M/s. Deep Jyoti Co. (Unit 2), SRIGANGANAGAR V. JCIT, SRIGANGANAGAR

ITA 530/JODH/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1564 (ITAT-JODHPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-02-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 15-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 530/JODH/2010 (ASSESSMENT YEAR 2005-06) M/S. DEEP JYOTI CO. (UNIT-2) VS. JCIT, 4-E-34, JAWAHAR NAGAR, SRIGANGANAGAR. SRIGANGANAGAR (RAJ.)-335001. PAN NO. AADFD 0294 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SURESH OJHA, ADVOCATE. DEPARTMENT BY : SH. G.R. KOKANI, (DR). DATE OF HEARING : 19/02/2013. DATE OF PRONOUNCEMENT : 04/03/2013. PER HARI OM MARATHA, J.M. : THIS APPEAL OF THE ASSESSEE FOR A.Y. 2005-06 IS DI RECTED AGAINST THE ORDER OF LD. CIT(A) DATED 25.08.2010. FOLLOWIN G GROUNDS HAVE BEEN RAISED IN THIS APPEAL :- 1. THAT LD. LOWER AUTHORITIES BELOW HAVE GROSSLY E RRED IN SUSTAINING PROTECTIVE ADDITION OF RS. 11,00,000. 00 REGARDING CAPITAL INTRODUCED BY PARTNER SHRI VISHNU KUMAR AGA RWAL, WITHOUT APPRECIATING THE FACTS, EVIDENCE AND JUDICI AL 2 DECISIONS, WHICH IS NOT JUSTIFIED, NOT PROPER AND A GAINST CANNON OF LAW. 2. THAT LD. LOWER AUTHORITIES BELOW HAVE GROSSLY ER RED IN ESTIMATING INCOME FROM CONTRACTORSHIP BUSINESS BY APPLICATION OF PROFIT RATE OF 9% AGAINST THE RETURN ED PROFIT RATE OF 8.02%, WHICH IS NOT JUSTIFIED, NOT PROPER A ND EXCESSIVE ALSO. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE FIRM IS DOING THE WORK OF A CIVIL CONTRACTOR. FOR A.Y. 2005 -06 IT FILED ITS RETURN OF INCOME (ROI) ON 27.10.2005 DECLARING TOTAL INCOM E OF RS. 3,04,870/. THE ASSESSMENT WAS FRAMED ON 27.12.2007 U/S 143(3) AT A TOTAL INCOME OF RS. 17,65,025/- BY MAKING VARIOUS ADDITION. IN F IRST APPEAL ALSO ALL ADDITIONS HAVE BEEN UPHELD. THE ASSESSEE IS FURTHER AGGRIEVED. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND CAREFULLY CI RCUMSPECTED THE ENTIRE RECORD. THE FACTS APROPOS GROUND NO. (1) ARE THAT SHRI VISHNU KUMAR AGARWAL WHO IS THE PARTNER IN THIS FIRM HAD D EPOSITED A SUM OF RS. 11,00,000/- IN CASH TOWARDS HIS CAPITAL IN THE CAPITAL ACCOUNT OF PARTNERS. THIS PARTNER HAD WITHDRAWN SOME AMOUNT FR OM THE FIRM IN THE F.Y. 2003-04 AND INTRODUCED THE ABOVE AMOUNT OU T OF THE WITHDRAWALS IN F.Y. 2006-07 IN HIS CAPITAL ACCOUNT OF THE FIRM. THE A.O. 3 HAS DOUBTED THE SOURCE OF THIS DEPOSIT AND BY REJEC TING THIS CLAIM HAS ADDED THE ENTIRE AMOUNT OF RS. 11 LAKHS IN THE HAND S OF THE FIRM. AS PER A.O. THE AMOUNTS OF RS. 7 LAKHS AND 4 LAKHS WER E WITHDRAWN BY SHRI AGARWAL ON 06.06.2003 AND 13.06.2003, AND REDEPOSIT ED THEM ON 05.04.2004 AND 18.04.2004, RESPECTIVELY, MAY NOT BE THE SAME AMOUNTS. THE CASE OF THE ASSESSEE IS THAT THE CAPIT AL INTRODUCED BY THE PARTNER OF THE FIRM CANNOT BE ADDED IN THE HANDS OF THE FIRM. IN OUR CONSIDERED OPINION BOTH AUTHORITIES BELOW HAVE PROC EEDED ON THE WRONG PREMISE BY TREADING THESE AMOUNTS AS CASH CRE DITS. IN FACT THE PARTNER HAS INTRODUCED THIS CAPITAL OF RS. 11 LAKHS IN HIS CAPITAL ACCOUNT AND EVEN IF HE COULD NOT OR WOULD NOT EXPLA IN THE SOURCE THEREOF, THIS AMOUNT CANNOT BE CONSIDERED IN THE HA NDS OF THE FIRM. IN ANY CASE THIS AMOUNT CAN BE CONSIDERED AND DISCUSSE D IN THE HANDS OF THE PARTNER AS INDIVIDUAL. ACCORDINGLY, WE ORDER TO DELETE THIS ADDITION OF RS. 11 LAKHS FROM THE HANDS OF THE ASSESSEE-FIRM AND ALLOW GROUND NO. (1) OF THIS APPEAL. 4. THE FACTS APROPOS GROUND NO. (2) OF THIS APPEAL ARE THAT THE ASSESSEE-FIRM HAS DISCLOSED GROSS-PROFIT 08.02% ON TOTAL TURN OVER OF RS. 1,28,31,382/-. THE A.O. HAS REJECTED THE BOOKS OF A CCOUNTS AND BY ADOPTING G.P. RATE OF 09% HAS MADE IMPUGNED ADDITIO N. THIS HAS BEEN CONFIRMED BY LD. CIT(A) ALSO. 4 5. BOTH PARTIES HAVE REITERATED THEIR EARLIER STAND . THE ASSESSEE AHS DECLARED NET PROFIT RATE OF 6.93% AS AGAINST 5.93% DECLARED IN THE IMMEDIATELY PRECEDING YEAR. IN OUR CONSIDERED OPINI ON NON- MAINTENANCE OF THE STOCK REGISTER, LABOUR REGISTER FOR WORK IN PROGRESS, ETC. ARE NOT THE SPECIFIC DEFECT SIN THE BOOKS OF THE ASSESSEE. MOREOVER, KEEPING IN VIEW TOTALITY OF FACTS AND THE CIRCUMSTANCES OF THIS ISSUE WE ARE NO APPROVING THE ACTION OF LD. CI T(A). THE ASSESSEE HAS DECLARED 08.02% OF G.P. RATE AND ADOPTION OF 09 % RATE OF G.P. BY THE A.O. IS NOT SUPPORTED BY ANY LOGIC. THIS IS SIM PLY AD HOC AND SUCH AD HOC BASELESS ADDITIONS CANNOT BE SUSTAINED IN TH E EYES OF THE LAW. ACCORDINGLY, WE ORDER TO DELETE THIS ADDITION SO MA DE AND ALLOW GROUND NO. (2) OF ASSESSEES APPEAL. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH MARCH, 2013. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 4 TH MARCH, 2013 VL/ COPY TO : 5 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR