The ITO, Ward-6(4), Surat V. Shri Vipulchandra D.Shah, Surat

ITA 3212/AHD/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0453 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-02-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 20-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y P VERMA
• Assessee Lawyers: MEHUL R SHAH
• Keywords: Opportunity of being heard
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMADABAD BEFORE SHRI MUKUL KR. SHRAWAT , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 3212/AHD/2011 ASSESSMENT YEAR :2008-09 INCOME TAX OFFICER, WD. 6(4), ROOM NO. 613, AAYAKAR BHAVAN, MAJURA GATE, SURAT V/S . SHRI VIPULCHANDRA D. SHAH 402, LIMBER SHOPPING CENTRE, BARDOLI, DIST. SURAT PAN NO. A HB PS2 113G (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI Y. P. VERMA, SR. D.R. /BY RESPONDENT SHRI MEHUL R. SHAH, A.R. /DATE OF HEARING 08.02.2013 /DATE OF PRONOUNCEMENT 22.03.2013 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WHIC H HAS EMANATED FROM THE ORDER OF CIT(A)-I, SURAT, DATED 27.09.2011 FOR A.Y. 2008-09. THE SOLE GROUND OF APPEAL IS AGAINST DELETING THE ADDIT ION OF RS.33,42,740/- AND RESTRICTING THE DISALLOWANCE OF RS.1,70,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED PURCHASES. ITA NO. 3212/AHD/11 A.Y. 08-09 PAGE 2 2. THE A.O. OBSERVED THAT THE ASSESSEE FILED RETURN OF INCOME SHOWING TOTAL INCOME OF RS.1,50,615/- ON 22.08.2008. THE A .O. SCRUTINIZED THE CASE U/S. 143(3) OF THE IT ACT. THE ASSESSEE IS ENGAGED IN RAILWAY TICKET BOOKING AND NETWORK COMMISSION INCOME. THE APPELLANT HAD S HOWN TOTAL PURCHASE OF RS.33,42,740/- AS OBSERVED BY THE A.O. NO DETAILS, SUCH AS, NAMES AND ADDRESSES OF THE PARTIES FROM WHOM THE PURCHASES WE RE MADE, MODE OF PAYMENT ETC. HAVE BEEN FURNISHED BY THE ASSESSEE. THE A.O. HAD GIVEN REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE . HOWEVER, THE APPELLANT COULD NOT FURNISH ANY DETAIL IN RESPECT OF PURCHASE SHOWN BY HIM BEFORE THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDING. A FTER DISCUSSING THE VARIOUS CASE LAWS, THE LD. A.O. DISALLOWED AS UNACC OUNTED PURCHASE AT RS.33,42,740/-. 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAD PARTLY ALLOWED TH E APPEAL. THE OPERATIVE PORTION OF THE ORDER IS AS UNDER: THE APPELLANT IS RUNNING A MOBILE PHONE REPAIR SH OP. HE IS ALSO DOING RAILWAY TICKET BOOKING ON COMMISSION BAS IS. THE ASSESSING OFFICER HAS DISALLOWED ENTIRE PURCHASES O F RS.33,42,740/- AGAINST WHICH APPELLANT HAS SHOWN SALES OF RS.34,46 ,299/-. THE ASSESSING OFFICER HAS CONCLUDED THAT THE ASSESSEE H AS ACTUALLY NOT MADE ANY PURCHASES, BECAUSE HE HAS FAILED TO FURNIS H NAMES AND ADDRESS OF PARTIES. THE APPELLANT HAS RIGHTLY ARGU ED THAT THE ASSESSING OFFICER HAS ACCEPTED THE SALES. THUS, BY REVERSE LOGIC THE PURCHASES HAVE TO BE TREATED AS GENUINE. THE A SSESSING OFFICER HAS ALSO ACCEPTED THE FIGURE OF CLOSING STOCK AS GE NUINE. IF THE ITA NO. 3212/AHD/11 A.Y. 08-09 PAGE 3 PURCHASES ARE BOGUS, HOW CAN THERE BE SALES AND CLO SING STOCK. THE APPELLANT HAS RIGHTLY ARGUED THAT THERE CANNOT BE SALES WITHOUT PURCHASES. IN EARLIER YEARS, THERE HAVE NEVER BEEN ANY DOUBT REGARDING PURCHASES. IT HAS BEEN ARGUED THAT BECAU SE OF MISTAKE OF A R, THE REQUIRED EVIDENCE COULD NOT BE PRODUCED. EVEN IF THE A R OF THE APPELLANT DID NOT FURNISH THE PURCHASE BILLS , ETC, THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING DISALLOWANCE OF ENTIRE PURCHASES WITHOUT MAKING ANY FURTHER ENQUIRY. THE ASSESSING OFFICER OUGHT TO HAVE BROUGHT SOME EVIDENCE ON RECORD BEFORE HE CONC LUDED THAT PURCHASES ARE BOGUS. THERE IS CONSIDERABLE FORCE I N THE ARGUMENTS OF APPELLANT THAT A OS ACTION IS NOT JUSTIFIED AND IS NOT TENABLE. HAVING REGARD TO THE ABOVE, AS ALSO THE ENTIRE FACT S AND CIRCUMSTANCES OF THE CASE AS WELL AS THE ARGUMENTS OF APPELLANT, IT IS CLEAR THAT A OS ACTION IN DISALLOWANCE OF ENTIRE P URCHASES IS JUST NOT SUSTAINABLE. IF THERE ARE SALES, THERE WILL BE PUR CHASES. THE APPELLANT IS RUNNING REPAIR SHOP FOR MOBILE PHONES WHEREIN HE NEEDS TO PURCHASE SPARE ETC. HOWEVER, IT IS ALSO A FACT THAT A O COULD NOT VERIFY THE PURCHASES AND THIS CALLS FOR SOME DISALL OWANCE. IT WILL MEET THE ENDS OF JUSTICE, IF 5% OF PURCHAS ES ARE DISALLOWED. ON THIS BASIS, THE DISALLOWANCE COMES TO RS.1,67,137/- WHICH IS ROUNDED OFF TO RS.1,70,000/-. AFTER MAKIN G THIS ADDITION, THE G P LEVEL IN MOBILE REPAIR BUSINESS GOES TO ABOUT 1 0% WHICH IS QUITE REASONABLE. THUS, THE DISALLOWANCE IS SUSTAINED AT RS.1,70,000 /- INSTEAD OF RS.33,42,740/-. 4. NOW THE REVENUE IS BEFORE US. LD. SR. D.R. VEHE MENTLY RELIED ON THE ORDER OF THE A.O. AND ARGUED THAT THE ASSESSEE COUL D NOT FURNISH ANY EVIDENCE IN RESPECT OF PURCHASE BEFORE THE A.O. AT THE TIME OF ASSESSMENT PROCEEDING, ITA NO. 3212/AHD/11 A.Y. 08-09 PAGE 4 WHEREAS, FROM THE SIDE OF THE APPELLANT, LD. A.R. A RGUED THAT SALES HAVE BEEN ACCEPTED BY THE APPELLANT. THE GP RATIO HAS BEEN D ECLARED BY THE APPELLANT @ 4.65% ON SALE OF RS.34,46,299/-. HE HAS ALSO DRA WN OUR ATTENTION ON PAGE NO.2 OF PAPER BOOK WHERE THE PURCHASE OF RS.33,42,7 40/- HAS BEEN DEBITED IN THE P&L ACCOUNT AGAINST THE SALE OF RS.34,46,299/-. LD. A.R. HAS ALSO DRAWN OUT ATTENTION ON PAGE NOS.3 TO 6 AND ARGUED THAT IN CASE OF MOBILE STORE LTD. IN A.Y. 09.10, THE GP HAS BEEN SHOWN AS 6.19%. THE ASSESSEE IS A SMALL DEALER IN SALE OF MOBILES. THEREFORE, HE HAS TO MA INTAIN THE CUSTOMER ON WHICH LESSER PROFIT IS RECEIVED BY HIM. HE FURTHER RELIED UPON IN CASE OF ITO VS. SUNSTEEL [2005] 92 TTJ (AHD) 1126, WHEREIN IDENTICAL ADDITION OF PURCHASE MADE FROM UNREGISTERED DEALERS. THE HONBLE D BE NCH, AHMADABAD, HAD CONFIRMED THE ADDITION TO THE EXTENT OF RS.50,000/- ON PURCHASE OF RS. 27,39,407/-. HE FURTHER ARGUED ON THIS BASIS THAT IF THE WHOLE PURCHASE IS ADDED IN THE INCOME OF THE ASSESSEE, THE GP WOULD C OME TO MORE THAN 100% IN CASE OF ASSESSEE, WHICH IS NOT POSSIBLE IN ANY L INE OF BUSINESS. THUS, HE REQUESTED TO CONFIRM THE ORDER OF THE CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THERE CANNOT BE ANY SALE WITHOUT PURCHASE WHEN SALES AS WELL AS CLOSING STOCK HAS BEEN ACCEPTED BY THE A.O. SIMILA RLY, THE PURCHASE SHOWN BY THE APPELLANT HAS TO BE ACCEPTED, AS SUCH. THER E IS NO EVIDENCE ON RECORD FROM THE SIDE OF THE REVENUE THAT THESE PURCHASES A RE BOGUS OR THE PAYMENT MADE FOR PURCHASE HAD BEEN COME BACK TO THE APPELLA NT. THE GP IS REASONABLY ACCEPTABLE BY CONSIDERING THE PAST HISTO RY OF THE CASE. FURTHER, ITA NO. 3212/AHD/11 A.Y. 08-09 PAGE 5 THE CIT(A) HAS CONFIRMED A LUMP SUM ADDITION OF RS. 1,70,000/- IS REASONABLE ON GIVEN CIRCUMSTANCES. THUS, WE CONFIRM THE ORDER OF THE CIT(A). 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . THIS ORDER PRONOUNCED IN OPEN COURT ON 22.03.2013 SD/- SD/- ( MUKUL KR. SHRAWAT ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ;