M/S PUSHP INDUSTRIAL TOOLS, Jaipur V. ITO, Jaipur

ITA 865/JPR/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7555 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 05-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Assessee Lawyers: S L PODDAR
• Keywords: Income from undisclosed sources; Salary income
• Section: 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR BEFORE SH. R.K. GUPTA, JUDICIAL MEMBER AND SH. N.L. KALRA, ACCOUNTANT MEMBER I.T.A. NO.865 /JP/2011 ASSESSMENT YEAR :2007-08 PAN:AAFFP3233M M/S. PUSHP INDUSTRIAL TOOLS, VS. THE INCOME TAX OF FICER, JAIPUR. WARD 4(2), JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. S.L. PODDAR, AR RESPONDENT BY :SH. D.K. MEENA, DR DATE OF HEARING :19.01.2012 DATE OF PRONOUNCEMENT:25.01.2012 ORDER PER N.L. KALRA, AM THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER OF THE CIT(A)-II, JAIPUR, DATED 06.09.2011 FOR THE ASSESSMENT YEAR 20 07-08. 2. THE FIRST GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 3,00,000/- UNDER SEC TION 69A OF THE INCOME-TAX ACT, 1961 ( IN SHORT, THE ACT) ON ACCOUNT OF UNEXPLAIN ED CASH CREDIT. 2 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN T HE CASE OF THE ASSESSEE, THE AO NOTICED THAT THREE PARTNERS HAVE INTRODUCED CASH IN THEIR CAPITAL ACCOUNTS AT RS.1,00,000/- EACH ON 15.11.2006. I) SH. MANOJ KUMARJANGID RS.1,00,000/- II) SH. SITA AM JANGID RS.1,00,000/- III) SH. MADAN LALA SHARMA RS.1,00,000/- 3.1 THE A.O. THEREFORE, ASKED THE ASSESSEE-FIRM TO PROVE THE SOURCE OF THE CASH SO INTRODUCED BY THE PARTNERS. BEFORE THE AO, THE A SSESSEE FILED THE REPLY WHICH IS AS UNDER: 6. THAT DURING THE YEAR UNDER CONSIDERATION THE PA RTNERS HAS MADE ADDITION IN THEIR CAPITAL ACCOUNT OUT OF FOLLO WING SOURCES:-. A) MADAN LAL SHARMA : IS ASSESSED TO INCOME TAX AND HIS PAN: ABSPS6516L. SH. MADAN LAL SHARMA IS HAVING OTHER SO URCE OF INCOME APART FROM SHARE OF INCOME FROM THE ASSES SEE FIRM. DURING THE YEAR UNDER CONSIDERATION, SH. MADA N LAL SHARMA HAS SHOWN AGRICULTURE INCOME OF RS.1,50,000/ - OUT OF WHICH HE HAS CONTRIBUTED CAPITAL IN THE FIRM. B) MANOJ KUMAR JANGID : IS ASSESSED TO INCOME TAX AND HIS PAN: AEGPJ0069L. SH. MANOJ KUMAR JANGID IS ALSO PROPRIETOR OF M/S. GANGA TURNERS. IN THE BALANCE SH EET OF SH. MANOJ KUMAR JANGID HE WAS HAVING RS.71,703/- AS CASH BALANCE AND RS.2,50,000/- DEBTORS AS ON 01.04.2006. OUT OF ABOVE BALANCES HE HAS CONTRIBUTED CAPITAL IN THE FI RM. COPY OF BALANCE SHEET AS ON 31.03.2006 IS ENCLOSED HEREW ITH. C) SITA RAM JANGID : IS ALSO ASSESSED TO INCOME TAX AND HIS PAN:ABZPJ4542Q. SH. SITA RAM JANGID IS ALSO PROPRIE TOR OF M/S. ANUPAN ENGINEERING WORKS.. THE ASSESSEE HAS AL SO SHOWN THE AGRICULTURE INCOME OF RS.1,33,125/-. HE H AS DEPOSITIED THE CAPITAL OUT OF HIS AGRICULTURE INCOM E. 3 3.2. THE AO HAS CONSIDERED THE REPLY FILED BY THE A SSESSEE.BUT HE WAS NOT SATISFIED WITH THE REPLY. THE OBSERVATIONS OF THE A O IN RESPECT OF EACH CREDIT ARE AS UNDER: 1. MADAN LAL SHARMA : THE ASSESSEE HAS NOT FILED AN Y DOCUMENTARY EVIDENCE FOR VIZ COPY OF INCOME TAX RETURN, COMPUTA TION OF INCOME, CASH FLOW STATEMENT, PROOF OF HAVING AGRICULTURE INCOME, BALANCE SHEET ETC. IN THE ABSENCE OF ANY EVIDENCE, THE SAME WAS TREATED AS UN DISCLOSED INCOME OF THE ASSESSEE-FIRM. 2. SITA RAM JANGID: IN THIS CASE ALSO, THE ASSESSEE HAS NOT FILED ANY EVIDENCE OF THE SAME NATURE AS MENTIONED IN THE CAS E OF SH. MADAN LAL SHARMA. THUS, CASH INTRODUCED IN THE NAME OF SH. SI TA RAM JANGID WAS TREATED AS UNDISCLOSED INCOME OF THE FIRM. 3. MANOJ KUMAR JANGID: IN THIS CASE, THE ASSESSEE F ILED COPY OF BALANCE SHEET AS ON 31.03.2006 SHOWING CASH BALANCE OF RS.7 1,703/-. ON THE BASIS OF THIS CASH BALANCE, THE AO ACCEPTED A SUM OF RS.15,0 00/- INTRODUCED BY SH. MANOJ KUMAR JANGID ON 01.04.2006, AS EXPLAINED. IN THE ABSENCE OF PERSONAL CASH BOOK OR CASH FLOW STATEMENT, THE AO WAS OF THE OPINION THAT THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE AVA ILABILITY OF CASH AS ON 15.11.2006 TO BE INTRODUCED IN THE BOOKS OF THE FIR M. 3.3. THE AO HAS MADE AN ADDITION OF RS.3,00,000/-. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A). 4. BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT ALL THE THREE PARTNERS ARE HAVING THEIR PAN AND ARE FILING RETURNS OF INCOME. THE IDE NTITY AND CAPACITY OF EACH 4 PARTNER STANDS ESTABLISHED. THE CAPITAL ACCOUNTS OF THE PARTNERS AS APPEARING IN THE BOOKS OF THE FIRM SHOW THAT THESE PARTNERS ARE HAVI NG SUFFICIENT OPENING BALANCE AND WERE HAVING FABULOUS INCOME. HENCE CREDIT-WORTH INESS OF THE PARTNERS WAS STATED TO BE ESTABLISHED. THE POSITION IN RESPECT O F EACH PARTNER AS SUBMITTED BEFORE THE LD. CITA) IS AS UNDER I) MANOJ KUMAR JANGID HE IS ASSESSED TO TAX ON PAN AEGPJ0069L. COPY OF ITR FOR THE ASSESSMENT YEAR 200 8-09 WAS SUBMITTED . COPY OF COMPUTATION OF INCOME FOR THE ASSESSMENT YE AR 2007-08 WAS ALSO SUBMITTED. FROM COMPUTATION OF INCOM, THE ASSESSEE SUBMITTED THAT SHRI MANOJ KUMAR JANGIR WAS HAVING INCOME FROM PROPRIETARY CONCERN I.E M/S GANGA TURNERS. SH. MANOJ KUMAR JANGID WAS HAVING SALARY INCOME OF RS. 1,50,000/-, INCOME FROM INTEREST OF RS. 1,27,932/- AND PROFIT FROM FIRM OF RS. 2,39,931/-. IT WAS THEREFORE, SUBMITTED THAT THE CAPACITY OF THE PARTNER TO CONTRIBUTE THE SUM OF RS. 1,00,000/- IS PROVED. (II) SITA RAM JANGID HE IS ASSESSED TO TAX ON PAN ABZPJ4542Q. COPY OF COMPUTATION OF INCOME FOR THE ASSESSMENT YE AR 2007-08 WAS FILED. ACCORDING TO WHICH SHRI SITA RAM JANGIR WAS HAVING INCOME OF RS.4,64,103/- FROM PROPRIETARY CONCERN M/ S ANUPAM ENGINEERING WORKS. BESIDES INCOME FROM PROPRIETORY CONCERN, SH. SITA RAM JANGID WAS HAVING INCOME FROM INTEREST OF RS. 38,905/- AND PROFIT FROM FIRM OF RS. 71,979/- AND THE AGRICULTUR AL INCOME OF RS. 1,33,125/-. THUS, CAPACITY OF THE PARTNER STANDS ES TABLISHED AND, THEREFORE, THE AO WAS NOT JUSTIFIED IN MAKING THE AD DITION. (III) MADAN LAL SHARMA HE IS ASSESSED TO TAX ON PAN ASBPS6516L. COPY OF COMPUTATION OF INCOME FOR THE A SSESSMENT YEAR 2007-08 AS WELL AS COPY OF ITR FOR ASSESSMENT YEAR 2006-07 AND BALANCE SHEET WERE ALSO SUBMITTED TO SHOW THAT SH. MADAN LAL 5 SHARMA IS FILING RETURN OF INCOME. SH. MADAN LAL S HARMA IS HAVING SALARY INCOME OF RS. 1,50,000/-, INCOME FROM INTERE ST OF RS. 25,483/- AND PROFIT FROM FIRM OF RS. 1,67,952/-. FROM THIS , THE LD. COUNSEL SUBMITTED BEFORE THE LD. CIT(A) THAT THE CAPACITY O F THE PARTNER STANDS ESTABLISHED. 4.1. BEFORE THE LD. CIT(A), THE LD. COUNSEL RELIED ON THE DECISIONS OF JURISDICTIONAL HIGH COURT IN THE CASE OF ARAVALI TRADING CO. VS. ITO (8 DTR 199) AND CIT VS. KEWAL KRISHANA AND PARTNERS ( 18 DTR 121). THESE DE CISIONS WERE CITED IN SUPPORT OF THE CONTENTION THAT THE ADDITION IS TO BE MADE I N THE CASE OF THE PARTNERS AND NOT IN THE CASE OF THE FIRM. BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT THE ADDITION COULD NOT HAVE BEEN MADE UNDER SECTION 69A OF THE ACT BECAUSE SECTION 69A IS NOT APPLICABLE. 4.2. THE LD. CIT(A) OBSERVED THAT THERE IS NO DIST INCTION BETWEEEN CAPITAL CONTRIBUTED BY THE PARTNERS AND THIRD PARTY OR UNSE CURED LOANS RECEIVED BY THE ASSESSEE. IF THE CASH CREDIT IN THE CAPITAL ACCOUNT OF THE ASSESSEE IS NOT SATISFACTORILY EXPLAINED THEN THE AO IS JUSTIFIED T O TREAT IT AS INCOME FROM UNDISCLOSED SOURCES. FOR THIS PROPOSITION, THE LD. CIT(A) RELIED ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KISHORILAL SANTOSHILAL ( 216 ITR 9). THE LD. CIT(A) OBSERVED THAT INCOME SHOWN BY ALL THE PARTNERS REPRESENT INCOME WHICH STANDS CREDITED IN THEIR ACCOUNT THROU GH JOURNAL ENTRY ON THE LAST 6 DAY OF THE FINANCIAL YEAR HENCE, THESE SUMS COULD NOT BE CONSIDERED TO BE SOURCE OF DEPOSITING THE CASH IN THE BOOKS OF THE ASSESSEE -FIRM. NEITHER CASH BOOK NOR BANK STATEMENT OF THE PARTNERS WERE SUBMITTED DURIN G APPELLATE PROCEEDINGS. THE LD. CIT(A) HAS OBSERVED THAT THE DECISION OF TH E JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KEWAL KRISHANA AND PARTNERS ( 18 DTR 121) IS NOT APPLICABLE BECAUSE IN THAT CASE, THE CREDITS WERE APPEARING ON THE FIRST DAY OF THE BUSINESS AND, THEREFORE, SUCH CREDITS COULD NOT HAVE BEEN AD DED IN THE HANDS OF THE FIRM. ACCORDING TO THE LD. CIT(A), THE LD. CIT(A) HAS POW ER TO DO WHAT THE AO CAN DO . HE, THEREFORE, HELD THAT THE ADDITION IS LIABLE TO BE ADDED UNDER SECTION 68 OF THE ACT. 5. WE HAVE HEARD BOTH THE PARTIES. SO FAR AS THE LE GAL POSITION IS CONCERNED, IT IS EVIDENT FROM THE DECISION OF THE JURISDICTIONAL HIGH COURT THAT CASH CREDIT IN THE NAME OF THE PARTNERS CAN BE ADDED IN THE HANDS OF T HE FIRM BECAUSE THE BURDEN IS ON THE FIRM TO PROVE THE GENUINENESS OF CREDITS. TH E DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KEWAL KRISHANA AN D PARTNERS (SUPRA) IS NOT APPLICABLE BECAUSE IN THAT CASE, THE HONBLE JURISD ICTIONAL HIGH COURT NOTICED THAT THE CREDITS ARE ON THE FIRST DAY OF THE BEGINNING O F THE BUSINESS AND, THEREFORE, THERE WAS NO OCCASION FOR THE FIRM TO HAVE EARNED A NY UNDISCLOSED INCOME. 7 5.1. WE HAVE SEEN THE PAPER BOOK FILED BY THE LD. C OUNSEL FOR THE ASSESSEE, COPY OF COMPUTATION OF INCOME AND BALANCE SHEET FOR THE ASSESSMENT YEAR 2007- 08 IN RESPECT OF SH. MANOJ KUMAR JANGID, WHICH ARE A VAILABLE AT PAGES 3 TO 6 OF THE PAPER BOOK. THE BALANCE SHEET SHOWS THE CAPITAL ACCOUNT OF RS.32,77,118/-. THE CAPITAL ACCOUNT IS ALSO ENCLOSED. ALL THE CREDI T ENTRIES IN THE CAPITAL ACCOUNT HAVE BEEN SHOWN IN THE COMPUTATION OF INCOME EXCEP T SHARE OF PROFIT FROM THE FIRM. DURNG THE COURSE OF PROCEEDINGS, WE REQUIRED THE LD. COUNSEL TO FILE THE BALANCE SHEET AND CAPITAL ACCOUNT OF SH. MANOJ KUMAR JANGID FOR THE ASSESSMENT YEAR 2006-07. IT IS SEEN THAT THE CLOSING CAPITAL A CCOUNT AS ON 31 ST MARCH, 2006 WAS RS.24,58,463/-. THE CAPITAL ACCOUNT FOR THE YEA R UNDER CONSIDERATION SHOWS WITHDRAWAL OF RS.4,19,972/-. THE LD. COUNSEL FOR TH E ASSESSEE HAS SUBMITTED THAT THE PARTNERS ARE NOT MAINTAINING THEIR INDIVIDUAL B OOKS OF ACCOUNT. THE ACCRETION IN CAPITAL ACCOUNT FROM 31.03.2006 TO 31.03.2007 ST ANDS EXPLAINED. AS PER CREDIT IN THE CAPITAL ACCOUNT AND THE INCOME SHOWN IN THE COMPUTATION OF INCOME, THERE HAS BEEN NO CASH CREDIT IN THE BALANCE SHEET OF THE PARTNER. IT MEANS THAT THE INVESTMENT MADE IN THE HANDS OF THE FIRM FROM T HE AVAILABLE FUNDS. IN CASE, IT WAS NOT FROM AVAILABLE FUNDS THEN THERE WOULD HAVE BEEN DIFFERENCE BETWEEN QUANTUM OF ASSET SHOWN IN THE BALANCE SHEET AND THE CAPITAL ACCOUNT BY THE SUM OF RS.1,00,000/-. WE, THEREFORE, FEEL THAT CREDIT-W ORTHINESS OF THE PARTNER SH. 8 MANOJ KUMAR JANGID STANDS ESTABLISHED. IDENTITY STAN DS ALREADY ESTABLISHED. HENCE, THE REQUIREMENT OF SECTION 68 STANDS COMPLIE D WITH AND HENCE, THE ADDITION MADE U/S 68 OF THE ACT IS TO BE DELETED. 5.2. PAGE 7 & 8 OF THE PAPER BOOK CONTAINS COPY OF COMPUTATION OF INCOME OF SH. SITA RAM JANGID FOR THE ASSESSMENT YEAR 2007-08 . IN THE COMPUTATION OF INCOME, THE ASSESSEE HAS SHOWN INCOME FROM OTHER SO URCES TO THE EXTENT OF RS.12,000/- AGRICULTURE INCOME HAS BEEN SHOWN AT R S.1,33,125/-. CAPITAL ACCOUNT AND BALANCE SHEET OF SH. SITA RAM JANGID AS ON 31.0 3.2006 HAS ALSO BEEN FILED. THERE IS NO CREDIT ENTRY IN THE BALANCE SHEET EXCEP T THE CAPITAL ACCOUNT. IN THE IMMEDIATELY PRECEDING YEAR, THE AGRICULTURE INCOME WAS SHOWN AT RS.4,59,240/-. WE ARE NOT HAVING BENEFIT OF BALANCE SHEET AS ON 31 .03.2007 IN THE CASE OF SH. SITA RAM JANGID. THE CAPITAL ACCOUNT OF SH. SITA RA M JANGID AS ON 31.03.2006 IS OF RS.11,36,525/-. THERE IS CASH IN HAND TO THE EXTENT OF RS.1,22,360/- . IT IS NOT THE CASE OF THE REVENUE THAT THERE IS ACCRETION IN ASSE T, WHICH IS DISPROPORTIONATE TO THE INCOME DISCLOSED FOR THE ASSESSMENT YEAR 2007- 08. WE, THEREFORE, FEEL THAT THE CREDIT-WORTHINESS AND GENUINENESS OF THE TRANS ACTION STANDS ESTABLISHED. THE LD. CIT(A) WAS, THEREFORE, NOT JUSTIFIED IN CONFIRMI NG THE ADDITION OF RS.1,00,000/- MADE UNDER SECTION 68 OF THE ACT ON ACCOUNT OF CRED IT IN THE NAME OF SH. SITA RAM JANGID. 9 5.3. THE ASSESSEE HAS FILED COMPUTATION OF INCOME F OR THE ASSESSMENT YEAR 2007-08 AND BALANCE SHEET FOR THE A.Y. 2006-07 IN T HE CASE OF SH. MADAN LAL SHARMA. THE FACTS IN THIS CASE ARE SIMILAR TO THE F ACTS OF SH. SITA RAM JANGID. IT IS NOT THE CASE OF THE REVENUE THAT THERE IS ACCRETION IN THE VALUE OF ASSETS IN THE CASE OF THE PARTNER, SH. MADAN LAL SHARMA, WHICH I S DISPROPORTIOATE TO THE INCOME DISCLOSED IN THE RETURN OF INCOME. WE, THERE FORE, FEEL THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.1 ,00,000/- UNDER SECTION 68 OF THE ACT IN THE CASE OF SH. MADAN LAL SHARMA. 6. IN VIEW OF THE ABOVE DISCUSSIONS, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.3,00,000/ -. HENCE, THE SAME IS DELETED. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 7. THE SECOND GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.80,828/- OUT OF C ONSUMABLE EXPENSES, OFFICE EXPENSES AND GENERAL EXPENSES. 7.1. THE AO WHILE MAKING DISALLOWANCE OF RS.80.828/ - HAS OBSERVED AS UNDER: 4. IN THE PROFIT & LOSS ACCOUNT, CONSUMABLES (INDI RECT) AMOUNTING TO RS.1,55,085/-, OFFICE EXPENSES RS.1,58,468/- AND GENERAL EXPENSES RS.90.585/- HAVE BEEN DEBITD. ON VERIFICATION WITH BOOKS OF ACCOUNTS, IT IS SEEN THAT MANY EXPENSES PAID IN CAS H ARE SUPPORTED WITH INTERNAL SELF-MADE VOUCHERS. AS SUCH THESE EXP ENSES ARE NOT 10 FULLY VERIFIABLE. CHANCES OF INFLATING THE EXPENSES TO UNDERSTATE NET PROFIT CANNOT BE RULED OUT. TO PLUG ANY POSSIBLE LE AKAGE ON THIS ACCOUNT, 20% OUT OF THESE EXPENSES IS DISALLOWED. T HIS MEANS ADDITION OF RS.80,828/- TO THE INCOME OF THE ASSESS EE. 7.2. BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT T HE AO HAS MADE AD-HOC DISALLOWANCE OF RS.20/- UNDER THE THREE HEADS I.E. CONSUMABLE EXPENSES, OFFICE EXPENSES AND GENERAL EXPENSES. BEFORE THE LD. CIT(A ), IT WAS SUBMITTED THAT THE DISALLOWANCE HAS BEEN MADE PURELY ON GUESS WORK. LO OKING TO THE TURNOVER OF THE ASSESSEE, IT WAS SUBMITTED BY THE LD. COUNSEL THAT PERCENTAGE OF THE EXPENDITURE IS REASONABLE AND NO DISALLOWANCE WAS TO BE MADE. 7.3. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIO NS HAS CONFIRMED THE DISALLOWANCE AFTER OBSERVING AS UNDER: 4.1. I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE APPELLANT. ON CAREFUL CONSIDERATION OF FACTS, I AM NOT FULLY INCLINED TO AGREE WITH THE CONTENTIONS OF THE APPELLANT. SINCE THE SELF MADE VOUCHERS DID NOT CONTAIN THE COMPLETE DETAILS I.E. NAMES AND ADDRESSES OF RECIPI ENTS, THE AO WAS NOT IN A POSITION TO CARRY OUT ANY VERIFICATION. FURTHER, THE PAYMENTS WERE MADE IN CASH, THEREFORE, THESE EXPENSES WERE INDEED NOT PRONE TO VERIFICATION. RELIANCE IS PLACED ON THE JUDGMENT OF HONBLE IGH CO URT OF RAJASTHAN IN CASE OF CIT VS. NARENDRA MOHAN PALIMAL (271 ITR 347 ) IN WHICH IT WAS HELD THAT IN THE ABSENCE OF BILLS AND VOUCHERS THE AO HA D NO OPTION BUT TO ESTIMATE THE EXPENSES. THE AO HAD ESTIMATED THE DIS ALLOWANCE ON 25 PERCENT OF THE TOTAL EXPENSES CLAIMED. THAT HAD BEE N AFFIRMED BY THE COMMISSIONER (APPEALS). IT WAS HELD BY JURISDICTION AL HIGH COURT THAT THE TRIBUNAL HAD NOT GIVEN ANY JUSTIFICATION AS TO WHY THAT WAS REDUCED. WHEN THE TWO AUTHORITIES HAD TAKEN THE SAME VIEW FOR DIS ALLOWANCE OF THE 11 EXPENSES, THE TRIBUNAL HAD COMMITTED AN ERROR IN RE DUCING THIS AMOUNT OF DISALLOWANCE WITHOUT ANY JUSTIFICATION. RELIANCE IS PLACED ON THE DECISION OF HONBLE HIGH COURT OF MADRAS IN CASE OF SUDARSHAN E STATE PVT. LTD. VS. STATE OF TAMIL NADU (211 ITR 273) WHEREIN IT WAS HELD THA T WAS NECESSARY FOR THE ASSESSEE TO PROVE BY PRODUCING PROPER VOUCHERS AND PROPER ACCOUNTS THE COST INCURRED FOR EQUIPMENT REPAIRS. IN THE ABSENCE OF PROPER VOUCHERS AND THE MAINTENANCE OF PRPER ACCOUNTS, THE INCOME TAX O FFICER AND THE APPELLATE AUTHORITIES WHO WER ENTITLED TO GO INTO T HE MATTER AND WHO WERE REQUIRED TO BE SATISFIED WITH REGARD TO EXPENSES IN CURRED FOR EQUIPMENT REPAIRS, WERE COMPETENT TO RECORD A FINDING AS PER THE RECORDS PRODUCED BEFORE HIM. IN THE INSTANT CASE, AS PROPER RECEIPTS AND ACCOUNTS WERE NOT PRODUCED, THE AUTHORITIES WERE JUSTIFIED IN RESTRIC TING THE CLAIM TO 75 PER CENT. IN THE PRESENT CASE, THERE WAS NO EVIDENCE TO ESTABLISH THAT EXPENSES SO CLAIMED WERE GENUINE IN THE ABSENCE OF BILLS & S UPPORTING OR THESE WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. I DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE AO . THE ADDITION OF RS.80,828/- MADE BY THE AO IS CONFIRMED. THIS GROUN D OF APPEAL IS DISMISSED. 8. WE HAVE HEARD BOTH THE PARTIES. NEITHER THE AO NOR THE ASSESSEE HAS GIVEN US DETAILS OF SUCH EXPENSES DEBITED IN THE IMMEDIAT ELY PRECEDING YEAR. IT IS TRUE THAT SUCH EXPENSES ARE TO THE EXTENT OF 1.46% TO 2. 6% OF THE RECEIPTS. THE AO IN HIS ORDER HAS OBSERVED THAT THE ASSESSEE HAS DECLAR ED GP RATE OF 30.62% ON THE TURNOVER OF RS.61.67 LACS AS AGAINST THE GP RATE OF 25% ON TURNOVER OF RS.50.12 LACS FOR IMMEDIATELY PRECEDING YEAR. THE ASSESSEE HAS BEEN SHOWING AN INCREASE IN THE GP RATE FOR THE LAST TWO SUCCEEDING ASSESSME NT YEARS. WHILE MAKING DISALLOWANCE, THE AO SHOULD HAVE COMPARED SUCH EXPE NSES VIS--VIS TURNOVER AS PER THE LAST YEAR. THERE MAY BE CERTAIN EXPENSES FO R WHICH VOUCHERS ARE NOT AVAILABLE BUT THAT DOES NOT SHOW THAT THE EXPENSES ARE UNTRUE OR FALSE. LOOKING TO 12 THE FACT THAT THE ASSESSEE HAS SHOWN BETTER RESULTS , AS COMPARED TO PRECEDING YEAR. WE, THEREFORE, FEEL THAT THE DISALLOWANCE MAD E BY THE AO IS EXCESSIVE. WE THINK IT WILL BE FAIR AND REASONABLE TO RESTRICT TH E DISALLOWANCE TO RS.20,000/- AS AGAINST RS.80,828/- MADE BY THE AO. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:25/01/2012 /SKR/ COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE: M/S. PUSHP INDUSTRIAL TOOLS, JAIPUR. 2. THE ITO 4(2), JAIPUR. 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, JAIPUR 6. GUARD FILE ITA NO.865/JP/2011