SHRI RAJESH KARSHANBHAI VEKARIYA,RAJKOT vs. THE ITO WD-2(1)(5), RAJKOT

5. Your Honour's appellant craves leave to add, to amend, alter, or withdraw any or more grounds of appeal on or before the hearing of appeal.” STATEMENT OF FACTS

1.0 The appellant, an individual, is assessed to tax by the Income tax Officer, Ward 2(1)(5), Rajkot (hereinafter referred to as the "AO") and maintains books of account and gets the same audited u/s. 44AB of the Act. The appellant filed his return of income of 2,84,452/- and agricultural income of Rs.2,05,000/- for the relevant AY on 29.09.2012 During assessment u/s 143(3) of the Act, the AO alleged that the appellant remained non-cooperative and did not comply with notices issued and thereby invoked section 144 of the Act. The AO, vide order u/s. 144 of the Act, dated 26.03.2015 assessed the total income at 98,02,210/- and agriculture income of Rs.2,05,000/-, wherein following variations to the returned income were made: (i) Treating unsecured loans of ₹86,68,718/- received from various depositors as unexplained and alleging that appellant has failed to discharge the onus and thereby made addition of 286,68,718/-u/s. 68 of the Act, on account of unexplained cash credit.

-RJT-2024 SHRI RAJESH KARSHANBHAI VEKARIYA (ii) Disallowing claim of depreciation of Rs.76,595/- being 7.5% on new Verna motor car on the alleged ground that appellant failed to furnish material evidences of purchase of new Verna car. (iii) Disallowing Rs.66,087/-& Rs.7,06,358/- being 10% of administrative expenses & groundnut kharajat expenses respectively on alleged ground that no proper check over the expenses has been made by the appellant. The assessment order passed u/s. 144 of the Act on 26/03/2015 and net total income assessed on Rs.98,02,210/- against the relevant income of Rs.2,84,452/- 3. Aggrieved by the addition made by AO assessee file an appeal before the Ld.CIT(A). That the Ld. CIT(A) has disposed the appeal with following remark: 4.2 I have considered the facts and circumstances of the case. Further, I have also given due consideration to the remand report submitted by the AO and the rejoinder to the remand report submitted by the appellant. Overall, I do not find enough merit in the rejoinder filed by the appellant and the remand report of the AO is very clear and convincing on why and how the additions made need to be sustained. Therefore, all additions and disallowances made by the AO are reasonable, justified and are sustained at this stage.

5. In the result, the appeal is dismissed.

4. Further aggrieved by the order of Ld. CIT(A) assessee has filed present appeal before the Tribunal. (i) During the course of hearing the Ld. AR has submitted that an addition of Rs.86,68,717/- u/s. 68 of the Act. On account of unsecured loan along with other addiction depreciation disallowed Rs.76,595/- kharajat expenditure. @ 10% 7,06,358/- In the appeal before Ld. CIT(A) and Ld.CIT(A) has disposed of the appeal on the ground that some documents have not been submitted. Page | 3 -RJT-2024 SHRI RAJESH KARSHANBHAI VEKARIYA (ii) On the contrary, Ld. Senior DR for the Revenue has submitted Sub: “Written Submission in the matter of Rajesh Karshanbhai Vekariya, ITA 173/Rjt/2024 for AY-2011-12-reg. DOH: 23/09/2024 Your Lordship, the revenue is bringing following facts from admission made by Appellant at stage of CIT (A).

2. He admitted that he is a wholesale trader of agricultural products however under as per the provision of Gujarat APMC Act he must produce a valid license for trading in APMC market yards, which he failed on two occasions where opportunity was given to him, before the Assessing officer and before the CIT (A), so his admission itself are going against him.

5. If indeed the Appellant was a wholesale trader in agricultural products as per his own admission, he failed to produce his license.

6. Due to these reasons this appeal is liable to be rejected.”

-RJT-2024 SHRI RAJESH KARSHANBHAI VEKARIYA

5.1 We note that the Ld. CIT(A) has asked for remand report from the AO on the four issues of addition made in the ex parte assessment order. (i) Remand report in respect of Rs.88,68,718/- according to be report submitted by the AO. That the outstanding creditors of the assessee are recorded on books of accountants are nothing but bogus. However, the addition was on accountant of unsecured loan. (ii) Addition of Rs.76,595/- on accountant of disallowance of deprecation. The reports is that motor car is not utilized for his business purpose. (iii) Disallowance of expense of Rs. 66,087/- is due to that electricity bill is not in the name of assessee. (iv) Disallowance of khajarat of Rs.87,06,358/- on account excess claimed. 5.2 We note that while considering remand report the Ld. CIT(A) has not given due care and attention and accepted the remand report considering that remand report is clear and convincing. We note that the books of account are duly audited. Sundry creditors shown in the books of account were considering as cash creditor. While making the assessment and the depreciation was disallowed on the ground -RJT-2024 SHRI RAJESH KARSHANBHAI VEKARIYA that the motor car is not use for business purpose. While in the order of assessment depreciation was disallowed because of ownership bill was not submitted in the assessment proceedings and ad hoc disallowance was made without any basis. While the books of account audited and are nothing wrong detected in the books of account. The AO's disallowance is made merely on suspicion, conjectures and surmises, is totally unjustified and deserves to be deleted.

5.3 We find that the Ld. CIT(A) has dealt with the remand report. We further note that when noting wrong detected in the books of account. Since the matter has not been adjudicated by AO in ex parte procedure u/s 144 of the Act. Since the assessee did not respond for such proceedings of ex parte assessment proceedings.

5.4 Regarding disallowance of Rs.86,68,718/-. We find that AO observed that it is unsecure loan and no evidence in available on records the assessee submitted that it is the trade creditors duly recorded in books of account. The Ld. CIT(A) concluded that outstanding creditors in the books of account the assessee are bogus. We disallow to the extent of 10% of trade creditors which comes to Rs.8,66,871/- to be added in the hands of the assessee. The AO is directed to compute the same. 5.5 Regarding depreciation of Rs.76,595/- for purchase of new motor car and no bill/voucher is available during the course of assessment proceedings. Bill submitted during the remand proceedings. The AO observed that the same as not used for business purposes. The Ld. CIT(A) observed that the depreciation on motor car is not allowable. Considering the car is used for personal purposes and for ends of justice, we disallow depreciation to the extent of 20% which comes to Rs.15,319/-. AO is directed accordingly. 5.6 Regarding administrative expenses of Rs.66,087/-, the AO disallowed by the AO @ 10% of total expenditure clam. The assessee is trader and the electric bill is -RJT-2024 SHRI RAJESH KARSHANBHAI VEKARIYA in the name of land lord. We restrict the administrative addition of 10% which comes to Rs. 6,087/-. The AO is directed accordingly.

5.7 Regarding groundnut kharajat expenses of Rs.7,06,358/-. We find that AO disallowed the same by no furnishing details because no expenses are related to filing in transaction expenses and added to the income of assessee. The Ld.CIT(A) confirmed the addition made by AO. Since all the has been submitted by the assessee in remand proceedings we restrict the disallowance @ 5% which comes to Rs.35,317/-. The AO is directed accordingly. With the additions to conclude the issues and to avoid any possible revenue leakage. We are of the view to confirm the addition of Rs.9,23,595/-. The grounds of assessee’s appeal is party allowed in above terms.