Shri Haribhai P. Uttamchandani, Baroda V. The Income Tax Officer, Ward-5(2), Baroda

ITA 2656/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8170 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 30-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M J SHAH
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S. S. GODARA, JUDICIAL MEMBER) ITA. NO: 2656/AHD/2014 (ASSESSMENT YEAR: 2011-12) HARIBHAI PUTTAMCHANDANI MUNSI KHANCHO, BARODA V/S INCOME TAX OFFICER, WARD- 5 (2), BARODA (APPELLANT) (RESPONDENT) PAN: AAPPT0319Q APPELLANT BY : SHRI M.J. SHAH, A.R. RESPONDENT BY : SMT. PRAJNA PARAMITA, SR. D. R. ( )/ ORDER DATE OF HEARING : 16-11-2017 DATE OF PRONOUNCEMENT : 17 -11-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER 1. THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A)-V, BARODA DATED 22.07.2014 PERTAINING TO A.Y. 2011-12. ITA NO. 2656 /AHD/2014 . A.Y.2011-12 2 2. THE FIRST GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN HOLDING THE DISALLOWANCE OF RS. 2,57,040/- BEING DISALLOWANCE M ADE BY THE A.O. U/S. 40(A)(IA) OF THE ACT. 3. THE ASSESSEE IS IN THE BUSINESS OF TRADING OF FIRE CRACKERS, THREADS, RAINCOATS/UMBRELLA, TOYS, COLORS AND RAKHI. 4. THE RETURN FOR THE YEAR WAS SELECTED FOR SCRUTINY A SSESSMENT AND ACCORDINGLY STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE A SSESSEE. WHILE SCRUTINIZING THE RETURN OF INCOME, THE A.O. NOTICED THAT THE ASS ESSEE HAS PAID INTEREST OF RS. 2,57,040/- ON WHICH NO TAX WAS DEDUCTED AT SOURCE. THE A.O. ASKED THE ASSESSEE TO SHOW CAUSE WHY THE INTEREST PAYMENT SHO ULD NOT BE DISALLOWED U/S. 40(A)(IA) OF THE ACT SINCE THERE IS NO DEDUCTION OF TAX AT SOURCE. 5. ASSESSEE IN ITS REPLY STATED THAT THE PAYEES HAVE F ILED DECLARATION FORMS NO. 15G AND 15H AND, THEREFORE, THE ASSESSEE WAS NOT LI ABLE TO DEDUCT TAX AT SOURCE. THE A.O. WAS OF THE OPINION THAT SINCE FORM NO. 15G /15H ARE DATED AFTER THE CLOSE OF THE FINANCIAL YEAR, THE LIABILITY TO DEDUC T TAX AT SOURCE AROSE ON 31 ST OF MARCH, THEREFORE, FAILING TO DEDUCT TAX AT SOURCE D ISALLOWANCE U/S. 40(A)(IA) BECOMES IMPERATIVE AND ACCORDINGLY DISALLOWED RS. 2 ,57,040/-. 6. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 7. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSEE HAS FURNISHED THE DECLARATIONS IN FORM NO. 15G/15H FROM THE RECIP IENT OF INTEREST AND, THEREFORE, WAS NOT LIABLE TO DEDUCT TAX AT SOURCE. IT IS THE SAY OF THE LD. COUNSEL THAT MERELY BECAUSE THE RECIPIENTS HAVE GIVEN THE F ORM NO. 15G/15H AFTER THE ITA NO. 2656 /AHD/2014 . A.Y.2011-12 3 CLOSE OF THE FINANCIAL YEAR, WOULD NOT MAKE THE ASS ESSEE LIABLE TO DEDUCT TAX AT SOURCE. 8. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FIN DINGS OF THE REVENUE AUTHORITIES. 9. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE THAT THE ASSESSEE HAS FU RNISHED THE REQUISITE DECLARATION IN FORM NO. 15G/15H AS PER THE PROVISIO NS OF THE ACT. IT IS ALSO TRUE THAT THE FORMS WERE DATED AFTER THE CLOSE OF T HE FINANCIAL YEAR. IN OUR CONSIDERED OPINION, SECTION 197A DOES NOT SPECIFY A S TO THE POINT OF TIME AT WHICH SUCH DECLARATION IS TO BE GIVEN. THERE IS NO DISPUTE THAT THE REQUIREMENT OF SECTION 197A OF THE ACT HAS BEEN ADMITTEDLY SATI SFIED IN THIS CASE. WE ARE THEREFORE OF THE VIEW THAT THE REJECTION OF FORM NO . 15G/15H FILED BY THE ASSESSEE IN THE CASE IN HAND FOR THE REASON THAT TH E PERSONS FURNISHING FORM NO. 15G/15H HAVE GIVEN THE SAME TO THE ASSESSEE AFT ER THE CLOSE OF THE FINANCIAL YEAR CANNOT BE SUSTAINED. CONSEQUENTLY, THERE WAS NO DEFAULT ON THE PART OF THE ASSESSEE U/S. 197A AND CONSEQUENTLY THE RE WOULD NOT BE ANY DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. GROUND NO. 1 IS ACCORDINGLY ALLOWED. 10. THE SECOND GRIEVANCE RELATES TO THE ESTIMATION OF P ROFIT AT 20%. 11. THE A.O. FOUND THAT ON A TOTAL SALES OF RS. 1.21 CR ORES , THE ASSESSEE HAS SHOWN GROSS PROFIT T RS. 23,44,198/- WHICH IS AROUND 19.2 3%. ON COMPARING THE GROSS PROFIT WITH THE GROSS PROFIT SHOWN IN THE PRECEDING ASSESSMENT YEARS, THE A.O. NOTICED THAT IN A.Y. 2010-11 ON SALES OF 51.88 LAKH S, THE ASSESSEE HAS RETURNED G.P. MARGIN OF 24.17%. THE A.O. WAS OF THE FIRM BEL IEF THAT THERE IS A FALL IN ITA NO. 2656 /AHD/2014 . A.Y.2011-12 4 THE GROSS PROFIT. THE A.O. FURTHER OBSERVED THAT TH E ASSESSEE IS NOT KEEPING THE STOCK REGISTER WHICH MAKES IT TRADING RESULTS NOT V ERIFIABLE. THE A.O. TAKING A LEAF OUT OF THE PAST HISTORY OF THE ASSESSEE ESTIMA TED THE PROFIT AT 20% WHICH RESULTED INTO ADDITION OF RS. 86,246/-. 12. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 13. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE VEHEMEN TLY STATED THAT THE PROFIT HAS BEEN ESTIMATED BY THE A.O. MERELY BECAUSE THE ASSES SEE WAS NOT MAINTAINING ANY STOCK REGISTER. IT IS THE SAY OF THE LD. COUNSE L THAT THE NATURE OF BUSINESS OF THE ASSESSEE IS SUCH THAT IT IS NOT PRACTICALLY POS SIBLE TO MAINTAIN THE STOCK REGISTER. THE LD. COUNSEL FURTHER STATED THAT THE A .O. HAS NOT POINTED OUT ANY SPECIFIC DEFECT IN THE METHOD OF ACCOUNTING EMPLOYE D BY THE ASSESSEE. THE ACCOUNTS WERE AUDITED AND THEREFORE THERE IS NO REA SON WHY THE A.O. SHOULD HAVE ESTIMATED THE PROFIT. 14. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTH ORITIES BELOW. IT IS TRUE THAT IN A.Y. 2010-11, THE G.P. MARGIN WAS 24.17%. IT IS EQUALLY TRUE THAT IN A.Y. 2009-10, THE G.P. MARGIN WAS 17.31% AND IN A.Y. 200 8-09, THE G.P. MARGIN WAS 12.23%. THE A.O. HAS SIMPLY TAKEN THE GROSS PRO FIT MARGIN OF A.Y. 2010- 11 WHICH WAS ON A TURNOVER OF RS. 51.88 LAKHS. IN T HE YEAR IN HAND, THE TURNOVER OF THE ASSESSEE IS 1.21 CRORES. IN A.Y. 20 08-09, THE TURNOVER OF THE ASSESSEE WAS ALSO 1.21 CRORES ON WHICH THE GROSS PR OFIT MARGIN WAS 12.23% WHEREAS THE SAME IS 19.23% IN THE YEAR IN HAND. 15. CONSIDERING THE PAST HISTORY OF THE ASSESSEE IN THE LIGHT OF THE AFOREMENTIONED FACTS, WE DO NOT FIND ANY MERIT IN THE ADDITIONS MA DE BY THE A.O. AND ITA NO. 2656 /AHD/2014 . A.Y.2011-12 5 CONFIRMED BY THE LD. CIT(A). WE ACCORDINGLY DIRECT THE A.O. TO DELETE THE ADDITION OF RS. 86,246/-. THE SECOND GRIEVANCE IS A LSO ALLOWED. 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 17 - 11- 20 17 SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 17 /11/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD