ITO, New Delhi V. Shri Vikas Sharma, New Delhi

ITA 5220/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61794 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 12-07-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 24-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B R R KUMAR
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH H HH H : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NOS SS S. .. .5126/DEL/2010 & 2605/DEL/2011 5126/DEL/2010 & 2605/DEL/2011 5126/DEL/2010 & 2605/DEL/2011 5126/DEL/2010 & 2605/DEL/2011 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEARS SS S : : : : 2005 2005 2005 2005- -- -06 & 2006 06 & 2006 06 & 2006 06 & 2006- -- -07 0707 07 SHRI VIKASH SHARMA, SHRI VIKASH SHARMA, SHRI VIKASH SHARMA, SHRI VIKASH SHARMA, PROP. M/S M PROP. M/S M PROP. M/S M PROP. M/S MAYA SAREE CENTRE, AYA SAREE CENTRE, AYA SAREE CENTRE, AYA SAREE CENTRE, 5862, NAI SARAK, 5862, NAI SARAK, 5862, NAI SARAK, 5862, NAI SARAK, JOGIWARA, JOGIWARA, JOGIWARA, JOGIWARA, DELHI DELHI DELHI DELHI 110 006. 110 006. 110 006. 110 006. PAN : BEUPS4557K. PAN : BEUPS4557K. PAN : BEUPS4557K. PAN : BEUPS4557K. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -28(2), 28(2), 28(2), 28(2), DRUMSHAPE BUILDING, ITO, DRUMSHAPE BUILDING, ITO, DRUMSHAPE BUILDING, ITO, DRUMSHAPE BUILDING, ITO, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO ITA NO ITA NO ITA NO.5220/DEL/2010 .5220/DEL/2010 .5220/DEL/2010 .5220/DEL/2010 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2005 2005 2005 2005- -- -06 06 06 06 INCOME TAX INCOME TAX INCOME TAX INCOME TAX OFFICER, OFFICER, OFFICER, OFFICER, WARD WARD WARD WARD- -- -28(2), 28(2), 28(2), 28(2), DRUMSHAPE BUILDING, ITO, DRUMSHAPE BUILDING, ITO, DRUMSHAPE BUILDING, ITO, DRUMSHAPE BUILDING, ITO, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. SHRI VIKASH SHARMA, SHRI VIKASH SHARMA, SHRI VIKASH SHARMA, SHRI VIKASH SHARMA, PROP. M/S MAYA SAREE CENTRE, PROP. M/S MAYA SAREE CENTRE, PROP. M/S MAYA SAREE CENTRE, PROP. M/S MAYA SAREE CENTRE, 5862, NAI SARAK, 5862, NAI SARAK, 5862, NAI SARAK, 5862, NAI SARAK, JOGIWARA, JOGIWARA, JOGIWARA, JOGIWARA, DELHI DELHI DELHI DELHI 110 006. 110 006. 110 006. 110 006. PAN : BEUPS4557K. PAN : BEUPS4557K. PAN : BEUPS4557K. PAN : BEUPS4557K. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANJAY AGARWAL, CA. REVENUE BY : DR.B.R.R.KUMAR, SR.DR. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : ITA NOS.5126 & 2605 ITA NOS.5126 & 2605 ITA NOS.5126 & 2605 ITA NOS.5126 & 2605 ASSESSEES APPEALS FOR AY 2005 ASSESSEES APPEALS FOR AY 2005 ASSESSEES APPEALS FOR AY 2005 ASSESSEES APPEALS FOR AY 2005- -- -06 & 2006 06 & 2006 06 & 2006 06 & 2006- -- -07: 07: 07: 07:- -- - THE ONLY GROUND RAISED IN THESE TWO APPEALS IS AGA INST THE APPLICATION OF GROSS PROFIT RATE AFTER THE REJECTIO N OF BOOKS OF ACCOUNT AND CONSEQUENTLY AN ADDITION OF ` 4,19,711/- AND ` 2,44,450/- FOR AY 2005-06 & 2006-07 RESPECTIVELY. 2. AT THE TIME OF HEARING BEFORE US, THE LEARNED CO UNSEL FOR THE ASSESSEE DID NOT PRESS ANY OF HIS APPEALS. ACCORDI NGLY, THE SAME ARE DISMISSED AS NOT PRESSED. ITA-5126/DEL/2010, 2605/DEL/2011 & 5220/DEL/2010 2 ITA NO.5220/DEL/2010 ITA NO.5220/DEL/2010 ITA NO.5220/DEL/2010 ITA NO.5220/DEL/2010 REVENUES APPEAL FOR AY 2005 REVENUES APPEAL FOR AY 2005 REVENUES APPEAL FOR AY 2005 REVENUES APPEAL FOR AY 2005- -- -06: 06: 06: 06:- -- - 3. THE ONLY GROUND RAISED IN THE REVENUES APPEAL R EADS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES AND IN LAW T HE LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.15,71,690/-, MADE U/S 40A(3) HOLDING THAT THE AS SESSING OFFICER HAS DETERMINED THE INCOME OF GP RATE BASIS SO THE CASH PAYMENTS ABOVE RS.20,000/- MADE FOR PURCHASES HAVE NO EFFECT, IGNORING THE OVERRIDING NATURE OF P ROVISIONS OF SECTION 40A. 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A N INDIVIDUAL. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER REJECTED THE ASSESSEES BOOKS OF ACCOUNT AND APPLIED GROSS PROFI T RATE OF 9.24% WHICH RESULTED IN THE ADDITION OF ` 4,19,711/-. HE ALSO DISALLOWED ` 15,71,690/- UNDER SECTION 40A(3). LEARNED CIT(A) U PHELD THE REJECTION OF BOOKS OF ACCOUNT AND CONSEQUENTLY, THE GROSS PROFIT ADDITION. HOWEVER, HE DELETED THE DISALLOWANCE UND ER SECTION 40A(3) ON THE GROUND THAT ONCE THE BOOKS OF ACCOUNT ARE RE JECTED AND GROSS PROFIT IS ESTIMATED, NO SEPARATE DISALLOWANCE IS RE QUIRED TO BE MADE UNDER SECTION 40A(3). THE REVENUE, AGGRIEVED WITH THE DELETION OF DISALLOWANCE UNDER SECTION 40A(3), IS IN APPEAL BEF ORE US. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THIS ISSUE TO BE SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX VS. BANWARI LAL BANSHIDHAR 229 ITR 229 (ALL.) AND KOL KATA SPECIAL BENCH OF ITAT IN THE CASE OF ITO VS. KENARAM SAHA & SUBHA SH SAHA (2009) 116 ITD 1 (KOL.)(SB) WHEREIN IT HAS BEEN HELD THAT NO DISALLOWANCE COULD BE MADE IN VIEW OF THE PROVISIONS OF SECTION 40A(3) AS NO ITA-5126/DEL/2010, 2605/DEL/2011 & 5220/DEL/2010 3 DEDUCTION WAS ALLOWED TO AND CLAIMED BY THE ASSESSE E. WHEN THE GROSS PROFIT RATE WAS APPLIED, THAT WOULD TAKE CARE OF EVERYTHING AND THERE WAS NO NEED FOR THE ASSESSING OFFICER TO MAKE SCRUTINY OF THE AMOUNT INCURRED ON THE PURCHASES MADE BY THE ASSESS EE. RESPECTFULLY FOLLOWING THE AFORESAID JUDGMENT OF HONBLE ALLAHAB AD HIGH COURT AND OF SPECIAL BENCH OF ITAT CITED SUPRA, WE UPHOLD THE ACTION OF THE LEARNED CIT(A) IN DELETING THE DISALLOWANCE MADE UN DER SECTION 40A(3) AND DISMISS THE APPEAL FILED BY THE REVENUE. 6. IN THE RESULT, THE ASSESSEES APPEALS AS WELL AS THE APPEAL OF THE REVENUE ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON CONCLUSION OF HEARING ON 17 TH JULY, 2012. SD/- SD/- ( (( (RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 17.07.2012 VK. COPY FORWARDED TO: - 1. ASSESSEE : SHRI VIKASH SHARMA, SHRI VIKASH SHARMA, SHRI VIKASH SHARMA, SHRI VIKASH SHARMA, PROP. M/S MAYA SAREE CENTRE, PROP. M/S MAYA SAREE CENTRE, PROP. M/S MAYA SAREE CENTRE, PROP. M/S MAYA SAREE CENTRE, 5862, NAI SARAK, 5862, NAI SARAK, 5862, NAI SARAK, 5862, NAI SARAK, JOGIWARA, JOGIWARA, JOGIWARA, JOGIWARA, DELHI DELHI DELHI DELHI 110 006. 110 006. 110 006. 110 006. 2. REVENUE : INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -28(2), DRUMSHAPE BUILDING, ITO, 28(2), DRUMSHAPE BUILDING, ITO, 28(2), DRUMSHAPE BUILDING, ITO, 28(2), DRUMSHAPE BUILDING, ITO, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR