Vijaygopal Sannappa Redyy, Sangli V. Joint Commissioner of Income-tax,

ITA 1934/PUN/2013

• Counselvise Citation: 193424514 RSA 2013
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 01-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P S NAIK
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1934/PN/2013 (ASSESSMENT YEAR : 2009-10) SHRI VIJAYGOPAL SANNAPPA REDDY, MAHAVIR NIWAS, PATIL GALLI, NEAR KORE TALIM, MIRAJ 416410 PAN NO.ABLPR2190L .. APPELLANT VS. JCIT, RANGE-2, SANGLI .. RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI P.S. NAIK DATE OF HEARING : 15-04-2015 DATE OF PRONOUNCEMENT : 24-04-2015 ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 26-08-2013 OF THE CIT(A) KOLHAPUR RELATING TO ASSESSMENT YEAR 2009-10. 2. THIS CASE WAS FIRST FIXED FOR HEARING ON 23-09-2 014. SINCE NONE APPEARED ON BEHALF OF THE ASSESSEE THE CASE WA S ADJOURNED TO 15-01-2015. SINCE AGAIN NOBODY APPEARED ON 15-01-2 015 NOTICE WAS ISSUED THROUGH RPAD (ACKNOWLEDGEMENT PLACED ON RECORD) FIXING THE HEARING ON 15-04-2015. HOWEVER, AT THE TIME OF HEARING WHEN THE NAME OF THE ASSESSEE WAS CALLED, NONE APPE ARED ON BEHALF OF THE ASSESSEE NOR ANY PETITION SEEKING ADJOURNMEN T OF THE CASE 2 WAS FILED. THEREFORE, THE APPEAL IS BEING DECIDED ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE FILED HIS RETURN OF INCOME ON 02-10-2009 DECLARING TOTAL INCOME OF R S.69,67,530/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT A SURVEY ACTION U/S.133A OF THE I.T. ACT WAS CONDUC TED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 25 TH & 26-02-2009. DURING THE COURSE OF THE SURVEY ACTION, THE SURVEY PARTY HAD D ETECTED DISCREPANCIES IN EXCESS CASH OF RS.3,65,930/- AND E XCESS STOCK (WORK IN PROGRESS) OF RS.45,55,000/- WHICH RESULTED INTO DISCLOSURE BY THE ASSESSEE OF AN ADDITIONAL INCOME OF RS.49,20 ,930/- OVER AND ABOVE THE REGULAR INCOME FOR THE RESPECTIVE ASSESSM ENT YEAR. THE AO NOTED THAT ALTHOUGH THE ASSESSEE HAD DISCLOSED T HE ABOVE AMOUNT IN THE COMPUTATION OF TOTAL INCOME, HOWEVER, THE ASSESSEE HAS WRONGLY REDUCED THE GROSS PROFIT BY DEBITING TH E FIGURE OF RS.45,55,000/- WHICH WAS ALREADY DISCLOSED DURING T HE COURSE OF SURVEY ACTION U/S.133A OF THE I.T. ACT AS UNDISCLOS ED WORK IN PROGRESS. HE, THEREFORE, RECASTED THE TRADING ACCO UNT OF THE ASSESSEE AFTER EXCLUDING THE AMOUNT OF RS.45,55,000/- WHICH RESULTED INTO AN ADDITION OF RS.45,55,000/- TO THE TRADING ACCOUNT. ALTERNATIVELY, HE HELD THAT IF RS.45,55,000/- IS ALLOWED AS PURCHASES WHICH IS NOTHING BUT UNDISCLOSED STOCK OF THE ASSESSEE NOT REFLECTED IN THE REGULAR BOOKS OF ACCOUNT, CLOSING STOCK WILL INCREASE BY SI MILAR AMOUNT WHICH WILL RESULT INTO ADDITION OF RS.45,55,000/- I N THE GROSS PROFIT. HE FURTHER NOTED THAT THE ASSESSEE IN THE IMMEDIATE LY PRECEDING 3 ASSESSMENT YEAR, I.E. 2008-09 HAD SHOWN GROSS PROFI T AT 52.36% AS AGAINST WHICH THE GROSS PROFIT PERCENTAGE DURING TH E YEAR HAS GONE DOWN TO 28.42% ONLY. ONE OF THE MAIN REASONS FOR T HIS DRASTIC FALL IN GROSS PROFIT MAY BE THAT IN PURCHASE ACCOUNT THE ASSESSEE HAS INCLUDED THE FIGURE OF RS.45,55,000/- AS WORK IN PR OGRESS WHICH HAD ALREADY BEEN DISCLOSED DURING THE COURSE OF SURVEY ACTION U/S.133A OF THE I.T. ACT. AS THE SAME WAS NOT REFLECTED IN THE REGULAR BOOKS OF ACCOUNT AND THIS UNDISCLOSED STOCK OF THE ASSESS EE WAS DETECTED ONLY DURING THE SURVEY CONDUCTED U/S.133A OF THE I. T. ACT., THE AO MADE ADDITION OF RS.45,55,000/- TO THE TOTAL INCOME OF THE ASSESSEE. THE AO SIMILARLY DISALLOWED AN AMOUNT OF RS.43,480/ - BEING POOJA EXPENSES DEBITED BY THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT. SIMILARLY OUT OF THE VARIOUS EXPENSES CLAIMED BY TH E ASSESSEE IN THE PROFIT AND LOSS ACCOUNT THE AO DISALLOWED RS.4,63,8 71/-BEING 10% OF THE SAME ON ESTIMATE BASIS OUT OF THE FOLLOWING EXPENSES BEING PERSONAL IN NATURE AND IN ABSENCE OF ANY SUPPORTING EVIDENCE : SL.NO. PARTICULARS AMOUNT (I) PETROL & DIESEL EXPENSES RS.35,80,751/- (II) SITE LABOUR RATION EXPENSES RS,8,18,563/- (III) TRAVELLING EXPENSES RS.1,02,005/- (IV) VEHICLE REPAIRING EXPENSES RS.1,37,400/- TOTAL RS.46,38,719/- 4. IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE AO. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSE E IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW IN DISALLOWING RS.45,55,000/- OF STOCK OF WORK-IN-PROGRESS DECLARED BY THE APPELLANT DURING THE SURVEY, WITHOUT APPRECIATING TH E FACT THAT, THE SAME WAS ALREADY ADDED BY THE APPELLANT IN HIS COMPUTA TION OF INCOME. THE SAID DISALLOWANCE HAS RESULTED INTO DOUBLE DISALLOWANCE OF SAME AMOUNT. 4 2. THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW I N DISALLOWING RS.4,63,871/- CALCULATED AT 10% OF EXPENSES DEBITED U NDER HEADS PETROL & DIESEL EXPENSES, SITE LABOUR RATION, TRAVELLIN G EXPENSES AND VEHICLE REPAIRS EXPENSES, WITHOUT APPRECIATING THE SUBM ISSIONS MADE IN THIS BEHALF. THE DISALLOWANCE IS MADE ON AD HO C BASIS AND ON MERE SURMISES AND CONJECTURES. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELET E OR SUBSTITUTE ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. 5. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS AN ADMITTED FACT THAT DURING THE COURSE OF SURVEY THE ASSESSEE HAD MADE D ISCLOSURE OF RS.45,55,000/- ON ACCOUNT OF EXCESS STOCK (WORK IN PROGRESS) AND RS.3,65,930/- ON ACCOUNT OF EXCESS CASH. WHILE FIL ING THE RETURN OF INCOME ,ALTHOUGH THE ASSESSEE HAS DISCLOSED THE SAI D AMOUNT OF RS.49,20,930/- IN THE COMPUTATION OF INCOME, HOWEVE R, THE ASSESSEE HAS DEBITED THE DISCLOSURE OF RS.45,55,000/- ON ACC OUNT OF SUCH EXCESS STOCK IN THE PURCHASE ACCOUNT SUMMARY FOR TH E IMPUGNED YEAR. THUS, IN EFFECT, THE ASSESSEE HAS NOT OFFERE D TO TAX THE ADDITIONAL AMOUNT DECLARED DURING THE COURSE OF SUR VEY TO THE EXTENT OF EXCESS STOCK (WORK-IN- PROGRESS). THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) UPHOLDING THE ACTION OF THE AO IN BRINGING TO TAX THE AFORESAID AMOUNT OF RS.45,55 ,000/-. THE FIRST GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY DISMIS SED. 6. SO FAR AS THE DISALLOWANCE OF EXPENSES OF RS.4,6 3,871/- BEING 10% OF THE EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT IS CONCERNED, THE SAME ALSO IN OUR OPINION IS JUSTIFIE D. IT IS AN ADMITTED FACT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO HAD ASKED THE ASSESSEE TO EXPLAIN AS TO WHY CERT AIN EXPENSES ON THESE ACCOUNTS SHOULD NOT BE DISALLOWED BEING PERSO NAL IN NATURE 5 AND NOT VERIFIABLE AS SUPPORTED BY SELF-MADE VOUCHE RS ONLY. THE ASSESSEE HAD MERELY STATED THAT THE EXPENSES ARE FO R BUSINESS PURPOSES. HOWEVER, NO PLAUSIBLE REASON WAS GIVEN F OR THE EXPENSES NOT BEING SUPPORTED BY PROPER VOUCHERS. UNDER THES E CIRCUMSTANCES WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) UPHOLDING THE ACTION OF THE AO. ACCORDINGLY, GROUN D OF APPEAL NO.2 BY THE ASSESSEE IS ALSO DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 24-04-2015. SD/- SD/- (SUSHMA CHOWLA) (R.K. PA NDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 24 TH APRIL, 2015 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A) KOLHAPUR 4. THE CIT KOLHAPUR 5. THE D.R, B PUNE BENCH 6. 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