M/s. G.C.Bhutia, Angul V. DCIT, Circle-4(1), Bhubaneswar

ITA 137/CTK/2017

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7226 (ITAT-CUTTACK)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-01-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 04-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K BANDYOPADHYAY
• Assessee Lawyers: C PARIDA
• Keywords: Business expenditure; Additional evidence

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ITA NO. 137 /CTK/2017 ( / ASSESSMENT YEAR : 20122013 ) M/S G.C.BHUTIA, AT/PO - HATATOTA, ARY A VIHAR, TALCHER, DIST - ANGUL - 759100 VS. DCIT, CIRCLE - 4(1), BHUBANESWAR ./ ./ PAN/GIR NO. : A A VFS 2700 A ( / APPELLANT ) .. ( / RESPONDENT ) /AS SESSEE BY : SHRI C.PARIDA , AR /RE VENUE BY : SHRI S.K.BANDYOPADHYAY , DR / DATE OF HEARING : 04 / 01 /201 8 / DATE OF PRONOUNCEMENT 22 / 01 /201 8 / O R D E R PER SHRI N.S.SAINI , A M : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE C IT(A) - 2 , BHUBANESWAR DATED 30.01.2017 . 2. GROUND NOS.1 & 5 OF THE APPEAL OF THE ASSESSEE ARE GENERAL IN NATURE, HENCE, REQUIRES NO SEPARATE ADJUDICATION. 3. IN GROUND NO.2 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ORDER OF AO IN MAKING ADDITION OF RS.8,33,148/ - @20% ON TOTAL SITE EXPENDITURE OF RS.41,65,741/ - ON ESTIMATED BASIS TO THE TOTAL INCOME OF THE ASSESSEE AND IN G ROUND N O.3, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN LA W AND ON FACTS IN CONFIRMING THE ORDER OF AO IN MAKING ADDITION OF RS1,69,010/ - @20% ON TOTAL MESS EXPENSES AMOUNTING TO RS.8,45,079/ - ON ESTIMATED BASIS TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO. 137 /17 2 4. BRIEF FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT THE SITE EXPENSES AND MESS EXPENSES WERE SUPPORTED ONLY BY SELF - MA D E VOUCHERS, THEREFORE, HE MADE ADDITION OF 20% OF THE EXPENSES CLAIMED. 5. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF AO FOR THE REASON THAT THE EXPENSES HAVE BEEN CLAIMED ONLY ON SELF - MADE VOUC HERS AND, THUS, EXPENSES ARE NOT FULLY VERIFIABLE. 6. BEFORE US, THE AR OF THE ASSESSEE ADMITTED THAT THE EXPENSES ARE SUPPORTED BY SELF - MADE VOUCHERS. HE SUBMITTED THAT NO DETAILS HAVE BEEN GIVEN EITHER BY THE AO OR BY THE CIT(A) THAT WHICH OF THE EXPEN SES ARE NOT FULLY VERIFIABLE. THE REVENUE CAN MAKE ADDITION OF ONLY THOSE EXPENSES WHICH ARE EITHER NOT VERIFIABLE OR NOT INCURRED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. HE ARGUED THAT NO EVIDENCE HAS BEEN BROUGHT ON RECORD EITHER BY THE AO OR BY THE CIT(A) WHICH OF THE EXPENSES ARE NOT VERIFIABLE OR ARE NOT INCURRED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. IN ABSENCE OF THE SAME, NO DISALLOWANCE OF EXPENDITURE CAN BE MADE IN THE HANDS OF THE ASSESSEE. 7. THE DR THOUGH SUPPORTED THE ORDERS OF LOWE R AUTHORITIES BUT COULD NOT CONTROVERT THE ABOVE SUBMISSIONS OF THE AR OF THE ASSESSEE. 8. IN THE ABOVE BACK GROUND OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE AO CAN DISALLOW THE EXPENDITURE WHICH IS EITHER NOT SUPPOR TED BY ANY EVIDENCE OF INCURRING OF THE EXPENDITURE OR THE EXPENDITURE IS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. WE FIND THAT THE AO AS WELL AS CIT(A) HAS NOT POINTED OUT THAT WHICH OF THE EXPENSES THE ASSESSEE ITA NO. 137 /17 3 WAS NOT ABLE TO PRODUCE ANY VOUCHER FOR INCURRING THE EXPENDITURE OR THE EXPENSES WERE NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. IT HAS BEEN ADMITTED BY THE AO AS WELL AS THE CIT(A) THAT EXPENSES ARE SUPPORTED BY SELF - MA DE VOUCHERS OF THE ASSESSEE. NO EVIDENCE AFTER EXAMINING THE SAID VOUCHERS HAS BEEN BROUGHT ON RECORD BY EITHER OF THE LOWER AUTHORITIES TO SHOW THAT THE EXPENSES CLAIMED ARE NOT GENUINE. IN THE ABOVE BACK GROUND OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE GENUINE BUSINESS EXPENDITURE CLAIMED BY THE ASSESSEE CANNOT BE DISALLOWED BY THE AO MERELY OBSERVING THAT THE EXPENSES ARE SUPPORTED BY SELF - MADE VOUCHERS. THEREFORE, WE SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DELETE THE ADDITION OF RS.8,33 ,148/ - MADE UNDER THE HEAD SITE EXPENDITURE AND RS.1,69,010/ - MADE UNDER THE HEAD MESS EXPENSES , RESPECTIVELY AND ALLOW BOTH THE GROUNDS OF APPEAL OF THE ASSESSEE. 9 . IN GROUND NO.4 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.7,32,104/ - U/S.40(A)(IA) OF THE ACT FOR NON - DEDUCTION OF TDS. 10 . BRIEF FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT ASSESSEE HAD PAID INTEREST TO FINANCIAL INSTITUTIONS OF RS.6,42,104/ - WITHOUT DEDUCTION OF TDS U/S.194A OF THE ACT, DETAILS OF WHICH ARE AS UNDER : - SL.NO. PARTICULARS AMOUNT 1. SREI EQUIPMENT FINANCE PVT. LTD. RS.5,46,691/ - 2. MAGMA FINCORP. LIMITED RS.65,413/ - ITA NO. 137 /17 4 THE ASSESSEE CONTENDED THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE NOT APPLICABLE IN A CASE WHERE EXPENSES HAVE ALREADY BEEN PAID DURING THE YEAR BUT ONLY TO THE PAYABLE PORTION AT THE END OF THE YEAR. 11 . ON APPEAL, THE CIT(A) OBSERVED THAT AFTER THE DECISION OF THE VIZAG SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING TRAN SPOR T VS. ACIT, 146 TTJ (1) (VIZAG); HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. CRESCENT EXPORT SYNDICATE [2013] 33 TAXMANN.COM 250 (CALCUTTA) , HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT - IV VS. SIKANDARKHAN N. TUNVAR [2013] 33 TAXMANN.COM 133 (G UJARAT) AND HONBLE HIMACHAL PRADESH HIGH COURT IN THE CASE OF PALAM GAS SERVICE VS. CIT [2014] 47 TAXMANN.COM 310 (HIMACHAL PRADESH) HA VE OVERRULED THE DECISION OF THE VIZAG SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING TRANSPORT (SUPRA) A ND, THEREFORE, HE CONFIRMED THE ADDITION MADE BY THE AO U/S.40(A)(IA) OF THE ACT OF RS.6,42,104/ - . 12 . BEFORE US, THE AR OF THE ASSESSEE HAS FILED AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE S IN THE FORM OF CA CERTIFICATE GIVEN IN THE CASE OF SREI EQUIPMENTS FINANCE LTD. TO WHOM INTEREST WAS PAID OF RS.5,46,691/ - AND CA CERTIFICATE IN THE CASE OF MAGMA FINCORP LIMITED TO WHOM INTEREST OF RS.95,413/ - WAS PAID WITHOUT DEDUCTION OF TAX AT SOURCE AND SUBMITTED THAT THESE ASSESSEES HAVE INCLUDED THE INTE REST INCOME PAID BY THE ASSESSEE AS THEIR INCOME IN THE RETURN OF INCOME FILED AND PAID DUE TAX THEREON. IT WAS THE SUBMISSION OF AR THAT IN VIEW OF THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT INSERTED BY THE FINANCE ACT, 2012 W.E.F.1 ST APRIL, 2013 NO DISALLOWANCE U/S.40(A)(IA) OF THE ACT IS CALLED ITA NO. 137 /17 5 FOR WHERE THE RECIPIENT OF THE AMOUNT HAS INCLUDED THE AMOUNT RECEIVED BY THE ASSESSEE BY WAY OF INTEREST IN THEIR RETURN OF INCOME AND PAID DUE TAXES THEREON, IF THE ASSESSEE PRODUCES THE EVIDENCE TO THAT EFFECT. HE, THEREFORE, PRAYED THAT THE ADDITIONAL EVIDENCE SHOULD BE ADMITTED AND MATTER SHOULD BE RESTORED BACK TO THE FILE OF AO FOR VERIFICATION AND THEREAFTER DELETING THE ADDITION. HE SUBMITTED THAT HE IS ALIVE TO THE FACT THAT THE ASSESSMENT YEAR UN DER CONSIDERATION IN THE ASSESSMENT YEAR 2012 - 2013 AND THE AMENDMENT IS EFFECTIVE FROM 01.04.2013. HE SUBMITTED THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD. [2015] 61 TAXMANN.COM 45 (DELHI) H AS HELD THAT THE PR OVISO ADDED U/S.40(A)(IA) OF THE INCOME TAX ACT ,1961 WAS RETROSPECTIVE IN OPERATION AND, THEREFORE, THE ASSESSEE IS ENTITLED TO THE BENEFIT OF THE SAME. 13 . THE DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF LOWER AUTHORITIES. 14. IN THE ABOVE BACK GROUND OF THE CASE, WE FIND THAT IN THE INTEREST OF SUBSTANTIAL JUSTICE, THE ADDITIONAL EVIDENCE NOW FILED BEFORE US SHOULD BE ADMITTED AND THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF AO FOR ADJUDICATING THE ISSUE OF DISALLOWANCE OF INTEREST EXPENDITURE OF RS.5,46,691/ - BEING AMOUNT PAID TO SREI EQUIPMENT FINANCE PVT. LTD. AND RS.95,413/ - BEING AMOUNT PAID TO MAGMA FINCORP LIMITED (TOTALLING TO RS.6,42,104/ - ) U/S.40(A)(IA) OF THE ACT FOR FRESH ADJUDICATION AFTER ALLOWING REASONABLE AND PROPER OPPORTUNITY O F HEARING TO THE ASSESSEE. WE ORDER ACCORDINGLY. THUS, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 137 /17 6 15 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 / 01 /201 8 . SD/ - ( PAVAN KUMAR GADALE ) SD/ - (N. S. SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 22 /01/2018 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - M/S G.C.BHUTIA, AT/PO - HATATOTA, ARYA VIHAR, TALCHER, DIST - ANGUL - 759100 2. / THE RESPONDENT - DCIT, CIRCLE - 4(1), BHUBANESWAR 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//