M/s. Raj Ratan Industries Ltd., Kanpur V. ACIT, Kanpur

ITA 129/LKW/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48369 (ITAT-LUCKNOW)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 16-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SINGH
• Keywords: Principle of natural justice; Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE HONBLE SHRI H.L. KARWA AND HONBLE SHRI N.K. SAINI ITA NO.129/LKW/2011 ASSESSMENT YEAR:2006-07 M/S RAJ RATAN INDUSTRIES LTD 7/141-A(3), SWAROOP NAGGER KANPUR V. ACIT CENTRAL CIRCLE-III KANPUR PAN:AACCR4220Q (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI. V.V. SINGH, D.R. O R D E R PER H. L. KARWA: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-I, KANPUR DATED 1.2.2011 RELATING TO ASSESSMENT YEAR 2006-07. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A)-I, KANPUR HAS BEEN WRONG IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.131990/- OUT OF CONSUMABLE EXPENSES AND REPAIRS AND MAINTENANCE EXPENSES. 2. THAT THE ADDITION OF RS.131990/- OUT OF CONSUMABLE EXPENSES AND REPAIRS & MAINTENANCE EXPENSES BY THE LEARNED COMMISSIONER OF INCOME TAX (A)-I, KANPUR IS WITHOUT CONSIDERING THE REAL FACTS OF THE CASE AND IS UNJUSTIFIED AND ARBITRARY. 3. THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A)- I, KANPUR IS BAD IN LAW, ON FACTS AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 4. THAT THE 'A' COMPANY CRAVES LEAVE TO AMEND ANY ONE OR MORE OF THE GROUNDS OF APPEAL AS STATED ABOVE AS AND WHEN NEED OF :-2-: DOING SO ARISE DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE HON'BLE BENCH OF I.T.A.T. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF M.S. IGNOT (MILD STEEL) AND TRADING OF IRON AND STEELS. WHILE FRAMING THE ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), THE ASSESSING OFFICER MADE AN ADDITION OF ` 1,31,990 OBSERVING AS UNDER:- ON EXAMINATION OF THE MANUFACTURING AND OTHER EXPENSES (AS PER SCHEDULE N OF BALANCE SHEET) SHOWING TOTAL EXPENSES UNDER THIS HEAD RS.7,37,26,365/- OUT OF WHICH RS.12,89,547/- DEBITED AS CONSUMABLE EXPENSES AND RS.30,361/-AS REPAIR AND MAINTENANCE. VOUCHERS PRODUCED HAVE BEEN CHECKED AND IT IS NOTICED THAT VOUCHERS OF MAJOR EXPENSES ARE SUPPORTED BY THE EVIDENCE SUCH AS BILLS, INVOICES BUT MOST OF THE EXPENSES ARE SELF VOUCHED IN NATURE WITHOUT SUPPORTING EVIDENCES. THERE ALWAYS REMAINS LOOPHOLES AND SCOPE OF INFLATION OF EXPENSES INCURRED IN CASH THROUGH SELF MADE VOUCHERS WITHOUT ANY SUPPORTING EVIDENCES. THEREFORE CONSIDERING THE FACTS OF THE CASE, NATURE AND EXTENT OF MAINTENANCE OF VOUCHERS BEING NOT VERIFIABLE, A DISALLOWANCE OF 10% IS BEING MADE ON THE EXPENSES OF RS.13,19,908/- (1289547 + 30361). THEREFORE, THE DISALLOWANCE OF RS.131,990/- IS MADE AND ADDED TO THE INCOME OF THE ASSESSEE. 4. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ADDITION AND HENCE THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 5. BEFORE US, SHRI. RAKESH GARG, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT MAJOR EXPENSES DEBITED UNDER THE HEADS IN QUESTION ARE SUPPORTED BY BILLS/VOUCHERS AND MINOR EXPENSES ARE SUPPORTED BY SELF-MADE VOUCHERS BY THE ASSESSEE-COMPANY AND THE SAME HAVE BEEN DULY FURNISHED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, BUT THE ASSESSING OFFICER HAS DISALLOWED @ 10% OF TOTAL EXPENDITURE BY ESTIMATE WITHOUT POINTING OUT ANY SPECIFIC REASON. SHRI. RAKESH GARG, LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT PREPARATION OF SELF-MADE VOUCHERS COULD NOT BE AGAINST TRADE PRACTICE AS HELD :-3-: BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF NISAR BIRI SIKKA V. CIT REPORTED IN 174 TAXMAN 51. 5.1. THE LD. D.R. HEAVILY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW IN SUPPORT OF DEPARTMENTAL CASE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. IN OUR VIEW, THERE WAS NO JUSTIFICATION IN MAKING THE AD HOC DISALLOWANCE. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SINGLE INSTANCE FOR WHICH THE ASSESSEE HAS NOT MAINTAINED VOUCHER. ON THE CONTRARY, THE ASSESSEE HAS PRODUCED VOUCHERS OF MAJOR EXPENSES WHICH WERE SUPPORTED BY EVIDENCE SUCH AS BILLS AND INVOICES. IT SEEMS THAT THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE OF 10% WITHOUT BRINGING ANY SUPPORTING EVIDENCE. AS WE HAVE ALREADY NOTED HEREINABOVE THAT THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SINGLE ITEM OF EXPENSES FOR WHICH THE ASSESSEE HAS NOT MAINTAINED VOUCHER. IT IS SEEN THAT MAJOR EXPENSES DEBITED UNDER THIS HEAD ARE SUPPORTED BY BILLS/VOUCHERS AND THE MINOR EXPENSES ARE SUPPORTED BY SELF-MADE VOUCHERS BY THE ASSESSEE- COMPANY AND THE SAME HAVE BEEN DULY FURNISHED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THUS, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS ALSO NOT APPRECIATED THE FACTS OF THE CASE AS WELL AS THE ARGUMENTS OF THE ASSESSEE. IN THAT VIEW OF THE MATTER, WE DELETE THE ADDITION OF ` 1,31,990 MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A). THE APPEAL OF THE ASSESSEE STANDS ALLOWED. 7. NO OTHER POINT WAS RAISED DURING THE COURSE OF HEARING BEFORE US. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 11.7.2011. SD/- SD/- [ N. K. SAINI] [H. L. KARWA] ACCOUNTANT MEMBER VICE PRESIDENT DATED:11.7.2011 JJ:1107 :-4-: COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR