Ravi Pharmaceuticals Pvt. Ltd., Anand V. The Income Tax Officer, Ward-1(3)(2), Vadodara

ITA 246/AHD/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4801 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 31-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ILA M PARMAR
• Keywords: Corroborative evidences
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER) ITA. NO: 246/AHD/2017 (ASSESSMENT YEAR: 2012-13) RAVI PHARMACEUTICALS PVT. LTD. PLOT NO. 69, GIDC, KANSARI, KHAMBHAT, ANAND-388640 V/S INCOME TAX OFFICER, WARD- 1 (3)(2), VADODARA (APPELLANT) (RESPONDENT) PAN: AAACR 9331E APPELLANT BY : SHRI KARAN SHAH, AR RESPONDENT BY : SMT. ILA M. PARMAR, SR. D.R. ( )/ ORDER DATE OF HEARING : 17 -10-201 8 DATE OF PRONOUNCEMENT : 23 -10-2018 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-1, VADODARA DATED 20.10.2016 PERTAINING TO A.Y. 2012-1 3 AND SOLELY GROUND IN THE ITA NO. 246/ AHD/2017 . A.Y. 2012-13 2 APPEAL IS THAT LD. CIT(A) HAS ERRED IN LAW AND ON F ACTS IN CONFIRMING THE ADDITION ON ACCOUNT OF DISALLOWANCE OF REIMBURSEMEN T EXPENSES OF RS. 13,24,168/- MADE BY THE LD. A.O. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGA GED IN THE BUSINESS OF MANUFACTURING, TRADING, PROCESSING OF PHARMACEUTICA LS ITEMS. 3. ON VERIFICATION OF THE PROFIT & LOSS ACCOUNT, IT WA S NOTICED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.13,60,065/- AS AGAINST RS.43,702/-. IN VIEW OF THE SAME, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN THE REASONS FOR SUCH HUGE VARIATION IN THE CLAIM OF EXPENSES. IN RESPONSE, THE A.R. OF THE ASSESSEE VIDE HIS SUBMISS ION DATED 28.02.2015 STATED THAT THE COMPANY HAS REIMBURSED RS.13,24,168/- TO V ET MED CHEMICALS FOR TRAVELLING AND CONVEYANCE INCURRED ON BEHALF OF THE ASSESSEE-COMPANY FOR WORK CARRIED OUT BY THE MEDICAL REPRESENTATIVE ON S ALARIES WITHIN MAHARASHTRA STATE. IT WAS ALSO STATED THAT THE MEDICAL REPRESEN TATIVE WERE APPOINTED FOR GATHERING, ENQUIRING AND PROCUREMENT OF TENDERS TO PRODUCE PURCHASE ORDERS FROM MAHARASHTRA STATE GOVERNMENT DEPARTMENTS AND C OLLECTION OF PAYMENT AFTER SUPPLYING THE REQUISITE QUANTITIES AS PER THE REQUIREMENTS AND ORDERS IN THE NAME OF THE COMPANY. FROM THE COPIES OF VOUCHERS PR ODUCED IT CAN BE SEEN THAT EACH PERSON WAS ENTITLED TO TRAVELLING EXPENSE S INCURRED ALONG WITH ALLOWANCE AND ITS FIXED SALARY AS WAS AGREED HAVING BEEN SUBMITTED BY THE VET MED CHEMICALS AND THE PAYMENTS HAVE BEEN EFFECTED T HROUGH THE SAID PARTY AS PER THE LEDGER ACCOUNT SUBMITTED. 4. IN VIEW OF THE ABOVE, A SHOW CAUSE NOTICE DATED 10. 03.2015 ISSUED TO THE ASSESSEE. IN RESPONSE TO THE SHOW CAUSE NOTICE THE ASSESSEE FILED ITS REPLY VIDE ITA NO. 246/ AHD/2017 . A.Y. 2012-13 3 LETTER DATED 18.03.2015. THE REPLY OF THE ASSESSEE CONSIDERED BUT FOUND TO BE NOT JUSTIFIABLE. 5. ON PERUSAL OF THE DETAILS FURNISHED BY THE ASSESSEE , IT WAS NOTICED THAT THE ASSESSEE HAS NOT FURNISHED ANY COPY OF AGREEMENT OR APPOINTMENT LETTER OR THE TERMS AND CONDITIONS AGREED UPON BY THE COMPANY WIT H VET MED CHEMICALS THOUGH IT HAS REPEATEDLY STATED THAT THE PAYMENTS W ERE MADE AS PER THE FIXED TERMS AND CONDITIONS. IN SUPPORT OF ITS CONTENTION, THE COMPANY HAS FURNISHED A COPY OF CERTIFICATE DATED 1.1TH OCTOBER, 2010, AU THORIZING M/S. VET MED CHEMICALS TO QUOTE AND PARTICIPATE ON BEHALF OF THE COMPANY IN THE TENDER OF THE CHIEF EXECUTIVE OFFICER, MAHARASHTRA, LIVE STOC K DEVELOPMENT BOARD FOR THE YEAR 2010-12. NO OTHER DETAILS WERE FURNISHED B Y THE ASSESSEE TO SUBSTANTIATE THE NATURE OF RESPONSIBILITY GIVEN TO THE SAID PARRY. 6. IN VIEW OF THE SAME, A NOTICE UNDER SEC. 133(6) OF THE ACT WAS ISSUED TO M/S, VET MED CHEMICALS ON 10.03.2015 REQUIRING IT FURNIS H COPY OF BANK STATEMENTS, LEDGER ACCOUNTS, COPY OF AGREEMENT, NATURE OF TRANS ACTIONS ENTERED WITH THE ASSESSEE-COMPANY, ETC. WERE CALLED FOR. IN RESPONSE , THE SAID PARTY HAS FURNISHED COPY OF BANK STATEMENT, LEDGER ACCOUNT, ETC. HOWEVE R, IT WAS STATED THERE WAS NO WRITTEN AGREEMENT AND THE TERMS AND CONDITIONS W ERE ORALLY DECIDE BETWEEN US. 7. ON PERUSAL OF THE DETAILS FURNISHED BY THE ASSESSEE AND INFORMATION GATHERED THROUGH ISSUE OF NOTICE UNDER SEC. 133(6) OF THE AC T, IT WAS NOTICED THAT THE COMPANY IS REIMBURSING THE EXPENSES CLAIMED TO HAVE BEEN INCURRED BY VET MED CHEMICALS. HOWEVER, NO DETAILS AS TO WHAT NUMBE R OF M. RS. WERE APPOINTED, WHAT ARE THE TERMS AND CONDITIONS OF APP OINTMENT, ETC. WERE NOT ITA NO. 246/ AHD/2017 . A.Y. 2012-13 4 AVAILABLE OR FURNISHED BY THE ASSESSEE. FURTHER, TH E SUPPORTING EVIDENCES FURNISHED IN THE VOUCHERS ARE ONLY SELF MADE VOUCHE RS, WITHOUT AFFIXING REVENUE STAMP OR NOT SUPPORTED BY ANY OTHER DOCUMENTARY EVI DENCES. MOREOVER, THE ASSESSEE COMPANY HAS NO DIRECT CONTROL OVER THE DAY TO DAY FUNCTIONING OF M.RS. 8. FROM THE CERTIFICATE ISSUED BY THE COMPANY, IT IS N OTICED THAT THE SAID PARTY IS WORKING FOR THE COMPANY SINCE 2010. HOWEVER, THE EX PENSES CLAIMED UNDER THIS HEAD WERE VERY NOMINAL IN THE FINANCIAL YEAR 2 010-11. THE ASSESSEE HAS ALSO TRIED TO EXPLAIN THE EXPENDITURE BY BIFURCATING THE SAME INTO DIFFERENT HEADS I.E. SALARY, CONVEYANCE AND TRAVELLING. IN THE ABSENCE O F ANY APPOINTMENT LETTER OR EVIDENCES, IT IS NOT POSSIBLE TO VERIFY THE CLAIM O F THE ASSESSEE. 9. MOREOVER, AS PER THE DETAILS FURNISHED ALL THE PAYM ENTS MADE TO VET MED CHEMICALS WERE IN THE NATURE OF REIMBURSEMENT TO M. RS. BUT NO SUCH PAYMENTS WERE MADE TO VET MED CHEMICALS AGAINST THE SO CALLE D SERVICES PROVIDED BY THEM. 10. IN VIEW OF THE SAME, THE BUSINESS EXPEDIENCY OF THE CLAIM OF EXPENDITURE IS NOT ASCERTAINABLE AND GENUINENESS OF THE CLAIM OF EXPEN DITURE IS ALSO NOT EXPLAINED WITH PROPER SUPPORTING EVIDENCES. THEREFORE, THE EX PENSES ARE NOT FULLY VERIFIABLE. IN VIEW OF THE ABOVE SAID REASONS, THE ABOVE EXPENSES AMOUNTING TO RS. 13,24,168/- IS DISALLOWED & ADDED BACK TO THE T OTAL INCOME. 11. AGAINST THE DISALLOWANCE OF REIMBURSEMENT EXPENSES OF RS. 13,24,168/-, APPELLANT PREFERRED FIRST STATUTORY APPEAL BEFORE T HE LD. CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE. ITA NO. 246/ AHD/2017 . A.Y. 2012-13 5 12. NOW APPELLANT IS BEFORE US BY WAY OF SECOND APPEAL. 13. IN THIS CASE, APPELLANT HAD REIMBURSED AN AMOUNT OF RS. 13,24,168/- TO M/S. VET MED CHEMICALS FOR TRAVELLING AND CONVEYANCE INC URRED ON BEHALF OF THE ASSESSEE COMPANY FOR WORK CARRIED OUT BY THE MEDICA L REPRESENTATIVES ON SALARIES WITHIN MAHARASHTRA STATE. IT WAS CLA IMED THAT THE MRS WERE APPOINTED FOR GATHERING, ENQUIRING AND PROCUREMENT OF TENDERS TO PRODUCE PURCHASE ORDERS FROM MAHARASHTRA STATE GOVERNM ENT DEPARTMENT AND COLLECTION OF PAYMENT AFTER SUPPLYING THE REQUISITE QUANTITIES AS PER THE REQUIREMENTS AND ORDERS IN THE NAME OF THE APPELLAN T COMPANY. 14. IN SUPPORT OF ITS CONTENTION, APPELLANT SUBMITTED T HE LEDGER ACCOUNT OF THE PARTY TO WHOM PAYMENT WAS MADE AND ALL PAYMENTS WER E MADE THROUGH CHEQUE AND VOUCHERS WERE ALSO SUBMITTED TO THE LOWER AUTHO RITIES. WE ARE OF THE CONSIDERED OPINION, THAT APPELLANT HAS DISCHARGED H IS ONUS BY SUBMITTING THE ABOVE SAID DETAILS TO THE LOWER AUTHORITIES AND WE DO NOT FIND ANY REASON TO DISALLOW SUCH EXPENSES. 15. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON 23- 10- 2018 SD/- SD/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 23/10/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)