The DCIT, Navsari Circle, Navsari V. Shri Jitendra Maganlal Shah, Navsari

ITA 1689/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94722 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 23-11-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 23-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANTOSH KARNANI
• Assessee Lawyers: S B VAIDYA
• Keywords: Business income
• Section: 133A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ./ ITA NO.1689/AHD/2011 / ASSESSMENT YEAR : 2006-2007 DY. COMMISSIONER OF INCOME-TAX, NAVSARI CIRCLE, NAVSARI VS SHRI JITENDRA MAGANLAL SHAH, OPP. RAILWAY GATE, BAZAR MAROLI, DIST. NAVSARI PAN : AFAPS 0793 K (APPELLANT) (RESPONDENT) BY APPELLANT : SHRI SANTOSH KARNANI, SR DR BY RESPONDENT : SHRI S. B. VAIDYA, AR / DATE OF HEARING : 23/11/2015 /DATE OF PRONOUNCEMENT: 24/11/2015 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER :- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), VALSA D DATED 17.02.2011 FOR ASSESSMENT YEAR 2006-07. 2. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT TH E LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.20,60,547/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LOW G.P. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED HIS RETURN OF INCOME ON 31.12.2006 DECLARING TOTAL INCOME OF RS.1 ,46,69,340/-. IN THE CASE OF ASSESSEE, A SURVEY WAS CONDUCTED U/S 133A O F THE INCOME-TAX ACT ON 11.11.2005 AT THE BUSINESS PREMISES OF THE A SSESSEE AND DURING ITA NO.1689/AHD/2011 DCIT VS. SHRI JITENDRA MAGANLAL SHAH A.Y. 2006-07 - 2 - THE COURSE OF THE SAID SURVEY PROCEEDINGS, THE ASSE SSEE DECLARED A SUM OF RS.81,77,930/-. THE CASE OF ASSESSEE WAS ACCORD INGLY SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE U/S 143(2) DATED 01. 03.2007 WAS ISSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD. ASSESSING OFFICER OBSERVED THA T THE ASSESSEE DECLARED A NET PROFIT OF RS.64,70,542/- @ 4.05%, WI THOUT TAKING INTO CONSIDERATION THE AMOUNT SURRENDERED BY HIM DURING THE SURVEY PROCEEDINGS; WHEREAS IN THE IMMEDIATELY PRECEDING Y EAR THE NP WAS 5.34%. THE LD. ASSESSING OFFICER ALSO OBSERVED TH AT THE BOOKS OF ACCOUNTS WERE NOT PROPERLY MAINTAINED AND THE BILLS /VOUCHERS PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDING S WERE FOUND TO BE SELF MADE. THE LD. ASSESSING OFFICER REJECTED T HE BOOKS OF ACCOUNTS OF THE ASSESSEE BY INVOKING PROVISIONS OF SECTION 145( 3) OF THE ACT ON THE GROUND THAT THE BOOKS OF THE ASSESSEE DID NOT REFLE CT THE TRUE AND FAIR RESULT OF THE ASSESSEE AND IT IS NOT POSSIBLE TO ES TIMATE THE INCOME ON THE BASIS OF SAME BOOKS OF ACCOUNTS AND THUS, APPLIED T HE NP @ 5.34% BY FOLLOWING THE NP RATE DISCLOSED BY THE ASSESSEE IN THE IMMEDIATELY PRECEDING YEAR AND THUS, MADE ADDITION OF RS.20,60, 547/-. THE LD. CIT(A) HAS DELETED THE ADDITION BY OBSERVING AS UND ER:- 5.3 DECISION :- I HAVE CONSIDERED THE OBSERVATION S OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTIONS RAISED BY THE AR OF THE APPELLANT IN THE WRITTEN SUBMISSION. I DO NOT AGRE E WITH THE AO AS THE COMPARISON OF RESULTS WITH THE PRECEDING YEARS CANN OT BE MADE BY EXCLUDING THE FIGURE OF DISCLOSURE MADE DURING THE COURSE OF SURVEY. THE APPELLANT HAS SHOWN MORE GP/NP POST SURVEY PERIOD C OMPARED TO THE PRE-SURVEY PERIOD. WHEN THE SURVEY DISCLOSURE WAS ACCEPTED ON A PARTICULAR RATE OF GP/NP, THE AO CANNOT GO BACK TO THE EARLIER YEAR AND ADOPT THE GP FOR MAKING ADDITION TO THE INCOME OF T HE APPELLANT. IT APPEARS THE AO HAS NOT UNDERSTOOD THE INCOME SHOWN BY THE APPELLANT BY TAKING THE DISCLOSED AMOUNT INTO THE P&L A/C. T HE PROFITS OF THE YEAR HAS TO BE WORKED OUT TAKING INTO CONSIDERATION OF T HE SURVEY DISCLOSURE ITA NO.1689/AHD/2011 DCIT VS. SHRI JITENDRA MAGANLAL SHAH A.Y. 2006-07 - 3 - MADE WHICH THE APPELLANT HAS DONE. IN MY VIEW, THE ADDITION MADE BY THE AO HAS NO BASIS FOR THE REASON THAT HE HAS ADOP TED GP OF THE PRECEDING YEAR AND WHEN THE GP AFTER SURVEY WAS MOR E COMPARATIVE TO THE PRE-SURVEY PERIOD. THEREFORE, THE AO IS DIRECT ED TO DELETE THE ADDITION. THUS, THIS GROUND OF APPEAL IS ALLOWED. 4. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY S UBMITTED THAT THE ORDER PASSED BY THE LD. CIT(A) IS FACTUALLY INC ORRECT AS THE AMOUNT SURRENDERED DURING THE COURSE OF SURVEY WAS NOT PAR T OF THE BUSINESS RECEIPTS AND CONSEQUENTLY, SHOULD NOT BE CONSIDERED WHILE WORKING OUT THE GP/NP OF THE ASSESSEE AND THEREFORE, PRAYED FOR SETTING ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORING THE ORDER OF THE ASSESSING OFFICER. 5. THE LD. AUTHORIZED REPRESENTATIVE, ON THE OTHER HAND, SUBMITTED THAT THE SURRENDER WAS MADE DURING THE COURSE OF SU RVEY IN ORDER TO COVER THE DEFECTS IN THE BOOKS OF ACCOUNT, TO BUY P EACE OF MIND AND TO AVOID UNNECESSARY LITIGATION WITH THE DEPARTMENT. THE LD. AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THAT THE ORDER PAS SED BY THE LD. CIT(A) IS PERFECT AS PER LAW AND DESERVES TO BE UPH ELD. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE NOTE THAT THE ASSESSEE SURRENDERED RS.8 1,77,930/- DURING THE COURSE OF SURVEY PROCEEDINGS COVERING THE EXCES S STOCK INVESTMENT, EXPENSES, ETC.. WE ALSO NOTE THAT THE LD. CIT(A) D ELETED THIS ADDITION BY OBSERVING THAT THE SAID SURRENDER WAS PART OF THE P ROFITS OF THE ASSESSEE AND CORRECTLY ARRIVED AT THE CONCLUSION THAT THE GP /NP SHOULD BE WORKED OUT AFTER TAKING INTO ACCOUNT THE AMOUNT SUR RENDERED DURING THE SURVEY PROCEEDINGS. THE ASSESSEE HAD DECLARED A NET PROFIT @ 9.16% IF THE AMOUNT SURRENDERED IS TAKEN INTO ACCOUNT; WH EREAS THE NET PROFIT ITA NO.1689/AHD/2011 DCIT VS. SHRI JITENDRA MAGANLAL SHAH A.Y. 2006-07 - 4 - IN THE PRECEDING YEAR WAS 5.34% WHICH IS FAIR AND R EASONABLE. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE CON SIDERED OPINION THAT THE ORDER PASSED BY THE LD. CIT(A) IS NOT REQUIRED TO BE INTERFERED AND THE SAME IS HEREBY UPHELD. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON THIS DAY, THE 24 TH NOVEMBER, 2015 AT AHMEDABAD. SD/- SD/- ( SHAILENDRA KUMAR YADAV ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED 24/11/2015 *BT !'#'$ / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#$ ! / THE RESPONDENT. 3. %&%' $$ ( / CONCERNED CIT 4. $$ ( ( ) / THE CIT(A) 5. +,-$'' , $$' , & / DR, ITAT, AHMEDABAD 6. -0 1 / GUARD FILE. TRUE COPY / BY ORDER, TRUE COPY / (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD