Shri Vinayak Jaysingh Surve, Baroda V. The ACIT.,Circle-2(2), Baroda

ITA 109/AHD/2009

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80383 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 01-09-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 09-01-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Assessee Lawyers: S N DIVETIA
• Keywords: Gross profit estimation; Depreciation; Principle of natural justice
• Section: 143(3); 194C; 68; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL CHATURVEDI , A.M.) I. T. A. NO. 109 / AHD/ 20 09 (A SSESSMENT YEAR: 2005 - 06) SHRI VINAYAK JAYSINGH SURVE C - 3, SAHAJANAND APARTMENT. NEAR WARD NO. 6 OFFICE, VADODARA V/S THE ACIT, CIRCLE - 2(2), VADODARA. (AP PELLANT) (RESPONDENT) PAN: ABWPS4100N APPELLANT BY : SHRI S.N. DIVETIA, A.R. RESPONDENT BY : SHRI ROOP CHAND, SR. D.R. ( )/ ORDER DATE OF HEARING : 01.09.2014 DATE OF PRONOUNCEMENT : 19 - 09 - 2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - II, BARODA DATED 07.10.2 008. FOR A.Y. 2005 - 06. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD AS UNDER. 3. ASSESSED IS AN INDIVID UAL STATED TO BE ENGAGED IN THE BUSINESS OF INDUSTRIAL CONSTRUCTION WORK AND CONSULTING OF CIVIL ENGINEERS AND IS PROPRIETOR OF VIVEK CIVIL ENGIN EERS AND CONTRACTORS . ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 05 - 06 ON 31.10.2005 DECLARING TOTAL INCOM E OF RS. ITA NO 109/AHD/2009 . A.Y. 2005 - 06 2 7,17,000/ - . THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S. 143(3) VIDE ORDER DATED 22.11.2007 AND TOTAL INCOME WAS DETERMINED AT RS. 57,57,340/ - . AGGRIEVED BY THE ORDER OF A.O, ASSESSED CARRIED THE MATTER BEFORE C IT(A). CIT(A) VIDE ORDER DATED 07.10.2008 GRANTED PARTIAL RELIEF TO THE ASSESSED. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSED IS NOW IN APPEAL BEFORE US AND HAS MODIFIED THE GROUNDS OF APPEAL AND THE EFFECTIVE MODIFIED GROUNDS READS AS UNDER: - 1.1 THE ORDER PASSED U/S.250 ON 7 - 10 - 2008 FOR A.Y.2005 - 06 BY CIT(A) - I, BARODA, CONFIRMING PARTLY THE ADDITIONS/DISALLOWANCES MADE BY AO IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 2.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON F ACTS IN UPHOLDING THE FOLLOWING ADDITIONS/DISALLOWANCES: (A) DISALLOWANCE U/S 40(A)(IA) RS. 38,02,469 (B) UNEXPLAINED ADVANCE RS. 1,00,000 (C) UNEXPLAINED LOANS RS. 53,450 (D) DISALLOWANCE @ 1/6 TH OF EXP. RS. 29,437 (E) ADDITION TOWARDS LOW G. P RS. 1,47,365 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) OUGHT NOT TO HAVE UPHELD THE ADDITIONS/DISALLOWANCES AS ABOVE SAID, 3.1 WITHOUT PREJUDICE TO THE ABOVE, THE ADDITIONS/DISALLOWANCES MADE BY AO AND CONFIRMED BY CIT(A) ARE HIGHLY EXCESSIVE AND THE SAME MAY BE TELESCOPED. 1 ST GROUND IS GENERAL NOT PRESSED AND THEREFORE DISMISSED. GROUND NO. 2.1 ( A ) IS WITH RESPECT TO DISALLOWANCE U/S. 40(A)(IA). 4. DURING THE COURSE OF ASSESSMENT PROCEE DINGS, A.O NOTICED THAT ASSESSEE HAD M ADE PAYMENTS TO VARIOUS PERSONS LISTED AT PAGE 2 & 3 OF THE ASSESSMENT ORDER AGGREGA TING TO RS. 38,02,469/ - . A.O NOTED THAT ASSESSEE HAD NOT DEDUCTED THE TDS U/S. 194C BEFORE MAKING THE PAYMENTS. A .O WAS OF THE VIEW THAT ASSESSEE WAS LIABLE TO DEDUCT TDS U /S. 194C AND SINC E ASSESSEE HAS NOT DEDUCTED TDS, T HE PROVISIONS OF SECTION 40(A)(IA) ARE APPLICABLE AND HE ACCORDINGLY DISALLOWED THE AGGREGATE AMOUNT OF RS. 38,02,469/ - . ITA NO 109/AHD/2009 . A.Y. 2005 - 06 3 AGGRIEV ED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A) . CIT(A) CON FIRMED THE DISALLOWANCE BY HOLDING AS UNDER: - 2.4. I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE. THERE IS NO DISPUTE ABOUT THE FACT THAT THE APPELLANT IS AN INDIVIDUAL TO WHOM THE PROVISIONS O F SECTION 194C(1) ARE NOT APPLICABLE IN THIS ASSESSMENT YEAR. HOWEVER, THE PROVISIONS OF SECTION 194C(2) ARE CLEARLY APPLICABLE SINCE THE GROSS RECEIPT/TURNOVER FROM THE APPELLANT'S BUSINESS EXCEEDS THE MONETARY LIMITS SPECIFIED IN SECTION 44AB OF THE INCOME - TAX ACT. THE ONLY ISSUE WHICH REQUIRES ATTENTION IS WHETHER THE WORK CARRIED OUT BY THE PERSONS TO WHOM THE APPELLANT HAS MADE THE PAYMENT OF RS.38,02,469/ - CAN BE CONSIDERED TO BE SUB --- CONTRACTORS. A SUB CONT RACTOR IS ONE WHO CARRIES OUT PART OF THE WORK FOR THE CONTRACTOR TO MEET THE TERMS AND CONDITIONS OF THE ORIGINAL CONTRACT. IN THE PRESENT CASE, THE CONTRACT WAS AWARDED TO THE APPELLANT. HE IN TURN TO COMPLETE THE WORK ALLOTTED SEVERAL PERSONS, PARTS OF THE CONTRACT. THE WORK WAS ASSIGNED BY THE APPELLANT TO THE THIRD PARTIES FOR SUPPLY OF ARTICLES OR THINGS OR FOR CARRYING OUT CERTAIN JOBS AS PER SPECIFICATIONS. SINCE SUCH PERSONS WERE AWARDED THE WORK FOR MEETING THE TERMS AND CONDITIONS OF THE ORIGINAL CONTRACT ITSELF, IT LOGICALLY FOLLOWS THAT SUCH PERSONS WERE THE SUB CONTRACTORS. PAYMENTS MADE TO THESE PERSONS WERE ARISING FROM THE CARRYING OUT OF ACTIVITIES OF THE CONTRACT ALLOTTED TO THE APPELLANT. THE APPELLANT SHOULD HAVE DEDUCTED TDS AS PRESCRIBED U/S. 194(C)(2). FAILURE TO DO SO WOULD ATTRACT THE PROVISIONS OF SECTION 40(A)(IA). THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE DISALLOWANCE AND THE SAME IS THEREFORE CONFIRMED. 5. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND CIT(A) AND FURTHER SUBMITTED THAT THE PAYMENTS MADE BY THE ASSESSEE DID NOT FALL UNDER THE DEFINITION OF SUB - CON TRACT AND THEREFORE THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS U/S. 194C. ON THE OTHER HAND LD. D.R. RELIED ON THE ORDER OF A.O AN D CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE, A.O WAS OF THE VIEW THAT THE PAYMENT MADE TO THE 32 PARTIES LISTED ON PAGE 2 & 3 AGGREGATING TO RS. 38,02,469/ - WAS PAYMENT TO SUB - CONTRACTOR AND ASSES SEE WAS LIABLE TO DEDUCT TDS U/S. 194C ON SUCH PAYMENTS . BEFORE US, LD. A.R. HAS SUBMITTED THAT ASSESSEE HAD NOT SUBLET ANY WORK EITHER IN FULL OR IN PART TO ANY CONTRACTOR AND THEREFORE THE PAYMENT MADE CANNOT BE CONSIDERED TO BE PAYMENT TO SUB - CONTRACTO R. WE FURTHER FIND THAT REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO DEMONSTRATE THAT THE PAYMENT MADE BY THE ASSESSEE WAS TO SUB - CONTRACTORS AND THE ASSESSEE WAS LIABLE TO DEDUCT TDS. BEFORE US REVENUE HAS NOT BROUGHT ANY MATERIAL ON ITA NO 109/AHD/2009 . A.Y. 2005 - 06 4 RECORD TO CONTRO VERT THE SUBMISSIONS OF ASSESSEE. IN VIEW OF THESE FACTS, WE ARE OF THE VIEW THAT IN THE ABSENCE OF ANY MATERIAL ON RECORD TO DEMONSTRATE THAT THE PAYMENTS WHICH WERE MADE BY ASSESSEE WAS IN THE NATURE OF PAYMNT TO SUB CONTRACTORS AND THEREFORE ASSESSEE WA S LIABLE TO DEDUCT TDS U/S. 194C NO DISALLOWANCE U/S. 40(A)(IA) IS CALLED FOR IN THE PRESENT CASE. WE ACCORDINGLY DIRECT THE DELETION OF ADDITION. THUS THIS GROUND IS ALLOWED. GROUND NO. 2.1 ( B ) IS WITH RESPECT TO UNEXPLAINED ADVANCE. 7. DURING THE COURSE O F ASSESSMENT PROCEEDINGS, A.O NOTICED THAT ASSESSEE HAD RECEIVED AN ADVANCE OF RS. 1 LAC FROM AMOLI ORGANICS LTD. ASSESSEE WAS ASKED TO FURNISH THE COPY OF CONFIRMATION AND PAN NUMBER. IN THE ABSENCE OF ANY CONFIRMATION, A.O NOTE D THAT ASSESSEE HAD FAILED TO PROVE THE GENUINENESS OF TRANSACTION , IDENTITY OF THE CREDITOR AND ITS CREDITWORTHINESS. HE THEREFORE HELD THAT THE CREDIT ENTRY APPEARING IN THE BOOKS OF ACCOUNTS IN THE NAME OF AMOLI ORGANICS LTD. WAS ASSESSEE S INCOME FROM UND ISCLOSED SOURCES AND A DDED THE SAME TO THE INCOME. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER THE BEFORE CIT(A). CIT(A) CONFIRMED THE ACTION OF A.O BY HOLDING AS UNDER: - 4.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE AND THE ORDER OF THE ASSESSING OFFICER. THE ASSESSEE HAS CLAIMED RS.1,00,000/ - AS ADVANCE RECEIVED FROM M/S. AMOLI ORGANICS PVT. LTD. AND HAS REFLECTED THE SAME IN THE BALANCE SHEET UNDER THE HEAD LOANS AND ADVANCES. DESPITE ADEQUATE OPPORTUNITY THE APPELLANT FAILED TO SUBMIT CONFIRMATION FROM THE SAID PARTY. NO EVIDENCE WAS ADDUCED BY THE APPELLANT TO SHOW THE NATURE OF RECEIPT AND ALSO THE METHOD IN WHICH IT HAD BEEN RECEIVED BY THE APPELLANT. THE APPELLANT ALSO COULD NOT ESTABLISH THE GENUINENESS OF THE TRANSACTION. RELIANC E ON THE DECISION OF THE RAJASTHAN TRIBUNAL ALSO DOES NOT HELP THE APPELLANT SINCE THE FACTS ARE DIFFERENT AND IT IS NOT CLEARLY ESTABLISHED THAT THE AMOUNT WAS CREDITED IN THE BOOKS OF ACCOUNTS IN THE EARLIER YEAR. IN VIEW OF THE ABOVE, I HELD THAT THE AD DITION MADE BY THE ASSESSING OFFICER WAS JUSTIFIED AND THE SAME IS THEREFORE CONFIRMED. 8. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. ITA NO 109/AHD/2009 . A.Y. 2005 - 06 5 9. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND CIT(A). HE FURTHER SUBMITTE D THAT THE DEBIT BALANCE SHOWN AGAINST AMOLI ORGANICS PVT. LTD. WAS BROUGHT FORWARD FROM EARLIER YEARS AND THERE HAS BEEN NO TRANSACTION WITH THE SAID PARTY DURING THE YEAR. HE THEREFORE SUBMITTED THAT NO DISALLOWANCE CAN BE MADE U/S. 68 OF THE ACT. HE ALS O POINTED TO THE COPY OF LEDGER ACCOUNT OF AMOLI ORGANICS PVT. L TD. AS APPEARING IN ITS BOOKS WHICH WAS PLACED AT PAGE 37 OF THE PAPER BOOK TO DEMONSTRATE THAT THE BALANCE WAS AN OPENING BALANCE AND THERE WERE NO TRANSACTIONS DURING THE YEAR. HE THEREFORE SUBMITTED THAT THE ADDITION BE DELETED. L.D D.R. ON THE OTHER HAND RELIED ON THE ORDER OF A.O AND CIT(A). 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT ASSESSEE HAD SHOWN AMOUNT RECEIVABLE FROM A M OLI ORGANICS PVT. LTD. AND THE AMOUNT WAS SHOWN UNDER THE HEAD LOAN AND ADVANCE . BEFORE US, LD. A.R. HAS PLACED ON RECORD THE COPY OF THE LEDGER ACCOUNT AS APPEARING IN HIS BOOKS OF ACCOUNTS TO DEMONSTRATE THAT THE BALANCE IS AN OPENI NG BALANCE AND FURTH ER THERE WERE NO TRANSACTIONS WITH THE PARTIES DURING THE YEAR. BEFORE US, REVENUE HAS NOT CONTROVERTED THE SUBMISSIONS MADE BY THE ASSESSEE . CONSIDERING THE AFORESAID FACTS AND THE FACT THAT THERE ARE NO TRANSACT ION DURING THE YEAR WITH THE AFORESAID PA RTY AND THE BALANCE O UTSTANDING IS AN OPENING BROUGHT FORWARD BALANCE FROM EARLIER YEARS, W E ARE OF THE VIEW THAT NO ADDITION U/S. 68 CAN BE MADE IN THE PRESENT CASE. WE THEREFORE DIRECT ITS DELETION AND THUS THIS GROUND IS ALLOWED . GROUND NO. 2.1(C) IS WITH RESPECT TO ADDITION ON ACCOUNT OF UNEXPLAINED LOAN. ITA NO 109/AHD/2009 . A.Y. 2005 - 06 6 11. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NOTICED THAT ASSESSEE HAD TAKEN LOAN FROM 3 PARTIES NAMELY ANUBEN ( RS.17,450), JAYSINGH SURV E( RS. 18,500), AND PRATIMA SURV E( RS. 17,500) AGGREGATING TO RS. 53,450/ - . THE ASSESSEE WAS ASKED TO FURNISH THE COPY OF ACCOUNT AND CONFIRMATION OF UNSECURED LOAN. A.O NOTED THAT ASSESSED FILED THE CONFIRMATION LETTERS BUT IT DID NOT CONTAIN COMPLETE ADDRESS , PAN NUMBERS, IF ASSESSED TO TAX, SOURCE OF PAYMENT ET C. A.O WAS OF THE VIEW THAT MERELY FILING THE CONFIRMATION LETTER ON A PLAIN PAPER WILL NOT PROVE THE IDENTITY OF THE PERSON , CREDITWORTHINESS OF THE PERSON AND THE GENUINENESS OF THE TRANSACTION. HE WAS THEREFORE OF THE VIEW THAT SINCE THE ASSESSEE HAS FA ILED TO PROVE THE GENUINENESS OF THE TRANSACTION , THE AGGREGATE AMOUNT OF RS. 53,450/ - WAS ADDED AS INCOME. AGGRIEVED BY THE ORDER OF A .O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CI T(A) CONFIRMED THE ORDER OF A.O. 12. AGGRIEVED BY THE ORDER OF CIT(A), ASS ESSEE IS NOW IN APPEAL BEFORE US. 13. BEFORE US, LD. A.R. SUBMITTED THAT THE 3 PARTIES FROM WHOM THE ASSESSEE HAD RECEIVED THE LOAN ARE HIS FAMILY MEMBERS AND HAD ALSO FILED THE CONFIRMATION LETTERS FROM EACH OF THEM. HE FURTHER SUBMITTED THAT THE AMOUNT OF LOAN IN EACH CASE IS LESS THAN 20,000/ - AND THE AMOUNT WAS OUT OF PAST SAVINGS . HE THEREFORE S UBMITTED THAT SINCE THE ASSESSEE HAS FILED THE CONFIRMATION LETTERS AND THE PERSONS WHO HAVE LEND THE MONEY ARE FAMILY MEMBERS , THE ADDITION BE DELETED. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O AND CIT(A). 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. FROM THE DETAILS OF PARTIES STATED IN THE ASSESSMENT ORDER, IT IS SEEN THAT ITA NO 109/AHD/2009 . A.Y. 2005 - 06 7 ASSESSEE HAD TAKEN LOAN FROM 3 PARTIES EACH OF WH ICH IS LESS THAN RS. 20,000/ - . IT IS ASSESSEE S SUBMISSION THAT ALL THE 3 PERSONS ARE FAMILY MEMBERS AND HAD ALSO FILED THE CONFIRMATION LETTERS. CONSIDERING THE FACT THAT THE PARTIES ARE THE FAMILY MEMBERS AND THE LOAN TAKEN FROM EACH OF THEM IS LESS THAN 20,000/ - AND THE AGGREGATE LOAN BEING RS. 53,450/ - AND CONSIDERING THE PECULIAR FACTS OF THE CASE, WE ARE OF THE VIEW THAT NO ADDITIO N ON THIS ACCOUNT IS CALLED FOR M ORE SO, WHEN THE SUBMISSION OF THE ASSESSEE HAS NOT BEEN CONTROVERTED BY REVENUE. WE THUS DELETE THE ADDITION AND THUS THIS GROUND OF ASSESSEE IS ALLOWED . GROUND NO. 2.1 ( D ) IS WITH RESPECT TO DISALLOWANCE OF TRAVELLING EXPENSES. 15. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NOTICED THAT ASSESSEE HAD CLAIMED EXPENDITURE TOWARDS PETROL EX PENSES, TELEPHONE EXPENSES, VEHICLE REPAIR EXPENSES, CAR LOAN INTEREST, DEPRECIATION ON CAR AND TOWARDS T RAVELLING EXPENSES. THE ASSESSEE WAS ASKED TO PROVE THAT THE EXPENDITURE WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF B USINESS. A.O NOTED TH AT ASSESSEE HAS NOT MAINTAINED ANY LOG BOOK FOR THE USE OF VEHICLE. HE WAS THEREFORE OF THE VIEW THAT THE POSSIBILITY OF THE EXPENSES FOR PERSONAL USE CANNOT BE RULED OUT. HE ACCORDINGLY CONSIDERED 1/6 TH OF THE TOTAL EXPENSES OF RS. 3,14,439/ - WHICH WORKE D OUT TO RS. 52,406/ - AS BEING NOT FOR THE PURPOSE OF BUSINESS AND ACCORDINGLY DISALLOWED THE SAME. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) FOLLOWING THE ORDER OF HIS PREDECESSOR GRANTE D PARTIAL RELIEF TO THE ASSESS EE BY HOLDING AS UNDER: - 6. THE FOURTH GROUND OF APPEAL IS THAT THE ID. ACIT HAS ERRED IN LAW AND ON FACT IN DISALLOWING RS.52,406/ - BEING L/6 TH OF TOTAL EXPENSE OF RS.3,14,439/ - INCURRED TOWARDS VEHICLE, TELEPHONE AND TRAVELING EXPENSE. THIS ISSUE HAS BEE N COVERED BY MY PREDECESSOR IN THE APPELLANT'S OWN CASE FOR ASSESSMENT YEAR 2004 - 05. ITA NO 109/AHD/2009 . A.Y. 2005 - 06 8 FOLLOWING THE ORDER OF MY ID. PREDECESSOR I HOLD THAT THERE WAS NO JUSTIFICATION FOR DISALLOWANCE OF THE TRAVELING EXPENSE. HOWEVER, THE ADDITION ON ACCOUNT OF TELEPHONE A ND VEHICLE EXPENSE IS CONFIRMED. 16. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSED IS NOW IN APPEAL BEFORE US. 17. BEFORE US, LD. A.R. SUBMITTED THAT THE EXPENSES HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. HE THEREFORE SUBMITTED THAT NO DISALLOWANCE WAS CALLED FOR. THE LD. D.R. ON THE OTHER HAND RELIED ON THE ORDER OF A.O AND CIT(A). 18. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT CIT(A) WHILE GRANTING PARTIAL RELIEF HAS FOLLOWED THE ASSESSEE S OWN CASE FOR A.Y. 04 - 05 AND ACCORDINGLY DELETED THE DISALLOWANCE ON ACCOUNT OF TRAVELLING EXPENSES BUT CONFIRMED THE DISALLOWANCE ON ACCOUNT OF TELEPHONE AND VEHICLE EXPENSES. BEFORE US, LD. A.R. HAS NOT PLACED ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF CIT(A). WE THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS THIS GROUND OF ASSESSEE IS DISMISSED. GROUND NO. 2.1( E ) IS WITH RESPECT TO ADDITION ON ACCOUNT OF LOW GP. 19. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NOTICED TH AT ASSESSEE HAD SHOWN GROSS PROFIT OF 12.92% AS AGAINST THE GROSS PROFIT OF 14.4% IN THE IMMEDIATE PRECEDING ASSESSMENT YEAR. THE ASSESSEE WAS ASKED TO FURNISH THE REASONS FOR FALL IN GROSS PROFIT AND NET PROFIT RATE. A.O NOTED THAT ASSESSEE HAS FAILED TO FURNISH ANY REASON FOR FALL IN GP. A.O THEREFORE PROCEEDED TO ESTIMATE D THE GROSS PROFIT AT 15% AS AGAI NST 12.92% SHOWN BY THE ASSESSEE AND WORKED OUT THE GROSS PROFIT OF RS. 21,56,559/ - AS AGAINST ITA NO 109/AHD/2009 . A.Y. 2005 - 06 9 THE GROSS PROFIT OF RS. 18,61,829/ - SHOWN BY THE ASSESSEE AND THUS MADE ADDITION OF RS. 2,94,730/ - . AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE GRANTED PARTIAL RELIEF TO THE ASSESSED BY HOLDING AS UNDER: - 8.2. I HAVE CONSIDERED THE SUBMISSION OF THE ID. AUTHORIZED REPRESENTATIVE AND THE ORDER OF THE ASSESSING OFFICER. THE ADDITION WAS MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE VOUCHERS PRODUCED FOR VERIFICATION HAVE NOT BEEN INCURRED FOR THE PURPOSE OF BUSINESS. HOWEVE R, SPECIFIC DETAILS OR INSTANCES HAVE NOT BEEN POINTED OUT BY THE ASSESSING OFFICER. CORRESPONDINGLY THE APPELLANT HAS ALSO GIVEN A GENERAL SUBMISSION WITH REGARD TO THE INCREASE IN PRICES. HE HAS NOT BROUGHT ANY EVIDENCE TO SUBSTANTIATE THE FALL IN GP. I THEREFORE HOLD THAT TRUTH LIES SOMEWHERE IN BETWEEN. THE APPELLANT HAS DECLARED THE GP OF 12.92% THE ASSESSING OFFICER HAS ESTIMATED THAT 15% THEREBY MAKING AN ADDITION OF 2.04%. IN VIEW OF THE FACT THAT NEITHER THE ASSESSING OFFICER NOR THE ASSESSEE HAS B EEN ABLE TO CORROBORATE THE STAND IT WOULD BE FAIR TO CONFIRM THE ADDITION TO THE EXTENT OF 50%. THE ASSESSED GETS RELIEF OF RS. 1,47,365/ - . THE BALANCE AMOUNT ALSO BEING RS. 1,47,365/ - IS CONFIRMED. 20. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW IN A PPEAL BEFORE US. 21. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND CIT(A). ON THE OTHER HAND LD. D.R. RELIED ON THE ORDER OF A.O. 22. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT CIT(A) WHILE GRANTIN G PARTIAL RELIEF TO THE ASSESSEE HAS NOTED THAT NO SPECIFIC DETAILS OR EXP ENSES WERE POINTED BY THE A.O I N SUPPORT OF ITS CONTENTION, THAT THE EXPENSES WERE NOT INCURRED FOR THE PURPOSE OF BUSINESS AND ON THE OTHER HAND THE ASSESSEE ALSO HAD NOT BROUGHT AN Y EVIDENCE TO SUBSTANTIATE THE FALL IN GP. CONSIDERING THE FACTUAL POSITION HE GRANTED PARTIAL RELIEF TO THE ASSESSEE . BEFORE US, LD. A.R. HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF CIT(A). WE THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS THIS GROUND OF ASSESSEE IS DISMISSED. ITA NO 109/AHD/2009 . A.Y. 2005 - 06 10 23. GROUND NO. 2.2 & 3.1 ARE GENERAL AND NOT PRESSED AND THEREFORE DISMISSED. 24. IN THE RESULT, THE APP EAL OF THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON 19 - 09 - 201 4 . SD/ - SD/ - (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH 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