ITO 13(3)(2), MUMBAI V. HEMANT V. LUHANA, MUMBAI

ITA 3613/MUM/2011

• Counselvise Citation: 361319914 RSA 2011
• Duration Of Justice: 2 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 11-07-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 05-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Assessee Lawyers: G N MAKWANA
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , MUMBAI BENCH H , MUMBAI BEFORE SHRI B. RAMAKOTAIAH , ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN , JUDICIAL MEMBER ITA NO. 3613/M/2011 ASSESSMENT YEAR : 2007 - 08 INCOME TAX OFFICER WARD 13(3)(2) ROOM NO.428, 4 TH FLOOR AAYAKAR BHAVAN MUMBAI - 400 0 20 . VS. SHRI HEMANT V. LUHANA C/O. 12, NATH KRUPA 03 RD FLOOR, V.N. PURAV MARG OPP. ATI CHUNABHATI MUMBAI - 400 0 2 2. PAN NO .AAAPL 8581 F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.N. MAKWANA REVENUE BY : SHRI PANKAJ R. TOPRANI DATE OF HEARING : 29/08/2013 DATE OF PRONOUNCEMENT : 06 / 0 9 /2013 O R D E R PER B. RAMAKOTAIAH , AM: THIS IS AN APPEAL R EVENUE AGAINST THE ORDER OF CIT(A) - 24 , MUMBAI DATED 28.02.2011. R EVENUE HAS RAISED DETAILED GROUNDS ON TWO ISSUES. 2. WE HAVE HEARD THE LD. DR AND THE LD. COUNSEL FOR ASSESSEE. 3. GROUND NO.1 IS ON THE ISSUE OF RESTRICTING THE ESTIMATE OF PROFIT TO 2% AS AGAINST 6% ESTIMATED BY AO. THE ASSESSEE IS IN THE BUSINESS OF TRANSPORT OPERATIONS AND HAS HIRED TRUCKS IN HIS BUSINESS. IN THE ABSENCE OF BOOKS OF ACCOUNT , ASSESSEE ESTI MATED INCOME AT RS.3.00 LACS ON GROSS TURNOVER OF RS.1.62 CRORES. AO NOTICED THAT THE PROFIT DECLARED IS AT 1.84% AND ASKED THE A SSESSEE WHY INCOME SHOULD NOT BE ESTIMATED AT 6%. THE ASSESSEE SUBMITTED SIMILAR CASES OF OTHER INDIVIDUALS WHERE EVEN ON TURNOVER VARYING FROM RS.3.48 CRORES TO R S.23.64 CRORES, THE NET ITA NO. 3613/M/11 A.Y. 07 - 08 2 PROFIT WA S AROUND 1.46% TO 2%. HOWEVER, AO DID NOT AGREE ON THE REAS ON THAT THOSE PERCENTAGES ARE OF AUDITED BOOKS OF ACCOUNT AND SO, CAN NOT BE ACCEPTED. HOWEVER WITHOUT ANY COMPARABLE FIGURES , HE ESTIMATED INCOME AT 6% AND MADE ADDITION OF RS.6,76,466/ - TO THE BUSINESS INCOME. THE LD. CIT(A) AFTER EXAMINING THE CONTENTIO NS AND ALSO ON THE REASON THAT ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO RELY ON THE ESTIMATED 6% REDUCE D THE ESTIMATION TO 2%. THE REVENUE IS AGGRIEVED. 4. AFTER CONSIDERING THE RIVAL CONTENTIONS AND EXAMINING THE FACT S AS AVAILABLE ON RECORD, WE DO NOT SEE ANY REASON TO UPHOLD THE REVENUES GROUNDS. FIRST OF ALL AO HAS NOT BROUGHT ANYTHING ON RECORD WHY HE IS ESTIMATING INCOME AT 6%. THERE ARE NO PROPER REASONS WHY THE COMPARABLE FIGURES FURNISHED BY THE ASSESSEE IN ALL OTHE R CASES ARE REJECTED. AUDIT OF BOOKS OF ACCOUNT CAN NOT CHANGE PROFIT MARGIN S . CONSIDERING THAT ASSESSEE DOES NOT OWN VEHICLES AND OPERATES ON HIRED VEHICLES , THE ESTIMATION AT 2% IS REASONABLE AND APPROPRIATE. THE GROUND IS REJECTED. 5. GROUND NO.2 PERTAINS TO ADDI TION OF RS.11,32,464/ - AS UNEXPLAINED CAPITAL. IT WAS DELETED BY THE CIT(A) AFTER DUE EXAMINATION. AS ALREADY STATED EARLIER , THE ASSESSEE DID NOT MAINTAIN BOOKS OF ACCOUNT FOR THIS YEAR . I N THE COURSE OF ASSESSMENT PROCEEDINGS IN SUPPORT OF OPENING BALAN CE S DECLARED, THE B ALANCE SHEET OF EARLIER YEAR I.E. AY 2006 - 07 WAS VERIFIED . AO COMPARED THE B ALANCE SHEET FILED WITH HIM IN THE COURSE OF ASSESS MENT IN THIS YEAR WITH THAT OF B ALANCE SHEET ENCLOSED WI TH THE RETURN OF INCOME FOR AY 2006 - 07 AND FOUND THAT THER E ARE DISCREPANCIES IN THE TWO B ALANCE SHEETS. THE ASSESSEE EXPLAINED THAT PRAMOD C. SHAH FILED DOCUMENTS IN THE COURSE OF ASSESSMENT PROCEEDINGS OF ASSESSMENT YEAR 20 0 7 - 08 WITHOUT KNOWLEDGE OF ASSESSEE AND FURNISHED REASONS FOR VARIATION IN THE CAPITA L AMOUNT. AO HOWEVER DID NOT AGREE AND MADE AN ADDITION OF RS.11,32,464/ - AS DIFFERENCE IN ITA NO. 3613/M/11 A.Y. 07 - 08 3 CAPITAL AS UNEXPLAINED INCOME . THE MATTER WAS EXAMINED IN DETAI L BY THE CIT(A) AND AFTER REMAND ING AND OBTAINING A REPORT FROM THE ASSESSING OFFICER , CAME TO THE C ONCLUSION THAT ASSESSEE HAS SUCCESSFULLY EXPLAINED THE REASONS FOR THE MIS - UNDERSTANDING/DOUBTS CREATED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND WHY THERE ARE DISCREPANCIES IN THE STATEMENT PREPARED, MAINLY ON THE VALUE OF BUNGLOW WHOSE VALUES WERE DEFERRING FROM ONE STATEMENT TO ANOTHER, SATISFIED AND DELETED THE ADDITION. 6. AFTER CONSIDERING THE RIVAL SUBMISSION S, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE WELL REASONED ORDER OF THE CIT(A).IN FACT THE ISSUES WERE ULTIMATELY EXAMINED AND AO WA S GIVEN OPPORTUNITY, THEREFORE, THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). MOREOVER, WE WERE ALSO SURPRISED TO SEE THAT THE LD. ASSESSING OFFICER COMPARED TWO BALANCE SHEETS SUPPOSED TO BE FOR ASSESSMENT YEAR 2006 - 07 AND ON THE SO C ALLED DISCREPANCIES I N THOSE FIGURES PERTAINING TO ASSESSMENT YEAR 2006 - 07, CONSIDERED THE SAME AS INCOME IN AY 2007 - 08. IT WAS NOT EXPLAINED HOW ADDITION WAS MADE IN THIS ASSESSMENT YEAR ON THE SO CALLED DISCREPANCIES IN THE BALANCE SHEET PERTAINING TO E ARLIER ASSESSMENT YEAR. LOOKING AT IT IN ANY WAY, THERE IS NO MERIT IN THE CONTENTIONS RAI SED BY THE REVENUE . THEREFORE, GROUND IS REJECTED. 7. IN THE RESULT , APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH SEPTEMBER , 2 013 . SD/ - SD/ - ( DR. S.T.M. PAVALAN ) JUDICIAL MEMBER ( B. RAMAKOTAIAH ) ACCOUNTANT MEMBER MUMBAI, DATED: 06 /0 9 / 20 1 3 . JV. ITA NO. 3613/M/11 A.Y. 07 - 08 4 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCER NED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.