Hira Global Marketing Limited, RAIPUR (CG) V. Assistant Commissioner of Income Tax-1(2), RAIPUR (CG)

ITA 167/BIL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94010 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 08-07-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MEENA
• Assessee Lawyers: S R RAO
• Keywords: Depreciation; Corroborative evidences
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE S/SHRI MUKUL K SHRAWAT, ( JM) AND SHAMIM YAHYA,(AM) I TA . NO . 16 7 AND 16 8 / BLPR / 201 1 (ASSESSMENT YEAR S : 200 4 - 05 AND 200 6 - 07 ) HIRA GLOBAL MARKETING LTD., OM KUTIR, OPP SAGAR NURSIN G HOME, CIVIL LINES, RAIPUR (CG) VS. ASSTT. COMMISSIONER OF INCOME TAX - 1( 2 ), RAIPUR (CG), APPELLANT .. RESPONDENT PAN/GIR NO. : AABCH3906J APPELLANT BY : SHRI S R RAO RESPONDENT BY : SHRI S K MEENA DATE OF HEARING : 1 2 .6.2015 DATE OF PRONOUNCEMENT : 19 . 6. 201 5 O R D E R PER MUKUL K SHRAWAT, ( JM) : TH ESE TWO APPEALS OF THE ASSESSEE ARE EMANATING FROM THE CONSOLIDATED ORDER OF COMMISSIONER OF INCOME TAX (A) DATED 3 0 . 1 2 .2 0 1 0 RESPECTIVELY FOR THE ASSESSMENT YEAR S 200 4 - 05 AND 200 6 - 07 . 2. T HE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS FOR THE ASSESSMENT YEAR (2004 - 05) : 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA S E THE LD. CIT(A) ERRED IN CONFIRMING THE LAOS DI SA LLOWANCE OF RS.20,000/ - CLAIMED BY THE ASSESSEE COMPANY ON ACCOUNT OF PAYMENT TO AND PROVISIONS FOR EMPLOYEES ALLEGING THAT THERE WAS NO BUSINESS ACTIVITY DURING THE YEAR UNDER ASSESSMENT, WHICH IS HIGHLY AR BITRARY AND UNWARRANTED AND UNJUSTIFIED ; ITA. N O. 16 7 AND 16 8 / BLPR/201 1 2 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN CONFIRMING THE LAOS DISALLOWANCE OF RS.15,205 CLAIMED BY THE ASSESSEE COMPANY ON ACCOUNT OF OTHER EXPENSES ALLEGING THAT THERE WAS NO BUSINESS ACTIVITY DURING THE YEAR UNDER ASSESSMENT, WHICH IS HIGHLY ARBITRARY AND UNWARRANTED AND UNJUSTIFIED; 3. CONSEQUENT UPON THE SEARCH UNDER SECTIOKN 132 OF THE INCOME TAX ACT, 1961 (THE ACT) CONDUCED ON 17.11.2006, THE AO HAS PASSED THE IMPUGNED ORDER UNDER SECTION 153A(1) R. W.S.143(3) OF THE ACT, DATED 31.12.2008. THE AO HAS NO T ED THAT THE ASSESSEE COMPANY WAS INCORPORATED ON 14.1.2004 AND NO WORK HAD BEEN DONE BY T HE ASSESSEE . ACCORDING TO THE AO THERE WAS NO ACTIVITY AS PER THE PROFIT AND LOSS ACCOUNT. THE ONLY EXPENDITURE OF RS.20,000/ - MARKED AS PROVISION FOR EMPLOYEES WAS MADE. LIKEWISE THE PROVISION FOR OTHER EXPENSES OF RS.15,205 / - WAS MADE. SINCE NO WORK OR BUSINESS WAS CONDUCTED BY THE ASSESSEE, THEREFORE, THE AO HAS DISALLOWED THE SAME. OUR ATTENTION HAS ALSO BE EN DRAWN THAT THERE WAS LOSS AS PER THE RETURN FILED. HENCE, EVEN AFTER THE SAID TWO ADDITIONS THE TOTAL INCOME WAS ASSESSED AT RS.NIL. 4. WHEN THE MATTER WAS CARRIED BEFORE THE LD.CIT(A), THE LD.CIT(A) AFTER ANALYZING THE FACTS AND CIRCUMSTANCES OF THE CASE, HELD THAT ADMITTEDLY THERE WAS NO BUSINESS DURING THE RELEVANT PREVIOUS YEAR AND EXPENDITURE SHOULD BE ALLOWED IF INCURRED FOR THE PURP OSE OF BUSINESS. AFTER REFERRING FEW CASE LAWS, IT WAS HELD THAT THE ASSESSEE HAD NOT BROUGHT ON RECORD ANY EVID ENCE TO PROVE THAT A SYSTEMATIC BUSINESS ACTIVITY WAS CARRIED OUT ; HENCE THE DISALLOWANCE MADE BY THE AO WAS CONFIRMED. 5 . IT IS ALSO WORTH TO MENTION THAT AN ALTERNATIVE CONTENTION HAS ALSO BEEN MADE THAT IN THE ABSENCE OF ANY INCRIMINATING DOCUMENTS, TH E ADDITION WAS WRONGLY MADE. HOWEVER THAT PLEA HAS ALSO BEEN REJECTED BY THE LD.CIT(A) ON THE GROUND THAT AS PER THE SECOND PROVISO TO SECTION ITA. N O. 16 7 AND 16 8 / BLPR/201 1 3 153A(1) OTHER PROCEEDINGS HAVE BEEN ABATED , AND THAT THE AO IS EMPOWERED TO ISSUE NOTICES FOR SIX ASSESSMENT YE A R S. THEREFORE, EVEN IN THE ABSENCE OF ANY INCRIMINATING DOCUMENTS THE ADDITION COULD HAVE BEEN MADE BY THE AO . 6 . THE LD. AR APPEARING FOR THE ASSESSEE PLACED BEFORE US A COPY OF THE AUDITED ACCOUNTS TO DEMONSTRATE THAT IN THE SUBSEQUENT ASSESSMENT YEAR S THE BUSINESS ACTIVITIES OF THE ASSESSEE HAD BEEN STARTED , THEREFORE, THE ADDITION SHOULD NOT HAVE BEEN MADE BY THE AO . ACCORDING TO HIS ARGUMENTS THERE WAS ONLY TEMPORARY SUSPENSION OF THE BUSINESS. FOR THIS LEGAL PROPOSITION THE RELIANCE WAS PLACED ON THE DECISION OF JAIPUR BENCH OF THIS TRIBUNAL RENDERED IN THE CASE OF VINAYAK LOCAL AREA BANK LTD V/S DCIT REPORTED IN (2012) 76 DTR 0129M(2012) 149 TTJ 0261 AND THE DECISION OF DELHI BENCH OF T HE TRIBUNAL IN THE CASE OF M/S SHANKAR TALKIES V/S ITO REP ORTED IN (1977) 3 TTJ 0496. 7 . HAVING HEARD THE SUBMISSIONS MADE BY BOTH THE SIDES, WE ARE OF THE CONSIDERED OPINION THAT IN A SITUATION WHEN THE COMPANY IN QUESTION WAS INCORPORATED ON 14.1.2004 AND CERTAIN EXPENDITURES WERE INCURRED PRIOR TO STARTING OF BUSINESS, THEREFORE, THE SAME COULD HAVE BEEN CAPITALIZED AS PRESCRIBED UNDER THE PROVISIONS OF ACT. THIS IS NOT THE CASE, AS APPEARED FROM THE FACTS, THAT THERE WAS SUSPENSION OF BUSINESS TEMPORARILY FOR THE YEAR UNDER CONSIDERATION . THE ADMITTED FA CTUAL POSITION WAS THAT THE BUSINESS OF THE COMPANY HAD NOT COMMENCED AT ALL DURING THE YEAR UNDER CONSIDERATION. NATURALLY THE EXPENDITURE INCURRED PRIOR TO THE COMMENCEMENT OF THE BUSINESS CANNOT BE ALLOWED. WE, THE REFORE, FIND NO FORCE IN THE ARGUMEN TS OF THE ASSESSEE . WE HEREBY CONFIRM THE LEGAL AS WELL AS FACTUAL FINDING OF THE LD. CIT(A) AND DISMISS BOTH THE GROUNDS OF ASSESSEE . ITA. N O. 16 7 AND 16 8 / BLPR/201 1 4 8 . APPEAL FOR THE ASSESSMENT YEAR 2004 - 05 IS DISMISSED. 9 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS FOR THE A SSESSMENT YEAR (2006 - 07): 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN CONFIRMING THE LAOS DISALLOWANCE OF RS. 1 2,000/ - CLAIMED BY THE ASSESSEE COMPANY ON ACCOUNT OF SALARY ALLEGING THAT THERE WAS NO BUSINESS ACTIV ITY DURING THE YEAR UNDER ASSESSMENT, WHICH IS HIGHLY ARBITRARY AND UNWARRANTED AND UNJUSTIFIED; 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN CONFIRMING THE LAOS DISALLOWANCE OF RS. 71,500 CLAIMED BY THE ASSESSEE COMPANY ON ACCOUNT OF OTHER EXPENSES ALLEGING THAT THERE WAS NO BUSINESS ACTIVITY DURING THE YEAR UNDER ASSESSMENT, WHICH IS HIGHLY ARBITRARY AND UNWARRANTED AND UNJUSTIFIED; 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN CONFIRMING THE LAOS DISALLOWANCE OF RS.1,14,557 CLAIMED BY THE ASSESSEE COMPANY ON ACCOUNT OF DEPRECIATION ALLEGING THAT THERE WAS NO BUSINESS ACTIVITY DURING THE YEAR UNDER ASSESSMENT, WHICH IS HIGHLY ARBITRARY AND UNWARRANTED AND UNJUSTI FIED; 10 . SO FAR AS THE GROUNDS OF APPEAL NO.1 AND 2 ARE CONCERNED , A VIEW HAS ALREADY BEEN TAKEN THAT IN THE ABSENCE OF COMMENCE MENT OF REGULAR BUSINESS ACTIVITY THE E X PENDITURE HAS WRONGLY BEEN CLAIMED. ON THE SAME LINES FOR THE YEARS UNDER CONSIDER ATION, THE EXPENDITURE OF RS.12,000/ - UNDER THE HEAD SALARY AND RS.71,500/ - UNDER THE HEAD OTHER EXPENSES ARE HEREBY CONFIRMED. THESE TWO GROUNDS ARE DISMISSED. 11 . APROPOS , GROUND NO.3, THE ASSESSEE HAS CLAIMED DEPRECIATION OF RS.1,14,557/ - BUT THERE WAS NO SUPPORTING EVIDENCE TO DEMONSTRATE THAT THE ASSET IN QUESTION WAS ACTUALLY USED FOR THE PURPOSE OF BUSINESS. HENCE, WE ARE NOT INCLINED TO DISTURB THE LEGAL AS WELL FACTUAL FINDING OF THE LD. CIT(A). WE FIND NO FORCE IN THE SUBMISSIONS OF THE LD. AR. THIS GROUND IS ALSO DISMISSED. ITA. N O. 16 7 AND 16 8 / BLPR/201 1 5 1 2 . IN THE RESULT, THE APPEAL S OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19TH JUNE , 201 5 SD SD ( SHAMIM YAHYA ) ( MUKUL K SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER RAIPUR : 19TH JUNE,2015. SRL , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2 . THE RESPONDENT. 3. THE CIT(A) - CONCERNED 4. CIT CONCERNED 5. DR, ITAT, RAIPUR CONCERNED 6. GUARD FILE. BY ORDER, SENIOR PRIVATE SECRETARY /AR