Concept Cars Limited, Hardoi V. Income Tax Officer- 3(2), Hardoi

ITA 182/LKW/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 2455 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 15-03-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HARISH GIDWANI
• Keywords: Unexplained investment
• Section: 69A

Judgement Text

I.T.A. No.181 & 182/Lkw/2020 Assessment Year:2012-13 & 13-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH ‘SMC’, LUCKNOW BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA No.181 & 182/Lkw/2020 Assessment Year:2012-13 & 13-14 M/s Concept Cars Limited, Ganga Buxpurva, Bilgram Road, Hardoi. PAN:AAECC0119M Vs. Income Tax Officer-3(2), Hardoi. (Appellant) (Respondent) O R D E R These two appeals have been filed by the assessee against the separate orders of CIT(A) dated 12/12/2019 and 28/02/2020 for assessment year 2012-13 and 13-14 respectively. The grounds of appeal taken by the assessee in these appeals are reproduced below: I.T.A. No.181/Lkw/2020 1. That the CIT(A), Bareilly erred on facts and in law in confirming the disallowance of Rs.1,00,000/- out of total disallowance of Rs.8,31,134/- only on surmise. I.T.A. No.182/Lkw/2020 1. That the CIT(A), Bareilly erred on facts and in law in confirming the addition of Rs.15,00,000/- being advances given by the Appellant by Shri Sanjay Saxena, C.A. Respondent by Shri Harish Gidwani, D. R. Date of hearing 26/07/2022 Date of pronouncement 27/07/2022 I.T.A. No.181 & 182/Lkw/2020 Assessment Year:2012-13 & 13-14 2 appellant as unexplained investments which is contrary to facts and in law. 2. That the CIT(A), Bareilly erred on facts and in law in confirming the disallowance of Rs.16,21,944/- being 10% of salary expenses. 3. That the CIT(A), Bareilly erred on facts and in law in confirming the disallowance of Rs.1,64,956/- being 10% of telephone expenses. 4. That the CIT(A), Bareilly erred on facts and in law in confirming the disallowance of Rs.1,14,972/- being 10% of travelling expenses. 5. That the CIT(A), Bareilly erred on facts and in law in confirming the disallowance of Rs.1,06,200/- being 10% of general expenses. 6. That the CIT(A), Bareilly erred on facts and in law in confirming the disallowance of Rs.4,31,400/- being 10% of lubricant & oil consumed. 7. That the CIT(A), Bareilly erred on facts and in law in confirming the disallowance of Rs.1,98,220/- being 10% of security expenses. 8. That the CIT(A), Bareilly erred on facts and in law in confirming the disallowance of Rs.1,87,280/- being 10% of vehicle in use expenses.” 2. Learned counsel for the assessee, arguing appeal in I.T.A. No.181, submitted that the Assessing Officer had made a disallowance of Rs.8,31,311/- on ad hoc basis out of business expenses and which the learned CIT(A) has restricted to Rs.1,00,000/-. It was submitted that the assessee is a private limited company and cannot be said to have debited to its profit & loss account any personal expenses and these expenses were incurred for the purpose of business and therefore, the learned CIT(A) has rightly deleted the same but he has again upheld the disallowance to the extent of Rs.1,00,000/- without any basis and which needs to be deleted. 3. Arguing the appeal in I.T.A. No.182, Learned counsel for the assessee submitted that in this year also, the Assessing Officer had made ad hoc disallowance and the submissions were made before learned CIT(A) that ad hoc additions cannot be made and reliance was also placed on the order of CIT(A) in the preceding year but learned CIT(A) dismissed the grounds of I.T.A. No.181 & 182/Lkw/2020 Assessment Year:2012-13 & 13-14 3 appeal. It was submitted that when ad hoc additions were deleted by learned CIT(A) in a particular year, the action of learned CIT(A) in upholding the same in succeeding year is not justified and it was prayed that the same may be deleted. 4. Learned counsel for the assessee further submitted that another issue involved in this year is that assessee had made advances of Rs.15 lacs to three different persons in the preceding year and which were there in the books of account as opening balances and the payments of which were made through banking channels and the authorities below have wrongly made and upheld the addition u/s 69A of the Act. Learned counsel for the assessee submitted that when the advances were given in the preceding year and that too through banking channels and which were duly recorded in the books of account of the assessee, how they can be classified as unexplained investment u/s 69A of the Act. In this respect our attention was invited to paper book pages 7 to 16 where a copy of ledger account of the persons, to whom advances in the preceding years were made, was placed. Learned D. R. submitted that the copies of ledger accounts of the previous years and current year clearly demonstrate that advances were made in the earlier years and payments were made through banking channels and in this year they are outstanding as opening balances. 5. Learned D. R., on the other hand, as regards sustenance of disallowance in I.T.A. No.181 towards ad hoc disallowance, argued that learned CIT(A) has substantially allowed relief to the assessee and Hon'ble Allahabad High Court in the case of Principal CIT vs. Rimjhim Ispat 382 ITR 152 has clearly held that where the assessee does not produce complete vouchers, the action of the Assessing Officer in making the disallowance out of such expenses is justified. Regarding confirmation of disallowance as ad I.T.A. No.181 & 182/Lkw/2020 Assessment Year:2012-13 & 13-14 4 hoc expenses in I.T.A. No.182, Learned D. R. submitted that since this issue of disallowance is a factual issue therefore, learned CIT(A) has rightly not followed the earlier order as the assessee had failed to produce any vouchers/bills before the Assessing Officer and learned CIT(A). Regarding the issue of Rs.15 lacs, Learned D. R. relied on the order of the authorities below. 6. I have heard the rival parties and have gone through the material placed on record. As regards appeal in I.T.A. No.181, I find that there is only one issue of sustenance of part disallowance which the Assessing Officer had made out of expenses on ad hoc basis. I find from the order of the Assessing Officer that he had noted in his order that the assessee had not produced any evidence except copy of ledger account of the expenses and neither assessee had submitted any bills and vouchers. I find that the learned CIT(A) has substantially allowed relief to the assessee and keeping in view the judgment of Hon'ble Allahabad High Court in the case of Principal CIT vs. Rimjhim Ispat 382 ITR 152, the sustenance of addition of Rs.1,00,000/- out of expenses is justified. Therefore, Ground No. 1 in I.T.A. No.181 is dismissed. 7. Now coming to I.T.A. No.182, I find that in this year the Assessing Officer again made disallowance out of expenses and learned CIT(A) confirmed the same by holding that no bills/vouchers were filed before Assessing Officer and before him. The arguments of Learned counsel for the assessee that learned CIT(A) should have followed the earlier order of CIT(A) for assessment year 2012-13 has no force as the issue of disallowance out of expenses is a factual issue and which needs to be verified each year. However, to be fair to both the parties, I deem it appropriate that this issue of disallowance be remitted to the file of the I.T.A. No.181 & 182/Lkw/2020 Assessment Year:2012-13 & 13-14 5 Assessing Officer who should direct the assessee to produce bills and vouchers in support of claim of expenses and after verifying from the vouchers and bills with the books of account should arrive at the amount of disallowance, if any. The assessee is also directed to cooperate with the proceedings before Assessing Officer. In view of the above, ground no. 2 to 8 are allowed for statistical purposes. 9. Now coming to the other ground regarding addition of Rs.15 lacs, I find that assessee had advanced an amount of Rs.3,00,000/- to Shri Krishna Kumar Singhania on 28/08/2010 which was carried forward in the succeeding years as opening balance. Similarly, on 20/08/2010 and on 01/10/2010 the assessee had advanced an amount of Rs.3,90,000/- to Smt. Manju Singhania which again has been carried forward to succeeding year. Similarly, on 18/08/2010 an amount of Rs.8,10,000/- was advanced to Shri Om Prakash Singhania which was again carried forward to the succeeding year. The copy of account of these persons is placed at pages 7 to 16 of the paper book. These transactions have been recorded in the books of account and the payments have been made through banking channels. Therefore, the addition u/s 69A is not in accordance with law. The Assessing Officer has made the addition by holding that assessee had not explained any genuine reason to advance such loans. The learned CIT(A) has dismissed this ground of appeal by holding that the assessee had not furnished the source of these advances either before the Assessing Officer or before the appellate proceedings. I find that the reasons cited by the Assessing Officer and learned CIT(A) for making and upholding the addition is not justified and since the amount has been recorded in the books of account and the advances have been made through banking channels and that too in the earlier year therefore, the addition sustained by learned CIT(A) is deleted and ground No. 1 is allowed. I.T.A. No.181 & 182/Lkw/2020 Assessment Year:2012-13 & 13-14 6 10. In the result, the appeal in I.T.A. No.181 is dismissed whereas the appeal in I.T.A. No.182 is partly allowed for statistical purposes. (Order pronounced in the open court on 27/07/2022) Sd/. ( T. S. KAPOOR ) Accountant Member Dated:27/07/2022 *Singh Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. The CIT(A) 5. D.R., I.T.A.T., Lucknow