Shivangi Exports Pvt.Ltd., Baroda V. The Income tax Officer, Ward-4(3), Baroda

ITA 1334/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94901 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-12-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 20-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VILAS V SHINDE
• Assessee Lawyers: M K PATEL
• Keywords: Corroborative evidences
• Section: 144

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.1334/AHD/2012 [ASSTT/YEAR 2004-2005] SHIVANGI EXPORTS P. LTD. 57/D, MAHESHWARI SOCIETY GORI ROAD, BARODA 390 007. PAN : AACCS 9775 P VS ITO, WARD-4(3) BARODA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI M.K. PATEL REVENUE BY : SHRI VILAS V. SHINDE, DR ! / DATE OF HEARING : 02/12/2015 '#$ ! / DATE OF PRONOUNCEMENT: 10/12/2015 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF THE LD.CIT(A) DARTED 19.3.2012 PASSED FOR THE ASSTT.YEA R 2004-05. 2. THE ASSESSEE HAS TAKEN THREE GROUNDS OF APPEAL, BUT ITS GRIEVANCE REVOLVES AROUND A SINGLE ISSUE, WHEREBY, IT HAS PLE ADED THAT THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMI NG THE DISALLOWANCE OF RS.22,55,435/- WHICH IS 50% OF THE INDIRECT EXPENSE S INCURRED IN CASH. ITA NO.1334/AHD/2012 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 1.11.2004 DECLARING A LOSS OF RS.56,80,98 1/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT A ND NOTICE UNDER SECTION 143(2) WAS ISSUED AND SERVED UPON THE ASSES SEE. THE AO HAS PASSED EX PARTE ASSESSMENT ORDER UNDER SECTION 144 OF THE INCOME T AX AT. THE LD.AO HAS NOTICED THAT THE ASSESSEE-COMPAN Y HAS DEBITED EXPENSES OF RS.95,30,347/- AS INDIRECT EXPENSES TO THE P&L ACCOUNT. HE NOTED THE DETAILS OF THE EXPENDITURE IN PARAGRAP H-5 OF THE ASSESSMENT ORDER. THE NATURE OF THE EXPENSES ARE E LECTRICITY CHARGES, FACTORY MAINTENANCE, FACTORY DIESEL AND KEROSENE EX PENSES, MACHINERY MAINTENANCE ETC. THE LD.AO RECORDED AN FINDING THA T IN SCHEDULE-L, THE ASSESSEE HAS DEBITED INDIRECT EXPENSES OF RS.73,49, 750/-. THEREFORE, HE DIRECTED THE ASSESSEE TO SUBMIT SUPPORTING DETAI LS WITH REGARD TO THESE EXPENDITURES. SINCE THE ASSESSEE FAILED TO S UBMIT THE DETAILS, HE MADE DISALLOWANCE AT 50% OF THE EXPENDITURES AND MA DE ADDITION OF RS.36,74,875/-. 4. ON APPEAL, THE LD.CIT(A) HAS RESTRICTED THIS DIS ALLOWANCE TO RS.22,55,435/-. THIS IS THE 50% OF THE EXPENDITURE WHICH WERE INCURRED IN CASH. 5. WITH THE ASSISTANCE OF THE LEARNED REPRESENTATIV ES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. IT IS PERTINENT TO N OTE THAT THAT SECTION 144 WOULD SUGGEST THAT IN ORDER TO ESTIMATE INCOME, LEARNED ASSESSING OFFICER HAS TO EXERCISE HIS DISCRETION WHICH SHOULD BE IN CONSONANCE WITH BEST OF HIS JUDGMENT. WE ARE CONSCIOUS OF THE FACT THAT IN VARIOUS AUTHORITATIVE PRONOUNCEMENTS, IT HAS BEEN PROPOUNDE D THAT IN MAKING A BEST JUDGMENT ASSESSMENT, THE ASSESSING OFFICER MUS T NOT ACT DISHONESTLY OR VINDICTIVELY OR CAPRICIOUSLY. HE MUS T MAKE, WHAT HE HONESTLY BELIEVE TO BE A FAIR ESTIMATE OF THE PROPE R FIGURE OF ASSESSMENT AND FOR THIS PURPOSE HE MUST BE ABLE TO TAKE INTO C ONSIDERATION, LOCAL ITA NO.1334/AHD/2012 3 KNOWLEDGE, REPUTATION OF THE ASSESSEE ABOUT HIS BUS INESS, THE PREVIOUS HISTORY OF THE ASSESSEE OR THE SIMILARLY SITUATED A SSESSEE. IT IS ALSO PERTINENT TO MENTION THAT JUDGMENT IS A FACULTY TO DECIDE MATTER WITH WISDOM, TRULY AND LEGALLY. JUDGMENT DOES NOT DEPEND UPON THE ARBITRARY, CAPRICE OF AN ADJUDICATOR, BUT ON SETTLE D AND INVARIABLY PRINCIPLES OF JUSTICE. THUS, IN A BEST JUDGMENT, EV EN IF, THERE IS AN ELEMENT OF GUESS WORK, IT SHOULD NOT BE A WILD ONE, BUT SHALL HAVE REASONABLE NEXUS TO THE AVAILABLE MATERIAL AND CIRC UMSTANCES OF EACH ASSESSEE. 6. IN THE LIGHT OF THE ABOVE DISCUSSION, IF WE EXAM INE THE IMPUGNED ORDERS, THEN IT WOULD REVEAL THAT EXPENSE DISALLOWE D AT 50% IS ON THE HIGHER SIDE. ADMITTEDLY THE ASSESSEE WAS NOT IN A POSITION TO PRODUCE SUPPORTING EVIDENCE, THEN AD HOC DISALLOWANCE ON ACCOUNT OF SUCH FAILURE OUGHT NOT TO BE MADE MORE THAN 20% OF THE E XPENSES. TAKING INTO CONSIDERATION ALL THESE ASPECTS, WE CONFIRM TH E DISALLOWANCE TO 20% OF THE EXPENDITURE SHOWN IN SCHEDULE L. IN O THER WORDS, THE DISALLOWANCE WOULD BE 20% OF RS.73,49,750/-. THESE FIGURES WERE CONSIDERED BY THE LD.AO WHILE MAKING THE ADDITION A T RS.36,74,875/- BEING 50%. NOW THE DISALLOWANCE WILL BE RS.14,69,9 50/- I.E. (RS.73,49,750 X 20%) 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 10 TH DECEMBER, 2015 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 10/12/2015