Dy.C.I.T., Circle-1, Aligarh V. Sh. Trilok Chandra Agrawal, Aligarh

ITA 84/AGR/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67458 (ITAT-AGRA)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 04-09-2013
• Assessment Year: misc
• Appeal Filed On: 04-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: RAJIV BANSAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA (SMC) BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 84/AGRA/2013 ASSTT. YEAR : 2006-07 D.C.I.T., CIRCLE-1, VS. SRI TRILOK CHANDRA AGAR WAL, ALIGARH. M/S. GOYAL ELECTRONIC & AUTOMOBILE, SUBHASH ROAD, ALIGARH. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.K. MISHRA, JR. D.R. RESPONDENT BY : SHRI RAJIV BANSAL, C.A. DATE OF HEARING : 04.09.2013 DATE OF PRONOUNCEMENT OF ORDER : 05.09.2013 ORDER THIS DEPARTMENTAL APPEAL IS DIRECTED AGAINST THE O RDER OF LD. CIT(A), MUZAFFARNAGAR DATED 12.12.2012 FOR THE ASSESSMENT Y EAR 2006-07. 2. I HAVE HEARD THE LD. REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERED THE MATERIA L AVAILABLE ON RECORD. 3. ON GROUND NO. 1, THE REVENUE CHALLENGED THE DELE TION OF ADDITION OF RS.6,57,297/- ON ACCOUNT OF LOW NET PROFIT. THE ASS ESSEE DEALS IN TRADING OF ELECTRONIC GOODS AND PARTS. DURING THE YEAR, THE AS SESSEE HAS SHOWN GROSS PROFIT OF RS.3,55,498/- AND SHOWN NET LOSS OF (-) RS.9,88,400 /-. THE GROSS PROFIT IS 1.50% IN ITA NO. 84/AGRA/2013 2 THE ASSESSMENT YEAR UNDER APPEAL, WHICH WAS FOUND L ESS AS COMPARED WITH THE PRECEDING ASSESSMENT YEARS 2005-06 AND 2004-05, IN WHICH IT WAS 2.70% AND 5.15%. THE ASSESSEE EXPLAINED THAT DUE TO COMPETITI ON AMONGST THE DEALERS OF ELECTRONICS GOODS, THERE WAS FALL IN THE PROFIT. TH E AO, HOWEVER, FOUND THAT THE ASSESSEES SALES ARE NOT FULLY VOUCHED AND ALMOST 3 0% OF SALES HAVE BEEN MADE IN CASH. THE AO INCREASED THE NET PROFIT TO 1.8% AS CO MPARED WITH THE PROFIT OF PRECEDING ASSESSMENT YEAR 2005-06 AND MADE ADDITION OF RS.6,57,297/-. 4. IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT THE ASSESSEE MAINTAINED PROPER BOOKS OF ACCOUNT AND BOOK RESULTS ARE FULLY VERIFIA BLE. THE PURCHASES ARE MADE FROM SAMSUNG LTD. AND ALL THE SALES BEAR GUARANTEE, WHICH BEARS THE NAME OF THE PERSONS TO WHOM THE SALES HAVE BEEN MADE. THE ASSES SEE MAINTAINED STOCK REGISTER, WHICH WAS PRODUCED BEFORE THE AO ALONGWITH THE BOOK S OF ACCOUNT AND PURCHASE & SALES VOUCHERS. THE BOOKS OF ACCOUNT ARE AUDITED. MERELY BECAUSE CASH SALES HAVE BEEN MADE IS NO GROUND TO MAKE ADDITION. NO SP ECIFIC DEFECTS HAVE BEEN POINTED OUT IN THE BOOKS OF ACCOUNT. THEREFORE, THE ADDITION IS UNJUSTIFIED FOR LOW PROFIT RATE. THE CONTENTION OF THE ASSESSEE HAS BEE N ACCEPTED BY THE LD. CIT(A) BECAUSE NO DEFECTS WERE POINTED OUT BY THE AO IN TH E MAINTENANCE OF BOOKS OF ACCOUNT AND THERE IS NO MATERIAL AVAILABLE ON RECOR D TO JUSTIFY THE ADDITION. MERE FALL IN PROFIT IS NO GROUND FOR ADDITION. THEREFORE , THE ADDITION MADE WAS DELETED. ITA NO. 84/AGRA/2013 3 5. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, I DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE AO MAINLY ON A CCOUNT OF FALL IN PROFIT RATE MADE THE ADDITION WHICH BY ITSELF IS NO GROUND TO M AKE THE ADDITION. NO SPECIFIC DEFECTS HAVE BEEN POINTED OUT IN MAINTENANCE OF BOO KS OF ACCOUNT AND STOCK REGISTER MAINTAINED BY THE ASSESSEE AND EVEN THE AO HAS NOT REJECTED THE BOOK RESULTS. THEREFORE, THERE WAS NO JUSTIFICATION TO E NHANCE THE PROFIT RATE OF ASSESSEE. THE AO MERELY STATED THAT 30% OF SALES HAVE BEEN MA DE IN CASH, WHICH IS NOT A VALID GROUND TO MAKE THE ADDITION. IT IS SETTLED LA W THAT BOOKS OF ACCOUNT CANNOT BE REJECTED IF IN THE CASH SALES THE NAMES AND ADDRESS OF THE PURCHASERS ARE NOT MENTIONED. THERE IS NO NEED TO MENTION THE NAME AND ADDRESS IN THE CASH SALES. I AM FORTIFIED IN MY VIEW BY THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF R.B. JASSARAM FATEHCHAND VS. CIT, 75 ITR 33 AND KERALA HIGH COURT IN THE CASE OF M. DURAI RAJ VS. CIT, 83 ITR 484. CONSIDERI NG THE NATURE OF BUSINESS OF ASSESSEE AND ALL THE PURCHASES AND SALES ARE FULLY VERIFIABLE BEING SUBJECTED TO GUARANTEE AGREEMENTS, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. GROUND NO. 1 OF APPEAL OF THE REVENUE IS ACCORDINGLY DISMI SSED. 6. ON GROUND NO. 2 & 3, THE REVENUE CHALLENGED THE DELETION OF ADDITION OF RS.5,75,000/- ON ACCOUNT OF UNEXPLAINED UNSECURED L OAN AND INTEREST THEREON. THE AO FOUND THAT THE ASSESSEE HAS SQUARED UP UNSECURED LOANS AND WAS DIRECTED TO SUBMIT BANK ACCOUNT OF THE LENDERS. THE ASSESSEE CO ULD NOT PRODUCE BANK STATEMENT ITA NO. 84/AGRA/2013 4 OF SMT. USHA KELA FROM WHOM THE ASSESSEE HAS TAKEN RS.5,00,000/- AND PAID INTEREST @ 15%. ACCORDINGLY, THE ADDITION OF RS.5,7 5,000/- WAS MADE AS UNDISCLOSED INCOME OF THE ASSESSEE. 7. IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT THE ASSESSEE HAS FILED CONFIRMATION LETTER OF SMT. USHA KELA, WHO IS ALSO INCOME-TAX ASSESSEE AND ASSESSED BY ITO, ALIGARH. THE ASSESSEE HAS PROVED T HE IDENTITY OF THE CREDITOR, GENUINENESS OF THE TRANSACTION AND HER CREDITWORTHI NESS. COPY OF BANK ACCOUNT WAS ALSO FILED IN SUPPORT OF THE CONTENTION, WHICH THE CIT(A) ON EXAMINATION OF CONFIRMATION AND THE BANK STATEMENT FOUND THAT CRED ITOR IS IDENTIFIABLE AND IS ASSESSED TO TAX AND HER CREDITWORTHINESS IS PROVED FROM THE BANK ACCOUNT. THEREFORE, THE ASSESSEE DISCHARGED THE ONUS OF PROV ING GENUINE CREDIT. IT WAS ALSO FOUND THAT AO WRONGLY CALCULATED THE INTEREST AT RS .75,000/- WHICH IN FACT SHOULD HAVE BEEN WORKED OUT TO RS.25,000/- ONLY, ON WHICH THE ASSESSEE HAS ALSO MADE TDS OF RS.2550/-. THE ADDITION WAS ACCORDINGLY DELE TED. 8. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, I DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN DELET ING THE ADDITION OF RS.5,75,000/-. THE ASSESSEE HAS FILED COPY OF THE ACCOUNT AT PAGE 39 OF THE PAPER BOOK TO SHOW THAT RS.5,00,000/- WAS TAKEN AS LOAN BY CHEQUE NO. 0016491 ON DATED 27.07.2005 UPON WHICH THE INTEREST OF RS.25,000/- WAS CREDITED . THE CHEQUE WAS DRAWN ON ITA NO. 84/AGRA/2013 5 BANK OF BARODA, ALIGARH AND CREDITOR IS ASSESSED TO TAX AND HAS GIVEN HER PAN. THE LOAN AMOUNT WAS REPAID ON 27.11.2005 BY CHEQUE NO. 436917 DRAWN ON CANARA BANK. THE BANK ACCOUNT SHOWS THAT PRIOR TO G IVING OF CHEQUE OF RS.5,00,000/- TO THE ASSESSEE, THE CREDITOR SMT. US HA KELA WAS HAVING BANK BALANCE OF RS.15,41,000/- IN HER ACCOUNT. THE DOCUMENTS ARE FILED IN THE PAPER BOOK FROM PAGES 39 TO 42 OF THE PAPER BOOK. THEREFORE, HER ID ENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION HAVE BEEN PROVED. TH E LD. CIT(A) ON PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD CORREC TLY DELETED THE ADDITION. GROUND NO. 2 & 3 OF THE DEPARTMENTAL APPEAL ARE, ACCORDING LY, DISMISSED. 9. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY