M/s. Preksha Aluminium, Ahmedabad V. The Income Tax Officer, Ward-6(2), Ahmedabad

ITA 131/AHD/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8014 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 19-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: HIREN TRIVEDI
• Section: 143(3); 40(a)(ia)

Judgement Text

ITA NO. 131/AHD/2016 PREKSHA ALUMINUM VS. ITO ASSESSMENT YEAR: 2010-11 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD BENCH A, AHMEDABAD [CORAM: JUSTICE P P BHATT, PRESIDENT, AND PRAMOD KU MAR, VICE PRESIDENT] ITA NO. 131/AHD/2016 ASSESSMENT YEAR: - 2010-11 PREKSHA ALUMINUM ..............APPELLANT 3, PUNCH VILA, OPP. LADLI PARTY PLOT, BHUYANGDEV CHAR RASTA, MEMNAGAR, AHMEDABAD-380013 [PAN : AAKFP 0962 G] VS INCOME TAX OFFICER .................RESPON DENT WARD 6(2), AHMEDABAD APPEARANCES BY HIREN TRIVEDI, FOR THE APPELLANT JAMES KURIAN, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 02.04.2019 DATE OF PRONOUNCEMENT : 25.06.2019 O R D E R PER PRAMOD KUMAR, VICE PRESIDENT: 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HA S CHALLENGED THE CORRECTNESS OF THE ORDER DATED 16 TH NOVEMBER 2015 PASSED BY THE BY THE LD. CIT(A)-13, AHMEDABAD IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2010-11. 2. GROUND NO. 1 IS GENERAL IN NATURE AND DOES NOT CALL FOR ANY SPECIFIC ADJUDICATION BY US. 3. IN GROUND NO. 2, THE ASSESSEE HAS RAISED FOLLOWI NG GRIEVANCE:- 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.22,77,611/- BEING 20% OF THE UNVERIFIABLE PURCHASES OF RS.1,13,88,057/- AFTER REJECTING THE B OOKS OF ACCOUNT OF THE APPELLANT. ITA NO. 131/AHD/2016 PREKSHA ALUMINUM VS. ITO ASSESSMENT YEAR: 2010-11 PAGE 2 OF 5 4. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN ALUMINIUM SEC TIONS, HARDWARE, THERMOCOL AND OTHER PRODUCTS. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, THE ASSESSING OFFICER REQUISITIONED THE BOOKS OF ACCOUNTS AND VOUCHERS FO R VERIFICATION OF PURCHASES. AS AGAINST THE PURCHASES OF RS.2,22,46,591/-, THE ASSE SSEE FURNISHED DETAILS ONLY IN RESPECT OF PURCHASES OF RS.1,08,58,534/-. WHEN THE ASSESSING OFFICER REQUISITIONED THE DETAILS OF THE REMAINING PURCHASES, THE ASSESSE E DID NOT HAVE ANYTHING TO SAY. IT WAS IN THIS BACKDROP THAT THE ASSESSING OFFICER DIS ALLOWED 20% OF THE UNVERIFIABLE PURCHASES OF RS.1,13,88,057/-. THE DISALLOWANCE THU S CAME TO RS.22,77,611/-. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE THE LEARNED CIT(A) BUT WITHOUT ANY SUCCESS. DURING THE COURSE OF APPELLAT E PROCEEDINGS BEFORE THE LEARNED CIT(A), THE APPELLANT HAD FURNISHED ADDITIONAL EVID ENCES IN RELATION TO UNVERIFIABLE PURCHASES WHICH WERE DULY FORWARDED TO THE ASSESSIN G OFFICER FOR REMAND REPORT. IN THE REMAND REPORT, THE ASSESSING OFFICER STATED THA T THE ASSESSEE HAS FURNISHED COPIES OF CERTAIN DETAILS, BUT THE RELATED ORIGINAL BILLS/VOUCHERS AND THE BOOKS OF ACCOUNTS HAVE NOT PRODUCED EVEN AT THE REMAND STAGE . HE THUS URGES THE CIT(A) TO CONFIRM THE DISALLOWANCE MADE EARLIER. WHILE CONFI RMING THE ACTION OF ASSESSING OFFICER, THE CIT(A), INTER ALIA, OBSERVED AS FOLLOWS:- 5. I HAVE PERUSED THE REMAND REPORT AND THE COMM ENTS THEREAFTER BY THE APPELLANT. I FIND THAT EVEN DURING THE REMAND PROC EEDINGS THE DIFFERENCE BETWEEN PROCEEDINGS THE DIFFERENCE BETWEEN THE PURC HASES AS PER THE PURCHASE LEDGER VIS-A-VIS PURCHASES IN THE P&L A/C HAVE NOT BEEN SATISFACTORILY RECONCILED BEFORE THE A.O. THE APPEL LANT'S CONTENTION THAT THIS RESULT IS AS A RESULT OF VAT, HOWEVER, IS ALSO DEVO ID OF MERIT AS THE VERIFICATION BY THE A.O REVEAL THAT COPIES OF VAT RETURN UNDER G UJARAT VALUE ADDED TAX ACT, 2003 ARE UNAUTHENTICATED I.E. WITHOUT DATE, PL ACE AND SIGNATURE. THE A.O HAS ALSO POINTED OUT THAT ONLY SAMPLE COPIES OF 55 PURCHASE BILLS WERE PRODUCED. THE A.O HAS EMPHASIZED THAT NO ORIGINAL B ILLS OR VOUCHERS WITH THE RELEVANT BOOKS OF ACCOUNTS WERE PRODUCED EVEN DURIN G THE REMAND PROCEEDINGS. THE APPELLANT, HOWEVER, HAS DEVOTED BU LK OF ITS REBUTTAL COMMENTS ON ITS INABILITY TO PRODUCE SUCH DETAILS B EFORE THE A.O EITHER BECAUSE OF PRE-OCCUPATION OR BECAUSE OF ILLNESS OF HIS AUTHORISED REPRESENTATIVE. THE APPELLANT, ON MERIT HAS REITERA TED THAT COPY OF PURCHASE REGISTER, COPIES OF VAT RETURN, COPIES OF PURCHASE BILLS WERE ALSO FILED BEFORE ME VIDE ARMEXURE-1, IV, A & B RESPECTIVELY. I HAVE PERUSED DIE REMAND REPORT AND THE REBUTTAL COMMENTS AND I FIND THAT THERE IS A MERIT IN THE OBSERVATION MADE BY THE A.O, THE APPELLANT HAS NOT SATISFACTORI LY RECONCILED THE DIFFERENCE IN THE PURCHASE FIGURE EVIDENT FROM, THE BOOKS OF ACCOUNTS VIS-A-VIS PURCHASED WITH THE P & L A/C. THE ORIGINAL BILLS, P URCHASE VOUCHERS FROM THE BOOKS OF ACCOUNTS HAS NOT BEEN PRODUCED BEFORE THE A.O FOR PRIMARY VERIFICATION, ACCORDINGLY, IN MY VIEW THE ACTION OF A.O IN DISALLOWING PURCHASES ON ESTIMATE AT THE RATE OF 20% OF UNVERIFIABLE PURC HASES IS SUSTAINABLE. THE ADDITION OF RS.22,77,611/- THEREFORE, IS CONFIRMED. GROUND NO. 1 IS DISMISSED. ITA NO. 131/AHD/2016 PREKSHA ALUMINUM VS. ITO ASSESSMENT YEAR: 2010-11 PAGE 3 OF 5 5. THE ASSESSEE IS NOT SATISFIED AND IS IN APPEAL B EFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 7. WE FIND THAT IT IS AN UNDISPUTED POSITION THAT T HE ASSESSEE HAS NOT PRODUCED THE ORIGINAL BILLS, PURCHASE VOUCHERS AND THE BOOKS OF ACCOUNTS BEFORE THE ASSESSING OFFICER EVEN AT THE REMAND STAGE PROCEEDINGS. WE HA VE ALSO NOTED THAT ALL THE PURCHASE BILLS WERE NOT PRODUCED BEFORE THE ASSESSI NG OFFICER AND ONLY COPIES OF SOME OF THE INVOICES WERE PROVIDED TO THE ASSESSING OFFICER AT THE REMAND STAGE. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED VIEW, THE AD -HOC DISALLOWANCE WAS INDEED JUSTIFIED BUT HAVING REGARD TO THE FACTS AND CIRCUM STANCES OF THE CASE, WE SCALE IT DOWN TO 10%. 8. GROUND NO.2 IS THUS PARTLY ALLOWED. 9. IN GROUND NO.3, ASSESSEE HAS RAISED FOLLOWING GR IEVANCE:- 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.2,01,402/- MADE U/ S 40(1)(IA) FOR NOT DEDUCTING TAX ANODIZING CHARGES. 10. SO FAR AS THIS GRIEVANCE OF THE ASSESSEE IS CON CERNED, IT IS NOTED THAT THE ASSESSEE HAS SHOWN ANODIZING CHARGES OF RS. 2,01,40 2/- BUT NO DETAILS OF TAX DEDUCTION AT SOURCE WERE FILED. IT WAS IN THIS BAC KDROP THAT THE ASSESSING OFFICER DISALLOWED THE EXPENSES UNDER SECTION 40(A)(IA) OF THE ACT FOR WANT OF APPLICABLE DEDUCTION OF TAX AT SOURCE. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A). LEARNED CIT(A) CONFIRME D THE ACTION SO TAKEN BY THE ASSESSING OFFICER. THE ASSESSEE IS AGGRIEVED AND I S IN APPEAL BEFORE US. 11. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 12. WE FIND THAT THE ASSESSEE VIDE LETTER DATED 20. 06.2013 HAD GIVEN COPIES OF THE BILLS OF ANODIZING CHARGES, AND, AS EVIDENT FRO M THE BILLS AND LEDGER ACCOUNT, A COPY OF WHICH IS PLACED BEFORE US, THE TAX WITHHOLD ING OBLIGATIONS DID NOT APPLY IN RESPECT OF THESE PAYMENTS. NONE OF THE BILLS EXCEED THE AMOUNT OF RS.20,000/-. THE VERY FOUNDATION OF DISALLOWANCE WAS THUS VITIATED I N LAW. WE, THEREFORE, UPHOLD THE PLEA OF THE ASSESSEE AND DELETE THE IMPUGNED DISALL OWANCE OF RS.2,01,402/-. 13. GROUND NO.3 IS THIS ALLOWED. 14. IN GROUND NO.4, ASSESSEE HAS RAISED FOLLOWING G RIEVANCE:- 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.43,950/- BEING 20% OF THE TRANSPORTATION AND FREIGHT EXPENDITURE. ITA NO. 131/AHD/2016 PREKSHA ALUMINUM VS. ITO ASSESSMENT YEAR: 2010-11 PAGE 4 OF 5 15. SO FAR AS THIS GRIEVANCE IS CONCERNED, THE DISA LLOWANCE WAS MADE BY THE ASSESSING OFFICER FOR THE SHORT REASON THAT NO PROO F OF THE TRANSPORTATION AND FREIGHT EXPENSES WAS GIVEN, AND, IN THE ABSENCE OF THESE DE TAILS, 20% DISALLOWANCE WAS MADE ON AD-HOC BASIS. THUS, OUT OF TOTAL EXPENDITU RE OF RS.2,19,752/- ON ACCOUNT OF TRANSPORTATION AND FREIGHT EXPENSES, AN AMOUNT OF R S.43,950/- BEING 20% OF THE TOTAL EXPENSES WAS DISALLOWED. AGGRIEVED, THE ASSESSEE C ARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 16. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 17. WE FIND THAT THE OVERRUNNING OF MAJORITY OF THE SE EXPENSES CONSTITUTE SMALL CASH PAYMENTS TO THE LABOUR, RICKSHAW, TEMPO ETC AN D ARE OF A SMALL AMOUNT SUCH AS BELOW RS.1000/-. CONSIDERING THE NATURE OF THESE E XPENSES, IN MOST OF THE CASES, IT IS NOT REALLY POSSIBLE TO OBTAIN PROPER VOUCHERS FO R SUCH PAYMENTS. IN ANY CASE, THE DETAILS OF THESE EXPENSES WERE BEFORE THE ASSESSING OFFICER. THEREFORE, THE AD-HOC DISALLOWANCE IS REALLY NOT CALLED FOR. IN VIEW OF THE ABOVE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE DEEM IT FI T AND PROPER TO DELETE THE DISALLOWANCE OF RS.43,950/-. 18. GROUND NO. 4 IS THUS ALLOWED. 19. GROUND NO. 5 DOES NOT REQUIRE ANY SPECIFIC ADJ UDICATION AND IS DISMISSED AS SUCH. 20. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 25 TH DAY OF JUNE, 2019. SD/- SD/- JUSTICE P P BHATT PRAMOD KU MAR (PRESIDENT) (VICE PRESIDENT) AHMEDABAD, DATED THE 25 TH DAY OF JUNE, 2019 BT COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ETC TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD ITA NO. 131/AHD/2016 PREKSHA ALUMINUM VS. ITO ASSESSMENT YEAR: 2010-11 PAGE 5 OF 5 1. DATE OF DICTATION: ...25.06.2019............ 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: . 25.06.2019........ 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: .25.06.2019.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 25.06.2019 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : .... 25.06.2019.. 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER : . 8. DATE OF DESPATCH OF THE ORDER: ......