Smt. Rekha Singh, Bhilwara V. ITO, Ward-4, Bhilwara

ITA 194/JODH/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6318 (ITAT-JODHPUR)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 02-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHRI A K DAS
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH (SMC), JODHPUR BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 194/JODH/2018 (ASSESSMENT YEAR-2014-15 SMT. REKHA SINGH, 6A-42, CHANDRA SHEKHAR AZAD NAGAR, BHILWARA VS THE INCOME TAX OFFICER, WARD-4, BHILWARA (APPELLANT) (RESPONDENT) PAN: JDHR06554C ASSESSEE BY SHRI HEMANT CHHAJED (CA) REVENUE BY SHRI SHRI A. K. DAS (JCIT) DR DATE OF HEARING 17/07/2018 DATE OF PRONOUNCEMENT 20/07/2018 O R D E R PER: R.C. SHARMA, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), AJMER DATED 28/02/2018 FOR THE A.Y. 201 4-15 IN THE MATTER OF ORDER U/S 143(3) OF THE INCOME-TAX ACT, 1 961 [HEREINAFTER REFERRED TO AS THE ACT, FOR SHORT]. THE GROUNDS RAISED BY THE ASSESSEE IN APPEAL ARE REPRODUCED AS UNDER: 1. THE IMPUGNED ADDITIONS AND DISALLOWANCES MADE IN THE ORDER U/S 143(3) DATED 28.02.2018 ARE BAD IN LAW AND ON FACTS OF T HE CASE, FOR WANT OF JURISDICTION AND VARIOUS OTHER REASONS AND HENCE THE SAME KINDLY BE DELETED. 2 ITA 194/JODH/2018 SMT. REKHA SINGH, BHILWARA VS. ITO 2. RS. 1,20,270/-: THE LD. CIT(A) ERRED IN LAW AS W ELL AS ON THE FACTS OF THE CASE IN CONFIRMING ADDITION OF RS. 1,20,270/- AS A TRADING ADDITIONS TOWARDS DISALLOWANCES OF EXPENSES WITHOUT KNOWING T HE SUBSTANTIATION OF TRANSACTIONS, IS CONTRARY TO THE PROVISIONS OF L AW AND FACTS OF THE CASE. HENCE, THE SAME KINDLY BE DELETED IN FULL. 3. RS. 4,87,881/- THE LD. CIT(A) ERRED IN LAW AS WE LL AS THE FACTS OF THE CASE IN CONFIRMING ADDITION OF RS. 4,87,881/- FOR TRAVEL LING EXPENSES WITHOUT KNOWING THE SUBSTANTIATION OF TRANSACTIONS AND IGNO RING EVIDENCES, IS CONTRARY TO THE PROVISIONS OF LAW AND FACTS OF THE CASE. HENCE, THE SAME KINDLY BE DELETED IN FULL. 4. RS. 75,000/- THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING ADDITION OF RS. 75,000/- FOR DEE MED RENTAL INCOME WITHOUT KNOWING THE SUBSTANTIATION OF THE FACTS THA T THE ACTUAL PROPERTY SITUATED AT KAMLA CRISTLE AT KAMLA VIHAR, BHILWARA BUT WRONGLY UNDERSTOOD AS KAMLA ENCLAVE, A POSH COLONY AT BHILW ARA, IS CONTRARY TO THE PROVISIONS OF LAW AND FACTS OF THE CASE. HENCE, THE SAME KINDLY BE DELETED IN FULL. 5. THE APPELLANT PRAYS YOUR HONOUR INDULGENCE TO AD D, AMEND OR ALTER OF OR ANY OF THE GROUNDS OF THE APPEAL ON OR BEFORE TH E DATE OF HEARING. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING AND TRADING OF FINISHED CLOTHS. DURING THE COURSE O F SCRUTINY ASSESSMENT. THE ASSESSING OFFICER REJECTED THE BOOK S OF ACCOUNTS AND MADE TRADING ADDITION OF RS. 6,58,398/ -. 3. BY THE IMPUGNED ORDER, THE LD CIT(A) HAS UPHELD THE ADDITION OF RS. 1,20,270/- AND DELETED THE ADDITION OF RS. 3 ITA 194/JODH/2018 SMT. REKHA SINGH, BHILWARA VS. ITO 5,38,128/-. AGAINST THIS TRADING ADDITION OF RS. 1, 20,270/-, THE ASSESSEE IS IN APPEAL BEFORE ME. 4. I HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE REMAND REPORT AND THE REPLY OF THE ASSESSEE SO FILE D DURING REMAND PROCEEDING. FROM THE RECORD, I FOUND THAT TH E REASON FOR DECLINING THE GP RATIO FROM 19.89% IN (A.Y. 2013-14 ) TO 18.2% IN A.Y. 2014-15 IS DUE TO INCREASING SALES BY 19.21 %. IT IS NORMAL PHENOMENON OF ANY BUSINESS INDUSTRY, HIGHER THE SALE LOWER THE MARGIN AND VICE VERSA. I FOUND THAT COMPA RISONS OF GROSS PROFIT (GP): THE COMPARISON OF G.P. AND N.P F OR THE LAST THREE ASSESSMENT YEARS ARE AS UNDER: (RS. IN LACS) 2012-13 2013-14 2014-15 GROSS TURN-OVER 467.48 434.19 517.63 GROSS PROFIT 47.76 86.38 96.37 GROSS PROFIT(%) 10.21% 19.89% 18.62% NET PROFIT 9.90 9.34 10.30 IT IS CLEAR THAT N.P RATIO IS HIGHER IN THE A.Y. 20 14-15 IN COMPARISON TO A.Y. 2012-13 & 2013-14. 4 ITA 194/JODH/2018 SMT. REKHA SINGH, BHILWARA VS. ITO 6. I ALSO FOUND THAT THE ASSESSING OFFICER HAS NOT FOUND THAT PURCHASE AND SALES RECORDED IN THE BOOKS ARE INFLAT ED OR BOGUS. FURTHER THE BOOKS OF ACCOUNTS ARE AUDITED U/S 44AB OF THE INCOME TAX ACT. WITHOUT POINTING OUT ANY DEFECTS IN THE BOOKS OF ACCOUNTS THE LEARNED A.OS CONCLUSION TO POSSIBLE L EAKAGE OF REVENUE IS HYPOTHETICAL AND NOT TENABLE. 7. IN VIEW OF THE ABOVE DISCUSSION, IT IS VERY CLEA R THAT THERE IS INCREASE N.P. RATE DURING THE YEAR UNDER CONSIDERATION AS CO MPARED TO THE EARLIER TWO YEARS. UNDER THESE FACTS AND CIRCUMSTANCES OF TH E CASE, THERE IS NO JUSTIFICATION FOR MAKING ANY TRADING ADDITION. ACCO RDINGLY ENTIRE TRADING ADDITION SO MADE BY THE ASSESSING OFFICER IS DIRECT ED TO BE DELETED. 8. NEXT GRIEVANCE OF ASSESSEE RELATE TO DISALLOWANCE OF FOREIGN TRAVELLING OF EXPENDITURE OF RS. 4,87,881/-.FROM THE RECORDS, I FOUND THAT THE ASSESSEE WAS ENGAGED IN BUSINESS OF MANUFACTURING AN D TRADING OF FINISHED CLOTHES IN INDIA AND EXPORT ABROAD MAINLY JEDDAH OU T OF THE TRAVELLING EXPENDITURE OF RS. 8,54,292/-. THE ASSESSING OFFICE R DISALLOWED FOREIGN EXPENDITURE OF RS. 4,87,881/-. FROM THE RECORD, I F OUND THAT ACTUAL FOREIGN TRAVELLING WAS AT RS. 115,000/- INCURRED BY B.P. SIN GH ON TOUR TO JEDDAH ON BEHALF OF THE ASSESSEE. REST OF THE EXPENSES RS. 3, 72,881/- WERE PAYMENT TO ONE OF THE STAFF MR. PUNEETSINGH FOR INLAND TRAV ELLING WHICH INADVERTENTLY 5 ITA 194/JODH/2018 SMT. REKHA SINGH, BHILWARA VS. ITO DISPLAYED AS A FOREIGN TRAVELLING IN THE INCOME TAX RETURN. ALL EXPENSES WERE PAID TO HIM BY CHEQUES AS PER HIS SUBMISSION OF BAN K STATEMENT FOR ONLINE PAYMENT TO IRCTC AND AIRLINES AND HOTELS. SINCE THE ASSESSEE WAS HAVING EXPORT SALES TO JEDDAH AND BAHRAIN, TRAVELLING TO T HIS COUNTRY WAS FOR THE PURPOSE OF BUSINESS. UNDER THESE FACTS AND CIRCUMST ANCES OF THE CASE, I DO NOT FIND ANY MERIT FOR DISALLOWANCE FOREIGN TRAVELLI NG EXPENDITURE, HAVING BEEN INCURRED BY THE ASSESSEE FOR THE PURPOSE OF TH IS BUSINESS. ASSESSING OFFICER IS DIRECTED TO DELETE THE SAME. 8. THE LAST GRIEVANCE OF THE ASSESSEE RELATES TO CO NFIRMATION OF ADDITION OF RS. 75,000/- ON ACCOUNT OF DEEMED RE NTAL INCOME. 9. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. DURING THE ASSESSMENT PROCEEDINGS, IT WAS NOTICED B Y THE ASSESSING OFFICER THAT THE ASSESSEE HAS PURCHASED A HOUSE AT KAMLA ENCLASE, BHILWARA ON 29.01.2014 BUT NO RENTAL INCOME FROM THE SAID HOUSE PROPERTY WAS DECLARED. SINCE TH E ASSESSEE WAS ALREADY HAVING ANOTHER HOUSE PROPERTY AT 6-A-42 , CHANDRASHEKHAR AZAD NAGAR, BHILWARA, THEREFORE, THE ANNUAL VALUE OF PROPERTY AT KAMLA ENCLAVE, NAGAR, BHILWARA , THEREFORE, THE ANNUAL VALUE OF PROPERTY AT KAMLA ENCLAVE, BHIL WARA WAS 6 ITA 194/JODH/2018 SMT. REKHA SINGH, BHILWARA VS. ITO DETERMINED ON THE BASIS OF COMPARABLE CASE OF SHRI NIRMAL KUMAR PATNI AND ANNUAL RENTAL WAS TAKEN AT RS. 4,50 ,000/- AND RENTAL INCOME FOR TWO MONTHS I.E. FEBRUARY AND MARC H, 2014 WAS CALCULATED AT RS. 75,000/- AND THE SAME WAS ADDED T O THE TOTAL INCOME OF THE ASSESSEE AS DEEMED RENT. 10. BY THE IMPUGNED ORDER THE CIT(A) CONFIRMED THAT ADDITION. THE ASSESSEE IS FURTHER IN APPEAL BEFORE ME. 11. I FOUND THAT THE PROPERTY PURCHASED BY THE ASSE SSEE IS SITUATED AT KAMLA CRYSTAL AND NOT IN KAMLA ENCLAVE AND THE SAME WAS USED FOR RESIDENTIAL PURPOSES BY THE ASSES SEE SINCE ITS PURCHASE. FURTHER, THE HOUSE AT 6-A-42, C.S. AZAD N AGAR WAS OCCUPIED FOR THE BUSINESS OF R.K. TEXTILES FOR GRAD ING AND FINISHING JOB. THE HOUSE WHICH IS NOT HAVING ANY AC TUAL RENTAL INCOME BUT SELF OCCUPIED BY ASSESSEE SHOULD BE DETE RMINED AS PER THE MUNICIPAL RATABLE VALUE. ACCORDINGLY, THE M ATTER IS RESTORED TO FILE OF THE ASSESSING OFFICER TO FIND O UT THE MUNICIPAL RATABLE VALUE OF THE HOUSE FOR COMPUTING INCOME U/S 22 OF THE I.T. ACT. WE DIRECT ACCORDINGLY. 7 ITA 194/JODH/2018 SMT. REKHA SINGH, BHILWARA VS. ITO IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED I N PART. ORDER PRONOUNCED IN THE OPEN COURT ON 20/07/2018. SD/- [R.C. SHARMA] ACCOUNTANT MEMBER DATED : 20/07/2018 *GANESH KR. COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 6. GUARD FILE (ITA NO. 194/JODH/2018) ASSISTANT REGISTRAR JODHPUR BENCH