DCIT, Circle-3(2), Hyd, Hyderabad V. Sri Vinayaka Paper and Boards Ltd., Hyd, Hyderabad

ITA 1294/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2523 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 06-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Assessee Lawyers: P MURALI MOHAN RAO
• Section: 143(3)

Judgement Text

ITA NO 1294 OF 2016 VINAYAKA PAP ER AND BOARDS LTD HYDERABAD PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.1294/HYD/2016 (ASSESSMENT YEAR: 2011-12) DY. COMMISSIONER OF INCOME TAX, CIRCLE 3(2) HYDERABAD VS M/S. VINAYAKA PAPER AND BOARDS LTD HYDERABAD PAN: AAECS 6961 K FOR REVENUE : SMT. U. MINI CHANDRAN, DR FOR ASSESSEE : SHRI P. MURALI MOHAN RAO O R D E R PER SM T. P. MADHAVI DEVI, J.M. THIS IS REVENUES APPEAL FOR THE A.Y 2011-12. IN TH IS APPEAL, THE REVENUE IS AGGRIEVED BY THE ORDER OF TH E CIT (A)-3 HYDERABAD DATED 20.07.2016 DELETING THE ADDITIONS M ADE BY THE AO BY DISALLOWING EXPENDITURE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A COMPANY WHICH IS INTO MANUFACTURING AND TRADING OF PAPERS AND PAPER PRODUCTS. IT FILED ITS RETURN OF INCOME FOR T HE A.Y 2011-12 ON 30.09.2012 DECLARING A NET INCOME OF RS.50,47,23 0 AND AGRICULTURAL INCOME OF RS.5,58,595. DURING THE ASSE SSMENT PROCEEDINGS U/.S 143(3) OF THE ACT, THE AO OBSERVED THAT MOST OF THE EXPENDITURE UNDER THE HEAD FREIGHT & CARTAGE, M ACHINERY DATE OF HEARING : 03.05.2017 DATE OF PRONOUNCEMENT : 09.05.2017 ITA NO 1294 OF 2016 VINAYAKA PAP ER AND BOARDS LTD HYDERABAD PAGE 2 OF 3 MAINTENANCE AND HUSK PURCHASE, ETC., ARE INCURRED IN CASH WITH EACH PAYMENT BEING LESS THAN RS.20,000. THE AO OBSE RVED THAT ALL SUCH EXPENSES ARE NOT AVAILABLE FOR VERIFICATIO N AS THEY ARE ONLY SUPPORTED BY SELF-MADE VOUCHERS. TO COVER UP SUCH D EFICIENCIES WHICH ARE BOUND TO BE INHERENT IN THESE EXPENSES, T HE AO DISALLOWED 10% OF THE TOTAL OF THE EXPENDITURE UNDER THESE HEADS, I.E. RS.58,24,354. AGGRIEVED, THE ASSESSEE PREFERRE D AN APPEAL BEFORE THE CIT (A) WHO DELETED THE DISALLOWANCE BY HOLDING THAT THE AO DID NOT POINT OUT ANY SPECIFIC DEFECTS IN TH E BOOKS OF ACCOUNT NOR HAS HE HELD THAT THE EXPENDITURE INCURR ED IS NOT GENUINE. THE CIT (A) OBSERVED THAT THE DISALLOWANCE WAS MADE SIMPLY BECAUSE THE VOUCHERS WERE SELF-MADE AND THER EFORE, THE ASSESSMENT ORDER CANNOT BE SUSTAINED. AGGRIEVED, TH E REVENUE IS IN APPEAL BEFORE US. 3. THE LEARNED DR SUPPORTED THE ORDERS OF THE AO WH ILE THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDERS OF THE CIT (A). 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE EXPENDITURE CONSIDERED FOR DISALLOWANCE IS UNDER THE HEADS FREIGHT & CARTAGE, M ACHINERY MAINTENANCE AND HUSK PURCHASE, ETC. THE ONLY GROUND FOR DISALLOWANCE IS THAT THEY ARE SUPPORTED BY SELF MAD E VOUCHERS OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE HAD SUBMITTED THAT THE ASSESSEE HAS BEEN MAINTAINING THE BOOKS OF ACCOUNTS AND IN THE EARLIER AND SUBSEQUENT ASSESSMENT YEARS, NO SUCH DISALLOWANCES WERE MADE BY THE AO. HE HAD ALSO SUBM ITTED THAT ITA NO 1294 OF 2016 VINAYAKA PAP ER AND BOARDS LTD HYDERABAD PAGE 3 OF 3 UNLESS AND UNTIL THE AO GIVES A FINDING THAT THE EX PENDITURE IS NOT GENUINE, NO DISALLOWANCE CAN BE MADE. WE AGREE WITH THE CONTENTION OF THE ASSESSEE SINCE THE AO HAS NOT POI NTED OUT ANY DEFECTS EXCEPT THAT THE VOUCHERS ARE SELF-MADE. WHI LE NO DEFECTS HAVE BEEN POINTED OUT AND ALSO NO FINDING IS GIVEN THAT SUCH EXPENDITURE IS EXCESSIVE, NO DISALLOWANCE CAN BE SU STAINED. IN VIEW OF THE SAME, WE SEE NO REASON TO INTERFERE WIT H THE ORDER OF THE CIT (A) AND THE REVENUES APPEAL IS ACCORDINGLY DISMISSED. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH MAY, 2017. SD/- SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 9 TH MAY, 2017. VINODAN/SPS COPY TO: 1 DY. COMMISSIONER OF INCOME TAX, CIRCLE 3(2) 7 TH FLOOR, SIGNATURE TOWERS, KONDAPUR, HYDERABAD 2 M/S. VINAYAKA PAPER & BOARDS LTD, 404A, 4 TH FLOOR, CONCOURSE, 7-1-58 GREENLANDS ROAD, AMEERPET, HYDERABAD 500016 3 CIT (A)-3 HYDERABAD 4 PR. CIT 3 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER