K.S. Ashwath (HUF), Chitradurga V. ITO, Chitradurga

ITA 1357/BANG/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0662 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 16-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BIJOY KUMAR PANDA
• Assessee Lawyers: C R NULVI

Judgement Text

PAGE 1 OF 5 ITA NO.1357/BANG/201 2 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE SHRI N BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NO.1357/BANG/2012 (ASSESSMENT YEAR 2009-2010) M/S K S ASHWATH (HUF), MAIN ROAD, BELLAGUR, HOSADURGA TALUK, CHITRADURGA DIST. PA NO.AAFHK 0438 R VS THE INCOME TAX OFFICER, WARD-1, CHITRADURGA. (APPELLANT) (RESPONDENT) DATE OF HEARING : 09.01.2013 DATE OF PRONOUNCEMENT : 09.01.2013 APPELLANT BY : SHRI C R NULVI, FCA RESPONDENT BY : SHRI BIJOY KUMAR PANDA , ADDL. CIT ORD ER PER GEORGE GEORGE K : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE IMPUGNED ORDER OF THE LEARNED CIT (A), HUBLI DATED 28.9.2012 . THE RELEVANT ASSESSMENT YEAR IS 2009-2010. 2. SOLITARY EFFECTIVE GROUND RAISED BY THE ASSESSEE , IN ITS GROUNDS OF APPEAL, IS THAT THE CIT (A) WAS NOT JUSTIFIED IN SUSTAINING THE AD DITION OF 25% ON THE DIRECT EXPENSES CLAIMED. 3. BRIEFLY STATED, THE AO HAD, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NOTICED THAT THE ASSESSEE CLAIMED DEDU CTION UNDER THE HEAD PAGE 2 OF 5 ITA NO.1357/BANG/201 2 2 OTHER EXPENSES OF RS.33.03 LAKHS WHICH CONSISTED, AMONG OTHERS, THE DIRECT EXPENSES IN COIR PRODUCTS OF RS.27.81 LAKHS. ON VE RIFICATION OF BOOKS OF ACCOUNT, BILLS, VOUCHERS ETC., THE AO NOTICED THAT THE ASSESSEE HAD NOT MAINTAINED PROPER BILLS/VOUCHERS AND MOST OF THE WH ICH WAS NOT PRODUCED AND IN THE ABSENCE OF THE SAME, A SUM OF RS.6.95 LA KHS BEING 25% OF DIRECT EXPENSES WAS DISALLOWED. 4. AGGRIEVED, THE MATTER WAS TAKEN UP BY THE ASSESS EE BEFORE THE CIT (A) FOR RELIEF. THE CIT (A) HAD, AFTER DUE CON SIDERATION OF THE ASSESSEES SUBMISSION AND THE REMAND REPORT OF THE AO AS WELL, REJECTED THE ASSESSEES PLEA FOR THE FOLLOWING REASONS: (ON PAGE 4) THOUGH THE AO HAS GIVEN REASONABLE OPPORTUNITY TO TH E ASSESSEE TO SUBSTANTIATE HIS (ITS) CLAIM OF GENUINE NESS OF THE EXPENDITURE BY PRODUCING THE REQUIRED INFORMATIO N, THE ASSESSEE HAS NOT AVAILED THE SAME. THE ONLY EVI DENCE PRODUCED BEFORE THE AO IS A NOTE BOOK CONTAINING TH E NAME AND SIGNATURE OF THE PERSONS TO WHOM THE PAYMEN TS WERE MADE. 5. THE ASSESSEE, BEING AGGRIEVED, HAS COME UP WITH THE PRESENT APPEAL. DURING THE COURSE OF HEARING, THE LEARNED AR HAS REITERATED MORE OR LESS WHAT WAS REPRESENTED BEFORE THE FIRST APPELLAT E AUTHORITY. IN FURTHERANCE, IT WAS SUBMITTED THAT WITH REGARD TO ( A) GENERATOR AND MACHINERY EXPENSES AND POWER CHARGES, THIRD PARTY BIL LS WERE PRODUCED DURING THE COURSE OF ASSESSMENT AS WELL AS REMAND P ROCEEDINGS; (B) FOR OTHER EXPENSES CLAIMED, THE ASSESSEE HAD MAINTAINED SELF-MADE VOUCHERS FOR WHICH RECIPIENTS HAVE ACKNOWLEDGED THE RECEIPT OF SUCH PAYMENTS. IT PAGE 3 OF 5 ITA NO.1357/BANG/201 2 3 WAS, FURTHER, SUBMITTED THAT THE CIT (A) HAD SUSTAI NED THE ADDITION WITHOUT GOING INTO THE MERIT OF THE CASE. IT WAS, THEREFOR E, PLEADED THAT AS THE DISALLOWANCE OF 25% ON THE DIRECT EXPENSES CLAIMED BEING ENORMOUSLY ON THE HIGHER SIDE, THE SAME REQUIRES TO BE DELETED. TO S UBSTANTIATE HIS ARGUMENT, THE LEARNED A R HAD FURNISHED A PAPER BOOK CONTAINI NG 1 81 PAGES WHICH CONSISTED OF, AMONG OTHERS, COPIES OF (I) CORRESPON DENCE WITH THE AUTHORITIES BELOW; (II) LEDGER EXTRACTS UNDER VARIOUS HEADS ETC ., 5.1. ON THE OTHER HAND, THE LEARNED DR SUBMITTED T HAT IN THE ABSENCE OF ANY DOCUMENTARY PROOF TO SUBSTANTIATE ITS CLAIM (EXCEPT SELF MADE VOUCHERS) FOR HUGE EXPENSES, THE AUTHORITIES B ELOW WERE JUSTIFIED IN DISALLOWING 25% OF SUCH EXPENSES UNDER DIRECT EXPEN SES. IT WAS, THEREFORE, PLEADED THAT THE STAND OF THE REVENUE REQUIRES TO B E SUSTAINED. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS, PERUSED THE RELEVANT CASE RECORDS AND ALSO THE DOCUMENTARY EVIDE NCES PRODUCED BY THE LEARNED AR IN THE SHAPE OF A PAPER BOOK. INDEED, THE AO HAD, IN THE ABSENCE OF PROPER BILLS AND VOUCHERS FOR A SUBSTANT IAL CLAIM OF RS.27.81 LAKHS ON DIRECT EXPENSES, DISALLOWED 25% OF THE SAME. MO REOVER, THE AO, IN HIS REMAND REPORT DATED 23.5.2012 (COURTESY: P 25 27 OF PB AR] SUBMITTED BEFORE THE CIT (A) THAT THE ASSESSEE HAS PRODUCED A BILL FROM M/S. NANDI FUELS, HOSADURGA, A RETAIL DEALER OF M/S. ESSAR OIL LIMITED FOR PURCHASE OF DIESEL. ON ENQUIRY, IT IS LEARNT THAT M/S. NANDI FU ELS HAVE STOPPED OPERATIONS AND M/S. ESSAR OIL LIMITED HAVE TERMINAT ED THE FRANCHISEE AGREEMENT WITH M/S. NANDI FUELS. THIS FACT HAS NOT BEEN REPUDIATED BY THE ASSESSEE EITHER BEFORE THE FIRST APPELLATE AUTH ORITY OR BEFORE THIS PAGE 4 OF 5 ITA NO.1357/BANG/201 2 4 BENCH. FURTHER, THE ASSESSEE HAD, IN ITS STATEMENT OF FACTS, CONCEDED THAT IT HAD MAINTAINED ONLY SELF-MADE VOUCHERS FOR OTHER EXPENSES. ON VERIFICATION OF COPIES OF LEDGER ACCOUNT UNDER THE HEADS HAMALI ACCOUNT (P 44 54 OF PB), LOCAL LORRY ACCOUNT (P.55 65), WAGES ACCOUNT (P 68 80) ETC., WE HAVE NOTICED THAT SUBSTANTIAL AMOUNTS HAVE BEEN PAID BY CASH FOR WHICH NO PROPER AND AUTHENTICATED VOUCHERS ARE FORT HCOMING. THE ASSESSEE HAD ALSO CLAIMED AN EXPENDITURE OF RS.58,400/- UNDE R THE HEAD GENERATOR EXPENSES DIESEL PURCHASE (REFER: P 43 OF PB). H OWEVER, THIS CLAIM OF THE ASSESEE HAS BEEN DISPUTED BY THE DIESEL DEALER AS BR OUGHT ON RECORD BY THE AO (SUPRA). 6.1. CONSIDERING THE FACTS AND CIRCUMSTANCES OF TH E ISSUE AND ALSO KEEPING THE NATURE OF BUSINESS OF THE ASSESSEE IN V IEW, WE ARE OF THE CONSIDERED OPINION THAT A DISALLOWANCE OF 20% ON DI RECT EXPENSES - AS AGAINST 25% RESORTED TO BY THE AO WHICH WAS SUBSEQUE NTLY SUSTAINED BY THE CIT (A) WOULD BE MORE APPROPRIATE AND REASONABLE. IT IS ORDERED ACCORDINGLY. 7. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. THE ORDER IS PRONOUNCED ON THE 9 TH DAY OF JANUARY, 2013 AT BANGALORE. SD/- SD/- (N BARATHVAJA SANKAR) (GEORGE GEORGE K) VICE PRESIDENT JUDICIAL MEMBER PAGE 5 OF 5 ITA NO.1357/BANG/201 2 5 COPY TO : 1. THE REVENUE 2. THE ASSESSEE 3. THE CIT CONCERNE D. 4. THE CIT(A) CONCERNED. 5. DR 6. GF MSP/ BY ORDER SENIOR PRIVATE SECRETARY, ITAT, BAN GALORE.