Income Tax Appellate Tribunal - Jodhpur
Ganesh Foundry vs Income-Tax Officer on 4 April, 2000
ORDER
S. R. Chauhan, J.M.
1. This appeal by assessee for asst. yr. 1990-91 is directed against the order of CIT(A), Jodhpur, dt. 3rd November, 1993, whereby he sustained the trading addition of Rs. 26,363 disallowance of Rs. 15,498 out of motor vehicle expenses and depreciation and Rs. 5,000 out of telephone expenses.
2. We have heard the arguments of both the sides and also perused the records.
3. Ground No. 1 has not been passed by the learned authorised representative during arguments, and so the same is dismissed accordingly.
4. Ground No. 2 disputes the trading addition of Rs. 26,363. The learned authorised representative of assessee has contended that the entire sales are made to Railway Department and are vouched. He has contended that the purchases are also vouched though there are some Kacha vouchers as the assessee makes purchases of raw material for its foundry from Kabadies who come there itself and make the sales. He has also contended that it is not practically possible for assessee to declare uniform rate of G.P. year after year. He has contended that the decline in G.P. rate has been mainly due to increase in the rate of wages and of job work charges and bonus paid to employees. He has contended that the AO has not examined any Kabadi, nor did he call upon assessee to produce any. He has also contended that no specific defects/mistakes have been pointed out by AO in assessee's accounting system or in account books. He has contended that mere absence of stock register cannot justify rejection of accounts or books. He has cited Soni & Co. vs. Asstt. CIT (2000) Direct Taxes Courier Vol. 14, p. 122 and Vinod Kumar Pramod Kumar vs. ITO (2000) 66 TTJ (Jd) 722, in his support. As against this the learned Departmental Representative of Revenue has contended that the AO has recorded finding of facts which justify the applicability of s. 145(1). He has contended that the accounts are not verifiable as it is not possible for AO to verify each Kacha voucher. He has contended that the AO has already granted required relief.
5. We have considered the rival contentions as also the relevant material on records, and have also gave through the cited decisions. In the case of Vinod Kumar Pramod Kumar vs. ITO (supra), it has been held by this Tribunal that correctness of book results cannot be challenged without pointing out any specific mistake or deficiency in the books of account or without recording a firm finding that the profits and gains cannot be properly deduced from such books of account. In the case of Soni & Co. vs. Asstt. CIT (supra) it has been held by Jodhpur Bench of Tribunal that mere absence of day-to-day stock records or meagre fall in GP rate cannot by themselves justify rejection of the book results and the AO cannot invoke the proviso to s. 145(1) or 145(2) on that basis alone. As such considering all the facts and circumstances of the case and respectfully following the above-mentioned decisions of the Tribunal we are of the view that the addition made in the trading result is not justified and uncalled for. We, therefore, delete the addition.
6. Ground No. 3 disputes two items of disallowance, one Rs. 15,498, pertaining to motors vehicle maintenance expenses and depreciation, and the other of Rs. 5,000, pertaining to telephone expenses. The learned authorised representative of assessee has contended that some element of personal use may be involved in these above expenses but the disallowance is excessive. As against this the learned Departmental Representative has relied on the orders of the authorities below.
7. We have considered the rival contentions as also the material on record. Considering all the facts and circumstances of the case we are of the view that the disallowance of Rs. 15,498 out of motor vehicle maintenance and depreciation is somewhat excessive and so we restrict the same to one-fourth of the claim as against 1/3rd of the claim as disallowed by the authorities below. However, as regards the disallowance pertaining to telephone, we do not consider the same to be excessive in the circumstances of the case. We, therefore, uphold this disallowance.
8. Grounds No. 4 and 5 are general in nature calling for no specific decision on our part.
9. In the result this appeal of assessee is allowed in part as indicated above.