Ratnadeep Traders, Nadiad V. The Income tax Officer,Ward-1, Nadiad

ITA 2676/AHD/2010

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5950 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 09-04-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 13-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID SR D R
• Assessee Lawyers: SUNIL H TALATIAR
• Keywords: Gross profit estimation; Gift; Income from undisclosed sources
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMADABAD , , , , BEFORE SHRI KUL BHARAT , JUDICIAL MEMBER AND , SHRI T.R. MEENA, ACCOUNTANT MEMBER .. , !' ! # $ ! # $ ! # $ ! # $ ITA NO. 2625/AHD/2010 ASSESSMENT YEAR :2003-04 M/S. RATNADEEP SALES CORPORATION PROP. SHRI MANISH A. SHAH 4-GUNJ BAZAR, NADIAD V/S . INCOME TAX OFFICER WARD-1, NADIAD PAN NO. A GOPS6703J (APPELLANT) .. (RESPONDENT) ITA NO. 2676/AHD/2010 ASSESSMENT YEAR :2003-04 M/S. RATNADEEP TRADERS 7, GUNJ BAZAR, NADIAD V/S . INCOME TAX OFFICER WARD-1, NADIAD PAN NO. AACFR0191D (APPELLANT) .. (RESPONDENT) % & ' ! / BY REVENUE SHRI J. P. JHANGID, SR.D.R. ! & ' ! /BY ASSESSEE SHRI SUNIL H. TALATI, A.R. () & ' /DATE OF HEARING 09.04.2014 *+, & ' /DATE OF PRONOUNCEMENT 29.04.2014 O R D E R PER : SHRI T. R. MEENA, ACCOUNTANT MEMBER THESE TWO APPEALS FILED BY TWO DIFFERENT ASSESSEE, ARE ARISING OUT OF THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-I V, BARODA, DATED 16.06.2010 FOR A.Y. 03-04 IN M/S. RATNADEEP SALES C ORPORATION & 26.07.2010 ITA NOS. 2625/AHD/10 IN RATNADEEP SALES. CORP. & 2676/AHD/10 IN RATNADEEP TRADERS FOR A.Y. 03-04 PAGE 2 FOR A.Y. 03-04 IN CASE OF M/S. RATNADEEP TRADERS. BOTH APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS C OMMON ORDER FOR THE SAKE OF CONVENIENCE. THE EFFECTIVE GROUNDS OF BOTH APPE ALS ARE AS UNDER: GROUNDS OF ITA NO. 2625/AHD/2010 (IN CASE OF RATNAD EEP SALES CORPORATION) GROUND NO. 1 : THE ORDER PASSED BY THE HON'BLE CIT (A)- IV BARO DA IS BAD IN LAW AND CONTRARY TO LEGAL PRONOUNCEMENT AND BE QUASHED. THE ADDITIONS /DISALLOWANCES CONFIRMED BY CIT (A) - IV, BARODA ARE UNWARRANTED AND HENCE THE SAID BE DELETED NOW. GROUND NO. 2 : THE HON'BLE CIT (A) - IV, BARODA HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 10,000/- OUT OF RS. 3,10,000/- ON ACCOUNT OF UNACCOUNTED STOCK CALCULATED DURING THE COURSE OF SURVEY ON ESTIMATED BASIS. SINCE THE DISCLOSURE OF STOCK WAS MADE ON ESTIMATED BASIS, THERE IS NO JUSTIFICATION TO DISALLOW RS. 10 ,000/- BEING ON ESTIMATED BASIS. GROUND NO. 3 : THE HON'BLE CIT (A) - IV, BARODA HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 20,000/- OUT OF RS. 50,000/- BEING PROFESSIONAL FEES PAID MERELY ON ASSUMPTION AND NOT ACCEPTING THE FACTS SUBMITTED DURING THE COURSE OF HEARING FROM TIME TO TIME. THE ADDITION CONFIRMED BY HON'BLE CIT (A) - IV BARODA BE DIRECTE D TO BE DELETED NOW. GROUND NO. 4 : THE HON'BLE CIT(A) - IV BARODA HAS ERRED IN CONF IRMING THE ADDITION OF RS. 54,000/- WITHOUT APPRECIATING T HE FACTS SUBMITTED BEFORE HIM THAT THE SAID AMOUNT OF RS. 54,000/- WAS PAID BY SHRI ASHWINBHAI SHAH AND CONFIRMED BY HIM BY THE STATEME NT RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS, IN SPITE OF THE F ACT THAT CIT (A) - IV, BARODA HAS ACCEPTED THE INVESTMENT IN STOCK FOR RS. 3,00,000/- BASED ON THE SAID STATEMENTS. THE HON'BLE CIT (A) -- IV BARO DA IS THEREFORE NOT JUSTIFIED IN PART ACCEPTANCE OF THE STATEMENT. GROUND NO. 5 : THE HON'BLE CIT (A) - IV BARODA HAS ERRED IN CONF IRMING THE ADDITION OF RS. 60,000/- MADE BY INVOKING PROVI SIONS OF SEC. 68 WITHOUT APPRECIATING THE FACTS SUBMITTED DURING THE COURSE OF HEARING AND ITA NOS. 2625/AHD/10 IN RATNADEEP SALES. CORP. & 2676/AHD/10 IN RATNADEEP TRADERS FOR A.Y. 03-04 PAGE 3 EVIDENCE FILED ALONGWITH THE WRITTEN SUBMISSION. TH E SAME BE DIRECTED TO BE DELETED NOW. GROUND NO. 6 : THE HON'BLE CIT (A) - IV BARODA HAS ERRED IN CONF IRMING THE ADDITION OF RS. 11,200/- MADE BY INVOKING PROVI SIONS OF SEC. 68 WITHOUT APPRECIATING THE FACTS SUBMITTED DURING THE COURSE OF HEARING AND EVIDENCE FILED ALONGWITH THE WRITTEN SUBMISSION. TH E SAME BE DIRECTED TO BE DELETED NOW. GROUND NO. 7 : THE HON'BLE CIT (A) - IV BARODA HAS ERRED IN CON FIRMING THE DISALLOWANCE OF SALARY PAID TO SHRI RONAK A. SH AH WITHOUT APPRECIATING THE FACTS SUBMITTED THAT HE HAS RENDERED THE SERVIC ES TO THE APPELLANT. SIMPLY BECAUSE HE HAPPENS TO BE IN RELATION TO ONE OF THE PARTNERS, THE SAME IS NOT JUSTIFIED TO BE DISALLOWED. IT BE HELD SO NOW AND ADDITION MADE BY THE AO E DIRECTED TO BE DELETED. GROUND NO. 8 : THE HON'BLE CIT (A) - IV BARODA HAS ERRED IN CONFI RMING THE DISALLOWANCE OF RS. 50,000/- OUT OF RS. 2,37,01 9/- BEING ADDITION MADE ON ESTIMATION OF GROSS PROFIT OF 16% THOUGH THE HON 'BLE CIT (A) BARODA HAS APPRECIATED THE FACTS SUBMITTED, HE HAS CONFIRM ED THE ADDITION OF RS. 50,000/-WITHOUT ANY BASE. YOUR APPELLANT SUBMITS TH AT THE ADDITION MADE BY THE AO BE DELETED. GROUNDS OF ITA NO. 2676/AHD/2010 (IN CASE OF RATNAD EEP TRADERS) 1. THE ORDER PASSED BY THE HON'BLE COMMISSIONER OF INCOME TAX (APPEALS) - IV BARODA IS BAD IN LAW, CONTRARY TO LE GAL PRONOUNCEMENTS AND SAME BE QUASHED. 2. THE HON'BLE CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 2,75,358 MADE IN THE VALUATION OF STOCK WITHOUT APPRECIATING THE FACTS SUBMITTED DURING THE COURSE OF HEARING AND PARTICULARLY IGNOR ING THE DISCLOSURE MADE AT THE TIME OF SURVEY. YOUR APPELLANT SUBMITS THAT THE ADDITION CONFIRMED BY THE HON'BLE CIT (A) IS UNJUST AND UNCALLED FOR A ND BE DELETED NOW. 3. THE HON'BLE CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 1,50,000 BY NOT GIVING CREDIT ON DISCLOSURE MADE AL THE LIME OF SURVEY. YOUR APPELLANT SUBMITS THAT THE ADDITION BE DELETED. ITA NOS. 2625/AHD/10 IN RATNADEEP SALES. CORP. & 2676/AHD/10 IN RATNADEEP TRADERS FOR A.Y. 03-04 PAGE 4 4. THE HON'BLE CIT (A) HAS ERRED IN DISALLOWING RS. 20000 OUT OF PROFESSIONAL FEES OF RS. 50000 ON THE GROUND THAT T HE SAME IS VERY HIGH. YOUR APPELLANT SUBMITS THAT AN AMOUNT OF RS. 50000 WAS PAID INCLUDING FEES FOR SURVEY PROCEEDINGS AND HENCE IS REASONABLE AND BE ALLOWED AS CLAIMED. 5. THE HON'BLE CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 15000 OUT OF RS. 32216 BEING SO CALLED DISCREPANCY IN CAS H BALANCE FOUND DURING THE SURVEY. YOUR APPELLANT SUBMITS THAT THE EXPLANA TION WAS OFFERED WHICH HAS BEEN PARTLY ACCEPTED WITHOUT ASSIGNING ANY REAS ON IN THIS BEHALF. IT IS THEREFORE SUBMITTED THAT THE ADDITION OF RS. 15000 BE DELETED. 6. THE HON'BLE CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 9000 BY INVOKING PROVISIONS OF SEC.68. IT IS SUBMITTED THA T DEPOSIT BEING GENUINE THE ADDITION CONFIRMED BY THE CIT(A) BE DELETED. FIRST WE TAKE ITA NO. 2625/AHD/2010 (IN CASE OF RAT NADEEP SALES CORPORATION 2. GROUND NOS. 1 & 2 HAVE NOT BEEN PRESSED BY THE A SSESSEE. THUS, THE SAME ARE DISMISSED AS NOT PRESSED. 3. GROUND NO.3 IS AGAINST CONFIRMING THE DISALLOWAN CE OF RS.20,000/- OUT OF RS. 50,000/- BEING PROFESSIONAL FEES. THE ASSES SEE CLAIMED PROFESSIONAL FEES OF RS.50,000/- PAID TO PIYUSH PANCHAL & CO. D URING THE ASSESSMENT PROCEEDING AS WELL AS AT THE TIME OF SURVEY PROCEED ING, THE A.O. FOUND THESE EXPENSES WERE NOT INCURRED WHOLLY AND EXCLUSIVELY F OR BUSINESS PURPOSES. THUS, HE MADE ADDITION OF RS.50,000/-. LD CIT(A) H AD RESTRICTED RS.20,000/- BY OBSERVING THAT SHRI VISHAL SHAH WAS PARTNER OF P IYUSH PANCHAL & CO. AND RENDERED SERVICES TO THE APPELLANT IN CONNECTION WI TH TAXATION MATTER. AFTER CONSIDERING THE PRECEDING YEAR PAYMENT OF PROFESSIO NAL FEES FOR A.Y. 2001-02, HE RESTRICTED THIS DISALLOWANCE AT RS.20,000/-. LD . A.R. SUBMITTED THAT THE ITA NOS. 2625/AHD/10 IN RATNADEEP SALES. CORP. & 2676/AHD/10 IN RATNADEEP TRADERS FOR A.Y. 03-04 PAGE 5 PROFESSIONAL FIRM HAD PROVIDED LEGAL SERVICE ON DIF FERENT OCCASION TO THE APPELLANT. THEREFORE, RS.50,000/- WAS REASONABLE P AYMENT TO PIYUSH PANCHAL & CO. AT THE OUTSET, LD. SR. D.R. SUPPORTE D THE ORDER OF CIT(A). AFTER CONSIDERING BOTH THE SIDES, IT IS FOUND THAT LD. CI T(A) HAS HELD THAT PAYMENT IS EXCESSIVE BUT INCURRED FOR BUSINESS PURPOSES. THE LD. CIT(A) HAD COMPARED THE PRECEDING YEARS FEES I.E. A.Y. 01-02, WHEREAS, THE CASE IS BEFORE US FOR A.Y. 03-04 AND THERE WAS A SURVEY PROCEEDING ON THE ASSESSEE RELEVANT TO PREVIOUS YEAR. THEREFORE, WE FIND THAT FEES PAID T O PROFESSIONAL FIRM ARE REASONABLE. ACCORDINGLY, WE ALLOW THE ASSESSEES A PPEAL ON THIS GROUND. 4. GROUND NO.4 IS AGAINST CONFIRMING THE ADDITION OF RS.54,000/- PAID BY SHRI ASHWINBHAI SHAH. THE A.O. FOUND THAT ASSESSEE HAD INCURRED SHOP REPAIRING EXPENSES OF RS.54,000/-. THE A.O. FOUND THAT THIS EXPENDITURE WAS INCURRED MUCH BEFORE 31/03/2003. THERE IS NO CREDI T IN CAPITAL ACCOUNT FOR THIS EXPENDITURE. THE AFFIDAVIT DATED 24.03.2006 MADE B Y SHRI ASHWINBHAI M. SHAH IS AFTER THOUGHT. THE ASSESSEE DID NOT FILE C OPY OF BILL SHOWING EXPENSES, NAME OF PERSON TO WHOM PAYMENTS WERE MADE , ITEMS PURCHASE/EXPENSES AND TYPE OF EXPENSES. THUS, HE M ADE ADDITION OF RS.54,000/- U/S. 69 OF THE IT ACT. THE LD. CIT(A) HAS HELD THAT CREDIT FOR RS. 3 LACS ALREADY HAS BEEN GIVEN AGAINST THE UNACCOUNTED INCOME. THEREFORE, NO FURTHER TELESCOPIC BENEFIT OF RS.54,000/- CAN BE GI VEN. THE LD A.R. SUBMITTED THAT APPELLANT STARTED NEW BUSINESS OF SEMI-WHOLESA LE TRADING IN KIRIYANA IN OCTOBER, 2012. BEFORE STARTING THE NEW BUSINESS, C ERTAIN REPAIRING IS CARRIED OUT IN THE SHOP. THIS AMOUNT WAS PAID BY THE FATHE R OF THE ASSESSEE. ITA NOS. 2625/AHD/10 IN RATNADEEP SALES. CORP. & 2676/AHD/10 IN RATNADEEP TRADERS FOR A.Y. 03-04 PAGE 6 THEREFORE, ON WHICH AFFIDAVIT WAS FILED BEFORE THE A.O. LD. SR. D.R. SUPPORTED THE ORDER OF THE CIT(A). THE ASSESSEE WAS PARTNER IN RATNADEEP KIRIYANA STORE. AN AFFIDAVIT WAS FILED BY SHRI ASHWINBHAI S HAH THAT THIS EXPENDITURE WAS INCURRED FROM THEIR PREVIOUS BUSINESS, HAD NOT BEEN CONTROVERTED BY THE LD. CIT(A) AS WELL AS BY LD. SR. D.R. THUS, WE ALL OW THE ASSESSEES APPEAL ON THIS ISSUE. 5. GROUND NOS. 5 & 6 ARE AGAINST CONFIRMING THE ADD ITION OF RS.60,000/- AND CONFIRMING THE ADDITION OF RS.11,200/- U/S. 68 OF THE IT ACT. THE A.O. FOUND THAT THERE WAS A DEPOSIT OF RS.30,000/- ON 27 .08.2002 AND RS.30,000/- ON 11.12.2002 IN THE NAME OF KINJALBEN AMITBHAI SHA H, WIFE OF APPELLANTS BROTHER, ON WHICH INTEREST OF RS.6,779/- WAS CREDIT ED. THE APPELLANT EXPLAINED THAT KINJALBEN SHAH RECEIVED GIFT OF US DOLLARS 200 0/- FROM BHAVESHKUMAR C. PATEL. COPY OF GIFT DEED WAS FILED BEFORE THE A.O. BUT THE A.O. DID NOT FIND THIS GIFT AS GENUINE GIFT. THUS, HE MADE ADDITION OF RS .1,61,040/- INCLUDING SOME OTHER CASH CREDITORS. BEFORE LD. CIT(A), THE ASSES SEE SUBMITTED THAT KINJALBEN A. SHAH PAID THIS AMOUNT THROUGH CHEQUE. THE CONFI RMATION WAS FILED BEFORE THE A.O. SHE WAS ASSESSED TO TAX WITH ITO, NADIAD HAVING PAN. ALL THE EVIDENCES OF GIFTS WERE FILED BEFORE THE A.O. HOWE VER, HE FOUND LOAN OF RS.94,261/- RECEIVED FROM SOME CASH CREDITORS AS EX PLAINED BUT REMAINING LOAN OF RS.60,000/- HAS BEEN CONFIRMED IN ABSENCE O F ANY EXPLANATION FURNISHED BY THE APPELLANT. LD. A.R. ARGUED THAT L D. CIT(A) PARTLY ACCEPTED THE ASSESSEES EXPLANATION AND PARTLY NOT, WHEREAS CASH CREDITOR IS SMT. KINJALBEN A. SHAH WAS ALSO ASSESSED TO TAX. CONFI RMATION OF LOAN HAD BEEN ITA NOS. 2625/AHD/10 IN RATNADEEP SALES. CORP. & 2676/AHD/10 IN RATNADEEP TRADERS FOR A.Y. 03-04 PAGE 7 FILED BEFORE THE A.O. AND INTEREST INCOME HAS BEEN SHOWN BY HER IN HIS RETURN, WHO ASSESSED TO TAX WITH SAME ITO. THUS, THE ADDIT ION CONFIRMED BY THE LD. CIT(A) IS NOT JUSTIFIED. LD. SR. D.R. SUPPORTED TH E ORDER OF THE CIT(A). THE ASSESSEE PROVED THE GENUINENESS OF THE TRANSACTION, CREDITWORTHINESS AND IDENTITY OF THE PERSON BEFORE THE A.O. THEREFORE, WE REVERSE THE ORDER OF THE CIT(A) AND ALLOW THE ASSESSEES APPEAL ON THIS GROU ND. AS REGARD, LOANS OF RS.11,200/- IN THE NAME OF SHRI BABUBHAI R. PATEL W HO DENIED HAVING BEEN GIVEN ANY CASH LOAN TO THE ASSESSEE. THUS, WE DISM ISS THE GROUND NO.6. 6. GROUND NO.7 IS AGAINST CONFIRMING THE DISALLOWAN CE OF SALARY PAID TO SHRI RONAK A. SHAH AT RS.24,000/-. THE ASSESSEE HA S CLAIMED SALARY PAID TO RONAK ATULBHAI SHAH OF RS.24,000/-. THE ASSESSEE F ILED EXPLANATION BEFORE THE A.O. THAT HE IS B.COM. STUDENT. HE WAS FULL TI ME ENGAGED WITH THE FIRM AND RENDERED THE SERVICE FOR THE ASSESSEE DURING TH E YEAR. THE CIT(A) CONFIRMED THE ADDITION BY OBSERVING THAT RONAK A. S HAH WAS WORKING IN MARKETING AND COLLECTION WORK, WAS NOT SUPPORTED BY ANY EVIDENCE, THOUGH ONUS OF ADDUCING THE SAME WAS OF THE APPELLANT ONLY . HE IS FAMILY MEMBER AND WAS A FULL TIME STUDENT OF B.COM. THE LD. A.R. ARGUED THAT HE WAS A STUDENT OF B.COM BUT RELATED WORK OF BANK AS WELL A S SOME OUTSTANDING RECOVERY WAS TO MAKE BY HIM. RONAK A. SHAH WAS HEL PING IN THE BUSINESS ALSO TO THE APPELLANT. LD. SR. D.R. HEAVILY RELIED UPON THE ORDER OF THE CIT(A). AFTER CONSIDERING THE BOTH SIDES, THE ASSESSEE PAID RS.2,000/- PER MONTH TO RONAK A. SHAH WHO WAS B.COM. STUDENT. IT IS ESTABL ISHED BY THE ASSESSEE THAT HE HAD RENDERED SERVICE TO THE APPELLANT IN MA RKETING AS WELL AS COLLECTION ITA NOS. 2625/AHD/10 IN RATNADEEP SALES. CORP. & 2676/AHD/10 IN RATNADEEP TRADERS FOR A.Y. 03-04 PAGE 8 WORK, WHICH HAS NOT BEEN CONTROVERTED BY THE LD. SR . D.R. THUS, WE ALLOW THE ASSESSEES APPEAL ON THIS GROUND. 7. GROUND NO.8 IS AGAINST CONFIRMING THE DISALLOWAN CE OF RS.50,000/- OUT OF RS.2,37,019/- BEING ADDITION MADE ON ESTIMATION OF GROSS PROFIT OF 16%. THE A.O. FOUND THAT ASSESSEE WAS NOT MAINTAINING AN Y BILL VOUCHER FOR KIRANA BUSINESS IN THE NAME OF RATNADEEP KIRANA STORE. TH E A.O. REJECTED THE BOOK RESULT AND ESTIMATED PROFIT @ 16% ON SALE OF RS.21, 02,268/-. THUS, ADDITION OF RS.2,37,019/- WAS MADE. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD. CIT(A). LD. CIT(A) STATED THAT THE ASSESSEE HAD DI SCLOSED RS.4.5 LACS ON ACCOUNT OF INVESTMENT IN STOCKS, THERE WAS NO SCOPE OF FURTHER ADDITION OF RS.2,37,019/- ON ACCOUNT OF GP. HOWEVER, LD. CIT(A ) HAD NOT CONVINCED WITH THE STATEMENT MADE BY THE APPELLANT. HE FINALLY CO NFIRMED RS.50,000/- ADDITION UNDER THIS HEAD. THE LD. A.R. REITERATED THE SAME ARGUMENT MADE BEFORE THE CIT(A) AND REQUESTED TO DELETE THE ADDIT ION MADE ON ESTIMATION. THE MARGINAL PROFIT IN KIRANA BUSINESS IS 5 TO 6%. THUS, THE SAME MAY BE DELETED. LD. SR. D.R. SUPPORTED THE ORDER OF THE C IT(A). WHEN SURVEY HAS BEEN CONDUCTED BY THE REVENUE ALL EXCESS STOCK FOUN D DURING THE COURSE OF SURVEY IS A RESULT OF SUPPRESSED INCOME ON ACCOUNT OF LOW GP. THUS, FURTHER ADDITION OF RS.50,000/- CANNOT BE CONFIRMED ON SALE MADE DURING THE YEAR. ACCORDINGLY, WE ALLOW THIS GROUND OF APPEAL. NOW WE TAKE ITA NO. 2676/AHD/2010(IN CASE OF RATNAD EEP TRADERS) 8. GROUND NO.1 WAS NOT PRESSED. THUS, THIS GROUND IS DISMISSED AS NOT PRESSED. ITA NOS. 2625/AHD/10 IN RATNADEEP SALES. CORP. & 2676/AHD/10 IN RATNADEEP TRADERS FOR A.Y. 03-04 PAGE 9 9. GROUND NOS. 2& 3 ARE AGAINST CONFIRMING THE ADDI TION OF RS.2,75,358/- AND RS.1,50,000/- ON ACCOUNT OF EXCESS STOCK. THER E WAS A SURVEY U/S. 133(A) AT THE BUSINESS PREMISES OF ASSESSEE ON 26.1 2.2002. ON THE BASIS OF PHYSICAL STOCK TAKEN DURING THE COURSE OF SURVEY AN D STOCK ENTRIES MADE IN THE BOOK OF ACCOUNT ON THE BASIS OF PURCHASE AND SALE W ERE VERIFIED AND FINALLY THE ASSESSEE DISCLOSED AN ADDITIONAL INCOME OF RS.1,50, 000/-, WHICH WAS NULLIFIED BY THE ASSESSEE BY PASSING ENTRIES IN THE P&L ACCOU NT UNDER THE HEAD STOCK ACCOUNT DISCLOSED TO THIS, THE CREDIT IN THE P&L A CCOUNT. THUS, THE A.O. MADE ADDITION OF RS.4,45,358/-. THE ASSESSEE CARRIED TH E MATTER BEFORE THE CIT(A) WHO HAD CONFIRMED THE ADDITION OF RS.2,75,358/-. T HE ASSESSEE SUBMITTED THAT THE SURVEY TEAM HAS MADE OVER CALCULATION IN R ESPECT OF PREMIUM BASMATI & DILKHUSH BASMATI OF RS.2,06,081/- . THE APPELLANT SUBMITTED BEFORE THE LD. CIT(A) THAT COMPARATIVE CHART OF CA LCULATING OF VARIOUS ITEMS OF STOCK FOUND ON THE DAY OF SURVEY AND QUANTITY AS PE R STOCK REGISTRAR, THERE WAS NO MAJOR DIFFERENCE BETWEEN THE TWO. THE ASSESSEE DISCLOSED RS.1.5 LACS TO COVER ANY DISCREPANCY IN THE STOCK. THUS, HE PRAYE D TO DELETE THE ADDITION. AT THE OUTSET, LD. SR. D.R. SUPPORTED THE ORDER OF THE A.O. AS SUBSTANTIAL RELIEF HAS BEEN GIVEN BY THE LD. CIT (A), AFTER CONSIDERING TH E ASSESSEES RECONCILIATION OF CALCULATING STOCKS AND BILL FOR PURCHASE OF GOL (JAGGERY) AND OVER VALUATION OF BASMATI RICE. AFTER CONSIDERING BOTH THE SIDES AND PAPER BOOK SUBMITTED BY THE ASSESSEE, DURING THE COURSE OF HEARING, THE APP ELLANT HAS DRAWN OUR ATTENTION ON PAGE NOS.6 TO 14. THE BASIC MISTAKE W AS EXPENDITURE OF FREIGHT HAD NOT BEEN CONSIDERED IN VALUING THE CLOSING STOC K AS CLEARLY STATED DURING ITA NOS. 2625/AHD/10 IN RATNADEEP SALES. CORP. & 2676/AHD/10 IN RATNADEEP TRADERS FOR A.Y. 03-04 PAGE 10 THE COURSE OF SURVEY. FURTHER CORRECT VALUATION OF STOCK WAS SUBMITTED BY THE ASSESSEE BEFORE THE A.O., WHICH HAD NOT BEEN DISPUT ED. THE APPELLANT HAD EXPLAINED THE DIFFERENCE BEFORE THE LOWER AUTHORITI ES WITH EVIDENCE. THEREFORE, ADDITION CONFIRMED BY THE CIT(A) AT RS.2 ,75,358/- DELETED. HOWEVER, ACCOUNTING ENTRY MADE BY THE ASSESSEE IN T HE BOOKS OF ACCOUNT FOR ADDITIONAL INCOME DISCLOSED AT RS.1.5 LACS ALSO WHI CH NULLIFIED THE DISCLOSURE MADE BY THE ASSESSEE DURING THE COURSE OF SURVEY, W HICH IS CONTRARY TO THE ACCOUNTING PRINCIPLE. ACCORDINGLY, WE CONFIRM THE ADDITION OF RS.1.5 LACS ON ACCOUNT OF ADDITIONAL INCOME DISCLOSED BY THE ASSES SEE. 10. GROUND NO.3 IS AGAINST CONFIRMING THE DISALLOWA NCE OF RS.20,000/- OUT OF RS. 50,000/- BEING PROFESSIONAL FEES. THE ASSES SEE CLAIMED PROFESSIONAL FEES OF RS.50,000/- PAID TO PIYUSH PANCHAL & CO. D URING THE ASSESSMENT PROCEEDING AS WELL AS AT THE TIME OF SURVEY PROCEED ING, THE A.O. FOUND THESE EXPENSES WERE NOT INCURRED WHOLLY AND EXCLUSIVELY F OR BUSINESS PURPOSES. THUS, HE MADE ADDITION OF RS.50,000/-. LD CIT(A) H AD RESTRICTED RS.20,000/- BY OBSERVING THAT SHRI VISHAL SHAH WAS PARTNER OF P IYUSH PANCHAL & CO. AND RENDERED SERVICES TO THE APPELLANT IN CONNECTION WI TH TAXATION MATTER. AFTER CONSIDERING THE PRECEDING YEAR PAYMENT OF THE PROFE SSIONAL FEES FOR A.Y. 2001-02, HE RESTRICTED THIS DISALLOWANCE AT RS.20,0 00/-. LD. A.R. SUBMITTED THAT THE PROFESSIONAL FIRM HAD PROVIDED LEGAL SERVI CE ON DIFFERENT OCCASION TO THE APPELLANT. THEREFORE, RS.50,000/- WAS REASONAB LE PAYMENT TO PIYUSH PANCHAL & CO. AT THE OUTSET, LD. SR. D.R. SUPPORTE D THE ORDER OF CIT(A). AFTER CONSIDERING BOTH THE SIDES, IT IS FOUND THAT LD. CI T(A) HAS HELD THAT PAYMENT IS ITA NOS. 2625/AHD/10 IN RATNADEEP SALES. CORP. & 2676/AHD/10 IN RATNADEEP TRADERS FOR A.Y. 03-04 PAGE 11 EXCESSIVE BUT INCURRED FOR BUSINESS PURPOSES. THE LD. CIT(A) HAD COMPARED THE PRECEDING YEARS FEES I.E. A.Y. 01-02, WHEREAS, THE CASE IS BEFORE US FOR A.Y. 03-04 AND THERE WAS A SURVEY PROCEEDING ON THE ASSESSEE RELEVANT TO PREVIOUS YEAR. THEREFORE, WE FIND THAT FEES PAID T O PROFESSIONAL FIRM ARE REASONABLE. ACCORDINGLY, WE ALLOW THE ASSESSEES A PPEAL ON THIS GROUND. 11. GROUND NOS. 5 & 6 ARE AGAINST CONFIRMING THE AD DITION ON ACCOUNT OF CASH DISCREPANCY FOUND DURING THE COURSE OF SURVEY AND LOAN OF RS.9,000/-. BOTH ISSUES HAVE NOT SERIOUSLY ARGUED BY THE A.R. THUS, BOTH THE GROUNDS ARE DISMISSED. 12. IN THE RESULT, BOTH ASSESSEES APPEALS ARE PART LY ALLOWED. THESE ORDERS PRONOUNCED IN OPEN COURT ON 29.04.2014 SD/- SD/- ( KUL BHARAT ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA !- !- !- !- & && & ./ ./ ./ ./ 0!/, 0!/, 0!/, 0!/, / COPY OF ORDER FORWARDED TO:- 1. % / REVENUE 2. ! / ASSESSEE 3. 4 / CONCERNED CIT 4. 4- / CIT (A) 5. /8 .( , , / DR, ITAT, AHMEDABAD 6. 8:; <= / GUARD FILE. BY ORDER/ !- !, >/ % , $