The DCIT, Circle-3, Surat V. M/s. Desai Automobiles, Surat

ITA 2303/AHD/2006

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9265 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 29-06-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 03-11-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B D BAROT
• Assessee Lawyers: P J DESAI
• Keywords: Gross profit estimation; Rejection of books of accounts; Unexplained investment; Gift; Business income; Depreciation; Income from undisclosed sources; Deemed to accrue or arise in india; Cost of acquisition; Unabsorbed depreciation; Set aside
• Section: 69C; 133A; 234B; 143(1); 143(2); 69A; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: AHMEDABAD BEN CHES D BENCH: AHMEDABAD (BEFORE S/SHRI H. L. KARWA, JM AND A N PAHUJA, AM) ITA NO. 2303/AHD/2006 A Y: 2003-04 THE DCIT, CIRCLE-3, ROOM NO.112, AAYAKAR BHAVAN, MAJURA GATE, SURAT VS M/S. DESAI AUTOMOBILES, MAHAN TERRACE, ADAJAN PATIA, SURAT [PAN: AADFD 8372 K ] APPELLANT RESPONDENT C. O. NO.280/AHD/2006 (IN ITA NO.2303/AHD/2006) M/S. DESAI AUTOMOBILES, MAHAN TERRACE, ADAJAN PATIA, SURAT VS THE DCIT, CIRCLE-3, ROOM NO.112, AAYAKAR BHAVAN, MAJURA GATE, SURAT APPELLANT RESPONDENT REVENUE BY SHRI B. D. BAROT, DR ASSESSEE BY SHRI P. J. DESAI, AR ORDER A N PAHUJA: THIS APPEAL BY THE REVENUE AND THE CROSS-OBJECTIO N BY THE ASSESSEE AGAINST AN ORDER DATED 30-8-2006 OF THE LEARNED CIT(A)-II, SURAT RAISE THE FOLLOWING GROUNDS: ITA NO. 2303/AHD/2006[REVENUE] 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.7,0 0,000/- ON ACCOUNT OF SALE OF SCRAP. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS)-II, SUR AT HAS ERRED IN APPRECIATING THE FACT THAT THE ASSESSEE FAILED T O GIVE ANY PLAUSIBLE EXPLANATION FOR NOT SHOWING ANY SALE OF S CRAP DURING THE YEAR. ITA NO.2303/AHD/2006 AND CO NO.280/AHD/2006 M/S. DESAI AUTOMOBILES 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.7,64,049/- ON ACCOUNT OF SALE COMMISSION. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS)-II,, SU RAT HAS ERRED IN APPRECIATING THE FACT THAT THE ASSESSEE COULD NO T FURNISH EVEN THE NAME AND ADDRESS OF THE PERSONS TO WHOM PAYMENT OF COMMISSION WAS CLAIMED TO HAVE BEEN MADE AS ALSO TO FURNISH CO MPLETE DETAILS OF RECIPIENTS OF SUCH COMMISSION. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.17,759/- IN RESPECT OF DISALLOWANCE OF STAFF WELFARE EXPENSES. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.1,53,550/- IN RESPECT OF DISALLOWANCE OF VARIOUS EXPENSES. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A)-II, SURAT OUGHT TO HAVE UPHELD THE O RDER OF THE ASSESSING OFFICER TO THAT EXTENT. 8. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD . CIT(A)MAY BE SET ASIDE AND THAT OF THE A. O. MAY BE RESTORED. C.O. NO.280/AHD/2006[ASSESSEE] (1) REJECTION OF BOOKS OF ACCOUNTS:- (1) ON THE FACTS AND CIRCUMSTANCES OF THE CASES, TH E LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING REJECTION OF BOOKS OF ACCOUNTS ON THE TE CHNICAL GROUND THAT NO SEPARATE GROUND WAS TAKEN. (2) THE APPELLANT SUBMITS THAT INHERENT IN THE GRO UND OBJECTING TO THE ADDITION WAS THE GROUND IN RESPECT OF REJECTION OF BOOKS OF ACCOUNTS. (II) GROSS PROFIT ADDITION SPARE PARTS:- (1) THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.17,84,902/- BY ADOPTING OF GROSS PROFIT RATE @41% IN RESPECT OF SP ARE PARTS. ITA NO.2303/AHD/2006 AND CO NO.280/AHD/2006 M/S. DESAI AUTOMOBILES 3 (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE AFOREMENTIONED ADDITION WAS REQUIRED TO BE DELETED. (III) GROSS PROFIT ADDITION ACCESSORIES :- (1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) ERRED IN CONFIRMING ADDITION OF RS.3,79,716/- BY AD OPTING OF GROSS PROFIT RATE @56.79% IN RESPECT OF SPARE PARTS . (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE AFOREMENTIONED ADDITION WAS REQUIRED TO BE DELETED. (IV) SEGREGATION OF INCOME DECLARED UNDER SURVEY RS.55,00,000/- (1) THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS ) ERRED IN SEGREGATING RS.55,00,000/- IN RESPECT OF A MOUNTS DISCLOSED DURING COURSE OF SURVEY WHEN THE AFOREMEN TIONED AMOUNT WAS PART OF NORMAL BUSINESS INCOME. (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ACTION OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) WAS NOT JUSTIFIED. (V) MISCELLANEOUS: - (1) THE APPELLANT SUBMITS THAT INTEREST U/S. 234B OUGHT NOT TO HAVE BEEN CHARGED. (2) THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR VAR Y ANY OF THE GROUNDS OF APPEAL. 2. ADVERTING FIRST TO THE GROUNDS RAISED IN THE CRO SS-OBJECTION OF THE ASSESSEE, FACTS, IN BRIEF, AS PER RELEVANT ORDERS A RE THAT RETURN DECLARING INCOME OF RS.6,89,814/- FILED ON 22-10-2003 BY THE ASSESS EE, AFTER BEING PROCESSED U/S 143(1) OF THE INCOME-TAX ACT (HEREINAFTER REFERRED TO AS THE ACT) WAS SELECTED FOR SCRUTINY WITH THE ISSUE OF NOTICE U/S 143(2) OF THE ACT SINCE IN THIS CASE A SURVEY U/S 133A OF THE ACT WAS CONDUCTED ON 18-02-2003, W HEN THE ASSESSEE OFFERED UNACCOUNTED INCOME OF RS.55,00,000/- TO TAX. THE AS SESSEE IS A DEALER IN AUTOMOBILE PRODUCTS AND DERIVES INCOME FROM SALE OF SPARE PARTS AND ACCESSORIES BESIDES PROVIDING AUTOMOBILE SERVICES T O THEIR CUSTOMERS. THOUGH ITA NO.2303/AHD/2006 AND CO NO.280/AHD/2006 M/S. DESAI AUTOMOBILES 4 THE ASSESSEE REFLECTED SALE OF RS. 24,65,32,430/- B ESIDES OTHER INCOME OF RS.51,88,690/-, THE ASSESSING OFFICER[AO IN SHORT] FOUND THAT NEITHER ANY TRADING ACCOUNT WAS PREPARED NOR ANY QUANTITATIVE DETAILS O F SPARE PARTS AND ACCESSORIES WERE MAINTAINED. ACCORDING TO THE AO, IF THE AMOUNT OF RS.55,00,000/- OFFERED TO TAX DURING THE COURSE OF SURVEY IS REDUCED FROM THE PROFITS, THERE WOULD BE LOSS OF RS. 25,87,594/-. THEREFORE, THE AO WAS OF THE OPINI ON THAT EITHER THE GROSS PROFIT HAD BEEN SUPPRESSED OR EXPENDITURE HAD BEEN INFLATE D. DURING THE COURSE OF SURVEY, IT WAS NOTICED THAT THE ASSESSEE PURCHASED BUILDING MATERIALS WORTH RS. 35,00,000/- AND HAD ALSO INVESTED IN PURCHASE OF FU RNITURE & FIXTURES AND COMPUTER AS DETAILED HEREUNDER: 1. RS.4,55,000/- - SAND 2. RS.6,40,000/- - KAPCHI 3. RS.4,41,000/- - BRICKS 4. RS.6,05,000/- - CEMENT 5. RS.1,45,000/- - FLOORING 6. RS.1,20,000/- - COLOUR 7. RS.10,94,000/- - STEEL RS.35,00,000/- RS. 1,45,000/- - FRONT BOARD RS. 3,55,000/- - FURNITURE & FIXTURE RS. 5,00,000/- - COMPUTER RS.45,00,000 SHRI NITIN N. DESAI, PARTNER OF THE ASSESSEE FIRM, IN HIS STATEMENT RECORDED ON 18.2.2003 ADMITTED THE AFORESAID EXPENDITURE OUT OF THEIR UNACCOUNTED INCOME. BESIDES, THE FOLLOWING AMOUNT OF CASH WAS TAKEN AWA Y BY THE PARTNERS OUT OF THE UNACCOUNTED INCOME:: NAME OF THE PARTNERS AMOUNT SHRI DAULATBHAI G. DESAI RS. 5,00,000/- SMT. PRABVINBHAI DAULATBHAI G. DESAI RS.2,00,000/- SHTI PIYUSHBHAI G. DESAI RS.3,00,000/- SINCE THE AFORESAID UNDISCLOSED AMOUNTS WERE NOT A CCOUNTED FOR IN THE BOOKS OF ACCOUNTS, THE AO WAS OF THE OPINION THAT THE BOOKS OF ACCOUNT WERE INCOMPLETE AND UNRELIABLE. IT WAS FURTHER FOUND DURING THE COU RSE OF ASSESSMENT PROCEEDINGS ITA NO.2303/AHD/2006 AND CO NO.280/AHD/2006 M/S. DESAI AUTOMOBILES 5 THAT THE ASSESSEE WAS NOT MAINTAINING ANY QUANTITAT IVE DETAILS OF SPARE PARTS AND ACCESSORIES NOR ANY STOCK REGISTER. THE ASSESSEE D ID NOT EVEN SUBMIT THE DETAILS OF OPENING AND CLOSING STOCK DESPITE SUFFICIENT OP PORTUNITY GIVEN. INSTEAD, IT WAS MENTIONED IN ANNEXURE-G THAT SALE AND PURCHASE, QU ANTITY OF SPARE PARTS AND ACCESSORIES IS NOT GIVEN BECAUSE LOOKING INTO THE N ATURE OF ITEMS IT WAS NOT POSSIBLE TO MAINTAIN QUANTITATIVE RECORD. HOWEVER, AFTER AN INORDINATE DELAY OF TWO YEARS, ON 4-1-2006 THE ASSESSEE SUBMITTED ONLY THE DETAILS OF CLOSING STOCK WITHOUT SUBMITTING CORRESPONDING DETAILS OF OPENING STOCK. TO A QUERY BY THE AO, THE ASSESSEE ADMITTED THAT THE DETAILS OF OPENING S TOCK WERE NOT MAINTAINED. THE AO ALSO FOUND THAT DETAILS OF OPENING STOCK AND CLO SING STOCK WERE NOT MAINTAINED FOR THE FY 2001-02, 2003-04 AND 2004-05. MOREOVER, THE ASSESSEE WAS NOT ABLE TO EXPLAIN THE WARRANTY CLAIMS IN TERM S OF QUANTITY OF STOCK USED. THE AO ON EXAMINATION OF THE SPARE PARTS ACCOUNT A ND ACCESSORIES ACCOUNT SEPARATELY RE-CAST THE TRADING ACCOUNT AS UNDER: TRADING A/C OF SPARE PARTS TO OPENING RS. 7672853/- BY SALES 4353420/- TO PURCHASE RS. 6079182/- BY CLOSING STOCK 7713153/- BY LOSS 1685462 RS.13752035 13752035 AS REVEALED FROM THE AFORESAID TRADING ACCOUNT, THE ASSESSEE REFLECTED LOSS OF RS.16,85,462/-; WHEREAS IN THE IMMEDIATELY PRECEDIN G YEAR GROSS PROFIT RATE OF 41% WAS SHOWN. IN RESPONSE TO A SHOW CAUSE NOTICE PROPOSING TO ADD AN AMOUNT OF RS.17,84,902/- ON ACCOUNT OF SUPPRESSION IN GROSS PROFIT ON SALE OF SPARE PARTS, THE ASSESSEE EXPLAINED THAT THERE IS A N ELEMENT OF WARRANTY CLAIM FOR AN AMOUNT OF RS. 14,07,340/-. HOWEVER, EVEN AFT ER TAKING THIS AMOUNT INTO CONSIDERATION, STILL THERE WAS LOSS OF RS.2,77,123/ - (RS.16,84,463 RS.14,07,340). MOREOVER, AFTER EXCLUSION OF RS.55,0 0,000/- AND UNABSORBED DEPRECIATION OF RS.10.48 LACS, THE NET TRADING RES ULT WORKED OUT TO LOSS OF RS.37,61,761/-.SINCE THE ASSESSEE DID NOT MAINTAIN DETAILS OF OPENING STOCK ITA NO.2303/AHD/2006 AND CO NO.280/AHD/2006 M/S. DESAI AUTOMOBILES 6 WHILE DETAILS OF CLOSING STOCK WERE NOT SUPPORTED B Y ANY EVIDENCE NOR QUANTITATIVE DETAILS OF VARIOUS ITEMS WERE MAINTAIN ED AND AO ON SCRUTINY OF DETAILS OF PURCHASE AND SALE OF 10 SELECTED ITEMS M ENTIONED ON PAGE 10 OF THE ASSESSMENT ORDER, FOUND AVERAGE GP OF 53.59% IN THE SE ITEMS WHILE THE ASSESSEE DID NOT EXPLAIN STEEP FALL IN GP RATE ON S ALE OF SPARE PARTS VIS--VIS PRECEDING YEAR WITH ANY COGENT REASONS , THE AO REJ ECTED THE BOOK RESULTS, HAVING RECOURSE TO PROVISIONS OF SECTION 145(3) OF THE ACT. ACCORDINGLY, THE AO APPLIED GROSS PROFIT RATE OF 41.38% OF THE PRECEDIN G YEAR AND MADE ADDITION OF RS.17,84,902/- RELYING, INTER ALIA, ON THE DECISION S IN THE CASE OF RATANLAL OM PRAKASH VS. CIT,132 ITR 640(ORISSA),RAM PRAKASH VS CIT (1983) 15 TAXMAN 533 (ALL.), HUKUM CHAND MAHENDRA KUMAR VS. CST (197 2) 29STC 394 (ALL), VRAJLAL MANILAL & CO. VS. CIT, (1973) 92 ITR 287 (M P), MULJI UDHAVJI VS CIT (1986) 145 ITR 575 (MP), DINANATH DUBEY VS CIT (198 6) 57 CTR 233 (MP) AND DHANDIA JEWELLERS VS CIT (1995) 214 ITR 712. 714 (R AJ). 3. ON APPEAL, THE ASSESSEE ARGUED THAT THE DISCREPA NCIES NOTICED IN THE SURVEY WERE ALREADY CONSIDERED IN THE BOOKS OF ACCO UNT. WHILE MENTIONING THAT SALE OF SPARE PARTS WAS AN INTEGRAL PART OF SERVICI NG OF VEHICLES AND STOCK OF SPARES COULD BE COMPARED WITH THE JOB CARD ISSUED A T THE TIME OF SERVICING OF THE VEHICLES AND CLAIM OF WARRANTY WERE CREDIBLE, THE A SSESSEE STATED THAT COMPLETE DETAILS OF STOCK IN RESPECT OF PURCHASE AND SALES O F SPARE PARTS WERE NOT MAINTAINED, THERE BEING 4000 ITEMS AND SOME OF THEM BEING OF SMALL VALUE. WHILE RELYING UPON CERTAIN DECISIONS, THE ASSESSEE ARGUED THAT IN SOME OF THE ITEMS GROSS PROFIT OF SPARE PARTS WAS MUCH LOWER TH AN OVER ALL GROSS PROFIT AND IN THE ASSESSMENT YEAR 2001-02, GROSS PROFIT HAS BEEN ACCEPTED. THE AO WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT AND EST IMATING THE GROSS PROFIT ON THE BASIS OF RESULTS DISCLOSED IN THE PRECEDING YEAR, T HE ASSESSEE SUBMITTED. IN THE LIGHT OF THESE SUBMISSIONS ,THE LEARNED CIT(A) UPHE LD THE ADDITION, HOLDING AS UNDER: 8. AT THE OUTSET, THE ARS ARGUMENTS AGAINST REJE CTION OF BOOKS OF ACCOUNT HAVE TO BE REJECTED. THIS IS BECAUSE, IN TH E GROUNDS OF APPEAL ITA NO.2303/AHD/2006 AND CO NO.280/AHD/2006 M/S. DESAI AUTOMOBILES 7 FILED ALONG WITH THE APPEAL MEMO IN FORM NO. 35, TH IS GROUND WAS NOT TAKEN. IN THE FIRST GROUND OF APPEAL, IT HAS SIMPLY STATED,THE LD. ACIT HAS ERRED IN MAKING ADDITION OF RS.17,84,902 ON ACCOUNT OF ALLEGED SUPPRESSION OF GROSS PROFIT IN SPARE PARTS .NOR DID THE AR PREFER ANY ADDITIONAL GROUND OF APPEAL IN COURSE OF THE APPELL ATE PROCEEDINGS, CONTESTING THE REJECTION OF BOOKS OF ACCOUNTS U/S 1 45(3) OF THE IT ACT. THEREFORE, ALL ARGUMENTS AND CONTENTIONS AS WELL AS CASES RELIED UPON BY THE AR WITH REGARD TO THE REJECTION OF BOOKS OF ACC OUNT, ARE REJECTED. .8.1 ON THE OTHER HAND, THE AO GAVE DETAILED REASO NS AS TO WHY THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE NOT RELIABLE. THE ARS ARGUMENT THAT THE DISCLOSURE OF RS.55 LAKHS MADE IN COURSE O F THE SURVEY HAD BEEN DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT, MAKING IT COMPLETE AND RELIABLE, ONLY STRENGTHENS THE AOS ARGUMENT THAT T HE TRADING RESULTS HAD BEEN MANIPULATED TO ACCOMMODATE THE DISCLOSURE, SO THAT, IF THE DISCLOSED AMOUNT OF RS.55 LAKH WERE TO BE EXCLUDED, THEN THE TRADING RESULTS WOULD SHOW A LOSS. THIS WAS TRUE NOT ONLY IN RESPECT OF T HE OVERALL BUSINESS BUT ALSO OF THE SPARE PARTS ACCOUNT. THE ASSESSEE HAD D ECLARED A TOTAL INCOME OF RS.6,89,840 WHICH WAS ARRIVED AT AFTER AD JUSTING CURRENT YEARS DEPRECIATION OF RS.18.24 LAKHS AND BROUGHT-FORWARD DEPRECIATION OF RS.10.48 LAKH. IF THE BROUGHT FORWARD DEPRECIATION WAS TO BE EXCLUDED, THE TOTAL INCOME WOULD WORK OUT TO RS.17,38,239 AND, IF THE DISCLOSURE OF RS.55 LAKHS WAS TO BE REDUCED FROM THE TRADING ACCO UNT, IT WOULD RESULT IN A LOSS OF RS.37,61,761. SIMILAR WOULD BE THE CASE I F ADJUSTMENTS WERE MADE TO THE DECLARED NET PROFIT OF RS.29.12 LAKHS. TO THIS EXTENT, THE ARS ARGUMENT THAT THE OVER ALL RESULTS OF THE BUSINESS WERE COMPARABLE TO EARLIER YEARS IS NOT SUPPORTED BY FACTS. AS FAR AS THE SPARE PARTS ACCOUNT IS CONCERNED, THE INCLUSION OF THE SUM OF RS.55 LAK H IN THE TRADING ACCOUNT HAD RESULTED IN A TRADING LOSS OF RS.16,85,462 AS A GAINST THE GP OF 41.38% IN THE IMMEDIATELY PRECEDING YEAR. THAT THE GP HAD BEEN SUBSTANTIALLY SUPPRESSED WAS FURTHER EVIDENCED BY T HE AO IN THE FORM OF THE GP OF INDIVIDUAL ITEMS WITH REGARD TO TEN OF WH ICH, HE BROUGHT ON RECORD THE PURCHASE COST AS WELL AS THE SELLING PRI CE AND SHOWED THAT THE AVERAGE GP OF SUCH ITEMS WAS 53.59%. 8.2 IT HAS BEEN EXPLAINED BY THE AR THAT THE GP OF SPARE PARTS WAS VARIABLE SINCE, THE SALE OF SPARES DURING WARRANTY PERIOD IS NOT COUNTED IN SALES EVEN THOUGH, THE PURCHASE OF SUCH PARTS IS RE CORDED. CONSEQUENTLY, THE PROFITABILITY OVER THE YEARS CANNOT BE COMPARED . THIS ARGUMENT OF THE AR IS NOT ACCEPTABLE. FIRSTLY BECAUSE, EVEN THOUGH THE PARTS SOLD OR PROVIDED AGAINST WARRANTY ARE NOT RECORDED IN SALES YET, THE VALUE OF SUCH PARTS IS REIMBURSED BY THE COMPANY AND, DURING THIS YEAR, THE VALUE OF SUCH WARRANTY RECEIVED FROM BAJAJ AUTO WAS RS.14,07 ,340. AND, EVEN AFTER INCLUDING THIS AMOUNT IN THE SALES, THE NET R ESULT WOULD WORK OUT TO A LOSS OF RS.2,77,123/-. IN OTHER WORDS, THE RECEIPT AGAINST SALE OF SUCH PARTS DO GET RECORDED, IF NOT IN THE SALES, THEN AT LEAST IN THE WARRANTY ACCOUNT. SECONDLY, THE ASSESSEE DID NOT MAINTAIN ANY QUANTIT ATIVE RECORDS OF EITHER ITA NO.2303/AHD/2006 AND CO NO.280/AHD/2006 M/S. DESAI AUTOMOBILES 8 PURCHASES OR SALE OF SPARE PARTS AND THEREFORE, WAS NOT IN A POSITION TO EXPLAIN OR TO PROVE THE TRUE EXTENT OF INCOME FROM THE SALE OF SPARE PARTS. THIRDLY, CONTRARY TO WHAT HAS BEEN CONTENDED BY THE AR THAT THE PURCHASE AND SALE OF SPARE PARTS IS ONLY AN AUXILIARY BUSINE SS TO THE MAIN BUSINESS OF SELLING VEHICLES, AND THAT PARTS ARE SUPPLIED/IS SUED ONLY WHEN VEHICLES ARE SERVICED, IT CANNOT BE DENIED THAT PARTS ARE AL SO SOLD BY THE SERVICE STATIONS INDEPENDENTLY I.E. WITHOUT THEY BEING PROV IDED AND CHARGED FOR, WHILE SERVICING VEHICLE. THEREFORE, IT WAS NECESSA RY FOR THE ASSESSEE TO MAINTAIN COMPLETE RECORDS OF THE SPARE PARTS. IN TH E ABSENCE OF SUCH RECORDS, ESPECIALLY OF PURCHASE AND SALES, THE AR C ANNOT ARGUE AND SUBSTANTIATE HIS CLAIM REGARDING THE VARIABILITY OF THE GP. INTERESTINGLY, IN THE WRITTEN SUBMISSIONS (PAGE 2) WHILE THE AR HAS C HALLENGED THE AOS OBSERVATION THAT, DAY-TO-DAY REGISTER WAS NOT MAINT AINED, AND IN DOING SO HAS REFERRED TO THE SEVERAL LETTERS ADDRESSED TO TH E AO IN COURSE OF THE ASSESSMENT PROCEEDINGS YET, AT THE SAME TIME IT HA S BEEN ADMITTED BY THE AR (PAGE6) THAT QUANTITATIVE DETAILS OF SPARE P ARTS AND ACCESSORIES ARE NOT MAINTAINED BECAUSE OF THE LARGE NUMBER OF ITEMS INVOLVED. IT IS NOT UNDERSTOOD AS TO HOW THE STOCK REGISTER COULD BE MA INTAINED WITHOUT THE RECORD OF EITHER THE PURCHASE OR THE SALES. THIS HA S NOT BEEN EXPLAINED BY THE AR. 8.3 THUS FROM ALL ACCOUNTS AND FROM ALL ANGLES, IT BECOMES QUITE CLEAR THAT EVEN THOUGH THE ASSESSEE HAD INCLUDED THE SUM OF RS.55 LAKH IN THE ACCOUNTS SUBSEQUENT TO THE SURVEY YET, IT HAD NO EF FECT OF ENHANCING ITS REGULAR INCOME WHICH WAS NOT ONLY NOT OF THE SAME L EVEL AS IN THE PRECEDING YEARS, BUT HAD ACTUALLY RESULTED IN SUBST ANTIAL LOSS NOT ONLY IN RESPECT OF SPARE PARTS AND ACCESSORIES BUT ALSO IN RESPECT OF THE OVER ALL BUSINESS. RELYING ON THE DECISION OF THE HON. GUJAR AT HIGH COURT IN 247 ITR 290 THE AO RIGHTLY POINTED OUT THAT THE UNEXPLA INED CASH OF RS.10 LAKH WAS TO BE ASSESSED AS DEEMED INCOME U/S. 69A AND TH E UNEXPLAINED PURCHASE/INVESTMENT IN BUILDING MATERIALS WAS TO BE ASSESSED AS DEEMED INCOME U/S. 69C OF THE I. T. ACT. AS PER THE VIEW T AKEN BY THE JURISDICTIONAL HIGH COURT, NO EXPENDITURE IS TO BE ADJUSTED AGAINS T SUCH DEEMED INCOMES. IN OTHER WORDS, THE DISCLOSURE MADE IN COU RSE OF THE SURVEY AND THE UNEXPLAINED INCOME DEEMED TO HAVE ACCRUED AND S O DISCLOSED, IS TO BE ASSESSED IN ADDITION TO THE REGULAR AND NORMAL I NCOME FOR THE YEAR. THIS WAS THE VIEW TAKEN BY THE HON. ITAT, AHMEDABAD BENCH IN THE FOLLOWING CASES: I) CIT V/S. HARI OM STEEL ITA NO.254/AHD/1996 II) OJAS TECHNOCHEM V/S. CIT ITA NO.1394/AHD/1996 III) SUPER INDUSTRIES V/S. ACIT ITA NO.191/AHD/199 9 IV) WHITE LINE CHEMICALS V/S. ITO WD. 2(1), SU RAT ITA NO.3509/AHD/2004 DT. 30/8/2005 ITA NO.2303/AHD/2006 AND CO NO.280/AHD/2006 M/S. DESAI AUTOMOBILES 9 8.4 THEREFORE, I AM OF THE VIEW THAT THE AO WAS FUL LY JUSTIFIED IN ADOPTING THE GP AT 41% AND MAKING THE ADDITION OF R S.17,84,902, WHICH IS THUS, CONFIRMED. 4. LIKE WISE, WHILE SCRUTINIZING THE DETAILS OF A CCESSORIES, THE AO NOTICED THAT IN THE TRADING ACCOUNT OF THE ACCESSORIES,THE ASSESSEE HAD SHOWN GP RATE OF 3.09% AS AGAINST GP RATE OF 56.79% OF PRECEDING YEA R. TO A QUERY BY THE AO, THE ASSESSEE DID NOT EXPLAIN THE REASONS FOR ABNORM AL FALL IN GP ON SALE OF ACCESSORIES. ACCORDINGLY, THE AO ESTIMATED PROFIT O F RS.3,79,716/- BY APPLYING GP RATE OF 56.79% OF THE PRECEDING YEAR ON TOTAL S ALE OF RS.7,07,113/-. 5. ON APPEAL, THE ASSESSEE CONTENDED THAT REASONS F OR LOW GP IN RESPECT OF ACCESSORIES WERE NEVER ENQUIRED BY THE AO. IT WAS E XPLAINED THAT THE ASSESSEE COULD NOT REALISE THE NORMAL SALE PRICE OF SOME OF THE ACCESSORIES, RESULTING IN FALL IN GP. HOWEVER, LEARNED CIT(A) DID NOT ACCEPT THESE SUBMISSIONS ON BEHALF OF THE ASSESSEE AND UPHELD THE ADDITION HOLDING AS UND ER: 12. I HAVE CAREFULLY CONSIDERED THE POSITION TA KEN BY THE AO AS WELL AS THE SUBMISSIONS OF THE AR. AS NOTED EARLIER, THERE WAS A CLEAR OBSERVATION OF THE AO IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAD BEEN UNABLE TO EXPLAIN THE FALL IN GP IN SPITE OF SEVERAL OPPORTUNITIES PROVIDED IN CO URSE OF THE ASSESSMENT PROCEEDINGS. THE AOS OBSERVATION IS SUPPORTED BY T HE FACT THAT THE CASE WAS HEARD ON 12 DIFFERENT DATES BEGINNING WITH 14/5/200 4 AND ENDING WITH 24/2/2006. THIS IS RECORDED ON THE FIRST PAGE OF THE ASSESSMEN T ORDER. THEREFORE, THE ARS CONTENTION THAT NEITHER DID THE AO SEEK AN EXPLANAT ION REGARDING THE GP NOR WAS ANY OPPORTUNITY PROVIDED TO THE ASSESSEE TO DO SO, IS SIMPLY NOT ACCEPTABLE. EVEN IN APPELLATE PROCEEDINGS, THE AR HAS NOT MADE ANY EFFORT TO CONTEST THE GP ADOPTED BY THE AO. THE GP WITH REGARD TO ACCESSORIE S WAS 52.18% IN THE F. Y. 1999-2000, 20.17% IN 2000-01 AND 56.80% IN 2001-02. THERE IS ABSOLUTELY NO EXPLANATION AS TO WHY THE GP DURING THE YEAR UNDER CONSIDERATION HAD FALLEN TO 3.09%. THE ONLY EXPLANATION GIVEN IS THAT HE ASSESS EE DID NOT REALIZE THE NORMAL SALE PRICE OF SOME OF THE ITEMS. THIS EXPLANATION W ITHOUT ANY EVIDENCE TO BACK IT UP, DOES NOT EXPLAIN SUCH A DRASTIC FALL IN THE GP. THEREFORE, I AM OF THE VIEW THAT THE AOS ACTION OF ADOPTING THE PREVIOUS YEARS GP OF 56.79% WAS FULLY JUSTIFIED. APPLYING THIS RATE, THE GROSS PROFIT WORKED OUT TO RS.4,01,569 AS AGAINST RS.21,853 DISCLOSED BY THE ASSESSEE. THE ADDITION O F THE DIFFERENCE, I.E. THE SUM OF RS.3,79,716 IS THEREFORE CONFIRMED. 6. THE ASSESSEE IN THEIR CROSS OBJECTION HAVE DISPU TED THE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED AR ON B EHALF OF THE ASSESSEE WHILE ITA NO.2303/AHD/2006 AND CO NO.280/AHD/2006 M/S. DESAI AUTOMOBILES 10 REITERATING THEIR SUBMISSIONS BEFORE THE LEARNED CI T(A). CONTENDED THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE A FORESAID ADDITIONS, ADOPTING THE GP RATE OF PRECEDING YEAR. ON THE OTHER HAND, T HE LEARNED DR SUPPORTED THE FINDINGS OF THE LEARNED CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AS IS APPARENT FROM THE FACTS OF THE CASE, DURING T HE COURSE OF SURVEY, IT WAS NOTICED THAT THE ASSESSEE HAD PURCHASED BUILDING MA TERIALS LIKE SAND,STEEL,KAPACHI ETC. WORTH RS. 35,00,000/- AND H AD ALSO INVESTED IN PURCHASE OF FURNITURE & FIXTURES AND COMPUTER ETC.TO THE EXT ENT OF RS. 10 LACS. SHRI NITIN N. DESAI, PARTNER OF THE ASSESSEE FIRM, IN HIS STATEME NT RECORDED ON 18.2.2003 ADMITTED THE AFORESAID AMOUNT OF RS. 45 LACS AS UNA CCOUNTED INCOME OF THE FIRM BESIDES AN AMOUNT OF RS. 10 LACS CASH TAKEN AWAY BY THE PARTNERS OUT OF THE UNACCOUNTED INCOME. SINCE THE AFORESAID UNDISCLOSED AMOUNTS WERE NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNT, THE AO AND T HE LD. CIT(A) WERE OF THE OPINION THAT THE BOOKS OF ACCOUNT WERE INCOMPLETE A ND UNRELIABLE. IT WAS FURTHER FOUND DURING THE COURSE OF ASSESSMENT PROCEEDINGS T HAT THE ASSESSEE WAS NOT MAINTAINING QUANTITATIVE DETAILS OF SPARE PARTS AND ACCESSORIES NOR ANY STOCK REGISTER. THE ASSESSEE DID NOT EVEN SUBMIT THE DET AILS OF OPENING AND CLOSING STOCK DESPITE SUFFICIENT OPPORTUNITY GIVEN. INSTEAD , IT WAS MENTIONED THAT SALE AND PURCHASE, QUANTITY OF SPARE PARTS AND ACCESSORI ES IS NOT GIVEN BECAUSE LOOKING INTO THE NATURE OF ITEMS IT WAS NOT POSSIBL E TO MAINTAIN QUANTITATIVE RECORD. AFTER AN INORDINATE DELAY OF TWO YEARS ON 4-1-2006, THE ASSESSEE SUBMITTED ONLY THE DETAILS OF CLOSING STOCK WITHOUT SUBMITTING CORRESPONDING DETAILS OF OPENING STOCK. TO A QUERY BY THE AO, THE ASSESSEE ADMITTED THAT THE DETAILS OF OPENING STOCK WERE NOT MAINTAINED AND T HE AO FURTHER FOUND THAT DETAILS OF OPENING AND CLOSING STOCK WERE NOT MAINT AINED FOR THE FY 2001-02, 2003-04 AND 2004-05.UNDISPUTEDLY, THE TRADING RESUL TS IN SPARES AND ACCESSORIES REFLECTED LOSSS AS AGAINST GP RATE OF 41.38% & 56.7 9% RESPECTIVELY IN THE PRECEDING YEARS. NEITHER BEFORE THE AO NOR BEFORE T HE LD. CIT(A) THE ASSESSEE COULD SUBSTANTIATE THE STEEP FALL IN GP OF SPARES A ND ACCESSORIES VIS--VIS GP IN ITA NO.2303/AHD/2006 AND CO NO.280/AHD/2006 M/S. DESAI AUTOMOBILES 11 THE PRECEDING YEARS. THE ASSESSEE DID NOT MAINTAIN EVEN ANY QUANTITATIVE RECORDS OF EITHER PURCHASES OR SALE OF SPARE PARTS NOR PLACED RELEVANT MATERIAL ON RECORD, EVIDENCING THE TRUE EXTENT OF INCOME FR OM THE SALE OF SPARE PARTS AND ACCESSORIES. IN THE ABSENCE OF QUANTITATIVE RECORDS , ESPECIALLY OF PURCHASE AND SALES, THE LD. AR COULD NOT SUBSTANTIATE HIS CLAIM OF STEEP FALL IN GP ON SALES OF SPARES AND ACCESSORIES AS COMPARED TO THEIR OWN GP RESULTS IN THE PRECEDING YEARS. AT THE SAME TIME, IT HAS BEEN ADMITTED BEFOR E THE LD. CIT(A) THAT QUANTITATIVE DETAILS OF SPARE PARTS AND ACCESSORIES ARE NOT MAINTAINED BECAUSE OF THE LARGE NUMBER OF ITEMS INVOLVED. BEFORE THE LD. CIT(A) AND EVEN BEFORE US, THE ASSESSEE DID NOT PLACE ANY MATERIAL CONTROVERTI NG THE FINDINGS OF THE AO THAT THE AVERAGE GP OF TEN ITEMS AS WORKED OUT BY THE A O ON PAGE 10 OF THE ASSESSMENT ORDER WAS 53.59%.AS REGARDS FALL IN GP O N SALE OF ACCESSORIES, NO EXPLANATION WAS FURNISHED BEFORE THE AO AND THE LD. CIT(A). IN THESE CIRCUMSTANCES, ONCE THE ASSESSEE FAILED TO FURNISH THE RELEVANT DETAILS AND SUBSTANTIATE THE TRADING RESULTS FOR THE YEAR UNDE R CONSIDERATION, IT WAS OPEN TO THE AO AND THE LD. CIT(A) TO REJECT THE BOOK RESULT S AND ESTIMATE THE GROSS PROFIT. THIS VIEW OF OURS IS FORTIFIED BY THE DECISION OF HONBLE ORISSA HIGH COURT IN THE CASE OF RATANLAL OMPRAKASH VS. CIT,132 ITR 640(ORIS SA) AND DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. KY PI LLIAH AND SONS, 63 ITR 411(SC). NO DOUBT THE AO/CIT(A) SHOULD TRY TO MAKE AN HONEST AND FAIR ESTIMATE OF THE INCOME EVEN IN A BEST JUDGMENT ASSESSMENT, A ND SHOULD NOT ACT TOTALLY ARBITRARILY, BUT THERE IS NECESSARILY SOME AMOUNT O F GUESS WORK INVOLVED IN A BEST JUDGMENT ASSESSMENT, AND IT IS THE ASSESSEE HIMSELF WHO IS TO BLAME AS HE DID NOT SUBMIT PROPER ACCOUNTS AND DETAILS.[ KACHWALA G EMS VS JCIT, 288 ITR 10 (2007)(SC) ].AS ALREADY STATED, THE ASSESSEE HAD PU RCHASED BUILDING MATERIALS LIKE SAND, STEEL, KAPACHI ETC. WORTH RS. 35,00,000/ - AND HAD ALSO INVESTED IN PURCHASE OF FURNITURE & FIXTURES AND COMPUTER ETC. TO THE EXTENT OF RS. 10 LACS. SHRI NITIN N. DESAI, PARTNER OF THE ASSESSEE FIRM, IN HIS STATEMENT RECORDED ON 18.2.2003 ADMITTED THE AFORESAID AMOUNT OF RS. 45 L ACS AS UNACCOUNTED INCOME OF THE FIRM BESIDES AN AMOUNT OF RS. 10 LACS CASH T AKEN AWAY BY THE PARTNERS OUT OF THE UNACCOUNTED INCOME. SINCE THE SAID AMOUNT W AS NOT REFLECTED IN THE ITA NO.2303/AHD/2006 AND CO NO.280/AHD/2006 M/S. DESAI AUTOMOBILES 12 BOOKS OF ACCOUNTS WHILE ASSESSEE DID NOT SUBSTANTI ATE THE TRADING RESULTS WITH COGENT EVIDENCE BEFORE THE AO OR THE LD. CIT(A), WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LEARNED CIT(A) WHILE UPHOLDIN G REJECTION OF BOOK RESULTS AND SUSTAINING THE ADDITION , APPLYING THE GP RATE OF T HE IMMEDIATE PRECEDING ASSESSMENT YEAR. THE FACTS AND CIRCUMSTANCES OF GP IN AY 2001-02 ARE NEITHER EVIDENT FROM THE ORDER OF THE LOWER AUTHORITIES NOR HAVE BEEN ELABORATED BEFORE US BY THE LD. AR. IT IS TRUE THAT 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 ASSESSING OFFICER SHOULD ADOPT A METHOD WHICH MUST REFLECT THE PROFITS TRULY AND JUSTLY[ GEMINI PICURES LTD. VS CIT (1958) 33 ITR 547 (MAD).] FOR ESTIMATING THE GROSS PROFIT, THE LD. CIT(A) CAN ALWAYS HAVE A LOOK AT THE MARGIN RETURNED IN CO MPARABLE CASES OR EVEN IN ASSESSEES OWN CASE. WE ARE OF THE OPINION THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS JUSTIFIED IN APPLYIN G GP RATE OF THE IMMEDIATE PRECEDING ASSESSMENT YEAR WHILE UPHOLDING TRADING A DDITION ON SALE OF SPARE PARTS AND ACCESSORIES, ESPECIALLY WHEN THE LD. AR ON BEHALF OF THE ASSESSEE DID PLACE ANY MATERIAL BEFORE US FOR HAVING A DIFFEREN T VIEW IN THE MATTER. IN THESE CIRCUMSTANCES, WE ARE NOT INCLINED TO INTERFERE WIT H THE FINDINGS OF THE LEARNED CIT(A). THEREFORE, GROUND NOS. I ,II & III IN THE C ROSS-OBJECTION OF THE ASSESSEE ARE DISMISSED. 8. GROUND NO. IV IN THE CROSS OBJECTION RELATES TO AN AMOUNT OF RS.55,00,000/- DISCLOSED DURING THE COURSE OF SURVE Y. AS IS APPARENT FROM THE FACTS OF THE CASE, DURING THE COURSE OF SURVEY, IT WAS NOTICED THAT THE ASSESSEE HAD PURCHASED BUILDING MATERIALS LIKE SAND,STEEL,KA PACHI ETC. WORTH RS. 35,00,000/- AND HAD ALSO INVESTED IN PURCHASE OF FU RNITURE & FIXTURES AND COMPUTER ETC.TO THE EXTENT OF RS. 10 LACS. SHRI NIT IN N. DESAI, PARTNER OF THE ASSESSEE FIRM, IN HIS STATEMENT RECORDED ON 18.2.20 03 ADMITTED THE AFORESAID AMOUNT OF RS. 45 LACS AS UNACCOUNTED INCOME OF THE FIRM BESIDES AN AMOUNT OF RS. 10 LACS CASH TAKEN AWAY BY THE PARTNERS OUT OF THE UNACCOUNTED INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THOUGH THE ITA NO.2303/AHD/2006 AND CO NO.280/AHD/2006 M/S. DESAI AUTOMOBILES 13 ASSESSEE DISCLOSED AN AMOUNT OF RS.55,00,000/- BUT AFTER CLAIMING DEPRECIATION OF RS.28,72,000/- ,THE INCOME WAS CONSIDERABLY REDU CED. AFTER EXCLUSION OF RS.55,00,000/- AND DEPRECIATION, TRADING RESULTS IN LOSS OF RS.41,55,000/- (RS.55,00,000/- MINUS RS.10,88,000/-). SINCE THE SA ID AMOUNT OF RS.55,00,000/- WAS NOT SHOWN IN THE TRADING AND PROFIT & LOSS ACCO UNT EITHER BY WAY OF SUPPRESSION OF GP OR BY WAY OF INFLATION OF EXPEND ITURE, THE AO CONCLUDED THAT UNACCOUNTED INVESTMENT AND EXPENDITURE OUTSIDE THE BOOKS OF ACCOUNT HAS TO BE CONSIDERED INDEPENDENTLY U/S 69 AND 69C OF THE ACT. SINCE THE ASSESSEE COULD NOT EXPLAIN BEFORE THE AO, THE REASONS FOR GROSS LO SS AFTER EXCLUSION OF AMOUNT RS.55,00,000/- SURRENDERED DURING THE COURSE OF SU RVEY, RELYING UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF FAKIR MOHMED HAJI HASSAN VS CIT 247 ITR 290 (GUJ.), THE AO ASSESSED T HE UNDISCLOSED AMOUNT OF RS.55,00,000/- U/S 69A AND 69C OF THE ACT. 9. ON APPEAL, THE ASSESSEE REITERATED THEIR CONTENT IONS BEFORE THE AO. HOWEVER, THE LEARNED CIT(A) UPHELD THE FINDINGS OF THE AO HOLDING AS UNDER: 8.3 THUS FROM ALL ACCOUNTS AND FROM ALL ANGLES, I T BECOMES QUITE CLEAR THAT EVEN THOUGH THE ASSESSEE HAD INCLUDED THE SUM OF RS.55 LAKH IN THE ACCOUNTS SUBSEQUENT TO THE SURVEY YET, IT HAD NO EF FECT OF ENHANCING ITS REGULAR INCOME WHICH WAS NOT ONLY NOT OF THE SAME L EVEL AS IN THE PRECEDING YEARS, BUT HAD ACTUALLY RESULTED IN SUBST ANTIAL LOSS NOT ONLY IN RESPECT OF SPARE PARTS AND ACCESSORIES BUT ALSO IN RESPECT OF THE OVER ALL BUSINESS. RELYING ON THE DECISION OF THE HON. GUJAR AT HIGH COURT IN 247 ITR 290 THE AO RIGHTLY POINTED OUT THAT THE UNEXPLA INED CASH OF RS.10 LAKH WAS TO BE ASSESSED AS DEEMED INCOME U/S. 69A AND TH E UNEXPLAINED PURCHASE/INVESTMENT IN BUILDING MATERIALS WAS TO BE ASSESSED AS DEEMED INCOME U/S. 69C OF THE I. T. ACT. AS PER THE VIEW T AKEN BY THE JURISDICTIONAL HIGH COURT, NO EXPENDITURE IS TO BE ADJUSTED AGAINS T SUCH DEEMED INCOMES. ........................................ ................................................... .................... 30. I DO NOT FIND ANY MISTAKE IN THE COMP UTATION MADE BY THE AO. AT THE VERY BEGINNING OF THE ASSESSMENT ORDER, THE AO EXPR ESSED HIS VIEW THAT THE DISCLOSURE MADE IN COURSE OF THE SURVEY WAS TO BE TREATED SEPARATELY AND ADDED TO THE NORMAL PROFIT OF THE ASSESSEES BU SINESS. THIS ISSUE HAS BEEN DEALT WITH IN GROUNDS OF APPEAL 1 & 2, EARLIER IN THIS ORDER. WHAT THE AO DID WAS TO WORK OUT THE NORMAL PROFIT OF THE ASS ESSEES BUSINESS ON THE BASIS OF THE GP RATIO OF THE PRECEDING YEAR AND IN DOING SO, HE MADE THE ADDITIONS TO THE GP ON SPARE PARTS AND ACCESSOR IES. AFTER HAVING ITA NO.2303/AHD/2006 AND CO NO.280/AHD/2006 M/S. DESAI AUTOMOBILES 14 MADE THESE ADDITIONS AND AFTER DISALLOWING CERTAIN EXPENSES, THE AO WORKED OUT THE NET LOSS FROM THE ASSESSEES BUSINES S AT RS.3,59,705/- AND AFTER ADJUSTING SHORT TERM CAPITAL GAIN OF RS.2 ,69,298 AND TAKING INTO CONSIDERATION THE INCOME FROM OTHER SOURCES OF RS.1 ,28,632/-, THE AO WORKED OUT THE TOTAL INCOME OF THE ASSESSEE AT RS.3 8,225 TO WHICH HE ADDED THE SUM OF RS.55 LAKH WHICH WAS DECLARED BY T HE ASSESSEE IN COURSE OF THE SURVEY. THIS ACTION OF THE AO IS DULY SUPPORTED BY THE VIEW TAKEN BY THE GUJARAT HIGH COURT (SUPRA) AND THE FOU R CASES DECIDED BY THE AHMEDABAD BENCH OF THE ITAT (SUPRA) WHICH HAVE ALRE ADY BEEN DISCUSSED IN THIS ORDER. THE ASSESSEES APPEAL ON T HIS GROUND IS REJECTED. 10. THE ASSESSEE IS DISPUTING THE AFORESAID FINDING S OF THE LD. CIT(A) IN THEIR CROSS OBJECTION . BEFORE US, THE LD. AR MERELY REI TERATED THEIR SUBMISSIONS BEFORE THE LD. CIT(A) WHILE THE LD. DR SUPPORTED THE FINDI NGS OF THE AO. SINCE THE LEARNED AR ON BEHALF OF THE ASSESSEE DID NOT PLACE ANY MATERIAL BEFORE US, CONTROVERTING THE AFORESAID FINDINGS OF THE LEARNE D CIT(A) WHILE RELYING UPON THE AFORESAID DECISION OF THE HONBLE JURISDICTIONAL HI GH COURT IN FAKIR MOHMED HAJI HASSAN VS CIT 247 ITR 290 (GUJ.) NOR EVEN POINTED O UT ANY CONTRARY DECISION, WE ARE NOT INCLINED TO INTERFERE WITH HIS FINDINGS. ACCORDINGLY, GROUND NO. IV IN THE CROSS OBJECTION IS REJECTED. 11. GROUND NO. V(1) IN THE CROSS OBJECTION RELATES TO CHARGING OF INTEREST U/S 234B OF THE ACT. THE LD. AR ON BEHALF OF THE ASSESS EE DID NOT MAKE ANY SUBMISSIONS ON THIS GROUND. LEVY OF INTEREST U/S 23 4B OF THE ACT , BEING MANDATORY [COMMISSIONER OF INCOME TAX.VS ANJUM M. H . GHASWALA AND OTHERS,252 ITR 1(SC)] AND NO INFIRMITY HAVING BEEN POINTED OUT IN ITS LEVY, THIS GROUND IS DISMISSED. 12. NO ADDITIONAL GROUND HAVING BEEN MADE IN TERMS OF RESIDUARY GROUND NO.V(2), THIS GROUND IS ALSO DISMISSED. ITA NO. 2303/AHD/2006 13. ADVERTING NOW TO THE APPEAL BY THE REVENUE, GR OUND NOS. 1 AND 2 RELATE TO DELETION OF ADDITION ON ACCOUNT OF SALE OF SCRAP . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASS ESSEE HAD SOLD SCRAP OF ITA NO.2303/AHD/2006 AND CO NO.280/AHD/2006 M/S. DESAI AUTOMOBILES 15 RS. 6,41,035/- IN THE AY 2002-03 WHEREAS IN THE YEA R UNDER CONSIDERATION NO SUCH SALE WAS SHOWN. THE AO FURTHER NOTICED THAT IN THE YEAR UNDER CONSIDERATION THERE WAS WARRANTY CLAIM OF RS.14,07 ,340/- AS AGAINST SIMILAR WARRANTY CLAIM OF RS.11,27,336/- IN THE IMMEDIATEL Y PRECEDING YEAR. ACCORDINGLY, THE AO WAS OF THE OPINION THAT THE ASSESSEE HAS SU PPRESSED SCRAP ,EITHER HAVING BEEN SOLD OUTSIDE THE BOOKS OR HAVING NOT SH OWN IN THE STOCK INVENTORY. TO A QUERY BY THE AO, THE ASSESSEE SUBMITTED THAT T HERE WAS NO SUCH SALE OF SCRAP IN THE YEAR UNDER CONSIDERATION. SINCE IN THE PRECEDING YEAR SCRAP WAS SOLD ON A TURNOVER OF RS.15,99,05,438/- WHEREAS IN THE YEAR UNDER CONSIDERATION TURNOVER INCREASED TO RS. 24,10,32,430/-, THE AO E STIMATED SCRAP SALES OF RS.7,00,000/- AND ADDED TO THE INCOME OF THE ASSESS EE. 14. ON APPEAL, THE ASSESSEE CONTENDED THAT SCRAP WA S NOT SOLD EVERY YEAR ON REGULAR BASIS. IN THE PRECEDING YEAR SCRAP OF RS.6, 41,035/- WAS SOLD WHEREAS IN THE FINANCIAL YEARS 1999-2000 AND 2000-01 NO SUCH S ALE WAS MADE. RELYING UPON THE DECISION OF THE HONBLE J &K HIGH COURT IN THE CASE OF INTERNATIONAL FOREST COMPANY VS CIT 101 ITR 721, IT WAS CONTENDE D THAT THE ONUS WAS ON THE AO TO PROVE THAT THE ASSESSEE HAS EARNED MORE I NCOME THEN DISCLOSED. INTER ALIA, THE LEARNED AR RELIED UPON THE DECISION OF AH MEDABAD BENCH OF THE ITAT IN THE CASE OF SUMUL VS CIT 99 TTJ 390. IN THE LIGHT O F THE AFORESAID SUBMISSIONS OF THE ASSESSEE, THE LEARNED CIT(A) DELETED THE ADDITI ON HOLDING AS UNDER: 16. I HAVE CAREFULLY CONSIDERED BOTH THE POSITIONS . THE VERY FACT THAT NO SCRAP WAS SOLD DURING THE FINANCIAL YEARS 1999-2000 AND 2000-01, SHOWED THAT SCRAP WAS NOT SOLD BY THE ASSESSEE ON REGULAR BASIS EVERY YEAR. IN THE YEAR UNDER CONSIDERATION, THE AO MADE THE ADDIT ION PURELY ON ESTIMATE WITHOUT BRINGING ON RECORD ANY CORROBORATI VE EVIDENCE TO SHOW THAT SCRAP HAD INDEED BEEN SOLD. IT WAS NOT SUFFICI ENT TO TAKE A VIEW AND MAKE THE ADDITION SIMPLY BECAUSE SCRAP HAD BEEN SOL D IN THE IMMEDIATELY YEAR AND BECAUSE, BOTH DURING THE PRECEDING YEAR AS WELL AS DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD RECEIVED WARRANTY CLAIM RESULTING IN REPLACEMENT OF SPARE PARTS. THERE WAS THUS, ABSOLUTELY NO BASIS TO EITHER COME TO THE CONCLUSION THAT SCRAP H AS BEEN SOLD OUTSIDE BOOKS OR EVEN TO ARRIVE AT FIGURE OF RS.7 LAKLH. TH E ADDITION OF THE SAID SUM IS THEREFORE, DELETED. ITA NO.2303/AHD/2006 AND CO NO.280/AHD/2006 M/S. DESAI AUTOMOBILES 16 15. THE REVENUE IS NOW IN APPEAL AGAINST THE AFORES AID FINDINGS OF THE LEARNED CIT(A). THE LEARNED DR CONTENDED THAT EVEN THOUGH THE ASSESSEE HAS SHOWN SCRAP SALES IN THE PRECEDING YEAR, NO SUCH SA LE WAS SHOWN IN THE YEAR UNDER CONSIDERATION. TO A QUERY BY THE BENCH THE LE ARNED DR DID NOT REPLY AS TO WHETHER THERE WAS SINGLE INSTANCE OF SALE OF SCRAP OUTSIDE THE BOOKS IN THE YEAR UNDER CONSIDERATION. ON THE OTHER HAND, THE LEARNED AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF THE LEARNED CIT( A). 16. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. IN THE ABSENCE OF ANY BASIS FOR THE ADDITION OF RS.7, 00,000/- ON ACCOUNT OF SALE OF SCRAP, WE ARE NOT INCLINED TO INTERFERE WITH THE FI NDINGS OF THE LEARNED CIT(A). ACCORDINGLY, GROUND NOS. 1 AND 2 IN THE APPEAL OF T HE REVENUE ARE REJECTED. 17. GROUND NOS. 3 AND 4 IN THE APPEAL RELATE TO ADD ITION OF RS.7,64,059/- ON ACCOUNT OF SALE COMMISSION. DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS DEBITED COMMISSION OF RS.7,64,059/- PAID TO BROKERS AS WELL AS CUSTOMERS, PAYMENT RANGING FROM RS.500/- TO RS.1,000/- PER VEHICLE. TO A QUERY BY THE AO, THE ASSESSEE EXPLAIN ED THAT RATE OF COMMISSION WAS NOT FIXED AND THIS WAS PAID TO MEET COMPETITION IN THE MARKET . IT WAS FURTHER ARGUED THAT BAJAJ PRODUCTS WERE FACING STIFF COMPET ITION FROM OTHER PRODUCTS OF HERO HONDA, LML, TVS AND YAMAHA ETC. HOWEVER, THE A O REJECTED THESE CONTENTIONS OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS MERELY INFLATED THE EXPENDITURE IN ORDER TO REDUCE THE PROFITS AND NO BUSINESSMAN WOULD PAY COMMISSION WHILE FACING LOSS IN THE BUSINESS. INTER ALIA, SINCE THE ASSESSEE DID NOT FURNISH ADDRESS OF THE RECIPIENTS OF THE COMMIS SION, THE AO DISALLOWED THE ENTIRE COMMISSION . 18. ON APPEAL, THE LEARNED AR ON BEHALF OF THE ASSE SSEE REITERATED THEIR SUBMISSIONS BEFORE THE AO AND ARGUED THAT COMMISSIO N HAD BEEN PAID ONLY TO 1000 CUSTOMERS OUT OF 5572 CUSTOMERS. THOUGH THE AO WAS REQUESTED TO IDENTIFY FEW ENTRIES FOR WHICH DETAILED INFORMATION INCLUDIN G NAME AND ADDRESSES WERE NECESSARY, THE AO DID NOT RESPOND TO THEIR OFFER NO R PERUSED THE MATTER FURTHER. IN ITA NO.2303/AHD/2006 AND CO NO.280/AHD/2006 M/S. DESAI AUTOMOBILES 17 THE LIGHT OF THESE SUBMISSIONS, THE LEARNED CIT(A) DELETED THE ADDITION, HOLDING AS UNDER: 20. I HAVE CAREFULLY CONSIDERED THE VIEW TAKEN BY THE AO AS WELL AS THE SUBMISSIONS OF THE AR, MADE BOTH BEFORE THE AO AND BEFORE ME, IN COURSE OF THE APPELLATE PROCEEDINGS. I HAVE ALSO PE RUSED A COPY OF THE LEDGER ACCOUNT OF DISCOUNT AND COMMISSION. IT IS SEEN FROM THE COPY OF THE LEDGER ACCOUNT THAT THE ASSESSEE HAD PAID BOTH COMMISSION AND ALLOWED DISCOUNT. ALMOST ALL THE PAYMENTS HAD BEEN MADE IN CASH AND THE AMOUNTS VARIED FROM AS LITTLE AS RS.11 TO RS.59,650 . THE ENTRIES SHOW THE DATES, THE NATURE OF PAYMENT, THE NAMES OF THE PAYE ES AND THE ACCOUNT NUMBERS. I HAVE ALSO PERUSED A COPY OF THE LETTER D TD. 10/12/2004 ADDRESSED BY THE ASSESSEE TO THE AO WHEREIN, THE AS SESSEE HAD REQUESTED THE AO TO CHOOSE ENTRIES FROM THE LEDGER ACCOUNT FOR WHICH THE REQUIRED INFORMATION REGARDING FULL NAMES AND ADDRE SSES WOULD BE PROVIDED. A COPY OF THE LEDGER ACCOUNT HAD BEEN ENC LOSED. 20.1 THIS OFFER OF THE ASSESSEE FINDS NO MENTION IN THE ASSESSMENT ORDER. THE AO SIMPLY REJECTED THE DETAILS FURNISHED ON THE GROUND THAT THE ADDRESSES OF THE PAYEES HAD NOT BEEN FURNISHED. HE ALSO TOOK THE VIEW THAT NO COMMISSION WAS REQUIRED TO BE PAID TO ATTRA CT CUSTOMERS SINCE THEY WOULD COME ON THEIR OWN IN ANY CASE. I DO NOT AGREE WITH THIS PROPOSITION. THE INTENSE COMPETITION BETWEEN THE SE VERAL MANUFACTURERS OF TWO-WHEELERS AND THREE-WHEELERS IN THE MARKET, I S COMMON KNOWLEDGE. IN SUCH A SCENARIO, IT WOULD NOT BE UNUSUAL FOR THE DEALERS TO BEAT COMPETITION BY PROVIDING INCENTIVES TO THE PROSPECT IVE CUSTOMERS. IT IS ALSO WELL KNOWN THAT EVERY TIME A CUSTOMER ENTERS A COMP ETITIVE MARKET, HE ASKS FOR DISCOUNT. MOREOVER, THE FACTUAL POSITION O R THE CORRECTNESS OF THE ASSESSEES CLAIM COULD HAVE ALSO BEEN VERIFIED FROM BAJAJ AUTO LTD. WITHOUT MAKING SUCH INQUIRY EITHER FROM BAJAJ AUTO LTD. OR FROM THE MARKET AND THE DEALERS OF OTHER BRANDS, IT WAS NOT APPROPR IATE TO SIMPLY TAKE THE VIEW THAT THE ASSESSEE HAD DELIBERATELY INFLATED TH E EXPENSES. 20.2 AS REGARDS THE ASSESSEES TRADING RESULTS SHOW ING A LOSS IF THE DISCLOSURE OF RS. 55 LAKH IS EXCLUDED, THIS ISSUE H AD ALREADY BEEN TAKEN CARE OF BY THE AO AND ADDITIONS MADE ON ACCOUNT OF LOW GROSS PROFIT. HAVING DONE SO, THIS COULD NOT BE TAKEN AS A GROUND ONCE AGAIN TO DISALLOW SUCH AN EXPENDITURE FOR WHICH NO ADVERSE E VIDENCE HAD BEEN BROUGHT ON RECORD. 20.3 TAKING THE ABOVE INTO CONSIDERATION, I HOLD TH AT THERE WAS NO JUSTIFICATION IN DISALLOWING THE EXPENDITURE OF RS. 7,64,059 ON ACCOUNT OF DISCOUNT AND COMMISSION EXPENSES. THE AO IS DIRECTE D TO ALLOW THE CLAIM. ITA NO.2303/AHD/2006 AND CO NO.280/AHD/2006 M/S. DESAI AUTOMOBILES 18 19. THE REVENUE IS IN APPEAL AGAINST THE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED DR REPLIED ON THE ORDER OF THE AO WHILE THE LEARNED AR SUPPORTED THE FINDINGS OF THE LEARNED CIT(A). 20. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. THE REVENUE HAVE NOT PLACED BEFORE US ANY MATERIAL CONTRARY TO THE AFORESAID FINDINGS OF THE LD. CIT(A) THAT THE ASSESSEE REQUESTED THE AO TO CHOOSE ENTRIES FROM THE LEDGER ACCOUNT FOR WHICH THE REQUIRED INFO RMATION REGARDING FULL NAMES AND ADDRESSES WERE REQUIRED IN ORDER TO ESTABLISH G ENUINENESS OF THE COMMISSIONS AND THAT DUE TO THE INTENSE COMPETITION BETWEEN THE MANUFACTURERS OF TWO-WHEELERS AND THREE-WHEELERS, IT WAS NOT UNU SUAL FOR THE DEALERS TO PROVIDE INCENTIVES TO THE CUSTOMERS. THERE BEING NO MATERIAL BEFORE US TO TAKE A DIFFERENT VIEW IN THE MATTER, WE ARE NOT INCLINED T O INTEREFERE WITH THE FINDINGS OF THE LD. CIT(A). THEREFORE, GROUND NOS. 3 & 4 IN THE APPEAL OF THE REVENUE ARE DISMISSED. 21. GROUND NO.5 IN THE APPEAL OF THE REVENUE RELATE S TO DELETION OF ADDITION OF RS.17,759/- IN RESPECT OF STAFF WELFARE EXPENSES .T HE AO DISALLOWED 25% OF THE EXPENSES OF RS. 71,039/- DEBITED ON ACCOUNT OF STAF F WELFARE EXPENSES INCURRED IN TEA, COFFEE AND LUNCH ETC. ON THE GROUND THAT EN TIRE EXPENSES WERE NOT INCURRED ON STAFF WELFARE. 22. ON APPEAL, THE ASSESSEE CONTENDED THAT DURING T HE PEAK SEASONS, THE EMPLOYEES HAVE TO WORK FOR LONG HOURS AND ACCORDING LY TEA, COLD DRINKS, LUNCH, DINNER AND BREAK-FAST ETC. WERE ARRANGED AND CABLE TV WAS ALSO INSTALLED, FOR WHICH RS.1000/- WAS PAID. SINCE THE EXPENDITURE WAS FOR THE PURPOSE OF BUSINESS, NO PORTION OF IT SHOULD BE DISALLOWED, IT WAS CONTENDED. IN THE LIGHT OF THESE SUBMISSIONS, THE LD. CIT(A) DELETED THE DISAL LOWANCE. ITA NO.2303/AHD/2006 AND CO NO.280/AHD/2006 M/S. DESAI AUTOMOBILES 19 23. THE REVENUE IS NOW IN APPEAL AGAINST THE AFORES AID FINDINGS OF THE LEARNED CIT(A). THE LEARNED DR SUPPORTED THE ORDER OF THE AO WHILE THE LEARNED AR ON BEHALF OF THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED CIT(A). 24. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE FACTS OF THE CASE. WE FIND THAT THE AO HAS NOT BROUGHT ANY MATERIAL O N RECORD THAT EXPENDITURE WAS EITHER PERSONAL IN NATURE OR WAS CAPITAL IN NATURE SINCE THE AO DID NOT DOUBT THE GENUINENESS OF THE EXPENDITURE NOR COULD BRING ANY EVIDENCE ON RECORD THAT THE EXPENDITURE WAS NOT INCURRED FOR THE PURPOSE OF THE BUSINESS, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LEARNED CIT(A ). THEREFORE, GROUND NO. 5 IN THE APPEAL IS DISMISSED. 25. GROUND NO.6 IN THE APPEAL RELATES TO DISALLOWAN CE OUT OF VARIOUS EXPENSES. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE AO NOTICED THAT THERE WAS ABNORMAL INCREASE IN SOME OF THE ITEMS OF THE EXPENDITURE VIS-A-VIS PRECEDING YEAR. LABOUR EXPENDITURE OF RS.74,785/- INCURRED IN THE PRECEDING YEAR INCREASED TO RS.3,32,425/- IN THE YEAR UNDER C ONSIDERATION WHILE EXPENDITURE ON DIWALI GIFTS AND BONUS HAD INCREASED FROM RS.15,550/- TO RS.95,855/- IN THE YEAR UNDER CONSIDERATION. LIKEWI SE, SALE PROMOTION EXPENSES HAD ALSO INCREASED. ACCORDINGLY, THE AO CONCLUDED T HAT EXPENDITURE WAS EITHER INFLATED OR WAS OF PERSONAL NATURE AND WAS NOT VERI FIABLE. THEREFORE, THE AO DISALLOWED 10% OF THE TOTAL EXPENDITURE , RESULTING IN ADDITION OF RS.1,53,553/-. 26. ON APPEAL, THE LEARNED AR CONTENDED THAT INCREA SE IN THE EXPENDITURE IS COMMENSURATE WITH THE INCREASE IN TURNOVER AND IS S UPPORTED BY ALL THE BILLS AND VOUCHERS. IN THE LIGHT OF THESE SUBMISSIONS, THE LE ARNED CIT(A) DELETED THE ADDITION HOLDING AS UNDER: 28. THIS DISALLOWANCE HAS BEEN DISCUSSED BY THE AO ON PAGES 15-16 OF THE ASSESSMENT ORDER. I AM OF THE VIEW THAT THER E WAS NO JUSTIFICATION IN MAKING GENERAL DISALLOWANCE OF 10% OUT OF ALL EXPEN SES CLAIMED BY THE ASSESSEE OTHER THAN STAFF SALARY, INSURANCE AND LEG AL AND PROFESSIONAL EXPENSES, ESPECIALLY WHEN, HE MADE THE DISALLOWANCE ON THE BASIS OF ITA NO.2303/AHD/2006 AND CO NO.280/AHD/2006 M/S. DESAI AUTOMOBILES 20 CERTAIN CRYPTIC OBSERVATIONS WITH REGARD TO A FEW I TEMS OF EXPENDITURE. WITHOUT POINTING OUT ANY DEFECT IN THE ACCOUNTS OR BRINGING ON RECORD ANY EVIDENCE TO SHOW THAT THE EXPENSES CLAIMED WERE NOT GENUINE, NO SUCH DISALLOWANCE COULD BE MADE. THE AO HAS ALSO SUMMARI LY REJECTED THE ASSESSEES CONTENTION THAT THE EXPENSES HAD INCREAS ED BECAUSE OF THE INCREASED TURNOVER. THAT THE DISALLOWANCE WAS BASED ON MERE PRESUMPTION IS SHOWN BY HIS OBSERVATION, MAJO R PORTIONS CAN BE PRESUMED FOR BUSINESS PURPOSES BUT SOME OF EXPENDIT URE IS DEFINITELY EITHER INFLATED ONE OR PERSONAL NATURE OR HAVING NO VERIFIABLE VOUCHERS.. NEITHER WAS THE AO ABLE TO PROVE THAT THE EXPENSES WERE INFLATED OR WERE OF A PERSONAL NATURE, NOR WAS HE ABLE TO POINT OUT ANY ITEM OF EXPENDITURE WHICH WAS NOT SUPPORTED BY BILLS OR VOUCHERS. IN SU CH A SITUATION, I HAVE NO OTHER OPTION BUT TO TAKE THE VIEW THAT THE DISAL LOWANCE WAS COMPLETELY UNWARRANTED. THE ADDITION OF THE SUM OF RS.1,53,550 , IS THEREFORE, DELETED. 27. THE REVENUE IS IN APPEAL AGAINST THE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED DR RELIED ON THE ORDER OF THE A O WHILE THE LEARNED AR SUPPORTED THE FINDINGS OF THE LEARNED CIT(A). 28. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. SINCE THE AO NEITHER POINTED OUT A SINGLE ITEM OF P ERSONAL NATURE NOR DOUBTED THE GENUINENESS OF SUCH EXPENDITURE NOR EVEN RECORDED A NY FINDING THAT THE EXPENDITURE WAS NOT SUPPORTED BY THE RELEVANT BILLS , WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LEARNED CIT(A).T HEREFORE, GROUND NO.6 IN THE APPEAL IS DISMISSED. 29. GROUND NOS.7 AND 8 IN THE APPEAL OF THE REVENUE ,BEING GENERAL IN NATURE, DO NOT REQUIRE ANY SEPARATE ADJUDICATION AND ARE , ACCORDINGLY, DISMISSED. 30. IN THE RESULT, APPEAL OF THE REVENUE AS WELL AS CROSS-OBJECTION OF THE ASSESSEE, ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH AUGUST,2 009 SD/- SD/- (H. L. KARWA) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 28TH AUGUST,2009 ITA NO.2303/AHD/2006 AND CO NO.280/AHD/2006 M/S. DESAI AUTOMOBILES 21 LAKSHMIKANT/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE 2. THE DCIT, CIRCLE-3,ROOM NO.112, AAYAKAR BHAVAN, MAJURA GATE, SURAT 3. CIT(A)-II,SURAT 4. THE CIT CONCERNED 5. THE D.R. ITAT, AHMEDABAD, 6. GUARD FILE BY ORDER DR / AR, ITAT, AHMEDABAD I