The Assistant Commissioner of Income Tax, Pathankot V. M/s. Pioneer Industries Ltd., Pathankot

ITA 112/ASR/2014

• Counselvise Citation: 11220914 RSA 2014
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 21-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SMEER AGGARWAL
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.112(ASR)/2014 ASSESSMENT YEAR:2008-09 PAN :AABCP4708L ASSTT. COMMR. OF INCOME TAX, VS. M/S. PIONEER INDUS TRIES LIMITED. CIRCLE-VI, PATHANKOT. CHHOTI NEHAR, MALIKPUR, PATHANKOT. (APPELLANT) (RESPONDENT) APPELLANT BY:SMT. RATINDER KAUR, DR RESPONDENT BY:SH. SMEER AGGARWAL, CA DATE OF HEARING:20/01/2015 DATE OF PRONOUNCEMENT:28/01/2015 ORDER PER B.P. JAIN, AM : THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER O F THE CIT(A), AMRITSAR, DATED 06.12.2013 FOR THE ASSESSMENT YEAR 2008-09. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) IS RIGHT IN LAW IN DELETING ADDITION OF RS.1 0,00,000/- MADE BY AO OUT OF EXPENSES ON ACCOUNT OF WAGES AND SALARY, TRAVELING, GENERAL EXPENSES ETC. INCLUDED IN CAPITA L WORK IN PROGRESS AND FOR WHICH ASSESSEE HAD NOT MAINTAINED THE SEPARATE ACCOUNTS AND THE ASSESSEE DID NOT COME FORWARD TO O BJECT TO THE DISALLOWANCE DURING THE ASSESSMENT PROCEEDINGS. ITANO.112(ASR)/2014 2 2. APPELLANT CRAVES LEAVE TO AMEND OR ADD ANY OR MO RE GROUNDS OF APPEAL. 2. THE BRIEF FACTS OF THE CASE AS PER AOS ORDER AR E REPRODUCED HEREINBELOW: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACT URING OF VANASPATI & REFINED OIL, GLUTEN AND ENA, IMFL, COUN TRY LIQUOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED THAT THE ASSESSEE HAD DEBITED THE FOLLOWING EXPENSES UNDER T HE HEAD SALARY, TRAVELLING AND OTHER EXPENSES: WAGES AND SALARY RS.90,26,313/- TRAVELLING RS. 7,56,113/- GENERAL EXPENSES RS.10,82,757/- TELEPHONE AND POSTAGE RS. 4,04,996/- STAFF WELFARE RS. 5,32,010/- ASSESSEE IS RUNNING UNITS WHICH ARE MANUFACTURING, GLUTIN, REFINED OIL & RELATED PRODUCTS AS WELL AS A NEW DISTILLERY UNIT HAVE SET UP. DURING THE YEAR, THE ASSESSEE HAS MADE ADDITION OF RS.8,56,82,871/- UNDER THE HEAD CAPITAL-WORK-IN PROGRESS FOR EXPA NSION OF ITS UNITS. THE ASSESSEE HAS NOT MAINTAINED SEPARATE ACCOUNTS S HOWING ANY EXPENSES ON ACCOUNT OF NEW UNIT BEING SET UP, UNDER THE HEADS OF DIFFERENT TYPES OF EXPENSES AS NARRATED ABOVE WHICH RELATE T SETTING UP AND EXPANSION OF NEW UNITS. FOR EXAMPLE THE USE OF TELEPHONES, CONVEYANCES ETC. FOR THESE UNITS BEING SET UP CANNO T BE RULED OUT. SIMILARLY THE EXPENSES ON ACCOUNT OF WAGES AND SALA RY. TRAVELING, GENERAL EXPENSES, STAFF WELFARE ETC. AS IT IS NOT S EPARABLE FROM EXISTING AND OTHER UNITS WHEREIN EXPANSION IS THERE DURING THE YEAR AND THE ASSESSEE HAS NOT MAINTAINED SEPARATE ACCOUN TS FOR THEIR EXPENSES, AS PER THE PAST HISTORY OF THE CASE AN AD DITION OF RS.10,00,000/- IS MADE ON ACCOUNT OF DISALLOWANCES ON ACCOUNT OF EXPENSES RELATING TO SETTING UP AND EXPANSION OF TH E NEW UNITS AND ADDED BACK TO THE INCOME OF THE ASSESSEE. SINCE THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME, PEN ALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME TAX ACT, ARE INITIATED SEPARATELY. ITANO.112(ASR)/2014 3 3. THE LD. CIT(A) DELETED THE ADDITION. WHILE DELET ING THE ADDITION, LD. CIT(A) OBSERVED THAT ASSESSEE HAS BEEN CONTESTING THAT SEPARATE RECORDS FOR DISTILLERY UNIT ARE DULY MAINTAINED, BUT THE ASSESS EE HAS BEEN DEPRIVED OF THE OPPORTUNITY OF CONFRONTING THE AOS OBSERVATION. TH E IMPUGNED EXPENSES HAVE BEEN CAPITALIZED UNDER THE HEAD CAPITAL WORK- IN-PROGRESS WHICH IS WELL WITHIN THE ACCOUNTING STANDARD. THE ACCOUNTS O F THE ASSESSEE ARE DULY AUDITED AND DULY SUPPORTED BY VOUCHERS. NO DEFECT I N THE SAME HAS SPECIFICALLY BEEN POINTED OUT. THE DISALLOWANCE HAS BEEN MADE ON SURMISES AND GUESS-WORK. ACCORDINGLY, THE LD. CIT(A) DELETED THE DISALLOWANCE SO MADE BY THE A.O. 4. THE LD. DR ARGUED THAT THE ASSESSEE HAS NOT MAIN TAINED SEPARATE ACCOUNTS AND ASSESSEE HAS NOT COME FORWARD TO OBJEC T TO THE DISALLOWANCE DURING THE ASSESSMENT PROCEEDINGS. 5. THE LD. COUNSEL FOR THE ASSESSEE, MR. SAMEER AGG ARWAL, CA ARGUED THAT THE ASSESSEE HAS MAINTAINED COMPLETE HEAD-WISE ACCOUNTS SHOWING SEPARATE PRE-OPERATIVE EXPENDITURE OF THE NEW DISTI LLERY UNIT, DULY SUPPORTED BY BILLS AND VOUCHERS. THEREFORE, THE FACTS IN THE IMPUGNED YEAR ARE QUITE DIFFERENT TO THE PRECEDING YEAR AS FOLLOWED BY THE A.O. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT(A). ITANO.112(ASR)/2014 4 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ALLEGATION OF THE AO WAS THAT THE ASSESSEE HAD NOT MAINTAINED SEPARATE ACCOUNTS WITH REGARD TO THE EXPENSES OF THE NEW UNI T BEING SET UP. FROM THE PERUSAL OF THE ORDER OF THE AO, IT IS EVIDENT THAT THE AO HAS NOT PROVIDED ANY OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE ACCOUNTS SEPARATELY MAINTAINED FOR THE NEW UNIT BEING SET UP. ANY DECISION IN THE MATTER BY THE AO WITHOUT AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSE E SHALL BE PRESUMED TO BE A DECISION ON SURMISES AND CONJECTURES. THE AO HAS FOLLOWED THE PAST HISTORY OF ASSESSEES OWN CASE IN THE ABSENCE OF AN Y DISCUSSION OF PAST HISTORY IN THE ASSESSMENT ORDER. HOWEVER, THE ASSES SEE HAD MAINTAINED BEFORE THE AO AS WELL AS BEFORE THE LD. CIT (A) THA T THE SEPARATE ACCOUNTS HAVE BEEN MAINTAINED FOR THE NEW UNIT BEING SET UP AND THEREFORE, THE FACTS IN THE IMPUGNED YEAR WHERE ACCOUNTS HAVE BEEN SEPARATE LY MAINTAINED FOR THE NEW UNIT BEING SET UP CANNOT BE EQUATED WITH THE PA ST HISTORY OF THE CASE WHERE THE ACCOUNTS PROBABLY HAVE NOT BEEN MAINTAIN ED. ACCORDINGLY, THE AO IS NOT JUSTIFIED IN FOLLOWING THE PAST HISTORY O F THE CASE. AS REGARDS THE OBJECTION OF LD. DR THAT THE ASSESSEE DID NOT OBJEC T TO THE DISALLOWANCE DURING ASSESSMENT PROCEEDINGS. IN VIEW OF OUR FINDI NGS HEREINABOVE, THE ASSESSEE WAS NEVER CONFRONTED WHETHER HE HAD MAINT AINED SEPARATE ACCOUNTS FOR THE NEW UNIT BEING SET UP I.E. HE WAS NEVER GIV EN AN OPPORTUNITY TO ITANO.112(ASR)/2014 5 PRODUCE ACCOUNTS OF NEW UNIT BEING SET UP. ACCORDIN GLY, IN THE ABSENCE OF ANY SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNTS WHICH ARE DULY AUDITED AND IN VIEW OF OUR FINDINGS HEREINABOVE, THE GROUND OF THE REVENUE FAILS AND THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY DELETED THE DISALLOWANCE MADE BY THE AO. THUS, THE SOLE GROUND OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.112(ASR)/2014 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH JANUARY, 2015. SD/- SD/- (A.D.JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28TH JANUARY, 2015 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. PIONEER INDUSTRIES LIMITED, PATHA NKOT. 2. THE ACIT, CIR.VI, PATHANKOT 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.