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Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR
Before: SHRI R.C.SHARMA & SHRI SANDEEP GOSAIN
PER SANDEEP GOSAIN, J.M.
The present appeal has been filed by the assessee against the order of
Ld. CIT(A)-II, Udaipur dated 24.09.2019 for the assessment year 2011-12 on
the grounds mention hereinbelow:-
“1. Under the facts and circumstances of the case and in law, the order dated 24.09.2010 passed by the Ld. CIT (Appeals)-II Udaipur u/s 250(6) of the Income Tax Act, 1961 is bad in law & illegal.
Under the facts and circumstances of the case and in law, Ld. CIT (Appeals)-II Udaipur has erred in affirming the order of Ld. Assistant Commissioner of Income tax, Central Circle-2, Udaipur, passed U/s
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144 rws 144/143(3) of the IT Act, 1961 without giving reasonable opportunity being heard to the appellant therefore ex parte order passed by the Ld. AO is against the natural justice therefore action of Ld. CIT(Appeals)-II, Udaipur, is erroneous & bad in law and liable to be deleted.
Under the facts and circumstances of the case and in law, Ld. CIT (Appeals)-II Udaipur has erred in granting relief of Rs. 75,392/- only out of total addition of Rs. 3,87,730/- on account of suppression of x- ray receipt revenue based on ad-hoc estimation basis made by the Ld. AO, which unjustified, unwarranted & bad in law and liable to be deleted entirely.
Under the facts and circumstances of the case and in law, Ld. CIT (Appeals)-II Udaipur has erred in granting relief of Rs.14,11,384/- only out of total disallowance of Rs. 18,81,845/- on account of discount claimed by the appellant on ad-hoc estimation basis made by the Ld. AO, which unjustified, unwarranted & bad in law and liable to be deleted entirely.
The appellant prays for justice and the appeal deserves to be allowed.
The appellant craves leave to add, alter, amend and modify any grounds of appeal on or before the date of hearing."
At the time of hearing ground No. 1 and 2 of the appeal are not
pressed by the ld. AR of the assessee. Therefore, these two grounds are
dismissed as not pressed.
Ground No. 3 of the appeal relates to part addition sustained on
account of X-Ray receipts. We have heard the rival contentions and carefully
gone through the orders of the authorities below and found from the record
that the AO made addition for Rs. 3,87,730/- which was sustained at Rs.
3,12,338/- and relief was allowed at Rs. 75,392/- by the ld. CIT(A). The AO
observed that during the course of search, X-ray done during the period of 4
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months from October, 2016 to January, 2017 it was found that X-Ray receipts
were for 3839 whereas X-Ray consumed was 4530, and as such there was
excess consumption of 691 films. On these hypothesis it was observed that X-
rays receipt in total was 3.87%. On these facts for the search year for
financial year 2017-18 suppression of receipts was estimated at Rs.
3,87,7301-. The CIT(A) allowed deduction for 3% on account of wastages and
allowed relief of Rs. 75,392/- and sustained balance addition of Rs.3,12,338/-.
We also found from the record that the contention of the assessee is
that the entire basis for addition was not justified. Based on the X-rays done
during the 4 months period from October, 2016 to January, 2017, cannot be
any basis for the addition in the year. Even various factors of wastages had
not been considered, error of technician, package charges, scheme charges
etc. has not been considered. Sometimes films are wasted due to calibration
& technical issues and even repeat X- Rays are done, if the same is not done
properly. The assessee also relied upon some judicial decisions in support that
the estimated addition cannot be made.
We also observe that the addition is not based upon any material or
evidence for the year under consideration and even during search nothing has
been found related to the year. There is no basis for estimation of suppression
of X-Rays. Even the technician during the search proceedings had stated that
in every bundle certain X-Rays gets damaged, and further there are various
other reasons by which X-Rays films can get damaged. There is no allegation
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that some X-Rays having been done, and there is no receipts issued or there
is any suppression of receipts. Therefore, in view of the above facts and
circumstances of the case, we find no merit in the addition sustained by the ld
CIT(A) at Rs. 3,12,338/-, hence we direct the A.O. to delete the same.
The next issue relates to addition for discounts. From perusal of the
record, we found that the AO made addition for Rs. 18,81,845/- for discounts
which was partly deleted by the ld. CIT(A) and 25% of the disallowance to the
extent of Rs. 4,70,461/- was sustained on which the assessee is in appeal.
The AO made addition on the ground that in the search year it was found that
the appellant had claimed certain discounts which could not be verified. The
AO also observed that during search some persons accepted discount and
some did not accepted. Though there was no claim of discount during the
year, the AO estimated the discount at Rs. 18,81,845/- and made addition
thereof.
We also found that the ld CIT(A) observed that in the search year it
was observed that discounts was being allowed and in earlier year the
receipts were net of discounts. The assessee had changed the method of
account of discounts. However, on the basis of conclusion drawn in the search
year the CIT(A) observed that disallowance deserves to be made but the
same was restricted to 25% of the total addition and accordingly addition of
Rs. 4,70,461/- was sustained and balance addition was deleted.
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We also observe that there is no claim of discount as such, and the
addition was based on estimated discounts. In case there is no claim of such
discounts the question of disallowance of any addition is uncalled for. There is
no case of suppression of receipts by showing lesser receipts. Further if the
receipts are shown net of discount the same cannot be said to be not
verifiable as the same is directly linked to the corresponding receipts. The
addition being made only on the basis of suspicion, therefore, we direct to
delete the same.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 20/03/2020.
Sd/- Sd/- (R.C.SHARMA) (SANDEEP GOSAIN) Judicial Member Accountant Member
Dated :. 20/03/2020 *Ranjan Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. The CIT(A) 5. DR, ITAT, Jodhpur 6. Guard File (ITA No. 431/Jodh/2019) By order
Assistant Registrar ITAT Jodhpur