Saraya Sugar Mills,Ltd., Gorakhpur V. Asstt.cimmissioner of Income tax, Gorakhpur

ITA 139/ALLD/2011

• Counselvise Citation: 13920714 RSA 2011
• Duration Of Justice: 1 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 15-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANDEEP CHAUHAN
• Assessee Lawyers: DR N C AGARWAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH, ALLAHABAD BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.139/A/2011 ASSESSMENT YEAR: 2007-08 SARAYA SUGAR MILLS LIMITED, VS. ASSTT. COMMISSION ER OF INCOME TAX, SARDAR NAGAR, RANGE-1, GORAKHPUR. GORAKHPUR (PAN : AADCS 2031 H). (APPELLANT) (RESPONDENT) APPELLANT BY : DR. N.C. AGARWAL, C.A. RESPONDENT BY : SHRI SANDEEP CHAUHAN, CIT D.R. DATE OF HEARING : 07.11.2012 DATE OF PRONOUNCEMENT : 19.11.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 10.12.2010 PASSED BY THE LD. CIT(A)-III, LUCKNOW FOR THE ASSES SMENT YEAR 2007-08. 2. IN BRIEF, THE GROUNDS RAISED IN THE APPEAL OF TH E ASSESSEE ARE IN RESPECT OF DISALLOWANCE OUT OF THE FOLLOWING EXPENSES :- REPAIRS OF PLANT & MACHINERY RS.2,00,000/- REPAIRS OF BUILDING RS.8,00,000/- LEGAL & PROFESSIONAL CHARGES RS.8,00,000/- TRAVELLING AND CONVEYANCE EXPENSES RS.50,000/- MISCELLANEOUS EXPENSES RS.40,000/- REPAIRS & MAINTENANCE OF OTHERS RS.3,00,000/- ITA NO.139/A/2011 A.Y. 2007-08 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN MANUFACTURING AND SALE OF WHITE CRYSTAL SUGAR AND I TS BYPRODUCTS. THE ASSESSING OFFICER MADE ADDITION OF RS.13,18,500/- ON ACCOUNT OF GROSS PROFIT WHICH HAS BEEN DELETED BY THE CIT(A). THE ASSESSING OFFICER HAS A LSO MADE DISALLOWANCE OUT OF VARIOUS EXPENSES ON THE GROUND THAT THE ASSESSEE DI D NOT PRODUCE THE COMPLETE BILLS FOR VERIFICATION. THE EXPENSES CLAIMED IN THE VARI OUS HEADS ARE ON HIGHER SIDE. THE ASSESSING OFFICER DISALLOWED RS.50,000/- OUT OF POWER FUEL & ELECTRICITY, RS.1,50,000/- OUT OF STORES & PACKING MATERIALS, RS .40,000/- OUT OF STAFF & WORKMAN WELFARE, RS.2,00,000/- OUT OF REPAIRING & M AINTENANCE OF PLANT & MACHINERY, RS.1,00,000/- OUT OF BUILDING/ROAD EXPEN SES, RS.3,00,000/- OUT OF OTHER EXPENSES, RS.1,00,000/- OUT OF LEGAL & PROFESSIONAL CHARGES, RS.50,000/- OUT OF TRAVELLING & CONVEYANCE, RS.40,000/- OUT OF MISCELL ANEOUS EXPENSES. THE TOTAL DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOU NT OF DISALLOWANCE OF VARIOUS EXPENSES ARE RS.10,30,000/-. 4. THE CIT(A), AFTER MAKING COMPARISON OF EARLIER Y EARS AND AFTER CONSIDERING THE ASSESSEES SUBMISSIONS, DELETED THE ADDITION OF RS.50,000/- OUT OF POWER FUEL & ELECTRICITY AND RS.1,50,000/- OUT OF STORES & PAC KING MATERIAL. HOWEVER, THE CIT(A) CONFIRMED RS.2,00,000/- OUT OF REPAIRING & M AINTENANCE EXPENSES ON THE GROUND THAT THERE WAS AN ABNORMAL INCREASE IN THE R EPAIRS OF PLANT & MACHINERY. THE CIT CONFIRMED THE ADDITION OUT OF TRAVELLING & CONVEYANCE RS.50,000/-. THE ITA NO.139/A/2011 A.Y. 2007-08 3 CIT(A) HAS ALSO CONFIRMED RS.40,000/- OUT OF STAFF & WORKMEN WELFARE EXPENSES. AS REGARDS DISALLOWANCE OUT OF BUILDING/ ROAD EXPENSES AND LEGAL & PROFESSIONAL CHARGES, THE CIT(A) FOUND THAT THE ASS ESSING OFFICER HAS MADE DISALLOWANCE ON LOWER SIDE. HE, THEREFORE, ENHANCE D THE DISALLOWANCE TO THE EXTENT OF RS.8,00,000/- EACH OUT OF BUILDING/ROAD EXPENSES AND OUT OF LEGAL & PROFESSIONAL CHARGES IN THE PLACE OF RS.1,00,000/- EACH DISALLOW ED BY THE ASSESSING OFFICER. THE DISALLOWANCE OF RS.40,000/- OUT OF MISCELLANEOU S EXPENSES HAS BEEN CONFIRMED BY THE CIT(A). 5. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND RECORDS PERUSED. THE MAIN CONTENTION OF THE LEARNED AUTHOR ISED REPRESENTATIVE WAS THAT THE CIT(A) HAS ENHANCED THE DISALLOWANCE WITHOUT CO MPLYING THE PROVISIONS OF SECTION 251(2) OF THE ACT. THE CIT(A) DID NOT ISSU E ANY SHOW CAUSE NOTICE BEFORE ENHANCING THE DISALLOWED AMOUNT. WE FIND FORCE IN THE SUBMISSION OF THE LEARNED AUTHORISED REPRESENTATIVE THAT THE CIT(A) HAS ENHAN CED THE DISALLOWANCE WITHOUT PROVIDING OPPORTUNITY OF HEARING TO THE ASSESSEE. THIS CONTENTION OF THE LEARNED AUTHORISED REPRESENTATIVE HAS NOT BEEN CONTROVERTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. WE, THEREFORE, FIND SUBSTANCE IN T HE SUBMISSIONS OF THE LEARNED AUTHORISED REPRESENTATIVE THAT THE CIT(A) HAS ENHAN CED THE AMOUNT OF DISALLOWANCE WITHOUT PROVIDING OPPORTUNITY OF HEARI NG. WE NOTICED THAT THE CIT(A) HAS ENHANCED THE DISALLOWANCE AMOUNT OUT OF BUILDING /ROAD EXPENSES AND ITA NO.139/A/2011 A.Y. 2007-08 4 LEGAL & PROFESSIONAL EXPENSES MERELY ON THE GROUND THAT NO DETAILS WERE AVAILABLE AND ONLY ON PRESUMPTION THAT THE DETAILS ARE NOT AV AILABLE AS TO WHETHER ANY TDS WAS MADE OUT OF THESE CHARGES, WHETHER THE SAME ARE RELATED TO REVENUE EXPENSES OR CAPITAL IN NATURE. WE NOTICE THAT THE ASSESSING OFFICER HAS ALSO CONSIDERED THESE ASPECTS AND AFTER MAKING COMPARISON OF ASSESSEES C LAIM HAS MADE THE DISALLOWANCE. THE CIT(A) HAS ALSO ENHANCED THE MOU NT OF DISALLOWANCE MERELY ON THE BASIS OF PRESUMPTION. DISALLOWANCE AMOUNT ENHA NCED FROM RS.1,00,000/- TO RS.8,00,000/- IS ALSO WITHOUT ANY BASIS. IN THE LI GHT OF THE FACT, WE ARE OF THE VIEW THAT THE AMOUNT OF DISALLOWANCE ENHANCED BY THE CIT (A) IS NOT IN ACCORDANCE WITH LAW. THEREFORE, ADDITION TO THE EXTENT OF ENHANCED AMOUNT RS.7,00,000/- OUT OF BUILDING/ROAD EXPENSES AND RS.7,00,000/- OUT OF LEG AL & PROFESSIONAL CHARGES ARE DELETED. THE DISALLOWANCE OUT OF OTHER EXPENSES MA DE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) AFTER TAKING INTO CONSI DERATION THE PAST HISTORY AND COMPARATIVE POSITION OF THE EXPENSES CLAIMED BY THE ASSESSEE AND ALLOWED IN EARLIER YEARS. AS PER THE PAST HISTORY OF THE CASE , THE EXPENSES CLAIMED TO SOME EXTENT WERE NOT FOR THE PURPOSE OF BUSINESS, AS SUC H, DISALLOWANCE WERE MADE IN THE PAST ALSO. THE ASSESSEE DID NOT FURNISH ANY CO NCRETE MATERIAL OR EVIDENCE IN SUPPORT OF THE CLAIM BEFORE US ALSO. IN THE LIGHT OF THE FACT, THE DISALLOWANCE OUT OF VARIOUS EXPENSES ARE WARRANTED AND THE ASSESSING OF FICER AND THE CIT(A) AFTER CONSIDERING THE FACT OF THE CASE HAS MADE DISALLOWA NCE. IN THE LIGHT OF THE FACT, THE DISALLOWANCES SUSTAINED BY THE CIT(A) ARE CONFIRMED OUT OF STAFF & WORKMEN ITA NO.139/A/2011 A.Y. 2007-08 5 WELFARE EXPENSES RS.40,000/-, REPAIR AND MAINTENANC E OF PLANT & MACHINERY RS.2,00,000/-, BUILDING/ROAD EXPENSES RS.1,00,000/- , LEGAL AND PROFESSIONAL CHARGES RS.1,00,000/-, TRAVELLING & CONVEYANCE EXPENSES RS. 50,000/-, MISCELLANEOUS EXPENSES RS.40,000/-. 6. THE ASSESSING OFFICER HAS ALSO DISALLOWED RS.3,0 0,000/- OUT OF OTHER EXPENSES BUT THE CIT(A) DID NOT GIVE ANY FINDING IN THIS REGARD. KEEPING IN VIEW THE OTHER DISALLOWANCES MADE AND ALSO KEEPING IN VI EW THE CASE BEING OLD ONE AND TO PUT AN END TO THE LITIGATION, THE ADDITION OF RS .3,00,000/- MADE BY THE ASSESSING OFFICER OUT OF OTHER EXPENSES IS DELETED. THUS, IN THE LIGHT OF THE ABOVE DISCUSSION, WE DELETE THE ADDITION OF RS.7,00,000/- OUT OF BUIL DING/ROAD EXPENSES AND RS.7,00,000/- OUT OF LEGAL & PROFESSIONAL CHARGES E NHANCED BY THE CIT(A). WE HAVE ALSO DELETED THE ADDITION OF RS.3,00,000/- MAD E BY THE ASSESSING OFFICER AS DISCUSSED ABOVE. WE CONFIRM THE ORDER OF CIT(A) FO R DELETION OF ADDITION OF RS.50,000/- OUT OF POWER AND FUEL, RS.1,50,000/- OU T OF STORE & PACKING, TOTALING TO RS.2,00,000/-. TOTAL ADDITIONS OF RS.5,30,000/- AR E CONFIRMED OUT OF TOTAL ADDITIONS OF RS.10,30,000/- MADE BY THE ASSESSING OFFICER. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER ITA NO.139/A/2011 A.Y. 2007-08 6 PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, ALLAHABAD BENCH, ALLAHABAD 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE T RIBUNAL, ALLAHABAD TRUE COPY