DCIT, V. M/s Anankit Granite Ltd.,

ITA 1060/BANG/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80784 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 03-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI ADD
• Section: 143(3)

Judgement Text

ITA NO.1060 OF 2013 ANKIT GRANITE LTD BANGALORE PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BBENCH, BANGALORE BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.1060/BANG/2013 (ASSESSMENT YEAR: 2006-07) DY. COMMISSIONER OF INCOME TAX, CIRCLE 11 (1) BANGALORE VS. M/S. AANKIT GRANITE LTD NO.886, 19 TH MAIN, 4 TH CROSS, BTM LAYOUT II STAGE, BANGALORE 560076 PAN: AABCA 5821 D (APPELLANT) (RESPONDENT) DEPARTMENT BY: DR.P.K.SRIHARI, AD D.CIT, (DR) ASSESSEE BY: SHRI CUDDAPAH RAMESH, CA DATE OF HEARING: 27/11/2014 DATE OF PRONOUNCEMENT: 01/12/2014 O R D E R PER RAJPAL YADAV, J.M. THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF THE LEARNED CIT (A) DATED 26.04.2013 PASSED IN ASSESSME NT YEAR 2006-07. THE SOLITARY GRIEVANCE OF THE REVENUE IS T HAT THE LEARNED CIT (A) HAS ERRED IN RESTRICTING THE DISALL OWANCE OUT OF THE FREIGHT INWARD CHARGES AT 10% AS AGAINST 25% OF THE TOTAL CLAIM MADE BY THE ASSESSEE, DISALLOWED BY THE ASSES SING OFFICER. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E DECLARED AN INCOME OF RS.11,52,736/- FOR ASSESSMENT YEAR 2006-0 7. AN ASSESSMENT ORDER U/S 143(3) WAS MADE ON 31.12.2008 WHEREBY THE ASSESSING OFFICER HAS DETERMINED THE TAXABLE IN COME OF THE ASSESSEE AT RS.3,34,64,610/-. THE ASSESSING OFFICER HAS MADE ADDITIONS UNDER SIX HEADS. DISSATISFIED WITH THE OR DER OF THE ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER IN A PPEAL BEFORE THE CIT (A). THE LEARNED CIT (A) DECIDED THE APPEAL OF THE ITA NO.1060 OF 2013 ANKIT GRANITE LTD BANGALORE PAGE 2 OF 4 ASSESSEE VIDE HIS ORDER DATED 30.04.2010 AND GRANTE D PARTIAL RELIEF. THE ASSESSEE TOOK THE MATTER IN APPEAL BEF ORE THE TRIBUNAL AND THE TRIBUNAL HAS DECIDED THE APPEAL OF THE ASSESSEE BEARING ITA NO.881/BANG/2010 VIDE ORDER DATED 21.4. 2011. THE ASSESSEE HAD FILED M.A. BEARING NO.37/B/2011 WHICH HAS BEEN PARTLY ALLOWED BY THE TRIBUNAL ON 30.06.2011. THE T RIBUNAL HAS REMITTED THREE ISSUES FOR RE-ADJUDICATION TO THE FI LE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS DECIDE D THE ISSUES VIDE ORDER DATED 30.12.2011. THE TOTAL INCOME OF TH E ASSESSEE HAS BEEN DETERMINED AT RS.41,55,677/-. IN THIS APPE AL ONLY, ONE OF THE ISSUE IS INVOLVED, WHICH PERTAINS TO AN ADDI TION OF RS.28,32,554/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD MADE A CLAIM OF RS. 1,13,30,214/- TOWARDS FREIGHT INWARD C HARGES. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE DETAIL S SUBMITTED BY THE ASSESSEE. THEREFORE, ON AN ESTIMATED BASIS, HE DISALLOWED 25% OF THE CLAIM MADE BY THE ASSESSEE. 4. ON APPEAL TO THE CIT (A), THIS DISALLOWANCE HAS BEEN RESTRICTED TO 10%. IN OTHER WORDS, THE CIT (A) HAS CONFIRMED THE ADDITION OF RS.11,33,021/- AND DELETED THE ADDITION OF RS.16,99,553/-. THE BRIEF FINDINGS RECORDED BY THE CIT (A) READ AS UNDER: 3.2 NOTWITHSTANDING THE SUBMISSIONS MADE BY THE APPELLANT EXPLAINING THE DIFFICULTIES INVOLVED IN MAINTAINING PERFECT ACCOUNTS IN THIS REGARD, I AM O F THE CONSIDERED OPINION THAT THE APPELLANT IS NOT ENTITLED TO THE DEDUCTION IN FULL BUT THE APPELLANT S EXPLANATIONS CANNOT BE BRUSHED ASIDE IN TOTO. THE APPELLANT FILED VARIOUS DETAILS LIKE ANALYSIS STATEMENT, LINK STATEMENT ETC. IN SUPPORT OF ITS CL AIM. FURTHER, IT IS CLAIMED THAT CASH PAYMENTS WERE VERY LESS AS SUBSTANTIAL PAYMENTS WERE MADE BY CHEQUE OR ACCOUNT ADJUSTMENTS. THE DETAILS FILED BY THE APPELLANT WERE NOT FOUND TO BE FALSE AND NO SPECIFI C ITA NO.1060 OF 2013 ANKIT GRANITE LTD BANGALORE PAGE 3 OF 4 DEFECTS WERE POINTED OUT BY THE A.O. I, THEREFORE, CONSIDER THAT RESTRICTING THE DISALLOWANCE TO 10% O F THE CLAIM MADE WOULD MEET THE ENDS OF JUSTICE. HENCE, THE DISALLOWANCE IS RESTRICTED TO RS.11,33,021/-. THE APPELLANT GETS A RELIEF OF RS.16,99,533/-. THE A.O IS DIRECTED TO GIVE RELIEF ACCORDINGLY. 5. WITH THE ASSISTANCE OF THE LEARNED REPRESENTATIV ES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. WE ARE CONSCIOUS OF THE FACT THAT IN VARIOUS AUTHORITATIVE PRONOUNCEMENTS, IT HA S BEEN PROPOUNDED THAT IN MAKING A BEST JUDGMENT, QUA, THE ADHOC DISALLOWANCE OF ANY CLAIM OF THE ASSESSEE, THE A.O MUST NOT ACT DISHONESTLY OR VINDICTIVELY OR CAPRICIOUSLY. HE MUS T MAKE WHAT HE HONESTLY BELIEVE TO BE A FAIR ESTIMATE OF THE FI GURE OF THE DISALLOWANCE WITH REGARD TO ANY PARTICULAR ITEM AND FOR THIS PURPOSE, HE MUST BE ABLE TO TAKE INTO CONSIDERATION THE NATURE OF THE BUSINESS, EXPENSES INCURRED BY ANY OTHER SIMILA RLY SITUATED ASSESSEE ON THIS ITEM, THE PREVIOUS HISTORY OF THE ASSESSEE, LOCAL KNOWLEDGE OF THE ASSESSING OFFICER WITH REGARD TO T HIS LINE OF BUSINESS AND REPUTATION OF THE ASSESSEE. IT IS ALSO PERTINENT TO MENTION THAT JUDGMENT ON A PARTICULAR CLAIM IS A FA CTUALITY TO DECIDE THE MATTER WITH WISDOM, TRULY AND LEGALLY. I T DOES NOT DEPEND UPON THE ARBITRATORY CAPRICE OF AN ADJUDICAT OR, BUT ON SETTLED AND INVARIABLY PRINCIPLE OF JUSTICE. IT IS TRUE THAT IN AN ADHOC DISALLOWANCE OF ANY EXPENDITURE, AN ELEMENT O F GUESS WORK IS INVOLVED, BUT IT SHOULD NOT BE A WILD ONE. THE ASSESSING OFFICER HAS DISALLOWED 25% OF THE TOTAL CLAIM MADE BY THE ASSESSEE. HE DEVOTED MUCH ENERGY TOWARDS REJECTING THE EVIDENCE PRODUCED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM. T O THAT EXTENT, THERE IS NO DISPUTE. THE CIT (A) HAS UPHELD THE ACT ION OF THE ASSESSING OFFICER THAT THE ASSESSEE FAILED TO SUBMI T THE COMPLETE DETAILS. BUT AFTER REJECTING THE SUPPORTING EVIDENC E, THE ASSESSING OFFICER HAS NOT JUSTIFIED HIS ESTIMATION AT 25% OF THE TOTAL CLAIM FOR DISALLOWANCE. HE ONLY OBSERVED THAT HE FEEL THA T DISALLOWANCE ITA NO.1060 OF 2013 ANKIT GRANITE LTD BANGALORE PAGE 4 OF 4 MADE IN THE ORIGINAL ESTIMATION AT 25% IS REASONABL E. WE HAVE PERUSED THE ORIGINAL ASSESSMENT ALSO. THE FINDINGS OF THE ASSESSING OFFICER ON THIS ISSUE IS RUNNING INTO IN 6 LINES ONLY. HE NOWHERE ASSIGNED ANY REASON AS TO HOW HE QUANTIF IED THE DISALLOWANCE AT 25% OF THE TOTAL CLAIM. ON THE OTHE R HAND THE LEARNED FIRST APPELLATE AUTHORITY HAS RE-APPRECIATE D THE FACTS AND CIRCUMSTANCES AND ARRIVED AT A CONCLUSION THAT ENDS OF JUSTICE WOULD MET IF, DISALLOWANCE IS TO BE MADE AT 10% OF THE TOTAL CLAIM. IT WOULD NOT BE JUSTIFIABLE FOR THE TRIBUNAL BEING A SECOND APPELLATE AUTHORITY TO INTERFERE IN THE DISCRETION EXERCISED BY THE LEARNED CIT (A), UNLESS IT IS DEMONSTRATED THAT EXE RCISE OF SUCH A POWER AT THE END OF THE FIRST APPELLATE AUTHORITY I S BASED ON EXTRANEOUS REASONS AND NOT IN CONSONANCE WITH THE F ACTS AND CIRCUMSTANCES ON THE RECORD. THE LEARNED DR FAILED TO POINT OUT ANY GLARING DEFECT IN THE ORDER OF THE LEARNED FIRS T APPELLATE AUTHORITY. THEREFORE, TAKING INTO CONSIDERATION THE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY MERIT IN THIS APP EAL, IT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST DECEMBER, 2014. SD/- SD/- (JASON P. BOAZ) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED 1 ST DECEMBER, 2014. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCHES, BANGALORE