Jagruti Rubber Enterprise Pvt.Ltd., Ahmedabad V. The Income tax Officer,Ward-4(2), Ahmedabad

ITA 1211/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94751 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 30-11-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 25-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAGDISH
• Keywords: Business income; Corroborative evidences
• Section: 142(1)

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO.1211/AHD/2011 /BLOCK ASSTT. YEAR: 2007-2008 JAGRUTI RUBBER ENTERPRISE PVT. LTD. 21, P.D. ESTATE NR. REVABHAI INDL. ESTATE AMRAIWADI, AHMEDABAD. PAN : AABCJ 0438 R VS ITO, WARD - 4(2) AHMEDABAD. %& / (APPELLANT) '( %& / (RESPONDENT) ASSESSEE BY : SHRI ASEEM L. THAKKAR REVENUE BY : SHRI JAGDISH, CIT-DR / DATE OF HEARING : 30/11/2015 / DATE OF PRONOUNCEMENT: 01/12/2015 )*/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF THE CIT(A)-VIII, AHMEDABAD DATED 24.1.2011. 2. THE GROUNDS TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH THE RULE 8 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES , 1963 - THEY ARE DESCRIPTIVE AND ARGUMENTATIVE IN NATURE. IN BRIE F, ITS GRIEVANCE IS THAT THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDIN G THE FOLLOWING DISALLOWANCES: ITA NO.1211/AHD/2011 2 (A) OUT OF CUTTING CHARGES : RS.92,890/- (B) OUT OF HIRE CHARGES : RS.45,689/- (C) OUT OF MATERIAL HANDLING CHARGES : RS.1,39,037/- (D) OUT OF MISC. EXPENSES : RS.1,92,346/- 3. BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY WAS ENGAGED IN TRADING OF CONVEYER BELTS AND ITS JOB WORK. THE ASSESSEE COMPANY HAS SHOWN TOTALS SALE OF RS.5, 65,39,094/-. IT HAS FILED ITS RETURN OF INCOME ON 13.10.2007 DECLARING TOTAL INCOME OF RS.6,22,380/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) ALONG WITH QUESTIONNAIRE UNDER SECTION 142(1) WAS ISSUED ON 18.9.2008. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE HAS DEBITED CUTTING CHARGES OF RS.4,64 ,454/-, HIRE CHARGE OF RS.2,28,445/-, MATERIAL HANDLING CHARGES AT RS.6,95 ,187/- AND MISC. EXPENSES OF RS.9,61,728/-. ACCORDING TO THE AO, WHEN TOTAL SALES ARE BEING COMPARED FROM THE PRECEDING YEAR, THEN EXPENSES ARE ON THE H IGHER SIDE. HE NOTICED THAT IN THE PRECEDING YEAR, SALES WERE SHOWN BY THE ASS ESSEE AT RS.4,17,26,448/-. IT HAS DEBITED MISC.EXPENSES OF RS.1,45,006/-. T HIS YEAR SALES ARE RS.5,65,39,094/-, BUT MISC. EXPENSES HAVE BEEN DEBI TED AT RS.9,61,728/-. THE AO FURTHER RECORDED A FINDING THAT THE ASSESSEE COU LD NOT BUTTRESS ITS EXPENDITURE WITH PLAUSIBLE EVIDENCE, WHICH CAN BE C ROSS-VERIFIED. THEREFORE, HE DISALLOWED 20% OF THE EXPENDITURE. 4. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF TH E AO. 5. WITH THE ASSISTANCE OF THE LEARNED REPRESENTATIV ES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. THE LD.DR RELIED UPO N THE ORDER OF THE AO AND POINTED OUT THAT THE EXPENSES HAVE BEEN INCREASED M ANY FOLD BUT SALES DID NOT ITA NO.1211/AHD/2011 3 INCREASE IN THE SAME RATIO. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT CUTTING CHARGES ETC. WERE PAID TO IL LITERATE LABOURERS, AND THEREFORE, THE VOUCHERS ARE SELF-MADE VOUCHERS. OT HERWISE, THE ASSESSEE HAS BEEN MAINTAINING COMPLETE DETAILS. THE DISALLOWANC E AT THE RATE OF 20% IS ON THE HIGHER SIDE. 6. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES OF THE CASE, WE ARE OF THE VIEW THAT THE ASSESSEE FAILED TO SUBSTANTIAT E ITS EXPENDITURE VOUCHERS WITH PLAUSIBLE EXPLANATION AS WELL WITH SUPPORTING EVIDENCES. THEREFORE, THE AO IS JUSTIFIED TO MAKE AD HOC DISALLOWANCE ON ACCOUNT OF NON-VERIFIABLENESS OF THE VOUCHERS. HOWEVER, THE DISALLOWANCE AT THE RATE OF 20% APPEARS TO BE ON THE HIGHER SIDE. THE AO HAS NOT MADE REFERENCE TO ANY INSTANCES IN THIS LINE OF BUSINESS. THEREFORE, WE ARE OF THE VIEW TH AT THE ENDS OF JUSTICE WOULD BE MET, IF WE REDUCE THE DISALLOWANCE FROM 20% MADE BY THE AO TO 10% (TEN PERCENT). THUS, THE TOTAL DISALLOWANCE IS RESTRICT ED AT 10% (TEN PERCENT). THIS GROUND IS PARTLY ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 1 ST DECEMBER, 2015 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 01/12/2015