VISARIA SECURITIES P. LTD, V. DCIT 4(2),

MA 120/MUM/2013

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0942 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 06-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 01-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Assessee Lawyers: G N MAKWANA
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO.3613/M/2011 ASSESSMENT YEAR : 2007-08 INCOME TAX OFFICER WARD 13(3)(2) ROOM NO.428, 4 TH FLOOR AAYAKAR BHAVAN MUMBAI-400 020. VS. SHRI HEMANT V. LUHANA C/O. 12, NATH KRUPA 03 RD FLOOR, V.N. PURAV MARG OPP. ATI CHUNABHATI MUMBAI-400 022. PAN NO.AAAPL 8581 F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.N. MAKWANA REVENUE BY : SHRI PANKAJ R. TOPRANI DATE OF HEARING : 29/08/2013 DATE OF PRONOUNCEMENT : 06 / 0 9 /2013 O R D E R PER B. RAMAKOTAIAH, AM: THIS IS AN APPEAL REVENUE AGAINST THE ORDER OF CIT( A)-24, MUMBAI DATED 28.02.2011. REVENUE HAS RAISED DETAILED GROUN DS ON TWO ISSUES. 2. WE HAVE HEARD THE LD. DR AND THE LD. COUNSEL FOR ASSESSEE. 3. GROUND NO.1 IS ON THE ISSUE OF RESTRICTING THE E STIMATE OF PROFIT TO 2% AS AGAINST 6% ESTIMATED BY AO. THE ASSESSEE IS I N THE BUSINESS OF TRANSPORT OPERATIONS AND HAS HIRED TRUCKS IN HIS BU SINESS. IN THE ABSENCE OF BOOKS OF ACCOUNT, ASSESSEE ESTIMATED INC OME AT RS.3.00 LACS ON GROSS TURNOVER OF RS.1.62 CRORES. AO NOTICED THA T THE PROFIT DECLARED IS AT 1.84% AND ASKED THE ASSESSEE WHY INCOME SHOULD N OT BE ESTIMATED AT 6%. THE ASSESSEE SUBMITTED SIMILAR CASES OF OTHER INDIVIDUALS WHERE EVEN ON TURNOVER VARYING FROM RS.3.48 CRORES TO RS. 23.64 CRORES, THE NET ITA NO.3613/M/11 A.Y.07-08 2 PROFIT WAS AROUND 1.46% TO 2%. HOWEVER, AO DID NOT AGREE ON THE REASON THAT THOSE PERCENTAGES ARE OF AUDITED BOOKS OF ACCO UNT AND SO, CAN NOT BE ACCEPTED. HOWEVER WITHOUT ANY COMPARABLE FIGURES , HE ESTIMATED INCOME AT 6% AND MADE ADDITION OF RS.6,76,466/- TO THE BUSINESS INCOME. THE LD. CIT(A) AFTER EXAMINING THE CONTENTI ONS AND ALSO ON THE REASON THAT ASSESSING OFFICER HAS NOT BROUGHT ANY M ATERIAL ON RECORD TO RELY ON THE ESTIMATED 6% REDUCED THE ESTIMATION TO 2%. THE REVENUE IS AGGRIEVED. 4. AFTER CONSIDERING THE RIVAL CONTENTIONS AND EXAM INING THE FACTS AS AVAILABLE ON RECORD, WE DO NOT SEE ANY REASON TO UP HOLD THE REVENUES GROUNDS. FIRST OF ALL AO HAS NOT BROUGHT ANYTHING O N RECORD WHY HE IS ESTIMATING INCOME AT 6%. THERE ARE NO PROPER REASON S WHY THE COMPARABLE FIGURES FURNISHED BY THE ASSESSEE IN ALL OTHER CASES ARE REJECTED. AUDIT OF BOOKS OF ACCOUNT CAN NOT CHANGE PROFIT MARGINS. CONSIDERING THAT ASSESSEE DOES NOT OWN VEHICLES AND OPERATES ON HIRED VEHICLES, THE ESTIMATION AT 2% IS REASONABLE AND AP PROPRIATE. THE GROUND IS REJECTED. 5. GROUND NO.2 PERTAINS TO ADDITION OF RS.11,32,464 /- AS UNEXPLAINED CAPITAL. IT WAS DELETED BY THE CIT(A) A FTER DUE EXAMINATION. AS ALREADY STATED EARLIER, THE ASSESSEE DID NOT MAI NTAIN BOOKS OF ACCOUNT FOR THIS YEAR. IN THE COURSE OF ASSESSMENT PROCEEDINGS IN SUPPORT OF OPENING BALANCES DECLARED, THE BALANCE SHEET OF EARLIER YEAR I.E. AY 2006-07 WAS VERIFIED. AO COMPARED THE BALANCE SHEET FILED WITH HIM IN THE COURSE OF ASSESSMENT IN THIS YEAR WITH THAT OF BALANCE SHEET ENCLOSED WITH THE RETURN OF INCOME FOR AY 2006-07 AND FOUND THAT THERE ARE DISCREPANCIES IN THE TWO BALANCE SHEETS. THE ASSESS EE EXPLAINED THAT PRAMOD C. SHAH FILED DOCUMENTS IN THE COURSE OF ASS ESSMENT PROCEEDINGS OF ASSESSMENT YEAR 2007-08 WITHOUT KNOW LEDGE OF ASSESSEE AND FURNISHED REASONS FOR VARIATION IN THE CAPITAL AMOUNT. AO HOWEVER DID NOT AGREE AND MADE AN ADDITION OF RS.11,32,464 /- AS DIFFERENCE IN ITA NO.3613/M/11 A.Y.07-08 3 CAPITAL AS UNEXPLAINED INCOME. THE MATTER WAS EXAMI NED IN DETAIL BY THE CIT(A) AND AFTER REMANDING AND OBTAINING A REPORT FROM THE ASSESSING OFFICER, CAME TO THE CONCLUSION THAT ASSESSEE HAS S UCCESSFULLY EXPLAINED THE REASONS FOR THE MIS-UNDERSTANDING/DOUBTS CREATE D DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND WHY THERE ARE DISCREP ANCIES IN THE STATEMENT PREPARED, MAINLY ON THE VALUE OF BUNGLOW WHOSE VALUES WERE DEFERRING FROM ONE STATEMENT TO ANOTHER, SATISFIED AND DELETED THE ADDITION. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE DO N OT SEE ANY REASON TO INTERFERE WITH THE WELL REASONED ORDER OF THE CI T(A).IN FACT THE ISSUES WERE ULTIMATELY EXAMINED AND AO WAS GIVEN OPPORTUNI TY, THEREFORE, THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE LD . CIT(A). MOREOVER, WE WERE ALSO SURPRISED TO SEE THAT THE LD. ASSESSING O FFICER COMPARED TWO BALANCE SHEETS SUPPOSED TO BE FOR ASSESSMENT YEAR 2 006-07 AND ON THE SO CALLED DISCREPANCIES IN THOSE FIGURES PERTAINING TO ASSESSMENT YEAR 2006-07, CONSIDERED THE SAME AS INCOME IN AY 2007- 08. IT WAS NOT EXPLAINED HOW ADDITION WAS MADE IN THIS ASSESSMENT YEAR ON THE SO CALLED DISCREPANCIES IN THE BALANCE SHEET PERTAININ G TO EARLIER ASSESSMENT YEAR. LOOKING AT IT IN ANY WAY, THERE IS NO MERIT I N THE CONTENTIONS RAISED BY THE REVENUE. THEREFORE, GROUND IS REJECTED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH SEPTEMBER, 2013. SD/- SD/- (DR. S.T.M. PAVALAN ) JUDICIAL MEMBER (B. RAMAKOTAIAH ) ACCOUNTANT MEMBER MUMBAI, DATED: 06/09/2013. JV. ITA NO.3613/M/11 A.Y.07-08 4 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.