ACIT, Madurai V. M/s. Susee Auto (Firm), Tirunelveli

ITA 1411/CHNY/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64116 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 07-08-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 27-08-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K RAJAGOPA L IRS
• Assessee Lawyers: G BASKAR
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI V.DURGA RAO, JUDICIAL MEMBER ITA NO.1411(MDS)/2010 ASSESSMENT YEAR:2003-04 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE III, MADURAI. VS. M/S.SUSEE AUTO (FIRM), 184/2, TRIVANDRUM ROAD, TIRUNELVELI. PAN AAKFS6766R. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.RAJAGOPA L, IRS, JCIT RESPONDENT BY : SHRI G.BASKAR, ADV OCATE DATE OF HEARING : 7 TH AUGUST, 2012 DATE OF PRONOUNCEMENT : 7 TH AUGUST, 2012 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THIS APPEAL IS FILED BY THE REVENUE. THE RELEVAN T ASSESSMENT YEAR IS 2003-04. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-II AT MADURAI, DATED 21-4-2010. THE APPEAL ARISES OUT OF THE ASSE SSMENT COMPLETED UNDER SECTION 143(3), READ WITH SECTION 1 53C OF THE - - ITA 1411 OF 2010 2 INCOME-TAX ACT, 1961. THE REVENUE HAS RAISED THREE GROUNDS RELATING TO THE ADDITIONS OF ` 5,33,680/-, ` 1,22,939/- AND ` 6,03,820/- RESPECTIVELY. 2. THIS APPEAL WAS ORIGINALLY HEARD AND DISPOSED O F BY THE TRIBUNAL THROUGH THEIR ORDER DATED 8-8-2011. T HE APPEAL FILED BY THE REVENUE WAS DISMISSED. 3. THEREAFTER, THE REVENUE FILED A RECTIFICATION P ETITION BEFORE THE TRIBUNAL IN M.P. NO.32(MDS)/2012. THE R EVENUE HAS POINTED OUT IN THE RECTIFICATION PETITION THAT THE TRIBUNAL HAS NOT ADJUDICATED THE GROUNDS RAISED BY THE REVENUE IN GR OUND NOS.3(A) TO 3(C). THE TRIBUNAL AGREED WITH THE MIS TAKE POINTED OUT BY THE REVENUE, HOLDING THAT THE GROUNDS POINTE D OUT BY THE REVENUE HAVE NOT BEEN ADJUDICATED BY THE TRIBUNAL. THEREFORE, THE RECTIFICATION PETITION WAS ALLOWED AND THE ORDE R OF THE TRIBUNAL PASSED ON 8-8-2011WAS RECALLED FOR DISPOSI NG OF THE APPEAL AFRESH. THIS RECALL WAS MADE THROUGH THE OR DER DATED 18-5-2012 PASSED IN M.P. NO.32(MDS)/2012. - - ITA 1411 OF 2010 3 4. THIS IS HOW THE APPEAL IS COMING UP BEFORE THE TRIBUNAL FOR THE SECOND TIME. 5. WE HEARD BOTH SIDES IN DETAIL. THE FIRST GROUN D RELATING TO THE ADDITION OF ` 5,33,680/- MADE BY THE ASSESSING OFFICER TOWARDS THE EXCESS AMOUNT COLLECTED AT THE TIME OF REGISTRATION, WAS CONSIDERED BY US IN THE EARLIER O RDER. CONSIDERING THE EARLIER ORDERS OF THE TRIBUNAL, THE SAID GROUND RAISED BY THE REVENUE WAS REJECTED, HOLDING THAT TH E COMMISSIONER OF INCOME-TAX(APPEALS) HAD RIGHTLY DEL ETED THE ADDITION. THE SAID REASONINGS HOLD HERE VERY WELL. THEREFORE, WE FIND THAT THERE IS NO MERIT IN THE GROUND RAISED BY THE REVENUE. 6. NOW, REGARDING THE DISALLOWANCE OF EXPENSES MAD E BY THE ASSESSING OFFICER UNDER SECTION 37 AMOUNTING TO ` 6,03,820/- AND COMPLIMENTARY EXPENSES AMOUNTING TO ` 34,676/-, WE HAVE TO STATE THAT THESE TWO ISSUES W ERE CONSIDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE F OR THE ASSESSMENT YEARS 2001-02, 2002-03 AND 2004-05 IN TH E - - ITA 1411 OF 2010 4 COMMON ORDER DATED 1-4-2011 IN ITA NOS.1409, 1410 & 1412(MDS)/2010. THE TRIBUNAL HAS CONSIDERED THE IS SUE IN PARAGRAPH 12 OF ITS COMMON ORDER. THE ASSESSING OF FICER HAS MADE DISALLOWANCE OF 50%. THIS DISALLOWANCE WAS EN TIRELY DELETED BY THE COMMISSIONER OF INCOME-TAX(APPEALS). THE TRIBUNAL, AFTER CONSIDERING THE CASE, UPHELD THE DI SALLOWANCE TO THE EXTENT OF 25%. 7. FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL, WE H OLD THAT DISALLOWANCE TO THE EXTENT OF 25% IS JUSTIFIED . THEREFORE, THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) ON THIS POINT IS SET ASIDE AND DISALLOWANCE OF 25% IS UPHELD IN T HE PRESENT CASE. THIS GROUND IS PARTLY ALLOWED IN FAVOUR OF T HE REVENUE. 8. THE THIRD ISSUE TO BE CONSIDERED IS REGARDING T HE EXPENDITURE OF ` 58,02,823/- CLAIMED BY THE ASSESSEE. THIS DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER ON T HE GROUND THAT THE EXPENSES DID NOT RELATE TO BUSINESS PURPOS ES. THE ASSESSEE WAS DOING THE BUSINESS OF PURCHASE AND SAL E OF SECOND-HAND VEHICLES. IN THE COURSE OF THE BUSINES S CARRIED ON - - ITA 1411 OF 2010 5 BY THE ASSESSEE, ONE OF THE STAFF MEMBERS WAS AUTHO RISED TO BUY AND SELL SECOND-HAND VEHICLES. THE SAID STAFF MEMBER SOLD SECOND-HAND VEHICLES AND HELD BACK THE MONEY FOR PU RCHASE OF OTHER VEHICLES. BUT, FINALLY HE DID NOT ACCOUNT TH IS MONEY TO THE ASSESSEE AND HE LEFT THE SERVICE OF THE ASSESSEE AL ONGWITH THE MONEY. COMPLAINTS WERE FILED BY THE ASSESSEE BEFOR E THE MAGISTRATE AS WELL AS BEFORE THE POLICE AND ULTIMAT ELY IT WAS TURNED OUT THAT THE AMOUNT COULD NOT BE RECOVERED. IT IS IN THESE CIRCUMSTANCES THAT THE ASSESSEE HAS CLAIMED THE EXP ENDITURE UNDER SECTION 37 OF THE INCOME-TAX ACT, 1961. 9. WE FIND THAT THE CIRCUMSTANCES EXPLAINED BY THE ASSESSEE JUSTIFY THE EXPENDITURE CLAIMED BY IT. TH E LOSS INCURRED BY THE ASSESSEE WAS DEFINITELY INCURRED IN THE COUR SE OF CARRYING ON OF THE BUSINESS. THEREFORE, WE FIND THAT THE OR DER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) ON THIS POINT I S JUSTIFIED. THIS GROUND OF THE REVENUE FAILS. 10. IN RESULT, THIS APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. - - ITA 1411 OF 2010 6 ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON TUESDAY, THE 7 TH OF AUGUST, 2012 AT CHENNAI. SD/- SD/- (V.DURGA RAO) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 7 TH AUGUST, 2012. V.A.P. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.