Shri Lalchand B. Vasvani, Ahmedabad V. The ACIT., Circle-12, Ahmedabad

ITA 1490/AHD/2007

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57319 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 25-01-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 13-04-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: A C SHAH
• Keywords: Unexplained cash credit; Rejection of books of accounts; Gift; Question of law
• Section: 68; 145

Judgement Text

-1- IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI BHAVNESH SAINI - JM AND SHRI A K GARODIA - AM ITA NO.1490/AHD/2007 (ASSESSMENT YEAR:-2003-04) LALCHAND B VASVANI, PROP. GOPAL EMPORIUM, 107-108, GOPAL TOWER, MANINAGAR, AHMEDABAD- 380008 V/S THE ASSISTANT COMMISSIONER OF INCOME- TAX, CIRCLE-12, AHMEDABAD PAN: AAMPV 7549 R [APPELLANT] [RESPONDENT] ITA NO.1922/AHD/2007 (ASSESSMENT YEAR:-2003-04) THE ASSISTANT COMMISSIONER OF INCOME- TAX, CIRCLE-12, AHMEDABAD V/S LALCHAND B VASVANI, PROP. GOPAL EMPORIUM, 107-108, GOPAL TOWER, MANINAGAR, AHMEDABAD- 380008 [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI A C SHAH, AR REVENUE BY:- SHRI B L YADAV, DR DATE OF HEARING:- 25-01-2012 DATE OF PRONOUNCEMENT:- 23-03-2012 O R D E R PER A K GARODIA (AM) :- THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE WHICH ARE DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-XVIII, AHMEDABAD DATED 15-02-200 7 FOR ASSESSMENT YEAR 2003-04. THESE APPEALS WERE HEARD T OGETHER AND 2 2 ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER F OR THE SAKE OF CONVENIENCE. 2 GROUND NO.1 OF THE ASSESSEES APPEAL AND GROUND N O.2 OF THE REVENUES APPEAL ARE INTER-CONNECTED WHICH ARE AS UNDER:- BY ASSESSEE :- 1 THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDI TION TO THE EXTENT OF RS.6,17,000/- ON THE GROUND THAT THE SAME IS NOT EXPLAINED IN AS MUCH AS THE CONFIRMATION WITH ADDRE SS AND SOURCE HAVE BEEN FURNISHED IN CASE OF EACH DEPOSITO R TO THE AO. 1.1 THE ASSESSEE HAS DISCHARGED THE ONUS BY FURNISHING CONFIRMATION LETTERS STATING THEREIN THE SOURCE OF DEPOSIT MADE WITH THE ASSESSEE. IT IS THEREAFTER FOR THE AO TO D ISCHARGE HIS ONUS TO THE EFFECT THAT THE CONFIRMATION FILED WERE NOT PROPER. 1.2 THE CIT(A) SENT FOR A REMAND REPORT TO THE AO AND T HE AO EVEN DURING REMAND PROCEEDINGS DOES NOT DISPUTE THE CONFIRMATION. BY REVENUE :- 2 THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN DEL ETING THE ADDITION OF RS.9,14,918/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT. 3 THE BRIEF FACTS TILL THE ASSESSMENT STAGE ARE NOT ED BY THE LEARNED CIT(A) IN PARA-5 OF HIS ORDER, WHICH IS REP RODUCED BELOW:- 5 THE NEXT ISSUE AGITATED M THIS APPEAL IS ADDITIO N OF RS.15,3L,918/- AS UNEXPLAINED CASH CREDIT. THE APPE LLANT HAD ACCEPTED DEPOSITS / LOANS FROM CERTAIN PERSONS. THE ASSESSIN G OFFICER REQUIRED THE APPELLANT TO FURNISH CONFIRMATIONS FROM ALL THE NEW DEPOSITORS. THE APPELLANT HAD FILED A LIST OF DEPOSITORS. THE AO FU RTHER OBSERVED THAT THE TAX AUDITOR VIDE COLUMN NO.24A(5) HAD STATED TH AT IT IS NOT POSSIBLE FOR ME TO VERIFY WHETHER LOANS OR DEPOSITS HAVE BEEN TAKEN OR ACCEPTED OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE, OR ACCOUNT PAYEE 3 3 BANK DRAFT AS THE NECESSARY EVIDENCE WAS NOT IN POS SESSION OF THE ASSESSEE. SIMILAR REMARKS WERE GIVEN BY TAX AUDITOR IN COLUMN NO. 24B(4) REGARDING REPAYMENT OF LOANS/DEPOSITS. AS PE R LETTER DATED 07- 12-2002 APPELLANT WAS SPECIFICALLY ASKED TO FURNISH ADDRESSES OF THE PERSONS FROM WHOM DEPOSITS WERE TAKEN. THOUGH THE A PPELLANT HAD PROMISED TO FURNISH RELEVANT INFORMATION BEFORE 3/1 /2003 THE DETAILS WERE NOT FURNISHED. THE ASSESSING OFFICER POINTED O UT THAT EVEN THOUGH THE APPELLANT WAS SPECIFICALLY REQUESTED TO FURNISH THE CONFIRMATIONS OF ALL THE NEW DEPOSITORS GIVING THEI R NAMES AND ADDRESSES MODE OF PAYMENT AND THEIR CAPACITY TO LEN D MONEY. NO SUCH DETAILS WERE PRODUCED FOR VERIFICATION. ACCORDINGLY HE TREATED THE CREDIT AMOUNTING TO RS.15,31,919/- AS UNEXPLAINED A ND ASSESSED THE SAME AS INCOME U/S 68 OF THE I.T. ACT. 4 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A), WHO HAS ALLOWED RELIEF T O THE ASSESSEE OF RS.9,14,918/- AND CONFIRMED THE BALANCE ADDITION OF RS.6,17,000/-. NOW THE REVENUE IS IN APPEAL BEFORE US FOR THE RELIEF ALLOWED BY THE LEARNED CIT(A) AND THE ASSESS EE IS IN APPEAL FOR THE PART ADDITION CONFIRMED BY THE LEARNED CIT( A). 5 IT WAS SUBMITTED BY THE LEARNED AR OF THE ASSESSE E THAT CONFIRMATIONS WERE FURNISHED FROM ALL THE CREDITORS AND MAJORITY OF THE DEPOSITORS WERE HOLDING PA NUMBERS AND THERE FORE THE ADDITION MADE BY THE AO IS NOT JUSTIFIED. HE PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN T HE CASE OF CIT VS. ROHINI BUILDERS 256 ITR 360 (GUJ). 6 THE LEARNED DR SUPPORTED THE ASSESSMENT ORDER. HE ALSO SUBMITTED THAT ONLY CONFIRMATIONS ARE GIVEN AND THE RE IS NO PROOF REGARDING IDENTITY AND CREDITWORTHINESS OF THE DEPO SITORS AND THEREFORE THE ASSESSMENT ORDER ON THIS ISSUE SHOULD BE CONFIRMED. 4 4 7 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE JUDGMENT CITED BY THE LEARNED AR OF THE ASSESSEE. WE FIND THAT ON PAGES 9 AND 10 OF THE PAPER BOOK ARE THE DETAILS OF VARIOUS UNSECURED LOANS TAKEN BY THE ASSESSEE IN THE PRESENT YEAR. OUT OF THIS, FOR MANY CREDITOR S, EVEN PA NUMBERS ARE NOT MENTIONED. IN ADDITION TO THE CONFI RMATIONS, THE ASSESSEE HAS NOT FURNISHED ANY OTHER DOCUMENT IN SU PPORT OF THE IDENTITY OF CREDITORS OR THEIR CREDITWORTHINESS. UN DER THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS NOT DISCHARGED HIS ONUS OF ESTABLISHING THE THREE INGRE DIENTS OF SECTION 68 OF THE ACT I.E. IDENTITY AND CREDITWORTH INESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS. THER EFORE, THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DELETING PART A DDITION. REGARDING THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF ROHINI BUILDERS (SUPRA), WE FIND THAT THIS JUDGMENT IS NOT OF HELP TO THE ASSESSEE IN THE PRES ENT CASE BECAUSE THE FACTS ARE DIFFERENT. IN THAT CASE, IT I S NOTED BY THE TRIBUNAL THAT THE AO HAS RECORDED THE STATEMENTS OF SIX CREDITORS OUT OF TOTAL 21 CREDITORS AND THE ASSESSEE HAS FURN ISHED THEIR COMPLETE ADDRESSES ALONG WITH GIR / PA NUMBERS AS W ELL AS CONFIRMATIONS ALONG WITH THE COPIES OF ASSESSMENT O RDERS PASSED IN THE CASES OF SOME CREDITORS AND IN THE REMAINING CASES, WHERE THE ASSESSMENT ORDERS WERE NOT READILY AVAILABLE, T HE ASSESSEE HAS FURNISHED THE COPIES OF RETURNS FILED BY THE CREDIT ORS. ON THE BASIS OF THESE DOCUMENTS, IT WAS HELD BY THE TRIBUN AL IN THAT CASE THAT THE ASSESSEE HAD ESTABLISHED THE IDENTITY AND 5 5 CREDITWORTHINESS OF THE CREDITORS AND THAT DECISION OF THE TRIBUNAL IN THAT CASE WAS UPHELD BY THE HONBLE HIG H COURT BY HOLDING THAT NO SUBSTANTIAL QUESTION OF LAW ARISES. IN THE PRESENT CASE, THE ASSESSEE HAS MERELY FURNISHED CONFIRMATIO NS AND IN SOME OF THE CONFIRMATIONS, NO PA NUMBERS ARE MENTIO NED. THE ASSESSEE HAS NOT FURNISHED THE COPIES OF ASSESSMENT ORDERS OF CREDITORS OR INCOME-TAX RETURNS FILED BY THEM WITH THEIR STATEMENT OF INCOME / BALANCE SHEETS. HENCE THIS JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IS NOT OF HELP TO THE ASSESSEE I N THE PRESENT CASE. SINCE THE ASSESSEE COULD NOT ESTABLISH THE ID ENTITY AND CREDITWORTHINESS OF THE CREDITORS, WE ARE OF THE CO NSIDERED OPINION THAT THE ADDITION MADE BY THE AO U/S 68 IS JUSTIFIED IN THE FACTS OF THE PRESENT CASE. HENCE GROUND NO.1 OF THE ASSESSEES APPEAL IS REJECTED WHEREAS GROUND NO.2 OF THE REVEN UES APPEAL IS ALLOWED. 8 GROUND NO.2 OF THE ASSESSEES APPEAL READS AS UND ER:- 2 THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.5,00,000/- BEING THE GIFT RECEIVED ON THE GROUND THAT THERE IS NO RELATION IN AS MUCH AS THE CONFIRMATION OF THE DONO R AND THE GIFT DEED WERE FURNISHED AND THAT THERE NEED NOT BE ANY RELAT IONS BETWEEN DONOR AND DONEE AND THAT THE QUESTION OF HUMAN PROBABILIT Y DOES NOT ARISE ON THE FACTS OF THE CASE. 9 THE BRIEF FACTS TILL THE ASSESSMENT STAGE ARE NOT ED BY THE LEARNED CIT(A) IN PARA-6 OF HIS ORDER WHICH IS REPR ODUCED BELOW:- 6 AS PER GROUND NO.5 APPELLANT OBJECTED TO THE AD DITION OF RS.5,00,000/- BEING GIFT TREATED AS UNEXPLAINED CRE DIT. AO HAS DISCUSSED THE ISSUE IN PARA 8 OF THE ASSESSMENT ORD ER. APPELLANT HAD CREDITED A SUM OF RS.5,00,000/- IN HIS CAPITAL ACCO UNT AND CLAIMED THAT 6 6 THE SAME WAS RECEIVED AS GIFT. AO REQUIRED THE ASSE SSEE TO FURNISH EXPLANATION AND EVIDENCES TO PROVE THE GENUINENESS OF THE CLAIM OF GIFT. APPELLANT AS PER LETTER DATED 13-3-2006 STATE D THAT THE GIFT WAS RECEIVED FROM J.S. THAKKAR AND A COPY OF THE GIFT D ECLARATION WAS FURNISHED. AO OBSERVED THAT THE GIFT DEED WAS WRITT EN IN STAMP PAPER OF RS.20/- BY ONE LADY BY NAME JYOTI SUNILBHAI THAK KAR AND EXECUTED ON 17-3-2003 ON STAMP PAPER PURCHASED ON THE SAME D AY IT WAS WRITTEN IN THE DECLARATION THAT THE APPELLANT WAS H ER CLOSE FRIEND AND THE GIFT WAS MADE OUT OF SYMPATHY AND NATURAL LOVE. APPELLANT DID NOT EXPLAIN WHETHER SHE WAS RELATED TO HIM AO OBSERVED THAT DONOR WAS NOT RELATED TO APPELLANT AS SHE HAPPENED TO BE THAK KAR BY CASTE AND HE IS A SINDHI. THE DECLARATION WAS HELD TO BE NOT REL IABLE AND ACCORDINGLY THE AMOUNTS OF RS.5 LAKHS WAS TREATED A S UNEXPLAINED CREDIT AND ASSESSED AS INCOME U/S 68 OF IT ACT. 10 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) BUT WITHOUT SUCCESS AND N OW THE ASSESSEE IS IN APPEAL BEFORE US. IT WAS SUBMITTED BY THE LEARNED AR OF THE ASSESSEE THAT THE GIFT WAS GENUINE AS THE SAME WAS SUPPORTED BY THE GIFT DEED AND THERE IS NO REQUIREM ENT OF LAW THAT GIFT CAN BE MADE ONLY BY A RELATIVE. HE ALSO SUBMIT TED THAT THE COPY OF RETURN FILED BY THE DONOR IS ALSO FILED BEF ORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR EST ABLISHING THE GENUINENESS OF THE GIFT. IT WAS ALSO SUBMITTED THAT AT PAGE NOS.77 TO 83 OF PAPER BOOK IS THE COPY OF GIFT DEED AND IN COME-TAX RETURN OF THE DONOR. HE ALSO SUBMITTED THAT AS PER THE BALANCE SHEET OF THE DONOR AS ON 31-03-2002, APPEARING AT P AGE-83 OF THE PAPER BOOK, THE DONOR WAS HAVING CAPITAL OF RS.10.3 5 LACS. RELIANCE WAS PLACED ON THE FOLLOWING JUDGMENTS:- (I) CIT VS. ASHA HAMPANNAVAR [S.L.P. (CIVIL) NO.16370 OF 2009) 319 ITR 5 (ST) 7 7 (II) MURLIDHAR LAHORIMAL VS. CIT (2006) 280 ITR 512 (GUJ) 11 IN REPLY, THE LEARNED DR ON BEHALF OF THE REVENU E SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. IT WA S ALSO SUBMITTED THAT THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT CITED BY THE LEARNED AR IS NOT APPLICABLE BECAUSE T HE FACTS ARE DIFFERENT. HE SUBMITTED THAT IN THAT CASE, THE DONO R APPEARED BEFORE THE AO AND THEREFORE, THE GENUINENESS OF THE TRANSACTION WAS ESTABLISHED. 12 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND THE JUDGMENTS CITED BY THE LE ARNED AR OF THE ASSESSEE. WE FIND THAT BOTH THE JUDGMENTS CITED BY THE LEARNED AR ARE NOT APPLICABLE IN THE PRESENT CASE. AS PER THE JUDGMENT OF THE HONBLE APEX COURT CITED BY THE LEA RNED AR, IT IS NOTED BY THE TRIBUNAL IN THAT CASE THAT THE COND ITIONS OF GENUINE GIFT WERE FULFILLED BY THE ASSESSEE. SIMILA RLY IN THE CASE OF MURLIDHAR LAHORIMAL (SUPRA) ALSO, THE DONOR APPE ARED BEFORE THE AO AND THEREBY GENUINENESS OF THE GIFT WAS ESTA BLISHED. IN THE PRESENT CASE, THERE IS NEITHER ANY RELATIONSHIP BETWEEN DONOR AND DONEE NOR ANY OCCASION OF GIFT AND DONOR HAS NO T APPEARED BEFORE THE AO. THEREFORE, AS PER THE THEORY OF PRE PONDERANCE OF PROBABILITIES, GIFT CANNOT BE ACCEPTED AS GENUINE B ECAUSE NO PERSON WILL GIFT 50% OF HIS CAPITAL TO A PERSON WIT H WHOM HE HAS NO RELATIONSHIP WHETHER BLOOD RELATION OR FRIENDSHI P AND THEREFORE WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE. ACCORDINGLY, GROUND NO.2 OF THE ASSE SSEES APPEAL IS REJECTED. 8 8 13 GROUND NOS.3 AND 4 IN THE ASSESSEES APPEAL ARE AS UNDER:- 3 THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS.10,000 OUT OF ADVERTISEMENT EXPENSES I N AS MUCH AS THE SAID EXPENDITURE IS WHOLLY AND EXCLUSIVELY LAID OUT FOR THE PURPOSE OF BUSINESS. 4 THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE A DDITION OF RS.5,360 BEING 10% OF TEA, COFFEE, VEHICLE, PETROL ETC. EXPENSES IN AS MUCH AS THE SAID EXPENSES HAS BEEN LAID OUT EXCLUSI VELY FOR THE PURPOSES OF BUSINESS. 14 IT WAS SUBMITTED BY THE LEARNED AR OF THE ASSESS EE THAT THESE ARE ADHOC DISALLOWANCES AND THEREFORE, SHOULD BE DELETED. THE LEARNED DR ON BEHALF OF THE REVENUE SUPPORTED T HE ORDERS OF THE AUTHORITIES. 15 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT OUT OF TOTAL ADVERT ISEMENT EXPENSES OF RS.2,47,493/- AS AGAINST RS.93,085/- IN THE IMMEDIATELY PRECEDING YEAR, THE AO MADE DISALLOWANC E OF 25% OF SUCH EXPENSES WHICH HAD BEEN RESTRICTED BY THE L EARNED CIT(A) TO ONLY RS.10,000/-. IN ADDITION TO THIS, TH E AMOUNT OF TOTAL EXPENSES WAS OF RS.53,598/- ON ACCOUNT OF TEA , COFFEE, VEHICLE AND PETROL EXPENSES AND THE AO DISALLOWED 1 0% ON THIS BASIS THAT FULL DETAILS WERE NOT FURNISHED. CONSIDE RING THE FACTS OF THE PRESENT CASE, WE FEEL NO NEED TO INTERFERE IN T HE ORDER OF THE LEARNED CIT(A). GROUND NOS.3 AND 4 OF THE ASSESSEE S APPEAL ARE ALSO REJECTED. 9 9 16 NOW, WE TAKE UP GROUND NO.1 OF THE REVENUES APP EAL, WHICH IS REPRODUCED BELOW:- 1 THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION OF RS.3,64,680/- MADE BY THE AO ON ACCOUNT OF SHORTFALL IN G.P. 17 THE BRIEF FACTS OF THE CASE STILL THE STAGE OF A SSESSMENT ARE NOTED BY THE LEARNED CIT(A) IN PARA-4 OF HIS ORDER, WHICH IS REPRODUCED BELOW:- 4 AS PER GROUND NO.3 & 4 THE APPELLANT OBJECTED TO THE ADDITION OF RS.3,64,680/- THE ASSESSING OFFICER OBSERVED THA T THE GROSS PROFIT ADMITTED DURING THE YEAR WAS LOW. IT WAS ALSO OBSER VED THAT THE AUDITOR IN THE TAX AUDIT REPORT IN FORM NO.3CD HAD STATED THAT THE APPELLANT DI NOT MAINTAIN DAY TO DAY STOCK RECORDS. ACCORDING TO HIM WITHOUT ASCERTAINING THE CORRECT OPENING STOCK AND CLOSING STOCK NO CORRECT PROFIT COULD BE DERIVED FROM ACCOUNTS. THE APPELLANT WAS REQUESTED TO EXPLAIN THE POSITION REGARDING THE COR RECTNESS OF THE GROSS PROFIT ADMITTED. THE AO FOUND THE REPLY TO BE NOT SATISFACTORY. HE STATED THAT IN THE TYPE OF BUSINESS TRADING OF G ARMENTS ON RETAIL BASIS THE GROSS PROFIT SHOULD HAVE BEEN MORE THAN 4 0% AND IN THE ABSENCE OF DAY TO DAY STOCK RECORDS, THE AO RESORTE D TO PROVISIONS OF SECTION 145 OF THE IT ACT AND REJECTED THE BOOKS OF ACCOUNTS. THE GROSS PROFIT WAS ESTIMATED AT 30% ON SALES. THE DIF FERENCE BETWEEN THE ESTIMATED GROSS PROFIT AND GROSS PROFIT ADMITTE D AMOUNTING TO RS.3,64,680/- WAS ADDED TO THE INCOME. 18 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) WHO HAS DELETED THE ADDIT ION AND NOW THE REVENUE IS IN APPEAL BEFORE US. THE LEARNED DR ON BEHALF OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE LEARN ED CIT(A). 19 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THIS IS NOTED BY TH E LEARNED 10 10 CIT(A) IN HIS ORDER THAT GROSS PROFIT OF 17.98% WAS ACCEPTED BY THE DEPARTMENT IN AY 1998-99. WE ALSO FIND THAT IN THE IMMEDIATELY PRECEDING YEAR I.E. IN AY 2002-03, GP D ECLARED BY THE ASSESSEE WAS 20.08% WHEREAS IN THE PRESENT YEAR , THE GP DECLARED BY THE ASSESSEE IS 20.06% (BY IGNORING UND ISCLOSED STOCK) AS HAS BEEN NOTED BY THE LEARNED CIT(A) AT P AGE 5 OF HIS ORDER. UNDER THESE FACTS, WE FEEL THAT NO INTERFERE NCE IS CALLED FOR IN THE ORDER OF THE LEARNED CIT(A) BECAUSE THE GP D ECLARED BY THE ASSESSEE IS AT PAR WITH THE PRECEDING YEAR AND IS MORE THAN THE GP DECLARED IN AY 2001-02 AND AY 1998-99. HENCE , THIS GROUND OF THE REVENUE IS REJECTED. 20 GROUND NO.3 OF THE REVENUES APPEAL IS AS UNDER: - 3 THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN DELETING THE DISALLOWANCE MADE BY THE AO IN RESPECT OF ADVERTISE MENT EXPENSES OF RS.51,870/-. 21 THE LEARNED DR ON BEHALF OF THE REVENUE SUPPORTE D THE ASSESSMENT ORDER WHEREAS THE LEARNED AR OF THE ASSE SSEE SUPPORTED THE ORDER OF THE LEARNED CIT(A). 22 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT IT IS NOTED BY THE LEARNED CIT(A) IN PARA 7.2 OF HIS ORDER THAT MOST OF THE EXPENSES RELATED TO THE ADVERTISEMENT GIVEN TO NEWS-PAPERS AND OTHER PUBLIC ATIONS. IT IS ALSO NOTED BY HIM THAT THERE ARE SOME EXPENSES INCU RRED FOR DISTRIBUTION OF DIARIES AND OTHER COMPLIMENTS AND H E HAS CONFIRMED THE DISALLOWANCE OUT OF ADVERTISEMENT EXP ENSES TO THE 11 11 EXTENT OF RS.10,000/- BY HOLDING THAT THE DISALLOWA NCE MADE BY THE AO AT THE RATE OF 25% IS UNREASONABLY HIGH. CON SIDERING THE FACTS OF THE PRESENT CASE, WE FEEL THAT THE DISALLO WANCE UPHELD BY THE LEARNED CIT(A) IS REASONABLE AND THEREFORE, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LEARNED CIT(A). GROU ND NO.3 OF THE REVENUES APPEAL IS REJECTED. 23 IN THE RESULT, THE APPEAL OF THE ASSESSEE AS WEL L AS REVENUE BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 23-03-2012 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (A K GARODIA) ACCOUNTANT MEMBER DATE : 23-03-2012 COPY OF THE ORDER FORWARDED TO: 1. LALCHAND B VASVANI, PROP. GOPAL EMPORIUM, 107-10 8, GOPAL TOWER, MANINAGAR, AHMEDABAD-380008 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -12, AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XVIII, AHMEDABAD 5. DR, ITAT, AHMEDABAD BENCH-D, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD