Shri Sandeep Kumar Gupta, Jammu V. The Income-tax Officer, Jammu

ITA 277/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8861 (ITAT-AMRITSAR)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 03-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA SH K V K SINGH
• Keywords: Depreciation
• Section: 144

Judgement Text

ITA NOS. 277 & 502(ASR)/2015 & 2014 ASSESSMENT YEARS: 2008-09 & 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR (SMC) JAMMU CAMP BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NOS. 277 & 502(ASR)/2015 & 2014 ASSESSMENT YEARS:2008-09 & 2009-10 PAN: ABYPG7497G SH. SANDEEP KUMAR GUPTA, VS. INCOME TAX OFFICER, NARWAL, JAMMU. WARD-1(3), JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. P.N.ARORA, ADVOCATE RESPONDENT BY:SH. K.V.K. SINGH, DR DATE OF HEARING: 02/12/2015 DATE OF PRONOUNCEMENT: 26/02/2016 ORDER THESE ARE THE ASSESSEES APPEALS FOR THE ASSESSMEN T YEARS 2008-09 & 2009-10, INVOLVING COMMON ISSUES. 2. THE FIRST ISSUE IS REGARDING ADDITION OF RS.5,63 ,888/- FOR THE ASSESSMENT YEAR 2008-09 AND RS.1,47,062/- FOR THE A SSESSMENT YEAR 2009-10 ON ACCOUNT OF SUNDRY CREDITORS. 3. THE FACTS ARE THAT THE ASSESSEE IS A PARTNER IN TWO FIRMS, NAMELY, M/S. LAXMI FRUIT TRADERS AND M/S. DHARAMPAL SANDEEP KUMAR, BOTH AT FRUIT AND VEGETABLE MANDI, NARWAL, JAMMU. M/S. LAXM I FRUIT TRADERS IS ENGAGED IN THE BUSINESS OF FRUITS, WHEREAS M/S. DHA RAMPAL SANDEEP KUMAR IS INTO THE BUSINESS OF VEGETABLES ON WHOLESA LE TRADING/COMMISSION BASIS. M/S. LAXMI FRUIT TRADERS COMPRISES OF THE ITA NOS. 277 & 502(ASR)/2015 & 2014 ASSESSMENT YEARS: 2008-09 & 2009-10 2 ASSESSEE, HIS BROTHER SUDHIR GUPTA AND THEIR FATHE R SH. DHARAMPAL GUPTA, WHEREAS IN M/S. DHARAMPAL SANDEEP KUMAR, THE ASSESSEE, HIS BROTHER SH. SUDHIR GUPTA ARE THE PARTNERS. THE PROF IT WAS CLAIMED EXEMPT U/S 10(2A) OF THE I.T. ACT. 4. THE AO ASKED THE ASSESSEE TO FURNISH THE DETAILS OF BANK ACCOUNTS HELD BY HIM. AS PER THE ASSESSEES S.B. A/C WITH IC ICI BANK, JAMMU, THERE WERE DEPOSITS IN CASH. THE ASSESSEES BALANCE -SHEET SHOWED FOR THE AY 2008-09 ON THE LIABILITY SIDE RS.5,63,888/- ON A CCOUNT OF SUNDRY CREDITORS. THE ASSESSEE COULD NOT FURNISH DETAILS THEREOF, BUT FOR STATING THAT THEY WERE GROWERS. HE FURNISHED A FEW NAMES, L IKE M/S. MADAN LAL & SONS, M/S. SURINDER KUMAR TRADERS, ABHISHEK BROS. & M/S. JAGDISH RAJ & SONS, ALL STATED TO BE LOCATED IN FRUIT MANDI , NARWAL. THE AO ISSUED SUMMONS TO ALL OF THEM. ALL OF THEM DENIED H AVING HAD ANY TRANSACTION WITH THE ASSESSEE IN HIS INDIVIDUAL CAP ACITY, THOUGH THEY ADMITTED HAVING HAD TRANSACTIONS WITH M/S. LAXMI FR UIT TRADERS, IN WHICH, THE ASSESSEE WAS A PARTNER. TO THIS, THE ASS ESSEE STATED THAT HE HAD BEEN LOOKING AFTER THE BUSINESS OF THE FIRM H IMSELF AND MAKING PURCHASES FOR THE FIRM AND FOR HIMSELF FROM THE GRO WERS AND OTHER PARTIES AND HAD, THUS, MIXED UP THE NAMES OF THE SUPPLIERS/ CUSTOMERS OF THE FIRM AND HIS OWN BUSINESS. 5. THE ASSESSEE PRODUCED PRINT-OUTS OF LEDGER AND CASH BOOK. THE LEDGER ACCOUNT CONTAINED ONE ACCOUNT TITLED COLLE CTION/PAYMENTS AGAINST SUPPLY. IT WAS STATED TO BE ON ACCOUNT OF COLLECTION ITA NOS. 277 & 502(ASR)/2015 & 2014 ASSESSMENT YEARS: 2008-09 & 2009-10 3 MADE/BALANCE FROM THE CUSTOMERS. IN THIS ACCOUNT, T HE DUES FROM CUSTOMERS WERE SHOWN ON THE CREDIT SIDE. THESE ENTR IES WERE ALL IN CASH, WHETHER DEPOSITED BY THE CUSTOMERS DIRECTLY INTO TH E ASSESSEES BANK ACCOUNT, OR SHOWN AS RECEIVED BY HAND. LIKEWISE, ON THE DEBIT SIDE, CASH ENTRIES WERE SHOWN, STATED TO BE AMOUNTS PAID TO T HE PERSON FROM WHOM THE GOODS WERE PURCHASED. THERE WERE NO LEDGER A CCOUNT OF THE CUSTOMERS/SUPPLIERS. THE AO OBSERVED THAT THIS SHO WED THAT THE BOOKS OF ACCOUNT PRODUCED WERE NOT THE ONES WHICH THE ASS ESSEE PREPARED IN THE COURSE OF HIS BUSINESS. THE ASSESSEE DID NOT PR ODUCE ANY BILLS OF PURCHASE, BILLS/ADVICE NOTE OF SALE, ADVICE NOTES/A NY MEMO OF HIS GOODS SOLD BY HIS CONSIGNEES, OR THE NAMES AND ADDRESSES OF HIS SUPPLIERS. THE ASSESSEE WAS ASKED AS TO WHEN THE SAID BOOKS WERE P REPARED AND AS TO WHAT THE BASIC DOCUMENTS WERE, ON THE BASIS OF WHI CH, THE COMPUTERIZED BOOKS HAD BEEN PREPARED. THE ASSESSEE STATED THAT THE BOOKS HAD BEEN WRITTEN DURING THE CURRENT YEAR, ON THE BASIS OF BA NK STATEMENT AND INFORMATION AVAILABLE WITH HIM. THE AO ASKED HIM A S TO WHY THE BOOKS OF ACCOUNT MAY NOT BE REJECTED, SINCE THEY HAD ADMI TTEDLY NOT BEEN MAINTAINED IN THE REGULAR COURSE OF BUSINESS AND TH EY WERE NOT SUPPORTED BY ANY BILLS/VOUCHERS. THE ASSESSEE STATE D THAT HE WAS NOT REQUIRED TO MAINTAIN REGULAR BOOKS OF ACCOUNT, AS HIS TURNOVER WAS BELOW THE PRESCRIBED LIMIT. THE AO OBSERVED THAT TH IS SHOWED THAT THE BOOKS PRODUCED WERE NOT THE ONES REQUIRED TO BE MAINTAINED DURING THE REGULAR COURSE OF BUSINESS. IT WAS, AS SUCH, TH AT THE AO, BEING ITA NOS. 277 & 502(ASR)/2015 & 2014 ASSESSMENT YEARS: 2008-09 & 2009-10 4 DISSATISFIED WITH THE CORRECTNESS AND COMPLETENESS OF THE ASSESSEES BOOKS OF ACCOUNT, REJECTED THEM. 6. APROPOS THE SUNDRY CREDITORS OF THE ASSESSEE, T HE AO OBSERVED THAT EVEN THOUGH THE BANK ACCOUNT AND COPIES OF CH EQUES OBTAINED FROM THE BANK SHOWED SOME PAYMENTS MADE BY CHEQUES, THE SUNDRY CREDITORS, AS SHOWN BY THE ASSESSEE IN HIS BALANCE SHEET, REM AINED UNVERIFIED; THAT EVEN REGARDING PURCHASES FROM KASHMIRI GROWERS, I T WOULD HAVE BEEN NATURAL FOR THE ASSESSEE TO HAVE THE DETAILS OF P ERSONS TO WHOM THE PAYMENTS WERE REQUIRED TO BE MADE; THAT, HOWEVER, THE ASSESSEE HAD NOT FURNISHED ANY SUCH DETAILS; THAT THE LEDGER DID NOT SHOW ANY ACCOUNT OF THE PERSONS FROM WHOM THE PURCHASES WERE CLAIMED T O HAVE BEEN MADE; THAT THE ASSESSEE HAD NOT BEEN ABLE TO SUBSTANTIATE THE EXISTENCE OF THE SUNDRY CREDITORS AS CLAIMED; AND THAT BESIDES, THE BUSINESS ADMITTEDLY CARRIED ON BY THE ASSESSEE HAD NOT BEEN REFLECTED I N HIS RETURN OF INCOME. IN THIS MANNER, THE AO MADE ADDITION OF RS.5,63,88 8/- TO THE INCOME OF THE ASSESSEE. A SIMILAR ADDITION OF RS.1,47,062/- WAS MADE FOR THE ASSESSMENT YEAR 2009-09. 7. THE LD. CIT(A) CONFIRMED THE ADDITIONS. 8. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION WRONGLY MADE B Y THE AO; THAT WHILE DOING SO, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT WHEREAS THE AO HAD ACCEPTED THE AMOUNTS APPEARING ON THE ASSETS SIDE O F THE BALANCE SHEET AND THE SECURED LOAN TAKEN AGAINST CAR, AS SHOWN ON THE LIABILITIES SIDE OF ITA NOS. 277 & 502(ASR)/2015 & 2014 ASSESSMENT YEARS: 2008-09 & 2009-10 5 THE BALANCE SHEET, HE HAD NOT ACCEPTED THE SUNDRY C REDITORS SHOWN BY THE ASSESSEE; AND THAT THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THAT AFTER REJECTING THE BOOKS OF ACCOUNT, THE AO OUGHT TO HAVE WORKED OUT THE PROFITS, RATHER THAN ILLEGALLY ADDING THE SUNDR Y CREDITORS, AS WAS DONE. 9. ON THE OTHER HAND, THE LD. DR HAS PLACED RELIANC E ON THE IMPUGNED ORDER. 10. WITH REGARD TO THIS ISSUE, IT IS SEEN THAT THE LD. CIT(A) HAS CONFIRMED THE AOS ACTION IN REJECTING THE ASSESSE ES BOOKS OF ACCOUNT AND ADDING THE SUNDRY CREDITORS FOR BOTH THE YEARS. THE ASSESSEE HAS ALL THOUGH STATED THAT HE HAD NOT MAINTAINED BOOKS OF A CCOUNT, AS HIS TURN- OVER WAS OF LESS THAN THE PRESCRIBED LIMIT. HE HAD GOT THE BOOKS PREPARED ON COMPUTER ON THE BASIS OF HIS BANK ACCOU NT, WHEN HE HAD BEEN ASKED TO DO SO BY THE AO IN THE ASSESSMENT PR OCEEDINGS. THIS CONTENTION OF THE ASSESSEE HAS BEEN TAKEN NOTE OF A T PAGE 2, PARA 4 OF THE ASSESSMENT ORDER FOR THE AY 2008-09. THE AO HAS NO T REBUTTED THIS FACT. ACTUALLY, AS OBSERVED BY THE AO AT PAGE 5, PARA 7.1 OF THE SAID ASSESSMENT ORDER, EVEN THE BUSINESS DONE BY THE ASS ESSEE IN HIS INDIVIDUAL CAPACITY HAD ITSELF NOT BEEN REFLECTED BY HIM IN HIS RETURN OF INCOME. THIS WAS SO, BECAUSE THE TURNOVER OF THIS B USINESS WAS BELOW THE TAXABLE LIMIT. THE LD. CIT(A) HAS ERRED IN NO T TAKING INTO CONSIDERATION THIS ASPECT OF THE MATTER. ITA NOS. 277 & 502(ASR)/2015 & 2014 ASSESSMENT YEARS: 2008-09 & 2009-10 6 11. THEN, THE AO HAD ERRED IN ON THE ONE HAND ACC EPTING THE TRADING RESULTS OF THE ASSESSEE, AND AT THE SAME TIME REJEC TING HIS BOOKS OF ACCOUNT. THE LD. CIT(A) WENT WRONG IN FAILING TO AP PRECIATE THAT SUCH A COURSE OF ACTION IS IMPERMISSIBLE IN LAW. THE BOOK S OF ACCOUNT NEED TO BE EITHER ACCEPTED, OR REJECTED IN TOTALITY. AND O NCE THE TRADING RESULTS OF THE ASSESSEE WERE ACCEPTED, THERE REMAINED NO SCOP E FOR THE AO TO MAKE ANY ADDITION OF SUNDRY CREDITORS. 12. FURTHER, EVEN IF, FOR THE SAKE OF ARGUMENT, THE AFORESAID ACTION OF THE AO IS TREATED AS VALID, THE ONE AND ONLY COURSE LEFT AVAILABLE TO THE AO AFTER REJECTING THE BOOKS OF THE ASSESSEE WAS TO PROCEED U/S 144 OF THE INCOME TAX ACT AND TO MAKE BEST JUDGMENT ASSESS MENT. PER CONTRA, HE MADE ADDITION OF SUNDRY CREDITORS, HOLDING THAT THE ASSESSEE HAD NOT BEEN ABLE TO SUBSTANTIATE THE EXISTENCE OF THE SUN DRY CREDITORS AS CLAIMED AND THUS, THEY COULD NOT BE ACCEPTED. THE L D. CIT(A) WAS INCORRECT IN SUSTAINING THIS ADDITION MADE AGAINST THE LAW BY THE AO. 13. THUS, LOOKED AT FROM ANY ANGLE, THE LD. CIT(A) HAS FALLEN INTO ERROR IN SUSTAINING THE UNSUSTAINABLE ADDITION MADE BY T HE AO. THE GRIEVANCE OF THE ASSESSEE IN THIS REGARD IS, THEREF ORE, JUSTIFIED. IT IS ACCEPTED. THE ORDERS OF THE LD. CIT(A) ON THIS ISSU E ARE REVERSED. 14. THE FACTS REMAINING THE SAME FOR BOTH THE YEAR S, BOTH THE ADDITIONS, I.E., THAT OF RS.5,63,888/- FOR AY 2008 -09 AND THAT OF RS.1,47,062/- FOR AY 2009-10, ARE CANCELLED. ITA NOS. 277 & 502(ASR)/2015 & 2014 ASSESSMENT YEARS: 2008-09 & 2009-10 7 15. THE ONLY OTHER CHALLENGE BY THE ASSESSEE IS TO THE ACTION OF THE LD. CIT(A) IN UPHOLDING THE DISALLOWANCE OF RS.36,304/- FOR AY 2008-09 AND THAT OF RS.31,406/- FOR AY 2009-10, RESPECTIVELY, ON ACCOUNT OF CAR EXPENSES. THE DISALLOWANCE IS OF 10% OF CAR EXPENSE S INCURRED BY THE ASSESSEE IN EACH OF THE YEARS ON ACCOUNT OF INTERES T ON LOAN, REPAIR AND MAINTENANCE AND DEPRECIATION. THE DISALLOWANCE WAS MADE ON ACCOUNT OF USE OF CAR FOR PERSONAL PURPOSES. 16. HERE, THE ASSESSEE HAS NOT BEEN ABLE TO CONTROV ERT THE FINDINGS OF THE TAXING AUTHORITIES. NO LOG BOOK HAS BEEN PRODUC ED AT ANY STAGE SO AS TO PROVE THAT THE CAR HAD BEEN USED EXCLUSIVELY FOR THE BUSINESS PURPOSES OF THE ASSESSEE AND NOT AT ALL FOR HIS PER SONAL PURPOSES. THE ASSESSEE HAS NOT EVEN RAISED ANY ALTERNATIVE GROUND THAT THE DISALLOWANCE FOR EITHER OF THE YEARS IS EXCESSIVE. 17. IN VIEW OF THE ABOVE, THE GRIEVANCE OF THE ASSE SSEE IN THIS REGARD FOR BOTH THE YEARS IS REJECTED. THE DISALLOWANCES O F RS.36,034/- FOR AY 2008-09 AND RS.31,406/- FOR AY 2009-10, AS CONFIRME D BY THE LD. CIT(A), ARE UPHELD. 18. IN THE RESULT, BOTH THE APPEALS ARE PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/02/2016 SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 26/02/2016 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE: SH. SANDEEP KUMAR GUPTA, NARWAL, J AMMU 2. THE ITO, WARD 1(3), JAMMU. ITA NOS. 277 & 502(ASR)/2015 & 2014 ASSESSMENT YEARS: 2008-09 & 2009-10 8 3. THE CIT(A), JAMMU. 4. THE CIT, JAMMU 5. THE SR. DR, ITAT, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR.