DCIT, Circle-3(2), Hyd, Hyderabad V. Sri Vinayaka Paper and Boards Ltd., Hyd, Hyderabad

ITA 1084/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2202 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 12-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: P MURALI MOHANA RAO
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1084/HYD/2016 ASSESSMENT YEAR: 2012-13 THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-3(2), HYDERABAD. VS. M/S SRI VINAYAKA PAPER & BOARDS LTD., HYDERABAD. PAN-AAECS6961K (APPLICANT) (RESPONDENT) REVENUE BY : SMT. SUMAN MALIK ASSESSEE BY : SRI P. MURALI MOHANA RAO DATE OF HEARING : 11-12-2017 DATE OF PRONOUNCEMENT : 29-12-2017 ORDER PER P. MADHAVI DEVI, J.M.: IN THIS APPEAL THE REVENUE IS AGGRIEVED BY THE ORDER OF THE CIT(A)-3, HYDERABAD DATED 20-05-2016. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDER: 1. THE LD. CIT(A) ERRED BOTH IN LAW AND ON FACTS OF THE CASE. 2. THE LD. CIT(A) ERRED IN DELETING THE ADDITION / DISALLOWANCE OF RS. 3,08,428- OUT OF TOTAL AMOUNT OF RS. 30,84,285/- CLAIMED TOWARDS BOILER MAINTENANCE WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE A.O. 3. THE LD. CIT(A) ERRED IN DELETING THE ADDITION/DISALLOWANCE OF RS. 7,93,998/- OUT OF TOTAL AMOUNT OF RS. 79,39,981/- CLAIMED TOWARDS COAL PURCHASE WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE A.O. 4. THE LD. CIT(A) ERRED IN DELETING THE ADDITION/DISALLOWANCE OF RS. 41,12,317/- OUT OF TOTAL AMOUNT OF RS. 8,22,46,345/- 2 ITA .NO.1084/HYD/2016, M/S SRI VINAYAKA PAPER, & BOARDS LTD., HYDERABAD. CLAIMED TOWARDS HUSK PURCHASE WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE A.O. 5. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT THE ADDITIONS/DISALLOWANCES WERE MADE ON ACCOUNT OF UNVERIFIABLE/SELF-MADE VOUCHERS MAINTAINED BY THE ASSESSEE AS OBSERVED BY THE A.O AND CONFIRMED BY THE CIT(A). 6. ANY OTHER GROUND(S) THAT MAY URGED AT THE TIME OF HEARING. 2. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE COMPANY, WHICH IS ENGAGED IN THE MANUFACTURING AND TRADING OF PAPER AND PAPER PRODUCTS, FILED ITS RETURN OF INCOME FOR THE A.Y 2012-13 ON 25-09-2012, DECLARING A TOTAL INCOME OF RS. 52,82,920/-. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE A.O VERIFIED THE LEDGERS OF BOILER MAINTENANCE AND COAL AND HUSK PURCHASES AND OBSERVED THAT MOST OF THE EXPENDITURE UNDER THESE HEADS ARE INCURRED IN CASH WITH EACH AMOUNT BEING LESS THAN RS. 20,000/-. HE ALSO OBSERVED THAT ALL SUCH EXPENSES ARE SUPPORTED ONLY BY SELF-MADE VOUCHES. HENCE HE HELD THAT OVER INVOICING IS BOUND TO BE INHERENT IN THESE TYPE OF EXPENSES. THUS, HE DISALLOWED 10% OF BOILER MAINTENANCE AND COAL PURCHASES; AND 5% OF HUSK PURCHASES AND ADDED IT TO THE TOTAL INCOME OF THE ASSESSEE. FURTHER, HE ALSO OBSERVED THAT AN AMOUNT OF RS. 77,300/- HAS BEEN DEBITED TOWARDS INCOME TAX AND SINCE IT IS NOT AN ADMISSIBLE 3 ITA .NO.1084/HYD/2016, M/S SRI VINAYAKA PAPER, & BOARDS LTD., HYDERABAD. EXPENDITURE, HE ADDED IT BACK TO THE COMPUTATION AND BROUGHT IT TO TAX. 3. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), WHO DELETED THE DISALLOWANCES BOILER MAINTENANCE AND PURCHASES OF COAL AND HUSK BUT CONFIRMED THE DISALLOWANCE OF THE INCOME TAX PAID. AGAINST THE RELIEF GRANTED BY THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE VERY SAME ISSUES HAVE ARISEN IN THE ASSESSEES OWN CASE FOR THE A.Y 2010-11 AND THE TRIBUNAL AT PARAS 4 AND 5 OF ITS ORDER, HAS HELD AS UNDER: 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE EXPENDITURE CONSIDERED FOR DISALLOWANCE IS UNDER THE HEADS FREIGHT & CARTAGE, MACHINERY MAINTENANCE AND HUSK PURCHASE, ETC. THE ONLY GROUND FOR DISALLOWANCE IS THAT THEY ARE SUPPORTED BY SELF MADE VOUCHERS OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE HAD SUBMITTED THAT THE ASSESSEE HAS BEEN MAINTAINING THE BOOKS OF ACCOUNTS AND IN THE EARLIER AND SUBSEQUENT ASSESSMENT YEARS, NO SUCH DISALLOWANCES WERE MADE BY THE AG. HE HAD ALSO SUBMITTED THAT UNLESS AND UNTIL THE AO GIVES A FINDING THAT THE EXPENDITURE IS NOT GENUINE, NO DISALLOWANCE CAN BE MADE. WE AGREE WITH THE CONTENTION OF THE ASSESSEE SINCE THE AO HAS NOT POINTED OUT ANY DEFECTS EXCEPT THAT THE VOUCHERS ARE SELF-MADE. WHILE NO DEFECTS HAVE BEEN POINTED OUT AND ALSO NO FINDING IS GIVEN THAT SUCH EXPENDITURE IS EXCESSIVE, NO DISALLOWANCE CAN BE SUSTAINED. IN VIEW OF THE SAME, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE CIT (A) AND THE REVENUE'S APPEAL IS ACCORDINGLY DISMISSED. 5. IN THE RESULT, REVENUE'S APPEAL IS DISMISSED. 4 ITA .NO.1084/HYD/2016, M/S SRI VINAYAKA PAPER, & BOARDS LTD., HYDERABAD. 5. SINCE THE FACTS AND CIRCUMSTANCES FOR THE ASSESSMENT YEAR BEFORE US ARE THE SAME, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY THE REVENUES GROUNDS ARE REJECTED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 29 TH DECEMBER, 2017. SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED:29 TH DECEMBER, 2017. KRK 1) M/S SRI VINAYAKA PAPER & BOARDS LTD., 404A, CONCOURSE, 7-1-58, GREENLAND ROAD, AMEERPET, HYDERABAD-16 2) DY.CIT, CIRCLE-3(2), HYDERABAD. 3) CIT(A) -3, HYDERABAD 4) THE PCIT 3, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6) GUARD FILE.