SHRI PREM CHAND GUPTA,JHALAWAR vs. INCOME TAX OFFICER, JHALAWAR

PER BHAGCHAND, AM

The appeal filed by the assessee emanates from the order of the ld.

CIT(A), Kota dated 05-10-2017 for the Assessment Year 2012-13 raising

therein following grounds of appeal.

‘’1. Under the facts and circumstances of the case, the ld. CIT(A) has erred in disallowing the claim of Rs. 3,43,760/-, the same may be allowed.

ITA No.1032/JP/2017 Shri Prem Chand Gupta vs ITO, Jhalawar

2.1 Apropos Ground No. 1 of the assessee, the facts as emerges from

the order of the ld. CIT(A) are as under:-

‘’I have gone through assessee's submissions and AO’s findings.

On the facts involved, the appellant has not been able to produce evidences despite adequate opportunity given by the AO in this regard. Despite the requirements of giving confirmations, the assessee gave only some phone numbers to the AO thus not fulfilling his onus regarding the claim. He has not been able to prove the basis of any subsequent documents being admissible in the appellate proceedings as covered u/r 46A as well. Under the circumstances, I am in agreement with the AO as regards disallowance of the claim of Rs. 3,43,760/- claimed to be pertaining to shortages, discounts etc. for produce sold to non-dealers. The disallowance made by the AO is accordingly upheld. This ground of appeal is treated as dismissed.’’

2.2 During the course of hearing, the ld.AR of the assessee submitted

that the assessee tried to obtain the confirmations from the respective

dealers as to the disallowance made by the AO. However, the assessee

vide his letter dated 16-06-2014 submitted the addresses and mobile

numbers of major dealers. The ld.AR of the assessee further submitted

that the assessee had submitted the confirmation from 07 dealers

involving amount of Rs. 2,49,660/-. The ld.AR of the assessee further

submitted that the AO had not made efforts to collect the informations 2

ITA No.1032/JP/2017 Shri Prem Chand Gupta vs ITO, Jhalawar from the parties for which the assessee had provided the addresses and

mobile nos. Thus the lower authorities have confirmed the addition to the

tune of Rs. 3,43,760/- and the books of account were tax audited u/s

44AB of the Act. Hence, the ld.AR of the assessee prayed for deletion of

addition sustained by the ld. CIT(A).

2.3 On the other hand, the ld. DR supported the orders of the lower

authorities.

2.4 We have heard the rival contentions and perused the materials

available on record. Brief facts of the case are that the assessee deals in

agricultural produce on wholesale basis. The AO during the course of

assessment proceeding noted that the assessee had sold the goods to the

dealers other than plants debited the claim of Rs. 3,43,760/- for which the

assessee could not produce the evidences before the AO as required

during the course of assessment proceeding. Hence, the AO made the

addition of Rs. 3,43,760/- which in first appeal has been confirmed by

the ld. CIT(A). The ld.AR of the assessee submitted that some

confirmations of the parties amounting to Rs. 2,49,660/-were submitted

before the ld. CIT(A) but they were not considered. It is further noted that

ld. CIT(A) has not taken into consideration the confirmations of the

parties produced by the assessee for the reason that ‘’assessee has not

ITA No.1032/JP/2017 Shri Prem Chand Gupta vs ITO, Jhalawar been able to produce the basis of any subsequent documents being

admissible in the appellate proceedings as covered u/r 46A as well’’. The

ld. CIT(A) thus confirmed the disallowance of the claim of Rs. 3,43,760/-

pertaining to shortages, discounts etc. for produce sold to non-plant

dealers. In view of the above facts, circumstances of the case and the

submissions of the ld.AR of the assessee, it will be reasonable in the

interest of equity and justice to sustain the addition of Rs. 1,71,880/- i.e.

50% of disallowance of Rs. 3,43,760/-. Thus Ground No. 1 of the

assessee is partly allowed.

3.1 Apropos Ground No. 2 of the assessee, the facts as emerges from

the order of the ld. CIT(A) are as under:-

‘’I have gone through assessee's submission and AO’s findings.

The ITAT Mumbai Bench ‘H’ in the case of Amitabh Bachchan Corpn. Ltd vs Deputy Commissioner of Income Tax, Central Circle-13, Mumbai 56 Taxmann.com 77 (Mumbai-trib) held.

Section 37(1) of the Income-tax Act, 1961 – Business expenditure – Allowability of (Raw material discarded) –Assessment Year 1999-2000 – Assessee company was engaged in business of producing films, TV serials and audio tapes - It claimed deduction on account of ‘raw material discarded’’ but it could not furnish any relevant details to satisfaction of Assessing Officer – Whether disallowance made by Assessing Officer of said deduction was to be confirmed – Held yes. 4

ITA No.1032/JP/2017 Shri Prem Chand Gupta vs ITO, Jhalawar

The submission made by the appellant are neither documented nor satisfactory. The purchase of Bardana when he has own stock for sale is not understand able in the absence of purchase bills. The entire explanation is at best theoretical and the expenses of Rs. 1,37,325/- is therefore, rightly disallowed by the AO. This ground of appeal is treated as dismissed.’’

3.2 During the course of hearing, the ld.AR of the assessee prayed that

the lower authorities have erred in sustaining the addition of Rs.

1,37,325/- as the assessee purchases goods in loose from farmers and the

same is dispatched to the party by packing materials i.e. Bardana. The

ld.AR of the assessee further submitted that sometimes the assessee purchases 2nd hand bardana from the market for which bills and invoices

are not available. It also noted that assessee had submitted its trading

account before the ld. CIT(A) showing that the assessee had sold

agriculture produce during the year under consideration.

3.3 On the other hand, the ld. DR supported the order of the lower

authorities.

3.4 We have heard the rival contentions and perused the materials

available on record. It is noted that the assessee deals in sales of

agricultural produce which is purchased from the farmers. The assessee

will dispatch the agricultural produce to the party in the Bardana.

ITA No.1032/JP/2017 Shri Prem Chand Gupta vs ITO, Jhalawar However, the assessee has not produced the bills before the lower authorities for purchase of Bardana amounting to Rs. 1,37,325/- which was sustained by the ld. CIT(A). In view of the submissions of the assessee and the business field of the assessee, it will be in the interest and equity and justice to reduce the addition to the extent of Rs. 68,663/- i.e. 50% of Rs. 1,37,325/-. Thus Ground No. 2 of the assessee is partly allowed. 5.0 In the result, the appeal of the assessee is partly allowed. Order pronounced in the open Court on 24-05-2018.

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