DEEPAK CHOUDHARY, Jaipur V. ITO, Jaipur

ITA 531/JPR/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3006 (ITAT-JAIPUR)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 10-07-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 16-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANITA RI TESH
• Keywords: Business income
• Section: 40A(3); 2

Judgement Text

1 ITA 531/2013 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH SMC JAIPUR BEFORE SHRI B.R. JAIN, ACCOUNTANT MEMBER ITA NO. 531/JP/2013 ASSTT. YEAR 2008-09 PAN: ABIPC8350N SHRI DEEPAK CHOUDHARY VS. THE INCOME TAX OFFICE R 32, JOSHI COLONY, TONK ROAD WARD-6(3) JAIPUR. JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANISH AGRAWAL RESPONDENT BY : MS. ANITA RITESH.. DATE OF HEARING : 10.07.2013 DATE OF PRONOUNCEMENT : 10.07.2013 O R D E R PER B.R. JAIN, A.M. THIS APPEAL BY ASSESSEE AGAINST ORDER DATED 20/03/ 2013 OF LD. CIT (APPEALS)-II, JAIPUR RAISES THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, LD. CIT(A) HAS ERRED IN UPHOLDING REJECTION OF THE BOOKS OF ACCOUN T U/S 145(3) OF THE INCOME TAX ACT SIMPLY FOR THE REASON THAT STOCK REG ISTER WAS NOT MAINTAINED WHICH IS QUITE IMPOSSIBLE LOOKING TO THE NATURE OF BUSINESS OF THE ASSESSEE, THUS APPLICATION OF THE S ECTION 145(3) DESERVES TO BE HOLD BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING LUMP SUM TRADING ADDITIO N RS. 50,000/- WITHOUT ANY BASIS, ARBITRARILY. 2.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN NOT AP PRECIATING THE FACT THAT THE LD. AO HAS NOT BROUGHT ANY MATERIAL/EVIDENCE ON RECORD TO JUSTIFY THE TRADING ADDITION MADE AND PASSED THE SA ID IMPUGNED 2 ASSESSMENT WITHOUT BRINGING ANY CORROBORATING MATER IAL ON RECORD THUS THE ADDITION SO SUSTAINED DESERVES TO BE DELET ED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE DISALLOWANCES OF RS . 20,000/- MADE OUT OF VARIOUS EXPENSES, THOUGH TELESCOPING OF THE SAME IS ALLOWED OUT OF TRADING ADDITION, WITHOUT APPRECIATING THE F ACT THAT LD. AO HAS FAILED TO POINT OUT A SINGLE INSTANCE WHERE THE CLA IM OF EXPENSES WAS UNJUSTIFIED OR UNREASONABLE, THUS THE DISALLOWANCE OF EXPENSES SO UPHOLD DESERVES TO BE DELETED. 4. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, DELE TE, AMEND OR ABANDON ANY OF THE GROUNDS OF APPEAL EITHER BEFORE OR AT TH E TIME OF HEARING OF APPEAL. 2. BRIEFLY THE FACTS ARE THAT THE ASSESSEE RETURNED INCOME OF RS. 1,56,800/- FROM THE TRADING OF CONFECTIONARY ITEMS. THE ASSESSEE HAS DE CLARED GROSS PROFIT RATE OF 17.41% ON TOTAL SALES OF RS. 46,35,859/- AS AGAINST GROSS PRO FIT RATE OF 22% ON SALES OF RS. 37,05,825/- IN THE IMMEDIATELY PRECEDING YEAR. THE ASSESSING OF FICER FOUND THAT THERE IS A DECLINE IN GROSS PROFIT RATE AND THE ASSESSEE HAD ALSO NOT MAI NTAINED STOCK RECORD NOR DID HE PROVIDE QUANTITATIVE TALLY. HE, THEREFORE, REQUIRED HIM TO SHOW CAUSE AS TO WHY THE BOOKS OF ACCOUNT BE NOT REJECTED U/S 145(3) OF THE ACT AND INCOME ES TIMATED ACCORDINGLY. IN RESPONSE THERETO, THE ASSESSEE EXPLAINED THE DECLINE IN FALL OF GROSS PROFIT RATE AND SUBMITTED THAT IT HAS EARNED MORE PROFIT DURING THE YEAR UNDER CONSID ERATION IN MONETARY TERMS. AFTER CONSIDERING THE ASSESSEES REPLY, THE ASSESSING OFF ICER CONSIDERING THE DEFECTS, FOUND THAT THE TRUE PROFITS CANNOT BE DEDUCED FROM THE BOOKS O F ACCOUNT. IT, THEREFORE, PROCEEDED TO APPLY PROVISIONS OF SECTION 145(3) OF THE ACT AND C ONSIDERED IT FAIR AND REASONABLE TO MAKE A LUMP SUM ADDITION OF RS. 50,000/- TO BE DECLARED TRADING RESULT BESIDES DISALLOWING EXPENSES OF RS. 20,000/- ON AD HOC BASIS. 3 3. THE LD. CIT(A) UPHELD THE APPLICATION OF PROVISI ON OF SECTION 145(3) OF THE ACT AS WELL AS TRADING ADDITION OF RS. 50,000/-. SHE, HOWE VER, ALLOWED TELESCOPING OF THE DISALLOWANCE OF EXPENSES OF RS. 20,000/- AGAINST TH E TRADING ADDITION OF RS. 50,000/-. 4. IN APPEAL THE ASSESSEES COUNSEL CONTENDS THAT T HE ASSESSING OFFICER HAS TAKEN INTO CONSIDERATION ALL THE FACTS AND CIRCUMSTANCES OF TH E CASE AND THEREAFTER PROCEEDED TO MAKE A LUMP SUM ADDITION OF RS. 50,000/-, WHICH INCLUDED T HE FACT OF CASH PURCHASES OR PAYMENTS MADE IN CASH IN CONTRAVENTION OF PROVISION OF SECTI ON 40A(3) OF THE ACT ALSO. SINCE THE ASSESSEE HAD MADE PAYMENTS UNDER EXCEPTIONAL CIRCUM STANCES AND ESTIMATION IS ARBITRARY, THE SAME IS REQUIRED TO BE DELETED. 5. ON THE OTHER HAND, LD. DR SUPPORTS THE FINDINGS AND CONCLUSIONS REACHED BY THE AUTHORITIES BELOW AND CONTENDS THAT ON THE PECULIAR FACTS OF THIS CASE, THE APPEAL IS LIABLE TO BE DISMISSED. 6. I HAVE HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECORD. THE ASSESSING OFFICER AFTER REJECTING THE BOOKS OF ACCOUNT AND TAKING INT O CONSIDERATION ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, CONSIDERED IT FAIR AND R EASONABLE TO MAKE A LUMP SUM ADDITION OF RS. 50,000/- IN THE DECLARED TRADING RESULTS. ESSEN TIALLY, WHEN ALL THE FACTS AND CIRCUMSTANCES HAVE BEEN TAKEN INTO CONSIDERATION FO R MAKING ESTIMATION OF INCOME, THE ASSESSING OFFICER IS SAID TO HAVE CONSIDERED THE FA CT OF PAYMENTS IN CASH IN CONTRAVENTION OF PROVISION OF SECTION 40A(3) OF THE ACT ALSO. I, THEREFORE, DO NOT FIND ANY REASON TO INTERFERE WITH THE CONCLUSION REACHED BY THE LD. CI T(A) AND FIND NO REASON TO ALLOW ANY RELIEF IN THE ESTIMATION SO MADE BY THE ASSESSING O FFICER WITHIN THE SCOPE OF HIS POWERS. THE DISALLOWANCE OF EXPENSES ALSO CAN BE MADE ON RE ASONABLE BASIS AS HAS BEEN HELD BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF KANHAIYA L AL JANGID VS. ACIT, 2008 217 CTR 4 (RAJ) 354. THE SAME IS ALSO NOT REQUIRED TO BE INTE RFERED WITH. THE GROUNDS RAISED IN APPEAL, THEREFORE, STAND REJECTED AND APPEAL STANDS DISMISS ED AS ANNOUNCED IN THE OPEN COURT IN PRESENCE OF PARTIES IMMEDIATELY AFTER CONCLUSION OF HEARING OF PARTIES ON 10/07/2013. SD/- (B.R. JAIN) ACCOUNTANT MEMBER JAIPUR DATED: 10 TH JULY, 2013 * RANJAN COPY FORWARDED TO:- 1. SHRI DEEPAK CHOUDHARY, JAIPUR. 2. THE INCOME TAX OFFICER, WARD-6(3), JAIPUR 3. THE CIT (A) 4. THE CIT 5. THE D.R. GUARD FILE (ITA NO. 531/JP/2013) BY ORDER AR, ITAT, JAIPUR