M/s. Inova Cast Pvt. Ltd., RAJKOT-GUJARAT V. The Deputy Commissioner of Income Tax, Circle-1, RAJKOT-GUJARAT

ITA 301/RJT/2011

• Counselvise Citation: 30124914 RSA 2011
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 11-07-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KRISHNA PRABHAKAR
• Assessee Lawyers: WRITTEN SUBMISSIONJ

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI T.K. SHARMA (JM) AND SHRI A.L. GEHLOT ( AM) I.T.A. NO.301/RJT/2011 (ASSESSMENT YEAR 2006-07) M/S INOVA CAST PVT LTD VS THE DY.CIT, CIR.1 350, SILVER CHAMBERS RAJKOT TAGORE ROAD, RAJKOT PAN : AAACI4641L (APPELLANT) (RESPONDENT) DATE OF HEARING : 30-11-2011 DATE OF PRONOUNCEMENT : 02-12-2011 APPELLANT BY : WRITTEN SUBMISSIONJ RESPONDENT BY : SHRI KRISHNA PRABHAKAR O R D E R PER AL GEHLOT (AM) THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A), GANDHIDHAM DATED 20-05-2011 FOR THE ASSESSMENT YEAR 2006-07. THE GROUND RAISED IN THE APPEAL IS IN RESPECT OF ADDITION OF R S. 3 LAKHS. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF ALLOY CASTING FOUN DRY AND WIND POWER GENERATION. ON PERUSAL OF PROFIT & LOSS ACCOUNT, T HE ASSESSING OFFICER NOTICED THAT VOUCHERS FOR VARIOUS EXPENSES WERE DEFECTIVE AS THE Y DID NOT CARRY NAME OF THE PAYEE, INCOMPLETE ADDRESSES AND OTHERS. THE ASSESS ING OFFICER, IN ABSENCE OF COMPLETE DETAILS, MADE ADDITION OF RS.3 LAKHS. THE ASSESSEE FILED RETURN OF ITA NO.301/RJT/2011 2 INCOME DECLARING LOSS OF RS.48,27,000. THE CIT(A) CONFIRMED THE ADDITION OBSERVING AS UNDER: 6. LOOKING TO THE NATURE OF EXPENDITURE AND THE CO MMENTS OF THE A.O. AND THE SUBMISSIONS OF THE AR IT WAS CONSI DERED APPROPRIATE THAT THE VOUCHERS OF THESE EXPENSES ARE EXAMINED TO FIND OUT THE TRUTH. FURTHER, P&L A/C FOR A.Y. 2006 -07 (UNDER APPEAL), A.Y. 2005-06 AND A.Y. 2004-05 WERE ALSO CA LLED FOR SO THAT REASONABLENESS OF THE EXPENSES MAY BE GAUGED VIDE O RDER SHEET DATED 18.01.2011 THE ASSESSEE WAS ASKED TO PRODUCE THEM ON 10.02./2011. NO ONE COMPLIED ON THAT DATE. FRESH NOTICE OF HEARING WAS ISSUED AND ON 06.04.2011 SHRI D.R. ADHI A ATTENDED BUT DID NOT PRODUCE THE VOUCHERS AND BILLS. HE WAS INFORMED THAT LAST OPPORTUNITY IS BEING GIVEN FOR 19.05.2011. HO WEVER, ON THAT DATE ALSO NO VOUCHERS OR BILLS WERE PRODUCED. IN THE ABOVE CIRCUMSTANCES, THE ASSESSEE IS CLEARL Y NOT WANTING TO GET ITS VOUCHER FOR EXPENSES EXAMINED. THE ASSESSEE CANNOT CLAIM THAT THE EXPENSES ARE FULLY VERIFIABLE ON ONE HAND AND AVOID THE EXAMINATION ON THE OTHER HAND. THE PROOF FO THE PUDDING IS IN ITS EA5TING. THEREFORE, THERE IS EVERY REASO N TO BELIEVE THAT THE EXPENSES ARE NOT VERIFIABLE. THE ADDITION BY WAY O F DISALLOWANCES OF EXPENSES AS MADE BY THE A.O. IS THEREFORE CONFIR MED. THE APPEAL IS DISMISSED. 