DCIT, New Delhi V. M/s. UOP India Pvt. Ltd., New Delhi

ITA 2332/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6463 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 02-11-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 16-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UMESH CHAND DUBEY
• Assessee Lawyers: SHEEL VARDHAN
• Keywords: Business expenditure; Principle of natural justice; Additional evidence; Revised return
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO . 2332 /DEL/20 1 4 A.Y. : 2007 - 08 DCIT, CIRCLE 18(1), NEW DELHI VS M/S UOP INDIA PVT. LTD., 17, GROUND FLOOR, AMRIT HOUSE, SANT NAGAR, NEW DELHI 110 065 (PAN: AAACU2687E) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) DEPARTMENT BY : SH. UMESH CHAND DUBEY, SR. DR ASSESSEE BY : SH. SHEEL VARDHAN, ADV. ORDER ORDER ORDER ORDER PER PER PER PER H.S. H.S. H.S. H.S. SIDHU : JM SIDHU : JM SIDHU : JM SIDHU : JM THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE IMPUGNED ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA LS)-XXI, NEW DELHI FOR THE ASSESSMENT YEAR 2007-08. 2. THE GROUNDS RAISED IN THE REVENUES READ AS UND ER:- 1. LD. CIT(A) HAD ERRED IN DELETING THE ADDITION O F RS. 38,77,222/- WITHOUT APPRECIATING THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND CLAIMED EXPENDITURE ON ACCRUAL BASIS AT THE END OF THE PREVIOUS YEAR. 2. THE APPELLANT CRAVES, LEAVE FOR RESERVING THE RI GHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY 2 GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED THE ORIGINAL RETURN OF RS. 9,46,23,915/- AND SUBSEQUENTLY FILED THE REVISED RETURN OF RS. 10,20,74,658/-. THE CASE OF THE ASSESSEE WAS T AKEN UP FOR SCRUTINY. IN THIS CASE THE AO HAD MADE THE DISALLOWANCE OF P ROVISIONS EXPENSES UNDER THE VARIOUS HEADS OF RS. 47,92,249/- MAINLY O N THE GROUND THAT THE PAYMENTS WERE MADE IN THE NEXT FINANCIAL YEAR AND A S SUCH THE SAME ARE NOT ALLOWABLE IN THIS YEAR. THE ASSESSMENT IN THIS CASE U/S. 143(3) OF THE I.T. ACT, 1961 HAS BEEN COMPLETED AT AN INCOME OF R S. 11,65,46,350/- VIDE ORDER DATED 27.12.2010. 4. AGGRIEVED WITH THE AFORESAID ORDER OF THE AO, TH E ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) WHO VIDE IMPUGNED ORDE R DATED 20.01.2014 DELETED SOME ADDITIONS AND PARTLY ALLOWED THE APPEA L OF THE ASSESSEE. 5. AGAINST THE ORDER OF THE LEARNED CIT(A) THE REVE NUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 7. ON THE CONTRARY, THE LD. COUNSEL OF THE ASSESSEE CONTENDED THAT THE ACTION OF THE AO WAS NOT JUSTIFIED. THEREFORE, HE RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT THE SAME MAY BE UPHE LD. 3 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. WE FIND THAT THE LD. CIT(A) HAS ELABORATELY DISCUSSED THE ISSUE IN DISPUTE AND GAVE HIS FINDING VIDE PARA NO. 5.6 TO 5.8 OF HIS IM PUGNED ORDER. FOR THE SAKE OF CONVENIENCE, THE RELEVANT FINDING OF THE LD . CIT(A) IS REPRODUCED BELOW:- 5.6 I HAVE CONSIDERED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN THE SUBMISSIONS OF THE ASSESSE. IT IS SEEN THAT ALL THE EXPENSES UNDER THE VARIOUS HEADS LIKE SECURITY CHAR GES, PROFESSIONAL EXPENSES, DRIVER CHARGES, HOUSEKEEPING SERVICES, COMPUTER REPAIRS, CONSULTANCY CHARGES, TELEPHONE CH ARGES, PRINTING AND STATIONARY ETC. ARE RELATED TO THE LAS T MONTH OF THE YEAR I.E MARCH 2007 AND THE PAYMENTS HAS BEEN M ADE IN THE SUBSEQUENT YEAR. THE ASSESSEE HAS OFFERED THE E XCESS PROVISIONS OF RS. 3,26,223/-OF EARLIER YEARS U/S 41 (1) AND THE SAME HAS BEEN REDUCED FROM THE CURRENT PROVISIONS. THE ASSESSEE HAS ALSO REVERSED AND OFFERED THE EXCESS P ROVISION OF COMMISSION OF RS. 4,63,427/- AND RS. 78,418/- UN DER THE HEAD ELECTRICITY FOR TAXATION U/S 41(1) IN THE NEXT ASSESSMENT YEAR. IT IS SEEN THAT THE ASSESSEE HAS MADE THE PRO VISIONS OF EXPENSES WHICH HAS ARISEN AND CRYSTALLZED DURING TH E CURRENT YEAR AND AS SUCH THE ASSESSEE IS ELIGIBLE FOR DEDUC TION OF THESE EXPENSES AND THE CASE LAWS RELIED ON BY THE A SSESSEE ARE ALSO APPLICABLE IN FAVOUR OF THE ASSESSEE. IT I S SEEN THAT 4 THE ASSESSEE HAD SUBMITTED ALL THE DETAILS OF EXPEN SES/ PROVISIONS WHICH WERE FORWARDED TO THE AO FOR THE R EMAND REPORT AND THE AO HAS NOT ALSO GIVEN ANY ADVERSE FI NDING ABOUT ANY EXPENDITURE BEING BOGUS OR NOT ALLOWABLE AS PER LAW VIDE THE REMAND REPORT OF THE AO. BUT IT IS SEE N THAT THE ASSESSEE HAS NOT SUBMITTED ANY DETAILS OR VOUCHERS OR ANY EVIDENCE OF THE MISCELLANEOUS EXPENSES/ PROVISIONS OF RS. 9,15,027/- EITHER BEFORE THE AO OR AT THE APPELLATE STAGE AND AS SUCH THE CLAIM OF THESE EXPENSES IS APPARENTLY N OT JUSTIFIABLE. 5.7 IT IS ALSO SEEN THAT THE AO DID NOT MAKE ANY ENQUIRY EITHER AT THE STAGE OF ASSESSMENT PROCEEDINGS OR AT THE STAGE OF REMAND REPORT PROCEEDINGS REGARDING THE GENUINEN ESS OF THE CLAIM OF THE PROVISIONS/ EXPENSES AND AS SUCH T HERE IS NO PROPER JUSTIFICATION FOR THE ADDITION MADE BY THE A O. THERE IS ALSO NO MERIT IN THE SUBMISSIONS OF THE AO THAT THE ADDITIONAL EVIDENCE/ DETAILS SUBMITTED BY THE ASSESSEE SHOULD NOT BE ADMITTED AS IT IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE AND IT IS DIFFICULT TO SUSTAIN ANY ADDITION/ DISALLOWANCE UNLESS IT IS PROVED BY THE AO THROUGH ENQUIRY AND EXAMINATION TH AT THE CLAIM OF THE ASSESSEE IS EITHER BOGUS OR THE SAME I NOT ALLOWABLE AS PER LAW. 5.8 AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANC ES OF THE CASE, I AM OF THE VIEW THAT THE PROVISION FOR EXPEN SES ARE 5 ALLOWABLE BUSINESS EXPENSES AND THE ASSESSEE HAS MA DE THE PROVISIONS AS PER AS-1 AND THERE IS NO EVIDENCE FRO M THE AO TO SHOW THAT ANY OF THE CLAIMS ARE BOGUS AND AS SUC H THERE IS NO PROPER JUSTIFICATION EITHER IN THE ORDER OF THE AO OR IN THE ORDER OF THE LD. CIT(A) TO DISALLOW SUCH EXPENSES/ PROVISIONS AND AS SUCH ALL THE EXPENSES CLAIMED BY THE ASSESSE E ARE ALLOWED FOLLOWING THE CASE LAWS BY THE ASSESSEE EXC EPT THE MISCELLANEOUS EXPENSES OF RS. 9,15,027/- FOR WHICH NO DETAILS OR EVIDENCES WERE SUBMITTED AND ACCORDINGLY THE ADD ITION TO THE EXTENT OF RS. 9,15,027/- IS CONFIRMED AND THE B ALANCE ADDITION OF RS. 38,77,222/- (RS. 47,92,249/- (-) RS.9,15,027/-) IS DELETED. 8.1 AFTER PERUSING THE AFORESAID LD. CIT(A)S FINDI NG, I FIND THAT ALL THE EXPENSES UNDER THE VARIOUS HEADS LIKE SECURITY CHAR GES, PROFESSIONAL EXPENSES, DRIVER CHARGES, HOUSEKEEPING SERVICES, CO MPUTER REPAIRS, CONSULTANCY CHARGES, TELEPHONE CHARGES, PRINTING AN D STATIONARY ETC. ARE RELATED TO THE LAST MONTH OF THE YEAR I.E MARCH 200 7 AND THE PAYMENTS HAS BEEN MADE IN THE SUBSEQUENT YEAR. THE ASSESSEE HAS OFFERED THE EXCESS PROVISIONS OF RS. 3,26,223/- OF EARLIER YEAR S U/S 41(1) AND THE SAME HAS BEEN REDUCED FROM THE CURRENT PROVISIONS. THE ASSESSEE HAS ALSO REVERSED AND OFFERED THE EXCESS PROVISION OF C OMMISSION OF RS. 4,63,427/- AND RS. 78,418/- UNDER THE HEAD ELEC TRICITY FOR TAXATION U/S 41(1) IN THE NEXT ASSESSMENT YEAR. WE ALSO NOTE THAT THE ASSESSEE HAS MADE THE PROVISIONS OF EXPENSES WHICH HAS ARISE N AND CRYSTALIZED 6 DURING THE CURRENT YEAR AND AS SUCH THE ASSESSEE IS ELIGIBLE FOR DEDUCTION OF THESE EXPENSES. WE ALSO NOTE THAT THE ASSESSEE HAD SUBMITTED ALL THE DETAILS OF EXPENSES/ PROVISIONS WHICH WERE FORWARDE D TO THE AO FOR THE REMAND REPORT AND THE AO HAS NOT ALSO GIVEN ANY ADV ERSE FINDING ABOUT ANY EXPENDITURE BEING BOGUS OR NOT ALLOWABLE AS PER LAW VIDE THE REMAND REPORT OF THE AO. BUT IT IS SEEN THAT THE ASSESSEE HAS NOT SUBMITTED ANY DETAILS OR VOUCHERS OR ANY EVIDENCE OF THE MISCELLA NEOUS EXPENSES/ PROVISIONS OF RS. 9,15,027/- EITHER BEFORE THE AO O R AT THE APPELLATE STAGE AND AS SUCH THE CLAIM OF THESE EXPENSES IS APPARENT LY NOT JUSTIFIABLE. WE FURTHER FIND THAT AO DID NOT MAKE ANY ENQUIRY E ITHER AT THE STAGE OF ASSESSMENT PROCEEDINGS OR AT THE STAGE OF REMAND RE PORT PROCEEDINGS REGARDING THE GENUINENESS OF THE CLAIM OF THE PROVI SIONS/ EXPENSES AND AS SUCH THERE IS NO PROPER JUSTIFICATION FOR THE ADDIT ION MADE BY THE AO. IN VIEW OF ABOVE, AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE PROVISION FOR EX PENSES ARE ALLOWABLE BUSINESS EXPENSES AND THE ASSESSEE HAS MADE THE PRO VISIONS AS PER AS-1 AND THERE IS NO EVIDENCE FROM THE AO TO SHOW THAT A NY OF THE CLAIMS ARE BOGUS AND AS SUCH THERE IS NO PROPER JUSTIFICATION EITHER IN THE ORDER OF THE AO OR IN THE ORDER OF THE LD. CIT(A) TO DISALLO W SUCH EXPENSES/ PROVISIONS AND AS SUCH ALL THE EXPENSES CLAIMED BY THE ASSESSEE ARE ALLOWED FOLLOWING THE CASE LAWS BY THE ASSESSEE EXC EPT THE MISCELLANEOUS EXPENSES OF RS. 9,15,027/- FOR WHICH NO DETAILS OR EVIDENCES WERE SUBMITTED AND ACCORDINGLY THE LD. CIT(A)S ACTION R ELATING TO ADDITION TO THE EXTENT OF RS. 9,15,027/- WAS RIGHTLY CONFIRMED AND THE BALANCE 7 ADDITION OF RS. 38,77,222/- (RS. 47,92,249/- (-) R S.9,15,027/-) WAS ACCORDINGLY. 9. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS, WE ARE OF THE VIEW THAT LD. CIT(A) HAS PASSED A WELL REASONED ORDER WH ICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/12/2016. S SS SD DD D/ // / S SS SD DD D/ // /- -- - [ [[ [PRASHANT MAHARISHI PRASHANT MAHARISHI PRASHANT MAHARISHI PRASHANT MAHARISHI] ] ] ] [ [[ [H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR DATE: 16-12-2016 COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES