Shri Vishal Madhusudan Chokshi, Ahmedabad V. The ACIT,(OSD), Cir.9, Ahmedabad

ITA 1437/AHD/2013

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2716 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 27-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 15-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA; MEHUL TALERA ARS
• Keywords: Gross profit estimation; Rejection of books of accounts; Depreciation; Principle of natural justice; Capital receipt
• Section: 143(3); 133A; 145

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL , D BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV , JUDICIAL MEMBER AND SHRI WASEEM AHMED , ACCOUNTANT MEMBER ./ ITA NO . 1437/AHD/2013 / ASSTT. YEAR : 2009 - 2010 SHRI VISHAL MADHUSUDAN CHOKSHI , PROP. SHREENATH TRANSPORT , 3 - A, SARVODAYA SOC. JAWAHAR CHOWK , MANINAGAR , AHMEDABAD - 380008. PAN: AAYPC9709J VS . A.C.I.T , (OSD), CIR.9 , AHMEDABAD . (APPLICANT) ( RESPON D ENT ) ASSESSEE BY : SHRI S.N. DIVETIA AND SHRI MEHUL TALERA , A.R S REVENUE BY : SHRI PRAVEEN KUMAR, SR.D.R / DATE OF HEARING : 23 / 01 / 201 9 / DATE OF PRONOUNCEMENT: 20 /02 /2 01 9 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) - 10 , AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO. CI T(A) - XV/ACIT/CIR - 9/431/11 - 12 , DATED 20 / 02 / 2013 ARISING IN THE MATTER OF ASSE SSMENT ORDER PASSED UNDER SECTI ON 143(3) OF THE INCOME TAX ACT, 1961 ( HERE - IN - AFTER REFERRED TO AS 'THE ACT') DATED 19/12 /201 1 RELEVANT TO ASSESSMENT YEAR (AY) 2009 - 10 . ITA NO.1437/AHD/2013 ASSTT. YEAR 2009 - 10 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1.1 THE ORDER PASSED U/S.250 ON 20.2.2013 FOR A.Y. 2009 - 10 BY CIT(A) - XV, ABAD PARTLY CONFIRMING THE ADDITION IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR FACTS IN NOT CONSIDERI NG FULLY AND PROPERLY THE EXPLANATION FURNISHED AND EVIDENCE PRODUCED BY THE APPELLANT. 2.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN UPHOLDING THE REJECTION OF BOOK RESULTS DISCLOSED BY THE APPELLANT, THOUGH THE CONDITIONS PROVIDED U/S. 145 WERE NOT FULFILLED . THE ID. CIT(A) HAS FAILED TO APPRECIATE THAT THE AO HAD NOT REJECTED THE BOOK RESULT SHOWN BY THE APPELLANT AND HENCE, THE ACTION ON PAR T OF CIT(A) WAS PRIMA FACIE ILLEGAL, AND UNLAWFUL. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) OUGHT NOT TO HAVE UPHELD THE REJECTION OF BOOK RESULTS DISCLOSED BY THE APPELLANT. 3.1 THE LD. CIT(A) HAS G RIEVOUSLY ERRED IN LAW AND ON FACTS IN ESTIMATING GP AT 22% AND THEREBY MAKING AN ADDITION OF RS. 66,08,953 AS AGAINST BOOK LOSS OF RS.42,26,870 DECLARED BY THE APPELLANT. THE ENHANCEMENT OF INCOME SO MADE BY CIT(A) WAS WHOLLY ILLEGAL, UNLAWFUL AND AGAINS T THE PRINCIPLES OF NATURAL JUSTICE. 3.2 WITHOUT PREJUDICE TO ABOVE AND IN THE ALTERNATIVE, THE ESTIMATION OF GP AND CONSEQUENTIAL ADDITION MADE BY CIT(A) WERE HIGHLY EXCESSIVE AND CALLS FOR SUBSTANTIAL REDUCTION . 4.1 THE LD. CIT(A) HAS GRIEV OUSLY ERRED IN LAW AND/OR ON FACTS IN CONFIRMING THE DISALLOWANCE OF RS . THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) OUGHT NOT TO HAVE CONFIRMED THE DISALLOWANCE OF RS.18,000 U/S.40(A)( IA ). 3 . AT THE OUTSET THE LD. COUNSEL FOR THE ASSESSEE BEFORE US SUBMITTED THAT HE HA D BEEN INSTRUCTED BY THE ASSESSEE NOT TO PRESS THE CONFIRMATION OF THE ADDITION MADE BY THE LD.CIT (A) FOR RS. 18,000/ - THEREFORE, WE DISMISS THE SAME AS NOT PRESSED. ITA NO.1437/AHD/2013 ASSTT. YEAR 2009 - 10 3 4 . THE ONLY ISSUE RAISED BY THE ASSESSEE AGAINST THE CONFIRMATION OF THE ADDITION MADE BY THE AO FOR RS. 66,08,953/ - ON ACCOUNT OF UNDISCLOSED RECEIPTS. 5 . THE FACTS OF THE CASE ARE THAT THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL AND ENGAGED IN THE BU SINESS OF TRANSPORTATION UNDER THE NAME AND STYLE M/S SHREENATH TRANSPORT COMPANY . THE ASSESSEE IN THE YEAR UNDER CONSIDERATION ASSESSEE HAS FILED THE RETURN OF INCOME DE CLARING LOSS OF RS. 53,28,582/ - ONLY. 6 . T HE AO DURING THE ASSESSMENT PROCEEDINGS FOUND THAT THE ASSESSEE DURING SURVEY PROCEEDINGS UNDER SECTION 133A OF THE ACT HA S ADMITTED THE UNACCOUNTED RECEIPT OF RS. 25 LACS FROM ITS PROPRIETARY CONCERN AND UNACCOUNTED RECEIPT OF RS. 66.97 LACS ON ACCOUNT OF SALE OF THE TRUCK AGGREGATING TO RS. 91 .97 LACS ONLY . BUT THE ASSESSEE FILED THE RETURN OF INCOME DECLARING LOSS. ACCORDINGLY , THE AO REJECTED THE LOSS CLAIMED BY THE ASSESSEE AND ASSESSED THE INCOME AT RS. 91.97 LACS TREATING THE A MOUNT DESCRIBED ABOVE AS UNDISCLOSED INCOME OF THE ASSESSEE. 7 . THE ASSESSEE CARRIED THE MATTER TO THE LD.CIT (A) WHO REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND ESTIMATED THE GROSS PROFIT AT THE RATE OF 22% OF THE GROSS RECEIPTS. ACCORDINGLY, T HE TOTAL INCOME WAS DETERMINED BY THE LD.CIT (A) I N THE MANNER RE PRODUCED AS UNDER: 2,61,14,000 ADD: OTHER INCOME (SCHEDULE 10) PROFIT ON SALE OF FIXED ASSET PROFIT ON SALE OF FIXED 26,59,824 54,51,145 ITA NO.1437/AHD/2013 ASSTT. YEAR 2009 - 10 4 ASSET DECLARED 66,97,000 1,21,48,145 3,82,62,145 LESS; ADMINISTRATIVE EXP . (SCHEDULE 12) INTEREST & FINANCE CHARGES (SCHEDULE 13) 41,03,371 1,22,62,720 1,63,66,091 2,18,96,054 LESS: DEPRECIATION AS PER BOOKS OF ACCOUNTS PROFIT FROM THE PROPRIET A RY CONCERN M/S SHREENATH TRANSPORT CO. 1,95,13,971 23,82,083 6.2 (C) (VI) IN CONCLUSION, THE A.O S TREATMENT OF DISCLOSURE OF RS.91.97 LAKH IS NOT CORRECT AS INCOME FROM OTHER SOURCES . AT THIS PLACE, THE A.O S CONTENTION FOR REJECTION OF BOOKS OF ACCOUNTS ARE UPHELD AND THROUGH GROSS PROFIT ESTIMATION, THE INCOME FROM APPELLA NT S PROP. BUSINESS M/S SHREENATH TRANSPORT CORPORATION UNDER THE HEAD PROFIT & GAINS FROM BUSINESS & PROFESSION WAS COMPUTED AT RS.10,09,752/ - . THIS WORKING IS WITH THE ASSUMPTION THAT APPELLANT S DISCLOSURE OF UNACCOUNTED RECEIPT OF RS.25,00,000/ - IS A LREADY INCLUDED IN G.P. ESTIMATION SINCE THERE WAS NO CORRECTNESS OR COMPLEXNESS IN SUCH DISCLOSURE. FURTHER, WHILE COMPUTING THIS INCOME, THE APPELLANT WAS ALLOWED DEDUCTION OF DEPRECIATION AT RS.91,82,343/ - AS PER I.T. ACT WHICH INTER ALIA IS AFTER CONSI DERING THE EFFECT OF APPELLANT S DISCLOSURE OF RS.66.97 LAKH AS ON MONEY ON SALE OF TRUCK AS PER SECTION 50 OF THE I.T. ACT. THE GROUND IS THEREFORE PARTLY ALLOWED. 8 . BEING AGGRIEVED BY THE ORDER OF LD.CIT (A) ASSESSEE IS IN APPEAL BEFORE US . 9 . THE LD. AR BEFORE US FILED A PAPER BOOK RUNNING FROM PAGES 1 TO 90 AND SUBMITTED THAT THE RECEIPT ON ACCOUNT OF SALE OF TRUCKS C OULD NOT BE ADDED ITA NO.1437/AHD/2013 ASSTT. YEAR 2009 - 10 5 TO THE TOTAL INCOME OF THE ASSESSEE. IT IS BECAUSE THIS IS A CAPITAL RECEIPT WHICH NEEDS TO BE ADJUSTED AGAINS T THE WDV OF TRUCKS AS SHOWN IN THE BOOKS . AS SUCH THE AMOUNT OF RECEIPT FROM THE SALE OF TRUCKS NEEDS TO BE REDUCED FROM THE BLOCK OF ASSETS AS PER THE PROVISIONS OF SECTION 50 OF THE ACT . 10 . ON THE OTHER HAND THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF AUTHORITIES BELOW. 11 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE PRECEDING DISCUSSION , WE NOTE THAT THE ASSESSEE HAS NOT CHALLENGED THE REJECTION OF THE BOOKS OF ACCOUNTS . T HERE REMAINS NO AMBIGUITY THA T IN THE EVENT OF REJECTION OF THE BOOKS OF ACCOUNTS THE ONLY BASIS TO DETERMINE THE INCOME IS TO ESTIMATE THE PROFIT ON A REASONABLE BASIS . ACCORDINGLY THE LD.CIT (A) ESTIMATED THE GROSS PROFIT OF THE ASSESSEE AT THE RATE OF 22% OF THE SALE PROCEEDS OF RS. 11,87,38,319.00 AND WORKED OUT THE GROSS PROFIT AT RS. 2,61,14,000.00 ONLY AS DISCUSSED ABOVE . AS T HE ASSESSEE HAS NOT CHALLENGED THE GROSS PROFIT WOR KED OUT ABOV E , WE DRAW THE CONCLUSION THAT THE AMOUNT OF GROSS PROFIT WORKED OUT ABOVE HAS REACHED TO ITS FINALITY. 11 . 1 NOW THE AMOUNT OF GROSS PROFIT AS WORKED ABOVE NEEDS TO BE REDUCED FROM THE FOLLOWING ITEMS TO ARRIVE AT THE NET PROFIT: I. ADMINISTRAT IVE EXPENSES RS. 41,03,371.00 II. INTEREST & FINANCE CHARGES RS. 1,22,62,720.00 III. D EPRECIATION AS PER BOOKS RS. 1,95,13,971.00 TOTAL RS. 3,58,80,062.00 BALANCE NET PROFIT AS PER BOOKS RS. - 97,66,062.00 ITA NO.1437/AHD/2013 ASSTT. YEAR 2009 - 10 6 11 . 2 NOW THE ABOVE PROFIT AS PER BOOKS NEEDS TO BE ADJUSTED IN THE MANNER AS BELOW: NET PROFIT AS PER BOOKS RS. - 97,66,062.00 ADDITION: ADDITION AS PER COMPUTATION OF THE ASSESSEE RS. 2,03,78,776.00 1,06,12,714.00 SUBTRACTION: BANK INTEREST RS. 20,619.00 DEP AS INC O ME TAX RS. 91,82,343.00 92,02,962.00 BALANCE TAXABLE INCOME: 14,09,752.00 11 .3 FROM THE ABOVE, IT IS CLEAR THAT THERE WAS NO ADDITION MADE BY THE LD CIT(A) ON ACCOUNT OF RECEIPTS FROM THE SALE OF TRUCKS. THUS ONCE THERE WAS NO ADDITION MADE BY THE LD.CIT (A) ON ACCOUNT OF SALE OF TRUCKS AS INCOME OF THE ASSESSEE, THERE IS NO QUESTION OF REDUCING THE SAME FROM THE TAXABLE INCOME OF THE ASSESSEE. 11 .4 HOWEVER, WE NOTE THAT THE LD.CIT (A) HAS WORKED OUT TAXABLE INCOME AT RS. 10,09,752/ - AS EVIDENT FROM ITS FINDING PLACED ON PAGE 25 OF ITS ORDER. BUT AS PER OUR CALCULATION AS MENTIONED ABOVE THE TAXABLE INCOME WORKS OUT AT RS. 14,09,752/ - ONLY. THUS THE D IFFERENCE OF RS. 4 LACS IS ARISING ON ACCOUNT OF A CALCULATION ERROR IN THE ORDER OF THE LD.CIT (A). AS SUCH T HE LD.CIT (A) HAS MADE A CALCULATION ERROR INADVERTENTLY IN DETERMINING THE TAXABLE INCOME. THE RELEVANT FINDING OF THE LD.CIT (A) IS REPRODUCED A S UNDER: THE APPELLATE COMPUTED TOTAL LOSS FROM THE HEAD INCOME FROM BUSINESS AND 0 PROFESSION AT RS.51,99,201/ - THE SAME WILL THEREFORE BE REPLACED AT PROFIT OF RS.10,09,752/ - (66,08,953 51,99,201). FROM THE ABOVE , IT IS CLEAR THAT THE FIGURE OF TAXABLE INCOME WILL WORK OUT AT RS 14,09,752/ - AFTER REDUCING THE SUM OF RS. 51,99,201/ - FROM RS. ITA NO.1437/AHD/2013 ASSTT. YEAR 2009 - 10 7 66,08,953/ - ONLY . THUS, TAXABLE INCOME FROM THE BUSINESS OF THE ASSESSEE IS OF RS. 14,09,752/ - ONLY. 11 .5 ACCORDINGLY WE DISAGREE WITH THE ALLEGATION OF THE ASSESSEE THAT THERE IS THE ADDITION OF THE RECEIPTS OF RS . 66,97,000/ - ON ACCOUNT OF SALE OF TRUCKS. 11 .6 WE ALSO FIND PERTINENT TO MENTION THAT, THE LD.CIT (A) HAS FURTHER OMITTED TO MAKE THE ADDITION O F INCOME OF RS. 26,59,824/ - CLAIMED BY THE ASSESSEE AS OTHER INCOME. HOWEVER, WE FIND THAT THE REVENUE HAS NOT CHALLENGE D THE SAME BY FILING THE APPEAL BEFORE US . THEREFORE WE REFRAIN OURSELVES FROM ADJUDICATING THE SAME. 11 .7 IN VIEW OF THE ABOVE WE HOLD THAT THERE IS NO INFIRMITY IN THE ORDER OF THE LD.CIT (A). HENCE WE DECLINE TO INTERFERE IN THE ORDER OF THE LD.CIT (A). HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 12 . IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISSED. O RDER PRONOUNCED IN THE COURT ON 20 /02 / 2019 AT AHMEDABAD. - SD - - SD - ( RAJPAL YADAV ) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (TRUE COPY) A HMEDABAD; DATED 20 / 02 /2019 MANISH ITA NO.1437/AHD/2013 ASSTT. YEAR 2009 - 10 8 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , / DR, ITAT, 6. / GUARD FILE .