ITO, Ward - 42(1), Kolkata, Kolkata V. Smt. Premlata Gupta, Kolkata

ITA 1662/KOL/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3205 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2013
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 05-12-2011
• Court: TRIBUNAL
• Department Lawyers: D K SONOWAL JCIT SRDR
• Keywords: Rejection of books of accounts; Business expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.1662/KOL/2011 ASSESSMENT YEAR:2006-07 INCOME TAX OFFICER, WARD-42(1), 18, RABINDRA SARANI, PODDAR COURT, 4 TH FLOOR, KOLKATA 700 001 / V/S . SMT. PREMLATA GUPTA 5, B.K. PAUL AVENUE, KOLKATA 700 005 [ PAN NO.ADNPG 2386H ] /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI D.K. SONOWAL, JCIT, SR-DR /BY RESPONDENT SHRI SUBASH AGARWAL, AR /DATE OF HEARING 10-06-2013 /DATE OF PRONOUNCEMENT 21 -06-2013 /O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-XII, KOLKATA (CIT(A) FOR SHOR T) DATED 26-09-2001AND THE ASSESSMENT U/S 143(3) OF THE INCOME-TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS THE ACT) BY THE ACIT, CIRCLE-42 KOLKATA FOR THE ASSESS MENT YEAR (AY) 2006-07. 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) DELETING THE DISALLOWANCE OF EXPENSES ADDED BY THE ASSESSING OFFICER ON ACCOUNT OF FREIGHT, CONVEYANCE, GENERAL EXPENSES AN D UNLOADING CHARGES @ 10% ITA NO.1662/KOL/11 AY 2006-07 ITO WD-42(1) KOL V. SMT. PREMLATA GUPTA PAGE 2 OF THE EXPENSES OF RS.31,43,295/- I.E., RS.3,14,329 /-. FOR THIS, REVENUE HAS RAISED THE FOLLOWING GROUND NO.1:- 1. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.3,14,329/- ON ACCOUNT OF DISALLOWANCE OF EXPENSES FROM P/L A/C. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE ASSESSM ENT ORDER THAT ASSESSING OFFICER DISALLOWED ON THE PREMISES THAT THE VOUCHER S ARE ONLY INTERNAL VOUCHERS IN RESPECT TO THIS EXPENSES. HENCE, HE DISALLOWED 1 0% OF THE EXPENSES. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE DISALLOWANC E BY STATING THAT THESE ARE LEGITIMATE BUSINESS EXPENSES AND THERE ARE NO DEFEC T POINTED OUT BY THE AO IN THE SELF-MADE VOUCHERS. THE CIT(A) IN PARA-6 HAS OB SERVED AS UNDER:- 6. THE ADDITION OF RS.3,14,329/- RELATES TO AD HOC DISALLOWANCE @ 10% OF FREIGHT, CONVEYANCE AND GENERAL EXPENSES. THE ASSESSEE HAD S UBMITTED THE DETAILS OF FREIGHT PAID TO VARIOUS PARTIES ALONG WITH DETAILS OF TDS D EDUCTED ON THE FREIGHT AND CLAIMED THAT THE EXPENSES ARE DULY VOUCHED AND LEGITIMATE B USINESS EXPENDITURE. THE AO HAS NOT POINTED OUT BY SPECIFIC DEFECTS IN ANY SPECIFIC VOUCHERS. FURTHER, AO HAS NOT ISSUED ANY SHOW CAUSE NOTICE BEFORE MAKING THIS AD HOC DISALLOWANCE AND ACCOUNTS OF THE ASSESSEE ARE DULY AUDITED AND EXPENSES ARE DULY VOUCHED. THEREFORE, AD HOC ADDITION IS DELETED. 4. WE FIND THAT THE ASSESSING OFFICER COULD NOT POI NT OUT ANY DEFECT IN THE VOUCHERS AND EVEN IT IS NOT STATED BY REVENUE THAT THESE EXPENSES ARE EXCESSIVE OR UNREASONABLE. ONCE THE POSITION, WE ARE OF THE V IEW THAT LD. CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCES AND WE CONFIRM TH E SAME. THIS GROUND OF REVENUES APPEAL IS DISMISSED. 5. COMING TO SECOND ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE DISALLOWANCE OF EXPENSES OF PER SONAL EXPENSE OF RS.25,493/-. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.2:- ITA NO.1662/KOL/11 AY 2006-07 ITO WD-42(1) KOL V. SMT. PREMLATA GUPTA PAGE 3 2. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.25,493/- ON ACCOUNT OF DISALLOWANCE OF EXPENSES CLAIMED IN THE COMPUTATION. 6. WE FIND FROM THE ASSESSMENT ORDER THAT THE ASSES SEE IS MAINTAINING PERSONAL PROFIT AND LOSS ACCOUNT WHICH IS ENCLOSED WITH THE MAIN ACCOUNTS. IN THIS PERSONAL ACCOUNT, ASSESSEE HAS CLAIMED EXPENSE S ON ACCOUNT OF TELEPHONE CHARGES, BANK CHARGES AND FILING FEES ETC., THE ASS ESSEE HAS CLAIMED THESE EXPENSES IN THE NATURE OF BUSINESS. THE ASSESSING O FFICER WHILE NOTICING THESE EXPENSES, MADE DISALLOWANCE BEING PERSONAL IN NATUR E FOR THE REASONS THAT THESE ARE ON ACCOUNT OF PERSONAL EXPENSES OF THE ASSESSEE . AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED THE DIS ALLOWANCE BY OBSERVING AS UNDER:- 7. THE ADDITION OF RS.25,493/- RELATES TO DISALLOW ANCE ON ACCOUNT OF PERSONAL EXPENSES FOR TELEPHONE, BANK CHARGES AND FILING TEE S. THE FILING FEES FOR NSDL AND BANK CHARGES WERE LEGITIMATE BUSINESS EXPENDITURE, HENCE, ADDITION MADE OF RS.11,480/- IS DELETED. THE BALANCE ADDITION OF RS. 24,0114/- ON ACCOUNT OF TELEPHONE EXPENSES RELATING TO TELEPHONE INSTALLED AT OFFICE PREMISES AND RESIDENCE. THEREFORE, THE DISALLOWANCE ON THIS ACCOUNT IS RESTRICTED TO 1 /5 TH OF THE TOTAL EXPENDITURE ON ACCOUNT OF CLAIM OF TELEPHONE EXPENSES OF RESIDENCE . WE FIND THAT CIT(A) HAS DELETED THE EXPENSES OF FIL ING FEES IN NSDL AND BANK CHARGES WHICH WERE LEGITIMATE BUSINESS EXPENSES. WE HAVE NO QUARREL OVER THE SAME BUT IN REGARD TO TELEPHONE EXPENSES, WHICH IS INSTALLED AT THE RESIDENCE OF THE ASSESSEE, THE EXPENSES ARE AT RS.24,014/-. THE CIT(A) DIRECTED TO RESTRICT THE SAME AT 1/5 TH . WE HAVE SERIOUS RESERVATION ON THE SAME BECAUSE T HESE ARE NOT BUSINESS EXPENSES RATHER THESE ARE PERSONAL EXPENSE . IN SUCH CIRCUMSTANCES, THE DISALLOWANCE OF EXPENSE SHOULD HAVE BEEN CONFIRMED AND WE CONFIRM ACCORDINGLY. THIS ISSUE OF REVENUES APPEAL IS PART LY ALLOWED. 7. COMING TO NEXT COMMON ISSUE REGARDING DELETION O F ADDITION OF RS.1,80,703/- ON ACCOUNT OF SALE OF SUPPRESSION OF AAMSUT AND DELETION OF ITA NO.1662/KOL/11 AY 2006-07 ITO WD-42(1) KOL V. SMT. PREMLATA GUPTA PAGE 4 ADDITION ON ACCOUNT OF SALE OF SUPPRESSION OF MUST ARD OIL. FOR THIS REVENUE HAS RAISED FOLLOWING TWO GROUNDS:- 3. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,80,703/- ON ACCOUNT O F SALE SUPPRESSION OF AAMSUT. 4. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.45,98,227/- ON ACCOUNT OF SALE S UPPRESSION OF MUSTARD OIL. 8. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT IN RESPECT OF THE ADDITION MADE BY ASSESSING OFFICER IN RESPECT TO CLOSING STOCK OF A AMSUT, HE NOTED THAT FROM THE QUANTITATIVE TALLY THAT AAMSUT RATE OF CLOSING ST OCK IS AT RS.17.40 WHEREAS THE SALES HAVE BEEN DECLARED @ 16.10. ACCORDING TO AO, THE SALE PRICE HAS BEEN REDUCED BY A SUM OF RS.1,80,703/- FOR THE QUANTITY OF 1,39,002 KGS. SIMILARLY, IN RESPECT TO MUSTARD OIL THE AO NOTED THAT ACCORDIN G TO OUTSIDE CONSIGNMENT SALE RATE WAS AT RS.45.81 KG. BUT THE LOCAL SALE IS @ RS .41.70 KG. ACCORDINGLY, THE SUPPRESSION OF SALE OF RS.4.11 WAS ADDED BY THE AO TO THE QUANTITY OF MUSTERD OIL SOLD LOCALLY AT 11,18,790 KGS. AND ACCORDINGLY THE TOTAL ADDITION WAS MADE AT RS.45,98,227/-. AGGRIEVED ON BOTH THE COUNTS, AS SESSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED THE ADDITION BY OBSERVI NG IN PARA-4 OF HIS ORDER, WHICH IS REPRODUCED AS UNDER:- 4. AFTER CAREFUL CONSIDERATION OF THE ASSESSMENT O RDER AND WRITTEN SUBMISSION. IT IS NOTICED THAT THE ASSESSEE ENGAGED IN THE BUSINESS O F MUSTARD OIL WHICH IS SOLD LOCALLY IN BENGAL AND MUSTARD OIL IS ALSO SOLD ON CONSIGNME NT BASIS IN ANDAMAN & NICOBER ISLANDS. THE AO HAS COMPARED THE SALE PRICE OF MUST ARD OIL DURING CONSIGNMENT SALE WITH THE LOCAL SALE PRICE AND MADE ADDITIONS OF RS. 45,98,227/- ON ACCOUNT OF SUPPRESSION OF SALE VALUE @ RS.4.11 PER KG. THE CON SIGNMENT SALE PRICE OF MUSTARD OIL THROUGH CONSIGNEE INCLUDES TRANSPORTATION CHARGES, STORAGE EXP., CONSIGNEE COMMISSION AND OTHER INCIDENTAL EXPENSES FOR CONSIG NMENT SALE AT ANDAMAN. IT IS ADMITTED FACT THAT AO HAD NOT REJECTED THE BOOKS OF ACCOUNTS SINCE THE AO DID NOT NOTICE ANY DEFECTS OF THE BOOKS OF ACCOUNTS TO REJE CT ITS RESULTS. THEREFORE, THE COMPARISON MADE BY AO IS NOT REASONABLE. HENCE, THE ADDITION OF RS.45,98,227/- IS DELETED. THE ADDITION OF RS.1,80,703/- RELATES TO C OMPARISON OF RATE IN AAMSUT SINCE THE CLOSING STOCK WAS VALUED AT HIGHER PRICE THAN T HE SALE PRICE BY AN AMOUNT OF RS.1.3 PER KG. THE CLOSING STOCK VALUE INCLUDES THE PURCHASE PRICE, FREIGHT AND CST WHILE THE SALE PRICE IS CREDITED AFTER EXCLUDING VA T. SINCE THE ASSESSEE IS FOLLOWING THIS POLICY CONSISTENTLY AND BOOKS OF ACCOUNTS HAVE NOT BEEN REJECTED BY THE AO. THE ITA NO.1662/KOL/11 AY 2006-07 ITO WD-42(1) KOL V. SMT. PREMLATA GUPTA PAGE 5 ADDITION OF RS.180,703/- IS BASED ON CONJECTURE AND SURMISES. THE ADDITION OF RS.1,80,703/- IS DELETED. 9. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE ARE OF THE VIEW THAT CIT(A) HAS RIGHTLY DELETED THE ADDITION OF SUPPRESSION OF SALE OF MUSTERED OI L AT RS.45,98,227/- FOR THE REASON THAT THE CONSIGNMENT SALE PRICE OF MUSTERED OIL THROUGH CONSIGNEE INCLUDES TRANSPORTATION CHARGES, STORAGE CHARGES, C ONSIGNEE COMMISSION AND OTHER INCIDENTAL EXPENSES, WHICH INCREASES RATE OF THE COMMODITY. SIMILARLY, IN RESPECT TO ADDITION OF AAMSUT IN THE CLOSING STOC K THE ASSESSING OFFICER HAS MADE ADDITION OF PURCHASE PRICE INCLUDING FREIGHT A ND CST WHEREAS FROM THE SALE BILL AND THE CST ARE EXCLUDED. IN VIEW OF THE ABOVE DIFFERENCE IN SALE PRICE AND VAT FROM THE CLOSING STOCK IS DIFFERENT. WE FIN D NO REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) AND ACCORDINGLY, WE CONFIRM THE SAME. THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 10. IN THE RESULT, APPEAL OF REVENUE IS PARTLY ALLO WED . ORDER IS PRONOUNCED IN THE OPEN COURT 21 ST JUNE, 2013 SD/- SD/- (N.S.SAINI) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER KOLKATA, *DKP DATE: 21ST JUNE, 2013 !'# - ITA NO.1662/KOL/11 AY 2006-07 ITO WD-42(1) KOL V. SMT. PREMLATA GUPTA PAGE 6 %%& %%& %%& %%& '& '& '& '& / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. ''%( ) / CONCERNED CIT 4. ) - / CIT (A) 5. &*+ %%%( , %( / DR, ITAT, KOLKATA 6. +,- ./ / GUARD FILE. BY ORD ER/ , 0/2 '3 %(,