Hirabhai Anandbhai Vadalia, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-2 (2), RAJKOT-GUJARAT

ITA 88/RJT/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9056 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 16-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A N SONTAKKE
• Assessee Lawyers: DM RINDANI

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] JKTDKSV U;K;IHB] JKTDKSVA VK;DJ VIHYH; VF/KDJ.K] JKTDKSV U;K;IHB] JKTDKSVA VK;DJ VIHYH; VF/KDJ.K] JKTDKSV U;K;IHB] JKTDKSVA VK;DJ VIHYH; VF/KDJ.K] JKTDKSV U;K;IHB] JKTDKSVA IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AHMEDABAD] LOZJH EGKOHJ IZLKN] U;KF;D LNL; ,OA LOZJH EGKOHJ IZLKN] U;KF;D LNL; ,OA LOZJH EGKOHJ IZLKN] U;KF;D LNL; ,OA LOZJH EGKOHJ IZLKN] U;KF;D LNL; ,OA VEJTHR FLAG] YS [KK LNL; DS LE{KA VEJTHR FLAG] YS[KK LNL; DS LE{KA VEJTHR FLAG] YS[KK LNL; DS LE{KA VEJTHR FLAG] YS[KK LNL; DS LE{KA (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ) ./ I.T.A. NO.88/RJT/2016 ( / ASSESSMENT YEAR :2010-11) HIRABHAI ANANDBHAI VADALIA RAJKOT. / VS. THE INCOME TAX OFFICER, WARD-2(2), RAJKOT. ./ ./ PAN/GIR NO. : AAWPV 8627 L ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI D. M. RINDANI, A.R. / RESPONDENT BY : SHRI A. N. SONTAKKE, SR. D.R. / DATE OF HEARING 02/05/2017 !'# / DATE OF PRONOUNCEMENT 22/05/2017 $% / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-II, RAJKOT, DAT ED 18/02/2016 FOR THE ASSESSMENT YEAR (AY) 2010-11 AND ASSESSEE HAS T AKEN THE FOLLOWING GROUNDS OF APPEALS: I. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEAL S) - 2, RAJKOT ERRED IN SUSTAINING DISALLOWANCE OF CLAIM OF EXPEND ITURE OF ITA NO. 88/RJT/ 2016 HIRABHAI ANANDBHAI VADALIA VS. ITO ASST.YEAR 2010-11 - 2 - RS.1,50,000/- MADE BY THE ASSESSING OFFICER BY WAY OF SALARY PAID TO ONE MS. RINKUBEN. II. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEA LS) - 2, RAJKOT ERRED IN SUSTAINING DISALLOWANCE OF PURCHASE EXPEND ITURE OF RS. 92,811/- MADE BY THE ASSESSING OFFICER BY WAY OF EX CESS PURCHASES DEBITED TO PROFIT AND LOSS ACCOUNT. III. THE LEARNED COMMISSIONER OF INCOME - TAX (APPE ALS) - 2, RAJKOT ERRED IN SUSTAINING DISALLOWANCE OF RS. 1,83,295/- MADE BY THE ASSESSING OFFICER BY WAY OF UNDER VALUATION OF CLOS ING STOCK. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN RETAIL TRADING OF MACHINERY AND ELECTRIC GOODS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO AS WELL AS CIT(A) HELD THAT THE SALARY OF RS.1,50,0 00/- WAS PAID TO RINKUBEN, A RELATIVE OF THE APPELLANT WITHOUT SUPPO RT OF ANY EVIDENCE OF HER ATTENDING THE OFFICE. IN THE ABSENCE OF ANY EVI DENCES, THE FINDING OF THE AO ON THE ISSUE OF DISALLOWANCE OF RS.1,50,000/ - IN RESPECT OF SALARY PAID TO RINDKUBEN WAS JUSTIFIED AND SAME WAS CONFIR MED BY THE LEARNED CIT(A) ON THE GROUND THAT ASSESSEE FAILED TO PRODUC E ANY DOCUMENTARY EVIDENCES TO SUBSTANTIATE THE CLAIM OF SALARY PAID. 3. IN THE SECOND GROUND OF APPEAL, THE ASSESSEE CHA LLENGED THE DISALLOWANCE OF RS. 92,811/- CONSIDERING THE SAME A S EXCESS PURCHASE DEBITED TO P & L ACCOUNT. ITA NO. 88/RJT/ 2016 HIRABHAI ANANDBHAI VADALIA VS. ITO ASST.YEAR 2010-11 - 3 - DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED UNEXPLAINED PURCHASES OF RS.92,811/- DEBITED TO THE P & L A/C., ON VERIFICATION OF PURCHASE REGISTER. THE AO CONTENDED THAT IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE HAS FAILED TO FURNI SH DOCUMENTARY EVIDENCES TO EXPLAIN THE VARIATION IN THE EXCESS PU RCHASES DEBIT TO P & L A/C OVER AND ABOVE TO THE PURCHASES BOOKED IN PURCH ASE REGISTER AS DISCUSSED IN POINT NO.5 ON PAGE NO.3 OF ASSESSMENT ORDER. AGAIN, IN THE COURSE OF APPELLATE PROCEEDINGS, BEFORE THE LEARNED CIT(A) THE ASSESSEE HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCES OR EXPLA NATION AS REGARDS TO THE DISCREPANCY NOTICED BY THE AO AS DISCUSSED ABOV E. THEREFORE, DISALLOWANCE OF RS. 92,811/- BEING UNEXPLAINED PURC HASE DEBITED TO P&L ACCOUNT WAS JUSTIFIED AND SAME WAS CONFIRMED BY THE LEARNED CIT(A). 4. IN THE THIRD GROUND OF APPEAL, THE ASSESSEE CHAL LENGED THE DISALLOWANCE OF RS. 1,83,295/- CONSIDERING THE SAME AS UNDERVALUATION OF CLOSING STOCK. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT CLOSING STOCK WAS UNDERVALUED BY RS.1,83,295/- AS PER POINT NO.6 ON PAGE NO.3 TO 5 OF THE ASSESSMENT ORDER. THE AO DISCUSSED THE REPLY OF THE ASSESSEE WHEREIN HE SUBMITTED THAT THE STATEMENT OF STOCK FI LED WAS AS PER SALES TAX RECORD WHILE SOME GOODS WERE SENT BACK TO SUPPLIER OF INTERIOR QUALITY AND ACTUAL STOCK WAS ACCOUNTED FOR, HENCE, DIFFEREN CE WAS DUE TO GOODS RETURN OF RS. 1,83,295/-. HOWEVER, THE ASSESSEE HAS NEITHER PRODUCED ANY DOCUMENTARY EVIDENCE SUCH AS CREDIT NOTE ISSUED BY SUPPLIER OR RECORD OF ITA NO. 88/RJT/ 2016 HIRABHAI ANANDBHAI VADALIA VS. ITO ASST.YEAR 2010-11 - 4 - GOODS SENT BACK TO SUPPLIER DURING THE COURSE OF AS SESSMENT PROCEEDINGS NOR APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) . UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE FINDINGS OF THE AO O N THE ISSUE OF DISALLOWANCE OF RS. 1,83,295/- ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK WAS JUSTIFIED AND CONFIRMED BY THE LEARNED CI T(A). 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E US, LEARNED DR RELIED ON THE ORDER PASSED BY THE AUTHORITIES BELOW . LEANED AR FILED A LETTER DATED 1 ST MARCH, 2013. ACCORDING TO LEARNED AR SAME LETTER W AS FILED BEFORE THE CIT(A), BUT SAME WAS NOT CONSIDERE D BY THE AUTHORITIES BELOW. LEARNED AR FURTHER STATED THAT HE ALSO FILED THE STATEMENT OF TRADING ACCOUNT AND PROFIT AND LOSS ACCOUNT AND OTH ER DETAIL PERTAINING TO THE ISSUE INVOLVED IN THE CASE. 6. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER AND HEARD THE RIVAL SUBMISSION. WE HAVE NOTICED THAT MO ST OF THE ADDITIONS HAVE BEEN SUSTAINED BY THE LEARNED CIT(A) ON THE GR OUND THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE EXPENDITURE S AND VALUATION OF STOCK WITH THE DOCUMENTARY EVIDENCES. ON THE OTHER HAND D URING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US THE LEARNED COUNSEL CONTENDED THAT HE HAD FURNISHED THE RELEVANT SUPPORTING DETAILS WHICH WERE NOT CONSIDERED AT THE ASSESSMENT STAGE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE F IND IT APPROPRIATE TO RESTORE THIS MATTER TO THE FILE OF A O TO DECIDE THE CASE ITA NO. 88/RJT/ 2016 HIRABHAI ANANDBHAI VADALIA VS. ITO ASST.YEAR 2010-11 - 5 - DENOVO AFTER CONSIDERING THE MATERIAL PRODUCED BY THE ASSE SSEE AND AFTER PROVIDING DUE OPPORTUNITY TO THE ASSESSEE. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSE. THIS ORDER PRONOUNCED IN OPEN COURT ON 22/05/2017 SD/- SD/- VEJTHR FLAG VEJTHR FLAG VEJTHR FLAG VEJTHR FLAG &' $ ( $ ) ()* $ ) ( AMARJIT SINGH ) ( MAHAVIR PR ASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 22/05/2017 PRITI YADAV, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. , -. / / CONCERNED CIT 4. / () / THE CIT(A)-II, RAJKOT. 5. 012 **-. , -.# , '&$,$ / DR, ITAT, AHMEDABAD 6. 245 6 / GUARD FILE. / BY ORDER, 0 * //TRUE COPY// / !'# ( DY./ASSTT.REGISTRAR) #$ %, / ITAT, AHMEDABAD TRUE COPY