I.T.O., Ward-3(1), Etah V. M/s Anand Deep Torches Pvt. Ltd., Etah

ITA 148/AGR/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0300 (ITAT-AGRA)
• Duration Of Justice: 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-01-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 13-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.148/AGR/2012 ASSESSMENT YEAR: 2008-09 INCOME TAX OFFICER (AO), VS. M/S ANAND DEEP TORCH ES PVT. LTD., WARD-3(1), ETAH. SEWA NIKETAN COMPOUND, AGRA ROAD, AGRA. (PAN: AAGCA 6957 M) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.K. MISHRA, JR. D.R. RESPONDENT BY : SHRI DEEPENDRA MOHAN, C.A . DATE OF HEARING : 11.01.2013 DATE OF PRONOUNCEMENT OF ORDER : 18.01.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 30.01.2012 PASSED BY THE LD. CIT(A), GHAZIABAD. 2. THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL READ AS UNDER :- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS TO ALLOW RELIEF TO THE ASSESSEE OF RS.1,95,969/- ON ACCOUNT OF EXPENSE S THOUGH THE ASSESSEE HAD FAILED TO PRODUCE BOOKS OF ACCOUNTS AT THE TIME OF ASSESSMENT AS WELL AS DURING THE REMAND REPORT. TH EREFORE EXPENSES REMAINED UNEXPLAINED. THE A.O. HAD RIGHTLY DISALLO WED @ 50% OF MANUFACTURING AND ADMINISTRATIVE EXPENSES. ITA NO.148/AGR/2012 A.Y. 2008-09 2 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.14,40,000/- ON ACCOUNT OF SHARE CAPI TAL AS THE ASSESSEE FAILED TO EXPLAIN THE SHARE CAPITAL AS NEITHER ANY REPLY NO ANY EVIDENCE WAS FILED IN THIS REGARD DURING THE ASSESS MENT AS WELL AS REMAND PROCEEDINGS. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.17,92,037/- ON ACCOUNT OF SUNDRY CRE DITORS, SINCE THESE REMAINED UNVERIFIED AND UNCONFIRMED BOTH AT THE TIM E OF ASSESSMENT AS WELL AS REMAND PROCEEDINGS. 4. THAT THE ORDER OF LD. CIT(A) BE QUASHED AND THAT OF THE A.O. BE RESTORED. 5. APPELLANT CRAVES LEAVE TO AMEND, ALTER, ADD OR M ODIFY ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF CASE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E DERIVES INCOME FROM PRODUCING AND ASSEMBLING OF LED BASED TORCHES. THE COMPANY WAS INCORPORATED ON 03.05.2007. THE ASSESSEE DID NOT APPEAR BEFORE THE A.O. INSPITE OF VARIOUS OPPORTUNITIES PROVIDED. THE A.O. MADE EX-PARTE ASS ESSMENT UNDER SECTION 144 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. THE BOOKS OF ACCOUNT WAS ALSO NOT PRODU CED BEFORE THE A.O. THE A.O. REJECTED THE BOOKS OF ACCOUNT UNDER SECTION 145(3) OF THE ACT AND MADE ADDITION OF RS.3,20,969/-, BEING 50% OF TOTAL EXPENSES CLAIMED BY THE ASSESSEE IN TRADING AND PROFIT & LOSS ACCOUNT. THE A.O. ALSO MADE ADDITION OF RS.14,40,000/- ON ACCOUNT OF SHARE CAPITAL INTRODUCED DURING THE YEAR. ADDIT ION OF RS.18,67,037/- HAS ALSO BEEN MADE BY THE A.O. ON ACCOUNT OF SUNDRY CREDITOR S, AS NO CONFIRMATION AND ITA NO.148/AGR/2012 A.Y. 2008-09 3 OTHER RECORDS WERE PRODUCED BEFORE THE A.O. THE CI T(A), AFTER REPRODUCING THE ASSESSEES SUBMISSION, RESTRICTED THE ADDITION TO T HE EXTENT OF RS.1,25,000/- OUT OF TOTAL ADDITION OF RS.3,20,969/- AS UNDER :- (PARAGR APH NO.8.6, PAGE NOS.12 & 13) ON ACCOUNT OF NON-PRODUCTION OF BOOKS OF ACCOUNT, PRIMARILY EVIDENCE OF EXPENSES; THE AO MADE ESTIMATED DISALLO WANCE OF 50% OF MANUFACTURING AND ADMINISTRATIVE EXPENSES. BOOKS OF ACCOUNT WERE NOT PRODUCED EVEN DURING APPEAL/REMAND PROCEEDINGS AND HENCE AOS ACTION OF MAKING ESTIMATED DISALLOWANCE IS UPHELD. HOWEVER, ON ESTI MATE BASIS, THIS DISALLOWANCE IS REDUCED TO RS.1,25,000/-. 4. THE CIT(A) HAS ALSO DELETED THE ADDITION OF RS.1 4,40,000/- AS UNDER :- (PARAGRAPH NO.8.4, PAGE NO.12) I FIND THAT THE NAMES AND ADDRESSES OF SHARE APPLI CANT AND SHARE HOLDERS ARE PROPERLY GIVEN ON RECORD. ALL TH ESE PERSONS ARE FAMILY MEMBER OF MANAGING DIRECTOR SH. ANAND KUMAR SHARMA. ALL THESE PERSONS ARE REGULARLY ASSESSED TO TAX AND THE IR RETURNS ON INCOME SHOW SUFFICIENT CREDITWORTHINESS. ALL THESE PERSONS HAVE ALONG WITH THEIR RETURNS, FILED BALANCE SHEET WHEREIN SUC H SHARE HOLDING IS DULY REFLECTED. THUS, I HOLD THAT SHARE CAPITAL OF RS.14,40,000/- I S WELL EXPLAINED AND NO ADDITION IS WARRANTED ON THIS GROU ND. 5. THE CIT(A) HAS RESTRICTED THE ADDITION TO THE EX TENT OF RS.75,000/- OUT OF TOTAL ADDITION OF RS.18,67,037/- ON ACCOUNT OF CRED ITORS AS UNDER :- (PARAGRAPH NO.8.5, PAGE NO.12) ITA NO.148/AGR/2012 A.Y. 2008-09 4 I FIND THAT THE LIST CONTAINING NAMES AND ADDRESSE S OF THE CREDITORS WAS THERE ON RECORD BEFORE THE AO. NOW D URING APPEAL, CONFIRMATIONS HAVE ALSO BEEN FURNISHED IN RESPECT O F ALL THE MAJOR SUNDRY CREDITORS NAMELY SIDHI VINAYAK CEROUIT SYSTE M; YASHODA ENGINEERING WORKS; SHRI JAI PRAKASH SHARMA AND M/S AKSHYA LEDS. THE REST OF THE CREDITS ARE OF SMALL AMOUNTS. IN A BSENCE OF PROPER CONFIRMATIONS, AN ESTIMATED ADDITION OF RS.7 5,000/- IS UPHELD ON THIS ACCOUNT. 6. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES. WE NOTICE THAT THE ORDER OF CIT(A) IS NOT IN ACCORDANCE WITH SECTION 2 50(6) OF THE ACT. THE CIT(A), INSPITE OF THE FACT THAT THE ASSESSEE DID NOT PRODU CE BOOKS OF ACCOUNT, REDUCED THE ADDITION FROM RS.3,20,969/- TO RS.1,25,000/- WITHOU T ANY BASIS. FURTHER IN ABSENCE OF PROPER CONFIRMATION, THE CIT(A) RESTRICTED THE L UMP SUM ADDITION OF RS.75,000/- OUT OF THE ADDITION MADE ON ACCOUNT OF CREDITORS. THIS IS UNUSUAL FINDING OF CIT(A) THAT HOW IN CASE OF ADDITION ON ACCOUNT OF C ASH CREDITOR CAN BE SUSTAINED ON LUMP SUM BASIS. THE ORDER OF CIT(A) IS CONTRARY TO BASIC UNDERSTANDING AND AGAINST THE LAW. THE CIT(A) DELETED THE ADDITION O N ACCOUNT OF SHARE APPLICATION WITHOUT VERIFYING THE FACTS AND WITHOUT RECORDING T HE COMPLETE FACTS. HOWEVER, THE LD. AUTHORISED REPRESENTATIVE HAS GIVEN UNDERTAKING THAT THE ASSESSEE WILL PRODUCE THE BOOKS OF ACCOUNT BEFORE THE CIT(A). KEEPING IN VIEW THE ORDER OF CIT(A) WHICH IS NOT IN ACCORDANCE WITH SECTION 250(6) OF T HE ACT AND IN THE LIGHT OF UNDERTAKING GIVEN BY THE LD. AUTHORISED REPRESENTAT IVE, WE SEND THIS MATTER BACK ITA NO.148/AGR/2012 A.Y. 2008-09 5 TO THE FILE OF CIT(A) WITH THE DIRECTION TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO BOTH THE SIDES. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS AL LOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY