Income Tax Appellate Tribunal - Rajkot
Sadashiv P. Shetty,, Gandhidham vs Department Of Income Tax on 18 July, 2012
आयकर अपील य अ धकरण, राजकोट यायपीठ राजकोट IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT.
ी ट .के. शमा, या यक सद य एंव ी डी.के. ीवा तव, लेखा सद य के सम ।
Before Shri T. K. Sharma, JM and Shri B. R. Jain AM ITA.No. 553/Rjt/2012 नधारण वष / Assessment Year 2008-09.
Asstt. Commissioner of Income-tax Shri Sadashiv P. Shetty,
Gandhidham Circle, Gandhidham- Prop. Meridian Shipping
Kutch Services, 12, Bajaj Chambers,
PAN : AKOPS1154K Plot No. 265, Ward-12B,
Gandhidham.
(अपीलाथ /Appellant) यथ /Respondent
राज व क ओर से / Revenue by Shri Ankur Garg, D. R.
नधा रतीक ओर से / Assessee by Written Submissions filed.
सुनवाई क तार ख / Date of Hearing 11-12-2012
घोषणा क तार ख / 14-12-2012
Date of Pronouncement
आदेश / Order
ट .के. शमा, या यक सद य / T. K. Sharma, J. M. : This appeal by the
Revenue is against the order dated 18-07-2012 of CIT (A)-II, Rajkot for the assessment year 2008-09.
2. Briefly stated, the facts are that the assessee is an individual doing business of clearing, forwarding and transporting. For the assessment year under appeal, he filed return of income on 30-09-2008 declaring total income at Rs.67.46,230/-. AO framed the assessment u/s.143(3) of the I. T. Act, 1961 on 09-12-2010 wherein, AO made addition of outstanding receivables 1,32,42,635/- for the detailed reason given in the assessment year 2006-07. Apart from this, AO made adhoc disallowance of trip expenses of Rs.5,00,000/- for the detailed reasons given in para-5 of the assessment order. On appeal, in the impugned order dated 18-07-2012, the ld. CIT(A) following the decision of ITAT in 2 ITA 553/Rjt/2012 assessee's own case for A.Y. 2003-04 and 2004-05, deleted the addition of Rs.1,32,42,635/-made by AO out of outstanding reasonable for the detailed reason given in para-3.2 which reads as under:-
"3.2 I have perused the copies of various orders submitted by the AR of the appellant, findings of the Assessing Officer in his assessment order as well as submissions of the AR of the appellant. As stated above, the appellant has been following "cash" system of accounting for the last so many assessment years which is evident from the record and under the cash system, any receivables which were actually not received could neither be reflected in the profit & loss account nor need to be shown as income. It has also been brought to the tax in the succeeding year and therefore it would amount to double taxation if the same are brought to tax in this year also. The Hon'ble ITAT, Rajkot Bench, vide its order in ITA No.481/RJT/2006 dated 13/2/2009 has upheld the findings of the CIT(A) on the issue of outstanding receivables by observing that though the appellant has been following cash system of accounting, still there is nothing on record to conclusively say that there was any deliberate attempt on the part of the appellant to postpone the receipts. The Tribunal also observed that the phenomenon of receipts remaining outstanding at the end of the year and being paid in the first week of April regularly appears for all the assessment years. The A.O. has accepted the cash system of accounting for A.Y. 96-97. Moreover, it is well settled principle of judiciary that a system of accounting regularly followed from year to year cannot be changed in a particular year in isolation of other years. While deciding so, the ITAT has also relied on the decision of the Hon'ble Gujarat High Court in the case of CIT vs. Advance Construction Co. (143 Taxman 61) wherein it was held that according to section 145 of the Act, income chargeable under the head 'profits & gains of business or profession' shall be computed in accordance with the method of accounting regularly employed by the appellant. The only exception where the method employed is such that in the opinion of the A.O., income cannot be properly deduced therefrom, then he shall then compute the income on such basis and in such manner as he may determine. The Tribunal viewed that the provision of S.145, therefore, specifically provides that the choice of method of accounting lies with the assessee but the only caveat being that he has to show that the chosen method has been regularly followed. Accordingly, the Hon'ble ITAT noticed that it has been held by CIT(A) that the appellant is following cash system of accounting in accordance with the established norms and there is nothing on record to show that there was any deliberate attempt on the part of the appellant to postpone the receipts. The outstanding receivables are in the normal course of business activities. The Hon'ble ITAT has also followed the said decision of A.Y. 03-04 in appellant's own case for A.Y. 2005-06, vide order in ITA No.290/RJT/2008 dated 24/7/2009. The facts and circumstances of the appellant's case are 3 ITA 553/Rjt/2012 identical to those of A.Ys. 03-04, 05-06 & 06-07 and therefore, respectfully following the decisions of the Hon'ble ITAT, Rajkot Bench and my learned predecessor in appellant's own case for the preceding years, the addition made of Rs.1,32,42,635/- is hereby directed to be deleted."
3. Further, in the impugned order, the ld. CIT(A) reduced the adhoc addition of Rs.5,00,000/- being 50% for the detailed reason given in para-4.1 which reads as under:-
"4.1 I have perused the findings of the A.O. and the submissions of the AR of the appellant. The turnover/gross receipts of the appellant are Rs.4,4006,851/- whereas the trailer diesel/oil/trip expenses are at Rs.1,79,85,925/- (i.e. 40.87%) as against Rs.2,20,29,792/- ( i.e.42.76%) in the immediately preceding year. The A.O. made adhoc disallowance at Rs.5,00,000/- as most of the expenses under this head of expenditure were incurred on various dates in cash only on the basis of self-made vouchers. Such cash payment on self-made vouchers is very volatile and prone to inflation/manipulation. Considering these facts and the past history of the case, fifty per cent of the disallowance is confirmed and remaining amount is directed to be deleted.
Aggrieved with the order of ld. CIT(A), the revenue is in appeal before the Tribunal on the following grounds:-
1) The Ld CIT(A) has erred in law and on facts in deleting the addition made on account of Rs.2,50,000/- of Outstanding receivables of Rs.1,32,42,635/-.
2) The Ld. CIT(A) has erred in law and on facts in restricting the addition to the tune of Rs.2,50,000/- out of Rs.5,00,000/- made on account of disallowance of trip expenses.
4. At the time of hearing, none was present from the side of the assessee. However, Shri D. R. Adhia of the assessee filed written submissions wherein it was contended that the ld. CIT (A) has followed the Tribunal's order in assessee's own case of A.Ys. 2003-04, 2005-06 and 2006-07. Therefore, view taken by ld. CIT(A) for deleting the addition in respect of outstanding receivable amount of Rs.1,32,42,635/- be upheld. With regard to allowing relief out of trip expenses, the counsel of the assessee relied on the order of ld. CIT(A) in para-4.1.
4 ITA 553/Rjt/2012
5. The ld. D.R. fairly conceded that issue involved in ground No.1 is squarely covered in respect of decision of the Tribunal in assessee's own case in the earlier year as mentioned by ld. CIT(A) in the impugned order. However, with regard to adhoc disallowance, the ld. D.R pointed out that disallowance of Rs.5,00,000/- was reasonable and ld. CIT(A) is not justified in restricting the same to 50% thereof.
6. We have carefully gone through the orders of authorities below. Admittedly, the ld. CIT(A) deleted the addition made by AO on account of outstanding receivables amounting to Rs.1,32,42,635/- following the decision in assessee's own case for earlier years. We therefore, inclined to upheld the order of ld. CIT(A). Ground No.1 is accordingly rejected.
7. With regard to other ground, we found that the AO made adhoc disallowance of Rs.5,00,000/- as some payment was made by self-made vouchers. The ld. CIT(A) in the impugned order restricted the same to 50%. Looking to the facts and figures mentioned by CIT(A) in para-4.1 of the impugned order, we are of the view that view taken by ld. CIT(A) is fair and reasonable. We therefore, declined to interfere. This ground of appeal is also rejects.
8. In the result, the appeal of the revenue is dismissed.
This Order pronounced in Open Court on the date mentioned hereinabove.
Sd/- Sd/-
( B. R. Jain ) (ट .के. शमा/ T. K. Sharma)
लेखा सद य/ Accountant Member या यक सद य/Judicial Member
आदेश दनांक/Order Date 14-12-2012.
राजकोट /Rajkot
आदेश क त ल प अ े षत / Copy of Order Forwarded to:-
1. अपीलाथ / Appellant-.Asstt. CIT, Gandhidham Circle, Gandhidham.
2. यथ / Respondent- Shri Sadashiv P. Shetty, Gandhidham.
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3. संबं धत आयकर आयु त / Concerned CIT-I,Rajkot.
4. आयकर आयु त- अपील / CIT (A)-II, Rajkot.
5. वभागीय त न ध, आयकर अपील य अ धकरण, राजकोट / DR, ITAT, Rajkot
6. गाड फाइल / Guard file.
आदेश से / By order, True copy.
Asstt. Registrar सहायक पंजीकार आयकर अपील य अ धकरण, राजकोट Income tax Appellate Tribunal, Rajkot.
6 ITA 553/Rjt/2012
1.Date of dictation : 11-12-2012.
2.Date of placing the draft. : 12-12-2012.
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4.Date of return from JM :
5.Date of pronouncement :
6.Date of sending to Bench Clerk :
7.Date of receipt by Bench Clerk :
8.Date of placing it for endorsement :
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