2004-VIL-253-ITAT-JDP

Equivalent Citation: TTJ 094, 1119,

Income Tax Appellate Tribunal JODHPUR

Date: 22.11.2004

JAGDISH LAL.

Vs

INCOME TAX OFFICER.

BENCH

Member(s)  : HARI OM MARATHA., JOGINDER PALL.

JUDGMENT

By this order, we shall dispose of this appeal filed by the assessee against the order of CIT(A), Jodhpur, for the asst. yr. 1995-96.

2. At the outset, the learned counsel for the assessee submitted that assessee does not want to press ground No. 1 relating to sustaining of a trading addition of Rs. 33,064 and disallowance of Rs. 2,212 out of rickshaw expenses. These grounds are, therefore, dismissed as not pressed.

3. The only issue now being agitated in this appeal relates to confirming an addition of Rs. 58,275 made under s. 40A(3). The facts of the case are that the AO made the trading addition of Rs. 33,064 by rejecting the book results and by applying GP rate of 8.15 per cent as against declared at 6.97 per cent. The learned CIT(A) upheld the addition and the ground relating to the same has not been pressed before us. Further, AO also made additions of Rs. 1,26,630 being cash payments made in violation of provisions of s. 40A(3). On appeal, the learned CIT(A) reduced the addition to Rs. 58,275 on the ground that assessee failed to establish that such payments had been made under exceptional circumstances mentioned under r. 6DD(j). Assessee is aggrieved by the order of CIT(A). Hence, this appeal before us.

4. The learned counsel for the assessee submitted that since AO had rejected the book results and estimated the income by applying the GP rate, it cannot be said that AO has allowed any deduction for cost of purchases. Therefore, no disallowance could be made under s. 40A(3).

5. The learned Departmental Representative simply relied on the orders of authorities below.

6. We have heard both the parties and given our thoughtful consideration to the rival submissions with reference to facts of the case. Now it is not in dispute that AO estimated the income by applying GP rate after rejecting the book results. Such action of the AO has also been upheld by the CIT(A) and ground relating to the same has been withdrawn before us. Thus, this issue has attained the finality. Once the GP rate was applied to compute the income, the expenses are deemed to be considered while applying the GP rate and that, therefore, no further disallowance under s. 40A(3) could be made. This view finds support from the judgment of Allahabad High Court in the case of CIT vs. Banwarilal Bansidhar (1998) 148 CTR (All) 533 : (1998) 229 ITR 229 (All) and recent judgment of Madhya Pradesh High Court in the case of CIT vs. Purshottamlal Tamrakar Uchehra (2003) 184 CTR (MP) 349 : (2004) 270 ITR 314 (MP). Accordingly, we set aside the order of CIT(A) and delete the impugned disallowance. This ground of appeal is allowed.

7. In the result, the appeal filed by the assessee is allowed.

 

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