The ITO, Ward-9(4), Ahmedabad V. Shri Bathabhai Lakhabhai Bharwad, Ahmedabad

ITA 1885/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73055 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 10-01-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 31-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Assessee Lawyers: S N DIVETIA
• Keywords: Depreciation
• Section: 68

Judgement Text

, , , , C, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + ) ' )* + ) ' )* + ) ' )* + ) ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.1885/AHD/2010 WITH CO NO.263/AHD/2010 [ASSTT.YEAR : 2007-2008] ITO, WARD-9(4) AHMEDABAD. /VS. SHRI BATHABHAI LAKHABHAI BHARWARD 9, SHUKUN BUNGLOW OPP: CHANKYAPURI, SECTOR 2/3 NEW HIGH COURT ROAD GHATLODIA, AHMEDABAD. PAN : AFXPB 8702 N ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) + 1 2 )/ REVENUE BY : SHRI J.P. JHANGID, SR. -DR 4& 1 2 )/ ASSESSEE BY : SHRI S.N. DIVETIA 5 1 &(*/ DATE OF HEARING : 10 TH JANUARY, 2014 678 1 &(*/ DATE OF PRONOUNCEMENT : 03-03-2014 )9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT : THIS APPEAL OF THE REVENUE AND THE CO OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-200 8 ARE DIRECTED AGAINST THE ORDER OF THE CIT(A)-XV, AHMEDABAD DATED 26.3.2010. THESE ARE BEING DISPOSED OF WITH THIS CONSOLIDATED ORDER. ITA NO.1885/AHD/2010 (REVENUES APPEAL) 2. THE GROUND NO.1 OF THE APPEAL OF THE REVENUE IS AS UNDER: ITA NO.1885/AHD/2010 WITH CO NO.263/AHD/2010 -2- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.33,47,155/- MADE BY THE AO ON ACCOUNT OF GROS S PROFIT. 3. THE LEARNED DR SUBMITTED THAT THE CIT(A) HAS WRO NGLY DELETED THE TRADING ADDITION BY OBSERVING THAT THE ASSESSEE WAS NOT GIVEN A SHOW CAUSE NOTICE BEFORE THE IMPUGNED ADDITION. HE SUBMITTED THAT THE SHOW CAUSE NOTICE WAS SERVED ON THE ASSESSEE AND AMPLE OPPORTUNITY WA S GIVEN TO THE ASSESSEE. THE ASSESSEE HAS NOT AVAILED THE OPPORTUNTY ALLOWED TO IT. HE SUBMITTED THAT THE AO VIDE NOTICE DATED 21.12.2009 HAVE ASKED THE ASSE SSEE WHY THE GP RATE AT 25% SHOULD NOT BE ESTIMATED. HE SUBMITTED THAT THE CIT(A) HAS NOT ADVANCED ANY VALID REASON FOR DELETING THE TRADING ADDITION MADE BY THE AO. THE LEARNED COUNSEL FOR THE ASSESSEE HAS OPPOSED THE SUBMISSION S OF THE LEARNED COUNSEL FOR THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE HAS D ECLARED NET PROFIT AT 2.81% OF THE GROSS RECEIPTS OF ITS TRANSPORT BUSINESS AND TH E AO HAS APPLIED THE RATE OF 25% WITHOUT ALLOWING THE EXPENSES OR EVEN THE DEPRE CIATION CLAIMED AT RS.15 LAKHS AND ODDS. HE SUBMITTED THAT THE TOTAL RECEIP TS OF THE ASSESSEE WERE OF RS.1,33,88,622/- AND TO ASSESS THE ASSESSEE AT INCO ME OF RS.33,47,155/- BY APPLYING A FLAT RATE OF 25% AND WITHOUT ALLOWING AN Y EXPENDITURE THEREFROM, IS ARBITRARY. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE PE RUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE AO HAS ALLOWED A NUMBER OF OPPORTUNITIES TO THE ASSESSEE TO PLEAD ITS CASE AND LEAD EVIDENCES, WHICH THE ASSESSEE HAS NOT FULLY AVAILED. IN THESE CIRCUMSTA NCES, THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE RIGHTLY REJECTED BY THE REVENUE. HOWEVER, THE ACTION OF THE AO IN WORKING OUT THE TAXABLE INCOME OF THE ASSESSE E BY APPLYING A RATE OF 25% ON THE GROSS RECEIPTS OF RS.1,33,88,622/- FROM THE TRANSPORT BUSINESS OF THE ASSESSEE AND NOT ALLOWING ANY EXPENDITURE INCLUDING THAT OF DEPRECIATION ETC., IS NOT SUSTAINABLE IN LAW. THE ASSESSEE HAS CLAIMED D EPRECIATION AT RS.15,51,405/- AND NO REASON HAS BEEN GIVEN BY THE AO TO DISALLOW THE SAME. THE ASSESSEE HAS ITA NO.1885/AHD/2010 WITH CO NO.263/AHD/2010 -3- ALSO INCURRED EXPENSES ON PAYMENT OF INTEREST RS.5, 85,246/- AND TELEPHONE EXPENSES RS.27,144/- AND SALARY EXPENSES OF RS.6,25 ,000/-. THUS, THE EXPENSES WERE CLEARLY OF ALLOWABLE NATURE, AND NO REASON HAS BEEN ADVANCED BY THE AO TO DISALLOW THE SAME. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE RATE APPLIED AT 25% ON THE GROSS RECE IPTS OF THE ASSESSEE IS UNJUSTIFIED AND THAT ENDS OF JUSTICE SHALL BE MET I F FLAT RATE OF NET PROFIT AT 8% IS APPLIED ON THE GROSS RECEIPTS RECEIVED BY THE ASSES SEE, WITHOUT ANY FURTHER DEDUCTION OF ANY EXPENSES OR DEPRECIATION, WHICH CO MES TO RS.10,71,000/- AND WE DIRECT THE AO TO ADOPT THIS FIGURE OF RS.10,71,0 00/- AS INCOME FROM THE TRANSPORT BUSINESS OF THE ASSESSEE, AS AGAINST THE INCOME ESTIMATED BY THE AO AT RS.33,47,155/- AND THE GROUND NO.1 OF THE REVENUE I S PARTLY ALLOWED. 5. THE GROUND NO.2 OF THE REVENUES APPEAL IS AS UN DER: 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.26,82,709/- MADE ON ACCOUNT OF CASH CREDIT U/ S.68 OF THE ACT. 6. THE LEARNED DR SUBMITTED THAT THE PLEA THAT THE AMOUNT IN QUESTION WERE SHOWN AS INCOME IN THE SUCCEEDING ASSESSMENT YEAR 2 008-2009 WAS NOT TAKEN BY THE ASSESSEE BEFORE THE AO, AND THEREFORE, SHOUL D BE VERIFIED. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E HAS ACCOUNTED FOR THE AMOUNTS IN QUESTION AS INCOME IN THE SUCCEEDING ASS ESSMENT YEAR 2008-2009 FOR WHICH THE COPIES OF THE LEDGER ACCOUNT OF THE PARTI ES HAVE BEEN FILED IN THE COMPILATION BEFORE THE TRIBUNAL, AND ACCORDINGLY, N O ADDITION SHOULD BE MADE IN THE RELEVANT ASSESSMENT YEAR. 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE PE RUSED THE ORDERS OF THE AO AND THE CIT(A) AND ALSO COPIES OF VARIOUS DOCUME NTS FILED IN THE COMPILATION BEFORE THE TRIBUNAL. WE FIND THAT THE AMOUNTS IN QUESTION IF HAVE BEEN ACCOUNTED FOR AS INCOME IN THE SUCCEEDING ASSE SSMENT YEAR 2008-2009, THE SAME COULD NOT BE DOUBLY TAXED IN THE RELEVANT ASSE SSMENT YEAR 2007-2008 ALSO, AND ACCORDINGLY, WE DIRECT THE AO TO VERIFY FROM RE CORD AND THE LEDGER ACCOUNT ITA NO.1885/AHD/2010 WITH CO NO.263/AHD/2010 -4- OF THE DIFFERENT PARTIES, AND IN CASE, THE ASSESEE HAS ACCOUNTED FOR THE AMOUNTS IN QUESTION AS INCOME IN THE SUCCEEDING ASSESSMENT YEA R 2008-2009, NO ADDITION UNDER SECTION 68 OF THE ACT, OF THE AMOUNT IN QUEST ION, SHOULD BE MADE BY THE REVENUE FOR THE RELEVANT ASSESSMENT YEAR 2007-08. WE DIRECT ACCORDINGLY. 8. THE GROUND NO.3 OF THE REVENUES APPEAL IS AS UN DER: 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN ADMITTING FRESH EVIDENCES IN VIOLATION OF RULE 46A AND NOT ALLOWING THE AO AN OPPORTUNITY TO VERIFY AND COMMENT UPON THE FRESH EV IDENCES FURNISHED BY THE ASSESSEE. 9. WE HAVE HEARD PARTIES ON THIS ISSUE. WE FIND TH AT IN VIEW OF OUR RESTORING THE ISSUE IN THE GROUND NO.2 OF THE REVENUE TO THE FILE OF THE AO FOR VERIFICATION, AND IN VIEW OF OUR DECISION IN APPLYING THE FLAT RA TE OF NET PROFIT ON THE GROSS RECEIPTS OF THE ASSESSEE, THIS GROUND OF THE APPEAL OF THE REVENUE HAS NO MERIT, AND ACCORDINGLY, IS DISMISSED. CO NO.263/AHD/2010 (ASSESSEES CO) 10. THE CO OF THE ASSESSEE IS BARRED BY LIMITATION BY SEVEN DAYS. THE ASSESSEE HAS FILED AN APPLICATION FOR CONDOLATION O F DELAY OF SEVEN DAYS. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. IN THE FACTS NARRATED BY THE ASSESSEE, WE ARE OF THE VIEW THAT THE DELAY WAS CAUSED DUE TO SUFFICIENT REASON, AND THEREFORE DELAY IN PRESENTING THE CO BEFORE THE TRI BUNAL IS CONDONED. 11. THE GROUNDS OF THE CO OF THE ASSESSEE ARE AS UN DER: 1. THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND O R ON FACTS IN CONFIRMING DISALLOWANCE TO THE EXTENT OF 1/3 RD OF THE CASH EXPENSES TOTALING TO RS.15,09,481/- 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) OUGHT NOT TO HAVE CONFIRMED DISALLOWANCE TO THE EXTENT OF 1/3 RD OF CASH EXPENSES, WHEN THE BOOKS OF ACCOUNT WERE NOT REJECT ED NOR THE CASH EXPENSES FOUND NON-GENUINE ITA NO.1885/AHD/2010 WITH CO NO.263/AHD/2010 -5- 12. WE HAVE HEARD PARTIES. WE FIND THAT IN OUR VIE W OF APPLYING A FLAT RATE OF NET PROFIT AT THE RATE OF 8% TO THE GROSS RECEIPTS OF THE TRANSPORT BUSINESS OF THE ASSESSEE, WHILE DISPOSING OF THE REVENUES APPEAL, IN FOREGOING PARAS OF THIS ORDER, WE HOLD THAT NO SEPARATE ADDITION TO THE EXT ENT OF 1/3 RD OF THE CASH EXPENSES COULD BE MADE, AND ACCORDINGLY, THE DISALL OWANCE MADE IS DELETED AND CO OF THE ASSESSEE IS ACCORDINGLY ALLOWED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED AND THE CO OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER ( .. /G.C. GUPTA ) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD