M/s. Sunshrey Associates, Ahmedabad V. The Dy.CIT.,(OSD)Circle-10, Ahmedabad

ITA 1065/AHD/2009

• Counselvise Citation: 106520514 RSA 2009
• Duration Of Justice: 2 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 01-03-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 08-04-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Assessee Lawyers: RAVISH BHATT
• Keywords: Rejection of books of accounts; Revised return
• Section: 145

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, A BENCH . .. . . .. . , !'# !'# !'# !'#, , , , $ $ $ $ %& %& %& %& , , , , &' ( & # &' ( & # &' ( & # &' ( & # BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND TEJ RAM MEENA, ACCOUNTANT MEMBER) ITA NO.1065/AHD/2009 [ASSTT.YEAR : 2005-2006] M/S.SUNSHREY ASSOCIATES RAVISH D. BHATT, ADVOCATE 37, SAMARPAN BUNGLOWS NR. JUDGES BUNGALOWS POLICE CHOWKY, BODAKDEV AHMEDABAD -380 015. PAN : AANFS 3200 R /VS. DCIT (OSD) CIR.10 AHMEDABAD. ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) .% / 0 &/ ASSESSEE BY : SHRI RAVISH BHATT ( / 0 &/ REVENUE BY : SHRI RAHUL KUMAR, SR.DR 2 / %3'/ DATE OF HEARING : 1 ST MARCH, 2012 456 / %3'/ DATE OF PRONOUNCEMENT : 07-03-2012 &7 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER O F INCOME TAX (APPEALS)- XVI, AHMEDABAD DATED 22.1.2009 FOR THE ASSESSMENT Y EAR 2005-2006. 2. THE ASSESSEE HAS FILED CONCISE GROUNDS OF APPEAL , WHICH ARE REPRODUCED BELOW: ITA NO.1065/AHD/2009 -2- 1. REJECTION OF BOOKS OF ACCOUNTS U/S.145 IS ILLEG AL AS BEING BASED ON EXTRANEOUS CONSIDERATION AND WITHOUT THE S ATISFACTION OF STATUTORY CONDITIONS PRESCRIBED. 2. ADDITION OF GP IS ILLEGAL AS BEING BASED ON THE FOUNDATION OF REJECTION OF BOOKS OF ACCOUNTS, WHICH ITSELF IS ILL EGAL. FURTHERMORE, THE ADDITION OF GROSS PROFIT IS IN ANY CASE ARBITRA RY AS HAVING BEEN ADDED WITHOUT ANY RELEVANT MATERIAL FOR THE SAME. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT BOOKS OF ACCOUNTS WERE WRONGLY REJECTED UNDER SECTION 145 OF THE ACT BY THE AO. HE SUBMITTED THAT THE ASSESSEE HAS MAINTAINED REGUL AR BOOKS OF ACCOUNTS AND NO DEFECTS COULD BE POINTED OUT BY THE AO TO JU STIFY THE REJECTION OF BOOKS OF ACCOUNTS OF THE ASSESSEE. HE SUBMITTED TH AT THE ASSESSEE HAS RETURNED LOSS AND THE AO HAS APPLIED THE GP RATE OF 13% WHICH WAS REDUCED IN APPEAL BY THE CIT(A) TO 5%. HE SUBMITTE D THAT THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.2004-20 05 IS NOT APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE SINCE THE LAB OUR CHARGES IN THE LAST YEAR WERE 38% AND THIS YEAR IT HAS REDUCED TO 28% AND TH E DEFECTS NOTED BY THE TRIBUNAL IN THE EARLIER YEAR WHILE REJECTING THE BO OKS OF ACCOUNTS WERE ABSENT DURING THE RELEVANT YEAR. HE SUBMITTED THAT THE ASSESSEE WAS IN THE BUSINESS OF CONSTRUCTION ACTIVITIES AND IT IS NOT P OSSIBLE TO MAINTAIN QUANTITATIVE DETAILS OF THE STOCK IN THE LINE OF TR ADE. HE RELIED ON THE DECISION OF THE HYDERABAD TRIBUNAL IN THE CASE OF V ISHAL INFRASTRUCTURE LTD. VS. ACIT, 104 ITD 537 WHEREIN IN IDENTICAL FACTS, I T WAS HELD THAT THE ACCOUNTS BOOKS OF THE ASSESSEE COULD NOT BE REJECTE D BY THE DEPARTMENT. THE LEARNED DR SUBMITTED THAT THE RATIO OF THE DECI SION OF THE TRIBUNAL IN ASSESEES OWN CASE FOR A.Y.2004-2005 IS CLEARLY APP LICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE DURING THE RELEVANT YEAR. HE SUBMITTED THAT THE ASSESSEE HAS NOT MAINTAINED ANY DAY-TO-DAY STOCK RE GISTER AND NO QUANTITATIVE DETAILS OF THE CLOSING STOCK WERE FILE D BY THE ASSESSEE. HE SUBMITTED THAT WITH REGARD TO LABOUR CHARGE PAYMENT S, THEY ARE SUPPORTED ONLY BY VOUCHERS PRE-PRINTED BY THE ASSESSEE AND TH EY DID NOT CONTAIN PAYEE ITA NO.1065/AHD/2009 -3- ADDRESS ETC. AND THE SIGNATURES THEREON ARE IN MANY INSTANCES NOT LEGIBLE OR BEARS A THUMB IMPRESSION AND NOT OPEN TO VERIFICATI ON. HE SUBMITTED THAT THE ONUS IS ON THE ASSESSEE TO PROVE THAT ITS BOOKS OF ACCOUNTS REPRESENT THE CORRECT STATE OF AFFAIRS OF THE ASSESSEE. HE RELIE D ON THE ORDERS OF THE AO AND THE CIT(A). 4. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT MERELY BECAUSE THE AS SESSEE DID NOT MAINTAIN QUANTITATIVE DETAILS IS NOT A GROUND TO REJECT THE ACCOUNTS BOOKS OF THE ASSESSEE UNDER SECTION 145 OF THE ACT AND PARTICULA RLY SO, CONSIDERING THE NATURE OF THE BUSINESS OF CONSTRUCTION ACTIVITIES O F THE ASSESSEE. WITH REGARD TO NON-FURNISHING OF PROPER SUPPORTING EVIDE NCES REGARDING LABOUR CHARGES CLAIMED BY THE ASSESSEE, WE FIND THAT THESE DEFECTS ITSELF WOULD NOT JUSTIFY THE REJECTION OF ACCOUNTS BOOKS OF THE ASSE SSEE MAINTAINED BY THE ASSESSEE IN ITS NORMAL COURSE OF BUSINESS. IN CASE THE LABOUR CHARGES WERE UNVERIFIABLE DUE TO NON-MENTIONING OF THE FULL ADDR ESS OF THE PAYEES AND THEIR CONFIRMATION, THE ONLY COURSE OPEN TO THE AO WAS TO DISALLOW A PART OF SUCH EXPENSES CLAIMED BY THE ASSESSEE, CONSIDERING THE ENTIRETY OF THE FACTS OF THE CASE. WE FIND THAT THE ASSESSEE COULD NOT F ILE ANY CORROBORATIVE EVIDENCE TO PROVE THE GENUINENESS OF THE LABOUR CHA RGES CLAIMED BY IT. IN THE NATURE OF BUSINESS OF THE ASSESSEE, THE BUSINES S COULD NOT BE UNDERTAKEN WITHOUT INCURRING LABOUR CHARGES, BUT IN THE ABSENC E OF DOCUMENTARY EVIDENCES TO PROVE THE CLAIM OF THE ASSESSEE, WE AR E OF THE VIEW THAT SOME DISALLOWANCE ON THIS COUNT, ON ACCOUNT OF POSSIBLE INFLATION IN THE EXPENSES IS CALLED FOR. IN THIS VIEW OF THE MATTER, WE HOLD THAT THE ACCOUNT BOOKS OF THE ASSESSEE WAS WRONGLY REJECTED BY THE DEPARTMENT , AND ACCORDINGLY NO GP RATE WAS APPLICABLE TO THE TURNOVER OF THE ASSES SEE AND THE ADDITION MADE ON THIS COUNT IS DELETED. HOWEVER, ON ACCOUNT OF LABOUR CHARGES NOT PROPERLY VOUCHED AND IN THE ABSENCE OF ANY CORROBOR ATIVE EVIDENCE, WE HOLD THAT THE ENDS OF JUSTICE SHALL BE MET, IF THE DISALLOWANCE OF ITA NO.1065/AHD/2009 -4- RS.5,00,000/- OUT OF LABOUR CHARGES CLAIMED BY THE ASSESSEE IS MADE, AND WE DIRECT ACCORDINGLY. HOWEVER, WE MAKE IT CLEAR THAT THE ASSESSEE HAS FILED A REVISED RETURN DECLARING NIL INCOME ON 17 -3-2006 AND AFTER GIVING EFFECT TO THE ORDER OF THE LEARNED CIT(A) AN D THE TRIBUNAL, THE ASSESSEES INCOME SHOULD NOT BE LESS THAN NIL TOTAL INCOME DECLARED BY THE ASSESSEE IN ITS RETURN OF INCOME. WE DIRECT ACCORD INGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %& %& %& %& / TEJ RAM MEENA) &' ( &' ( &' ( &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !'# !'# !'# !'# /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD