Lion Tapes Pvt. Ltd., Bhavnagar V. The ITO, Ward-1(2), Bhavnagar

ITA 1478/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5135 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 15-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANJAN KUMAR SINGH
• Keywords: Additional evidence; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ITA NO. 1478/AHD/2017 ( / ASSESSMENT YEAR : 2012-13) LION TAPES PVT. LTD. 283/B CHITRA GIDC BHAVNAGAR / VS. THE INCOME TAX OFFICER WARD-1(2) BHAVNAGAR ./ ./ PAN/GIR NO. : AAACL 3629 B ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : NONE / RESPONDENT BY : SHRI RANJAN KUMAR SINGH, SR.DR / DATE OF HEARING 08/01/2019 !'# / DATE OF PRONOUNCEMENT 01/02/2019 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)6, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)-6 /110/15-16 DATED 21.03.2017 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS 'TH E ACT') DATED 24/03/2015 RELEVANT TO ASSESSMENT YEAR (AY) 2011-12 . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL:- 1. THE LEARNED CIT APPEALS ERRED IN CONFORMED THE ADD ITION MADE BY THE ASSESSING AUTHORITY RS.1,11,080/- OUT O F ADMINISTRATIVE AND SUNDRY EXPENSES AND VEHICLE RUNN ING AND ITA NO.1478/AHD/2017 LION TAPES PVT.LTD. VS. ITO ASST .YEAR - 2012-13 - 2 - FREIGHT AND CARRIAGE OUT WARD EXPENSES AND ADD TO T HE TOTAL INCOME OF THE APPELLANT. 2. THE LEARNED CIT APPEALS ERRED CONFORMED THE ADDITIO N MADE BY THE ASSESSING AUTHORITY RS.111115/-OUT OF FOREIG N TRAVEL EXPENDITURE. 3. ORDER OF CIT APPEALS-XX BEEN RECEIVED BY THE APPELL ANT ON 15 APRIL 2017 HENCE THIS APPEAL IS IN TIME. 3. AT THE OUTSET, WE FOUND THAT THE APPEAL FILED BY THE ASSESSEE IS BARRED BY LIMITATION BY ONE DAY. THE LD. DR DID NOT OBJECT FOR THE CONDONATION OF THE DELAY, CONSIDERING THE LENGTH OF DELAY. THEREFORE, WE DECIDED TO CONDONE THE DELAY OF ONE DAY IN FILING T HE APPEAL BY THE ASSESSEE. 4. AT THE OUTSET, WE FIND THAT AT THE TIME OF HEARI NG THERE WAS NOBODY APPEARED FROM THE SIDE OF THE ASSESSEE AS WELL AS N O ADJOURNMENT APPLICATION WAS FILED. HOWEVER, WE FIND THAT THE A MOUNT INVOLVED IN THE APPEAL IS OF SMALL VALUE. THEREFORE WE DECIDED TO A DJUDICATE THE ISSUE AFTER HEARING THE LD. DR. 5. THE FIRST ISSUE RAISED BY THE ASSESSEE IS THAT T HE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSIN G OFFICER FOR RS. 1,11,080/- ON AN ESTIMATED BASIS. 6. THE ASSESSEE IN THE PRESENT CASE IS A PRIVATE L IMITED COMPANY AND ENGAGED IN THE BUSINESS OF MANUFACTURING OF NARROW FABRICS TAPES. THE ITA NO.1478/AHD/2017 LION TAPES PVT.LTD. VS. ITO ASST .YEAR - 2012-13 - 3 - ASSESSEE IN THE PROFIT & LOSS ACCOUNT HAS CLAIMED C ERTAIN EXPENSES UNDER THE HEAD OF OTHER EXPENSES AS DETAILED UNDER: SL.NO. PARTICULARS AMOUNT (RS.) 1. ADMINISTRATIVE AND SUNDRY EXPENSES 44,378/- 2. VEHICLE RUNNING EXPENSE 22,190/- 3. FREIGHT & CARRIAGE OUTWARDS EXPENSES 4,75,047/- TOTAL 7,40,515/- 6.1. THE ASSESSEE IN SUPPORT OF THESE EXPENSES HA S PRODUCED THE VOUCHERS TO THE ASSESSING OFFICER DURING THE ASSESS MENT PROCEEDINGS. HOWEVER, THE ASSESSING OFFICER FOUND CERTAIN DEFECT S IN THE VOUCHERS FILED BY THE ASSESSEE. THEREFORE, THE ASSESSING OF FICER DOUBTED ON THE GENUINENESS OF THE EXPENSES AND ACCORDINGLY HELD TH AT THE POSSIBILITY OF OVERSTATEMENT OF THE EXPENSES COULD NOT BE RULED OU T. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED THE EXPENSES OF RS.1,1 1,080/- BEING 15% OF THE TOTAL EXPENSES AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 7. ASSESSEE PREFERRED AN APPEAL TO THE LD.CIT(A). THE ASSESSEE BEFORE THE LD.CIT(A) SUBMITTED THAT ALL THE NECESSA RY SUPPORTING EVIDENCE WERE FILED BEFORE THE ASSESSING OFFICER DU RING THE ASSESSMENT PROCEEDINGS. BUT THE ASSESSING OFFICER WITHOUT POI NTING OUT ANY SPECIFIC DEFECT AND AFFORDING ANY OPPORTUNITY BY WAY OF ISSU ING SHOW-CAUSE NOTICE HAS MADE THE DISALLOWANCE ON AN ESTIMATED BA SIS. ITA NO.1478/AHD/2017 LION TAPES PVT.LTD. VS. ITO ASST .YEAR - 2012-13 - 4 - 8. THE ASSESSEE REGARDING THE ADMINISTRATIVE AND SU NDRY EXPENSES SUBMITTED THAT IT HAS ALREADY MADE DISALLOWANCE OF RS.1,500/- ON ACCOUNT OF CHARITY AND DONATION. MOST OF THE EXPENSES CLAI MED UNDER THIS HEAD WERE PAID THROUGH ACCOUNT PAYEE CHEQUE. SOME OF THE EXPENSES REPRESENT THE OFFICE WELFARE, SUCH AS, TEA, REFRESH MENT, ETC. FOR WHICH NECESSARY VOUCHERS WERE MAINTAINED. THESE VOUCHERS WERE ALSO DULY SIGNED BY THE RECIPIENT. THE ASSESSEE ALSO FILED T HE LEDGER COPY IN SUPPORT OF SUCH EXPENSES. 8.1. THE ASSESSEE REGARDING THE VEHICLE EXPENS ES DID NOT RAISE ANY OBJECTION. AS SUCH THE ASSESSEE DID NOT PRESS THIS DISALLOWANCE. 9. THE ASSESSEE REGARDING FREIGHT AND CARRIAGE OUTW ARDS EXPENSES SUBMITTED THAT THIS COST WAS INCURRED FOR PURCHASIN G AND SELLING THE GOODS FROM OUTSIDE THE BHAVNAGAR WHERE ITS FACTORY WAS LO CATED. 9.1. THE ASSESSEE ON MANY OCCASIONS HAS IMPORTED TH E GOODS FROM FOREIGN COUNTRIES AND INCURRED THE COST FOR THE TRA NSPORTATION OF THE SAME TO THE FACTOR. THE CARRIAGE OUTWARDS WAS ALSO INCU RRED BY TRANSFERRING THE PRODUCTS IN A SMALL TRANSPORT VEHICLE TO THE BIGGER TRANSPORT TO MAKE THE DELIVERY OF THE GOODS TO THE PARTIES. 9.2. MOST OF THE TIME, THE PAYMENT FOR FREIGHT AND CARRIAGE OUTWARDS EXPENSES WAS MADE THROUGH ACCOUNT PAYEE CHEQUE. THE ASSESSEE IN SUPPORT OF ITS CLAIM FILED THE COPIES OF THE VOUCHE RS AND LEDGER. ITA NO.1478/AHD/2017 LION TAPES PVT.LTD. VS. ITO ASST .YEAR - 2012-13 - 5 - 9.3. HOWEVER, THE LD.CIT(A) DISREGARDED THE C ONTENTION OF THE ASSESSEE BY OBSERVING THAT THERE WAS NO APPLICATION FILED BY THE ASSESSEE FOR THE ADMISSION OF ADDITIONAL PIECES OF EVIDENCE UNDER RULE 46A OF THE ACT. ACCORDINGLY, THE LD.CIT(A) CONFIRMED THE DISA LLOWANCE MADE BY THE ASSESSING OFFICER. 10. BEING AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 11. THE LD.DR BEFORE US VEHEMENTLY SUPPORTED THE OR DERS OF THE LOWER AUTHORITIES. 12. WE HAVE HEARD THE LD.DR AND PERUSED THE MATERIA LS AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS FILED ADDITIONAL EVIDENCE TO THE LD.CIT(A), BUT THE SAME WERE NOT ADMITTED AS THE APPLICATION FOR RULE 46A OF THE ACT WAS NOT FILED BY THE ASSESSEE. IN THIS REGARD, WE NOTE THAT IF THERE WAS NO REQUEST LETTER FILED BY T HE ASSESSEE FOR THE ADMISSION OF THE ADDITIONAL DOCUMENTS, THEN THE LD. CIT(A) SHOULD HAVE AFFORDED THE OPPORTUNITY TO THE ASSESSEE TO RECTIFY THE SAME. 12.1. WE ALSO NOTE THAT THE ASSESSEE HAS FILED SUP PORTING VOUCHERS WHICH WERE FOUND DEFECTIVE BY THE AUTHORITIES BELOW . THEREFORE, THE DISALLOWANCE WAS MADE @ 15%. FROM THE PRECEDING DI SCUSSION, WE NOTE THAT THE SUPPORTING VOUCHERS WERE AVAILABLE WITH TH E AO. THUS IN OUR CONSIDERED VIEW, IT WAS THE DUTY OF THE ASSESSING O FFICER TO POINT OUT THE ITA NO.1478/AHD/2017 LION TAPES PVT.LTD. VS. ITO ASST .YEAR - 2012-13 - 6 - SPECIFIC INSTANCES WHERE THE SUPPORTING VOUCHERS WE RE DEFECTIVE. BUT THE AO DID NOT SO. 12.2. WE ALSO NOTE THAT THE ASSESSEE HAS NOT PR ESSED THE DISALLOWANCE OF THE VEHICLE RUNNING BEFORE THE LD.CIT(A). BUT ON PERUSAL OF THE GROUND OF ASSESSEES APPEAL, WE NOTE THAT IT HAS CH ALLENGED THE SAME BEFORE US, THEREFORE, WE FIND THE CONTRADICTORY ST ATEMENT IN THE CLAIM OF THE ASSESSEE. 12.3. AS THE AMOUNT INVOLVED IN THE ISSUE IS VERY NOMINAL, THEREFORE WE ARE INCLINED TO TAKE THE LENIENT VIEW. THUS AFTER C ONSIDERING THE FACTS OF THE CASE IN TOTALITY, IN OUR CONSIDERED VIEW THE J USTICE WILL BE SERVED UPON THE ASSESSEE IF THE DISALLOWANCE IS REDUCED FR OM 15% TO 10% FOR ALL THE EXPENSES. HENCE, THE GROUND OF APPEAL IS PARTL Y ALLOWED. 13. THE SECOND ISSUE RAISED BY THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF FOREIGN TRA VELING EXPENSES FOR RS.1,11,115/- ONLY. 14. THE ASSESSEE DURING THE YEAR HAS CLAIMED FORE IGN TRAVELING EXPENSES AMOUNTING TO RS. 5,55,777/- ONLY. BUT THE ASSESSEE FAILED TO PRODUCE THE DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIM. THER EFORE, THE ASSESSING OFFICER MADE THE DISALLOWANCE OF RS.1,11,115/- BEIN G 20% OF THE FOREIGN TRAVELING EXPENSES AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO.1478/AHD/2017 LION TAPES PVT.LTD. VS. ITO ASST .YEAR - 2012-13 - 7 - 15. THE AGGRIEVED ASSESSEE, PREFERRED AN APPEAL TO THE LD. CIT(A). THE ASSESSEE BEFORE THE LD.CIT(A) SUBMITTED THAT TH E DIRECTORS OF THE COMPANY HAVE TRAVELED TO FOREIGN COUNTRIES FOR EXPL ORING THE NEW DEVELOPMENT IN THE MACHINERY AS WELL AS THE CONTACT S. THE ASSESSEE ALSO CLAIMED TO HAVE BEEN FILED THE DETAILED LEDGER COPY WITH SUPPORTING EVIDENCE TO THE ASSESSING OFFICER DURING THE ASSESS MENT PROCEEDINGS. THE ASSESSEE FURTHER CLAIMED THAT THERE WERE NO PER SONAL COST INVOLVED IN FOREIGN TRAVELING EXPENSES. 15.1. HOWEVER, THE LD.CIT(A) DISREGARDED THE CONTEN TION OF THE ASSESSEE BY OBSERVING THAT THERE WAS NO SUPPORTING EVIDENCE FILED TO JUSTIFY THE FOREIGN TRAVELING EXPENSES. THEREFORE, HE CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 16. BEING AGGRIEVED BY THE ORDER OF LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 17. THE LD.DR BEFORE US VEHEMENTLY SUPPORTED THE OR DER OF AUTHORITIES BELOW. 18. WE HAVE HEARD THE LD.DR AND PERUSED THE MATERIA LS AVAILABLE ON RECORD. FROM THE PRECEDING DISCUSSION, WE NOTE THAT THE ASSESSEE HAS NOT FILED SUFFICIENT DOCUMENTARY EVIDENCE IN SUPPORT OF ITS CLAIM. THEREFORE, THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER @ 20% OF FOREIGN TRAVELING EXPENSES. THE LD. CIT(A) SUBSEQUENTLY CO NFIRMED THE VIEW OF THE ASSESSING OFFICER. ITA NO.1478/AHD/2017 LION TAPES PVT.LTD. VS. ITO ASST .YEAR - 2012-13 - 8 - 18.1 WE ALSO NOTE THAT THE ASSESSEE HAS ALSO NOT FILED ANY SUPPORTING DOCUMENTARY EVIDENCE BEFORE US IN SUPPORT OF THE EX PENSE. HOWEVER, TAKING A LENIENT VIEW, WE ARE INCLINED TO RESTRICT THE DISALLOWANCE @ 10% OF THE FOREIGN TRAVELING EXPENSES. THUS, TO MEET TH E ENDS OF JUSTICE, WE DIRECT THE ASSESSING OFFICER TO MAKE THE DISALLOWAN CE OF FOREIGN TRAVELING EXPENSES @ 10% OF THE FOREIGN TRAVELING E XPENSES. 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 01/02/2019 SD/- SD/- ( RAJPAL YADAV ) ( WASEEM AHMED ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 01/02/2019 &.., .(.. / T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)- 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) $%, / ITAT, AHMEDABAD