Rajesh Vishnoi, Jodhpur V. ACIT, Circle-1, Jodhpur

ITA 512/JODH/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2217 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 06-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABHIMAN Y U SINGH YADAV J
• Keywords: Depreciation
• Section: 143(3); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH (SMC), JODHPUR BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER ITA NO. 512/JODH/2018 (ASSESSMENT YEAR-2011-12) RAJESH VISHNOI D-3, SARASWATI NAGAR, BASNI 1 ST PHASE, JODHPUR. VS THE ACIT, CIRCLE-1, JODHPUR. (APPELLANT) (RESPONDENT) PAN: AAIPV0192Q ASSESSEE BY SHRI RAJENDRA JAIN, FCA REVENUE BY SHRI ABHIMANYU SINGH YADAV (JCIT-DR) DATE OF HEARING 16 / 0 3 / 20 20 DATE OF PRONOUNCEMENT 20/03/2020 O R D E R PER R.C. SHARMA, A.M. THIS IS THE APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)-1, JODHPUR DATED 27/08/2018 FOR THE ASSESSMENT YEAR 2011-12, IN THE MATTER OF ORDER PAS SED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE A CT). 2. IN THIS APPEAL THE ASSESSEE IS AGGRIEVED FOR TRA DING OF ADDITION OF RS. 5,80,245/- UPHELD BY THE LD. CIT(A) OUT OF TOTAL ADDITION OF RS. 8,12,343/- MADE BY THE ASSESS ING OFFICER. 2 ITA 512/JODH/2018 RAJESH VISHNOI VS ACIT 3. THE ASSESEE IS ALSO AGGRIEVED FOR UPHOLDING DISALLOWANCE OF RS. 38,103/-OUT OF TOTAL DISALLOWAN CE OF RS. 50,804/- MADE BY THE ASSESSING OFFICER ON ACCOUNT O F TELEPHONE, CONVEYANCE AND DEPRECIATION ON CAR EXPEN SES ETC. 4. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND CARE FULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN MANUFACTORY OF HANDICRAFT ITEMS, TRAD ING OF WOOD, SS FLAT ETC. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE E-FILED THE RETURN OF INCOME FOR A.Y. 2011-12 ON 29.09.2011 DECLARING TOT AL INCOME AT RS. 24,48,743/-. FURTHER, THE APPELLANT FILED REVISED R ETURN ON 21.11.2012 DECLARING TOTAL INCOME OF RS. 20,59,719/-. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S 143(2) OF THE AC T WAS ISSUED ON 07.09.2013. APPELLANT IS ENGAGED IN THE MANUFACTURI NG OF HANDICRAFT ITEMS, TRADING OF WOOD, SS FLAT ETC. ALSO, OPERATES BUS THROUGH HIS PROPRIETARY CONCERNS NAMELY M/S SHISHAM UDYOG AND M /S SARASWATI UDYOG. HE IS ALSO IN RECEIPT OF SALARY, SHORT TERM CAPITAL GAIN AND INTEREST. AFTER HEARING THE ASSESSEE, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT ON 04.02.2014 DETE RMINING THE TOTAL INCOME AT RS. 29,22,865/- MAKING VARIOUS ADDITIONS/ DISALLOWANCES. THE ASSESSING OFFICER NOTICED THAT THE GP RATE OF 1.06% DECLARED IN THE YEAR UNDER CONSIDERATION IN RESPECT OF HANDICRAFT BUSINE SS WAS LOWER AS COMPARED TO GP RATE OF 7.21% DECLARED IN THE IMMEDI ATE PRECEDING 3 ITA 512/JODH/2018 RAJESH VISHNOI VS ACIT YEAR. THE A.O. APPLIED G.P. RATE OF 7% AND MADE ADD ITION OF RS. 8,12,343/- IN RESPECT OF HANDICRAFT BUSINESS. BY TH E IMPUGNED ORDER, THE LD. CIT(A) HAS UPHELD THE ADDITION OF RS. 5,80,245/ - AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE ITAT. 5. FROM THE RECORD I FOUND THAT THE LOSS WAS GENUIN ELY CAUSED IN WOODEN HANDICRAFTS BUSINESS BECAUSE OF INSECT BITIN G WHICH CANNOT BE THRUSTED ON SUPPLIER OF THE WOODS BECAUSE INSECT BI TING OCCURS AT THE PREMISES OF THE ASSESSEE HIMSELF AFTER RECEIPT OF T HE WOODS. I FOUND THAT THE A.O. HAS REJECTED ASSESSEES CLAIM FOR LOSS DUE TO INSECT BITING ON THE PLEA THAT THE ASSESSEE DEALING IN SESAME WOOD W HICH IS A VERY HARD WOOD AND CANNOT BE EATEN AWAY BY THE INSECTS. TO CO NTROVERT THIS OBSERVATION OF THE A.O., THE ASSESSEE HAS PRODUCED SAMPLES OF SESAME WOOD DURING THE ASSESSMENT PROCEEDINGS AND SHOWED T HAT INSECT BITING IS ALSO AFFECTED ON SESAME WOOD. I ALSO FOUND THAT THE A.O. HAS ACCEPTED THE FIGURE OF CLOSING STOCK AND THERE WAS NO SUPPRESSION OF ANY SALES, ACCORDINGLY, I DO NOT FIND ANY JUSTIFICA TION FOR APPLYING THE G.P. RATE OF 7% BY REJECTING CLAIM OF LOSS OF HANDI CRAFT/WOOD DIVISION. ACCORDINGLY, I DIRECT THE A.O. TO DELETE THE ADDITI ON SO MADE BY THE A.O. AND UPHELD BY THE LD. CIT(A). 6. THE A.O. ALSO MADE LUMPSUM DISALLOWANCE OF VARIO US EXPENSES AND DEPRECIATION AMOUNTING TO RS. 50,804/-. BY THE IMPUGNED ORDER, THE 4 ITA 512/JODH/2018 RAJESH VISHNOI VS ACIT LD. CIT(A) HAS RESTRICTED THE ADDITION TO THE EXTEN T OF RS. 38,103/-. THESE DISALLOWANCES ARE WITH REGARD TO CONVEYANCE E XPENSES, TELEPHONE EXPENSES AND DEPRECIATION ON CAR. I HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT ASSESSEE HAD FURNISHED FULL DETAILS OF EXPENSES SO INCURRED BEFORE THE AO. I ALSO FOUND THAT THE GENUI NENESS OF THE EXPENSES SO CLAIMED WAS NOT DOUBTED BY THE A.O.. FU RTHERMORE, THE TOTAL EXPENSES CLAIMED OF RS. 3,04,825/- IN RELEVAN T AY IS LOWER THAN TOTAL EXPENSES CLAIMED OF RS. 3,56,428/- IN AY 2020 -11 DESPITE INCREASE IN VOLUME OF THE BUSINESS, THE TOTAL EXPENSE HAD BE EN REDUCED. KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, I RESTRICT THE DISALLOWANCE TO THE EXTENT OF RS. 5,000/-. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH MARCH, 2020. SD/- [R.C. SHARMA] ACCOUNTANT MEMBER DATED : 20/03/2020 *RANJAN COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 6. GUARD FILE (ITA NO. 512/JODH/2018) ASSISTANT REGISTRAR JODHPUR BENCH