Biplab Chakraborty, Howrah V. ACIT, Circle - 47, Kolkata, Kolkata

ITA 1681/KOL/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0164 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 06-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PROVAS ROY
• Assessee Lawyers: PINKY SHAW
• Keywords: Business expenditure; Onus to prove
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA SMC BENCH, KOLKATA [BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER] I.T.A. NO. 1681/KOL/2018 ASSESSMENT YEAR: 2012-13 BIPLAB CHAKRABORTY.........APPELLANT 78/418, THAKUR RAMKRISHNA LANE SHIBPUR HOWRAH 711 103 [PAN : AEXPC 7167 D] ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-47, KOLKATA...RESPONDENT APPEARANCES BY: MISS PINKY SHAW, A/R, APPEARED ON BEHALF OF THE ASSESSEE. SHRI PROVAS ROY, JCIT, APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : NOVEMBER 26 TH , 2018 DATE OF PRONOUNCING THE ORDER : NOVEMBER 5 TH , 2018 O R D E R PER J. SUDHAKAR REDDY :- THIS APPEAL FILED BY THE ASSESSE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)- 14, (HEREINAFTER THE LD. CIT (A)), PASSED U/S 250 OF THE INCOME TAX ACT, 1961 (THE ACT), DT. 04/09/2017, FOR THE ASSESSMENT YEAR 2012-13. 2. THERE IS A DELAY OF 9 DAYS IN FILING OF THIS APPEAL. AFTER PERUSING THE PETITION FOR CONDONATION ALONG WITH AN AFFIDAVIT. I AM SATISFIED THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM FILING THIS APPEAL ON TIME. HENCE THE DELAY IS CONDONED AND APPEAL ADMITTED. 3. THE ASSESSEE IS AN INDIVIDUAL AND IS IN THE BUSINESS OF MANUFACTURING SPARES, GEAR BOX, FABRICATION AND RESELLER OF IRON AND STEEL. HE FILED HIS RETURN ELECTRONICALLY ON 27/09/2012, DECLARING TOTAL INCOME OF RS.26,29,371/-. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT, BY DETERMINING THE TOTAL INCOME AT RS.30,88,980/- INTERALIA MAKING DISALLOWANCE ON ACCOUNT OF LATE DELIVERY CHARGES, EXPENDITURE UNDER THE HEAD CARRIAGE INWARD AND OUTWARD, REPAIRS AND MAINTENANCE, TOUR AND TRAVELLING AND DONATION AND ADVERTISEMENT. ON APPEAL, THE LD. FIRST APPELLATE AUTHORITY GRANTED PART RELIEF. 2 I.T.A. NO. 1681/KOL/2018 ASSESSMENT YEAR: 2012-13 BIPLAB CHAKRABORTY 4. FURTHER AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- 1. FOR TH.AT THE LD. CIT(A) UNLAWFULLY SUSTAINED RS. 1,03,422/- FOR LATE DELIVERY CHARGES HOLDING THE SAME NOT ATTRIBUTABLE TO THE YEAR UNDER APPEAL OR FOR LACK OF PROOF ALTHOUGH UNDER THE INCOME TAX LAW SUCH CLAIM IS FULLY ADMISSIBLE. 2. FOR THAT THE LD. CIT(A) WAS NOT CORRECT IN UPLOADING ESTIMATED ADDITION OF A SUM OF RS. 96,818/- BEING 10% OF CARRIAGE INWARD AND OUTWARD ON ESTIMATE, WHICH IS BONAFIDE AND GENUINE BUSINESS EXPENSES AND SUCH DISALLOWANCE IS LIABLE TO BE STRUCK DOWN IN THIS FORUM. 3. FOR THAT THE LD. CIT(A) DID NOT CONSIDER THE APPELLANT'S CONTENTION IN PROPER PERSPECTIVE SUSTAINED THE ESTIMATED ADDITION RS. 11,811/- I.E. 10% OF REPAIR & MAINTENANCE EXPENSES OF RS. 1,18,117/- WHICH MAY BE DELETED IN HIGHER FORUM. 4. FOR THAT THE LD. CIT(A) WAS ERRED IN LAW IN SUSTAINING THE ARBITRARY ESTIMATE ADDITION BEING 15% ON RS. 1,19,879/- I.E. RS. 17,982/- ON THE HEAD OF TOUR & TRAVEL EXPENSES WITHOUT BINGING ANY COGENT MATERIAL IN SUPPORT OR SUCH ESTIMATED DISALLOWANCE AND ACCORDINGLY THESE DISALLOWANCES LIABLE TO BE DELETED IN THIS FORUM. 5. FOR THAT THE CIT(A) HAS WRONGLY ADDED BACK RS. 10,000/- ON DONATION & ADVERTISEMENT WHICH ARE NOT SUSTAINABLE IN LAW AND MAY BE DELETED IN THIS FORUM. YOUR APPELLANT CRAVES LEAVE TO ADD SUPPLEMENT OR AMEND FURTHER GROUND OR GROUNDS AT THE TIME OF HEARING. 5. LD. COUNSEL FOR THE ASSESSEE, MISS P. SHAW, SUBMITTED THAT THE ASSESSING OFFICER HAS WRONGLY MADE DISALLOWANCE OF LATE DELIVERY CHARGES CLAIMED ON THE GROUND THAT THE DELAY WAS ATTRIBUTABLE TO THE ASSESSEE. SHE CONTENDED THAT THE EXPENDITURE IS BUSINESS EXPENDITURE, WHICH WAS DEDUCTED AT SOURCE BY PURCHASERS. SHE FURTHER SUBMITTED THAT THE EXPENDITURE WAS DISALLOWED ON AN ADHOC BASIS BY THE ASSESSING OFFICER AND WHEREAS THE LD. CIT(A) HAS MADE SPECIFIC DISALLOWANCE. SHE ARGUED THAT THE LD. CIT(A) HAS CONFIRMED THE DISALLOWANCE ON THE GROUND THAT PROOF OF PAYMENT WAS NOT SUBMITTED. SHE POINTED OUT THAT THIS CONCLUSION WAS AN ERROR AS IT WAS THE PARTIES, WHO DEDUCTED THIS AMOUNT FROM THE PAYMENTS DUE TO THE ASSESSEE AND HENCE NO SEPARATE PROOF OF CASH RECEIPTS WAS REQUIRED TO BE PRESENTED. SHE RELIED ON THE DECISION OF THE CIT(A)-XXX, KOLKATA, IN THE CASE OF PATRON INDUSTRIAL CORPORATION, ORDER DT. 19/01/2010 AND SUBMITTED THAT UNDER SIMILAR CIRCUMSTANCES THE EXPENDITURE WAS ALLOWED BY THE LD. FIRST APPELLATE AUTHORITY. SHE FURTHER REFERRED TO THE ADHOC DISALLOWANCE MADE BY THE ASSESSING OFFICER OF THE CLAIMS THAT, EXPENDITURE WAS INCURRED TOWARDS A) CARRIAGE INWARDS AND OUTWARDS, B)REPAIRS AND MAINTENANCE, C) TOURS & TRAVELLING EXPENSES & D) DONATION AND ADVERTISEMENTS AND ARGUED THAT THERE IS NO BASIS FOR MAKING SUCH ADHOC DISALLOWANCE. SHE SUBMITTED THAT SPECIFIC DISALLOWANCE MAY BE MADE OF ANY 3 I.T.A. NO. 1681/KOL/2018 ASSESSMENT YEAR: 2012-13 BIPLAB CHAKRABORTY A PARTICULAR EXPENDITURE WHICH IS CLAIMED TO HAVE BEEN INCURRED UNDER A PARTICULAR HEAD OF INCOME, AND IF IT IS NOT SATISFACTORILY PROVED BY THE ASSESSEE BUT GENERAL ADHOC DISALLOWANCE SHOULD NOT BE MADE ON SURMISES AND CONJECTURES. SHE RELIED ON THE JUDGMENT OF THE D BENCH OF THE KOLKATA TRIBUNAL IN ITA NO. 345/KOL/2017, ASSESSMENT YEAR 2012-13, B.S. CONSULTANCY SERVICES VS. ITO , ORDER DT. 06/09/2017, FOR THIS PROPOSITION. SHE FURTHER RELIED ON THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF PCIT-2 VS. MAZDA LTD. [2017] 86 TAXMANN.COM 27 (GUJARAT) , FOR THE PROPOSITION THAT DAMAGES PAID FOR DELAYED DELIVERY IS A BUSINESS EXPENSES. 5.1. THE LD. D/R, MR. PROVAS ROY, ON THE OTHER HAND, OPPOSED THE CONTENTIONS OF THE LD. COUNSEL FOR THE ASSESSEE AND SUBMITTED THAT IN THE CASE OF DELAYED DELIVERY CHARGES, THE LD. CIT(A) HAS EXAMINED THE DETAILS BILL-WISE AND HAS COME TO A CONCLUSION THAT PROOF OF PAYMENT WAS NOT GIVEN BY THE ASSESSEE IN THIS CASE. HE REFERRED TO PARA 5.2.2. OF THE LD. CIT(A)S ORDER AND SUBMITTED THAT THE BURDEN TO PROVE THAT A PARTICULAR EXPENDITURE WAS INCURRED FOR THE PURPOSE OF BUSINESS, IS ON THE ASSESSEE. ON THE ISSUE OF ADHOC DISALLOWANCE, HE RELIED ON THE ORDER OF THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSING OFFICER HAS SPECIFICALLY POINTED OUT THAT THE PAYMENTS WERE MADE IN CASH AND THAT THE VOUCHERS SUBMITTED WERE NOT NUMBERED ETC. HE RELIED ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT APPEAL OF THE ASSESSEE SHOULD BE DISMISSED. 6. HEARD RIVAL CONTENTIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, I HOLD AS FOLLOWS:- 7. THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE THAT NO DISALLOWANCE CAN BE MADE OF EXPENDITURE INCURRED ON DELAYED DELIVERY HAS TO BE ACCEPTED FOR THE REASON THAT WHEN THE PURCHASER DEDUCTS THE AMOUNT IN QUESTION WHILE MAKING THE PAYMENT TO THE ASSESSEE NO SEPARATE RECEIPT IS ISSUED BY THE PURCHASER. THE ASSESSEE HAD SUBMITTED ALL NECESSARY EVIDENCES BEFORE THE ASSESSING OFFICER IN THIS REGARD. THESE EXPENDITURES ARE ALLOWABLE AS BUSINESS EXPENDITURE HAS HELD BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF MAZDA LTD. (SUPRA). EVEN OTHERWISE, THE ASSESSING OFFICER HAS MADE ADHOC DISALLOWANCE OF EXPENDITURE CLAIMED BY THE ASSESSEE. I ALSO FIND THAT THE ASSESSING OFFICER HAS ALSO 4 I.T.A. NO. 1681/KOL/2018 ASSESSMENT YEAR: 2012-13 BIPLAB CHAKRABORTY MADE ADHOC DISALLOWANCE OF EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS CARRIAGE INWARDS AND OUTWARDS, REPAIRS AND MAINTENANCE, TOURS & TRAVELLING EXPENSES & DONATION AND ADVERTISEMENTS. THE LD. COUNSEL FOR THE ASSESSEE HAS RIGHTLY RELIED ON THE DECISION OF THE KOLKATA D BENCH OF THE TRIBUNAL IN THE CASE OF B.S. CONSULTANCY SERVICES (SUPRA) , WHEREIN AT PARA 7, IT HAS BEEN HELD AS FOLLOWS:- 7. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ASSESSEE'S WORK IS ROAD SURVEY CONSULTANCY (PLANNING AND DESIGNING OF NEW ROAD CONSTRUCTION) IN THE NORTH-EASTERN REGION OF INDIA. THE TERRAIN CONSISTS OF MOUNTAINS AND JUNGLES WHERE LODGING, CONVEYANCE, FOOD WERE NOT READILY AVAILABLE AND COMES WITH A HIGH COST. THE SAID AREAS ARE HIGH RISK ZONE BECAUSE OF INSURGENCY (UNDER- GROUND ACTIVITIES). THE ASSESSEE IN ORDER TO COMPLETE THE TASK REQUIRES THE ENGINEERS AND EXPERTS WHO ARE NOT READY TO WORK IN THESE DIFFICULT CONDITIONS, SO HAD TO BE LURED BY GIVING LUCRATIVE INCENTIVES. THE BUSINESS EXPEDIENCY REQUIRES THE ASSESSEE TO DISBURSE THE HIGH COST IN CONVEYANCE, LODGING AND FOOD FOR THE FIELD EMPLOYEES OF THE COMPANY IN THIS FAR-FLUNG AREA WHICH ARE HIGH RISK ZONES. BEFORE THE AO, THE ASSESSEE PRODUCED INTERNAL VOUCHERS AND BILLS WHEREVER IT COULD GET THE BILLS THAT WAS PRODUCED; AND OF COURSE THE OFFICE VOUCHERS WERE PRODUCED BEFORE THE AO. HOWEVER, THE AO HAS DISALLOWED 20% HOLDING THAT EXPENSES MAY NOT BE BONA FIDE AND GENUINE. WE DO NOT SUBSCRIBE TO SUCH ACTION OF THE AUTHORITIES BELOW ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE. THE AD-HOC DISALLOWANCE OF 20% IS AKIN TO ARBITRARINESS AND BASED ON SURMISES AND CONJECTURES WITHOUT SPELLING OUT THE DEFECTS IN THE VOUCHERS AND BOOKS PRODUCED BEFORE HIM. THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED AND THE AO HAS NOT FOUND ANY DEFAULT WITH THE BOOKS OF ACCOUNT. IF THERE WAS ANY ITEM-WISE DEFECT NOTICED BY THE AO, THEN HE SHOULD HAVE DISALLOWED THE SAID ITEM-WISE DISALLOWANCE BUT NOT AD-HOC DISALLOWANCE WHICH CANNOT STAND UNDER SCRUTINY OF LAW AND, THEREFORE, WE ARE INCLINED TO ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 8. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE DELETE THE ADDITIONS IN QUESTION AND ALLOW ALL THE GROUNDS OF THE ASSESSEE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. KOLKATA, THE 5 TH DAY OF NOVEMBER, 2018. SD/- [ J. SUDHAKAR REDDY ] ACCOUNTANT MEMBER DATED : 05.12.2018 {SC SPS} 5 I.T.A. NO. 1681/KOL/2018 ASSESSMENT YEAR: 2012-13 BIPLAB CHAKRABORTY COPY OF THE ORDER FORWARDED TO: 1. BIPLAB CHAKRABORTY 78/418, THAKUR RAMKRISHNA LANE SHIBPUR HOWRAH 711 103 2. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-47, KOLKATA 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES