GANPAT N. KANUGO, MUMBAI V. ASST CIT RG 15(3), MUMBAI

ITA 2486/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2095 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 03-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 02-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 37; 144; 2

Judgement Text

SHRI GANPAT N KANUNGO ITA NO. 2486 /MUM/20 1 3 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G , MUMBAI , , BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI RAMIT KOCHAR , ACCOUNTAN T MEMBER ITA NO. : 24 86 /MUM/20 1 3 ( ASSESSMENT YEAR: 200 9 - 1 0 ) SHRI GANPAT N KANUNGO , 40,NANALAL MANCHALAL BUILDING, 2 ND FLOOR, 1 ST CARPENTER STREET, N D ROAD, MUMBAI - 400 0 04 .: PAN: AEBPK 5625 E VS ASST COMMISSIONER OF INCOME TAX - RANGE 15(3 ) , MATRU MANDIR, MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI RAJESH OJHA /DATE OF HEARING : 03 - 11 - 201 5 / DATE OF PRONOUNCEMEN T : 30 - 11 - 201 5 ORDER , . . : PER AMIT SHUKLA, J M : THE AFORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE AGAINST IMPUGNED ORDER DATED 0 4 .0 2 .2013 , PASSED BY CIT(A) - 26 , MUMBAI IN RELATION TO THE QUANTUM OF ASSESSMENT PASSE D U/S 144 OF THE ACT FOR THE ASSESSMENT YEAR 200 9 - 1 0 . THE GROUND RAISED BY THE ASSESSEE IN ITS GROUNDS OF APPEAL READS A S UNDER : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 26, MUMBAI ERRED IN CONFIRMING THE DISALLOWANCES MADE BY THE ASSESSING OFFICER TO THE FOLLOWING EXPENSES : - LABOUR CHARGES OF RS. 1,25,593/ - CUTTING CHARGES OF RS. 1,13,315/ - HAMALI CHARGES OF RS. 1,62,817/ - OFFICE EXPENSES OF RS. 47,214/ - SUNDRY EXPENSES OF RS. 8 1,209/ - THIS IS 50% OF THE ABOVE MENTIONED EXPENSES AND THE DISALLOWANCES COMES IN TOTALITY RS. 5,30,148/ - . SHRI GANPAT N KANUNGO ITA NO. 2486 /MUM/20 1 3 2 2. DESPITE SERVICE OF NOTICE THROUGH RPAD , NONE APPEARED ON BEHALF OF THE APPELLANT - ASSESSEE NEITHER ANY ADJOURNMENT LETTER HAS BEEN FILED HENCE, WE PROCEED TO DECIDE THE APPEAL EX - PARTE ON MERITS AFTER HEARING LD. DR. 3. IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS MAINLY CHALLENGED DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE CIT(A) ON ACCOUNT OF FORFEITURE OF DEPOSITS. FROM THE PERUSAL OF THE IMPUGNED ORDERS, IT IS NOTICED THAT THE AO HAS PASSED THE EX - PARTE ORDER U/S 144 ON THE GROUND THAT NONE APPEARED BEFORE HIM DESPITE SERVICE OF STATUTORY NOTICES ON SEVERAL OCCASIONS . ASSESSMENT HAS BEEN COMPLETED AT AN INCOME OF RS. 2,82,89,834/ - AS AGAI NST RETURNED LOSS OF RS. 19,48,896/ - . THE LD. CIT(A) HAS DELETED THE MOST OF THE DISALLOWANCE AND THE ADDITIONS AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AS WELL AS THE REMAND REPORT OF THE AO. SO FAR AS THE ISSUE OF DISALLOWANCE OF VARIOUS EXPENSES @ 50%, THE LD. CIT(A) AFTER NOTING DOWN THE ASSESSEES SUBMISSION AND THE REMAND REPORT OF THE AO HAS OBSERVED AND HELD AS UNDER : - AFTER CONSIDERING THE RIVAL SUBMISSIONS, I DO AGREE WITH THE FINDINGS OF THE AO THAT IN WANT OF VERIFIABLE DETAILS OF ANY OF THE EXPENSES UNDER THESE HEADS, THE AO CANNOT ASCERTAIN THE GENUINENESS OF SUCH EXPENSES. IT IS ALSO NOTED THAT IN SPITE OF THE FACT THAT IN EARLIER YEARS I.E. AY 2007 - 08 WHEN SIMILAR DISALLOWANCE WAS MADE BY THE AO, THE APPELLANT HAS NOT MADE ANY EFFO RT IN MAINTAINING PROPER VOUCHERS AND HE CONTINUED THE PRACTICE OF CLAIMING THE EXPENSES ON THE BASIS OF SELF MADE VOUCHERS WHICH EVEN DOES NOT CONTAIN THE ADDRESS OF THE PARTIES TO WHOM SUCH PAYMENTS HAVE BEEN MADE. UNDER THESE CIRCUMSTANCES, WHEN THE APP ELLANT FAILED TO PROVE THAT SUCH EXPENSES WERE ACTUALLY INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSE THEN A REASONABLE DISALLOWANCE HAS TO BE MADE BECAUSE THE APPELLANT CANNOT BE ALLOWED TO CLAIM ANY AMOUNT OF EXPENDITURE WITHOUT HAVING PROPER VER IFIABLE VOUCHERS. THE APPELLANT HAS ALSO NOT BEEN ABLE TO SHOW THAT DURING THE YEAR UNDER CONSIDERATION EXPENDITURE UNDER THESE HEADS ARE COMPARATIVELY LESS THAN THE EARLIER YEARS, THEREFORE BY FOLLOWING THE PRINCIPLES OF CONSISTENCY AND UNIFORMITY, I DO N OT FIND ANY REASON TO DERIVATE FROM THE FINDING OF THE AO OF DISALLOWANCE OF 50% OF SUCH EXPENSES WHICH IS IN CONFORMITY WITH THE SIMILAR FINDINGS SHRI GANPAT N KANUNGO ITA NO. 2486 /MUM/20 1 3 3 OF AO AS WELL AS CIT(A) IN PRECEDING YEARS. THIS GROUND OF APPEAL IS ACCORDINGLY DISMISSED IN ABSENCE OF A NY REBUTTAL ON SUCH FINDING OF FACT RECORDED BY THE CIT(A), WE DO NOT FIND ANY REASON TO DEVIATE FROM SUCH A FINDING AND ACCORDINGLY , SAME IS CONFIRMED AND THUS THE DISALLOWANCES MADE UNDER THE VARIOUS HEADS STANDS CONFIRMED. ACCORDINGLY, GROUND NO. 1 RAIS ED BY THE ASSESSEE IS DISMISSED. 4. IN GROUND NO. 2, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF RS. 46,85,551/ - ON ACCOUNT OF FORFEITURE OF DEPOSITS. 5. THE RELEVANT FACT IN ASSESSEES SUBMISSION AS WELL AS FINDING OF THE CIT(A) ON THIS SCORE READS AS UNDER : - GROUND NO. 6 IS AGAINST THE DISALLOWANCE OF RS. 46,84,551/ - BEING DEPOSIT FOR TENDER TO GOVERNMENT OF INDIA, MINT. IN THE REMAND PROCEEDINGS IT WAS EXPLAINED BY THE APPELLANT TO THE AO THAT HE HAD PAID ADVANCE OF RS. 48,60,180/ - AGAINST LIFT ING OF SCRAP. SINCE THE RATE OF SCRAP CAME DOWN HEAVILY AND THE TRANSACTION WAS NOT YIELDING ANY PROFIT THE APPELLANT CHOSE NOT TO LIFT THE SCRAP. HENCE, THE ADVANCE PAYMENT WAS FORFEITED WHICH WAS CLAIMED AS DEDUCTIBLE EXPENDITURE. AO HAS OBJECTED TO THE DEDUCTION ON THE GROUND THAT THE DEPOSITS HAS BEEN FORFEITED VIDE LETTER DT. 26.06.2012 OF THE INDIA GOVT. MINT. THIS LETTER HAS A REFERENCE OF ANOTHER LETTER DT. 25.04.2009 WHEREIN THE APPELLANT WAS GIVEN ONE MONTH NOTICE TO LIFT THE MATERIAL. THIS EVENT TOOK PLACE AFTER THE END OF THE RELEVANT PREVIOUS YEAR, THEREFORE ASSESSEES ACT OF CLAIMING SUCH AMOUNT IN AY 2009 - 10 IS PREMATURE. 9.1 IN THIS RESPECT THE APPELLANTS SUBMISSIONS MADE DURING THE APPEAL PROCEEDINGS ARE AS UNDER : - 11.1 DURING THE COU RSE OF BUSINESS OF APPELLANT HAS ENTERED INTO A TRANSACTION OF PURCHASES OF SCRAP AT AGREED PRICE FROM INDIA GOVERNMENT MINT, SAHID BHAGATSINGH ROAD, MUMBAI - 23. THE APPELLANT HAS PAID AN ADVANCE PAYMENT OF RS. 48,60,180/ - AGAINST LIFTING OF SCRAP MATERIAL VIDE AUCTION NO. MSTC/WRO/SPMCIL/4,MUMBAI/08 - 09/1594 DATED 15.07.2008 FOR DISPOSAL OF 1800MT OF FSS SCISSELS. AS THE RATE OF SCRAP WAS HEAVILY CAME DOWN AND THE TRANSACTION WAS NOT YIELDING ANY PROFIT, THEREFORE, THE APPELLANT CHOSEN NOT TO LIFT THE SCRAP SHRI GANPAT N KANUNGO ITA NO. 2486 /MUM/20 1 3 4 FROM INDIA GOVERNMENT MINT. SINCE THE APPELLANT HAS NOT LIFTED THE SCRAP AS AGREED UPON, THEREFORE, INDIA GOVERNMENT MINT HAS FORFEITED THE ADVANCE PAYMENT MADE OF RS. 48,60,180/ - SINCE IT WAS A BUSINESS LOSS THEREFORE THE APPELLANT HAS CLAIMED SAID FORFE ITED AMOUNT AS DEDUCTION IN THE PROFIT AND ACCOUNT. THE LEARNED ASSESSING OFFICER WHILE COMPLETING ASSESSMENT HAS DISALLOWED SAID CLAIM FOR WANT OF DETAILS. 11.2 WE ARE NOW ENCLOSING HEREWITH LETTER FROM INDIA GOVERNMENT MINT TO THIS EFFECT WHICH IS APPEA RING ON PAGE 233 236 OF PAPER BOOK FOR YOUR KIND PERUSAL. IT IS SUBMITTED THAT SAID AMOUNT WAS GIVEN AS BUSINESS ADVANCE AGAINST BUSINESS TRANSACTION AND ANY FORFEITURE OF SAID AMOUNT IS A BUSINESS LOSS AND SAME IS ALLOWABLE UNDER SECTION 37 OF THE ACT. 11.3 WE, THEREFORE, REQUEST YOUR HONOUR TO KINDLY DIRECT THE ASSESSING OFFICER TO DISALLOW CLAIM OF THE APPELLANT ON THIS ACCOUNT AND WHOLE OF AMOUNT OF RS. 46,84,551/ - BE ALLOWED AS DEDUCTION. 9.2 AFTER CONSIDERING THE RIVAL SUBMISSIONS, I DO NOT AGREE WITH THE CONTENTION OF THE APPELLANT. IT IS A FACT SUBSTANTIATED BY THE DOCUMENTARY EVIDENCE, I.E. THE LETTER OF INDIA GOVT. MINT, WHICH PROVES THAT VIDE LETTER DT. 25.04.2009 THE APPELLANT WAS GIVEN ONE MONTH NOTICE TO LIFT THE MATERIAL, MEANING THEREBY THE APPELLANT COULD HAVE LIFTED THE SCRAP BY THE END OF MAY, 2009 WHICH FALLS IN AY 2010 - 11. THERE IS NO EVIDENCE FROM THE SIDE OF THE APPELLANT, TO SHOW THAT HE HAD FINALLY TAKEN THE DECISION OF NOT LIFTING THE SCRAP DURING THE FINANCIAL YEAR. UNDER THESE CIRCUMSTANCES THE APPELLANT CANNOT CLAIM THE FORFEITED AMOUNT DURING THIS YEAR AS IT DOES NOT PERTAIN TO THE CURRENT YEAR. THEREFORE, DISALLOWANCE MADE BY THE AO IS CONFIRMED. ACCORDINGLY, THIS GROUND IS DISMISSED. HERE, ON THIS SCORE ALSO IN ABSENC E OF ANY REBUTTAL OF THE FINDING OF THE CIT(A) BY THE ASSESSEE, WE CONFIRM THE ORDER OF THE CIT(A) AND HENCE GROUND NO. 2 AS RAISED BY THE ASSESSEE IS DISMISSED. SHRI GANPAT N KANUNGO ITA NO. 2486 /MUM/20 1 3 5 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER , 2015. SD/ - SD/ - ( ) ( ) (RAMIT KOCHAR ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 30 TH NOVEMBER , 2015 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 26 , MUMBAI. 4 ) THE CIT 15 , MUMBAI. 5 ) , , / THE D.R. G BENCH, MUMBAI. 6 ) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MU MBAI * . . *CHAVAN, SR.PS