Sh. Virendra Pal Singh, Agra V. I.T.O.-1(3), Agra

CO 31/AGR/2010

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6287 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 01-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCHA, AGRA BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER ITA NO.82/AGR/2010 ASSESSMENT YEAR: 2006-07 INCOME TAX OFFICER 1(3), VS. SHRI VIRENDRA PAL SINGH, AGRA. PROP. M/S. AGRA ART GALLERY, 30-B, MUNRO ROAD, AGRA. (PAN: AFDPS 4900 H). C.O. NO.31/AGR/2010 (IN ITA NO.82/AGR/2010) ASSESSMENT YEAR: 2006-07 SHRI VIRENDRA PAL SINGH, VS. INCOME TAX OFFICER 1(3), PROP. M/S. AGRA ART GALLERY, AGRA. 30-B, MUNRO ROAD, AGRA. (PAN: AFDPS 4900 H). (APPELLANTS) (RESPONDENTS) REVENUE BY: SHRI A.K. SHARMA, JR. D.R. ASSESSEE BY: NONE ORDER PER BENCH: THE APPEAL BY THE REVENUE AND THE CROSS OBJECTION B Y THE ASSESSEE HAVE BEEN FILED AGAINST THE IMPUGNED ORDER DATED 15.01.2 010 PASSED BY THE LD. CIT(A)- I, AGRA FOR THE ASSESSMENT YEAR 2006-07. 2 2. THE REVENUE HAS TAKEN TWO GROUNDS IN ITS APPEAL TO THE EFFECT THAT THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN DELETING THE AD DITION OF (I) ` 3,78,420/- OUT OF ADDITION OF ` 7,50,000/- MADE BY ESTIMATING THE INCOME; AND (II) ` 9,27,201/- MADE BY INVOKING THE PROVISIONS CONTAINED IN SECTION 40( A)(IA) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) AS TAX HAS NOT BEEN DE DUCTED FROM THE PAYMENT OF COMMISSION. ON THE OTHER HAND, ONLY OBJECTION OF T HE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN DISALLOWING THE SUM OF ` 20,000/- OUT OF CONVEYANCE EXPENSES. 3. THE FACTS MENTIONED IN THE ASSESSMENT ORDER ARE THAT THE ASSESSEE IS CARRYING ON THE BUSINESS OF TRADING IN HANDICRAFTS AND MARBLE GOODS. FROM THE AUDIT REPORT, IT IS ASCERTAINED THAT THE TURNOVER I N THIS YEAR AMOUNTED TO ` 61,75,036/- AGAINST ` 29,60,588/- IN THE IMMEDIATELY PRECEDING YEAR. TH E GROSS PROFIT SHOWN IS AT 33% AS AGAINST 32% LAST YEAR AND THE NET PROFIT IS ABOUT 5% OF THE SALES. THE ASSESSEE WAS REPEATEDLY ASKED TO PR ODUCE BILLS AND VOUCHERS OF PURCHASE AND EXPENDITURE, BUT THE SAME WERE NOT PRO DUCED. HE WAS ALSO ASKED TO PRODUCE DETAILS OF TAX DEDUCTED AT SOURCE FROM THE COMMISSION. HOWEVER, ONLY SOME SIMPLE REGISTER WAS PRODUCED WHICH DOES NOT CO NTAIN THE NAMES OF THE PAYEES. THE TAX HAS ALSO NOT BEEN DEDUCTED FROM TH E PAYMENT OF COMMISSION. IN ABSENCE OF THE AFORESAID DETAILS, THE ASSESSING OFF ICER ESTIMATED THE TURNOVER AT ` 75,00,000/- AND NET PROFIT AT 10% THEREOF, THUS, CO MPUTED THE PROFITS AND GAINS OF 3 BUSINESS AT ` 7,50,000/-. SINCE NO TAX WAS DEDUCTED AT SOURCE F ROM THE COMMISSION PAID, THE EXPENDITURE OF ` 9,27,201/- HAS ALSO BEEN DISALLOWED BY INVOKING T HE PROVISIONS CONTAINED IN SECTION 40(A)(IA) OF THE AC T. THUS, THE TOTAL INCOME HAS BEEN COMPUTED AT ` 16,77,200/-. 4. AGGRIEVED BY THIS ORDER, THE ASSESSEE FILED APPE AL BEFORE THE LD. CIT(A)-I, AGRA. IN REGARD TO ESTIMATION OF PROFITS, IT WAS S UBMITTED THAT NO LEGALLY TENABLE BASIS EXISTED FOR REJECTION OF BOOKS OF ACCOUNT. N O DEFECT HAS BEEN MENTIONED BY THE ASSESSING OFFICER IN MAINTENANCE OF BOOKS OF AC COUNT. THEREFORE, ESTIMATION OF SALES AT ` 50,00,000/- WAS NOT JUSTIFIED. FURTHER, THE ASSESS ING OFFICER HIMSELF ADMITTED THAT THE G.P. RATIO IN THIS YEAR IS BETTER THAN THE G.P. RATIO OF LAST YEAR, ALBEIT BY ONLY 1%. IN THE LIGHT OF THESE FACTS, TH E PROFITS COULD NOT HAVE BEEN ESTIMATED AT AN AMOUNT HIGHER THAN THE AMOUNT SHOWN BY THE ASSESSEE. COMING TO INVOCATION OF PROVISIONS CONTAINED IN SECTION 40(A) (IA), IT IS SUBMITTED THAT THE TURNOVER OF LAST YEAR WAS LESSER THAN THE LIMIT PRE SCRIBED UNDER SECTION 44AB OF THE ACT. THEREFORE, THE PROVISIONS CONTAINED IN SECOND PROVISO TO SECTION 194H OF THE ACT WAS APPLICABLE AND THE ASSESSEE WAS NOT REQUIRE D TO DEDUCT TAX AT SOURCE FROM PAYMENTS MADE IN THIS YEAR. CONSEQUENTLY, THE PROV ISION OF SECTION 40(A)(IA) WAS NOT APPLICABLE. THE LD. CIT(A) CONSIDERED THE FACT S OF THE CASE AND SUBMISSIONS MADE BEFORE HIM. IN RESPECT OF ESTIMATION OF PROFI T, IT HAS BEEN HELD THAT THE 4 SUBMISSIONS OF THE ASSESSEE ARE TENABLE. HOWEVER, HE FOUND THAT CONVEYANCE EXPENSES HAVE INCREASED FROM ` 5,000/- IN LAST YEAR TO ` 27,200/- IN THIS YEAR. THEREFORE, HE SUSTAINED THE ADDITION OF ONLY ` 20,000/-, BEING IN THE NATURE OF DISALLOWANCE FROM CONVEYANCE EXPENSES. IN ANOTHER WORD, THE ASSESSEE WAS GRANTED RELIEF OF ` 3,51,580/-. THE LD. CIT(A) ALSO ACCEPTED THE SUBMI SSION THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE IN VIEW OF THE PROVISION CONTAINED IN SECOND PROVISO TO SECTION 194H OF THE ACT. ACCORDINGLY, THE ADDITION MADE IN THIS BEHALF WAS ALSO DELETED. 4.1 AGGRIEVED BY THIS ORDER, THE REVENUE IS IN APPE AL BEFORE US AND THE ASSESSEE HAS FILED THE CROSS OBJECTION. THE SHORT SUBMISSIO N MADE BY THE LD. DEPARTMENTAL REPRESENTATIVE BEFORE US IS THAT THE ASSESSEE NEVER PRODUCED BILLS AND VOUCHERS OF EXPENDITURE BEFORE THE ASSESSING OFFICER. THIS WAS THE MAIN REASON FOR REJECTION OF BOOKS AND ESTIMATION OF PROFIT. THESE VOUCHERS HAVE NOT BEEN PRODUCED EVEN BEFORE THE LD. CIT(A). THE FINDING OF THE ASSESSIN G OFFICER WAS THAT ONLY A REGISTER CONTAINING DETAILS OF PAYMENT WAS PRODUCED , WHICH DID NOT CONTAIN THE NAME AND ADDRESS OF THE PAYEES. THE ENTRIES CONTAI NED SIGNATURES OF 2- 3 PERSONS ONLY. THESE MATTERS HAVE BEEN IGNORED BY THE LD. C IT(A) BY ARRIVING AT THE CONCLUSION THAT ONLY A SUM OF ` 20,000/- COULD BE DISALLOWED FROM CONVEYANCE EXPENSES. THE CASE HAS TO BE SEEN ON THE FACTS OF THIS YEAR AND A SUMMARY VIEW 5 CANNOT BE TAKEN WHEN SPECIFIC DISCREPANCIES ARE POI NTED OUT. THE HEARING WAS FINALLY FIXED FOR 25.05.2011 WHEN NONE ATTENDED ON BEHALF OF THE ASSESSEE. THEREAFTER, THE NOTICE WAS SERVED THROUGH THE ASSES SING OFFICER ON 19.07.2011, FIXING THE APPEAL FOR HEARING ON 10.08.2011. NONE ATTENDED ON BEHALF OF THE ASSESSEE ON THIS DATE ALSO. THUS, THE APPEAL IS DE CIDED ON THE BASIS OF FACTS ON RECORD AND THE SUBMISSIONS MADE BY THE LD. DEPARTME NTAL REPRESENTATIVE. FROM THE SUBMISSIONS OF THE LD. DEPARTMENTAL REPRESENTAT IVE, IT IS CLEAR THAT THE REAL OBJECTION TAKEN BY THE ASSESSING OFFICER IN THE ASS ESSMENT ORDER REGARDING LACK OF PROPER VOUCHERS EVIDENCING THE EXPENDITURE HAS NOT BEEN DEALT WITH THE LD. CIT(A). AT THE SAME TIME, THE ASSESSING OFFICER HAS ALSO NO T CONSIDERED COMPARABLE CASES OR THE RESULTS DECLARED BY THE ASSESSEE IN THE EARL IER YEARS FOR THE ESTIMATION OF PROFIT. THEREFORE, WE ARE OF THE VIEW THAT THIS MA TTER IS REQUIRED TO BE LOOKED INTO BY THE ASSESSING OFFICER FOR PROPER DETERMINATION O F THE BUSINESS PROFITS. ACCORDINGLY, THE MATTER IS RESTORED TO HIS FILE TO COMPUTE THE BUSINESS PROFIT OF THIS YEAR DENOVO AFTER GIVING THE ASSESSEE REASONABLE OP PORTUNITY OF BEING HEARD. 5. IN SO FAR AS INVOKING THE PROVISIONS CONTAINED I N SECTION 40(A)(IA) IS CONCERNED., THE LD. DEPARTMENTAL REPRESENTATIVE COU LD NOT IN ANY MANNER SHOW TO US AS TO HOW THE CASE IS NOT COVERED UNDER SECOND P ROVISO TO SECTION 194H OF THE ACT. THE LD. CIT(A) HAS GIVEN A CATEGORICAL FINDIN G ON THE BASIS OF TURNOVER OF LAST 6 YEAR THAT THIS PROVISION IS APPLICABLE. ACCORDINGL Y, IT IS HELD THAT THE LD. CIT(A) HAS RIGHTLY DELETED THIS ADDITION. THUS, GROUND NO .2 IS DISMISSED. 6. THE ONLY GROUND TAKEN IN THE CROSS OBJECTION IS THAT THE CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE OF ` 20,000/- OUT OF CONVEYANCE EXPENSES. SINCE THE WHOLE MATTER OF ESTIMATION OF BUSINESS PROFIT IS BE ING RESTORED TO THE ASSESSING OFFICER, HE IS DIRECTED TO EXAMINE THIS MATTER ALSO AFRESH, AFTER HEARING THE ASSESSEE. 7. IN THE RESULT, APPEAL OF THE REVENUE IS TREATED AS PARTLY ALLOWED AND THE CROSS OBJECTION OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. (ORDER PRONOUNCED IN THE OPEN COURT ON 12.08.20 11). SD/- SD/- (H.S. SIDHU ) (K.G. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 12 TH AUGUST, 2011 PBN/* COPY OF THE ORDER FORWARDED TO: APPELLANT/RESPONDENT/CIT CONCERNED/CIT(APPEALS) CO NCERNED/D.R., ITAT, AGRA BENCH, AGRA/GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY