Smt. Jayshree M. Shah,, JAMNAGAR v. The Assistant Commissioner of Income Tax, Central Circle-2,, RAJKOT-GUJARAT

ITA 397/RJT/2011 | 2009-2010
Pronouncement Date: 26-07-2013 | Result: Allowed

Appeal Details

RSA Number 39724914 RSA 2011
Assessee PAN AFGPS1759F
Bench Rajkot
Appeal Number ITA 397/RJT/2011
Duration Of Justice 1 year(s) 9 month(s) 2 day(s)
Appellant Smt. Jayshree M. Shah,, JAMNAGAR
Respondent The Assistant Commissioner of Income Tax, Central Circle-2,, RAJKOT-GUJARAT
Appeal Type Income Tax Appeal
Pronouncement Date 26-07-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 26-07-2013
Date Of Final Hearing 13-06-2013
Next Hearing Date 13-06-2013
Assessment Year 2009-2010
Appeal Filed On 24-10-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT BEFORE SHRI T K SHARMA JM AND SHRI D K SRIVASTAVA AM ITA NO. 397 /RJ T/201 1 ASSESSMENT YEAR : 200 9 - 20 10 SMT JAYSHREE M SHAH PROP. MEENA ROADWAYS JAMNAGAR PAN: AFGPS 1759 F V. ACIT CENTRAL CI RCLE - 2 RAJKOT DATE OF HEARING : 13 .0 6 .2013 DATE OF PRONOUNCEMENT : 26 .0 7 .2013 ASSESSEE BY : SHRI J C RANPURA CA REVENUE BY : SHRI RAJIV RANADE DR ORDER D. K. SRIVASTAVA : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER PASSED BY THE CIT(A) - IV AHMEDABAD ON 24 . 08 .2 0 11 ON THE FOLLOWING GROUNDS: - 1) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN FACTS AND LAW BY DISALLOWING THE FREIGHT CHARGES TO THE EXTENT OF RS.5516710/ - 2) THE APPELLANT RESERVES ITS RIGHT TO ADD ALTER OR OMIT ANY OF THE GROUNDS OF THE APPEAL. 2. THE ASSESSEE IS A PROPRIETOR OF M/S. MEENA ROADWAYS. SEARCH AND SEIZURE OPERATIONS U/S 132 OF THE INCOME - TAX ACT WERE CARRIED OUT AT THE PREMISES OF SHRI SHAKTISINH CHUDASAMA AND OTHER MEBERS OF THE MEENA AGENCY GROUP ON 29.01.2009. AS STATED EARLIER THE SEARCH AND SEIZURE OPERATIONS TOOK PLACE ON 29.01.2009 AND THEREFORE THEY WERE RELEVANT FOR THE ASSESSMENT YEAR UNDER APPEAL. RETURN OF INCOME WAS FILED BY THE ASSESSEE RETURNING TOTAL INCOME AT RS.98 26 838/ - ON 27.03.2010. DETAILED QUESTIONNAIRE WAS ISSUED CALLING UPON THE ASSESSEE TO FURNISH VARIOUS DETAILS. IN RESPONSE TO NOTICE OF HEARING ISSUED BY THE ASSESSING OFFICER SHRI HITEN PARIKH CA ATTENDED ALONGWITH SHRI MANISH MEHTA AC COUNTANT OF THE ASSESSEE AND FILED WRITTEN SUBMISSIONS. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD DEBITED A SUM OF RS.11 03 34 217/ - TO H ER PROFIT AND LOSS ACCOUNT TOWARDS FREIGHT CHARGES. ON BEING CALLED UPON TO FURNISH THE RELEVANT DETAILS IN T HIS BEHALF TOGETHER WITH COMPLETE PROOF / EVIDENCE IN SUPPORT OF THE IMPUGNED EXPENDITURE THE ASSESSEE S ACCOUNTANT VIDE ORDER SHEET ENTRY DATED 06.12.2010 2 397 - RJT - 2011 SMT JAYSHREE M SHAH AGREED TO DISALLOWANCE OF 5% OF THE TOTAL EXPENDITURE WITH THE RESULT THAT THE SAID SUM OF RS.55 16 710/ - WAS ADDED TO THE TOTAL INCOME RETURNED BY THE ASSESSEE. 3. AGGRIEVED BY THE ORDER PASSED BY THE ASSESSING OFFICER THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD CIT(A). THE LD CIT(A) HOWEVER DISMISSED THE APPEAL FILED BY THE ASSESSEE WIT H THE FOLLOWING OBSERVATIONS: - 6. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT AND THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER. 6.1 ON VERIFICATION OF RECORDS IT IS ASCERTAINED THAT THERE IS NO SUCH LETTER DATED 06 - 12 - 2010 ON RECORD VIDE WHICH THE ASSESSEE HAS GIVEN CONSENT TO THE DISALLOWANCE TO THE EXTENT OF 5% OF THE TOTAL FREIGHT EXPENDITURE AS HAS BEEN MENTIONED IN THE ASSESSMENT ORDER. HOWEVER THE PERUSAL OF ORDER SHEET NOTINGS MADE ON 06 - 12 - 2010 CLEARLY MENTIONS THE FACT THAT DISALLOWANCE TO THE EXTENT OF 5% OF THE TOTAL FREIGHT EXPENSES HAS BEEN AGREED TO BY MR. MANISH MEHTA AUTHORISED REPRESENTATIVE AND CHIEF ACCOUNTANT OF THE ASSESSEE. THE RELEVANT PORTION OF THE NOTINGS MADE IN THE AFORESAID ORDER SHEET ON 30 - 11 - 2010 06 - 12 - 2010 AND 24 - 12 - 2010 ARE REPRODUCED AS UNDER: - 30 - 11 - 2010 MR. MANISH MEHTA HAS ATTENDED & SUBMITTED DETAILS. HE HAS BEEN ASKED TO PRODUCE BOOKS OF A/CS & BILLS FOR TRANSPORTATION CHARGES RECEIVED & PAID. CASE ADJOURNED TO 06 - 12 - 2010 MR. M ANISH MEHTA ACCOUNTANT OF ASSESSEE AND PRODUCED BOOKS BILLS FOR TRANSFER CHARGES PAID & RECEIVED. THE VOUCHER SELF MADE VOUCHERS WHICH ARE NOT VERIFIABLE. IN ABSENCE OF THIS ASSESSEE HAVE AGREED TO DISALLOWANCE OF 5% OUT OF TRANSPORT CHARGES PAID. THEY HAVE BEEN ASKED TO FILE BALANCE DETAILS.CASE ADJOURNED TO 20 - 12 - 2010 AT 11.00 A.M. 4 - 12 - 2010 MR. MANISH MEHTA & PARIKH HAVE ATTENDED DETAILS FILED & CASE DISCUSSED. 6.2 IT IS QUITE CLEAR FROM THE ABOVE NOTINGS THAT SIGNED BY MR. MANISH MEHTA & THE ASSESSING OFFICER DATE NOT MENTIONED SIGNED BY MR. MANISH MEHTA & THE ASSESSING OFFICER SIGNED BY SHRI HIREN PARISH MR. MANISH MEHTA & THE ASSESSING OFFICER 3 397 - RJT - 2011 SMT JAYSHREE M SHAH ( I ) BOOKS OF A/C AND BILLS FOR TR ANSPORT CHARGES RECEIVED AND PAID WERE SPECIFICALLY ASKED TO BE PRODUCED BY THE AO AS FOR THE NOTINGS MADE ON 30 - 11 - 2010. THEREFORE IT IS NOT CORRECT THAT THE ASSESSING OFFICER HAS NEVER ASKED ANY QUESTION WHICH SPECIFICALLY RELATES TO THE FREIGHT CHARGES PAID BY THE ASSESSEE. ( II ) AS PER NOTINGS ON 06 - 12 - 2010 IT IS BEYOND DOUBT THAT THE DISALLOWANCE OF 5% OUT OF TRANSPORT CHARGES PAID HAS BEEN AGREED TO BY MR. MANISH MEHTA CHIEF ACCOUNTANT IN VIEW OF SELF - MADE VOUCHERS WHICH ARE NOT VERIFIABLE. THE SAID ORD ER SHEET NOTINGS IS DULY SIGNED BY MR. MANISH MEHTA. THEREFORE IT IS NOT TRUE AT ALL THAT THE APPELLANT HAS PRIMA FACIE GIVEN CONSENT FOR THE ADDITION TO THE TUNE OF RS.5 TO 7 LAKHS ONLY. THE ASSERTION BY THE APPELLANT THAT IT WAS UNDER THE IMPRESSION THA T THERE SHOULD BE A ADDITION OF RS.5 TO RS.7 LAKHS AND ACCORDINGLY CONSENT WAS GIVEN IS TOTALLY DEVOID OF ANY TRUTH IN VIEW OF CLEAR CUT NOTINGS MADE IN THE ORDER SHEET. THOUGH THE SAID DATE IS NOT SPECIFICALLY MENTIONED ON THE ORDER SHEET BUT AS PER THE N OTE SHEET ENTRY OF EARLIER HEARING HELD ON 30 - 11 - 2010 WHICH IS ADJOURNED TO 06 - 12 - 2010 IT IS QUITE APPARENT THAT THE NOTINGS ARE MADE ON 06 - 12 - 2010 ONLY. ( III ) ON THE FINAL DATE OF HEARING ON 24 - 12 - 2010 THE NOTE SHEET IS DULY SIGNED BY THE MR. MANISH MEHTA C HIEF ACCOUNTANT AS WELL AS BY SHRI HITEN PARIKH CA. A COPY OF THE ABOVE ORDER SHEET WAS DULY HANDED OVER TO SHRI HITEN PARIKH CA ON 10 - 08 - 2011 BY THE UNDERSIGNED. 6.3 IN VIEW OF THE ABOVE AND TAKING INTO CONSIDERATION THE FACT THAT THE APPELLANT HAS AB SOLUTELY AGREED TO THE DISALLOWANCE OF 5% OF TOTAL FREIGHT EXPENDITURE ON THE GROUND THAT THE SELF MADE VOUCHERS IN RESPECT OF TRANSPORT EXPENSES ARE NOT VERIFIABLE THE CONSEQUENTIAL ADDITION OF RS.55 16 710/ - MADE ON ACCOUNT OF DISALLOWANCE OUT OF FREIGH T EXPENDITURE DOES NOT CALL FOR ANY INTERFERENCE. THIS IS SO BECAUSE IF IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE AGREES TO SOME ADDITION/DISALLOWANCE HE VIRTUALLY STOPS THE ASSESSING OFFICER BY IMPLICATIONS FROM PURSUING FURTHER 4 397 - RJT - 2011 SMT JAYSHREE M SHAH INVESTIGATIO N IN THE MATTER. THEREFORE CONSENT GIVEN BY THE ASSESSEE FOR DISALLOWANCE CAN BE USED AS EVIDENCE AND THE ASSESSMENT MADE ON THE BASIS OF SAME IS PERFECTLY JUSTIFIED. ACCORDINGLY DISALLOWANCE OF RS.55 16 710/ - OUT OF FREIGHT EXPENSES MADE BY THE ASSESSIN G OFFICER IS SUSTAINED. 4. AGGRIEVED BY THE ORDER PASSED BY THE LD . CIT(A) THE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. IN SUPPORT OF APPEAL THE LD . AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS FILED SYNOPSIS OF HIS SUBMISSIONS WHICH READ S A S UNDER: - (A) THE APPELLANT SUBMITS THAT SHE WAS NOT SERVED WITH ANY WRITTEN NOTICE IN RESPECT OF THE PROPOSED DISALLOWANCE OF FREIGHT CHARGES BY THE AO NOR SHE HAD GIVEN ANY WRITTEN CONSENT FOR THE ALLEGED AGREED DISALLOWANCE. THE AGREEMENT FOR THE DISA LLOWANCE OF FREIGHT CHARGES MADE BY THE ACCOUNTANT OF THE APPELLANT THAT TOO IS UNDER MISTAKEN BELIEF CANNOT BIND THE APPELLANT AND THEREFORE THE DISALLOWANCE MADE MAY KINDLY BE DELETED. (B) FURTHER STATEMENT SHOWING COMPARISON OF GP NP AND FREIGHT CHA RGES CLAIMED DURING THE RELEVANT PREVIOUS YEAR WITH PRECEDING TWO YEARS AND THE SUBSEQUENT YEAR AS ATTACHED AT PAGE 3. AS MAY BE SEEN FROM THE SAID CHART THAT THE GP DURING THE RELEVANT PREVIOUS YEAR WAS 3.39% AS AGAINST 3.53% AND 3.63% IN THE TWO PRECEDIN G YEARS AND 3.12% IN THE SUBSEQUENT YEAR. FURTHER RATIO OF FREIGHT INCOME AND EXPENSES DURING THE RELEVANT PREVIOUS YEAR IS AT 96.61% AS AGAINST 96.47% AND 96.37% IN THE TWO PRECEDING YEARS AND 96.88% IN THE SUBSEQUENT YEAR. THUS VARIATION IN GP AND FREIG HT EXPENSE DURING THE RELEVANT PREVIOUS YEAR IS NEGLIGIBLE AND THE DISALLOWANCE MADE BY THE AO FROM FREIGHT CHARGES AT RS.55 16 710/ - MAY KINDLY BE DELETED. (C) WITHOUT PREJUDICE TO THE ABOVE DURING THE COURSE OF SURVEY PROCEEDINGS CARRIED OUT IN THE CAS E OF APPELLANT AND GROUP COMPANIES THE APPELLANT HAD ADMITTED INCOME OF RS.70 00 000/ - AS TRANSPORTATION INCOME FOR THE YEAR UNDER CONSIDERATION. THUS CONSIDERING THE SAID INCOME GP WORKS 5 397 - RJT - 2011 SMT JAYSHREE M SHAH OUT AT 8.97% AND IF THE DISALLOWANCE AS MADE BY THE AO IS CONSIDERE D THE SAME WILL WORK OUT AT 13.53% WHICH QUITE ABNORMAL. (D) CONSIDERING THE INCOME DISCLOSED AT RS.70 00 000/ - NO FURTHER DISALLOWANCE WAS REQUIRED TO BE MADE AS THE DISCLOSED INCOME TAKES CARE OF DISCREPANCY IF ANY. IT IS THEREFORE HUMBLE PRAYED THAT THE DISALLOWANCE MAY KINDLY BE DELETED. 5. IN REPLY THE LD . DR RELIED UPON THE ORDER PASSED BY THE LD CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONSIDERED THEIR SUBMISSIONS. THE IMPUGNED DISALLOWANCE WAS AGREED TO BY SHRI MANISH MEHTA A CCOUNTANT OF THE ASSESSEE. PERUSAL OF THE COPIES OF ORDER SHEET TAKEN FROM THE ASSESSMENT RECORDS MAINTAINED BY THE ASSESSING OFFICER SHOWS THAT SHRI MANISH MEHTA HAS ALL ALONG BEING REPRESENTING THE ASSESSEE BEFORE THE ASSESSING OFFICER. IT IS NOW THE CA SE OF THE ASSESSEE THAT SHRI MANISH MEHTA WAS NOT AUTHORIZED TO GIVE ANY CONSENT FOR THE IMPUGNED DISALLOWANCE. IT IS ALSO CONTENDED THAT THERE WAS NO POWER OF ATTORNEY EXECUTED BY THE ASSESSEE AUTHORIZING SHRI MANISH MEHTA TO GIVE ANY UNDERTAKING ON BEHAL F OF THE ASSESSEE AND THEREFORE THE IMPUGNED DISALLOWANCE REPORTEDLY AGREED TO BY SHRI MANISH MEHTA WAS LIABLE TO BE DELETED. IT IS ALSO SUBMITTED THAT THE RATE OF GROSS PROFIT SHOWN BY THE ASSESSEE IN THE YEAR UNDER APPEAL WAS COMPARABLE WITH THE ONE SHOW N BY HER IN THE NE XT ASSESSMENT YEARS AND THEREFORE NO DISALLOWANCE W AS CALLED FOR. 7. LD. CIT(A) HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT SHRI MANISH MEHTA WAS AUTHORIZED EITHER EXPRESSLY OR BY IMPLICATION BY THE ASSESSEE TO GIVE CONSENT TO T HE IMPUGNED DISALLOWANCE. THIS ASPECT OF THE MATTER HAS NOT BEEN DEALT WITH BY THE LD . CIT(A). PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE IMPUGNED DISALLOWANCE WAS AGREED TO BY SHRI MANISH MEHTA AS THE EXPENSES WERE NOT SUPPORTED BY FULLY VERIFIABLE IN DEPENDENT VOUCHERS. IT IS NOT KNOWN AS TO WHAT WAS THE AMOUNT OF FREIGHT CHARGES WHICH WERE NOT SUPPORTED BY VERIFIABLE INDEPENDENT VOUCHERS/EVIDENCES. IN THIS VIEW OF THE MATTER IT IS CONSIDERED APPROPRIATE TO VACATE THE ORDER PASSED BY THE LD CIT(A) AND RESTORE THE MATTER TO HIS FILE FOR FRESH DECISION IN CONFORMITY WITH LAW. HE IS DIRECTED TO RECORD HIS FINDINGS AS TO WHETHER ENTIRE 6 397 - RJT - 2011 SMT JAYSHREE M SHAH AMOUNT OF FREIGHT CHARGES CLAIMED TO HAVE BEEN PAID ARE SUPPORTED BY FULLY VERIFIABLE INDEPENDENT VOUCHERS/EVIDENCES. IN C ASE THE IMPUGNED EXPENSES ARE NOT AMENDABLE TO FULL VERIFICATION FOR WANT OF COMPLETE DETAILS OR FOR SOME OTHER REASONS THE LD . CIT(A) SHALL IN THAT CASE QUANTIFY THE AMOUNT OF FREIGHT CHARGES WHICH ARE NOT SO VERIFIABLE AND EXAMINE AS TO WHETHER THE ENTI RE AMOUNT WHICH ARE NOT OPEN TO VERIFICATION SHOULD BE ALLOWED IN ITS ENTIRETY OR PART THEREOF ALONE SHOULD BE DISALLOWED. HE WILL ALSO EXAMINE AS TO WHETHER THERE WAS ANY AUTHORIZATION EITHER EXPRESSLY OR BY IMPLICATION ON THE BASIS OF WHICH THE ASSESSEE COULD BE FASTEN ED WITH THE CONSENT GIVEN BY SHRI MANISH MEHTA FOR THE IMPUGNED DISALLOWANCE. APART FROM EXAMINING THE AFORESAID ASPECT S T HE LD. CIT(A) SHALL BE FREE TO EXAMINE SUCH OTHER ASPECT S AND TAKE SUCH DECISION WHICH MAY BE REQUIRED ON THE FACTS OF THE CASE. THE MATTER THUS STAND S RESTORED TO THE FILE OF THE LD CIT(A) WITH THE AFORESAID OBSERVATIONS. THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 26 . 0 7 . 201 3 SD/ - SD/ - (T. K. SHARMA) ( D. K. SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT: 26 .07 .2013 B T COPY OF ORDER FORWARDED TO: - 1 . APPELLANT SMT JAYSHREE M SHAH PROP. MEENA ROADWAYS JAMNAGAR 2 . RESPONDENT - ACIT CENTRAL CIRCLE - 2 RAJKOT 3 . CONCER NED CIT - (CENTRAL) - II AHMEDABAD 4 . CIT(A) - IV AHMEDABAD 5 . DR ITAT RAJKOT 6 . GUARD FILE. BY ORDER TRUE COPY PRIVATE SECRETARY ITAT RAJKOT