ITO, Kota V. SHRI BABU LAL SOMANI PROP., Kota

ITA 602/JPR/2011

• Counselvise Citation: 60223114 RSA 2011
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 15-11-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 10-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHRI
• Assessee Lawyers: C M BIRLA
• Keywords: Business income; Depreciation
• Section: 44AD; 40A(3); 143(3); 194C; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.602/ JP/2011 ASSESSMENT YEAR 2004-05 PAN: ATBPA 9231 K THE ITO VS. SHRI BABU LAL SOMANI WARD- 2(1) PROP. M/S. SOMANI & CO. AND M/S. SOMA NI CARRIER KOTA BUNDI ROAD, KOTA (APPELLANT ) (RESPONDENT) ITA NO.609/ JP/2011 ASSESSMENT YEAR 2004-05 PAN: ATBPA 9231 K SHRI BABU LAL SOMANI VS. THE ITO PROP. M/S. SOMANI & CO., AND M/S. SOMANI CARRIER WARD- 2 (1) KUNARI, BUNDI ROAD, KOTA KOTA (APPELLANT ) (RESPONDENT) ITA NO.603/ JP/2011 ASSESSMENT YEAR 2005-06 PAN: ATBPA 9231 K THE ITO VS. SHRI BABU LAL SOMANI WARD- 2(1) PROP. M/S. SOMANI & CO. AND M/S. SOMA NI CARRIER KOTA BUNDI ROAD, KOTA (APPELLANT ) (RESPONDENT) ITA NO.610/ JP/2011 ASSESSMENT YEAR 2005-06 PAN: ATBPA 9231 K SHRI BABU LAL SOMANI VS. THE ITO PROP. M/S. SOMANI & CO., AND M/S. SOMANI CARRIER WARD- 2 (1) KUNARI, BUNDI ROAD, KOTA KOTA (APPELLANT ) (RESPONDENT) 2 ITA NO.604/ JP/2011 ASSESSMENT YEAR 2006-07 PAN: ATBPA 9231 K THE ITO VS. SHRI BABU LAL SOMANI WARD- 2(1) PROP. M/S. SOMANI & CO. AND M/S. SOMA NI CARRIER KOTA BUNDI ROAD, KOTA (APPELLANT ) (RESPONDENT) ITA NO.611/ JP/2011 ASSESSMENT YEAR 2006-07 PAN: ATBPA 9231 K SHRI BABU LAL SOMANI VS. THE ITO PROP. M/S. SOMANI & CO., AND M/S. SOMANI CARRIER WARD- 2 (1) KUNARI, BUNDI ROAD, KOTA KOTA (APPELLANT ) (RESPONDENT) ITA NO.605/ JP/2011 ASSESSMENT YEAR 2007-08 PAN: ATBPA 9231 K THE ITO VS. SHRI BABU LAL SOMANI WARD- 2(1) PROP. M/S. SOMANI & CO. AND M/S. SOMA NI CARRIER KOTA BUNDI ROAD, KOTA (APPELLANT ) (RESPONDENT) ITA NO.612/ JP/2011 ASSESSMENT YEAR 2007-08 PAN: ATBPA 9231 K SHRI BABU LAL SOMANI VS. THE ITO PROP. M/S. SOMANI & CO., AND M/S. SOMANI CARRIER WARD- 2 (1) KUNARI, BUNDI ROAD, KOTA KOTA (APPELLANT ) (RESPONDENT) ITA NO.606/ JP/2011 ASSESSMENT YEAR 2008-09 PAN: ATBPA 9231 K THE ITO VS. SHRI BABU LAL SOMANI WARD- 2(1) PROP. M/S. SOMANI & CO. AND M/S. SOMA NI CARRIER KOTA BUNDI ROAD, KOTA (APPELLANT ) (RESPONDENT) 3 ITA NO.613/ JP/2011 ASSESSMENT YEAR 2008-09 PAN: ATBPA 9231 K SHRI BABU LAL SOMANI VS. THE ITO PROP. M/S. SOMANI & CO., AND M/S. SOMANI CARRIER WARD- 2 (1) KUNARI, BUNDI ROAD, KOTA KOTA (APPELLANT ) (RESPONDENT) DEPARTMENT BY : SHRI VINOD JOHRI ASSESSEE BY : SHRI C.M. BIRLA DATE OF HEARING: 15-11-2011 DATE OF PRONOUNCEMENT: 13-01-2012 ORDER PER BENCH THE ASSESSEE AS WELL AS REVENUE FILED THE APPEALS AGAINST RESPECTIVE ORDERS OF THE LD. CIT(A). 2.1 GROUND OF APPEAL 1 & 2 BY ASSESSEE FOR ASSESSME NT YEAR 2004-05 READS AS UNDER:- 1. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN NOT ANNULLING THE ORDER OF THE LEARNED AO WHICH WAS BASED ON REPORT OF THE LEARNED SPECIAL AU DITORS WHO WERE APPOINTED FOR THE ASSIGNMENTS BEYOND THE PROVI SIONS OF SEC.142(2A) OF THE INCOME TAX ACT, 1961. RELIANCE I N THIS REGARD IS MADE ON DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. BAJRANG TEXTILES 205 CTR 287 (RAJ.). 2 THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) FURTHER ERRED IN NOT ANNULLING ORDER OF THE LEARNED AO WHICH WAS FRAMED BY HIM BEYOND TIME PROVIDED IN SECTION 153(2) OF THE IT ACT 1961 WHICH WAS EXTENDED BY LEA RNED AO BY APPOINTING SPECIAL AUDITORS U/S 142(2A) AND EXTENDI NG THEIR TIME AGAIN AND AGAIN THUS TAKING BENEFIT OF PROVISO TO S EC.153(4). 2.2 GROUND OF APPEAL 1 BY ASSESSEE FOR ASSESSMENT Y EAR 2005-06 TO 2008-09 READS AS UNDER:- 4 THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN NOT ANNULLING THE ORDER OF THE LEAR NED AO WHICH WAS BASED ON REPORT OF THE LEARNED SPECIAL AUDITORS WHO WERE APPOINTED FOR THE ASSIGNMENTS BEYOND THE PROVISIONS OF SEC.142(2A ) OF THE INCOME TAX ACT, 1961. RELIANCE IN THIS REGARD IS MADE ON D ECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. BAJRANG TEXTIL ES 205 CTR 287 (RAJ.). 2.3 THE FACTS IN THIS CASE ARE SIMILAR TO THE FACTS IN THE CASE OF SHRI RITESH SOMANI. WHILE DECIDING THE APPEAL IN THE CASE OF SHRI RITES H SOMANI IN ITA NO. 592 TO 597 JP/2011 AND 618 TO 623/JP /2011 VIDE ORDER DATED 30 -12-2011, WE HAVE HELD THAT REFERENCE FOR SPECIAL AUDIT IS IN ACCORDANCE WITH T HE PROVISIONS OF LAW. FOLLOWING THAT ORDER, WE DISMISS THE ABOVE GROUNDS OF APPEAL. ASSESSMENT YEAR 2004-05 3.1 AS GROUND OF APPEAL NO. 3(III) OF THE ASSESSEE AND GROUND OF APPEAL (III) OF THE DEPTT ARE ON THE COMMON ISSUE AND WILL HAVE IMPACT ON OT HER GROUNDS OF APPEAL FOR DIFFERENT ASSESSMENT YEARS AND HENCE THIS ISSUE IS TAKEN UP F IRST. GOA NO.3(III) OF THE ASSESSEE THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN APPLYING NP RATE OF 10% ON DISCLOSED SALES RS. 4784 456/- AS AGAINST DISCLOSED NP RATE AS PER TRADING A/C ATTACHED WITH ORIGINAL ROI AT 5.14% WHEREIN NO DEFECT WAS FIND OUT BY THE LEARNED AO . GOA NO.(III) OF DEPTT .- THE LEARNED CIT(A) ERRED IN DELETING ADDITION ON A CCOUNT OF UNRECORDED TRANSPORTATION RECEIPTS OF RS.655944/- 3.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E AO FOUND THAT VEHICLE RECEIPTS WERE OF RS.3284720/- AGAINST WHICH EXPENSES OF RS.291682 0/- WERE THERE WHICH WERE VERY HIGH AND THEREFORE, THE AO ESTIMATED INCOME @ 20% OF TR ANSPORTATION RECEIPTS RS.3284720/- AND MADE ADDITION OF RS.655944/-. WHILE MAKING THIS ADDITION , THE AO DID NOT CONSIDER 5 THAT ASSESSEE HAD JCB INCOME RS. 326537/- ALSO WHI CH WAS APPEARING IN THE P&L A/C. BESIDES, THE AO DID NOT THINK IT APPROPRIATE TO PRO VIDE US DEDUCTION OF THE INCOME ALREADY DISCLOSED. 3.3 DURING THE COURSE OF APPEAL PROCEEDINGS, THE AS SESSEE FAIRLY ADMITTED THAT AS PER P&L A/C ATTACHED TO RETURN OF INCOME, THE INCOME IS FR OM BUSINESS OF GITTI SUPPLY TO RAILWAY, PLYING OF DUMPER /TRUCKS AND JCB MACHINE AND INSIGN IFICANT SALES OF MARBLE. THE ASSESSEE ADMITTED THAT PROFIT FROM GITTI BUSINESS AND TRANSP ORTATION CANNOT BE SEGREGATED AND REQUESTED TO THE LD. CIT(A) THAT CONSOLIDATED NP RATE ON CONSOLIDATED SALES AND TRANSPORTATION RECEIPTS SUBJECT TO DEPRECIATION AND BANK INTEREST IN ASS.YEAR 2004-05,2005- 06,2006-07,2007-08 & 2008-09 WAS AT 9.31%, 9.80%, 1 7.78%, 12.76% & 15.84% RESPECTIVELY WHICH BEING FAIRLY WELL AND HENCE ADD ITIONS BEING UNCALLED AND THE SAME BE DELETED. 3.4 IN ALTERNATE, THE LD. AR REQUESTED THE LD. C IT(A) THAT ASSESSEE PLYS TRUCKS /DUMPERS AND JCBS WHICH IN TOTAL BEING LESS THAN 10 IN NUMB ER AND THEREFORE THE ASSESSEE IS BEING COVERED WITHIN THE PROVISIONS OF SEC.44AE. IT WAS S UBMITTED THAT WHEN SPECIFIC PROVISIONS ARE THERE FOR COMPUTATION OF INCOME IT WILL PREVAIL OVER GENERAL PROVISIONS. RELIANCE IN THIS REGARD WAS MADE TO RAKESH KUMAR MUNDRA VS. ITO (200 9) XLI TAXWORLD 59 (JD.). AS AFTER COMPUTATION OF INCOME U/S 44AE INCOME FROM GITTI BU SINESS IS 5.14%, WHICH BEING REASONABLE IT SHOULD NOT BE INTERFERED. 3.5 IN FURTHER ALTERNATE, THE ASSESSEE SUBMITTED TH AT INCOME FROM VEHICLES SUBJECT TO DEPRECIATION AND INTEREST WAS 14.81% WHEREAS IN CAS E OF ORIENT MAIL SPEED TRANSPORT SERVICE VS.ITO (2008) XL TW 138(JP) HONBLE ITAT J AIPUR BENCH APPROVED NP RATE OF 6 6.76%. . THE ASSESSEE THEREFORE REQUESTED THAT PRO FIT BEING FAIRLY WELL ADDITION BE DELETED. 3.6 THE LD CIT(A) CONSIDERED SUBMISSIONS BUT FINAL LY APPLIED SUBMISSION MADE BY ASSESSEE IN PARA 3.5 ABOVE PARTLY. AS THE PROFIT I N RELATION TO INCOME FROM GITTI SUPPLY WAS WORKED OUT IN THIS PROCESS AT 5.14%, HE CONSIDERED IT LOW, APPLIED NP RATE OF 10% AND MADE ADDITION OF RS. 232318/-. RELEVANT PART OF LD. CIT( A)S ORDER IS REPRODUCED AS UNDER:- AS MENTIONED BY APPELLANT, HE HAS DECLARED NET PRO FIT OF RS.289773/- IN HIS PROFIT & LOSS ACCOUNT WHICH INC LUDES INCOME FROM GITTI SUPPLY AS WELL AS TRANSPORTATION BUSINESS. IN THE ABSENCE OF CORRECT AND COMPLETE BOOKS OF ACCOUNTS, IT WILL BE PROPER TO ESTIMATE INCOME FROM TRANSPORTATION BUSINESS AS PER THE PRO VISIONS OF SECTION 44AE. DURING THE YEAR APPELLANT HAS 1 TRUCK AND 1 DUMPER FOR FULL YEAR AND 1 TRUCK FOR SIX MONTHS. INCOME FROM THESE VEHICLES IS ESTIMATED AT RS.3500/- PER MONTH EACH. THIS GIVES FIGURE OF RS. 105000/-. INCOME OF JCB IS ESTIMATED AT RS.75000/- FOR THE ENTIRE YEAR. THU S TOTAL INCOME FROM TRANSPORTATION BUSINESS IS ESTIMATED AT RS.180000/ - (105000 + 75000). AS DISCUSSED EARLIER TOTAL PROFIT OF RS.289773/- HA S BEEN DECLARED BY APPELLANT IN RESPECT OF BOTH BUSINESSES. AFTER GIVI NG CREDIT FOR DEPRECIATION ON CAR, SCOOTER AND FURNITURE (DEPRECIATION CLAIMED RS. 136355/-) THE FIGURE OF PROFIT IS RS.426128/-. IF INCOME FROM TRA NSPORTATION BUSINESS OF RS.180000/- AS ESTIMATED ABOVE IS REDUCED FROM THIS , THE REMAINING FIGURE IS OF RS.246128/-. THIS IS THE INCOME OF APPELLANT FRO M GITTI SUPPLY BUSINESS. DURING THE YEAR TOTAL SALE OF GITTI IS OF RS.478445 6/- AND AS PER ABOVE WORKING PROFIT COMES TO 5.14% (246128 IS 5.14% OF 4 784456/-), WHICH IS ON THE LOWER SIDE. IT WILL BE FAIR AND REASONABLE TO ESTIMATE INCOME OF APPELLANT FROM GITTI SUPPLY BUSINESS BY APPLYING PROFIT RATE OF 10% ON TOTAL SALES OF RS.4784456/-. THIS WILL GIVE A FIGURE OF RS.478446/ -. SINCE THE APPELLANT HAS DECLARED INCOME OF RS.246128/- IN HIS RETURN, AO IS DIRECTED TO MAKE FURTHER ADDITION OF RS. 232318/- ON THIS ACCOUNT. THUS AO I S DIRECTED TO DELETE ADDITION OF RS. 655944/- MADE BY HIM IN RESPECT OF TRANSPORTATION BUSINESS. AT THE SAME TIME HE IS DIRECTED TO MAKE SEPARATE AD DITION OF RS. 232318/- IN RESPECT OF GITTI SUPPLY BUSINESS. GROUND NO. 4(III) IS THUS PARTLY ALLOWED. 3.7 BEING AGGRIEVED BOTH ASSESSEE AND DEPTT ARE IN APPEAL BEFORE US AND SUBMISSIONS OF ASSESSEE ARE AS UNDER:- 7 THE LD. AR SUBMITTED THAT APPEAL OF THE DEPTT. I S NOT MAINTAINABLE BECAUSE OUT OF THE 3 OPTIONS AVAILABLE WITH LD CIT( A) HE HAS APPLIED THE MOST FAVOURABLE OPTION TO DEPTT. WE THEREFORE REQUEST YO UR HONOUR TO DISMISS THIS GROUND OF APPEAL OF DEPTT. IN RELATION TO OUR GROUND OF APPEAL FIRSTLY WE REQU EST YOUR HONOUR THAT OUR TWO BUSINESSES ARE SO INTERMIXED THAT INCOME FR OM TWO BUSINESS CAN NOT BE SEGREGATED. AS OUR CONSOLIDATED NP IS 9.31% WHIC H IS VERY FAIR IT SHOULD NOT BE INTERFERED AND ADDITION SO CONFIRMED BY HON BLE CIT(A) BE DELETED. IN ALTERNATE WE REQUEST THAT WHILE APPLYING 10% NP RAT E ON GITTI SUPPLY THE HONBLE CIT(A) DID NOT CONSIDERED FOLLOWINGS:- (I) THAT OUR VEHICLES ARE BEING USED IN OUR GITT I SUPPLY BUSINESS ALSO WHEREAS INCOME FROM PLYING OF VEHICLE S CONSIDERED SEPARATELY INCONSONANCE TO PROVISION OF SEC.44AE. (II) THAT ASSESSEE BEING A SUPPLIER TO RAILWAYS WHERE THERE IS CUT THROAT COMPETITION, MARGIN OF PROFIT IS COMP ARATIVELY LESS. WE THEREFORE REQUEST YOUR HONOUR THAT RATE APPLIED BY HONBLE CIT(A) IS TOO HIGH AND OUR DISCLOSED PROFIT RATE @ 5.14 BEING VERY REASONABLE THE SAME BE ACCEPTED IN VIEW OF DECISION S OF THIS HONBLE BENCH. IN ALTERNATE WE REQUEST THAT A REASONABLE RATE BE A PPLIED. 3.8 WE HAVE HEARD BOTH THE PARTIES. THE CHART OF RE CEIPT OTHER DETAILS AS FILED BY THE LD. AR IS AS UNDER:- PARTICULARS A.Y.2004-05 A.Y. 2005-06 A.Y.2006-07 A. Y.2007-08 A.Y.2008-09 DISCLOSED INCOME 1. NET PROFIT A 289773 272298 259479 490986 484386 TRUCK 224651 303779 136699 47845 81337 DUMPER 99867 59920 26964 65117 222060 JCB MACHINE 24485 18363 16526 26960 474746 B 349003 382062 180189 382642 778143 ADD. DEPRECIATION C 136355 10884 61577 109012 92705 ADD INTEREST TO 6308 46602 46602 137843 158350 8 BANK B TOTAL A+B+C+D 781439 809846 547847 1120483 1513584 2(I) SALES 4784456 5471468 880189 3605514 4640597 (II) TRANSPORTATION RECEIPTS 3613257 2796992 2201825 5172417 4915737 8397713 8268460 3082014 8777931 9556334 3.CONCOLIDATED NET PROFIT RATE 9.31% 9.80% 17.78% 12.76% 15.84% 4. INCOME FROM VEHICLES U/S 44AE 105000 126000 126000 168000 168000 JCB MACHINE 75000 75000 75000 15000 15000 18000 201000 201000 318000 318000 ADD(I) 349003 382062 180189 382642 778143 (II) 6308 46602 46602 137843 158350 (III) 18000 201000 201000 318000 318000 TOTAL 535311 629664 427791 838485 1254492 5(I)TRANSPORTATION RECEIPTS 3613257 2796992 2201825 5172417 4915737 (II) INCOME SUBJECT TO DEPRECIATION AND INTT BANK 536311 629664 427791 838485 1254493 (III) N.P.% VIS A VIS TRANSPORTATION RECEIPT 14.81% 22.51% 19.43% 16.21% 25.52% 6.INCOME FROM GRIT SUPPLY BUSINESS (I) SALES 4784456 5471468 88189 3605514 4640597 (II) INCOME SUBJECT TO DEPRECIATION ON CAR ETC 246128 180182 120056 281998 259091 (III) N.P. % VIS A VIS SALES (SUBJECT TO DEPRECIATION ) 5.14% 3.29% 13.63% 7.82% 5.58% IT IS NOTICED THAT COMBINED NET PROFIT RATE VARIES FROM YEAR TO YEAR. REASON IS OBVIOUS. THE NET PROFIT RATE ON SUPPLY OF GRIT AND ON TRANSPORTA TION RECEIPTS WILL BE DIFFERENT. RECEIPT UNDER TWO DIFFERENT HEADS ARE NOT IN THE SAME PROP ORTION. MOREOVER, ON CREDIT SIDE, THERE ARE LIME STONE SALES IN ASSESSMENT YEAR 2007-08 AND 2008-09 WHILE THERE ARE NO SALES IN 9 EARLIER YEARS. IN THE Y 2004-05, THERE IS SALE OF M ARBLE TO THE EXTENT OF RS. 8,934/-. ON CREDIT SIDE, THE FOLLOWING ENTRIES FOR DIFFERENT Y EARS ARE AS UNDER:- A.Y. 2004-05 DISCOUNT RS. 3806 INTT ON FDR RS. 5229 INTT FROM BANK RS. 633 RS. 9668. A.Y. 2005-06 INTT. ON I.T. REFUND RS. 6000 A.Y. 2006-07 INTT. ON FDR RS. 6143 INTT ON I.T. REFUND RS. 5200 INTT FROM BANK RS. 285 RS. 11628. A.Y. 2007-08 INTT. ON I.T. REFUND RS. 4479 A.Y. 2008-09 INTT. ON I.T. REFUND RS. 1540 INTT. ON FDR RS. 46702 RS. 48,242 3.9 IN THIS CASE, THE ABOVE CREDIT ENTRIES AS APPEA RING IN THE PROFIT AND LOSS ACCOUNT ARE REDUCED FROM NET PROFIT. THE NET PROFIT OF DIF FERENT ASSESSMENT YEARS AND THE PERCENTAGE OF NET PROFIT OVER TOTAL RECEIPTS WILL B E AS UNDER:- ASSESSMENT YEAR AMOUNT NET PROFIT RATE 2004-05 2,80,105 3.33% 2005-06 2,66,298 3.22% 2006-07 2,47,851 8.04% 2007-08 4,86,507 5.54% 2008-09 4,36,144 4.56% 3.10 THE DEPRECIATION IN ASSESSMENT YEAR 2006-07 IS ONLY RS. 2.40 LACS AS AGAINST RS. 4.90 LACS OF EARLIER YEAR. IN THE ASSESSMENT YEAR 2 007-08 AND 2008-09, THERE ARE LIME STONE SALES IN ADDITION TO GRIT SALES. SUCH LIME ST ONES WERE NOT EXISTING IN EARLIER YEARS. IN 10 THE ASSESSMENT YEAR 2006-07, THE TURNOVER IS ONLY AROUND RS. 30.00 LACS AS AGAINST AROUND RS. 85.00 TO 90.00 LACS IN OTHER YEARS. THER EFORE, THE CASE FOR THE ASSESSMENT YEAR 2006-07 IS NOT AT ALL COMPARABLE. NEITHER THE AO N OR THE LD. CIT(A) HAS REFERRED TO ANY COMPARABLE CASES. IT IS AN ADMITTED POSITION THAT N ET PROFIT RATE WILL DEPEND UPON PROPORTION OF TRANSPORTATION RECEIPTS AND GRIT SALE S AS COMPARED TO THE TOTAL TURNOVER . CONSIDERING THE NATURE OF EXPENSES DEBITED IN TRADI NG AND PROFIT AND LOSS ACCOUNT AND THE FACT THAT MAJOR EXPENSES ARE IN RESPECT OF PURCHAS ES. WE THEREFORE, FEEL THAT IT WILL BE FAIR AND REASONABLE TO APPLY NET PROFIT RATE OF 6% FOR T HE ASSESSMENT YEAR 2004-05, 2005-06, 2007-08 AND 2008-09. ASSESSMENT YEAR N.P. RATE AFTER 6% ADDITION CONFIRMED 2004-05 5,03,862 2,23,757 2005-06 4,96,107 2,29,809 2007-08 5,26,675 40,168 2008-09 5,73,380 1,37,236 THUS THE ADDITION WHICH IS REQUIRED TO BE ADDED IN RESPECT OF BOTH THE BUSINESS OF GRIT AND TRANSPORTATION RECEIPTS ON DISCLOSED RECEIPTS W ILL BE AS ABOVE. ACCORDINGLY GROUND NO. 3 OF THE ASSESSEE AND GROUND NO. (III) OF THE D EPARTMENT ARE DISPOSED OF AS ABOVE MEANING THEREBY THAT GROUND OF APPEAL OF THE ASSESS EE IS PARTLY ALLOWED WHILE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 4.1 THE GROUND OF APPEAL NO.3(I) OF THE ASSESSEE AND G ROUND OF APPEAL NO.(I) OF THE DEPTT. READS AS UNDER:- GOA NO.3(I) OF THE ASSESSEE THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN APPLYING NP RATE OF 10% ON UNDISCLO SED SALES RS.1846288/- AS AGAINST 5.14% DISCLOSED BY THE APPELLANT AS PER TRADING ACCOUNT APPENDED WITH ORIGINAL ROI FILED. 11 GOA NO.(I) OF DEPTT .- THE LEARNED CIT(A) ERRED IN DELETING ADDITION OF UNRECORDED BUSINESS OF GITTI & MARBLE AT RS. 4805085/- 4.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO VIDE HIS LETTER DATED 26.05.2010 ASKED ASSESSEE TO FURNISH EXPLANATION FO R UNDISCLOSED PURCHASES OF RS.3173477/-, RS.247551/- & RS. 948676/-. THE ASSES SEE VIDE HIS LETTER DATED 11.06.2010 SUBMITTED THAT OF IT PURCHASES OF RS. 14 61035/- & RS.134940/- ARE VERIFIABLE FROM RECORDS AVAILABLE WITH THE AO HIMSELF. BESIDES PURCHASES OF RS. 948676/- ARE TAKEN TWICE. THE AO HOWEVER DID NOT ACCEPT THE SAME AND TAXED UNVERIFIABLE PURCHASES OF RS. 4369704/- PLUS PROFIT THEREON AT RS. 620010/- AND T HEREBY MADE TOTAL ADDITIONS OF RS. 4989714/-. 4.3 DURING THE COURSE OF APPEAL PROCEEDINGS, THE AS SESSEE SUBMITTED AS UNDER :- 'DURING THE ASSESSMENT PROCEEDINGS THE LEARNED AO V IDE HIS LETTER DATED 26.05.2010 REQUIRED ME TO EXPLAIN UNRE CORDED PURCHASES RS. 3173477/-,(PARA 3 OF LETTER), RS. 247 551/-(PARA 4 OF LETTER) AND RS. 94S676/- (PARA 6(II) OF LETTER) THU S TOTALING TO RS. 4369704/-. AS MY LEDGER BOOK WAS NOT AVAILABLE THER EFORE I COULD NOT GET IT VERIFIED, HOWEVER, I SUBMITTED THAT OF T HESE PURCHASES, PURCHASES TO THE EXTENT OF RS. 1439800/- WERE FROM MY SON'S FIRM M/S SWASTIK STONE CRUSHER WHICH IS BEING REPORTED B Y MY AUDITORS ALSO IN THEIR REPORT INFORM 3 CD IN PARA 18 AND THE REFORE THE SAME BE REDUCED FROM IT. BESIDES I ALSO STATED THAT PAYM ENT OF PURCHASE OF RS. 134940/- TO CHOUDHARY CRUSHERS IS VERIFIABLE FR OM MY ACCOUNTS AND THE SAID FIRM HAS ALSO CONFIRMED IT WHICH IS EV IDENT FROM PARA 2 OF THE LEARNED AO'S LETTER ALSO THEREFORE THE SAME ALSO BE REDUCED. BESIDES MY REQUEST WAS THAT PURCHASE OF RS.948676/- IS OVERLAPPING WHICH IS EVIDENT FROM PAGE 48 & 49 OF ANNEXURE 20 A LSO. I HAD THEREFORE REQUESTED THAT PURCHASES OF RS. 4369704/- BE REDUCED BY RS.L439800/-(PURCHASES FROM MY SON'S FIRM SWASTIK S TONE CRUSHERS AS PER REPORT OF AUDITORS INFORM 3CD), RS. 134940/- (AS PER PARA 2 OF LETTER OF LEARNED AO) AND RS. 9486761- (PAGE 48 & 49 OF 'ANNEXURE 20) WHICH SHALL BRING NETT UNDISCLOSED PU RCHASES, AS PER IMPOUNDED RECORDS, TO RS. 1846288/-. HOWEVER THE LE ARNED AO NOT 12 ONLY DID NOT GRANT ME DEDUCTION FOR IT BUT AFTER MA KING HYPOTHICAL ADDITION OF DEEMED PROFIT OF RS. 620010/- ESTIMATED SALES AT RS. 4989714/- AND BY TAKING 100% NP RATE THEREON MADE A DDITION OF RS. 4989714/-. I SUBMIT MY EVERY PURCHASE IS RECORDED; OF COURSE I T MAY BE IN SOME OTHER HEAD. BUT IT IS TRUE THAT THERE IS DE FICIENCY IN MY BOOK KEEPING. I AM A MAN OF MORE THAN 70 YEARS OF AGE AN D THEREFORE TO PURCHASE PEACE I ACCEPT THE PURCHASES BUT SUBMIT PU RCHASES RS. 4369704/- NEEDS DEDUCTION OF RS. 1439800/-, RS. 134 940/- AND RS. 9486761- THUS LEAVING BALANCE RS. 1846288/- WHEREON NP RATE MAY BE ESTIMATED AT REASONABLE RATE OF 8% BEING AT PAR TO SEC.44AD, WHICH SHALL GROSS UP SALES TO RS. 1993991/- AND NP THEREON TO RS. 159519/-. I THEREFORE SUBMIT ADDITION MAY BE MAINTA INED AT RS. 1595191- WITH RELIEF AT RS. 4830195/-. COPY OF LETT ER DATED 26.05.2010 OF THE LEARNED ITO, COPY OF 3CD OF MY AU DITORS REPORT PAGE 48 & 49 OF THE IMPOUNDED ANNEXURE 20 ARE ENCLO SE JF BY VIDE ANNEXURE F-L TO F-3 TO THIS LETTER.' 4.4 THE LD CIT(A) ACCEPTED THE SUBMISSION PARTLY A ND DECIDED AS UNDER:- AS EXPLAINED BY APPELLANT, PURCHASES OF RS.1439800 /- ARE MADE BY HIM FROM M/S SWASTIK STONE CRUSHER (CONCERN OF SHRI RITESH SOMANI, SON OF APPELLANT). PURCHASES OF RS.1 34940/- ARE FROM CHOUDHARY CRUSHERS, WHICH IS ALSO CONFIRMED BY THE OTHER PARTY. THESE PURCHASES ARE RECORDED IN REGULAR BOOK S OF APPELLANT. MOREOVER PURCHASES OF RS.948676/- AS PER ANNEXURE A -20 ARE INCLUDED IN PURCHASES OF RS.3173477/- RECORDED IN A NNEXURE A-10. AFTER EXCLUDING THESE THREE FIGURES OF PURCHASES FR OM THE TOTAL OF RS.4369704/- THE REMAINING PURCHASES ARE OF RS.1846 288/- (4369704 - 134940 - 1439800 - 948676). IT WILL BE F AIR AND REASONABLE TO ESTIMATE PROFIT @ 10% ON THIS AMOUNT OF RS.1846288/-. THIS GIVES FIGURE OF RS.184629/-. AO IS DIRECTED TO RESTRICT ADDITION UNDER THIS HEAD TO RS.184629/- AS AGAINST RS.4989714/- MADE BY HIM. GROUND NO. 4(I) IS THUS P ARTLY ALLOWED. 4.5 BOTH ASSESSEE AND DEPTT. ARE IN APPEAL BEFORE U S. 4.6 THE CONTENTION OF THE DEPTT. IS IN RELATION TO RELIEF OF RS.4805085/- (4989714- 184629) WHILE THE ASSESSEES CONTENTION IS IN RELA TION TO APPLICATION OF RATE OF 10% AS AGAINST 5.14% DISCLOSED RATE. THE ASSESSEE REQUEST THAT SO FAR AS REDUCTION OF PURCHASES 13 FROM RS. 4369704/- TO RS. 1846288/- IS CONCERN THER E IN NO CASE OF DEPTT. BECAUSE THIS IS PURCHASES WHICH IS EITHER DULY INCORPORATED OR IT I S ALREADY APPEARING IN ACCOUNTS WHICH IS VERIFIABLE FROM THE RECORDS LYING WITH LEARNED AO. THE ASSESSEE ALSO SUBMIT THAT DEPTT. HAS NOT AGITATED IT IN REMAND LETTER ALSO. IN VIEW OF THIS FACT IT IS SIMPLY A CASE OF APPLICATION OF PROFIT RATE ON BALANCE PURCHASES OF RS.1846288/- AND THEREFORE DEPTTS APPEAL DESERVE TO BE DISMISSED. THERE ARE PLETHORA OF JUDGMENTS WHEREIN THIS HONBLE BENCH HAS HELD THAT IN CASE OF UNDISCLOSED SALES DI SCLOSED PROFIT RATE SHOULD BE APPLIED. IN VIEW OF THIS FACTUAL AND LEGAL POSITION, THE ASSESS EE REQUESTED TO DIRECT AO TO APPLY THE DISCLOSED RATE ON UNVERIFIABLE PURCHASE OF RS.18462 88/-. 4.7 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ERS OF THE AO. 4.8 WE HAVE HEARD BOTH THE PARTIES. IN THE CASES OF RITESH SOMANI AND SMT. MEENA SOMANI, WE HAVE HELD THAT PROFIT IS TO BE ADDED TO THE INCOME IN RESPECT OF UNDISCLOSED SALES. FOLLOWING OUR FINDINGS IN THE CASE OF SHRI R ITESH SOMANI AND SMT. MEENA SOMANI, WE HOLD THAT PROFIT IS TO BE APPLIED ON UNDISCLOSED SALES. ON THE UNDISCLOSED SALES INCLUDING TRANSPORTATION RECEIPTS, WE HELD NET PROF IT RATE OF 6%. IT WILL BE FAIR AND REASONABLE IF NET PROFIT RATE OF 8% IS APPLIED ON T HE UNDISCLOSED SALES BECAUSE SOME OF THE EXPENSES IN RESPECT OF SUCH SALES STANDS INCLUDED IN THE UNDISCLOSED SALES. HENCE, GROUND OF APPEAL 3(I) OF THE ASSESSEE IS PARTY ALLOWED WHI LE GROUND OF APPEAL 1 OF THE REVENUE IS DISMISSED. SUCH RATE IS TO BE APPLIED FOR OTHER YEA RS ALSO. 5.1 THE GROUND OF APPEAL NO.3(II) OF THE ASSESSEE AND GROUND OF APPEAL NO.(II) OF THE DEPTT. READ AS UNDER:- GOA NO.3(II) OF THE ASSESSEE 14 THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN CONFIRMING ESTIMATION OF LIME STONE SALES MADE BY LEARNED AO UNSCIENTIFICALLY AT RS. 2710000/ - AND APPLYING NP RATE OF 7.5% THEREON AS AGAINST NORMAL RATE APPL IED IN OTHER COMPARABLE CASES . GOA NO.(II) OF DEPTT .- THE LEARNED CIT(A) ERRED IN DELETING ADDITION OF LIME STONE BUSINESS AT RS.2506750/- 5.2 THE AO ON THE BASIS OF ROYALTY PAYMENT OF RS.1 232000/- IN RESPECT OF MINE ML- 280/97 ESTIMATED SALES OF RS.2710000/-. 5.3 DURING THE APPEAL PROCEEDINGS ASSESSEE SUBMITTE D AS UNDER:- BASED ON THE INFORMATION ANNEXURE 28 THAT DURING F. Y. 2003-04 I HAVE PAID ROYALTY OF RS. 1232000/- FOR MY LIME STONE MINE AND PRESUMING THAT MY ROYALTY PAYME NT IS RS.40/- PER M.TON AND ALSO PRESUMING THAT THE SALE PRICE OF LIME STONE IS RS. 88/- PER M.TON THE LEARNED AO WOR KED OUT MY LIME STONE PRODUCTION AT 30800 TONS AND SALES AT RS. 2710000/- RESPECTIVELY. HE DID NOT APPRECIATE THIS FACT THAT IN SAME ANNEXURE PRODUCTION IS APPEARING AT 4070.66 M.TONS AND IF THE LEARNED AO HAS TO WORKED OUT SALE S AND THAT TOO @ 88/- PER M.TON HE SHOULD HAVE WORKED OUT IT FOR 4070.66 TONS ONLY WHICH SHALL BRING SALES PRICE TO RS. 358218/- 1 SUBMIT IF THE LEARNED AO IS TAKEN ONE IN FORMATION OF ANNEXURE HE HAS TO ACCEPT ANOTHER INFORMATION TH EREFORE LEARNED AO SHOULD HAVE TAKEN PRODUCTION AT 4070.66 TONS ONLY. THOUGH I DENY PRODUCTION OF 4070.66 TONS ALSO BUT AGAIN TO PURCHASE PEACE IF IT IS ACCEPTED AND EVEN ITS SALE PRICE IS TAKEN AT RS. 358218/-1 SUBMIT IT SHOULD BE TAXED ON REASONABLE NP RATE OF 5%, AT PAR TO SEC.44AF, WHICH SHALL BRING ADDITION TO RS. 179111- WITH RELIEF OF RS. 26 92089/-. 5.4 THE LD CIT(A) DECIDED ISSUE AS UNDER:- AO HAS ESTIMATED THE ENTIRE RECEIPTS OF APPELLANT AS INCOME WHICH IS NOT JUSTIFIED. EVEN IN THE ABSENCE OF REGULAR BOOKS OF ACCOUNTS, INCOME HAS TO BE ESTIMATED IN A REASON ABLE MANNER. IT WILL BE FAIR AND REASONABLE TO APPLY N.P. RATE OF 7 .5% ON TOTAL SALES OF RS.2710000/- ESTIMATED BY AO. THIS WILL GI VE FIGURE OF RS. 203250/-. THUS ADDITION UNDER THIS HEAD RESTRICTED TO RS.203250/- 15 AS AGAINST RS. 2710000/- MADE BY AO. GROUND NO. 4(I I) IS THUS PARTLY ALLOWED. 5.5 THE DEPTT IS IN APPEAL IN RELATION TO RELIEF OF RS.2506750/- (2710000-203250) AND ASSESSEE IS IN APPEAL BEFORE US FOR APPLICATION OF NORMAL NP RATE OF 5% IN THIS LINE OF BUSINESS ON UNDISCLOSED SALES RS.2710000/-. THE ASS ESSEE SUBMITTED THAT THE APPEAL OF DEPTT.IS NOT MAINTAINABLE BECAUSE AO HAS ESTIMATED 100% PROFIT ON UNDISCLOSED SALES WHICH IS UNJUDICIOUS BECAUSE WHILE ESTIMATING PROFI T ON UNDISCLOSED SALES AOS APPROACH SHOULD BE HONEST AND REASONABLE. THE ASSES SEE THEREFORE SUBMITTED THAT DEPARTMENTAL APPEAL ON THIS GROUND DESERVES TO BE D ISMISSED. SO FAR AS ASSESSESS GROUND OF APPEAL IS CONCERNED, THE ASSESSEE SUBMITTED THA T IN THE CASE OF SMT. MEENA SOMANI IN THE SIMILAR CIRCUMSTANCES THE HONBLE CIT(A) HAS AP PLIED 5% RATE ON UNDISCLOSED GITTI SALES. IGNORING THE ASSESSEE'S EARLIER SUBMISSION AND IN ORDER TO PURCHASES PEACE, THE ASSESSEE SUBMITTED THAT THE SAME RATE OF 5% BE APP LIED IN HIS CASE ALSO. 5.6 WE HAVE HEARD BOTH THE PARTIES. THIS ISSUE HAS BEEN DECIDED IN THE CASE OF SMT. MEENA SOMANI AS WELL AS IN SHRI RITESH SOMANI. WE T HEREFORE, HOLD THAT NET PROFIT RATE OF 5% BE APPLIED ON LIME STONE SALES ESTIMATED BY THE AO AT RS. 27.10 LACS. 6.1 THE DEPTT. GROUND OF APPEAL NO.(IV) READS AS UNDER:- THE HONBLE CIT(A) HAS ERRED IN DELETING ADDITION O N ACCOUNT OF ADVANCES AT RS.104284/- 6.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E AO FOUND THAT ADVANCES HAS BEEN GIVEN TO SHRI BHAVSINGH ON 4 OCCASION TOTALING TO RS. 57000/- AND TO MOHAN MEENA ON 7 OCCASIONS TOTALING TO RS.32900/-. HE CALCULATE D INTEREST THERE @ 18% P.A.FOR FULL YEAR AND TAXED BOTH ADVANCE AND INTEREST IN MY HAND S IGNORING MY SUBMISSION THAT IT IS EXPENDITURE IN RELATION TO MY UNDISCLOSED LIME STON E SALES. 16 6.3 DURING APPEAL PROCEEDINGS, THE ASSESSEE SUBMIT TED AS UNDER:- THE LEARNED AO IN PARA 6 OF HIS ORDER HAS DEALT WIT H UNRECORDED ADVANCE OF RS. 89900/- (RS.57000+24400+8 500) - ADVANCES TO BHAV SINGH, MOHAN MEENA AND MOHAN MEENA RESPECTIVELY AND HAS FURTHER MADE ADDITION OF RS. 1 4384/-THEREON AS DEEMED INTEREST @ 18%, THUS MAKING TOTAL ADDITIO NS AT RS. 104284/-. I SUBMIT, THAT THESE ADVANCES WERE TOWARD S LABOUR EXPENSES IN RELATION TO UNDISCLOSED LIME STONE BUSI NESS REFERRED IN GROUND NO. 4(II) (SUPRA). AS NP RATE HAS ALREADY BE EN APPLIED THEREON NEITHER FURTHER DEDUCTION IS ALLOWABLE TO M E NOR ADDITIONS AS MADE BY LEARNED AO ARE CALLED FOR. I THEREFORE S UBMIT THAT ADDITION OF RS. 104284/- BE DELETED. ' 6.4 THE HONBLE CIT(A) DECIDED IT AS UNDER:- IT WAS CLAIMED BY THE APPELLANT THAT ABOVE AMOUNTS WERE LABOUR EXPENSES OF HIS LIME STONE BUSINESS, IN RESPECT OF WHICH ADDITION OF RS. 2710000/- HAS BEEN ALREADY MADE AS PER PARA 4 OF AS SESSMENT ORDER BY AO. EVEN IN HIS REMAND REPORT AO HAS NOT BOTHERED T O EXAMINE THIS CLAIM OF APPELLANT AND MECHANICALLY REPRODUCED OBSERVATIO NS OF THE ORIGINAL ASSESSMENT ORDER. IN THE ABSENCE OF ANY SPECIFIC MA TERIAL BEING BROUGHT ON RECORD, THESE ADVANCES ARE CONSIDERED AS PART OF RE GULAR BUSINESS OF APPELLANT. ADDITION TO THE EXTENT OF RS. 203250/- H AS BEEN ALSO CONFIRMED BY UNDERSIGNED IN RESPECT OF UNRECORDED LIME BUSINE SS OF APPELLANT AS PER GROUND NO. 4(II) OF THIS APPEAL. I THEREFORE HOLD THAT SEPARATE ADDITION OF RS.104284/- IS NOT JUSTIFIED AND THE SAME IS DIRECT ED TO BE DELETED. GROUND NO. 4(IV) IS THUS ALLOWED. 6.5 BEING AGGRIEVED DEPTT IS IN APPEAL. THE ASSESSE E SUBMITTED THAT THESE TWO PERSONS ARE LABOUR CONTRACTORS ENGAGED FOR LIME STONE MINES JHARAI TO WHOM PAYMENT OF RS. 89900/- IS MADE ON 11 OCCASIONS. AS UNRECORDED LIME STONE BUSINESS INCOME HAS BEEN TAXED SEPARATELY, HENCE THIS ADDITION IS UNCALLED F OR. IT IS THEREFORE SUBMITTED BY THE ASSESSEE THAT THIS GROUND OF APPEAL OF DEPTT. BE DI SMISSED. 6.6 AFTER HEARING BOTH THE PARTIES, WE FEEL THAT THE LD . CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION ON ACCOUNT OF ADVANCE OF RS. 1,04,284/- 7.1 THE GROUND OF APPEAL NO.(V) OF DEPTT. READS AS UNDER:- 17 THE LEARNED CIT(A) ERRED IN DELETING ADDITION ON ACCOUNT OF UNRECORDED ADVANCES AT RS. 320000/-. 7.2 DURING HEARING OF THE GROUP CASE, IT WAS ARGUE D BY THE ASSESSEE THAT IN ANNEXURE- 24 CONTAINS FINANCIAL ACTIVITIES OF SMT.MEENA SOMAN I FROM ASSESSMENT YEAR 2002-03 TO 2009-10 WERE APPEARING. IT WAS ALSO SUBMITTED BY TH E ASSESSEE THAT ORIGIN OF THE ANNEXURE- 24 IS ASSESSMENT YEAR 2002-03. THE ASSESSEE SUBM ITTED THAT ACTION U/S 148 IN THIS GROUP WAS TAKEN AS UNDER:- SHRI BABULAL SOMANI ASS.YEAR 2004-05 TO 2007-08 SMT.MEENA SOMANI ASS.YEAR 2002-03 TO 2005-06 RITESH KUMAR SOMANI ASS.YEAR 2003-04 TO 2007-08 AS IN ANNEXURE-24 ENTRIES ARE FROM ASS. YEAR 2002-0 3 AND AS NOTICE U/S 148 FOR ASS.YEAR 2002-03 WAS ISSUED TO SMT.MEENA SOMANI ONLY, THE AS SESSEE SUBMITTED THAT THE THEN AO WAS PERHAPS VERY CLEAR THAT ANNEXURE-24 BELONGS TO HER ONLY. THE ADDITIONS IN RELATION TO ANNEXURE-24 WERE MADE IN ASS.YEAR 2002-03 & 2003-04 IN SMT.MEENA SOMANI. ADDITIONS FOR AMOUNT ADVANCED AND ADHOC INTEREST @ 18% FOR FU LL YEAR WERE MADE FROM ASS.YEAR 2003-04 TO 2008-09 IN CASE OF RITESH KUMAR SOMANI O N SUBSTANTIVE BASIS AND SAME WERE REPEATED FOR AMOUNT ADVANCED ONLY IN ASS.YEAR 2004- 05 TO 2008-09 IN HIS HANDS ON PROTECTIVE BASIS. INSTALLMENT REALIZABLE AND INTERE ST RECEIVED WERE AGAIN TAXED IN HIS HANDS FOR ASS.YEAR 2004-05 TO 2008-09 ON SUBSTANTIVE BASI S AND FOR ASS.YEAR 2004-05 & 2005-06 IN SMT.MEENA SOMANI ON PROTECTIVE BASIS. AS SMT.MEE NA SOMANI HAD NOT RECEIVED ANY NOTICE U/S SEC.148 FOR ASS.YEAR 2006-07 & 2007-08 A ND DID NOT FILE HER RETURN OF INCOME FOR THESE 2 YEARS, NO ADDITIONS WERE MADE IN HER HA NDS IN THOSE YEARS. NOTICE U/S 148 WAS NOT GIVEN TO SMT.MEENA SOMANI FOR ASS.YEAR 2006-07 & 2007-08 AFTER COMPLETION OF ASSESSMENTS IN THESE TWO YEARS IN MY CASE. IN ASS.Y EAR 2008-09 SMT.MEENA SOMANI HAD 18 FILED ROI WHICH WAS SUBJECT TO SCRUTINY. DURING ASS ESSMENT PROCEEDINGS LEARNED AO EXAMINED BOOKS OF ACCOUNTS VIZ-A-VIZ ANNEXURE-24 A ND AS THE AO DID NOT FIND ANY DEFICIENCY THEREIN AND THE AO DID NOT MAKE ANY ADD ITIONS IN SPITE OF THE FACT THAT IN SAME ASSESSMENT YEAR ADDITIONS WERE MADE IN THE CASE OF THE ASSESSEE. SUCH ASSESSMENT WAS COMPLETED ON 13.12.2010 I.E. AFTER 5 MONTHS OF EARL IER ORDERS. THE STATUS OF ADDITIONS MADE BY AO AND RELIEF BY LD CIT(A) EITHER WITH DIRECTIO N OR WITHOUT DIRECTION IN DIFFERENT YEARS IN DIFFERENT HAND ARE AVAILABLE AT PAPER BOOK PAGES 235 TO 240. 7.3 DURING APPEAL HEARING IN RELATION TO ADDITION OF RS .320000/- ON SUBSTANTIVE BASIS, THE ASSESSEE SUBMITTED TO THE LD CIT(A) AS UNDER:- ON THE BASIS OF ANNEXURE 24 THE LEARNED AO HAS MADE ADDITIONS OF LOANS OF RS. 285000/- AND INTEREST THE REON AT RS. 35000/- THUS TOTALING TO RS. 320000/-. THE LEARNED AO DID NOT APPRECIATE THIS FACT THAT INVESTMENT WAS ALREADY DI SCLOSED BY SMT.MEENA SOMANI IN HER BOOKS OF ACCOUNTS SMT. MEEN A SOMANI DURING ASSESSMENT PROCEEDINGS HAD SUBMITTED THAT AN NEXURE-24 PERTAINS TO HER BUSINESS ACTIVITIES AND MYSELF AND MY SON RITESH SOMANI WERE ALSO TELLING THE SAME THING. THE LEARNE D AO HAS ACCEPTED THE INTEREST RS. 861287- DISCLOSED BY SMT. MEENA SOMANI IN HER ASSESSMENT. ONE INCOME IS TO BE TAXED AT ONE PLACE ONLY. I MAY ALSO SUBMIT THAT WHILE COMPLETING ASSESSMENT U/ S 143(3) FOR ASS.YEAR 2008-09 IN CASE OF SMT. MEENA SOMANI THE L EARNED AO HAS ACCEPTED THE RETURNED FIGURES OF LOANS AND INTEREST ON LOANS AND DID NOT MADE ANY ADDITIONS LIKE EARLIER YEARS. COPY OF ORDER IS ENCLOSED VIDE ANNEXURE-H TO THIS LETTER. IN VIEW OF THESE FA CTS I SUBMIT ADDITIONS IN MY HANDS ARE UNCALLED FOR AND IT MAY B E DELETED. ' 7.4 THE LD CIT(A) ALSO VERIFIED THESE ADVANCES AND INTEREST FROM SMT.MEENA SOMANIS RECORDS AND HE DELETED THE ADDITION WITH FOLLOWING OBSERVATIONS- FROM THE PERUSAL OF RECORDS IT IS FOUND THAT IT WA S CLAIMED BY APPELLANT DURING THE COURSE OF SURVEY PROCEEDING S AS WELL AS ASSESSMENT PROCEEDINGS THAT TRANSACTIONS RECORDED I N ANNEXURE 24 PERTAIN TO SMT. MEENA SOMANI. AO ALSO MADE ADDITION ON THIS ACCOUNT IN THE CASE OF SMT. MEENA SOMANI FOR A.Y. 2 002-03 AND 2003-04. APPELLANT ALSO FURNISHED COPY OF CASH BOOK OF SMT. MEENA SOMANI AND DETAILS OF LOANS AND ADVANCES IN HER CAS E FOR VARIOUS 19 YEARS DURING THE COURSE OF APPELLATE PROCEEDINGS, C OPY OF WHICH WAS ALSO FORWARDED TO AO FOR HIS COMMENTS IN THE CASE O F SMT. MEENA SOMANI. AO HAS NOT POINTED OUT ANY DISCREPANCIES IN THESE DETAILS FURNISHED BY APPELLANT. IN SUCH A SITUATION ADDITIO N OF RS.320000/- IN THE CASE OF APPELLANT FOR THIS YEAR IS NOT JUSTIFIE D AND THE SAME IS DIRECTED TO BE DELETED. GROUND NO. 4(V) IS THUS ALL OWED. 7.5 BEING AGGRIEVED DEPTT.IS IN APPEAL BEFORE US. 7.6 THE LD. DR RELIED UPON THE ORDER OF THE AO. 7.7 THE ASSESSEE SUBMITTED THAT DEPARTMENTAL APPEAL IS NOT TENABLE BECAUSE OF THE FOLLOWING REASONS:- (I) THAT BASE OF ANNEXURE-24 STARTS FROM ASS.YEAR 2 002-03 AND NOTICE U/S 148 FOR ASS.YEAR 2002-03 WAS GIVEN TO SM T.MEENA SOMANI ONLY WHICH MEANS THAT THE THEN AO WAS SATISFIED THAT THI S ANNEXURE CONTAINS HER FINANCIAL ACTIVITIES ONLY. (II) IN RESPONSE TO NOTICE U/S 148 SMT.MEENA SOMANI HAD FILED HER ROI FOR ASS.YEAR 2002-03 TO 2005-06 IN APRIL/MAY 20 09 WHEREIN ALL ENTRIES RELATING TO ANNEXURE-24 IS VERIFIABLE. COPIES OF IM POUNDED PAPERS WERE GIVEN TO HER ON 01.05.2010 I.E. AFTER MORE THAN ONE YEAR OF ROI FILED. (III) NO NOTICE U/S 148 WAS GIVEN TO SMT.MEENA SOM ANI FOR ASS.YEAR 2006-07 & 2007-08. (IV) ASSESSMENT OF SMT.MEENA SOMANI FOR ASS.YEAR 20 08-09 WAS MADE U/S 143(3) AND NO ADDITION ON THIS ISSUE WERE MADE LIKE ASS.YEAR 2002- 03 TO 2005-06. (V) WHEN TOGETHERWITH LETTER DATED 21.12.2010 COPY OF THE CASH BOOK AND LEDGER ACCOUNTS OF PARTIES WERE FILED DURI NG APPEAL PROCEEDINGS OF SMT.MEENA SOMANI BEFORE THE HONBLE CIT(A) AND HON BLE CIT(A) FORWARDED A COPY OF THE SAME TO LEARNED AO HE MADE NO COMMENTS ON THIS ISSUE IN HIS REMAND REPORT (VI) THE HONBLE CIT(A) HAD ALSO VERIFIED CASH BOOK AND LEDGER ACCOUNTS DURING APPEAL PROCEEDINGS OF SMT.MEENA SOM ANI AND FOUND IT MATCHING WITH ANNEXURE 24. . (VII) MATTER IN RELATION TO ASS.YEAR 2004-05 TO 200 8-09 IN CASE OF MYSELF, RITESH KUMAR SOMANI AND SMT.MEENA SOMANI FO R LIMITED PURPOSE I.E. VERIFICATION OF CASH BOOK OF SMT.MEENA SOMANI VIZ-A-VIZ ANNEXURE-24 20 WAS REMITTED BACK TO LEARNED AO BY HONBLE CIT(A). THE LEARNED AO VERIFIED ALL ENTRIES FROM ASS.YEAR 2002-03 TO 2008- 09 AND DID NOT FOUND ANY WRONG THEREIN (PB 241 TO 250). 7.8 IN VIEW OF AFORESAID FACTS, THE ASSESSEE SUBMIT TED THAT ORDER OF LD CIT(A) DOES NOT CALL FOR ANY INTERFERENCE AND THIS GROUND OF APPEAL OF DEPTT. BE DISMISSED. 7.9 WE HAVE HEARD BOTH THE PARTIES. THIS ISSUE HAS BEEN CONSIDERED IN THE CASE OF SMT. MEENA SOMANI AND SHRI RITESH SOMANI. IN THAT CASES, WE HAVE CONFIRMED THE FINDINGS OF THE LD. CIT(A). FOLLOWING OUR FINDINGS, WE HOLD THA T THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION ON ACCOUNT OF UNRECORDED ADV ANCE OF RS. 3.20 LACS. 8.1 THE GROUND OF APPEAL NO.(VI) OF DEPTT. READS A S UNDER:- T HE LEARNED CIT(A) HAS ERRED IN DELETING ADDITION ON ACCOUNT OF PROTECTIVE INVESTMENT AT RS. 300000/-. 8.2 THE FACTS ARE SIMILAR TO THE FACTS AS PER GROUN D OF APPEAL NO. (V) OF DEPARTMENT AND SUBMISSIONS OF THE ASSESSEE ARE ALSO THE SAME. 8.3 THE HONBLE CIT(A) ALSO VERIFIED IT FROM SMT.ME ENA SOMANIS RECORDS AND HE DELETED THE ADDITION WITH FOLLOWING OBSERVATIONS- AS MENTIONED EARLIER, TRANSACTIONS RECORDED IN ANN EXURE-24 WERE CLAIMED TO BE BELONGING TO SMT.MEENA SOMANI. AO IS DIRECTED TO EXAMINE WHETHER THIS AMOUNT OF RS.300000/- IS VERIFIABLE FROM THE BOOKS OF SMT. MEENA SOMANI FOR A.Y. 2004-05 OR NOT. IF THE AMOUNT IS VERIFIABLE, AO IS DIRECTED TO DELETE THE ADDITION IN THIS CASE. IF THE AMOUNT IS NOT VERIFIABLE, AO IS D IRECTED TO TAKE SUITABLE ACTION IN THE CASE OF SMT. MEENA SOMANI FOR A.Y. 2004-05. GROUND NO. 4(VI) IS THUS PARTLY ALLOWED. 8.4 BEING AGGRIEVED, THE DEPTT. IS IN APPEAL BEFOR E US. 8.5 WE HAVE HEARD BOTH THE PARTIES. THE ABOVE REFER RED ISSUE STANDS CONCLUDED IN THE CASE OF SMT. MEENA SOMANI AND SHRI RITESH SOMANI. I N THAT CASE, WE HAVE CONFIRMED THE FINDINGS OF THE LD. CIT(A). FOLLOWING THAT FINDING , WE HOLD THAT THE LD. CIT(A) WAS 21 JUSTIFIED IN DELETING THE PROTECTIVE ADDITION.. 9.1 THE GROUND OF APPEAL NO.(VII), (VIII) & (IX) OF DEPTT. READS AS UNDER:- (VII) T HE LEARNED CIT(A) ERRED IN RESTRICTING ADDITION ON ACCOUNT OF DISALLOWANCES OF TELEPHONE EXPENSES AT RS.5000/-. (VIII) T HE LEARNED CIT(A) ERRED IN DELETING ADDITION ON ACC OUNT OF DISALLOWANCES OF DEPRECIATION ON VEHICLES AT RS.199 62/-. (IX) T HE LEARNED CIT(A) ERRED IN RESTRICTING ADDITION ON ACCOUNT OF DISALLOWANCES OF VEHICLE EXPENSES AT RS.20000/-. 9.2 IN AUDITED P&L A/C ATTACHED WITH RETURN OF INCO ME, THE ASSESSEE CLAIMED TELEPHONE EXPENSES OF RS.55152/-, VEHICLE EXPENSES OF RS.289113/- AND DEPRECIATION ON VEHICLE AT RS.133083/-. THE AO MADE DISALLOWANCE O F RS.11030/- OUT OF TELEPHONE EXPENSES, RS. 43370/- OUT OF VEHICLE EXPENSES AND R S.19962/- OUT OF DEPRECIATION FOR ELEMENT OF PERSONAL USE. 9.3 DURING HEARING OF APPEAL, THE ASSESSEE SUBMITTED A S UNDER:- 'THE LEARNED AO HAS DISALLOWED 20% OF TELEPHONE EXP ENSE, 15% OF VEHICLE EXPENSES (WHICH IS FOR 1 SCOOTER, 1 CAR AND 1 TATA SPADO) AND ALSO 15% OF DEPRECIATION ON CAR, SCOOTER AND TATA S PADO. I SUBMIT PERSONAL USE OF CAR AND TELEPHONE IS NOT DENIED BUT CONSIDERING MY NATURE OF BUSINESS DISALLOWANCE FROM TELEPHONE EXPENSES, B E RESTRICTED TO 10% AND DISALLOWANCE FROM VEHICLE EXPENSES BE RESTRICTE D FOR ONE CAR SAY RS. 1000/-P.M. SO FAR AS DEPREDATION IS CONCERN IT IS F ULLY ALLOWABLE ONE AND DISALLOWANCE THEREFROM IS UNCALLED FOR. RELIANCE IN THIS REGARD IS MADE ON MUKESH K.SHAH VS. ITO 92 TTJ1060 (MUMBAI) ' 9.4 THE LD CIT(A) DECIDED ISSUE AS UNDER:- IT HAS BEEN HELD BY VARIOUS JUDICIAL AUTHORITIES T HAT DEPRECIATION IS A STATUTORY ALLOWANCE OUT OF WHICH NO DISALLOWANCE IS JUSTIFIED FOR ELEMENT OF PERSONAL USE. THE .DISALLO WANCE OF RS.19962/-OUT OF DEPRECIATION IS DIRECTED TO BE DELETED. THE VERY NATURE OF TELEPHONE EXPENSES AND VEHICLE EXPENSES ARE SUCH THAT ELEMENT OF PERSONAL USE IS INVARIABLY PRE SENT. HOWEVER THE DISALLOWANCE MADE BY AO IS ON THE HIGHER SIDE. AO I S DIRECTED TO RESTRICT DISALLOWANCE OUT OF TELEPHONE EXPENSE TO RS.5000/- AND DISALLOWANCE OUT OF VEHICLE EXPENSES TO RS.20000/-. GROUND NO.5 IS T HUS PARTLY ALLOWED. 9.5 BEING AGGRIEVED, THE DEPTT.IS IN APPEAL BEFOR E US 22 9.6 THE LD. DR RELIED UPON THE ORDER OF THE AO.. 9.7 THE ASSESSEE SUBMITTED THAT LD CIT(A) HAS DELET ED DISALLOWANCE OF DEPRECIATION WHICH IS BASED ON DECISION OF THIS HONBLE BENCH IN CASE OF ITO VS. AWADESH KATTA (2010) XLVI TAXWORLD 85 (JP). THE ASSESSEE THEREFOR E SUBMITTED THAT THERE IS NO CASE OF DEPTT IN RELATION TO GROUND NO.(VIII) SO FAR AS OT HER 2 GROUNDS ARE CONCERNED THE LD CIT(A) HAS GIVEN RELIEF TAKING DISALLOWANCE FROM TE LEPHONE EXPENSES AT RS. 400/- PER MONTH AND ON CAR MAINTENANCE AT RS.1600/- PER MONTH ON ACCOUNT OF PERSONAL USE. THE ASSESSEE IS OF 70 YEARS OF AGE AND HAS SMALL FAMILY WITH ONLY ONE SON. IN VIEW OF THIS FACT DISALLOWANCE CONFIRMED BY LD CIT(A) BEING VERY REAS ONABLE DEPARTMENT APPEAL DESERVE TO BE DISMISSED. 9.8 WE HAVE HEARD BOTH THE PARTIES. THE PERSONAL US E OF TELEPHONE AND VEHICLES CANNOT BE RULED OUT. SECTION 38(2) PERMITS THE REVE NUE AUTHORITIES TO DISALLOW DEPRECIATION ON AN ASSET WHICH IS NOT WHOLLY USED F OR THE PURPOSE OF THE BUSINESS. THE DISALLOWANCE CONFIRMED BY THE LD. CIT(A) ON ACCOUN T OF TELEPHONE EXPENSES IS REASONABLE. IN RESPECT OF DISALLOWANCE OF DEPRECIA TION ON VEHICLES, WE HOLD THAT IT WILL BE FAIR AND REASONABLE TO DISALLOW 1/8 TH OF THE DEPRECIATION ON VEHICLE I.E. CAR. THE DISALLOWANCE OF VEHICLE EXPENSES RESTRICTED TO RS. 20,000/- BY THE LD. CIT(A) IS IN ORDER. ASSESSMENT YEAR 2005-06 10.1 THE GOA NO.2(I) OF THE ASSESSEE AND GOA NO.4 OF THE DEPTT. READS AS UNDER:- GOA NO.2(I) OF THE ASSESSEE THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN APPLYING NP RATE OF 10% ON UNDISCLO SED SALES RS.1315065/- AS AGAINST 3.29% DISCLOSED BY THE APPELLANT AS PER TRADING ACCOUNT APPENDED WITH ORIGINAL ROI FILED. GOA NO.4 OF DEPTT .- 23 THE LEARNED CIT(A) ERRED IN DELETING ADDITION OF UNRECORDED BUSINESS AT RS.2067960/- 10.2 WE HAVE HEARD BOTH THE PARTIES. THESE ISSUES H AVE BEEN DECIDED BY US WHILE DISPOSING OFF THE APPEAL OF THE ASSESSEE FOR THE AS SESSMENT YEAR 2004-05. ACCORDINGLY GROUND NO. 2(I) OF THE ASSESSEE IS PARTY ALLOWED AN D THE GROUND OF APPEAL 4 OF THE REVENUE IS DISMISSED. 11.1 THE GROUND OF APPEAL NO. 1 OF THE DEPTT. READ S AS UNDER:- THE LEARNED CIT(A) ERRED IN DELETING ADDITION ON A CCOUNT OF CONTRACT PAYMENT WITHOUT DEDUCTING TDS AT RS. 530714/- 11.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS TH E AO FOUND THAT THE ASSESSEE HAS MADE CONTRACT PAYMENT TO TRANSPORTERS OF RS. 530714 /- WITHOUT DEDUCTING TDS U/S 194C AND THEREFORE THE AO MADE ADDITION OF RS.530714/-. 11.3 DURING THE COURSE OF APPEAL, THE ASSESSEE SUB MITTED AS UNDER:- IN THIS REGARD WE SUBMIT THAT ADDITIONS FOR NOT DE DUCTING TDS IS NOT MAINTAINABLE BECAUSE (A) IT IS BASED ON UNACCOUNTED BUSINESS WHEREIN PROVISION OF SEC.194 ARE NOT APPLICABLE (B), THE LEARNED AO F AILED TO APPRECIATE THIS FACT THAT PROVISION OF SEC. 194 ARE APPLICABLE ONLY WHEN WRITTEN /VERBAL CONTRACT IS THERE WHICH BEING NOT IN EXISTENCE IN THIS CASE PRO VISIONS ARE NOT APPLICABLE AND (C) AS IN CASE OF REGULAR BOOKS ALSO ONCE BOOKS ARE REJECTED WHETHER SPECIFICALLY OR IMPLIEDLY NP RATE IS TO BE APPLIED AND PROVISION OF SEC.194 READ WITH SEC.40A(I)(A), ARE NOT APPLICABLE. RELIANCE IN THIS REGARD IS MADE ON CHOUDHARY & BROS.VS.ITO (2011) 135 TTJ 55 (JP) (UO). WE THERE FORE REQUEST YOUR HONOUR TO DELETE THE ADDITION. 11.4 THE LD CIT(A) DECIDED THIS ISSUE VIDE PARA 5.3 OF HIS ORDER WHICH READS AS UNDER:- AS MENTIONED BY AO HIMSELF IN THE ASSESSMENT ORDER , FREIGHT EXPENSES OF RS.530714/- IN RESPECT OF UNACCOUNTED BUSINESS O F APPELLANT. THESE EXPENSES HAVE NOT BEEN CLAIMED BY THE APPELLANT IN HIS BOOKS OF ACCOUNTS AND THEREFORE THE SAME CANNOT BE DISALLOWED. EVEN OTHERWISE BOOKS OF ACCOUNTS OF APPELLANT HAVE BEEN REJECTED BY AO AND INCOME HAS BEEN ESTIMA TED BY APPLYING PROFIT RATE. IN SUCH A SITUATION ALSO, NO FURTHER DISALLOWANCE I S JUSTIFIED U/S 40(A)(IA). ADDITION OF RS.530714/- IS DIRECTED TO BE DELETED. GROUND NO. 5(I) IS THUS ALLOWED. 24 11.5 BEING AGGRIEVED DEPTT.IS IN APPEAL BEFORE US. 11.6 THE LD. DR RELIED UPON THE ORDER OF THE AO 11.7 THE ASSESSEE IN THIS REGARD SUBMITTED AS UNDER :- (I) THE AO HAS MADE ADDITION U/S 194C. IN MY CASE PROVISIONS OF SEC.194C ARE NOT ATTRACTED. (II) IN MY CASE NO WRITTEN OR VERBAL CONTRACT IS FO UND BY LEARNED AO AND THEREFORE PROVISIONS OF 194C ARE NOT ATTRACTED. (III) AS THERE ARE SEVERAL DEFECTS IN MY BOOKS, WHI CH IS EVIDENT FROM ORDER OF THE LEARNED AO ALSO, MY ACCOUNTS ARE REJEC TED BY IMPLICATION. RELIANCE IN THIS REGARD IS MADE ON CHOUDHARY & BROS . VS.ITO (2011) XLV TW 98 (JP). IF BOOKS ARE REJECTED MY INCOME IS COMPUTED U/S 28 AND THEREFORE DEDUCTION OF EXPENSES FROM SEC.30 TO 38 B EING NOT ALLOWABLE PROVISIONS OF SEC.40(A)(IA) ARE NOT ATTRACTED. 11.8 WE HAVE HEARD BOTH THE PARTIES. THE ASSESSEE H AS ENGAGED THE TRANSPORTER FROM THE MARKET AND THERE HAS BEEN NO MATERIAL ON RECORD TO SUGGEST THAT PAYMENTS HAVE BEEN ON THE BASIS OF CERTAIN CONTRACT. THEREFORE, THE LD. C IT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 5,30,714/- 12.1 GROUND NO. 2 OF THE DEPARTMENT IS THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF FREIGHT / CONTRACT PAYMENT W ITHOUT DEDUCTING TDS AT RS. 21,646/-. 12.2 WE HAVE HEARD BOTH THE PARTIES. OUR FINDING IS THE SAME AS GIVEN AGAINST GROUND NO. 1 OF THE DEPARTMENT. WE THEREFORE, HOLD THAT TH E LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. 13.1 THE GOA NO.2(III) OF THE ASSESSEE AND GOA NO.6 OF THE DEPTT. READS AS UNDER:- GOA NO.2(III) OF THE ASSESSEE THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN APPLYING NP RATE OF 10% ON DISCLOSED SALES RS. 5471 468/- AS AGAINST DISCLOSED NP RATE AS PER TRADING A/C ATTACHED WITH ORIGINAL ROI AT 3.29% WHEREIN NO DEFECT WAS 25 FIND OUT BY THE LEARNED AO . GOA NO.6 OF DEPTT.- THE LEARNED CIT(A) ERRED IN DELETING ADDITION ON A CCOUNT OF UNRECORDED TRANSPORTATION RECEIPTS OF RS.542683/- 13.2 WE HAVE HEARD BOTH THE PARTIES. BOTH THESE GRO UNDS OF APPEAL HAVE BEEN CONSIDERED WILE DISPOSING OF THE APPEAL FOR THE ASS ESSMENT YEAR 2004-05. FOLLOWING OUR FINDINGS FOR THE ASSESSMENT YEAR 2004-05, THE GROUN D OF APPEAL NO. 2(III) OF THE ASSESSEE IS PARTLY ALLOWED WHILE THE GROUND OF APPEAL NO. 6 OF THE REVENUE IS DISMISSED. 14.1 THE GOA NO.2(II) OF THE ASSESSEE AND GOA NO.5 OF TH E DEPTT. READS AS UNDER:- GOA NO.2(II) OF THE ASSESSEE THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN CONFIRMING ESTIMATION OF LIME STONE SALES MADE BY LEARNED AO UNSCIENTIFICALLY AT RS. 1122000/- AND APPLYING N P RATE OF 7.5% THEREON AS AGAINST NORMAL RATE APPLIED IN OTHER COMPARABLE CASES . GOA NO.5 OF DEPTT .- THE LEARNED CIT(A) ERRED IN DELETING ADDITION OF UNRECORDED LIME STONE BUSINESS AT RS.1037850/- 14.2 WE HAVE HEARD BOTH THE PARTIES. THESE ISSUES H AVE BEEN DECIDED BY US WHILE DISPOSING OF THE APPEAL OF THE ASSESSEE FOR THE ASS ESSMENT YEAR 2004-05. WE HAVE DIRECTED TO APPLY NET PROFIT RATE OF 5%. ACCORDINGL Y THE GROUND OF APPEAL NO 2(II) OF THE ASSESSEE IS PARTLY ALLOWED AND GROUND OF APPEAL NO. 5 OF THE DEPARTMENT IS DISMISSED. 15.1 THE GROUND OF APPEAL NO. 3 OF THE DEPTT. READ S AS UNDER:- THE LEARNED CIT(A) ERRED IN DELETING ADDITION ON ACCOUNT OF UNRECORDED PAYMENT AT RS. 626524/- 26 15.2 THE AO HAS DEALT THESE ADDITION IN PARA 5 OF ASSESSMENT ORDER WHICH HAS BEEN REPRODUCED BY HONBLE CIT(A) IN HIS ORDER AND WHICH READS AS UNDER:- IN PARA 4 OF QUESTIONNAIRE IT IS ASKED TO THE ASSES SEE TO EXPLAIN THE PAYMENT MADE TO SHRI ALLANUR OF RS. 778724/-, IN HIS REPLY THE ASSESSEE HAS EXPLAIN THAT THE AMOUNT IS STRUCK OF B EFORE SURVEY AS THE A/C DID NOT EXIST. HOWEVER, IT IS ALSO STATED BY THE AS SESSEE THAT HE HAS PAID AMOUNT FOR DIESEL TO VARIOUS PETROL PUMPS. THE ABOV E CONTENTS OF THE ASSESSEE ARE NOT ACCEPTABLE AS ON THE PERUSAL OF TH E NATURE OF THE PAYMENT IT LOOKED THE PAYMENT OF TRANSPORTATION. IN VIEW OF ABOVE IT IS CLEAR THE ASSESSEE HAS VIOLATED THE PROVISIONS UNDE R SECTION 194 OF THE I. T. ACT, 1961. HENCE, AN ADDITION OF RS. 626524/- IS MADE IN THE TOTAL INCOME OF THE ASSESSEE.' 15.3 DURING THE COURSE OF APPEAL PROCEEDINGS, THE A SSESSEE SUBMITTED IN THIS REGARD AS UNDER:- 'DURING THE COURSE OF AUDIT THE LEARNED SPECIAL AUD ITORS FOUND THAT IN OUR BOOKS OF ACCOUNTS THERE IS ONE ACCOUNT OF SHRI ALANOOR WHICH WAS STRUCK BEFORE SURVEY WHEREIN PAYMENT OF RS. 778 7241- IN DIFFERENT DATES WERE APPEARING AND FROM THIS ACCOUNT RS. 6265 241- WERE TRANSFERRED TO DIFFERENT ACCOUNTS AND RS. 152200/- TO ALLANOOR 'S ACCOUNT. DETAILS OF TRANSFERRED AMOUNT RS. 626524/- ARE GIVE N BY SPECIAL AUDITORS IN PARA 4 OF THE ANNEXURE TO THEIR REPORT, DETAILED AS UNDER :- S.NO. ACCOUNT NAME L.F. FREIGHT (RS.) 1 RJ-20, G-2190 135 47930 2 SADDIQUE 137 47320 3 RASID 139 36610 4 4482 140 26253 5 HAKIM 141 39158 6 8557 142 48066 7 ALLANOOR 143 46985 8 3050 144 46707 9 3335 145 46949 10 3357 147 43636 11 6253 187 31968 12 GANESH 190 43880 13 TULSIRAM 195 47996 14 SAMSHUDDIN 138 39945 15 SWASTIK STONE CRUSHER 122 33121 TOTAL: 626524 27 DURING THE COURSE OF ASSESSMENT PROCEEDINGS WE SUBM ITTED TO THE LEARNED AO THAT THESE EXPENSES WERE WRONGLY DEBITED TO ALLA NOOR'S ACCOUNT WHICH WERE LATTER TRANSFERRED TO DIFFERENT ACCOUNTS. HOWEVER T HE LEARNED AO DID NOT ACCEPTED OUR SUBMISSIONS AND MADE ADDITIONS OF RS 77S724/-. WE SUBMIT THAT THESE EXPENSES WERE NEVER CLAIMED BY US AS EXPENSES BUT THESE WERE THE DEBITS IN DIFFERENT ACCOUNTS. THE LE ARNED SPECIAL AUDITORS HAVE ALSO MENTIONED IT IN THEIR REPORT THAT THESE ARE TR ANSFERS FROM ONE ACCOUNT TO ANOTHER. IF BY MISTAKE ONE ITEM IS DEBITED IN ONE A CCOUNT AND IF IT IS CORRECTED LATTER, THERE CAN NOT BE ADDITIONS. THESE ENTRIES W ERE NEVER CLAIMED BY US AS EXPENSES. BESIDES WITH RECTIFICATION IN THIS ACCOUN T, RECTIFICATION WAS MADE IN PRIMARY RECORD (CASH BOOK) ALSO. IN VIEW OF THESE F ACTS IT IS SUBMITTED ADDITIONS ARE UNCALLED FOR AND IT MAY KINDLY BE DELETED. ' 15.4 THE HONBLE CIT(A) DECIDED THIS GROUND IN PARA 7.3 OF HIS ORDER AS UNDER:- REGARDING THESE ENTRIES SPECIAL AUDITORS MENTIONED IN THEIR REPORT THAT THESE ARE TRANSFER ENTRIES FROM ONE ACCOUNT TO ANOT HER. APPELLANT EXPLAINED THAT THESE EXPENSES WERE NOT CLAIMED BY HIM IN THE BOOK S OF ACCOUNTS AND THEREFORE NO DISALLOWANCE U/S 40(A)(IA) IS JUSTIFIE D. AO HAS NOT BOTHERED TO EXAMINE THIS CLAIM OF APPELLANT EVEN DURING APPELLA TE PROCEEDINGS AND MECHANICALLY REPEATED HIS OBSERVATIONS OF THE ASSES SMENT ORDER IN THE REMAND REPORT AS WELL. SINCE THE BOOKS OF ACCOUNTS HAVE BE EN REJECTED BY AO, NO DISALLOWANCE U/S 40(A)(IA) IS JUSTIFIED. ADDITION O F RS. 626524/- IS DIRECTED TO BE DELETED. GROUND NO. 5(III) IS THUS ALLOWED. 15.5 BEFORE US, THE LD. DR SUPPORTED THE ORDER OF T HE AO. 15.6 BEFORE US, THE LD. AR HAS SUBMITTED AS UNDER:- THE ASSESSEE SUBMIT THAT ADDITIONS ARE MADE BY LE ARNED AO WITHOUT UNDERSTANDING THE EFFECT OF THE ENTRIES. IF SOME ENTRIES ARE WRONGLY DEBITED IN ONE ACCOUNT WHICH IS RECTIFI ED LATTER BY WAY OF DEBITING OTHER ACCOUNT AND DELETING OLD ONE WHAT IS WRONG THEREIN. EVEN HONBLE SPECIAL AUDITORS IN PARA 4 OF THEIR REPORT DATED 08.05.2010 HAVE ADMITTED THAT 15 ENTRIES IN T HIS ACCOUNT TOTALING TO RS.626524/- HAVE BEEN DEBITED TO OTHER ACCOUNT. ONLY STRUCK OFF OF OLD ACCOUNT (BEFORE SURVEY) DOES NOT HAVE ANY EFFECT. IN VIEW OF THESE FACTS THE HONBLE CIT(A) HAVE DELE TED ADDITIONS VERY FAIRLY AND IT DOES NOT CALL FOR ANY INTERFEREN CE. THIS GROUND OF APPEAL OF DEPTT. THEREFORE NEEDS DISMISSAL. 28 15.7 AFTER HEARING BOTH THE PARTIES, WE FEEL THAT O RDER OF THE LD. CIT(A) IS FAIR AND REASONABLE AND DOES NOT REQUIRE ANY INTERFERENCE. A CCORDINGLY THE GROUND OF APPEAL NO. 3 OF THE DEPARTMENT IS DISMISSED. 16.1 THE GROUND NO. 7 OF THE REVENUE IS THAT THE LD . CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF UNRECORDED ADVANCES AT RS. 13,67,284/- 16.2 THE GROUND NO. 8 OF THE REVENUE IS THAT THE LD . CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF PROTECTIVE INVESTMENT AT RS . 19.75 LACS. 16.3 BOTH THESE ISSUES ARE THE SAME WHICH HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE WHILE DISPOSING OFF THE APPEAL FOR THE ASSESSMENT Y EAR 2004-05. HENCE, GROUND OF APPEAL NO. 7 AND 8 OF THE REVENUE ARE DISMISSED. 17.1 THE GROUND NO. 9 OF THE REVENUE IS THAT THE LD . CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF TELEPHONE EXPENSES. 17.2 WE HAD HELD THAT THE DISALLOWANCE AS CONFIRMED BY THE LD. CIT(A) IS REASONABLE AND HAD ALSO HELD THAT THE ADDITION ON ACCOUNT OF DEPRECIATION ON VEHICLE IS TO BE RETAINED AT 1/8 TH . THUS THE DISALLOWANCE ON VEHICLE EXPENSES AT RS. 10,000/- AS CONFIRMED BY THE LD. CIT(A) IS UPHELD. ASSESSMENT YEAR 2006-07 18.1 THE GROUND OF APPEAL NO.2(I) OF THE ASSESSEE AND GROUND OF APPEAL NO.1 OF THE DEPTT. READS AS UNDER:- GOA NO.2(I) OF THE ASSESSEE THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS.150400/- ON ACCOUNT OF EXCESSIVE PURCHASE. GOA NO.1 OF DEPTT .- 29 THE LEARNED CIT(A) ERRED IN DELETING ADDITION OF RS.24064/- OF UNRECORDED BUSINESS OF GITTI 18.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS TH E LEARNED AO OBSERVED THAT THERE IS DIFFERENCE OF RS.150400/- IN PURCHASES AS PER ACCOU NTS AND AS PER PAPERS ATTACHED WITH RETURN OF INCOME . HE THEREFORE CALCULATED ELEMENT OF PROFIT OF RS.24064/- THEREON AND MADE ADDITION OF RS.174464/-. 18.3 DURING THE COURSE OF APPEAL PROCEEDINGS, THE A SSESSEE SUBMITTED AS UNDER:- THE LEARNED AO HAS TAKEN UNRECORDED PURCHASES AT RS .150400/- AS DISCUSSED BY HIM IN PARA 6 OF ASSESSMENT ORDER. HE FURTHER ADDED PROFIT ELEMENT OF RS. 24064/-THEREON THUS TOTALING TO RS. 174464/- AND TAXED IT AT 100% NP RATE AND MADE ADDITION OF RS. 1J4464/-. I ADMITT THAT THERE IS DEFICIENCY IN MY BOOK KEEPIN G. I AM A MAN OF MORE THAN 70 YEARS OF AGE AND THEREFORE TO PURCHASE PEAC E I ACCEPT THE PURCHASES BUT SUBMIT A REASONABLE RATE OF SAY 8%, BEING AT PAR TO SEC.44AD BE APPLIED, WHICH SHALL GROSS UP SALES TO RS.163478/- AND NP THEREON TO RS. 13078/- I THEREFORE SUBMIT ADDITION MAY BE REDUCED TO RS. 13078/- WITH RELIEF AT RS.161386/- ' 18.4 THE HONBLE CIT(A) DECIDED THIS GROUND VIDE PA RA 7.3 OF HIS ORDER AS UNDER:- APPELLANT HAS NOT FURNISHED ANY SATISFACTORY REPLY REGARDING DIFFERENCE HI PURCHASES OF GITTI. AO IS THEREFORE J USTIFIED IN MAKING ADDITION OF RS.150400/-AND THE SAME IS CONFIRMED. H OWEVER THERE IS NO JUSTIFICATION FOR FURTHER ADDITION OF RS.24064/- AN D THE SAME IS DIRECTED TO BE DELETED. THUS ADDITION UNDER THIS HEAD IS RESTRI CTED TO RS.150400/- AS AGAINST RS.174464/- MADE BY AO. GROUND NO. 5(III) I S THUS PARTLY ALLOWED. 18.5 THE ASSESSEE SUBMITTED THAT HE IS IS IN APPE AL BEFORE US FOR ADDITION OF RS.150400/- AND DEPTT. IS IN APPEAL FOR ADDITION OF RS.24064/-. SO FAR AS DEPTT. APPEAL IS CONCERN, IT IS NOT MAINTAINABLE BECAUSE OF THIS REA SON ALSO THAT ON ACCOUNT OF DIFFERENCE IN 2 FIGURES IT IS DIFFERENCE ONLY WHICH IS TO BE TAXE D AND NOT THE ELEMENT OF PROFIT THEREON. IN OUR CASE ACCOUNTS ARE REJECTED AND PROFIT RATE I S APPLIED. IN SUCH CIRCUMSTANCES DIFFERENCE IN PURCHASES AS PER ACCOUNTS AND AS PER PAPERS ATTACHED WITH ROI HAS NO 30 RELEVANCY. WHATEVER ADDITION ARE MADE ON ACCOUNT OF APPLICATION OF RATE IT COVERS PURCHASES ALSO. THE ASSESSEE THEREFORE PRAYED THAT ADDITION OF RS.150400/- ARE UNCALLED FOR AND THE SAME BE DELETED. 18.6 WE HAVE HEARD BOTH THE PARTIES. WHILE CONSIDER ING THE NET PROFIT RATE FOR THE ASSESSMENT YEAR 2006-07, WE HAVE HELD THAT NET PROF IT RATE DISCLOSED BY THE ASSESSEE IS REASONABLE. THEREFORE, THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION ON UNRECORDED PURCHASED. THE PROFIT ON UNRECORDED PURC HASES IS ALSO NOT INCLUDED. THE DISCLOSED NET PROFIT RATE IS 8%. THEREFORE, WE HOLD THAT THE AO WAS JUSTIFIED IN MAKING THE ADDITION OF RS. 1,50,400/- PLUS RS. 20,000/-. T HUS GROUND OF APPEAL NO. 2(I) OF THE ASSESSEE IS DISMISSED WHILE GROUND OF APPEAL 1 OF T HE REVENUE IS DISMISSED. 19.1 THE GOA NO.2(II) OF THE ASSESSEE AND GOA NO.2 OF THE DEPTT. READS AS UNDER:- GOA NO.2(II) OF THE ASSESSEE THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN CONFIRMING ESTIMATION OF LIME STONE SALES MADE BY LEARNED AO UNSCIENTIFICALLY AT RS. 1168200/- AND APPLYING N P RATE OF 7.5% THEREON AS AGAINST NORMAL RATE APPLIED IN OTHER COMPARABLE CASES. GOA NO.2 OF DEPTT .- THE LEARNED CIT(A) ERRED IN DELETING ADDITION ON ACCOUNT OF UNRECORDED BUSINESS OF LIME STONE AT RS.1080585/- 19.2 WE HAVE HEARD BOTH THE PARTIES. THE ABOVE ISSU E STANDS DECIDED WHILE DISPOSING OFF THE APPEAL FOR THE ASSESSMENT YEAR 2004-05. FOL LOWING OUR FINDINGS FOR THE ASSESSMENT YEAR 2004-05, THE AO IS DIRECTED TO APPLY NET PROFI T RATE OF 5%. 20.1 THE GROUND OF APPEAL NO.3 OF THE DEPTT. READS AS UNDER:- GOA NO.3 OF DEPTT .- THE LEARNED CIT(A) ERRED IN DELETING ADDITION ON ACCOUNTED BUSINESS 31 OF MARBLE OF RS.188738/- 20.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUNDED UNRECORDED BUSINESS OF MARBLE RS.210336/- AND THEREFORE HE MADE ADDITIO N OF RS.210336/-. 21.1 DURING APPEAL PROCEEDINGS, THE ASSESSEE SUBMI TTED AS UNDER:- 'VIDE PARA JO OF HIS ORDER AND INCONSONANCE TO ANNE XURE 15 OF THE IMPOUNDED MATERIAL THE LEARNED AO HAS WORKED OU T UNACCOUNTED MARBLE SALES AT RS. 210336/-. HE HAS TAXED IT @ 100 % NP RATE. IT SHALL NOT TO BE INAPPROPRIATE TO MENTION AT THIS STAGE TH AT DURING ASS. YEAR 2005-06 THERE WAS UNRECORDED MARBLE PURCHASES OF RS . 188738/- (GROUNDS NO.5(IVJ OF THE APPEAL). THOUGH THERE WAS NO SALE EITHER IN REGULAR BOOKS OR IMPOUNDED RECORDS BUT IT WAS GROSS UP AND TAXED, WE SUBMIT THIS SALE SHOULD BE TAKEN RELATED TO AFORESA ID PURCHASE AND THEREFORE ITS CORRESPONDING TELESCOPY BENEFIT SHOUL D BE PROVIDED TO US AND WHATEVER RESIDUE SHALL REMAIN A REASONABLE NP R ATE AT PAR TO SEC. 44AD BE APPLIED THEREON AND RELIEF BE PROVIDED TO U S. ' 21.2 THE LD CIT(A) DECIDED THIS ISSUE VIDE PARA 9. 3 OF HIS ORDER WHICH READS AS UNDER:- DURING ASSESSMENT YEAR 2005-06 IT WAS FOUND BY AO THAT APPELLANT HAS MADE UNRECORDED PURCHASES OF RS.188738/-. IT WILL B E THEREFORE REASONABLE TO ALLOW CREDIT FOR THE SAME TO APPELLANT DURING THIS YEAR. AS MENTIONED ABOVE UNRECORDED SALES DURING THE YEAR ARE OF RS. 210336/ -. AO IS THEREFORE DIRECTED TO RESTRICT ADDITION DURING THIS YEAR TO RS.21598/- (2 10336 - 188738) AS AGAINST RS. 210336/- MADE BY HIM. GROUND NO. 5(V) IS THUS PARTL Y ALLOWED 21.3 THE REVENUE RELIED UPON THE ORDER OF THE AO. 21.4 THE ASSESSEE SUBMITTED THAT BEING AGGRIEVED DE PTT.IS IN APPEAL BEFORE US ON DELETION OF ADDITION OF RS.188738/- AND FURTHER SUB MITTED THAT R THAT THERE IS NO DISPUTE TO THIS FACT THAT THERE IS OUT OF BOOKS MARBLE SALE OF RS.210336/- THE REASONABLE AND JUDICIOUS APPROACH THEREON MAY BE TO APPLY REASONAB LE NP RATE. THE LD CIT(A) HAS ALREADY CONFIRMED ADDITION OF RS.21598/- WHICH IS M ORE THAN 10% AND ASSESSEE IS NOT IN APPEAL THE PURPOSE IS ALREADY ACHIEVED. THE ASSESSE E THEREFORE, PRAYED THAT THIS GROUND OF APPEAL OF DEPTT.BE DISMISSED. 21.5 WE HAVE HEARD BOTH THE PARTIES. IN RESPECT OF UNRE CORDED SALES, WE ARE HOLDING THAT PROFIT IS TO BE ADDED. IN RESPECT OF ADDITION ON ACCOUNT OF PROFIT, THE ASSESSEE IS NOT IN 32 APPEAL. WE THEREFORE, FEEL THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION TO THE EXTENT OF RS. 1,88,638/-. 22.1 THE GROUND OF APPEAL NO.4 OF THE DEPTT. READS AS UNDER:- GOA NO.4 OF DEPTT .- THE LEARNED CIT(A) ERRED IN DELETING ADDITION ON A CCOUNT OF UNRECORDED TRANSPORTATION RECEIPTS OF RS.440365/- A ND UNRECORDED JCB RENT OF RS.146666/- 22.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE D AO FOUND THAT OUR VEHICLE RECEIPTS WERE OF RS.2201825/- AGAINST WHICH EXPENSE S OF RS.1839623/- WERE THERE WHICH WERE VERY HIGH AND THEREFORE HE ESTIMATED INCOME @ 20% OF TRANSPORTATION RECEIPTS RS.2201825/- AND MADE ADDITION OF RS.440365/-. WHIL E MAKING THIS ADDITION HE DID NOT THINK IT APPROPRIATE TO PROVIDE US DEDUCTION OF THE INCOME ALREADY DISCLOSED. BESIDES HE TAXED UNRECORDED JCB RENT RS.146666/- SEPARATELY. 22.3 DURING THE COURSE OF APPEAL PROCEEDINGS, THE ASSESSEE FAIRLY ADMITTED THAT AS PER P&L A/C ATTACHED TO RETURN OF INCOME, HIS INCOME IS FROM BUSINESS OF GITTI SUPPLY TO RAILWAY, PLYING OF DUMPER /TRUCKS AND JCB MACHINE A ND INSIGNIFICANT SALES OF MARBLE. THE ASSESSEE , ADMITTING THAT PROFIT FROM GITTI BUSINES S AND TRANSPORTATION CANNOT BE SEGREGATED, REQUESTED TO THE LD CIT(A) THAT AS HIS CONSOLIDATED NP RATE ON CONSOLIDATED SALES AND TRANSPORTATION RECEIPTS SUBJECT TO DEPRECIATION AND BANK INTEREST IN ASS.YEAR 2004-05,2005- 06,2006-07,2007-08 & 2008-09 WAS AT 9.31%, 9.80%, 1 7.78%, 12.76% & 15.84% RESPECTIVELY WHICH BEING FAIRLY WELL ADDITIONS BEIN G UNCALLED FOR THE SAME BE DELETED. 22.4 IN ALTERNATE, THE ASSESSEE REQUESTED THE LD C IT(A) THAT ASSESSEE PLYS TRUCKS /DUMPERS AND JCBS WHICH IN TOTAL BEING LESS THAN 10 IN NUMB ER AND THEREFORE HE IS BEING COVERED WITHIN THE PROVISIONS OF SEC.44AE. IT WAS SUBMITTED THAT WHEN SPECIFIC PROVISIONS ARE THERE 33 FOR COMPUTATION OF INCOME IT WILL PREVAIL OVER GENE RAL PROVISIONS. RELIANCE IN THIS REGARD WAS MADE TO RAKESH KUMAR MUNDRA VS. ITO (2009) XLI TAXWORLD 59 (JD.). AS AFTER COMPUTATION OF INCOME U/S 44AE INCOME FROM GITTI BU SINESS IS 13.63%, WHICH BEING REASONABLE IT SHOULD NOT BE INTERFERED. 22.5 IN FURTHER ALTERNATE, THE ASSESSEE SUBMITTED THAT INCOME FROM VEHICLES SUBJECT TO DEPRECIATION AND INTEREST WAS 19.43% WHEREAS IN CAS E OF ORIENT MAIL SPEED TRANSPORT SERVICE VS.ITO (2008) XL TW 138(JP) THE ITAT JAIP UR BENCH APPROVED NP RATE OF 6.76%. THE ASSESSEE THEREFORE REQUESTED THAT HIS PROFIT IS FAIRLY WELL AND ADDITION BE DELETED. 22.6 THE LD CIT(A) CONSIDERED SUBMISSIONS BUT FINAL LY APPLIED SUBMISSION MADE BY THE ASSESSEE IN PARA 3.04 ABOVE. RELEVANT PART OF HIS ORDER IS REPRODUCED AS UNDER:- AS MENTIONED BY APPELLANT, HE HAS DECLARED NET PRO FIT OF RS.259479/- IN HIS PROFIT & LOSS ACCOUNT WHICH INCL UDES INCOME FROM GITTI SUPPLY AS WELL AS TRANSPORTATION BUSINES S. IN THE ABSENCE OF CORRECT AND COMPLETE BOOKS OF ACCOUNTS, IT WILL BE PROPER TO ESTIMATE INCOME FROM TRANSPORTATION BUSINESS AS PER THE PROVISIONS OF SECTION 44AE. DURING THE YEAR APPELLANT HAS 2 TR UCKS AND 1 DUMPER FOR FULL YEAR. INCOME FROM THESE VEHICLES IS ESTIMATED AT RS. 3500/- PER MONTH EACH. THIS GIVES FIGURE OF RS. 126000/-. INCOME OF JCB IS ESTIMATED AT RS. 75000/- FOR THE E NTIRE YEAR. THUS TOTAL INCOME FROM TRANSPORTATION BUSINESS IS ESTIMA TED AT RS.201000/- (126000 + 75000). AS DISCUSSED EARLIER TOTAL PROFIT OF RS.259479/- H AS BEEN DECLARED BY APPELLANT IN RESPECT OF BOTH BUSINESSES . AFTER GIVING CREDIT FOR DEPRECIATION ON CAR, SCOOTER AND FURNITU RE (DEPRECIATION CLAIMED RS. 61577/-) THE FIGURE OF PROFIT IS RS.321 056/-. IF INCOME FROM TRANSPORTATION BUSINESS OF RS. 201000/- AS EST IMATED ABOVE IS REDUCED FROM THIS, THE REMAINING FIGURE IS OF RS. 1 20056/-. THIS IS THE INCOME OF APPELLANT FROM GITTI SUPPLY BUSINESS. DURING THE YEAR TOTAL SALE OF GITTI IS OF RS. 880931/- AND AS PER ABOVE WORKING PROFIT COMES TO 13.63% (120056 IS 13.63% OF 880931/ -), WHICH IS 34 REASONABLE. THEREFORE NO FURTHER ADDITION IN RESPEC T OF GITTI SUPPLY BUSINESS IS JUSTIFIED FOR THIS YEAR. THUS AO IS DIRECTED TO DELETE ADDITION OF RS. 587 031/- MADE BY HIM IN RESPECT OF TRANSPORTATION BUSINESS. GROUN D NO. 5(VI) IS THUS ALLOWED. 22.7 BEING AGGRIEVED DEPTT. IS IN APPEAL BEFORE US AND THE LD. DR RELIED UPON THE ORDER OF THE AO.. 22.8 THE ASSESSEE SUBMITTED THAT APPEAL OF THE DEPT T. IS NOT MAINTAINABLE BECAUSE OUT OF THE 3 OPTIONS AVAILABLE WITH LD CIT(A) HE HAS APPLIED T HE MOST FAVOURABLE OPTION TO DEPTT. THE ASSESSEE THEREFORE PRAYED TO DISMISS THIS GROUND OF APPEAL OF DEPTT. 22.9 WE HAVE HEARD BOTH THE PARTIES. SINCE WE HAD D IRECTED TO APPLY THE NET PROFIT RATE ON CONSOLIDATED ACCOUNT AND THEREFORE, NO FURTHER ADDI TION ON ACCOUNT OF UNRECORDED TRANSPORTATION RECEIPTS ARE TO BE MADE. THERE IS NO EVIDENCE ON RECORD IN RESPECT OF SUCH UNRECORDED RECEIPTS. WE THEREFORE, UPHOLD THE FINDI NGS OF THE LD. CIT(A). 23.1 THE GROUND OF APPEAL NO.5 OF DEPTT. READS AS UNDER:- THE LEARNED CIT(A) ERRED IN DELETING ADDITION ON ACCOUNT OF UNRECORDED ADVANCES AT RS. 2854918/-. 23.2 WE HAVE HEARD BOTH THE PARTIES. THE ABOVE ISSU E IS DECIDED IN FAVOUR OF THE ASSESSEE WHILE DISPOSING OFF THE APPEAL FOR THE ASSESSMENT Y EAR 2004-05. HENCE, WE FEEL THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. 24.1 THE GROUND OF APPEAL NO.7 OF DEPTT. READS AS UNDER:- THE LEARNED CIT(A) ERRED IN RESTRICTING THE ADDI TION ON ACCOUNT OF DISALLOWANCE OF TELEPHONE EXPENSES AT RS. 2500/-. 24.2 WE HAVE HEARD BOTH THE PARTIES. IN THE IMMEDI ATELY PRECEDING YEAR, SUCH DISALLOWANCE WAS CONFIRMED BY THE LD. CIT(A) TO THE EXTENT OF RS. 5,000/- AND THE SAME HAS BEEN UPHELD. ACCORDINGLY WE HOLD THAT IT SHOULD BE RESTRICTED TO RS. 5,000/-. HENCE, THIS 35 GROUND OF APPEAL OF THE DEPARTMENT IS PARTLY ALLOWE D. 25.1 THE GROUND OF APPEAL NO.8 OF DEPTT. READS AS UNDER:- THE LEARNED CIT(A) ERRED IN DELETING THE ADDITIO N ON ACCOUNT OF DEPRECIATION ON VEHICLE AT RS. 6,334/- 25.2 WE HAVE HEARD BOTH THE PARTIES. FOLLOWING OUR FINDINGS FOR THE ASSESSMENT YEAR 2004-05, WE HOLD THAT DEPRECIATION TO THE EXTENT OF 1/8 TH IS TO BE DISALLOWED. 26.1 THE GROUND OF APPEAL NO.9 OF DEPTT. READS AS UNDER:- THE LEARNED CIT(A) ERRED IN RESTRICTING THE ADDI TION ON ACCOUNT OF DISALLOWANCE OF VEHICLE EXPENSES TO RS. 10,000/- 26.2 AFTER HEARING BOTH THE PARTIES, WE FEEL THAT T HE DISALLOWANCE MADE BY THE LD. CIT(A) IS REASONABLE 27.1 THE GROUND OF APPEAL NO. 10 OF DEPTT. READS A S UNDER:- THE LEARNED CIT(A) ERRED IN ALLOWING TELESCOPING BENEFIT OF RS. 4,62,967/- 27.2 WE HAVE HEARD BOTH THE PARTIES. LOOKING TO OUR FINDINGS RECORDED IN THE CASE OF RITESH SOMANI, , THE ISSUE IS ONLY ACADEMIC AS THER E IS NO NEED OF TELESCOPING. ASSESSMENT YEAR 2007-08 28.1 THE GROUND OF APPEAL NO.2(I) OF THE ASSESSEE AND GOA NO.1 OF THE DEPTT. READS AS UNDER:- GOA NO.2(I) OF THE ASSESSEE THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN APPLYING NP RATE OF 10% ON UNDISCLO SED MARBLE SALES RS. 69992/- AS AGAINST 7.82% DISCLOSED BY THE APPELLANT AS PER TRADING ACCOUNT APPENDED WITH ORIGINAL ROI FILED GOA NO.1 OF DEPTT .- 36 THE LEARNED CIT(A) HAS ERRED IN RESTRICTING ADDIT ION ON ACCOUNT OF UNRECORDED MARBLE SALES TO RS.7000/- 28.2 WE HAVE HEARD BOTH THE PARTIES. SINCE WE HAD A PPLIED THE NET PROFIT RATE ON THE ENTIRE TURNOVER AT 6%. THERE IS UNDISCLOSED MARBLE SALES OF RS. 96,992/-. SINCE WE ARE HOLDING THAT PROFIT IS TO BE APPLIED ON UNRECORDED SALES, HENCE WE FEEL THAT LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION. HOWEVER, THE ASSESSEE HAS NOT PRESSED ITS GROUND OF APPEAL. 29.1 THE GROUND OF APPEAL NO.2(II) OF THE ASSESSEE AND GROUND OF APPEAL NO.3 OF THE DEPTT. READS AS UNDER:-2 GOA NO.2(II) OF THE ASSESSEE THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF LIME STONE S ALES MADE BY LEARNED AO UNSCIENTIFICALLY AT RS. 1557003/- AND APPLYING N P RATE OF 7.5% THEREON AS AGAINST NORMAL RATE APPLIED IN OTHER COMPARABLE CASES GOA NO.2 OF DEPTT .- THE LEARNED CIT(A) ERRED IN RESTRICTING ADDITION ON ACCOUNT OF UNRECORDED BUSINESS OF LIME STONE AT RS.155700/- 29.2 WE HAVE HEARD BOTH THE PARTIES. BOTH THESE ISS UES STAND COVERED BY OUR FINDINGS FOR THE ASSESSMENT YEAR 2004-05. FOLLOWING OUR FINDINGS , WE HOLD THAT AO WILL APPLY THE NET PROFIT RATE OF 5%. 30.1 THE GROUND OF APPEAL NO.2(III) OF THE ASSESSE E AND GROUND OF APPEAL NO.2 OF THE DEPTT. READS AS UNDER:- GOA NO.2(III) OF THE ASSESSEE THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN APPLYING NP RATE OF 10% ON DISCLOSE D SALES RS. 3605514/- AS AGAINST DISCLOSED NP RATE AS PER TRADING A/C ATTACH ED WITH ORIGINAL ROI AT 7.82% WHEREIN NO DEFECT WAS FIND OUT BY THE LEARNED AO 37 GOA NO.6 OF DEPTT .- THE LEARNED CIT(A) ERRED IN DELETING ADDITION ON A CCOUNT OF UNRECORDED TRANSPORTATION RECEIPTS OF RS.1501728 30.2 WE HAVE HEARD BOTH THE PARTIES. THIS ISSUE HAS BEEN CONSIDERED BY WHILE DECIDING THE APPEAL FOR THE ASSESSMENT YEAR 2004-05. FOLLOW ING OUR FINDINGS WHILE DISPOSING OFF THE APPEAL FOR THE ASSESSMENT YEAR 2004-05, WE HOLD THA T THE GROUND NO. 2(III) IS PARTLY ALLOWED AND GROUND NO. 6 OF THE REVENUE IS DISMISSED. 31.1 THE GROUND OF APPEAL NO.4 OF DEPTT. READS AS UNDER:- THE LEARNED CIT(A) ERRED IN DELETING ADDITION ON A CCOUNT OF UNRECORDED ADVANCES AT RS. 2311000/-. 31.2 THE GROUND OF APPEAL NO.6 OF DEPTT. READS AS UNDER:- THE LEARNED CIT(A) HAS ERRED IN DELETING ADDITION ON ACCOUNT OF PROTECTIVE INVESTMENT AT RS. 1220000/-. 31.3 THIS ISSUE HAS BEEN CONSIDERED BY US WHILE DIS POSING OFF THE APPEAL FOR THE ASSESSMENT YEAR 2004-05. FOLLOWING THAT ORDER FOR T HE ASSESSMENT YEAR 2004-05, WE HOLD THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDIT ION ON ACCOUNT OF PROTECTIVE INVESTMENT AT RS. 12.20 LACS 32.1 THE GROUND OF APPEAL NO.5 OF THE DEPTT READS AS UNDER:- GOA NO.5 OF DEPTT .- THE LEARNED CIT(A) ERRED IN DELETING ADDITION ON ACCOUNT OF VIOLATION OF PROVISION OF SEC.40A(3) OF RS.200000/ -. 32.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE AO IGNORING THE SUBMISSIONS THAT PAYMENT OF RS. 200000/- ARE TO OUR SISTER CONC ERN ON ACCOUNT OF ACUTE NECESSITY IN 38 CASH THE AO MADE ADDITION OF RS.200000/- BECAUSE O F CONTRAVENTION OF PROVISION OF SEC.40A(3). 32.3 DURING HEARING OF APPEAL WE SUBMITTED AS UNDER :- 'DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON SCR UTINY OF PAPERS THE LEARNED AO FOUND THAT THE ASSESSEE HAS P AID PAYMENT OF RS.200000/- IN CONTRAVENTION TO SEC. 40A(3). I SUBM IT THIS PAYMENT IS MADE TO MY SON'S FIRM WHO WAS IN URGENT NEED FOR PA YMENT TO DABORAWALAS FROM WHOM HE PURCHASES HOLDERS. GUINNES S OF PAYMENT IS NOT IN DOUBT. BESIDES SUCH ADDITIONS ARE NOT MAINTA INABLE WHERE BOOK RESULTS ARE REJECTED AND NP RATE IS APPLIED. AS IN MY CASE BOOK RESULTS ARE REJECTED I SUBMIT SUCH DISALLOWANCE IS UNCALLED FOR. RELIANCE IN THIS,REGARD IS MADE ON CIT VS. BANWARI LAL BANSIDHA R 229ITR 229 (ALL), BANNA LAL JAT 26 TW 447 (JD.), JK CONSTRUCTION CO. VS. ITO 100 'TTJ 1101 (JD.), ACIT VS. PADAMCHAND BHANSALI 85 TTJ 215 (JD.) & SINGHAL BUILDERS CONTRACTORS VS. ADD!. CIT 133 TTJ (JP) 102 (UR). WE THEREFORE REQUEST YOUR HONOUR TO DELETE THE ADDITION OF RS. 2 00000/-.' 32.4 THE HONBLE CIT(A) HELD AS UNDER:- IT HAS BEEN HELD BY VARIOUS JUDICIAL AUTHORITIES T HAT ONCE BOOKS OF ACCOUNTS ARE REJECTED AND INCOME IS ESTIMATED BY APPLYING PROFIT RATE, NO FURTHER DISALLOWANCE IS JUSTIFIED U/S 40A(3). AS MENTIONED EARLIER, IN THIS CASE BOOKS ARE NOT CORRECT AND COMPLETE AND IN COME IS ESTIMATED BY APPLYING PROFIT RATE ON TURNOVER OF APPELLANT. THER EFORE FURTHER DISALLOWANCE U/S 40A(3) IS NOT JUSTIFIED. ADDITION OF RS. 200000/- IS DIRECTED TO BE DELETED. GROUND NO. 5(VII) IS THUS A LLOWED' 32.5 BEING AGGRIEVED DEPTT.IS IN APPEAL AND RELIED UPON THE ORDER OF THE AO 32.6 THE ASSESSEE SUBMITTED THAT IN THIS CASE BOOK S OF ACCOUNTS HAVE BEEN REJECTED BY AO. BOOKS OF ACCOUNTS ARE TREATED AS REJECTED BY IM PLICATION ALSO. THE RELIED UPON THE DECISION IN THE CASE OF CHOUDHARY & BROTHERS VS. I TO 45 TW PAGE 99 (JP)). ONCE BOOKS ARE REJECTED DISALLOWANCE U/S 40A(3) SHOULD NOT BE MADE. THE FURTHER RELIED UPON THE CASE LAWS IN THE CASE OF CIT VS. G.K.CONTRACTOR (2009) 19 DTR 305 (RAJ) FOLLOWED IN ITO VS. SADHWANI BROS. 58 DTR 368 (JP) ALSO RAJENDRA KUMAR KEDIA 22 TW 506 & KIRAN UDHYOG 34 TW 80. 32.7 WE HAVE HEARD BOTH THE PARTIES. WE ARE TAKING CONSISTENT STAND WHEN THE BOOKS OF 39 ACCOUNTS ARE REJECTED THEN NO DISALLOWANCE U/S 40A (3) IS TO BE MADE. THIS ISSUE HAS BEEN CONSIDERED IN THE CASE OF SHRI RITESH SOMANI. FOLLO WING OUR FINDINGS GIVEN IN THE CASE OF SHRI RITESH SOMANI, WE HOLD THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 2.00 LACS U/S 40A(3) OF THE ACT. 33.1 GROUND NO. 7 OF THE REVENUE IS THAT THE LD. CI T(A) HAS ERRED IN RESTRICTING THE ADDITION ON ACCOUNT OF DISALLOWANCE OF TELEPHONE E XPENSES AT RS. 4,000/-. 33.2 WE HAVE HEARD BOTH THE PARTIES. WE FEEL THAT T HE DISALLOWANCE SHOULD BE RESTRICTED TO RS. 5,000/-. 34.1 GROUND NO. 8 OF THE REVENUE IS THAT THE LD. CI T(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF DEPRECIATION ON VEHICLE OF RS. 15,856 /-. 34.2 WE HAVE HEARD BOTH THE PARTIES. FOLLOWING OUR FINDINGS FOR THE ASSESSMENT YEAR 2004-05, WE HOLD THAT DEPRECIATION AT 1/8 TH OF THE VEHICLE I.E. CAR IS TO BE DISALLOWED U/S 38(2) OF THE ACT. 35.1 GROUND NO. 9 OF THE REVENUE IS THAT THE LD. CI T(A) HAS ERRED IN RESTRICTING THE ADDITION ON ACCOUNT OF DISALLOWANCE OF VEHICLE EXP ENSES TO RS. 15,000/-. 35.2 WE HAVE HEARD BOTH THE PARTIES. WE FEEL THAT T HE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING THE DISALLOWANCE. ASSESSMENT YEAR 2008-09 36.1 THE GROUND OF APPEAL NO.2(I) OF THE ASSESSEE AND GOA NO.1 OF THE DEPTT. READS AS UNDER:- GOA NO.2(I) OF THE ASSESSEE THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN APPLYING NP RATE OF 10% ON UNDISCLO SED SALES RS.133392/- AS AGAINST 5.58% DISCLOSED BY THE APPELLANT AS PER TRADING ACCOUNT APPENDED WITH ORIGINAL ROI FILED GOA NO.1 OF DEPTT .- 40 THE LEARNED CIT(A) HAS ERRED IN RESTRICTING ADDIT ION ON ACCOUNT OF UNRECORDED MARBLE SALES TO RS.13339/- 36.2 THESE ISSUES STAND COVERED BY OUR ORDER FOR TH E ASSESSMENT YEAR 2004-05. WE DIRECTED THE AO TO APPLY THE NET PROFIT RATE OF 8% ON UNDISCLOSED SALES. ACCORDINGLY GROUND OF APPEAL 2(I) OF THE ASSESSEE IS PARTLY ALLOWED AN D GROUND NO. 1 OF THE REVENUE IS DISMISSED. 37.1 THE GROUND OF APPEAL NO.2(II) OF THE ASSESSEE AND GOA NO.3 OF THE DEPTT. READS AS UNDER:- GOA NO.2(II) OF THE ASSESSEE THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN APPLYING NP RATE OF 10% ON UNDISCLO SED MARBLE SALES RS.121013/- AS AGAINST 5.58% DISCLOSED BY THE APPEL LANT AS PER TRADING ACCOUNT APPENDED WITH ORIGINAL ROI FILED GOA NO.3 OF DEPTT .- THE LEARNED CIT(A) HAS ERRED IN DELETING ADDITION ON ACCOUNT OF UNRECORDED MARBLE BUSINESS OF RS.208324/- 37.2 THE ISSUES ARE THE SAME AS HAVE BEEN CONSIDERE D BY US FOR THE ASSESSMENT YEAR 2007- 08. FOLLOWING OUR FINDINGS, WE DISMISS THE GROUND O F APPEAL 2(II) OF THE ASSESSEE AS WELL AS GROUND OF APPEAL 3 OF THE REVENUE. 38.1 THE GROUND OF APPEAL NO.2(III) OF THE ASSESSE E AND GOA NO.2 OF THE DEPTT. READS AS UNDER:- GOA NO.2(III) OF THE ASSESSEE THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN APPLYING NP RATE OF 10% ON UNDISCLO SED SALES RS.4640597/- AS AGAINST 5.58% DISCLOSED BY THE APPELLANT AS PER TRADING ACCOUNT APPENDED WITH ORIGINAL ROI FILED GOA NO.2 OF DEPTT .- 41 THE LEARNED CIT(A) HAS ERRED IN RESTRICTING ADDIT ION ON ACCOUNT OF UNRECORDED MARBLE SALES TO RS.5107684/- 38.2 THIS ISSUE HAS BEEN CONSIDERED BY US WHILE DIS POSING OFF THE APPEAL FOR THE ASSESSMENT YEAR 2004-05. FOLLOWING OUR FINDINGS FOR THE ASSESSMENT YEAR, 2004-05, WE DIRECT THE AO TO APPLY THE NET PROFIT RATE OF 8% ON UNDISCLOSED SALES. 38.3 THE GROUND OF APPEAL NO.4 OF DEPTT. READS AS UNDER:- THE LEARNED CIT(A) ERRED IN DELETING ADDITION ON ACCOUNT OF UNRECORDED ADVANCES AT RS. 1102000/-. 38.4 THE GROUND OF APPEAL NO.6 OF DEPTT. READS AS UNDER:- THE LEARNED CIT(A) HAS ERRED IN DELETING ADDITION ON ACCOUNT OF PROTECTIVE INVESTMENT AT RS. 250000/-. 38.5 THE ABOVE REFERRED ISSUES HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE WHILE DISPOSING OFF THE APPEAL FOR THE ASSESSMENT YEAR 20 04-05. HENCE, WE HOLD THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITIONS 39.1 THE GROUND OF APPEAL NO.5 OF THE DEPTT READS A S UNDER:- GOA NO.5 OF DEPTT .- THE LEARNED CIT(A) ERRED IN DELETING ADDITION ON A CCOUNT OF VIOLATION OF PROVISION OF SEC.40A(3) OF RS.1095000/ -. 39.2 WE HAVE HEARD BOTH THE PARTIES. THIS ISSUE IS ALSO TO BE DECIDED IN FAVOUR OF THE ASSESSEE IN VIEW OF OUR FINDINGS FOR THE ASSESSMENT YEAR 2007-08. HENCE, WE HOLD THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION O N ACCOUNT OF VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT. 40.1 THE 7 TH GROUND OF APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DELETING 42 THE ADDITION ON ACCOUNT OF TRANSPORTATION/CONTRACT PAYMENT WITHOUT TDS OF RS. 38,12,700/-. 40.2 THIS ISSUE HAS BEEN CONSIDERED AND WE HAVE HEL D THAT ASSESSEE WAS NOT LIABLE TO DEDUCT THE TDS AS THERE WAS NO VERBAL CONTRACT AND THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. 41.1 THE 8 TH GROUND OF APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF CONTRACT PAYMENT WITHOUT TDS OF RS.13,29,105/-. 41.2 WE HAVE HEARD BOTH THE PARTIES. THE LD. CIT(A) HAS CONSIDERED THAT THE SUM IS INCLUDED IN THE SUM OF RS. 38,12,700/-. HENCE THIS ISSUE STANDS COVERED WHILE DECIDING THE GROUND NO. 7 OF THE REVENUE. ACCORDINGLY, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. 42.1 THE 9 TH GROUND OF APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION ON ACCOUNT OF DISALLOWANC E OF TELEPHONE EXPENSES AT RS. 4,000/-. 42.2 WE HAVE HEARD BOTH THE PARTIES. WE HAVE ALREAD Y HELD THAT THE TELEPHONE EXPENSES SHOULD BE RESTRICTED TO RS. 5,000/-. 43.1 THE 10 TH GROUND OF APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF DEPRECIATION ON VEHICLE S AT RS. 13,400/-. 43.2 WE HAVE HEARD BOTH THE PARTIES. FOLLOWING OUR FINDINGS FOR THE EARLIER YEAR, WE HOLD THAT 1/8 TH OF DEPRECIATION ON VEHICLE I.E. CAR IS TO BE DISAL LOWED U/S 38(2) OF THE ACT. 44.1 THE 11TH GROUND OF APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION ON ACCOUNT OF DISALLOWANC E OF VEHICLE EXPENSES TO RS. 7,500/-. 45.1 AFTER HEARING BOTH THE PARTIES, WE FEEL THAT T HE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING THE DISALLOWANCE TO RS. 7,500/-. 46.1 THE 12 TH GROUND OF APPEAL OF THE DEPARTMENT IS THAT THE LD. CIT(A) HAS ERRED IN 43 RESTORING BACK THE MATER FOR VERIFICATION OF ADDITI ON ON ACCOUNT OF EXCESS DEPRECIATION ON TRUCK OF RS. 2,71,124/-. 46.2 WE HAVE HEARD BOTH THE PARTIES. SINCE THE LD. CIT(A) HAS RESTORED BACK THE MATTER, THEREFORE, WE DONT FEEL TO INTERFERE WITH THE FIND INGS OF THE LD. CIT(A). WE CONFIRM THE LD. CIT(A)S ORDER IN RESTORING THE MATTER BACK TO THE FILE OF THE AO. 47 IN THE RESULT, THE APPEALS OF THE ASSESSEE AS WE LL AS REVENUE ARE PARTLY ALLOWED THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 13-01 -2012. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 13 /01/2012 *MISHRA COPY FORWARDED TO :- 1. THE ITO WARD- 2 (1), KOTA 2. SHRI BABU LAL SOMANI, KOTA 3. THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5. THE LD.DR 6. THE GUARD FILE (ITA NO.602 TO 613/JP /11) A.R, ITAT, JAIPUR 44 45