The ITO,Vapi Ward-4, Nani Daman V. Shri Upendrasingh S.Singh, Nani Daman

ITA 1583/AHD/2011

• Counselvise Citation: 158320514 RSA 2011
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 16-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 07-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Corroborative evidences
• Section: 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, AHMEDABAD BEFORE SHRI D.K.TYAGI, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.1583 / AHD/2011 (ASSESSMENT YEAR 2006-07) ITO, VAPI, WARD 4, DAMAN VS. SHRI UPENDRA SHRIRAMPATI SINGH, C/O PSL HOLDINGS P. LTD., KACHIGAM, NANI DAMAN PAN/GIR NO. : ARDPS3684G (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI VINOD TANWANI, SR. DR RESPONDENT BY: NONE DATE OF HEARING: 16.09.2011 DATE OF PRONOUNCEMENT: 23.09.2011 O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDE R OF CIT(A), VALDSAD DATED 29.01.2011 FOR THE ASSESSMENT YEAR 20 06-07. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O. TO ESTIMATE N.P.@ 2% ON RECEIPTS WITHOUT APPRECIATING THE FACTS THAT THE DI SALLOWANCE OF 10% OF EXPENSES WERE MADE FOR WANT OF VERIFICATION AND AFTER GIVING ENOUGH OPPORTUNITIES FOR PRODUCING THE VOUCHERS. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASID E AND THAT OF THE A.O. BE RESTORED. 3. THERE WAS A REQUEST FOR ADJOURNMENT BY THE ASSES SEE ON THIS BASIS THAT LD. A.R. OF THE ASSESSEE IS NOT IN A POSITION TO ATTEND THE HEARING ON 16.09.2011 BECAUSE HE IS HIGHLY OCCUPIED WITH PREPA RATION OF ADVANCE TAX CHALLANS AND AUDITING OF ACCOUNTS OF HIS CLIENT AND TO FILE INCOME TAX I.T.A.NO.1583 /AHD/2011 2 RETURNS FOR THE ASSESSMENT YEAR 2011-12 ON OR BEFOR E 30.09.2011. BUT THIS REQUEST FOR ADJOURNMENT WAS REJECTED BECAUSE T HE REASONS FOR SEEKING ADJOURNMENT ARE NOT CONVINCING AND ADEQUATE AND THE APPEAL OF THE REVENUE WAS HEARD EX-PARTE QUA THE ASSESSEE. 4. LD. D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. D.R., PERUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT IT IS NOTED BY THE A.O. IN PARA 3 OF T HE ASSESSMENT ORDER THAT THE ASSESSEE HAS CLAIMED RS.159.66 LACS TOWARDS EXP ENSES. HE ASKED THE ASSESSEE TO FURNISH DETAILS OF THESE EXPENSES ALONG WITH SUPPORTING VOUCHERS BUT THE ASSESSEE FAILED TO SUBMIT THE DETA ILS AND VOUCHERS FOR VERIFICATION AND HENCE, THE A.O. MADE DISALLOWANCE OF RS.15,96,662/- BEING 10% OF THESE EXPENSES. WHEN THE ASSESSEE CAR RIED THE MATTER IN APPEAL BEFORE LD. CIT(A), IT WAS HELD BY LD. CIT(A) THAT G.P. FOR PRECEDING TWO YEAS IS 1.78% FOR ASSESSMENT YEAR 200 5-06 AND 1.5% FOR THE ASSESSMENT YEAR 2006-07 AND 10% IS TOO HIGH MAR GIN IN THIS TYPE OF BUSINESS. REGARDING THIS OBSERVATION OF CIT(A), WE FEEL THAT THE SAME IS UNFOUNDED BECAUSE THE A.O. HAS NOT HELD THAT 10% OF THE TURNOVER OF THE ASSESSEE COMPANY SHOULD BE THE NET PROFIT OF THE AS SESSEE COMPANY. THE A.O. HAS SIMPLY MADE DISALLOWANCE OF 10% OF THE EXP ENSES CLAIMED BY THE ASSESSEE BECAUSE THE ASSESSEE COULD NOT FILE TH E DETAILS AND SUPPORTING EVIDENCE REGARDING THESE EXPENSES. IT WAS HELD BY THE LD. CIT(A) THAT ESTIMATION OF NET PROFIT @ 2% WILL MEET THE ENDS OF JUSTICE. WE FIND THAT IN PARA 2 OF HIS ORDER, IT IS NOTED BY THE LD. CIT( A) THAT IT WAS SUBMITTED BY THE ASSESSEE BEFORE HIM THAT TOTAL RECEIPT OF TH E ASSESSEE IN THE PRESENT YEAR WAS RS.159.56 LACS AND NET PROFIT WAS RS.2,48, 436/- AND HENCE, THE EXPENSES CLAIMED BY THE ASSESSEE IS ONLY RS.1,57,07 ,842/- AND NOT RS.1,59,66,278/-. SINCE THERE IS NO EXPLANATION BE FORE THE A.O. OR BEFORE THE CIT(A) ALSO AS TO WHY NO DETAILS OF EXPENSES OR ITS SUPPORTING WERE I.T.A.NO.1583 /AHD/2011 3 FURNISHED, WE FEEL THAT IT WAS NOT PROPER ON THE PA RT OF THE CIT(A) TO SIMPLY PROCEED ON THE BASIS OF ESTIMATION OF NET PR OFIT ON THE BASIS OF EARLIER TWO YEARS AND THAT TOO AT A VERY LOW RATE O F 2% OF THE TURNOVER. SINCE NO SUCH DETAILS OR EVIDENCES WERE FURNISHED B Y THE ASSESSEE BEFORE ANY OF THE AUTHORITIES BELOW, WE FEEL THAT NET PROF IT OF THE ASSESSEE SHOULD BE ESTIMATED @ 5% INSTEAD OF 2% BECAUSE ON SIMILAR BUSINESS OF THOSE ASSESSEES, WHO ARE HAVING TURNOVER OF UP TO RS.40 L ASS, INCOME OF THE ASSESSEE IS REQUIRED TO BE ASSESSED @ 8% OF TURNOVE R AS PER THE PROVISIONS OF SECTION 44AD. ALTHOUGH THE TURNOVER OF THE ASSE SSEE IS MORE THAN THIS AMOUNT AND HENCE, THE PROVISIONS OF SECTION 44AD AR E NOT APPLICABLE BUT IN THE FACTS OF THE PRESENT CASE, GUIDANCE CAN BE T AKEN FROM THE PROVISIONS OF THIS SECTION FOR THE PURPOSE OF DECIDING REASONA BLE NET PROFIT RATE SINCE THE ASSESSEE COULD NOT PRODUCE ANY DETAILS AND EVID ENCES REGARDING THE ENTIRE AMOUNT OF EXPENSES. IN THE FACTS OF THE PRE SENT CASE, WE FEEL THAT NET PROFIT RATE OF 5% WILL MEET THE ENDS OF JUSTICE . WE HOLD ACCORDINGLY. 6. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY A LLOWED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD SEP., 2011. SD./- SD./- (D.K. TYAGI) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED : 23.09.2011 SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD I.T.A.NO.1583 /AHD/2011 4 1. DATE OF DICTATION 20/9 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21/9 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 22/9 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 23/9 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.23/9 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 23/9/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..