RAKESH UPADHYAY, MUMBAI V. ITO 21(1)(4), MUMBAI

ITA 2437/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93364 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2015
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 20-07-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 10-04-2014
• Court: TRIBUNAL
• Department Lawyers: O P MEENA
• Assessee Lawyers: CHINTAN PATEL

Judgement Text

, . . , IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI . . , BEFORE SHRI R.C.SHARMA , ACCOUNTANT MEMBER ./ ITA NO. 2437 / MUM/20 1 4 ( / ASSESSMENT YEAR : 200 6 - 0 7 ) RAKESH UPADHYAY, 104 GALAXY AZAD ROAD, VILE PARLE (EAST), MUMBAI - 400057 VS. ITO - 21(1)(4), MUMBAI ./ ./ PAN/GIR NO. : A A APU 6468 L ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI CHINTAN PATEL /REVENUE BY : SHRI O.P.MEENA / DATE OF HEARING : 20 /0 7 / 2015 / DATE OF PRONOUNCEMENT 30 /0 7 /2015 / O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AG AINST THE ORDER CIT (A), FOR THE ASSESSMENT YEAR 200 6 - 0 7 , IN THE MATTER OF ORDER PASSED U/S. 14 3(3) OF THE INCOME TAX ACT. 2 . IN THIS APPEAL THE ASSESSEE IS AGGRIEVED FOR DISALLOWING ENTIRE PURCHASES OF RS. 8,86,021/ - . 3. RIVAL CONTENTIONS HAVE BEEN HEARD AN D RECORD PERUSED. FACTS IN BRIEF ARE THAT ASSESSEE IS A DEALER IN ITEMS RELATING TO FIRE SAFETY. RETURN OF INCOME FOR THE RELEVANT ASSE SSMENT YEAR UNDER CONSIDERATION WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF SCRUTINY ASSESSMENT THE AO FOUND THAT PUR CHASE OF RS. 8,86,021/ - WAS NOT VERIFIABLE, THEREFORE, THE AO ADDED ENTIRE AMOUNT OF PURCHASE IN THE INCOME OF THE ASSESSEE. ITA NO. 2437 /1 4 2 4. BY THE IMPUGNED ORDER, THE CIT(A) CONFIRMED THE ACTION OF THE AO , AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRI BUNAL. 5. I HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT ASSESSEE IS ENGAGED IN A DEALERSHIP IN ITEMS RELATING TO FIRE SAFETY, WHEREIN TURNOVER OF RS. 19.24 LAKHS HAS BEEN SHOWN. AS PER PROVISIONS OF SECTION 44AF , IN CASE OF AN ASSESSEE ENGAGED IN RETAI L TRADE IN ANY GOODS OR MERCHANDISE, A SUM EQUAL TO FIVE PER CENT OF THE TOTAL TURNOVER IN THE PREVIOUS YEAR ON ACCOUNT OF SUCH BUSINESS OR, AS THE CASE MAY BE, A SUM HIGHER THAN THE AFORESAID SUM AS DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF SUCH BUSINESS CHARGEABLE TO TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAS DECLARED TURNOVER OF RS. 19,24,283/ - ON WHICH GROSS PROFIT WAS OFFERED AT RS. 4, 80,75 5/ - I.E. 21.24%. THE NET PROFIT HAS BEEN DECLARED BY THE ASSESSEE AT RS. 2,36,313/ - , WHICH AMOUNTS TO MORE THAN 10% OF PROFIT. NOWHERE THE AO HAS DISPUTED THE QUANTUM OF SALES. ONCE, THE SALES IS ACCEPTED, THEN THE PURCHASES CANNOT BE DENIED. IN THE INSTANT CASE, IT APPEARS THAT ASSESSEE HAS MADE TWO PURCHASES VIDE BILL NO. 04736 FROM M/S VARSHA ENTERPRISES AMOUNTING TO RS. 4, 44,459/ - AND BILL LNO. 01276 FROM M/S SAHYADRI INDUSTRIES AMOUNTING TO RS. 4,41,562/ - . THE PAYMENT OF PURCHASES WERE MADE THROU GH ACCOUNT PAYEE CHEQUE. IF THE AO DISREGARD S THE PURCHASES, THEN AT THE SAME TIME SALES HAS TO BE DISREGARDED, WHEREAS THE AO HAS ACCEPTED THE SALES. UNDER SUCH CIRCUMSTANCES, ADDITION OF ENTIRE AMOUN T OF PURCHASES IS NOT WARRANTED. I T ITA NO. 2437 /1 4 3 APPEARS THAT ASSESS EE HAS PURCHASED GOODS FROM ONE PARTY BUT TAKEN BILLS FROM OTHER PARTY, WHICH IS NOT TRACEABLE AND THAT MAY BE FOR GETTING SOME BENEFIT OF TAX. TO COMPENSATE THE REVENUE, WE DIRECT THE AO TO RESTRICT THE ADDITION UPTO 10% OF THE PURCHASES. SECTION 44AF PER TAIN TO SPECIAL PROVISION FOR COMPUTING PROFITS AND GAINS OF BUSINESS ON PRESUMPTIVE BASIS AT NET PROFIT RATE OF 5 PER CENT. WHEN PROFIT IS COMPUTED APPLYING PROVISIONS OF SECTION 44AF AND 44AD, THE ASSESSEE WILL NOT BE REQUIRED TO MAINTAIN ITS BOOKS OF AC COUNTS AS PER PROVISIONS OF SECTION 44AF AND 44AB OF THE IT ACT ON THE SALES TURNOVER SHOWN BY HIM. SINCE IN THE INSTANT CASE THE ASSESSEE HAS SHOWN MORE THAN SPECIFIED RATE OF NET PROFIT, THEN ASSESSEE CANNOT BE ASKED TO SHOW THE BOOKS OF ACCOUNT. WE ACCO RDINGLY DIRECT THE AO TO RESTRICT ADDITION TO 10% OF SUCH PURCHASES. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 30/07 / 201 5 . SD/ - ( . . ) ( R.C.SHARMA ) / ACCOUNTANT MEMBER MUMBAI ; DATED 30/07 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RE SPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY/