Shri Kamlesh Denishchandra Shah, Surat V. The Income tax Officer,Ward-2(1), Surat

ITA 817/AHD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9813 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 17-09-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 17-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K JHA
• Assessee Lawyers: NONEWRITTEN SUBMISSION
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH A AA A BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI MUKUL SHRAWAT MUKUL SHRAWAT MUKUL SHRAWAT MUKUL SHRAWAT, , , , JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER AND AND AND AND SHRI SHRI SHRI SHRI N.S.SAINI N.S.SAINI N.S.SAINI N.S.SAINI, , , , ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER DATE OF HEARING :17-9-2010 DRAFTED ON:1 7-9-2010 ITA NO. 817 /AHD/ 2010 ASSESSMENT YEAR :2006-07 SH RI KAMLESH DINESHCHANDRA SHAH, PROP.OF SWASTIK STEEL, MAHAVIR BAZAR, NR.PETROL PUMP, MAIN ROAD, UDHNA, SURAT. VS. THE INCOME TAX OFFICER, WARD 2(1), AAYAKAR BHAVAN, MAJURA GATE, SURAT. PAN/GIR NO. : AFQPB 6045 M (A PPELLANT ) .. ( RESPONDENT ) APPELL ANT BY : NONE(WRITTEN SUBMISSION) RESPONDENT BY: SHRI S.K. JHA, D.R. O R D E R O R D E R O R D E R O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, SU RAT, DATED 8-12-2009. 2. GROUND NO.1 OF THE APPEAL IS DIRECTED AGAINST DI SALLOWANCE OF 20% FROM VEHICLE EXPENSES AND DEPRECIATION AND TELE PHONE EXPENSES. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE LEARNED ASSESSING OFFICER DISALLOWED 20% OUT OF THE EXPENSES OF `.11, 450/- CLAIMED UNDER THE HEAD VEHICLE EXPENSES AND DEPRECIATION ON VEHICLE OF `.5,312/- AND 20% OUT OF THE TELEPHONE EXPENSES OF `.13,860/- CLAIMED UNDER THE HEAD TELEPHONE EXPENSES BY THE AS SESSEE ON THE GROUND OF PERSONAL USE OF THE VEHICLE AND TELEPHON E BY THE ASSESSEE AS THE ASSESSEE DID NOT MAINTAIN LOG BOOK FOR THE V EHICLES AND CALL DETAILS REGISTER FOR TELEPHONE. ACCORDINGLY DISALLO WANCE OF `.3,352/- WAS MADE BY THE LEARNED ASSESSING OFFICER OUT OF VE HICLE EXPENSES - 2 - AND DEPRECIATION AND DISALLOWANCE OF `.2,772/- WAS MADE OUT OF TELEPHONE EXPENSES. 4. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) CONFIRMED THE DISALLOWANCE OUT OF VEHICLE EXPENSES AND DEPRECIATION AND TELEPHONE EXPENSES FOR THE REASON THAT NO RECOR DS OF THEIR USAGE WAS MAINTAINED BY THE ASSESSEE AND PERSONAL USE OF THE VEHICLE AND TELEPHONE CANNOT BE RULED OUT. 5. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE HAS FILED WRITTEN SUBMISSION WHEREIN IT IS STATED THAT SIMILAR DISALLOWANCES WERE MADE IN THE CASE OF SHRI DINESHCHANDRA P. SHAH FATHER OF THE ASSESSEE AND THE DISALLOWANCE WAS REDUCED TO 10% OF THE EXPENSES VIDE ORDER OF THE TRIBUNAL DATED 23-1-2009 PASSED I N ITA NO.2947/AHD/2008. IT IS SUBMITTED THAT CONSIDERING THE INSIGNIFICANT EXPENDITURE AS COMPARED TO THE TOTAL TURNOVER THE D ISALLOWANCE SHOULD BE DELETED. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTE D THE ORDERS OF THE LOWER AUTHORITIES. 7. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PA RTIES WE FIND THAT THE LEARNED ASSESSING OFFICER ESTIMATED THE PE RSONAL USE OF VEHICLES AT 20% OF THE EXPENDITURE OF `.11,450/- IN CURRED ON VEHICLES AND `.5,312/- DEPRECIATION CLAIMED ON VEHICLES AND THEREBY DISALLOWED `.3,352/- OUT OF VEHICLE AND DEPRECIATION. SIMILARL Y THE LEARNED ASSESSING OFFICER ESTIMATED THE PERSONAL USE OF TEL EPHONES AT 20% OF THE TELEPHONE EXPENSES OF `.13,860/- CLAIMED BY THE ASSESSEE AND DISALLOWED `.2,772/- OUT OF THE TELEPHONE EXPENSES OF THE ASSESSEE. THE SAME WAS CONFIRMED IN APPEAL BY THE LEARNED COM MISSIONER OF INCOME TAX (APPEALS) AS THE ASSESSEE HAD NOT MAINTA INED LOG BOOK FOR VEHICLE AND CALL REGISTER FOR TELEPHONE. CONSIDERI NG THE SUBMISSION OF THE ASSESSEE AND THE SMALLNESS OF THE AMOUNT INVOLV ED THE DISALLOWANCE IS RESTRICTED TO 10% OF THE EXPENSES O N ACCOUNT OF VEHICLE, DEPRECIATION, AND TELEPHONE EXPENSES. HENC E THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. - 3 - 8. GROUND NO.2 OF THE ASSESSEES APPEAL IS DIRECTED AGAINST CONFIRMING ADDITION OF `. 64,000/-ON ACCOUNT OF SHO RTAGE IN VARIOUS ITEMS DEALT IN BY THE ASSESSEE. 9. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF TRADING IN IRON AND STEEL BAR. THE ASSESSEE CLAIMED SHORTAGE OF 657.52 KGS. OF M.S. SHEET PLATES, 1422. 110 KGS IN M.S. STRUCTURE AND 202.67 KGS IN M.S. BARS. THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSEE IS A TRADER AND WHILE PU RCHASING THE GOODS WEIGHS THE SAME AND PAYS FOR THEM. SIMILARLY, THE A SSESSEE WHILE SELLING THE GOODS WEIGHS THE SAME AND CHARGES ACCOR DINGLY. THUS, IT IS NOT UNDERSTOOD AS TO WHY THE SHORTAGE HAS OCCURRED. HE FURTHER OBSERVED THAT MANY OTHER ASSESSEES ENGAGED IN SAME LINE OF BUSINESS AND FILING RETURN OF INCOME WITH HIS OFFICER HAS NO T CLAIMED ANY KIND OF SHORTAGE. THE LEARNED ASSESSING OFFICER FURTHER OBS ERVED THAT THE EXPLANATION OF THE ASSESSEE THAT VARIANCE IN WEIGHT WAS ALWAYS THERE AT THE TIME OF RECEIPT OF GOODS. THE LEARNED ASSESS ING OFFICER OBSERVED THAT THE EXPLANATION OF THE ASSESSEE IS NO T ACCEPTABLE BECAUSE IT IS NOT POSSIBLE THAT EACH TIME THE DIFFE RENCE IN WEIGHT ALWAYS RESULTS IN SHORTAGE OF WEIGHT AND AS SOMETIM ES IT IS LESS MANY A TIMES IT IS MORE ALSO. THUS, ON AN AVERAGE FOR T HE FULL YEAR THE SAME NULLIFIES. THE LEARNED ASSESSING OFFICER FURTHER OB SERVED THAT THE CONTENTION OF THE ASSESSEE THAT STANDARD WEIGHT OF THE TRUCK IS DEDUCTED FROM GROSS WEIGHT IS TOTALLY WRONG AS IT I S COMMON PRACTICE THAT GROSS WEIGHT AND TARE WEIGHT OF TRUCKS ARE TAK EN ON COMPUTERIZED WEIGHING MACHINE AND THE SAME ARE RECORDED ON MACHI NE. THUS, THERE ARE NO CHANCES OF WEIGHMENT DIFFERENCES. THEREFORE, HE DISALLOWED THE CLAIM OF SHORTAGE OF THE ASSESSEE AND MADE ADDI TION OF `.64,000/- TO THE INCOME OF THE ASSESSEE. 10. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESSING OFFICE R ON THE GROUND THAT SHORTAGES OF `.64,000/- WAS NOT SATISFACTORILY EXPLAINED. 11. THE LEARNED AUTHORISED REPRESENTATIVE OF THE AS SESSEE IN THE WRITTEN SUBMISSION FILED HAS ONLY STATED THAT SIMIL AR ISSUE HAD COME UP IN THE CASE OF THE FATHER OF THE ASSESSEE SHRI D INESHCHANDRA P. - 4 - SHAH (SUPRA) WHEREIN SHORTAGE OF 0.5% AMOUNTING TO `.92,875/- WAS CLAIMED WHICH WAS DISALLOWED BY THE LEARNED ASSESSI NG OFFICER AND CONFIRMED IN APPEAL BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) BUT WAS DELETED BY THE TRIBUNAL FOR THE R EASONS STATED IN PARA-8 OF THE TRIBUNALS ORDER. THEREFORE, THE DISA LLOWANCE OF SHORTAGE SHOULD BE DELETED. 12. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. HE SUBMITTED THAT IN THE CASE OF THE FATHER OF THE ASSESSEE SHRI DINESHCHANDRA P. SHAH THE ASSESSE E FILED COPY OF LETTER FROM THE MATERIAL SUPPLIERS CONFIRMING THAT SHORTAGE, IF ANY FOUND ON RECEIPT OF THE GOODS BEING LESS THAN 100 K GS WAS NOT ACCEPTED BY THEM. THE ASSESSEE ALSO FURNISHED COPI ES OF PURCHASE BILLS AND CERTIFICATES OF THE WEIGHT OF THE GOODS R ECEIVED AND WEIGHED BEFORE TAKING DELIVERY FROM THE TRANSPORTER TO PROV E THAT THERE IS VARIATION IN THE WEIGHT OF THE MATERIAL BOUGHT AND THE MATERIAL ACTUALLY RECEIVED. IN THE CASE OF THE ASSESSEE NO S UCH EVIDENCES WERE FILED BY THE ASSESSEE. THEREFORE, THE FACTS IN THE CASE OF SHRI DIESHCHANDRA P. SHAH ARE DIFFERENT AND DISTINGUISHA BLE FROM THE FACTS OF THE CASE OF THE ASSESSEE. HENCE, THE DECISION OF THE TRIBUNAL IN THE CASE OF SHRI DINESHCHANDRA P. SHAH WAS NOT APPLICAB LE TO THE ASSESSEE. 13. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE P ARTIES WE FIND THAT THE LEARNED ASSESSING OFFICER DISALLOWED SHORT AGE OF `.64,000/- ON ACCOUNT OF M.S. SHEET PLATES, M.S. STRUCTURE AND M.S. BAR CLAIMED BY THE ASSESSEE AS IN HIS OPINION THE ASSESSEE WAS A TRADER IN IRON AND STEEL BAR AND WAS RECEIVING MATERIAL BY WEIGHT AND WAS SELLING THE SAME BY WEIGHT AND THUS THERE CANNOT BE ANY SHORTAG E IN THE LIGHT OF THE BUSINESS OF THE ASSESSEE. ON APPEAL, THE LEARNE D COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ADDITION FOR THE REASON THAT THE SHORTAGE WAS NOT SATISFACTORILY EXPLAINED BY THE AS SESSEE. BEFORE US THE ASSESSEE RELIED UPON THE DECISION OF THIS TRIBU NAL IN THE CASE OF HIS FATHER SHRI DINESHCHANDRA P. SHAH. WE FIND THAT TH E BUSINESS OF THE ASSESSEE IS SIMILAR TO THAT OF HIS FATHER SRI DINES HCHANDRA P. SHAH WHERE THE TRIBUNAL ACCEPTED SIMILAR SHORTAGE IN STO CK AND DELETED THE ADDITION. IN THE INSTANT CASE THE SHORTAGE CLAIMED IS ALSO OF LESS THAN - 5 - 0.5%. IT IS ALSO OBSERVED THAT THE LEARNED ASSESSIN G OFFICER HIMSELF ADMITTED THAT THERE MAY BE VARIATION IN STOCK AT TH E TIME OF PURCHASE. IN THE VIEW OF THE LEARNED ASSESSING OFFICER THE VA RIATION MAY RESULT IN SHORTAGES AT TIMES AND ALSO EXCESS AT TIMES. WE FIN D THAT NO MATERIAL WAS BROUGHT ON RECORD THAT ULTIMATELY SHORTAGES CAN NOT BE OF LESS THAN 0.5% AS CLAIMED BY THE ASSESSEE. WE THEREFORE FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE SRI DINESHCHANDRA P. SHAH DELETE THE ADDITION OF `.64,000/- AND ALLOW THE GROUND OF APPE AL OF THE ASSESSEE. 14. GROUND NO.3 OF THE APPEAL IS DIRECTED AGAINST C HARGING OF INTEREST UNDER SECTION 234B, 234C AND 234D OF THE A CT. 15. IN THE WRITTEN SUBMISSION FILED BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE NO SUBMISSION HAS BE EN MADE ON THIS GROUND OF APPEAL OF THE ASSESSEE, THEREFORE, THIS G ROUND OF APPEAL OF THE ASSESSEE IS DISMISSED FOR WANT OF PROSECUTION. 16. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTL Y ALLOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 24 TH DAY OF SEPTEMBER, 2010. SD/- SD/- (MUKUL SHRAWAT ) ( N.S. SAINI ) JUDICIAL MEMBER AC COUNTANT MEMBER AHMEDABAD: ON THIS 24 TH DAY OF SEPTEMBER, 2010 COMPILED AND COMPARED BY: PATKI. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-II,SURAT. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD - 6 - DATE INITIALS 1. DRAFT DICTATED ON 17-9-2010 --------------- -- 2. DRAFT PLACED BEFORE AUTHORITY 17-9-2010 ------ ------------- 3. DRAFT PROPOSED & PLACED 23-9-2010 -- ----------------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 23-9-2010 --- -------------JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 24-9-2010 --------- ----------- 6. KEPT FOR PRONOUNCEMENT ON 24-9-2010 -------------------- 7. FILE SENT TO THE BENCH CLERK 24-9-2010 ---- --------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ----------- ----- ---------------------