M/s. Team Maintenance Specialities, Surat V. The ACIT.,Circle-7, Surat

CO 172/AHD/2011

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0622 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-06-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 15-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 21-07-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: KK SHAH
• Keywords: Unexplained cash credit; Depreciation
• Section: 142(1); 68; 144

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ITA NO. 1732/AHD/2011 & CO NO. 172/AHD/2011 / ASSESSMENT YEAR: 2007-08 THE ACIT, CIRCLE-7, SURAT M/S. TEAM MAINTENANCE SPECIALITIES, 806, ABHINANDAN ROYALE, NR. MANGALDEEP APARTMENT, BHATTAR ROAD, SURAT PAN : AABFT 4572 F / // / (APPELLANT) / // / (RESPONDENT/CROSS- OBJECTOR) REVENUE BY : SMT SONIA KUMAR, SR. DR. ASSESSEE(S) BY : SHRI K. K. SHAH, AR !'# $ %& !'# $ %& !'# $ %& !'# $ %& / DATE OF HEARING : 15/06/2015 '( $ %& / // / DATE OF PRONOUNCEMENT: 25/06/2015 )* )* )* )*/ // / O R D E R PER BENCH : THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-I, SURAT DATED 28.03.2011 PASSED FOR ASSESSMENT YEAR 2007-08. ON RECEIPT OF NOTICE IN T HE REVENUES APPEAL, THE ASSESSEE HAS FILED CROSS-OBJECTION BEARING NO. 172/ AHD/2011. 2. THE LD. COUNSEL FOR THE ASSESSEE, AT THE VERY OU TSET, DID NOT PRESS THE CROSS-OBJECTION FILED BY THE ASSESSEE; HENCE, THE C ROSS-OBJECTION FILED BY THE ASSESSEE IS REJECTED. 3. IN THE FIRST GROUND OF APPEAL, THE REVENUE HAS P LEADED THAT LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.78,03,060/ -. ITA NO.1732/AHD/2011 & CO NO.172/AHD/2011 ACIT VS. TEAM MAINTENANCE SPECIALITIES FOR AY: 2007-08 2 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF TRADING IN CHEMICALS AND MAINTENANCE MATERIALS. IT HAS FILED ITS RETURN OF INCOME ON 30.10.2007, DE CLARING TOTAL INCOME AT RS.13,74,870/-. THE CASE OF THE ASSESSEE WAS SELEC TED FOR SCRUTINY ASSESSMENT AND NOTICE U/S 143(2) OF THE INCOME-TAX ACT WAS ISSUED ON 17.07.2008. THIS NOTICE WAS SERVED UPON THE ASSESS EE ON 28.07.2008. ACCORDING TO THE ASSESSING OFFICER, A NOTICE U/S 14 2(1) WAS AGAIN ISSUED ON 05.10.2009 AND THEREAFTER, A QUESTIONNAIRE WAS ISSU ED ON 10.11.2009 ALONGWITH NOTICE U/S 142(1) WHICH WERE REMAINED UN- COMPLIED WITH. THEREFORE, HE PROCEEDED TO PASS AN EX-PARTE ASSESSM ENT U/S 144 OF THE INCOME-TAX ACT. ON PERUSAL OF THE DETAILS, IT REVE ALED TO THE ASSESSING OFFICER THAT THERE IS A FALL OF ABOUT 19.58% IN THE GP IN COMPARISON TO PRECEDING YEAR. THE ASSESSEE HAD MADE PURCHASES. THE LD. ASSESSING OFFICER HAS DISALLOWED 25% OF THE CLAIM OF THE ASSE SSEE OUT OF PURCHASES AND DEPRECIATION. HE HAS NOTICED ALL THESE DETAILS IN P ARAGRAPH NO.4 OF THE ASSESSMENT ORDER. ACCORDING TO THE ASSESSING OFFICE R, THE ASSESSEE HAS DEBITED A TOTAL SUM OF RS.3,15,07,724/- UNDER THE H EAD VARIOUS EXPENSES INCLUDING DEPRECIATION. THE 25% OF THE TOTAL EXPENS ES WERE WORKED OUT TO RS.78,76,931/-. THE LD. ASSESSING OFFICER HAS MADE ADDITION OF THIS AMOUNT. 5. ON APPEAL, IT WAS PLEADED BY THE ASSESSEE THAT N OTICE ISSUED U/S 142(1) WAS NOT SERVED UPON THE ASSESSEE. THE NOTICE DATED 30.11.2011 WAS SERVED UPON THE ASSESSEE ON 04.12.2009. THE ASSESS EE APPEARED BEFORE THE ASSESSING OFFICER AND THE QUESTIONNAIRE WAS SERVED UPON IT. THE EFFECTIVE DATE OF HEARING WAS 14.12.2009 ONLY. DUE TO THIS P AUCITY OF TIME, THE ASSESSEE COULD NOT COMPILE THE DETAILS. THE DETAIL S WERE ALLEGED TO HAVE BEEN SUBMITTED ON 16.12.2009 WHICH WERE NOT TAKEN O N RECORD BY THE ASSESSING OFFICER AND HE PASSED THE ASSESSMENT ORDE R. CONSIDERING THIS ITA NO.1732/AHD/2011 & CO NO.172/AHD/2011 ACIT VS. TEAM MAINTENANCE SPECIALITIES FOR AY: 2007-08 3 ASPECT, THE LD. FIRST APPELLATE AUTHORITY HAS ALLOW ED THE ASSESSEE TO PLACE ON RECORD THE DETAILS. THE LD. CIT(A) HAS CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER. AFTER GOING THROUGH THE REMAND REPORT OF THE ASSESSING OFFICER, THE LD. CIT(A) HAS PARTLY ALLOWED THE APPE AL OF THE ASSESSEE AND DELETED THE MAJOR ADDITION. THE FINDING RECORDED B Y THE CIT(A) READ AS UNDER:- 6.3 THE THIRD GROUND OF APPEAL IS RELATED TO THE ADDITION OF RS.78,76,931/- ON ADHOC BASE FOR DISALLOWANCE AT 25% OF THE PURCHA SES AND ALL EXPENSES INCLUDING DEPRECIATION AT RS.3,15,07,724/- AS PER P ARA 4 OF THE ORDER. AS PER THE REMAND REPORT, VERIFICATION IN RESPECT O F PURCHASES AND COMMISSION EXPENDITURE WAS MADE AND NO DISCREPANCY WAS FOUND. THE APPELLANT HAD RECONCILED THE DIFFERENCES, IF ANY. I THEREFORE, HOLD THAT NO ADDITION IS JUSTIFIED IN RESPECT OF PURCHASE AND CO MMISSION FOR RS.2,78,10,483/- AND RS.24,73,775/- RESPECTIVELY. T HE APPELLANT HAS FILED DETAILS OF OTHER EXPENSES ALONGWITH THE MAJOR EVIDE NCE, HOWEVER, THERE IS LIKELY TO BE SOME PERSONAL ELEMENTS IN EXPENSES LIK E TRAVELING AND TELEPHONE EXPENSES. I, THEREFORE, SUSTAIN ADDITION OF RS.20% OF TRAVELING AND TELEPHONE EXPENSES WHICH COMES TO RS.73,871/- 6. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE C ONTENDED THAT THOUGH THE ASSESSEE HAS RECONCILED THE PURCHASES BUT STILL THERE IS A DISCREPANCY WITH REGARD TO THE PURCHASES MADE FROM CERATIZIT IN DIA (P) LTD AND STANVAC CHEMICALS INDIA LTD. THESE CONCERNS DID NOT RESPON SE TO THE NOTICES OF THE ASSESSING OFFICER. THEREFORE, LD. FIRST APPELLATE A UTHORITY OUGHT TO HAVE NOT DELETED THE TOTAL DISALLOWANCE OUT OF THE EXPENSES. [ 7. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, CONTENDED THAT THE ASSESSING OFFICER DID NOT FIND ANY DISCREPANCY IN THE EVIDENCES FURNISHED BY THE ASSESSEE. HE DREW OUR ATTENTION TO WARDS THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE REMAND REPORT. 8. WE HAVE DULY CONSIDERED THE RIVAL SUBMISSIONS AN D GONE THROUGH THE REMAND REPORT OF THE ASSESSING OFFICER DATED 14.03. 2011. THE OBSERVATIONS ITA NO.1732/AHD/2011 & CO NO.172/AHD/2011 ACIT VS. TEAM MAINTENANCE SPECIALITIES FOR AY: 2007-08 4 OF THE ASSESSING OFFICER WITH REGARD TO DISALLOWANC E OUT OF PURCHASES AS WELL AS COMMISSION ARE WORTHWHILE TO REFER. THE RE LEVANT PARAGRAPHS READ AS UNDER:- IN RESPONSE TO THESE NOTICES ALL THE PURCHASE PART IES HAVE FURNISHED THE ASSESSEES COPY IN THEIR BOOKS OF ACCOUNT AND DETAI LS OF TOTAL PURCHASES MADE BY THE ASSESSEE FROM THEM. SIMILARLY ALL THE PARTIE S FILED CONFIRM/COMPUTATION OF INCOME/TDS CERTIFICATES ETC. THE DETAILS SUBMITTED BY THESE PARTIES HAVE BEEN CO MPARED WITH THE DETAILS OF PURCHASES AND COMMISSION FURNISHED BY THE ASSESSEE. NO DISCREPANCIES HAVE BEEN NOTICED IN PURCHASES AND COMMISSION PAYMENT SH OWN BY THE ASSESSEE IN DETAILS OF PURCHASES AND COMMISSION. 9. SINCE THE DISALLOWANCE WAS MADE IN AN EX-PARTE A SSESSMENT ORDER, ONCE THE ASSESSEE WAS GIVEN AN OPPORTUNITY TO RECON CILE ITS EXPENSES, THE ASSESSING OFFICER WAS SATISFIED WITH THE QUALITY OF THE EVIDENCE PRODUCED BY THE ASSESSEE. HE DID NOT FIND ANY DISCREPANCIES (A S DISCLOSED FROM HIS OBSERVATION) IN THE PURCHASES AND COMMISSION PAYMEN T SHOWN BY THE ASSESSEE. THEREFORE, WE DO NOT FIND ANY ERROR IN T HE ORDER OF THE CIT(A); ACCORDINGLY, THIS GROUND OF APPEAL IS REJECTED. 10. IN GROUND NO.2, THE REVENUE HAS PLEADED THAT TH E LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,33,679/-. T HIS ADDITION HAS BEEN MADE ON AN ESTIMATED BASIS OUT OF COMMISSION INCOME. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE FAILED TO SUBMIT TH E TDS DETAILS; THEREFORE, HE ESTIMATED THE COMMISSION INCOME. THE LD. FIRST APP ELLATE AUTHORITY HAS DELETED THE ADDITION ON THE GROUND THAT THE COMMISS ION INCOME IS VERIFIABLE FROM THE TDS CERTIFICATE. THE FINDING OF THE CIT(A ) IN THIS REGARD IS AS UNDER:- 6.4 THE FOURTH GROUND OF APPEAL IS RELATED TO THE ADDITION OF RS.1,33,679/- ON ACCOUNT OF ESTIMATE OF COMMISSION INCOME AS PER PARA 6 OF THE ORDER. ITA NO.1732/AHD/2011 & CO NO.172/AHD/2011 ACIT VS. TEAM MAINTENANCE SPECIALITIES FOR AY: 2007-08 5 THE COMMISSION INCOME IS VERIFIABLE FROM THE TDS CE RTIFICATE AND, THEREFORE, ESTIMATE OF SUCH INCOME AT LUMSUM AMOUNT IS NOT REQ UIRED AND, THEREFORE, THE ADDITION OF RS.1,33,679/- IS HEREBY DELETED. 11. AFTER GOING THROUGH THE FINDING OF THE CIT(A) A ND THE REMAND REPORT OF THE ASSESSING OFFICER, WE DO NOT FIND ANY ERROR IN THE ABOVE FINDING OF THE CIT(A). ACCORDINGLY, THIS GROUND OF APPEAL OF THE REVENUE IS ALSO REJECTED. 12. IN THE NEXT GROUND OF THE APPEAL, THE GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS .24,19,324/- WHICH WAS ADDED BY THE ASSESSING OFFICER U/S 68 OF THE INCOME -TAX ACT. 13. IN THE REMAND PROCEEDINGS, THE ASSESSEE HAS SUB STANTIATED THAT THIS AMOUNT REPRESENTS THE LOAN TAKEN FROM ICICI BANK LT D FOR THE PURPOSE OF VEHICLE. THERE IS NO UNEXPLAINED CREDIT IN THE ACCO UNT OF THE ASSESSEE. LD. FIRST APPELLATE AUTHORITY HAS DELETED THE ADDITION AFTER APPRECIATING THE REMAND REPORT AND THE EVIDENCES PRODUCED BY THE ASS ESSEE. THEREFORE, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE CIT(A); A CCORDINGLY, THIS GROUND OF APPEAL IS REJECTED. 14. IN VIEW OF ABOVE, THE APPEAL OF THE REVENUE IS DEVOID OF ANY MERIT AND DISMISSED. 15. IN THE RESULT, THE REVENUES APPEAL AS WELL AS ASSESSEES CROSS- OBJECTION, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 25 TH JUNE, 2015 AT AHMEDABAD. SD/- SD/- (G.D. AGRAWAL) VICE-PRESIDENT (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 25/06/2015 BIJU T., PS ITA NO.1732/AHD/2011 & CO NO.172/AHD/2011 ACIT VS. TEAM MAINTENANCE SPECIALITIES FOR AY: 2007-08 6 )* $ %+ ,)+% )* $ %+ ,)+% )* $ %+ ,)+% )* $ %+ ,)+%/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. !-- % '. / CONCERNED CIT 4. '. ( ) / THE CIT(A) 5. +12 % , , / DR, ITAT, AHMEDABAD 6. 2 3# / GUARD FILE . )*'! )*'! )*'! )*'! / BY ORDER, TRUE COPY 4 44 4/ // /! -5 ! -5 ! -5 ! -5 ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD