Shri Manish Valji Ahir, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-1, GANDHIDHAM

ITA 306/RJT/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0315 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 17-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 68; 144

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT [CONDUCTED THROUGH E COURT AT AHMEDABAD] BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO. 306/RJT/2015 / ASSESSMENT YEAR: 2005-06 SHRI MANISH VALJI AHIR C/O. KALPESH S. DOSHI & CO. CHARTERED ACCOUNTANTS 411, COSMO COMPLEX MAHILA COLLEGE CIRCLE RAJKOT 360 001. VS ITO, WARD-1 GANDHIDHAM. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI KALPESH DOSHI, AR REVENUE BY : SHRI PRAVEEN VERMA, SR.DR / DATE OF HEARING : 10/09/2018 /DATE OF PRONOUNCEMENT : 11 /09/2018 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST ORDER OF LD.CIT(A)-3, R AJKOT DATED 27.3.2015 FOR THE ASSESSMENT YEAR 2005-06. 2. IN THE FIRST GROUND OF APPEAL, IT HAS PLEADED TH AT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.1,88,778/- B Y UPHOLDING ESTIMATION OF NET PROFIT AT THE RATE OF 2%. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE AT THE RELEVANT TIME WAS ENGAGED IN THE BUSINESS OF TRANSPORTATION AND RUNNI NG A PROPRIETARY ITA NO.306 /RJT/2015 - 2 - CONCERN IN THE NAME AND STYLE OF M/S.SOMNATH ROADLI NES. HE HAS SHOWN TOTAL TURNOVER OF RS.1.96 CRORES AND NET PROFIT OF RS.2.03 LAKHS WHICH WAS IN THE RATE OF 1.03%. THE AO HAS ESTIMATED THE NET PROFIT AT A HIGHER FIGURE IN AN ASSESSMENT ORDER PASSED UNDER SECTION 144 OF THE INCOME TAX ACT. DISPUTE TRAVELLED UPTO THE TRIBUNAL AND ULTIM ATELY ALL THESE ISSUES WERE SET ASIDE BY THE TRIBUNAL IN ITA NO.228/RJT/20 11. IN THE SAID SET ASIDE ASSESSMENT ORDER AGAIN THE AO HAS ESTIMATED T HE PROFIT IN TRANSPORTATION BUSINESS AT 5%. ON APPEAL THE LD.CI T(A) REDUCED IT TO 2%. 4. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. THE ASSESSEE HAS NOT CHALLEN GED REJECTION OF BOOK RESULTS. IT MEANS, HIS PROFIT IS TO BE DETERMINED O N AN ESTIMATE BASIS. WHILE ESTIMATING THE PROFIT OF ANY ASSESSEE, SOME GUESS-W ORK WOULD ALWAYS BE INVOLVED. THE ESTIMATION HAS TO BE WORKED OUT AFTE R LOOKING INTO THE SURROUNDING CIRCUMSTANCES AND THE NATURE OF ASSESSE ES BUSINESS. THE ASSESSEE HIMSELF MADE REFERENCE TO A LARGE NUMBER O F ITAT ORDERS WHICH HAVE BEEN REPRODUCED BY THE CIT(A) WHEREIN NET PROF IT UPHELD BY THE ITAT RANGES IN BETWEEN 1.39% TO 2% OF THE TURNOVER. TAKING GUIDANCE FROM SUCH DECISIONS, THE LD.FIRST APPELLATE AUTHORI TY HAS UPHELD THE ESTIMATION OF NET PROFIT AT 2% INSTEAD OF 5% CALCUL ATED BY THE AO. AFTER CONSIDERING THE WELL REASONED ORDER OF THE LD.CIT(A ), WE DO NOT SEE ANY REASONS TO INTERFERE IN IT. HENCE, FIRST GROUND OF APPEAL IS REJECTED. 5. IN GROUND NO.2, THE ASSESSEE IS CHALLENGING CONF IRMATION OF ADDITION OF RS.10.50 LAKHS WHICH WAS ADDED BY THE AO WITH TH E AID OF SECTION 68. 6. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE TOOK L OANS FROM THE FOLLOWING PERSONS: ITA NO.306 /RJT/2015 - 3 - SR.NO. NAME AMOUNT OF LOAN GIVEN DETAILS PROVIDED 1. HASMUKHBHAI V. AHIR 2,00,000/- *COPY OF AFFIDAVIT (PG-44-45) *COPY OF ADDRESS PROOF (PG-46) *COPY OF CAPITAL ACCOUNT (PG-47) *COPY OF BALANCE SHEET (PG-48) 2. VALABHAI AHIR 2,50,000/- *COPY OF AFFIDAVIT (PG-49-50) *COPY OF CAPITAL ACCOUNT (PG-51) *COPY OF BALANCE SHEET (PG-52) 3. MADHABHAI J. AHIR 2.00.000/- *COPY OF AFFIDAVIT (PG-53-54) *COPY OF ADDRESS PROOF (PG-55) *COPY OF CAPITAL ACCOUNT (PG-56) *COPY OF BALANCE SHEET (PG-57) 4. RAMESHBHAI MAHADEVA 2,00,000/- *COPY OF AFFIDAVIT (PG-58-59) *COPY OF ADDRESS PROOF (PG-60) *COPY OF CAPITAL ACCOUNT (PG-61) *COPY OF BALANCE SHEET (PG-62) 5. SHAMJIBHAI V. AHIR 2,00,000/- *COPY OF AFFIDAVIT (PG-63-64) *COPY OF ADDRESS PROOF (PG-65) *COPY OF CAPITAL ACCOUNT (PG-66) *COPY OF BALANCE SHEET (PG-67) 7. IN ORDER TO DISCHARGE ITS BURDEN CAST UPON BY VI RTUE OF SECTION 68, THE ASSESSEE HAS FILED AFFIDAVITS OF CREDITORS AND THEI R ADDRESSES, COPY OF CAPITAL ACCOUNT AND COPY OF BALANCE SHEET. SOMEHOW , THE LD.REVENUE AUTHORITIES DID NOT FIND SUCH EVIDENCES AS SUFFICIE NT TO DISCHARGE BURDEN PUT UPON UNDER SECTION 68 OF THE ACT. THE LD.AO MA DE AN ADDITION WHICH MET APPROVAL OF THE LD.CIT(A). 8. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD. SECTION 68 OF THE INCOME TAX ACT CONTE MPLATES THAT WHERE ANY ITA NO.306 /RJT/2015 - 4 - SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE M AINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATI ON ABOUT THE NATURE AND SOURCE THEREOF, OR THE EXPLANATION OFFERED BY THE A SSESSEE IS NOT, IN THE OPINION OF THE AO SATISFACTORY, THEN THE SUM SO CRE DITED IN THE ACCOUNTS MAY BE TREATED AS INCOME OF THE ASSESSEE OF THAT PR EVIOUS YEAR. WE FIND THAT OUT OF FIVE CREDITORS, SHRI HASMUKHBHAI V. AHI R, SHAMJIBHAI V. AHIR ARE BROTHERS OF THE ASSESSEE. SHRI VALABHAI AHIR I S THE FATHER. OTHER TWO CREDITORS ARE ALSO HIS RELATIVES. THUS, THEIR IDEN TITY IS NOT IN DISPUTE. HE HAS GIVEN RESIDENTIAL ADDRESSES OF THESE CREDITORS. THEY HAVE CONFIRMED THE TRANSACTION. IF IN THE REMAND PROCEEDINGS, THE AO WOULD REQUIRE THEM, THEY COULD BE PRODUCED BEFORE THE AO. NO DOUBT THE Y ARE MEN OF SMALL MEANS ENGAGED IN PETTY TRANSPORT BUSINESS. BUT OUT RIGHT DISCOUNTING THEM FOR THEIR CREDIT-WORTHINESS WITHOUT THERE BEING ANY BASIS IS ALSO NOT JUSTIFIABLE AT THE END OF THE AO. THEY HAVE GIVEN CONFIRMATION ABOUT ADVANCING THE LOAN TO THE ASSESSEE. CONSIDERING AL L EVIDENCES SUBMITTED BY THE ASSESSEE, THE LD.CIT(A) OUGHT TO HAVE NOT CO NFIRMED THE ADDITION. AFTER TAKING INTO CONSIDERATION THE AFFIDAVITS AND OTHER RELEVANT DETAILS, WE ARE OF THE VIEW THAT THE ASSESSEE HAS DISCHARGED ON US PUT UPON HIM BY SECTION 68 OF THE ACT. WE ALLOW THIS GROUND OF APP EAL AND DELETE THE ADDITION. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 11 TH SEPTEMBER, 2018. SD/- (WASEEM AHMED) ACCOUNTANT MEMBER SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED, 11/09/2018