Arvindkumar Bhimjibhai Antala, Prop. of Lovely Proteins, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-1(2), RAJKOT-GUJARAT

ITA 315/RJT/2011

• Counselvise Citation: 31524914 RSA 2011
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 04-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: DR ADHIA
• Keywords: Gross profit estimation
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH SMC, RAJKOT BEFORE SHRI A.L. GEHLOT (AM) I.T.A. NO.315/RJT/2011 (ASSESSMENT YEAR 2005-06) SHRI ARVINDKUMAR BHIMJIBHAI ANTALA VS THE ITO, WD.1 (2) PROP OF LOVELY PROTEINS JUNAGADH DHORAJI ROAD SABALPUR, DIST : JUNAGADH PAN : ABSPA3098A (APPELLANT) (RESPONDENT) DATE OF HEARING : 25-10-2011 DATE OF PRONOUNCEMENT : 25-10-2011 APPELLANT BY : SHRI DR ADHIA RESPONDENT BY: WRITTEN SUBMISSION O R D E R THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(A)-XXI, AHMEDABAD DATED 07-06-2011 PERTAINING TO ASSESSMENT YEAR 2005-06. 2. NONE WAS PRESENT ON BEHALF OF THE REVENUE; HOWEV ER, A WRITTEN SUBMISSION HAS BEEN FILED ON RECORD. THEREFORE, TH E APPEAL IS DISPOSED OF AFTER HEARING THE LD.AR OF THE ASSESSEE AND ON CONSIDERAT ION OF THE WRITTEN SUBMISSION FILED BY THE REVENUE. 3. THE ASSESSEE HAS RAISED FOLLOWING EFFECTIVE GROU NDS IN THE APPEAL: 1. THE LD.C.I.T.(A) ERRED IN LAW AND FACTS IN CONF IRMING LUMP SUM ADDITION OF AN AMOUNT OF RS.20,000/- MADE BY TH E LD A.O. AT PARA 3 OF THE ASSESSMENT ORDER. THE ADDITION NEEDS DELETION. ITA NO.315/RJT/2011 2 2. THE LD.C.I.T.(A) ERRED IN LAW AND FACTS IN CONFI RMING ADDITION OF AN AMOUNT OF RS.20,088/- MADE BY THE LD.A.O. U/S 40A(3) IN RESPECT OF EXPENSES INCURRED. THE ADDITION NEED S DELETION. 3. THE LD.C.I.T.(A) ERRED IN LAW AND FACTS IN CO0NF IRMING LUMP SUM ADDITION OF AN AMOUNT OF RS.15,000/- MADE BY TH E LD.A.O. IN RESPECT OF MILL LABOUR CHARGES. THE ADD ITION NEEDS DELETION. 4.1 THE LDF.C.I.T.(A) ERRED IN LAW AND FACTS IN CON FIRMING ADDITION OF AN AMOUNT OF RS.31,050/- MADE BY THE LD.A.O. IN RESPECT OF POSTAGES AND TELEPHONE EXPENSES AND MOTOR CAR EXPENSES AT 20% IN LUMP SUM. THE ADDITION NEEDS DE LETION. 4.2 WITHOUT PREJUDICE, THE LD.C.I.T.(A) ERRED IN LA W AND FACTS IN CONFIRMING ADDITION OF AN AMOUNT OF RS.31,050/- MAD E BY THE LD.A.O. IN RESPECT OF POSTAGES AND TELEPHONE EXPENS ES AND MOTOR CAR EXPENSES AT 20% IN LUMP SUM. THE ADDITIO N NEEDS SUITABLE REDUCTION BEING VERY EXCESSIVE. 5. TAKING INTO CONSIDERATION THE LEGAL, STATUTORY A ND FACTUAL POSITION, AMOUNT OF RS.20,000/-, 20,088/-, 15,000/- AND 31,050/- OUGHT NOT TO HAVE BEEN CONFIRMED AND ADDIT ION MADE ON THIS ACCOUNT OUGHT TO HAVE BEEN DELETED. 4. GROUND NO.1 WHICH PERTAINS TO LUMP SUM ADDITION OF RS.20,000 ON ACCOUNT OF LOW GROSS PROFIT RATE HAS NOT BEEN PRESS ED BY THE LD. AR OF THE ASSESSEE. ACCORDINGLY GROUND NO.1 IS REJECTED. 5. THE SECOND GROUND PERTAINS TO DISALLOWANCE U/S 4 0A(3) OF THE ACT. THE ASSESSING OFFICER DISALLOWED AN AMOUNT OF RS.20, 08 8 BEING 20% OF RS.1,00,440 SAID TO BE EXPENDITURE INCURRED IN CASH. THE CIT(A ) WITHOUT ADDUCING ANY REASONS HAS UPHELD THE DISALLOWANCE. THE LD.AR O F THE ASSESSEE BEFORE US HAS FILED A COPY OF THE DECISION OF THE RAJKOT BENCH S MC IN THE CASE OF M/S RADHKRISHNA TRADING CO IN ITA NO.185//RJT/2011 ORDE R DATED 10-06-2011 TO ITA NO.315/RJT/2011 3 BRING HOME THE POINT THAT UNDER SIMILAR SET OF FACT S, THE TRIBUNAL HAS DELETED SIMILAR ADDITION. THE REVENUE IN ITS WRITTEN SUBMI SSION HAS SIMPLY RELIED UPON THE ORDER OF CIT(A). I FIND THAT BOOKS OF ACCOUNT HAS BEEN REJECTED AND AN ADDITION OF RS.20,000 MADE WHICH HAS BEEN ACCEPTED BY THE ASSES SEE. WHEN BOOKS OF ACCOUNT IS REJECTED, UNDER THAT CIRCUMSTANCES PROVI SIONS OF SECTION 40A(3) IS NOT APPLICABLE AS INCOME HAS BEEN ESTIMATED AFTER CONSI DERING ALL ASPECTS. I DO NOT FIND JUSTIFICATION IN SEPARATE ADDITION OF RS20,088 . TTHEREFORE SAME IS DELETED. 5. THE THIRD GROUND PERTAINS TO LUMP SUM ADDITION O F RS.15,000 IN RESPECT OF MILL LABOUR CHARGES. THE TOTAL EXPENDITURE CLAIMED BY THE ASSESSEE UNDER THE HEAD OIL MILL LABOUR CHARGES IS RS.86,250/-. THE ASSESSING OFFICER MADE THE ADDITION ON THE GROUND THAT THE VOUCHERS FOR THE EX PENDITURE ARE NOT SERIALLY NUMBERED; THERE IS NO COMPLETE DESCRIPTION OF THE W ORK DONE AND ALL VOUCHERS ARE CASH PAYMENTS BELOW RS.20,000. I FIND THAT THE CIT(A) HAS NOT APPENDED ANY REASON WHILE CONFIRMING THE ADDITION WHEREAS TH E REASONS BROUGHT OUT BY THE ASSESSING OFFICER IS INSIGNIFICANT. EVEN IF THERE COULD BE ANY OMISSIONS, IN VIEW OF THE GROSS PROFIT ADDITION OF RS.20,000 MAINTAINED, THAT WOULD TAKE CARE OF ANY SUCH OMISSIONS. EVEN OTHERWISE ALSO SEPARATE ADDIT ION ON ACCOUNT OF LABOUR CHARGES CANNOT BE MADE WHEN ADDITION FOR ESTIMATION OF PROFIT IS MADE BY MAKING ADDITION OF RS.20,000. I, THEREFORE, DO NOT FIND J USTIFICATION FOR THIS SEPARATE ADDITION. THE ADDITION OF RS.15,000 IS DELETED. ITA NO.315/RJT/2011 4 6. GROUND NO.4.1 PERTAINS TO 20% DISALLOWANCE OF RS .31,050 ON LUMP SUM BASIS OUT OF POSTAGES; TELEPHONE EXPENSES AND MOTOR CAR EXPENSES WHEREAS GROUND NO.4.2 IS AN ALTERNATIVE GROUND DISPUTING TH E REASONABILITY OF THE EXPENDITURE. I HAVE ALREADY OPINED AT PARAGRAGH 5 ABOVE THAT ANY OMISSION IN THE EXPENDITURE CLAIMED BY THE ASSESSEE WOULD COVER BY THE ADDITION MADE ON ACCOUNT OF LOW GROSS PROFIT RATE SHOWN BY THE ASSES SEE. IN VIEW OF THAT, AS A CONSEQUENCE, THERE IS NO ROOM FOR MAINTAINING THIS DISALLOWANCE, TOO. THEREFORE, SAME IS DELETED. 7. GROUND 5 IS A GROUND IN SUMMATION OF THE OTHER G ROUNDS WHICH HAVE ALREADY BEEN DEALT BY ME INDIVIDUALLY. THEREFORE, IT DOES NOT REQUIRE FURTHER ADJUDICATION. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 -10-2011. SD/- (A.L. G EHLOT) ACCOUNTANT MEMBER RAJKOT, DT : 25 TH OCTOBER, 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-XXI, AHMEDABAD 4. THE CIT-III, RAJKOT 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT