SHANKAR KHANDELWAL, Jaipur V. ACIT, Jaipur

ITA 131/JPR/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54114 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 17-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K L MOOLCHANDAN I; R K KHUTETA
• Keywords: Unexplained cash credit; Depreciation; Additional evidence
• Section: 40A(3); 68

Judgement Text

1 1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.131/ JP/2011 ASSESSMENT YEAR 2002-03 PAN: ADRPK 5003 F SHRI SHANKAR LAL KHANDELWAL VS. THE ACIT A-2, RANA PRATAP NAGAR CENTRAL CIRCLE- 1 JHOTWARA, JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ITA NO.225/ JP/2011 ASSESSMENT YEAR 2002-03 PAN: ADRPK 5003 F THE ACIT VS. SHRI SHANKAR LAL KHANDELWAL CENTRAL CIRCLE- 1 A-2, RANA PRATAP NAGAR JAIPUR JHOTWARA, JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI K.L. MOOLCHANDANI & SHRI R.K. KHUTETA DEPARTMENT BY : SHRI SUNIL MATHUR DATE OF HEARING: 07-07-2011 DATE OF PRONOUNCEMENT: 19-08-2011 ORDER PER N.L. KALRA, AM:- THE ASSESSEE AS WELL AS REVENUE HAVE FILED THE A PPEALS AGAINST THE ORDER OF THE LD. CIT(A), CENTRAL, JAIPUR DATED 31- 12-2010 FOR THE ASSESSMENT YEARS 2002-03. 2 2 2.1 THE FIRST GROUND OF APPEAL OF THE ASSESSEE IS T HAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 82,864/- BY CONFIRMING THE DISALLOWANCE AT 50% ON CONSTRUCTION AND WIP EXPENSE S AS AGAINST DISALLOWANCE OF RS. 2,76,214/- MADE BY THE AO. 2.2 THE REVENUE IN GROUND NO. 1 IS AGGRIEVED THAT T HE LD. CIT(A) HAS ERRED IN GRANTING RELIEF OF RS. 1,93,350/-. 2.3 THE AO AS WELL AS THE LD. CIT(A) HAS GIVEN THE FINDING WHICH IS SIMILAR TO THE FINDINGS GIVEN IN THE CASE OF THE AS SESSEE FOR THE ASSESSMENT YEAR 2008-09. 2.4 BEFORE US, THE LD. AR HAS SUBMITTED THAT THERE HAS BEEN NO SALE MADE DURING THE YEAR AND THEREFORE, NO DISALLOWANCE IS R EQUIRED TO BE MADE. NO EXPENDITURE HAS BEEN CLAIMED. IT IS NOT THE CASE OF THE REVENUE THAT VALUATION OF THE CLOSING STOCK IS BEING REDUCED. 2.5 ON THE OTHER HAND, THE LD. DR REITERATED THE SA ME SUBMISSIONS AS GIVEN IN THE CASE OF THE ASSESSEE FOR THE ASSESSMEN T YEAR 2008-09. 2.6 WE HAVE HEARD BOTH THE PARTIES. THE EXPENDITURE INCURRED HAS BEEN INCLUDED IN THE CLOSING STOCK AND THE EXPENDITURE H AS NOT BEEN CLAIMED IN THE COMPUTATION OF INCOME. THE REVENUE HAS NOT RECORDED THE FINDING THAT CLOSING STOCK IS TO BE REDUCED. IF THE CLOSING STOC K IS REDUCED THEN PROFIT IN SUBSEQUENT YEAR WILL STAND DECREASED BY THE SAME FI GURE. SINCE THERE HAS 3 3 BEEN NO CLAIM OF EXPENDITURE, THEREFORE, THE LD. CI T(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 82,864/-. HENCE, GRO UND NO. 1 OF THE ASSESSEE IS ALLOWED AND GROUND NO. 1 OF THE REVENUE IS DISMISSED. 3.1 THE SECOND GROUND OF APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 72,500/ - MADE BY THE AO BY APPLYING THE PROVISIONS OF SECTION 40A(3) OF THE AC T. 3.2 WE HAVE HEARD BOTH THE PARTIES. WE HAD ALREADY HELD THAT THE ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE IN THE COMPUTATION OF INCOME. IN CASE THE ASSESSEE CLAIMS DEDUCTION THEN THE PROVISIONS OF SE CTION 40A (3) ARE APPLICABLE. HENCE, THE DISALLOWANCE U/S 40A (3) IS NOT WARRANTED. THUS THE GROUND NO. 2 OF THE ASSESSEE IS ALLOWED AND THE ASS ESSEE WILL GET THE RELIEF OF RS. 72,500/-. 4.1 THE THIRD GROUND OF THE ASSESSEE IS THAT THE LD . CIT(A) HAS ERRED IN ESTIMATING THE GROSS RECEIPTS AND NET PROFIT JOB WO RK AT RS. 2.50 LACS AND RS. 79,225/- RESPECTIVELY AS AGAINST GROSS RECEIPTS AND PROFIT DECLARED BY THE ASSESSEE AT RS. 1,48,395.39 AND RS. 47,030/-. 4.2 THE REVENUE VIDE GROUND NO. 3 IS AGGRIEVED AGAI NST GRANTING THE RELIEF OF RS. 1,20,775/-OUT OF ADDITION MADE ON ACCOUNT OF INCOME FROM JOB WORK OF FURNITURE. 4 4 4.3 THE ASSESSEE HAS DECLARED GROSS FURNITURE JOB W ORK RECEIPTS AT RS. 1,48,395/- AND CLAIMED THE EXPENSES OF RS. 1,01,365 /-. AS PER THE AO, THE A HAS NOT PRODUCED ANY SUPPORTING VOUCHERS. THE AO AC CORDINGLY ESTIMATED THE INCOME FROM FURNITURE JOB WORK RECEIPTS AT RS. 2.00 LACS AS AGAINST RS. 47,030/- MADE BY THE ASSESSEE. 4.4 THE LD. CIT(A) HAS ESTIMATED THE GROSS RECEIPTS AT RS. 2.50 LACS AND ESTIMATED THE NET PROFIT AT RS. 79,225/-. THUS THE LD. CIT(A) HAS CONFIRMED THE ADDITION OF RS.32,195/-.. 4.5 WE HAVE HEARD BOTH THE PARTIES. THE AO FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 ESTIMATED THE EXPENSES AND RECE IPTS AS DECLARED BY THE ASSESSEE WERE ACCEPTED. WHILE DISPOSING OFF THE APP EALS FOR THE ASSESSMENT YEAR 2003-04 AND 2004-05, THE LD. CIT(A) HAS ALSO E STIMATED THE EXPENSES. FOLLOWING OUR FINDINGS FOR THE ASSESSMENT YEAR 2003 -04 AND 2004-05, WE FEEL THAT SOME DISALLOWANCE OUT OF THE EXPENSES IS REQUIRED TO BE MADE. LOOKING TO THE QUANTUM OF DISALLOWANCE OF EXPENSES CONFIRMED IN THE ASSESSMENT YEARS 2003-04 AND 2004-05, WE FEEL THAT IT WILL BE FAIR AND REASONABLE TO ESTIMATE THE DISALLOWANCE OF EXPENSES AT RS. 20,000/-.. THUS THE ADDITION IS RESTRICTED TO RS. 20,000/- AS AGAIN ST 32,195/- CONFIRMED BY THE LD. CIT(A). HENCE, GROUND NO. 3 OF THE ASSESSEE IS PARTLY ALLOWED AND GROUND NO. 4 OF THE REVENUE IS DISMISSED. 5 5 5.1 THE FOURTH GROUND OF THE ASSESSEE IS THAT THE L D. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OUT OF TAXI EXPENSES TO THE EXTENT OF 20% AS AGAINST DISALLOWANCE OF 1/3 RD OF TAXI EXPENSES MADE BY THE AO. 5.2 THE 5 TH GROUND OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN RESTRICTING THE CLAIM OF DEPRECIATION ON TAXIES TO THE EXTENT OF POSITIVE INCOME FROM TAXIES. 5.3 THE REVENUE IN GROUND NO. 2 IS AGGRIEVED AGAINS T REDUCING THE EXPENSES FROM TAXI EXPENSES AT 20% AS AGAINST 33.3% MADE BY THE AO. THE ALTERNATE SUBMISSION IS THAT THE INCOME SHOULD BE C ONSIDERED AS POSITIVE INCOME IN CASE DEPRECIATION IS CONSIDERED AS ALLOWA BLE. 5.4 WE HAVE HEARD BOTH THE PARTIES. DURING THE YEAR PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION , THERE ARE FOUR TAXIES WHICH HAVE BEEN RUN THROUGH OUT THE YEAR. THERE ARE THREE OTHER TAXIES WHICH HAVE BEEN RUN FOR THE PART OF THE YEAR. LOOKING TO RATE OF TAXIES AND HIRING CHARES DURING THE PREVIOUS YEAR RELEVANT TO THE ASS ESSMENT YEAR UNDER CONSIDERATION, WE FEEL THAT IT WILL BE FAIR AND REA SONABLE TO ESTIMATE THE INCOME FROM TAXI AT RS. 50,000/- AFTER ALLOWING DEP RECIATION. HENCE, THE GROUNDS OF APPEAL OF THE ASSESSEE AS WELL AS OF THE ASSESSEE ARE PARTLY ALLOWED AS INDICATED ABOVE. 6 6 6.1 THE SIXTH GROUND OF THE ASSESSEE IS THAT THE LD . CIT(A) HAS ERRED IN ANNULLING THE ASSESSMENT ORDER 6.2 FOLLOWING OUR FINDING FOR THE SUBSEQUENT ASSESS MENT YEAR IN THE CAE OF THE ASSESSEE, WE FEEL THAT THAT THE LD. CIT(A) WAS JUSTIFIED IN NOT ANNULLING THE ASSESSMENT ORDER. HENCE, THE GROUNDS OF APPEAL 6 OF THE ASSESSEE IS DISMISSED. 7.1 THE FOURTH GROUND OF THE REVENUE IS THAT THE L D. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 13.00 LACS MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 7.2 THE 5TH GROUND OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN ADMITTING THE ADDITIONAL EVIDENCES. 7.3 WE HAD ALREADY HELD WHILE DISPOSING OFF THE APP EAL FOR THE ASSESSMENT YEAR 2008-09 AND 2007-08 THAT THE LD. CIT(A) WAS JU STIFIED IN ADMITTING THE ADDITIONAL EVIDENCE. FOLLOWING OUR FINDING, WE HOLD THAT THE LD. CIT(A) WAS JUSTIFIED IN ADMITTING THE ADDITIONAL EVIDENCE. WE HAVE ALSO ALREADY HELD WHILE DISPOSING OFF THE APPEAL FOR THE ASSESSMENT Y EAR 2008-09 AND 2007-08 THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE A DDITION U/S 68 OF THE ACT ON THE BASIS OF THE ADDITIONAL EVIDENCE WHICH INCLUDED THE CONFIRMATIONS AND AFFIDAVITS. HENCE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 13.00 LACS 7 7 8. IN THE RESULT, THE APPEALS OF THE ASSESSEE AS WE LL AS OF THE REVENUE ARE PARTLY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19-08 -2011 SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 19/08/2011 *MISHRA COPY FORWARDED TO :- 1. SHRI SHANKAR LAL KHANDELWAL, JAIPUR 2. THE ACIT, CENTRAL CIRCLE- 1, JAIPUR 3 THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5 THE LD.DR 6 THE GUARD FILE (ITA NO.131/JP /11) A.R, ITAT, JAIPUR 8 8