ITO, Sawai Madhopur V. SHRI NARDEV KUMAR GUPTA, Sawai Madhopur

ITA 829/JPR/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1556 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 29-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA
• Section: 40A(3); 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR (BEFORE SHRI B.R. MITTAL AND SHRI B.R. JAIN) ITA NO. 829/JP/2012 ASSESSMENT YEAR : 2009-10 PAN: AGGPG 6125 J THE ITO VS. SHRI NARDEVKUMAR GUPTA WARD- 2 C/O M/S. GHANSHYAM DAS MADAN MOHAN SAWAI MADHOPUR GANGAPURCITY (APPELLANT) (RESPONDENT) C.O. NO.75/JP/2012 (ARISING OUT OF ITA NO. 829/JP/2012) ASSESSMENT YEAR : 2009-10 PAN: AGGPG 6125 J SHRI NARDEVKUMAR GUPTA VS. THE ITO C/O M/S. GHANSHYAM DAS MADAN MOHAN WARD- 2 GANGAPURCITY SAWAI MADHOPUR (APPELLANT) (RESPONDENT) DEPARTMENT BY: MISS. ROSHANTA MEENA ASSESSEE BY : SHRI MAHENDRA GARGIEYA DATE OF HEARING: 22-01-2013 DATE OF PRONOUNCEMENT: 23-01-2013 ORDER PER B.R. MITTAL, JM:- THE DEPARTMENT HAS FILED THIS APPEAL FOR THE ASSES SMENT YEAR 2009-10 AGAINST THE ORDER OF THE LD. CIT(A), KOTA DATED 31-08-2012 ON FOLLOWING GROUNDS. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A), HAS ERRED IN:- 2 . (1) DELETING THE ADDITION OF RS. 21,59,700/- ON ACCOUNT OF DISALLOWANCE U/S 40A(3) WITHOUT GOING INTO THE NATURE OF TRANSACTIONS (2) THE APPELLANT CRAVES LIBERTY TO RAISE ADDITIONA L GROUND AND TO MODIFY/ AMEND THE GROUND OF APPEAL AT THE TIME OF HEARING. 2.1 THE ASSESSEE HAS FILED THE C.O. TAKING FOLLOWIN G GROUNDS (1) THE IMPUGNED ADDITIONS AND DISALLOWANCES MADE IN THE ORDER UU143(3) DATED 28-10-2011 ARE BAD IN LAW AND ON FACTS OF THE CASE FOR WANT OF JURISDICTION AND VARIOUS OTHER REASONS AND HENCE, THE SAME KINDLY BE DELETED. (2) RS.1,00,000/-: THE LD. CIT(A) ERRED IN LAW AS W ELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE TRADING ADDITIO N OF UPTO RS. 1,00,000/- (OUT OF RS. 3,19,477/- MADE BY THE AO). THE ADDITIO N SO MADE AND PARTLY CONFIRMED BY THE LD. CIT(A) BEING TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS OF THE CASE, KINDLY BE DELETED IN FULL.;; (3) RS.17,076/-: THE LD. CIT(A) ERRED IN LAW AS WEL L AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF RS. 17,076/- MADE BY THE AO ON ACCOUNT OF MISC. EXPENSES. THE DISALLOWA NCE SO MADE AND CONFIRMED BY THE LD. CIT(A) BEING TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS OF THE CASE, KINDLY BE DELETED IN FULL. (4) THE CROSS OBJECTOR PRAYS YOUR HONOUR INDULGENCE S TO ADD, AMEND OR ALTER OF OR ANY OF THE GROUNDS OF C.O. BEF ORE THE DATE OF HEARING. 3.1 AT THE TIME OF HEARING, THE LD. AR OF THE ASSES SEE SUBMITTED THAT THE GROUNDS OF THE C.O. TAKEN BY THE ASSESSEE ARE WITHDRAWN. 3.2 IN VIEW OF THE ABOVE SUBMISSIONS OF THE LD. AR, THE GROUNDS OF THE C.O. ARE DISMISSED . 4.1 IN RESPECT OF GROUND OF APPEAL TAKEN BY THE DE PARTMENT, THE RELEVANT FACTS ARE THAT THE ASSESSEE DERIVES INCOME FROM NEWSPAPER AGENCY S ALES AND PURCHASES OF COMMISSION. THE ASSESSEE FILED RETURN OF INCOME ON 31-03-2010. THE AO HAS POINTED OUT CERTAIN 3 DEFECTS IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. H E HAS ALSO OBSERVED THAT THE ASSESSEE MADE SALES IN CASH. THE AO WHILE MAKING THE BEST JU DGEMENT ACCEPTED THE SALES AS SUCH SHOWN BY THE ASSESSEE BUT APPLIED HIGHER GROSS PROF IT RATE AND MADE TOTAL ADDITION OF RS. 3,19,477/- IN RESPECT OF INCOME FROM NEWSPAPER BUS INESS. BESIDES ABOVE, THE AO ALSO MADE TRADING ADDITION OF RS. 21,59,700 U/S 40A(3) O F THE ACT ON THE GROUND THAT THE ASSESSEE MADE CASH PAYMENTS TO THE NEWSPAPER COMPAN Y. BEING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4.2 AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE, THE LD. CIT(A) UPHELD THE ORDER OF THE AO IN REJECTING THE BOOKS OF ACCOUNTS U/S 14 5(3) OF THE ACT BUT STATED THAT CONSIDERING OVERALL FACTS, TOTAL ADDITION SUSTAINED BY HIM IS RS. 1.00 LAC AS AGAINST RS.3,19,477/- MADE BY THE AO. THE LD. CIT(A) FURTHE R STATED THAT WHEN INCOME IS ASSESSED BY ESTIMATING THE PROFIT AFTER REJECTION O F BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT THEN NO DISALLOWANCE CAN BE MADE SEPARATELY U/S 40A (3) OF THE ACT. THEREFORE, THE LD. CIT(A) HAS DELETED SAID ADDITION OF RS. 21,59,700/- . HENCE, THIS APPEAL BY THE DEPARTMENT. 4.3 AT THE TIME OF HEARING, THE LD. DR SUPPORTED TH E ORDER OF THE AO. THE LD. DR ALSO REFERRED THE DECISION OF HON'BLE GUJARAT HIGH COUR T IN THE CASE OF CIT VS. HYNOUP FOOD AND OIL IND. (P) LTD. , 290 ITR 702 AND SUBMITTED I F THE PAYMENTS ARE MADE IN CASH EXCEEDING PRESCRIBED LIMIT, DISALLOWANCE U/S 40A(3) OF THE ACT IS JUSTIFIED. 4.4 ON THE OTHER HAND, THE LD. AR SUPPORTED THE ORD ER OF THE LD. CIT(A) IN DELETING SAID ADDITION OF RS. 21,59,700/- AS THE LD. CIT(A) HAS UPHELD THE ACTION OF THE AO TO REJECT THE BOOKS OF ACCOUNTS OF THE ASSESSEE, THER EFORE, NO FURTHER ADDITION CAN BE MADE 4 ON ACCOUNT OF MAKING DISALLOWANCE. THE LD. AR PLAC ED RELIANCE ON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. G.K. CONTRACTOR,19 DTR 305. 4.5 WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES AND THE ORDERS OF THE AUTHORITIES BELOW AND THE CASES CITED BEFORE US. AT THE OUTSET WE MAY STATE THAT THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. HYNOUP FOOD AND OIL IND. (P) LTD. (SUPRA) CITED BY THE LD. DR IS NEITHER RELEVANT TO THE ISSUE BEFORE US NOR THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE AO REJECTED THE BOOK RESULTS U/S 145(3) OF THE ACT. NO W THE QUESTION ARISES AS TO WHETHER ANY ADDITION INTER ALIA U 40A(3) CAN BE MADE BY MAKING DISALLOWANCE OVER AND ABOVE ADHOC ADDITION MADE AND/OR WHEN GROSS PROFIT RATE IS APPL IED AFTER REJECTING BOOKS RESULTS. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF C IT VS. G.K. CONTRACTOR (SUPRA) HAS HELD THAT WHEN ESTIMATED PROFIT IS CONSIDERED AFTER REJ ECTING ASSESSEE'S BOOKS ACCOUNTS BY INVOKING THE PROVISION OF SECTION 145(3) OF THE ACT , NO SEPARATE ADDITION CAN BE MADE EVEN U/S 68 OF THE ACT, EVEN THOUGH THE ASSESSEE HA S FAILED TO DISCHARGE THE ONUS OF PROOF IN EXPLAINING THE AMOUNT SHOWN IN THE BOOKS OF ACCO UNTS AS MARKET OUTSTANDING. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. PRAVIN AND CO. 274 ITR 534 HAS HELD THAT ONCE THE ADDITION HAS BEEN MADE BY INCREASING THE GROSS PROFIT RATE THEN THERE IS NO FURTHER SCOPE OF MAKING SEPARATE ADDITION UNDER DIF FERENT HEADS. THE ITAT JAIPUR BENCH IN THE CASE OF CHOUDHARY BROS IN ITA NO. 1177/JP/20 10 VIDE ORDER DATED 31-05-2010 HAS ALSO TAKEN A VIEW THAT COMPOSITE ADDITION BY WAY OF APPLICATION OF GROSS PROFIT RATE AND NET PROFIT RATE WOULD BE SUFFICIENT TO TAKE CARE OF SUCH DISCREPANCIES. SIMILAR VIEW HAS ALSO BEEN TAKEN BY HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. BANWARI LAL BANSHIDHAR, 229 ITR 229 WHEREIN IT WAS HELD THAT WH EN INCOME OF THE ASSESSEE WAS 5 COMPUTED BY APPLYING THE GROSS PROFIT RATE, THERE W AS NO NEED TO LOOK INTO THE PROVISION OF SECTION 40A(3) OF THE ACT. 4.6 CONSIDERING THE ABOVE DECISIONS, WE HOLD THAT T HE LD. CIT(A) HAS RIGHTLY DELETED SEPARATE ADDITION MADE BY THE AO OF RS. 21,59,700/- U/S 40A(3) OF THE ACT. HENCE, THE GROUND OF APPEAL TAKEN BY THE DEPARTMENT IS REJECTE D. 5.0 IN THE RESULT, THE APPEAL OF THE DEPARTMENT AS WELL AS C.O. OF THE ASSESSEE BOTH ARE DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 23-01 -2013 . SD/- SD/- (B.R. JAIN) (B.R. MITTAL) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 23 RD JAN 2013 *MISHRA COPY FORWARDED TO:- BY ORDER 1. THE ITO, WARD- 2, SAWAI MADHOPUR 2. SHRI NARDEV KUMAR GUPTA, GANGAPURCITY 3.THE LD. CIT 4.THE LD. CIT(A) 5.THE LD. DR 6.THE GUARD FILE (IT NO.829/JP/12) A.R. ITAT: JA IPUR 6 7