Income Tax Appellate Tribunal - Ahmedabad
Harihar D. Nima, Ahmedabad vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
'A' BENCH - AHMEDABAD
(BEFORE S/SHRI BHAVNESH SAINI, JM AND A. N. PAHUJA, AM)
ITA Nos.107 and 108/Ahd/2004
A. Y.: 1998-99 and 1999-2000
Shri Harihar D. Nima, Vs The Income Tax Officer,
502, Shailraj Tower, Ward-2(1),
Near Management Enclave, Ahmedabad
Vastrapur, Ahmedabad-9
PA No.AATPN 1927C
(Appellant) (Respondent)
ITA No.432/Ahd/2004
A.Y.: 1999-2000
The Income Tax Officer, Vs Shri Harihar D. Nima,
Ward-2(1), 502, Shailraj Tower,
Ahmedabad Near Management Enclave,
Vastrapur, Ahmedabad-9
PA No.AATPN 1927C
(Appellant) (Respondent)
Assessee by Shri T. P. Hemani, AR
Department by Shri Govind Singhal, DR
ORDER
PER BHAVNESH SAINI: All the above appeals by the assessee and the Revenue are directed against different orders of the CIT(A)-VI, Ahmedabad dated 08-12-2006 for assessment years 1998-99 and 1999-2000.
2. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record.
ITA No.107, 108 and 432/Ahd/2004 2Shri Harihar D. Nima ITA No.107/Ahd/2004 (Assessee's appeal)
3. On ground No.1, the assessee challenged the addition of Rs.14,00,913/- on account of estimate of sales and gross profit rate. Briefly, the facts of the case are that survey u/s 133A of the IT Act was conducted at the business premises of the assessee on 17th March 1999. Physical stock worth of Rs.23,51,352/- and cash of Rs.55,800/- were reported to be found. The Books of Accounts were impounded. Statement of the assessee was recorded. Statement of Shri Babulal, partner of M/s. Minerwa Stone & Granites, Shri Indravadan Dave, employee Shri V. Rameshbhai Pandya, employee was also recorded. The assessee is having sister concern namely M/s. Minerwa Granite and Stone wherein his wife Smt. Anita H. Nima and his brother Shri Pranjivan D. Nima are partners. The assessee is trading in the business of marble, kota stone and tiles and also supplying the materials after sizing according to need of the purchases. During the assessment year under consideration the assessee has shown gross profit of Rs.18,71,137/- @13.36% on total sales of Rs.1,40,04,760/-. The AO noted that the assessee was concealing income from marble business by using the following means:-
(i) Sales are shown at lower amount than the actual bill amount
(ii) Assessee issuing two bills of the same number and recording only one bill in the books of account and not recording the other bill and
(iii) The expenditure is not recorded in the books of account.
The AO in Para 5 of the assessment order noted the gist of sales not fully recorded by the assessee and some of the sale bills were accounted at lower amount than the actual sale amount. The seized paper Annexure A-36 shows that the assessee had not accounted for expenditure of ITA No.107, 108 and 432/Ahd/2004 3 Shri Harihar D. Nima exhibition of Rs.26,633/-. Stock statement as on 31st March 1998 furnished with Bank of India shows the stock of Rs.39,92,109/- and the closing stock disclosed in the books of account of M/s. Minerwa Marble shows Rs.37,32,884/-. Thus, there was discrepancy in the closing stock of Rs.2,59,275/- which would show that the assessee has not disclosed full sales. The statement of the assessee was also recorded in which he has admitted that sales are made of the products and payments are received through cheques and some payments are also received in cash. The AO, therefore, inferred that the assessee has made 10% on the cash sales which are not recorded in the books of account. Tentative trading account was recasted showing 10% cash sales on the basis of estimate made as per the purchases. The AO accordingly rejected the books results u/s 145 of the IT Act and estimated the sales at Rs.1,55,00,000/- and applied gross profit rate of 21.11% and made addition of Rs.14,00,913/-.
4. The addition was challenged before the learned CIT(A) and it was submitted that the assessee made purchases which are mainly from outside Gujarat. Raw marble rocks etc. are purchased and cut into specific size as per the requirement of the customers. The assessee explained the discrepancies pointed out by the survey officials but the AO did not consider it properly and rejected the book results. No defect has been found in the books of account. There was no basis to arrive at the conclusion that the assessee was making cash sales to the extent of 10% which were not recorded in the books. As regards the difference in the amount mentioned in the sale bill and the account of collection shown against such sale bills, it was explained that it was due to the reason that the customers at the time of making payment used to bargain for some concession and normally the amount was paid by them in round figure which was obviously less than the amount mentioned in the sale bills. It was accordingly submitted that the addition may be ITA No.107, 108 and 432/Ahd/2004 4 Shri Harihar D. Nima deleted. The learned CIT(A) on considering submission of the assessee confirmed the addition and dismissed this ground of appeal of the assessee. His findings are reproduced as under:
"3.2 I have considered the submissions of the learned counsel and I have also perused the material on record. I have also gone through the reply of the appellant submitted by him before the Assessing Officer vide his letter dtd. 22.5.2001 along with enclosures thereto. I have also gone through the various details furnished by the appellant before the Assessing Officer in the course of assessment proceedings. From a perusal of the material on record, it clearly emerges that the appellant has not maintained day-to-day stock register and quantitative details and, therefore, the trading results shown cannot be taken as verifiable. The stock found at the time of survey was much less than the stock worked out as per books meaning thereby that the appellant was making sales outside books also. The appellant has also not been able to explain satisfactorily the difference in the amount as mentioned in the sale bill and the amount shown as collected against that sale bill. The argument of the appellant that the difference in these two amounts arose on account of the fact that the customers at the time of settlement of bill used to make payment of less amount than that shown in the bill is also not correct because in most of the cases the amount shown as collected is more than the amount mentioned in the sale bill. The appellant also could not explain the discrepancy as to why the sale bills of same number were issued to two or more customers indicating therein different quantities and different amounts. No explanation was furnished as regards difference in the stock as shown in the statement submitted to the bank and the stock reflected in the books as on 31.3.1998. From the above facts, it is clear that the books maintained by the appellant did not reflect the true stat of affairs of the appellant's business. In the circumstances, the Assessing Officer was justified in rejecting the books of account and in applying the provisions of Section 145(3) to determine the profits of the appellant's business and his findings in this regard are upheld. The estimation of sales at Rs.1,55,00,000/- as against the sales shown at Rs.1,40,04,760/- is also reasonable looking to the fact that full sale amount was not recorded in the books. In the appellant's line of business, the margin of profit, as disclosed by marble dealers in Kisangarh in Rajasthan, normally ITA No.107, 108 and 432/Ahd/2004 5 Shri Harihar D. Nima ranges from 30% to 40%. Since the appellant has to purchase raw marble rocks from Rajasthan and the transportation cost borne by him is higher as compared to the dealers in Kisangarh, the margin of profit in his case should not have been less than 25% to 30%. The Assessing Officer has applied the gross profit rate at 21.11% only which cannot be considered as excessive or unreasonable. In the circumstances, the estimation of sales at Rs.1,55,00,000/- and application of gross profit rate at 21.11% are upheld. Accordingly, the addition of Rs.14,00,913/- made in the trading result on account of low gross profit is confirmed."
The learned Counsel for the assessee referring to Para 5.2 of the assessment order submitted that bill of dated 15-10-1998 fall in the next assessment year and with regard to other gills he has referred to the reply filed before the authorities below PB -48 in which it was also explained that sale invoice to Abhishek Engineering was cancelled and it was not accounted for. The sale to JMC Project Ltd. was properly accounted for in the books of account. Higher value of the sales has been shown for bill No.237. For bill NO.346, it was explained that since the assessee received Rs.5,000/- only. Therefore, difference was of Rs.1,793/- which was not received by the assessee. Therefore, conclusion of the AO is incorrect that actual sale amount is not recorded in the books of account. He has submitted that there was no stock difference in the quantity but it was difference on account of stock statement furnished to the bank and the stock mentioned in the books of account which was the practice to inflate the stock in order to get more finance from the bank. In support of his submission he has referred to PB -23 to show that there was no discrepancy in the stock in quantity but it was dispute of valuation only. He has submitted that no reasons are given to reject the book results and that in the statement of the assessee cash payment of the sales was accepted but in fact no sales have been made in cash outside the books of account. He has submitted that the AO recasted the trading account by taking 10% as cash sales on the basis of purchases made and similarly sales have been enhanced. As ITA No.107, 108 and 432/Ahd/2004 6 Shri Harihar D. Nima regards expenses of Rs.26,633/- incurred on exhibition, it was submitted that the amount was spent by the principal for exhibition and since no amount was incurred by the assessee, addition is unjustified as well as for the purpose of rejecting t he book results. The learned Counsel for the assessee, therefore, submitted that method of the estimate is erroneous. He has relied upon the decision of the Hon'ble Bombay High Court in the case of R. B. Abirchand Spinning and Weaving Mills Vs CIT 75 ITR 260 (Bom.) in which it was held that AO's right for rejection of the book result arises only after his finding is recorded as to the unacceptability of the method and irregularities of the accounts kept. He has also relied upon the decision of the Hon'ble Supreme Court in the case of CIT Vs Padamchand Ramgopal 76 ITR 719 (SC) in which it was held that "on the facts, that the Tribunal was not justified in holding that the additions made by the Income-tax Officer were in accordance with law. The additions were arbitrarily made. The two mistakes were insignificant and they afforded no basis for rejecting the accounts for the subsequent years. Further, the method adopted for determining the escaped income was highly capricious".
5. On the other hand, the learned DR relied upon the orders of the authorities below and submitted that incriminating documents were found during the course of survey which was confronted to the assessee but the assessee could not explain the same. Part of the sales is not recorded in the books of accounts. Duplicate bills were issued by the assessee for sales. The assessee admitted large scale unaccounted sales not recorded in the books of accounts and also admitted cash sales made by the assessee outside the books of account. The assessee has not produced any evidence for cancellation of the sale bills. The assessee has also not produced any evidence that no amount was incurred on exhibition. The learned DR submitted that expenses are not properly recorded in the books of account. Therefore, authorities below were ITA No.107, 108 and 432/Ahd/2004 7 Shri Harihar D. Nima justified in estimating book results declared by the assessee. The learned DR relied upon the decision of the Hon'ble Bombay High Court in the case of National Plastics Industries Vs ITO 309 ITR 191 (Bom.) in which it was "Held, dismissing the appeal, that once the authorities had come to the conclusion that the books of account were not properly maintained and suffered from deficiencies, the Assessing Officer was justified in computing income on a reasonable basis in an appropriate manner. The Assessing Officer besides noticing the deficiencies in the books f account had also formed an opinion that there were instances of leakage of revenue in the books of account and the method of accounting applied was not proper."
6. We have considered the rival submissions and material on available on record. During the course of survey physical stock did not found tally with the stock recorded in the books of account. The survey party noticed that the assessee was issuing two bills of the same number and recorded only one bill in the books of account and not recorded the other bill. This fact is not disputed by the assessee and this fact also finds mentioned in the order dated 18th March 1999 impounding the documents found during the course of survey. Two sets of sale bills were found and seized along with several loose papers to show that the book result of the assessee was not reliable. Though the learned Counsel for the assessee rightly contended that the bill dated 15th October 1998 pertains to the next assessment year but no evidence of cancellation of the bill in the name of Abhishek Engineering was produced before the authorities below. Similarly, for bill No.346 in the name of M/s. M. S. Khurana, the AO noted that sale bills were accounted at lower amount than the actual sale amount because in this case Rs.5,000/- was recorded in the books of account as against sale bill of Rs.6,793/-. There was a difference of Rs.1,793/-. According to the learned Counsel for the assessee entire amount of sale proceeds was not recovered from the party. Therefore, whatever amount was recovered was mentioned in the ITA No.107, 108 and 432/Ahd/2004 8 Shri Harihar D. Nima books of account by the assessee. The AO has however, mentioned in the assessment order the amount of Rs.6,793/- on the basis of actual bill as per the collection document. The learned Counsel for the Assessee during the course of arguments admitted that the amount of bill as per collection document (actual bill) was found during the course of survey. It would, therefore, show that as per the actual amount the sale figure was something else and realization was mentioned at lower figure. No confirmation from the same party is filed to explain the above discrepancy. It would, therefore, prove the findings of the authorities below that the assessee was showing the sales at lower amount than the actual bill amount. The assessee also used to maintain two sets of bills of sales through which sales are made but showing different figures. It would also support the findings of the AO that the assessee was not recording proper sales in the books of account. Similarly, for Rs.26,633/- no amount has been shown in the books of account despite material seized during the course of survey to show that the assessee had made payment for expenditure on exhibition of Rs.26,633/- but not accounted for in the books of account. This would also support the findings of the AO that the expenditure has not been properly accounted for in the books of account. The assessee also claimed that Principal has incurred expenditure for exhibition but no such evidence was filed before the authorities below. There was also discrepancy in the stock shown to the bank and as per books of account but ultimately in the next assessment year it was found that stock do not tally as per the books of account which was found during the course of survey. The above facts were, therefore, sufficient to hold that the book results of the assessee are not correct and complete. The discrepancies above noted by the AO have not been explained through any material or evidence on record. However, we may note as regards cash sales made by the assessee, the AO heavily relied upon the statement of the assessee recorded at the time of survey in which the assessee agreed to have received payment in cash of the ITA No.107, 108 and 432/Ahd/2004 9 Shri Harihar D. Nima sales but such was general statement made by the assessee without having any corroborative evidence on record. In the absence of any specific material on record for making cash sales by the assessee outside the books of account, the authorities below were not justified in relying upon the statement of the assessee recorded at the time of survey to enhance gross profit by treating the sales inc ash made out of books of account. Therefore, the authorities below were not justified in rejecting the book results on this reason. However, we find that learned DR was justified in contending that since the expenditure were not properly accounted for in the books of account and that the expenditure were not supported by any material or evidence, therefore, this itself is a sufficient reason to reject the book results of the assessee. We, therefore, considering the incriminating evidences and explanation of the assessee in total hold that the book results of the assessee have been rightly rejected by the authorities below u/s 145 of the Act. The discrepancies pointed out by the AO in the assessment order and incriminating material seized during the course of survey clearly indicated that the same deficiencies in the books of account of the assessee are vital and significant to reject the book results. However, considering the above fact and the fact that there was no basis to make the addition on the basis of cash sales outside the books of account, we are of the view that the addition is on excessive side. Hon'ble Privy Council in the case of CIT, Central And United Provinces Vs Laxminarayan Badridas 5 ITR 170 held "that estimate of income should be fair. AO should not act dishonestly or vindictively. All knowledge, previous history, local knowledge and circumstances of the assessee to be considered to arrive at fair and proper estimation of income". The assessee in the earlier assessment year has shown gross profit rate of 13.24% and in subsequent assessment year 1999-2000 he has disclosed gross profit rate of 19.99%. Therefore, considering the totality of the facts and circumstances, it would be reasonable and proper to estimate the income of the assessee by estimating the total sales at ITA No.107, 108 and 432/Ahd/2004 10 Shri Harihar D. Nima Rs.1,50,00,000/- and direct the AO to apply gross profit rate at 18% and accordingly calculate the taxable income of the assessee. As a result, we modify the orders of the authorities below to that extent and direct the AO to calculate the income accordingly on the sales of Rs.1,50,00,000/- by applying gross profit rate of 18%. As result, ground No.1 of the appeal of the assessee is allowed partly.
7. On ground No.2, the assessee challenged the addition on account of commission payment worth Rs.70,000/-. Commission was paid to Shri Harihad D. Nima , HUF and Pranjeevandas D. Nima, HUF. The assessee submitted before the learned CIT(A) that disallowance of the commission is not justified because Shri Pranjevandas D. Nima who is partner in the firm M/s. Minerwa Granites engaged in the trading decorative flooring materials, glass bricks etc. attending the factory of the assessee to supervise the work, cutting and supplying of stones and marbles etc. It was submitted that Shri H. D. Nima also rendered similar services to the assessee. Therefore, commission paid to them should be allowed as expenditure. The learned CIT(A) however, did not accept the contention of the assessee and rejected this ground of appeal of the assessee because they are fulltime partners in other firms and had no time to attend the business of the assessee and no material/evidence are produced to show that the above services were rendered by them. The learned Counsel for the assessee referred to PB -53 Para 6.1, in this, explanation is given on this issue that they have attended the business activity of the assessee and rendered services in the business of the assessee. On the other hand, the learned DR submitted that no evidence of actual services rendered by them have been filed before the AO and that H. D. Nima, HUF is of the assessee only and there is no difference between individual or HUF through Karta. He has submitted that P. D. Nima has not rendered any services for the assessee. Therefore, addition is correctly made.
ITA No.107, 108 and 432/Ahd/2004 11Shri Harihar D. Nima
8. On consideration of the rival submissions, we are of the view that the addition is rightly made by the authorities below. H. D. Nima, HUF is of the assessee because assessee individual is the Karta of his HUF. Therefore, what individual has to do for his business is explained to be done by the Karta of the HUF. The learned DR is, therefore, justified in contending that no specific services have been rendered by the HUF. Similarly, P. D. Nima, HUF pertain to his brother and no evidence is filed as to what services have been rendered by them in the business of the assessee. Mere explanation is given that he was involved in supervising, cutting and supplying of stones, marbles etc. for the assessee for which no evidence is filed. In the absence of any evidence on record that they have rendered any actual services for the assessee, we do not find any justification to interfere with the orders of the authorities below. We confirm the findings and dismiss this ground of appeal of the assessee.
9. On ground No.3, the assessee challenged the addition of Rs.26,633/- on account of unrecorded expenditure incurred on exhibition . Since we have confirmed the finding of the authorities below on this issue on ground No.1, therefore, this addition would remain sustained. The learned Counsel however, relied upon the decision of the Hon'ble Gujarat High Court in the case of CIT Vs Star Builders 294 ITR 338 (Guj) and submitted that if the addition is made on account of unexplained income in investment, that will give rise to the cost and addition will remain zero. However, we may note that since this addition is considered on the issue of estimate of gross profit, therefore, no separate addition is required to be made. AO is, therefore, directed not to take into account the addition of Rs.26,633/- separately. This ground of appeal of the assessee is accordingly disposed of.
10. On ground No.4, the assessee challenged the addition of Rs.69,600/- being income from truck. The AO noted that the assessee is ITA No.107, 108 and 432/Ahd/2004 12 Shri Harihar D. Nima having one truck, one Tata 407 and Loading Rickshaw. During the course of survey a blank transport receipt book of M/s. Aditya Transport was found. One copy of this LR was inventorised vide page NO.73 to 75 of D-12. No income from transport business was shown by the assessee. The assessee was directed as to why income from these vehicles be not calculated as per provisions of Section 44AE of the IT Act. The assessee explained that the above provisions is applicable in the business of plying, hiring or leasing of goods carriage but in fact vehicles are engaged in carrying goods of the assessee. The AO did not accept the explanation of the assessee because blank LR book in the name of Aditya Transport was found during the course of survey. Further, on verification of the purchase bills it was noticed that LR and lorry number is not shown in the bill of the purchases which do not match with the registration number of the vehicles owned by the assessee. Thus, registration numbers of the vehicles mentioned in these bills are not the vehicles owned by the assessee. The AO, therefore, noted that the assessee was doing business of hire of goods in the name of Aditya Transport for which no income is offered. The AO by invoking the provisions of Section 44AE of the IT Act calculated the income at Rs.69,600/-. Addition was accordingly made. The learned CIT(A) on the same basis confirmed the addition.
11. The learned Counsel for the assessee referred to PB -52 which is explanation filed before the authorities below and PB-61 and 63 to show that all purchase bills, the numbers of vehicles of the assessee are mentioned as per the registration. He has submitted that the assessee was not engaged in the business of plying trucks. Therefore, addition is unjustified. On the other hand, the learned DR relied upon the orders of the authorities below and submitted that blank transport receipt book in the name of Aditya Transport was found from the possession of the ITA No.107, 108 and 432/Ahd/2004 13 Shri Harihar D. Nima assessee which would show that the assessee was doing the business of transport for which no income is offered for taxation.
12. We have considered the rival submissions and material available on record and do not find any justification to interfere with the orders of the authorities below. Transport receipt in the name of Aditya Transport was found from the possession of the assessee which was seized and inventorised. Admittedly, assessee is having one truck, one Tata 407 and one Loading Rickshaw. The assessee has failed to explain possession of transport receipt book in the name of Aditya Transport. Recovery of the incriminating material shows that assessee was engaged in the business of carrying goods, hiring or leasing of goods, as per Section 44AE of the IT Act. Since the assessee was plying goods carriage as per the seized material, therefore, authorities below were justified in calculating the taxable income as per Section 44AE of the IT Act. As a result, this ground of appeal of the assessee is dismissed.
13. On ground No.5, assessee challenged the order of the learned CIT(A) in not allowing depreciation to the extent of Loading Rickshaw. The learned CIT(A) noted that depreciation on Loading Rickshaw is admissible because the assessee used the same for its business purpose. The AO was of accordingly directed to allow depreciation on Loading Rickshaw. Since relief has already been granted by the learned CIT(A), therefore, no further finding is required. Ground No.5 of the appeal of the assessee is accordingly disposed of.
14. The learned Counsel for the assessee submitted that Ground Nos. 6 and 7 are general. These are accordingly dismissed.
15. As a result, appeal of the assessee partly allowed.
ITA No.107, 108 and 432/Ahd/2004 14Shri Harihar D. Nima ITA No.108/Ahd/2004 (Assessee's appeal) ITA No.432/Ahd/2004 (Departmental appeal)
16. On ground Nos. 1, 2 and 3 of the appeal of the assessee, the assessee challenged estimation of income by rejecting book results. The Revenue on ground No.1 challenged the order of the learned CIT(A) in granting relief in a sum of Rs.7,10,000/-. This issue is same as is considered on ground No.1 in the appeal of the assessee for assessment year 1998-99. In this year, the assessee has shown gross profit of Rs.39,10,286/- @ 19.99% on the total sales of Rs.1,95,56,621/-. Survey was conducted on 17th March 1999 which pertaining to assessment year under appeal. The physical stock did not tally with the book results. The margin in the actual sales and [purchases was also found varied from 2.77% to 37.93%. Several discrepancies were noted as we noted in the preceding assessment year. The physical stock could not be reconciled with the book results. There were difference in the actual sales and the actual amount of sales recorded in the books of account. Certain expenditure was also not found recorded in the books of account. The AO accordingly rejected the book results. Cash sales were also found outside the books of account as per the statement of the assessee. The AO accordingly estimated total sales at Rs.2,00,00,000/- and applied gross profit rate of 31.05% and made addition of Rs.22,99,714/-. Similar submissions were made before the learned CIT(A) as were made in the preceding assessment year. The learned CIT(A) confirmed the findings of the AO in rejecting the book results. However, the gross profit rate was reduced to 27.5% as against 31.05% applied by the AO. The estimated sales remained same at Rs.2,00,00,000/-. Addition of Rs.15,89,714/- was accordingly confirmed and the assessee was granted relief in a sum of Rs.7,10,000/-. Learned representatives of both the parties reiterated their submissions as have been made in the assessment year 1998-99. On consideration of the above facts, we are of the view that this issue is identical as is considered in assessment year 1998-99. By following the ITA No.107, 108 and 432/Ahd/2004 15 Shri Harihar D. Nima same reasons for decision, we confirm the findings of the authorities below in rejecting the book results of the assessee. However, we find that application of gross profit rate is still on higher side. We accordingly, modify the orders of the authorities below and direct the AO to apply gross profit rate of 24% against estimated sales of Rs.2,00,00,000/- and work out the gross profit accordingly. As a result, the appeal of the assessee on this ground is partly allowed. Departmental appeal stands dismissed.
17. On ground Nos. 4 and 6, the assessee challenged the addition on account of unaccounted payment made to Shri Asharam Patel of Rs.15,000/-, Shri Banvari of Rs.36,500/-, Shri Sandheepbhai of Rs.20,000/- and Devendrabhai of Rs.25,000/-. In alternate submissions it is stated that effect of the addition would be neutralized in view of the provisions of Section 69C of the IT Act. The learned CIT(A) did not accept the contention of the assessee because at the assessment stage, the assessee himself admitted that these payments were not recorded in the books of account and agreed for addition to his total income on account of such unrecorded payments. The learned CIT(A) further noted that since the assessee agreed to such additions, therefore, the assessee prevent ed the department from investigating into the matter further at the assessment stage. Therefore, the assessee cannot be allowed to retract from such surrender. This ground of appeal of the assessee was accordingly dismissed.
18. Learned counsel for the assessee referred to PB-110 which is reply of the assessee and submitted that in case the addition is confirmed the same may be telescoped on account of addition if any made towards gross profit. On the other hand, the learned DR relied upon the orders of the authorities below.
ITA No.107, 108 and 432/Ahd/2004 16Shri Harihar D. Nima
19. On consideration of the above facts, we are of the view that no interference is called for in this matter. The AO at the assessment stage confronted the material collected during the course of survey to the assessee and sought explanation. The assessee agreed to these seized materials for the purpose of addition and offered the same for the purpose of taxation. Since the assessee failed to explain the material found during the course of survey, therefore, there is no infirmity in the orders of the authorities below in making or confirming the addition. We accordingly, do not find any justification to interfere with the orders of the authorities below. However, we have confirmed the addition on quantum and, therefore, this addition would be telescoped from the addition made on account of gross profit. No separate addition shall be made of the same amount while calculating the taxable income. Ground Nos. 4 and 6 of the appeal of the assessee are accordingly disposed of.
20. On ground No.5, the assessee challenged the addition on account of truck business and Rs.67,200/- u/s 44AE of the IT Act. Learned CIT(A) confirmed the addition by following his order for assessment year 1998-99 in which we have dismissed the appeal of the assessee. By following the same order, we confirm the addition and dismiss t his ground of appeal of the assessee.
21. Learned Counsel for the assessee submitted that ground Nos. 7 and 8 are general. These are accordingly dismissed. There is no other ground in the appeal of the assessee.
22. In the departmental appeal, ground No.2 is raised to challenge the deletion of addition of Rs.4,25,000/- on account of undisclosed income from molding works. The learned CIT(A) noted that molding works of marble slabs etc. is assessee's part business on which gross profit is made. Therefore, no separate addition is required to be made on this amount. We find no infirmity in the order of the learned CIT(A) in issuing ITA No.107, 108 and 432/Ahd/2004 17 Shri Harihar D. Nima such direction. We accordingly, dismiss this ground of appeal of the Revenue.
23. As a result, appeal of the assessee is partly allowed and departmental appeal is dismissed.
24. As a result of the above discussions, both the appeals of the assessee are partly allowed and the departmental appeal is dismissed.
Order pronounced on 12-03-2010
Sd/- Sd/-
(A. N. PAHUJA) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date : 12-03-2010
Lakshmikant/-
Copy of the order forwarded to:
1. The Appellant
2. The Respondent
3. The CIT concerned
4. The CIT(A) concerned
5. The DR, ITAT, Ahmedabad
6. Guard File
BY ORDER
Dy. Registrar, ITAT, Ahmedabad