M/s Kapurthala Estate (P) Ltd, Jalandhar V. The Assistant commissioner of Income Tax, Jalandhar

ITA 109/ASR/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4563 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 23-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A N MISHRA LD
• Keywords: Fair market value; Competent authority

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AN D SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.109(ASR)/2017 ASSESSMENT YEAR:2008-0 9 M/S. KAPURTHALA ESTATE (PVT.) LTD., KAPURTHALA ROAD BASTI BAWA KHEL JALANDHAR (35, GOPAL PARK, KAPURTHALA) PAN:AABCK8901G VS. ASST. CIT, CENTRAL CIRCLE-I, JALANDHAR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SURINDER MAHAJAN (ADV .) RESPONDENT BY: SH. A. N. MISHRA (LD. DR) DATE OF HEARING: 17.05.2018 DATE OF PRONOUNCEMENT: 29.05.2018 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE/APPELLANT, ON FEELING AGGRIEVED AGAINST THE ORD ER DATED 28.12.2016, IMPUGNED HEREIN, PASSED BY THE LD. CIT(A ) BATHINDA, U/S 250(6) OF THE I.T. ACT, 1961 (HEREINAFT ER CALLED AS THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEA L. 1. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE, LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] HAS GROSSLY ITA NO.109/ASR/2017 (A.Y:2008-09) M/S KAPURTHALA ESTATE (P) LTD. VS. ACIT 2 ERRED IN LAW IN CONCLUDING THAT JURISDICTION OVER T HE APPELLANT WAS CONFERRED ON THE A.O. BY WAY OF A VALID ORDER U /S 127 BY THE COMPETENT AUTHORITY. ASSESSMENT FRAMED U/S 143( 3) IS ILLEGAL & BAD IN LAW AND IS WITHOUT JURISDICTION. 2. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE, L EARNED CIT(A) HAS GROSSLY ERRED IN CONFIRMING ADDITION OF RS.1,00,000/- BEING DEVELOPMENT EXPENSES. ADDITION CONFIRMED IS ILLEGAL AND BAD IN LAW. 3. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE, L EARNED CIT(A) HAS GROSSLY ERRED IN CONFIRMING ADDITION OF RS.14,000/- MADE BY LEARNED ASSESSING OFFICER OUT OF COMMISSION PAID BY INVOKING PROVISIONS OF SECTION 40A(2)(B) OF THE ACT . ADDITION CONFIRMED BY THE LEARNED CIT(A) IS ILLEGAL AND BAD IN LAW. 3. THE FACTS OF THE CASE ARE ALREADY ON RECORD, WHICH ARE NOT REPEATED HEREIN FOR THE SAKE OF CONVENIENCE AND BREVIT Y. 4. THE LD. COUNSEL DID NOT RAISE GROUND NO.1, HENCE, DOES NOT REQUIRE ANY ADJUDICATION. GROUND NO.2 RELATES TO THE DISALLOWANCE OF SOME OF THE EXPENSES TO THE TUNE OF RS.1,00,000/-. IN SUPPORT OF IT S GROUND, IT WAS SUBMITTED BY THE LD. AR THAT NO INCRIMINATING M ATERIAL HAS BEEN FOUND BY THE DEPARTMENT FOR THE YEAR UNDER CON SIDERATION AND IT IS AN ESTABLISHED LAW THAT NO ADDITION CAN BE M ADE DURING THE ASSESSMENT PROCEEDINGS IN ABSENCE OF INCRIMINATING MATER IAL RECOVERED DURING THE SEARCH OPERATIONS. FURTHER, IT WAS ALSO SUBMITTED THAT ADDITION HAS BEEN MADE IN AN ARBITRARY MANNER ON ASSUMPTION & PRESUMPTIONS WIT HOUT ANY MATERIAL ON RECORDS. EVEN, WHILE MAKING ADDITION, NO ITA NO.109/ASR/2017 (A.Y:2008-09) M/S KAPURTHALA ESTATE (P) LTD. VS. ACIT 3 DOCUMENT HAS BEEN CONFRONTED TO THE ASSESSEE AS NO DETAILS O F EXPENSES HAVE BEEN GIVEN IN THE ASSESSMENT ORDER. IN SUPPORT OF GROUND NO.3, IT WAS SUBMITTED BY THE LE ARNED COUNSEL THAT ADDITION OF RS.14,000/- WAS MADE BY INVOK ING PROVISION OF SEC.40A(2) OF THE ACT. THE LD. COUNSEL AR GUED THAT YARDSTICK FOR DETERMINING AN EXPENDITURE TO BE EXCESSIVE OR UNREASONABLE, IS THE FAIR MARKET VALUE OF THE GOODS/SE RVICES OF FACILITIES FOR WHICH THE PAYMENT IS MADE AND THE ONUS LI ES ON THE ASSESSING OFFICER TO SHOW THAT THE EXPENDITURE FOR WHICH PAYMENT HAS BEEN MADE IS EXCESSIVE OR UNREASONABLE HAVING REGARD TO THE MARKET VALUE OF THE GOODS. SECTION 40A( 2) CASTS VERY HEAVY BURDEN ON THE INCOME TAX OFFICER TO RECORD HIS FINDINGS BEFORE MAKING ANY DISALLOWANCE UNDER THIS SECT ION. 5. ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDER PASSED BY THE AUTHORITIES BELOW AND SUBMITTED THAT ORD ER UNDER CHALLENGE DOES NOT REQUIRE ANY INTERFERENCE AS THE SAME DOES NOT SUFFER FROM ANY ILLEGALITY, IMPROPRIETY AND PER VERSITY. 6. WE HAVE GONE THROUGH WITH THE FACTS AND CIRCUMSTANCES OF THE CASE, AS IT REFLECTS FROM THE ORDER PASSED BY THE AUTH ORITIES BELOW THAT ADDITION OF RS.1,00,000/- WAS MADE ON THE GROUND THAT SOME OF THE EXPENSES UNDER THIS HEAD WERE SPENT IN CASH, NOT ALL OF WHICH ARE PROPERLY VOUCHED. FROM THE ORDER , IT DOES NOT REFLECT THAT WHICH VOUCHERS WERE NOT PROPERLY VOUCHE D AND ITA NO.109/ASR/2017 (A.Y:2008-09) M/S KAPURTHALA ESTATE (P) LTD. VS. ACIT 4 LEADING TO LACK OF VERIFIABILITY. EVEN OTHERWISE, NO DOCUMENT/VOUCHER HAS BEEN CONFRONTED TO THE ASSESSEE. NEITHER ANY DOCUMENT/VOUCHER WAS CONFRONTED TO THE ASSESSEE NOR DETAILS OF THE EXPENSES SPECIFIED IN THE ORDER PASSED BY THE AUTHORITIES BELOW. IN THAT EVENTUALITY, THE ADDITION CANNOT BE SUSTAINED AND THEREFORE, LIABLE TO BE DELET ED. HENCE, GROUND NO.2 IS ALLOWED. GROUND NO.3 RELATES TO THE ADDITION OF RS.14,000/-. WHILE MAKING THIS ADDITION, THE REVENUE AUTHORITIES NEVER CONFRONTED THE ASSESSEE WITH THE CALCULATION MADE FOR MAKING OUT THE SAID DISALLOWANCE AND EVEN OTHERWISE, THE ASSESSEE WAS NEVER ASKE D TO JUSTIFY RATES OF COMMISSION PAID BY THE COMPANY WHICH GOES TO SHOW THAT THE ADDITION HAS BEEN MADE ONLY ON ASSUMPT ION WITHOUT COMPARING WITH THE FAIR MARKET VALUE OF GOOD S/SERVICES OR FACILITIES OF WHICH THE PAYMENT IS MADE. HENCE, THE SA ME IS ALSO LIABLE TO BE DELETED. HENCE, GROUND NO. 3 IS ALSO A LLOWED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 .05.2018. SD/- SD/- (SANJAY ARORA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIA L MEMBER DATED:29.05.2018 /PK/ PS. ITA NO.109/ASR/2017 (A.Y:2008-09) M/S KAPURTHALA ESTATE (P) LTD. VS. ACIT 5 COPY OF THE ORDER FORWARDED TO: (1) M/S KAPURTHALA ESTATE (PVT.) LTD., JALANDHAR (2) THE ASST. CIT, CENTRAL CIRCLE-I, JALANDHAR (3) THE CIT(A), BATHINDA (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER