Appeal Details
Counselvise Citation
[2009] 114 COUNSELVISE.COM (IT) 9331 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 year(s) 8 month(s) 26 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-08-2009
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
27-08-2009
Assessment Year
2004-2005
Appeal Filed On
04-12-2006
Judgement Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI T.K.SHARMA, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING : 19/08/09 DRAFTED ON: 24/08/09 ITA NO.2641/AHD/2006 ASSESSMENT YEAR : 2004-05 THE ITO, SABARKANTHA WARD-4, MODASA VS. SUBHASHCHANDRA DWARKADAS SONI, MODASA-383315 PAN/GIR NO. : AVMPS1522Q (APPELLANT) .. (RESPONDENT) /08/09 DRAFTED ON: 24/08/09 C.O. NO.34/AHD/2007 ASSESSMENT YEAR : 2004-05 SUBHASHCHANDRA DWARKADAS SONI, MODASA-383315 VS. THE ITO, SABARKANTHA WARD-4, MODASA (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI GOVIND SINGHAL, SR. DR RESPONDENT BY: SHRI GAURAV NAHTA, CA O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- GROUND NO. 1 OF THE APPEAL RELATES TO RESTRICTING T HE ADDITION MADE ON ACCOUNT OF UNACCOUNTED SALES FROM RS.17,60,506/ - (5,98,575 + 11,61,934) TO RS.1,27,285/- BEING GROSS PROFIT @ 7. 23% 2. GROUND NO. 1 OF THE CROSS OBJECTION IS DIRECTED AGAINST CONFIRMING THE ADDITION OF RS.1,27,285/- ON ACCOUNT OF GROSS P ROFIT ON ALLEGED UNACCOUNTED SALES. 2 3. SINCE, THE FACTS AND ISSUE INVOLVED IN THE ABOVE GROUND OF APPEAL OF REVENUE AND GROUND OF CROSS OBJECTION OF THE ASSESS EE ARE COMMON, THEY ARE BEING DISPOSED OF TOGETHER FOR THE SAKE OF CONV ENIENT. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE A.O. H AS MADE ADDITION OF RS.5,98,572/- ON ACCOUNT OF UNACCOUNTED SALES. THE A.O. HAS NOTED THAT AS PER STATEMENT OF ACCOUNTANT, UGRANI BOOKS CONTAI NED UNACCOUNTED SALES AND THEREFORE, AS PER UGRANI BOOK TRANSACTIONS EFFE CTED OF RS.5,98,572/- WAS TREATED AS SALES AND ADDED TO THE TOTAL INCOME RELYING UPON THE DECISION OF DCIT, CIRCLE 2(1)V/S. BHOGILAL MOOLCHAN D. THE ASSESSING OFFICER HAS ALSO MADE ADDITION OF RS.11,61,934/- ON THE GROUND THAT ESTIMATE BOOK FOUND DURING THE SURVEY PROCEEDINGS C ONTAINED VARIOUS MISSING PAGES AND THE ASSESSEE DURING THE COURSE OF STATEMENT RECORDED HAD STATED THAT THE SAME WERE DESTROYED. THE A.O. O BSERVED THAT THE PERCENTAGE OF WRITTEN PAGES VIS--VIS MISSING PAGES COME TO 34% AND THAT PERCENTAGE OF MISSING PAGES COMES TO 66%. ACCORDIN GLY, HE ESTIMATED THE SALES OF MISSING PAGES AS 66 / 34 X 5,98,572 = RS.11,61,934/-. THE A.O. FURTHER NOTED THAT SEVERAL OPPORTUNITIES WERE GIVEN BUT NO EXPLANATION WAS GIVEN AND THEREFORE, HE MADE THE A BOVE ADDITION.. IN APPEAL THE LD. CIT(A) REDUCED THE ADDITION MADE TO RS.1,27,285/- BY OBSERVING AS UNDER:- 6. 3 RD AND 4 TH GROUNDS OF APPEAL ARE AGAINST ADDITION OFRS.5,98,5 72/- ON ACCOUNT OF UNACCOUNTED SALES AS PER THE UGRANI BOOK S AND ADDITION 3 OFRS.11,61,934/- ON THE BASIS OF ALLEGED UNACCOUNTE D SALES OF MISSING PAGES OF ESTIMATED BOOKS RESPECTIVELY. THESE TWO GROUNDS AR E SUCH ON WHICH ADDITIONS HAVE BEEN MADE IN VARIOUS YEARS STARTING FROM A.Y. 2001-02 AND FACTS AS WELL AS SUBMISSION OF THE ASSESSEE ARE IDENTICAL. IT H AS ALREADY BEEN HELD IN EARLIER YEARS APPELLATE ORDERS THAT ONLY PROFIT ON THE SALE HAS TO BE ADDED. THIS WAS FOR THE REASON THAT THE UGRANI BOOK AND OTHER BOOKS FOUND AT THE TIME OF SURVEY CLEARLY SHOW REGULAR DEBIT AND CREDIT ENTRIES AND O NLY PEAK AMOUNT OF THAT WOULD AMOUNT TO UNEXPLAINED EXPENDITURE IN MAKING P URCHASES. IF THE PEAK SALES FOR THE YEAR UNDER CONSIDERATION IS SEEN THE SAME IS FOUND TO BE AS ON19.11.03 AMOUNTING TO RS.34,449/- . IF EVEN ENTI RE PURCHASE OF ONE MONTH IS TAKEN INTO ACCOUNT THE SAME WOULD BE HARDLY RS.1,50 ,000/-. FOR THIS VERY REASON ENTIRE ADDITION IN RESPECT OF UNACCOUNTED SA LES WAS CONFIRMED IN A.Y. 2001-02 AND IN EVERY EARLIER YEAR CREDITS INTRODUCE D IN BOOKS OF ACCOUNTS TO EXPLAIN THE INVESTMENT IN PURCHASE HAS BEEN CONFIRM ED. THE TOTAL OF SUCH AMOUNTS CONFIRMED EXCEEDS THE INVESTMENT REQUIRED T O BE MADE IN THESE PURCHASE. THEREFORE, FOR THIS YEAR ONLY PROFIT ELEM ENT ON THESE PURCHASES IS LIABLE TO BE ADDED. IT IS NOTICED THAT GP RATE FOR THIS YEAR WAS7.23% AND THIS FACT IS ALSO EVIDENCED FROM ASSESSEES OWN STATEMEN T ON 25.11.04 I.E. ON THE DATE OF SURVEY. IN REPLY TO QUESTION NO. 20 AS REPR ODUCED ON PAGE9 OF THE ASSESSMENT ORDER, THE ASSESSEE HAS HIMSELF STATED T HAT CONSIDERING THE PURCHASES AND GP RATE OF 7.23% IN F.Y. 2003-04 THE NET UNACCOUNTED INCOME SHOULD BE WORKED OUT. THOUGH THESE FIGURES OF UNAC COUNTED SALES ARE RELATED TO A.Y. 2005-06 BUT THE ANSWER ITSELF SHOWS THE GP RATE FOR THE YEAR UNDER CONSIDERATION AND AS TO HOW THE ASSESSEE HIMSELF WA S ACCEPTING HIS UNACCOUNTED INCOME ON THAT BASIS. THEREFORE, THE P ROFIT ELEMENT WHICH IS LIABLE TO BE TAXED WOULD BE 7.23% OF BOTH THESE FIG URES OF SALES. THE FIGURE OF SALES CANNOT BE DISTURBED FOR THE SIMPLE REASON THA T UNACCOUNTED SALES FORM PART PERIOD OF THE YEAR AS PER UGRANI BOOKS IS ABOU T 5.98 LAKHS AND THE PERIOD COVERED IS ABOUT 3 TO 4 MONTHS. THEREFORE ESTIMATE OF SALES FOR THE ENTIRE YEAR AND FOR THE REMAINING PERIOD HAS CORRECTLY BEEN MAD E BY THE A.O. THEREFORE ADDITION IS CONFIRMED TO THE EXTENT OF7.23% OF THE FIGURE OF UNACCOUNTED SALES I.E. RS.17,60,506/-. THEREFORE, ADDITION OF RS.1,27 ,285/- IS CONFIRMED AND THE BALANCE IS DELETED. 4 5. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED TH E ORDER OF THE A.O. AND LD. AUTHORISED REPRESENTATIVE OF THE ASSES SEE SUBMITTED THAT UNDISCLOSED SALE SHOULD HAVE BEEN TAKEN AT RS.5,98, 575/- ALONE AND FURTHER ESTIMATION OF UNDISCLOSED SALE AT RS.11,61, 934/- WAS WITHOUT BASIS AND CONTRARY TO THE FACTS OF THE CASE. THEREFORE, THE SAME SHOULD BE DELETED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANCE CASE, A SURVEY OPERATION UNDER SECTION 133(A) WAS C ONDUCTED ON 25.11.2004 IN WHICH BOOKS STYLED AS UGERANI BOOK WA S FORM. THE SAID UGERANI BOOK SHOWS UNDISCLOSED SALE OF RS.5,98,572/ -. THE LEARNED ASSESSING OFFICER OBSERVED THAT CERTAIN PAGES OF UG ERANI BOOK WERE TEARED OFF AND THE PAGES TEARED OFF WAS ABOUT 66% O F TOTAL PAGES. HE ASSUMED THAT SIMILAR UNDISCLOSED SALE WAS RECORDED IN THE TEARED OFF PAGES. ON THIS BASIS, HE ARRIVED AT THE FIGURE OF R S.11,61,934/- AS UNDISCLOSED SALE WHICH WERE RECORDED IN THE TEARED OF PAGES. THE LEARNED ASSESSING OFFICER THEREFORE DETERMINED THE UNDISCLO SED SALE OF THE ASSESSEE AT RS.17,60,506/- (RS.598,572+1161934/-) A ND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. ON APPEAL, LEARNED C OMMISSIONER OF INCOME TAX(APPEALS) HELD THAT THE ENTIRE SALE VALUE CANNOT BE TREATED AS INCOME OF THE ASSESSEE AND THEREFORE, HE ESTIMATED PROFIT OF THE ASSESSEE 5 ON SUCH UNDISCLOSED SALES AT THE RATE 7.23% WHICH WAS THE RATE OF GROSS PROFIT DISCLOSED BY THE ASSESSEE IN ITS RETURN OF D ISCLOSED. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THOUGH CONFIRME D THE ADDITION TO THE EXTENT OF RS.1,27,285/- AND DELETED THE REMAINI NG AMOUNT BOTH THE PARTIES ARE IN APPEAL BEFORE US AGAINST THE ABOVE O RDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). THE GRIEVANCE OF THE REVENUE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS ) OUGHT TO HAVE CONFIRMED THE ADDITION OF ENTIRE AMOUNT OF UNDISCLO SED SALES AS THE INCOME OF THE ASSESSEE AND NOT THE GROSS PROFIT THE REON WHEREAS THE GRIEVANCE OF THE ASSESSEE WAS THAT UNDISCLOSED SALE S SHOULD HAVE BEEN TAKEN AT RS.5,98,575/- ALONE AND AFTER ESTIMATION O F UNDISCLOSED SALE AT RS.11,61,934/- WAS WITHOUT BASIS AND CONTRARY TO FA CT OF THE CASE. WE FIND THAT LEARNED D.R. SUPPORTED THE ORDER OF LEARNED AS SESSING OFFICER ONLY AND COULD NOT POINT OUT ANY ERROR IN THE ORDER OF T HE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN ESTIMATING P ROFIT ON UNDISCLOSED SALE AT THE RATE 7.23%. IN OUR CONSIDE RED OPINION, IT IS WELL SETTLED POSITION THAT WHAT CAN BE ASSESSED IS THE O NLY INCOME ELEMENT EMBEDDED IN THE UNDISCLOSED SALE AND NOT THE ENTIRE VALUE OF THE UNDISCLOSED SALE. WE FIND THAT BOTH THE PARTIES BEF ORE US HAVE NOT DISPUTED THE FACT THAT PROFIT ELEMENT EMBEDDED IN T HE UNACCOUNTED SALE WAS ABOUT 7.23% AS ESTIMATED BY THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS). THUS, WE DO NOT FIND ANY FORCE IN TH E APPEAL IN THE 6 REVENUE. IN RESPECT OF THE CROSS OBJECTION OF THE A SSESSEE, IT IS OBSERVED THAT THE DOCUMENTS FOUND DURING THE COURSE OF SURVE Y INDICATED UNDISCLOSED SALES OF RS.5,98,575/- ONLY. THE LEARNE D ASSESSING OFFICER ON THE BASIS OF PRESUMPTION THAT SIMILAR UNDISCLOSE D SALE HAVE BEEN RECORDED IN THE PAPERS WHICH WERE TEARED OFF FROM T HE UGERANI BOOK PRESUMED FURTHER UNDISCLOSED SALE OF RS.11,61,934/- . WE FIND THAT NO FURTHER CORROBORATIVE MATERIAL IN SUPPORT OF THIS A SSUMPTION WAS FOUND. NO UNDISCLOSED ASSET OR EXPENDITURE OF THE ASSESSEE CORROBORATING THE ABOVE PRESUMPTION WAS BROUGHT ON RECORD BY THE REVE NUE. IN OUR CONSIDERED OPINION, IN ABSENCE OF SUCH A CORROBORAT IVE MATERIAL BROUGHT ON RECORD THE REVENUE WAS NOT JUSTIFIED IN ASSUMING UNRECORDED SALE MERELY ON THE BASIS THAT CERTAIN PAGES OF THE UGERA NI BOOK WERE TORN OFF AND NOT AVAILABLE. THUS, IN OUR CONSIDERED OPINION, THE ADDITION OF UNDISCLOSED SALE OF RS.11,61,934/- WAS ONLY ON THE BASIS OF SURMISES AND DOUBTS AND WAS NOT ON THE BASIS OF ANY COGENT MATER IAL BROUGHT ON RECORD. WE THEREFORE, ARE OF THE OPENION THAT THE UNDISCLOS ED SALE ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD COMES TO RS.5,98,5 75/-. WE THEREFORE, MODIFY THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND DIRECT THE LEARNED ASSESSING OFFICER TO ACCEPT THE UNDISCLOSED SALE OF RS.5,98,575/- AND WORK OUT PROFIT THEREON AT THE R ATE 7.23% AS HELD BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). TH US, THIS GROUND OF CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. 7 7. GROUND NO. 2 OF THE APPEAL RELATES TO DELETING T HE DISALLOWANCE MADE FOR BOGUS LABOUR CHARGES OF RS.2,00,908/- BEIN G 20% OF TOTAL EXPENDITURE IGNORING THE FACTS THAT THE ASSESSEE HA S FAILED TO PRODUCE ANY DETAILS/EVIDENCES AND ASSESSMENT WAS COMPLETED US. 144 OF THE I.T. ACT,1961 8. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER HAS OBSERVED THAT THE ASSESSEE HAS SHOWN LABOUR CHARGES (NET) RS.4,40,642/-. FROM THE DETAILS FURNISHED IT IS SEEN THAT THE ASSE SSEE HAS SHOWN RS.14,45,186/- UNDER THE HEAD LABOUR CHARGES RECEI VED. THE ASSESSING OFFICER WAS OF THE VIEW THAT IT CANNOT BE CONSTRUED FROM THE ABOVE THAT ASSESSEE MAY HAVE PAID LABOUR CHARGES OF RS.10,04,544/-. THE ASSESSEE HAS NOT PRODUCED SUPPORTING IN RESPECT OF LABOUR CHARGES PAID. THE ASSESSING OFFICER THEREFORE OBSERVED THAT BY GI VING BENEFIT OF DOUBT AND CONSIDERING OTHER FACTORS SUCH AS LABOUR CHARGE S CANNOT BE RECEIVED UNLESS THE SAME IS PAID, BUSINESS NEED OF THE ASSES SEE IN WHICH HE IS ENGAGED, THE ASSESSEE HAS NO SALARIED LABOUR. HE, THEREFORE, ALLOWED 80% OF THE LABOUR CHARGES PAID AND MADE ADDITION OF RS. 2,00,908/- AS BOGUS EXPENDITURE. 9. IN APPEAL, THE CIT(A) HELD AS UNDER: I HAVE CONSIDERED THE ISSUE CAREFULLY. THOUGH THE ASSESSMENT HAS BEEN EX- PARTE BUT THE SAME SHOULD BE MADE ON A REASONABLE B ASIS. I FIND THAT THOUGH 8 THE ASSESSEE WAS ENGAGED IN THE SIMILAR BUSINESS IN EARLIER YEAR BUT NO SUCH DISALLOWANCE EVER MADE. SIMPLY BECAUSE THE ASSESSE E DID NOT APPEAR. THERE WAS NO JUSTIFICATION TO DISALLOW 20% OF SUCH EXPENS ES. IT IS ALSO NOTICED THAT THE ACCOUNTS ARE AUDITED AND SUCH AUDIT REPORT WAS AVAILABLE WITH THE A.O. AND NO DEFECTS SO FAR AS LABOUR CHARGES IS CONCERNED WA S FOUND. THIIS DISALLOWANCE IS THEREFORE DELETED. 10. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED T HE ORDER OF THE ASSESSING OFFICER. 11. THE LD. AUTHROISED REPRESENTATIVE OF THE ASSESS EE ARGUED THAT THE ASSESSING OFFICER HAS NOT POINTED OUT WHICH EXPENS ES UNDER THEHEAD LABOUR EXPENSES ARE BOGUS. THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED AND THERE ARE NO ADVERSE COMMENTS MADE BY T HE AUDITOR ON THE ACCOUNTS OF THE ASSESSEE. NO SPECIFIC DEFECTS HAS B EEN POINTED OUT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE DISALLOWANCE MADE IS ON SURMISES AND CONJECTURES WHICH CANNOT BE SUSTAINED IN LAW. T HEREFORE, THE ORDER OF THE CIT(A) SHOULD BE CONFIRMED THE APPEAL OF THE R EVENUE BE DISMISSED. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TR ADING IN GOLD AND SILVER JEWELLERY AND ALSO EARNS INCOME FROM MAKING CHARGES . THE ASSESSEE HAS DECLARED MAKING CHARGES OF RS.14,45,186/- AND CLAIM ED EXPENDITURE OF RS.10,04,544/- THERE AGAINST. THE LEARNED ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS OF ASSESSEE ON ACCOUNT OF NON PRO DUCTION OF BOOKS 9 BEFORE HIM. THE LEARNED ASSESSING OFFICER THEREAFTE R, OBSERVING THE FACT THAT THERE WAS NO EMPLOYEE AGREED WITH THE PROPOSTI ON THAT THE LABOUR CHARGES MUST HAVE BEEN PAID BY THE ASSESSEE TO RECO VER MAKING CHARGES. HOWEVER, HE DISALLOWED 20% OF LABOUR CHARGES AS BOG US. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) FINDING THAT NO SUCH DISALLOWANCE OUT OF LABOUR CHARGES WERE MADE IN EARLIER YEARS DE LETED THE DISALLOWANCE OF RS. 2,00,908/- IN ITS ENTIRETY. IN OUR CONSIDER ED VIEW, AFTER REJECTING BOOKS OF ACCOUNT, THE PROFIT OF THE ASSESSEE SHOULD BE COMPUTED ON A REASONABLE BASIS. THOUGH SOME ELEMENT OF GAS WORK C ANNOT BE RULEDOUT BUT WILD GUESS ARE NOT PERMISSIBLE. THE LEARNED ASS ESSING OFFICER CANNOT DISALLOW EXPENSES ON THE BASIS OF WHIMS EVEN IN AN ASSESSMENT MADE UNDER SECTION 144 AND DISALLOWANCE CAN BE MADE ONLY ON SOME REASONABLE BASIS. IN THE INSTANT CASE, THE LEARNED ASSESSING OFFICER HAS BROUGHT NO MATERIAL ON RECORD TO SHOW THAT THE EXPE NSES OF RS.10,04,544/- CLAIMED UNDER THE HEAD LABOUR CHARGES WAS UNREASONA BLE OR EXCESSIVE. KEEPING IN VIEW THE MAKING CHARGES RECEIVED OF RS.1 4,45,184/- DECLARED BY THE ASSESSEE AND NOT LABOUR WAS EMPLOYED BY THE ASSESSEE, WE FIND THAT ASSESSEE HAS CLAIMED EXPENSES OF RS.10,04,544/- AGA INST THE RECEIPT OF RS.14,45,186/- AND THIS INCOME DISCLOSED AGAINST TH E LABOUR CHARGES RECEIVED WORKS OUT TO 30.50% (APPX.). WE FIND THAT NO MATERIAL WAS BROUGHT ON RECORD TO SHOW THAT THE ABOVE PROFIT DIS CLOSED BY THE ASSESSEE WAS LOW. IN ABSENCE OF ANY SUCH MATERIAL, WE DO NOT FIND ANY GOOD REASON 10 TO INTERFERE WITH THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS). THE SAME IS CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 13. GROUND NO.3 OF THE APPEAL DIRECTED AGAINST DELE TING THE DISALLOWANCE OF RS.21,375/- OUT OF ADVERTISEMENT E XPENSES AS UNEXPLAINED EXPENDITURE. 14. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS DEBITED RS.21,375/- UNDER THE HEAD ADVERTISEMENT EXPENSES IN THE PROFIT & LOSS ACCOUNT. IN SUPPORT OF THE SAME ASSESSEE HAS PRODUCED TWO BILLS OF M/S. F.I. TRADERS DATED 1 -11-2003 FOR RS.11,250/- AND 6-12-2003 FOR RS.10,125/- AGGREGATI NG TO RS.21,375/-. INSPECTOR WAS DEPUTED TO COLLECT INFORMATION U/S. 1 33(6) OF THE INCOME- TAX ACT. IT IS SEEN FROM THE REPORT OF THE INSPECT OR DATED 7-12-2005 THAT NO FIRM IN THE NAME OF M/S. F.I. TRADERS WAS EVER R UNNING BUSINESS AT THE SAID ADDRESS. THEREFORE, THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED EXPENDITURE. 15. IN APPEAL, THE CIT(A) DELETED THE DISALLOWANCE BY OBSERVING AS UNDER: 11 9.2 I HAVE CONSIDERED THE ISSUE CAREFULLY AND I FIN D THAT THE EVIDENCE COLLECTED BY THE A.O. HAS NOT BEEN CONFRONTED TO TH E ASSESSEE AND THAT EVIDENCE IS IN THE NATURE OF INSPECTORS REPORT. T HE ASSESSEE HAS FURNISHED BILLS FOR SUCH PURCHASES WHICH WERE RELATED TO ADVERTISEM ENT AND PAYMENT HAS BEEN MADE THROUGH BANKING CHANNELS. ALL THESE PAPERS WER E ALSO SENT TO THE A.O. FOR HIS REPORT ALONG WITH MY LETTER DATED 18.3.06. THERE IS NOTHING IN THE A.O.S REPORT SO FAR AS THIS ASPECT IS CONCERNED. AS THE AMOUNT HAS BEEN PAID THROUGH BANK AND THE ADDITION HAS BEEN MADE WITHOUT CONFIRMING THE ASSESSEE WITH THE EVIDENCE I FIND NO JUSTIFICATION FOR THIS ADDITION AND THE SAME IS DELETED. 16. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED T HE ORDER OF THE A.O. AND LD. AUTHORISED REPRESENTATIVE OF THE ASSES SEE SUPPORTED THE ORDER OF THE CIT(A). 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, THE ASSESSEES CLAIM OF ADVERTISING EXPENSES OF RS.21,375/- WAS DISALLOWED BY THE LEARNED ASSESSING OFFICER ON THE BASIS OF AN INSPECTORS REPORT TO THE EFFECT THAT THE PAYEE WAS NOT FOUND AT THE ADDRESS GIVEN IN THE BILL. THE LEARNED COMMISSIONER OF INCO ME TAX(APPEALS) DELETED THE ADDITION FOR TWO REASONS. FIRSTLY, THE INSPECTORS REPORT WHICH WAS RELIED UPON BY THE LEARNED ASSESSING OFFICER WA S NOT CONFRONTED TO THE ASSESSEE BEFORE COMPLETING OF THE ASSESSMENT. S ECONDALY, THE PAYMENT BY THE ASSESSEE WAS MADE THROUGH BANKING CH ANNEL AND IN THE REMAND REPORT ARE CALLED BY THE LEARNED COMMISSIONE R OF INCOME TAX(APPEALS) FROM THE LEARNED ASSESSING OFFICER NO ADVERSE COMMENT 12 WAS GIVEN THE LEARNED ASSESSING OFFICER IN RESPECT OF THIS ISSUE. WE FIND THAT NO ERROR IN THE ABOVE FINDING OF THE LEARNED C OMMISSIONER OF INCOME TAX(APPEALS) COULD BE POINTED OUT BY THE LEA RNED DEPARTMENTAL REPRESENTATIVE. IN OUR CONSIDERED OPINION, NO MATER IAL WHICH WAS COLLECTED BY THE LEARNED ASSESSING OFFICER AT THE B ACK OF THE ASSESSEE COULD BE READ AS AN EVIDENCE AGAINST THE ASSESSEE U NTIL THE ASSESSEE IS CONFRONTED WITH THE FINDING OF THAT ENQUIRY AND IS ALLOWED REASONABLE OPPORTUNITY OF HEARING IN RESPECT OF THE SAME. WE T HEREFORE, DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). IT IS CONFIRMED AND THE GRO UND OF THE APPEAL OF REVENUE IS DISMISSED. 18. GROUND NO. 4 AND 5 OF THE APPEAL ARE GENERALLY IN NATURE AND THEREFORE, REQUIRE NO ADJUDICATION. 19. GROUND NO. 2 OF THE CROSS OBJECTION IS DIRECTE D AGAINST CONFIRMING THE ADDITION OFRS.57,580/- MADE ON ACCO UNT OF ALLEGED BOGUS EXPENSES. 20. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF SURVEY LOOSE PAPERS WERE FOUND. THE CLARIFICATIONS WERE GI VEN VIDE STATEMENT ON 2-12-2004. THE DETAILS OF THE CLARIFICATIONS ARE A S FOLLOWS : 13 SR.NO. PAGE NO. DESCRIPTION AMT. F.Y. WHETHER ACCOUNTED OROT 7 35 DETAILS OF REPAIRS OF SILVER 13050 03-04 LABOUR OF MUGAT 8 36 DETAILS OF LABOUR 530 03-04 DO NOT PERTAINS TO ME 10 39 CARBON COPY OF PAGE 35 AND OTHER TRANSACTION WRITTEN 14000 03-04 NOTACCOUNTED 39 98 DETAILS ABOUT PURCHASE OF MOBILE 15000 03-04 NOT ACCOUNTED 49 109 PURCHASE RECEIPT OF GHANSHYAM JEWELERS 15000 03-04 DONT KNOW TOTAL 57580 21. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSE E HAS NOT GIVEN HIS EXPLANATION EITHER AGREEING OR REBUTTAL OF PROPOSE D ADDITION OFRS.57,580/-. THEREFORE, IN ABSENCE OF ANY EXPLANA TION AND RELYING ON ASSESSEES CLARIFICATION GIVEN ABOVE, THE ASSESSING OFFICER MADE ADDITION OFRS.57,580/- AS UNEXPLAINED EXPENDITURE. 22. IN APPEAL, THE LD. CIT(A) CONFIRMED THE ADDITIO N BY OBSERVING THAT IT IS A FACT THAT PAPER ON THE BASIS OF WHICH ADDIT ION HAS BEEN MADE WAS 14 FOUND FROM THE PREMISES OF THE ASSESSEE AND IT WAS FOR THE ASSESSEE TO EXPLAIN THE NATURE OF THOSE DOCUMENTS ON THE BASIS OF PROPER EVIDENCE. BY SIMPLY SAYING THAT THE PAPER DOES NOT PERTAIN TO HIM OR THAT NO SUCH AMOUNT WAS PAID BY HIM, DOES NOT ABSOLVE THE ASSES SEE FROM TAXATION. THEREFORE, THE LD. CIT(A) CONCLUDED THAT THE AMOUNT S REPRESENTED UNEXPLAINED EXPENDITURE OF THE ASSESSEE AND CONFIRM ED THE ORDER OF THE ASSESSING OFFICER. 23. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESS EE SUBMITTED THAT IT WILL BE SEEN THAT SERIAL NO. 7 MARKED AS PAGE NO.35 REGARDING DETAILS OF REPAIRS OF SILVER RS.13,050/- IS THE ORIGINAL AND S R. NO. 10 MARKED AS PAGE 39 IS THE CARBON COPY OF THAT WHERE THE AMOUNT OF RS.14,000/- IS MENTIONED. THEREFORE, THIS AMOUNTED TO DOUBLE ADD ITION OF RS.14,000/-. AS REGARDS THE OTHER ADDITION, HE RELIED UPON THE S UBMISSIONS MADE BEFORE THE LOWER AUTHORITY. 24. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED T HE ORDER OF THE LD.CIT(A). 25. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. THE ONLY CONTENTION OF THE ASSESSEE IS THAT SR.NO.7 OF PAGE NO.35 CONTAINING THE DETAILS OF REPAIRS OF SILVER OF RS.13,050/- IN FINA NCIAL YEAR 2003-04 AND SR. 15 NO.10 OF PAGE NO.39 SHOWING AMOUNT OF RS.14,000 IN FINANCIAL YEAR 2003-04 IS THE CARBON COPY OF PAGE 35 AND OTHER TRA NSACTIONS WRITTEN FOUND DURING THE COURSE OF THE SURVEY. THUS, THE AD DITION BEING MADE FROM BOTH THE PAGES AMOUNTS TO DOUBLE ADDITION AND THEREFORE, HE PRAYED FOR DELETION OF RS.14,000/-. THEREFORE, THE ASSESSE E PRAYED FOR DELETION OF RS.14,000/- OUT OF TOTAL ADDITION OF RS.57,580/-. W E FIND THAT THIS ASPECT OF THE MATTER WAS NOT CONSIDERED BY THE LOWER AUTHO RITIES. WE THEREFORE, REMAND THIS PART OF THE ADDITION TO THE FILE OF THE LEARNED ASSESSING OFFICER AND DIRECT HIM TO VERIFY THE SAME AND ALLOW RELIEF TO THE ASSESSEE IF THERE IS ANY DOUBLE ADDITION. NEEDLESS TO MENTIO N THAT REASONABLE OPPORTUNITY OF HEARING SHOULD BE ALLOWED TO THE ASS ESSEE BEFORE ADJUDICATING THE ISSUE AFRESH. THEREFORE, THIS GROU ND OF CROSS OBJECTION IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 26. GROUND NO. 3 OF THE CROSS OBJECTION IS DIRECTED AGAINST CONFIRMING THE DISALLOWANCE OFRS.3,339/- OUT OF TELEPHONE EXPE NSES. 27. GROUND NO. 4 OF THE CROSS OBJECTION IS DIRECTED AGAINST CONFIRMING THE DISALLOWANCE OF RS.5,070/- OUT OF VEHICLE EXPEN SES. 28. IN BOTH THE GROUNDS OF CROSS OBJECTION THE AMOU NT INVOLVED ARE SMALL AND NOT ARGUMENTS WERE MADE ON THEM BY THE LE ARNED AUTHORISED 16 REPRESENTATIVE OF THE ASSESSEE AT THE TIME OF HEARI NG. THEREFORE, THEY ARE DISMISSED FOR LACK OF PROSECUTION. 29. GROUND NO. 5 & 6 OF CROSS OBJECTION ARE GENERAL LY IN NATURE AND REQUIRES NO ADJUDICATION BY US. 30. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED AS ABOV E. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 31/08/2009. SD/- SD/- ( T.K. SHARMA ) ( N.S. SAINI ) JUDICIAL MEMBER A CCOUNTANT MEMBER AHMEDABAD; DATED 31/08/2009 PARAS# COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-VIII, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD
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