ahmedabad
Appeal Number ITA 3540/AHD/2008
Duration Of Justice 2 year(s) 4 month(s) 18 day(s)
Appellant The ITO, Ward-9(2),, Surat
Respondent Shri Hasmukhlal Mohanlal Telwala,HUF, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 11-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 11-03-2011
Date Of Final Hearing 03-03-2011
Next Hearing Date 03-03-2011
Assessment Year 2005-2006
Appeal Filed On 24-10-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE SHRI D.K. TYAGI JUDICIAL MEMBER AND SHRI A.N.PHAUJA ACCOUNTANT MEMBER ITA NO.3540/AHD/2008 ASSESSMENT YEAR:2005-06 DATE OF HEARING:3.3.11 DRAFTED:7.3.11 INCOME TAX OFFICER WARD-9(2) AAYAKAR BHAVAN ROOM NO.421 MAJURAGATE SURAT V/S. HASMUKHLAL MOHANLAL TELWALA HUF PROP. H. TEX 78 SURPAPUR INDUSTRIAL ESTATE A.K. ROAD SURAT PAN NO.AAAHH7473N (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI P.R.GHOSH SR-DR RESPONDENT BY:- SHRI K.K. SHAH AR O R D E R PER D.K. TYAGI JUDICIAL MEMBER:- THIS IS A REVENUE APPEAL AGAINST THE ORDER OF COMM ISSIONER OF INCOME- TAX(APPEALS)-V SURAT IN APPEAL NO.CAS-V/144/2007-0 8 DATED 28-08-2008 FOR THE ASSESSMENT YEAR 2005-06. 2. THE REVENUE HAS TAKEN FOLLOWING TWO GROUNDS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.8 49 2 68/- MADE BY THE A.O ON ACCOUNT OF CASH DEPOSITING WITHOUT APPRECIATING T HE FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.1 85 0 12/- MADE BY THE A.O ON ACCOUNT OF FALL IN G.P. WITHOUT GIVING ANY SPECIFI C REASON AND IGNORING THE FACTS OF THE CASE. 2. FIRST GROUND RELATES TO DELETION OF ADDITION OF RS.8 49 268/- MADE BY ASSESSING OFFICER ON ACCOUNT OF CASH DEPOSITED. TH E BRIEF FACTS ARE THAT THE ITA NO.3540/AHD/2008 A.Y. 2005 -06 ITO WD-9(2) SRT V. HASMUKHLAL M TELWALA HUF PAGE 2 ASSESSEE IS A MANUFACTURER GETTING HIS WORK DONE ON A JOB WORK BASIS. HE DOES NOT HAVE HIS OWN MANUFACTURING FACILITIES. THE ASSESSEE S CASE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY THE ASSESSEE WAS ASKED TO PRODUCE B OOKS OF ACCOUNT AND OTHER RECORDS. HOWEVER IT WAS STATED BY ASSESSEE THAT SI NCE ALL HIS RECORDS WERE WASHED OUT IN DELUGE IN AUGUST 2006 AND HE WAS UNABLE TO PRODUCE THE RECORDS. CONSIDERING THIS FACTS AND CIRCUMSTANCES ASSESSING OFFICER CALLED FOR BANK STATEMENT AND FROM THERE HE CALCULATED THE DEPOSITS MADE IN THE BANK. DURING THE YEAR UNDER CONSIDERATION TAKING A CUE FROM THE BAN K DEPOSITS IT WAS OBSERVED THAT THE ASSESSEE HAS SHOWN THE TOTAL TURNOVER OF RS.6 0 1 58 624/- WHEREAS TOTAL DEPOSITS IN BANK WERE AMOUNTING TO RS.749 28 900/-. AFTER CONSIDERING THE INCREASE AND DECREASE OF CREDITORS AND DEBTORS THE ASSESSIN G OFFICER FOUND THAT THERE WAS STILL DIFFERENCE OF RS.34 60 813/-. THE ASSESSEE WA S ASKED FOR EXPLANATION AS TO WHY THIS EXCESS DEPOSIT SHOULD NOT BE CONSIDERED AS HIS INCOME. THE ASSESSEE REPLIED WAS THAT A SUM OF RS.21 10 045/- WAS ON ACCOUNT OF CHEQUES RETURN WHICH WERE RE- DEPOSITED WHEREAS SUM OF RS.13.50 LAKH WAS ON ACCO UNT OF DEPOSIT RECEIVED FROM ITS SISTER CONCERN. HOWEVER ACCORDING TO AO THE AS SESSEE COULD NOT SUBSTANTIATE THIS CLAIM AND THEREFORE HE ADDED SAID INCOME AS IN COME OF ASSESSEE U/S.68 OF THE IT ACT. AGGRIEVED BY THIS ORDER OF AO ASSESSEE WANT IN APPEAL BEFORE FIRST APPELLATE AUTHORITY DURING THE COURSE OF APPELLATE PROCEEDIN GS HE PRODUCED BANK STATEMENT SHOWING EACH INDIVIDUAL CREDITS AND DEBITS AND ALSO PRODUCED DETAILS OF CHEQUES DEPOSITED CHEQUES RETURNED UN-CLEARED AND CHEQUES RE-DEPOSITED DATE-WISE DULY RECONCILED WHEREAS REGARDS TO DEPOSIT IN RESPECT OF SISTER COMPANY CHEQUES THE ASSESSEE PRODUCED SISTER CONCERNS ACCOUNTS SHOWING SUCH ENTRIES THEREIN ALONG WITH THEIR BANK STATEMENT. LD. CIT(A) TREATED THIS IS AS ADDITIONAL EVIDENCE AND AFTER GIVING OPPORTUNITY TO THE ASSESSING OFFICER ADMITTE D THE SAME AND CALLED FOR REMAND REPORT ON THIS ADDITIONAL EVIDENCE FROM THE ASSESSI NG OFFICER. THE AO IN HIS REMAND REPORT SUBMITTED THAT IN RESPECT OF SUM OF RS.13.50 LAKH ASSESSEE HAD PRODUCED DETAILS FROM ITS SISTER CONCERN AND SAME WERE FOUND EXPLAINED BY HIM. AS REGARDS TO CHEQUES RETUNED AND RE-DEPOSITED AO FOUND THAT OUT OF TOTAL CHEQUES RETURNED AMOUNTING TO RS.21 10 813/- AND SUM OF RS.12 61 045 /- WERE ONLY RE-DEPOSITED IN THE FORM OF CHEQUES AND BALANCE AMOUNT WERE DEPOSIT ED IN THE FORM OF CASH. ASSESSEES COMMENTS WERE TAKEN ON THIS REMAND REPOR T OF THE AO AND AFTER TAKING INTO ACCOUNT THE ASSESSMENT ORDER REMAND REPORT A ND THE REPLY OF ASSESSEE. LD. CIT(A) DELETED THIS ADDITION. ITA NO.3540/AHD/2008 A.Y. 2005 -06 ITO WD-9(2) SRT V. HASMUKHLAL M TELWALA HUF PAGE 3 3. AGGRIEVED BY THIS ORDER OF LD. CIT(A) NOW REVENU E IS IN APPEAL BEFORE TRIBUNAL IN RESPECT OF SUM OF RS.8 49 268/- WHICH WERE DEPOSITED IN CASH BY THE ASSESSEE IN ITS BANK ACCOUNT. AT THE TIME OF HEARIN G LD. SR-DR SUBMITTED THAT AS AMOUNT OF RS.8 49 268/- WAS DEPOSITED IN CASH AND S AME COULD NOT BE ASSUMED THAT THIS SUM WAS OUT OF THOSE RETURNED CHEQUES ONLY AND THEREFORE LD. CIT(A) SHOULD HAVE CONFIRMED THE ADDITION TO THIS EXTENT. 4. LD. AUTHORIZED REPRESENTATIVE ON THE OTHER HAND RELIED ON THE ORDER OF LD. CIT(A). 5. HEARD BOTH THE PARTIES. PERUSED THE RECORDS AND FIND THAT WHILE GIVING RELIEF TO THE ASSESSEE LD. CIT(A) HAS OBSERVED AS UNDER:- I HAVE GONE THROUGH THE CONTENTION OF THE APPELLAN T AS WELL AS THAT OF THE AO. SO FAR AS CHEQUES DEPOSITS IS CONCERNED SINCE TH E SAME HAS BEEN RECONCILED AND NO FAULT FOUND THEREIN THE ADDITION MADE IN THIS REGARD STANDS DELETED AND THEREFORE ADDITION OF RS.12 61 045/- IS DELETED. AS REGARD CASH DEPOSIT IS CONCERNED ON APPRECIATION OF FACTS IT IS SEEN THAT THE AMOUNT OF CASH DEPOSITED IS IN LINE WITH THE CHEQUES RETUNED. IN THE BUSINESS IT NOT UNCOMMON THAT WHERE THE CHEQUES ARE RETURNED THE PA RTIES CONCERNED WOULD ASK FOR CASH PAYMENT SINCE THE PROBABILITY OF OTHER CHEQUES ALSO GETTING BOUNCED COULD NOT BE DENIED. FURTHER IT IS ALSO NOT IN DISPUTE NOR THE AO HAS FOUND ANY FAULT WITH IS THAT THE AMOUNT OF TOTAL CA SH DEPOSITED IN THIS REGARD WAS MATCHING WITH THE AMOUNT OF CHEQUES RETURNED. S INCE THE DEPOSIT OF CHEQUES MATCH WITH THE AMOUNT OF CHEQUES RETURNED A ND BASED ON SUCH CASH DEPOSITS ONLY THE OTHER BALANCE SHEET FIGURES ARE M ATCHING THE PROBABILITY OF PREPONDERANCE GOES IN FAVOUR OF THE ASSESSEE. HENCE I AM ALSO IN AGREEMENT WITH THE APPELLANT THAT WHEN THE TURNOVER IS RECONC ILED WITH THE TOTAL DEPOSITS AND TOTAL WITHDRAWALS EVEN IF THE AMOUNT OF CASH DE POSIT IS CONSIDERED AS OTHERWISE THE TURNOVER IN ANY CASE WOULD GET REDUCE D BY THE AMOUNT OF CHEQUES RETURNED AND THEREFORE IN EITHER CASE THE T OTAL TURNOVER WOULD MATCH ONLY WHEN BOTH CASH DEPOSIT AND CHEQUES RETURNED AR E CONSIDERED IN TANDEM. THUS CONSIDERING THE OVERALL FACTS OF THE CASE I AM OF CONSIDERED VIEW THAT APPELLANT HAS EXPLAINED THE DIFFERENCE AND THAT NO ADDITION COULD BE ENVISAGED ON THIS ACCOUNT AND AS SUCH ADDITION IN R ESPECT OF BALANCE RS.8 49 268/- IS ALSO DELETED. SINCE AT THE TIME OF HEARING ABOVE FINDING OF LD. C IT(A) HAS REMAINED UN- CONTROVERTED WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) AND SAME IS HEREBY UPHELD. THIS GROUND OF APPEAL BY DEP ARTMENT IS DISMISSED. ITA NO.3540/AHD/2008 A.Y. 2005 -06 ITO WD-9(2) SRT V. HASMUKHLAL M TELWALA HUF PAGE 4 6. THE SECOND GROUND RELATES TO DELETION OF ADDITIO N OF RS.1 85 012/- MADE BY ASSESSING OFFICER ON ACCOUNT OF FALL IN GROSS PROFI T. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT IN THE YEAR UNDER CONSIDERATION THE ASSESSEES GP MARGIN HAD DROP FROM 3.5% IN PREVIOUS YEARS TO 2.92% THUS THERE WAS A FALL IN MARGIN BY 0.64%. THE ASSESSEE COULD N OT PRODUCE ANY MATERIAL BEFORE ASSESSING OFFICER TO SUBSTANTIATE HIS CLAIM. THUS I N ABSENCE OF COGENT EVIDENCE PRODUCED BEFORE THE AO THE AO MADE ADDITION OF RS.3 85 012/- COMPUTED ON THE BASIS OF DIFFERENCE IN GP MARGIN VIS--VIS TOTAL TU RNOVER. BEFORE CIT(A) ASSESSEE GAVE COMPARATIVE CHART OF MANUFACTURING EXPENSES AN D SUBMITTED THAT IT IS GETTING ITS WORK DONE FROM THE OUTSIDERS AND SINCE THE PARTIES FROM WHOM HE GOT HIS WORK DONE INCREASED THERE WAS A DECLINE IN GP MARGIN. ACCORDI NG TO ASSESSEE IN THE PRECEDING PREVIOUS YEAR TOTAL MANUFACTURING COST PER METER OF CLOTH WORKED OUT TO RS.3 575 PER MT. AS PER AGAINST WHICH THE COST IN THE YEAR UNDER CONSIDERATION WAS WORKING OUT TO 3.93 PER MT. FURTHER IT WAS ALSO SUBMITTED THAT IT S TURNOVER OF THE CURRENT YEAR INCREASED FROM 4 87 10 736/- TO RS.6 01 58 264/- WH ICH ALSO LED TO A REDUCTION IN MARGIN. LD. CIT(A) WAS OF THE VIEW THAT IN SUPPORT OF ITS SUBMISSION THAT COST OF MANUFACTURING WAS MORE THIS YEAR NO DOCUMENTARY EVI DENCE WAS FILED. HE HOWEVER TAKING INTO CONSIDERATION THE FACT THAT DURING THE YEAR TOTAL TURNOVER OF THE ASSESSEE INCREASED FROM RS.4 87 10 736/- TO RS.6 01 58 264/- FOUND IT REASONABLE TO RESTRICT THIS ADDITION AT RS.2 LAKH. THUS GIVING RELIEF TO THE ASSESSEE TO THE EXTENT AMOUNT OF RS.1 85 012/-. AGGRIEVED BY THIS ORDER REVENUE IS I N APPEAL BEFORE US. 7. AT THE TIME OF HEARING LD. SR-DR PLACING RELIAN CE ON THE ORDER OF ASSESSING OFFICER SUBMITTED THAT THE ORDER PASSED BY LD. CIT( A) MAY KINDLY BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. 8. THE LD AUTHORIZED REPRESENTATIVE ON THE OTHER H AND SUBMITTED THAT THERE WAS A SMALL FALL OF 0.64% AND THE SAME WAS DUE TO R ISE IN THE COST OF MANUFACTURING COST PER METER. SINCE LUMP SUM ADDITION ON ACCOUNT OF GP IS ALREADY ACCEPTED NO FURTHER ADDITION OF GP MAY BE CONFIRMED. HE FURTHER SUBMITTED THAT ADDITION ON GP IS MADE WITHOUT THERE BEING MATERIAL DEFECTS IN THE BO OKS OF ACCOUNT. 9. HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. WE FIND THAT ASSESSING OFFICER HAS MADE ADDITION OF RS.3 85 012/- DUE TO F ALL IN GP MARGIN BY 0.64% DURING ITA NO.3540/AHD/2008 A.Y. 2005 -06 ITO WD-9(2) SRT V. HASMUKHLAL M TELWALA HUF PAGE 5 THE YEAR UNDER APPEAL IN COMPARISON TO THE EARLIER YEAR AND THE LD. CIT(A) HAS RESTRICTED THIS ADDITION TO RS.2 LAKH TAKING INTO C ONSIDERATION THE INCREASE IN TURNOVER OF THE ASSESSEE FROM RS.4 87 10 736/- TO RS.6 01 58 265/- DURING THE YEAR. SOME REDUCTIONS OF MARGIN IN GROSS PROFIT IS ATTRIBUTABL E TO SUCH INCREASE OF TURNOVER. THEREFORE WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER PASSED BY LD. CIT(A) AND THE SAME IS HEREBY UPHELD. THE SUBMISSION OF LD. AU THORIZED REPRESENTATIVE ARE BEING IGNORED AS ASSESSEE IS NOT IN APPEAL AGAINST THE ORDER OF LD. CIT(A). THIS GROUND OF REVENUE IS ALSO DISMISSED. 10. IN THE RESULT REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 11/03/2011 SD/- SD/- (A.N.PHAUJA) (D.K. TYA GI) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD DATED : 11/03/2011 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-V SURAT 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD