M/s. Bhandari Capacitors Pvt. Ltd., Indore V. THE ACIT 5(1), Indore

ITA 305/IND/2014

• Counselvise Citation: 30522714 RSA 2014
• Duration Of Justice: 1 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 22-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S N AGRAWAL; PANKAJ MOGRA CAS
• Section: 40A(3); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE (SINGLE MEMBER CASE) BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER I.T.A.NO. 305/IND/2014 A.Y. : 2008-09 M/S.BHANDARI CAPACITORS PVT.LTD., ACIT, 5(1), INDORE. VS. INDORE. APPELLANT RESPONDENT PAN NO. AABCB2661C A PPELLANT S BY : S HRI S.N.AGRAWAL AND SHRI PANKAJ MOGRA, CAS RESPONDENT BY : SHRI R.A.VERMA, DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-II, INDORE, DATED 27.02.2014 FOR THE ASSE SSMENT YEAR 2008-09. 2. FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE : - DATE OF HEARING : 10.12.2015 DATE OF PRONOUNCEMENT : 10.12.2015 BHANDARI CAPACITORS PVT.LTD., INDORE VS. ACIT, 5(1) , INDROE. I.T.A.NO. 305/IND/2014 2 2 (1) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) ERRED IN MAINTAINING ADDITION AS MAD E BY THE ASSESSING OFFICER IN ESTIMATION OF JOB WORK REC EIPT AT RS. 12,00,000/- AS AGAINST RS. 4,80,000/- OFFERE D BY THE ASSESSEE COMPANY WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND SUBMISSION MADE BEFORE HIM. (2) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) ERRED IN MAINTAINING DISALLOWANCE OF RS. 4,23,284/- AS MADE BY THE ASSESSING OFFICER OUT OF SALARY AND RETRENCHMENT COMPENSATION PAID TO THE EMPLOYEES OF THE ASSESSEE COMPANY WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND SUBMISSION MADE BEFORE HIM. 3. THE ASSESSEE HAS FILED THE RETURN OF FRINGE BENEFIT TAX DECLARING TAXABLE INCOME AT RS. 23,832/- ON 30.09.2 008. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAS JOB RECEIPT FROM BHANDA RI CONTROL AND ELECTRICAL PVT.LTD. (BCEL) FOR THE YEAR UNDER CONSIDERATION OF RS. 4,80,000/- WHILE IT HAD DECLAR ED JOB CHARGES OF RS. 12 LAKHS IN THE PREVIOUS YEAR. THE A O HAS GIVEN SHOW CAUSE NOTICE AND AFTER GIVING SHOW CAUSE NOTIC E, HE MADE THE ADDITION OF RS. 12 LAKHS. 5. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. BHANDARI CAPACITORS PVT.LTD., INDORE VS. ACIT, 5(1) , INDROE. I.T.A.NO. 305/IND/2014 3 3 6. BEFORE ME, THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS DECLARED JOB RECEIP T FROM BHANDARI CONTROL AND ELECTRICAL PVT.LTD. FOR RS. 4, 80,000/-, WHILE IT HAS DECLARED JOB CHARGES OF RS. 12 LAKHS. THE ASSESSEE HAD JOB CONTRACT DEED, WHEREIN THE ASSESSEE HAS LEA SED THE MACHINERY AT FIXED RATE OF RS. 1 LAKH IN THE EARLIE R YEAR IRRESPECTIVE OF PRODUCTION DONE, WHILE UNDER YEAR U NDER CONSIDERATION, THE ASSESSEE HAS RECEIVED RS. 40,000 /- PER MONTH BASED ON CALCULATION OF RS. 8/- PER KVAR PROD UCED BY THE ASSESSEE. IT WAS STATED THAT DUE TO POOR CONDIT ION, BCEL WAS NOT AGREED FOR PAYING RS. 1 LAKH PER MONTH. AS SUCH THE AGREEMENT WAS DONE FOR MINIMUM OF RS. 40,000/- PER MONTH. IT IS CLAIMED THAT IN THE PRECEDING YEAR, THE ASSES SEE HAS MADE TOTAL PRODUCTION OF RS. 1,24,725/- KVAR ON JOB WORK WHILE DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HA S MADE TOTAL PRODUCTION OF 60,000 KVAR AND AS SUCH IN THE PRECEDING YEAR THE RATE PER KVAR WAS WORKED OUT TO RS. 9.62, WHILE IN THIS YEAR, THE RATE WAS WORKED OUT AT RS. 8/- PER K VAR. THEREFORE, THE ASSESSEE HAS CLAIMED THE LOWER RATE. BHANDARI CAPACITORS PVT.LTD., INDORE VS. ACIT, 5(1) , INDROE. I.T.A.NO. 305/IND/2014 4 4 7. ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDER S OF THE AUTHORITIES BELOW. 8. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PART IES. I HAVE GONE THROUGH THE SUBMISSION MADE BY THE LD. AU THORIZED REPRESENTATIVE. THE ASSESSEE HAS GIVEN THE STATEMEN T IN THE WRITTEN SUBMISSION WHICH IS FOUND TO BE SELF-SERVIN G. IN THE WRITTEN SUBMISSION, IT WAS BROUGHT TO THE NOTICE TH AT LEASE RENT WAS REDUCED BY MUTUAL CONSENT, BUT AT THE SAME TIME IT WAS ALSO AGREED THAT IN ABSENCE OF WORK ORDER FOR L EASE, THE ASSESSEE COMPANY CAN USE THE PLANT AND MACHINERY F OR ITS FULL PRODUCTION. THEREFORE, THE SAME MUTUAL CONSENT AGREEMENT WAS MADE AFTER THOUGHT. THEREFORE, I AM O F THE VIEW THAT THE ASSESSEE DURING THE YEAR UNDER CONSIDERATI ON, HAS FAILED TO PRODUCE THE COPY OF JOB WORK BILL, NO INW ARD AND OUTWARD REGISTERS WERE MAINTAINED AND THE STATEMENT OF THE DIRECTOR OF BCEL WAS ALSO RECORDED U/S 131 OF INCOM E-TAX ACT, 1961. THEREFORE, I AM OF THE VIEW THAT THE AO AND L D. CIT(A) ARE JUSTIFIED IN THEIR ACTION AND OUR INTERFERENCE IS NOT REQUIRED. BHANDARI CAPACITORS PVT.LTD., INDORE VS. ACIT, 5(1) , INDROE. I.T.A.NO. 305/IND/2014 5 5 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE ON THIS G ROUND IS DISMISSED. GROUND NO. 2 : 10. THE AO FOUND THAT THE ASSESSEE HAS CLAIMED SALARY EXPENSES PAID TO SHRI L.N. PATEL AND SHRI NANURAM M ALVIYA OF RS. 2,81,083/- RELATED TO PRIOR YEAR CLAIMED ON THE BASIS OF CRYSTALLIZATION OF THE LIABILITY. HOWEVER, SAME WAS PAID DURING THE PREVIOUS YEAR. HENCE, THE AMOUNT OF SALARY WAS DISALLOWED BY THE ASSESSING OFFICER AND SALARY OF RS. 95,258/- AND RS. 46,196/- IN CASH WAS PAID TO SHRI DILIP CHAUDHARY IN VIOLATION OF SECTION 40A(3) OF THE INCOME-TAX ACT, 1961. THEREFORE, THE AO HAS MADE THE ADDITION OF RS. 4,23 ,284/-. 11. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) HAS DISMISSED THE APPEAL. 12. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT SH RI L.N.PATEL AND SHRI NANURAM MALVIYA WERE OLD EMPLOY EES OF THE COMPANY. THE COMPANY WAS NOT PAYING ANY SALARY TO BOTH OF THEM SINCE APRIL, 1999 TO JUNE, 2005, SINCE THE COMPANY WAS HAVING DISPUTE WITH BOTH OF THEM. THE EMPLOYEES HAVE AGREED FOR THIS SETTLEMENT OF THEIR SALARY DURING T HE YEAR. SINCE BHANDARI CAPACITORS PVT.LTD., INDORE VS. ACIT, 5(1) , INDROE. I.T.A.NO. 305/IND/2014 6 6 THE COMPANY WAS ALSO NOT INTERESTED TO CONTINUE THE DISPUTE AND WANTED TO GET RID OF THE EMPLOYEES IT HAS DECID ED TO PAY SALARY TO THE SAID EMPLOYEES. THEREFORE, THE ENTIR E SALARY WAS PAID TO THEM AND SAME WAS CRYSTALLIZED DURING THE Y EAR. THEREFORE, THE SALARY MAY BE ALLOWED. 13. IN RESPECT OF SHRI DILIP CHOUDHARY, HIS BEHAVIOUR W AS NOT PROPER AND HE WAS PROBLEM CREATOR WORKER AND HE NCE, THE ASSESSEE COMPANY WAS NOT PAYING HIM THE SALARY SINC E APRIL 1999 AND THE ASSESSEE PAID THIS SALARY TO SHRI DILI P CHOUDHARY IN CASH. THEREFORE, IT MAY BE ALLOWED. 14. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PART IES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT IT IS THE CASE OF THE ASSESSEE THAT THE ASSESSEE HA S NOT PAID SALARY TO SHRI L.N. PATEL AND SHRI NANURAM MALVIYA FROM APRIL, 1999 TO JUNE 2005. 15. DURING THE COURSE OF HEARING, THE LD. AUTHORIZED REPRESENTATIVE COULD PRODUCE ANY EVIDENCE TO SHOW T HAT SHRI L.N. PATEL AND SHRI NANURAM MALVIYA WERE PAID THE S ALARY IN THE YEAR UNDER CONSIDERATION. THEREFORE, I RESTORE THIS ISSUE BACK TO THE FILE OF AO TO VERIFY WHETHER THE ASSESS EE COMPANY BHANDARI CAPACITORS PVT.LTD., INDORE VS. ACIT, 5(1) , INDROE. I.T.A.NO. 305/IND/2014 7 7 HAS PAID SALARY TO SHRI L.N.PATEL AND SHRI NANURAM MALVIYA IN THE YEAR UNDER CONSIDERATION. SECONDLY, THE ASSESSE E HAS NOT PAID SALARY SINCE APRIL 1999 TO JUNE,2005, HAS TO B E VERIFIED BY THE ASSESSING OFFICER AND IF THE AO FINDS THAT N O SALARY WAS PAID AND IF THEY ARE EMPLOYEES OF THE ASSESSEE, THE SALARY MAY BE ALLOWED AS PER LAW. 16. IN RESPECT OF SHRI DILIP CHOUDHARY, THE SALARY WAS PAID IN CASH. THEREFORE, WHEN THE SALARY WAS PAID IN CAS H, IT IS IN VIOLATION OF SECTION 40A(3) OF THE ACT. THEREFORE, I DISMISS THE SAME. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OP EN COURT ON 10 TH DECEMBER, 2015. SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 10 TH DECEMBER, 2015. BHANDARI CAPACITORS PVT.LTD., INDORE VS. ACIT, 5(1) , INDROE. I.T.A.NO. 305/IND/2014 8 8 CPU*