TTG Industries Ltd., CHENNAI V. ACIT, CHENNAI

ITA 2671/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86288 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 23-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: R VIJAYARAGHAVAN
• Section: 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI .. , ! , ' #$ BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ ITA NO. 2671/MDS/2014 ' % &% / ASSESSMENT YEAR : 2006-07 M/S TTG INDUSTRIES LTD., NO.9, VANAGARAM ROAD, AYANAMBAKKAM, CHENNAI - 600 095. PAN : AAACT 6106 F V. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE III, CHENNAI - 600 034. (!(/ APPELLANT) (*+!(/ RESPONDENT) !( , - / APPELLANT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE *+!( , - / RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT . , / / DATE OF HEARING : 05.02.2015 01& , / / DATE OF PRONOUNCEMENT : 05.02.2015 / O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING T HE ORDER DATED 30.07.2014, PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-III, CHENNAI AND IT RELATES TO ASSESSMENT YEAR 2006-07. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD. CI T(APPEALS) IN CONFIRMING THE ADDITION MADE OUT OF PURCHASES EXPEN DITURE TO THE EXTENT OF ` 1.81 CRORES. 2 I.T.A. NO. 2671/MDS/14 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. WE NOTICE THAT THE ASSESSMENT WAS COMPLETED BY THE ASSESSING OFFICER TO THE BEST OF HIS JUDGMENT UNDER SECTION 144 OF THE INCOM E-TAX ACT, 1961 (IN SHORT 'THE ACT') WHEREIN HE DISALLOWED THE PURC HASE EXPENDITURE CLAIMED TO THE TUNE OF ` 10.65 CRORES ON THE REASONING THAT THE ASSESSEE HAS FAILED TO PROVE THE SAME. 3. IN THE APPELLATE PROCEEDINGS, THE ASSESSEE FURNI SHED CERTAIN DETAILS AND HENCE THE LD. CIT(APPEALS) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER. IN THE REMAND REPORT, THE A.O. REPORTED THAT THE ASSESSEE HAS FURNISHED EVIDENCE FOR AN AMO UNT OF ` 8.84 CRORES AND NO EVIDENCE WAS FURNISHED FOR THE BALANC E AMOUNT OF ` 1.81 CRORES. ACCORDINGLY, THE LD. CIT(APPEALS) GRA NTED RELIEF TO THE TUNE OF ` 8.84 CRORES AND CONFIRMED THE BALANCE ADDITION OF ` 1.81 CRORES. 4. THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE HAD INCURRED THE EXPENDITURE PURELY FOR BUSINESS PURPOSES. THE ASSESSEES NET WORTH HAS BECOME NEGATIVE AND HENCE A REFERENCE WAS MADE TO BIFR. CONSEQUENT THERETO, BANKS ALSO CLASSIFIED CO MPANY ACCOUNT AS NON-PERFORMING ASSET AND THEY HAVE STOPPED THE O PERATIONS. THE LD. COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE HAD MADE THE PURCHASES IN CONNECTION WITH CONTRACTS FOR ITS CUST OMERS. AS THE 3 I.T.A. NO. 2671/MDS/14 COMPANY HAS BECOME SICK AND SINCE ALMOST ALL EMPLOY EES LEFT THE ORGANIZATION, IT WAS DIFFICULT FOR THE ASSESSEE TO TRACE ALL DOCUMENTS/PAPERS AND PRODUCE THE SAME BEFORE THE TA X AUTHORITIES. ACCORDINGLY, THE LD. COUNSEL SUBMITTED THAT THE DIS ALLOWANCE MADE BY THE ASSESSING OFFICER BE DELETED IN VIEW OF THE PECULIAR FACTS PREVAILING IN THE INSTANT CASE. 5. ON THE CONTRARY, THE LD. D.R. SUBMITTED THAT THE RESPONSIBILITY TO PROVE THE EXPENDITURE LIES UPON THE ASSESSEE. H ENCE, HE PRAYED THAT THE ORDER OF THE LD. CIT(APPEALS) BE CONFIRMED . 6. HAVING HEARD THE RIVAL SUBMISSIONS, WE ARE OF TH E VIEW THAT ONE SHOULD APPRECIATE THE DIFFICULTY EXPERIENCED BY THE ASSESSEE IN VIEW OF IT BECOMING SICK. WE NOTICE FROM THE ASSES SMENT ORDER THAT THE ASSESSEE HAS CLAIMED ` 78.31 CRORES AS PURCHASE EXPENSES OF WHICH, THE ASSESSING OFFICER HAS MADE ADDITION TO T HE TUNE OF ` 10.65 CRORES AND THE LD. CIT(APPEALS) HAS SUSTAINED ONLY TO THE TUNE OF ` 1.81 CRORES, MEANING THEREBY THE ASSESSEE HAS FURN ISHED EVIDENCE TOWARDS 90% OF THE EXPENDITURE CLAIM MADE BY IT. CONSIDERING THE DIFFICULTY FACED BY THE ASSESSEE, W E ARE OF THE VIEW THAT IT IS NOT JUSTIFIABLE TO DISALLOW THE ENTIRE B ALANCE AMOUNT OF ` 1.81 CRORES. HENCE, TO PUT THIS MATTER TO REST, WE ARE OF THE VIEW THAT THE ADDITION MAY BE SUSTAINED TO THE EXTENT OF 25% OF ` 1.81 4 I.T.A. NO. 2671/MDS/14 CRORES. ACCORDINGLY, WE MODIFY THE ORDER OF THE LD. CIT(APP EALS) AND DIRECT THE ASSESSING OFFICER TO SUSTAIN THE ADD ITION TO THE EXTENT OF 25% OF 1.81 CRORES AND COMPUTE THE INCOME. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSI ON OF HEARING ON THE 5 TH DAY OF FEBRUARY, 2015 AT CHENNAI. SD/- SD/- ( ! ) ( .. ) (VIKAS AWASTHY) (B.R. BASKARAN) ' /JUDICIAL MEMBER /ACCOUNTANT MEMBER /CHENNAI, A /DATED, THE 5 TH FEBRUARY, 2015. KRI. B , *'/C D &/ /COPY TO: 1. !( /APPELLANT 2. *+!( /RESPONDENT 3. . E/ () /CIT(A)-III, CHENNAI-34 4. . E/ /CIT, CHENNAI-III, CHENNAI-34. 5. FG *'/' /DR 6. GH% I /GF.