KRISHNA AKAR, Jaipur V. ITO, Jaipur

ITA 80/JPR/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2035 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 24-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: POONAM ROY DCIT DHK
• Keywords: Depreciation
• Section: 80C; 144

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPAN] YS[KK LNL; ] DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 80/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 KRISHNA AKAR, 66, KISHANPOLE BAZAR, JAIPUR, RAJ.-302001 CUKE VS. INCOME TAX OFFICER, WARD-1(4), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABWPA 2864 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MUKESH KHANDELWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SMT. POONAM ROY (DCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 26/09/2017 MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 29/09/2017 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST EMA NATES FROM THE ORDER OF THE LD. CIT(A), ALIGARH, (CAMP OFFICE), JA IPUR DATED 13/10/2016 FOR THE A.Y. 2010-11. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADIN G OF GEMS STONES. THE ASSESSMENT WAS FINALIZED U/S 144 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE LD. CIT(A) PARTLY ALLOWED THE APPE AL OF THE ASSESSEE. ITA 80/JP/2017_ KRISHNA AKAR VS ITO 2 NOW THE ASSESSEE IS IN APPEAL BEFORE THE ITAT BY TAKI NG FOLLOWING GROUNDS OF APPEAL: 1. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED SERIOUSLY ON THE FACTS AND IN LAW IN SUST AINING TRADING ADDITION OF RS. 7,40,581/- (OUT OF ADDITION OF RS. 13,35,454 DONE BY THE A.O.) TO THE INCOME OF THE APPELLANT WITHOUT IN VOKING PROVISIONS OF SECTION 145(3) OF THE INCOME TAX ACT, 1961. 2. THAT UNDER THE CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) HAS ERRED SERIOUSLY ON THE FACTS AND IN LAW:- (A) IN SUSTAINING A DISALLOWANCE OF RS. 1,43,878 O UT OF TOTAL EXPENSE OF RS. 7,19,391 (AS DETAILED AT PAGE 5 OF H IS ORDER). (B) IN SUSTAINING SEPARATE DISALLOWANCES OUT OF EX PENSES EVEN AFTER SUSTAINING THE ORDER FRAMED BY LD. A.O. U/S 1 `44 OF THE INCOME TAX ACT, 1961. 3. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED ON FACTS IN SUSTAINING ADDITION OF RS. 96 ,447/- UNDER THE HEAD INCOME FROM OTHER SOURCES. 4. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED ON FACTS IN SUSTAINING ADDITION OF RS. 1, 00,000/- CLAIMED AS DEDUCTION BY THE APPELLANT U/S 80C OF THE INCOME TAX ACT, 1961. 5. THAT THE ASSESSEE CRAVES LEAVE TO ADD, AMEND, AL TER, AND DELETE ANY OF THE GROUNDS OF APPEAL BEFORE THE HEARING. 3. IN THE GROUND NO. 1, THE ISSUE INVOLVED IS SUSTA INING THE TRADING ADDITION OF RS. 7,40,581/- OUT OF TOTAL ADDITION OF RS. 13,35,454/- MADE BY THE ASSESSING OFFICER. WHILE PLEADING ON BEHALF OF THE ASSESSEE, THE LD A.R. HAS SUBMITTED AS UNDER: THE APPELLANT WISHES TO REVISE THE GROUND AS UNDER ITA 80/JP/2017_ KRISHNA AKAR VS ITO 3 1. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT (A) HAS ERRED SERIOUSLY ON THE FACTS AND IN LAW IN SUSTAINING TRADING ADDITION OF RS.7,40,581 (OUT OF ADDITION OF RS. 13,35,454 DONE BY LD. AO) TO THE INCOME OF THE APPELLANT. THE ONLY VARIATION BETWEEN GROUND NO. 1 AS TAKEN I N MEMO OF APPEAL AND AS BEING REQUESTED IS DELETION OF THE WO RDS ABOUT INVOCATION OF PROVISIONS OF SECTION 145(3). IT IS T HEREFORE SINCERELY REQUESTED THAT THE SAME MAY KINDLY BE ALLOWED TO BE REVISED. HISTORICAL GP RATE CHART OF THE APPELLANT IS AS UN DER SN ASSTT. YEAR TURNOVER G.P. AMOUNT G.P. RATE 1 2008 - 09 2,69,41,316 34, 82,691 12.92% 2 2009 - 10 82,74,105 20,71,289 25.03% 3 2010 - 11 1,97,84,500 26,22,784 13.25% THE LD. AO OBSERVED THAT SINCE THE GP RATE DECLARED BY THE APPELLANT IN THE RETURN FOR THE YEAR UNDER APPEAL W AS ON LOWER SIDE AS COMPARED TO PAST YEAR AND HENCE HE APPLIED A RATE OF 20% ON DECLARED TURNOVER MAKING AN ADDITION OF RS. 13,3 4,116. THE LD. CIT (A) OBSERVED THAT THERE WAS AN INCREASE OF 139% IN THE TURNOVER AS COMPARED TO IMMEDIATELY PRECEDING Y EAR AND HENCE HE REDUCED THE RATE TO 17% AND ALLOWED RELIEF OF 3%. DURING THE ASSTT. YEAR 2008-09 THE APPELLANT HAD DE CLARED A GP RATE OF 12.92% ON A TURNOVER OF RS. 2,69,41,316 WHI CH AFTER ASSESSMENT WAS ENHANCED TO 16% ONLY ON THE ALLEGATI ON OF UNVERIFIABLE PURCHASES FROM SOME PARTIES (TO THE EX TENT OF 57.2% OF TOTAL PURCHASES). THIS FACT WAS APPRECIATED BY T HE LD. CIT (A) ALSO (AS PER PAGE 3 PARA 5.5 OF THE CIT (A) ORDER) BUT EVEN AFTER THAT HE APPLIED A RATE OF 17% FOR ESTIMATING INCOME OF THE ITA 80/JP/2017_ KRISHNA AKAR VS ITO 4 APPELLANT. THEREFORE ADEQUATE RELIEF MAY KINDLY BE ALLOWED TO THE APPELLANT. IT IS SINCERELY REQUESTED THAT ADEQUATE RELIEF MAY PLEASE BE ALLOWED BY LOWERING THE ESTIMATED GP RATE, AS TH IS BUSINESS INVOLVES VERY HEAVY COMPETITION DUE TO WHICH PROFIT MARGIN SHRINKS YEAR AFTER YEAR AND HENCE TO ASSUME EARNING OF PROF IT AT AN INCREASING RATE AS COMPARED TO IMMEDIATELY PRECEDIN G YEAR IS NOT PRACTICABLE. 4. ON THE OTHER HAND, THE LD. DR HAS RELIED ON THE ORDER OF THE LD. CIT(A). 5. I HAVE HEARD BOTH THE SIDES ON THIS ISSUE. IN TH E IMMEDIATE PRECEDING YEAR, THERE WAS INCREASE IN THE TURNOVER F ROM 82.74 LACS TO 197.84 LACS. IN THE A.Y. 2008-09, THE TURNOVER WAS O F RS. 2,69,41,316/- AND IN THAT YEAR, THE ASSESSING OFFICER ESTIMATED T HE G.P. RATE @ 16% FOR NON VERIFIABLE PURCHASES. IN THE YEAR UNDER CONSIDE RATION, THE LD. CIT(A) HAS APPLIED THE G.P. RATE OF 17%. AFTER CONSIDERING THE PLEADINGS OF BOTH THE SIDES, ALSO CONSIDERING THE CASE LAWS RELIED UPO N AND LOOKING TO THE PECULIAR FACTS OF THE CASE, I DIRECT TO ESTIMATE TH E G.P. RATE @ 16%. THUS THE ASSESSEES GROUND OF APPEAL PARTLY SUCCEED. ACC ORDINGLY, GROUND NO. 1 OF THE APPEAL IS PARTLY ALLOWED. 6. IN THE GROUND NO. 2, THE ISSUE INVOLVED IS SUSTA INING THE DISALLOWANCE OF RS. 1,43,878/- MADE OUT OF VARIOUS E XPENSES DEBITED TO ITA 80/JP/2017_ KRISHNA AKAR VS ITO 5 THE P&L ACCOUNT. THIS WAS 20% OF THE CERTAIN EXPENSES DEBITED IN THE P&L ACCOUNT. THE ASSESSING OFFICER DISALLOWED 20% OF THE EXPENSES UNDER THE HEAD INSURANCE, SALE PROMOTION, TRAVELLIN G, TELEPHONE, OTHER EXPENSES AND DEPRECIATION AND THE LD. CIT(A) HAD CON FIRMED THE ACTION OF THE ASSESSING OFFICER. SINCE I HAVE SUSTAINED THE A DDITION FOR ESTIMATING THE GROSS PROFIT, THEREFORE, THERE IS NO REQUIREMEN T TO SUSTAIN THE AD HOC ADDITION FROM CERTAIN EXPENSES DEBITED TO THE P&L A CCOUNT. HENCE, I DIRECT TO DELETE THE SAME. 7. IN THE GROUND NO. 3, THE ISSUE RAISED IS SUSTAIN ING THE ADDITION OF RS. 96,447/- UNDER THE HEAD INCOME FROM OTHER SOURC ES. ON THIS ISSUE, THE LD. AR HAS SUBMITTED THAT THE LD. CIT(A) HAS SUS TAINED THE ADDITION FOR THE REASON THAT THE ASSESSEE HAD SHOWN HER INABILITY TO PRODUCE ANY DOCUMENTARY EVIDENCE ON THE ISSUE. IT WAS PLEADED TH AT THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER. 8. ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT THIS ISSUE WAS NOT PRESSED BY THE ASSESSEE BEFORE THE LD. CIT(A). THE L D AR WAS NOT ABLE TO CONTROVERT THIS FACT, THEREFORE, THIS GROUND OF APP EAL IS DISMISSED FOR THE REASON THAT THE ASSESSEE HAS SHOWN HER INABILITY TO PRODUCE ANY DOCUMENTARY EVIDENCE BEFORE THE LD. CIT(A) AND FOR T HE SAME THE ASSESSEE HAS NOT PRESSED THIS GROUND BEFORE THE LD. CIT(A). THEREFORE, ITA 80/JP/2017_ KRISHNA AKAR VS ITO 6 THIS ISSUE IS NOT ARISING OUT OF THE DECISION OF TH E LD. CIT(A), THE SAME IS HEREBY DISMISSED. ACCORDINGLY, THIS GROUND OF THE A SSESSEES APPEAL IS DISMISSED. 9. GROUND NO. 4 OF THE APPEALS IS AGAINST SUSTAININ G THE ADDITION OF RS. 1,00,000/- CLAIMED BY THE ASSESSEE U/S 80C OF T HE ACT. GROUND NO. 5: THAT THE ADDITION ON ACCOUNT OF DEDUC TION U/S 80C AMOUNTING TO RS. 1,00,000/- IS BAD IN LAW. NOT PRESSED IN VIEW OF THE FACT THAT ALL EVIDENCES A RE AVAILABLE WITH THE EX COUNSEL WHO HAS NOT BEEN COOPERATING THE APP ELLANT NOW. FU.KZ; VIHYKFKHZ US LO;A GH VIUS FYF[KR FUOSNU ESA DGK GS FD OG BL EQN~NS IJ CY NSUS DK BPNQD UGHA GSA VR% VIHY DS BL VK/KKJ DKS [KKFJT FD;K TKR K GSA SINCE NO DOCUMENT WAS PRODUCED BEFORE THE LD. CIT(A) AND THE ISSUE WAS ALSO NOT PRESSED BEFORE THE LD. CIT(A), THEREFORE AF TER HEARING BOTH THE SIDES, I DO NOT FIND ANY MERIT IN THIS GROUND OF AP PEAL AND THE SAME STANDS DISMISSED. 10. GROUND NO. 5 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. ITA 80/JP/2017_ KRISHNA AKAR VS ITO 7 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/09/2017. SD/- HKKXPAN (BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 29 TH SEPTEMBER, 2017 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SMT. KRISHNA AKAR, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD-1(4), JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 80/JP/2017) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR