Deepak D.Methwani-Indl., Surat V. The Income tax Officer,Ward-2(2), Surat

ITA 1392/AHD/2009

• Counselvise Citation: 139220514 RSA 2009
• Duration Of Justice: 3 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 08-11-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 01-05-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y P VERMA
• Assessee Lawyers: R N VEPARI
• Keywords: Additional evidence

Judgement Text

, , , , B, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ %& %& %& %& , , , , &' ( & &' ( & &' ( & &' ( & ' ' ' ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND TEJ RAM MEENA, ACCOUNTANT MEMBER) ITA NO.1392/AHD/2009 [ASSTT.YEAR : 2005-2006] DEEPAK D. METHWANI (INDIVIDUAL) C/O. KISHORE N. THAWANI 607, SURYAKIRAN APARTMENTS GHOD DOD ROAD, SURAT. /VS. ITO, WARD-2(2) SURAT. ITA NO.1393/AHD/2009 [ASSTT.YEAR : 2005-2006] DEEPAK D. METHWANI (HUF) C/O. KISHORE N. THAWANI 607, SURYAKIRAN APARTMENTS GHOD DOD ROAD, SURAT. /VS. ITO, WARD-2(2) SURAT. ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) .% / 0 &/ ASSESSEE BY : SHRI R.N. VEPARI ( / 0 &/ REVENUE BY : SHRI Y.P. VERMA 2 / %3'/ DATE OF HEARING : 8 TH NOVEMBER, 2012 456 / %3'/ DATE OF PRONOUNCEMENT : 07-12-2012 &7 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THESE TWO APPEALS BY THE ASSESSEES FOR THE ASSESSMENT YEAR 2005-2006 ARE DIRECTED AGAINST ITA NO.1392 AND 1393/AHD/2009 -2 THE ORDER OF THE CIT(A)-II, SURAT. THESE ARE BEI NG DISPOSED OF WITH THIS CONSOLIDATED ORDER. ITA NO.1392/AHD/2009 2. THE ONLY EFFECTIVE GROUND OF THE ASSESSEES APP EAL IS AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN CONFIRMING ADDITION OF RS.4,12,238/- WHEN THERE WAS NO SUCH DEFICIT AND WAS EXPLAINED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAS SHOWN A BETTER GROSS PROFIT RATE DURING THE REL EVANT PERIOD AT 13.2% AS AGAINST 7.4% OF THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. HE SUBMITTED THAT THE TECHNICAL SHORTFALL IN THE M ONTH-WISE PURCHASE AND SALE STATEMENT OF CLOTH IN THE MONTH OF SEPTEM BER, 2004 TO DECEMBER, 2004 WERE EXPLAINED BY THE ASSESSEE BY CL AIMING THAT THE SALES MADE IN THE MONTH OF SEPTEMBER, 2004 WERE IN FACT DELIVERED BY ISSUE OF CHALLANS IN THE MONTH OF JANUARY, 2005. H E SUBMITTED THAT THE AO SHOULD HAVE MADE FURTHER VERIFICATION OF THE CLA IM OF THE ASSESSEE INSTEAD OF MAKING THE ADDITION OF RS.4,12,238/-. 4. THE LEARNED DR HAS OPPOSED THE SUBMISSIONS OF TH E LEARNED COUNSEL OF THE ASSESSEE. HE SUBMITTED THAT THE ON US WAS ON THE ASSESSEE TO PROVE THE DISCREPANCY IN THE MONTH-WISE PURCHASE AND SALE STATEMENT OF CLOTH. HE REFERRED TO THE RELEVANT PA RAS OF THE ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE. HE RE LIED ON THE ORDER OF THE AO AND THE CIT(A). 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE ASSESSEE H AS CLAIMED THAT THE TECHNICAL SHORTFALL IN THE MONTHWISE PURCHASE A ND SALE OF CLOTH ITA NO.1392 AND 1393/AHD/2009 -3 STATEMENT IN THE MONTH OF SEPTEMBER, 2004 TO DECEMB ER, 2004 IS DUE TO SALE OF GOODS IN THE MONTH OF SEPTEMBER, 2004, O F WHOM, CHALLANS WERE ISSUED IN THE MONTH OF JANUARY, 2005. WE FIND THAT THE FULL VERIFICATION OF THE CLAIM MADE BY THE ASSESSEE WAS NOT MADE BY THE REVENUE AUTHORITIES. THE LEARNED COUNSEL FOR THE A SSESSEE BEFORE US HAS SUBMITTED THAT DUE TO SMALLNESS OF THE ADDITION MADE BY THE AO, IT MAY NOT BE EXPEDIENT TO RESTORE THE ISSUE TO THE FI LE OF THE AO FOR FURTHER VERIFICATION IN THE MATTER, AS THE RELEVANT ASSESSMENT IS AS OLD AS A.Y.2005-2006. WE FIND THAT NEITHER THE REVENUE HAS MADE FULL VERIFICATION REGARDING THE CLAIM OF THE ASSESSEE NO R THE ASSESSEE HAS DISCHARGED ITS ONUS OF PROVING THE GENUINENESS OF I TS EXPLANATION FULLY. IN THESE FACTS OF THE CASE, WE ARE OF THE V IEW THAT THE ENDS OF THE JUSTICE SHALL BE MADE IF TRADING ADDITION BY REJECT ING THE BOOKS OF THE ASSESSEE IS RESTRICTED AT RS.2 LAKHS AS AGAINST THE ADDITION OF RS.4,12,238/- SUSTAINED BY THE CIT(A), AND ACCORDIN GLY THE GROUND OF THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO.1393/AHD/2009 6. THE GROUND NO.1 OF THE ASSESSEES APPEAL IS AS U NDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN CONFIRMING IS ALLOWANCE OF INTEREST OF RS. 58,301/- 7. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT NO CASE OF DISALLOWANCE OF INTEREST OF RS.58,301/- COULD BE MA DE OUT BY THE DEPARTMENT AS THE FACT REMAINS THAT THE ASSESSEE HA S CHARGED INTEREST AT THE RATE OF 12% ON ITS ADVANCES AND WAS PAYING A LE SSER RATE OF INTEREST AT 8.5% ON ITS BORROWINGS. THE ASSESSEE HAS FILED SUPPORTING ITA NO.1392 AND 1393/AHD/2009 -4 EVIDENCES IN THE FORM OF ADDITIONAL EVIDENCE BEFORE THE TRIBUNAL. THE LEARNED DR HAS RELIED ON THE ORDERS OF THE AO AND T HE CIT(A). 8. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE PE RUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE ASSESSEE HAS FILED BEFORE US THE CERTIFICATE OF INDIAN OVERSEAS BANK D ATED 24-4-2009 CERTIFYING THAT THEY HAVE CHARGED INTEREST AT THE R ATE OF 8.5% FROM THE ASSESSEE. COPIES OF THE ACCOUNTS OF THE PARTIES HA VE BEEN FILED SHOWING THAT THE ASSESSEE HAS CHARGED INTEREST AT 1 2% P.A. ON ITS ADVANCES. IN THESE FACTS OF THE CASE, WE ARE OF TH E VIEW THAT NO CASE FOR DISALLOWANCE OUT OF INTEREST COULD BE MADE OUT BY THE DEPARTMENT, AND ACCORDINGLY THE DISALLOWANCE OF RS.58,301/- IS DELETED AND THE GROUND NO.1 OF THE ASSESSEE IS ALLOWED. 9. THE GROUND NO.2 OF THE ASSESSEE IS AS UNDER: 2. THE LD.CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF RS.6,390/- OUT OF TELEPHONE EXPENSES WHEN LOOKING A T THE SIZE OF THE BUSINESS, THE EXPENDITURE WAS INCURRED FOR THE PURPOSE OF THE BUSINESS. 10. THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT PR ESSED THIS GROUND OF THE ASSESSEE, WHICH IS ACCORDINGLY DISMISSED. 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE S ARE PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %& %& %& %& / TEJ RAM MEENA) &' ( &' ( &' ( &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT