Prithviraj Bafna, Kolkata V. ITO, Ward - 43(1), Kolkata, Kolkata

ITA 605/KOL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2472 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 25-03-2010
• Court: TRIBUNAL
• Keywords: Gross profit estimation; Corroborative evidences; Set aside
• Section: 133(6)

Judgement Text

1 , B , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH-B , KOLKATA / ORDER . .. . . .. . , , , , SHRI C.D.RAO, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE CIT(A) , KOLKATA DATED 21.01.2010 FOR THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS : 1. THAT THE ORDER OF THE LEARNED COMMISSIONER (AP PEAL)-XXX, KOLKATA CONFIRMING THE 2% INCREASE OF G.P. BY A.O. IS ERRONEOUS IN LAW A S WELL AS ON FACTS OF THE CASE. 2. THAT ON THE FACTS BROUGHT ON RECORD, THE L EARNED COMMISSIONER (APPEAL) OUGHT TO HAVE DELETED THE FULL ADDITION AMOUNTING TO RS.70 ,000 MADE UNDER THE HEAD DRAWINGS INSTEAD OF ALLOWING RS.35,000/-. 3. THAT ON THE FACTS BROUGHT ON RECORDS, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) OUGHT TO HAVE DELETED THE ADDITION UNDER THE HEAD CAR MAINTENANCE RS.7,422/- AND CAR RUNNING EXPENSES RS 20,500/- INSTEAD OF ALLOWING PARTS RS.12,922/-. ( ) BEFORE ! !! !. . . . . . . . ' ' ' ' # ## # , , , , , SRI B.R.MITTAL, JUDICIAL MEMBER. $% $% $% $% /AND . .. . . .. . , , , , , SRI C.D.RAO, ACCOUNTANT MEMBER %& %& %& %& / ITA NO. 605/KOL/10 '() *+/ ASSESSMENT YEAR : 2006-2007 PRITHVIRAJ BAFNA PAN:ADUPB 6564 B (APPELLANT) ITO,WARD 43(1) KOLKATA (RESPONDENT) (-. / APPELLANT ) - ( - - VERSUS -. (01-./ RESPONDENT ) -. 2 3 / FOR THE APPELLANT: / SHRI SUBASH AGARWAL. 01-. 2 3 / FOR THE RESPONDENT: / SMT JYOTI KUMARI. 2 3. THE FACTS RELATING TO GROUND NO. 1 ARE THAT TH E A.O. HAS INCREASED THE GROSS PROFIT BY 2% FOR THE IMPUGNED ASSESSMENT YEAR BY OBSERVING THAT THE ASSESSEE DISCLOSED GROSS PROFIT AT 10.31% OF THE TURNOVER FOR THIS YEAR COMPARED TO 17.83% DURING THE EARLIER YEAR. THE A.O. NOTICED SHARP FALL IN THE GROSS PROFIT. THE A.O. CALLED FOR THE DETAILS FROM THE ASSESSEE TO VERIFY THE FALL. THE ASSESSEE FAILED TO PRODUCE BALANCE SHEET AND ALL RELEVANT PAPERS AND DOCUMENTS DURING THE ASSESSMENT. THE A.O. HELD T HAT THE ASSESSEE HAS NOT SATISFACTORILY EXPLAINED THE FALL IN THE GROSS PROFIT. THE A.O. INCREASED THE GROSS PROFIT BY 2% AND MADE AN ADDITION OF RS.1,68,641. 4. AGGRIEVED BY THIS THE ASSESSEE WENT IN APPEAL BEFORE THE LEARNED CIT(A) AND SUBMITTED THAT THE A.O. ERRED IN MAKING AN ADDITIO N TO THE GROSS PROFIT OF 2% AMOUNTING TO RS.1,68,641. IT IS CONTENDED THAT THE BALANCE SH EET COULD NOT BE PRODUCED TILL HIS ILL HEALTH. THE A.O. ISSUED NOTICE U/S 133(6) TO M/S MANAK EXPORTS BUT THE NOTICE COULD NOT BE COMPLIED WITH AND THE DETAILS WERE FURNISHED. I T IS SUBMITTED THAT THE TURNOVER FOR THE EARLIER YEAR WAS RS.39.13 LACS WHEREIN GROSS PROFIT DISCL OSED WAS 17.83% . IT IS SUBMITTED THAT THE TURNOVER FOR THIS YEAR IS RS.84.32 LACS AND THE GROSS PROFIT IS 10.31% . IT IS SUBMITTED THAT THERE IS A VARIATION IN THE GROSS PROFIT ON ACCOUN T OF CHANGE IN THE MARKET CONDITIONS. IT IS SUBMITTED THAT THE MARKET IS COMPETITIVE AND HEN CE A LOWER MARGIN IS REALIZED . IT IS PRAYED FOR THE DELETION OF THE ADDITION. HOWEVER, THE LEARNED CIT(A) HAS CONFIRMED THE SAME BY OBSERVING THAT THE DETAILS CALLED FOR BY THE A.O. WERE NOT FURNISHED. THE CIT(A) HELD THAT THE A.OS ACTION IS CORRECT AS PER LAW AND UPH ELD THE SAME. 5. AGGRIEVED BY THIS THE ASSESSEE NOW IS IN APPEAL BEFORE US. AT THE TIME OF HEARING BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED T O THE COMPARATIVE CHART OF THE GROSS PROFITS WHICH WERE PLACED AT PAGE NO. 5 OF THE PAPER BOOK . HE SUBMITTED THAT THE ADDITION OF 2% EXTRA GROSS PROFIT IS NOT JUSTIFIABLE BECAUSE OF T HE COMPETITIVE MARKET POSITION AND THE ASSESSEE HAS TAKEN A BIG ORDER FROM WHERE HE RECEIVES LOW MARGIN. 6. ON THE OTHER HAND, THE LEARNED D.R. RELIED ON T HE ORDERS OF THE REVENUE AUTHORITIES AND CONTENDED THAT THE ASSESSEE DID NOT FILE ANY SUB STANTIAL EVIDENCE IN SUPPORT OF THE CONTENTIONS OF THE ASSESSEE AND FURTHER THE DOCUME NTS AND DETAILS CALLED FOR BY THE A.O. WERE ALSO NOT FILED. THEREFORE, SHE REQUESTED T O UPHOLD THE ORDERS OF THE REVENUE AUTHORITIES. 7. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD , KEEPING IN VIEW THE SUBMISSIONS OF THE ASS ESSEE , WE ARE OF THE CONSIDERED OPINION THAT THE MARKET IS COMPETITIVE AND HENCE LOW MARGIN IS REALIZED WHICH HAS NOT BEEN SUBSTANTIATED BY ANY CORROBORATIVE EVIDENCE. IN ADDITION TO THE SE, THE ASSESSEE HAS NOT COMPLIED WITH THE DOCUMENTS AND DETAILS NEITHER BEFORE THE REVENUE AUTHORITIES NOR BEFORE US. IT IS FURTHER OBSERVED THAT THE ASSESSEE HAS DECLARED GROSS P ROFIT FOR THE ASSESSMENT YEAR 2004-05 AT 3 15.27% AND FOR 2005-06 AT 17.83% WHEREAS FOR TH IS IMPUGNED ASSESSMENT YEAR HE DECLARED GROSS PROFIT AT 10.31% . THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE INCREASE OF GROSS PROFIT BY 2% BY THE REVENUE IS QUITE JUSTIFIED IN THE ABSENCE OF DETAILS AND OTHER CORROBORATIVE EVIDENCES FOR LOW GROSS PROFIT. THEREFORE, WE CON FIRM THE ORDERS OF THE REVENUE AUTHORITIES AND DISMISS THIS GROUND OF THE ASSESSEE. 8. SECOND ISSUE IS RELATING TO THE CONFIRMATION OF ADDITION OF RS.35,000 ON ACCOUNT OF PERSONAL DRAWINGS. THE A.O. HELD THAT THE ASSESS EE HAS DISPOSED OFF THE DRAWINGS OF RS.1,27,767 DURING THE EARLIER YEAR. FOR THIS YE AR, HE DISCLOSED ONLY RS.60,000. CONSIDERING THE FAMILY EXPENDITURE OF THE ASSESSEE , THE A.O. MADE AN ADDITION OF RS.27,000 TOWARDS LOW DRAWINGS. 9. ON APPEAL, THE LEARNED CIT(A) HAS REDUCED THIS DISALLOWANCE TO RS.35,000 TO MEET THE ENDS OF JUSTICE. 10. AGGRIEVED BY THIS NOW THE ASSESSEE IS IN APP EAL BEFORE US. AT THE TIME OF HEARING BEFORE US BY PLACING RELIANCE ON THE FAMILY DRAW INGS CHART FOR THE LAST THREE YEARS WHICH WAS PLACED AT PAGE NO. 6 OF THE PAPER BOOK , THE LEARN ED COUNSEL FOR THE ASSESSEE CONTENDED THAT DURING THE PREVIOUS ASSESSMENT YEAR THE ASSESSEE HAS INCURRED FOREIGN TRAVEL EXPENDITURE OF RS.70,925 AND MEDICAL INSURANCE OF RS.8,842 AND T HUS THE DRAWINGS ARE ONLY RS.48,000 WHEREAS IN THE IMPUGNED ASSESSMENT YEAR THE NET DRA WINGS ARE RS.60,000. THEREFORE, HE REQUESTED TO DELETE THE ADDITION OF RS.35,000 SU STAINED BY THE LEARNED CIT(A) ON ACCOUNT OF LOW DRAWINGS. 11. ON THE OTHER HAND, THE LEARNED D.R. RELIED O N THE ORDERS OF THE REVENUE AUTHORITIES. 12. AFTER HEARING THE RIVAL SUBMISSIONS AND ON A PE RUSAL OF THE MATERIALS AVAILABLE ON RECORD , WE ARE OF THE CONSIDERED OPINION THAT THE LEA RNED CIT(A) IS JUSTIFIED IN RESTRICTING THE ADDITION OF RS.70,000 ON ACCOUNT OF LOW DRAWINGS TO RS.35,000. AFTER TAKING INTO CONSIDERATION THE SUBMISSIONS MADE BY THE ASSESSE E, WE FIND NO REASON TO FURTHER REDUCE THIS ADDITION. THEREFORE, WE CONFIRM THE ORDER OF THE CIT(A) ON THIS ISSUE AND DISMISS THIS GROUND OF THE ASSESSEE. 13. LAST GROUND IS RELATING TO THE SUSTENANCE OF RS.12,922 ON ACCOUNT OF CAR MAINTENANCE AND CAR RUNNING EXPENSES. AFTER HEARING THE RIVA L SUBMISSIONS AND CAREFUL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD, IT IS OBSERVED TH AT THE A.O. HAS DISALLOWED THE SAME BY OBSERVING THAT THE ASSESSEE IS NOT OWNING THE CA R AND THE ASSESSEE DID NOT DISCLOSE THE SAME IN THE BALANCE SHEET. HOWEVER, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS SOLD THE CAR DURING THE PREVIOUS YEA R RELEVANT TO THE ASSESSMENT YEAR UNDER DISPUTE, I.E. WHY THE CAR IS NOT APPEARING IN TH E BALANCE SHEET. IT IS FURTHER OBSERVED THAT THE MOTOR CAR RUNNING EXPENSES ARE ONLY RS.20,500. R EPAIRS ON VEHICLES ARE RS.7,422 WHEREAS 4 THE SALES ARE RS.84.32 LAKHS. THEREFORE, WE FIND NO JUSTIFICATION TO DISALLOW ANY PART OF THESE EXPENDITURE. THEREFORE, WE SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES ON THIS ISSUE AND DIRECT THE A.O. TO DELETE THE ADDITION OF RS.12,922 . THIS ISSUE OF THE ASSESSEE IS ALLOWED. 14. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. 4 5 6 5( 7 48 THIS ORDER IS PRONOUNCED IN OPEN COURT ON 30.07.20 10 SD/- SD/- [ ! !! !. . . . . . . . ' ' ' ' # ## # ] , [ B.R.MITTAL] JUDICIAL MEMBER. [ . .. . . .. . ] [C.D.RAO] ACCOUNTANT MEMBER . ( (( ( ) )) ) DATE: 30.07.2010 2 0''9 :9*;- COPY OF THE ORDER FORWARDED TO : 1. -. / THE APPELLANT : PRITHVIRAJ BAFNA, 13, NOORMAL LOHIA LANE,KOLKATA 2 01-. / THE RESPONDENT: ITO, WARD-43(1), KOLKATA. 3. '(/ THE CIT, 4. '( ()/ THE CIT(A), 5. A'7 0'( / DR, KOLKATA BENCHES, KOLKATA 6. GUARD FILE . 19 0'/ TRUE COPY , (5/ BY ORDER, C %D /DEPUTY REGISTRAR . *B.C.DE EF '(GD 'H/ SR. PRIVATE SECRETARY. 5