M/S KAY CEE HOSIERY PVT LTD , RANCHI V. ITO WARD-1(5) , RANCHI

ITA 269/RAN/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9738 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 4 month(s) 29 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 06-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K MOHANTY
• Assessee Lawyers: VINAY KUMAR JALAN
• Keywords: Principle of natural justice; Cost of acquisition; TDS
• Section: 142(1)

Judgement Text

1 ITA NO. 269 /RAN/ 201 7 IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI N.S.SAINI , ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE , JUDICIAL MEMBER ITA NO. 269 /RAN/201 7 A.Y. : 20 1 3 - 20 1 4 M/S KAY CEE HOSIERY PVT LTD C/O - SRI VINAY KUMAR JALAN, M/S O.P.JALAN & ASSOCIATES CONSULTANTS LLP, 48 CART SARAI ROAD, UPPER BAZAAR, RANCHI, JHARKHAND - 834001 V S ITO WARD - 1(5), RANCHI P AN NO. : A ACC K 7593 F (APPELLANT ) . RESPONDENT ASSESSEE BY : SHRI VINAY KUMAR JALAN , ADVOCATE REVENUE BY :SHRI A.K.MOHANTY , JCIT DATE OF HEARING : 2 5 . 05 .201 8 DATE OF PRONOUNCEMENT : 28 . 05 .201 8 O R D E R PER PAVAN KUMAR GADALE, JM : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT ( A ) , RANCHI , DATED 07.09.2017 , FOR THE A SSESSMENT YEAR 2013 - 2014 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1 . FOR THAT, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER PASSED BY THE LD. CIT(A) WAS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND WAS BAD IN LAW BECAUSE THE B OOKS OF ACCOUNTS OF THE ASSESSEE HAS BEEN DULY AUDITED, ACCEPTED AND NOT REJECTED, THEN THE DISALLOWANCE OF ENTIRE CLAIM OF FREIGHT INWARD AND DISALLOWANCE OF ADMINISTRATIVE AND OTHER EXPENSES ON ESTIMATE BASIS IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND IS BAD IN LAW. 2 . FOR THAT, THE LD. CIT(A) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 1,46,967/ - 2 ITA NO. 269 /RAN/ 201 7 MADE BY THE LD. ASSESSING OFFICER, WHICH IS 100% OF THE AMOUNT DEBITED TO THE P&L ACCOUNT UNDER THE HEAD FREIG HT INWARD. 3 . FOR THAT, THE LD. CIT(A) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE ERRED IN DISALLOWING RS. 62,886/ - WHICH IS 10% OF RS. 6,28,864/ - DEBITED UNDER THE HEAD ADMINISTRATIVE AND OTHER EXPENSES. 4. FOR THAT, THE OTHER GROUNDS SHALL BE URGED AT THE TIME OF HEARING. 3 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN HOSIERY ITEMS AND FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013 - 2014 ON 27.09.2013 WITH TOTAL INCOME OF RS. 6,15,220/ - AND THE RETURN OF INCOME WAS DULY PROCESSED U/S.143(1) OF THE ACT AND THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS . SUBSEQUENTLY, NOTICE U/S.143(2) & 142(1) OF THE ACT WERE ISSUED TO THE ASSESSEE. IN COMPLIANCE, THE AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND CAS E WAS DISCUSSED . THEREAFTER THE AO COMPLETED THE ASS ESSMENT AND MADE VARIOUS ADDITION S AND ASSESSED TOTAL INCOME AT RS. 23,48,670/ - AND PASSED ORDER U/S.143(3) OF THE ACT, DATED 28.03.2016 . 4 . AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE HAS FILED AN AP PEAL WITH THE CIT(A). IN THE APPELLATE PROCEEDINGS THE ASSESSEE ARGUED THE GROUNDS AND REITERATED THE SUBMISSIONS MADE BEFORE THE AO. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AND THE FINDINGS OF AO, PARTLY ALLOWED THE APPEAL OF THE ASSESSE E. 5 . AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. 3 ITA NO. 269 /RAN/ 201 7 6 . LD. AR BEFORE US SUBMITTED THAT THE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE AO IRRESPECTIVE OF THE FACT THAT THE ASSESSEE HAS PRODUCED ALL T HE DETAILS AND THE AO ALSO VERIFIED THE DETAILS OF FREIGHT INWARDS. THE CONTENTION OF LD.AR IS THAT THE TAX AUDIT REPORT WAS FILED AND ALSO THE ASSESSEE HAS COMPLIED THE DIRECTIONS OF THE AO.THE AO FOUND THAT THERE IS NO PROPER SUBMISSIONS IN RESPECT OF CL AIM OF FREIGHT CHARGES AND NO TDS WAS DEDUCTED. THE CIT(A) HAS CONFIRMED THE ADDITION. LD.AR ALSO SUBSTANTIATES THAT THE FREIGHT INWARDS WAS ALREADY INCLUDED IN THE PURCHASE COST. ON THE SECOND GROUND THE AO FOR WANT OF INFORMATION HAS MADE ESTIMATION OF E XPENDITURE AND MADE DISALLOWANCE A ND THE CIT(A) HAS CONFIRMED TH E SAME AND THEREFORE, THE AR PRAYED THAT APPEAL BE ALLOWED. 7 . LD.DR RELIED ON THE ORDERS OF LOWER AUTHORITIES. 8 . WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE LD.AR OF THE ASSESSEE ON THE FIRST DISPUTED ISSUE THAT FREIGHT CHARGES OF RS.1,46,967/ - IS IN RESPECT OF FREIGHT INWARDS AND THE ASSESSEE HAS PURCHASED THE MATERIAL AND THE FREIGHT CHARGES ARE ALREADY INCLUDED IN THE INVOICES AND AFTER ADJUSTING THE FREIGHT PAYMEN T, THE AMOUNT IS PAID BY THE ASSESSEE, AND THE PAYMENTS ARE LESS THAN RS.20000/ - IN TH E CASE S , THEREFORE, NO TDS WAS DEDUCTED. THE LD. AR ALSO BROUGHT TO OUR KNOWLEDGE THE SAMPLES OF THE INVOICES WHERE INVOICE FREIGHT AMOUNT HAS BEEN REDUCED FROM INVOICE VA LUE ON PURCHASE AND REMAINING AMOUNT IS PAID AND, THEREFORE WAS NO OCCASION TO PAY THE TDS. HENCE, WE ARE OF THE 4 ITA NO. 269 /RAN/ 201 7 CONSIDERED VIEW THAT CONSIDERING THE GOING CONCERN CONCEPT AND CONSISTENCY FOLLOWED BY THE ASSESSEE IN THE EARLIER YEARS AND SUBSEQUENT YEARS, WHI CH HAS BEEN ACCEPTED BY THE REVENUE, THE ADDITION MADE BY THE AO IS NOT TENABLE AND WE DIRECT THE AO TO DELETE THE ADDITION. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 9. IN RESPECT OF SECOND GROUND OF DISALLOWANCE OF 10% OF ADMINISTRATIVE AND OTHER EXPENSES, THE AO FOUND THAT THE ASSESSEE COULD NOT SUBMIT ANY EVIDENCE TO SUBSTANTIATE ITS CLAIM THEREFORE, 20% OF THE TOTAL AMOUNT WAS DISALLOWED. ON APPEAL, THE CIT(A) HAS REDUCED THE PERCENTAGE OF DISALLOWANCE TO 10% AGAINST 20% MADE BY THE AO. LOOKING TO THE FACTS OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE IS A GOING CONCERN AND HAS BEEN FOLLOWING THE CONSISTENCY, 10% OF THE TOTAL DISALLOWANCE IS ON HIGHER SIDE. THEREFORE, WE CONSIDERING THE OVERALL ASPECTS AND RESTRICT THE DISALLOWAN CE TO 5% AS AGAINST 10% MADE BY THE CIT(A) AND PARTLY ALLOW THIS GROUND OF APPEAL OF ASSESSEE. 10 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 28 / 05 /201 8 SD/ - SD/ - ( N.S.SAINI ) ( PAVAN KUMAR GADALE ) ACCOUNTANT MEMBER JUDICIAL MEMBER RANCHI, DATED 28 / 05 /201 8 PRAKASH KUMAR MISHRA , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT M/S KAY CEE HOSIERY PVT LTD C/O - SRI VINAY KUMAR JALAN, M/S O.P.JALAN & ASSOCIATES CONSULTANTS 5 ITA NO. 269 /RAN/ 201 7 BY ORDER, //TRUE COPY// SR.PS, ITAT, RANCHI LLP, 48 CART SARAI ROAD, UPPER BAZAAR, RANCHI, JHARKHAND - 834001 2. THE RESPONDENT ITO WARD - 1(5), RANCHI 3. THE CIT(A) CONCERNED 4. CIT , CONCERNED 5. DR, ITAT, RANCHI 6. GUARD FILE.