3. THE ASSESSEE, INSTEAD OF PUTTING HIS PERSONAL PR ESENCE, HAS FILED WRITTEN SUBMISSION. IN THE WRITTEN SUBMISSION IT IS STATED THAT THE ASSESSING OFFICER DID NOT POINT OUT ANY SPECIFIC VOUCHERS FOR SUCH DEFECT S. THE OBSERVATION OF THE ASSESSING OFFICER THAT THE DETAILS OF EXPENSES WERE MISSING IS INCORRECT AND THE FINDING OF THE ASSESSING OFFICER IS VAGUE. IT IS F URTHER SUBMITTED THAT THE ASSESSEE HAS CLAIMED TOTAL EXPENSES OF RS.62,96,985 OUT OF W HICH DISALLOWANCE MADE WAS ONLY RS.3 LAKHS WHICH IS ON LUMP BASIS FOR VAGUE AN D WITHOUT ANY COGENT REASONS. IN THE WRITTEN SUBMISSION THE ASSESSEE HA S RELIED UPON THE FOLLOWING DECISIONS: ITA NO.301/RJT/2011 3 1. 289 ITR 266 (P&H) CIT VS OWAL WOOLLEN MILLS LTD - SMALL EXPENDITURE CANNOT BE DISALLOWED ON THE GROUN D THAT THEY ARE NOT FULLY VOUCHED. 2. 51 TTJ 408 (JAIPUR) RAJ ENTERPRISES VS ITO AD HOC DISALLOWANCE WITHOUT ANY COGENT REASONS ARE NOT SUS TAINABLE. 3. 54 TTJ 405 (AHD) MONARCH FOODS PVT LTD VS ACIT ADHOC DISALLOWANCE WITHOUT ANY COGENT REASON SPECIALLY IN THE CASE OF AUDITED ACCOUNTS ARE NOT PERMITTED. 4. 97 TTJ 147 (JOD) SUMERPUR TRUCK OPERATOR UNION V S DCIT ALL EXPENSES AS VOUCHED AND VERIFIED BY AUDITORS ARE AL LOWABLE. 5. (2006) 6 SOT 86 (BANG) DCIT VS MRS. IRENE DSOUZ A ASSESSEE HAVING SHOWN BY FURNISHING NECESSARY DETAILS THAT E XPENSE WERE INCURRED IN THE COURSE OF BUSINESS, ENTIRE EXPENDIT URE WAS ALLOWABLE AND DISALLOWANCE OF 50 PER CENT WAS NOT CALLED FOR. 6. 50 TTJ 375 (IND) BETA NAPHTHOL P LTDF VS DCIT LUMP SUM DISALLOWANCE CANNOT BE APPRECIATED DISALLOWANCE D ELETED. 7. HON.ITAT RAJKOT SIBRAM PRADHAN V/S ITO NO SU BSTANCE FOUND IN SUSTAINING (LUMP SUM) ADDITION. 4. AFTER HEARING THE LD.DR, WHO RELIED UPON THE ORD ER OF CIT(A) WE FIND THAT THE CIT(A) CALLED FOR THE DETAILS OF EARLIER YEAR T O FIND OUT THE REASONABLENESS OF THE EXPENSES VIDE ORDER SHEET DATED 18-01-2011. TH E ASSESSEE FAILED TO PRODUCE SUCH DETAILS. THE ASSESSEE APPEARED BEFORE CIT(A) ON 06-04-2011 WITHOUT PRODUCING VOUCHERS AND BILLS. THE LAST OPP ORTUNITY WA GIVEN BY THE CIT(A) ON 19-05-2011. HOWEVER, ON THAT DATE ALSO, NO DETAILS AND VOUCHERS WERE PRODUCED. THE CIT(A) OBSERVED THAT IN THE ABS ENCE OF DETAILS, IT CANNOT BE HELD THAT THE EXPENSES ARE VERIFIABLE. THEREFORE, UNDER THE CIRCUMSTANCES, THE ASSESSING OFFICER HAS NO ALTERNATIVE BUT TO MAKE A LUMP SUM ADDITION AS ESTIMATION BEARS SOME GUESS WORK. THE ASSESSEE HAS NOTHING TO SAY ABOUT THE ITA NO.301/RJT/2011 4 FINDING OF THE CIT(A) THAT INSPITE OF REQUEST FOR F URNISHING THE VOUCHERS AND DETAILS THE ASSESSEE OPTED NOT TO FURNISH THE SAME. EVEN B EFORE US ALSO NO SUCH DETAILS WERE FILED. UNDER THE CIRCUMSTANCES, THE CASES REL IED UPON BY THE ASSESSEE IN THE WRITTEN SUBMISSION DOES NOT HELP THE ASSESSEE. WHEN THE ASSESSEE OPTED FOR NOT TO FURNISH ANY DETAILS, WE HAVE ALSO NO OPT ION BUT TO CONFIRM THE ORDER OF CIT(A). 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 02-11-2011. SD/- SD/- (T.K. SHARMA) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT, DT : 02 ND DECEMBER, 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A), GANDHINAGAR 4. THE CIT, GANDHINAGAR 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT