GOODLUCK ELECTRONICS P.LTD, MUMBAI V. ITO RG 9(1)(4), MUMBAI

ITA 8279/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62550 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 18-06-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 30-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P ARTH SARATHI NAIK
• Keywords: Rejection of books of accounts; Business income
• Section: 133(6); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G , MUMBAI BEFORE SHRI G.E. VEERABHADRAPPA, HON'BLE PRESIDENT AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO.8279/MUM/2010 ASSESSMENT YEAR: 2006-2007 GOODLUCK ELECTRONICS P. LTD., 88 B,GOVT. INDL. ESTATE, KANDIVALI (W), MUMBAI-67. PAN NO.AAACW 0798 G ITO RG 9(1)(4), MUMBAI APPELLANT VS. RESPONDENT APPELLANT BY : MR. SAMEER DALAL RESPONDENT BY : MR. PARTHSARATHI NAIK DATE OF HEARING : 18 TH JUNE 2012 DATE OF PRONOUNCEMENT : 22 ND JUNE, 2012 O R D E R PER AMIT SHUKLA (J.M.) : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 4-10-2010, PASSED BY THE CIT(A )-19, MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143( 3) FOR THE ASSESSMENT YEAR 2006-2007. 2 . THE ONLY ISSUE INVOLVED IN THIS APPEAL IS DISALLOWANCE OF ` .1,00,000/- ON ESTIMATE BASIS IN THE TRADING ACCOUNT. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF ELECTRONICS ITEMS AND IS ALSO HAVING INCOME FROM HOUSE PROPERTY. THE ASSESSING OFFICER NOTED CERTAIN INFIRMITIES IN THE TRADING ACCOUNT WHICH HAS BEEN GIVEN AT PAGE 2 & 3 OF THE ASSESSMENT ORDER, WHICH IS BEING SUMMARIZED HEREIN UNDER :- ITA NO : 8279/M/10 2 I. DIFFERENT IN SALES AS PER NOTICE ISSUED UNDER S. 133(6) IN THE CASE OF M/S BINDRA AUTOMOBILES AND AS PER SALES DECLARED. II. FAILED TO FURNISH MONTH WISE, QUANTITY WISE, ITEM WISE PRODUCTION DETAILS ALONG WITH COST/VALUE. III. INTEREST OF ` .7,61,395/- PAID ON UNSECURED LOAN CLAIMED UNDER S.24 OF THE ACT AGAINST INCOME FROM HOUSE PROPERTY. IV. MOST OF EXPENSES INCURRED IN CASH, SUPPORTED ONLY WITH SELF-MADE VOUCHERS. V. REMUNERATION PAID TO DIRECTOR AT ` .1,68,759/- THOUGH TRADING RESULT IS A LOSS. 3 . ON THE ABOVE GROUNDS, THE ASSESSING OFFICER HELD THAT THE ASSESSEES BOOKS OF ACCOUNT AND TRADING RESULT ARE NOT RELIABLE, THEREFORE, AFTER INVOKING THE PROVISIONS OF SECTION 145 REJECTED THE BOOKS OF ACCOUNT AND DISALLOWED T HE LOSS CLAIMED BY THE ASSESSEE. ACCORDINGLY, THE BUSINESS INCOME WAS TAKEN AS NIL. 4 . BEFORE THE CIT(A), THE ASSESSEE GAVE DETAIL REBUTTAL OF EACH AND EVERY POINTS RAISED BY THE ASSESSING OFFICER, WHICH HAS BEEN DEALT WITH BY THE CIT(A) FROM PAGES 2 TO 5 OF THE APPELLATE ORDER. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) HELD THAT THE REASONING GIVEN BY THE ASSESSING OFFICER ARE NOT CORRECT AND CANNOT ITA NO : 8279/M/10 3 BE SUSTAINED AND AS SUCH REJECTION OF THE ASSESSING OFFICER ARE BASED ON WHIMSICAL GROUNDS. HOWEVER, AFTER REJECTING THE FINDING AND CONCLUSION OF THE ASSESSING OFFICE R, THE CIT(A) PROCEEDED TO MAKE AD HOC DISALLOWANCE OF ` .1,00,000/- IN THE TRADING ACCOUNT TO COVER UP POSSIBLE LEAKAGES AND HELD THAT THE LOSS AS DECLARED FROM BUSINESS STANDS REDUCED BY SUM OF ` .1,00,000/-. 5 . BEFORE US, LEARNED AR SUBMITT ED THAT ONCE THE CIT(A) HAS HELD THAT THERE IS NO BASIS FOR REJECTION OF BOOKS OF ACCOUNT AND THE TRADING RESULT ARE RELIABLE, NO AD HOC DISA LLOWANCE SHOULD NOT BE MADE. ON THE OTHER HAND, LEARNED CIT DR SUBMITTED THAT LOOKING TO THE ENTIRETY OF THE FACTS, THE CIT(A) HAS MERELY REDUCED THE LOSS BY ` .1,00,000/- AND THERE IS NO INFIRMITY IN SUCH A FINDING. 6 . WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND ALSO FINDINGS GIVEN IN THE ASSESSMENT ORDER AS WELL AS THE CIT(A). ONCE THE CIT(A) HAS CATEGORICALLY HELD THAT THE REASONS FOR REJECTION OF BOOKS OF ACCOUNTS BY THE ASSESSING OFFICER ARE NOT CORRECT AND GAVE A CATEGORICAL FINDING THAT HE IS UNABL E TO SUSTAIN THE ACTION OF THE ASSESSING OFFICER FOR REJECTING T HE TRADING RESULT, HE COULD NOT HAVE PROCEEDED TO MAKE AD HOC DISALLOWANCE OF ` .1,00,000/- IN THE TRADING ACCOUNT WITHOUT ANY BASIS. ONCE THE BOOKS OF ACCOUNT HAVE BEEN FOUND TO BE CORRECT AND THE TRADING RESULT ARE BASED ON ENTRIES VERIFIABLE FROM BOOKS OF ACCOUNT THEN SAME ARE TO BE ACCEPTED. ITA NO : 8279/M/10 4 HENCE, WE DO NOT FIND ANY RE ASON TO CONFIRM SUCH AD HOC DISALLOWANCE. CONSEQUENTLY, THE ADDITION OF ` .1,00,000/- IS DELETED. THUS, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. 7 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 22 ND DAY OF JUNE, 2012. SD/- SD/- (G.E. VEERABHADRAPPA) ( AMIT SHUKLA ) PRESIDENT JUDICIAL MEMBER MUMBAI, DT: 22 ND JUNE, 2012 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, B - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR PKM ITAT, MUMBAI BENCHES, MUMBAI