Bala Chamundeswari Cotton Company, Guntur V. The Assistant Commissioner of Income Tax, Central Circle, , Vijayawada

ITA 119/VIZ/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5542 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 05-03-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K S RAJENDRA KUMAR
• Keywords: Corroborative evidences; Set aside
• Section: 142(1); 143(2); 119; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI N.K. CHOUDHRY, HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, HON'BLE ACCOUNTANT MEMBER I.T.A. NO. 119/VIZ/2020 (ASST. YEAR : 2006 - 07 ) M/S. BALACHAMUNDESWARI COTTON COMPANY , D.NO. 11 - 696, OPP. INDUSTRIAL ESTATE, AMARAVATHI ROAD , GUNTUR. VS. ACIT, CENTRAL CIRCLE, VIJAYAWADA. PAN NO. AAIFS 2875 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI, ADVOCATE. DEPARTMENT BY : SHRI K.S. RAJENDRA KUMAR, CIT DR DATE OF HEARING : 27 / 04/2021 . DATE OF PRONOUNCEMENT : 07 / 05/2021 . O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 30 /1 2 /2019 IMPUGNED HEREIN PASSED BY THE L D.COMMISSIONER OF INCOME TAX (APPEALS) - 3 [FOR SHORT , LD.COMMISSIONER] , VISAKHAPATNAM U/SEC. 250(6) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT') FOR THE A.Y. 20 06 - 07 . 2 ITA NO. 119 / VIZ /2020 ( M/S. BALA CHAMUNDESWARI COTTON COMPANY ) 2. GROUND NOS. 1 & 3 ARE GENERAL IN NATURE, WHICH DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 3 GROUND NO.2 IS RELATED TO SUSTAINING THE ADDITION OF RS.46,83,170/ - MADE BY THE AO RELATED TO THE EXPENSES INCURRED UNDER THE FOLLOWING HEADS: - 1. DISCOUNT RS. 1,47,218 2. GINNING E XPENSES RS. 6,42,156 3. GRADING EXPENSES RS. 4,12,190 4. GINNING CONTRACT RS. 16,55,250 5. LABOUR CONTRACT RS. 18,26,356 TOTAL RS. 46,83,170 3 . 1 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAS DEBITED THE ABOVE EXPENDITURE TO THE PROFIT AND LOSS ACCOUNT AND THE ASSESSEE COULD NOT FURNISH THE SUPPORTING EVIDENCE THOUGH THE SHOW CAUSE NOTICE WAS ISSUED ASKING THE ASSES SEE TO SUBMIT THE PROOF IN SUPPORT OF THE ABOVE EXPENDITURE. SINCE THE ASSESSEE FAILED TO SUBMIT THE PROOF IN SUPPORT OF THE ABOVE EXPENDITURE, THE AO DISALLOWED 10% OF THE EXPENDITURE DEBITED TO THE PROFIT & LOSS ACCOUNT. AGAINST WHICH, THE ASSESSEE WEN T ON APPEAL BEFORE THE LD. COMMISSIONER AND THE LD. COMMISSIONER HAS RESTRICTED THE DISALLOWANCE TO 5%. 4 . AGAINST WHICH, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD . FROM THE ASSESSMENT ORDER, WE FIND IN PARA 2 AT PAGE 1 THAT IN RESPONSE TO THE NOTICE ISSUE D U/SEC. 143(2) AND 142(1) , LD.AR SHRI G. SIVA RAMA KRISHNA PRASAD APPEARED AND 3 ITA NO. 119 / VIZ /2020 ( M/S. BALA CHAMUNDESWARI COTTON COMPANY ) FILED THE DETAILS AND FURNISHED THE INFORMATION AS CALLED FOR. BEFORE THE LD. COMMISSIONER ALSO, HE ASSERTED THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS PRODUCED ALL THE RELEVANT INFORMATION AND GIVEN EXPLANATION, BUT THE AO WITHOUT CONSIDERING THE EXPLANATION , MADE THE ADDITION. LD.AR INVITED OUR ATTE NTION TO PAGE NO.4 OF THE PAPER BOOK AND SUBMITTED THAT THE ASSESSEE HAS ADMITTED THE ADDITIONAL INCOME OF RS. 39,72,180/ - IN THE REVISED THE PROFIT & LOSS ACCOUNT CONSEQUENT TO THE SEARCH CONDUCTED , T HEREFORE, ARGUED THAT NO FURTHER ADDITION IS WARRANTED AND ADDITIONAL INCOME WOULD TAKE OF THE DEFICIT , I F A N Y . A SEARCH U/SEC. 132 WAS CONDU C TED IN THE INSTANT CASE ON 08/02/2006 DURING THE FINANCIAL YEAR UNDER CONSIDERATION BUT NO SPECIFIC EVIDENCE WAS UNEARTHED BY THE I.T. DEPARTMENT WITH REGARD TO INFL ATION OF EXPENDITURE TILL THE DATE OF SEARCH. T AKING INTO CONSIDERATION OF THE ABOVE DISCUSSION AND IN VIEW OF THE FACT THAT THE ASSESSEE HAD ADMITTED THE ADDITIONAL INCOME OF RS.39,72,180/ - , WE CONSIDER , IT IS UNJUSTIFIED TO MAK E THE DISALLOWANCE S ON EST IMATE BASIS . THEREFORE, W E SET ASIDE THE ORDER OF THE LD. COMMISSIONER AND DELETE THE ADDITION MADE BY THE AO AND ALLOW THE APPEAL OF THE ASSESSEE. 6 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE STANDS ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON TH IS 0 7 T H DAY OF MAY , 2021 . S D / - S D / - (N.K. CHOUDHRY) (D.S. SUNDER SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 0 7 T H MAY , 20 2 1 . 4 ITA NO. 119 / VIZ /2020 ( M/S. BALA CHAMUNDESWARI COTTON COMPANY ) VR/ - COPY TO: 1. THE ASSESSEE - M/S. BALA CHAMUNDESWARI COTTON COMPANY, D.NO. 11 - 696, OPP. INDUSTRIAL ESTATE, AMARAVATHI ROAD, GUNTUR. 2. THE REVENUE ACIT, CENTRAL CIRCLE, VIJAYAWADA. 3. THE PR. CIT (CENTRAL) , VISAKHAPATNAM. 4. THE CIT(A) - 3 , VISAKHAPATNAM. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.