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TAXAP/2014/2010 4/ 4 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 2014 of
2010
=========================================================
KRISHNAKANT
NATWARLAL BHAVSAR - Appellant(s)
Versus
INCOME
TAX OFFICER, WARD 6(4) - Opponent(s)
=========================================================
Appearance
:
MR
RK PATEL for
Appellant(s) : 1,
None for Opponent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE AKIL KURESHI
and
HONOURABLE
MS JUSTICE SONIA GOKANI
Date
: 08/11/2011
ORAL
ORDER
(Per
: HONOURABLE MR.JUSTICE AKIL KURESHI)
Appellant
assessee has filed this appeal challenging decision of Tribunal
dated 7.5.2010. Following questions are presented for our
consideration :
“(1) Whether
on facts and evidence on record the Tribunal is right in law in its
interpretation of section 145 and section 37 read with allied
provisions of the Income-tax Act, 1961 for confirming addition of
Rs.4,29,116/- towards suppressed sales/job work receipts?
(2) Whether
on facts and evidence on record and on interpretation of law the
Tribunal is right in confirming the disallowance of Rs.52,898/- and
Rs.5,01,000/- towards commission?
(3) Whether
the Tribunal’s approach and conclusion of confirming the addition
towards suppressed sales/job work receipts and disallowance of
commission expenses are unwarranted of facts and contrary to
evidence on record resulting into “vitiated” findings
unsustainable in law?”
Question
no.(1) pertains to addition of Rs.4.29/- lakh made by the Assessing
Officer. The Assessing Officer on basis of figures presented before
him, was of the opinion that the computation of income presented by
the assessee was not accurate. By giving detailed reasons therefore,
and also taking into account different parameters such as
consumption of Grey fabric, electricity, etc., Assessing Officer
made addition of above sum.
2.1
Assessee carried the issue in appeal. CIT(Appeals) reversed the
order of the Assessing Officer primarily observing that book results
were not rejected. Assessing Officer only on the basis of arithmetic
calculation made addition which was not justified.
2.2
Revenue thereafter, went in appeal before the Tribunal. Tribunal
restored the order of the Assessing Officer observing that Assessing
Officer had sufficient reasons to reject book result. There was
enough evidence to discard the accounts. Tribunal further observed
that even after such addition, Gross Profit rate comes to 13.66%
which is still lower than Gross Profit Rate of 17.81% shown by
assessee of previous year.
2.3
Counsel for the assessee submitted that the Assessing Officer had
not rejected book result. Tribunal therefore, gravely erred in
upholding the rejection of books and Assessing Officer’s estimation
of profit. He submitted that CIT(Appeals) has given cogent reasons.
In view of difference of opinion between two authorities, issue
requires consideration.
2.4
We are however, of the opinion that entire issue is based on
appreciation of evidence. Assessing Officer as well as Tribunal was
of the opinion that the assessee’s account did not reflect accurate
computation of income. It is true that the Assessing Officer has not
said in so many words that accounts are not accepted. However, if
one peruses order of the Assessing officer on the issue which run
into several pages, detailed reasons have been recorded to come to
the conclusion that computation of income as per book result does
not match other parameters such as consumption of Grey fabric etc.
and therefore, it was necessary to compute profit independently. In
that view of the matter, Tribunal was justified in observing that
“We accordingly upheld rejection of books and Assessing
officer’s estimation of profit”.
2.5
Entire issue being purely factual in nature, no question of law
arises.
Question
no. 2 and 3 pertains to disallowance on commission paid by one Shri
Hanuman R. Prasad. Claim of the assessee was disallowed by the
Assessing Officer on the premise that no material was placed with
respect to work done by the so-called commission agent. Assessing
Officer also noted that for the total income of Rs.5,01,100/-
allegedly paid, entries were made on last date of accounting year.
Such payment was disallowed treating the same as bogus and not
incurred for the purpose of business of the assessee company. This
view of-course was reversed by the CIT(Appeals) noting that details
of payment made to Shri Hanuman Prasad were presented. It was
noticed that TDS was also deducted. In further appeal by the
Revenue, Tribunal restored the order of the Assessing Officer and
set aside the order of CIT(Appeals) observing that merely because in
earlier years, expenditure was allowed and TDS was made on such
payment, would not permit the CIT(Appeals) to interfere. It was
observed that assessee was required to explain and clarify that for
what purpose such claim was paid, what services said commission
agent had rendered. Names and addresses of those clients were also
required to be provided. Such client ought to have confirmed that
such job was given to the assessee at the instance of commission
agent. In absence of such evidence, it cannot be presumed that
commission was paid for business expenditure.
3.1
Here also Counsel for the appellant submitted that in view of
conflict of view between the revenue authorities, issue requires
consideration.
3.2
We are of the opinion that entire issue is based on appreciation of
evidence. Assessing officer as well as Tribunal was of the opinion
that expenditure of commission was not fully established.
Authorities were of the opinion that in absence of any evidence as
to the nature of work done by commission agent, claim could not have
been accepted. In totality of facts and circumstances of the case,
we are of the opinion that no question of law arises. As noted,
entries were made on last date of accounting year.
In
the result, Tax Appeal is dismissed.
(Akil
Kureshi,J.)
(Ms.
Sonia Gokani,J.)
(raghu)
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