M/s Drolia Electrosteel Pvt Ltd., V. ACIT,

ITA 179/RAN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2188 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 20-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANDIP RAJ
• Assessee Lawyers: S PODDAR M K CHOWDHURY
• Keywords: Depreciation
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BEFORE S/SHRI SHAMIM YAHYA (AM) & PARTHA SARATHI CHAUDHURY (JM) I.T.A. NO.179/RAN/2014: ASSESSMENT YEAR :2005-06 I.T.A. NO.02/RAN/2015: ASSESSMENT YEAR :2007-08 M/S. DROLIA ELECTOSTEEL PVT LTD., DROLIA HOUSE, KANKE ROAD, RANCHI V S ACIT, CIRCLE-1, RANCHI PAN/GIR NO. : AAACD 5584 H (APPELLANT ) .. RESPONDENT APPELLANT BY : SHRI S.PODDAR, M.K.CHOWDHURY & DEVESH PODDAR, ADV RESPONDENT BY : SHRI SANDIP RAJ, ADDL. CIT DATE OF HEARING : 29-02-2016 DATE OF PRONOUNCEMENT : 01 -03 -2016 O R D E R PER PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER: BOTH THE APPEALS FILED BY THE ASSESSEE ARE ARISIN G FROM SEPARATE ORDERS OF THE LD CIT(A), RANCHI DATED 24.2.2014 AND 29.9.014 FOR THE ASSESSMENT YEARS 2005-06 AND 2007-08, RESPECTIVELY. SINCE MOST OF THE ISSUE OF DISALLOWANCE COMMON IN BOTH THE APPEALS, T HEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER FOR THE SAKE OF CONVENIENCE. 2 I.T.A. NO.179/RAN/2014: ASSESSMENT YEAR :2005-06 I.T.A. NO.02/RAN/2015: ASSESSMENT YEAR :2007-08 2. THE ASSESSEE IS AGGRIEVED BY THE 10% OF THE DISA LLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD CIT(A ) IN VARIOUS DISALLOWANCES AS DETAILED BELOW IN THE RESPECTIVE A SSESSMENT YEARS: PARTICULARS/DISALLOWANCE 2005-06(RS.) 2007-08(RS.) CONSIGNMENT EXPENSES 1,98,677/- - GENERAL /CANTEEN 46,221/-/ 80,438/- 14,135/- LODGING & FOODING EXP. 17,421/- - SALES COMMISSION 92,466/- 2,10,161/- VEHICLE MAINT. EXPS. 1,13,979/- - VEHICLE DEPRECIATION 69,602/- - REPAIR & MAINT. 1,22,568/- 9,928/- TELEPHONE EXPENSES. 37,113/- - MANUFACTURING EXPENSES - 3,01,648/- 3. FACTS AS EMERGED FROM THE CORRESPONDING ASSESSME NT ORDER U/S.143(3) OF THE I.T.ACT, 1961 FOR BOTH THE ASSESS MENT YEARS UNDER APPEAL ARE THAT THE ASSESSING OFFICER DISALLOWED TH E ABOVE EXPENSES BEING 10% OF THE TOTAL CLAIM OF EXPENSES MADE BY THE ASSE SSEE UNDER THE DIFFERENT HEADS, ON THE GROUND THAT COMPLETE BILLS AND VOUCHERS WERE NOT PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDING S , EXCEPT DISALLOWANCE OF 25% UNDER THE HEAD VEHICLE EXPENSE S AND DEPRECIATION 3 I.T.A. NO.179/RAN/2014: ASSESSMENT YEAR :2005-06 I.T.A. NO.02/RAN/2015: ASSESSMENT YEAR :2007-08 ON VEHICLE. IN THE FIRST APPEAL, THE LD CIT(A) CO NFIRMED THE ACTION TAKEN BY THE ASSESSING OFFICER, HENCE, THE ASSESSEE HAS F ILED APPEALS BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING, LD COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE DISALLOWANCES MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD CIT(A) IS ON HIGHER SIDE AND THE SAME IS MADE ON AS SUMPTION AND SURMISES. ON THE OTHER HAND, LD D.R. SUPPORTED THE ACTION OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD OF THE CASE. WE HAVE ALSO GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE OBSERVE THAT THE ASSESSING OFFICER IN THE ASSESSMEN T ORDER HAS SPECIFICALLY DISCUSSED THE DIFFERENT HEAD-WISE DISALLOWANCE WITH JUSTIFICATION. IT APPEARS THAT THE EXPENSES CLAIMED BY THE ASSESSEE U NDER DIFFERENT HEADS ARE NOT FULLY VOUCHED AND THE ASSESSEE WAS NOT ABLE TO FURNISH FULL DETAILS OF BILLS AND VOUCHERS. IT WAS IN THIS BACKDROP THA T BOTH THE AUTHORITIES BELOW HAVE ESTIMATED 10% OF THE CLAIM OF EXPENSES B Y THE ASSESSEE. IT IS THE CONTENTION OF THE ASSESSEE THAT ALL THE EXPE NSES ARE FOR THE PURPOSES OF ASSESSEES BUSINESS AND ESTIMATION IS N OT CALLED FOR. HOWEVER, CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ESPECIALLY THAT THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THE CLAIM WITH DOCUMENTARY EVIDENCES UNDER THE DIFFEREN T HEADS AS 4 I.T.A. NO.179/RAN/2014: ASSESSMENT YEAR :2005-06 I.T.A. NO.02/RAN/2015: ASSESSMENT YEAR :2007-08 MENTIONED ABOVE, WE, IN THE INTEREST OF JUSTICE, RE STRICT THE DISALLOWANCE TO 5% AS AGAINST 10% ESTIMATED BY THE AUTHORITIES B ELOW. HENCE, WE DIRECT THE ASSESSING OFFICER ACCORDINGLY. 6. AS REGARDS TO THE ADDITION OF RS.28,716/- ON ACC OUNT OF SUNDRY BALANCES WRITTEN OFF, THE ASSESSING OFFICER DOUBTED THE WRITTEN OFF AND DISALLOWED THE SAME FOR THE REASONS THAT THE ASSES SEE HAS STARTED ITS MANUFACTURING ACTIVITY IN THE YEAR UNDER CONSIDERAT ION. LD CIT(A) CONFIRMED THE SAME ON THE SAME GROUND. WE DO NOT APPRECIATE THE STAND TAKEN BY THE AUTHORITIES BELOW BECAUSE THERE IS NO MANDATE IN THE INCOME TAX ACT THAT IN THE FIRST YEAR, THE ASSESSEE CANNOT WRITE OFF THE AMOUNT. HOWEVER, CONSIDERING THE SMALLNESS OF AMOU NT, WE DIRECT TO DELETE THE SAME. 7. THE CHARGING OF INTEREST UNDER SECTION 234B IS C ONSEQUENTIAL. 8. IN THE RESULT, BOTH THE APPEALS ARE PARTLY ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/03/2 016 . SD/- SD/- (SHAMIM YAHYA) (PA RTHA SARATHI CHAUDHURY) ACCOUNTANT MEMBER JUDICIAL MEMBER RAIPUR , DATED 01 / 03/2016 5 I.T.A. NO.179/RAN/2014: ASSESSMENT YEAR :2005-06 I.T.A. NO.02/RAN/2015: ASSESSMENT YEAR :2007-08 PARIDA , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT : M/S. DROLIA ELECTOSTEEL PVT LTD., DROLIA HOUSE, KANKE ROAD, RANCHI 2. THE RESPONDENT: ACIT, CIRCLE-1, RANCHI 3. THE CIT(A)- RANCHI 4. CIT , RANCHI 5. DR, ITAT, RANCHI 6. GUARD FILE. BY ORDER, //TRUE COPY// SR.PRIVATE SECRETARY ITAT, RANCHI