Shri N. Munipandian, CHENNAI V. ACIT, CHENNAI

ITA 2078/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8194 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 30-11-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 08-07-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: PONRAJ

Judgement Text

, A/SMC , IN THE INCOME TAX APPELLATE TRIBUNAL A/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ I.T.A.NO.2078/MDS/2016 ( / ASSESSMENT YEAR:2012-13) SHRI N. MUNIPANDIAN C/O.SIVASAKTHI TIMBER TRADERS, 9/2,PRASANNA VINAYAGAR KOIL STREET,MYLAPORE, CHENNAI 600 004. VS. THE ASST. COMMSSR. OF INCOME TAX, NON-CORPORATE CIRCLE-1, CHENNAI 600 034. PAN:AAIPM6004G ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MR. PONRAJ , C . A /RESPONDENT BY : MR. SHIVA SRINIVAS , JCIT ! ' #$ / DATE OF HEARING : 30 . 11 .201 6 %& # $ / DATE OF PRONOUNCEMENT : 09 . 0 1 .201 7 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-2, CHENNA I, DATED 31.03.2016 IN ITA NO.233/CIT(A)-2/2014-15. ITA NO. 2078/MDS/2016 :-2-: 2. IN THIS APPEAL, THE ASSESSEE CHALLENGED THE FOL LOWING ADDITIONS CONFIRMED BY THE LD.CIT(A). ` I) SAWING CHARGES 1,67,500 II) COOLY & CARTAGE 1,43,780 III) BROKERAGE & COMMISSION 64,769 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND THE PROPRIETOR OF M/S.SIVASAKTHI TIMBER TRADERS , DEALING IN WHOLESALE AND RETAIL TRADE OF SIZED TIMBER. THE ASS ESSEE FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2012-13 ON 10. 10.2012 ADMITTING A TOTAL INCOME OF ` 19,73,960/- AND CLAIMED REFUND OF 64,149/- AFTER PAYMENT OF TAX. THE RETURN WAS INIT IALLY PROCESSED U/S.143(1) OF THE ACT AND REFUND AS CLAIMED ALONG W ITH INTEREST WAS ISSUED TO THE ASSESSEE. ON NOTICE U/S.143(2), DETA ILS AS CALLED FOR WERE FURNISHED BY THE ASSESSEE AND ASSESSMENT WAS COMPLETED U/S.143(3) ON 21.02.2015 WHEREIN THE AO DISALLOWED THE ABOVE MENTIONED THREE ITEMS ON THE GROUND THAT: A) INCREASE OF 21% OVER EARLIER YEAR EXPENDITURE ITA NO. 2078/MDS/2016 :-3-: B) ALL EXPENSES ARE INCURRED IN CASH AGAINST SELF- MADE VOUCHERS. C) UNABLE TO ACCEPT GENUINENESS OF THE EXPENDITUR E, 10% THEREOF IS DISALLOWED. 3.1 AGGRIEVED BY THE ORDER OF LD. ASSESSING OFFICE R, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). ON APPEAL , THE CIT(A) OBSERVED THAT APART FROM STATING THAT THE LABOURERS WHO CARRIED OUT THE COLLY & CARTAGE WORK CAN ONLY BE PAID IN CASH AND DO NOT FURNISH ANY VOUCHERS ON THEIR OWN, THE ASSESSEE HAS NOT BRO UGHT ON RECORD ANY DETAILS OR MATERIALS TO JUSTIFY THE INCREASE OF 21% IN THE EXPENDITURE TOWARDS COOLY & CARTAGE PAYMENTS, VIS- -VIS THE EARLIER YEAR. FURTHER, LD.CIT(A) OBSERVED THAT THE ONUS WAS CLEARLY CAST ON THE ASSESSEE TO SATISFACTORILY EXPLAIN THE REASON F OR THE JUMP IN THE EXPENDITURE. HENCE, THE LD.CIT(A) CONFIRMED THE ACT ION OF AO. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 4. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. FIRSTLY, COOLY & CARTAGE PAYMENTS CLAIMED B Y THE ASSESSEE ITA NO. 2078/MDS/2016 :-4-: SUPPORTED BY THE SELF-MADE VOUCHERS. THERE IS EVER Y CHANCE OF INFLATING EXPENDITURE, SINCE THE EXPENDITURE CLAIME D BY THE ASSESSEE WAS NOT CORRESPONDING WITH THE EARLIER YEAR EXPENDI TURE AS COMPARED WITH THE TURNOVER AND EXPENDITURE BEING SO, THE AO DISALLOWED 10% OF THE EXPENDITURE TOWARDS COOLY & CARTAGE. BEFORE US ALSO, THE ASSESSEE IS NOT ABLE TO SHOW THE INCREASE EXPENDITU RE AT 21% AS COMPARED TO THE EARLIER YEARS. HENCE, WE HAVE NO HE SITATION IN CONFIRMING THE ORDERS OF LOWER AUTHORITIES ON THIS . HENCE, THIS ISSUE STANDS DISMISSED. 4.1 THE NEXT ISSUE TAKEN UP IS RELATED TO SAWING CHARGES. THE FACTS OF THE ISSUE ARE THAT THOUGH THERE WAS FALL IN SALE S COMPARED TO THE EARLIER YEAR, THE SAWING CHARGES HAD AN INCREASE OF 22.5% OVER THE PREVIOUS YEAR. THE AO FOUND THAT THE PAYMENTS WERE MADE TO THE ASSESSEES OWN FIRM M/S.SIVASAKTHI SAW MILL THROUGH CHQUES. ACCORDING TO AO, THE SAWING IS DONE IN THE ASSESSEE S OWN PREMISES AND THE JOB OF SAWING HAS BEEN OUTSOURCED TO HIS SI STER FIRM AND THE PAYMENTS ARE SUBJECT TO TAX DEDUCTION AT SOURCE. F URTHER, ON ITA NO. 2078/MDS/2016 :-5-: PERUSING THE LEDGER ACCOUNT, IT WAS FOUND THAT THE ASSESSEE HAS NOT BEEN REGULAR IN DEDUCTING TAX AT SOURCE. THE ENTIR E TDS OF 11,163/- WAS OUTSTANDING EVEN AS ON 31.03.2011. FURTHER, AS PER TAX AUDIT REPORT THE ASSESSEE HAS NOT COMPLIED WITH THE PROV ISIONS OF CHAPTER XVII-B. FURTHER, THE AO NOTICED FROM THE LEDGER AC COUNT THAT THE LAST ENTRY OF PURPORTED BILLS RAISED BY M/S.SIVASAKTHI S AW MILL EVERY MONTH IS A ROUND FIGURE. THE AO FOUND THAT BOTH ON THE COUNT OF GENUINENESS OF EXPENDITURE AND ON THE BASIS OF EXCE SSIVE EXPENDITURE, THE SUM OF ` 1,67,500/- WAS DISALLOWED U/S.40A(2)(B) OF THE ACT AS THE PAYMENT IS MADE TO A RELATED CONCERN . AGGRIEVED, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A ). ON APPEAL, THE LD.CIT(A) OBSERVED AFTER GOING THROUGH THE SUBMISSI ONS OF THE ASSESSEE THAT THE ASSESSEE MADE CONTRADICTORY STATE MENT I.E. ON ONE HAND THE ASSESSEE HAS IMPORTED LOGS WORTH ` 59,38,114/- FROM AFRICA, ON THE OTHER HAND, HE HIMSELF GOES ON TO ST ATE THAT DURING THE PREVIOUS FINANCIAL YEAR, THERE WERE NO IMPORT OF LO GS. THUS, FROM THE ASSESSEES SUBMISSIONS, IT WAS NOT CLEAR AS TO WHET HER THE SAME SET OF CIRCUMSTANCES I.E. THE VARIETY OF LOGS USED, THE PROCEDURE OF ITA NO. 2078/MDS/2016 :-6-: DISCOUNTS ETC. WERE PREVAILING IN THE EARLIER FINAN CIAL YEAR. ACCORDING TO LD.CIT(A), THE ASSESSEE HAS FAILED TO EXPLAIN AS TO HOW THE SAWING CHARGES HAVE INCREASED BY 22.5% OVER THE PREVIOUS Y EAR AND THE ONUS WAS CAST ON THE ASSESSEE TO EXPLAIN THE GENUIN ENESS OF THE SAID EXPENDITURE, ESPECIALLY WHEN THERE WAS A BIG INCREA SE COMPARED TO THE EARLIER YEAR. REGARDING TDS, IT WAS FOUND THAT THE ENTIRE TDS AMOUNT REMAINED OUTSTANDING AS ON 31.03.2011, WHICH WAS BORNE OUT BY FACTS. IN THE ABSENCE OF ASSESSEES SATISFA CTORY EXPLANATION ON THIS ISSUE, THE LD.CIT(A) SUSTAINED THE DISALLOW ANCES MADE BY THE LD. ASSESSING OFFICER. AGAINST THIS, THE ASSESSEE I S IN APPEAL BEFORE US. 4.1.2 I HAVE HEARD BOTH THE PARTIES AND PERUSED T HE MATERIAL ON RECORD. THIS EXPENDITURE IS SAID TO BE PAID BY THE ASSESSEE TO FIRM M/S.SIVASAKTHI SAW MILL, WHICH IS OWNED BY ASSESSEE S SON AND THERE WAS AN INCREASE OF 22.5% AS COMPARED TO THE EARLIER YEAR. HOWEVER, THE SALES WAS INCREASED FROM ` 715.8 LAKHS TO ` 730.29 LAKHS AS COMPARED TO THE EARLIER YEAR. FURTHER, MOST OF THE EXPENDITURE WAS ITA NO. 2078/MDS/2016 :-7-: PAID OF ROUND FIGURE AND THE ASSESSEE IS NOT ABLE T O EXPLAIN HOW IT WAS PAID ALWAYS IN ROUND FIGURE. THERE WAS A DOUBT IN THE MIND OF LOWER AUTHORITIES THAT THE ASSESSEE HAS INFLATED TH E EXPENDITURE AS SUCH EVEN PAYMENTS OF ASSESSEE IS NOT ABLE TO DEMON STRATE HOW THE SAID EXPENDITURE WAS INCREASED BY 22.5% AS COMPARED TO THE EARLIER YEAR. CONSIDERING THIS, AO DISALLOWED A SMALL AMOUN T OF ` 1,67,500/- WHICH IS VERY REASONABLE AND THE SAME IS CONFIRMED . HENCE, THIS GROUND OF ASSESSEE IS DISMISSED. 4.2 THE THIRD ISSUE IS RELATED TO DISALLOWANCE OF ` 64,769/- TOWARDS BROKERAGE AND COMMISSION. 4.2.1 THE FACTS OF THE ISSUE ARE THAT THE ASSESSE E HAS BOOKED AN AMOUNT OF ` 3,23,845/- AS AGAINST ` 2,33,000/- IN THE EARLIER YEAR UNDER THE HEAD BROKERAGE AND COMMISSION. TE ENTIRE EXPENDITURE IS BOOKED IN CASH AND IS SUPPORTED BY SELF MADE VOUCHE RS. THE ASSESSEE STATED THAT THE ENTIRE EXPENDITURE IS TO B E PAID TO CARPENTERS TO BRING IN BUSINESS FOR THE ASSESSEE. H OWEVER, THE ITA NO. 2078/MDS/2016 :-8-: MONTHLY EXPENDITURE IS BOOKED IN THE RANGE OF ` 26,000/-. HOWEVER, THE ASSESSEE COULD RELATE THE PAYMENTS TO ANY PARTI CULAR BILL. THE AO POINTED OUT THAT THE MONTHLY SALES WAS RANGING FROM ` 34.14 LAKHS TO ` 84 LAKHS, BUT THE BROKERAGE IS STATED TO BE CONSTA NT FIGURE AROUND ` 26,000/- EVERY MONTH. THE AO DISALLOWED 20% OF THE EXPENDITURE SINCE THE GENUINENESS OF EXPENDITURE IS DOUBTFUL IN VIEW OF SELF MADE VOUCHERS. AGGRIEVED, THE ASSESSEE CARRIED THE APPEA L BEFORE THE LD.CIT(A). ON APPEAL, THE LD.CIT(A) CONFIRMED THE A DDITION MADE BY THE AO ON THIS ISSUE ON THE REASON THAT THE AMOUNTS ARE PAID TO CARPENTERS TO BRING IN BUSINESS TO THE ASSESSEE CAN NOT BE COMPLETELY RULED OUT, BUT AT THE SAME TIME THE GENUINENESS OF THE EXPENDITURE ITSELF IS SUSPECT, IN VIEW OF THE SELF MADE VOUCHER S. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 4.2.2. I HAVE HEARD BOTH THE PARTIES AND PERUSED T HE MATERIAL ON RECORD. THE EXPENDITURE WAS SUPPORTED BY THE SE LF-MADE VOUCHERS AS THERE WAS DOUBT IN THE MIND OF THE AO O N THE BASIS OF EXPENDITURE WAS INCREASED BY 39% AS COMPARED TO THE EARLIER YEAR. AND ALSO, THE ASSESSEE IS NOT ABLE TO EXPLAIN REASO NS SATISFACTORILY FOR ITA NO. 2078/MDS/2016 :-9-: SUCH STEEP INCREASE OF 39%. WHEN THE EXPENDITURE I S SELF-MADE VOUCHERS, THERE IS EVERY CHANCE OF INFLATING THE EX PENDITURE. ACCORDINGLY, THE DISALLOWANCE OF ` 64,769 IS VERY REASONABLE AND THE SAME IS CONFIRMED. HENCE, THIS ISSUE STANDS DISMISS ED. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH JANUARY, 2017 AT CHENNAI. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 9 TH JANUARY, 2017 . K S SUNDARAM. ' #)* +*# / COPY TO: 1 . / APPELLANT 3. ! ,# () / CIT(A) 5. */0 #1 / DR 2. / RESPONDENT 4. ! ,# / CIT 6. 02 3' / GF