ITO, Jaipur V. PARASMAL SUTHAR, Jaipur

ITA 1126/JPR/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 47928 (ITAT-JAIPUR)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 09-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ADJ APPLICATION REJE CTED
• Section: 131; 68

Judgement Text

1 ITA 1126-10 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 1126/JP/2010 ASSTT. YEAR : 2007-08. THE INCOME-TAX OFFICER, VS. SHRI PARASMAL SUTHAR, WARD 7(2), PROP. MAHASHAKTIHANDICRAFT, JAIPUR. PLOT NO. 2, ASHAPURI COLONY, MUKUNDPURA ROAD, BHANKROTA, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJAY KUMAR RESPONDENT BY : ADJ. APPLICATION REJE CTED. ORDER DATE OF ORDER : 24/06/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY DEPARTMENT AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2007-08. 2. THE DEPARTMENT IS OBJECTING IN DELETING THE TRAD ING ADDITION OF RS. 3,14,669/-, DELETING ADDITION OF RS. 1,20,000/- MADE ON ACCOUNT OF RENT PAYMENT AND DELETING ADDITION OF RS. 8,56,000/- OUT OF RS. 9,05,500/- MA DE BY AO UNDER SECTION 68. 3. THE ASSESSEE HAS SHOWN GROSS PROFIT @ 13.36% ON TURNOVER OF RS. 86 LACS OR ODD. THE AO IN HIS ORDER NOTED THAT THE ASSESSEE WAS ALL OWED OPPORTUNITY, HOWEVER, NO BOOKS OF ACCOUNT WERE PRODUCED. THE ASSESSEE HAS NOT MAI NTAINED STOCK REGISTER, THE DETAILS OF RAW MATERIAL AND FINISHED MATERIAL. THEREFORE, HE APPLIED G.P. RATE OF 17% AGAINST 13.36% WHICH RESULTED IN TRADING ADDITION OF RS. 3, 14,669/-. IT WAS SUBMITTED THAT IT IS 2 WRONG TO SAY THAT ASSESSEE HAS NOT AVAILED THE OPPO RTUNITY PROVIDED TO HIM. ALL THE BOOKS OF ACCOUNTS WERE PRODUCED BEFORE THE AO. IT WAS FU RTHER SUBMITTED THAT SHRI GHEESALAL SHARMA, ACCOUNTANT APPEARED BEFORE THE AO ALONG WIT H BOOKS OF ACCOUNT. HOWEVER, AO DID NOT TOOK THE MATTER ON THAT DAY. THEREFORE, THE SAME WAS ADJOURNED. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE IS DOING BUSINESS OF MA NUFACTURING OF HANDICRAFT ITEMS ON A SMALL SCALE. HANDICRAFT ITEMS ARE MANUFACTURED FRO M WOOD. THEREFORE, MAINTENANCE OF STOCK REGISTER IS NOT POSSIBLE. IT WAS ALSO SUBMITT ED THAT FOR THE LAST FIVE YEARS THE G.P. RATE SHOWN BY ASSESSEE IS RANGING BETWEEN 13% TO 13.36% . IT WAS FURTHER SUBMITTED THAT THE G.P. RATE IN THIS YEAR IS BETTER THAN G.P. RATE SHO WN IN EARLIER YEAR. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, TH E LD. CIT (A) FOUND THAT THE AO WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT AND APPLYING G.P. RATE OF 17%. IF THE BOOKS OF ACCOUNT ARE LIABLE TO BE REJECTED THEN G.P. RATE SHOULD HAVE BEEN APPLIED ON THE BASIS OF PAST HISTORY. THE G.P. RATE SHOWN BY ASSESSEE DURIN G THE YEAR IS BETTER AS COMPARED TO EARLIER YEAR, THEREFORE NO ADDITION WAS WARRANTED. ACCORDINGLY TRADING ADDITION MADE BY AO WAS DELETED. 4. THE LD. D/R PLACED RELIANCE ON THE ORDER OF AO. 5. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. C IT (AP, WE FIND NO INFIRMITY WITH THE FINDING OF LD. CIT (A) WHICH RE FINDING OF FACT . ACCORDINGLY WE CONFIRM THE ORDER OF LD. CIT (A) ON THIS ISSUE. 6. NEXT ISSUE IS AGAINST DELETING THE ADDITION OF R S. 1,20,000/- ON ACCOUNT OF RENT PAID BY ASSESSEE. 7. AS PER ORDER OF AO, THE ASSESSEE WAS REQUIRED TO GIVE COMPLETE NAME AND ADDRESS OF THE TENANT WHICH HE HAS NOT PROVIDED AS THE BOOK S OF ACCOUNT WERE NOT PRODUCED. 3 THEREFORE, HE DISALLOWED RENT PAYMENT OF RS. 1,20,0 00/-. IT WAS SUBMITTED BEFORE LD. CIT (A) THAT THE ASSESSEE HAS TAKEN FROM SMT. KANTA DEV I RESIDENT OF ASHAPURI COLONY, NEAR TIBAWALA, MUKUNDPURA ROAD, BHANKROTA, JAIPUR THE BU SINESS PREMISES @ RS. 72,000/- PER ANNUM AND FROM SHRI LADU RAM RESIDENT OF RAMRAT AN COLONY, MUKUNDPURA ROAD, BHANKROTA, JAIPUR HAS TAKEN GODOWN ON RENT @ RS. 6 0,000/- PER ANNUM. IT WAS FURTHER SUBMITTED THAT BOTH THE LANDLORDS ARE ASSESSED TO T AX AND THEY HAVE FILED THE RETURNS OF INCOME SHOWING INCOME RECEIVED FROM THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT BOTH THE PREMISES ARE USED FOR BUSINESS PURPOSES DURING THE YEAR, THEREFORE, THERE IS NO JUSTIFICATION IN DISALLOWING PART RENT I.E. RS. 1,2 0,000/-. 7.1. AFTER CONSIDERING THE SUBMISSIONS AND ORDER OF THE AO, THE LD. CIT (A) FOUND THAT THE ASSESSEE IS USING FACTORY AND GODOWN FOR BUSINE SS PURPOSE AND IN LIEU THEREOF RENT WAS PAID. THEREFORE, HE HELD THAT DISALLOWANCE OF R ENT PAID BY ASSESSEE IS NOT JUSTIFIED. ACCORDINGLY HE DELETED THE ADDITION. THE FINDING OF LD. CIT (A) ARE FINDING OF FACT WHICH NEITHER COULD BE CONTROVERTED NOR ANY MATERIAL WAS BROUGHT ON RECORD TO ESTABLISH OTHERWISE. THEREFORE, THE FINDING OF LD. CIT (A) I S CONFIRMED ON THIS ISSUE. 7.2. REMAINING ISSUE RELATES TO DELETION OF ADDITIO N MADE UNDER SECTION 68. THE AO MADE AN ADDITION OF RS. 9,05,500/- UNDER SECTION 68 BY OBSERVING THAT ASSESSEE COULD NOT EXPLAIN THE CREDITWORTHINESS OF THE LOAN AMOUNT. TH E AO HAS ALSO OBSERVED THAT THE CONFIRMATIONS FILED ARE INCOMPLETE AS FULL NAME AND FATHERS NAME OF THE CREDITOR HAS NOT BEEN MENTIONED. THEREFORE, THE CONFIRMATIONS ARE DO UBTFUL. ACCORDINGLY THE IMPUGNED ADDITION WAS MADE. IT WAS SUBMITTED THAT CONFIRMAT IONS FROM ALL THE CREDITORS WERE FILED SHOWING COMPLETE NAME AND ADDRESS. IT WAS FURTHER SUBMITTED THAT MOST OF THE CREDITORS ARE OLD WHICH WERE TAKEN SO MANY YEARS BACK AND TH EY HAVE SHOWN IN THEIR ACCOUNT IN 4 EARLIER YEAR. IT WAS FURTHER SUBMITTED THAT ON CON FIRMATION LETTERS, PAN NUMBER ALONG WITH CHEQUE NUMBER ETC. HAVE BEEN MENTIONED. IT WAS FURTHER SUBMITTED THAT ACCOUNTANT SHRI GHASILAL APPEARED BEFORE THE AO. HOWEVER, ON THAT DAY THE CASE WAS ADJOURNED. THEREFORE, ON LAST DATE NO SUCH QUERY WAS RAISED. I T WAS FURTHER SUBMITTED THAT NEITHER SUMMONS UNDER SECTION 131 HAVE BEEN ISSUED NOR ASSE SSEE WAS REQUIRED TO FILE FURTHER DETAILS. 7.3. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, THE LD. CIT (A) OBSERVED THAT ON THE DATE OF HEARING BEFORE AO ON 20.11.2009 THE ACCOUNTANT OF THE ASSESSEE APPEARED ALONG WITH BOOKS OF ACCOUNT. HOWE VER, AO REFUSED TO HEAR ON THAT DAY. IT WAS FURTHER NOTED BY LD. CIT (A) THAT MOST OF THE LOANS ARE OLD, THEREFORE, NO ADDITION CAN BE MADE IN THE YEAR UNDER CONSIDERATIO N. ACCORDINGLY, THE LD. CIT (A) OBSERVED THAT THIS AMOUNT ADDED BY THE AO WAS NOT J USTIFIED. ACCORDINGLY THE LOANS WHICH WERE TAKEN IN EARLIER YEAR THEY WERE DELETED. THEREAFTER, THE LD. CIT (A) FOUND THAT THERE ARE THREE NEW CASH CREDITORS I.E. SHRI AMIT, SHRI MAHENDRA AND SHRI NARENDRA FROM WHOM A SUM OF RS. 19,000/-, RS. 18,500/- AND RS. 12 ,000/- WERE TAKEN. THE LD. CIT (A) NOTED THAT THESE CASH CREDITS ARE OF VERY SMALL AMO UNT. HOWEVER, THEY HAVE NOT APPEARED AND THE AMOUNT IN QUESTION WAS DEPOSITED IN CASH. THEREFORE, THE LD. CIT (A) FOUND THAT THE CREDITWORTHINESS OF THIS AMOUNT ARE NOT PROVED. ACCORDINGLY, THE ADDITION TO THIS EXTENT WAS CONFIRMED AND THE REMAINING AMOUNT WAS D ELETED. 7.4. THE ABOVE FINDING OF LD. CIT (A) NEITHER COULD BE CONTROVERTED NOR ANY MATERIAL WAS BROUGHT ON RECORD. THE FINDING OF LD. CIT (A) ARE FINDING OF FACT, THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE FINDING OF LD. CIT (A). ACCORDINGLY, WE CONFIRM THE ORDER OF LD. CIT (A) ON THIS ISSUE. 5 8. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMI SSED. 9. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 24. 6.2011. SD//- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- THE ITO WARD 7(2), JAIPUR. SHRI PARASMAL SUTHAR, BANKROTA, JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 1126/JP/2010) BY ORDER, AR ITAT JAIPUR.