M/s. Porwal Trading Corproation, BHILWARA V. ITO, BHILWARA

ITA 316/JODH/2007

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54369 (ITAT-JODHPUR)
• Duration Of Justice: 4 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 29-11-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 19-04-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gift; Depreciation
• Section: 68

Judgement Text

1 ITA 316-07 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH SMC JODHPUR. ( BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER ) ITA NO. 316/JODH/2007 ASSTT. YEAR : 2003-04. M/S. PORWAL TRADING CORPORATION, VS. THE INCOME-T AX OFFICER, GARIB NAWAZ MARKET, WARD IV, GANGAPUR CHAURAHA, BHILWARA. BHILWARA. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KISHAN GOYAL RESPONDENT BY : SHRI MAHESH KUMAR DATE OF HEARING : 01.12.2011. DATE OF PRONOUNCEMENT : 09.12.2011. ORDER DATED : 09.12.2011. THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2003-04. 2. FIRST GROUND IS AGAINST SUSTAINING ADDITION OF R S. 2,00,000/- ON ACCOUNT OF TRADING ADDITION. 3. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO FILE DETAILS IN RESPECT TO TRADING ACCOUNT, BOOKS OF ACCOUNT ALONG WITH ALL OTHER DETAILS, WHICH WERE FILED. QUANTITY-WISE STOCK REGISTER WAS NOT PREPAR ED AND THE ASSESSING OFFICER ON THIS BASIS REJECTED THE BOOKS OF ACCOUNT. THEREAFTER, T HE ASSESSING OFFICER BY OBSERVING THAT SINCE QUANTITY-WISE STOCK REGISTER HAS NOT BEEN MAI NTAINED, THEREFORE, PURCHASE AND SALE WAS NOT OPEN TO VERIFICATION. HE FURTHER OBSERVED THAT GP RATE SHOWN BY ASSESSEE AT 2 15.49% AGAINST 22.83% SHOWN IN THE IMMEDIATELY PREC EDING YEAR IS ALSO ON LOWER SIDE. THEREFORE, ASSESSING OFFICER APPLIED 18% GP RATE WH ICH RESULTED IN TRADING ADDITION OF RS. 3,09,689/-. THE LD. CIT (A) AFTER CONSIDERING THE SUBMISSIONS REDUCED THE TRADING ADDITION TO RS. 2,00,000/-. 4. AFTER CONSIDERING THE ORDERS OF THE ASSESSING OF FICER AND LD. CIT (A) AND SUBMISSIONS OF THE ASSESSEE, I FIND THAT THERE WAS NO JUSTIFICATION IN MAKING THE TRADING ADDITION. EACH AND EVERY PURCHASE IS VOUCHED WHICH IS VERIFIABLE FROM THE STOCK REGISTER. SALES VOUCHERS ARE KEPT, THEREFORE, SALES ARE ALSO VERIFIABLE. ONLY QUANTITY-WISE REGISTERS WERE NOT MAINTAINED AND IN ABSENCE OF NON MAINTENAN CE OF QUANTITATIVE REGISTER, IN MY VIEW, ATTRACTING PROVISIONS OF SECTION 145(3) WERE NOT JUSTIFIED AS ALL OTHER DETAILS ARE KEPT BY THE ASSESSEE. STOCK REGISTER IS MAINTAINED WHER E PURCHASES ARE ENTERED AND SALES ARE SHOWN. THEREFORE, IN MY VIEW, DISTURBING THE TRADIN G RESULT ARE NOT JUSTIFIED. ACCORDINGLY, I DELETE THE ADDITION OF RS. 2,00,000/-. 5. SECOND ISSUE IS AGAINST CONFIRMING ADDITION OF R S. 78,000/-. 6. DURING THE COURSE OF SURVEY, A LOOSE PAPER AT PA GE NO. 24 OF ANNEXURE-9 WAS FOUND WHICH SHOWS THE RECEIPTS AND PAYMENT OF M/S. PORWAL TRADING CORPORATION. THE ASSESSEE AT THE TIME OF SURVEY, COULD NOT EXPLAIN T HE TRANSACTION. SUBSEQUENTLY, THIS WAS EXPLAINED THAT THIS TRANSACTION WAS RELATED TO SHRI K.L. PORWAL PERSONAL ACCOUNT WHO IS MANAGER OF THE FIRM AND TRANSACTION PERTAINS TO PER SONAL NATURE. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND HELD THAT AMOUNT MENTIONED IN THE RECEIPT TOTALING RS. 69,000/- IS U NEXPLAINED EXPENDITURE. ACCORDINGLY HE ADDED THE SAME IN THE HANDS OF THE ASSESSEE. TH E LD. CIT (A) HAS ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 3 7. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, I FIND THAT HERE ALSO ASSESSEE DESERVES TO SUCCEED. FIRST REAS ON IS THAT THE PAPER FOUND DURING THE COURSE OF SURVEY RELATES TO MANAGER SHRI K.L. PORWA L WHO ADMITTED THAT THIS PAPER BELONGS TO HIM. THE PAPER SHOWS RECEIPT OF THE PAYM ENT, THEREFORE, IT CAN BE ADDED UNDER SECTION 68 AND NOT UNDER SECTION 69. WHATEVER, THE RECEIPTS WERE THERE, THEY WERE ON ACCOUNT OF SHRI K.L. PORWAL, MANAGER OF THE ASSESSE E FIRM AND NOT OF THE ASSESSEE. THEREFORE, FOR THIS REASON ALSO NO ADDITION SHOULD HAVE BEEN MADE IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, I DELETE THIS ADDITION. 8. THE REMAINING GROUND IS AGAINST CONFIRMING VARIO US DISALLOWANCES ON ACCOUNT OF VARIOUS EXPENSES TABULATED IN THE ORDER OF LD. CIT (A) AT PAGE 6 ARE AS UNDER :- OFFICE EXPENSES RS. 6,000/- TELEPHONE EXPENSES RS. 17,700/- PETROL AND DIESEL EXPENSES RS. 4,000/- PRINTING & STATIONARY EXPENSES RS. 1,500/- FREIGHT AND CARTAGE EXPENSES RS. 5,200/- GIFT AND ARTICLES EXPENSES RS. 2,400/- REPAIR AND MAINTENANCE EXPENSES RS. 5,100/- TRAVELLING EXPENSES RS. 5,500/- DISCOUNT EXPENSES RS. 13,500/- DEPRECIATION EXPENSES RS. 5,900/- 9. THE LD. CIT (A) ALLOWED PART RELIEF TO THE ASSES SEE AS HE CONFIRMED THE EXPENSES OF RS. 3,000/- ON ACCOUNT OF OFFICE EXPENSES, RS. 1 5,000/- ON ACCOUNT OF TELEPHONE EXPENSES, RS. 2,000/- ON ACCOUNT OF PETROL AND DIES EL, RS. 1,000/- ON PRINTING AND STATIONARY, RS. 2,200/- ON FREIGHT AND CARTAGE, RS. 1,000/- ON GIFT ARTICLES, RS. 2,000/- ON REPAIR AND MAINTENANCE, RS. 2,000/- ON TRAVELING EX PENSES, RS. 10,000/- ON DISCOUNT EXPENSES AND RS. 3,000/- ON DEPRECIATION. 4 10. AFTER CONSIDERING SUBMISSIONS AND PERUSING OTHE R MATERIALS ON RECORD, I FIND THAT ASSESSEE DESERVES TO SUCCEED IN THIS GROUND IN PART . I NOTED THAT ALL THE DETAILS IN RESPECT TO THE EXPENSES CLAIMED WERE MAINTAINED BY THE ASSE SSEE. PRINTING AND STATIONARY EXPENSES, FREIGHT & CARTAGE EXPENSES, GIFT ARTICLE EXPENSES, DISCOUNT EXPENSES, OFFICE EXPENSES, IN MY VIEW, CANNOT BE DISALLOWED AS ALL T HE DETAILS ARE KEPT AND THEY ARE FOR BUSINESS EXPEDIENCY. HOWEVER, IN RESPECT TO OTHER EXPENSES, I FEEL THAT THE DISALLOWANCE SUSTAINED BY LD. CIT (A) IS ON HIGHER SIDE AND, I D IRECT THE ASSESSING OFFICER TO REDUCE THE DISALLOWANCE BY 50% AGAINST DISALLOWANCE SUSTAINED BY LD. CIT (A). I ORDER ACCORDINGLY. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D IN PART. 12. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09 .12.2011. SD/- ( R.K. GUPTA ) JUDICIAL MEMBER JODHPUR, COPY FORWARDED TO :- M/S. PORWAL TRADING CORPORATION, BHILWARA. THE ITO WARD-IV, BHILWARA. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 316/JODH/2007) BY ORDER, AR ITAT JODHPUR.