MURARILAL VAISHNAV, Jaipur V. ITO, Sawai Madhopur

ITA 134/JPR/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59525 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 18-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Keywords: Wrong claim
• Section: 131

Judgement Text

1 ITA 134-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ) ITA NO. 134/JP/2011 ASSTT. YEAR : 2005-06. SHRI MURARILAL VAISHNAV, VS. THE INCOME-TAX OFFI CER, BAJRANG BHAWAN, GRAM & POST WARD-1, BAHRAVADA KHURD, SAWAI MADHOPUR. SAWAI MADHOPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MAHENDRA GARGIEYA RESPONDENT BY : SHRI D.K. MEENA DATE OF HEARING : 21.12.2011 DATE OF PRONOUNCEMENT : 09.01.2012. ORDER DATED : 09.01.2012. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2005-06. 2. GROUND NOS. 1 TO 3 ARE AGAINST UPHOLDING INVOCAT ION OF PROVISIONS OF SECTION 145(3) AND SUSTAINING APPLICATION OF NP RATE OF 10% ON GROSS RECEIPTS OF RS. 1,01,34,655/- AND ASSESSING THE NET INCOME AT RS. 1 0,13,465/- AS AGAINST DECLARED TOTAL INCOME OF RS. 1,16,913/-. 3. DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTICE D VARIOUS DISCREPANCIES IN MAINTAINING THE BOOKS OF ACCOUNT. IT WAS FOUND THA T DAY TO DAY WAGES REGISTER WAS NOT MAINTAINED. REGARDING VOUCHERS, IT WAS FOUND THAT MOST OF THE VOUCHERS WERE THUMB 2 IMPRESSED INSTEAD OF SIGNATURE. THERE WAS NO MENTI ON OF NAME OF FATHER OF LABOURER, VILLAGE NAME OR ADDRESS IN THE VOUCHERS. THERE WER E CERTAIN MORE DISCREPANCIES NOTED BY THE AO AND FOUND THAT PROVISIONS OF SECTION 145(3) ARE CLEARLY APPLICABLE. ACCORDINGLY HE INVOKED THE PROVISIONS OF SECTION 145(3). THERE AFTER HE EXAMINED THE PROFIT & LOSS ACCOUNT AND FOUND THAT VARIOUS EXPENSES CLAIMED ARE NOT REASONABLE AND HE TOTALED THE VARIOUS EXPENSES WHICH IN HIS VIEW ARE DISALLOWABLE . TOTAL DISALLOWABLE EXPENSES WERE FOUND AT RS. 17,64,347/-. HOWEVER, INSTEAD OF DISAL LOWING THE VARIOUS EXPENSES, THE AO APPLIED NP RATE OF 10% ON THE GROSS RECEIPTS SHOWN. WHILE APPLYING NP RATE, THE AO HAS FURTHER NOTED THAT THERE WERE VARIOUS BILLS IN THE NAME OF SHRI NAVNEET MEENA ON ACCOUNT OF PAYMENT FOR TRANSPORTING THE MATERIAL. SHRI NAV NEET MEENA WAS SUMMONED UNDER SECTION 131 AND HE DENIED HAVING ANY RELATION WITH THE ASSESSEE OR SUPPLYING ANY MATERIAL TO THE ASSESSEE. FOR THIS REASON ALSO THE AO DRAWN INFERENCE THAT BOOKS OF ACCOUNT ARE NOT RELIABLE AND, THEREFORE, THEY WERE REJECTED AND NP RATE OF 10% WAS APPLIED. THE AO ALSO NOTED THAT CERTAIN EXPENSES WERE CLAIMED TWICE . IN THIS WAY HE ESTIMATED THE NET INCOME RS. 10,13,465/- AS AGAINST INCOME OF RS. 1,1 6,913/- SHOWN BY ASSESSEE. // THE AO FURTHER NOTICED THAT IN PROFIT & LOSS ACCOUNT THE A SSESSEE HAS SHOWN CEMENT EXPENSES AT RS. 7,03,770/-. DURING THE ASSESSMENT PROCEEDINGS IT WAS FOUND THAT OVER AND ABOVE THE EXPENSES CLAIMED IN THE PROFIT & LOSS ACCOUNT, THE ASSESSEE HAS ALSO BOUGHT 400 BAGS OF CEMENT WHICH WERE TRANSPORTED BY TRUCK NO. RJ 34N 0 061. THERE WAS NO BILL OF 400 BAGS OF CEMENT NEITHER THEY WERE ENTERED IN THE BOO KS OF ACCOUNT WHEREAS THE ASSESSEE HAS SHOWN THE PAYMENT OF TRANSPORTER AT RS. 6,440/- IN THE ACCOUNT OF SALARY AND WAGES. ACCORDINGLY, THE AO INFERRED THAT THE PAYMENT WAS M ADE ON ACCOUNT OF PURCHASE OF 400 BAGS OF CEMENT OUT OF BOOKS OF ACCOUNT. THEREAFTER THE AO WROTE A LETTER TO M/S. 3 MANGALAM CEMENT LTD. VIDE LETTER NO. 549 DATED 04.1 0.2007 FOR VERIFYING THE PURCHASE OF 400 BAGS OF CEMENT. M/S. MANGALAM CEMENT LTD. VIDE LETTER DATED 06.10.2007 STATED THAT THEY HAVE SOLD 400 BAGS OF CEMENT FOR RS. 1,57,708/ -. THE AO NOTED THAT ASSESSEE HAS SHOWN PAYMENT OF RS. 54,000/- IN ITS BOOKS OF ACCOU NT. ACCORDINGLY, IT WAS ASCERTAINED BY AO THAT A SUM OF RS. 1,03,708/- HAS BEEN MADE OU T OF BOOKS OF ACCOUNT FROM UNDISCLOSED SOURCES. ACCORDINGLY, THE ADDITION OF THIS AMOUNT WAS ALSO MADE BY THE AO. 4. THEREAFTER, AN ADDITION OF RS. 23,500/- WAS ALSO MADE ON ACCOUNT OF GRIT EXPENSES. THE AO NOTICED THAT ASSESSEE HAS PAID A SUM OF RS. 19,500/- ON 1.11.2004 IN THE NAME OF SHRI DAYARAM KIWARA. HOWEVER, HE FOUND THAT NO SUCH PAYMENT HAS BEEN ENTERED IN THE BOOKS OF ACCOUNT. ACCORDINGLY HE FOUND THAT THIS A MOUNT HAS BEEN PAID OUT OF BOOKS OF ACCOUNT FROM UNDISCLOSED SOURCES. SIMILARLY, THE A O NOTED THAT A FURTHER SUM OF RS. 4,000/- HAS BEEN PAID OUT OF BOOKS OF ACCOUNT FROM UNDISCLOSED SOURCES. IN THIS WAY, TOTAL ADDITION OF RS. 23,500/- WAS MADE OVER AND AB OVE THE INCOME ESTIMATED AT 10% AND ADDITION OF RS. 1,03,708/- WAS MADE ON ACCOUNT OF U NEXPLAINED PAYMENT FOR PURCHASE OF 400 BAGS OF CEMENT. 5. ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A) BEF ORE WHOM NONE APPEARED. THEREAFTER, THE LD. CIT (A) DECIDED THE ISSUE ON ME RIT. ENTIRE ORDER OF AO WAS DISCUSSED IN THE ORDER OF LD. CIT (A), AND THE LD. CIT (A) FO UND THAT THERE IS NO INFIRMITY IN THE ORDER OF AO WHO HAS RIGHTLY APPLIED 10% NP RATE AND HAS RIGHTLY MADE ADDITION ON ACCOUNT OF UNEXPLAINED PAYMENT FOR PURCHASE OF CEME NT AND PAYMENT MADE TO SHRI DAYARAM KIWARA ETC. ACCORDINGLY, APPEAL OF THE ASS ESSEE WAS DISMISSED. 6. NOW THE ASSESSEE IS IN APPEAL HERE BEFORE THE TR IBUNAL. 7. THE LD. A/R FILED WRITTEN SUBMISSION. 4 8. ON THE OTHER HAND, THE LD. D/R PLACED STRONG REL IANCE ON THE ORDERS OF AO AND LD. CIT (A). PART OF THE ORDER OF THE AO AND LD. CIT ( A) WERE READ ALSO. ATTENTION OF THE BENCH WAS DRAWN SPECIFICALLY AT PAGE 4 ONWARDS OF O RDER OF LD. CIT (A). 9. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AFTER CONSIDERING THE MATERIAL AND PERUSING THE WRITTEN S UBMISSIONS, WE FIND THAT IN GROUND NOS. 1 TO 3 ASSESSEE DESERVES TO SUCCEED IN PART. VARIOUS DEFECTS WERE POINTED OUT BY THE AO AND NO COGENT REPLY WAS GIVEN ON BEHALF OF THE A SSESSEE. VARIOUS DEFECTS HAVE BEEN NOTED BY THE AO IN HIS ORDER WHICH IS REPRODUCED IN THE ORDER OF LD. CIT (A). THEREFORE, WE ARE NOT MENTIONING THOSE DEFECTS IN THIS ORDER A GAIN. AFTER GOING THROUGH THOSE DEFECTS, IT IS CLEARLY SEEN THAT BOOKS OF ACCOUNT W ERE NOT RELIABLE AND THE AO WAS RIGHT IN REJECTING THE BOOKS OF ACCOUNT BY INVOKING PROVISIO NS OF SECTION 145(3) OF THE ACT. ACCORDINGLY, WE CONFIRM HIS ORDER IN THIS RESPECT. 10. WE FURTHER NOTED THAT IF THE DISALLOWANCE ESTIM ATED BY THE AO IS TAKEN INTO CONSIDERATION THEN DISALLOWANCE WAS TO THE TUNE OF RS. 17 LACS OR ODD WHEREAS THE AO HAS APPLIED NP RATE AT 10% AND, THEREFORE, NO SEPARATE DISALLOWANCE WAS MADE. IT IS ALSO WELL SETTLED THAT WHERE NP RATE IS APPLIED, NO SEPARATE DISALLOWANCE CAN BE MADE IN THE PROFIT & LOSS ACCOUNT. HOWEVER, WE FIND THAT SINCE BOOKS OF ACCOUNT WERE NOT RELIABLE AND TAKING INTO CONSIDERATION PROVISIONS OF SECTION 44A D, IF NP RATE OF 8% IS APPLIED THEN IT WILL MEET THE ENDS OF JUSTICE TO BOTH THE SIDES. WE ARE NOT REPEATING THE DEFECTS NOTED THE AO AND THE DISCREPANCIES IN RESPECT OF BOGUS CLAIM OF TRANSPORTATION CHARGES AND VARIOUS EXPENSES ENTERED TWICE AS WE ARE CONFIRMING THE APP LICATION OF NP RATE. 10.1. REGARDING THE CONTENTION OF THE ASSESSEE THAT PAST HISTORY SHOULD BE TAKEN INTO CONSIDERATION, IN THE PRESENT CASE PAST HISTORY IS NOT APPLICABLE AS THE AO HAS NOTED 5 SPECIFIC DEFECTS IN THE YEAR UNDER CONSIDERATION. THERE WAS PAYMENT OF RS. 2500/- EACH MADE TO ONE SHRI NAVEET MEENA ON ACCOUNT OF TRANSPO RTATION OF MATERIAL. SHRI NAVEET MEENA HAS DENIED HAVING TRANSPORTED ANY MATERIAL ON BEHALF OF THE ASSESSEE. THEREFORE, IT IS AMPLY PROVED THAT BOOKS OF ACCOUNT WERE NOT R ELIABLE AT ALL. CERTAIN BILLS WERE ENTERED TWICE. CERTAIN PAYMENTS WERE MADE OUT SIDE BOOKS OF ACCOUNT AND THIS FACT COULD NOT BE CONTROVERTED BY THE LD. A/R BY FILING ANY PO SITIVE EVIDENCE. THEREFORE, ON THE FACTS OF THE PRESENT CASE PAST HISTORY CANNOT BE AP PLIED. WE HAVE ALREADY TAKEN A VERY LENIENT VIEW BY DIRECTING TO APPLY NP RATE OF 8% AG AINST 10% APPLIED BY THE AO. ACCORDINGLY, WE DIRECT THE AO TO RE-COMPUTE THE INC OME BY APPLYING NP RATE OF 8% ON GROSS RECEIPTS SHOWN BY ASSESSEE. 11. GROUND NOS. 4 & 5 WHERE ADDITION OF RS. 1,03,70 8/- AND RS. 23,500/- WERE MADE ON ACCOUNT OF EXPENDITURE INCURRED OUT OF BOOKS OF ACCOUNT. 12. IN VIEW OF THE EXPLANATIONS ADDED THAT NO UNLAW FUL EXPENSES WILL BE ALLOWED TO BE SET OFF AGAINST ANY OTHER ADDITION AS CONTENDED BY LD. A/R, THEREFORE, THESE GROUNDS OF THE ASSESSEE ALSO DISMISSED. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D IN PART. 14. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09 .01.2012. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/ 6 COPY FORWARDED TO :- SHRI MURARILAL VAISHNAV, SAWAI MADHOPUR. THE ITO WARD-1, SAWAI MADHOPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 134/JP/2011) BY ORDER, AR ITAT JAIPUR.