M/s. T&T Motors Ltd., New Delhi V. ACIT, New Delhi

ITA 3161/DEL/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69600 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2005-2006
• Appeal Filed On: 20-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEEHAR RANJAN PANDEY
• Assessee Lawyers: K V S R KRISHAN
• Keywords: Opportunity of being heard
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: H NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A .NO.-3161/DEL/ 2013 (ASSESSMENT YEAR-2005-06) T&T MOTORS LIMITED, GA-2, B-1, EXTN. MOHAN COOPERATIVE INDUSTRIAL ESTATE, MATHURA ROAD, NEW DELHI-110044 P AN-AAACT5980F (APPELLANT) VS ACIT, CIRCLE-16(1), C.R. BUILDING, NEW DELHI. (RESPONDENT) APPELLANT BY SH. K.V.S.R.KRISHAN, CA RESPONDENT BY SH. NEEHAR RANJAN PANDEY, SR. DR ORDER PER DIVA SINGH, JM BY THE PRESENT APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 21.03.2013 OF CIT(A)-19, NEW DELHI PERTAINING TO 20 05-06 ASSESSMENT YEAR THE ASSESSEE AGITATES THAT THE FOLLOWING ADHOC DISALLOW ANCE MADE BY THE AO OUGHT TO HAVE BEEN DELETED BY THE CIT(A) :- (A) RS.4,17,130/- OUT OF BUSINESS PROMOTION EXPENS ES. (B) RS.2,32,100/- OUT OF TRAVELING & CONVEYANCE EXP ENSES AND (C) RS.1,42,600/- OUT OF STAFF WELFARE EXPENSES. 2. QUA THE GROUNDS RAISED IT IS FURTHER AGITATED TH AT IN REGARD TO THE DISALLOWANCE MADE NO SPECIFIC SHOW CAUSE NOTICE WAS ISSUED BY THE AO AND THE PAST HISTORY ON THE SAID ISSUE HAS NOT BEEN CONSIDE RED BY THE CIT(A). 2.1. THE RELEVANT FACTS OF THE CASE ARE THAT THE AO IN THE COURSE OF THE ASSESSMENT PROCEEDINGS MADE THE FOLLOWING ADDITION S :- I.T.A .NO.-3161/DEL/2013 2 3. THE INCOME IS COMPUTED SUBJECT TO THE BELOW MEN TIONED : BUSINESS PROMOTION EXPENSES RS.1,86,25,177/- A SUM OF RS.1,86,25,177/- HAS BEEN CLAIMED ON ACCOU NT OF BUSINESS PROMOTION BY THE ASSESSEE UNDER THE HEAD SELLING AN D DISTRIBUTION EXPENSES. IN THESE BACKGROUND FACTS THE BOOKS OF A CCOUNTS PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WERE LOOKED IN TO. IT WAS NOTED THAT THE SUM OF RS.4,17,130/- DEBITED UNDER THIS HEAD WA S NOT FULLY VERIFIABLE. ACCORDINGLY, IN THE ABSENCE OF SUPPORTING VOUCHERS, IT IS BEING DISALLOWED AND IS ADDED TO THE RETURNED INCOME. (DISALLOWANCE : RS.4,17,130/-) TRAVELING & CONVEYANCE EXPENSES RS.84,82,244/- THE ASSESSEE HAS DEBITED A TOTAL SUM OF RS.84,82,24 4/- IN RESPECT OF TRAVELING & CONVEYANCE EXPENSES UNDER THE HEAD ADMI NISTRATION EXPENSES. THE DETAILS WERE PRODUCED DURING THE COURSE OF ASSE SSMENT PROCEEDINGS AND IT WAS FOUND THAT A SUM OF RS.2,32,100/- WAS NOT VE RIFIABLE DUE TO NON AVAILABILITY OF THE SUPPORTING VOUCHERS. THIS SUM IS BEING DISALLOWED AND IS ADDED BACK TO THE RETURNED INCOME OF THE ASSESSEE. (DISALLOWANCE : RS.2,32,100/-) STAFF WELFARE EXPENSES RS.36,99,979/- ON ACCOUNT OF STAFF WELFARE EXPENSES THE ASSESSEE H AS CLAIMED A SUM OF RS.36,99,979/- IN THE PROFIT AND LOSS ACCOUNT UN DER THE HEAD PERSONNEL. THE BOOKS OF ACCOUNTS PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WERE LOOKED INTO. IT WAS NOTED THAT TH E SUM OF RS.,142,600/- DEBITED UNDER THIS HEAD WAS NOT FULLY VERIFIABLE. ACCORDINGLY, IN THE ABSENCE OF SUPPORTING VOUCHERS, IT IS BEING DISALLOWED AND IS ADDED TO THE RETURNED INCOME. (DISALLOWANCE : RS.1,42,600/-) 3. IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE AGITATED THAT QUA THE ADDITIONS MADE NO SPECIFIC SHOW CAUSE NOTIC E WAS ISSUED AND THE ADHOC DISALLOWANCES HAVE BEEN MADE IGNORING THE PAST HIST ORY AND FACTS ON RECORD. IT WAS SUBMITTED THAT FOR A COMPANY HAVING A TURN OVER OF RS.207.40 CRORES THE ADDITION ON ACCOUNT OF EXPENDITURE ON BUSINESS PROM OTION OF ONLY 0.90% OF THE TURN OVER WAS NOT WARRANTED. IT WAS FURTHER CONTEN DED THAT THE AO HAS MERELY OBSERVED THAT THESE EXPENSES ARE NOT VERIFIABLE WIT HOUT CARING TO POINT OUT AS TO WHAT WAS THE SPECIFIC DEFICIENCY. A PERUSAL OF THE RECORD ALSO SHOWS THAT A COMPLETE BREAK UP OF STAFF WELFARE EXPENSES WAS G IVEN WHICH HAS BEEN REPRODUCED IN PAGE 5 OF THE IMPUGNED ORDER SO AS TO CONTEND THAT THE AO HAS NOT POINTED OUT WHAT WAS NOT VERIFIABLE. HOWEVER N OT CONVINCED BY THE I.T.A .NO.-3161/DEL/2013 3 ARGUMENTS ADVANCED THE CIT(A) CONFIRMED THE ACTION OF THE AO HOLDING THE REPLY OFFERED BY THE ASSESSEE AS A GENERAL REPLY. 4. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BE FORE THE TRIBUNAL. 5. WE HAVE HEARD THE RIVAL SUBMISSION WHEREAS THE L D. AR REITERATED THE ARGUMENTS ADVANCED BEFORE THE CIT(A) INVITING ATTEN TION TO THE ASSESSMENT ORDER PAGE 1 SO AS TO CONTEND THAT NO INFIRMITY WAS POINTED OUT BY THE AO AS THE QUESTIONNAIRE ISSUED WAS REPLIED TO AND NO DISCREPA NCY WAS POINTED OUT IN THE BOOKS OF ACCOUNTS AND THE AO SPECIFICALLY MAKES A N OTE THEREOF. APART FROM THAT THE SUBMISSIONS ADVANCED BEFORE THE CIT(A) WER E RELIED UPON. THE LD. SR. DR ON THE OTHER HAND RELIES UPON THE IMPUGNED ORDE R. 5.1. IN THE AFORE-MENTIONED PECULIAR FACTS AND CIRC UMSTANCES, WE ARE OF THE VIEW THAT THE ISSUE HAS TO BE RESTORED TO THE FILE OF THE AO. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE AO HAS GIVEN A CATE GORICAL FINDING THAT THE BOOKS OF ACCOUNTS WERE FOUND TO BE IN ORDER AND THE QUESTIONNAIRES ISSUED IN THE COURSE OF HEARING WERE REPLIED TO BY THE ASSESSEE. FOR READY-REFERENCE WE EXTRACT THESE OBSERVATIONS FROM THE ASSESSMENT ORDE R:- AGAIN A DETAILED QUESTIONNAIRE ALONGWITH NOTICES U /S 143(2) AND 142(1) WERE ISSUED AND DULY SERVED UPON THE ASSESSEE. IN RESPO NSE THERETO SHRI R.A.AGARWAL & SHRI S.MUKHERJEE, CA/ARS OF THE ASSES SEE COMPANY ATTENDED THE PROCEEDINGS FROM TIME TO TIME AND FURNISHED WRI TTEN REPLIES TO THE QUESTIONNAIRE AND PRODUCED REQUISITIONED DOCUMENTS INCLUDING BOOKS OF ACCOUNTS, BILLS AND VOUCHERS, BANK STATEMENTS WHICH WERE PUT TO TEST CHECKS. 2. THE ASSESSEE COMPANY IS AN AUTHORIZED DEALER OF M/S DALMLER CHRYSLER (INDIA) PVT. LTD. FOR SALE & SERVICE OF ME RCEDES BENZ CARS IN DELHI, UP & HARYANA. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE DERIVED INCOME FROM TRADING, SERVICING AND REPAIRING OF THE SE VEHICLES. DURING THE TEST CHECKS OF THE BOOKS OF ACCOUNTS NO MATERIAL DI SCREPANCY WAS FOUND. THEREFORE, THE TRADING RESULTS ARE ACCEPTED AS SUCH . 5.2. IT IS FURTHER SEEN THAT THE AO HAS MADE THE AD DITIONS FOR BUSINESS PROMOTION EXPENSES, TRAVELING AND CONVEYANCE EXPE NSES AND STAFF WELFARE EXPENSES HOLDING THAT THE EXPENSES WERE NOT FULLY VERIFIABLE. NO ATTEMPT WAS CONSIDERED NECESSARY TO POINT OUT THE SPECIFIC DEFE CTS; INFIRMITY OR DEFICIENCY I.T.A .NO.-3161/DEL/2013 4 PRESUMABLY NOTED BY HIM. THE SAID ACTION CANNOT BE UPHELD. THE ASSESSEE CAN BE HAULED UP FOR OFFERING A GENERAL EXPLANATION IF DESPITE SPECIFIC DEFECTS POINTED OUT HE FAILS TO OFFER A SPECIFIC AND PLAUSI BLE EXPLANATION. IN THE ABSENCE OF ANY SPECIFIC DEFICIENCY POINTED OUT BY THE AO TH E ACTION OF THE CIT(A) IN CONFIRMING THE ORDER CAN NOT BE UPHELD. IN VIEW OF THE ABOVE WE DEEM IT APPROPRIATE TO SET ASIDE THE IMPUGNED ORDER AND RES TORE THE ISSUE BACK TO THE AO WHO IS DIRECTED TO CONFRONT THE ASSESSEE WITH THE S PECIFIC OBJECTIONS NOTED BY HIM QUA THE ADDITIONS MADE AND THEREAFTER DECIDE TH E ISSUE IN ACCORDANCE WITH LAW BY WAY OF A SPEAKING ORDER AFTER GIVING THE ASS ESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 22 ND OF NOVEMBER 2013. SD/- SD/- (B.C.MEENA) (D IVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED:-22/11/2013 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSIS TANT REGISTRAR ITAT NEW DELHI