The ITO, Ward-6(2), Ahmedabad V. Shri Himanshu B.Amin, Ahmedabad

ITA 2110/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6532 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 31-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 02-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K PATEL
• Assessee Lawyers: PRAVIN R SHAH
• Keywords: Business income; Depreciation
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' BEFORE SHRI T K SHARMA,JM & SHRI A N PAHUJA,AM ITA NO.2110/AHD/2009 WITH CO NO.180/AHD/2009 (ASSESSMENT YEAR:-2006-07) INCOME-TAX OFFICER, WARD- 6(2), 1 ST FLOOR,CU SHAH BUILDING, ASHRAM ROAD, AHMEDABAD V/S SHRI HIMANSHU B AMIN, C/38, GREEN WOOD SOCIETY, NR. SOLA RAILWAY CROSSING, AHMEDABAD PAN: ABKPA 6570 C [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI A K PATEL, DR ASSESSEE BY:- SHRI PRAVIN R SHAH, AR O R D E R A N PAHUJA: THIS APPEAL BY THE REVENUE AND THE CORRESPONDING CROSS-OBJECTION[CO] BY THE ASSESSEE AGAINST AN OR DER DATED 17-04- 2009 OF THE LD. CIT(APPEALS)-XI, AHMEDABAD, FOR TH E ASSESSMENT YEAR 2006-07, RAISE THE FOLLOWING GROUNDS :- ITA NO.2110/AHD/2009[REVENUE] [1] THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XI, AH MEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.28,51,281/- ON ACCOUNT OF LOW G.P. [2] THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XI , AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.70,809/- ON ACCOUNT OF PERSONAL EXPENDITURE. [3] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XI, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. [4] IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD . COMMISSIONER OF INCOME-TAX (APPEALS)-XI, AHMEDABAD MAY BE SET ASIDE AND THAT OF THE AO BE RESTORED. 2 ITA NO.2110/AHD/09 & CO NO . 180/AHD/09 2 CO NO.180/AHD/2009: [1] THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS-XI) AHMEDABAD HAS HELD IN SUSTAINING ADDITION OF RS.50, 000/- FOR FALL IN GROSS PROFIT. IT IS SUBMITTED THAT ADDITION SUSTAIN ED TO BE DELETED. [2] THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS -XI) AHMEDABAD HAS HELD IN RETAINING IN ADDITION OF RS.2 5,000/- UNDER THE HEAD OF PERSONAL EXPENDITURE . 2 AT THE OUTSET, THE LEARNED AR ON BEHALF OF THE AS SESSEE REQUESTED PERMISSION TO WITHDRAW THE CO FILED BY TH E ASSESSEE. THE LEARNED DR DID NOT RAISE ANY OBJECTION. ACCORDINGLY , GROUNDS RAISED IN THE CO FILED BY THE ASSESSEE ARE DISMISSED AS WI THDRAWN. 3. ADVERTING NOW TO GROUND NO.1 IN THE APPEAL OF THE REVENUE, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT TH E RETURN DECLARING INCOME OF RS.7,18,400/- FILED ON 26-12-2006 BY THE ASSESSEE, MANUFACTURING PREFABRICATED POLLYARETHANE SANDWICH PANEL,AFTER BEING PROCESSED ON 22-05-2007 U/S 143(1) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT], WAS SE LECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE ACT ISSUED ON 22-10- 2007. DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT THE ASSESSEE REFL ECTED G.P. OF RS.42,56,225/- @ 8.42% ON THE TOTAL TURNOVER OF RS. 5,05,71,362/- FOR THE YEAR UNDER CONSIDERATION AS AGAINST G.P. OF RS. 26,64,364/- @ 14.06% ON THE TOTAL TURNOVER OF RS.1,89,45,856/- IN THE PRECEDING ASSESSMENT YEAR. TO A QUERY BY THE AO, SEEKING THE REASONS FOR FALL IN G.P. WITH SUPPORTING DOCUMENTARY EVIDENCE, THE A SSESSEE REPLIED THAT THE GP RATE DEPENDED ON MANY FACTORS E.G. THE GENERAL MARKET CONDITIONS BASED ON DEMAND AND SUPPLY POSITION PART ICULARLY WHEN THE TURNOVER OF THE ASSESSEE INCREASED DRASTICALLY FROM RS.189.45 LAKH TO RS.505.71 LAKH THIS YEAR. IT WAS POINTED OU T THAT THE MAIN REASONS FOR FALL IN GP WERE INCREASE IN THE INPUT C OST OF RAW MATERIAL AND DECREASE IN SALE PRICE. HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND REJECTED THE BOOK R ESULTS ON THE 3 ITA NO.2110/AHD/09 & CO NO . 180/AHD/09 3 GROUND THAT THE ASSESSEE DID NOT PRODUCE STOCK REGI STERS, EXCISE REGISTERS ETC IN SUPPORT OF HIS CLAIM NOR SUBSTANTIATED THEIR CL AIM OF INCREASE IN THE COST OF MATERIAL. INTER ALIA, IT WAS POINTED OUT THAT THE A SSESSEE HAD NOT BEEN MAINTAINING THE STOCK REGISTER PROPERLY, AS REQUIRED UNDER THE PROVISIONS OF THE ACT. IN THESE CIRCUMSTANCES, RELYING ON THE DECISIONS IN THE CA SE OF S.N. NAMASIVAYAM CHETTIAR V. CIT [1960] 38 ITR 579 (SC); KACHWALA GE MS VS JT.CIT [288 ITR 10](2007) AND BIMAL KUMAR ANANT KUMAR VS. CIT (2007 ) [288 ITR 278](AII.), THE AO CONCLUDED THAT CORRECT AND TRUE PROFITS OF THE BUSINESS CANNOT BE DEDUCED FROM THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESS EE. ACCORDINGLY, INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT, THE AO REJECTED THE BOOK RESULTS AND APPLIED THE G.P RATE SHOWN BY THE ASSESSEE IN THE I MMEDIATELY PRECEDING YEAR, RESULTING IN ADDITION OF RS.28,51,281/- . 4. ON APPEAL, THE ASSESSEE SUBMITTED THAT THEY MAIN TAINED QUANTITATIVE RECORDS DULY VERIFIED BY THE EXCISE AU THORITIES. WHILE REITERATING THEIR SUBMISSIONS BEFORE THE AO, THE ASSESSEE CONTENDED THAT IN ORDER TO GET ENTRY IN REPUTED COMPANIES, THEY QUOTED MOST COMPETITIVE RAT ES AND CUT DOWN SALES PRICE, AS EVIDENT FROM THE FOLLOWING DETAILS: PARTY NAME 2004-05 2005-06 INCREASE IN RS. INCREASE IN % BLUE STAR LTD 993048 9729947 8736899 879.74% NEWTRONICS 6482810 17032670 10549860 162.73% VOLTAS LTD 853443 1487202 633759 74.25% CARRIER AIRCON & REF LTD NIL 6184183 BESIDES, THEY WERE MANUFACTURER OF TAILOR MADE PROD UCTS WITH THE USE OF RAW MATERIAL SUCH AS STEEL, CHEMICALS AND HARDWARES. TH E INCREASE IN COST OF INPUTS ALSO AFFECTED THE GP, THE STEEL PRICE OF RS.199.60 IN THE YEAR 2004-05 INCREASED TO RS.206/- IN 2005-06. RELYING UPON THE JUDGMEN TS IN INTERNATIONAL FOREST CO. 4 ITA NO.2110/AHD/09 & CO NO . 180/AHD/09 4 VS. COMMISSIONER OF INCOME TAX (101 ITR 721 (J&K); ALUMINUM INDUSTRIES PVT. LTD. VS. COMMISSIONER OF INCOME TAX (1995) 80 TAXMA N 184 (GAU).; BIMAL KUMAR VS CIT (2007) 288 ITR 278 (AII) AND KT SAOJI VS. COMMISSIONER OF INCOME TAX 165 ITR 397 ( BOM) , THE ASSESSEE CONTEN DED THAT SINCE THE EXCISE AUTHORITIES AND SALES TAX AUTHORITIES AS WELL AS AU DITOR DID NOT POINT OUT ANY DISCREPANCY IN THE BOOKS WHILE PURCHASES AND SALES WERE PROPERLY VOUCHED , THE ADDITION MADE BY THE AO SHOULD BE DELETED. IN THE L IGHT OF THESE SUBMISSIONS, THE LD. CIT(A) REDUCED THE ADDITION TO RS.50,000/- IN THE FOLLOWING TERMS:- 3.2. THE SUBMISSIONS MADE BY THE A. R. OF THE APPE LLANT HAVE BEEN PERUSED. THE DECISIONS, REFERRED AS ABOVE, WHICH AR E RELIED UPON BY THE A. R. OF THE APPELLANT HAVE BEEN PERUSED. THE DETAILS PRODUCED BEFORE ME BY THE A. R. OF THE APPELLANT AND THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAVE ALSO BEEN EXAMINED. 3.2.1. IT IS SEEN THAT THE BOOKS OF ACCOUNTS OF THE APPELLANT ARE AUDITED BY THE TAX AUDITORS AS PER THE PROVISIONS OF SECTION 4 4AB OF THE I. T. ACT, 1961. THE AUDITORS HAVE NOT GIVEN ANY ADVERSE COMME NTS WITH REGARD TO THE BOOKS OF ACCOUNTS MAINTAINED BY THE APPELLANT. ON CAREFUL PERUSAL OF THE SALES-TAX ORDER AS WELL AS CST ORDER, IT IS SEE N THAT THE SAME IS TALLIED WITH THE TURNOVER OF THE APPELLANT. IT IS ALSO SEEN THAT THE MAIN REASON GIVEN BY THE AR OF THE APPELLANT FOR FALLEN IN G. P . IS DUE TO INCREASE IN INPUT COST OF RAW MATERIALS. 3.2.2. IT IS ALSO SEEN THAT THE APPELLANT IS MANUFA CTURER OF TAILOR MADE PRODUCTS AND ITS MAJOR RAW MATERIALS USED ARE STEEL , CHEMICALS AND HARDWARE WHICH ARE ACCORDING TO THE A. R. ARE FABRI CATED ITEMS AND THEIR RATES ARE CHANGING DAY BY DAY. 3.2.3. IT IS TO BE MENTIONED THAT IT IS A COMMON PR ACTICE IN BUSINESS THAT THE SALE PRICE OF THE MANUFACTURED GOODS ARE DECIDED AF TER TAKING COST OF RAW MATERIALS AND OTHER EXPENDITURES INTO ACCOUNT. THER EFORE, IT CANNOT BE SAID THAT EVEN AFTER INCREASE IN COST OF MANUFACTURED GO ODS, THE APPELLANT CONTINUED TO SELL GOODS AS PER THE OLD PRICE ONLY. THEREFORE, THERE IS A POSSIBILITY OF SALES INCREASE IN SALE PRICE ALSO. H ENCE, I AM OF THE VIEW THAT G. P. ADDITION REQUIRES TO BE SUSTAINED TO SOME EXT ENT. SINCE, THE ADDITION MADE BY THE ASSESSING OFFICER IS AT HIGHER SIDE, I AM INCLINED TO SUSTAIN THE ADDITION OF RS.50,000/-. THE A0 IS DIRECTED ACCORDI NGLY AND DELETE THE BALANCE ADDITION MADE BY HIM. THUS, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 5. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED DR SUPP ORTED THE ORDER 5 ITA NO.2110/AHD/09 & CO NO . 180/AHD/09 5 OF THE AO WHILE RELYING ON THE DECISION IN DHONDIRA M DALICHAND VS. CIT (1971) 81 ITR 609 (BOM). AND FURTHER CONTENDED THAT REJECTION OF BOOK RESULTS HAVING NOT BEEN DISPUTED BY THE ASSESS EE, THE ADDITION MADE BY THE AO SHOULD BE RESTORED BY ADOPTING AVER AGE GP RATE OF THE PRECEDING YEARS. ON THE OTHER HAND, THE LD. AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF THE LD. CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES & GONE THROUGH T HE FACTS OF THE CASE. AT THE OUTSET, WE FIND THAT THE DECISION IN DHONDIRAM DALICHAND VS. CIT (1971) 81 ITR 609 (BOM) WAS RENDE RED ON TOTALLY DIFFERENT FACTS AND CIRCUMSTANCES. IN THE CITED CAS E, THE ASSESSEE, DEALING IN HANDLOOM CLOTH, PRIMARILY RETAIL IN NATU RE., PRODUCED TWO SETS OF ACCOUNTS BOTH CLOSED AND ADJUSTED FOR ITS HEAD OFFI CE AS WELL AS ITS BRANCH AT BOMBAY. BALANCE-SHEETS WERE ALSO DRAWN UP. THE INCO ME-TAX OFFICER NOTICED IN THE BALANCE-SHEET OF THE HEAD OFFICE AN EXCESS OF A SSETS OF RS.4,268 OVER THE LIABILITIES. THE ASSESSEE HAD NOT MAINTAINED ANY QU ANTITATIVE STOCK RECORD FOR THE GOODS DEALT WITH BY IT. IN THE HEAD OFFICE THE ASSE SSEE HAD SHOWN SALES OF RS.7,34,038 AND A GROSS PROFIT OF 7-8 PER CENT AS A GAINST SALES OF RS.5,83,805 AND GROSS PROFITS OF 8 PER CENT FOR THE IMMEDIATELY PRECEDING YEAR. THE SALES TO THE EXTENT OF RS.5,00,301 WERE IN CASH AND REST OF THE SALES WERE CREDIT AND ON SCRUTINY OF THE CASH MEMOS IT WAS FOUND THAT THE BU SINESS WAS RETAIL WITH THE CONSUMERS AND OUT OF THE TOTAL SALES OF RS.7 LAKHS AND ODD, SALES TO THE EXTENT OF ABOUT RS.6 LAKHS WERE RETAIL. ON FURTHER GOING THRO UGH THE CREDIT SALES, THE INCOME-TAX OFFICER FOUND THAT THE ASSESSEE HAD CHAR GED PROFIT OF 8 PER CENT TO 10 PER CENT ON THE COST. HE NOTICED, HOWEVER, THAT THE PROFIT WAS SUBJECT TO DEDUCTION OF TRANSPORT CHARGES OF ABOUT 2 PER CENT. THE INCOM E-TAX OFFICER CAME TO THE CONCLUSION THAT THE ASSESSEE'S MARGIN OF PROFIT ON THE RETAIL BUSINESS MUST BE SUBSTANTIAL. THE ITO ACCORDINGLY, REJECTED THE BOOK S OF ACCOUNT PRODUCED BY ASSESSEE AND HELD THAT HAVING REGARD TO RETAIL NATU RE OF BUSINESS, GROSS PROFIT EARNED SHOULD BE 10 PER CENT ON SALES. THE AAC AS W ELL AS THE TRIBUNAL UPHELD THE ITO'S ORDER SUBSTANTIALLY. IN THE LIGHT OF THES E FACTS, HONBLE HIGH COURT HELD THAT THE MATERIAL OF ALL THE SURROUNDING CIRCUMSTAN CES AND FACTS AS FOUND BY THE 6 ITA NO.2110/AHD/09 & CO NO . 180/AHD/09 6 ITO AND THE AAC INDUCED THEM TO HOLD THAT IN THE AB SENCE OF THE QUANTITATIVE TALLY REGARDING THE SALES AND PURCHASES MADE BY THE ASSESSEE, IT WAS NECESSARY TO EXERCISE POWERS AVAILABLE UNDER THE PROVISO TO S ECTION 13 OF 1922 ACT. CONSEQUENTLY, POWER SO EXERCISED BY THEM WAS JUSTIF IED, HONBLE HIGH COURT CONCLUDED. THE LD. DR DID NOT DEMONSTRATE BEFORE U S AS TO HOW THIS DECISION HELPS THE REVENUE ,ESPECIALLY WHEN THE FACTS AND C IRCUMSTANCES ,WERE ALTOGETHER DIFFERENT IN THE CITED CASE .IN THE INST ANT CASE, THE AO DID NOT EVEN QUESTION THE SALES OR PURCHASES I.E THERE IS NO I NSTANCE OF SUPPRESSION OF SALES OR INFLATION OF PURCHASES WHILE THE ASSESSEE HAS M AINTAINED STOCK REGISTER AS PER EXCISE RECORDS AND NO DEFECT HAS BEEN POINTED OUT T HEREIN. THUS, RELIANCE ON THE AFORECITED DECISION IS TOTALLY MISPLACED.INDISPUTAB LY, THE ASSESSEE REFLECTED G.P. @ 8.42% ON THE TOTAL TURNOVER OF RS .5,05,71,362/- FOR THE YEAR UNDER CONSIDERATION AS AGAINST G.P@ 14.06% ON THE TOTAL TURNOVER OF RS.1,89,45,856/- IN THE PRECEDING ASSES SMENT YEAR. WITH THE INCREASE IN TURNOVER MANIFOLD, THE ASSESSEE EXP LAINED THE FALL IN GP RATE DUE TO INCREASE IN COST OF INPUTS WITHOUT C OMMENSURATE INCREASE IN SELLING PRICES; RATHER IN SOME CASES SE LLING PRICES WERE ALSO REDUCED TO PENETRATE THE MARKET. HOWEVER, THE AO REJECTED THE BOOK RESULTS ON THE GROUND THAT THE ASSESSEE DID NO T PRODUCE STOCK REGISTERS, EXCISE REGISTERS ETC IN SUPPORT OF HIS C LAIM NOR SUBSTANTIATED THEIR CLAIM OF INCREASE IN THE COST OF MATERIAL INCREASE WITHO UT CORRESPONDING INCREASE IN THE SALE PRICE TO THAT EXTENT. INTER ALIA, IT WAS POIN TED OUT THAT THE ASSESSEE HAD NOT BEEN MAINTAINING THE STOCK REGISTER PROPERLY. ON TH E OTHER HAND, THE ASSESSEE IN TERMS OF HIS SUBMISSIONS DATED 19.12.2008 PRODUC ED THE STOCK RECORDS BEFORE THE AO. ADMITTEDLY, THE ASSESSEE DID NOT DISPUTE TH E FINDINGS OF THE AO, REJECTING THE BOOK RESULTS IN TERMS OF PROVISI ONS OF SEC. 145 OF THE ACT, BEFORE THE LD. CIT(A) NOR THE LATTER RECOR DED ANY FINDINGS ON THIS ASPECT IN THE IMPUGNED ORDER. EVEN BEFORE US, NO SUCH GROUND HAS BEEN TAKEN. IN THESE CIRCUMSTANCES, ONLY ISSUE BEFORE US IS REGARDING ESTIMATION OF GP. NO DOUBT THE AO/CIT(A) SHOULD TRY TO MAKE AN HONEST AND FAIR ESTIMATE OF THE INCOME EVEN IN A BEST JUDGMENT ASSESSMENT AND SHOULD NOT ACT TOTALLY ARBI TRARILY, BUT THERE IS NECESSARILY SOME AMOUNT OF GUESS WORK INVOLVED I N A BEST 7 ITA NO.2110/AHD/09 & CO NO . 180/AHD/09 7 JUDGMENT ASSESSMENT, AND IT IS THE ASSESSEE HIMSELF WHO IS TO BLAME AS HE DID NOT SUBMIT PROPER ACCOUNTS AND DETA ILS.[ KACHWALA GEMS VS JCIT, 288 ITR 10 (2007)(SC) ]. IT IS TRUE T HAT ASSESSING OFFICER OR THE CIT(A) ARE NOT FETTERED BY TECHNICAL RULES OF EVIDENCE AND ARE ENTITLED TO ACT ON MATERIALS WHICH MAY NOT BE ACCEPTED AS EVIDENCE IN COURT OF LAW, NEVERTHELESS, THE ASSESSI NG OFFICER SHOULD ADOPT A METHOD WHICH MUST REFLECT THE PROFITS TRULY AND JUSTLY[ GEMINI PICURES LTD. VS CIT (1958) 33 ITR 547 (MAD).] FOR E STIMATING THE GROSS PROFIT, THE LD. CIT(A) CAN ALWAYS HAVE A LO OK AT THE MARGIN RETURNED IN COMPARABLE CASES OR EVEN IN ASSESSEES OWN CASE. IN THE INSTANT CASE, THE LD. CIT(A) FOUND THAT THE TU RNOVER SHOWN BY THE ASSESSEE HAS BEEN ACCEPTED BY THE AO. IN THE LIGHT OF PLEA OF THE ASSESSEE REGARDING INCREASE IN COST OF INPUTS, THE LD. CIT(A) SUSTAINED THE ADDITION TO THE EXTENT OF RS. 50,000/ - ON THE GROUND THAT THERE MIGHT BE INCREASE IN SALE PRICES. CONSID ERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, ESP ECIALLY WHEN THE ASSESSEE ACCEPTED THE AFORESAID ADDITION OF RS. 50, 000/- SUSTAINED BY THE LD. CIT(A) AS ALSO THE FINDINGS OF THE AO, REJECTING THE BOOKS OF ACCOUNTS ,INVOKING THE PROVISIONS OF SEC. 145 OF THE ACT AND THERE IS NO INSTANCE OF SUPPRESSION OF SALES OR INFLATION OF PURCHASES WHILE THE ASSESSEE HAS MAINTAINED STOCK REGISTER AS PER EXCISE RECORDS AND NO DEFECT HAS BEEN POINTED OUT THEREIN AND THE REVENUE DID NOT PLACE ANY MATERIAL BEFORE US SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER, WE ARE NOT INC LINED TO INTERFERE WITH THE FINDINGS OF THE LEARNED CIT(A). THEREFOR E, GROUND NO 1 IN THE APPEAL IS DISMISSED. 7. GROUND NO.2 RELATES TO AN ADDITION RS.70,809/- ON ACCOUNT OF PERSONAL EXPENDITURE. THE AO NOTICED THAT THE ASSES SEE CLAIMED THE FOLLOWING EXPENSES IN THE PROFIT AND LOSS ACCOU NT: (I) VEHICLE REPAIRING RS. 57,398 (II) PETROL RS.2,19,854 (III) TELEPHONE RS. 27,648 8 ITA NO.2110/AHD/09 & CO NO . 180/AHD/09 8 (IV) DEPRECIATION ON VEHICLES RS.1,17,938 --------------- TOTAL RS.4,22,838 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE WAS SPECIFICALLY ASKED TO JUSTIFY WITH EVIDENCE THAT TH E ABOVE EXPENDITURE WAS EXCLUSIVELY INCURRED FOR BUSINESS PURPOSES ONLY . SINCE THE ASSESSEE DID NOT MAINTAIN ANY SEPARATE DETAILS REGA RDING THE EXPENSES FOR BUSINESS AND PERSONAL PURPOSES WHILE T HE ELEMENT OF PERSONAL USE OF VEHICLES AND TELEPHONE WAS NOT DENI ED, THE AO DISALLOWED 1/5TH OF ABOVE EXPENSES, RESULTING IN AD DITION OF RS.70,809 (84,567-13,758) , THE AMOUNT OF RS.13,758 /- HAVING BEEN OFFERED SUO MOTU FOR DISALLOWANCE. 8. ON APPEAL, THE LEARNED CIT(A) SUSTAINED THE ADHO C DISALLOWANCE OF RS.25,000/- . 9. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED DR SUPP ORTED THE ORDER OF THE AO WHILE THE LEARNED AR ON BEHALF OF THE ASS ESSEE RELIED ON THE FINDINGS OF THE LD. CIT(A) . 10. AFTER HEARING BOTH THE PARTIES AND CONSIDERING THE FACTS OF THE CASE, WE FIND THAT THE REVENUE HAVE NOT REFERRED US TO ANY MATERIAL WARRANTING INTERFERENCE WITH THE FINDINGS OF THE LD. CIT(A). S INCE PERSONAL USE OF CAR OR TELEPHONE BY THE ASSESSEE AND HIS FAMILY MEMBERS OR STAFF HAS NOT BEEN DENIED NOR IT WAS CLAIMED THAT THE ASSESSEE HAD I NDEPENDENT VEHICLES OR TELEPHONES FOR PERSONAL USE, IN OUR OPINION DISALL OWANCE SUSTAINED BY THE LD. CIT(A) IN RESPECT OF THE EXPENSES ON RUNNING AND MAINTENANCE OF VEHICLES, INCLUDING DEPRECIATION THEREON AS ALSO ON TELEPHON ES, IN THE LIGHT OF PROVISIONS OF SEC. 38(2) OF THE ACT, IS REASONABLE . THEREFORE , GROUND NO. 2 OF THE APPEAL IS REJECTED. 9 ITA NO.2110/AHD/09 & CO NO . 180/AHD/09 9 11. GROUND NOS.3 AND 4 IN THE APPEAL OF THE RE VENUE BEING MERE PRAYER NOR ANY SUBMISSIONS HAVING BEEN MADE ON THES E GROUNDS, DO NOT REQUIRE ANY SEPARATE ADJUDICATION AND ARE, THER EFORE, DISMISSED. 12. IN THE RESULT , BOTH THE APPEAL OF THE REVEN UE AND THE CO FILED BY THE ASSESSEE, ARE DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 3-06-2011 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 3-06-2011 COPY OF THE ORDER FORWARDED TO: 1. SHRI HIMANSHU B AMIN, C/38, GREEN WOOD SOCIETY, NR. SOLA RAILWAY CROSSING, AHMEDABAD 2. E ITO, WARD-6(2), AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XI, AHMEDABAD 5. DR, ITAT, AHMEDABAD BENCH-A, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD