Smt. Ashaben Parshottambhai Patel, Surat V. The Dy.CIT.,Circle-6, Surat

ITA 1314/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94658 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 15-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 15-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Keywords: Gift
• Section: 143(3); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER) ITA NO: 1314/AHD/2012 (ASSESSMENT YEAR: 2008-09) ASHABEN PARSHOTTAMBHAI PATEL PLOT NO. 13-A AND 14A, OPP. SODA FACTORY, UDHNA- MAGDALLA ROAD, SURAT-395001 V/S THE DEPUTY COMMISSIONER OF INOCME TAX, CIRCLE-6, SURAT (APPELLANT) (RESPONDENT) PAN: ABTPP7260P APPELLANT BY : NONE (WRITTEN SUBMISSIO N) RESPONDENT BY : SHRI DINESH, SINGH, SR. D.R. ( )/ ORDER DATE OF HEARING : 15-10-2015 DATE OF PRONOUNCEMENT : 30 -10-2015 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A)-I, SURAT DATED 26.03.2012 FOR A.Y. 2008-09. ITA NO 1314/ AHD/2012 . A.Y. 2008-09 2 2. IN THIS CASE ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF ASSESSEE BUT HOWEVER WRITTEN SUBMISSIONS WERE FILED BY THE ASSES SEE. WE THEREFORE PROCEED TO DECIDE THE APPEAL, EX PARTE QUA THE ASSE SSEE ON THE BASIS OF MATERIAL ON RECORD AND WRITTEN SUBMISSIONS. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 4. ASSESSEE IS AN INDIVIDUAL STATED TO BE DERIVING INC OME FROM DEALERSHIP OF FUEL BUSINESS. ASSESSEE FILED HER RETURN OF INCOME FOR AY 2008-09 ON 30.9.2008 DECLARING TOTAL INCOME OF RS 21,14,633/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U /S 143(3) VIDE ORDER DATED 30.12.2008 AND THE TOTAL INCOME WAS DETERMINE D AT THE RS 30,69,080/- AGGRIEVED BY THE ORDER OF A.O, ASSESSEE PREFERRED A PPEAL BEFORE LD. CIT(A) WHO VIDE ORDER DATED 26.3.2012 GRANTED PARTIAL RELI EF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NO W IN APPEAL BEFORE US AND THE GROUNDS RAISED BY THE ASSESSEE READS AS UND ER:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION ON THE GROUND OF ALLEGED UN DERVALUATION OF CLOSING STOCK TO THE TUNE OF RS. 28,453/-. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN CONFIRMING 50% DISALLOWANCE OUT OF SALES PROMOTION EXPENSES TO THE TUNE OF RS. 1,11,280/- ON THE GROUND OF NOT BEING SUBJECT TO VE RIFICATION. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE TO THE EXTENT OF 20% OU T OF TANKER EXPENSES AND EXTRA CARE HOUSE-KEEPING EXPENSES TO THE TUNE OF RS. 55,7 87/- AND 24,328/- RESPECTIVELY ON THE GROUND OF NOT BEING SUBJECT TO VERIFICATION. 4. THE APPELLANT PRAYS FOR GRANTING SUCH OTHER RELIEF AS MAY BE DEEMED JUST AND PROPER BY YOUR HONOURS CONSIDERING THE FACTUAL AND LEGAL A SPECTS OF THE CASE OF THE APPELLANT. ITA NO 1314/ AHD/2012 . A.Y. 2008-09 3 1 ST GROUND IS WITH RESPECT TO ADDITION OF UNDERVALUATI ON OF STOCK 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NO TICED THAT STOCK OF 3113 LITERS OF OIL THAT WAS LYING IN STOCK AT THE END OF THE YEAR WAS VALUED @ RS 103.46 PER LITER AS AGAINST THE AVERAGE COST OF OIL OF RS 112.60 PER LITER. THE ASSESSEE WAS ASKED TO JUSTIFY THE LOWER VALUATION T O WHICH ASSESSEE INTER ALIA SUBMITTED THAT THE OIL IN STOCK WAS OF SUBSTAN DARD QUALITY AND NOT SALEABLE. THE SUBMISSION OF THE ASSESSEE WAS NOT FO UND ACCEPTABLE TO THE A.O IN VIEW OF THE FACT THAT ASSESSEE HAD NOT MAINT AINED ANY REGISTER OF ACCOUNT FROM WHICH THE QUALITY AND AGE OF OIL COULD BE INFERRED. HE WAS THEREFORE OF THE VIEW THAT THE VALUATION OF STOCK A T 'NET REALIZABLE VALUE' ADOPTED BY ASSESSEE WAS SUBJECTIVE AND WITHOUT ANY EVIDENCE AND PROOF. HE ACCORDINGLY REJECTED THE BOOKS RESULTS AS REGARDS T HE CLOSING STOCK U/S 145 OF THE ACT AND THEREAFTER VALUED THE STOCK OF OIL AT R S 112.6 PER LITER AND MADE ADDITION OF RS 28,453/-. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO UPHELD THE ORDER OF A. O BY HOLDING AS UNDER:- 8.2 THE ASSESSING OFFICER HAS TAKEN THE VALUATION O F CLOSING STOCK AT COST BASIS. APPELLANT CLAIMS THAT IT HAS VALUED AT MARKET VALUE WHICH IS LOWER THAN COST. HOWEVER, NO EVIDENCE REGARDING THE SAME, WHICH COULD BE VERIFIED, HAS BE EN SUBMITTED. THEREFORE, THIS GROUND OF APPEAL IS DISMISSED. 6. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS N OW IN BEFORE US. 7. BEFORE US, THE LD AR IN THE WRITTEN SUBMISSIONS INT ER ALIA STATED THAT THE STOCK OF OIL WAS OF INFERIOR QUALITY WHICH WOULD NO T FETCH AVERAGE COST OF PURCHASE ON ITS SALE AND THAT THE ASSESSEE WAS REGU LARLY FOLLOWING THE ITA NO 1314/ AHD/2012 . A.Y. 2008-09 4 METHOD OF VALUATION OF STOCK AS 'COST OR MARKET VAL UE WHICHEVER IS LOWER'. IT WAS THEREFORE SUBMITTED THAT THE ADDITION BE DELETE D. 8. THE LD DR ON THE OTHER HAND SUBMITTED THAT ASSESSEE HAS NOT PLACED ANY MATERIAL ON RECORD TO DEMONSTRATE THAT THE QUALITY OF OIL WAS OF SUBSTANDARD QUALITY. HE THEREFORE SUBMITTED THAT A.O WAS JUSTIF IED IN MAKING THE ADDITION. HE THUS SUPPORTED THE ORDER OF A.O AND LD . CIT(A). 9. WE HAVE HEARD THE LD DR AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS VALUATION OF STOCK. IT IS ASSES SEE'S SUBMISSION THAT THE QUALITY OF OIL WAS OF SUBSTANDARD QUALITY AND THERE FORE IT WAS VALUED AT NET REALIZABLE VALUE. BEFORE US, APART FROM THE SUBMIS SION THAT THE QUALITY OF OIL IS SUBSTANDARD, NO EVIDENCE IN ITS SUPPORT HAS BEEN FILED BY ASSESSEE. FURTHER, ASSESSEE HAS ALSO NOT PLACED ANY MATERIAL TO SUPPORT HER CONTENTION THE OIL WAS INDEED SOLD SUBSEQUENTLY AT THE REALIZA BLE VALUE CONSIDERED BY THE ASSESSEE FOR THE PURPOSE OF VALUATION. IN SUCH CIRCUMSTANCES, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF AO AND THUS T HIS GROUND OF ASSESSEE IS DISMISSED. 2 ND GROUND IS WITH RESPECT TO DISALLOWANCE OF 50% OF S ALES PROMOTION EXPENSES 10. ASSESSEE HAD CLAIMED RS 2,22,550/- AS SALES PROMOTI ON EXPENSES WHICH WAS STATED TO BE TOWARDS PROVIDING 1 LITER OF MINERAL W ATER BOTTLE TO THE CUSTOMERS WHO REFILLED THEIR FUEL TANK IN EXCESS OF RS 1000/-. A.O NOTED THAT ASSESSEE DID NOT SUPPORT ITS CONTENTION BY FURNISHI NG THE NAMES, ADDRESSES AND COMPLETE DETAILS OF THE CUSTOMERS. HE ACCORDING LY HELD THAT THE EXPENSE ITA NO 1314/ AHD/2012 . A.Y. 2008-09 5 HAD REMAINED UNVERIFIABLE AND ACCORDINGLY DISALLOWE D 50% OF EXPENSES. THE ACTION OF A.O WAS CONFIRMED BY LD. CIT(A) BY HOLDIN G AS UNDER:- 8.5 CLAIM OF ADVERTISEMENT EXPENSES IS ALLOWED IN F ULL AS THESE EXPENSES HAVE BEEN INCURRED FOR ADVERTISEMENT IN TV CHANNELS / CABLE T V ETC. SALES PROMOTION EXPENSES ARE MAINLY EXPENSES OF MINERAL WATER BOTTLES CLAIMED TO HAVE BEEN DISTRIBUTED FREE OF COST AS GIFT TO CUSTOMERS. SINE THIS EXPENDITURE IS NOT SUB JECT TO VERIFICATION, THE 50 % DISALLOWANCE OUT OF RS 2,22,560/- MADE BY THE ASSES SING OFFICER IS CONFIRMED. 11. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS N OW IN APPEAL BEFORE US. 12. BEFORE US, ASSESSEE IN WRITTEN SUBMISSIONS INTER AL IA SUBMITTED THAT THE EXPENSES WERE INCURRED FOR THE PURPOSE OF BUSINESS AND CANNOT BE HELD TO BE PERSONAL IN NATURE AND THAT THE ASSESSEE HAD PRODUC ED THE BILLS BEFORE AO AND EXCEPT FOR A SUM OF RS 4,160/-, ALL THE PAYMENT S HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES AND THAT THERE IS NO EVIDENCE OF THE EXPENSE TO BE BOGUS. IT WAS THEREFORE SUBMITTED THAT THE ADDITION BE DELETED. LD DR ON THE OTHER HAND SUPPORTED THE ORDER OF LOWER AUTHORITIES . 13. WE HAVE HEARD THE LD. D.R AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS ABOUT AD HOC DISALLOWANCE OF SA LES PROMOTION EXPENSES. BEFORE US, IT IS ASSESSEE'S SUBMISSION THAT THE EXP ENSES HAVE BEEN INCURRED FOR SUPPLYING 1 LITER MINERAL WATER BOTTLE TO THE C USTOMERS WHO HAVE GOT THEIR FUEL TANKS FILLED FOR MORE THAN RS 1,000, ALMOST AL L THE EXPENSE HAS BEEN INCURRED BY ACCOUNT PAYEE CHEQUE AND THE EXPENSES H AVE NOT BEEN FOUND TO BE BOGUS. THE AFORESAID SUBMISSIONS OF THE ASSESSEE ARE NOT SUPPORTED BY ANY EVIDENCE AND AT THE SAME TIME, THE AFORESAID SU BMISSIONS OF THE ASSESSEE HAVE ALSO NOT BEEN CONTROVERTED BY REVENUE . FURTHER, REVENUE HAS ITA NO 1314/ AHD/2012 . A.Y. 2008-09 6 ALSO NOT PLACED ANY EVIDENCE ON RECORD TO DEMONSTRA TE THAT THE EXPENSE IS NOT FOR BUSINESS PURPOSE. CONSIDERING THE FACT THAT THE SUBMISSIONS OF BOTH THE PARTIES ARE NOT SUPPORTED BY ANY EVIDENCE, THE DISA LLOWANCE BEING MADE BY A.O ON ADHOC BASIS, THE PASSING OF A CRYPTIC ORDER OF LD. CIT(A), WE ARE OF VIEW THAT IN THE PRESENT CASE CONSIDERING THE FACT THAT THE MATTER IS MORE THAN 7 YEARS OLD AND NO USEFUL PURPOSE WOULD BE SERVED I N REMANDING THE MATTER BACK. IN SUCH A SITUATION, WE ARE OF THE VIEW THAT THE ENDS OF JUSTICE SHALL BE MET IF THE DISALLOWANCE IS RESTRICTED TO RS 25,000/ - AS AGAINST RS 2,20,000/- MADE BY A.O. WE THUS DIRECT ACCORDINGLY. IN THE RES ULT THIS GROUND OF ASSESSEE IS PARTLY ALLOWED. 3 RD GROUND IS WITH RESPECT TO DISALLOWANCE OF TANKER A ND HOUSE- KEEPING EXPENSES 14. A.O NOTICED THAT ASSESSEE HAS CLAIMED RS 2,78,935/- AS TANKER CLEANING EXPENSES AND RS 1,21,640 AS HOUSE- KEEPING EXPENSES . AO NOTED THAT ASSESSEE HAD FURNISHED ONLY SELF GENERATED VOUCHERS WHICH ACCORDING TO A.O DID NOT PROVE THE GENUINENESS AND INCURRENCE OF EXPENSES. HE ACCORDINGLY DISALLOWED 50% OF EXPENSES WHICH IN APP EAL WAS REDUCED TO 20% BY LD. CIT(A). AGGRIEVED BY THE ORDER OF LD. CI T(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 15. BEFORE US, IN THE WRITTEN SUBMISSION IT IS STATED T HAT THE EXPENSES ARE GENUINE EXPENDITURE AND HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS AND THEREFORE THERE WAS NO REASON FOR DISALLOWANCE. LD DR ON THE OTHER HAND SUPPORTED THE ORDER OF LD. CIT(A). ITA NO 1314/ AHD/2012 . A.Y. 2008-09 7 16. WE HAVE HEARD THE LD D.R AND PERUSED THE MATERIAL O N RECORD. CONSIDERING THE NATURE OF EXPENSE AND THE FINDING OF A.O, WE AR E OF THE VIEW THAT LD. CIT(A) WAS JUSTIFIED IN REDUCING THE DISALLOWANCE T O 20% AS AGAINST 50% MADE BY A.O. WE THUS FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A). THUS THIS GROUND OF ASSESSEE IS DISMISSED. 17. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30 - 10 - 201 5. SD/- SD/- (S.S. GODARA) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD