ITO, Ward - 3(3), Kolkata, Kolkata V. M/s. Hasan Exports Pvt. Ltd., Kolkata

ITA 1738/KOL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78324 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2014
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 19-12-2011
• Court: TRIBUNAL
• Department Lawyers: SABOORUL HASAN USMANI
• Assessee Lawyers: N O N E
• Section: 142(1); 144

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , ! ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA, AM] ' / I.T.A NO.1738/KOL/2011 #$ %&/ ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER, WD-3(3), KOLKATA. VS. M/S. HA SAN EXPORTS PVT. LTD. PAN: AAACH8527J) (() /APPELLANT ) (*+()/ RESPONDENT ) DATE OF HEARING: 29.04.2014 DATE OF PRONOUNCEMENT: 29.04.2014 FOR THE APPELLANT: SHRI SABOORUL HASAN USMANI, JCIT , SR. DR FOR THE RESPONDENT: N O N E / ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-I, KOLKATA IN APPEAL NO. 478/CIT(A)-I/WD-3(3)/08-09 DATED 15.09.2011. ASSES SMENT WAS FRAMED BY ITO, WARD-3(3), KOLKATA U/S. 144 OF THE INCOME-TAX ACT, 1961 (HEREI NAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2006-07 VIDE HIS ORDER DATED 17.12. 2008. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY AO ON ACCOUNT OF AD HOC DISALLOWAN CE OF 20% AND MANUFACTURING EXPENSES OF RS.18,43,092/-, 5% PURCHASES EXPENSES OF RS.18,0 3,119/- AND 20% OF OTHER EXPENSES OF RS.38,27,539/-. 3. BRIEFLY STATED FACTS ARE THAT THE AO MADE FOLLOWING DISALLOWANCES: 1.MANUFACTURING EXPENSES @ 20% OF RS.18,43,092/- 2. 5% OF PURCHASE EXPENSES RS.18,03,119/- 3. OTHER EXPENSES @ 20% OF RS.38,27,539/- = RS.7,65 ,507/- BEFORE THE AO, THE ASSESSEE NEITHER APPEARED NOR PR ODUCED ANY DETAILS OR DOCUMENTS. HENCE, THE AO MADE THE ABOVE ADDITIONS AFTER FRAMING ASSES SMENT U/S. 144 OF THE ACT. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A). BEFORE HI M ASSESSEE CONTENDED THAT EFFECTIVELY THE FIRST TIME THE AO ISSUED NOTICE U/S. 143(2) OF THE ACT ALONG WITH NOTICE U/S. 142(1) DATED 12.12.2008 AND IN RESPONSE TO THE SAME, MR. GHULAM UMAR WAS HANDLING INCOME-TAX MATTER OF 2 ITA NOS. 1738/K/2011 M/S. HASAN EXORTS PVT. LTD.. AY 2006-07 THE ASSESSEE COMPANY APPEARED AND ASKED FOR ADJOURN MENT BUT NO TIME WAS ALLOWED. IT MEANS THAT THE REVENUE HAS NOT GIVEN ANY TIME. ONLY ONE EFFECTIVE HEARING WAS GIVEN THAT ALSO AT THE FAG END. IT MEANS THAT THE REVENUE HAS NOT STARTED THE ASSESSMENT PROCEEDINGS EVEN THOUGH THE FIRST NOTICE U/S. 143(2) OF THE ACT WAS ISSUED ON 1 3.10.2007. THEREAFTER, ONLY THE CASE WAS FIXED FOR THE FIRST TIME ON 17.12.2008 WHEN THE ASS ESSMENT WAS FRAMED U/S. 144 OF THE ACT. BEFORE THE CIT(A) ASSESSEE CONTENDED THAT THE ASSES SEE HAS MAINTAINED BOOKS OF ACCOUNT AND THE SAME ARE AUDITED U/S. 44AB OF THE ACT. THE ASS ESSEE PRESENTED BEFORE THE CIT(A) BALANCE SHEET AND P&L ACCOUNT, WHICH WAS ALSO SUBMITTED BEF ORE THE AO AND ALSO THE DETAILS OF EXPENSES. THE CIT(A) CALLED REMAND REPORT FROM THE AO BUT THE AO DID NOT CONSIDER THE EVIDENCE PRODUCED BEFORE HIM DURING THE REMAND PROC EEDINGS. THE CIT(A) RESTRICTED THE DISALLOWANCE OF EXPENSES AT 50% BUT DELETED THE PUR CHASES AND MANUFACTURING EXPENSES VIDE PARA 10 AND 10.1 OF HIS APPELLATE ORDER AS UNDER: 10. THUS, THE A.O. HAS BEEN GIVEN OPPORTUNITY TO E XAMINE THE DETAILS REQUIRED BY HIM BUT THE A.O. HAD SIMPLY RELIED UPON THE ORDER PASSE D U/S 144 OF THE I.T. ACT. THE APPELLANT HAS ARGUED THAT ACCOUNTS HAVE BEEN AUDITE D AND ANY DISALLOWARICE WITHOUT BRINING THE SPECIFIC DEFECTS IN THE BOOKS OF ACCOUN TS S WRONG. THE A.O. HAD MADE THE ADDITION OF RS.29,37,344/- ON ACCOUNT OF 5% OF PURC HASE EXPENSES AND 20% OF OTHER EXPENSES WITHOUT MENTIONING ANYTHING BRINGING ON RE CORD. THUS THE ACTION OF THE A.O. IS ARBITRAY AND WITHOUT ANY BASIS. THIS ACTION OF THE AO OF DISALLOWANCE OF THE EXPENSES INCURRED BY THE APPELLANT DURING THE COURSE OF BUSI NESS AND THAT TOO OUT OF AUDITED ACCOUNTS WITHOUT SPECIFYING ANY DEFECTS IS WITHOUT ANY BASIS. 10.1. SINCE THE ORDER WAS PASSED U/S 144 OF THE IT ACT AND THE DISALLOWANCE WAS MADE ON AD-HOC BASIS WITHOUT POINTING OUT ANY DEFECTS I S NOT MAINTAINABLE AS FAR AS PURCHASE EXPENSES ARE CONCERNED. THUS, THE APPELLANT GETS RE LIEF ON THE DISALLOWANCES MADE IN RESPECT OF PURCHASE EXPENSES. THE AO HAS FURTHER DI SALLOWED 20% OF OTHER EXPENSES AMOUNTING TO RS.7,65,507/- WITHOUT POINTING OUT ANY DEFECTS. THE APPELLANT HAS OBJECTED TO SUCH AD-HOC DISALLOWANCE WHEN THE BOOKS OF ACCOU NT IS AUDITED U/S 44AB AND THE EXPENDITURE HAVE BEEN DULY VERIFIED IN THE COURSE O F AUDIT AND THE EXPENDITURE HAS BEEN INCURRED SUBSTANTIALLY SUPPORTED BY EVIDENCES FOR T HE PURPOSE OF CARRYING OUT THE BUSINESS. THE DISALLOWANCES @ 20% IS AT VERY HIGHER SIDE. THE DISALLOWANCE ON ACCOUNT OF EXPENSES BY THE A.O IS RESTRICTED TO 50%. THE AP PELLANT GETS RELIEF TO THE EXPENDITURE OF RS.3,82,753/- ( I.E. 50% OF RS.7,65,507/-). 4. WE HAVE HEARD LD. SR. DR AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO HAS MADE AD HOC DISALLOWANCE OF 20 % OF THE MANUFACTURING EXPENSES AND 5% OF PURCHASE EXPENSES. THE CIT(A) DELETED THE EXPEN SES BECAUSE THE AO HAS NOT GIVEN ANY FINDING OF THESE EXPENSES DURING REMAND PROCEEDINGS EVEN THOUGH COMPLETE EVIDENCES WERE PRODUCED BEFORE HIM. HENCE, WE HAVE NO HESITATION IN CONFIRMING THE ORDER OF CIT(A). COMING TO THE DISALLOWANCE OF OTHER EXPENSES, WE FI ND THAT THE AO HAS DISALLOWED 20% OF EXPENSEX AT RS.7,65,507/- AND CIT(A) HAS RESTRICTED THE SAME AT 50% OF THE SAME I.E. 3 ITA NOS. 1738/K/2011 M/S. HASAN EXORTS PVT. LTD.. AY 2006-07 RS.3,82,753/-. AS THE LD. DR DURING THE COURSE OF HEARING COULD NOT POINT OUT ANY DEFECT IN THE ORDER OF CIT(A), WE CONFIRM THE SAME. APPEAL OF REV ENUE IS DISMISSED. 5. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 6. ORDER IS PRONOUNCED IN THE OPEN COURT. SD/- SD/- , ! , (SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29TH APRIL, 2014 ./ #01 2 JD.(SR.P.S.) 3 *4 5 4%6- COPY OF THE ORDER FORWARDED TO: 1 . () / APPELLANT ITO, WARD-3(3), KOLKATA 2 *+() / RESPONDENT M/S. HASAN EXPORTS PVT. LTD., 8, DOLA I DUTTA STREET, KOLKATA-73. 3 . # ( )/ THE CIT(A), KOLKATA 4. 5. # / CIT KOLKATA 4:; *# / DR, KOLKATA BENCHES, KOLKATA +4 */ TRUE COPY, #