ITO, CHURU V. M/s. Vaishali, CHURU

ITA 74/JODH/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54419 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 08-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Assessee Lawyers: SHAFI MOHD
• Section: 133A

Judgement Text

1 ITA 74(2)-10 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH JODHPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ) ITA NO. 74/JODH/2010 ASSTT. YEAR : 2006-07. THE INCOME-TAX OFFICER, VS. M/S. VAISHALI, WARD-2, NEAR GHANTAGHAR, CHURU. PO. SUJANGARH, CHURU. (APPELLANT) (RESPONDENT) C.O. NO. 4/JODH/2010 ( ARISING OUT OF ITA NO. 74/JODH/2010 ) ASSTT. YEAR : 2006-07. M/S. VAISHALI, NEAR GHANTAGHAR, VS. THE INCOME-TA X OFFICER, SUJANGARH, CHURU. WARD 2, CHURU. (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY : SHRI G.R. KOKANI RESPONDENT BY : SHRI SHAFI MOHD. DATE OF HEARING : 07.12.2011. DATE OF PRONOUNCEMENT : 15.12.2011. ORDER DATED : 15/12/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY DEPARTMENT AND CROSS OBJECTIO N BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2006-07. 2. CROSS OBJECTION WAS NOT PRESSED BY THE LD. A/R, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 2 3. GROUND NO. 1 IN APPEAL OF THE DEPARTMENT IS AGAI NST DELETING ADDITION OF RS. 3,75,367/- MADE BY ASSESSING OFFICER ON ACCOUNT OF EXCESS STOCK FOUND DURING THE COURSE OF SURVEY. 4. SURVEY UNDER SECTION 133A WAS CONDUCTED ON 3.3.2 006. IT WAS ADMITTED BY ONE OF THE PARTNERS THAT THEIR GP IS ABOUT 15%. DURING SUR VEY PROCEEDINGS STOCK OF RS. 7,11,792/- WAS FOUND EXCESSIVE. IT WAS SUBMITTED T HAT STOCK HAS BEEN TAKEN ON THE BASIS OF MARKET PRICE. IF THE SAME IS TAKEN ON THE BASIS OF PURCHASE PRICE, THEN THERE WILL BE NO DIFFERENCE. BY ACCEPTING THIS CONTENTION OF THE AS SESSEE, THE ASSESSING OFFICER REDUCED 15% GP FROM THE TOTAL EXCESS STOCK AND, THEREFORE, IN THIS WAY HE COMPUTED UNDISCLOSED STOCK AT RS. 3,75,367/- AND MADE ADDITION. WHILE M AKING ADDITION, PROVISIONS OF SECTION 145(3) WERE APPLIED AND TRADING ADDITION OF RS. 53, 547/- WAS ALSO MADE BY APPLYING GP RATE OF 15% AGAINST 13.10% SHOWN BY ASSESSEE. THE L D. CIT (A) HAS CONFIRMED THE APPLICATION OF PROVISIONS OF SECTION 145(3) AS WELL AS APPLICATION OF GP RATE AT 15%. HOWEVER, LD. CIT (A) DELETED THE ADDITION ON ACCOUN T OF EXCESS STOCK FOUND DURING THE COURSE OF SURVEY. 5. THE LD. D/R PLACED RELIANCE ON THE ORDER OF ASSE SSING OFFICER. 6. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESS EE PLACED RELIANCE ON THE ORDER OF LD. CIT (A). 7. IT WAS CONTENDED BEFORE LD. CIT (A) THAT THERE W AS A SALE OUTSIDE BOOKS OF ACCOUNT AT RS. 30,93,000/- AND ON THIS SALE THE ASSESSEE HA S SURRENDERED A SUM OF RS. 4,33,000/- WHICH HAS NOT BEEN TAKEN INTO CONSIDERATION WHILE E STIMATING THE EXCESS STOCK. THE LD. CIT (A) ACCEPTED THIS CONTENTION OF THE ASSESSEE AN D, THEREFORE, HE HAS DELETED THE ADDITION. THIS FINDING OF LD. CIT (A) REMAINED UNC ONTROVERTED THAT THE PAYMENT ON 3 UNDISCLOSED SALES WAS EARNED BY ASSESSEE WHICH WAS MORE THAN THE EXCESS STOCK FOUND. THEREFORE, THERE SHOULD NOT HAVE ANY FURTHER ADDITI ON. 8. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE CON FIRM THE ORDER OF LD. CIT (A) ON THIS ISSUE. 9. NEXT ISSUE IS AGAINST REDUCING THE ADDITION OF R S. 1,44,482/- TO RS. 30,950/-. 10. THE ABOVE ADDITION WAS MADE BY THE ASSESSING OF FICER BY NOT ACCEPTING THE SURRENDER SALES OF RS. 30,93,000/- AS HE ESTIMATED SALES AT RS. 38,49,881/-. THE LD. CIT (A) HAS ALLOWED THIS ISSUE THAT SALES ADOPTED AT RS . 38,49,881/- AGAINST SALES ADMITTED BY ASSESSEE AT RS. 30,93,000/- AND DEPARTMENT HAS NOT CHALLENGED THIS FINDING OF LD. CIT (A). ASSESSEE HAS ALREADY ACCEPTED THE ADDITION OF RS. 4 ,33,000/- AND THE ASSESSING OFFICER HAS ENHANCED THIS INCOME AT RS. 5,77,482/- AND IN T HIS WAY THE ADDITION OF RS. 1,44,482/- WAS MADE. THE LD. CIT (A) HAS REDUCED THIS ADDITIO N OF RS. 1,44,482/- TO RS. 30,950/- BY OBSERVING THAT HE HAS UPHELD THE APPLICATION OF GP RATE AT 15% AGAINST 13.10% DECLARED BY ASSESSEE AND, THEREFORE, HE HAS APPLIED GP @ 15% ON SURRENDERED SALE WHICH RESULTED IN A FURTHER ADDITION OF RS. 30,950/-. ACCORDINGLY TO THIS EXTENT, THE LD. CIT (A) SUSTAINED THE ADDITION AND REMAINING ADDITION OUT OF RS. 1,44 ,482/- WAS DELETED. THE FINDING OF LD. CIT (A) ARE FINDING OF FACT WHICH NEITHER COULD BE CONTROVERTED NOR ANY OTHER MATERIAL WAS BROUGHT ON RECORD. THEREFORE, WE CONFIRM THE O RDER OF LD. CIT (A) IN THIS RESPECT ALSO. 11. NEXT ISSUE IS AGAINST DELETING THE ADDITION OF RS. 2,97,491/- MADE BY ASSESSING OFFICER ON ACCOUNT OF INITIAL INVESTMENT IN UNRECOR DED SALES. 12. ON THE BASIS OF SALES ESTIMATED BY ASSESSING OF FICER AT RS. 38,49,881/-, THE ASSESSING OFFICER OBSERVED THAT UNRECORDED SALES CA NNOT BE MADE WITHOUT MAKING ANY 4 INVESTMENT FOR PURCHASING THE MATERIAL. THEREFORE, HE ESTIMATED THE INVESTMENT AT RS. 2,97,498/- AND THE SAME WAS ADDED UNDER SECTION 68. IT WAS SUBMITTED BEFORE LD. CIT (A) THAT RS. 4,33,000/- HAS ALREADY BEEN SURRENDERED AN D ALL THE PURCHASES WERE NOT MADE AT ONE GO AS EVERY PURCHASES WERE ROUTED AND RECYCLED. THEREFORE, FURTHER ADDITION MADE ON ACCOUNT OF INVESTMENT IN PURCHASE WAS NOT JUSTIFIED . THE LD. CIT (A) SATISFIED AND ACCORDINGLY HE DELETED THE ADDITION. 13. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE ARE OF THE VIEW THAT LD. CIT (A) WAS REASONABLE IN DELETIN G THIS ADDITION AS AN ADDITION OF RS. 4,33,000/- AND ADDITION OF RS. 30,950/- AND ADDITIO N OF RS. 53,547/- HAVE ALREADY BEEN SUSTAINED ON ACCOUNT OF APPLYING HIGHER GP RATE AND ON ACCOUNT OF PROFIT ON UNRECORDED SALES. THEREFORE, WE CONFIRM THE ORDER OF LD. CIT ( A) ON THIS ACCOUNT ALSO. 14. THE REMAINING ISSUE IS AGAINST DIRECTING TO ALL OW REMUNERATION TO THE PARTNERS ON THE INCOME ASSESSED BY ASSESSING OFFICER. 15. THE LD. CIT (A) DIRECTED THE ASSESSING OFFICER TO ALLOW THE SALARY PAYABLE TO THE PARTNERS ON THE BASIS OF CLAUSES OF PARTNERSHIP AND ON THE AMOUNT FINALLY ASSESSED. PARTNERS ARE SHOWING SALARY ON THE BASIS OF PROFIT EARNED BY THE FIRM AND AS PER PARTNERSHIP CLAUSES. THE FIRM HAS SHOWN PROFIT OF RS. 3,82,750/-. HOWEVER, THE ASSESSMENT HAS BEEN MADE ON HIGHER FIGURE. ACCORDI NGLY, THELD. CIT (A) DIRECTED TO ALLOW THE REMUNERATION AS PER PARTNERSHIP CLAUSES A ND MAKE SURE THT ALLOWANCE OF SALARY IS TAXED IN THE HANDS OF THE PARTNERS. 16. IN THESE FINDING OF LD. CIT (A) WE SEEN NO UNRE ASONABLENESS. THEREFORE, WE CONFIRM THE FINDING OF LD. CIT (A) ON THIS ISSUE AL SO. 5 17. IN THE RESULT, APPEAL OF THE DEPARTMENT AS WELL AS CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. 18. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 15 .12.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JODHPUR, COPY FORWARDED TO :- THE ITO, WARD-2, CHURU. M/S. VAISHALI, SUJANGARH. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 74(2)/JODH/2010) BY ORDER, AR ITAT JODHPUR.