Shri Sherin Shrivastava(LH) of Late Sanjeev Shrivastava, GANDHIDHAM v. The Income Tax Officer, Ward 2, GANDHIDHAM

ITA 948/RJT/2009 | 2005-2006
Pronouncement Date: 16-12-2010 | Result: Allowed

Appeal Details

RSA Number 94824914 RSA 2009
Assessee PAN AFHPS5868Q
Bench Rajkot
Appeal Number ITA 948/RJT/2009
Duration Of Justice 1 year(s) 3 month(s) 21 day(s)
Appellant Shri Sherin Shrivastava(LH) of Late Sanjeev Shrivastava, GANDHIDHAM
Respondent The Income Tax Officer, Ward 2, GANDHIDHAM
Appeal Type Income Tax Appeal
Pronouncement Date 16-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 16-12-2010
Date Of Final Hearing 13-12-2010
Next Hearing Date 13-12-2010
Assessment Year 2005-2006
Appeal Filed On 26-08-2009
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. 948/RJT/2009 (ASSESSMENT YEAR 2005-06) SHERIN SHRIVASTAVA VS ITO WD.2 L/H OF SHRI SANJEEV SHRIVASTAVA GANDHIDHAM PROP M/S PANCHSHAKTI ROADLINES PLOT NO.113 & 14 GREEN PAK BLDG OSLO ROAD GANDHIDHAM (KUTCH) PAN : AFHPS5868Q (APPELLANT) (RESPONDENT) I.T.A. NO. 956/RJT/2009 (ASSESSMENT YEAR 2005-06) THE ITO WD.2 VS SHRI SANJEEV OMNARAYAN GANDHIDHAM SHRIVASTAV GANDHIDHAM (KUTCH) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIMAL DESAI REVENUE BY : SHRI AVINASH KUMAR O R D E R A.L. GEHLOT : THESE ARE CROSS APPEALS FOR ASSESSMEN T YEAR 2005-06 AND THEY ARISE OUT OF THE ORDER OF THE CIT(A)-II RAJKOT DAT ED 16-06-2009. 2. THE EFFECTIVE GROUNDS TAKEN BY THE ASSESSEE ARE AS UNDER: 2. THE LEARNED A.O. HAS ERRED ON FACTS AND IN LAW IN ESTIMATING THE NET PROFIT AFTER ALLOWANCES AND EXPENSES AT RS. 8 98 646/. THE LD.CIT(A) HAS ERRED IN CONFIRMING THE NET PROFI T TO THE TUNE OF RS.4 21 775/- BY ESTIMATING N.P. @1.25%. 2. THE LEARNED A.O. HAS ERRED ON FACTS AND IN LAW I N MAKING ADDITION OF RS.19 23 199/- ON ACCOUNT OF UNEXPLAINE D CASH CREDIT. THE LD.CIT(A) HAS ERRED IN CONFIRMING THE CASH CREDIT TO THE TUNE OF RS.13 97 813/-. 3. THE EFFECTIVE GROUNDS TAKEN BY THE REVENUE READ AS BELOW: ITA NO.948 & 956/RJT/2009 2 1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ESTIMATING N.P. OF 1.25% FOR LEXICON FREIGHT PLUS AND PANCHSHA KTI ROADLINES INSTEAD OF ESTIMATING N.P. 1.5% AND 2% OF LEXICON FREIGHT PLUS AND PANCHSHAKTI ROADLINES RESPECTIVELY AND GRANTING RELIEF OF RS.2 61 244/-. 2) THE LD.CIT(A) HAS ERRED IN LAW ANCD ON FACTS IN DELETING ADDITION OF RS.5 25 386/- AND RS.3 050/- ON ACCOUNT OF CASH CREDEITS. 4. THE BRIEF FACTS OF THE CASE ARE THE ASSESSEE DID NOT APPEAR BEFORE THE ASSESSING OFFICER NOR HAS PRODUCED BOOKS OF ACCOUNT OR OTHER EVIDENCES CALLED FOR BY THE ASSESSING OFFICER. THE ASSESSING OFFICE R MADE THE ASSESSMENT U/S 144 OF THE ACT. THE AQSSESSING OFFICER ESTIMATED NET P ROFIT AT RS.8 98 646 OBSERVING AS UNDER: THE ASSESSEE HA NOT PRODUCED THE BOOKS OF ACCOUNT S OR EVIDENCES IN ORDER TO EXPLAIN THE NET PROFIT DECLAR ED BY HIM IN HIS BOOKS OF ACCOUNTS. THE ASSESSEE HAS ALSO NOT RAISE D ANY OBJECTION AGAINST THE PROPOSED NET PROFIT RATIO IN THE SHOW C AUSE NOTICE SERVED UPON HIM. THE NET PROFIT AFTER ALLOWANCE OF ALL THE EXPENSES AND DEPRECIATION IS ASSESSED IN CASES OF HIS PROPRI ETARY CONCERNS AS UNDER:- PROPRIETARY CONCERN TURNOVER NP ADOPTED ASSESSED NET PROFIT NET PROFIT IN BOOKS OF A/CS DIFFERENCE FOR ADDITION FREIGHT PLUS 55 391 20.34% 11 267 11 267 0 LEXICON FREIGHT PLUS 2 28 87 268 1.5% 3 43 309 89 870 2 53 439 PANCHSHAKTI ROADLINES 2 72 03 507 2.0% 5 44 070 1 14 490 4 29 580 TOTAL 8 98 646 2 15 627 6 83 019 KEEPING IN VIEW THE ABOVE TOTAL NET PROFIT OF THE ASSESSEE FROM HIS ALL PROPRIETARY CONCERNS IS ASSESSED AT RS .8 98 646/- AS AGAINST THAT OF DECLARED IN BOOKS OF ACCOUNTS. THE ASSESSING OFFICER ALSO MADE ADDITION OF RS.19 2 3 199 ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. THE CIT (A) CONFIRMED THE ADDITION TO THE EXTENT OF RS. 4 21 775 AND ALLOWED RELIEF OF RS .2 61 244 OUT OF THE TOTAL INCOME AQSSESSED BY THE ASSESSING OFFICER AT RS.8 9 8 646 BY OBSERVING AS UNDER: ITA NO.948 & 956/RJT/2009 3 (C) I HAVE CONSIDERED THE STAND OF THE A.O. AND ARG UMENTS OF THE APPELLANT. THERE WAS NO COMPLIANCE IN ASSESSMEN T PROCEEDINGS AND THE ASSESSMENT WAS COMPLETED U/S 14 4. THE A.O. HAS NO OTHER ALTERNATIVE BUT TO ESTIMATE THE I NCOME. NO FAULT CAN BE FOUND WITH THE A.O. HOWEVER ARGUMENTS OF T HE APPELLANT THAT ONE CONCERN WAS STARTED IN THE YEAR AND OTHER CONCERNS N.P. WAS ACCEPTED IN SCRUTINY IN PRECEDING YEAR HAD GOT RELEVANCE FOR ESTIMATION OF INCOME. THE ARGUMENT OF DEPRECIATION CAN NOT BE ACCEPTED AS THE CLAIM OF DEPRECIATION WAS NOT VERIF I4ED IN ASSESSMENT DUE TO NON COMPLIANCE BY THE APPELLANT. THEREFORE ESTIMATE N.P. OF 1.25% FOR BOTH CONCERNS. THE ADDIT ION IS WORKED OUT AS UNDER: S.NO NAME OF CONCERN TURNOVER N.P. @1.25% N.P. ADDITION 1 LEXICON FREIGHT PLUS 2 28 87 268 2 86 091 89 870 1 96 221 2. PANCHSHAKTI ROADLINES 2 72 03 507 3 40 044 1 14 490 2 25 554 THE TOTAL ADDITION COMES TO RS.4 21 775 AND APPELLA NT GETS RELIEF OF RS.2 61 244. THIS GROUND IS PARTLY ALLOWED. THE ASSESSEE IS IN APPEAL RAISING GROUND NO.2 AND R EVENUE IS IN APPEAL RAISING GROUND NO.1. 5. THE SECOND ADDITION MADE BY THE ASSESSING OFFICE R IS OF RS.19 23 199 ON ACCOUNT OF CASH CREDIT. THE CIT(A) ALLOWED PART RE LIEF. AGAINST THIS THE REVENUE IS IN APPEAL VIDE GROUND NO.2 AND WHERE THE ADDITIO N IS SUSTAINED THE ASSESSEE IS IN APPEAL VIDE GROUND NO.3. 6. IN RESPECT OF CASH CREDIT THE LD.AR REFERRED TO ASSESSEES PAPER BOOK PAGES 2 & 3 WHICH IS REPRODUCED AS BELOW: PARTICULARS AMOUNT (RS.) REMARKS CREDIT ON ACCOUNT OF PANCHSHAKTI ROADLINES IN PERSONAL BALANCE SHEET 1 99 9057/- THE ASSETS AND LIABILITIES OF SHREE NARAYAN ROADWAYS HAVE BEEN TRANSFERRED TO PANCHSHAKTI ROADLINES. THE FIGURE OF RS.1 99 9057/- COMPRISDES OF RS.1 61 297/- (BEING CLOSING CAPITAL AS ON 31.03.2004 AS PER BALANCE SHEET OF SHREE NARAYAN ITA NO.948 & 956/RJT/2009 4 ROADWAYS) AND RS. 38 660/- (BEING AMOUNT OF HIRE CHARGES PAID TO SUNDARAM FINANCE FROM PERSONAL ACCOUNT FOR M/S PANCHSHAKTI ROADLINES) VEHICLE PURCHASED IN LEXICON FREIGHT PLUS 5 02 148/- DURING THE YEAR THE APPELLANT HAS PURCHASED INDEIGO CAR. THE PART PAYMENT FOR THE SAME HAS BEEN FINANCED BY LOAN FROM MR. I. ALEX AND PARTIALLY BY LOAN FROM CORPORATION BANK. BOTH THE LOANS ARE REFLECTED IN THE PERSONAL BALANCE SHEET. CAPITAL INTRODUCED DURING THE YEAR IN LEXICON FREIGHT PLUS 15 000/- OPENING CAPITAL OF PANCHSHAKTI ROADLINES 5 22 336/- NO ADDITION CAN BE MADE ON ACCOUNT OF OPENING BALANCE OF CAPITAL ACCOUNT CAPITAL INTRODUCED DURING THE YEA5R IN PANCHSHAKTI ROADLINES 2 68 524/- THE CAPITAL HAS BEEN INTRODUCED BY WITHDRAWAL THROUGH CHEQUE FROM BANK ACCOUNT GIFT IN PERSONAL BALANCE SHEET 75 000/- GIFT HAS BEEN RECEIVED FROM MATERNAL GRANDMOTHER THROUGH BANKING CHANNEL LOAN FROM UI. ALEX IN PERSONAL BALANCE SHEET 3 27 148/- LOAN HAS BEEN RECEIVED THROUGH BANKING CHANNEL AND THE SAME HAS BEEN UTILIZED FOR FINANCING THE CAR PURCHASED DURING THE YEAR DIFFERENCE IN LOAN IN THE NAME OF LEXICON FREIGHT PLUS IN THE BALANCE SHEET OF PANCHSHAKTI ROADLINES 3 050/- IN THE BOOKS OF PANCHSHAKTI ROADLINES THERE ARE 2 ACCOUNTS OF LEXICON FREIGHT PLUS ONE UNSECURED LOAN OF RS.4 00 000/- AND ANOTHER ON ACCOUNT OF LOANS & ADVANCES (DR BAL) RS.3 050/- THE NET EFFECT BEING CREDIT BALANCE OF RS.3 96 950/-. IN THE BOOKS OF LEXICON FREIGHT PLUS RS.3 96 950/- HAS BEEN SHOWN AS UNDER THE LOANS & ADVANCES FROM PANCHSHAKTI ITA NO.948 & 956/RJT/2009 5 ROADLINES. THUS THERE IS NO DIFFERENCE. LOAN FROM VIJAY KHATRI IN THE BALANCE SHEET OF PANCHSHAKTI ROADLINES 10 036/- VIJAY KHATRI IS THE EMPLOYEE OF THE APPELLANT. THIS FACT IS ON THE RECORDS OF THE DEPARTMENT. THE LD.AR SUBMITTED THAT THE CIT(A) HAS DELETED ONL Y RS.5 22 336 ON ACCOUNT OF OPENING CAPITAL OF PANCHSHAKTI ROADLINES AND RS.3 0 50 ON ACCOUNT OF DIFFERENCE IN LOAN IN THE NAME OF LEXICON FREIGHT PLUS WHEREAS HE OUGHT TO HAVE DELETED ALL THE ADDITIONS. THE LD.AR SUBMITTED THAT THE ASSESS EE FURNISHED THE EXPLANATION AND RECONCILIATIONS AS STATED IN ABOVE TABLE WHICH WERE NOT CONSIDERED BY THE CIT(A). THE LD AR FURTHER SUBMITTED THAT THE ASSES SEE HAS EXPIRED ON 03-02- 2008 AND THE CIT(A) PASSED THE ORDER ON 16-06-2009. IT IS ALSO THE SUBMISSION OF THE LD.AR THAT THE CIT(A) HAS WRONGLY APPLIED NE T PROFIT RATE AT 1.25% WHEREAS NET PROFIT RATE OF 1.15% HAS BEEN ACCEPTED IN PRECE DING YEAR. IT WAS ALSO ARGUED THAT THE PROFIT BEFORE DEPRECIATION WAS CONSIDERED RESULT WAS BETTER AS COMPARED TO PRECEDING YEAR. THE LD.AR SUBMITTED THAT THE DE PRECATION PART HAS NOT BEEN CONSIDERED BY THE CIT(A) MERELY ON THE OBSERVATION THAT DEPRECIATION WAS NOT VERIFIED IN ASSESSMENT DUE TO NON COMPLIANCE BY THE ASSESSEE. 7. THE LD.DR ON THE OTHER HAND SUBMITTED THAT THE CIT(A) HAS REDUCED THE RATE OF NET PROFIT WITHOUT ANY BASIS. HE FURTHER S UBMITTED THAT THE ASSESSEE DID NOT APPEAR BEFORE THE ASSESSING OFFICER. THEREFORE THE RATE OF PROFIT ESTIMATED BY THE ASSESSING OFFICER WAS ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. IT IS ALSO THE SUBMISSION OF THE LD.DR THAT CIT(A) HAS REDUCED THE NET PROFIT RATE WITHOUT GIVING OPPORTUNITY TO THE ASSESSING OFFICER. 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES RECORD PERUSED. THE ADMITTED FACTS OF THE CASE ARE THAT THE ASSESSE E DID NOT APPEAR BEFORE THE ASSESSING OFFICER. THE CIT(A) HAS ALLOWED APPEAL P ARTLY. THE ASSESSE AND REVENUE BOTH HAVE OBJECTION TO THE ORDER OF CIT(A). WE FIND THAT THE CIT(A) REJECTED ASSESSEES CLAIM MERELY ON THE GROUND THAT THE ASSESSEE DID NOT APPEAR ITA NO.948 & 956/RJT/2009 6 BEFORE THE ASSESSING OFFICER. THEREFORE THE DEPRE CIATION COULD NOT BE VERIFIED. THE ORDER OF THE CIT(A) IS BASED ON THE FACTS WITHO UT VERIFICATION AS THE ASSESSEE DID NOT APPEAR BEFORE THE ASSESSING OFFICER. IN RE SPECT OF CASH CREDITS THE EXPLANATION AND RECONCILIATION SUBMITTED BY THE ASS ESSE ARE ALSO REQUIRED TO VERIFY FROM THE BOOKS OF ACCOUNT WHICH IS NOT READI LY AVAILABLE AT THIS STAGE. AFTER CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE W E THINK IT PROPER TO SEND BACK THIS MATTER TO THE FILE OF THE ASSESSING OFFICER WITH TH E DIRECTION TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING REASO NABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. BEFORE PARTING FROM THE MATTER WE STATE THAT THE LD.AR ASSURED THAT THE ASSESSEE WILL EXTEND FULL COOPERATION TO T HE ASSESSING OFFICER. IN CASE OF FAILURE ON ACCOUNT OF THE ASSESSEE THE ASSESSING O FFICER IS AT LIBERTY TO PASS APPROPRIATE ORDER IN ACCORDANCE WITH LAW. 9. IN THE RESULT BOTH THE APPEALS ARE TREATED AS A LLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 16-12-2010. SD/- SD/- (D.T. GARASIA) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT DT : 16 TH DECEMBER 2010 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-II RAJKOT 4. THE CIT-I RAJKOT 5. THE DR (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT RAJKOT