Hem Construction, Valsad V. The Income tax Officer, Ward-2, Vapi

ITA 1366/AHD/2005

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8956 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 03-09-2009
• Assessment Year: 2000-2001
• Appeal Filed On: 09-05-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C
• Section: 44AD; 40A(3); 234B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' [BEFORE SHRI R V EASWAR VICE-PRESIDENT] [AND SHRI P K BANSAL ACCOUNTANT MEMBER) ITA NO.1366/AHD/2005 (ASSESSMENT YEAR: 2000-2001) M/S HEM CONSTRUCTION, ABHINAV PARK, SHOP NO.4, ZAINAB COMPLEX, N H NO.8, KILLA PARDI, V/S THE INCOME-TAX OFFICER, WARD-2, VAPI [APPELLANT] [RESPONDENT] APPELLANT BY :- SHRI TUSHAR P HEMANI RESPONDENT BY:- SHRI M C PANDIT, SENIOR DR O R D E R PER P K BANSAL (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT( A) DATED 23-02- 2005 BY TAKING THE FOLLOWING EFFECTIVE GROUNDS OF A PPEAL:- 1 LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ADDI TION OF RS.86,605/- MADE BY AO WHILE FRAMING ASSESSMENT U/S 44AD OF THE ACT WHEREAS IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE ASSESSMENT OUGHT NOT TO HAVE BEEN FRAMED U/S 44AD S INCE THE APPELLANT IS MAINTAINING REGULAR BOOKS OF ACCOUNTS. 2 ALTERNATIVELY AND WITHOUT PREJUDICE AO HAS ERRED IN DISALLOWING EXPENSES OF RS.59,984/- U/S 40A(3) & RS.52,975/- TO WARDS INSURANCE PAYMENT WHILE ESTIMATING INCOME U/S 44AD OF THE ACT. LD. CIT(A) HAS WITHOUT APPLICATION OF MIND CONFIRME D THE SAID ADDITIONS MADE BY AO. THESE DISALLOWANCES ARE TOTAL LY UNCALLED FOR AND DESERVE TO BE DELETED. 2 2 AT THE OUTSET, THE LEARNED AR DID NOT PRESS GROU ND NO.1. THEREFORE, THE SAME STANDS DISMISSED, AS NOT PRESSED. 3 IN RESPECT OF GROUND NO.2, THE LEARNED AR VEHEME NTLY CONTENDED THAT THE ASSESSMENT IN THIS CASE HAS BEEN MADE BY INVOKING THE PROVISIONS OF SECTION 44AD. ONCE THE P ROVISIONS OF SECTION 44AD HAVE BEEN INVOKED, NO FURTHER DISALLOW ANCE IN RESPECT OF VARIOUS EXPENSES CAN BE MADE BY THE AO. THE AO IN THIS CASE MADE THE DISALLOWANCE U/S 40A(3) AS WELL AS TOWARDS THE INSURANCE PAYMENT AMOUNTING TO RS.52,975/-. REL IANCE WAS PLACED IN THIS REGARD ON THE FOLLOWING DECISIONS:- - CIT V SANTOSH JAIN 296 ITR 324 (P&H) - CIT V BANWARI LAL BANARSHIDAS 229 ITR 229 (ALL) THE LEARNED DR RELIED ON THE ORDER OF THE AO. 4 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND, PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDER OF THE TAX AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH TH E CASE LAW AS RELIED ON BEFORE US. WE HAVE ALSO NOTED FROM THE DE CISION OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V SA NTOSH JAIN 296 ITR 324 (P&H) WHICH FOLLOWED THE DECISION OF TH E ALLAHABAD HIGH COURT IN THE CASE OF CIT V BANWARI L AL BANARSHIDAS 229 ITR 229 (ALL). IN THIS CASE IT WAS HELD BY THE HIGH COURT THAT WHERE THE INCOME OF THE ASSESSEE HA S BEEN COMPUTED BY APPLYING THE GP RATE, THERE IS NO NEED TO LOOK INTO THE PROVISIONS OF SECTION 40A(3) AS APPLYING THE GP RATE TAKES CARE OF EXPENDITURE OTHERWISE THAN BY WAY OF CROSS CHEQUE ALSO. 3 THEREFORE, IN OUR OPINION, THESE DECISIONS ARE EQUA LLY APPLICABLE TO THE CASE OF THE ASSESSEE. WE ACCORDINGLY REVERSE THE ORDER OF THE CIT(A) ON THIS ISSUE. THUS, THIS GROUND STANDS ALLOWED. 5 THE LAST GROUND RELATING TO LEVY OF INTEREST U/S 234A, 234B AND 234C IS CONSEQUENTIAL IN NATURE. THE AO IS DIRECTED TO GIVE CONSEQUENTIAL RELIEF AFTER GIVING EFFECT TO TH IS ORDER. 6 IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 18-09-2 009 SD/- SD/- (R V EASWAR) VICE-PRESIDENT (P K BANSAL) ACCOUNTANT MEMBER DATE : 18-09-2009 COPY OF THE ORDER FORWARDED TO : 1. M/S HEM CONSTRUCTION, ABHINAV PARK, SHOP NO.4, Z AINAB COMPLEX, N H NO.8, KILLA PARDI, 2. THE ITO, VAPI WARD-2, VAPI 3. CIT CONCERNED 4. CIT(A)-VALSAD 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABA