ACIT, CHENNAI V. Shri V.Ganapathi Sthapati, CHENNAI

ITA 1129/CHNY/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1219 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-01-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 12-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN SHRI N DEVANATHAN
• Assessee Lawyers: CROSSOBJECTOR
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOMETAX APPELLATE TRIBUNAL: B- BENCH:CHENN AI (BEFORE SHRI ABRAHAM P. GEORGE. ACCOUNT ANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER) ITA NOS.1129/MDS/10 & CO NO.74 /MDS/10 (ASST. YEARS 2007-08) THE ACIT BUSINESSCIR. III, CHENNAI VS SHRI GANAPATHI STAPATHI, S-46, 1 ST AVENUE, VETTUVANKENI, CHENNAI 600041. (PAN AAAGPG2298E) (APPELLANT) (RESPONDENT/CROSS-OBJECTOR) APPELLANT BY: RESPONDENT/CROSS OBJECTOR BY: SHRI P.B.SEKARAN, CIT-DR. SHRI N.DEVANATHAN. ORDER PER ABRAHAM P.GEORGE, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS-O BJECTION OF THE ASSESSEE AGAINST THE ORDER DATED 13-04-2010 OF THE CIT(A)-VIII, CHENNAI. GRIEVANCE OF THE REVENUE IN SHORT IS THAT THE CIT(A ) CANCELLED DISALLOWANCE OF ` 10 LAKHS MADE BY THE AO TOWARDS THE EXPENSES CLAIME D BY THE ASSESSEE. ACCORDING TO THE REVENUE, ONLY VAG UE EXPLANATIONS WERE GIVEN BY THE ASSESSEE IN SUPPORT OF HIS CLAIM OF EX PENSES. IN THE ABSENCE ITA NO.1129 & CO 74/MDS/10 2 OF SUPPORTING DOCUMENTARY EVIDENCES, AS PER REVENUE , DISALLOWANCE WAS RIGHTLY DONE BY THE AO. FURTHER, AS PER THE REVENUE , ADDITIONAL INCOME OF ` 30,74,946/- OFFERED BY ASSESSEE WAS ONLY ON ACCOUNT OF COMPULSION WHEN AO POINTED OUT CERTAIN DISCREPANCIES IN THE FI NANCIAL STATEMENT. 2. SHORT FACTS APROPOS ARE THAT THE ASSESSEE, A SCU LPTOR, HAD OFFERED REVENUE TOTALING ABOUT ` .684.72 LAKHS AGAINST WHICH THE NET PROFIT WORKED OUT WAS ` 20.36 LAKHS FOR THE RELEVANT PREVIOUS YEAR. INOME R ETURNED WAS ` 35,54,320/-. A SURVEY WAS CONDUCTED IN THE PREMISE S OF THE ASSESSEE AND IT SEEMS ASSESSEE AGREED TO PAY AN ADVANCE TAX OF ` 24 LAKHS FOR THE IMPUGNED ASSESSMENT YEAR. ASSESSEE DURING THE ASSES SMENT PROCEEDINGS AGREED FOR AN ADDITION OF ` 30,74,946/- ON ACCOUNT OF DIFFERENCES BETWEEN ADVANCE RECEIVED AND EXPENDITURE INCURRED ON VARIOU S PROJECTS HE WAS DOING AND ALSO ON ACCOUNT OF CERTAIN OTHER DISCREPA NCIES, INCLUDING WANT OF SUPPORTING EVIDENCE FOR EXPENDITURE. HOWEVER, AO WA S OF THE OPINION THAT THE ADDITION OFFERED BY ASSESSEE WAS NOT SUFFICIENT . ACCORDING TO AO, ASSESSEE WAS NOT IN A POSITION TO FURNISH INFORMATI ON AND DOCUMENTS IN RESPECT OF HIS CLAIM OF EXPENDITURE. AO NOTED THAT THE ACTUAL PROFIT SHOWN BY ASSESSEE, IF INTEREST AND OTHER ITEMS WERE EXCLU DED, WAS ONLY ` 5 LAKHS ON A TURNOVER OF ` 6.5 CRORES. HE, THEREFORE, MADE AN AD-HOC DISALLOWA NCE OF ` .10 LAKHS AGAINST THE CLAIM OF EXPENSES, IN ADDITIO N TO THE INCOME OF RS.30,74,946/- OFFERED BY ASSESSEE DURING THE COURS E OF ASSESSMENT. ITA NO.1129 & CO 74/MDS/10 3 3. LD. CIT(A) IN ASSESSEES APPEAL, HELD THAT THE V OLUNTARY OFFER OF ` 30,74,946/-, WHEN CONSIDERED ALONGWITH RETURNED INC OME OF ` 35,54,320/-, WAS REASONABLE AND FURTHER ADDITION OF ` 10 LAKHS ON ESTIMATE BASIS WAS NOT CALLED FOR. HE, THEREFORE, DELETED THE DISALLOW ANCE OF ` 10 LAKHS. 4. NOW BEFORE US, LD. DR STRONGLY ASSAILING THE ORD ER OF CIT(A), SUBMITTED THAT THE ADDITION WAS MADE SINCE ASSESSEE WAS UNABLE TO PRODUCE BOOKS OR EVIDENCE IN SUPPORT OF THE CLAIM O F EXPENSES. ACCORDING TO HIM, ADDITION WAS RIGHTLY DONE BY THE AO. PER CO NTRA, LD. AR SUPPORTED THE ORDER OF THE CIT(A). 5. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE RECORDS. TOTAL RECEIPTS OF THE ASSESSEE CAME TO ` 6.84 CRORES, WHICH INCLUDED INTEREST INCOME OF ` 9,.86 LAKLHS. ASSESSEE HAD RETURNED TOTAL INCOME OF ` 35,54,320/- IN HIS RETURN OF INCOME. FURTHER TO THI S AND PURSUANT TO THE SURVEY OPERATION DONE ON 09-02-2007, ASSESSEE HAD D URING THE COURSE OF ASSESSMENT, AGREED TO A FURTHER ADDITION OF ` 30,74,946/-. IT WAS CLEARLY MENTIONED BY THE ASSESSEE IN HIS SUBMISSION DATED 1 6-02-2009 BEFORE THE AO THAT THE ADDITION OF `30,74,946/- WAS BEING OFFERED FOR COVERING DIFFERENCES BETWEEN ADVANCE AND EXPENDITURE, DIFFERE NCES IN WORK IN PROGRESS AND FOR EXPENSES WHICH WERE NOT SUPPORTED BY PR OPER DOCUMENTS. NO DOUBT, ASSESSEE MIGHT NOT HAVE BEEN ABLE T O SUPPORT EVERY EXPENDITURE CLAIMED BY HIM BY NECESSARY DOCUMEN TS. NEVERTHELESS, THE INCOME OFFERED BY THE ASSESSEE DURING T HE COURSE OF ITA NO.1129 & CO 74/MDS/10 4 ASSESSMENT COMING TO `30,74,946/- ALONGWITH THE INCOME ORIGINALLY RETURNED AT `35,54,320/- WAS EVERY REASONABLE, ESPECIA LLY WHEN A PART OF THE OFFERED INCOME WAS FOR DEFICIENCY IN SUPPORTIN G THE CLAIM OF EXPENSES. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IN OUR OPINION, AO OUGHT NOT HAVE MADE ANY FURTHER ADDITION OF `10 LAKHS ON THE BASIS OF THIN MARGIN OF PROFIT WHEN THE RETURNED INCOME A GGREGATED WITH THE INCOME OFFERED DURING THE COURSE OF ASSESSMENT WAS SUBSTANT IAL. LD. CIT(A) THEREFORE, RIGHTLY DELETED THE DISALLOWANCE MADE. WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A). 6. NOW WE TAKE UPS THE CROSS-OBJECTION OF THE ASSES SEE. ASSESSEE IN HIS CROSS-OBJECTION HAS SUPPORTED THE ORDER OF LD. CIT(A). WE HAVE ALREADY DISMISSED THE APPEAL OF THE REVENUE AGAINST THE ORD ER OF THE CIT(A). THE CROSS-OBJECTION THEREFORE, HAS BECOME INFRUCTUOUS. 7. RESULTANTLY, APPEAL OF THE REVENUE AS WELL AS CR OSS-OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 19-1-2011. SD/- ( GEORGE MATHAN) SD/- (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI: 19TH JANUARY, 2011 NBR CC: ASSESSEE/ ASSESSING OFFICER/ CIT(A)/ CIT/ D .R/ GUARD FILE. ITA NO.1129 & CO 74/MDS/10 5