The ITO, Ward-2(1),, RAJKOT-GUJARAT v. M/s. Shubh Medicine,, Dhoraji

ITA 456/RJT/2008 | 2004-2005
Pronouncement Date: 03-12-2010 | Result: Dismissed

Appeal Details

RSA Number 45624914 RSA 2008
Assessee PAN AAAFS0295B
Bench Rajkot
Appeal Number ITA 456/RJT/2008
Duration Of Justice 2 year(s) 3 month(s) 15 day(s)
Appellant The ITO, Ward-2(1),, RAJKOT-GUJARAT
Respondent M/s. Shubh Medicine,, Dhoraji
Appeal Type Income Tax Appeal
Pronouncement Date 03-12-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 03-12-2010
Assessment Year 2004-2005
Appeal Filed On 19-08-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI D.T. GARASIA (JM) I.T.A. NO. 456/RJT/2008 (ASSESSMENT YEAR 2004-05) ITO WD.2(1) VS M/S SUBH MEDICINE RAJKOT NEAR ANTALA HOSPITAL JUNAGADH ROAD DHORAJI PAN : AAAFS0295B (APPELLANT) (RESPONDENT) REVENUE BY : SHRI AVINASH KUMAR ASSESSEE BY : SHRI SG BHUPTANI O R D E R A.L. GEHLOT : THIS IS AN APPEAL FILED BY THE REVENU E AND IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-III RAJKOT DATED 05-05-2008 FO R THE ASSESSMENT YEAR 2004- 05. THE FOLLOWING ARE THE EFFECTIVE GROUNDS OF APP EAL TAKEN BY THE REVENUE: 1. THE LD.CIT(A)-III RAJKOT HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION TO THE EXTENT OF RS.11 21 682 /- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT MADE U/S 69 OF TH E ACT. 2. THE LD.CIT(A)-III RAJKOT HAS ERRED IN LAW AND O N FACTS IN DELETING THE ADDITION TO THE EXTENT OF RS.13 046/- MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT MADE U/S 68 OF T HE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROC EEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEPOSITED A SUM OF RS .17 17 200 IN CC ACCOUNT OF CITIZENS CO-OPERATIVE BANK LTD DHORAJI ON DIFFEREN T DATES BUT IN THE BOOKS OF ACCOUNT THE ASSESSEE HAS SHOWN ONLY RS.5 37 090. T HERE WAS A DIFFERENCE OF RS.11 80 110. THE ASSESSING OFFICER NOTED THE DETA ILS OF AMOUNT DEPOSITED IN BANK ACCOUNT AT PAGES 2 TO 5 OF THE ASSESSMENT ORDE R. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE THE ASSESSING OFFICER MA DE ADDITION OF RXS.11 80 110 U/S 69 OF THE ACT BEING UNEXPLAINED I NVESTMENT. IT HAS ALSO BEEN ITA NO.456/RJT/2008 2 NOTED BY THE ASSESSING OFFICER THAT IN RESPECT OF A NOTHER CC ACCOUNT WITH CITIZENS CO-OPERATIVE BANK LTD DHORAJI THAT THE A SSESSEE CREDITED RS.50 000 IN THE BOOKS OF ACCOUNT IN THE SAID CURRENT ACCOUNT WH EREAS AS PER THE BANK STATEMENT THE AMOUNT WAS RS.34 000. THE DIFFERENC E OF RS.16 000 WAS ADDED BY THE ASSESSING OFFICER U/S 68 OF THE ACT. 3. THE CIT(A) EXAMINED THE ISSUES IN DETAIL AND FOU ND THAT THE ASSESSING OFFICER WAS NOT CORRECT IN TAKING ONLY ONE SIDE OF THE BANK STATEMENT WHEREAS THERE ARE SEVERAL WITHDRAWAL ENTRIES IN THE BANK ST ATEMENT WHICH WAS UNRECORDED IN BOOKS OF ACCOUNT. THERE ARE MISSING ENTRIES ON BOTH SIDES DEBIT AS WELL AS CREDIT SIDES. THE CIT(A) ACCEPTED THE ASSESSEES C ONTENTION THAT IN THESE CIRCUMSTANCES WHERE THE ENTRIES OF BOTH SIDES DEBI T AND CREDIT ARE MISSING AND THEREFORE THE ADDITION SHOULD BE THE AMOUNT OF TH E PEAK INVESTMENT OF WHICH CALCULATION COMES TO RS.45 382. THE CIT(A) ALSO AC CEPTED SOME APPARENT CALCULATION MISTAKE IN CALCULATION OF THE ASSESSING OFFICER OF UNEXPLAINED DEPOSITS WHICH COMES TO RS.7 32 600. THE CIT(A) WAS OF THE VIEW THAT UNDER THESE CIRCUMSTANCES THE ASSESSING OFFICER SHOULD HAVE RE JECTED THE BOOKS OF ACCOUNT IN VIEW OF SERIOUS DISCREPANCIES NOTED AND AFTER RE JECTING THE BOOKS OF ACCOUNT A FAIR AND REASONABLE ESTIMATION OF THE INCOME SHOULD BE MADE. THE CIT(A) CONSIDERED THIS ASPECT OF THE MATTER AND FOUND THAT THE SALES STATED IN THE PROFIT & LOSS ACCOUNT WAS RS.13 14 470 AND UNEXPLAINED DEPOS IT IN BOOKS OF ACCOUNT TREATING THE SAME AS SALE PROCEEDS WAS RS.7 32 600. THUS THE TOTAL TURNOVER COMES TO RS.20 47 070 (RS.13 14 470 + RS.7 32 600). THE CIT(A) HAS ALSO DISCUSSED PROVISIONS OF SECTION 44AF OF THE ACT AND HELD AS UNDER: IN VIEW OF THE ABOVE PROVISION THE PROFIT OF THE APPELLANT SHALL BE 5% OR HIGHER THAN THE SAME AS DECLARED BY THE APPEL LANT IN HIS RETURN OF INCOME. IN VIEW OF THE SAID PROVISION I T IS NOTICED THAT AS PER THE WORKING SUBMITTED BY THE AR THE PEAK UNEXP LAINED INVESTMENT VIS--VIS UNEXPLAINED DEPOSITS SHOWS PRO FIT RATIO OF 6.19% WHICH BEING HIGHER THE SAME IS ADOPTED AND A PPLIED ON THE TOTAL ESTIMATED TURNOVER OF RS./20 47 070/- ACCORD INGLY THE PROFIT OF THE APPELLANT IS ESTIMATED AT RS.1 26 714/-. THE A SSESSING OFFICER IS HEREBY DIRECTED TO ESTIMATE PROFIT AT RS.1 26 71 4/- THE APPELLANT ITA NO.456/RJT/2008 3 SHALL BE ENTITLED TO DEDUCTION OF RS.66 586/- ON AC COUNT OF INTEREST AND REMUNERATION PAID TO PARTNERS ACCORDINGLY THE NET PROFIT SHALL BE RS.60 128/-. IN VIEW OF THE ABOVE THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.11 80 110/- U/S. 69 OF THE ACT DOES NOT SURVIVE AND HENCE THE ASSESSING OFFICER IS DIRECTED TO DELETE THE SAME. THE ASSESSING OFFICER IS DIRECTED TO TAKE NET PROFIT OF APPELLANT AT RS.60 128/- INSTEAD OF RS.1 700/- SHOW N BY THE APPELLANT THEREBY MAKING ADDITION OF RS.58 428/-. 4. AS REGARDS THE ADDITION OF RS.16 000 U/S 68 OF T HE ACT THE CIT(A) RESTRICTED THE ADDITION TO RS.2 954/- BY OBSERVING AS UNDER:- 3.5 SO FAR AS THE ADDITION OF RS.16 000/- MADE U/ S 68 OF THE ACT IS CONCERNED IT IS TRITE LAW THAT IF ANY INTANGIBLE ADDITION IS MADE UNDER ONE HEAD THE ASSESSEE IS ENTITLED TO TAKE ADV ANTAGE OF THE SAME TO EXPLAIN THE SOURCE OF WHAT WAS CONSIDERED B Y THE DEPARTMENT AS INCOME FROM UNDISCLOSED SOURCES [CIT V. RAM SANEHI GIANCHAND (1972) 86 ITR 724 (P&H)]. THUS TH E APPELLANT SHALL BE ENTITLED TO GET TELESCOPIC BENEFIT OF INTA NGIBLE ADDITION MADE OF RS.58 428 (RS.60 128/- - RS.1 700/-). THIS ADDI TION SHALL ALSO TAKE CARE OF PEAK UNEXPLAINED INVESTMENT OF RS.45 3 82/- ON DATED 12-11-03 (SUPRA) AND ACCORDINGLY BALANCE AMOUNT OF RS.13 046/- IS AVAILABLE FOR CLAIMING TELESCOPIC BENEFIT. THE AO IS ACCORDINGLY DIRECTED TO GRANT TELESCOPIC BENEFIT OF RS.13 046/- AND ACCORDINGLY THE ADDITION U/S 68 OF THE ACT SHALL BE RESTRICTED TO RS.2 954/- ONLY. IN VIEW OF THE ABOVE THE APPEAL IS PARTLY ALLOWED. 5. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES RECORD PERUSED. THE ADMITTED FACTS OF THE CASE ARE THAT THE ASSESSE E DID NOT MAINTAIN PROPER BOOKS OF ACCOUNT AS VARIOUS BANK ENTRIES WERE NOT F OUND RECORDED IN THE BOOKS OF ACCOUNT. WHEN THE ASSESSEE DID NOT MAINTAIN PRO PER BOOKS OF ACCOUNT THE ASSESSING OFFICER IS EMPOWERED TO REJECT THE SAME A ND ESTIMATED A REASONABLE AND FAIR INCOME FOR THE YEAR. THE CIT(A) HAS RIGHT LY APPRECIATED THE FACT THAT AT THE MOST INCOME CAN BE ESTIMATED SUBJECT TO DEDUCTI ON ON ACCOUNT OF INTEREST AND REMUNERATION TO PARTNERS. THE CIT(A) HAS ESTIM ATED INCOME RELYING ON THE PROVISIONS OF SECTION 44AF ON TOTAL TURNOVER AND ES TIMATED THE INCOME AT RS.1 26 714. THE CIT(A) HAS ALSO CONSIDERED THE PE AK AMOUNT ON ACCOUNT OF UNACCOUNTED CASH ENTRIES FOUND IN THE BANK STATEMEN T. HE HAS ALSO DIRECTED THE ITA NO.456/RJT/2008 4 ASSESSING OFFICER THAT THE NET PROFIT OF THE ASSESS EE SHOULD BE TAKEN AT RS.60 128 INSTEAD OF RS.1 700 SHOWN BY THE ASSESSEE. THUS T HE NET ADDITION SUSTAINED BY THE CIT(A) IS RS.58 428. SINCE PEAK UNEXPLAINED IN VESTMENT COMES TO RS.45 382 WHICH IS COVERED BY THE ABOVE ADDITION SU STAINED BY THE CIT(A) AT RS.58 428. THE ASSESSING OFFICER HAS GROSSLY ERRED IN TREATING ONLY ONE SIDE OF THE BANK STATEMENT WHEREAS HE OUGHT TO HAVE CONSIDE RED BOTH THE SDIES OF THE STATEMENT THE DEBITS AND THE CREDITS. THEREFORE ON MERIT WE FIND NO ERROR IN THE CALCULATION MADE BY THE LD.CIT(A) AS SAME IS REQUIR ED ON ACCOUNT FAIR AND REASONABLE ESTIMATION OF THE INCOME. 6. WE ALSO FIND THAT THE CIT(A) HAS RIGHTLY RESTRIC TED THE ADDITION OF RS.2 954 OUT OF THE ADDITION MADE OF RS.16 000 U/S 68 OF THE ACT. THE CIT(A) HAS RIGHTLY ALLOWED THE SET OFF OF THE AMOUNT OF RS.13 046 AGAI NST THE ADDITION SUSTAINED IN ESTIMATING THE PROFIT. WE THEREFORE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). WE ACCORDINGLY CONFIRM THE ORDER OF LDE.CI T(A). 7. AT THE TIME OF HEARING THE LD.DR SUBMITTED THAT THE CIT(A) HAS DECIDED THE ISSUE ON DIFFERENT FOOTING WITHOUT PROVIDING OP PORTUNITY OF BEING HEARD TO THE ASSESSEE. HE ACCORDINGLY REQUESTED THAT THE MATTER MAY BE SENT BACK TO THE FILE OF THE ASSESSING OFFICER. THE LD.AR ON THE OTHER HAND SUBMITTED THAT THE ASSESSEE DID NOT FILE ANY ADDITIONAL EVIDENCE OR MA TERIAL BEFORE THE CIT(A) AND THEREFORE THERE IS NO NEED TO SEND BACK THE MATTER TO THE ASSESSING OFFICER. AFTER HEARING BOTH SIDES WE DID NOT FIND SUBSTANCE IN TH E SUBMISSION OF THE LD. DR BECAUSE THE CIT(A) HAS DECIDED THE ISSUE ON THE BAS IS OF MATERIAL ON RECORDS THEREFORE THE MATTER IS DECIDED ON MERITS AS INDI CATED ABOVE. 8. IN THE RESULT APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03-12-2010. SD/- SD/- (D.T. GARASIA) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT DT : 03 RD DECEMBER 2010 ITA NO.456/RJT/2008 5 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-III RAJKOT 4. THE CIT-II RAJKOT 5. THE DR (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT RAJKOT