OM CARPETS, Bhadohi V. ITO, Bhadohi

ITA 192/ALLD/2012

• Counselvise Citation: 19220714 RSA 2012
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 12-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y P SRIVASTA VA
• Assessee Lawyers: VINAY KUMAR AGARWAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ALLAHABAD BENCH, ALLAHABAD BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 192/ALLD./2012 ASSTT. YEAR : 2008-09 OM CARPETS, VS. INCOME-TAX OFFICER, G.T. ROAD, JANGIGANJ, BHADOHI. BHADHO. (AABFO 3205 F) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINAY KUMAR AGARWAL, C.A. RESPONDENT BY : SHRI Y.P. SRIVASTAVA DATE OF HEARING : 09.11.2012 DATE OF PRONOUNCEMENT OF ORDER : 19.11.2012 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF LD. CIT(A), VARANASI DATED 27.02.2009 FOR THE ASSESSMENT YEAR 2 008-09. 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. 3. ON GROUND NO. 1, THE ASSESSEE CHALLENGED ADDITIO N OF RS.50,000/- ON ACCOUNT OF EXTRA PROFIT. THE ASSESSING OFFICER NOTED THAT G.P. RATE OF THE ASSESSEE IS BETTER AS ITA NO. 192/ALLD./2012 2 COMPARED TO LAST TWO YEARS. THE ASSESSEE HAS DEBITE D MANUFACTURING AND FINISHING WAGES TO THE TUNE OF RS.1,88,38,071/- AGAINST VARIO US CHARGES, I.E., WEAVING CHARGES, WASHING, CLIPPING DYEING, KINNER, PECH, CARPET REPA IRING, MAP DESIGNING, STARCHING, KNOTTING, WAGES AND ROLL STARCHING. ON EXAMINATION OF BOOKS OF ACCOUNT, IT HAS BEEN OBSERVED THAT MOST OF THE EXPENSES WERE IN CASH AND MADE THEIR SELF MADE VOUCHERS. THE VOUCHERS DO NOT BEAR ANY SERIAL NUMBER AND THER E IS NO SIGNATURE OF THE RECIPIENT. IN THE ABSENCE OF COMPLETE NAMES AND ADDRESS OF THE SELLERS, VERIFICATION OF THESE PAYMENTS WERE NOT POSSIBLE, THEREFORE, THE ASSESSIN G OFFICER REJECTED THE BOOK RESULTS AND MADE ADHOC ADDITION OF RS.50,000/- TO COVER UP ALL POSSIBLE LEAKAGES. IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT NO SPECIFIC DE FECTS HAVE BEEN POINTED OUT IN THE BOOKS OF ACCOUNT. THEREFORE, ENHANCEMENT IS UNJUSTI FIED. THE LD. CIT(A), HOWEVER, CONFIRMED THE ADDITION. 4. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE AR E OF THE VIEW THAT THE ADDITION IS WHOLLY UNJUSTIFIED. THE ASSESSEE HAS PRODUCED CO MPLETE RECORDS BEFORE THE ASSESSING OFFICER, IN WHICH THE ASSESSING OFFICER H AS NOT POINTED OUT ANY SPECIFIC DEFECTS IN THE MAINTENANCE OF BOOKS OF ACCOUNT. ADM ITTEDLY, GROSS PROFIT RATE OF ASSESSEE AND ACTUAL PROFIT IS BETTER AS COMPARED TO THE EARLIER YEARS, WHICH IS ALSO NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. T HE ASSESSING OFFICER DID NOT POINT OUT ANY SPECIFIC DEFECT IN ANY OF THE VOUCHERS. THE ASSESSING OFFICER MADE ADHOC ITA NO. 192/ALLD./2012 3 ADDITION , WHICH IS NOT WARRANTED IN LAW AND FURTHE R THE ASSESSING OFFICER VERY VAGUELY NOTED THAT THE ADDITION OF RS.50,000/- WOUL D COVER ALL POSSIBLE LEAKAGES, WOULD MEAN THAT NOTHING ADVERSE MATERIAL WAS AVAILA BLE WITH THE ASSESSING OFFICER TO MAKE ADDITION ON ACCOUNT OF EXTRA PROFIT. FURTHER, WHEN THE ASSESSEE HAS ALREADY DECLARED HIGHER PROFIT IN ASSESSMENT YEAR UNDER APP EAL, THERE WAS NO REASON TO MAKE FURTHER ADDITION ON ADHOC BASIS. THE ORDERS OF THE AUTHORITIES BELOW ARE, THEREFORE, SET ASIDE AND ADDITION OF RS.50,000/- IS DELETED. GROUN D NO. 1 OF APPEAL OF THE ASSESSEE IS ALLOWED. 5. ON GROUND NO.2, THE ASSESSEE CHALLENGED THE ADDI TION OF RS.1,20,000/- U/S. 69B OF THE IT ACT REPRESENTING THE AMOUNT DEPOSITED BY MR. UMESH KUMAR MISHRA, PARTNER IN HIS CAPITAL ACCOUNT. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN DEPOSIT IN SAVING BANK ACCOUNT OF SHRI UMESH KUMAR MISHRA. THE ASSESSEE EXPLAINED THAT PARTNER MR. UMESH KUMAR MISHRA WITHDREW SUM OF RS.2 ,00,000/- FROM THE BANK ON 07.08.2007 TO THE ANTICIPATED EXPENSES ON THE TREAT MENT OF HIS MOTHER AT DELHI, BUT SHE COULD NOT BE TAKEN TO DELHI DUE TO SERIOUS ILLNESS. THE TREATMENT WAS TAKEN AT ALLAHABAD. HENCE, ACTUAL EXPENSES INCURRED ON HER T REATMENT WAS QUITE LESS THAN THE ANTICIPATED ONE. THEREFORE, THE ASSESSEE WAS LEFT W ITH THE AMOUNT OF RS.1,20,000/- OUT OF WITHDRAWALS. THE MONEY WAS DEPOSITED. THEREFORE, IT CANNOT BE TREATED AS UNEXPLAINED DEPOSIT WITH THE ASSESSEE FIRM. IT COUL D BE CONSIDERED IN THE INDIVIDUAL ITA NO. 192/ALLD./2012 4 ASSESSMENT OF THE PARTNER. REPLY OF THE ASSESSEE WA S NOT CONSIDERED FAVOURABLY AND ADDITION WAS MADE BECAUSE THE ASSESSEE COULD NOT FI LE THE EVIDENCE OF ILLNESS OF HIS MOTHER. THE LD. CIT(A) CONFIRMED THE ADDITION. 6. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE AR E OF THE VIEW THAT THE ADDITION IS WHOLLY UNJUSTIFIED. THE ASSESSEE IS A FIRM AND T HERE IS NO DEPOSIT WITH THE ASSESSEE FIRM. THE ASSESSING OFFICER SPECIFICALLY NOTED IN T HE ORDER SHEET PLEASE EXPLAIN EACH DEPOSIT IN SAVING BANK ACCOUNT OF SHRI UMESH KUMAR MISHRA, PARTNER. THIS ITSELF PROVES THAT THE ASSESSING OFFICER PROBED THE DEPOSI T MADE IN THE BANK ACCOUNT OF THE PARTNER. THE DEPOSIT IN THE BANK ACCOUNT OF THE PAR TNER COULD NOT BE SUBJECTED TO ANY ADDITION IN THE CASE OF THE FIRM BECAUSE UNDER THE IT ACT, THE FIRM AND THE INDIVIDUAL PARTNER HAVE DIFFERENT STATUS AND AS SUCH WHATEVER HAS BEEN DONE BY THE PARTNER IN HIS INDIVIDUAL CAPACITY, COULD NOT BE SUBJECTED TO ADDI TION IN THE CASE OF THE FIRM. THE WHOLE BASIS OF THE ASSESSING OFFICER WAS UNJUSTIFIE D IN MAKING THE ADDITION. AT THE MOST, THE ASSESSING OFFICER COULD TAKE ACTION AGAIN ST INDIVIDUAL PARTNER, SEEKING EXPLANATION FOR DEPOSIT IN HIS BANK ACCOUNT. WE, TH EREFORE, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.1,2 0,000/-. IN THE RESULT, GROUND NO. 2 OF APPEAL IS ALLOWED. OTHER GROUNDS IN APPEAL OF TH E ASSESSEE ARE GENERAL IN NATURE AND NEED NO FINDING. ITA NO. 192/ALLD./2012 5 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, ALLAHABAD 6. GUARD FILE ASSTT. REGISTRAR TRUE COPY