The ITO, Ward-2(3), Surat V. Shri Sawar Kumar Agrawal, Surat

ITA 3402/AHD/2009

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67816 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-09-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 24-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL SRDR
• Assessee Lawyers: MEHUL SHAH
• Keywords: Gross profit estimation
• Section: 68

Judgement Text

, , , , B, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ %& %& %& %& , , , , &' &' &' &' ( & ' ( & ' ( & ' ( & ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND TEJ RAM MEENA, ACCOUNTANT MEMBER) ITA NO.3402/AHD/2009 [ASSTT.YEAR : 2006-2007] ITO, WARD-2(3) SURAT. /VS. SHRI SAWAR KUMAR AGRAWAL 212-213, ANUPAM TEXTILE MARKET RING ROAD, SURAT. PAN : ADAPA 7839 G ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) ( . / &/ REVENUE BY : SHRI P.L. KUREEL, SR-DR 1% . / &/ ASSESSEE BY : SHRI MEHUL SHAH 2 . %3'/ DATE OF HEARING : 18 TH SEPTEMBER, 2013. 456 . %3'/ DATE OF PRONOUNCEMENT : 04/10/2013 &7 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2006-2007 IS DIRECT ED AGAINST THE ORDER OF THE CIT(A) DATED 2.9.2009. 2. THE GROUND NO.1 OF THE ASSESSEES APPEAL IS AS U NDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION MA DE BY THE AO OF RS.1,72,882/- ON ACCOUNT OF LOW GP. ITA NO.3402/AHD/2009 -2 3. WE HAVE HEARD PARTIES. WE FIND THAT THE CIT(A) HAS PASSED A WELL REASONED ORDER ON THE ISSUE OF GP ADDITION. T HE CIT(A) RECORDED THAT THE AO HAS MADE ADDITION IN A VERY SU MMARY MANNER, ALTHOUGH THE ASSESSEE HAS PRODUCED BOOKS OF ACCOUNT S BEFORE HIM, AND THAT THE AO HAS CONTRADICTED HIMSELF IN HIS OBSERVA TIONS RECORDED IN PARA-2 OF THE ASSESSMENT ORDER. THE CIT(A) HAS FUR THER OBSERVED THAT IT IS SIGNIFICANT THAT THE AO HAS ACCEPTED THE EXPL ANATION OF THE ASSESSEE REGARDING THE FALL IN THE GP RATIO AS HAVI NG SOME MERIT. IN THESE FACTS, WE FIND NO INFIRMITY IN THE ORDER OF T HE CIT(A), WHICH IS CONFIRMED ON THIS ISSUE, AND THE GROUND NO.1 OF THE REVENUE IS DISMISSED. 4. THE GROUND NO.2 OF THE REVENUE IS AS UNDER: 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION MA DE BY THE AO OF RS.11,05,039/- ON ACCOUNT OF UNEXPLAINED CASH CR EDIT U/S.68 OF THE ACT. 5. THE LEARNED DR HAS RELIED ON THE ORDER OF THE AO . HE REFERRED TO PARA-4 OF THE ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE, AND SUBMITTED THAT THE DEPOSITORS WERE FIL ING THEIR RETURN OF INCOME UNDER SECTION 44AF OF THE ACT, I.E. THEY WER E NOT MAINTAINING ANY BOOKS OF ACCOUNTS AND THAT THE ASSESSEE FAILED TO PRODUCE THE DEPOSITORS BEFORE THE AO. HE SUBMITTED THAT GENUIN ENESS AND CREDIT- WORTHINESS OF THE DEPOSITORS IS NOT PROVED IN THIS CASE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ALL THE DEP OSITORS WERE EXISTING INCOME-TAX ASSESSEES, AND HAVING THEIR OWN BANK ACC OUNT AND AT NO STAGE OF THE ASSESSMENT PROCEEDINGS, THE AO HAS ISS UED SUMMONS TO THE DEPOSITORS, IN CASE HE HAS SOME DOUBTS ABOUT TH E CREDIT-WORTHINESS ITA NO.3402/AHD/2009 -3 OF THE DEPOSITORS AND GENUINENESS OF THE TRANSACTIO N. HE RELIED ON THE ORDER OF THE LEARNED CIT(A). 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT ALL THE DEPOSI TORS ARE EXISTING INCOME-TAX ASSESSEES WITH THE DEPARTMENT. MERELY BE CAUSE THE DEPOSITORS WERE FILING RETURN UNDER SECTION 44AF OF THE ACT, AND WERE NOT MAINTAINING ANY REGULAR BOOKS OF ACCOUNTS AND A PPLIED FLAT RATE OF NET PROFIT, AS PROVIDED UNDER THE PROVISION OF THE ACT ITSELF, IS NO GROUND TO HOLD THAT THE CREDIT ENTRIES ITSELF ARE N OT GENUINE. WE FIND THAT THE IDENTITY OF THE DEPOSITORS AND THEIR CREDI T-WORTHINESS IS PROVED IN THIS CASE, AND THE INITIAL BURDEN CAST ON THE AS SESSEE TO PROVE THE GENUINENESS OF THE TRANSACTION HAS BEEN DISCHARGED BY THE ASSESSEE. WE FIND THAT IN CASE THE AO STILL HAS SOME DOUBT RE GARDING THE CREDIT WORTHINESS OF THE DEPOSITORS AND/OR GENUINENESS OF THE TRANSACTION, HE SHOULD HAVE ISSUED SUMMONS TO THE DEPOSITORS, WHICH HE HAS FAILED TO DO SO, AND ACCORDINGLY, WE HOLD THAT THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE UNDER SECTION 68 OF THE ACT. THE ORDER OF THE CIT(A) ON THIS ISSUE IS CONFIRMED AND THE GROUN D NO.2 OF THE REVENUE IS DISMISSED. 7. THE GROUND NO.3 OF THE REVENUES APPEAL IS AS UN DER: 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN RESTRICTING THE DISALLOW ANCE OF RS.43,170/- MADE BY THE AO ON ACCOUNT OF DISALLOWAN CE OUT OF VARIOUS EXPENSES TO RS.6,600/- 8. WE HAVE HEARD THE PARTIES. WE FIND THAT THE TOT AL DISALLOWANCE OUT OF THE EXPENSES WERE OF RS.43,170/- OUT OF CONV EYANCE EXPENSES, SHOP EXPENSES, TRAVELLING EXPENSES, PACKING MATERIA L EXPENSES ETC. THE CIT(A) HAS RECORDED THAT SUCH EXPENSES WERE ALW AYS PETTY IN ITA NO.3402/AHD/2009 -4 NATURE AND COMPRISE OF SMALL ITEMS INCURRED IN DAY- TO-DAY RUNNING OF ANY BUSINESS. THE PERSONS TO WHOM SUCH PAYMENTS WE RE MADE DO NOT USUALLY HAVE ANY BANK ACCOUNT WHICH MEANS MOST OF S UCH EXPENSES HAVE TO BE INCURRED IN CASH. IN THESE FACTS, THE D ISALLOWANCE MADE BY THE AO WAS RESTRICTED TO RS.6,600/-. THERE BEING N O MISTAKE IN THE ORDER OF THE CIT(A) ON THIS ISSUE, THE GROUND NO.3 IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %& %& %& %& / TEJ RAM MEENA) &' ( &' ( &' ( &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER/ DR/AR, ITAT, AHMEDABAD