The ITO, Ward-2(2), Surat V. Shri Mahavirprasar Beriwal,HUF, Surat

ITA 451/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63068 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 01-11-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 11-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SHANKAR
• Assessee Lawyers: RAMESH KUMAR MA LPANI
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , ! '#, $% $ & BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. ./ I.T.A.NO.316/AHD/2010 - ! ) ! ) ! ) ! )/ // / A.Y. 2006-07 2. ./ I.T.A.NO.451/AHD/2010 - ! ) ! ) ! ) ! )/ // / A.Y. 2006-07 1. MAHAVIR PRASAD BERIWALA (HUF) A-26, CHANDRAMANI SOC. UDHANA MAGDALLA ROAD SURAT 2. INCOME TAX OFFICER WARD-2(2), SURAT ! ! ! ! / VS. 1. INCOME TAX OFFICER WARD-2(2), SURAT 2. MAHAVIR PRASAD BERIWALA (HUF), SURAT * $% ./+, ./ PAN/GIR NO. : AACHB 7649 N ( *- / // / APPELLANTS ) .. ( ./*- / RESPONDENTS ) ASSESSEE BY : SHRI RAMESH KUMAR MALPANI, A.R. REVENUE BY : SHRI T.SHANKAR SR.DR !0 1 % / / / / DATE OF HEARING : 01/11/2012 23) 1 % / DATE OF PRONOUNCEMENT : 9.11.12 $4 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THESE ARE THE CROSS-APPEALS ARISING FROM THE ORDE R OF THE LD.CIT(A)-II, SURAT DATED 27.11.2009. BOTH THESE AP PEALS ARE CONSOLIDATED AND DECIDED BY THIS COMMON ORDER. [A] ITA NO.316/AHD/2010 (ASSESSEES APPEAL FOR A.Y . 2006-07) ITA NO.316/AHD/2010 (BY ASSESSEE) ITA NO.451/AHD/2010 (BY REVENUE) MAHAVIR PRASAD BERIWALA (HUF) VS. ITO ASST.YEAR 2006-07 - 2 - 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE AS SESSEE IN THE APPEAL:- 1) THAT THE HONBLE CIT(A) HAS ERRED IN SUSTAINING THE ORDER PASSED U/S.144 OF THE ACT BY LD. A.O. WHICH IS WRON G AND BAD IN LAW. 2) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , HON CIT(A) HAS ERRED IN SUSTAINING DISALLOWANCE OF RS.6,98,481 /- BEING 5% OF EXPENSES OF COLOUR & CHEMICALS AND COAL & LIGNITE. 3) WITHOUT PREJUDICE TO OTHER GROUNDS OF APPEAL, T HAT THE HON'BLE CIT(A) HAS ERRED IN NOT ADJUDICATING & DELETING THE INTEREST CHARGED U/S 234A/234B/234C OF THE ACT RELATING TO A BOVE UNPREDICTABLE ADDITIONS/DISALLOWANCES. 4) THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR MODIFY AND GROUNDS OF APPEAL. 2.1 GROUND NO.1 IS NOT PRESSED AND HENCE DISMISSED. 3. APROPOS TO GROUND NO.2 FACTS IN BRIEF AS EMERGE D FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.144 DATED 24.12.2008 WERE THAT THE ASSESSEE IN INDIVIDUAL CAPACITY IS A PROCE SS HOUSE UNDER HIS PROPRIETORSHIP OF M/S.PRATIGYA PROCESSORS. THIS YE AR THE GP RATE WAS STATED TO BE 20.95% AS AGAINST THE GP RATE OF 19.36 % IN THE PRECEDING YEAR. CERTAIN OPPORTUNITIES WERE GRANTED, HOWEVER , ON ACCOUNT OF NON- APPEARANCE OR UNSATISFACTORY EXPLANATION THE IMPUGN ED ADDITION WAS MADE. THE AO HAS NOTED THAT AS PER THE PROFIT & LOSS ACCOUNT, THE FOLLOWING EXPENDITURE WERE CLAIMED; REPRODUCED BELO W:- ITA NO.316/AHD/2010 (BY ASSESSEE) ITA NO.451/AHD/2010 (BY REVENUE) MAHAVIR PRASAD BERIWALA (HUF) VS. ITO ASST.YEAR 2006-07 - 3 - ACCOUNTING HEAD TOTAL EXPENDITURE DEBITED IN RS. COLOUR CHEMICAL 12316040 COAL AND LIGNITE 