The ACIT,Vapi Circle, Vapi V. M/s. Sudeep Motors Pvt.Ltd., Vapi

ITA 3215/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6523 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 01-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P TANGID SRDR
• Assessee Lawyers: K C THAKKAR
• Keywords: Business expenditure; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE SHRI D.K.TYAGI, HONBLE JUDICIAL MEMBER, AND SHRI D. C. AGRAWAL, HONBLE ACCOUNTANT MEMBER ITA NO.3215/AHD/2009 ASSESSMENT YEAR:2006-07 DATE OF HEARING:24.5.11 DRAFTED:25.5.11 ASSISTANT COMMISSIONER OF INCOME-TAX, VAPI CIRCLE, VAPI V/S . M/S. SUDEEP MOTORS PVT. LTD., 210, D\GIDC, VAPI PAN NO.AFKPK3440D (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI J.P. TANGID, SR-DR RESPONDENT BY:- SHRI K. C. THAKKAR, AR O R D E R PER D.K.TYAGI, JUDICIAL MEMBER:- THIS IS REVENUES APPEAL AGAINST THE ORDER OF COMM ISSIONER OF INCOME-TAX (APPEALS), VALSAD IN APPEAL NO. CIT(A)/VLS/394/08-0 9 FOR THE ASSESSMENT YEAR 2006-07. 2. REVENUE HAS TAKEN FOLLOWING EFFECTIVE GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ADDING UNSECURED LOANS OF RS.2, 21,215/- U/S. 68 OF THE ACT IGNORING THAT THE ASSESSEE DID NOT PRODUCE SUFF ICIENT EVIDENCE AT THE TIME OF ASSESSMENT AND OVERLOOKING THE CONDITIONS STIPUL ATED U/S.69 OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE IN A SUM OF RS.1 ,59,536/- OUT OF DISCOUNT ON CAR SALES DESPITE THE FACT THAT THE ASSESSEE DID NOT FURNISH THE DETAILS ASKED FOR AT THE TIME OF THE ASSESSMENT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE IN A SUM OF RS.1 ,24,500/- BEING FOREIGN TOUR EXPENSES DESPITE THE FACT THAT THE ASSESSEE DID NOT FURNISH THE DETAILS ASKED FOR AT THE TIME OF THE ASSESSMENT. ITA NO.3215/AHD/2009 A.Y. 2006-07 ACIT VAPI V. M/S. SUDEEP MOTORS PVT. LTD. PAGE 2 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN ADDING A SUM OF RS.1,00,000/-ON ACCOUN T OF ALLEGED DIFFERENCE IN THE ACCOUNTS OF HMIL DESPITE THE FACT THAT THE ASSE SSEE DID NOT FURNISH THE DETAILS ASKED FOR AT THE TIME OF THE ASSESSMENT. 5. IT IS, THEREFORE PRAYED THAT THE ORDER OF THE LE ARNED CIT(A) BE SET ASIDE AND THAT THE ORDER OF THE AO BE RESTORED. 3. GROUND NO.1 RELATES TO ADDITION OF UNSECURED LOA NS OF RS.2,21,215/- U/S 68 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS ASSESSIN G OFFICER OBSERVED THAT INSPITE OF VARIOUS OPPORTUNITIES PROVIDED TO THE ASSESSEE. HE DID NOT FURNISH THE DETAILS OF UNSECURED LOAN OF TURAKHAI FAMILY, WHICH IS DETAILE D AS UNDER:- SL. NO. NAME OF THE PERSON AMOUNTS (RS.) 1 SHRI K. M. TURAKHIA 44,243/- 2 DESHNA TURAKHIA 44,243/- 3 CHITAN TURAKHIA 44,243/- 4 NIRJA TURAKHIA 44,243/- 5 VIPULA TURAKHIA 44,243/- THE ASSESSING OFFICER FURTHER OBSERVED THAT ASSESSE E FAILED TO COMPLY WITH THE CONDITION STIPULATED U/S.68 OF THE ACT AND HENCE TH E ADDITION WAS MADE. 4. BEFORE LD. CIT(APPEALS) THE CONTENTION OF THE AS SESSEE WAS THAT ALL THE 5 DEPOSITORS GAVE UNSECURED LOANS TO THE FIRMS IN THE PREVIOUS YEAR RELATING TO ASSESSMENT YEAR 2002-03. HOWEVER, DUE TO THE CONVER SION OF THE PARTNERSHIP INTO PRIVATE LTD. CO. IN THE ASSESSMENT YEAR 2004-05 THE LOANS WERE TRANSFERRED IN THE BOOKS OF ACCOUNT OF THE COMPANY. IT WAS FURTHER SUB MITTED THAT IN THE CASE OF ASSESSEE-COMPANY ALL THESE LOANS WERE ACCEPTED WHIL E FINALIZING THE ASSESSMENT U/S.143(3) OF THE ACT. IN VIEW OF THIS SUBMISSION O F THE ASSESSEE, LD. CIT(APPEALS) DELETED THE ADDITION MADE BY ASSESSING OFFICER. SIN CE ALL THE DEPOSITS WERE GIVEN IN THE EARLIER YEARS AND WERE ACCEPTED BY THE REVENUE IN THAT YEAR THE ADDITION BY AO WAS NOT SUSTAINABLE AND LD. CIT(APPEALS) HAS RIGHTL Y DELETED THE ADDITION AND THEREFORE THE ORDER PASSED BY LD. CIT(A) IS HEREBY UPHELD. THIS GROUND OF REVENUES APPEAL IS DISMISSED. ITA NO.3215/AHD/2009 A.Y. 2006-07 ACIT VAPI V. M/S. SUDEEP MOTORS PVT. LTD. PAGE 3 5. SECOND GROUND RELATES TO DISALLOWANCE OF A SUM O F RS.1,59,536/- OUT OF DISCOUNT ON CAR SALES. DURING THE ASSESSMENT PROCEE DINGS AO OBSERVED THAT ASSESSEE DEBITED RS.31,91,722/- TOWARDS DISCOUNT ON CAR SALES. ON A RANDOM CHECKING THE ASSESSING OFFICER ASKED THE ASSESSEE T O FURNISH LEDGER ACCOUNT OF TWO PRINCIPAL PARTIES NAMELY, SHRI KAILASH TANKI AND SH RI DIPAK DESAI TO WHOM THE DISCOUNT FOR RS.90,122/- AND RS.15,633/- WERE GIVEN RESPECTIVELY. THE ASSESSEE FILED WRITTEN SUBMISSION WHICH DID NOT HAVE ANY CLARIFICA TION IN THIS REGARD. IN THE ABSENCE OF THE SAME, ASSESSING OFFICER DISALLOWED 5% OF DIS COUNT ON SALES OF CAR I.E. RS.1,59,536/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 6. BEFORE LD. CIT(APPEALS) THE CONTENTION OF THE AS SESSEE WAS THAT ASSESSEE IS AN AUTOMOBILE DEALER OF HUNDIA MOTORS INDIA LTD. (H MIL FOR SHORT) WHO PUBLICLY ANNOUNCES/ADVERTISE VARIOUS SCHEMES SUCH AS FREE AC CESSORIES, FREE INSURANCE, CASH DISCOUNT, EXCHANGE DISCOUNT AND ROYALTY DISCOU NT ETC. HE FURTHER SUBMITTED THAT DEALER IS BOUND TO FOLLOW THE SCHEME ANNOUNCED BY P RINCIPAL COMPANY. THE ASSESSEE ALSO FURNISHED COPIES OF INVOICE OF THE TW O PARTIES REFERRED TO IN THE ASSESSMENT ORDER, WHEREIN THE DISCOUNT TO THE CUSTO MERS WERE RECORDED IN THE INVOICES. IN VIEW OF THIS SUBMISSION, LD. CIT(A) DE LETED THE ADDITION. SINCE THE ASSESSING OFFICER HAS DISALLOWED THE DISCOUNT ON CA R SALES ON ESTIMATED BASIS WHILE LD. CIT(A) HAS DELETED THE ADDITION ON THE BASIS OF COPIES OF INVOICE, EVIDENCING THE DISCOUNT TO THE CUSTOMERS, WE FEEL NO NEED TO INTER FERE WITH THE ORDER PASSED BY LD. CIT(A) AND SAME IS HEREBY CONFIRMED. THIS GROUND OF REVENUES APPEAL IS DISMISSED. 7. THIRD GROUND RELATES TO DISALLOWANCE OF RS.1,24, 500/- BEING FOREIGN TOUR EXPENSES. DURING THE ASSESSMENT PROCEEDINGS ASSESSI NG OFFICER OBSERVED THAT ASSESSEE DEBITED FOREIGN TRIP EXPENSES OF RS.1,24,5 00/- FOR WHICH ASSESSEE WAS ASKED TO PRODUCE VOUCHERS OF FOREIGN TOUR AND EVIDE NCE TO PROVE WHETHER FOREIGN TOUR WAS UNDERTAKEN EXCLUSIVELY FOR THE PURPOSES OF BUSINESS. THE ASSESSEE DID NOT FURNISH ANY CLARIFICATION IN THIS REGARD. IN ABSENC E OF ANY EVIDENCE REGARDING THE PURPOSE OF FOREIGN TOUR, THE EXPENSES OF RS.1,24,50 0/- WERE DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE BEING NON-BUSINESS EXPENSES. ITA NO.3215/AHD/2009 A.Y. 2006-07 ACIT VAPI V. M/S. SUDEEP MOTORS PVT. LTD. PAGE 4 8. BEFORE LD. CIT(APPEALS) THE ASSESSEES CONTENTIO N WAS THAT FROM 21-01-2006 TO 22-01-2006 THERE WAS AN ALL INDIA MEET AT BANGKO K CONDUCTED BY THE COMPANY TO DISCUSS THE MARKETING STRATEGY AND TO DISTRIBUTE TH E PRIZES. ONE OF THE DIRECTORS OF THE COMPANY, SHRI DILIP SHAH ATTENDED THE CONFERENC E, FOR WHICH THE FOLLOWING DOCUMENTS WERE FURNISHED BEFORE THE AO DURING THE A SSESSMENT PROCEEDINGS, (1) COPY OF LETTER OF INVITATION FROM HMIL (2) COPY OF ITINERARY AND PROGRAMME OF THE MEETING (3) COPY OF VOUCHERS FOR EXPENSES INCURRED AND (4) COPY OF PASSPORT OF SHIR DILIP B SHAH. THE CONTENTION OF THE ASSESSEE WAS TH AT THESE DOCUMENTS WERE ITSELF SELF-EXPLANATORY TO JUSTIFY THE EXPENDITURE AND THE PURPOSE OF FOREIGN TOUR UNDERTAKEN BY ONE OF THE DIRECTORS OF THE COMPANY. IN VIEW OF THESE SUBMISSIONS, THE ADDITION MADE BY ASSESSING OFFICER WAS DELETED BY LD. CIT(A) . 9. SINCE THE ASSESSEE HAS FILED ALL THE REQUISITE D OCUMENTS IN SUPPORT OF HIS CONTENTION THAT EXPENDITURES OF RS.1,24,500/- WAS I NCURRED FOR BUSINESS PURPOSES BY THE DIRECTOR OF SHRI DILIP SHAH ON HIS VISIT TO BAN GKOK TO ATTEND ALL INDIA MEET AT BANGKOK, THE AO WAS NOT JUSTIFIED IN DISALLOWING TH E FOREIGN TOUR EXPENDITURE AND LD. CIT(APPEALS) HAS RIGHTLY DELETED THE ADDITION SO MA DE BY ASSESSING OFFICER. THEREFORE THE ORDER PASSED BY LD. CIT(A) IS HEREBY UPHELD. THIS GROUND OF REVENUES APPEAL IS DISMISSED. 10. GROUND NO.4 RELATES TO ADDITION OF RS.1 LAKH ON ACCOUNT OF DIFFERENCE IN THE ACCOUNTS OF HMIL. DURING THE ASSESSMENT PROCEEDINGS , AO OBSERVED ON VERIFICATION OF THE DETAILS CALLED FOR FROM M/S.HMIL THAT THE CO MPANY HAS SHOWN CLOSING DEBIT BALANCE OF RS.22,,65,994/- WHEREAS THE ASSESSEE HAS SHOWN CREDIT OF RS.4,99,730/- ONLY. SINCE THESE WERE PAYMENTS MADE BY ASSESSEE IN THE LAST WEEK OF MAR06 LAKH WHICH MIGHT NOT HAVE BEEN REFLECTED BY THE OTHER PA RTY THE RECONCILIATION OF ACCOUNT WAS CALLED FOR. THE ASSESSEE FILED WRITTEN SUBMISSI ON BUT NO RECONCILIATION WAS FILED. IN THE ABSENCE OF BOOKS OF ACCOUNT AND DETAILS A LU MP SUM AMOUNT OF RS.1 LAKH WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 11. BEFORE LD. CIT(APPEALS) IT WAS CONTENDED ON BEH ALF OF ASSESSEE THAT ASSESSEE IS A DEALER OF HMIL AND IT IS A PRACTICE T HAT COMPANY DISPATCHES THE CAR AGAINST THE INDENT. HOWEVER, AT THE FAG END OF THE QUARTER, HALF YEAR OR YEAR, IT MAY ALSO HAPPEN THAT THE COMPANY DISPATCHES CAR EVEN WI THOUT INDENT TO MEET WITH THE TARGET. IN SUCH CASE, THE PAYMENT REMAINS IN TRANSI T PARTICULARLY AT THE END OF THE ITA NO.3215/AHD/2009 A.Y. 2006-07 ACIT VAPI V. M/S. SUDEEP MOTORS PVT. LTD. PAGE 5 YEAR. IN SUCH CASES, IT IS A MATTER OF RECONCILIATI ON AND THE ASSESSEE FURNISHED THE PRODUCT-WISE COPIES OF ACCOUNTS FROM HIS BOOKS OF A CCOUNT AS WELL AS BOOKS OF ACCOUNT OF THE COMPANY ALONG WITH THE RECONCILIATIO N STATEMENTS. IN VIEW OF THIS RECONCILIATION FILED BY ASSESSEE LD. CIT(A) GAVE RE LIEF TO THE ASSESSEE. WE FIND NO INFIRMITY IN SUCH ORDER PASSED BY LD. CIT(A) AND TH E SAME IS HEREBY UPHELD. THIS GROUND OF REVENUES APPEAL IS DISMISSED. 12. GROUND NO.5 IS CONSEQUENTIAL IN NATURE DOES NOT REQUIRE ANY ADJUDICATION. 13. NO OTHER GROUND WAS TAKEN BY THE REVENUE AT THE TIME OF HEARING. 14. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 27/05/2011 SD/- SD/- (D.C.AGRAWAL) (D.K. TYAGI) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 27/05/2011 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-VALSAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD