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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: SHRI MAHAVIR PRASAD & SHRI AMARJIT SINGH
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [Conducted through E-Court at Ahmedabad]
(BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER)
ITA. No: 33/RJT/2014 (Assessment Year: 2009-10)
Shri Shamjibhai Tejabhai V/S Asst. Commissioner of Ahir Tejabhai Tower, 201, Income Tax Gandhidham Plot No. 208 Sector No. 9, Circle, Gandhidham- Gandhidham-Kutchh Kutchh (Appellant) (Respondent)
PAN: ACXPA7959H
Appellant by : Shri Chetan Agarwal, A.R. Respondent by : Shri Arvind N. Sontakke, Sr. D.R.
(आदेश)/ORDER
Date of hearing : 27 -04-2018 Date of Pronouncement : 10 -05-2018
MAHAVIR PRASAD, JUDICIAL MEMBER 1. This appeal by the Assessee is preferred against the order of the Ld. CIT(A)-II, Rajkot dated 22.03.2013 pertaining to A.Y. 2009-10 and following ground has been taken by the appellant:
ITA No. 33/Rjt/2014 2 . A.Y.2009-10 1. Hon. CIT(A) has erred in law as well as on fact in confirming addition of Rs. 24,25,000/- made by learned A.O. on account of 20% adhoc disallowance from purchases.
The facts of the case are that the appellant carried his business of manufacturing and trading of salt in the name of M/s. Shyam Salt Farm. The appellant also carried out the business of salt trading only in the name of Hari Trading Co. Appellant had maintained two separate set of books in respect of both these proprietary concerns and separate gross profit and net profit were derived on the basis of these books of accounts. These books of accounts were also audited u/s. 44AB of the Act. The Assessing Officer had carried out inquiries with the help of inspector of his office who paid spot visits and reported the non-existence of the parties from whom the salt was claimed to have been purchased for trading purpose. He also noticed the fact that the bardan and plastic bags were not used for filling in the salt as the opening and closing stock remained at the same figure. The A.O. after granting opportunities to the assessee calling for explanation and evidences, rejected he books of accounts u/s. 145 of the Act. He accepted the book results but disallowed the purchases @ 20% made by the two proprietary concerns and made addition of Rs. 48,30,000/- in respect of Hari Trading Co. and Rs. 12,60,000/- from Shyam Salt Farm. Thus, the A.O. made the total addition of Rs. 60,90,000/- out of purchases for the reason that the purchases were bogus and non-verifiable.
Against the said order, appellant preferred first statutory appeal before the ld. CIT(A) who partly allowed the appeal of the appellant.
ITA No. 33/Rjt/2014 3 . A.Y.2009-10 4. We have gone through the impugned order and facts of the case so far as rejection of books is concerned. While rejecting the books of accounts, defects have to be pointed out by the Assessing Officer and a specific finding should have been given as to whether these defects lead to derive satisfaction to the effect that the books of accounts so maintained were not correct or complete on the basis of which the income has been deducted. In the instant case, the A.O. did not point out the specific defects except for commenting on the identical printed material in the form of delivery challans which bear different rubber stamps. Based on these delivery challans, the Inspector carried inquires by paying spot visits at the places where the salt suppliers were manufacturing the salt at the relevant time and reported the non-availability of salt suppliers on the date of his visit. The visit was in November, 20.11 when there was off season in this line of business as contended by the A.R. of the appellant through vide para 4 of the written submissions dated 21.06.2012. However, the appellant had obtained the affidavits of some of the salt manufacturers/traders in the month of December, 2011, just within one month of the Inspector's visit on 18.11.2011. In the villages and particularly in line of this business, the persons are known by their names rather than the business names and any inquiry by giving business name in such remote places may not yield the desired results for locating such, persons. Therefore because of the peak season those businessmen could not be located.
So far disallowance of 20% is concerned because there was no specific adverse findings recorded on the basis of inquires made in that case. So far as the purchases of Rs. 2,41,50,000/- as debited in the books of Hari Trading Co. are concerned, there may be defects in maintain the records and non-existent of some of the parties at the time of inquiry made by the Inspector. But the
ITA No. 33/Rjt/2014 4 . A.Y.2009-10 affidavits filed during the course of assessment proceedings which were accepted without examining the persons on oath or otherwise lead to the fact that these parties were in existence who supplied the salt to the appellant at the relevant times. The Payments have also been evidenced in the subsequent years.
Ld. CIT(A) mentioned in his order that the addition of Rs. 60,90,000/- is held to be non-sustainable. Because if this addition is confirmed, then the gross profit of both the proprietary concerns will be enhanced to 26.22% as against the declared G.P. of 6.22% in the case of Hari Trading Co. wherein the highest gross profit of 13.67% was declared for assessment year 2008-09. Similarly, in the case of Shyam Salt Farm, the gross profit would be enhanced to 27.78% as against the declared GP of 7.78% for the year and the maximum gross profit in this concern was declared was 10.75% for assessment year 2006-07. Therefore, in our considered opinion, the lower authorities have made arbitrary and high pitched addition and appellant has given all the details in support of his contention. Therefore, in our considered opinion, addition of Rs. 24,25,000/- cannot be made. Thus, the A.O. is directed to delete the addition of Rs. 24,25,000/-.
In the result, the appeal filed by the appellant is accordingly allowed.
Order pronounced in Open Court on 10- 05 - 2018
Sd/- Sd/- (AMARJIT SINGH) (MAHAVIR PRASAD) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad dated: 10/05/2018