Sh. Neeraj Sharma prop., Gwalior V. A.C.I.T., Circle-3, Gwalior

ITA 117/AGR/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0720 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-07-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 18-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: MANUJ SHARMA S
• Keywords: Depreciation; Set aside
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.117/AGRA/2013 ASSESSMENT YEAR: 2008-09 SHRI NEERAJ SHARMA, VS. ASSTT. COMMISSIONER OF IN COME TAX, PROP. D.S. SECURITY AND CIRCLE-3, GWALIOR. D.S. CONSTRUCTION, 523, D SURESH NAGAR, GWALIOR. (PAN: AOMPS 5080 C). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJENDRA SHARMA & SHRI MANUJ SHARMA, ADVOCATES RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 10.07.2013 DATE OF PRONOUNCEMENT : 12.07.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 19.02.2013 PASSED BY THE LD. CIT(A), GWALIOR FOR THE A.Y. 2008 -09. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE , THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.4474 25/- MADE U/S 69. THE ADDITION MAY BE DELETED. ITA NO.117/AGRA/2013 A.Y. 2008-09 2 2. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS. 124843/- ON A/C OF EXCESS DEPRECIATION. 3. ON THE FACTS & IN THE CIRCUMSTANCE OF THE CASE, THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS. 24968/- ON A/C OF DEPRECIATION ON MOTOR CARS. 4. ON THE FACTS & IN THE CIRCUMSTANCE OF THE CASE, THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE MADE B Y THE AO AT 25% OF THE EXPENSES ON TELEPHONE, TRAVELLING & CONVEYANCE AMOUNTING TO RS.9387/-. 5. ON THE FACTS & IN THE CIRCUMSTANCE OF THE CASE, THE CIT(A) WAS NOT JUSTIFIED IN RETAINING A DISALLOWANCE OF RS.1 L AC OUT OF THE MATERIAL PURCHASED. 6. ON THE FACTS & IN THE CIRCUMSTANCE OF THE CASE, THE CIT(A) WAS NOT JUSTIFIED IN RETAINING A DISALLOWANCE OF RS.75, 000/- OUT OF LABOUR & WAGES. 7. THE ABOVE DISALLOWANCE ADDITION MAY KINDLY BE DE LETED OR SUITABLY REDUCED. 8. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, SUBSTITUTE, MODIFY OR DELETE ANY GROUND OF APPEAL AT THE TIME O R BEFORE HEARING OF APPEAL. 3. THE FIRST GROUND OF APPEAL PERTAINS TO ADDITION OF RS.4,47,425/- MADE UNDER SECTION 69 OF THE INCOME TAX ACT, 1961 (THE ACT H EREINAFTER). DURING THE ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE A SSESSEE MADE ADDITION IN FIXED ASSETS RS.34,68,958/-. THE A.O. ASKED THE ASSESSEE TO FURNISH THE INVOICES OF ASSETS ITA NO.117/AGRA/2013 A.Y. 2008-09 3 PURCHASED DURING THE RELEVANT A.Y. ON EXAMINATION, THE A.O. NOTICED THAT THE ASSESSEE HAS SHOWN PURCHASE OF FIXED ASSETS LESS BY RS.4,47,425/-. THE A.O. MADE ADDITION OF RS.4,47,425/- AS UNDISCLOSED INVESTMENT UNDER SECTION 69 OF THE ACT. 4. THE CIT(A) HAS CONFIRMED THE ORDER OF A.O. ON TH E GROUND THAT THERE IS NO DOCUMENTARY EVIDENCE OF WHATSOEVER NATURE TO SHOW THAT THE ASSESSEE HAS RECEIVED ANY DISCOUNT ON THE INVOICE VALUE. THE ASSESSEE HA S FAILED TO SUPPORT ITS EXPLANATION THAT THE DIFFERENCE WAS DUE TO DISCOUNT . THE ASSESSEE HAS FAILED TO PRODUCE ANY DOCUMENTARY EVIDENCE TO SHOW THAT THE I NVOICE VALUE OF ASSETS WHICH WAS RS.39,16,383/- PURCHASED FOR LESSER PRICE. IN THE ABSENCE OF MATERIAL, THE CIT(A) SUSTAINED THE ADDITION OF RS.4,47,425/- UNDE R SECTION 69 OF THE ACT. 5. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. THE A.O. MADE ADDITION ON THE BASIS OF TOTAL INVOIC E FURNISHED BY THE ASSESSEE IN RESPECT OF PURCHASE OF CAR, JCB AND OTHER VEHICLES. THE ASSESSEE HAS ACCOUNTED FOR THE COST OF THESE VEHICLES BY LESS AMOUNT RS.4, 47,425/-. THE ASSESSEE HAS FAILED TO SUPPORT THE REASONS GIVEN AND OTHER DOCUMENTS IN THE REASON WHY THE ASSESSEE HAS ACCOUNTED FOR THE FIXED ASSET BY LESSER AMOUNT THAN THE AMOUNT GIVEN IN BILLS. THE ASSESSEE HAS FAILED TO FURNISH ANY SATISFACTORY EXPLANATION AND EVIDENCE BEFORE THE A.O., BEFORE THE CIT(A) AND BEFORE US ALSO. IN THE LIGHT OF THE FACT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). ITA NO.117/AGRA/2013 A.Y. 2008-09 4 6. THE SECOND GROUND IS IN RESPECT OF DISALLOWANCE OF RS.1,24,843/- ON ACCOUNT OF EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE. DU RING THE ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS PURCHASED LOGAN CAR, AVEO CAR & RINO CAR AFTER 01.10.2007 ON WHICH THE ASSESS EE HAS CHARGED FULL DEPRECIATION @ 15% INSTEAD OF 7.5%. THE A.O. ACCOR DINGLY DISALLOWED 50% OF DEPRECIATION OF WHICH CALCULATION COMES TO RS.1,24, 843/-. THE ADDITION MADE BY THE A.O. HAS BEEN CONFIRMED BY THE CIT(A). 7. THE LD. AUTHORISED REPRESENTATIVE DID NOT PRESS THIS GROUND OF APPEAL, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 8. GROUND NO.3 IS IN RESPECT OF ADDITION OF RS.24,9 68/- ON ACCOUNT OF DEPRECIATION ON MOTOR CAR. THE A.O. HAS DISALLOWED 20% DEPRECIATION ON MOTOR CAR ON ACCOUNT OF PERSONAL USE OF WHICH CALCULATION COMES TO RS.24,968/-. THE ADDITION MADE BY THE A.O. HAS BEEN CONFIRMED BY THE CIT(A). 9. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. THE FACT IS THAT THE ASSESSEE HAS NOT MAINTAINED LO G BOOK FOR THE USE OF CAR THEREFORE PERSONAL USE CANNOT BE RULED OUT. IN THE LIGHT OF THE FACT, WE ARE OF THE CONSIDERED VIEW THAT THE DISALLOWANCE ON ACCOUNT OF DEPRECIATION ON MOTOR CAR IS WARRANTED. HOWEVER, THE LD. AUTHORISED REPRESENTAT IVE SUBMITTED THAT THE 20% ITA NO.117/AGRA/2013 A.Y. 2008-09 5 DISALLOWANCE MADE BY THE A.O. IS EXCESS. AFTER CON SIDERING THE FACTS OF THE CASE, WE FIND IT PROPER THAT THE DISALLOWANCE TO THE EXTE NT OF 10% WOULD BE REASONABLE. ACCORDINGLY, WE DELETE THE ADDITION OF RS.12,484/- AND RESTRICT THE DISALLOWANCE TO THE EXTENT OF 10% INSTEAD OF 20% MADE BY THE A.O. THE A.O. IS DIRECTED ACCORDINGLY. 10. GROUND NO.4 IS IN RESPECT OF DISALLOWANCE OF RS .9,387/- BEING 25% OUT OF TELEPHONE, TRAVELING AND CONVEYANCE. THE A.O. MADE THE ADDITION OF RS.9,387/- OUT OF TELEPHONE, TRAVELING AND CONVEYANCE EXPENSES BEING 25% OF THE EXPENSES CLAIMED FOR WANT OF PROPER VERIFICATION AND PERSONA L USE OF THESE EXPENSES. THE ADDITION MADE BY THE A.O. HAS BEEN CONFIRMED BY THE CIT(A). 11. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. WE FIND THAT THE DISALLOWANCE OF RS.9,387/- OUT OF TELEPHONE, TRAVELLING AND CONVEYANCE FOR WANT OF VOUCHERS ON ACCOUNT OF PERSO NAL USE IS FOUND TO BE REASONABLE. IN THE LIGHT OF THE FACT, CONSIDERING AMOUNT IN TOTAL AND NOT PERCENTAGE, WE FIND THAT THE CIT(A) HAS RIGHTLY CONFIRMED THE A DDITION OF RS.9,387/-. ORDER OF THE CIT(A) IS CONFIRMED ON THE ISSUE. 12. GROUND NO.5 IS IN RESPECT OF ADDITION OF RS.1,0 0,000/- OUT OF MATERIAL PURCHASED AND GROUND NO.6 IS IN RESPECT OF ADDITION OF RS.75,000/- OUT OF LABOUR ITA NO.117/AGRA/2013 A.Y. 2008-09 6 EXPENSES. DURING THE ASSESSMENT PROCEEDINGS, THE A .O. NOTICED THE ASSESSEE HAS CLAIMED MATERIAL PURCHASED RS.80,33,405/-. THE A.O . FOUND THAT THE VOUCHERS WERE SELF-MADE WITHOUT SUPPORTING BILLS. THE ASSES SEE HAS ALSO CLAIMED LABOUR EXPENSES OF RS.70,53,900/-. THE A.O. MADE THE ADDI TION OF RS.2,00,000/- ON ACCOUNT OF MATERIAL PURCHASED AND RS.1,50,000/- ON ACCOUNT OF LABOUR AND WAGES. THE CIT(A) SUSTAINED THE ADDITION OF RS.1,00,000/- ON ACCOUNT OF MATERIAL PURCHASED AND RS.75,000/- ON ACCOUNT OF LABOUR AND WAGES. 13. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. THE ADMITTED FACTS OF THE CASE ARE THAT THE A.O. HA S MADE LUMP SUM ADDITION WITHOUT POINTING OUT ANY SPECIFIC EXPENDITURE WHICH WAS NOT INCURRED FOR THE PURPOSE OF BUSINESS. LD. AUTHORISED REPRESENTATIVE FILED A COMPARATIVE CHART OF PROFIT WHICH IS REPRODUCED AS UNDER :- A.Y. 2008-09 A.Y. 2007-08 RECEIPTS 16844815 6258928 NET PROFIT 924349 346397 NET PROFIT RATE 5.48% 5.53% 14. ON PERUSAL OF THE ABOVE CHART WE FIND THAT THE ASSESSEE HAS SHOWN A REASONABLE PROFIT OF 5.48% IN COMPARISON OF 5.53% I N EARLIER YEAR. BOTH THE DISALLOWANCE OUT OF ABOVE MATERIAL PURCHASE AND LAB OUR & WAGES PERTAINED TO TRADING ACTIVITIES OF THE ASSESSEE AND WHEN THE ASS ESSEE HAS SHOWN A REASONABLE PROFIT RATE, WE ARE OF THE CONSIDERED VIEW THAT SUC H LUMP SUM ADHOC ADDITION ARE ITA NO.117/AGRA/2013 A.Y. 2008-09 7 NOT WARRANTED. IN THE LIGHT OF THE FACT, WE DELETE THE ADDITION OF RS.1,00,000/- ON ACCOUNT OF MATERIAL PURCHASE AND RS.75,000/- OUT OF LABOUR EXPENSES SUSTAINED BY THE CIT(A). THUS, THE ASSESSEE GETS RELIEF OF RS.1 ,75,000/- OUT OF ADDITION SUSTAINED BY THE CIT(A). ORDER OF CIT(A) ON BOTH TH ESE ISSUES IS SET ASIDE. ACCORDINGLY, ADDITIONS OF RS.1,00,000/- OUT OF MATE RIAL PURCHASE AND RS.75,000/- OUT OF LABOUR EXPENSES SUSTAINED BY THE CIT(A) ARE DELETED. 15. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNT ANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY