CHETNA ZARDA COMPANY, MUMBAI V. ITO 15(2)(2), MUMBAI

ITA 1031/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7747 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 09-02-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 16-02-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A R BAIWAR
• Assessee Lawyers: S C TIWARI
• Keywords: Corroborative evidences; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C,MUMBAI BEFORE SHRI R.V.EASWAR,SR.VICE PRESIDENT& SHRI T. R.SOOD (A.M) ITA NO.1031/MUM/2009(A.Y.2001-02) CHETNA ZARDA COMPANY, 1/213, NAVJIVAN SOCIETY, LAMINGTON ROAD, MUMBAI 08 PAN: AAAFC 0896Q (APPELLANT) VS. THE I.T.O 15(2)(2), MATRU MANDIR, TARDEO, MUMBAI. (RESPONDENT) APPELLANT BY : SHRI S.C.TIWARI RESPONDENT BY : SHRI. A.R. BAIWAR ORDER PER T.R.SOOD, A.M, THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. CIT(A)C- IV, MUMBAI DATED 11/12/2008 FOR THE ASSESSMENT YEAR 200 1-02. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE COMMISSIONER OF INCOME TAX(APPEALS) , CENTRAL CIRCL E IV, HEREINAFTER REFERRED TO AS THE LD. CIT(A) HAS ERRED IN LAW IN CONFIRMING TH E ADHOC AND ARBITRARY DISALLOWANCE OF RS. 12,243/- IN RESPECT OF CONVEYAN CE. THE SAID ADDITION MAY PLEASE BE DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) CENTRAL CIRCLE IV, HEREINAFTER REFERRED TO AS THE LD. CIT(A) HAS ERRED IN LAW IN CONFIRMING TH E ADHOC AND ARBITRARY DISALLOWANCE OF RS.17,255/- IN RESPECT OF HEL MAJUR I. THE SAID ADDITION MAY PLEASE BE DELETED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) CENTRAL CIRCLE IV, HEREINAFTER REFERRED TO AS THE LD. CIT(A) HAS ERRED IN LAW IN CONFIRMING TH E ADHOC AND ARBITRARY DISALLOWANCE OF RS.87,579/- IN RESPECT OF LABOUR MU KADAM EXPENSES. THE SAID ADDITION MAY PLEASE BE DELETED. ITA NO.2889/M/09(A.Y.2003-04) 2 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) CENTRAL CIRCLE IV, HEREINAFTER REFERRED TO AS THE LD. CIT(A) HAS ERRED IN LAW IN CONFIRMING TH E ADHOC AND ARBITRARY DISALLOWANCE OF RS.11,766/- IN RESPECT OF STAFF WEL FARE EXPENSES. THE SAID ADDITION MAY PLEASE BE DELETED. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) CENTRAL CIRCLE IV, HEREINAFTER REFERRED TO AS THE LD. CIT(A) HAS ERRED IN LAW IN CONFIRMING TH E ADHOC AND ARBITRARY DISALLOWANCE OF RS.1,88,536/- IN RESPECT OF MACHINE RY REPAIRS EXPENSES. THE SAID ADDITION MAY PLEASE BE DELETED. 2. FIRST WE TAKE UP GROUNDS NO. 1 TO 4. AFTER HEAR ING BOTH THE PARTIES WE FIND THAT IN RESPECT OF CONVEYANCE, HEL MAJURI, LABOUR MUKADAM AND STAFF WELFARE, THE EXPENSES CLAIMED WERE AT RS.48,973/- , RS.69,020/-, 3,50,31 6/- AND RS.46,063/- RESPECTIVELY. ON VERIFICATION THE A.O NOTICED THAT THESE EXPENSES WERE MAINLY CLAIMED ON THE BASIS OF SELF MADE VOUCHERS AND, THEREFORE, ACCORDINGLY 25% OF THE EXPENSES UNDER THESE HEAD WERE DISALLOWED. 3. ON APPEAL BEFORE LD. CIT(A) IT WAS SUBMITTED THA T NO REASONS HAVE BEEN GIVEN BY THE A.O FOR DISALLOWANCE AND THE AMOUNT OF EXPENDIT URE WAS REASONABLE AND ADDITION HAS BEEN MADE ON ADHOC BASIS WHICH IS NOT PERMISSIB LE. THE LD. CIT(A) DID NOT AGREE WITH THE SUBMISSIONS AND OBSERVED THAT THESE DISALL OWANCES WERE MADE BECAUSE SATISFACTORY EVIDENCE WAS NOT FURNISHED AND ACCORDI NGLY CONFIRMED THE ADDITION. 4. BEFORE US LD. COUNSEL FOR THE ASSESSEE REITERATE D THE SUBMISSIONS. HOWEVER, HE SUBMITTED THAT SMALL PERSONAL ELEMENT COULD BE INV OLVED IN CONVEYANCE AND STAFF WELFARE EXPENSES. ON THE OTHER HAND, LD. D.R. SUPP ORTED THE ORDERS OF THE LOWER AUTHORITIES. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS CAREFULL Y WE ARE PARTLY AGREE WITH THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE THA T IT IS NOT ALWAYS POSSIBLE TO OBTAIN ITA NO.2889/M/09(A.Y.2003-04) 3 OUTSIDE VOUCHERS FOR EXPENSES LIKE CONVEYANCE OR LA BOUR AND, THEREFORE, REASONABLENESS SHOULD HAVE ALSO BEEN TESTED. HOWEV ER, AT THE SAME TIME THE ONUS IS ALWAYS ON THE ASSESSEE TO PROVE THE EXPENDITURE CLA IMED BY HIM. CONSIDERING THE OVERALL CIRCUMSTANCES OF THE CASE WE ARE OF THE VIE W THAT ESTIMATED DISALLOWANCE OF 25% IS ON HIGHER SIDE AND, THEREFORE, WE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE A.O TO MAKE 10% DISALLOWANCE ON ACCOUNT OF THESE EX PENSES. 6. NOW WE TAKE UP GROUND NO.5. AFTER HEARING BOTH SIDES WE FIND THAT THE ASSESSEE HAS ALSO CLAIMED A SUM OF RS. 3,77,072/- IN THE OFF ICE ADMINISTRATIVE EXPENSES UNDER THE HEAD MACHINERY. THE A.O NOTICED THAT IN THE PR EVIOUS YEAR THE CLAIM IN THE SAME HEAD WAS ONLY RS. 31,388/-. SINCE NO BILLS ETC. W ERE PRODUCED 50% OF THE AMOUNT WAS DISALLOWED. 7. BEFORE LD. CIT(A) IT WAS MAINLY SUBMITTED THAT A MAJOR OVERHAULING WAS DONE DURING THE YEAR AND THAT IS WHY EXPENDITURE HAS INC REASED. THE LD. CIT(A) AFTER EXAMINING THE SUBMISSIONS CONFIRMED THE ADDITION VI DE PARA -9 OF HIS ORDER, WHICH IS AS UNDER:- 9. WHILE DISALLOWING A SUM OF RS. 1,88,536/- ON AC COUNT OF MACHINERY REPAIRS, THE A.O HAS CLEARLY STATED THAT THE BILLS IN RESPEC T THEREOF WERE NOT SUBMITTED. THAT FURTHER SUPPORTED HIS OBSERVATION THAT THE EXP ENDITURE FOR MACHINERY REPAIRS WERE MORE THAN 10 TIMES AS COMPARED WITH THE IMMEDI ATELY PRECEDING YEAR. THE APPELLANTS CONTENTION THAT BILLS HAVE BEEN PRODUCE D TOGETHER WITH BANK STATEMENTS IS NOT SUPPORTED AND BORNE OUT FROM THE FACTS ON RECORD. SUCH DOCUMENTS WERE NOT PRODUCED BEFORE THE AO FOR VERIF ICATION AND NEITHER BEFORE ME. THE ADDITION TO TOTAL INCOME HERE HAS TAKEN PL ACE FOR FAILURE OF THE APPELLANT TO DISCHARGE ITS ONUS OF PROVING TO THE SATISFACTIO N OF THE AO, TOGETHER WITH APPROPRIATE DOCUMENTARY EVIDENCE THAT IT DID INCUR SUCH EXPENDITURE TOGETHER WITH REASONS SUPPORTING ITS CLAIM AS PER THE PROVIS IONS OF SECTION 31 R.W.S. 37 OF THE ACT. I THEREFORE, REJECT THE SIXTH GROUND OF A PPEAL AND UPHOLD THE ADDITION OF RS. 1,88,536/- TO THE TOTAL INCOME OF THE APPELLANT , BY WAY OF DISALLOWANCE OF REPAIRS TO PLANT AND MACHINERY. HENCE, GROUND NO. 2 TO 6 FAIL. ITA NO.2889/M/09(A.Y.2003-04) 4 8. BEFORE US LD. COUNSEL FOR THE ASSESSEE REITERATE D THE SAME SUBMISSIONS. ON THE OTHER HAND LD. D.R. SUPPORTED THE ORDERS OF THE LOW ER AUTHORITIES. 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT IF ASSESSEE HAS INCURRED OVERHAULING EXPENSES THE ASSESSEE WAS DUTY BOUND TO PRODUCE THE BILLS FOR THE SAME. BUT NO DETAILS OR SUPPORTING EVIDENCE HAS BEEN PROD UCED EVEN BEFORE THE FIRST APPELLATE AUTHORITY OR BEFORE US. HOWEVER, IN THIS CASE ALSO ADDITION SEEMS TO BE ON HIGHER SIDE AND, THEREFORE, ACCORDINGLY WE RESTRICT THIS ADDITI ON TO 25% OF THE EXPENDITURE INCURRED I.E. RS.94,268/-. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED ON THE 10 TH DAY OF FEB.2010. SD/- SD/- (R.V.EASWAR) (T.R.SOOD) SR. VICE PRESIDENT ACC OUNTANT MEMBER MUMBAI, DT. 10 TH FEB.2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT(A)CONCERNED 4. THE CIT,CONCERNED. 5. THE D.RC BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO.2889/M/09(A.Y.2003-04) 5 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 9/2/2010 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 10/2/2010 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER ITA NO.2889/M/09(A.Y.2003-04) 6