The DCIT, Navsari Circle, Navsari V. Shri Sumanbhai Zaverbhai Patel, Navsari

ITA 2903/AHD/2009

• Counselvise Citation: 290320514 RSA 2009
• Duration Of Justice: 2 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 14-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 23-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI, A.K.GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.2903/AHD/2009 ASSESSMENT YEAR:2006-07 DY. COMMISSIONER OF INCOME-TAX, NAVSARI CIRCLE, NAVSARI V/S . M/S. SUMANBHAI ZAVERBHAI PATEL & SONS, RAJA ROAD, MAROLI BAZAR, MAROLI, DIST. NAVSARI PAN NO.AVFS4948J (APPELLANT) .. (RESPONDENT) /BY APPELLANT SHRI VINOD TANWANI, SR-DR /BY RESPONDENT SHRI TUSHAR P HEMANI, AR /DATE OF HEARING 14-03-2012 /DATE OF PRONOUNCEMENT 27-04-2012 O R D E R PER KUL BHARAT, JUDICIAL MEMBER:- THIS PRESENT APPEAL HAS BEEN FILED BY THE REVENUE A GAINST THE ORDER DATED 30-07-2009 OF THE LD. COMMISSIONER OF INCOME-TAX (A PPEALS)-VALSAD FOR THE ASSESSMENT YEAR 2006-07 ON THE FOLLOWING GROUNDS OF APPEAL:- [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE HONBLE CIT(A) ERRED IN DELETING THE ADDITION OF RS.9,44,95 9/- MADE ON ACCOUNT OF ESTIMATION OF NET PROFIT. [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ADDITION MADE BY TH E A.O. [3] IT IS, THEREFORE, PRAYED TO SET SIDE THE ORDER PASSED BY THE CIT(A) AND THAT OF THE ORDER PASSED BY THE AO BE RESTORED. ITA NO.2903/AHD/2009 A.Y. 2006-07 DCIT NAVASRI CIR. V. M/S SUMANBHAI Z PATEL & SONS PAGE 2 2. THE ONLY EFFECTIVE GROUND RAISED IN THIS APPEAL IS WITH REGARD TO DELETION OF ADDITION OF RS.9,44,959/- MADE ON ACCOUNT OF ESTIMA TION OF NET PROFIT. 3. THE FACTS IN BRIEF IS THAT A SURVEY ACTION WAS C ONDUCTED U/S. 133A OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) ON 11-11-2005. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT U/S. 1 43(3) OF THE ACT WAS COMPLETED VIDE ORDER DATED 24.12.2008. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT AND MADE ADDITION ON THE BASIS OF NET PROFIT ESTIMA TED AT 5% OF THE GROSS RECEIPTS OF RS.14,40,116/-. THE ASSESSEE BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER FIELD APPEAL BEFORE LD. CIT(A) WHO VIDE IMPUGNED OR DER DELETED THE ADDITION ON THE BASIS THAT REJECTION OF BOOK RESULT, ITSELF IS UNWA RRANTED. NOW, REVENUE FEELING AGGRIEVED BY THE ORDER OF LD. CIT(A) PREFERRED APPE AL BEFORE US. 4. LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE FI NDINGS OF THE ASSESSING OFFICER AND ON THE CONTRARY THE AUTHORIZED REPRESEN TATIVE FOR THE ASSESSEE RELIED UPON THE ORDER PASSED BY THE LD. CIT(A). LD. AR SUB MITTED THAT REVENUE HAS NOT CHALLENGED FINDING OF FACT AS ARRIVED AT BY LD. CIT (A) THAT THE REJECTION OF BOOKS OF ACCOUNT IS NOT WARRANTED. IN SUCH CIRCUMSTANCES, T HE BOOK RESULTS DECLARED BY THE ASSESSEE IS TO BE ACCEPTED. IN SUPPORT OF THIS CONT ENTION, LD. AR RELIED UPON THE ORDERS OF THE HONBLE CO-ORDINATE BENCH IN ITA NO.1948/AHD/2008 TITLED AS ACIT V. SHRI RAMANBHAI B PATEL HUF ORDER DATED 05-08-2011 AND M/S P.T. SYNTHECS V. ITO IN ITA NO.4520/AHD/2007 ORDER DATED 22-10-2010. FURTHER LD. AR SUBMITTED T HAT BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED U/S.44 AB OF THE ACT. THE AO WITHOUT PIN-POINTING ANY SPECIFIC DEFECT IN BOOKS OF ACCOUN T HAS REJECTED THE SAME. LD. AR SUBMITTED THAT THE AO ERRED IN INVOKING THE PROVISI ONS OF SECTION 145(3) OF THE ACT AS HE DID NOT FIND ANY EVIDENT DEFECTS IN BOOKS OF ACC OUNT. IN SUPPORT OF THIS SUBMISSION LD. AR RELIED ON THE DECISION OF ITAT AHMEDABAD BEN CHES IN THE CASE OF PUSHPANJALI DYING & PRINTING MILLS PVT. LTD. V. CIT 72 TTJ 886 (AHD). LD. AR SUBMITTED THAT DURING THE EARLIER YEARS, THE ASSESS EE HAS EARNED NET PROFIT (BEFORE CAPITAL, INTEREST AND PARTNERS SALARY) @ 0.51% IN FINANCIAL YEAR 2005-06 AND NO PROFIT WAS EARNED IN FINANCIAL YEAR 2004-05 AND SAME HAS B EEN ACCEPTED BY THE REVENUE. THIS CLEARLY SHOWS THAT THE RATE OF NET PROFIT EARN ED DURING THE YEAR UNDER CONSIDERATION IS CORRECT AND NO ESTIMATION IS REQUI RED. MOREOVER, THE UNACCOUNTED INCOME OF RS.14,10,610/- FOUND DURING THE SURVEY AC TION U/S. 133A OF THE ACT HAS ITA NO.2903/AHD/2009 A.Y. 2006-07 DCIT NAVASRI CIR. V. M/S SUMANBHAI Z PATEL & SONS PAGE 3 BEEN OFFERED TO TAX. THE ASSESSEE HAS CREDITED IN I TS PROFIT AND LOSS ACCOUNT AT RS.12,10,610/- AND REMAINING RS.2 LAKH HAS OFFERED IN ITS RETURN. THEREFORE, THERE WAS NO OCCASION FOR ESTIMATING THE NET PROFIT BY TH E AO. LD. AR SUBMITTED THAT IN THE ASSESSMENT ORDER AO HAS NOT JUSTIFIED ESTIMATION OF NET PROFIT @ 5% SAME BEING, HIGHER AND UNFAIR DESERVES TO BE DELETED. HE SUBMIT TED THAT ALTERNATIVELY AND WITHOUT PREJUDICE TO THE SUBMISSION MADE HEREINBEFORE, THE ASSESSEE IS ENTITLED FOR SET OFF AGAINST THE AMOUNT OF RS.2 LAKH WHICH HAD BEEN OFFE RED TO TAX. LD. AR VEHEMENTLY ARGUED THAT THE AO HAS NOT EARTHED ANY IRREGULARIT Y IN THE PURCHASE BILLS OR SALES OR THE SALES OF MATERIALS BROUGHT THEREFORE, NON-MAINT ENANCE OF DATE-WISE QUANTITATIVE DETAILS WOULD NOT AFFECT THE CORRECTNESS OF THE BOO K RESULT. HE THEREFORE SUBMITTED THAT EVEN THOUGH DAY-TO-DAY STOCK REGISTER IS NOT M AINTAINED BOOKS OF ACCOUNT CAN NOT BE REJECTED. IN SUPPORT OF THIS CONTENTION HE P LACED RELIANCE ON THE DECISION OF HONBLE CO-ORDINATE BENCH IN THE CASE OF ITO V. MANSI PRINTS PVT. LTD. IN ITA NO.498 & 872/AHD/2009 ORDER DATED 20-05-2011. HE SUBMITTED THAT UNDER TH E FACTS AND CIRCUMSTANCES OF THE CASE THE ESTIMATION OF NET PRO FIT MADE BY THE AO IS REQUIRED TO BE DELETED. 5. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE STRONGLY SUPPORTED THE ASSESSMENT ORDER AND SUBMITTED THAT THE CONTENTION OF LD. AR THAT THERE WAS NO OCCASION TO REJECT BOOKS OF ACCOUNT IS FACTUALLY IN CORRECT HE SUBMITTED THAT THE AO IN HIS ASSESSMENT ORDER IN PARA-6 TO 6.5 HAS CATEGORIC ALLY MENTIONED THE REASONS AS TO WHY THE BOOKS OF ACCOUNT OF THE ASSESSEE IS NOT REF LECTING THE FAIR AND TRUE RESULT. HE SUBMITTED THAT IT IS SETTLED PROPOSITION OF LAW IN THE CASE OF CIT V. BRITISH PAINTS INDIA LTD. (1991) 188 ITR 44 (SC) THAT THE ASSESSING OFFICER IS REQUIRED TO DEDUCE THE TRUE AND CORRECT PICTURE OF PROFIT/INCOME EARNED BY THE ASSESSEE. THEREFORE, UNDER THE FACTS AND CIRCUMSTANCES THE AO WAS JUSTIFIED IN REJ ECTING BOOKS OF ACCOUNT. HE SUBMITTED THAT THE FINDINGS OF LD. CIT(A) IS ERRONE OUS AND CONTRARY TO THE RECORD. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ONLY EFFECTIVE ISSUE RAISED BY THE REVENUE IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.9,44,959/- MADE ON ACCOUNT OF ESTIMA TION OF NET PROFIT. WE FIND THAT LD. CIT(A) HAS RETURNED A FINDING OF FACT THAT THE REJECTION OF BOOK RESULTS CLEARLY IS UNWARRANTED. ADMITTEDLY, THIS FINDING OF FACT IS N EITHER CHALLENGED BY REVENUE BY RAISING A SPECIFIC GROUND OF APPEAL NOR ANY ADDITIO NAL GROUND TO THIS EFFECT IS FILED. ITA NO.2903/AHD/2009 A.Y. 2006-07 DCIT NAVASRI CIR. V. M/S SUMANBHAI Z PATEL & SONS PAGE 4 UNDER SUCH CIRCUMSTANCES, IT CAN BE INFERRED THAT T HE REVENUE IS NOT AGGRIEVED BY THE SAME. WE FIND UNDER THE SIMILAR FACTS AND CIRCU MSTANCES HONBLE CO-ORDINATE BENCH HAS TAKEN A VIEW THAT IF THE FINDING OF FACT THAT BOOK RESULTS COULD NOT BE REJECTED IS NOT CHALLENGED BY THE REVENUE, THEREFOR E, THE BOOK RESULTS DECLARED BY THE ASSESSEE WILL HAVE TO BE ACCEPTED. ADMITTEDLY, LD. CIT(A) HAS DELETED THE ADDITION OF RS.9,44,959/- MADE BY AO ON THE BASIS T HAT THE REJECTION OF BOOK RESULTS ITSELF WAS UNWARRANTED. THE DECISIONS OF THE CO-ORD INATE BENCH PASSED IN ITA NO.1948/AHD/2008 TITLED AS SHRI RAMANABHAI B PATEL HUF (SUPRA) AND ITA NO.4520/AHD/2007 TITLED AS M/S P.T. SYNTHEICS (SUPRA) SQUARELY COVERED THIS ISSUE. THE HONBLE CO-ORDINATE BENCH IN ITA NO.1948/AHD/2008 FOLLOWING THE RATIO LAID IN ITA NO.4520/AHD/2007 (SUPRA) DISMISSED THE APPEAL FILED BY THE REVENUE. THE RELEVANT CONTENTS OF THE DECISION IN ITA NO.1948/AHD/2008 (SUPRA) IS REPRODUCED AS UNDER:- 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, WE FIND THAT IN THIS CASE THE AO HAS REJECTED THE BOOK RESULTS SHOWN BY THE ASSESSEE BY REJECTING THE BOOKS AND MADE THE GP ADDITION OF RS. 34,65,892/-. THE LD. CIT(A) WHILE ALLOWING THE APPEAL OF THE ASSESSEE HA S ALSO GIVEN THE FINDING OF FACTS THAT BOOK RESULTS COULD NOT BE REJECTED U/S. 145(3) OF THE ACT IN THIS CASE. WE FURTHER FIND THAT THIS FINDING OF FACTS OF LD. C IT(A) HAS NOT BEEN CHALLENGED BY THE REVENUE IN THE GROUNDS OF APPEAL TAKEN UP BE FORE US. IN THE ABSENCE OF SUCH CHALLENGE, THE BOOK RESULTS DECLARED BY THE ASSESSEE WILL HAVE TO BE ACCEPTED. THIS VIEW OF OURS IS SUPPORTED BY THE DEC ISION OF THE TRIBUNAL IN THE CASE OF ITO VS. M/S P.T. SYNTHETIC (SUPRA) WHEREIN IT WAS HELD AS UNDER:- 7. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND IT TO BE A FIT CASE FOR SUSTAINING EVEN PART ADDITION ON THIS ISSU E. THE LEARNED CIT(A) GAVE A SPECIFIC FINDING THAT REJECTION OF THE BOOK RESULTS IS NOT IN ORDER IN THIS CASE. THE LEARNED CIT(A) VERIFIED ALL THE D ETAILS AND MATERIAL FILED ON RECORD AND CAME TO THE FINDING THAT THE AS SESSEE MAINTAINED DETAILED STOCK REGISTER ON DAY TO DAY BASIS COMPRIS ING OF DETAILS OF SALES AND PURCHASES WHICH ARE VERIFIED. NO SPECIFIC DEFECT HAS BEEN POINTED OUT IN THE MAINTENANCE OF THE BOOK RESULTS. THE LEARNED CIT(A), THEREFORE, HELD THAT BOOK RESULTS CANNOT BE REJECTE D U/S. 145(3) OF THE IT ACT. THE ABOVE FINDING OF FACTS RECORDED BY THE LEA RNED CIT(A) HAVE NOT BEEN CHALLENGED BY THE REVENUE IN THE GROUND OF APPEAL. IN THE ABSENCE OF ANY CHALLENGE TO THE FINDING OF FACTS RE CORDED BY THE LEARNED CIT(A), IT IS CLEAR THAT THE BOOK RESULTS D ECLARED BY THE ASSESSEE SHALL HAVE TO BE ACCEPTED. THEREFORE, THER E IS NO REASON FOR THE LEARNED CIT(A) TO MAINTAIN EVEN PART ADDITION O N THIS ISSUE. THE FINDING OF FACTS RECORDED BY THE LEARNED CIT(A) HAV E NOT BEEN REBUTTED THROUGH ANY MATERIAL ON RECORD. WE, THEREFORE CONFI RM THE FINDINGS OF THE LEARNED CIT(A) WITH REGARD TO THE ACCEPTANCE OF THE BOOK RESULTS. HOWEVER, THE PART ADDITION SUSTAINED BY THE LEARNED CIT(A) IN A SUM OF RS.5,00,000/ IS SET ASIDE AND THE PART ADDITION MAI NTAINED BY HIM IS ITA NO.2903/AHD/2009 A.Y. 2006-07 DCIT NAVASRI CIR. V. M/S SUMANBHAI Z PATEL & SONS PAGE 5 ALSO DELETED BY SETTING ASIDE THE ORDER OF THE LEAR NED CIT(A) TO THAT EXTENT. IN THE RESULT, THE DEPARTMENTAL APPEAL ON G ROUND NO.1 IS DISMISSED AND THE APPEAL OF THE ASSESSEE ON GROUND NO.1 AND 2 IS ALLOWED. RESPECTFULLY FOLLOWING THE RATIO LAID THEREIN, WE H EREBY DISMISS THIS APPEAL OF THE REVENUE. 7. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMISSED . ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (A.K.GARODIA) (KUL BHARAT) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, *DKP - 27/04/2012 ()* + ,- ,- ,- ,- ../ ../ ../ ../ 0/ 0/ 0/ 0/ / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. *.3 , ,4 / CONCERNED CIT 4. , ,4- / CIT (A) 5. /67 ...3, , .3 , ()* / DR, ITAT, AHMEDABAD 6. 7:; <= / GUARD FILE. BY ORDER/ ,- , /TRUE COPY/ >/ ( ? , .3 , ()* +