GARIMA CASTINGS, Jaipur V. ACIT, Jaipur

ITA 212/JPR/2014

• Counselvise Citation: 21223114 RSA 2014
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 20-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: H M SINGHVI
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 212/JP/2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2008-09 M/S GARIMA CASTINGS, E-322, ROAD NO. 16, V.K.I. AREA, JAIPUR. CUKE VS. A.C.I.T., CIRCLE-4, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AAAFG 9463 F VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI H.M. SINGHVI (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI KAILASH MANGAL (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 16/10/2015 ?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 30/10/2015 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 08/01/2014 PASSED BY THE LEARNED CIT (A)-II, JAIPUR FOR A.Y. 2008-09. THE SOLE GROUND OF APPEALS IS AS UNDER:- 1) THAT THE LEARNED CIT(A) HAS ERRED IN OVERLOOKING AND IN SUMMARILY REJECTED THE DETAILED SUBMISSIONS, STATEMENT OF FACTS, VARIOUS DOCUMENTS AND EVIDENCES FILED WITH THE WRITTEN SUBMISSIONS, ITA 212/JP/2014_ GARIMA CASTINGS VS. ACIT 2 CONFIRMED THE DISALLOWANCE @ 10% ON ESTIMATED BASIS OF THE FOLLOWING EXPENSES:- I) RS. 19407 OUT OF RS. 194076/- FOR OFFICE EXPENSES. II) RS. 37317/- OUT OF RS. 373176 FOR POSTAGE & TELEPHONE EXPENSES. III) RS. 95253/- OUT OF RS. 952536/- FOR TRAVELLING AND CONVEYANCE. IV) RS. 19647/- OUT OF RS. 196478/- FOR STAFF WELFARE EXPENSES. 2. THE SOLE GROUND OF APPEAL IS AGAINST 10% DISALLOWA NCE CONFIRMED BY THE LD CIT(A) OUT OF OFFICE EXPENSES, POSTAGE AN D TRAVELLING EXPENSES, TRAVELLING AND CONVEYANCE AND STAFF WELFAR E EXPENSES. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURIN G, TRADING, EXPORT OF FERROUS AND NON FERROUS CASTINGS. THE ASSESSEE F ILED ITS RETURN ON 29/09/2008 DECLARING TOTAL INCOME OF RS. 23,02,870/ -. THE CASE WAS SCRUTINIZED U/S 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). THE LD ASSESSING OFFICER VERIFIED THE OFFICE EXPENSE S, POSTAGE AND TRAVELLING EXPENSES, TRAVELLING AND CONVEYANCE AND STAFF WELFARE EXPENSES AND HELD THAT THESE EXPENSES WERE CLAIMED O N SELF MADE VOUCHERS AND PAYMENTS WERE MADE IN CASH. THEREFORE, T HE SAME WERE NOT VERIFIABLE. THERE IS ALSO NO ANY CONNECTION ON T HE DETAILS THAT THEY WERE INCURRED WHOLLY OR EXCLUSIVELY FOR BUSINESS PURP OSES, THEREFORE, HE ITA 212/JP/2014_ GARIMA CASTINGS VS. ACIT 3 DISALLOWED 20% OUT OF THESE EXPENSES FOR NON BUSINES S PURPOSES AND ADDITION TO THE TUNE OF RS. 3,43,342/- WAS MADE ON A CCOUNT OF DISALLOWANCE UNDER ALL THE HEADS. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT(A ), WHO HAD RESTRICTED THESE EXPENSES UP TO 10% BY OBSERVING AS UNDER:- 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE, ASSES SMENT ORDER AND APPELLANTS WRITTEN SUBMISSION. ASSESSING OFFICE R DISALLOWED 20% OF OFFICE EXPENSES, TRAVELLING AND CONVEYANCE EXPENSES AND STAFF WELFARE EXPENSES ON TH E GROUND THAT COMPLETE AND PROPER VOUCHERS WERE NOT MAINTAINED. ASSESSING OFFICER ALSO DISALLOWED 20% OF TELEPHONE EXPENSES FOR PERSONAL USE IN THE ABSENCE OF CALL DETAILS TO BE MAINTAINED BY THE APPELLANT. AS REGAR DS DEFECTS IN VOUCHERS, A.O. NOTICED THAT MOST OF THE VOUCHERS ARE SELF MADE WITHOUT HAVING DETAILS OF ADDRESS OF P AYEES AND THEREFORE NO VERIFICATION IS POSSIBLE. REGARDIN G TRAVELLING AND CONVEYANCE EXPENSES, ASSESSING OFFIC ER NOTICED THAT VOUCHERS WERE NOT MAINTAINED FOR ENTIRE EXPENSES. APPELLANT SUBMITTED THAT BOOKS ARE AUDITE D AND VOUCHERS WERE PRODUCED BEFORE THE A.O.. APPELLANT AL SO CLARIFIED THAT TRAVELLING EXPENSES INCLUDED MOTOR C AR EXPENSES. CONSIDERING ALL THE FACTS OF THE CASE, IT CAN BE CONCLUDED THAT APPELLANT MAINTAINS VOUCHERS FOR ALL THE ITA 212/JP/2014_ GARIMA CASTINGS VS. ACIT 4 EXPENSES BUT SOME OF THEM ARE SELF MADE WITH INSUFFI CIENT DETAILS FROM WHICH NO VERIFICATION IS POSSIBLE. PERS ONAL USE OF TELEPHONES AND MOTOR CARS ALSO CANNOT BE DENIED BUT APPELLANT SUBMITTED THAT PART RECOVERY WAS MADE FROM PARTNERS. CONSIDERING THIS, PART DISALLOWANCE OUT OF THESE EXPENSES FOR WANT OF VERIFICATION AND PERSONAL USE I S JUSTIFIED. HOWEVER, THE DISALLOWANCE MADE BY THE A.O . AT 20% IS ON HIGHER SIDE. DISALLOWANCE OF 10% OF THESE EXPENSES WILL TAKE CARE OF DEFECTS IN SOME VOUCHERS AND PERSONAL ELEMENTS INVOLVED. ACCORDINGLY, THE DISALL OWANCE MADE BY THE A.O. IS RESTRICTED TO 10% OF THESE EXPE NSES CLAIMED AS AGAINST 20% DISALLOWED BY THE A.O. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LEARN ED A.R. FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A FIRM AND DISALLOWANCE MADE BY THE A.O. PURELY ON GUESS AND ARBITRARILY ON THE PRESUMPTION AND ASSUMPTION. THE LD ASSESSING OFFICER HAD ADMITTED T HAT ALL THESE EXPENSES WERE INCURRED FOR THE BUSINESS PURPOSES BU T SAME WAS HELD BY THE LD CIT(A) DISALLOWANCE OUT OF THESE EXPENSES F OR WANT OF VERIFICATION AND PERSONAL USE. THE LD AR RELIED UPON THE DECISION OF HONBLE MUMBAI TRIBUNAL IN THE CASE OF ARTHUR & AND ERSON & CO. VS. ADDL.CIT (2010 TIOL 416 ITAT) WHEREIN IT HAS BEEN HEL D THAT TOKEN DISALLOWANCE IS BAD IN LAW, BECAUSE SUCH A DISALLOWANC E IS INHERENTLY ITA 212/JP/2014_ GARIMA CASTINGS VS. ACIT 5 BASED ON SURMISES AND CONJECTURES AND DEVOID OF A L EGALLY SUSTAINABLE FOUNDATION. WHEN THE ASSESSEE SUBMITTED REQUIRED DE TAILS BEFORE THE ASSESSING OFFICER WITH JUSTIFICATION, NO DISALLOWANCE CAN BE MADE. HE FURTHER RELIED ON THE DECISION OF ITAT, JAIPUR BENCH IN THE CASE OF G L GEMS LTD. VS ACIT (2010 004 ITR TRIB 525) WHEREIN IT H AS BEEN HELD THAT EVEN IF BILLS AND VOUCHERS FOR FOOD, LODGING A ND TRAVEL ARE NOT AVAILABLE WITH THE ASSESSEE, ONE SHOULD SEE WHETHER THE EXPENDITURE WAS REASONABLE OR NOT. IF THE EXPENDITURE WAS REASONA BLE THEN SAME SHOULD NOT BE DOUBTED PARTICULARLY WHEN THE EXPENSES WERE INCURRED FOR BUSINESS PURPOSE. HE FURTHER RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF DAKESHWARI COTTON MILLS LTD. VS . CIT 26 ITR 775 AND HON'BLE RAJASTHAN HIGH COURT DECISION IN THE CA SE OF CIT VS. R V DURLABHJI 211 ITR 178 TO 189 WHEREIN IT HAS BEEN HELD BY THE HONBLE COURT THAT THE ASSESSING OFFICER IS NOT ENTITLED TO MAKE A PURE GUESS AND MAKE AN ASSESSMENT WITHOUT REFERENCE EVIDENCE OR ANY MATERIAL AT ALL. THEREFORE, HE PRAYED TO DELETE THE ADDITION. 5. AT THE OUTSET, THE LEARNED DR HAS VEHEMENTLY SUP PORTED THE ORDER OF THE LOWER AUTHORITIES. ITA 212/JP/2014_ GARIMA CASTINGS VS. ACIT 6 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE A LSO GONE THROUGH THE ORDER OF THE LOWER AUTHORITIES BUT NEITHER THE ASSESSING OFFICER NOR THE LD CIT(A) HAS COMPARED THE EXPENSES FROM THE PRE VIOUS YEAR OR SUBSEQUENT YEAR WITH REFERENCE TO TOTAL TURNOVER AND INCOME DISCLOSED. IT IS A FACT THAT THESE EXPENSES CAN BE CLAIMED ON SELF MADE VOUCHERS AND RECIPIENT PARTY FORCED TO MAKE PAYMENT IN CASH. THE NATURE OF THE EXPENSES ARE SUCH THAT THIRD PARTY EVIDENCE CANNOT BE COLLECTED BY THE ASSESSEE, THEREFORE, WE DO NOT FIND ANY REASON TO UP HOLD THE ORDER OF THE LD CIT(A). 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/10/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:-30 TH OCTOBER, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S GARIMA CASTINGS, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ACIT, CIRCLE-4, JAIPUR. 3. VK;DJ VK;QDR @ CIT ITA 212/JP/2014_ GARIMA CASTINGS VS. ACIT 7 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 212/JP/2014) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR