INDER KUMAR GUPTA, JAIPUR V. ITO, WARD 4-2, JAIPUR

ITA 528/JPR/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2000 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 29-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: POONAM ROY DCIT DHK
• Keywords: Unexplained cash credit; Rejection of books of accounts; Depreciation
• Section: 194C; 144

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPAN] YS[KK LNL; ] DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 528/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 INDER KUMAR GUPTA, N-11/1, LIC FLATS, SECTOR-6, VIDHYADHAR NAGAR, JAIPUR. CUKE VS. INCOME TAX OFFICER, WARD- 4(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AJUPG 9462 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SMT. POONAM ROY (DCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 23/06/2017 MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 25/07/2017 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATES FR OM THE ORDER OF THE LD. CIT(A)-2, JAIPUR DATED 17/03/2015 FOR THE A. Y. 2010-11, WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. C1T(A) HAS GROSSLY ERRED IN PASSING THE IMPUGNED ORDER U/S 144 OF THE INCOME TAX ACT. 1961 WITHOUT PROVIDING ADEQUATE OPP ORTUNITY TO THE ASSESSEE, HENCE THE ORDER SO PASSED DESERVES TO BE QUASHED. ITA 528/JP/2015_ INDER KUMAR GUPTA VS ITO 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE APPLICATION OF PROVISION OF SECTION 145(3) OF THE INCOME TAX ACT, 1961. 2.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS GROSSLY ERRED IN SUSTAINING AN ADDITION OF 4,23 ,833/-/- BY APPLYING G.P. RATE @ 2.75% AS AGAINST 2.49% DECLARE D BY ASSESSEE ARBITRARILY ON ESTIMATION BASIS WITHOUT AP PRECIATING THE FACT THAT ASSESSEE HAS DECLARED BETTER RESULTS AS C OMPARED TO PREVIOUS YEARS, THUS ADDITION SUSTAINED DESERVES TO BE DELETED. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE TO THE EXTENT OF RS.7,48,560/- MADE BY LD. AO U/S 40A(IA) WITHOUT CO NSIDERING THE SUBMISSION MADE AND EVIDENCE ADDUCED DURING THE PROCEEDINGS. 4.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN IGNORI NG THE FACT THAT PROVISION OF SEC 194C DOES NOT COVER THE CASE OF TH E ASSESSEE AS ALL THE PAYMENTS WERE MADE WERE OF LESS THAN RS.20, 000/- IN A DAY AND LESS THAN 50,000 IN WHOLE YEAR TO ONE SINGL E PARTY, THUS ADDITION SO SUSTAINED DESERVES TO BE DELETED. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN SUSTAINING THE LUMP SUM DISALL OWANCES OF ' 5,00.000/- MADE OUT OF VARIOUS EXPENSES CLAIMED IN THE PROFIT & LOSS ACCOUNT BY ALLEGING THE SAME AS NON-VERIFIABLE OF SAME WITHOUT CONSIDERING THE FACT THAT THE LD. AO HAS FA ILED TO POINT OUT EVEN A SINGLE INSTANCE WHEREIN PERSONAL ELEMENT IS INVOLVED AND EXPENSES WERE NOT INCURRED FOR BUSINESS PURPOSE S, IN THE CIRCUMSTANCES THE DISALLOWANCES SO SUSTAINED DESERV ES TO BE DELETED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S SHIVALIK STEELS ENGAGED IN THE BU SINESS OF TRADING IN IRON GOODS ON WHOLESALE BASIS. FOR THE YEAR UNDER AP PEAL THE ASSESSEE HAD FILED HIS RETURN OF INCOME DECLARING TOTAL INCO ME OF RS. 6,16,510/-. ITA 528/JP/2015_ INDER KUMAR GUPTA VS ITO 3 THE ASSESSMENT WAS COMPLETED U/S 144 OF THE INCOME TA X ACT, 1961 (IN SHORT THE ACT), WHEREIN TOTAL INCOME OF ASSESSEE WAS ASSESSED AT RS. 44,38,020/- BY MAKING TRADING ADDITION OF RS.9,16,2 77/- , THE ADDITION OF RS. 15,62,006/- U/S 40(A)(IA), THE ADDITION OF RS.8 ,22,356/- U/S 68 AS UNEXPLAINED CREDIT AND A LUMP SUM ADDITION OF RS. 5 ,00,000/- BY WAY OF DISALLOWANCE OF VARIOUS EXPENSES CLAIMED IN THE PROF IT & LOSS ACCOUNT. 3. GROUND NO.1 OF THE APPEAL WAS NOT PRESSED AT THE TIME OF HEARING, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 4. GROUND NO. 2 AND 2.1 OF THE APPEAL ARE AGAINST C ONFIRMING THE APPLICATION OF PROVISIONS OF SECTION 145(3) OF THE ACT AND SUSTAINING THE ADDITION OF RS. 4,23,833/- BY APPLYING G.P. RATE @ 2 .75% AS AGAINST 2.49% DECLARED BY THE ASSESSEE. THE LD. CIT(A) HAS RE STRICTED THE ADDITION BY HOLDING AS UNDER:- 2.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSE SSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE ASSESSEE IS ENGAG ED IN THE TRADING OF IRON GOODS & SCRAP. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, IT WAS SEEN THAT THE ASSESSEE HAD NOT MAINTAINED STOCK REGISTER AND ALSO HAD NOT MAINTAINED QUANTITATIVE AND QUALITATIVE DET AILS OF OPENING STOCK AND CLOSING STOCK. THE ASSESSEE ALSO DID NOT PRODUCE THE BOOKS OF ACCOUNTS ALTHOUGH NUMEROUS OPPORTUNITIES WERE GI VEN TO HIM. THE APPELLANT HAS NOT BEEN ABLE TO CONTROVERT THE ABOVE FINDINGS OF THE ASSESSING OFFICER. ON THE BASIS OF THE ABOVE DEFECT S, THE BOOKS OF ACCOUNTS ARE REJECTED U/S 145(3). THE ASSESSEE HAS DISCLOSED A G.P. RATE OF 2.49%, AS AGAINST 1.29% IN THE PRECEDING YE AR, WHILE ITS ITA 528/JP/2015_ INDER KUMAR GUPTA VS ITO 4 TURNOVER HAS INCREASED FROM RS. 10.15 CRORE TO RS. 16.41 CRORE. THE ASSESSING OFFICER APPLIED THE GP RATE OF A COMPARAB LE CASE OF SHRI SANJAY KABRA, OF 3.05%. THE APPELLANT HAS STATED TH AT ITS G.P. RATE IS PROGRESSIVE. ALSO, THE NATURE OF BUSINESS OF THE TW O CONCERNS IS NOT COMPARABLE IN SO FAR AS THE QUALITY OF SCRAP DEALT WITH BY THE COMPARABLE CONCERN RELATES TO SHIP BREAKING SCRAP. LOOKING TO THE ABOVE FACTS, MORE IMPORTANTLY THAT THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNTS DURING ASSESSMENT PROCEEDINGS IN SPITE OF BEING GIVEN NUMEROUS OPPORTUNITIES, THE G.P. RATE IS ESTI MATED AT 2.75% OF THE SALES. THE TRADING ADDITION MADE BY THE ASSESSI NG OFFICER, IS RESTRICTED ACCORDINGLY. THIS GROUND IS PARTLY ALLOW ED. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. THE LD. AR PLEADING ON BEHALF OF THE ASSESSEE HAS SUBMITTED AS UNDER:- IT IS HUMBLY SUBMITTED THAT THE ASSESSING OFFICER H AS NEITHER REJECTED THE BOOKS OF ACCOUNTS OF ASSESSEE, NOR HAS SPECIFIED AN Y JUSTIFIABLE REASON FOR MAKING THE IMPUGNED TRADING ADDITION. IT IS A WELL SETTLED POSITION THAT REJECTION OF BOOKS OF ACCOUNTS U/S 145(3) IS SINE Q UA NON FOR MAKING TRADING ADDITION HOWEVER, THE LD. AO HAS STRAIGHT A WAY PROCEEDED TO MAKE THE TRADING ADDITION WITHOUT EVEN INVOKING PRO VISIONS OF SECTION 145(3). IN THE IMPUGNED ASSESSMENT ORDER THERE IS N O OBSERVATION AS TO HOW THE BOOKS OF ACCOUNTS OF ASSESSEE ARE UNRELIABL E. IT IS VERY NECESSARY FOR THE ASSESSING OFFICER TO ESTABLISH AS TO HOW TR UE PROFITS CANNOT BE DEDUCED FROM THE BOOKS OF ACCOUNTS OF ASSESSEE WHIC H THE LD. AO HAS MISERABLY FAILED TO ESTABLISH. IT IS SUBMITTED THAT THE BOOKS OF ACCOUNTS OF ASSESSEE WERE DULY AUDITED BY A REPUTED FIRM OF CHA RTERED ACCOUNTANTS AND THE COPY OF AUDIT REPORT WAS ALSO FILED BEFORE THE LD. AO. THEREFORE, THE LD. AO COULD NOT HAVE PROCEEDED TO MAKE TRADING ADDITIONS WITHOUT INVOKING THE PROVISION OF SECTION 145(3). ITA 528/JP/2015_ INDER KUMAR GUPTA VS ITO 5 WITHOUT PREJUDICE AND EVEN IN THE EVENT THE BOOKS O F THE ASSESSEE ARE REJECTED AND PROVISIONS OF SEC 145(3) ARE APPLIED, IT IS HUMBLY SUBMITTED THAT IT IS A SETTLED POSITION OF LAW THAT THE BEST GUIDE TO ESTIMATE THE PROFITS IS THE PAST PERFORMANCE OF THE ASSESSEE. IN THIS REGARD KIND ATTENTION OF YOUR HONOUR IS DRAWN TO THE FACT THAT, THE TRADING RESULTS OF THE ASSESSEE ARE BETTER AS COMPARED TO THE PRECEDIN G YEAR. IT MUST BE APPRECIATED THAT THE GROSS TURNOVER OF ASSESSEE HAS INCREASED MANIFOLD AND SO IS THE CASE WITH THE GROSS PROFIT. A COMPARI SON OF THE GROSS TURNOVER, GROSS PROFIT AND GP RATE OF THE IMMEDIATE LY PRECEDING YEARS WITH THAT OF THE YEAR UNDER APPEAL IS TABULATED AS UNDER : ASSESSMENT YEAR GROSS SALES (RS. IN LACS) GROSS PROFIT (RS. IN LACS) G.P. RATE 2008 - 0 9 37.28 1.21 3.24% 2009 - 10 1015.37 13.07 1.29% 2010 - 11 1641.48 40.90 2.49% THE SALES / TURNOVER WHEN COMPARED WITH THE PRECEDI NG ASSESSMENT YEARS REVEALS THAT THERE HAS BEEN AN INCREASE OF ABOUT 62 % AND THE GP RATE ALSO HAS INCREASED FROM 1.29% TO 2.49%. THUS, IT CAN BE SEEN THAT THE GP WAS ON THE HIGHER SIDE AND THE SALES ALSO HAVE INCREASE D WITH HIGHER MARGIN. IN THIS CONNECTION, KIND ATTENTION OF THE HONBLE BENC H IS INVITED TO THE JUDGMENT OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF KANSARA BEARINGS PVT. LTD. VS. ACIT REPORTED IN 270 ITR 235 WHEREIN IT HAS BEEN HELD THAT FOR THE PURPOSE OF MAKING THE TRADING ADD ITION THE BEST GUIDE IS THE PAST HISTORY OF THE ASSESSEE. IN THE PRESENT CA SE, SINCE THE ASSESSEE HAS ALREADY DECLARED MUCH BETTER RESULTS AS COMPARE D TO THE PRECEDING YEAR, THEREFORE, NO FURTHER TRADING ADDITION COULD HAVE BEEN MADE. THE LD. AO HAD DISTURBED THE TRADING RESULTS DECLARED BY AS SESSEE MERELY ON GROUND THAT THE GP RATE WAS LOWER AS COMPARED TO TH E ASSESSMENT YEAR 2008-09 AND COMPLETELY IGNORED THE FACT THAT THE GR OSS TURNOVER AS WELL AS THE GROSS PROFIT WERE ON A MUCH HIGHER SIDE AS COMP ARED TO THE PRECEDING YEARS AND MERELY BECAUSE THE RATE OF GROSS PROFIT H APPENED TO BE LOWER ITA 528/JP/2015_ INDER KUMAR GUPTA VS ITO 6 THAN THE PRECEDING YEAR, IT CANNOT BE ALLEGED THAT THE TRADING RESULTS OF THE ASSESSEE ARE NOT RELIABLE. ] IN SUPPORT OF THE ABOVE CONTENTIONS RELIANCE IS PLA CED ON THE FOLLOWING CASE LAWS: PAST YEARS PROFIT IS THE BEST GUIDE: COLLECTOR RAM SHARMAVS. DCIT [ITAT FJPRT IN ITA NO. 771/JP/2012 DATED 10.11.2016 RELYING ON VARIOUS JURISDICTIONAL DECISIONS AND DEC ISIONS OF THIS ITAT, HELD THAT WHEN THE BOOKS OF THE ASSESSEE HAVE BEEN REJEC TED U/S 145( 3) OF THE ACT, THEN THE PAST HISTORY OF THE ASSESSEE IS THE B EST GUIDE TO ESTIMATE THE PROFITS. PRASHANT OIL MILL VS. ITO 172 TAXMANN.COM 136 (GUI) ] WHEN THE ASSESSING OFFICER FOUND MISTAKES IN THE BO OKS OF ACCOUNTS OF THE ASSESSEE ON VERIFICATION AND CONSEQUENTLY REJECTED THE SAME, THEN IT OUGHT NOT TO HAVE MADE ADDITIONS BY RELYING ON THE SAME BOOKS OF ACCOUNTS. INSTEAD, THE ASSESSING OFFICER OUGHT TO H AVE MADE THE BEST JUDGEMENT ASSESSMENT ON THE BASIS OF THE HISTORY AN D NATURE OF BUSINESS AND THE NET PROFIT RATE AS SHOWN BY THE ASSESSEE IN THE PREVIOUS YEAR. 99 TTJ 164 AJAY GOYAL VS. ITO (JD.) MAY 9. 2005 ACCOUNTS - REJECTION - GP RATE - BEST GUIDE FOR EST IMATION OF THE TRADING RESULTS AFTER REJECTING THE BOOKS IS EITHER THE PAS T HISTORY OF THE ASSESSEE OR ANY OTHER COMPARABLE CASE - THE PAST HISTORY OF THE ASSESSEE TAKES PREFERENCE OVER A COMPARABLE CASE - ASSESSEE HAVING DECLARED HIGHER GP RATE THAN THE PRECEDING YEAR, ITS TRADING RESULTS R EQUIRE ACCEPTANCE AND TRADING ADDITION REQUIRES DELETION. IT IS FURTHER SUBMITTED THAT THE CASE OF BUSINESS O F SHRI SANJAY KABRA WITH WHOM THE CASE OF ASSESSEE WAS COMPARED WAS NEITHER INFORMED TO THE ASSESSEE, NOR WAS ANY OPPORTUNITY ALLOWED FOR DISTI NGUISHING THE SAME. DURING THE COURSE OF APPELLATE PROCEEDINGS, IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT SHRI SANJAY KABRA WAS ENGAGED IN TH E BUSINESS OF SCRAP OF ITA 528/JP/2015_ INDER KUMAR GUPTA VS ITO 7 SHIP BREAKING UNITS WHEREAS THE ASSESSEE WAS HAVING THE SCRAP COLLECTED FROM VARIOUS INDUSTRIES WHICH WAS COMING AS INDUSTR IAL WASTE OUT OF THEIR PRODUCTS. IN OTHER WORDS, THE NATURE OF THE BUSINES S OF SHRI SANJAY KABRA MAY BE REFERRED TO AS THAT OF STEEL SCRAP BUT NOT O F THE STEEL DEALT WITH BY THE ASSESSEE. THIS CONTENTION OF ASSESSEE WAS APPRE CIATED BY THE CIT(A) TO OBSERVE THAT THE NATURE OF BUSINESS OF THE TWO CONC ERNS IS NOT COMPARABLE. BUT THE LD. CIT(A) SUSTAINED THE TRADIN G ADDITION BY ESTIMATING THE G P RATE OF THE ASSESSEE @ 2.75% WIT HOUT ANY BASIS DISCLOSED TO THE ASSESSEE. THEREFORE, IN LIGHT OF T HE SUBMISSIONS AND JUDICIAL PRONOUNCEMENTS, MADE ABOVE, IT IS PRAYED T HAT THE ADDITION OF RS. 4,23,833/- SUSTAINED BY THE LD. CIT(A), MAY KINDLY BE DIRECTED TO BE DELETED. 6. ON THE CONTRARY, THE LD DR HAS VEHEMENTLY SUPPOR TED THE ORDER OF THE LD. CIT(A). 7. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES, PERUSED THE MATERIAL AVAILABLE ON THE RECORD AND ALSO GONE THRO UGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEES TURNOVER WAS OF RS. 16,41,48,351/-, ON THIS THE ASSESSEE HAD DERIVED G.P. RATE @ 2.49% AND N.P. RATE OF 0.43%. THE ASSESSEE HAS NOT MAINTAINED STOCK REGISTER AND Q UANTITATIVE AND QUANTITATIVE DETAILS OF OPENING AND CLOSING STOCK. HE HAD NOT PRODUCED BOOKS OF ACCOUNT BEFORE THE AUTHORITIES CONCERNED, ALTHOUGH NUMEROUS OPPORTUNITIES WERE PROVIDED. THE BOOK RESULTS COULD N OT BE VERIFIED. IN A COMPARABLE CASE, G.P. RATE WAS 3.05%, LD. CIT(A) MADE ADJUSTMENTS FOR PART VARIATION IN NATURE OF TRADE. THE ASSESSEE WAS N OT ABLE TO CONTROVERT ITA 528/JP/2015_ INDER KUMAR GUPTA VS ITO 8 THE FINDINGS OF THE LD. CIT(A) AND ALSO FACTS NARRAT ED IN HIS ORDER. THE ASSESSEE HAS DISCLOSED GP RATE OF 2.49%, LD. CIT(A) CONFIRMED ONLY 2.75%. I AM DELETING OTHER SPECIFIC ADDITIONS MADE AND SUSTAINED. IN VIEW OF THESE FACTS, I HOLD THAT THE LD. CIT(A) HAS PASSED A SPEAKING AND REASONED ORDER. I FIND NO ANY INFIRMITY IN THE ORDE R, THEREFORE, I UPHOLD THE SAME. ACCORDINGLY, GROUND NO. 2 AND 2.1 OF THE ASSESSEES APPEAL IS DISMISSED. 8. GROUND NOS. 4 AND 4.1 OF THE APPEAL ARE AGAINST CONFIRMING THE DISALLOWANCE OF RS. 7,48,560/- U/S 40(A)(IA) AND ALS O IGNORING THE FACT THAT PROVISIONS OF SECTION 194C DOES NOT COVER THE CASE OF THE ASSESSEE. THE LD. CIT(A) HAS ALLOWED THE APPEAL PARTLY BY HOLDIN G AS UNDER: 3.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSE SSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE ASSESSING OFFICER HAS DISALLOWED U/S. 40A(IA), FREIGHT EXPENSES AMOUNTING TO RS. 14,14,26 3/- AND UNLOADING EXPENSES (CARTAGE) AMOUNTING TO RS. 1,48,243/-. THE APPELLANT HAS STATED THAT THE PROVISIONS OF SECTION 194C ARE NOT APPLICABLE TO UNLOADING EXPENDITURE AND THEREFORE, HE WAS NOT LIA BLE TO DEDUCT TDS ON THIS EXPENDITURE. THIS CONTENTION OF THE APPELLA NT IS CORRECT. IT HAS ALSO BEEN STATED BY THE APPELLANT THAT HE WAS REQUI RED TO DEDUCT TDS ON FREIGHT ONLY TILL 30.09.2009 AND NOT THEREAFTER. SUCH FREIGHT EXPENDITURE INCURRED TILL 30.09.2009 IS ONLY RS. 7, 48,560/-. IT HAS ALSO BEEN STATED THAT WITH RESPECT TO THIS FREIGHT EXPEN DITURE, NO EXPENDITURE HAS BEEN INCURRED IN EXCESS OF RS. 20,0 00/- AND EXPENDITURE TO NO ONE PERSON IS IN EXCESS OF RS. 50 ,000/- DURING THE ITA 528/JP/2015_ INDER KUMAR GUPTA VS ITO 9 YEAR, AS THIS FREIGHT PAYMENT HAS BEEN MADE TO DIFF ERENT TRUCK OWNERS WHO BRING GOODS TO THE GO-DOWN OF THE ASSESSEE. I H AVE PERUSED THE FREIGHT ACCOUNT OF THE APPELLANT. IT IS NOT CLEAR W HETHER THIS FREIGHT ACCOUNT WAS SUBMITTED DURING THE ASSESSMENT PROCEED INGS. THE CONTENTION OF THE APPELLANT THAT FREIGHT EXPENDITUR E TO NO ONE PERSON, DURING THE YEAR IS IN EXCESS OF RS. 50,000/- CANNOT BE VERIFIED SINCE FREIGHT HAS BEEN INCURRED IN CASH AND NO VOUCHERS W ERE PRODUCED DURING ASSESSMENT OR APPEAL PROCEEDINGS. THEREFORE, IT IS HELD THAT THE DISALLOWANCE U/S. 40A(IA) HAS BEEN CORRECTLY MADE O N FREIGHT EXPENDITURE OF RS. 7,48,560/- TILL 30.09.2009. NO D ISALLOWANCE U/S. 40A(IA) CAN BE MADE ON FREIGHT EXPENDITURE AFTER 30 .09.2009. THEREFORE, THE DISALLOWANCE OF FREIGHT AND CARTAGE MADE BY THE ASSESSING OFFICER U/S. 40A(IA) IS RESTRICTED TO RS. 7,48,560/-. GROUND NO. 2 IS PARTLY ALLOWED. 9. NOW THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. AT THE OUTSET OF HEARING, THE LD AR OF THE ASSESSEE HAS SUBMITTED AS UNDER:- IN THIS REGARD IT IS SUBMITTED THAT, THE PROVISIONS OF SECTION 194C IN RESPECT OF PAYMENT OF FREIGHT IS NOT APPLICABLE TO THE PAYMENTS WHICH ARE BELOW RS. 20,000/- IN A SINGLE PAYMENT AND WHER E THE PAYMENT IN AGGREGATE IS BELOW RS. 50,000/-, THEN ALSO THE PROV ISIONS OF SECTION 194C ARE NOT APPLICABLE. THUS, WHERE THE PAYMENTS A RE WITHIN THE AFORESAID LIMITS, THEN NO TDS IS REQUIRED TO BE MAD E. THIS POSITION HAS NEITHER BEEN DOUBTED BY THE LD. AO NOR BY THE LD. C IT(A), WHO HAS SUSTAINED THE ADDITION MERELY BY ALLEGING THAT THE EXPENSES WERE INCURRED IN CASH NO EVIDENCE WAS PRODUCED IN THIS R EGARD. HOWEVER, THE LD. CIT(A) HAS COMPLETELY IGNORED THE FACT THAT THE PAYMENT MADE TO THE TRANSPORTERS TOWARDS FREIGHT WA S DULY RECORDED BY THE ASSESSEE AND THE COPIES OF RELEVANT ACCOUNTS WERE SUBMITTED ITA 528/JP/2015_ INDER KUMAR GUPTA VS ITO 10 BEFORE THE LD. CIT(A) (COPY ENCLOSED). THESE EXPENS ES WERE MADE IN CASH EVERY DAY AND WERE PAID TO THE TRUCK OWNERS WH O DO NOT RAISE ANY BILL AND PREFER TO BE PAID IN CASH ONLY. FURTHER, W ITH REGARD TO THE CARTAGE EXPENSES ON ACCOUNT OF UNLOADING OF GOODS I T IS SUBMITTED THAT THE SAME ARE NOT COVERED WITHIN THE PROVISIONS OF S ECTION 194C AND THEREFORE, NO DISALLOWANCE ON ACCOUNT OF THE SAME C OULD HAVE BEEN MADE. THEREFORE, IN LIGHT OF THE FACTS NARRATED ABOVE IT IS SUBMITTED THAT NONE OF THE PAYMENTS MADE BY ASSESSEE REQUIRED ANY DEDUC TION OF TAX AT SOURCE INASMUCH AS THE PROVISIONS OF SECTION 194C A RE NOT ATTRACTED. THEREFORE, IT IS PRAYED THAT THE ENTIRE ADDITION OF RS. 7,48,560/- BE DIRECTED TO BE DELETED. 10. ON THE CONTRARY, THE LD DR HAS VEHEMENTLY SUPPO RTED THE ORDER OF THE LD. CIT(A). 11. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON THE RECORD AND ALSO GONE THRO UGH THE ORDERS OF THE AUTHORITIES BELOW. THE PROVISIONS OF SECTION 194C OF THE ACT FOR PAYMENT OF FREIGHT ARE NOT APPLICABLE WHERE PAYMENTS ARE BEL OW RS. 20,000/- IN A SINGLE PAYMENT AND THE AGGREGATE IS BELOW TO RS. 50, 000/-. WHEREVER, THE PAYMENTS ARE WITHIN THE AFORESAID LIMITS, THEN N O TDS IS REQUIRED TO BE MADE. FROM PERUSAL OF THE CHART REGARDING FREIGH T INWARD EXPENSES, WHICH IS AVAILABLE FROM THE DATE I.E. 10.04/2009 TO 31/03/2010, IT IS NOTED THAT THERE IS NO SINGLE PAYMENT OF MORE THAN RS. 20,000/- IN CASH. ITA 528/JP/2015_ INDER KUMAR GUPTA VS ITO 11 EXPENSES WERE MADE IN CASH EVERY DAY AND WERE PAID TO THE TRUCK OWNERS WHO DO NOT RAISE ANY BILL AND PREFER TO BE PAI D IN CASH ONLY. IN THIS CASE, THE PAYMENTS ARE WITHIN LIMITS, THEREFORE , PROVISIONS OF SECTION 194C OF THE ACT ARE NOT ATTRACTED. IN VIEW OF THE AB OVE FACTS AND CIRCUMSTANCES, I DELETE THE ADDITION CONFIRMED BY T HE LD. CIT(A). ACCORDINGLY, GROUND NO. 4 AND 4.1 OF THE APPEAL IS ALLOWED. 12. GROUND NO. 5 OF THE APPEAL IS AGAINST SUSTAININ G THE LUMP SUM DISALLOWANCES OF RS. 5,00,000/- MADE OUT OF VARIOUS EXPENSES CLAIMED IN THE P&L ACCOUNT. THE LD AR OF THE ASSESSEE HAS SUBMI TTED THAT THE SAID ADDITION OF RS. 5,00,0000/- WAS MADE MERELY ON THE B ASIS OF ASSUMPTIONS AND PRESUMPTIONS. IT IS SUBMITTED THAT WHILE MAKING DISALLOWANCE LD. AO HAS ALLEGED THAT ASSESSEE HAS CL AIMED EXPENSES IN THE PROFIT AND LOSS A/C AND SINCE HE DID NOT PRODUC E THE VOUCHERS FOR VERIFICATION. THE LD. AR SUBMITTED THAT THE TOTAL AM OUNT OF EXPENSES CLAIMED IN THE P/L A/C IS RS. 33,87,360/-, WHICH COM PRISES OF VARIOUS ADMINISTRATIVE EXPENSES, DEPRECIATION, BANK CHARGES ETC. THIS FORMS ONLY A MEAGRE PERCENTAGE OF 2.06% OF THE TOTAL TURNOVER, WHICH IS IN NO WAY EXCESSIVE, AND THERE WAS NO REASON TO DOUBT THE SAME . 13. ON THE CONTRARY, THE LD DR HAS SUPPORTED THE OR DER OF THE LD. CIT(A). ITA 528/JP/2015_ INDER KUMAR GUPTA VS ITO 12 14. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON THE RECORD. I HAVE ALREADY SU STAINED THE ADDITION ON ACCOUNT OF REJECTING THE BOOKS OF ACCOUNT AND ESTIM ATING THE GROSS PROFIT, THEREFORE, I DELETE THE LUMP SUM ADDITION CONFIRMED BY THE LD. CIT(A). 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/07/2017. SD/- HKKXPAN (BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 25 TH JULY, 2017 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI INDER KUMAR GUPTA, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD- 4(2), JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 528/JP/2015) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR