M/s. Vallabhbhai Dhanjibhai & Co., Bhavnagar V. The ACIT., Circle-1, Bhavnagar

ITA 2416/AHD/2010

• Counselvise Citation: 241620514 RSA 2010
• Duration Of Justice: 3 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-08-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 28-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P BHATHEJA
• Keywords: Agreed addition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER AN D SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO. 2416/AHD/2010 A.Y: 2007-08 VALLABHBHAI DHANJIBHAI & CO., T/7-8, DARSHAN COMPLEX, NILAMBAUG, BHAVNAGAR PAN : AACFV2572J VS ACIT, CIRCLE - 1, BHAVNAGAR (ASSESSEE) (REVENUE) REVENUE BY : SHRI O. P. BHATHEJA, SR. D R ASSESSEE(S) BY : SHRI SANJAY R. SHAH, AR / // / DATE OF HEARING : 14/08/2013 / DATE OF PRONOUNCEMENT: 23/08/2013 / O R D E R PER A. K. GARODIA: THIS APPEAL IS FILED BY THE ASSESSEE AND IS DIRECT ED AGAINST THE ORDER OF LEARNED CIT - XX, AHMEDABAD DATED 01.04.2010 FOR A.Y. 2007 08. 2. THE ASSESSEE HAS TWO GRIEVANCES. ONE GRIEVANCE I S FOR DISALLOWANCE OF RS. 179,700/- BEING 10% OF FACTORY EXPENSES CLAIMED BY THE ASSESS EE OF RS. 17,96,880/-. SECOND GRIEVANCE IS FOR DISALLOWANCE OF RS. 293,000/- BEI NG 10% OF FOREIGN TRAVEL EXPENSES CLAIMED BY THE ASSESSEE OF RS. 29,27,135/-. 3. IT IS SUBMITTED BY THE LEARNED AR OF THE ASSESSE E THAT BOTH THESE DISALLOWANCES ON ADHOC BASIS ARE NOT JUSTIFIED. HE ALSO SUBMITTED TH AT EVEN IF THE DISALLOWANCE OUT OF FACTORY EXPENSES IS TO MADE ON THIS BASIS THAT NO INVENTORY WAS MAINTAINED BY THE ASSESSEE, THE SAME MAY BE TO THE EXTENT OF 10% OF STORES ETC OF R S. 253,377/- AS PER DETAIL ON PAGES 26A TO 26 C OF THE PAPER BOOK. SIMILARLY FOR DISALLOWAN CE OUT OF FOREIGN TRAVEL EXPENSES, HE SUBMITTED THAT THERE SHOULD NOT BE ANY DISALLOWANCE OUT OF AIR TICKETS AND THE DISALLOWANCE MAY BE 10% OF EXPENSES IN RESPECT OF F OREIGN CURRENCY OF RS. 15,34,210/- AS PER DETAIL ON PAGES 35 TO 36 OF THE PAPER BOOK. HE ALSO SUBMITTED THAT GP OF THE PRESENT ITA NO.2416/AHD/2010 - 2 - YEAR IS BETTER AT 8.73% AS COMPARED TO 7.76% & 6.02 % IN PRECEDING TWO YEARS. AS AGAINST THIS, LEARNED DR SUPPORTED THE ORDER OF LEARNED CIT (A). HE ALSO SUBMITTED THAT IT IS NOTED BY THE A.O. IN THE ASSESSMENT ORDER AND ALSO BY THE LEARNED CIT (A) IN HIS ORDER THAT THE AR OF THE ASSESSEE BEFORE THE A.O. HAD AGREED FOR T HESE TWO DISALLOWANCES AND HENCE, THE ASSESSEE CANNOT DISPUTE THESE ADDITIONS. IN REJOIND ER, LEARNED AR SUBMITTED THAT THE AR OF THE ASSESSEE DID NOT AGREE FOR THESE ADDITIONS AND HE SIMPLY SIGNED THE ORDER SHEET AS A TOKEN OF HIS APPEARANCE BEFORE THE A.O. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT IT IS STATED BY THE A.O. IN TH E ASSESSMENT ORDER THAT THE AR OF THE ASSESSEE AGREED FOR BOTH THESE DISALLOWANCES. THIS FINDING OF THE A.O. IN THE ASSESSMENT ORDER IS APPROVED BY THE LEARNED CIT (A) ALSO AND T HE LEARNED AR OF THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE TO DISLODGE THIS FINDING OF TH E A.O. HE COULD HAVE PRODUCED THE AFFIDAVIT OF THE CONCERNED AR BUT IT IS NOT DONE BY THE ASSESSEE. EVEN THIS IS NOT SHOWN BY THE ASSESSEE THAT ANY EFFORT WAS MADE IN THIS RESPE CT. HE HAS NOT EVEN PRODUCED CERTIFIED COPY OF THE ORDER SHEET TO SUPPORT HIS ARGUMENT THA T ORDER SHEET WAS SIGNED ONLY AS A TOKEN OF APPEARANCE BEFORE THE A.O. AND NOT AS AN AGREEME NT FOR ADDITION. HENCE, WE FEEL THAT THIS ARGUMENT IS ONLY FOR THE SAKE OF ARGUMENT WITH OUT ANY EFFORT WHATSOEVER TO SUPPORT THE SAME BY BRINGING ANY MATERIAL ON RECORD AND THE REFORE, THIS ARGUMENT IS NOT ACCEPTABLE. ABOUT MERIT, WE WOULD LIKE TO OBSERVE THAT WHEN AN AGREED ADDITION IS MADE, FURTHER ENQUIRY IS NOT MADE AND EVEN ALL REASONING FOR ADDI TION ARE ALSO MANY TIMES NOT NARRATED IN THE ASSESSMENT ORDER. IN THE PAPER BOOK ALSO, AS PE R THE DETAILS OF THE FOREIGN TRAVEL EXPENSES, NO DETAIL IS GIVEN ABOUT THE EXPENSES IN RESPECT OF FOREIGN CURRENCY. WE AGREE THAT NO ADHOC 10% DISALLOWANCE SHOULD BE MADE OUT O F AIR TICKETS BUT SINCE THE ADDITION IS AN AGREED ADDITION, NO INTERFERENCE IS CALLED FO R BECAUSE DISALLOWANCE OF 10% IS NOT AS PER ANY PROVISION IN THE ACT. THE AGREEMENT IS FOR THE AMOUNT OF DISALLOWANCE AND NOT FOR ANY PERCENTAGE. IF THE PERCENTAGE OF DISALLOWANCE O UT OF FOREIGN TRAVEL EXPENSES OF RS. 2.93 LACS IS WORKED OUT WITH THE EXPENSES IN RESPEC T OF FOREIGN URRENCY OF RS. 15.34 LACS, THE PERCENTAGE OF DISALLOWANCE WILL WORK OUT TO ABO UT 19.10%, WHICH IS NOT EXCESSIVE IN VIEW OF THIS FACT THAT NO DETAIL OR SUPPORTING WHAT SOEVER IS BROUGHT ON RECORD IN RESPECT OF ITA NO.2416/AHD/2010 - 3 - EXPENSES IN FOREIGN CURRENCY BY THE PARTNERS. SIMIL ARLY, APART FROM FACTORY STORES EXPENSES OF RS. 253,377/- ALSO, FACTORY EXPENSES OF RS. 15,4 3,503/- WAS INCURRED, WHICH INCLUDES MANY BILLS FOR MATERIALS, AND THE SAME MAY ALSO HAV E SOME INVENTORY AT YEAR END. HENCE, IN THE FACTS OF THE PRESENT CASE, NO INTERFERENCE I S CALLED FOR IN THE ORDER OF LEARNED CIT (A) PARTICULARLY BECAUSE IT IS AN AGREED ADDITION. REGA RDING THIS ARGUMENT THAT GP IN THE PRESENT YEAR IS BETTER, WE WOULD LIKE TO OBSERVE TH AT THESE TWO EXPENSES ARE NOT BEFORE GP BUT ARE AFTER GP AND HENCE, THIS ARGUMENT IS ALSO N OT RELEVANT. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTION ED ON THE CAPTION PAGE. SD/- SD/- (MUKUL KUMAR SHRAWAT) (A .K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. #$#% ' '& / CONCERNED CIT 4. ' '&() / THE CIT(A)-III, AHMEDABAD 5. )*' %, ' ' % , ,-$ / DR, ITAT, AHMEDABAD 6. *./ 0 / GUARD FILE. / BY ORDER, 1 11 1/ // /,' #2 ,' #2 ,' #2 ,' #2 ( DY./ASSTT.REGISTRAR) ' ' % ' ' % ' ' % ' ' % , , , , ,-$ ,-$ ,-$ ,-$ / ITAT, AHMEDABAD