Pareta Enterprises v. Commissioner Of Income Tax, Spl. Range, Kota

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 36 / 2006 Pareta Enterprises, through its partner, Parmanand Pareta aged about 52 years, Office at Ramganjmandi, Kota. ----Appellant Versus Commissioner of Income Tax, Spl. Range, Kota. ----Respondent _____________________________________________________For Appellant(s) : Mr. Prakul Khurana For Respondent(s) : Ms. Parinitoo Jain with Mr. Nikhil Tiwari _____________________________________________________HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VINIT KUMAR MATHURJudgment Per Hon’ble Jhaveri J. 14/02/2017 1.By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal haspartly allowed the appeal preferred by the assessee and modifiedthe order of the Assessing Officer which was confirmed by theCIT(A). 2.This Court while admitting the appeal on 13.02.2006 hasframed the following substantial question of law: “When the assesee has maintainedcomplete books of account and no defectherein has been pointed out whether theaccounts can be rejected u/s 145(2) of theAct, 1961 merely for the reason that labourpayment vouchers were not properlymaintained whereas looking to the nature of work, there was no other way out exceptto obtain the thumb impression of labourpayment which are day to day recorded inthe register? Whether the ITAT was justified in sustainingthe addition of Rs.1,00,000/- on ad hocbasis on account of trading addition?” 3.The brief facts of this case are that the return declaring anincome of Rs. 10,00,900/- was filed on 29.10.96 alongwith auditreport inform No. 3CD u/s 44AB of IT Act, 1961 dated 29.10.96alongwith statement of trading a/c P&L account and balancesheet. Notice u/s 143(2) was served and compiled with. Shri G.D.Maheshwari, CA & A/R attended with shri Radheshyam,accountant and produced cash book, ledger, labour register,vouchers for expenses, bank statement, which were examined bytest check and case discussed. Required details and informationswere filed and examined.The assessee firm was constituted videpartnership deed dated 1.9.94 to carry on the business of mining,dealings, polishing and cutting of kota stone etc. During the periodended 31.3.96 the firm did job work of stone cutting and loadingand unloading of ASI Ltd. Ramganjmandi and also derived incomefrom letting of Shawal on hire. Total receipts amounted to Rs.1,99,42,994/- on which g.p. has been shown at Rs. 28,12,430/-giving g.p. Rate of 14.1%. Monthwise details of cutting/loadingand unloading receipts from ASI and shawal rent have been filed.Similarly details of labour payments for cutting/loading andunloading and other have been filed. While the receipts are foundfully vouched, the expenses are not properly vouched beingsupported by self made voucher and when, asked, it was explained by the assessee that looking to the nature of work,there was no other way out except to obtain the thumpimpression/signature of labour payment which are day to dayrecorded in the register. The explanation of the assessee wasconsidered but still possibility of some of the expenses of non-business consideration being included cannot be ruled out. explained by the assessee that looking to the nature of work,there was no other way out except to obtain the thumpimpression/signature of labour payment which are day to dayrecorded in the register. The explanation of the assessee wasconsidered but still possibility of some of the expenses of non-business consideration being included cannot be ruled out. 4.Counsel for the appellant has contended that the Tribunalhas seriously committed an error in not allowing the completeaddition raised by the appellant and has wrongly partly allowedthe appeal. Once the expenses vouchers which are thumbimpression which ought not have been permitted, the additionmade by the Assessing Officer in the Assessment Order where hehas added the expenses under head diesel/oil, cannot also besubjected to verification as no log book etc. has been maintained.Having regard to the above, the g.p. is computed @ 15% ofreceipts of Rs.1,99,42,994/- which works out to Rs.29,91,450/-.After deducting the declared g.p. of Rs.28,12,430/- a tradingaddition of Rs.1,79,020/- is made. 5.The CIT(A) has also confirmed the order. However, theTribunal in para 7 & 8 has observed as under: “7.As per the table given at page 10 ofthe CIT (A)’s order, it appears that theassessee has repaid the loans to M/s. GargEnterprises,Neemuch,M/s.GargInvestments, Neemuch, M/s. Prem SukhShyam Sukh, Neemuch and M/s. FathehlalGarg HUF, Neemuch. As per the table, theassessee has paid Rs. 25,000/- on31.8.1995 but the recipient has shown theentry of Rs. 50,000/- on 29.8.95 as per thetable given in the CIT (A)’s order at page10. The AO observed that the assessee hasmade the payment in excess in cash. At thethe CIT (A)’s order, it appears that theassessee has repaid the loans to M/s. GargEnterprises,Neemuch,M/s.GargInvestments, Neemuch, M/s. Prem SukhShyam Sukh, Neemuch and M/s. FathehlalGarg HUF, Neemuch. As per the table, theassessee has paid Rs. 25,000/- on31.8.1995 but the recipient has shown theentry of Rs. 50,000/- on 29.8.95 as per thetable given in the CIT (A)’s order at page10. The AO observed that the assessee hasmade the payment in excess in cash. At the same time he also observed that theassessee has made the payment at a laterdate but the same was accounted for by therecipient on earlier date. So he found theseentries as bogus and made the addition ofRs. 50,000/-. 8.By considering the totality of factsand circumstances of the case, we are ofthe view that the parties have shown thereceipt of the amounts on different datesthan that recorded by the assessee. But allthese dates are subsequent to the date onwhich the assessee has made therepayment except a few cases. It is alsoevident that certain Payment of Rs. 5,000/-each in the names of three parties and Rs.10,000/- in the name of 4[th] party has beenmade outside the books of account. At thesame time, at the close of the year, thebooks of recipients have also shown excessreceipt of Rs. 5,000/- each in the names ofthree parties and Rs. 10,000/- in the nameof 4[th] party and here also the addition ofRs. 25,000/- is justified. Heavy cashbalances cannot explain with both theabove discrepancies and no satisfactoryexplanation was made to remove thediscrepancies. When it is so, then we findno reason to interfere with the orders ofthe lower authorities who have rightlymade the addition of Rs. 50,000/-. Theorders of the lower authorities aresustained alongwith the reasons mentionedtherein.” 6.In our view, the majority of the expenses are on thumbimpression, in our view, the view taken by the Tribunal is just andproper. 7.In that view of the matter, the issue is answered in favour ofthe department and against the assessee. 8.The appeal stands dismissed. (VINIT KUMAR MATHUR)J. Asheesh Kr. Yadav/89 (K.S. JHAVERI)J.