The ITO, Ward-2(3),, Surat v. Shri Gopalbhai T.Patel, Surat

ITA 347/AHD/2007 | 1994-1995
Pronouncement Date: 28-05-2010 | Result: Partly Allowed

Appeal Details

RSA Number 34720514 RSA 2007
Bench Ahmedabad
Appeal Number ITA 347/AHD/2007
Duration Of Justice 3 year(s) 4 month(s) 8 day(s)
Appellant The ITO, Ward-2(3),, Surat
Respondent Shri Gopalbhai T.Patel, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 28-05-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 28-05-2010
Date Of Final Hearing 19-05-2010
Next Hearing Date 19-05-2010
Assessment Year 1994-1995
Appeal Filed On 19-01-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AT SURAT CAMP AHMEDABAD BEFORE SHRI T.K. SHARMA JUDICIAL MEMBER AND SHRI D. C. AGRAWAL ACCOUNTANT MEMBER ITA NO.347/AHD/2007 ASSESSMENT YEAR: 1994-95 DATE OF HEARING:19.5.10 DRAFTED:21.5.10 INCOME TAX OFFICER WARD-2(3) SURAT V/S . SHRI GOPALBHAI T PATEL 64 JAY ESTATE ANJANA FARM OPP. KAMELA DARWAJA SURAT PAN NO.ABAPP0289K (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI SANJEEV KASHYAP SR-DR RESPONDENT BY:- SHRI SAPNESH SHETH AR O R D E R PER D.C.AGRAWAL ACCOUNTANT MEMBER:- THIS APPEAL IS FILED BY REVENUE RAISING FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEANED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1 5 1 180/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S.69C OF THE I.T. ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION ON RS.4 3 5 781/- ON ACCOUNT OF SUPPRESSED SALES. 2. THE FACTS OF THE CASE ARE THAT ORIGINAL ASSESSME NT IN THIS CASE WAS COMPLETED U/S.143(3) OF THE ACT ON 31-03-1997 DETER MINING TOTAL INCOME AT RS.8 24 220/- AS AGAINST RETURNED INCOME OF RS.82 3 34/-. THE ASSESSING OFFICER HAD MADE THE FOLLOWING ADDITIONS:- ITA NO.347/AHD/2007 A.Y. 1994-95 ITO WD-2(3) SRT V. SH. GOPALBHAI T PATEL PAGE 2 1. UNACCOUNTED PURCHASES RS.1 41 675 2. UNEXPLAINED EXPENDITURES RS.1 51 180 3. SUPPRESSED SALES RS.4 49 029 IN APPEAL LD. CIT(APPEALS) RESTORED THE MATTER TO T HE FILE OF ASSESSING OFFICER. THE AO COMPLETED THE ASSESSMENT ON THE SAME INCOME ON 17-03-2000. IN FURTHER APPEAL LD. CIT(APPEALS) CONFIRMED THE ADDI TION. THE ASSESSEE CARRIED THE MATTER BEFORE ITAT WHICH VIDE ITS ORDER DATED 1 6-12-2004 SET ASIDE ALL THESE ADDITIONS TO THE FILE OF ASSESSING OFFICER WI TH A DIRECTION TO RE-EXAMINE THE MATTER AFTER GIVING OPPORTUNITY OF BEING HEARD TO ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S.143(3) R.W.S 2 45 OF THE ACT THE ASSESSEE FURNISHED DOCUMENTS WHICH WERE CLAIMED TO BE SUBMITTED BEFORE TRIBUNAL. THE AO FURTHER REQUIRED ASSESSEE TO PRODU CE ORIGINAL BOOKS OF ACCOUNTS BILLS VOUCHERS AND PERSONS WHO HAVE CLAIM ED TO HAVE DONE JOB WORK FOR THE ASSESSEE. THE ASSESSEE DID NOT PRODUCE ANYTHING AND ACCORDINGLY AO REPEATED THE SAME ADDITIONS AND ASSE SSED THE TOTAL INCOME AT RS.8 24 220/-. 3. IN APPEAL LD. CIT(APPEALS) CONFIRMED THE ADDITIO N OF RS.1 41 675/- BEING UNACCOUNTED PURCHASES. IN RESPECT OF OTHER TW O ADDITIONS LD. CIT(APPEALS) MADE ELABORATELY DISCUSSIONS. THOUGH H E CONFIRMED THE ADDITION BUT ALLOWED THESE AS EXPENDITURE. SIMILARL Y LD. CIT(APPEALS) THOUGH CONFIRMED THE ADDITION OF RS.4 49 029/- BUT ALLOWED PART OF IT AS DEDUCTION AND THUS HE ALLOWED RELIEF OF RS.4 35 781/- TO THE ASSE SSEE. 4. REGARDING ADDITION OF RS.1 51 180/- BEING UNEXPL AINED EXPENDITURE LD. SR-DR SUBMITTED THAT THIS WOULD AMOUNT TO A RESTRIC TION ON THE OPERATION U/S.69C AS WHENEVER UNEXPLAINED EXPENDITURE IS DISC OVERED BY THE ASSESSING OFFICER THEN SAME WOULD BE ALLOWED AS DEDUCTION AS EXPENDITURE BRINGING THE ADDITION U/S.69C AT NIL. THIS SHOULD NOT BE PERMITT ED. SEC.69C PROVIDES ONLY ITA NO.347/AHD/2007 A.Y. 1994-95 ITO WD-2(3) SRT V. SH. GOPALBHAI T PATEL PAGE 3 ADDITION AS DEEMED INCOME. NO EXPENDITURE AGAINST T HIS DEEMED INCOME CAN BE ALLOWED. IN RESPECT OF ADDITION OF RS.4 49 029/ - LD. SR-DR SUBMITTED THAT LD. CIT(APPEALS) HAS ALLOWED RELIEF ON THE BASIS OF TWO VOUCHERS OF EXPENSES DATED 24-03-1994. THESE VOUCHERS PERTAINED TO BUTTA CUTTING FOR THE PERIOD FROM 01-03-1994 TO 15-03-1994. ASSESSING OFFICER T OOK THE RECEIPTS OF GRAY CLOTH UP TO 31-03-1994 AND CONSIDERED THE SALES UP TO 11-03-1994 ONLY WHICH WAS NOT CORRECT. THE TRIBUNAL HAS SET ASIDE THE MA TTER FOR VERIFICATION BUT ASSESSEE FAILED TO PRODUCE THE RELEVANT BOOKS OF AC COUNTS SUCH AS STOCK REGISTER PRODUCTION REGISTER FOR VERIFICATION DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS. IN THE ORIGINAL ASSESSMENT ORDER IT WAS CLEARLY MENTIONED THAT MATERIAL RECEIVED FROM BUTTA CUTTING FROM 10-03-199 4 TO 31-03-1994 IS 21 668 MT. I.E. 14 343 MT ON 10-03-1994 AND 7 325 T ON 24- 03-1994. ON THE OTHER HAND SALES MADE ON 11-03-1994 WAS 661 MT THUS CLO SING STOCK OF THE GOODS SHOULD BE 21 007 MT WHEREAS ASSESSEE HAS SHOWN ONL Y 1484 MT. AS SUCH ASSESSEE COULD NOT SUBSTANTIATE HIS CONTRADICTIONS AT ANY STAGE. THE ORDER OF LD. CIT(APPEALS) PASSED ON 14-11-2006 WAS NOT JUSTI FIED. 5. LD. AR SUBMITTED THAT ONCE BOOKS ARE REJECTED BY ASSESSING OFFICER AND SUCH REJECTION ARE CONFIRMED THEN NO FURTHER ADDITI ON ON ANY SPECIFIC ITEM CAN BE MADE. WHATEVER DISCREPANCY AO HAS FOUND IS FROM THE BOOKS OF ACCOUNTS ONLY AND NOT BEYOND IT. THEREFORE ONCE THE BOOKS A RE REJECTED THE ONLY COURSE UPON TO THE ASSESSING OFFICER IS TO ESTIMATE THE PR OFITS. HE SUBMITTED THAT TOTAL SALES RECORDED IN THE BOOKS OF ACCOUNTS ARE R S.54 84 035/- WHEREAS DEPARTMENT HAS FURTHER DISCOVERED SALES OF RS.4 49 029/- IN RESPECT OF WHICH GROSS PROFIT ADDITION COULD BE MADE. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD. OUT OF THREE ADDITIONS WHICH WE RE SUBJECT-MATTER OF APPEAL BEFORE THE TRIBUNAL FIRST ADDITION OF RS.1 41 675/ - IS NOT IN DISPUTE AS THIS ADDITION IS CONFIRMED BY LD. CIT(APPEALS) AND THERE IS NO APPEAL OR CO FILED BY THE ASSESSEE. HOWEVER IN PARA-11.2 LD. CIT(APPE ALS) HAS GIVEN A FURTHER ITA NO.347/AHD/2007 A.Y. 1994-95 ITO WD-2(3) SRT V. SH. GOPALBHAI T PATEL PAGE 4 DIRECTION THAT THIS AMOUNT IF ADDED SHOULD BE ALLOW ED AS AN EXPENDITURE AGAINST THE INCOME COMPUTED. ONCE THIS AMOUNT IS AL LOWED AS AN EXPENDITURE AT THE SAME TIME TREATING AS INCOME AND REVENUE BEI NG NOT IN APPEAL NO INTERFERENCE IS MADE IN THE ORDER OF LD. CIT(APPEAL S). 7. REGARDING OTHER TWO ADDITIONS WE FIND THAT SUM OF RS.4 49 023/- RELATES TO SUPPRESSED SALES WHEREAS RS.1 51 186/- REPRESEN TS UNEXPLAINED EXPENDITURE. 8. LD. CIT(APPEALS) HAD CONFIRMED THE REJECTION OF BOOKS IN PARA-7.4 AS UNDER:- 7.4 AS HAS BEEN DISCUSSED EARLIER THE PRESENT ASS ESSMENT PROCEEDINGS WAS INITIATED ON THE DIRECTION OF THE I TAT WHO FOUND THAT THE CIT(A) IN HIS ORDER DTD. 20/7/2000 HAD DISMISS ED THE ASSESSEES APPEAL ON THE GROUND THAT THE ASSESSEE HAD FAILED T O FURNISH ALL RELEVANT DETAILS. WHILE ON THE OTHER HAND BEFORE THE ITAT T HE ASSESSEE HAD FILED DETAILS WHICH IT CLAIMED TO HAVE FILED BEFORE THE A .O. HOWEVER QUITE UNFORTUNATELY BEFORE THE AO IN THE PRESENT PROCEED INGS THE ASSESSEE WAS UNABLE TO SUBSTANTIATE THE CLAIM THAT HE HAD MA DE BEFORE THE ITAT. THE FAILURE OF THE ASSESSEE TO DO SO IS CLEARLY REF LECTED IN THE ENTIRE BODY OF THE ASSESSMENT ORDER DTD. 29/11/2005. APART FORM THE PAPER BOOK WHICH IT HAD FILED BEFORE THE ITAT THE ASSESS EE WAS UNABLE TO FURNISH ANY OTHER DETAIL. IN THE WRITTEN SUBMISSION S THE AR HAD PLACED STRONG RELIANCE ON ASSESSEES LETTERS DTD. 28/2/97 AND 24/11/2005 TO PROVE HIS CLAIM THAT THE RELEVANT BOOKS OF ACCOUNT HAD INDEED BEEN PRODUCED BEFORE THE AO. WHILE THE LETTER DTD. 28/2/ 1997 IS SO LONGER RELEVANT THE LETTER DTD. 24/11/2005 MERELY STATES THAT THE ABOVE FACTS CAN BE VERIFIED FROM THE BOOKS OF ACCOUNTS PRODUCED FOR YOUR VERIFICATION. AS PER THE ORDER-SHEET NOTING OF 24/11/2005 THE A R HAD PRODUCED ON THE SAID DATE ONLY THE CASH BOOK THE LEDGER AND THE PURCHASE AND SALES REGISTER. THIS MEANS THAT THE BO OKS WHICH WERE RELEVANT AND NECESSARY THAT IS THE STOCK REGISTER THE PRODUCTION REGISTER AND THE SALARY & WAGES REGISTER WERE NOT PRODUCED. BE THAT AS IT MAY THE AO LAID OUT IN CONSIDERABLE DETAIL THE FAILURE ON THE PART OF THE ASSESSEE TO PRODUCE THE RELEVANT DETAILS INN SU PPORT HIS CLAIM AGAINST THE ADDITIONS MADE EARLIER. THE ASSESSEE WA S ALSO UNABLE TO SUBSTANTIATE THE DETAILS THAT HAD BEEN FURNISHED BE FORE THE ITAT. TO THIS EXTENT THE AO WAS FULLY JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT U/S.145 OF THE I.T. ACT. ITA NO.347/AHD/2007 A.Y. 1994-95 ITO WD-2(3) SRT V. SH. GOPALBHAI T PATEL PAGE 5 SINCE THIS FINDING IS NOT CHALLENGED BY EITHER OF T HE PARTIES NO SPECIFIC ADDITION CAN BE MADE ON THE BASIS OF ENTRIES IN THE BOOKS. R EGARDING SUPPRESSED SALES OF RS.4 49 029/- ASSESSING OFFICER WILL WORK OUT GROSS PROFIT ON THE BASIS OF GP RATE DECLARED IN THE BOOKS OF ACCOUNTS. TO THIS EXTENT ADDITION IS RESTORED I.E. ADDITION ONLY TO THE EXTENT OF GP FO UND ON SUPPRESSED SALES ALONE IS SUSTAINED. 9. REGARDING UNEXPLAINED EXPENDITURE WE ARE OF THE VIEW THAT NO SEPARATE ADDITION CAN BE MADE ONCE BOOKS OF ACCOUNTS ARE REJ ECTED. ACCORDINGLY WE CONFIRM THE ORDER OF LD. CIT(APPEALS) IN DELETING T HE ADDITIONS THOUGH ON DIFFERENT GROUND. AS A RESULT APPEAL FILED BY REV ENUE IS PARTLY ALLOWED. 10. IN THE RESULT REVENUES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 28/05 /2010 SD/- SD/- (T.K.SHARMA) (D. C.AGRAWAL) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD DATED :28/05/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-II SURAT 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD