Gopichand Hukumatmal Navlani, V. Income Tax Officer-I,

ITA 92/JAB/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5673 (ITAT-JABALPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 13-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D R LATHORIYA
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

1 I.T.A. NO.92 /JAB/2014 (ASSESSMENT YEAR :2009-2010 ) IN THE INCOME TAX APPELLATE TRIBUNAL, JABALPUR BEFORE S/SHRI N.S. SAINI (AM) N. K. CHOUDHRY (JM ) I.T.A. NO.92 /JAB/2014 (ASSESSMENT YEAR :2009-2010 ) GOPICHAND HUKUMATMAL NAVLANI, DURGA CHOWK, ITARSI. VS. ITO,-II, ITARSI (MP). PAN/GIR NO. : AAOPN 9604 P .. ( RESPONDENT ) APPELLANT BY : NONE RESPONDENT BY : SH. D.R.LATHORIYA DATE OF HEARING : 06-04-2016 DATE OF PRONOUNCEMENT : 06-04. 2016 O R D E R PER NARENDRA KUMAR CHOUDHRY, JM THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATING FROM A N ORDER OF THE LD CIT(A)- 1, BHOPAL, DATED 11.2.2014, IN THE MATTER OF ASSESSMEN T UNDER SECTION 143(3) OF THE I.T.ACT, 1961, FOR THE ASSESSMENT YEAR 2009-2010. 2. GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDE R: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) WAS ERRONEOUS AND UNJUSTIFIED IN SUSTAINING THE DISALLOWAN CE OF RS.30,000/- OUT OF HAMMALI EXPENSES. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) IS TOTALLY UNJUSTIFIED IN SUSTAINING THE FOLLOWING DISALL OWANCES: A) SHOP EXPENSES : RS.6300/- B) TELEPHONE EXPENSES : RS.2950/- C) VEHICLE EXPENSES : RS. 650/- D) DEPRECIATION ON VEHICLE : RS.5142/- 2 I.T.A. NO.92 /JAB/2014 (ASSESSMENT YEAR :2009-2010 ) 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) IS TOTALLY UNJUSTIFIED IN SUSTAINING THE ADDITION OF RS.50 ,000/- ON ACCOUNT OF NON-VERIFIABILITY OF CLOSING STOCK. 2. THE ASSESSEE HAS FILED AN APPLICATION FOR ADJOURNMENT . HOWEVER, CONSIDERING THE ISSUE INVOLVED IN THE APPEAL, WE REJECT THE ADJOUR NMENT APPLICATION AND PROCEED TO DECIDE THE APPEAL ON MERITS AFTER HEARING LD D.R. AND ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 3. LD D.R. RELIED UPON THE ORDERS PASSED BY AUTHORIT IES BELOW AND REITERATED THE SAME 4. GROUND NO.1 RELATES TO ADDITION OF RS.30,000/- OU T OF HAMMALI EXPENSES. 5. AFTER HEARING BOTH THE SIDES AND PERUSING THE ORDER S OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE AO HA S OBSERVED THAT THE ASSESSEE HAS CLAIMED PURCHASE EXPENSES OF RS.7,97,774/- IN THE PROFIT AND LOSS ACCOUNT, WHICH INCLUDED EXPENSES ON ACCOUNT OF HAMMALI. THE AO REQUIR ED THE ASSESSEE TO PRODUCE THE VOUCHERS FOR THE SAME. THE ASSESSEE COULD NOT PRODU CE THE SAME. THEREFORE, HE MADE AN ESTIMATED DISALLOWANCE OF RS.30,000/- ON ACCOU NT OF HAMMALI EXPENSES., WHICH WAS CONFIRMED IN THE APPEAL BY THE LD CIT(A). W E FIND THAT THE AO HAS NOT GIVEN DETAILS OF SPECIFIC VOUCHERS OF HAMMALI EXPENSES, WHICH COULD NOT BE FILED BY THE ASSESSEE ON RECORD. HE HAS MADE AN ADHOC DISALLOWANCE OUT O F HAMMALI EXPENSES OF RS.30,000/-, WHICH IS NOT SUSTAINABLE IN LAW. WE, THER EFORE, SET ASIDE THE ORDERS OF 3 I.T.A. NO.92 /JAB/2014 (ASSESSMENT YEAR :2009-2010 ) LOWER AUTHORITIES AND DELETE THE ADDITION OF RS.30,0 00/- MADE UNDER THE HEAD HAMMALI EXPENSES. ACCORDINGLY, THIS GROUND IS ALLOWED. 6. IN GROUND NO.2, THE GRIEVANCE OF THE ASSESSEE IS THAT LD CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF EXPENSES UNDER THE FOLLO WING HEADS: 1. SHOP EXPENSES : RS.6,300/- 2. TELEPHONE EXPENSES : RS.2,950/- 3. VEHICLE EXPENSES : RS.6,500 4. DEPRECIATION ON VEHICLE : RS.5,1432/- 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON PERUSAL OF LOWER AUTHORITIES AND MATERIAL ON RECORD, WE FIND THAT THE AO OBSERVED TH AT THE ASSESSEE HAS NOT MAINTAINED VOUCHERS FOR EXPENSES CLAIMED UNDER THE HEAD SHOP EXPEN SES OF RS.31,500/-, TELEPHONE EXPENSES OF RS.14,751/-,. VEHICLE EXPENSES OF RS.25,707/- AND DEPRECIATION ON VEHICLE EXPENSES OF RS.25,707/-, ETC. THEREFORE, H E MADE AN ESTIMATED DISALLOWANCE OF 20% OUT OF EXPENSES CLAIMED BY THE ASSESSEE UNDER THOSE HEADS. WE FIND THAT THE AO HAS MADE AN ADHOC ESTIMATED DISALLOWA NCE OUT OF EXPENSES CLAIMED BY THE ASSESSEE AT 20% WITHOUT POINTING OUT FOR WHICH O F THE EXPENSES, THE ASSESSEE HAS NOT MAINTAINED VOUCHERS. SUCH AN ADHOC DISALLOWANCE CA NNOT BE SUSTAINED. WE, THEREFORE, SET ASIDE THE ORDERS OF AUTHORITIES BELOW A ND DELETE THE DISALLOWANCES MADE UNDER THOSE HEADS. HENCE, THIS GROUND IS ALLOWED. 4 I.T.A. NO.92 /JAB/2014 (ASSESSMENT YEAR :2009-2010 ) 8. IN GROUND NO.3, THE GRIEVANCE OF THE ASSESSEE IS THAT LD CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS.50,000/- UNDER THE HEAD CLOSING STOCK. 9. WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE RE CORD OF THE CASE. WE FIND THAT THE AO OBSERVED THAT THE ASSESSEE HAS SHOWN CLOSING STOCK OF R S. 63,94,814/-. HE NOTED FROM THE TAX AUDIT REPORT FILED BY THE ASSESSEE W ITH THE RETURN OF INCOME THAT THE AUDITOR HAS COMMENTED THAT IT IS NOT POSSIBLE FOR THEM T O VERIFY THE QUANTITY AS IT WAS NOT PRACTICALLY FOR THE ASSESSEE TO MAINTAIN THE QUANTITATIV E DETAILS. THE AO REQUIRED THE ASSESSEE TO FURNISH THE QUANTITATIVE DETAILS OF THE CLOSIN G STOCK. THEREFORE, THE AO OBSERVED THAT THE ASSESSEE COULD NOT GIVE THE BASIS FOR V ALUATION OF CLOSING STOCK AND, THEREFORE, THE MATTER OF VALUATION OF CLOSING STOCK COUL D NOT BE VERIFIED ON ACCOUNT OF NON-AVAILABILITY OF QUANTITATIVE DETAILS. HE MADE A LUMPSUM ADDITION OF RS.50,000/- TO THE CLOSING STOCK, WHICH WAS CONFIRMED IN THE APPEAL BY THE LD CIT(A). WE FIND THAT THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNT, WHICH HAVE BEEN AU DITED AND THE TAX AUDIT REPORT HAS BEEN FILED ALONGWITH THE RETURN OF INCOME BY THE ASSESSEE. THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE AO HAS N OT ACCEPTED THE CLOSING STOCK SHOWN BY THE ASSESSEE ONLY ON THE GROUND THAT NO STOCK REGISTER OF QUANTITATIVE TALLY OF THE STOCK COULD BE FURNISHED BEFORE HIM ON THE BASIS OF TAX AUDIT REPORT FILED BY THE ASSESSEE. THE AO WHILE MAKING LUMPSUM ADDITION OF RS.50,000/- TO THE CLOSING STOCK OF THE ASSESSEE HAS NOT GIVEN ANY BASIS FOR THE SAME. THEREFORE, THE ADDITION MADE WITHOUT REJECTING THE BOOKS OF ACCOUNT OF THE ASSE ESSEE AND NOT GIVING BASIS OF ADDITION OF RS.50,000/- CANNOT BE SUSTAINED IN THE EYE OF LAW. WE, THEREFORE, SET ASIDE 5 I.T.A. NO.92 /JAB/2014 (ASSESSMENT YEAR :2009-2010 ) THE ORDERS OF AUTHORITIES BELOW AND DELETE THE ADDITI ON OF RS.50,000/- MADE ON LUMPSUM BASIS TO THE CLOSING STOCK.. 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 /4/2016 . SD/- SD/- (N.S.SAINI) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER JABALPUR, DATED 6 / 4/2016 PARIDA , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT : GOPICHAND HUKUMATMAL NAVLANI, DU RGA CHOWK, ITARSI. 2. THE RESPONDENT: ITO,-II, ITARSI (MP). 3. THE CIT(A)-1, BHOPAL 4. CIT . BHOIPAL 5. DR, ITAT, JABALPUR 6. GUARD FILE. BY ORDER, //TRUE COPY// SR. PS, ITA T, CAMP: JABAL PUR