M/s. K.K. Distributors, Nani Daman v. The Income tax Officer,Vapi Ward-4,, Daman

ITA 795/AHD/2008 | 2005-2006
Pronouncement Date: 23-04-2010 | Result: Partly Allowed

Appeal Details

RSA Number 79520514 RSA 2008
Assessee PAN AAGFK3045D
Bench Ahmedabad
Appeal Number ITA 795/AHD/2008
Duration Of Justice 2 year(s) 1 month(s) 21 day(s)
Appellant M/s. K.K. Distributors, Nani Daman
Respondent The Income tax Officer,Vapi Ward-4,, Daman
Appeal Type Income Tax Appeal
Pronouncement Date 23-04-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 23-04-2010
Date Of Final Hearing 07-04-2010
Next Hearing Date 07-04-2010
Assessment Year 2005-2006
Appeal Filed On 03-03-2008
Judgment Text
ITA.795-08 A.Y.05-06 1 IN THE INCOME_TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD BEFORE SHRI T.K. SHARMA AND SHRI D.C. AGRAWAL. ITA. NO.795 /AHD/2008 (ASSESSMENT YEAR: 2005-06) M/S. K.K. DISTRIBUTORS SHOP NO.418 KHARIWAD NANI DAMAN. VS INCOME TAX OFFICER VAPI WARD-4 DAMAN. (APPELLANT) (RESPONDENT) PAN: AAGFK3045D APPELLANT BY : SHRI RAJESH UPADHYAY. RESPONDENT BY : SHRI RAJEEV AGARWAL. ( (( ( )/ )/)/ )/ ORDER PER: SHRI T.K. SHARMA. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 3 0-11- 2007 OF CIT (A) VALSAD FOR THE ASSESSMENT YEAR 2005-06. 2. BRIEFLY STATED THE FACTS ARE THAT ASSESSEE A PARTNER SHIP FIRM WAS CONSTITUTED BY DEED DATED 8-2-2004 TO CARRY ON BUSIN ESS OF PURCHASE AND SELL OF DAILY PROVISION STORE AT DAMAN. TH IS IS THE FIRST YEAR OF BUSINESS. FOR THE ASSESSMENT YEAR UNDER APPEAL IT FILED THE RETURN OF INCOME DECLARING NIL INCOME ON31-10-2005 ALO NG WITH AUDIT REPORT WITH PROFIT AND LOSS ACCOUNT AND BALANCE SHEET. A SSESSING OFFICER FRAMED THE ASSESSMENT UNDER SEC. 143(3) ON 30-8-20 07 AT ITA.795-08 A.Y.05-06 2 TOTAL INCOME OF RS.22 14 085/- WHEREIN HE MADE THE FO LLOWING ADDITIONS :- (1) UNSECURED LOAN. RS. 15 00 000/- (2) UNEXPLAINED CAPITAL. RS. 5 26 000/- (3) GROSS PROFIT. RS. 1 00 000/- (4) DEPRECIATION. RS. 30 395/- (5) EXPENSES. RS. 57 690/- ---------------- RS. 22 14 085/- ========= 3. ON APPEAL IN THE IMPUGNED ORDER THE LD. C.I.T. (A) DELETED THE ADDITION OF RS.5 26 000/- BUT CONFIRMED THE REMAINING FOUR ADDITIONS. AGGRIEVED BY THE ORDER OF LD. C.I.T.(A) ASSESSEE IS IN A PPEAL BEFORE US. WE HAVE HEARD BOTH THE PARTIES. 4. GROUND NO.1 IS AGAINST THE CONFIRMING THE ADDITION OF RS.15 LAKHS IN RESPECT OF UNSECURED LOAN RECEIVED FROM SHRI DIN ESH K. PATEL SON OF ONE OF THE PARTNER SHRI KILUBHAI K. PAREL. TH IS ADDITION WAS MADE BY A.O. MAINLY ON THE GROUND THAT NO CONFIRMATI ON FROM THE SAID CREDITOR WAS FILED. BEFORE THE LD. C.I.T.(A) ASSESSEE FIL ED THE CONFIRMATION AND ALSO STATED THAT BEFORE THE A.O. ASSESSEE HAS FILED A CERTIFICATE FROM INDIAN HIGH COMMISSIONER NIGERIA TO P ROVE GENUINENESS OF TRANSACTION AND CREDIT WORTHINESS OF IDENTI TY OF THE ASSESSEE. 5. BEFORE US THE COUNSEL OF THE ASSESSEE SUBMITTED THAT SIN CE NOW THE CONFIRMATION HAS BEEN FILED BY WAY OF CERTIFICATE F ROM CORPORATION BANK WAS ALSO PRODUCED BEFORE US INDICATING THE SOURCE OF DEPOSIT IN SAVINGS ACCOUNT OF THE CREDITOR. THE SAID CERTIFICATE READ S AS UNDER :- ITA.795-08 A.Y.05-06 3 CORPORATION BANK OR/CERT/2010. DATE 9-04-2010. TO WHOMSOEVER IT MAY CONCERN THIS IS TO CERTIFY THAT MR. DINESHBHAI KIKUBHAI PATE L IS MAINTAINING HIS NON RESIDENT SAVINGS ACCOUNT NO.SB/03./0 50065 WITH US SINCE 11.4.1998. WE HEREBY CONFIRM THE FOLLOWI NG TRANSACTIONS TOOK PLACE IN THIS ACCOUNT. DATE OF ENTRY PARTICULARS. AMOUNT. NATURE OF TRANSA CTION. 13.04.2004 BY NREKC/03/040020 234770.00 PROCEEDS OF FIXED DEPOSIT CLOSED. 13.04.2004 SDL 21/04 680000.00 PROCEEDS OF LOAN AVA ILED AGAINST DEPOSIT. 15.04.2004 BY NREKC/03/030090 215490.00 PROCEEDS OF FIXED DEPOSIT CLOSED. 15.04.2004 FOSC 76/04 FOR $8000 336000.00 FOREIGN INWARD REMITTANCE RECEIVED FROM ACCOUNT HOLDER. THIS CERTIFICATE IS ISSUED AT THE REQUEST OF OUR ACCOUNT H OLDER. FOR CORPORATION BANK. SD/- CHIEF MANAGER. 6. THE COUNSEL OF THE ASSESSEE SUBMITTED THAT SINCE NOW THE ASSESSEE HAS PROVED ALL THE 3 INGREDIENTS I.E. IDENTITY O F THE CREDITOR GENUINENESS OF THE TRANSACTION AND CREDIT WORTHINESS OF T HE CREDITOR. THEREFORE THE ADDITION OF RS.15 LACS BE DELETED. 7. THE LD. D.R. APPEARED FOR THE REVENUE VEHEMENTLY OBJECTED TO THE PLEA OF THE ASSESSEE. HE SUBMITTED THAT BASIC DOCUMENT I.E. CONFIRMATION OF CREDITOR WAS NOT FILED BEFORE THE A.O. THEREFORE VIEW TAKEN BY THE LD. C.I.T.(A) BE UPHELD. ITA.795-08 A.Y.05-06 4 8. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHO RITIES BELOW. ADMITTEDLY CONFIRMATION FROM THE CREDITOR WAS FILED BE FORE THE LD. C.I.T.(A). BEFORE THE A.O. ASSSESSEE STATED THAT CREDITOR HAD NRI ACCOUNT WITH CORPORATION BANK MUMBAI. THE CHEQUE DRAWN BY THE CREDITOR FROM THAT ACCOUNT IN THE NAME OF THE ASSESSEE PRO VED THE IDENTITY SOURCE AS WELL AS CREDIT-WORTHINESS. WE FOUND T HAT CONFIRMATION WAS NOT FILED BEFORE THE A.O. WE THEREFO RE SET ASIDE THE ORDER OF THE LD. CIT (A) AND RESTORE THIS ISSUE TO THE FILE OF THE A.O. WITH THE DIRECTION THAT ASSESSEE SHOULD FURNISH THE CONFIR MATION BEFORE THE A.O. ALSO FURNISH THE DETAILS WHETHER CREDITOR NA MELY SHRI KILUBHAI K. PAREL IS ASSESSED TO TAXIN INDIA HIS PAN NO. IF ANY. THE A.O. WILL RE- EXAMINE THE CREDIT OF RS.15 LACS AFRESH KEEPING IN VIEW THE PROVISIONS CONTAINED IN SECTION 68 AND RE-ADJUDICATE THIS ADDITION IN ACCORDANCE WITH LAW. 9. GROUND NO.2 IS AGAINST THE ESTIMATING GROSS PROFIT AT RS.1 LAC. THIS ADDITION WAS MADE BY A.O. BECAUSE BEFORE THE A.O. ASSESSEE DID NOT PRODUCE ANY BOOKS OF ACCOUNTS OR BILLS AND VOUCHERS. 10. BEFORE US THE COUNSEL OF THE ASSESSEE STATED THAT BOOKS OF ACCOUNTS AND VOUCHERS COULD NOT BE PRODUCED BECAUSE STOCK-IN -TRADE BEING WASHED OUT BY THE FLOOD AND INSURANCE COMPANY ACCEP TED THE CLAIM OF THE ASSESSEE WHICH IS EVIDENT FROM THE BOOKS OF A CCOUNTS. HE ACCORDINGLY SUBMITTED THAT BECAUSE OF THE FLOOD THE BOOK S OF ACCOUNTS COULD NOT BE PRODUCED. THE PROFIT AND LOSS ACCOUNTS CLEARLY INDICATE THAT ASSESSEE HAS RECEIVED INSURANCE CLAIM OF RS.7 93 185. THIS INSURANCE AMOUNT IS SHOWN IN THE PROFIT AND LOSS ACCOUNT. THIS INSURANCE CLAIM IS ALSO PART OF TRADING ACCOUNT. IF ONE TAKE INTO CONSIDERATION THE INSURANCE CLAIM OF RS.7 93 185/- THE A SSESSEE HAS ITA.795-08 A.Y.05-06 5 EARNED GROSS PROFIT OF RS.5 76 900/-(RS.7 93 185 RS.2 16 285).THEREFORE THE ADDITION OF RS.1 LAC BE DE LETED. 11. WE FOUND CONSIDERABLE FORCE IN SUBMISSIONS MADE BY TH E LEARNED COUNSEL OF THE ASSESSEE. FROM THE ANNUAL ACCOUNTS IT IS CLEA R THAT DUE TO FLOOD THERE WAS A LOSS AND ASSESSEE COULD NOT PRODUCE THE BOOKS OF ACCOUNTS. AFTER TAKING INTO ACCOUNT THE INSURANCE CLAIM TH E ASSESSEE HAS EARNED GROSS PROFIT OF RS.5 66 900/-. IN VIEW OF TH IS ADDITION OF RS.1 LAC MADE BY THE A.O. AND CONFIRMED BY THE C.I.T.( A) IN THE IMPUGNED ORDER IS DELETED. THIS GROUND OF APPEAL IS AL LOWED. 12. GROUND NO.3 IS AGAINST CONFIRMING THE DISALLOWANCE OF DEPRECIATION OF RS.30 395/-. THE A.O. DISALLOWED THE D EPRECIATION BECAUSE COULD NOT PRODUCE THE BILLS OR VOUCHERS OF FIXED ASSETS OPURCHASED ON WHICH THE ASSESSEE CLAIMED DEPRECIATION. ACCORD ING TO ASSESSEE THIS WAS DUE TO THE FACT ALL THE RECORDS WERE WASHE D OUT IN THE FLOOD. IT APPEARS THAT ASSESSEE HAS NOW PROCURED DUPL ICATE BILLS. WE THEREFORE SET ASIDE THE ORDER OF THE LD. C.I.T.(A ) ON THIS ISSUE AND DIRECT THE ASSESSEE TO FURNISH BILLS AND VOUCHERS BEFORE THE A.O. THE A.O. WILL RE-EXAMINE THE SAME AND ALLOW THE DEPRECIAT ION IN ACCORDANCE WITH LAW. THIS ISSUE IS ACCORDINGLY REMANDED TO THE A.O. 13. THE LAST GROUND OF APPEAL IS AGAINST CONFIRMING TH E ADDITION OF RS.57 690/-. THE A.O. DISALLOWED 10% OF AGGREGATE EXP ENSES OF RS.5 76 900/- DEBITED TO PROFIT AND LOSS ACCOUNT. THIS AD -HOC DISALLOWANCE IN OUR OPINION CANNOT BE SUSTAINED BECAUSE ASSESSEE WAS UNABLE TO PRODUCE NECESSARY RECORD BEFORE THE A.O. O N ACCOUNT OF FLOOD. THIS ADDITION IS ACCORDINGLY DELETED. ITA.795-08 A.Y.05-06 6 14. IN THE RESULT FOR THE STATISTICAL PURPOSES THE APPE AL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 23 /04 /2010. SD/- SD/- ( D.C. AGRAWAL) (T.K.SHARMA) ACCOUNTANT MEMBER. JUDICIAL MEM BER. AHMEDABAD. DATED: 23 /04 /2010. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT AHMEDABAD.