1653583 ELECTRICITY 8582241 GAS 8487014 REPAIR AND MAINTENANCE 596597 TOTAL : 31635475 3.1. IN THE ABSENCE OF RELEVANT PROOF AND EVIDENCES , THE AO HAD MADE A DISALLOWANCE @ 10% OF THE SAID AMOUNT, WHICH RESULT ED INTO AN ADDITION OF RS.31,63,547/-. THE ADDITION WAS CONTESTED. THE FIRST APPELLATE AUTHORITY HAS CALLED FOR A REMAND REPORT. IT WAS NOTICED THAT RELEVANT BILLS AND VOUCHERS ALONG WITH BOOKS OF ACCOUNTS WER E PRODUCED BEFORE THE AO IN REMAND PROCEEDINGS. LD.CIT(A) HAS REDUCE D THE DISALLOWANCE TO 5%, HENCE A PART RELIEF WAS GRANTED AS PER THE F OLLOWING FINDINGS:- 17.1 I HAVE CAREFULLY CONSIDERED BOTH THE POSIT IONS. I HAVE ALSO GONE THROUGH THE COPIES OF LEDGER ACCOUNTS, SOME OF WHICH HAVE BEEN CLAIMED TO HAVE BEEN CONFIRMED BY THE CONCERNE D PARTIES WHO ALLEGEDLY HAD SUPPLIED COLOUR CHEMICALS TO THE ASSE SSEE. THESE ARE THE ACCOUNT CONFIRMATIONS WHICH HAVE BEEN SUBMI TTED FROM A VERY SMALL PERCENTAGE OF SELLERS OUT OF THE TOTAL E XPENSES OF RS.1.23 CRORES CLAIMED BY THE ASSESSEE. AS REGARDS COAL AN D LIGNITE EXPENSES, THE AR HAS FURNISHED ONLY A MONTHLY SUMM ARY AND COPIES OF CERTAIN INVOICES AND DEBIT NOTES. AN EXA MINATION OF THE INVOICES RAISED BY THE GUJARAT MINERAL DEVELOPMENT CORPORATION, SHOWS THAT THEY HAVE BEEN RAISED IN THE NAME OF GOM TI PROCESSORS LTD., C/O. PRATIGYA PROCESSORS. THE MISCELLANEOUS EXPENSES COMPRISE OF VERY SMALL ITEMS, WHILE THE GAS AND ELE CTRICITY EXPENSES ARE SUPPORTED BY THE BILLS OF GUJARAT GAS LTD AND THE GEB. I AM OF THE VIEW THEREFORE, THAT NO DISALLOWA NCE COULD BE MADE OUT OF ELECTRICITY AND GAS EXPENSES AND GIVEN THE VOLUME OF TURNOVER, THE REPAIRS AND MAINTENANCE EXPENSES WERE QUITE REASONABLE AND DULY SUPPORTED BY BILLS AND VOUCHERS . BUT, THE ITA NO.316/AHD/2010 (BY ASSESSEE) ITA NO.451/AHD/2010 (BY REVENUE) MAHAVIR PRASAD BERIWALA (HUF) VS. ITO ASST.YEAR 2006-07 - 4 - COLOUR AND CHEMICAL EXPENSES AS ALSO THE EXPENSES I NCURRED ON COAL AND LIGNITE, ARE NOT FULLY VERIFIABLE. THE TO TAL EXPENSES UNDER THESE TWO HEAD WERE RS.1,23,16,040 + RS.16,53,583 = RS.1,39,69,623. THEREFORE THERE WAS A CASE FOR SOM E DISALLOWANCE TO BE MADE OUT OF SUCH EXPENSES. I AM OF THE VIEW THAT IT WOULD MEET THE ENDS OF JUSTICE IF ONLY 5% DISALLOWANCE IS MADE AGAINST THE 10% DISALLOWANCE MADE BY THE AO. 5% DISALLOWAN CE OUT OF THE TWO EXPENSES WOULD WORK OUT TO RS.6,98,481. TH E AO IS DIRECTED TO RESTRICT THE ADDITION TO THE SUM OF RS. 6,98,481, WHICH MEANS THAT THE ASSESSEE WILL GET A RELIEF OF RS.31, 63,547 RS.6,98,481 = RS.24,65,066. 4. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE HAVE NOTED THAT THE REVENUE AUTHORITIES HAVE PROCEEDED TO DISALLOW THE CLAIM MERELY ON ADHOC BASIS. AS FAR AS THE FIRST APPELLATE AUTHO RITY IS CONCERNED, HE HAS HELD THAT NO DISALLOWANCE WAS REQUIRED TO BE MADE O UT OF THE ELECTRICITY AND GAS EXPENSES. FURTHER HE HAS HELD THAT THE RE PAIRS AND MAINTENANCE EXPENSES WERE QUITE REASONABLE AND DULY SUPPORTED B Y THE BILLS AND VOUCHERS. HOWEVER, WE HAVE NOTED THAT IN RESPECT O F COLOUR AND CHEMICAL EXPENSES, THE LD.CIT(A) HAS COMMENTED THAT THOSE WERE NOT FULLY VERIFIABLE. DUE TO THIS REASON, HE HAD THOU GHT IT PROPER FOR A PART DISALLOWANCE. AS FAR AS THE PASSING OF AN EX-PARTE ORDER IS CONCERNED, LD.AR HAS PLEADED THAT THE ASSESSEE WAS HAVING A FI NANCIAL DIFFICULTY, HENCE STOPPED THE BUSINESS AND SHIFTED TO BOMBAY, T HEREFORE THERE WAS NO COMMUNICATION ABOUT THE NOTICE. WHEN HE CAME TO KNOW ABOUT THE NOTICE HE HAS ATTENDED THE PROCEEDINGS THROUGH HIS REPRESENTATIVE. LD.AR HAS FURTHER PLEADED THAT THE GP RATIO WAS BET TER FOR THE YEAR UNDER CONSIDERATION. HE HAS ALSO INFORMED THAT THE COL OUR AND CHEMICAL EXPENDITURE HAD GONE DOWN FROM 29.42% OF A.Y. 2005 -06 TO 27.82% OF ITA NO.316/AHD/2010 (BY ASSESSEE) ITA NO.451/AHD/2010 (BY REVENUE) MAHAVIR PRASAD BERIWALA (HUF) VS. ITO ASST.YEAR 2006-07 - 5 - A.Y.2006-07. FROM THE SIDE OF THE ASSESSEE, THE BILLS AND VOUCHERS WERE DULY PRODUCED ALONG WITH RELEVANT EVIDENCES. THE ASSESSEE HAS ALSO FURNISHED THE CONFIRMATION OF ACCOUNT FROM CER TAIN MAJOR PARTIES TO WHOM THE SALES WERE MADE. CONSIDERING THE TOTALI TY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE REVENUE AUTHORITIES HAVE MERELY MADE THE DISALLOWAN CE ON ESTIMATION. THE AD HOC DISALLOWANCE WITHOUT ANY BASIS IS NOT JU STIFIABLE. NO SPECIFIC FAULT WAS DETECTED IN THE ACCOUNTS OF THE ASSESSEE, THEREFORE WE HEREBY HOLD THAT THE EXPENDITURE AS CLAIMED BY THE ASSESSEE DESERVES TO BE ALLOWED. IN THE RESULT, THE PART RELIEF GRANTE D BY LD.CIT(A) IS HEREBY REVERSED AND HEREBY DIRECT TO ALLOW THE FULL CLAIM. ASSESSEES GROUND IS ALLOWED. 5. APROPOS TO GROUND NOS.3 & 4, THE SAME ARE EITHER CONSEQUENTIAL OR GENERAL IN NATURE, THEREFORE DISMISSED. 6. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED. [B] ITA 451/AHD/2010 (REVENUES APPEAL FOR A.Y. 2 006-07) 7. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL:- 1) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND I N LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION MADE B Y THE A.O. OF RS.6,35,5000 ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT, OUT OF TOTAL ADDITION MADE OF RS.10,59,431. ITA NO.316/AHD/2010 (BY ASSESSEE) ITA NO.451/AHD/2010 (BY REVENUE) MAHAVIR PRASAD BERIWALA (HUF) VS. ITO ASST.YEAR 2006-07 - 6 - 2) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND I N LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF INTEREST MADE BY THE AO ON THE UNEXPLAINED CASH CREDIT OF RS.6,3 5,000. 3) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND I N LAW, THE LD.CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE MADE BY THE AO OUT OF VARIOUS EXPENSES TO 5% ON THE EXPENSES O F RS.1,39,69,603 AS AGAINST 10% DISALLOWED BY THE AO ON THE SAID EXPENSES. 4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESS ING OFFICER. 5) IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) MAY BE SET ASIDE AND THAT OF ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EXTENT. 7.1. APROPOS TO GROUND NO.1, THE ASSESSEE HAS DIS CLOSED UNSECURED LOAN TOTALLING TO RS.10,59,431/- . THE TOTAL AMO UNT WAS BIFURCATED AS UNDER:- [A] (I) SAHELI SYNTHETICS PVT.LTD. RS.1,50,000 (II) NAND KISHORE BERIWALA RS.1,66,995 (III) SHILPA TRADERS RS. 57,436 (IV) SANJAY KUMAR KEJRIWALA RS. 50,000 TOTAL RS.4,24,431 THIS LEFT THE FOLLOWING DEPOSITORS: [B] (I) MAMTA KEJRIWALA RS. 25,000 (II) MAHAVIR PD.BERIWALA RS.4,20,000 (III) PRABHAWATI DEVI GOENKA RS.1,50,000 (IV) SUSHMA BERIWAL RS. 20,000 (V) SUSHMA BERIWALA RS. 20,000 TOTAL RS.6,35,000 ITA NO.316/AHD/2010 (BY ASSESSEE) ITA NO.451/AHD/2010 (BY REVENUE) MAHAVIR PRASAD BERIWALA (HUF) VS. ITO ASST.YEAR 2006-07 - 7 - 7.2. IT WAS NOTED THAT THE TOTAL AMOUNT WAS BIFURCA TED INTO TWO CATEGORIES. A SUM OF RS.4,24,431/- WAS UNDER A C ATEGORY AND IN THE OTHER GROUP OF B CATEGORY AMOUNT OF RS.6,35,000/- WAS MENTIONED AS THE LOAN AMOUNT IN THE NAME OF DIFFERENT PARTIES. THE AO HAS DISCUSSED PARTY-WISE REPLY OF THE ASSESSEE. IN RESPECT OF SMT.MAMTA KEJRIWAL AND SMT. PRABHAWTI DEVI GOENKA RETURNS FILED AND ASSES SED U/S.44AF OF THE IT ACT, 1961. THE AO WAS NOT CONVINCED AND HE HAS HELD THAT THE CASH CREDITORS WERE ESTABLISHED BEYOND DOUBT. ON APPR ECIATION OF THE EVIDENCES, LD.CIT(A) HAS DELETED THE ADDITION. 8. WE HAVE HEARD BOTH THE SIDES AND CAREFULLY PERUS ED THE EVIDENCES IN THE LIGHT OF THE ASSESSMENT ORDER. WE HAVE NOTED THAT IN PARA-10 AND PARA 10.1 THE LD.CIT(A) HAS DISCUSSED THE FACTS OF THE CASE AND AT ONE PLACE HE HAS SPECIFICALLY NOTED THAT THE LOANS HAVE BEEN REPAID DURING THE ASSESSMENT YEAR. SINCE IN SOME OF THE CASES, THE P AYMENTS WERE REPAID, THEREFORE LD.CIT(A) HAS DIRECTED NOT TO INVOKE THE PROVISIONS OF SECTION 68 OF THE IT ACT. IN REST OF THE CASES, THE LD. CIT(A) HAS GIVEN A FINDING THAT A SUM TOTALLING TO RS.4,24,431/- WAS NOT THE A MOUNT IN QUESTION FOR THE YEAR UNDER CONSIDERATION, BUT IT WAS BROUGHT FO RWARD FROM PAST YEARS. IN ALL, WE HAVE NOTED THAT THE INVOCATION OF THE PR OVISIONS OF SECTION 68 WAS WRONGLY INVOKED AND HENCE THE RELIEF GRANTED BY THE LD.CIT(A) IS HEREBY CONFIRMED. 9. GROUND NO.2 IS CONSEQUENTIAL TO GROUND NO.1 BECA USE THE AO HAD MADE A PROPORTIONATE DISALLOWANCE OF INTEREST ON TH E ADDITION MADE U/S.68 OF IT ACT. RESULTANTLY, THIS GROUND OF TH E REVENUE IS ALSO DISMISSED. ITA NO.316/AHD/2010 (BY ASSESSEE) ITA NO.451/AHD/2010 (BY REVENUE) MAHAVIR PRASAD BERIWALA (HUF) VS. ITO ASST.YEAR 2006-07 - 8 - 10. APROPOS TO GROUND NO.3, A VIEW HAS ALREADY BEEN TAKEN WHILE DECIDING THE APPEAL OF THE ASSESSEE, WHEREIN IT WAS HELD THAT NO SUCH ADHOC DISALLOWANCE WAS WARRANTED CONSIDERING THE FA CTS AND CIRCUMSTANCES OF THE CASE. FOLLOWING THAT VIEW, WE HEREBY DISMISSED THIS GROUND OF THE REVENUE. 11. AS A RESULT, ASSESSEES APPEAL IS PARTLY ALLOWE D, WHEREAS REVENUES APPEAL IS DISMISSED. SD/- SD/- ( ! '# ) ( ) $% ( ANIL CHATURVEDI ) ( MUKU L KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 9/ 11 /2012 5..!, .!../ T.C. NAIR, SR. PS $4 1 .6 7$6) $4 1 .6 7$6) $4 1 .6 7$6) $4 1 .6 7$6)/ COPY OF THE ORDER FORWARDED TO : 1. *- / THE APPELLANT 2. ./*- / THE RESPONDENT. 3. 8 / CONCERNED CIT 4. 8() / THE CIT(A)-II, SURAT 5. 6;< .! , , / DR, ITAT, AHMEDABAD 6. < =0 / GUARD FILE. $4! $4! $4! $4! / BY ORDER, /6 . //TRUE COPY// > >> >/ // / + + + + ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD