Naineshkumar Gordhanbhai Patel, Ahmedabad V. The Income Tax Officer, Ward-4(4), New Jurisdiction ITO, Ward-5(2)(3),

ITA 1372/AHD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7967 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 23-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N R SHAH
• Keywords: Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH BEFORE: SHR I , MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER NAINESHKUMAR GORDHANBHAI PATEL, PROPRIETOR OF YASHODHAR COTTON TRADERS PAN: ACTPP0380P (APPELLANT) VS THE ITO, WARD - 5(2)(3) AHMEDABAD (RESPONDENT) REVENUE BY : S H RI JAMES KURIAN , SR. D . R. ASSES SEE BY: S H RI N.R. SHAH , A.R. DATE OF HEARING : 24 - 11 - 2 017 DATE OF PRONOUNCEMENT : 18 - 12 - 2 017 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2012 - 13 , AR IS ES FROM ORDER OF THE CIT(A) - 5, AHMEDABAD DATED 09 - 05 - 2016 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 1372 / A HD/20 16 A SSE SSMENT YEAR 2012 - 13 I.T.A NO. 1372 /AHD/20 16 A.Y. 2012 - 13 PAGE NO NAINESHKUMAR GORDHABHAI PATEL VS. ITO 2 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE CIT(APPEAL) ERRED IN CONFIRMING DISALLOWANCE OF RS. 2,23,910/ - BEING 25% OF GINNING , PRESSING AND MAJOORI EXPENSES OF RS. 8,95,641/ - , PAID TO BHAVANI COTEX, A SISTER CONCERN BY APPLYING THE PROVISION OF SECTION 40A(2)(B), WITHOUT ANY SUPPORTING EVIDENCE. IT IS SUBMITTED THAT THE CHARGES WERE AS PER THE PREVAILING MARKET RATE AND MARKET PRACTICE AND COMPARED WITH RATES CHARGED BY BHAVANI COTEX IN EARLIER YEARS AND SUBSEQUENT YEARS FROM COTTON CORPORATION OF INDIA A THIRD PARTY, AND THEREFORE THE DISALLOWANCE OF RS. 2,23,910/ - B E DELETED. 3. IN THIS CASE, RETURN OF INCOME DECLARING INCOME OF RS. 6 , 05 , 500/ - WAS FILED ON 27 TH SEPTEMBER, 2012. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT. THE ASSESSEE IS A PROPRIETOR OF M/S. YASHODHAR COTTON TRADERS AND DEALS IN PROCESSING AND TRADING OF COTTON AND COTTON SEEDS. THE ASSESSEE IS ALSO A PARTNER IN A FIRM VIZ. M/S BHAVANI COTEX. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS OBSERVED THAT ASSESSEE HAS DE BITED GINNING AND PRESSING EXPENSE S OF RS. 6 , 84 , 469/ - AND MAJOORI EXPENSE S OF RS . 2 , 11 , 17 2 / - IN THE PROFIT AND LOSS ACCOUNT. ON FURTHER VERI FICATION, THE ASSESSING OFFICER NOTICED THAT THE AFORESAID EXPENSES WAS PAID TO THE SISTER CONCERN OF THE ASSESSE E M/S BHAVANI COTEX. THEREFORE, THE ASSESSING OFFICER HAS CALLED FOR THE DETAILS OF TRANSACTION CARRIED OUT BY THE ASSESSEE WITH THE PERSONS COVERED U/S. 40A(2)(B) OF THE ACT . THE ASSESSEE HAS FURNISHED THE COPY OF LEDGER ACCOUNT OF M/S BHAVANI COTEX WITH RESPECT TO THE EXPENDITURE PAID ON THE ABOVE TWO HEADS. ON VE RI FICATION OF THE BILLS, THE ASSESSING OFFICER HAS NOTICED THAT ALL THE BILLS WERE RAISED IN THE MONTH OF MARCH, 2012. HE HAS FURTHER NOTICED THAT PARTICULARS OF QUANTITIES MENTIONED IN TH E BILLS WERE NOT COMPARABLE WITH THE QUANTITY OF FINISHED GOODS AS REFLECTED I.T.A NO. 1372 /AHD/20 16 A.Y. 2012 - 13 PAGE NO NAINESHKUMAR GORDHABHAI PATEL VS. ITO 3 IN THE AUDIT ACCOUNT OF THE ASSESSEE. BECAUSE OF DEFICIENCY IN SUPPLYING THE COMPLETE INFORMATION, THE ASSESSING OFFICER OBSERVED THAT IT IS NO T POSSIBLE TO ASCERTAIN THE CORRECT NESS AND REASONABLENESS OF THE EXPENDITURE INCURRED BY THE ASSESSEE IN RESPECT OF TRANS AC TION S WITH T HE SISTER CONCERN, I.E. BHAVANI COTEX. CONSEQUENTLY, THE ASSESSING OFFICER HAS DISALLOWED 2 5 % OF THE AFORESAID EXPENSES AMOUNTING TO RS. 2 , 23 , 910/ - AND ADDE D TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED ASSESSE FILED APPEAL BEFORE T HE LD. CIT(A) . THE LD. CIT(A) HAS SUSTAINED THE SAID DISALLOWANCE ON THE GROUND THAT ASSESSEE FAILED TO SUBSTANTIATE THE EXPENDITURE WITH SUPPORTING EVIDENCES . DURING TH E COURSE OF APPELLATE PROCEEDINGS BEFORE US, LD. COUNSEL SUBMITTED PAPER BOOK CONTAINING INFORMATION WRITTEN SUBMISSION MADE BEFORE ASSESSING OFFICER AND COPY OF JUDICIAL PRONOUNCEMENTS ETC. HE CONTENDED THAT LD. CIT(A) HAS NOT CONSIDERED THE RELEVANT BIL LS, VOUCHERS IN RESPECT OF EXPENSES PAID TO SISTER CONCERN, M/S BHAVANI COTEX BY THE ASSESSEE BEFORE SUSTAINING THE DISALLOWANCE . ON THE OTHER , HAND, LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE LD. CIT(A). 5. WE HAVE HEARD BOTH THE SIDES A ND PERUSED THE MATERIAL ON RECORD CAREFULLY . WE HAVE GONE THROUGH THE PAPER BOOK SUBMITTED BY THE ASSESSEE AND NOTICED THAT ASSESSEE HAS ENCLOSED THE LEDGER ACCOUNT, BILL, VOUCHER ETC. IN SUPPORT OF HIS CLAIM FOR EXPENDITURE OF RS. 8,95,641 PAID TO M/S BHAVANI COTEX, TO WARDS GINNING AND I.T.A NO. 1372 /AHD/20 16 A.Y. 2012 - 13 PAGE NO NAINESHKUMAR GORDHABHAI PATEL VS. ITO 4 PRESSING AND MAJOORI EXPENSES . WE OBSERVED THE ASSESSING OFFICER HAS MADE DISALLOWANCE OF 25% OF THE EXPENSES ON ESTIMATE D BASIS WITHOUT DETERMINING THE UNREASONABLE NESS OF THE PAYMENT. THEREFORE, WE RESTORE THIS CASE TO THE FILE OF A SSESSING OFFICER TO DECIDE IT DE - NOVO ON MERIT AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND AFTER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE . 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PR ONOUNCED IN THE OPEN C OURT ON 18 - 12 - 201 7 SD/ - SD/ - ( MAHAVIR PRASAD ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 18 /12 /2017 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,