The DCIT, Central Circle-1(3), Ahmedabad V. Suraj Limited ( Formerly Known as Suraj Stainless Ltd.), Ahmedabad

CO 212/AHD/2016

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2890 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 20-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 14-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: GYAN PIPARA
• Keywords: Tax effect

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO. 1740/AHD/2013 & CO NO.212/AHD/2016 / ASSESSMENT YEAR : 2009-2010 SURAJ LIMITED (FORMERLY KNOWN AS SURAJ STAINLESS LTD), SURAJ HOUSE, VIDYANAGAR SOCIETY, OPP. USMANPURA GARDEN, USMANPURA, AHMEDABAD PAN : AAGCS 6939 M VS THE ACIT (OSD), CIRCLE-8, AHMEDABAD / (APPELLANT) / (RESPONDENT) & CROSS-OBJECTOR ASSESSEE BY : SHRI GYAN PIPARA, AR REVENUE BY : SHRI K. MADHUSUDAN, SR DR / DATE OF HEARING : 18/04/2017 / DATE OF PRONOUNCEMENT: 20/04/2017 / O R D E R PER AMARJIT SINGH, ACCOUNTANT MEMBER :- THIS APPEAL BY THE ASSESSEE AND THE CROSS-OBJECTION THEREOF FILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDER OF THE C OMMISSIONER OF INCOME- TAX (APPEALS)-XIV, AHMEDABAD DATED 25.04.2013 FOR A Y 2009-2010. 2. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS IN ITS APPEAL:- 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.7,40,270/- MADE BY A.O. ON ACCOUNT O F DISALLOWANCE OF PRIOR PERIOD INCOME OF INTEREST WITHOUT PROPER APPRECIATI ON OF THE FACTS OF THE CASE. IN VIEW OF THE FACTS AND SUBMISSIONS FILED COUPLED WITH LEGAL POSITION IN SUPPORT THEREOF, THE IMPUGNED ADDITION OF RS.7,40,2 70/- REQUIRES TO BE DELETED. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ADDITION OF RS.24,927/- MADE BY THE AO ON ACCOUNT O F PERSONAL EXPENSES. IN VIEW OF THE FACT THAT THE SAID EXPENSES HAVING BEEN INCURRED DURING THE NORMAL COURSE OF BUSINESS AND WHOLLY AND EXCLUSIVEL Y FOR THE PURPOSES OF ITA NO. 1740/AHD/2013 & CO 212/AHD/2016 SURAT LTD VS. ACIT(OSD) AY : 2009-2010 2 BUSINESS AND BEING THE NATURE OF ENTERTAINMENT OF E XPENSES OF CLIENT AND STAFF, THE IMPUGNED ADDITION OF RS.24,927/- REQUIRE S TO BE DELETED. 3. THE FACTS OF THE CASE WITH REGARD TO ADDITION ON ACCOUNT OF PRIOR PERIOD INCOME, AS CULLED OUT FROM THE RECORD ARE TH AT THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSING PROCEEDINGS, NOTICED THAT AS PER COLUMN NO. 22(B) OF THE TAX AUDIT REPORT, THERE WERE PARTICULA RS OF INCOME OR EXPENDITURE OF PRIOR PERIOD CREDITED OR DEBITED TO THE PROFIT & LOSS ACCOUNT. THE ASSESSING OFFICER ALSO FOUND THAT THERE WAS INTERES T INCOME OF RS.7,40,270/-, WHICH WAS NOT OFFERED BY THE ASSESSEE FOR TAXATION AND NO PROOF OR EVIDENCE OR EXPLANATION THEREOF WAS ALSO FURNISHED BY THE AS SESSEE IN THIS REGARD BEFORE THE ASSESSING AUTHORITY. THEREFORE, THE ENT IRE AMOUNT OF RS.7,40,270/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF PRIOR PERIOD EXPENSES. 4. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) ON THIS ISSUE; HOWEVER, LD. CIT(A) HAS SUSTAINED THIS ADDIT ION MADE BY THE LD. ASSESSING OFFICER BY OBSERVING AS UNDER:- I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER A ND THE SUBMISSION FILED BY THE APPELLANT. THE APPELLANT HAS CLAIMED THAT IS HA S NOT CLAIMED PRIOR PERIOD EXPENSES OF RS.13,78,385/-, HENCE PRIOR PERIOD INCO ME OF RS. 7,40,270/- SHOULD NOT BE TAXED. DEBIT ENTRY IN BALANCE SHEET I S MADE OF NET EXPENSES I.E. RS. 6,38,115/- (RS. 13,78,385/- - RS. 7,40,270/-) B ELOW THE LINE I.E. NO CLAIM OF UNABSORBED EXPENSES MADE BY THE APPELLANT. HOWEV ER, PERUSAL OF ISSUE INDICATES THAT UNCLAIMED EXPENSES ARE ON DIFFERENT ITEMS AND RS. 7,40,270/- IS INTEREST INCOME WHICH WAS IN DISPUTE AND GOT CRYSTA LLIZED IN THE YEAR UNDER CONSIDERATION. IT IS UNDERSTOOD THAT NO PROVISIONS WERE MADE IN THE BOOKS OF ACCOUNTS FOR IMMEDIATE PRECEDING YEAR, THEREFORE, T HE SET OFF / OF INCOME OF RS.7,40,270/- RELATING TO EARLIER YEAR CANNOT BE GI VEN AGAINST SO CALLED UNCLAIMED EARLIER YEAR EXPENSES OF RS. 13,78,385/-. THE DETAILS ARE MENTIONED IN ANNEXURE - K TO THE AUDIT REPORT FOR THE YEAR UN DER CONSIDERATION. IF THE CONTENTION NOW RAISED BY THE APPELLANT IS AC CEPTED, IT WILL RAISE SERIOUS DOUBTS ABOUT BOOKS OF ACCOUNTS AND AUDITED ACCOUNTS FOR EARLIER YEARS, THEREFORE, UNSETTLING ALREADY FINALIZED ISSUES. AS NO PROVISIONS WERE MADE IN ITA NO. 1740/AHD/2013 & CO 212/AHD/2016 SURAT LTD VS. ACIT(OSD) AY : 2009-2010 3 THE BOOKS OF ACCOUNTS, THE INCOME ARISING OF RS.7,4 0,270/- HAS BEEN ASSESSED CORRECTLY BY THE AO IN THE YEAR UNDER CONSIDERATION . THE GROUND OF APPEAL IS ACCORDINGLY DISMISSED. 5. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE ASS ESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. WE FIND FROM THE PAPER-BOOK AND AUDITED BALANCE-SHEET SUBMI TTED BY THE ASSESSEE EXPLAINING THAT THERE WAS PRIOR PERIOD EXPENDITURE AND PRIOR PERIOD INCOME AND BOTH WERE NOT CLAIMED IN THE COMPUTATION OF INC OME. LD. COUNSEL FOR THE ASSESSEE FURTHER STATED THAT INSTEAD OF ALLOWIN G PRIOR PERIOD EXPENDITURE, THE ASSESSING OFFICER HAS ADDED THE PRIOR PERIOD IN COME OF THE ASSESSEE. LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE AS SESSING OFFICER SHOULD HAVE ALLOWED THE PRIOR PERIOD EXPENDITURE AND PRIOR PERIOD INCOME CLAIMED BY THE ASSESSEE. BY NOT ALLOWING THE PRIOR PERIOD EXPENDITURES, THE ASSESSING OFFICER SHOULD NOT HAVE ADDED THE PRIOR P ERIOD INCOME. 7. WE ALSO OBSERVE THAT THE LD. CIT(A) HAS NOT JUST IFIED IN HIS FINDING BY NOT CONSIDERING THAT THE AMOUNT OF PRIOR PERIOD EXP ENDITURE WAS MORE THAN THE AMOUNT OF PRIOR PERIOD INCOME WHICH WAS NOT CLA IMED BY THE ASSESSEE AT ALL. WE FIND THAT THE ASSESSING OFFICER AND THE LD. CIT(A) HAVE NOT ELABORATED ANY REASONS FOR NOT CONSIDERING THE PRIOR PERIOD E XPENSES OF RS.13,78,385 ALONG WITH PRIOR PERIOD INCOME OF RS.7,40,270 OF TH E ASSESSEE. IN VIEW OF THE ABOVE STATED FACTS AND FINDINGS, WE CONSIDERED THAT THE LD.CIT(A) IS NOT JUSTIFIED IN SUSTAINING THE ADDITION MADE BY THE AS SESSING OFFICER. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED ON THIS IS SUE. 8. GROUND NO. 2 OF THE APPEAL RELATES TO THE DISALL OWANCE OF RS.24,927/- ON ACCOUNT OF PERSONAL EXPENSES. DURING THE COURSE OF SCRUTINY ASSESSMENT, ITA NO. 1740/AHD/2013 & CO 212/AHD/2016 SURAT LTD VS. ACIT(OSD) AY : 2009-2010 4 THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF CR EDIT CARD EXPENSES IN VIEW OF THE CONSTRAINTS MENTIONED IN THE AUDIT REPORT. ON VERIFICATION OF THE DETAIL FURNISHED BY THE ASSESSEE, THE ASSESSING OFF ICER NOTICED THAT CREDIT CARD REFLECT THE PAYMENT MADE TOWARDS THE BILLS OF GARME NTS AND RESTAURANTS ETC. THE ASSESSEE WAS ALSO AGREED FOR DISALLOWANCE OF RS .24,927/ PERTAINING TO BILLS OF GARMENTS, RESTAURANTS AND OTHERS. ACCORDIN GLY, THE ASSESSING OFFICER TREATED THE SAME AS PERSONAL EXPENDITURE AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 9. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A); HOWEVER, LD. CIT(A) D ISMISSED THE APPEAL OF THE ASSESSEE AS THE ASSESSEE COULD NOT BRING SPECIF IC FACTS ON RECORD IN THIS REGARD. 10. FURTHER AGGRIEVED, THE ASSESSEE IS IN APPEAL BE FORE THE TRIBUNAL ON THIS GROUND. 11. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. WE FIND THAT LD. COUNSEL COULD NOT EXPLAIN THAT THESE EXPEN DITURE ARE NOT OF PERSONAL EXPENSES IN NATURE; SO WE SUSTAIN THIS ADDITION MAD E BY THE ASSESSING OFFICER AND ACCORDINGLY, THIS GROUND OF THE ASSESSE E IS DISMISSED. 12. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 13. WITH RESPECT TO REVENUES CROSS-OBJECTION, WE F IND THAT PRIMA-FACIE THIS CO IS NOT MAINTAINABLE IN VIEW OF CBDT CIRCULA R NO. 21/2015 IN F.NO.279/MISC. 142/2007-ITJ (PT) DATED 10TH DECEMBE R 2015 AS THE TAX EFFECT INVOLVED IN THIS CASE IS BELOW THE PRESCRIBED LIMIT OF RS.10 LACS. ITA NO. 1740/AHD/2013 & CO 212/AHD/2016 SURAT LTD VS. ACIT(OSD) AY : 2009-2010 5 14. IN THE COMBINED RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AND REVENUES CROSS-OBJECTION THEREOF IS DI SMISSED. ORDER PRONOUNCED IN THE COURT ON 20 TH APRIL, 2017 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (AMARJIT SINGH) ACCOUNTANT MEMBER AHMEDABAD; DATED 20/04/2017 *BIJU T. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD