Shri Pankaj Babulal Shah, Ahmedabad V. The ACIT.,Circle-2, Ahmedabad

ITA 1767/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9226 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 27-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 08-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Keywords: Business income
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE SHRI KUL BHARAT, JM, & SHRI MANISH BORAD, AM. ITA NO.1767/AHD/2012 ASST. YEAR:2009-10 PANKAJ BABULAL SHAH, PROP. PRAKASH STEEL CORPN., 20, SUDARSHAN SOCIETY, PART-2, NR. NARANPURA GAM, NARANPURA, AHMEDABAD. VS. ACIT, CIRCLE-2, AHMEDABAD. APPELLANT RESPONDENT PAN AAFPS 6053C APPELLANT BY SMT. ARTI N. SHAH, AR RESPONDENT BY SHRI SONIA KUMAR, SR.DR DATE OF HEARING: 27.1.2016 DATE OF PRONOUNCEMENT: 15/03/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A) -6, AHMEDABAD, DATED 16.5.2012. ASSESSMENT W AS FRAMED U/S 143(3) OF THE IT ACT, 1961 (IN SHORT THE ACT) O N 26.12.2011 BY ACIT, CIRCLE-2, AHMEDABAD. SOLITARY GRIEVANCE OF TH E ASSESSEE AS CULLED OUT FROM THE GROUNDS OF APPEAL IS AGAINST TH E ORDER OF LD. CIT(A) IN PARTLY SUSTAINING THE ADDITION OF RS.2,50 ,000/- AS AGAINST RS.7,86,073/- DISALLOWED BY LD. ASSESSING OFFICER O N ACCOUNT OF MAJOORI EXPENSES. ITA NO. 1767/AHD/2012 ASST. YEAR 2009-10 2 2. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS AN IND IVIDUAL CARRYING ON THE BUSINESS OF MANUFACTURING BRIGHT BARS UNDER THE SOLE PROPRIETARY CONCERN M/S PRAKASH STEEL CORPN. RETURN OF INCOME WAS FILED ON 29.9.2009 DECLARING TOTAL INCOME OF RS.25, 91,230/-. GROSS TURNOVER OF THE ASSESSEE DURING THE ASST. YEAR 2009 -10 WAS SHOWN AT RS.40.72 CRORES. RETURN OF INCOME WAS ACCOMPANIED W ITH TAX AUDIT REPORT U/S 44AB OF THE ACT. CASE WAS SELECTED FOR S CRUTINY ASSESSMENT AND NOTICE U/S 143(2) OF THE ACT WAS ISS UED ON 17.9.2010 AND DULY SERVED UPON THE ASSESSEE FOLLOWED BY NOTIC E U/S 142(1) OF THE ACT DATED 18/01/2011 WAS ISSUED ALONG WITH QUES TIONNAIRE. THE CASE WAS DISCUSSED AND NECESSARY INFORMATION WERE S UPPLIED TO THE LD. ASSESSING OFFICER. ASSESSMENT WAS FRAMED AT AN INCOME OF RS.2,32,96,110/- AFTER MAKING CERTAIN ADDITION ON A CCOUNT OF SUNDRY CREDITORS AT RS.1,99,18,839/- AND DISALLOWANCE OF M AJOORI EXPENSES AT RS.7,86,043/-. 3. AGGRIEVED ASSESSEE WENT IN APPEAL BEFORE LD. CIT (A) WHO DELETED THE ADDITION OF RS. 1,99,18,839/- ON ACCOUN T OF SUNDRY CREDITOR AND PARTLY ALLOWED THE APPEAL OF ASSESSEE RESTRICTING THE DISALLOWANCE ON ACCOUNT OF MAJOORI EXPENSES AT RS.2 ,50,000/- IN PLACE OF RS.7,86,073/-. WHILE SUSTAINING THE DISALL OWANCE OF MAJOORI EXPENSES AT RS.2,50,000/- LD. CIT(A) OBSERVED AS UN DER :- 3.3 I HAVE CONSIDERED THE FACTS OF THE CASE; ASSES SMENT ORDER AND APPELLANT'S WRITTEN SUBMISSION. ASSESSING OFFICER D ISALLOWED ENTIRE MAJURI EXPENSES OF RS 7,86,043 ON THE GROUND THAT APPELLAN T DID NOT PRODUCE EVIDENCE OF THESE EXPENSES. ON THE OTHER HAND APPEL LANT SUBMITTED THAT OF ACCOUNTS ALONG WITH VOUCHERS FOR THESE EXPENSES WERE PRODUCED BEFORE THE ASSESSING OFFICER. VOUCHERS FOR MAJURI EXPENSES HAVE DETAILS OF TRUCK ITA NO. 1767/AHD/2012 ASST. YEAR 2009-10 3 NUMBER, DATE ETC. IT IS NOT IN DISPUTE THAT ENTIRE PAYMENT OF RS 7860 43 IS BY WAY OF CASH. THE NAME OF RECIPIENT IS NOT MEN TIONED IN ANY OF THE VOUCHER. THERE IS NO IDENTITY OR DETAILS OF THE PERSON RECEIVING THESE EXPENSES. HOWEVER CONSIDERING THE BUSINESS OF THE APPELLANT A ND LARGE AMOUNT OF LOADING AND UNLOADING OF GOODS INVO LVED, THERE WOULD BE NECESSITY OF THESE EXPENSES AND THEREFORE DISALLOWA NCE OF ENTIRE EXPENSE CLAIMED BY THE APPELLANT IS NOT JUSTIFIED. CONSIDER ING THE FACT THAT ENTIRE PAYMENT IS IN CASH AND PAYEES DETAILS ARE NOT THERE , NO VERIFICATION OF THESE EXPENSES IS POSSIBLE. PAYMENTS WERE MADE BY T HE APPELLANT ON SELF-MADE VOUCHERS. IN VIEW OF THIS, PART DISALLOWA NCE OF THESE EXPENSES IS REQUIRED FOR WANT OF VERIFICATION. ACCORDINGLY I CONFIRM THE DISALLOWANCE MADE BY THE ASSESSING OFFICER TO THE E XTENT OF RS 2.5 LAKHS OUT OF TOTAL DISALLOWANCE OF RS 786043. 4. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 5. LD. AR SUBMITTED THAT THE LD. A.O. AT THE TIME OF ASSESSMENT PROCEEDINGS CALLED FOR THE DETAILS IN RESPECT OF MA JURI EXPENSES. THE APPELLANT PRODUCED THE BOOKS OF ACCOUNTS ALONG WITH VOUCHERS FILED FOR THE EXPENSES FOR MAJURI. THE SAME HAD BEEN VERI FIED BY THE LD. A. O. THE VOUCHER FILES PRODUCED CONTAINS ALL THE VOUC HERS OF THE YEAR IN QUESTION, WHICH IS PREPARED BY THE APPELLANT. EACH VOUCHER PRODUCED SHOW THE DETAILS OF BILLS NO., TRUCK NOS., AND THE WEIGHT OF THE GOODS LOADED AND UNLOADED AND THE PAYMENT MADE TO THE PER SONS THROUGH WHOM THE WORK HAS DONE. THE LD. A.O. AFTER VERIFYIN G THOSE VOUCHERS HAVE NOT NOTICED ANY DEFECT IN THE MAINTENANCE OF T HE FILE. IN THIS CONNECTION I MAY SUBMIT THAT DURING THE IMMEDIATELY PRECEDING ASSESSMENT YEAR THE APPELLANT HAS SHOWN THE MAJURI EXPENSES OF RS.4,54,473/- ON THE TOTAL SALES AT RS.31,34,88,838 /- THE ASSESSMENT FOR THIS YEAR I.E. A.Y. 2008-09 HAS BEEN COMPLETED UNDER SECTION 143(3;~6TFHE I.T. ACT, WITHOUT DISALLOWING ANY EXPE NSES CLAIMED. DURING THE YEAR UNDER CONSIDERATION, THE TOTAL SALE S AS PER RECORD COMES TO RS.40,72,40,382/-. THE MAJURI EXPENSES CLA IMED AS PER ITA NO. 1767/AHD/2012 ASST. YEAR 2009-10 4 ACCOUNT COMES TO RS.7,86,043/-. ALL THESE EXPENSES INCURRED ARE COVERED IN VOUCHERS FILED WHICH WAS KEPT BY THE APP ELLANT, WHICH WERE PRODUCED DURING THE COURSE OF ASSESSMENT PROCE EDINGS. THE LD. A.O. HAS NOT POINTED OUT ANY REASONS FOR THE DI SALLOWANCE OF THE MAJURI EXPENSES, BUT SIMPLY DISALLOWED THE SAME IN THE ASSESSMENT ORDER. THE APPELLANT HAD TO BRING RAW MATERIALS AS WELL AS SENDING THE GOODS OFFER MANUFACTURE. THE LD. A.O. AT THE TIME O F COMPLETING THE ASSESSMENT HAS NEVER DISALLOWED THE FRIGHT PAYMENT MADE TO THE TRANSPORTERS FOR BRINGING THE RAW MATERIALS AS WELL AS SENDING THE FINISHED GOODS. THUS, THE EXPENSES INCURRED WAS PRO PERLY AND CORRECTLY WRITTEN IN THE BOOKS MAINTAINED BY THE AP PELLANT. 6. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDERS O F LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE ONLY ISSUE BEFORE US IS THAT AGAINST DISALLOWANCE OF MAJURI EXPENSES SUSTAINED AT RS.2,5 0,000/- BY LD. CIT(A). FROM GOING THROUGH THE PAPER BOOK WE FIND T HAT ASSESSEE IS CARRYING ON BUSINESS OF MANUFACTURING OF BRIGHT BAR S AND SALES TURNOVER FOR THE YEAR UNDER APPEAL IS RS.40.72 CROR ES AS AGAINST RS. 31.34 CRORES IN IMMEDIATELY PRECEDING YEAR. BOOKS OF ACCOUNTS OF THE ASSESSEE ARE AUDITED. NO SPECIFIC DEFECTS EXCEP T MAJURO EXPENSES HAS BEEN BROUGHT ON RECORD BY THE LOWER AU THORITIES AND FURTHER BOOKS OF ACCOUNTS HAVE NOT BEEN REJECTED BY THE LD. ASSESSING OFFICER. ITA NO. 1767/AHD/2012 ASST. YEAR 2009-10 5 8. WE FURTHER OBSERVE THAT ASSESSEE HAS SHOWN DETAI LS OF EXPENSES CLAIMED DURING THE YEAR OTHER THAN PURCHAS ES OF GOODS AT PAGE 41 OF THE PAPER BOOK DEALING IN VARIOUS KINDS OF EXPENSES WHICH ARE TOTALED TO RS.60.33 LACS AND OUT OF THIS EXHAUS TIVE LIST THE ONLY OBJECTION RAISED BY THE LD. ASSESSING OFFICER IS FO R MAJDOORI EXPENSES SHOWN AT RS.7,86,043/-. WE FURTHER FIND THAT THE LD . AR HAS SUBMITTED THAT THE ASSESSMENT OF THE ASSESSEE WAS COMPLETED F OR ASST. YEAR 2008-09 ALSO WHEREIN MAJDOORI EXPENSES OF RS.454473 /- WAS SHOWN AND THE SAME HAS BEEN ALLOWED BY THE REVE NUE AND NO DISALLOWANCE HAS BEEN CALLED FOR. 9. WE FURTHER OBSERVE THAT COMPLETE DETAILS OF LEDG ER ACCOUNT OF EACH AND EVERY EXPENSES COMING UNDER THE HEAD MAJDO ORI EXPENSES HAVE BEEN SHOWN AND ALSO IN THE VOUCHERS OF THE MAJ DOORI EXPENSES ALL DETAILS RELATING TO TRUCK NUMBER WITH DATE OF B ILL NUMBER AND QUANTITY HAS BEEN SPECIFICALLY MENTIONED WHICH LEAV ES NO DOUBT THAT IT HAS GENUINELY INCURRED MAJDOORI EXPENSES AND THE SA ME SHOULD HAVE BEEN ALLOWED. 10. WE DO NOT FIND ANY REASON THAT IN SUCH SITUATIO N WHEN BOOKS OF ACCOUNTS ARE AUDITED, NO SPECIFIC DEFECT HAS BEEN P OINTED OUT BY THE ASSESSING AUTHORITY DURING THE ASSESSMENT PROCEEDIN G, ALL NECESSARY SUPPORTING ARE AVAILABLE ON RECORD IN RELATION TO T HE IMPUGNED EXPENSES THEN MAKING OF DISALLOWANCE OF A CERTAIN E XPENSES AND THEN AGAIN MAKING AN ESTIMATED DISALLOWANCE JUST FO R THE REASON THAT THE IMPUGNED EXPENSES HAS BEEN INCURRED IN CASH, IS NOT A VALID ITA NO. 1767/AHD/2012 ASST. YEAR 2009-10 6 GROUND FOR MAKING DISALLOWANCE. WE, THEREFORE, DELE TE THE SUSTAINED ADDITION OF RS.2,50,000/- AND ALLOW THE APPEAL OF T HE ASSESSEE. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH MARCH, 2016 SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 15/03/2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 9/03/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 14/03/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 15/3/16 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: