Prakash Chandra Sachdeva, Vijayawada V. The Income Tax Officer, Ward-2(4), Vijayawada

ITA 290/VIZ/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 0280 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 15-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Revenue expenditure
• Section: 250

Judgement Text

आयकरअपीलीयअधिकरण, धिशाखापटणम पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM श्री द ु व्वूरु आर एल रेड्डी, न्याधयक सदस्य एिं श्री एस बालाकृ ष्णन, लेखा सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./I.T.A.No.290/ Viz/2019 (ननधधारण वर्ा / Assessment Year : 2013-14) Prakash Chandra Sachdeva Prop : Kamal Footwear B-301, Eco Space, Siva Sankar Nagar Donka Road, Patamata Vijayawada [PAN : ABJPC1755E] Vs. Income Tax Officer Ward -2(4) Vijayawada (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधथी की ओर से/ Appellant by : Shri B.V.S.Chalapathi Rao, AR प्रत्यधथी की ओर से / Respondent by : Shri S.P.G.Mudaliar, DR सुनवधई की तधरीख / Date of Hearing : 09.05.2022 घोर्णध की तधरीख/Date of Pronouncement : 15.07.2022 O R D E R Per Shri Duvvuru RL Reddy, Judicial Member : This appeal is filed by assessee against the order of the Commissioner of Income Tax (Appeals) [in short, “CIT(A)”]-2, Guntur in ITA No.62/GNT/CIT(A)-2/2016-17 dated 01.03.2019 for the Assessment Year (A.Y.) 2013-14. 2 ITA No.290/Viz/2019, A.Y. 2013-14 Prakash Chandra Sachdeva, Vijayawada 2. The assessee has raised the following grounds : 1. The impugned order passed by the learned Commissioner of income Tax (Appeals) Guntur under section 250 of the Act dt.01.03.2019 in so far as it is against the appellant is opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant’s case. 2. The learned Commissioner of Income Tax (Appeals) is not justified in law and on facts in not adjudicating the grounds raised by the appellant as regard to the introduction of fresh capital of Rs.48,28,332/- which is against principles of natural justice under the facts and circumstances of the case. 3. The learned Commissioner of Income Tax (Appeals) is not justified in law in confirming the additions made by the assessing officer of Rs.31,990/- being 10% on the disallowance of interest on personal investment of Rs.3,19,908/-. 4. Whether the facts and circumstances of the case the Commissioner of Income Tax (Appeals) erred in disallowance of expenditure of Rs.2,36,574/- as revenue expenditure as the expenditure is in the nature of payment towards job work charges paid to the workers for manufacture of chappals. 5. Whether the facts and circumstances of the case the Commissioner of Income Tax (Appeals) erred in disallowance of expenditure of Rs.4,97,140/- as revenue expenditure as the expenditure is in the nature of depot trade discounts. 6. There is no justification to pass the appellate order by the Commissioner of Income Tax (Appeals)-2, Guntur without informing the appellant about the change of appellate jurisdiction from Vijayawada CIT(A). 7. The appellant prays that the order of the Commissioner of Income Tax (Appeals)-2 Guntur may kindly be set aside and grant the relief on the disputed income addition made in the order passed u/s 3 ITA No.290/Viz/2019, A.Y. 2013-14 Prakash Chandra Sachdeva, Vijayawada 143(3) of the Income Tax Act, 1961 by the Income Tax Officer, Ward- 2(4), Vijayawada 8. The appellant craves leave to add, amend or alter any grounds of appeal either before or at the time of hearing. 3. Ground No.1, 7 and 8 are general in nature which does not require specific adjudication. 4. Ground No.2 is related to introduction of fresh capital. Brief facts of the case are that the assessee is an individual, engaged in the business of manufacturing and sale of chappals under the name and style of proprietorship concern, M/s Kamal Footwear. He filed his return of income for the A.Y.2013-14 on 10.12.2014, admitting total income of Rs.29,930/-. The case was selected for scrutiny under CASS and accordingly notice u/s 143(2) was issued. It was noticed by the AO that in Schedule -1 to the Capital Account for A.Y.2013-14 fresh capital of Rs.48,28,232/- was introduced. The AO vide his show cause letter dated 15.03.2016 asked the assessee to substantiate his claim by providing necessary supporting evidences in respect of sources for the introduction of fresh capital of Rs.48,28,232/-. The Ld.AR explained that the sources for the capital introduction of Rs.48,28,232/- was from out of the OD funds drawn from the OCC account No.042413046181711 held with Andhra Bank, but the entries in the said account statement did not establish any fund flow, as 4 ITA No.290/Viz/2019, A.Y. 2013-14 Prakash Chandra Sachdeva, Vijayawada stated by the AR of the assessee. Thus, the AO held that account statement copy as well as the explanation does not merit any consideration as they grossly failed to substantiate the sources for the fresh capital introduction during the year at Rs.48,28,232/- and added back to the total income of the assessee. 5. Ground No.3 is related to disallowance of interest on personal investment of Rs.3,19,908/-. During the course of assessment proceedings, the AO observed that the assessee had taken money from the interest bearing funds obtained from bank and various loan creditors and utilised for his personal purposes to the extent of Rs.3,19,908/-, therefore, the assessee is liable for interest disallowance from the bank interest payment. Considering the average rate of interest at 10%, the AO worked out the disallowance of interest on personal investments to Rs.31,990/- . 6. Ground No.4 is related to disallowance of expenditure of Rs.2,36,574/- . It was observed by the AO that the assessee has paid job work charges of Rs.11,82,870/- during the year under consideration, but failed to produce vouchers, bills , names of the recipients, nature of work and justification for making payment. In the absence of evidence, the AO disallowed 50% of the job work charges which works out to Rs.5,91,435/-. 5 ITA No.290/Viz/2019, A.Y. 2013-14 Prakash Chandra Sachdeva, Vijayawada 7. Ground No.5 is related to disallowance of expenditure of Rs.4,97,140/- . During the assessment proceedings, the assessee had claimed trade discounts at Rs.24,85,700/-, but failed to produce vouchers, bills. In the absence of evidence, the AO disallowed 50% of the trade discounts which works out to Rs.12,42,850/-. 8. Ground No.6 is related to change of jurisdiction. The Ld.AR submitted that the Ld.CIT(A), Guntur passed order without informing the assessee about the change of jurisdiction from CIT(A), Vijayawada. 9. At the outset, the Ld.Counsel for the assessee has submitted that the AO has not considered the evidences filed by the assessee and made disallowances. He further submitted that the AO has not considered the bank statement and other evidences filed by the assessee. Upon perusal of the assessment order, there was no discussion about bank statement etc. Considering the facts and circumstances of the case and in order to meet the principles of natural justice, we remit the matter back to the file of the AO to examine the evidences filed by the assessee and pass speaking order. The assessee is also directed to cooperate with the revenue authorities and place all evidences before the concerned authorities. 10. In the result, appeal of the assessee is allowed for statistical purpose. 6 ITA No.290/Viz/2019, A.Y. 2013-14 Prakash Chandra Sachdeva, Vijayawada Order Pronounced in open Court on 15 th July, 2022. Sd/- Sd/- (एस बालाकृ ष्णन) (द ु व्वूरु आर.एल रेड्डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयकसदस्य/JUDICIAL MEMBER Dated : 15.07.2022 L.Rama, SPS आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee - Prakash Chandra Sachdeva, Prop : Kamal Footwear , B-301, Eco Space, Siva Sankar Nagar, Donka Road, Patamata, Vijayawada 2. रधजस्व/The Revenue – Income Tax Officer, Central Revenue Buildings M.G.Road, Vijayawada 3. प्रधान आयकर आयुक्त / The Pr.Commissioner of Income Tax-2, Vijayawada 4. आयकर आयुक्त (अपील) / Commissioner of Income Tax (Appeals)-2, Guntur 5. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम/ DR,ITAT, Visakhapatnam 6.गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam