M/s. Sheetalnath Gas Agency, Surat V. The ACIT.,Circle-5, Surat

ITA 323/AHD/2010

• Counselvise Citation: 32320514 RSA 2010
• Duration Of Justice: 2 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 10-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 02-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: RASESH B SHAH
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER I.T.A. NO. 323/ AHD/2010 (ASSESSMENT YEAR 2006-07) M/S. SHEETALNATH GAS AGENCY, 1/1446, SHOP B-15, SHALIBHADRA APARTMENT, TIMALIYAWAD NANPURA, SURAT VS. ACIT, CIRCLE 5, SURAT PAN/GIR NO. : AARFS3840D (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI RASESH B SHAH, AR RESPONDENT BY: SHRI B L YADAV, SR. DR DATE OF HEARING: 10.05.2012 DATE OF PRONOUNCEMENT: 15. 06.2012 O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORD ER OF LD. CIT(A) IV, SURAT DATED 12.11.2009 FOR THE ASSESSMENT YEAR 2006-07. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN PARTLY CONFIRMING THE DISALLOWANCE OUT OF VARIOUS EXPENSES TO THE EXTENT OF RS.95,049/- @ 5% AS AGAINST DISALL OWANCE OF RS.5,90,098/- MADE BY ASSESSING OFFICER @ 10% OF IN DIRECT VEHICLE EXPENSES, LOADING/UNLOADING EXPENSES AND DI RECT VEHICLE EXPENSES. 2. IT IS THEREFORE PRAYED THAT THE ABOVE DISALLOW ANCE MADE BY ASSESSING OFFICER AND CONFIRMED BY COMMISSIONER OF INCOME-TAX (APPEALS) MAY PLEASE BE DELETED. 3. APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ANY GROUND(S) EITHER BEFORE OR IN THE COURSE OF HEARING OF THE AP PEAL. I.T.A.NO.323 /AHD/2010 2 3. BRIEF FACTS TILL THE ASSESSMENT STAGE ARE NTOED BY LD. CIT(A) ON PAGE 1 OF HIS ORDER AND THE RELEVANT PARA ARE REPRO DUCED BELOW: 'ON VERIFICATION OF BOOKS OF ACCOUNTS, THE A. O OB SERVED THAT THE APPELLANT INCURRED DIRECT VEHICLE EXPENSES OF RS.36 ,40,341/-, INDIRECT VEHICLE EXPENSES OF RS.8,90,934/- AND LOAD ING & UNLOADING EXPENSES OF RS.13,69,711/-. THE TOTAL EXP ENSES COMES TO RS.59,00,986/-. THE A. O ASKED FOR THE EXPLANATI ON REGARDING THESE EXPENSES OF RS.59,00,986/-. THE APPELLANT EXP LAINED THAT MAJOR PARTS OF SUPPORTING EVIDENCES WERE ALREADY DE STROYED DUE TO FLOOD IN SURAT CITY. THE A. O OBSERVED THAT THE EXPLANATION OFFERED BY T HE APPELLANT IS VERY GENERAL IN NATURE; LACKS SOUND REASONING AND S TATISTICAL BASE. THE ONUS IS ON THE APPELLANT TO PROVE THE GENUINENE SS OF THE EXPENSES INCURRED 'WHOLLY' AND 'EXCLUSIVELY' FOR TH E PURPOSE OF BUSINESS. THE EXPLANATION WAS NOT BASED UPON ANY BU SINESS PATTERN OR WITH SUPPORTING EVIDENCES, SUCH AS VOUCHERS FOR EXPENSES. EXPENSES WERE INCURRED IN CASH WHICH IS VERY CAN BE MANIPULATED VERY EASILY. NO CREDIT RECEIPTS WERE SHOWN BY THE A PPELLANT UNLOADING CHARGES. HE ADDED THE EXPENSES TO THE TOT AL INCOME OF THE APPELLANT. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A). IT WAS HELD BY LD. CIT(A) THAT IT WILL BE FAIR IF THE DISALLOWANCE IS RESTRICTED TO 5% OF ALL THE THREE E XPENDITURE. NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. IT WAS SUBMITTED BY THE LD. A.R. THAT A COMPARAT IVE CHART OF THESE EXPENSES FOR THE PRESENT YEAR ALONG WITH PRECEDING TWO YEARS AND SUBSEQUENT ASSESSMENT YEAR BEING ASSESSMENT YEAR 20 09-10 ARE AVAILABLE ON PAGE 8 OF THE PAPER BOOK. HE FURTHER SUBMITTED THAT A COMBINED RATIO OF THESE EXPENSES TO TOTAL TURNOVER IN THIS YEAR IS 3.93% AS AGAINST 3.46% IN THE PRECEDING YEAR AND 9.26% IN ASSESSMENT YEAR 2004-05 AND 3.61% IN THE ASSESSMENT YEAR 2009-10. HE FURTHER SUBMITT ED THAT NET PROFIT MARGIN OF THE PRESENT YEAR IS VERY HIGH AT 1.93% AS AGAINST 0.76% IN ASSESSMENT YEAR 2005-06, 0.80% IN ASSESSMENT YEAR 2 004-05 AND 0.81% I.T.A.NO.323 /AHD/2010 3 IN ASSESSMENT YEAR 2009-10 AND, THEREFORE, THE DISA LLOWANCE MADE BY THE A.O. AND PARTLY CONFIRMED BY LD. CIT(A) SHOULD BE D ELETED. 6. LD. D.R. OF THE REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT AS PER THE CHART GIVEN BY THE ASSESSEE ON PAGE 8 OF THE PAPER BOOK, COMBINED RATIO OF THE LOADING AND UNLOADING EXPENSE S, DIRECT VEHICLE EXPENSES AND CARTING EXPENSE TO THE TURNOVER IS 3.9 3% IN THE PRESENT YEAR AND 3.46% IN THE PRECEDING YEAR AND 3.61% IN ASSESS MENT YEAR 2009-10. THE DISALLOWANCE CONFIRMED BY LD. CIT(A) IS TO THE EXTENT OF 5% OF THESE THREE EXPENDITURE. IF 5% IS REDUCED FROM THE EXPEN SES OF THESE THREE HEADS WHICH ARE TO THE EXTENT OF 3.93% IN THE PRESE NT YEAR, THE EXPENSES THEN STAND ALLOWED TO THE EXTENT OF 3.73% OF THE TU RNOVER WHICH IS MORE THAN THE EXPENDITURE INCURRED UNDER THESE THREE HEA DS IN THE PRECEDING YEAR AND IN ASSESSMENT YEAR 2009-10. THE ASSESSEE COULD NOT PRODUCE THE SUPPORTING OF THE EXPENSE ON THE PLEA THAT THE RECO RDS WERE DESTROYED IN THE FLOOD. IN THE ABSENCE OF SUPPORTING RECORDS, A LLOWANCE HAS TO BE MADE ON THE BASIS OF PRECEDING AND SUCCEEDING YEARS WHIC H ARE SUPPORTED BY BOOKS AND VOUCHERS. SINCE THE EXPENSES ALLOWED BY LD. CIT(A) AFTER MAKING DISALLOWANCE OF 5% OF THE EXPENSES IS MORE T HAN EXPENSES INCURRED IN THE PRECEDING YEAR AND IN THE SUCCEEDIN G YEAR I.E. ASSESSMENT YEAR 2009-10, WE FEEL THAT NO INTERFERENCE IS CALL ED FOR IN THE ORDER OF LD. CIT(A). THE FACT THAT NET PROFIT RATE IS BETTER IS NOT DECISIVE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP I.T.A.NO.323 /AHD/2010 4 COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 13/6 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 14/6.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 15/6 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.15/6 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 15/6/12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .