ACIT-CENTRAL-CIRCLE-2(3), Nagpur V. GUPTA DOMESTIC FUELS (NAGPUR) LTD., Nagpur

ITA 201/NAG/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9225 (ITAT-NAGPUR)
• Duration Of Justice: 4 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 09-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: U U KASAR
• Section: 153A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO. 201 /NAG /201 4 / ASSESSMENT YEAR : 20 10 - 11 ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(3), NAGPUR ....... / APPELLANT / V/S. GUPTA DOMESTIC FUELS (NAGPUR) LTD., GUPTA BHAVAN, TEMPLE BAZAR ROAD, SITABULDI, NAGPUR PAN : AAACG5230D / RESPONDENT . / CO NO. 24/NAG/2017 / ASSESSMENT YEAR : 20 10 - 11 GUPTA DOMESTIC FUELS (NAGPUR) LTD., GUPTA BHAVAN, TEMPLE BAZAR ROAD, SITABULDI, NAGPUR PAN : AAACG5230D ....... / APPELLANT / V/S. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(3), NAGPUR / RESPONDENT 2 ITA NO .201/NAG/2014 & CO NO. 24/NAG/2017 ASSESSEE BY : S HRI RAJESH LOYA REVENUE BY : SHRI U.U. KASAR / DATE OF HEARING : 2 8 - 03 - 2019 / DATE OF PRONOUNCEMENT : 29 - 03 - 201 9 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - III, NAGPUR DATED 2 1 - 01 - 2014 FOR ASSESSMENT YEAR 20 10 - 11. THE ASSESSEE HAS FILED CROSS OBJECTIONS IN SUPPORT OF THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). 2. THE REVENUE IN APPEAL HAS RAISED 6 GROUNDS OF APPEAL. ALL THE GROUNDS ARE RELATED TO SINGLE ISSUE OF DISALLOWANCE OF EXPENDITURE RS.1,63,64,142/ - UNDER VARIOUS HEADS. 3. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE : THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF TRADING OF COAL AND STEEL. 3 ITA NO .201/NAG/2014 & CO NO. 24/NAG/2017 DURING SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DISALLOWED EXPENDITURE TABULATE AS UNDER : I . MANUFACTURING EXPENSES RS.2,36,176/ - II . CONSULTANCY CHARGES RS.3,38,447/ - III . TRAVELLING EXPENSES (DIRECTOR) RS.4,11,655/ - IV . PROFESSIONAL FEES RS.68,000/ - V . SELLING EXPENSES RS.290/ - VI . INTEREST PAID TO BANK RS.68,51,977/ - VII . INT EREST PAID TO OTHER RS.50,63,171/ - VIII . INTEREST ON VEHICLE LOAN RS.81,572/ - IX . BANK COMMISSION AND CHARGES RS.33,12,854/ - ________________ TOTAL RS.1,63,64,142/ - THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE HAS CLA IMED HUGE AND EXORBITANT EXPENSES AND THE GENUINENESS OF THE SAME WERE NOT ESTABLISHED. AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 28 - 12 - 2011, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER CONSIDERING THE FACTS AND DOCUMENTS ON RECORD DELETED THE ENTIRE ADDITION IN RESPECT OF DISALLOWANCE OF EXPENDITURE. HENCE, THE PRESENT APPEAL BY THE REVENUE. 4 ITA NO .201/NAG/2014 & CO NO. 24/NAG/2017 4. SHRI RAJESH LOYA APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT DISALLOWANCE OF EXPENDITURES WERE MADE BY THE ASSESSING OFFICER MERELY ON SURMISES AND CONJECTURES. THE ASSESSING OFFICER FAILED TO TAKE COGNIZANCE OF VARIOUS DOCUMENTARY EVIDENCES PRODUCED BY THE ASSESSEE. THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER APPRECIATING THE DOCUMENTS ON RECORD AND FACT S OF THE CASE HAS DELETED THE ENTIRE ADDITION. THE LD. AR FURTHER CONTENDED THAT THE BOOKS OF ACCOUNT OF ASSESSEE ARE SUBJECT TO AUDIT AND THE ASSESSING OFFICER HAS NOT REJECTED THE SAME BEFORE MAKING DISALLOWANCE OF EXPENDITURE. THE LD. AR FURTHER POINTE D THAT THE DISALLOWANCE ON ACCOUNT OF INTEREST CHARGES WAS MADE IN THE CASE OF ASSESSEES GROUP CONCERN. THE SAME WAS DELETED BY THE COMMISSIONER OF INCOME TAX (APPEALS). THE DEPARTMENT CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL IN ITA NO. 223/NAG/ 2013 FOR ASSESSMENT YEAR 2008 - 09. THE TRIBUNAL VIDE ORDER DATED 22 - 05 - 2015 UPHELD THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) AND DELETED THE ADDITION. 5. ON THE OTHER HAND SHRI U.U. KASAR REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE AS SESSMENT ORDER AND PRAYED FOR REVERSING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). 5 ITA NO .201/NAG/2014 & CO NO. 24/NAG/2017 6. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BELOW PERUSED. THE REVENUE IS IN APPEAL AGAINST DELETING OF VARIOUS EXPENDITURES AGGREGATING TO RS.1,63,64,142 / - . THE ASSESSING OFFICER MADE ADDITION RAISING DOUBT OVER THE GENUINENESS OF EXPENDITURES AS WELL AS THE QUANTUM OF EXPENDITURE. IN FIRST APPELLATE PROCEEDINGS THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION BY OBSERVING AS UNDER : IN MY CONSIDERED VIEW, THE AO HAS FAILED TO DISCHARGE THE ONUS UPON HIM TO CONCLUSIVELY PROVE THAT THE EXPENDITURE INCURRED ARE BOGUS. THE AO IN PAGE 4 PARA 4.4 OF THE ASSESSMENT ORDER AGREED THAT THE EXPENSES CLAIMED HAD TO BE RESTRICTED TO ONLY THOSE EXPENSE S WHICH WERE RELATED TO NON DELIVERY TRANSACTION OR PAPER TRANSACTIONS AND IN PARA 4.5 FURTHER HELD THAT IT IS REASONABLE TO ALLOW ONLY THOSE EXPENSES WHICH ARE GENUINELY INCURRED TO CARRY OUT SUCH PAPER TRANSACTIONS. THUS THE AO AGREES THAT THE EXPENSES ARE ALLOWABLE. HOWEVER, HE FAILED TO BRING ON RECORD ANY INFIRMITY IN THE INDIVIDUAL HEAD OF EXPENDITURE WHICH HAD BEEN CONSIDERED FOR DISALLOWANCE. I FIND THAT THE ASSESSEE HAS PAID INTEREST TO BANKS ON THE LC TRANSACTION AND FINANCE FACILITY. SIMILAR LY, THE BANK CHARGES AND COMMISSION HAVE BEEN PAID FOR LC DISCOUNTING. THE INTEREST PAID TO OTHERS IS ALSO FOR SECURING FUNDS FOR THE PURPOSE OF BUSINESS. IT IS NOWHERE ESTABLISHED BY THE AD THAT THE FUNDS HAVE BEEN UTILISED FOR PERSONAL PURPOSES OR NON BUSINESS ACTIVITY. THE GENUINENESS OF THE EXPENDITURE CANNOT BE DOUBTED AS THE PAYMENTS ARE MADE TO BANK AND OTHER PARTIES. THE MANUFACTURING EXPENSES LIKE FACTORY EXPENSES, ELECTRICITY CHARGES ETC. HAVE BEEN INCURRED TO CARRY OUT MANUFACTURING ACTIVITY AND THE AO ERRED IN DISALLOWING THE EXPENDITURE MERELY CONSTRUING THE MANUFACTURING ACTIVITY AS PAPER TRANSACTION. NO DEFECT HAS BEEN POINTED OUT IN ANY OF SUCH EXPENDITURE. THE AO HAS DISALLOWED PROFESSIONAL AND LEGAL CHARGES, TRAVELLING EXPENSES, CO NSULTANCY CHARGES AND SELLING EXPENSES ONLY ON THE BASIS THAT SUCH EXPENSES ARE NOT REQUIRED WITHOUT GOING INTO THE DETAILS OF SUCH EXPENDITURE, AND WHETHER THEY HAVE BEEN ACTUALLY INCURRED OR NOT. THE EXPENDITURE HAS BEEN DISALLOWED BY THE AO SUMMARILY WITHOUT PROPER VERIFICATIONS. I FIND THAT THE OTHER EXPENSES IN THE PROFIT AND LOSS ACCOUNT WHICH ARE ALSO OF SIMILAR NATURE HAVE BEEN ALLOWED AS DEDUCTION. SINCE IT IS HELD THAT THE ASSESSEE HAD CARRIED OUT THE REGULAR BUSINESS ACTIVITY ON WHICH PROFIT IS EARNED, THE EXPENDITURE INCURRED FOR SUCH TRANSACTION OR FOR FACILITATING THE BUSINESS HAVE TO BE ALLOWED. I FIND THAT THE ASSESSEE HAS INCURRED 6 ITA NO .201/NAG/2014 & CO NO. 24/NAG/2017 EXPENDITURE AND NO DEFECT/INFIRMITIES HAVE BEEN POINTED OUT BY THE A.O. IT IS TO BE FURTHER NOTED THAT NO EV IDENCE WAS FOUND DURING SEARCH ON THE BASIS OF WHICH AO COULD HAVE DISALLOWED THE EXPENDITURE. IN FACT, THERE IS NO SUCH FINDING AT ALL. HERE, I ALSO FIND THAT THE SIMILAR NATURE OF TRANSACTIONS AND THE BUSINESS ACTIVITY OF THE ASSESSEE AND THE EXPENDITURE INCURRED BY THE ASSESSEE WERE SUBJECT TO SCRUTINY IN EARLIER OCCASION AS WELL. PROCEEDINGS U/S.153A WERE INITIATED FOR A.Y.2004 - 05 IN PURSUANCE OF SEARCH CONDUCTED EARLIER ON 24 - 12 - 2003 AND THE ASSESSMENT ORDER WAS PASSED U/S.143(3) R.W.S. 153A ON 31 - 03 - 2006. THE EXPENDITURE WERE VERY MUCH ALLOWED AND THERE WAS NO EDITION MADE BY THE AO OF THIS NATURE. FURTHER, ON THE SIMILAR FACTS, THE CIT(A) - I VIDE HIS APPELLATE ORDER DATED 11/03/2013 IN THE CASE OF SHRI KRISHNA GUPTA FOR A.Y. 2008 - 09 VIDE APP EAL NUMBER CIT(A) - 1I545/2011 - 12 HAS HELD THAT THE EXPENDITURE IS DIRECTLY RELATABLE AND WITHOUT WHICH THE APPELLANT WOULD NOT HAVE EARNED INCOME AND ACCORDINGLY HAS ALLOWED THE APPEAL. CONSIDERING THE AFORESAID FACTS, I HOLD THAT THE EXPENDITURE CLAIMED B Y THE ASSESSEE ARE INCURRED AS WELL AS DIRECTLY RELATABLE FOR THE PURPOSE OF EARNING PROFIT ON THE ACTIVITIES CARRIED OUT BY THE ASSESSEE AND THEREFORE THE DISALLOWANCE OF RS.1,63,64,142/ - MADE BY THE AO IS UNJUSTIFIED AND THEREFORE DIRECTED TO BE DELET ED. THE GROUND OF APPEAL IS ALLOWED IN FAVOUR OF THE APPELLANT. 7. THE LD. DR HAS NOT BEEN ABLE TO CONTROVERT THE FINDINGS OF FIRST APPELLATE AUTHORITY. IN THE ABSENCE OF ANY CONTRARY MATERIAL , WE FIND NO REASON TO INTERFERE WITH THE REASONED FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). THE SAME ARE UPHELD , ACCORDINGLY AND THE APPEAL OF REVENUE IS DISMISSED BEING DEVOID OF ANY MERIT. 8. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. 7 ITA NO .201/NAG/2014 & CO NO. 24/NAG/2017 9. SINCE, WE HAVE DISMISSED THE APPEAL OF REVENUE, THE CROSS OBJECTIONS FILED BY THE ASSESSEE HAVE BECOME INFRUCTUOUS AND ARE DISMISSED AS SUCH. 10. TO SUM UP, THE APPEAL OF REVENUE , AS WELL AS CROSS OBJECTIONS BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 29 TH DAY OF MARCH, 2019. SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / NAGPUR ; / DATED : 29 TH MARCH, 2019. RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) 4. / THE CIT 5. , , , / DR, ITAT, NAGPUR BENCH, NAGPUR . 6. / GUARD FILE. // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, NAGPUR