TAXAP/259/2017 JUDGMENT IN HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 259 of 2017 With TAX APPEAL NO. 266 of 2017 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE B.N. KARIA 1 Whether Reporters of Local Papers may be allowed to see judgment ? 2 To be referred to Reporter or not ? 3 Whether their Lordships wish to see fair copy of judgment ? 4 Whether this case involves substantial question of law as to interpretation of Constitution of India or any order made thereunder ? PR. COMMISSIONER OF INCOME TAX....Appellant(s) Versus ZAYBA CONSTRUCTION CO.....Opponent(s) Appearance: MR SUDHIR M MEHTA, ADVOCATE for Appellant(s) No. 1 CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE B.N. KARIA Date : 28/04/2017 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) Page 1 of 5 HC-NIC Page 1 of 5 Created On Tue May 02 11:40:57 IST 2017 O/TAXAP/259/2017 JUDGMENT [1.0] As common question of law and facts arise in both these Tax Appeals and as such arise out of impugned common judgment and order passed by learned Income Tax Appellate Tribunal and with respect to same assessee but for different Assessment Years, both these Tax Appeals are decided and disposed of by this common judgment and order. [2.0] Feeling aggrieved and dissatisfied with impugned common judgment and order passed by learned Income Tax Appellate Tribunal D Bench, Ahmedabad (hereinafter referred to as learned tribunal ) in ITA No.2663/Ahd/2011 for Assessment Year 2008-09 and in ITA No.2656/Ahd/2011 for Assessment Year 2007-08 by which learned tribunal has dismissed said Appeals preferred by revenue and has confirmed orders passed by learned CIT(A), revenue has preferred present Tax Appeals with following proposed questions of law; (A) Whether on facts and circumstances of case and in law, ITAT is justified in holding that addition made by AO was without any basis, ignoring fact that content of document including cash book found from business premises of assessee was not satisfactorily explained by assessee and as per provision of Section 292C (1)(ii) content of such documents are presumed to true unless proved otherwise by assesee? Page 2 of 5 HC-NIC Page 2 of 5 Created On Tue May 02 11:40:57 IST 2017 O/TAXAP/259/2017 JUDGMENT (B) Whether on facts and circumstances of case and in law, ITAT is justified in holding that CIT(A) has passed detailed and reasoned order without appreciating fact that CIT(A) directed AO to make addition @ 13% of transaction amount paid to Director of Alok Industries without assigning any reason for arriving at said rate of 13%? [3.0] facts leading to present Tax Appeals in nutshell are as under; [3.1] respondent assessee filed return of income for Assessment Years 2007-08 & 2008-09. It appears that search was conducted under Section 133A of Income Tax Act on business premises of respondent assessee on 19/03/2008 in which certain documents were found and impounded. During assessment proceedings and alongwith return of income, respondent assessee produced audited books of accounts. However, Assessing Officer made additions solely on basis of documents impounded /seized during survey. Learned CIT(A) deleted additions made by Assessing Officer by accepting explanation given by respondent assessee that documents seized were incomplete books of accounts and solely on basis of documents seized, Assessing Officer was not justified in making additions. However, on basis of documents seized, learned CIT(A) held that amount of Rs.65 lakhs is required to be assessed in hands of respondent assessee and thereafter estimated GP at 13% on Rs.65 lakhs. learned CIT(A) held that Page 3 of 5 HC-NIC Page 3 of 5 Created On Tue May 02 11:40:57 IST 2017 O/TAXAP/259/2017 JUDGMENT amount to be taxed in hands of respondent assessee is Rs.45 lakhs being 13% of Rs.65 lakhs, and therefore, learned CIT(A) directed Assessing Officer to make further addition of Rs.8.45 lakhs in hands of respondent assessee. orders passed by learned CIT(A) came to be confirmed by learned tribunal by impugned common judgment and order. Being aggrieved and dissatisfied with impugned common judgment and order passed by learned tribunal, revenue has preferred present Tax Appeals with aforestated substantial questions of law. [4.0] We have heard Shri Sudhir Mehta, learned advocate appearing on behalf of revenue at length. We have also considered and perused assessment orders passed by Assessing Officer. We have also perused and considered orders passed by learned CIT(A) as well as learned tribunal. [4.1] From material on record, it appears that Assessing Officer made additions solely on basis of documents seized during course of survey. However, Assessing Officer did not specifically reject audited books of accounts produced by respondent assessee. Considering aforesaid facts and circumstances of case, learned CIT(A) deleted additions made by Assessing Officer, which was made solely on basis of incriminating material documents seized. Cogent reasons have been given by learned CIT(A) as well as learned tribunal in deleting additions made by Assessing Officer. We are in complete agreement with view taken by Page 4 of 5 HC-NIC Page 4 of 5 Created On Tue May 02 11:40:57 IST 2017 O/TAXAP/259/2017 JUDGMENT learned CIT(A) as well as learned tribunal while deleting additions made by Assessing Officer, more particularly, when Assessing Officer did not reject audited books of accounts produced and relied upon by respondent assessee. [4.2] Now so far as estimation of GP at 13% on Rs.65 lakhs is concerned, it is required to be noted that on basis of incriminating material, learned CIT(A) directed to make addition in hands of respondent assessee of Rs.65 lakhs. On appreciation of evidence and on basis of estimation learned CIT(A) determined GP at 13% and same has been confirmed by learned tribunal. By giving cogent reasons and on estimation basis, which is permissible, when learned CIT(A) estimated GP at 13% of Rs.65 lakhs, it cannot be said that any substantial questions of law arise. [5.0] In view of above and for reasons stated hereinabove, both these Tax Appeals deserve to be dismissed and are accordingly dismissed. (M.R. SHAH, J.) (B.N. KARIA, J.) Siji Page 5 of 5 HC-NIC Page 5 of 5 Created On Tue May 02 11:40:57 IST 2017 Pr. Commissioner of Income-tax v. Zayba Construction Co