Jayesh Rameshchandra Gandhi, Surat vs Department Of Income Tax

IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI KUL BHARAT, JUDICIAL MEMBER आयकर अपील सं./ ./ ITA No. 394/Ahd/2012 िनधा रण वष /Assessment Year: 2007-08 ITO, V/s. Shri Jayesh Rameshchandra Ward-9(2), Gandhi, Surat Gandhi Colony, AK Road, Surat PAN : ABKPG 0796 Q

अपीलाथ / अपीलाथ / (Appellant) ू यथ यथ / थ / (Respondent)

Revenue by : Shri Nimesh Yadav, Sr. DR.

Assessee(s) by : None

सुनवाई क# तार%ख/ / Dateof Hearing : 26/05/2015 घोषणा क# तार%ख / Date of Pronouncement: 29/05/2015

आदे श/O R D E R

PER G.D. AGRAWAL, VICE PRESIDENT:

This is an appeal filed by the Revenue and is directed against the order of the Ld. Commissioner of Income-tax(Appeals)-V, Surat dated 03.10.2011, pertaining to Assessment Year 2007-08.

2. In this appeal by the Revenue, following grounds were raised:-

1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.2,02,011/- by confirming Rs.1,00,000/- as reasonable out of low gross profit ratio.

2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.21,35,750/- on account of 10% disallowance of sundry creditors and sundry debtors.

3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. ITA No. 394/Ahd/2012 ITO vs. Shri Jayesh Rameshchandra Gandhi For AY 2007-08 2

4. It is, therefore, prayed that the order of the Ld. CIT(A) be set-aside and that of the A.O. be restored..

3. We have heard the ld. Departmental Representative and perused the material placed before us. After considering the facts of the case, the arguments of ld. Departmental Representative and the orders of the authorities below, our finding is as under:-

Ground No.1

4. The assessee derives income from trading of grey cloths and job work. The Assessing Officer found that the Gross Profit disclosed by the assessee was much less than the immediately preceding year. He, therefore, worked out the Gross Profit of the assessee at the rate of the immediately preceding year i.e. 15.09%, which resulted in the addition of Rs.3,02,011/-. On appeal, the CIT(A) observed as under and restricted the GP addition to Rs.1,00,000/-. :-

"G.P. Addition : The A.O. has made addition on account of low G.P. without giving any valid reasons for doing so. He could not find out any defect in the books of account produced before him. During the appellant proceedings, the A.R. also could not submitted any convincing reasons for fall in G.P. Looking into the totality in the case, I am of the view that confirming the addition Rs.1,00,000/- on this account will meet the end of the justice. Hence, this ground of appeal is partly allowed."

5. From the above, it is evident that the CIT(A) considered all the facts i.e. there was fall in GP, but at the same time he also recorded that the Assessing Officer has not found any defect in the books of accounts. Considering the totality of these facts, he reduced the GP addition from Rs.3,02,011/- to Rs.1,00,000/-. The assessee is not in appeal and has also not appeared at the time of hearing before us. Considering the totality of the facts and arguments of ld. Departmental Representative, we do not find any ITA No. 394/Ahd/2012 ITO vs. Shri Jayesh Rameshchandra Gandhi For AY 2007-08 3

justification to interfere with the order of the CIT(A) in this regard and the same is sustained.

Ground No.2

6. Regarding Ground No.2, we find that the Assessing Officer disallowed 10% of sundry creditors as well as sundry debtors. The CIT(A) deleted the disallowance with the following finding:-

"So far as addition of Rs.21,35,750/- is concerned, the A.O. has made this addition without any basis. He just writes in para 5 that "for want of verification 10% of sundry creditors & debtors combined is disallowed." I do not understand if it could not verify then why only 10% he disallowed. Further, there is no evidence that either creditors or the debtors are bogus. The very starting point is that he has even disallowed from the debtors which can never be done under any provisions of the Act. The A.O. has made this addition totally in arbitrary manner."

7. After considering the arguments of ld. Departmental Representative and the facts of the case, we do not find any infirmity in the order of the CIT(A). There is no provision under the Income-tax Act under which 10% of the sundry creditors/debtors can be disallowed. The Assessing Officer has also not given any section of the Income-tax Act under which such disallowance is made. In view of above, we uphold the order of the CIT(A) on this point and reject the Ground No.2 of the Revenue's appeal.

8. In the result, the Revenue's appeal is dismissed.

Order pronounced in the Court on 29th May, 2015 at Ahmedabad.

Sd/- Sd/-

(KUL BHARAT) (G.D. AGRAWAL) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 29/05/2015 Biju T., PS ITA No. 394/Ahd/2012

ITO vs. Shri Jayesh Rameshchandra Gandhi For AY 2007-08 4

षत Copy आदे श क# ूितिल+प अमे+षत/ of the Order forwarded to :

1. अपीलाथ / The Appellant

2. ू यथ / The Respondent.

3. संबंिधत आयकर आयु- / Concerned CIT

4. आयकर आयु-(अपील) / The CIT(A)

5. +वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड फाईल / Guard file.

/ BY ORDER, आदे शानु सार

TRUE COPY

Dy./Asstt.Registrar) उप/सहायक पंजीकार ( उप/ अिधकरण, अहमदाबाद / आयकर अपीलीय अिधकरण, ITAT, Ahmedabad