Ganpati Marketing, V. I.T.O.,

ITA 274/RAN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0313 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 10-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHOUDHARY ORAON
• Assessee Lawyers: SURESH SABOO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI CIRCUIT BENCH, RANCHI BEFORE SHRI N.S. SAINI, HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 274/RAN/2014 (ASST. YEAR : 2008-09) GANPATI MARKETING, EAST MARKET ROAD, UPPER BAZAR, RANCHI. VS. ITO, WARD-1(3), RANCHI. PAN NO. AAAFG 8536 H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SURESH SABOO ADV. DEPARTMENT BY : SHRI CHOUDHARY ORAON - DR DATE OF HEARING : 05/11/2015. DATE OF PRONOUNCEMENT : 05/11/2015. O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), RANCHI, DATED 25/06/2014. 2. THE GROUND NO.1 OF THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMING THE DISALLOWANCE OF RS. 73,384/- MADE BY THE ASSESSING OFFICER ON TH E GROUND THAT THE EXPENSES ARE NOT RELATED TO ASSESSEE. 3 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE O RDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD PRODUCED VOU CHERS FOR EXAMINATION IN SUPPORT OF THE MISCELLANEOUS EXPENSE S OF RS. 73,384/- 2 ITA NO. 274/RAN/2014 CLAIMED BY IT. HE OBSERVED THAT THE EXPENSES ARE NOT RELATED TO THE BUSINESS OF THE ASSESSEE AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 4. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) CO NFIRMED THE ACTION OF THE ASSESSING OFFICER FOR THE REASON THAT THE ASSESSING OFFICER HAS GIVEN A FINDING THAT THE EXPENSES ARE NOT RELAT ED TO THE BUSINESS OF THE ASSESSEE AND THE ASSESSEE HAD NOT PRODUCED RELE VANT EVIDENCE IN ITS SUPPORT. 5. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE REITERAT ED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 6 . ON THE OTHER HAND, DEPARTMENTAL REPRESENTATIVE SU PPORTED THE ORDERS OF THE LOWER AUTHORITIES. 7 . WE FIND THAT THE ASSESSING OFFICER HAS OBSERVED T HAT THE EXPENSES OF RS. 73,384/- CLAIMED UNDER THE HEAD MISCELLANEO US EXPENSES ARE NOT RELATED TO THE BUSINESS OF THE ASSESSEE. WE FI ND FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAS NOT DISCUSSED WHAT ARE THE EXPENSES CLAIMED BY THE ASSESSEE UNDER THE HEAD MISCELLANEOUS EXPENSES AND WHY THEY ARE CONNECTED TO THE BUSINESS OF THE ASSESSEE. IN ABSENCE OF ANY SUCH MATERIAL BEING BROUGHT ON RE CORD, IN OUR CONSIDERED OPINION, THE ASSESSING OFFICER WAS NOT J USTIFIED IN MAKING THE DISALLOWANCE OF RS. 73,384/- BY SIMPLY OBSERVING TH AT THE EXPENSES ARE NOT RELATED TO THE BUSINESS OF THE ASSESSEE. HENCE , WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND VACATE THE DISA LLOWANCE OF RS.73,384/- AND ALLOW THE GROUND OF APPEAL OF THE A SSESSEE. 8 . IN GROUND NO.2, THE GRIEVANCE OF THE ASSESSEE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE DISALLOWANCE OF RS. 8,50,000/- 3 ITA NO. 274/RAN/2014 9. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORD ERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. THE ASSESSING OFFICER OBSERVED THAT FROM THE VOUCHERS IT IS SEEN THAT ALL THE PAYMENTS HAVE BEEN MADE UNDER THE HEAD LABOUR CHARGES, TRUCK FREIGHT AND RAKE HANDLING CHARGES OF RANCHI AND DHANBAD UNIT, TOTALL ING TO RS.56,72,344/- AND RS. 39,16,218/- RESPECTIVELY WER E IN CASH AND ALL THE VOUCHERS PRODUCED IN THIS REGARD WERE SELF-MADE AND NOT AMENABLE TO CROSS VERIFICATION. THEREFORE, HE DISALLOWED 10 % OUT OF THE TOTAL EXPENSES OF RS.95,88,562/- AND MADE THE DISALLOWANC E OF RS.9,58,856/- AND ADDED THE SAME TO THE INCOME OF T HE ASSESSEE. 10 . ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT ASSESSING OFFICER MADE DISALLOWANCE OF THE EXPENSES ON THE GROUND THAT THE ASSESSEE HAS NOT PRODUCED RELEVANT THIRD PARTY EVIDENCES IN SUPPORT OF THE SAME. THEREFORE, ASSESSING OFFICER WAS JUST IFIED IN PARTLY DISALLOWING THE EXPENSES CLAIMED BY THE ASSESSEE. HOWEVER, HE HELD THAT THE DISALLOWANCE APPEARS TO BE ON THE HIGHER S IDE AND THEREFORE RESTRICTED THE DISALLOWANCE TO RS. 8,50,000/- AND D ELETED THE BALANCE DISALLOWANCE OF RS. 1,08,956/-. 11 . AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITT ED THAT THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TA X (APPEALS) HAS MADE DISALLOWANCE OF EXPENSES ON ADHOC BASIS WITHOUT POINTING OUT WHAT ARE THE VOUCHERS OF THE ASSESSEE ARE NOT VERIF IABLE AND, THEREFORE, DISALLOWANCE CANNOT BE SUSTAINED IN LAW. 12 DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS O F THE LOWER AUTHORITIES. 13 WE FIND THAT THE ASSESSING OFFICER MADE DISALLOWA NCE OF EXPENSES INCURRED BY THE ASSESSEE UNDER THE HEAD LABOUR CHAR GES, TRUCK FREIGHT AND RAKE HANDLING CHARGES OF RS. 9,58,956/- WHICH W AS CONFIRMED IN 4 ITA NO. 274/RAN/2014 APPEAL BY THE COMMISSIONER OF INCOME TAX (APPEALS) TO THE EXTENT OF RS. 8,50,000/-. THE ASSESSING OFFICER WHILE MAKING THE DISALLOWANCE HAS OBSERVED THAT VOUCHERS PRODUCED BEFORE HIM ARE NOT VERIFIABLE AND, THEREFORE MADE DISALLOWANCE OF 10% OF THE EXPENSES CLAIMED BY THE ASSESSEE. WE FIND THAT NO SPECIFIC VOUCHER WHICH I S NOT VERIFIABLE IS POINTED OUT BY THE ASSESSING OFFICER OR THE COMMISS IONER OF INCOME TAX (APPEALS) WHILE MAKING THE DISALLOWANCE. IN ABSENC E OF THE SAME, IN OUR CONSIDERED OPINION, THE ADHOC DISALLOWANCE 10% OF THE EXPENSES CANNOT BE SUSTAINED IN LAW. WE, THEREFORE, SET ASI DE THE ORDERS OF THE LOWER AUTHORITIES AND DELETED THE ADDITION OF RS. 8 ,50,000/- AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 14 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING ON THURSDAY, THE 5 TH DAY OF NOVEMBER, 2015 AT RANCHI. SD/- SD/- (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 05 TH NOVEMBER, 2015. VR/- COPY TO: 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT 4. THE CIT(A) 5. THE D.R. 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., RANCHI 5 ITA NO. 274/RAN/2014 DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 05/11/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 06/11/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 06/11/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 06/11/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 06/11/2015 SR.PS 6. DATE OF PRONOUNCEMENT 05/11/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 06/11/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER