Ravi Nath Mishra, Kanpur V. Income Tax Officer, Kanpur

ITA 428/LKW/2014

• Counselvise Citation: 42823714 RSA 2014
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-08-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 22-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Assessee Lawyers: J J MEHROTRA
• Keywords: Business expenditure
• Section: 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.428/LKW/2014 ASSESSMENT YEAR:2006 - 07 SHRI RAVI NATH MISHRA, PROP. M/S PEST KILLER, 24/93, BIRHANA ROAD, KANPUR. PAN:AGOPM8688A VS. INCOME TAX OFFICER_1(3), KANPUR. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI J. J. MEHROTRA, C.A. RESPONDENT BY SHRI ALOK MITRA, D.R. DATE OF HEARING 20/08/2014 DATE OF PRONOUNCEMENT 1 8 /09/2014 O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - II, KANPUR DATED 24/02/2014 FOR THE ASSESSMENT YEAR 2006 - 2007. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN ENHANCING THE DISALLOWANCE MADE BY THE LD. ASSESSING OFFICER TO RS.5,00,000/ - IN PLACE OF RS.73,710/ - WITHOUT ANY MATERIAL ON RECORD MERELY ON SURMISES AND CONJECTURES. 2. THAT THE OR DER PASSED BY THE LEARNED CIT(A) IN ENHANCING THE DISALLOWANCE IN THE HANDS OF THE APPELLANT IS WITHOUT PROPER OPPORTUNITY AND CONTRARY TO THE PROVISIONS OF SECTION 251(2) AND, THEREFORE, THE SAME DESERVES TO BE SET ASIDE. 3. THAT IN ANY VIEW OF THE M ATTER, THE VERY PREMISE OF THE ORDER OF THE LEARNED CIT(A) THAT THE APPELLANT HAS SHOWN REDUCED INCOME OF RS.1,06,453/ - IS CONTRARY TO THE FACTS ON RECORD AND, THEREFORE, THE ENHANCEMENT ON ACCOUNT OF FURTHER DISALLOWANCE IS TOTALLY UNWARRANTED AND 2 CO NTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND, THEREFORE, DESERVES TO BE DELETED. 4. THAT WITHOUT PREJUDICE, THE LEARNED CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE VARIOUS DISALLOWANCES MADE BY THE LEARNED ASSESSING OFFICER AND FURTHER ENHANCI NG THE SAME WITHOUT ANY MATERIAL ON RECORD MERELY ON CONJECTURES AND SURMISES ON THE PRETEXT THAT THE BOOKS OF ACCOUNT WERE NOT PRODUCED BEFORE HIM. 5. THAT THE ORDER PASSED BY THE LEARNED CIT(A) IS WITHOUT PROPER OPPORTUNITY AND BAD IN LAW. 6. THAT THE O RDER PASSED BY THE LEARNED CIT(A) IS AGAINST THE MERITS, CIRCUMSTANCES AND LEGAL ASPECTS OF THE CASE. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THE BOOKS OF ACCOUNT WERE AUDITED AND THE AUDITED PROFIT & LOSS ACCOUNT WERE MADE AVAILABLE TO THE AUTHORITIES BELOW AND HENCE, THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY CIT(A) ALONG WITH THE ENHANCEMENT IS NOT JUSTIFIED. 4. ON THE OTHER HAND, LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER OF LEARNED CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS IS UNDISPUTED FACT THAT NONE APPEARED ON BEHALF OF THE ASSESSEE BEFORE THE ASSESSING OFFICER AND THEREFORE, THE ASSESSING OFFICER WAS COMPELLED TO COMPLETE THE ASSESSMENT PROCEEDINGS U/S 144 OF THE ACT. WHILE DOING SO, IT IS NOTED BY ASSESSING OFFICER THAT THE ASSESSEE HAS REPORTED A GROSS PROFIT OF RS.6,82,160/ - ON TOTAL TURNOVER OF RS.44,56,520/ - I.E. GROSS PROFIT RATE OF 10.56%. THE ASSESSING OFFICER HAS MADE AN AD HOC ADDITION OF RS.50,000/ - FOR THE REASON THAT THE ASSESSEE HAS NOT PRODUCED BOOKS OF ACCOUNT ETC. IN ADDITION TO THAT , THE ASSESSING OFFICER HAS ALSO DISALLOWED AN AMOUNT OF RS.23,710/ - ON ACCOUNT OF VARIOUS EXPENSES SUCH AS GENERAL EXPENSES, CONVEYANCE, SALES PROMOTION, STAFF WELFARE, OF FICE MAINTENANCE, TRAVELLING, REPAIR & MAINTENANCE, MISCELLANEOUS EXPENSES AND SUB CONTRACT EXPENSES. WHEN THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A), HE HAS ENHANCED THE INCOME OF THE ASSESSEE BY RS.5 LAC S BUT WITHOUT GIVING ANY 3 BASIS FO R DOING SO. HE HAS MERELY STATED THAT RS.5 LAC OF LABOUR EXPENSES IS TREATED AS EXCESSIVE AND NON BUSINESS EXPENDITURE WITHOUT POINTING OUT ANY BASIS FOR DOING SO. IN OUR CONSIDERED OPINION, SUCH ENHANCEMENT MADE BY CIT(A) OF RS.5 LAC S IS VERY MUCH EXCES SIVE AND UNREASONABLE IN THE FACTS OF THE PRESENT CASE BECAUSE THE ASSESSEE HAS ALREADY REPORTED GROSS PROFIT OF 10.56% TO WHICH ASSESSING OFFICER HAS ALSO MADE ADDITION OF RS.50,000/ - AND RS.23,710/ - AND THEREFORE, IN THE FACTS OF THE PRESENT CASE, WE ARE OF THE CONSIDERED OPINION THAT THE ENHANCEMENT MADE BY CIT(A) IS NOT JUSTIFIED BECAUSE NO ADVERSE MATERIAL HAS BEEN BROUGHT ON RECORD THAT THE TURNOVER RECORDED BY THE ASSESSEE IS NOT CORRECT OR ANY COMPARABLE CASE DECLARING HIGHER GROSS PROFIT. HENCE, T HE ENHANCEMENT MADE BY CIT(A) IS NOT JUSTIFIED AND THE SAME IS DELETED. REGARDING VARIOUS DISALLOWANCES MADE BY ASSESSING OFFICER OF RS.50,000/ - AND RS.23,710/ - , WE FEEL THAT IN THE INTEREST OF JUSTICE AND IN THE FACTS OF THE PRESENT CASE, THE ADDITION MA DE BY ASSESSING OFFICER OF RS.50,000/ - IS SUFFICIENT TO TAKE CARE OF SOME POSSIBLE DISCREPANCIES AND PERSONAL EXPENSES ETC. DEBITED IN THE BOOKS OF ACCOUNT AND HENCE, WE CONFIRM THE ADDITION OF RS.50,000/ - AND DELETE THE BALANCE ADDITION OF RS.23,710/ - MAD E BY THE ASSESSING OFFICER. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 8 /09/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR