Aquagri Processing Pvt. Ltd., New Delhi V. DCIT, Circle- 3(1), New Delhi

ITA 2702/DEL/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4759 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 18-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR JIWANI
• Assessee Lawyers: AVINASH TRIPATHI
• Keywords: Business expenditure; Agreed addition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: C/SMC, NEW DELHI) BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO:- 2702/DEL/2018 ( ASSESSMENT YEAR: 2014-15) AQUAGRI PROCESSING PVT. LTD., 284, SULTAN SADAN, L-3 WESTEND MARG, SAIDULAJAIB PAN NO.-AAGCA7616M VS. DCIT, CIRCLE 3(1), NEW DELHI. APPELLANT RESPONDENT ASSESSEE BY : SH. AVINASH TRIPATHI, CA REVENUE BY : SH. VIJAY KUMAR JIWANI, SR. DR DATE OF HEARING : 07.08.2018. DATE OF PRONOUNCEMENT : 10/08/2018. ORDER PER: BHAVNESH SAINI, JM THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAIN ST THE ORDER OF LD.CIT(A)-I, NEW DELHI, DATED 12.02.2018 FOR ASSESSMENT YEAR 201 4-15, CHALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF 5% OF EXPE NSES AMOUNTING TO RS. 34,87,730/-. 2. BRIEFLY THE FACT OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD DEBITED AN AMOUNT OF RS. 22,01,127/- ( TOTAL MISCELLANEOUS EXPENSES OF 2 ITA NO.-2702/DEL/2018. AQUAGRI PROCESSING PVT. LTD., NEW DELHI. RS. 28,41,603/- IN WHICH PRIOR PERIOD EXPENSES RS. 3,37,844/- AND CAPITALIZED EXPENSES -RS. 3,02,630/- HAS ALREADY BEEN DISALLOWED IN THE COMPUTATION OF TOTAL INCOME OF THE ASSESSEE) ON ACCOUNT OF MISCELLANEOUS EXPENSES, RS. 5,76,17,961/- ON ACCOUNT OF SELLING EXPENSES, RS. 61,50,203/- ON ACCO UNT OF LABOUR EXPENSES AND RS. 37,85,038/- ON ACCOUNT OF TRAVELLING EXPENSES, IN TO TO RS. 6,97,54,599/-. SO, THE ASSESSEE WAS ASKED TO SUBSTANTIATE THE EXPENDITURE ON THE BASIS OF DOCUMENTARY EVIDENCES AND INVOICES IN ORIGINAL, SINCE SOME EXPE NSES FOUND OF NON-VERIFIABLE INVOICES, MOST OF THE EXPENDITURES PAID IN CASH AND SOME OF THEM ARE OF PERSONAL NATURE. THE LD. COUNSEL FOR THE ASSESSEE WAS ASKED TO GIVE PRECISE JUSTIFICATION ON ALL THESE EXPENSES ON VARIOUS OCCASIONS AS PER, THE ORD ER SHEET. VARIOUS DOCUMENTS HAVE BEEN CALLED FOR JUSTIFICATION OF EVERY EXPENDITURE AS MENTIONED ABOVE. 2.1 THE COUNSEL FOR THE ASSESSEE APPEARED ON 27 OCT OBER, 2016 AND EXPLAINED THE CASE BUT THE COUNSEL COULD NOT JUSTIFY THE ENTIRE E XPENDITURE AS BUSINESS EXPENDITURE. THE COUNSEL HAS BEEN CALLED FOR MUSTER ROLLS OF ALL THE LABOUR EXPENSES, BUT HE FAILED TO PRODUCE THE SAME. THEREFORE, PROPORTIONATE DISALLO WANCE IS WARRANTED. AGAIN THE INVOICES OF FREIGHT AND FORWARDING EXPENSES UNDER S ELLING EXPENSES HAVE BEEN CALLED FOR AND IT WAS NOTICED THAT THE EXPENSES WERE MADE IN C ASH ALSO. SOME INVOICES WERE NOT PRODUCED FOR VERIFICATION. IN CASE OF TRAVELLING E XPENSES, FOREIGN TOURS OF DIRECTORS AND THE STAFF ARE ALSO INCLUDED. SOME OF THE TOURS AND PAYMENTS THEREOF APPEAR TO BE PERSONAL IN NATURE AND CASH PAYMENTS HAVE ALSO BEEN MADE. THE AO ACCORDINGLY NOTED THAT APPARENTLY THE ASSESSEE DID NOT MAINTAIN BOOKS OF ACCOUNTS AND ITS INVOICES 3 ITA NO.-2702/DEL/2018. AQUAGRI PROCESSING PVT. LTD., NEW DELHI. PROPERLY. THEREFORE, ON THE BASIS OF NON-VERIFIABL E EXPENSES, PETTY CASH PAYMENTS, UNJUSTIFIABLE EXPENSES, ETC., THE AO CONSIDERED 5% OF THE EXPENSES DISALLOWABLE. THE COUNSEL FOR THE ASSESSEE AGREED FOR THE ADDITIONS V IDE ORDER SHEET DATED 27.10. 2016. THE AO ACCORDINGLY DISALLOWED 5% OF THE TOTAL EXPEN SES AND MADE ADDITION OF RS. 34,87,730/-. 3. THE ASSESSEE CHALLENGED THE ADDITIONS BEFORE THE LD. CIT(A). THE SUBMISSIONS OF THE ASSESSEE IS REPRODUCED IN THE APPELLATE ORDE R IN WHICH THE ASSESSEE BRIEFLY EXPLAINED THAT THE BOOKS OF ACCOUNTS, BILLS AND VOU CHERS DETAILS WERE PRODUCED BEFORE THE AO AND THEREFORE NO DISALLOWANCE OUT OF THE EXP ENSES SHOULD HAVE BEEN MADE. THE LD. CIT(A) NOTED IN HIS FINDINGS THAT ASSESSEE AGREED TO THE ADDITIONS VIDE ORDER SHEET DATED 27.10.2016 AND ASSESSEE ALSO ADMITTED T HAT THERE WAS AN ELEMENT OF NON- VERIFIABLE EXPENDITURE CLAIMED UNDER THIS HEAD. TH E LD. CIT(A) THEREFORE NOTED THAT, SINCE ADDITION WAS MADE ON AGREED BASIS WHICH HAVE NOT BEEN CONTROVERTED BY THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, ADDITION SHA LL HAVE TO BE CONFIRMED. THE LD. CIT(A) FOLLOWED THE DECISION OF THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF BANTA SINGH KARTAR SINGH VS. CIT, 125 ITR 239 AND DECISION OF KERALA HIGH COURT IN THE CASE OF CIT VS. VAMADEVAN BHANU, 330 ITR 559 AND DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE DO N OT FIND ANY MERIT ON THIS GROUND OF APPEAL OF THE ASSESSEE. LD. COUNSEL FOR THE ASS ESSEE SOUGHT ADJOURNMENT, HOWEVER, CONSIDERING THE FACTS OF THE CASE THAT ADDITION WAS AGREED BEFORE THE AO, THEREFORE, 4 ITA NO.-2702/DEL/2018. AQUAGRI PROCESSING PVT. LTD., NEW DELHI. REQUEST FOR ADJOURNMENT WAS FOUND IMPROPER AND WAS REJECTED. IT IS A WELL SETTLED LAW THAT NO APPEAL LIES ON AGREED ADDITIONS. WE RELY UP ON THE DECISION OF BOMABY HIGH COURT IN THE CASE OF JIVATLAL PURTAPSHI VS COMMISSIONER OF INCOME-TAX, 6 5 ITR 261, DECISION OF KERALA HIGH COURT IN THE CASE OF CIT VS. VAMADEVAN BHANU, 330 ITR 559 AND DECISION OF HONBLE PUNJAB AND HARYANA HIGH COU RT IN THE CASE OF BANTA SINGH KARTAR SINGH VS. CIT, 125 ITR 239. THE AO SPECIFICALLY NOTED IN THE ASSESSMENT ORDER THAT ASSESSEE AGREED FOR THESE ADD ITIONS VIDE ORDER SHEET DATED 27.10.2016. FURTHER, THE ASSESSEE COULD NOT EXPLAI N THE JUSTIFICATION OF MAKING THE AFORESAID EXPENSES. THE COUNSEL FOR THE ASSESSEE C OULD NOT CONTROVERT BEFORE THE LD. CIT(A) THAT ADDITIONS HAVE BEEN MADE ON AGREED BASI S. THESE FACTS CLEARLY SHOW THAT APPEAL OF THE ASSESSEE WAS NOT MAINTAINABLE BEFORE THE LD. CIT(A) AS WELL AS BEFORE THE TRIBUNAL ON ACCOUNT OF AGREED ADDITIONS. FURTHER, THE ASSESSEE COULD NOT PRODUCE THE PROPER DOCUMENTARY EVIDENCES AND JUSTIFICATION FOR MAKING THE EXPENSES. THE AUTHORITIES BELOW WERE THEREFORE JUSTIFIED IN MAKIN G THE ADDITIONS. THERE IS NO MERIT IN APPEAL OF THE ASSESSEE, SAME IS DISMISSED. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/8/2018 SD/- SD/- (PRASHANT MAHARISHI) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10.08.2018 POOJA/- 5 ITA NO.-2702/DEL/2018. AQUAGRI PROCESSING PVT. LTD., NEW DELHI. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 6 ITA NO.-2702/DEL/2018. AQUAGRI PROCESSING PVT. LTD., NEW DELHI. DATE OF DICTATION 07/8/2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 09/8/2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 10/8/2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 10/8/2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 10/8/2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER