M/s. Soni Auto Agencies, JODHPUR V. ITO, JODHPUR

ITA 97/JODH/2011

• Counselvise Citation: 9723314 RSA 2011
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 07-12-2011
• Assessment Year: 1993-1994
• Appeal Filed On: 14-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Assessee Lawyers: N R MERTIA
• Keywords: Unexplained cash credit
• Section: 68; 69

Judgement Text

1 ITA 97-11 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH SMC JODHPUR. ( BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER ) ITA NO. 97/JODH/2011 ASSTT. YEAR : 1993-94. M/S. SONIAUTO AGENCIES, VS. THE INCOME-TAX OFFIC ER, CHOPASNI ROAD, JODHPUR. WARD 3, JODHPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.R. MERTIA RESPONDENT BY : SHRI G.R. KOKANI DATE OF HEARING : 07.12.2011. DATE OF PRONOUNCEMENT : 09.12.2011. ORDER DATED : 09.12.2011. THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 1993-94. 2. FIRST ISSUE RELATES TO CONFIRMING THE ADDITION O F RS. 50,000/- ON ACCOUNT OF CAPITAL INTRODUCED BY PARTNER. 3. THE ASSESSING OFFICER NOTED THAT THERE ARE TWO P ARTNERS WHO HAVE INVESTED RS. 25,000/- EACH ON 9.7.1992 IN CASH. AS PER ORDER OF ASSESSING OFFICER, ASSESSEE HAS NOT FILED ANY DOCUMENTARY EVIDENCE AND CONFIRMATORY LET TERS WITH REGARD TO THE SOURCE OF CAPITAL. THEREFORE, HE MADE THE ADDITION UNDER SEC TION 68. THE LD. CIT (A) HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 4. AFTER CONSIDERING THE ORDERS OF THE ASSESSING OF FICER AND LD. CIT (A) AND SUBMISSIONS OF BOTH THE PARTIES, I FIND THAT IN VIE W OF THE DECISION OF HONBLE 2 JURISDICTIONAL HIGH COURT IN CASE OF KEWAL KRISHAN IN APPEAL NO. 185/08 DATED 12.1.2009, THE ASSESSEE DESERVES TO SUCCEED. IN TH IS DECISION IT HAS BEEN HELD THAT IT WAS FOR THE PARTNERS TO EXPLAIN THE SOURCE OF THE DEPOS ITS AND IF THEY FAILED TO DISCHARGE THE ONUS THEN SUCH DEPOSITS COULD BE ADDED IN THE HANDS OF THE PARTNERS ONLY AND NOT IN THE HANDS OF THE ASSESSEE FIRM. IN ANY CASE, SUCH CAPI TAL CONTRIBUTION ENTERED INTO THE BOOKS OF ACCOUNT OF THE ASSESSEE FIRM PRIOR TO THE COMMEN CEMENT OF THE BUSINESS CANNOT BE TREATED TO BE THE INCOME OF THE ASSESSEE FIRM IN CO NSIDERED OPINION OF THIS COURT, SUCH UNEXPLAINED CREDIT MAY BE ADDED TO THE INCOME OF TH E PARTNERS CONCERNED IN TERMS OF SEC. 69 AND NOT IN TERMS OF SEC. 68 OF THE I.T. ACT, 196 1. THE ABOVE RATIO IS SQUARELY APPLICABLE ON THE FACTS OF THE PRESENT CASE AS CAPI TAL CONTRIBUTION IS MADE BY PARTNERS ON THE FIRST DAY OF PARTNERSHIP. IT IS ALSO NOTED THA T BOTH THE PARTNERS ARE ASSESSED TO TAX, THEREFORE, IF ANY ADDITION CAN BE MADE, THAT CAN BE MADE IN THE HANDS OF THE PARTNERS AND NOT IN THE HANDS OF THE FIRM. ACCORDINGLY, I DELETE THIS ADDITION. 5. REMAINING ISSUE IS AGAINST CONFIRMING THE APPLIC ATION OF GP RATE OF 12.5% AS AGAINST 9.92% BY UPHOLDING THE PROVISIONS OF SECTIO N 145(2) OF THE ACT. 6. ASSESSEE DECLARED GP RATE OF 9.9%. THE ASSESSING OFFICER NOTICED THAT CERTAIN SALES ARE NOT VOUCHED PROPERLY AND, THEREFORE, HE I NVOKED THE PROVISIONS OF SECTION 145(2) AND IN HIS VIEW THE GP RATE SHOWN BY ASSESSEE WAS A LSO NOT PROPER. ACCORDINGLY HE APPLIED GP RATE AT 15% WHICH RESULTED IN TRADING AD DITION OF RS. 15,247/-. THE LD. CIT (A) ALLOWED THE ISSUE PARTLY IN FAVOUR OF THE ASSES SEE AS HE REDUCED THE GP RATE TO 12.5% AGAINST 15% APPLIED BY ASSESSING OFFICER. 7. AFTER CONSIDERING THE ORDERS OF THE ASSESSING OF FICER AND LD. CIT (A), I FIND THAT THIS IS THE FIRST YEAR OF FIRM AND ALL THE PURCHASE S ARE VOUCHED. BOOKS OF ACCOUNT ARE 3 MAINTAINED AND ASSESSEE HAS DECLARED GP AT 9.9% WHI CH, IN MY VIEW, IS REASONABLE CONSIDERING THE FACT THAT THIS IS THE FIRST OF ASSE SSEES BUSINESS. ACCORDINGLY, I HOLD THAT THE ASSESSING OFFICER AND LD. CIT (A) SHOULD NOT HA VE DISTURBED THE TRADING RESULT AS THERE WAS NO MAJOR DEFICIENCY IN MAINTAINING BOOKS OF ACC OUNT. ACCORDINGLY, I DELETE THE TRADING ADDITION. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . 9. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09. 12.2011. SD/- ( R.K. GUPTA ) JUDICIAL MEMBER JODHPUR, COPY FORWARDED TO :- M/S. SONI AUTO AGENCIES, JODHPUR. THE ITO WARD-3, JODHPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 97/JODH/2011) BY ORDER, AR ITAT JODHPUR.