Vijaykumar Mavjibhai Dodia, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-2(4), AMRELI

ITA 487/RJT/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76437 (ITAT-RAJKOT)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 06-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR JAYANT B JHAVERI DR
• Assessee Lawyers: DR ADHIA
• Keywords: Business income; Depreciation; Income from undisclosed sources
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM AND SHRI B. R. JAIN, A M ITA NO. 487/RJT/2013 / ASSESSMENT YEAR : 2009-10 VIJAYKUMAR MAVJIBHAI DODIA, PROP. OF SHRI JAYNATH SCALE CO., SAVAJI NAGAR, SAVAR KUNDLA, DIST. AMRELI PAN : ACFPD 0771 Q ( / APPELLANT) THE I.T.O., WARD 2(4), AMRELI / RESPONDENT ! ' #$ / ASSESSEE BY SHRI D. R. ADHIA, AR % ! ' #$ / REVENUE BY DR. JAYANT B. JHAVERI, DR # & ' ! ( / DATE OF HEARING 08.01.2014 ) ! ( / DATE OF PRONOUNCEMENT 07.03.2014 / ORDER .. , / T. K. SHARMA, J. M.: THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 10.10.2013 OF LD. CIT(A) -IV, RAJKOT FOR THE ASSESSMENT YEAR 2009-10. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL, ENGAGED IN THE BUSINESS OF MANUFACTURING OF MECHANICAL IRON SCALE IN HIS PROPRIETORSHIP CONCERN NAMELY M/S. SHRI JAYNATH SCALE. FOR THE ASSESSMENT YEAR UNDER APPEAL, HE FILED THE RETURN OF INCOME ON 09.10.2009 DECLARING TOTAL INCO ME AT RS.1,47,690/-. THE ASSESSING OFFICER FRAMED ASSESSMENT U/S 143(3) OF T HE INCOME-TAX ACT ON 26.12.2011, WHEREIN HE TREATED THE DEPOSIT AMOUNTING TO RS.25,7 9,207/- AS UNACCOUNTED INCOME OF THE ASSESSEE U/S 69A OF THE INCOME-TAX ACT, 1961. A PART FROM THIS, THE ASSESSING OFFICER MADE A LUMP-SUM ADDITION OF RS.11,380/- BEI NG 10% OF THE FACTORY EXPENSES OF RS.1,13,790/- SINCE BILLS/VOUCHERS WERE NOT SERIALL Y NUMBERED AND DID NOT BEAR DATE AND SIGNATURE ETC.. WHILE SOME VOUCHERS WERE MISSING. A LUMP-SUM ADDITION OF RS. 2,040/- (BY DISALLOWING 20% OF SHOP EXPENSES OUT OF RS.15,3 54/-), TELEPHONE EXPENSES OF RS.3,612/- AND DEPRECIATION OF MOTORCYCLE RS.1,723/ - WERE ALSO MADE BY THE ASSESSING OFFICER. 487-RJT-2013 - VIJAYKUMAR MAVJIBHAI DODIA 2 3. ON APPEAL, IN THE IMPUGNED ORDER, LD. CIT(A) CON FIRMED ALL THE AFORESAID ADDITIONS/DISALLOWANCES. AGGRIEVED WITH THE ORDER OF LD. CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL, CONTESTING THE AFORESA ID ADDITIONS/DISALLOWANCES NAMELY:- I) ADDITION OF RS.25,79,207/- AS UNACCOUNTED INCOME OF THE ASSESSEE U/S 69A OF THE ACT. II) DISALLOWANCE OF RS.11,380/- OUT OF 10% OF THE FACTORY EXPENSES OF RS.1,13,790/-. III) DISALLOWANCE OF RS. 2,040/- OUT OF 20% OF SHOP EXPENSES RS.15,354/-, TELEPHONE EXPENSES RS.3,612/- AND DEPRECIATION OF M OTORCYCLE RS.1,723/-. 4. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF T HE ASSESSEE, SHRI D. R. ADHIA, AR, APPEARED AND CONTENDED THAT THE VARIOUS DEPOSITS IN BANK ACCOUNT BEARING NO.10944781270 MAINTAINED WITH STATE BANK OF INDIA PERTAINED TO THE BUSINESS OF THE ASSESSEES HUF DOING SEPARATE BUSINESS; THEREFORE T HE INCOME THEREOF BEING NOT TAXABLE, NO RETURN OF INCOME WAS FILED; THEREFORE, NO ADDITION IS REQUIRED TO BE MADE IN HIS INDIVIDUAL ASSESSMENT. ALTERNATIVELY, THE AUTH ORIZED REPRESENTATIVE OF THE ASSESSEE PLEADED THAT IT MAY BE TAXED U/S 44AF @ 5%. IN SUP PORT OF THIS, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE RELIED UPON THE DECI SION OF THE HONBLE GUJARAT HIGH COURT AS ALSO IN THE CASE OF R.R. CARRYING CORPORA TION (126 TTJ (CTK) 240) AND THE DECISION OF THE ITAT, RAJKOT BENCH IN THE CASE OF G OPALBHAI GORDHANBHAI GARASIA IN ITA NO.540/RJT/2013. 5. AS AGAINST THE AFORESAID SUBMISSIONS MADE BY THE LD. AUTHORIZED REPRESENTATIVE, DR. JAYANT B. JHAVERI, DR, APPEARED FOR THE REVENU E, VEHEMENTLY SUPPORTED THE ORDER OF LD. CIT(A). THE LD. DR POINTED OUT THAT THE ENT IRE ADDITION OF RS.25,79,207/- IS RIGHTLY MADE BY THE ASSESSING OFFICER; THEREFORE, THE ORDER OF LD. CIT(A) BE UPHELD. 6. IN REJOINDER, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE PRODUCED A COPY OF STATEMENT OF ACCOUNT OF RELEVANT BANK ACCOUNT OF THE ASSESSEE BANK I.E. ACCOUNT NO.10944781270 MAINTAINED WITH STATE BANK OF INDIA. FROM THIS, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE POINTED OUT THAT IN THE BEGINNING OF THE YEAR I.E. 487-RJT-2013 - VIJAYKUMAR MAVJIBHAI DODIA 3 31.03.2008 THE BALANCE IN THIS ACCOUNT WAS RS.12321 /- AND AT THE END OF THE YEAR I.E. 31.03.2009 THE CLOSING BALANCE WAS RS.65838/-. IN T HIS BANK ACCOUNT ALSO, VARIOUS DEPOSITS AND WITHDRAWALS REPRESENT BUSINESS RECEIPT S AND PAYMENTS; THEREFORE AT THE MOST INCOME CAN BE TAXED U/S 44AF @ 5%. 7. HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECO RD AND CASE LAWS BROUGHT TO OUR NOTICE. ADMITTEDLY, THE COPY OF BANK ACCOUNT LAID O N RECORD REVEALED THAT OPENING BALANCE IN THIS ACCOUNT AS ON 31.03.2008 WAS RS.123 21/- AND CLOSING BALANCE AS ON 31.03.2009 WAS RS.65838/-. IN THIS ACCOUNT, THE SMA LL DEPOSITS WERE ALSO MADE AND WITHDRAWN. THE TRANSACTIONS OF DEBIT AND CREDIT IN THIS ACCOUNT ARE ALSO OF BUSINESS OF MANUFACTURING OF MECHANICAL IRON SCALE. SECTION 44 AF OF THE INCOME-TAX ACT IS APPLICABLE ONLY FOR COMPUTING PROFITS AND GAINS OF RETAIL BUSINESS. THE ASSESSEE BEFORE US IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF M ECHANICAL IRON SCALE. THE DEPOSITS IN ACCOUNT NO.10944781270 WITH SBI, WHICH IS NOT DI SCLOSED BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS, CONTAINED BUSINESS TRANSACTIONS OF THIS BUSINESS I.E. BUSINESS OF MANUFACTURING OF MECHANICAL IRON SCALE. FURTHER, F IX EXPENSES ARE DEBITED IN THE REGULAR BOOKS OF ACCOUNTS. WE ARE, THEREFORE, OF THE VIEW T HAT THE ENTIRE DEPOSITS IN THE ACCOUNT NO.10944781270 WITH SBI ARE NOT INCOME OF THE ASSES SEE AND IT WILL MEET THE END OF JUSTICE IF INCOME OF THESE BUSINESS TRANSACTIONS IS ESTIMATED BY APPLYING NET PROFIT RATE OF 10% ON BUSINESS RECEIPTS OF RS.25,79,207/-. WE H OLD ACCORDINGLY AND DIRECT THE ASSESSING OFFICER TO MAKE ADDITION OF RS.2,57,920/- (10% OF RS.25,79,207/-). ACCORDINGLY, ADDITION OF RS.2,57,920/- IS SUSTAINED AND BALANCE ADDITION IS DIRECTED TO BE DELETED. 8. AS REGARDS TO THE ASSESSEES GRIEVANCE OF SUSTAI NING THE ADDITION OF RS.11,380/- BEING 10% OF FACTORY EXPENSES OF RS.1,13,790/- AND LUMP-SUM ADDITION OF RS.2,040/- OUT OF SHOP EXPENSES OF RS.15,354, TELEPHONE EXPENS ES OF RS.3,612/- AND DEPRECIATION OF MOTORCYCLE RS.1,723/-; WE ARE OF THE VIEW THAT T HESE ADDITIONS ARE MADE FROM AUDITED BOOKS OF ACCOUNTS WHICH WERE PRODUCED BEFORE THE AS SESSING OFFICER. THESE ADDITIONS ARE FAIR AND REASONABLE AND WE, THEREFORE, DECLINE TO INTERFERE. 487-RJT-2013 - VIJAYKUMAR MAVJIBHAI DODIA 4 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. 10. SINCE ONE OF US (THE AM) IS NOT AVAILABLE AT RA JKOT, THIS ORDER SHALL BE DEEMED TO HAVE BEEN PRONOUNCED ON THE DATE ON WHICH IT IS NOT IFIED ON THE NOTICE BOARD OF RAJKOT BENCH IN TERMS OF RULE 34 OF THE INCOME-TAX (APPELL ATE TRIBUNAL) RULES. SD/- SD/- (B. R. JAIN) (T. K. SHARM A) $( #*% / ACCOUNTANT MEMBER #*% /JUDICIAL MEMBER *$+ ,*-/ ORDER DATE 07.03.2014 /RAJKOT *BT / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT- VIJAYKUMAR MAVJIBHAI DODIA, PROP. OF S HRI JAYNATH SCALE CO., SAVAJI NAGAR, SAVAR KUNDLA, DIST. AMRELI 2. /RESPONDENT- THE I.T.O., WARD 2(4),AMRELI 3. #-2- & 3 / CIT-III, RAJKOT 4. & 3 - / CIT(A)-IV, RAJKOT 5 . 678 , , / DR, ITAT, RAJKOT 6 . 89 :; / GUARD FILE. *$+ #$ / BY ORDER , PRIVATE SECRETARY, , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.