Income Tax Appellate Tribunal - Hyderabad
M/S. Sri Taraka Jewellers, Nalgonda, ... vs Assessee on 29 March, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH 'A', HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER and
SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER
ITA No. 1007/Hyd/2011
Assessment year 2007-08
M/s. Sri Taraka Jewellers Vs. The Income Tax Officer
Nalgonda Nalgonda
PAN: ABGFS4722E
Appellant Respondent
Appellant by: Shri A.V. Raghu Ram
Respondent by: Shri V. Srinivas
Date of hearing: 29.03.2012
Date of pronouncement: 10.05.2012
ORDER
PER CHANDRA POOJARI, AM:
This appeal by the assessee is directed against the order of the CIT(A)-VI, Hyderabad dated 31.3.2011 for assessment year 2007-08.
2. Facts of the case in brief are that the assessee is a firm that commenced its business 14.4.2006 and assessment year 2007-08 is the first assessment year. It filed its return of income admitting income u/s. 44AF since no books of account are maintained. It admitted an income of Rs. 5,47,210. This included income of Rs. 6,00,000 as charges from making and repairing. Before filing return of income there was a survey u/s. 133A on 13.9.2007. The return of income was filed on 3.10.2007. The Assessing Officer made the assessment after scrutiny determining the income at Rs. 1,44,28,520. While doing so the Assessing Officer has made the following additions:
2 ITA No. 1007/Hyd/2011M/s. Sri Taraka Jewellers ================= Sl. Amount Addition No. (Rs.)
1. Unexplained investment in purchases 1,19,43,361
2. Profit on the above @ 5% 5,89,677
3. Disallowance u/s. 40A(3) 1,38,670
4. Excess cash balance 10,00,000
5. Unexplained investment in assets 1,17,600
6. Profit on undisclosed sales 92,000
3. The facts relating to the addition towards value of stock difference between the stock statement given to the bank and that was shown in the books as unexplained investment in purchases, the Assessing Officer addressed a letter to the Indian Overseas Bank, Nalgonda on 9.9.2008 and obtained the details of the monthly closing stocks furnished by the assessee to the bank in connection with availing the loan facility. When compared with the figures furnished to bank, the closing stocks shown to bank appear to be very high or not at all matching with the figures shown to the Department. When questioned about the same, the assessee replied vide letter dated 28.6.2009 that regarding the closing stock of Rs. 55,06,000 shown to the bank on 31.3.2007, if the assessee do not declare the required and sufficient stock to the bank the loan account will not be renewed or continued, hence it has shown the above stock as closing stock to bank. It has got funds only to the extent of Rs. 36,56,176 which clearly shows that by its investment and profit, and there are no funds for stock of more than Rs. 36,56,176 as on 31.3.2007. On this submission the Assessing Officer had called for further details from the IOB authorities on 2.7.2009, who vide letter dt. 13.7.2009 replied that they value the closing stock based on the stock statements submitted by the borrowers. In open cash credit they will rely on the stock statement submitted by the borrowers and in case any huge variation they will call for the details from the borrowers. Though they will be physically verifying the stock periodically they shall not be verifying each item individually. They do not accept 3 ITA No. 1007/Hyd/2011 M/s. Sri Taraka Jewellers ================= the inflated value of the stocks. In case they find any variance they shall be calling for explanation and also reduce the drawing power/OCC limit if necessary.
4. A statement of peak excess stock amounting to Rs. 19,85,824 for the year was arrived at basing on the purchases and sales figures furnished by the assessee and stocks shown to the bank. Accordingly, a letter was addressed to the assessee on 20.7.2009 by the Assessing Officer to furnish reasons for not treating the excess peak stock amounting to Rs. 19,85,824 as unexplained investment. It has been further observed by the Assessing Officer from the month wise stock details furnished by the assessee to the bank that for the month of March, 2007 two statements were prepared i.e. for the period from 1.3.2007 to 30.3.2007 and the another is for the last days of the month. There was a difference of Rs. 18,40,000 in the stock between the figures of last two days of the moth. Keeping this in view, vide letter dated 20.7.2009, the Assessing Officer proposed to treat the same as sales for the year under consideration. In response, vide letter dated 12.08.2009, the assessee reiterated its contention that it had submitted enhanced stock valuation to the bank. The Assessing Officer vide letter dated 9.9.2009 addressed a letter to the then Branch Manager, IOB, seeking confirmation of the letter of the assessee that the stocks were shown at enhanced figures and to confirm the fact that whether the stocks have been personally or physically verified on each month end either by himself or got verified through their bank branch personnel and found to be genuine or not. Shri. T. Ramanaiah, the then Br. Manager, IOB, Nalgonda, vide letter dated 22.9.2009 stated that they have inspected the stocks and found the stock were more or less equivalent to the stocks statements submitted to the bank. He confirmed that the stocks were available in the showroom/godown as per the stock statements submitted by them every month (and 4 ITA No. 1007/Hyd/2011 M/s. Sri Taraka Jewellers ================= as per the copies of stock statements enclosed along with the Department letter). The statement given in their letter dt. 12.8.2009 is not correct. From the above, the Assessing Officer drew conclusion that the banks do not accept the inflated values of stocks and in case of any huge variation, details of stock will be called for. Further, in no case the bank authorities do not extent the credit facility to a particular party without verifying the stock position. He therefore, concluded that the assessee's argument that 'for continuation and renewal of loan facility the values of stocks are inflated and what is shown to bank is not correct' was firmly confuted by the bank authorities. During the course of hearing on 5,10.2009, the letter of the Branch Manager was put forth to the assessee calling for explanation. Once again the assessee's AR reiterated that they have inflated the stocks. Again vide letter dated 11.11.2009, the Assessing Officer had prepared a revised working sheet for the unaccounted stocks available and requested to offer the assessee's objections to add the amount of Rs. 1,19,43,361 on account of unaccounted purchases and profit @ 5% on the unaccounted sales of Rs. 1,17,93,537 i.e. Rs. 5,89,677. Even to this, the assessee only reiterated the stand that they have shown inflated value of the stocks to the bank authorities. Hence, placing reliance in the decision of Madras High Court in the case of Coimbatore Spinning & Weaving Co. Ltd. (95 ITR 375), the Assessing Officer had proceeded to treat the amount of Rs. 1,19,43,361 u/s. 69 of the Act being the investment towards unaccounted purchases. Similarly, on the unaccounted sales of Rs. 1,17,93,537, the profit was estimated @ 5% which worked out to Rs. 5,89,677 was also brought to tax.
5. The other addition is in respect of contravening the provisions of sec. 40A(3). The Assessing Officer during the course of scrutiny proceedings, issued a letter to the assessee 15.7.2009, proposing to disallow 20% of the payment Rs. 18,06,487, which 5 ITA No. 1007/Hyd/2011 M/s. Sri Taraka Jewellers ================= were made in cash to various parties. The assessee vide reply stated that the amounts totalling to Rs. 11,13,140 out of the list mentioned by the Assessing Officer in the show-cause letter were issued by DDs only and does not attract the provisions of Sec. 40A(3). In respect of the balance, the assessee stated that the same were paid in cash on Sundays or holidays. However, the Assessing Officer concluded that the payment dates do not fall under Sundays or holidays and thus attract the provisions of Sec. 40A(3), and therefore, disallowed an amount of Rs. 1,38,670 being 20% of Rs. 6,93,347.
6. The fourth addition is in respect excess cash balance of Rs. 10 lakhs. The Assessing Officer on verification of the cash flow details furnished by the assessee observed that the cash balance available as on 31.3.2007 was Rs. 11,24,707 whereas as per the working of the Department, the balance should be Rs. 44,04,444, and hence, vide letter dated 15.7.2009 requested the assessee to explain the same. In reply vide letter dt. 31.7.2009, the assessee stated that the Assessing Officer had not considered the cash inflow by way of bank loan of Rs. 1,69,614. Wherever as per the assessee's statement purchases of Rs. 54,39,747 and unaccounted purchases of Rs. 10 lakhs was also there. The assessee further stated that the Assessing Officer had not considered cash out flow for the car loan repayment, income-tax payment, partner's drawings and assets purchased. The assessee had also filed a cash flow statement before the Assessing Officer. After considering the above statements, the Assessing Officer concluded that it is an established fact that there is an excess balance of cash available to the extent of Rs 10 lakhs as on 31.3.2007. He further stated in the order that the Balance Sheet of the assessee does not depict any other liabilities except IOB, Nalgonda, and car loan for which the account copies have already been furnished and these amounts cannot be altered. As the cash 6 ITA No. 1007/Hyd/2011 M/s. Sri Taraka Jewellers ================= balance available as on 31.3.2007 was worked out to Rs. 21,24,707, the assessee's balance sheet results in a deficit of Rs. 10 lakhs on the liabilities side, which was nothing but profit and could be balanced by increasing the profit of the assessee to that extent and accordingly Rs. 10 lakhs was treated as profit of the assessee and added to the income returned.
7. In respect of the fifth addition, the assessee's claim of purchase of assets to the extent of Rs. 1,17,600 as the assessee could not produce any proof of invoices, the same- was also not accepted and the same was treated as unexplained investment u/s. 69 of the Act and was added to the income returned.
8. Further, the Assessing Officer observed that there was a difference of Rs. 18,40,000 in the stock between the figures of last two days of the month i.e. between the stocks at the end of the days 30.03.2007 and 31.3.2007. When it was questions by the Assessing Officer as to why the difference of closing stock amounting to Rs. 18,40,000 between 31.3.2007 and 30.03.2007 should not be treated as sales for the year under consideration, the assessee in its reply dt. 12.8.2009 (in response to the letter issued by the Assessing Officer on 20.7.2009) stated that the statements given to bank are not correct and those figures were given to renew and continuation of loan account. However, this reasoning was not accepted by the Assessing Officer, and the Assessing Officer proceeded to treat the amount of Rs. 18,40,000 as unaccounted sales of the assessee and hence estimated the profit @ 5% of this amount and arrived at Rs. 92,000 and this was added to the income returned.
7 ITA No. 1007/Hyd/2011M/s. Sri Taraka Jewellers =================
9. On appeal, the CIT(A) confirmed all the above additions. Against this, the assessee is in appeal before us.
10. Regarding the addition towards stock difference, the learned AR submitted that there is no purchases as the Assessing Officer is imagining and that with the capital available with the firm in the very first month it could not have purchased as much of stock as stated by him in his chart enclosed to the show cause letter, as per the Assessing Officer which is prepared based on information from the Bank. It was also submitted that for the purposes of cash credit loan the assessee submitted inflated stock details and it never had such stocks and that with the meagre investment in the very first year it is not possible to have so much of profits. The Assessing Officer, however, has not accepted the same and has treated Rs. 1,19,43,361. While doing so the Assessing Officer in his order states that on 5.10.2009, he has shown a letter from the earlier Manager according to which the details of stock given by the Bank is after verification and that the assessee has simply stated that giving inflated stock is common practice. It is not correct to state that the assessee is allowed to go through the letter referred to by the AO of the then Branch Manager. He has only shown it stating that as per that letter the stocks were more. The assessee never read the contents of the letter. Otherwise it would have asked for cross examination and evidence for visit by the Manager to the assessee's premises. Even otherwise it is not right practice to put across some material and elicit opinion without providing sufficient time to understand the contents of the material. When some material is proposed to be used against the assessee it is duty of the Assessing Officer to provide such material in advance and elicit objections on the same. The AR further submitted that without there being source there cannot be income. As submitted earlier this is the first year of business and within few days of commencement of business there could not 8 ITA No. 1007/Hyd/2011 M/s. Sri Taraka Jewellers ================= have been so much of undisclosed income to invest in purchases. The assessee has only availed cash credit account and not a key loan account. For the purpose of cash credit account it is required to give stock statement. Therefore, it is used to give inflated stock statement to continue to have cash credit. The AR invited the attention to the chart enclosed to the assessment order based on which the Assessing Officer made the addition. It could be seen from this statement that in the first month the Assessing Officer arrived at unaccounted stock at Rs. 40,37,286 and in the month of February, 2007 he arrived at the unaccounted stock at Rs. 45,40,879 besides various other months except July 06, October 06, Nov 06, Jan 07 and March 07. He has not even doubted as to how in the first month itself with the meagre turnover how the firm would have earned income of Rs. 40,37,286 to make unrecorded purchases. For the proposition that there cannot be income without sources the AR invited attention of the Bench to the decision of ITAT, Hyderabad in the case of M/s. Raghuram Residency, a copy of which is submitted for perusal. The AR submitted that the authorities even during survey recorded a statement and has enquired about the assets acquired by the partners. They have not found out any unrecorded investment in acquiring assets. The whole approach of the Assessing Officer is biased and unscientific and not substantiated with facts found during the course of survey. The bias is due to the reason that the assessee firm did not succumb to the pressure for admitting additional income after survey as per their estimation. With regard to sanctity on relying on stock statements given to Bank and making additions based on such statements the AR relied on the following decisions:
1. CIT vs. Sri Padmavathi Cotton Mills (236 ITR 340) (Mad)
2. CIT vs. N. Swamy (241 ITR 363) (Mad)
3. CIT vs. Pioneer Breeding Farms (295 ITR 78) (Mad)
4. CIT vs. Acrow India Ltd (298 ITR 447) (Bom) 9 ITA No. 1007/Hyd/2011 M/s. Sri Taraka Jewellers =================
5. CIT vs. Apcom Computers P. Ltd. (292 ITR 630) (Mad)
6. Jyothi Woollen Mill (125 TTJ 810) (Del ITAT)
11. It is consistently held in all the above cases that mere submission of stock statement to a bank different is from that of the assessee cannot be a reason for making addition without evidence. The assessee is not maintaining any books of account and admitted income adopting provisions of Sec. 44AF. When during the survey they have not found any material to suggest that the statements given to bank could be correct it is not proper to rely on such statements and make addition. The AR submitted that the same may please be deleted.
12. The learned DR relied on the orders of the lower authorities and submitted that the contention of the assessee that the assessee was not allowed to go through the contents of the letter of the Branch Manager so as to offer his explanation is not correct. The letter of the Branch Manager was put forth to the assessee during the course of hearing on 05.10.2009 and again vide letter dated 11.11.2009 the Assessing Officer had given an opportunity to assessee to explain the unaccounted stock to the tune of Rs. 1,19,43,361/-. The assessee all along has been reiterating the stand that they have shown the inflated value of the stocks to the Bank for continuing the CC loan facility and the figures submitted to the bank were totally fictitious. However, the Assessing Officer could rebut the claim of the assessee through the letter of Shri. T. Ramanaiah, the then Branch Manager, IOB, Nalgonda, received in the o/o ITO, Nalgonda on 22.9.2009, that "we have inspected the stocks and found the stock were more or less equivalent to the stocks statements submitted to the Bank. I confirm that the stocks were available in the showroom / godown as per the stock statements submitted by them every month (and as per the copies of stock statements enclosed along with your above letter). The 10 ITA No. 1007/Hyd/2011 M/s. Sri Taraka Jewellers ================= statement given in their letter dt. 12.8.2009 is not correct." From the above it is clear that the stocks were physically examined and the stocks available were equivalent to the stock statements submitted by the assessee, as certified by the bank authorities. He relied on the orders of the lower authorities.
13. We have heard both the parties and perused the material on record as also the evidence on record and facts of the case. In the present case entries in the books of account found tallied with the returns submitted by the assessee. The assessee explained before the lower authorities that the stocks were purposefully inflated for the purpose of getting higher credit facilities from the bank which explanation of the assessee was not accepted by the lower authorities. The books of account of the assessee were not considered as reliable. The result position was that there was excess stock as compared with the stock shown in the bank statement and books of account. This cannot be viewed as non- disclosure of non-existing stock with a view to suppressing the income of the assessee. The practice followed by various assessees declaring higher stock to the bank for getting higher loan or credit facility is not uncommon in the present commercial scenario. In our opinion, the assessee's income has to be assessed by the Assessing Officer on the basis of material which is required to be considered for the purpose of assessment and ordinarily not on the basis of statement that the assessee might have given to the bank unless there is material to corroborate the statement of the assessee given to the bank. The mere fact that the assessee had made such a statement by itself cannot be treated as having resulted in a prohibitory presumption against the assessee. The burden of showing that the assessee had undisclosed income is on the assessee. That burden cannot be said to be discharged by merely referring to the statement given by the assessee to a bank in connection with the transaction which is not directly related to 11 ITA No. 1007/Hyd/2011 M/s. Sri Taraka Jewellers ================= the assessment and making that the sole basis for finding that the assessee had deliberately suppressed its income.
14. In the present case the Department did not bring on record anything to show that on physical verification the stock found was in excess of the stock recorded in the books of account. It was explained by the assessee that the stock statement furnished to the bank was on estimate basis. On the other hand, the stock shown in the assessment proceedings was based on actual physical verification. As such there was no reason to reject the books of account of the assessee and no addition is called for solely on account of the difference in value of stock submitted to the bank and value of the stock shown in the accounts presented for assessment. We place reliance on the following judgements.
a) CIT v. Pioneer Breeding Farms (295 ITR 78) (Mad)
b) CIT v. Udaipur Chemicals & Fertilizers (P) Ltd., 211 CTR 191
c) Coimbatore Spinning & Weaving Co. Ltd. v. CIT (95 ITR 375) (Mad)
d) Dhansiram Agarwalla v. CIT (111 CTR 39) (Gau)
e) Century Foams (P) Ltd. v. CIT (123 CTR 342) (All)
f) V. Rajan v. CIT (96 ITR 64) (Mad)
g) S. Murugappa Chettiar v. CIT (71 CTR 154) (Ker)
15. This ground is allowed.
16. The next ground is with regard to addition of Rs. 5,89,677 being the estimation of profit at 5% on the unaccounted sales of Rs. 1,19,43,361. This addition is on the basis of the presumption that the assessee sold unaccounted stock on the basis of stock statement furnished to the bank. We have already held elsewhere in this order that there cannot be any addition towards difference in the stock statement furnished to the bank and that was shown in the books. Being so, this addition cannot be sustained and the same is deleted. This ground is allowed.
17. The next ground is with regard to addition of Rs. 10 lakhs towards excess cash on the ground that the assessee agreed that 12 ITA No. 1007/Hyd/2011 M/s. Sri Taraka Jewellers ================= there is excess cash vide its letter dated 31.7.2009. According to the AR this addition is contrary to the facts without appreciating the fact that what is admitted is unaccounted sales and purchases for sales amounting to Rs. 10 lakhs and it could not have been treated as unexplained cash since the amount is required only for purchase and not for the entire unaccounted sales.
18. We have heard the parties on this issue. As seen from the orders of the lower authorities there is an excess balance of cash available to the extent of Rs. 10 lakhs as on 31.3.2007. The Balance Sheet of the assessee does not show any liability other than partners capital, loan from IOB, Nalgonda and car loan. The cash balance was worked out on 31.3.2007 at Rs. 21,24,707 and the assessee's Balance Sheet shows the deficit of Rs. 10 lakhs on liabilities side. Further it was also confirmed by the assessee vide its letter dated 31.7.2009 that there is unaccounted purchases of Rs. 10 lakhs. Being so, in our opinion, the authorities below are justified in making the addition towards this count. Accordingly, the addition is sustained and the ground raised by the assessee is dismissed.
19. The next ground is with regard to addition of Rs. 1,17,600 towards unexplained investment. The learned AR submitted that the details of investment are very much available in the statements attached to the returns of income and mere absence of vouchers would not lead to addition as unexplained investment. The assessee has shown assets purchase in the cash flow statement as on 31.3.2007 at Rs. 1,17,600. According to the Assessing Officer the assessee has not produced the invoices towards purchase of these assets. In our opinion, non production of vouchers for purchase of assets would not result in addition u/s. 69 of the Act. Once the assessee is having enough sources to purchase the assets, the addition u/s. 69 of the Act is not 13 ITA No. 1007/Hyd/2011 M/s. Sri Taraka Jewellers ================= possible. The Department having not doubted the availability of funds to purchase the assets, the addition cannot be made. Accordingly the addition is deleted and the ground raised by the assessee is allowed.
20. The next issue is with regard to addition of Rs. 92,000 towards unrecorded sales., The learned AR submitted that this addition was made without appreciating the fact that there could not have been very much difference in the stock in one day. It would have been sold earning profit. The Assessing Officer observed that there was a difference of Rs. 18.40 lakhs in the stock between the figures of the last two days of the month, i.e., between the stock at the end of the days 30.3.2007 and 31.3.2007. When it was questioned that as to why the difference of closing stock amounting to Rs. 18.4 lakhs between 30.3.2007 and 31.3.2007 could not be treated as sales for the assessment year under consideration, the assessee in its reply dated 12.8.2009 stated that the figures given in the statement given to the bank are not correct and they were given for renewing the credit facility.
21. We have heard both the parties on this issue. The difference is due to stock statement furnished to the bank and the stock in the books. We have, elsewhere in this order, already held that the addition towards this is not possible. Accordingly, this addition is already deleted. On the same reason this ground is allowed.
22. The next ground is with regard to the addition of Rs. 1,38,670 on account of provisions of section 40A(3) of the Act though the assessee's income is determined u/s. 44AF of the Act. We have heard both the parties on this issue. This issue is covered in favour of the assessee by the decision of the 14 ITA No. 1007/Hyd/2011 M/s. Sri Taraka Jewellers ================= jurisdictional High Court in the case of Indwell Constructions vs. CIT (232 ITR 776) (AP) wherein it was held as under;
"Held, reversing the order of the Tribunal, that there was a big difference between profit earned with own capital and profit earned with borrowed capital and such a difference could have been taken into account by the Income-tax Officer while making an estimate. If the Commissioner had set aside the estimate on the ground that the vital fact that the business was carried on with own capital and not with borrowed capital had been ignored by the Income-tax Officer, there might not have been any difficulty in upholding that order. But when he proposed to add back an exact item in the profit and loss account, he was relying on the rejected books, which he could not do. There was also a further difficulty if section 40 was to be taken into account even after making an estimate. When there are certain other deductions which are to be disallowed as wealth-tax payment in section 40, it cannot be said that after making an estimate the wealth-tax charged in the profit and loss account should again be added back in to the profit. Therefore, it was not correct in law to make the separate addition of Rs. 63,859 representing the interest and remuneration paid to the partners to the income already estimated and assessed from contracts."
23. It is clear from the above judgement that where the books of account have been rejected the revenue cannot rely on the same books of account for making any other addition. It was also held that when an estimate is made towards income of the assessee, it is in substitution of the income that is to be computed u/s. 29 and in other words, all the deductions which are referred to u/s. 29 are deemed to have been taken into account, while making such an estimate. This will also mean that the embargo placed in section 40 is also taken into account. It has been held in the concluding paras of 4 and 5 of the judgement of High Court cited supra, as follows:
"4. The pattern of assessment under the IT Act is given by s. 29 which states that the income from profits and gains of business shall be computed in accordance with the provisions contained in ss. 30 to 43D. Sec. 40 provides for certain disallowances in certain cases notwithstanding that those amounts are allowed generally under other sections. The computation under s. 29 is to be made under s. 145 on the basis of the books regularly maintained by the assessee. If those books are not correct or complete, the Income tax Officer may reject those books and estimate the income to the best of his judgement. When such 15 ITA No. 1007/Hyd/2011 M/s. Sri Taraka Jewellers ================= an estimate is made it is in substitution of the income that is to be computed under s. 29. In other words, all the deductions which are referred to under s. 29 are deemed to have been taken into account while making such an estimate. This will also mean that the embargo placed in s. 40 is also taken into account.
5. No doubt there is big difference between profit earned with own capital and profit earned with borrowed capital and such a difference could have been taken into account by the Income tax Officer while making an estimate. If the CIT had set aside the estimate on the ground that the vital fact that the business was carried on with own capital and not with borrowed capital has been ignored by the ITO, there may not have been any difficulty in upholding that order. But, when he proposes to add back an exact item in the P&L a/c, he was relying on the rejected books which he could not do so as held by the Bench of this Court in Maddi Suda rsanam Oil Mills Co. vs. CIT (supra). There is also a further difficulty if s. 40, as argued by learned counsel, is to be taken into account even after making an estimate. When there are certain other deductions which are to be disallowed such as wealth-tax payment in s. 4, can it be said that after making an estimate, the wealth-tax charged in the P&L a/s should again be added back to the profit. This example, illustrates how the contention of the Revenue, that s. 40(b) makes a difference in the situation, is untenable....."
24. The above decision of the Andhra Pradesh High Court has been followed and a similar view has been taken by the Special Bench (Kolkata) of this Tribunal in the case of Income tax Officer vs. Kenaram Saha & Subhash Saha (2008) 116 TTJ (Kol) (SB) 289; (2008) 8 DTR (Kol) (SB) (Trib) 124; (2008) 301 ITR 171 (Kol) (SB) (AT) wherein disallowance made in terms of s. 40A(3) has been deleted.
25. In view of the above discussion, there cannot be any further addition u/s. 40A(3) of the Act. The addition is deleted and the ground raised by the assessee is allowed.
26. In the result, appeal of the assessee is partly allowed.
Order pronounced in the open court on 10th May, 2012.
Sd/- Sd/-
(ASHA VIJAYARAGHAVAN) (CHANDRA POOJARI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, dated the 10th May, 2012
16 ITA No. 1007/Hyd/2011
M/s. Sri Taraka Jewellers
=================
Copy forwarded to:
1. M/s. Sri Taraka Jewellers, c/o. M/s. K. Vasantkumar & A.V. Raghuram, Advocates, 610, 6th Floor, Babukhan Estate, Basheerbagh, Hyderabad-4.
2. The Income Tax Officer, Nalgonda.
3. The CIT(A)-VI, Hyderabad.
4. The CIT-VI, Hyderabad
5. The DR - A Bench, ITAT, Hyderabad.
tprao