The DCIT, Circle 1, JUNAGADH V. Shri Bharatkumar Gordhandas Rajani, JUNAGADH

ITA 79/RJT/2011

• Counselvise Citation: 7924914 RSA 2011
• Duration Of Justice: 2 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-04-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 04-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K SINGH DR IU
• Assessee Lawyers: J C RANPURA CA U C
• Keywords: Gross profit estimation; Unexplained investment; Gift; Business income; Business expenditure; Deemed to accrue or arise in india; Revised return
• Section: 143(3); 80HHC; 133A; 132

Judgement Text

C R, IN THE INCOME TAX APPELLATE TRIBU N AL; RAJKOT BENCH, RAJKOT. BEFORE SHRI D . K. TYAGI , JM AND SHRI A. M OHAN ALANKAMONY , AM IT A NO . 79 /RJT/ 2011 I I / ASSESSMENT YEAR 200 4 - 05 DCIT, CIRCLE - 1, JUNAGADH ( Y / APPELLANT) VS. SHRI BHARATKUMAR G. RAJANI, PROP. BHAGYODAY TEA CENTRE, JUNAGADH PAN : ABVPR 3701 M RY / RESPONDENT C.O.NO. 32/RAJ/2011 IN IT A NO . 79 /RJT/2011 I I / ASSESSMENT YEAR 200 4 - 05 SHRI BHARATKUMAR G. RAJANI, JUNAG ADH ( Y / CROSS - OBJECTOR ) VS. DCIT, CIRCLE - 1, JUNAGADH RY / RESPONDENT O U / REVENUE BY SHRI M K SINGH, DR IU /ASSESSEE BY SHRI J C RANPURA, CA U C / DATE OF HEARING 22.04.2013 U C / DATE OF PRONOUNCEMENT 26 .04.2013 / ORDER PER BENCH : THIS APPEAL OF THE REVENUE AND CROSS - OBJECTION S BY THE ASSESSEE ARE AGAINST THE ORDER OF THE LD. CIT(A) - XXI , AHMEDABAD IN APPEAL NO. CIT(A) - XXI/488/CIR.1.JNG/10 - 11 DATED 31 .1 2 .201 0 FOR THE A SSESSMENT YEAR 2004 - 0 5 PASSED U/S 250 R.W.S 143(3) OF THE ACT . SINCE APPEAL OF THE REVENUE AND C ROSS - OBJECTION S ARE WITH RESPECT TO SAME ISSUES AND FACTS , FOR THE SAKE OF CONVENIENCE, THEY ARE HEARD TOGETHER AND ARE DISPOSED - OFF BY THIS CONSOLIDATED ORDER . 2. THOUGH THE REVENUE HAS RAISED NINE GROUNDS IN ITS APPEAL, GROUND NO. 1, 7, 8 & 9 ARE GENERAL IN NATURE AND DO NOT SURVIVE FOR ADJUDICATION. THE OTHER FIVE GROUNDS ARE EXTRACTED HEREIN BELOW FOR OUR CONSIDERATION: - 79 /RJT / 2011 CO 3 2/RJT/201 1 2 2. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.7,80,481/ - MADE BY THE AO AS PER THE PROVISIONS OF SECTION 69A OF THE IT ACT, 1961. 3. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.50,000/ - MADE BY THE AO, ON ACCOUNT OF UN EXPLAINED INVESTMENTS. 4. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.4,75,370/ - MADE BY THE AO AS BHET YOJNA EXPENSES. 5. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.50,000/ - MADE BY THE AO, ON ACCOUNT OF UNEXPLAINED INVESTMENTS IN STOCK OF STRAP ROLL. 6. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.37,700/ - MADE BY THE AO OUT OF VARIOUS EXPENSES SIC ON ACCOUNT OF PERSONAL EXPENSES . 3. THE ASSESSEE HAS RAISED TWO GROUNDS IN ITS CROSS - OBJECTIONS, WHEREIN THE FIRST GROUND IS GENERAL IN NATURE AND DO NOT SURVIVE FOR ADJUDICATION. THE OTHER RELEVANT LONE GROUND IS REPRODUCED HEREIN BELOW FOR CONSIDERATION. 2.0 THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) - XXI, AHMEDABAD [HEREINAFTER REFERRED TO AS THE CIT(A)] ERRED ON FACTS AS ALSO IN LAW IN SUSTAINING DISALLOWANCE OF RS.30,000/ - ON ACCOUNT OF ALLEGED PERSONAL ELEMENT INVOLVED IN CAR, MISCELLANEOUS AND TELEPHONE EXPENSES. THE DISALLOWANCE MAY KINDLY B E DELETED. 4. BRIEF FACTS : - THE ASSESSEE IS AN INDIVIDUAL, EARNING INCOME FROM THE BUSINESS OF TRADING IN TEA ON WHOLESALE BASIS IN THE NAME AND STYLE OF M/S. BHAGYODAY TEA CENTRE, FILED HIS RETURN OF INCOME FOR THE AY 200 4 - 0 5 ON 25 .1 0 .200 4 DECLARING TO TAL INCOME OF RS. 3,75,300 / - . SUBSEQUENTLY REVISED RETURN OF INCOME WAS FILED ON 25.04.2005 DECLARING TOTAL INCOME AT RS.4,54,320/ - , ALONG WITH AUDITED P&L A/C., BALANCE - SHEET AND AUDIT REPORT IN FORM NO.3CD AS REQUIRED U/S 44AB OF THE I - T ACT. A SURVEY A CTION U/S 133A OF THE I - T ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 24.11.2003 WHEREBY SOME DISCREPANCIES WERE FOUND ON PHYSICAL VERIFICATION OF STOCK. THE EXCESS STOCK WAS BEING WORKED OUT AND VALUED AT RS.7,80,481 / - WHICH THE ASSES SEE ADMITTED , AND RECORDED IN THE BOOKS OF ACCOUNT AND PAID ADVANCE TAX ON THE SAME . SUBSEQUENTLY ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 27.12.2006 WHEREIN THE LD AO MADE VARIOUS ADDITIONS , MANY OF WHICH WERE DELETED BY THE LD CIT(A) AND NOW BO TH THE REVENUE AS WELL AS ASSESSEE ARE IN APPEAL BEFORE US. 79 /RJT / 2011 CO 3 2/RJT/201 1 3 5. GROUND NO.2 - DELETING THE ADDITION OF RS.7,80,481/ - MADE BY THE AO AS PER PROVISIONS OF SECTION 69A OF THE IT ACT, 1961 : - LD AO HAD CONSIDERED THE AMOUNT OF RS.7,80,481/ - BEING THE EXCESS S TOCK FOUND DURING THE COURSE OF SURVEY AS DEEMED INCOME U/S 69A OF THE ACT WHILE AS LD . CIT(A) ACCEDED TO THE SUBMISSION OF THE ASSESSEE AND TREATED THE SAME AS BUSINESS EXPENDITURE. AT THE OUTSET WE FIND THIS ISSUE COVERED IN FAVOUR OF THE ASS ESSEE BY THE DECISION RENDERED BY THE RAJKOT TRI BUNAL IN ITA NO. 83/RJT/2011 FOR AY 200 4 - 0 5 DATED 26.04.2013 IN THE ASSESSEES BROTHERS CASE WHEREIN FACTS AND ISSUES ARE SIMILAR ( PAGE NO.7, PARA NO.8.2 & 8.3 OF THE TRIBUNAL ORDER ) . THE RELEVANT PORTION OF THE ORD ER IS EXTRACTED HEREIN BELOW FOR REFERENCE: - 8.2 WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PERUSED THE MATERIALS ON RECORDS. ON PERUSING THE ORDER OF JURISDICTIONAL GUJARAT HIGH COURT CITED SUPRA BY THE LD AR, WE FIND THAT THE ISSUE IS SQUARELY COVER ED. THE HONBLE GUJARAT HIGH COURT HAD OBSERVED THUS IN THE CASE OF THE ASSESSEE SHRI PRABHUDAS S. PAREKH WHO IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF MANUFACTURE, EXPORT AND TRADING OF GOLD AND SILVER ORNAMENTS, FROM WHOM CERTAIN UNACCOUNTED JEWELRY W AS FOUND DURING ACTION U/S 132 OF THE ACT AND THE ASSESSING OFFICER HAD DENIED IT TO BE TREATED AS INCOME FROM BUSINESS WHILE AS THE LD CIT(A) DIRECTED THE AO TO TREAT THE SAME AS BUSINESS INCOME: - 5. IN THE PRESENT CASE, SEARCH WAS CONDUCTED AND SOME U NACCOUNTED JEWALLERY WAS FOUND. THE DEPARTMENT ACCEPTED THE STATEMENTS MADE BY THE ASSESSEE. AFTER CONSIDERING THE FACTS AND THE CIRCUMSTANCES AS DISCUSSED ABOVE AND IN VIEW OF LEGAL POSITIONS, WE ARE OF THE CONSIDERED OPINION THAT THE LEARNED CIT(A) IS PERFECTLY JUSTIFIED IN TREATING THE INCOME OF THE ASSESSEE FROM BUSINESS AND HE HAS CORRECTLY DIRECTED THE ASSESSING OFFICER TO RECOMPUTED THE DEDUCTION UNDER SEC. 80HHC TREATING THE DISCLOSED INCOME AS BUSINESS INCOME. THE FINDINGS OF THE LEARNED CIT(A PPEALS) DO NOT REQUIRE ANY INTERFERENCE FROM OUR SIDE AND HIS FINDINGS ARE UPHELD. 8.3 SINCE THE FACTS OF THIS CASE BEFORE US AND THE FACTS OF THE CASE DECIDED BY HONBLE JURISDICTIONAL HIGH COURT (SUPRA) ARE IDENTICAL, WE ARE BOUND BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT AND ACCORDINGLY WE HEREBY DIRECT THE LD AO TO TREAT THE EXCESS STOCK FOUND DURING THE COURSE OF SURVEY AS INCOME DERIVED FROM BUSINESS. ACCORDINGLY WE HEREBY CONFIRM THE ORDER OF THE LD CIT(A) ON THIS ISSUE. THUS THI S GROUND RAISED BY THE REVENUE IS DISMISSED. 5.1 FOLLOWING THE DECISION OF THE RAJKOT TRIBUNAL (SUPRA) WE CONFIRM THE ORDER OF THE LD CIT(A) ON THIS ISSUE. THUS THIS GROUND RAISED BY THE REVENUE IS DISMISSED. 79 /RJT / 2011 CO 3 2/RJT/201 1 4 6. GROUND NO.3 & 5 - DELETING THE ADDITI ON OF RS.50,000/ - EACH MADE BE THE AO ON ACCOUNT OF UNEXPLAINED INVESTMENTS & STRAP ROLL : - DURING THE COURSE OF SURVEY THE LD AO FOUND THAT THE ASSESSEE HAD UNEXPLAINED STOCK OF TIFFIN, MILKAN & STEEL BOXES ETC.. AND 216 KG OF STRAP ROLL WHICH WERE NOT RE CORDED IN THE BOOKS OF ACCOUNTS AND THEREFORE ADDED TO THE INCOME OF THE ASSESSEE. WE FIND T HIS ISSUE ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION RENDERED BY THE RAJKOT TRIBUNAL IN ITA NO. 83/RJT/2011FOR AY 2004 - 05 DATED 26.04.2013 IN THE ASSES SEES BROTHERS CASE WHEREIN FACTS AND ISSUES ARE SIMILAR AT PAGE NO.9 & 10, PARA NO. 10, 10.1 & 10.2 OF THE ORDER. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED HEREIN BELOW FOR REFERENCE: - 10. GROUND NOS.4 & 5 OF THE REVENUES APPEAL - DELETING THE ADDI TION OF RS.53,650/ - & RS.50,000/ - MADE BY THE AO ON ACCOUNT OF UNEXPLAINED INVESTMENT IN STOCK: - DURING THE COURSE OF SURVEY ACTION, IT WAS OBSERVED BY THE LD AO THAT CERTAIN ARTICLES SUCH AS TIFFIN, MILK CAN, STEEL BOXES AND STRAP ROLLS WERE FOUND WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS. THE LD AO MADE AN ADDITION OF RS.53,650/ - AND RS.50,000/ - AS UNEXPLAINED INVESTMENTS IN STOCK. IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE LD CIT(A) THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD LOD GED A SCHEME FOR DISTRIBUTION OF ARTICLES SUCH AS TIFFIN, MILK CAN, STEEL BOXES AS GIFTS. THE ASSESSEE FURTHER EXPLAINED THE AMOUNT OF RS.53,650/ - WAS TREATED AS PURCHASES AND CHARGED TO PROFIT AND LOSS ACCOUNT SINCE THEY WERE GIFT ARTICLES KEPT FOR DIST RIBUTION. LD CIT(A) CONSIDERING THE ARGUMENTS OF THE ASSESSEE AND FURTHER GIVING THE TELESCOPIC BENEFIT FOR THE ADDITION MADE ON ACCOUNT OF LOW GP DELETED THIS ADDITION OF RS.53,650/ - . AFTER HEARING BOTH THE SIDES, WE ARE OF THE VIEW THAT THE REVENUE IS NOT JUSTIFIED IN MAKING THE ADDITION OF RS.53,650/ - BEING GIFT ARTICLES PURCHASED BY THE ASSESSEE. THESE ARE PETTY ITEMS PURCHASED FOR DISTRIBUTION TO VARIOUS PEOPLE FOR PROMOTION OF THE BUSINESS. THESE ITEMS CANNOT BE CONSIDERED AS STOCK IN TRADE OR INVE STMENTS. MOREOVER, THE VALUE OF THESE ITEMS INDIVIDUALLY ARE VERY LESS. CONSIDERING THE NATURE OF EXPENDITURE AND THE ITEMS PURCHASED AND KEEPING IN VIEW OF THE ACCOUNTING CONCEPT OF MATERIALITY WE HEREBY DELETE THE ADDITIONS OF RS.53,650/ - AND SUSTAINED THE ORDER OF LD CIT(A). 10.1 LD AO HAD FURTHER MADE AN ADDITION OF RS.50,000/ - FOR THE STRAP ROLL OF 211KGS FOUND DURING THE COURSE OF SURVEY WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS. THE ASSESSEE HAS SUBMITTED BEFORE THE LD CIT(A) THAT THE STRA P ROLLS WERE NOT PURCHASED BY THE ASSESSEE BUT WERE PART OF PACKING MATERIAL RECEIVED FROM SUPPLIERS OF TEA AND THE SAME ARE TO BE SOLD - OF AS SCARP. THE LD CIT(A) HAS DELETED THE ADDITIONS WITH THE FOLLOWING OBSERVATIONS CONSIDERING THE SUBMISSIONS OF TH E ASSESSEE: - 7.1 I FIND SUBSTANTIAL FORCE IN THE CONTENTION OF THE LD AR IN THE MATTER. TEA IS PROCURED IN WOODEN BOXES WHICH ARE PACKED WITH STRAP ROLLS. THESE STRAP ROLLS ARE NOT ASSESSEES TRADING 79 /RJT / 2011 CO 3 2/RJT/201 1 5 ITEMS. THEY ARE USUALLY SOLD AS SCRAP. THEREFOR E, MAKING ADDITION BY TREATING THE SAME AS UNEXPLAINED INVESTMENT DOES NOT ARISE AND THEREFORE NO ADDITION IS CALLED FOR. THEREFORE, THIS GROUND OF ASSESSEES APPEAL IS ALSO ALLOWED. 10.2 WE FULLY AGREE WITH THE FINDINGS AND REASONING OF THE LD CIT(A) ON THIS ISSUE AND THEREFORE CONFIRM HIS ORDER. THUS, BOTH THE GROUND NOS.4 & 5 RAISED BY THE REVENUE ARE DISMISSED. 6.1 FOLLOWING THE DECISION OF THE RAJKOT TRIBUNAL (SUPRA) WE CONFIRM THE ORDER OF THE LD CIT(A) ON THIS ISSUE. THUS THESE GROUND S RAISED BY THE REVENUE ARE DISMISSED. 7. GROUND NO.4 - DELETING THE ADDITION OF RS.4,75,370/ - MADE BY THE AO AS BHET YOJ NA EXPENSES: - THE LD AO HAD OBSERVED THAT THE ASSESSEE HAD PAID RS.28,52,230/ - AS BHET YOGNA EXPENSES. THE ASSESSEE DID NOT FURNISH ANY DET AILS FOR THIS EXPENDITURE AND FURTHER THE AUDITORS HAD REPORTED THAT THE PAYMENTS MADE TO VARIOUS PARTIES ARE SUBJECT TO THEIR CONFIRMATION. THEREFORE, LD. AO MADE AN ADDITION OF RS.4,75,370/ - . BEFORE LD CIT(A) , LD AR MADE THE FOLLOWING SUBMISSIONS: - T HE AO VIDE PARA 15 OF THE ASSESSMENT ORDER HELD THAT THE AUDITOR IN COL. 5 OF THE NOTE ON ACCOUNTS REPORTED THAT PAYMENT MADE TO VARIOUS PARTIES ARE SUBJECT TO CONFIRMATION. THUS, ON THE ABOVE BASIS HE PRESUMED THAT THERE IS NO COMPLETE CHECK OVER THE EXPENSES AND DISALLOWED 1/6 TH OF SUCH EXPENSES. IN THE ABOVE CONNECTION THE APPELLANT SUBMITS THAT THE APPELLANT IS CARRYING THE BUSINESS IN TEA ON WHOLE SALE BASIS. DURING THE YEAR UNDER REFERENCE THE ASSESSEES TURNOVER IS RS.3.79 CRORES. IN ORDER TO DEVELOP THE BUSINESS IN COMPETITIVE MARKET, THE APPELLANT HAS TO LAUNCH VARIOUS SCHEMES GIFT PACKAGES TO ATTRACT THE BUYER AND NET WORK OF DEALERS. FOR HIS PURPOSE SCHEMES LAUNCHED HAS DIRECT NEXUS WITH THE SALES. FOR THESE PURPOSE TOTAL EXPENSES OF RS.2 8,52,230/ - WAS INCURRED UNDER THE VARIOUS HEADS. THE SAME ARE RUNS AS UNDER: - NATURE OF EXPENSE AMOUNT (RS.) HEAD OF EXPENSE EVIDENCES AT PAGE FIX SCRATCH COUPON FOR DEALERS. 15700 BHET YOJNA GRAHAK SCHEME (SMALL GIFT LIKE PENCIL, SPOON, ETC. ARE PACK ED WITH THE GOODS) 899953 - DO - R.C.B. AGENT, (RAJNI CHA BECHO AGENT SCHEME) 19535 - DO - RCB SCRATCH CARD FOR DEALERS 1532032 - DO - SALES PROMOTION COUPON & SAMPLING 385010 - DO - TOTAL 2852230 79 /RJT / 2011 CO 3 2/RJT/201 1 6 DETAILED ACCOUNT ALONG WITH THE COPY BILL OF BILLS IN RESPECT OF PURCHASES OF VARIOUS ITEMS LIKE THE TIFFIN, MILK CAN ETC. FOUND ARE ATTACHED AS STATED ABOVE. THUS, 1120 PRESENTATION ITEMS FOUND ARE DULY RECORDED IN THE BOOKS OF ACCOUNT IN RESPECT OF VARIOUS BHET YOJNA LAUNCHED FOR PROMOTION OF SALES. THE AO OUGHT TO HAVE APPRECIATED THE FACTS IN PROPER PERSPECTIVE BEFORE MAKING DISALLOWANCE OF RS.50,000/ - AND RS.4,75,370/ - ON A GENERAL STATUTORY ACCOUNTING NOTE. WHERE EVER APPLICABLE THE PAYMENT HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES TO THE PARTIES FROM THE ARTICLES WERE PURCHASED. THUS, THE ADDITION MADE ON PRESUMPTION AND SURMISES DESERVES TO BE DELETED. 7. 1 BASED ON THIS SUBMISSION, THE LD CIT(A) ARRIVED AT THE FOLLOWING CONCLUSION: - 6.1 I HAVE PERUSED THE ASSESSMENT ORDER AND THE SUBMISSION PUT FORTH BY THE LD AR OF THE ASSESSEE. IT IS ALSO SEEN FROM THE COPY OF THE STATEMENT THAT, DURING THE COURSE OF SURVEY, NO ADVERSE INFERENCE ON SUCH ITEMS KEPT FOR PROMOTIONAL SALES WAS TAKEN. FURTHER THE NATURE OF THE INVENTORY ITSELF PROVES THAT THE SAM E WERE KEPT FOR FREE DISTRIBUTION AMONGST CUSTOMERS. SINCE THE SAME HAS ALREADY BEEN RECORDED IN THE BOOKS, MAKING FURTHER ADDITION OUT OF THE SAME DOES NOT ARISE. THEREFORE, NO ADDITION ON THIS POINT IS CALLED FOR. 7.2 CONSIDERING THE SUBMISSION OF TH E LD AR AND THE FINDINGS OF THE LD. CIT(A), WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDER OF THE LD CIT(A) AT THIS STAGE. ACCORDINGLY WE CONFIRM THE ORDER OF THE LD CIT(A). THIS GROUND RAISED BY THE REVENUE IS DISMISSED. 8 . GROUND NO. 6 OF RE VENUES APPEAL AND GROUND NO.2 OF THE ASSESSEES CO - DELETING THE ADDITION OF RS.37,700/ - OUT OF TOTAL DISALLOWANCE RS.67,700/ - MADE BY THE AO ON ACCOUNT OF PERSONAL EXPENDITURE : - THE LD AO HAD DIS ALLOWED RS.32,140/, RS.15,160/ - & RS.20,400/ - BEING ONE FO RTH OF TOTAL EXPENDITURE INCURRED TOWARDS CAR, MISCELLANEOUS AND TELEPHONE EXPENSE RESPECTIVELY ON THE PREMISES THAT THE ASSESSEE WOULD HAVE ALSO USED THESE FACILITIES FOR PERSONAL USE. HOWEVER, THE LD CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE TO THE EXTENT OF RS. 37 , 700 / - AND SUSTAINED THE ADDITION OF RS. 3 0,000/ - . THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION RENDERED BY THE RAJKOT TRIBUNAL IN ITA NO. 82/RJT/2011FOR AY 2003 - 04 DATED 26.04.2013 IN THE ASSESSEES BROTHERS CASE WHEREIN FACTS AND ISSUES ARE SIMILAR AT PAGE NO.5 & 6, PARA NO.7, 7.1 & 7.2 OF THE ORDER. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED HEREIN BELOW FOR REFERENCE: - 79 /RJT / 2011 CO 3 2/RJT/201 1 7 7. GROUND 3 OF REVENUES APPEAL AND GROUND NO.2 OF THE ASSESSEES CROSS - OBJECTIONS - DELETING THE AD DITION OF RS.42,240/ - OUT OF THE TOTAL ADDITION OF RS.82,240/ - MADE BY THE AO, OUT OF VEHICLE/MISCELLANEOUS SHOP EXPENSES AND TELEPHONE EXPENSES: - THE LD AO HAD DISALLOWED RS.38,970/, RS.12,330/ - , RS.30,940 BEING ONE FORTH OF TOTAL EXPENDITURE INCURRED T OWARDS CAR, MISCELLANEOUS AND TELEPHONE EXPENSE RESPECTIVELY ON THE PREMISES THAT THE ASSESSEE WOULD HAVE ALSO USED THESE FACILITIES FOR PERSONAL USE. HOWEVER, THE LD CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE TO THE EXTENT OF RS.42,240/ - AND SUSTAINED THE AD DITION OF RS.40,000/ - . 7.1 THE LD DR JUSTIFIED THE STAND OF THE LD AO AND ARGUED THAT THE LD AO HAD JUDICIOUSLY DISALLOWED ONLY ONE FORTH OF THE TOTAL EXPENDITURE INCURRED BY THE ASSESSEE BECAUSE THERE WAS AN ELEMENT OF PERSONAL USE WHICH WAS NOT PROPER LY RECORDED BY THE ASSESSEE. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD. AO MAY BE RESTORED. LD AR ON THE OTHER HAND SUBMITTED THAT THE ADDITION MADE BY THE LD AO WHICH WAS FURTHER PARTLY SUSTAINED BY THE LD CIT(A) FOR RS.40,000 / - WAS NOT WARRANTED BECAUSE THERE WAS NO ELEMENT OF PERSONAL USE. IT IS THEREFORE SUBMITTED THAT THE ADDITION SUSTAINED BY THE LD CIT(A) MAY BE DELETED. 7.2 AFTER HEARING BOTH THE SIDES AND CAREFULLY PERUSING THE MATERIALS BROUGHT BEFORE US, WE DO NOT FIND ANY INFIRMITY I N THE ORDER PASSED BY LD CIT(A). THOUGH LD AO HAS RIGHTLY OBSERVED THAT THE ASSESSEE HAS NOT MAINTAINED PROPER RECORDS FOR PERSONAL USE FOR THE EXPENDITURE INCURRED BY THE OFFICE OF THE ASSESSEE, THE LD CIT(A) HAS JUDICIOUSLY GIVEN RELIEF OF RS.42,240/ - CO NSIDERING THE FACT THAT THAT LD AO HAS NOT BROUGHT ANY EVIDENCE TO DRAW SUCH ADVERSE INFERENCE. THEREFORE WE HEREBY CONFIRM THE ORDER OF LD CIT(A). ACCORDINGLY THE GROUND RAISED BY THE REVENUE IS DISMISSED AND ALSO THE GROUND RAISED BY ASSESSEE IN HIS CROS S - OBJECTION IS ALSO DISMISSED. 8.1 FOLLOWING THE DECISION OF THE RAJKOT TRIBUNAL (SUPRA) WE CONFIRM THE ORDER OF THE LD CIT(A) ON THIS ISSUE. THUS THIS GROUND RAISED BY THE REVENUE IS DISMISSED AND CONSEQUENTLY THE CO OF THE ASSESSEE IS ALSO DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND CO OF THE ASSESSEE IS ALSO DISMISSED. T HIS O RDER IS PRONOUNCED IN THE O PEN COURT ON THE DATE MENTIONED HEREINABOVE. SD/ - SD/ - (D .K. TYAGI) ( A. M OHAN ALANKAMONY ) O / JUDICIAL MEMBER OHAN / ACCOUNTANT MEMBER N/ ORDER DATE 26 .04.2013 /RAJKOT BT 79 /RJT / 2011 CO 3 2/RJT/201 1 8 9 RJO IO / COPY OF ORDER FORWARDED TO: - 1 Y / APPELLANT - DCIT, CIRCLE - 1, JUNAGADH 2 RY / RESPONDENT - SHRI BHARATKUMAR G. RAJANI, JUNAGADH R D / CIT CONCERNED 4. D - / CIT (A) - XXI, AHMEDABAD 5 R, C R, / DR, ITAT, RAJKOT 6 I / GUARD FILE. / BY ORDER , TRUE COPY SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, RAJKOT.