Nand Lal Tak, UDAIPUR V. ACIT, UDAIPUR

ITA 185/JODH/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7998 (ITAT-JODHPUR)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-11-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 23-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Assessee Lawyers: SHAILENDRA BARDIA
• Keywords: Unexplained investment; Corroborative evidences
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 185/JU/2012 ASSESSMENT YEAR: 2008-09 SHRI NAND LAL TANK VS. THE A.C.I.T 4/AV 33, RAJASTHAN HOUSING BOARD CIRCLE - 1 GOVARDHAN VILAS, SECTOR 14 UDAIPUR UDAIPUR PAN NO. AAPPT 1105 Q ITA NO. 221/JU/2012 ASSESSMENT YEAR: 2008-09 THE I.T.O VS. SHRI NAND LAL TANK WARD 1 (1) 4/AV 33, RAJASTHAN HOUSING BOARD UDAIPUR GOVARDHAN VILAS, SEC TOR 14 UDAIPUR PAN NO. AAPPT 1105 Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SHAILENDRA BARDIA DEPARTMENT BY : SHRI G.R. KOKANI DATE OF HEARING : 05.11.2012 DATE OF PRONOUNCEMENT : 19.12.2012 2 ORDER PER HARI OM MARATHA, J.M. ABOVE CROSS APPEALS, FOR ASSESSMENT YEAR 2008-09, ARE DIRECTED AGAINST THE ORDER OF THE CIT(A), UDAIP UR, DATED 14.03.2002. THEREFORE, WE PROCEED TO DECIDE T HEM BY A COMMON ORDER. 2. BRIEFLY STATED, THE FACTS LEADING TO THESE APPEA LS ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF REP AIRING AND MAINTENANCE OF MACHINERIES AND FABRICATION WORK IN THE NAME OF M/S ASHA ENGINEERING WORKS. IT WAS ARG UED BY THE LD. A.R. THAT THE ASSESSEE HAS MAINTAINED PROPE R BOOKS OF ACCOUNT AND ALL THE EXPENSES WERE FULLY VOUCHED. THE ASSESSEE HAD PRODUCED BOOKS OF ACCOUNT FOR VERIFICA TION ALOGNWITH VOUCHERS. THE ACCOUNTS ARE DULY AUDITED A ND NET PROFIT RATE OF 6.465 HAS BEEN DECLARED ON CONTRACT RECEIPTS OF RS. 1,32,45,050/- AS AGAINST NET PROFIT OF RS. 3 ,76,392/- @ 6.55% FOR THE IMMEDIATELY PRECEDING YEAR. IT WAS 3 ARGUED THAT THE A.O. HAS NOT PIN-POINTED OUT ANY SP ECIFIC INSTANCE OF THE EXPENDITURE WHICH WAS NOT GENUINE O R CORRECT. THE A.O. MADE ADHOC DISALLOWANCE OF RS. 5 LAKHS WHICH WAS SUSTAINED TO THE EXTENT OF RS. 2 LAKHS ON THE BASIS OF SLIGHT FALL IN NET PROFIT. HE ARGUED THAT CONTRACT RECEIPTS IN THE YEAR UNDER REFERENCE HAVE INCREASED SUBSTANTIALLY AND DIFFERENCE ON THE BASIS OF NET PR OFIT RATE IN THE QUANTUM COMES TO 11920/- AND NOT RS. 2 LAKHS . IN THE BACKGROUND OF THESE SUBMISSIONS, HE ARGUED THAT THIS ADDITION IS ARBITRARY, ADHOC AND BASELESS AND WHICH IS NOT JUSTIFIED IN LAW. TO SUPPORT HIS SUBMISSION AND AR GUMENT, THE LD. A.R. SHRI BARDIA HAS RELIED ON VARIOUS DECI SIONS INCLUDING MARWAR PETROL SERVICES VS. ITO [2000] 69 TTJ [JODH] 772 IN WHICH IT HAS BEEN HELD THAT WHERE THE ASSESSEE WAS MAINTAINING PROPER BOOKS OF ACCOUNT AN D THE SAME WERE AUDITED, THERE WAS NO JUSTIFICATION IN SU STAINING ANY PART OF THE ADDITION. IN CIT VS. JACKSONS HOUSE [2011] 198 TAXMAN 385 [DEL] IT HAS BEEN HELD THAT THE ASSE SSEES BOOKS OF ACCOUNT COULD NOT BE REJECTED WHERE THERE IS NO SPECIFIC DEFECT, POINTED OUT IN THE BOOKS OF ACCOUN T 4 MAINTAINED BY THE ASSESSEE. FURTHER, RELIANCE WAS ALSO PLACED ON THE DECISION IN THE CASE OF ITO VS. DR. K AILASH SHARMA & SONS [2004] 84 TTJ [JODH] 955 WHEREIN IT W AS HELD THAT WHERE THE PROVISIONS OF SECTION 145 HAD N OT BEEN MADE APPLICABLE, THE ADDITIONS COULD NOT BE MADE ON ESTIMATE BASIS. WITH THE FORCE OF THESE DECISIONS, A PRAYER WAS MADE TO DELETE THE IMPUGNED ADDITION. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE ALSO IN CONFORMITY WITH THE LD. CIT(A)S FINDING. THE TURN OVER IN THIS YEAR HAS SUBSTANTIALLY INCREASED FROM 57 AND O DD LAKHS TO 132 LAKHS WHICH IS ALMOST DOUBLE OF THE TURNOVER DISCLOSED IN THE IMMEDIATELY PRECEDING YEAR. IT IS ALSO TRUE THAT THE A.O. HAS NOT POINTED OUT ANY SPECIFIC INSTANCE WHEREBY IT CAN BE SAID THAT THE EXPENSES A RE NOT GENUINE OR CORRECT. WE HAVE FOUND THAT THE A.O. HA S MADE ADHOC DISALLOWANCE OF RS. 5 LAKHS ONLY ON ESTIMATE BASIS. THE LD. CIT(A) HAS NOT APPRECIATED THE FACT THAT TH E CONTRACT RECEIPTS IN THE RELEVANT YEAR HAS INCREASE D SUBSTANTIALLY. FURTHER, ON THE BASIS OF NET PROFIT RATE IN 5 QUANTUM COMES ONLY TO RS. 11,920/- AND NOT RS. 2 LA KHS AS CONFIRMED BY HIM. THE DECISIONS RELIED UPON BY THE LD. A.R. ARE ALSO RELEVANT. ACCORDINGLY, THE ADDITION OF RS. 2 LAKHS WHICH IS THE SUBJECT MATTER OF THIS APPEAL CA NNOT BE SUSTAINED IN THE EYES OF LAW AND HENCE DIRECTED TO BE DELETED IN THE HANDS OF THE ASSESSEE. 4. NEXT ISSUE IS REGARDING ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENTS IN SHARES. 5. THE A.O. MADE ADDITION OF RS. 31,69,541/- ON ACC OUNT OF ALL UNEXPLAINED INVESTMENT IN SHARES ON THE BASI S OF ANNUAL INFORMATION REPORT [AIR]. THE LD. CIT(A) HA S ALSO CONFIRMED THIS ADDITION MADE ON ACCOUNT OF ALL INVESTMENTS IN SHARES ON THE BASIS OF AIR TO THE EX TENT OF RS. 10,04,904/-. THE A.O. HAS DEALT WITH THIS ISSU E AT PAGE 8 OF HIS ORDER. THE LD. CIT(A) TREATED THE EN TIRE AMOUNT OF RS. 31,69,541/- AS PER AIR AS UNEXPLAINED INVESTMENT IN SHARES AND MADE ADDITION ALTHOUGH THE LD. CIT(A) HAS NOT MENTIONED THE SECTION UNDER WHICH TH E 6 ADDITION HAS BEEN MADE WHICH HAS BEEN ACTUALLY MADE U/S 69 OF THE ACT. THE LD. CIT(A) ALSO CALLED FOR REMA ND REPORT FROM THE ACIT. THIS REPORT CLEARLY STATES THAT IT IS VERY DIFFICULT TO COME TO THE CONCLUSION WHEN ASSESSEE H AD PAID THIS AMOUNT FOR INVESTMENT IN SHARES AS STATED IN T HE AIR. HE SUBMITTED TO THE LD. CIT(A) THAT ADDITION IS LIA BLE TO BE SUSTAINED MERELY ON THE BASIS OF AIR, IN FACT, THIS ADDITION HAS BEEN MADE ON THE BASIS OF SUSPICION AND SURMISE S WHICH AROSE FROM THE AIR. THE ISSUE OF INVESTMENT IN SHARES OF RS. 31,69,541/-ON THE BASIS OF AIR IN SUP PORT OF HIS CONTENTION, THE ASSESSEE HAS FILED AN AFFIDAVIT WHEREIN HE STATED THAT HE DID NOT MAKE INVESTMENT OF RS. 31,69,541/- AS STATED IN THE AIR. THE A.O., IN REM AND REPORT, ACCEPTED THE SAME. ON THIS BASIS ONLY THER E IS NO JUSTIFICATION FOR THIS ADDITION. BUT THE ACIT MADE THE IMPUGNED ADDITION U/S 69 OF THE ACT. THE LD. CIT(A ) HAS CONSIDERED THE ABOVE IN RESPECT OF INVESTMENT IN SH ARES WHICH WERE RECORDED IN THE BOOKS OF ACCOUNT, IN HIS VIEW WAS NOT FULLY EXPLAINED. THE LD. A.R. ALSO SUPPORT ED HIS CONTENTION WITH CERTAIN DECISIONS WHICH ARE AS UNDE R: 7 1. AUROBINDO SANITARY STORES VS. CIT [2005] 144 TAXMAN 872 [ORI] WHEREIN IT HAS BEEN HELD THAT UNLESS REQUIREMENT OF SECTION 69 ARE STRICTLY SATIS FIED BY A FINDING BY THE A.O. THAT THE ASSESSEE HAD MADE ANY INVESTMENT SEC. 69 CANNOT BE APPLIED. 2. ASHOK KUMAR RASTOGI VS. CIT [1991] 55 TAXMAN 433 [ALL] DR. ASHOK UPPAL VS. ITO [2007 108 TTJ [JO D] 734 WHEREIN IT HAS BEEN HELD THAT ANY ADDITION WHIC H IS BASED ON MERELY ON THE BASIS OF SURMISES AND CONJECTURES WITHOUT ANY SUPPORTING EVIDENCE CANNOT NOT BE SUSTAINED. 6. IN VIEW OF THE DECISIONS RELIED UPON BEFORE US A ND IN VIEW OF THE REASONS GIVEN AS ABOVE, WE ORDER TO DEL ETE THE ENTIRE ADDITION. ACCORDINGLY, WE ALLOW GROUND NOS. 1 TO 5 OF THIS APPEAL OF THE ASSESSEE. ITA NO. 221/JU/2012 7. THE SOLE ISSUE RAISED IN THE CROSS APPEAL OF THE REVENUE IS REGARDING ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENTS IN SHARES. THIS ISSUE HAS A LREADY 8 BEEN DEALT WITH BY US HEREINABOVE WHEREIN WE HAVE DELETED THE ADDITION MADE BY THE A.O. AND SUSTAINED BY THE LD. CIT(A). HENCE THIS GROUND OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED WHEREAS THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 19 TH DECEMBER, 2012. SD/- SD/- (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19 TH DECEMBER, 2012 VL/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR ITAT, JODHPUR