Sh. Kamal Kishore Baheti, JAIPUR V. ACIT, JODHPUR

CO 19/JODH/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7483 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-07-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 20-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Keywords: Audit objection; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JODHPUR BENCH, JODHPUR BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 605/JODH/2010 ASSTT. YEAR : 2003-04 ACIT, CENTRAL CIRCLE-2, VS. SHRI KAMAL KISHORE BA HETI, JODHPUR. PROP. M/S. VRAJ TRACTORS INDUSTRIES, B-4C I PHASE, BASNI, JODHPUR. (PAN :AANPB 4326 P) C.O. NO.19/JODH/2011 (ITA NO. 605/JODH/2010) ASSTT. YEAR : 2003-04 SHRI KAMAL KISHORE BAHETI, VS. ACIT, CENTRAL CIRC LE-2, PROP. M/S. VRAJ TRACTORS INDUSTRIES, JODHPUR. B-4C I PHASE, BASNI, JODHPUR. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI G.R. KOKANI, D.R. ASSESSEE BY : SHRI P.C. PARWAL, A.R. DATE OF HEARING : 09.07.2012 DATE OF PRONOUNCEMENT OF ORDER : 11.07.2012 ORDER PER BHAVNESH SAINI, J.M.: THE DEPARTMENTAL APPEAL AS WELL AS CROSS OBJECTIO N BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A), CENTRAL J AIPUR DATED 21.10.2010 FOR THE ASSESSMENT YEAR 2003-04. ITA NO. 605/JODH/2010 & C.O. NO. 19/JODH/2011 2 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. 3. IN THE DEPARTMENTAL APPEAL, THE REVENUE HAS RAIS ED SIX GROUNDS OF APPEAL, HOWEVER, EFFECTIVELY, CHALLENGED THE DELETION OF AD DITION OF RS.2,00,000/-, RS.1,26,530/-, RS. 94,750/- AND RS.2,01,000/- ON GR OUNDS NOS. 1 TO 3 & 5. THE AO DID NOT MAKE SEPARATE ADDITION ON ACCOUNT OF HOUSEH OLD EXPENSES, WHICH WAS ALSO SET OFF AGAINST THE TRADING ADDITION. THEREFORE, AC CORDING TO THE LD. COUNSEL FOR THE ASSESSEE, THE TOTAL ADDITION UNDER CHALLENGE IN THE DEPARTMENTAL APPEAL REMAINS IN A SUM OF RS.6,22,280/-, UPON WHICH THE TAX EFFECT IS BELOW RS.2,00,000/- AS PER CALCULATION FILED BY THE LD. COUNSEL FOR THE ASSESS EE. THERE IS NO DISPUTE THAT THE TAX EFFECT IN THE DEPARTMENTAL APPEAL, ON THESE GROUNDS , IS BELOW RS.2,00,000/-. THEREFORE, THE DEPARTMENTAL APPEAL IS FILED IN CONT RAVENTION OF CBDT CIRCULAR PRESCRIBING THAT THE DEPARTMENTAL APPEAL SHOULD NOT BE FILED IF TAX EFFECT DOES NOT EXCEED RS.2,00,000/-. NO SUBSTANTIAL QUESTION OF LA W ARISES ON THESE GROUNDS OF APPEAL AND NO AUDIT OBJECTION IS ALSO RAISED. ACCOR DINGLY, THE DEPARTMENTAL APPEAL IS HELD TO BE NOT MAINTAINABLE AS FILED AGAINST THE CBDT CIRCULAR. SAME IS ACCORDINGLY DISMISSED. 4. THE ASSESSEE IN THE CROSS OBJECTION CHALLENGED T HE DISALLOWANCE OF RS.1,05,250/- OUT OF SALARY PAYMENTS. THE AO OBSERV ED THAT THE ASSESSEE HAS ITA NO. 605/JODH/2010 & C.O. NO. 19/JODH/2011 3 CLAIMED RS.4,68,000/- ON ACCOUNT OF SALARY PAID TO EMPLOYEES IN M/S. VRAJ TRACTOR EXPORTS. HE HELD THAT THE PAYMENT OF SALARY WAS EXC ESSIVE AND WITHOUT ANY LEGITIMATE NEED AND ACCORDINGLY, RS.2,00,000/- WAS DISALLOWED OUT OF SALARY PAYMENT. IT WAS SUBMITTED BEFORE THE LD. CIT(A) THA T COMPLETE DETAILS REGARDING SALARY PAID TO THE EMPLOYEES INCLUDING THE VOUCHERS SIGNED BY THEM HAVE BEEN FILED. BREAK UP OF THE SALARY WAS FILED TO SHOW THE WORK HANDLED BY THEM. THE STATEMENT OF ONE OF THE EMPLOYEES SHRI RAJESH SARDA WAS RECORDED, IN WHICH HE HAS ACCEPTED THE SALARY RECEIVED BY HIM. IT WAS, THEREF ORE, SUBMITTED THAT THE DISALLOWANCE MAY BE DELETED. THE LD. CIT(A) NOTED T HAT IN RESPECT OF OTHER EMPLOYEES, AFFIDAVITS AND VOUCHERS WERE FILED, HOWE VER, THE EMPLOYEES HAVE NOT BEEN PAID SALARY ON MONTH TO MONTH BASIS. ALL PAYME NTS ARE MADE IN CASH. THEREFORE, INFLATION IN THE SALARY EXPENSES CANNOT BE RULED OUT. THE LD. CIT(A) ALSO FOUND THAT THE DISALLOWANCE IS, HOWEVER, ON EXCESSI VE SIDE. IT WAS NOTED THAT THE CLAIM OF SALARY EXPENSES LAST YEAR WAS RS.2,91,000/ - ON TURNOVER OF RS.17.66 LACS WHEREAS SALARY DURING THE YEAR UNDER CONSIDERATION IS RS.4.68 LACS ON TURNOVER OF RS.29.66 LACS. THE INCREASE IN THE SALARY TO THE EX TENT OF 25% OVER THE LAST YEAR WAS FOUND JUSTIFIED AND ACCORDINGLY, SALARY WAS WORKED OUT TO RS.3,63,700/- AS AGAINST CLAIM OF RS.4,68,000/-. THE ADDITION WAS RESTRICTED TO RS.1,05,250/-. 5. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). THE LD. CIT(A) SPECIFICALLY FOUND THAT ITA NO. 605/JODH/2010 & C.O. NO. 19/JODH/2011 4 THE SALARY IS NOT PAID TO THE EMPLOYEES ON MONTH TO MONTH BASIS AND THE SAME IS PAID IN CASH. THIS ITSELF IS SUFFICIENT REASON TO R EJECT THE CLAIM OF THE ASSESSEE FOR ENTIRE PAYMENT OF SALARY. IT IS DIFFICULT TO BELIEV E THAT SALARY WOULD NOT BE PAID EVERY MONTH TO THE EMPLOYEES. THEREFORE, THE LD. CI T(A) RIGHTLY NOTED THAT THERE ARE CHANCES OF INFLATION IN SALARY. THE LD. CIT(A) ON THE BASIS OF SALARY PAID LAST YEAR AS COMPARED TO THE SALES, RIGHTLY APPRECIATED AND ESTIMATED THE PAYMENT OF SALARY IN THE CASE OF THE ASSESSEE. WE, THEREFORE, DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) AND ACCO RDINGLY, THIS GROUND OF CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. 6. IN THE RESULT, THE DEPARTMENTAL APPEAL AS WELL A S THE CROSS OBJECTION OF ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, JODHPUR 6. GUARD FILE ASSTT. REGISTRAR TRUE COPY