Shri Bhagwanji Kanji Ayachi, Gandhidham, RAJKOT-GUJARAT V. The Assistant Commissioner of Income Tax, Gandhidham Circle, GANDHIDHAM

ITA 514/RJT/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94049 (ITAT-RAJKOT)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 01-09-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Keywords: Depreciation
• Section: 142(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ./ ITA NO.514/RJT/2014 / ASSTT. YEAR: 2009-10 SHRI BHAGWANJI KANJI C/O. KALPESH S. DOSHI & CO. CHARTERED ACCOUNTANTS 411, COSMOS COMPLEX MAHILA COLLEGE CIRCLE RAJKOT 360 001. VS ACIT, GANDHIDHAM CIRCLE GANDHIDHAM. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI KALPESH DOSHI, CA REVENUE BY : SHRI AVINASH KUMAR, AR / DATE OF HEARING : 20/05/2015 / DATE OF PRONOUNCEMENT: 22/05/2015 / O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST ORDER OF THE CIT(A)-XVI, AHMED ABAD DATED 20.06.2014 FOR THE ASSTT.YEAR 2009-10. 2. THE SOLE GROUND OF THE APPEAL OF THE ASSESSEE RE ADS AS UNDER: 1. LTD.CIT(A) HAS WRONGLY CONFIRMED THE ADDITION O F RS.15,29,366/- ON ACCOUNT OF ESTIMATION OF NET PROF IT AT THE RATE OF 3% OF TOTAL TURNOVER. 3. THE FACTS OF THE CASE ARE THAT THE AO OBSERVED T HAT HE HAD ISSUED NOTICE UNDER SECTIONS 143(2) AND 142(1) OF THE ACT TO THE ASSESSEE ON SEVERAL OCCASION. BUT THE ASSESSEE FAILED TO COMPL Y WITH THE SAME. HE OBSERVED THAT DURING THE YEAR, THE ASSESSEE HAS DEB ITED VARIOUS EXPENSES IN THE PROFIT & LOSS ACCOUNT, AND IN THE ABSENCE OF SUFFICIENT DETAILS AND CLARIFICATION FROM THE ASSESSEE, THE EX PENSES ARE NOT ITA NO.514/RJT/2014 2 VERIFIABLE, AND THEREFORE, HE PROCEEDED TO MAKE THE ASSESSMENT UNDER SECTION 144 OF THE ACT IN THE ABSENCE OF PROPER DET AILS. THE AO OBSERVED THAT THE EXPENSES DEBITED IN THE PROFIT & LOSS ACCOUNT ARE FOUND TO BE NON-GENUINE, AND THEREFORE, ESTIMATED T HE INCOME OF THE ASSESSEE AT 5% ON THE TURNOVER OF RS.9,25,75,748/- WHICH WORKED OUT TO RS.46,28,787-. THE AO OBSERVED THAT THE ASSESSE E HAS SHOWN INCOME OF RS.12,47,906/- AT THE RATE OF 1.34% IN TH E PROFIT & LOSS ACCOUNT. HE MADE ADDITION OF DIFFERENCE OF RS.33,8 0,881/- TO THE INCOME OF THE ASSESSEE. 4. ON APPEAL, THE CIT(A) THOUGH UPHELD THE ACTION O F THE AO IN ESTIMATING THE INCOME OF THE ASSESSEE, BUT HELD THA T IN THE ASSTT.YEAR 2009-10 THE PROFIT BEFORE THE DEPRECIATION AND INTE REST OF THE ASSESSEE WAS 9.87%, IN ASSTT.YEAR 2010-11 7.97% , AND PROFIT AFTER INTEREST AND DEPRECIATION IN A.Y.2009-10 WAS 2.11% AND FOR THE A SSTT.YEAR 2010-11 WAS 1.52%. HE, THEREFORE, ESTIMATED THE NET PROFIT AT 3%, AND THEREBY SUSTAINED THE ADDITION OF RS.15,29,366/- AND DELETE D THE BALANCE AMOUNT OF ADDITION OF RS.18,51,515/-. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. IN THE INSTANT CASE THE ASSESSEE IS ENGAGED IN THE BUSINES S OF TRANSPORTATION. THE ASSESSMENT OF THE ASSESSEE WAS COMPLETED UNDER SECTION 144 OF THE ACT BECAUSE OF FAILURE ON THE PART OF THE ASSES SEE TO COMPLY WITH THE NOTICES ISSUED BY THE ASSESSING OFFICER. THE ASSESS ING OFFICER ESTIMATED THE NET PROFIT FROM TRANSPORTATION BUSINESS @5% OF ITS TURNOVER OF RS.9,25,75,748/-WHICH WORKED OUT TO RS.46,28,787/-A ND ADDED THERE WITH OTHER INCOME OF RS.7,25,313/-DISCLOSED BY THE ASSESSEE AND THUS COMPUTED THE TOTAL INCOME OF THE ASSESSEE AT RS.51, 27,531/-IN-PLACE OF RETURNED INCOME OF RS.17,46,650/-. ITA NO.514/RJT/2014 3 6. ON APPEAL COMMISSIONER OF INCOME TAX (APPEALS) E STIMATED THE INCOME FROM TRANSPORTATION BUSINESS @3% IN PLACE OF 5% ESTIMATED BY THE ASSESSING OFFICER. 7. BEING STILL AGREED BY THE ORDER OF THE COMMISSIO NER OF INCOME TAX (APPEALS) THE ASSESSEE IS IN APPEAL BEFORE US ON TH E GROUND THAT COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIF IED IN ESTIMATING NET PROFIT FROM TRANSPORTATION BUSINESS @3% AND THE REBY CONFIRMING THE ADDITION TO THE EXTENT OF RS.15,29,366/-. 8. WE FIND THAT THE ASSESSEE HAS NOT DISPUTED REJEC TION OF BOOK RESULT ON ACCOUNT OF FAILURE OF THE ASSESSEE TO COM PLY WITH THE NOTICES. THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT THE ESTI MATE OF NET PROFIT @3% BY THE COMMISSIONER OF INCOME TAX (APPEALS) WAS EXCESSIVE IN COMPARE TO PROFIT ACCEPTED BY THE DEPARTMENT IN OTH ER YEARS IN THE CASE OF THE ASSESSEE. THE ASSESSEE DECLARED TOTAL I NCOME OF RS.19,73,220/-WHICH AFTER EXCLUDING OTHER INCOME OF RS.7,25,313/- COMES TO RS.12,47,906/-AND AS A PERCENTAGE OF TOTAL TURNOVER OF RS.9,25,75,748/-WORKS OUT TO 1.35% OF THE TOTAL TUR NOVER. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE IN O UR CONSIDERED VIEW IT SHALL MEET THE ENDS OF JUSTICE IF NET PROFIT FROM T RANSPORTING BUSINESS IS ESTIMATED @2.25% OF THE TURNOVER FROM TRANSPORTING BUSINESS IN PLACE OF 3% ESTIMATED BY COMMISSIONER OF INCOME TAX (APPE ALS). THUS THE GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 22 ND MAY, 2015 AT RAJKOT. SD/- SD/- ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 22/5/2015