M/s. Sorathiya Chelji Ratan & Co., Anjar V. The Income Tax Officer (OSD), GANDHIDHAM

ITA 483/RJT/2012

• Counselvise Citation: [2012] 120 COUNSELVISE.COM (IT) 0127 (ITAT-RAJKOT)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-12-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 24-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. BEFORE SHRI T. K. SHARMA JM AND SHRI B. R. JAIN AM ITA NO.483/RJT/2012 / ASSESSMENT YEAR 2007-08. M/S. SORATHIA VELJI RATAN & CO., ANJAR. C/O. KALPESH S. DOSHI & CO.,CHARTERED ACCOUNTANTS, 411, COSMO COMPLEX, MAHILA COLLEGE CIRCLE,RAJKOT.-1 PAN : AAXFS 2508 Q ( / APPELLANT V/S THE I. T. O, GANDHIDHAM RANGE, GANDHIDHAM. / RESPONDENT / ASSESSEE BY SHRI KALPESH DOSHI, C.A. # / REVENUE BY SHRI AVINASH KUMAR, D.R. & / DATE OF HEARING 04-12-2012 & / DATE OF PRONOUNCEMENT 07 - 12-2012 / / / / ORDER B. R. JAIN, A. M. : THIS APPEAL BY THE ASSESSEE AGAINST TH E ORDER DATED 05-7-2012 OF LEARNED CIT(A)-II, RAJKOT RAISES THE F OLLOWING GROUNDS:- 1. THAT, THE LEARNED CIT(A) HAS WRONGLY CONFIRMED T HE DISALLOWANCE OF RS.1,22,100/- OUT OF WORK EXPENSES. 2. THAT, THE LEARNED CIT(A) HAS WRONGLY CONFIRMED T HE DISALLOWANCE OF RS.37,400/- OUT OF SITE CANTEEN EXPENSES. 3. THAT, THE FINDING OF THE LEARNED CIT(A) ARE NOT JUSTIFIED IN LAW AS WELL AS FACTS OF THE CASE AND REQUIRED TO BE DELETE D. ITA 483/RJT/2012 2 2. IN GROUND NO.1, BRIEFLY STATED, THE FACTS ARE TH AT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONTRACTORS. IT HAS DECLA RED TOTAL INCOME OF RS.99,03,860/- ON THE TOTAL TURNOVER OF RS.19,08,94,430/-. THE AS SESSEE HAS CLAIMED WORK EXPENSES AMOUNTING TO RS.1,22,10,951/-. THE ASSESS ING OFFICER FOUND THAT THE EXPENSES CLAIMED TO HAVE BEEN PAID THROUGH SELF-PRE PARED VOUCHERS. SOME OF THE VOUCHERS DID NOT BEAR COMPLETE ADDRESS, SR. NO. AND THE NAMES APPEARING WERE ALSO ILLEGIBLE. HE THEREFORE, REQUIRED THE AS SESSEE TO EXPLAIN THE DEFECTS BUT THE REPLY FURNISHED BEING NON-SPECIFIC AND TOO GENERAL, THE ASSESSING OFFICER PROCEEDED TO DISALLOW RS.1,22,100/- EQUAL TO 1% OF THE TOTAL EXPENSES OF RS.1,22,10,430/- AND ADDED THE SAME TO THE INCOME O F THE ASSESSEE. 3. THE LD. CIT(A) FOUND THAT THE REGISTER MAINTAINE D BY THE ASSESSEE IS NOT A PRIMARY RECORD ON THE BASIS OF WHICH DEDUCTION HAS BEEN CLAIMED. THE APPELLANT ALSO ADMITTED THE POSSIBILITY OF SUCH DEFECTS AND I NCOMPLETENESS OF RECORD IN THE BUSINESS CARRIED BY HIM. HE THEREFORE, FOUND NO INF IRMITY IN THE DECISION AND SUSTAINED THE DISALLOWANCE. 4. ASSESSEES COUNSEL SHRI KALPESH DOSHI CONTENDS T HAT THE TRADING RESULTS OF THE ASSESSEE HAVE CONSIDERABLY BEEN IMPROVED WHE N COMPARED TO THE RESULTS ACHIEVED IN THE EARLIER YEARS AND BROUGHT ON RECORD A COMPARATIVE CHART AS UNDER:- A.Y. TURNOVER WORK EXPENSES PERCENTAGE MESS EXPENSES PERCENTAGE NET PROFIT BEFORE TAX N.P. RATIO 2005- 06 28,40,21,560 2,88,56,877 10.16% 6,25,053 0.22% 3425603 1.20 2006- 07 21,76,39,303 82,36,029 3.78% 10,38,966 0.48% 3815117 1.75 2007- 08 19,08,94,430 1,22,10,951 6.40% 3,73,897 0.19% 11703859 6.13 ITA 483/RJT/2012 3 5. IN VIEW OF THE AFORESAID CHART, IT WAS CONTENDED THAT THE ENTIRE AMOUNT OF DISALLOWANCE NEEDS TO BE DELETED AS THE SAME HAS BE EN MADE ON ADHOC BASIS OR IN THE ALTERNATE, ONLY NOMINAL DISALLOWANCE MAY BE SUSTAINED. 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE CONTENDED THAT THE LD. ASSESSING AUTHORITY HAS ALLOWED REASONABLE DEDUCTION IN VIEW OF THE DEFECTS FOUND AND NATURE OF BUSINESS AND INCOME DEC LARED BY THE ASSESSEE. 7. HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECO RDS. WE DO NOT FIND ANY INFIRMITY IN THE DECISION REACHED BY THE LD. CIT(A) AS THE ASSESSEE WAS UNABLE TO PRODUCE COGENT EVIDENT TO PROVE THAT ALL THE EXPENS ES HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS. WHILE MAKING DISALLOWANCE, TH E ASSESSING AUTHORITY IS FOUND TO HAVE CONSIDERED THE TOTAL TURNOVER, THE IN COME DECLARED AS WELL AS NATURE OF BUSINESS OF THE ASSESSEE AND THUS, MADE T HE DISALLOWANCE OF RS.1,22,100/- OUT OF THE TOTAL WORK EXPENSES CLAIME D AT RS.1,22,10,951/-. THIS VIEW FINDS SUPPORT FROM THE JUDGMENT RENDERED BY HO NBLE KERALA HIGH COURT IN THE CASE OF CIT VS. S.P. NAYAK & ORS. (1999) 235 IT R 94 (KERALA). GROUND IN APPEAL RAISED BY THE ASSESSEE, THEREFORE, STANDS RE JECTED. 8. IN GROUND NO.2, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS INCURRED SITE CANTEEN EXPENSES AT RS.3,73,897/-. HE ALSO FOUND THAT THE PARTNERS ARE USING THE SAID FACILITIES. ACCORDINGL Y, 10% OF SUCH EXPENDITURE INCURRED WAS TREATED FOR NON-BUSINESS PURPOSE AND D ISALLOWANCE OF RS.37,400/- HAS BEEN MADE. 9. THE LD. CIT(A) UPHELD THE DISALLOWANCE AS THE AR GUMENT GIVEN BY THE ASSESSEE IS TOO GENERAL AND WITHOUT ANY SUBSTANCE. 9. HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECO RD. SINCE THE EXPENDITURE INCURRED FOR USING THE FACILITY BY PARTNER IS PERSO NAL IN NATURE AND THE ITA 483/RJT/2012 4 DISALLOWANCE BEING REASONABLE, NO INFERENCE IS CONS IDERED NECESSARY. GROUND RAISED IN APPEAL, THEREFORE, STANDS REJECTED. 10. IN THE RESULT, APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07-12-2012. SD/- SD/- ( T. K. SHARMA ) ( B. R . JAIN ) # /JUDICIAL MEMBER # / ACCOUNTANT MEMBER +/ ORDER DATE 07-12-2012. /RAJKOT NVA/- - - - - .- .- .- .- / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S. SORATHIA VELJI RATAN & CO., ANJAR. 2. /RESPONDENT-THE INCOME-TAX OFFICER,GANDHIDHAM RANGE , GANDHIDHAM.. 3. 4 / CIT-I, RAJKOT. 4. 4- / CIT (A)-II, RAJKOT. 5. - , , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER , TRUE COPY. SENIOR PRIVATE SECRETARY, , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.