ITO, Jhansi V. M/s Vijay Kumar Goyal (HUF), Jhansi

ITA 37/AGR/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6817 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-05-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 06-02-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R C SHARMA
• Assessee Lawyers: NAVIN GARGH
• Keywords: Depreciation; Set aside
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI P.K. BANSAL, ACCOUNTANT MEMBER ITA NO.37/AGR/2009 ASST. YEAR: 2006-07 INCOME-TAX OFFICER 6(3), VS. M/S. VIJAY KUMAR GOYAL (HUF), JHANSI. C-1, NAVEEN GALLA MANDI, JHANSI. (PAN : AACHV 9063 L). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.C. SHARMA, JR. D.R. RESPONDENT BY : SHRI NAVIN GARGH, ADVOCATE ORDER PER P.K. BANSAL, A.M.: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) DATED 28.11.2008 BY WHICH THE CIT(A) DELETED THE ADDITION OF RS.7,75,097/- MADE UNDER SECTION 69 OF THE INCOME-TAX ACT, 1961 (THE ACT HEREINAFTER) AN D ALSO REDUCED THE DISALLOWANCE TOWARDS VARIOUS EXPENSES FOR PERSONAL USE @ 5% OF THE EXPEN SES IN PLACE OF 10% DISALLOWED BY THE A.O. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN GRAIN BUSINESS BEING REGULATED BY MANDI PARISHAD UNDER THE MANDI ACT. T HE ASSESSEE HAS TO MAINTAIN DAY-TO-DAY STOCK RECORDS AS WELL AS ISSUE RECEIPTS FOR SALE AN D PURCHASE ON A PREPRINTED FORMS SUPPLIED UNDER THE MANDI ACT WHICH ARE CHECKED BY THE CONCERNED RE GULATORY AUTHORITIES. THE ASSESSEES BOOKS ARE DULY AUDITED. THE ASSESSEE PURCHASES GOODS FRO M FARMERS ON WEIGHT BASIS, WHICH ARE FILLED IN OLD GUNNY BAGS OF 50 KGS. TO 115 KGS. BEFORE SALES AND DESPATCHES ARE MADE. THE SALES ARE MADE 2 ON WEIGHT BASIS AND NOT ON THE BASIS OF GUNNY BAGS. THE A.O. ESTIMATED THE SALES OF THE ASSESSEE AT RS.1,25,95,981/- AGAINST THE SALES OF RS.1,18,20 ,884/- TAKEN BY THE ASSESSEE AS PER THE BOOKS. THE DIFFERENCE THEREON WAS ADDED AMOUNTING TO RS.7, 75,097/- UNDER SECTION 69 OF THE ACT. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) DELETED THE ADDITIONS BY OBSERVING THAT IN THE ABSENCE OF ANY DEFECT IN BOOKS OF ACCOUNTS AND ALSO THE FACT THAT THE GROSS PROFIT (G.P.) IS COMPARABLE WITH THE G.P. OF THE PAST YEARS AND THE ASSESSEE HAS SUBMITTED THE COMPLETE QUANTITATIVE TALLY, THERE IS NO CASE FOR REJECTION OF THE BOOKS OF ACCOUNTS UNDER SECTION 145(3). 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME. WE NOTED THAT THE A.O. HAS INVOKED SECTION 145(3) WITHOUT POINTIN G OUT ANY SPECIFIC DEFECT. UNDER SECTION 145(3) THE BOOKS CAN BE REJECTED IF THE A.O. IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE OR WHERE THE ASSESS EE HAS NOT FOLLOWED THE METHOD OF ACCOUNTING AS PER SECTION 145(1) OR THE ASSESSEE HAS NOT FOLLO WED THE ACCOUNTING STANDARD AS NOTIFIED UNDER SECTION 145(2). WE AGREE WITH THE CIT(A) THAT THE A.O. HAS NOT MADE OUT THE CASE ON ANY POINT AS HAS BEEN SPECIFIED UNDER SECTION 145(3). UNDER THESE FACTS, IN OUR OPINION, THE CIT(A) WAS CORRECT IN LAW IN HOLDING THAT THE A.O. WAS NOT COR RECT IN INVOKING THE PROVISIONS OF SECTION 145(3). WE, THEREFORE, CONFIRM THE DELETION OF THE ADDITION OF RS.7,75,097/-. THUS, GROUND NOS.1 TO 4 STAND DISMISSED. 4. GROUND NO.5 RELATES TO THE RESTRICTION OF DISALL OWANCE TO 5%. THE A.O. HAD DISALLOWED 10% OF THE TOTAL EXPENSES AMOUNTING TO RS.8,544/- O UT OF MOTOR CAR EXPENSES/DEPRECIATION AND TELEPHONE EXPENSES TREATING THEM TO BE PERSONAL EXP ENSES ON THE BASIS OF PERSONAL USER OF THE CAR AND TELEPHONE. 3 5. AFTER CAREFULLY CONSIDERING THE RIVAL SUBMISSION S AND GOING THROUGH THE ORDERS OF THE TAX AUTHORITIES BELOW, WE NOTED THAT THE CIT(A) HAS RED UCED THE DISALLOWANCE TO 5% UNDER THESE HEADS MERELY ON THE BASIS THAT THE A.O. IN THE CASE OF M/S. SINGH CAREERS FOR THE A.Y. 2006-07 HAS MADE THE DISALLOWANCE @ 5% UNDER THEE HEADS. 6. BEFORE US, THE LD. A.R. DID NOT DENY PERSONAL US E OF THE VEHICLE AND TELEPHONE BY THE ASSESSEE. WE NOTED THAT THE SAME CIT(A) IN OTHER C ASES HAS SUSTAINED THE DISALLOWANCE @ 10% OUT OF THE CAR AND TELEPHONE EXPENSES. WE ALSO NOT E THAT THE CIT(A) HAS NOT DISCUSSED THE FACTS OF M/S SINGH CARRIERS. IN OUR OPINION, NO THUMP RU LE CAN BE LAID DOWN FOR DISALLOWING THE PERSONAL EXPENSES. IT WILL DEPEND ON THE FACT OF E ACH AND EVERY CASE. SINCE THE PERSONAL USE OF THE CAR AND TELEPHONE CANNOT BE DENIED, IN OUR OPIN ION, THE A.O. WAS FAIR ENOUGH TO ESTIMATE THE DISALLOWANCE @ 10% AS HAS BEEN DONE BY THE SAME CIT (A) IN OTHER CASES. WE, ACCORDINGLY, SET ASIDE THE ORDER OF CIT(A) ON GROUND NO.5 AND RESTOR E THE ORDER OF THE A.O. 7. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY A LLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 25.06.2010) . SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 25 TH JUNE, 2010. PBN/* 4 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY