Super Katha Industries Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 3217/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65918 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 26-11-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 30-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHUMANA SEN
• Assessee Lawyers: AKASH KASHYAP
• Keywords: Principle of natural justice
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `G NEW DELHI BEFORE SHRI A.N. PAHUJA, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.3217/DEL/2010 ASSESSMENT YEAR : 2006-07 SUPER KATHA INDUSTRIES PVT. LTD., VS INCOM E TAX OFFICER, 56, KUCHA BELAMAL, NAYA BANS, WARD - 9(4), NEW DELHI-110006 NEW DELHI. (PAN: AAGCS4772G) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI AKASH KASHYAP RESPONDENT BY : SMT. SHUMANA SEN, SR.DR O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(A)-XII, NEW DELHI DATED 14.4.10 FOR A.Y.2006-07. 2. THE GROUNDS OF APPEAL READ AS UNDER:- 1. THAT DISALLOWANCE OUT OF GENERATOR EXPENSES AN D PACKING MATERIAL ON ESTIMATED BASIS, WITHOUT POINTI NG OUT EVEN A SINGLE INSTANCE IS BAD IN LAW. 2. THAT CONFIRMATION OF DISALLOWANCE ON THE BASIS OF NON PRODUCTION OF ORIGINAL BILLS ON ONLY IN ONE PARTICU LAR HEARING IS AGAINST NATURAL JUSTICE. ITA NO.3217/DEL/2010 ASSTT.YEAR: 2006-07 2 3. THAT CONFIRMATION OF DISALLOWANCE OF GENERATOR EXPENSES, COMPARING THE SAME WITH HEATING, LIGHTING AND POWER EXPENSES BUT IGNORING THE COMPARISON OF THE S AME WITH PRODUCTION. 3. BRIEF FACTS GIVING RISE TO THIS APPEAL ARE THAT THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND STATUTORY NOTICES U/S 143(2 ) AND 142(1) OF THE INCOME TAX ACT 1961 (FOR SHORT THE ACT) ALONG WITH QUESTIONNAIRE WERE SERVED ON THE ASSESSEE. THE ASSESSEE WAS ASKED TO FURNISH THE NECESSARY DETAILS IN RESPECT OF EXPENSES CLAIMED FOR GENERATO R EXPENSES AND PACKING MATERIAL. THE ASSESSING OFFICER NOTED THAT SOME OF THE EXPENSES WERE NOT PROPERLY VOUCHED. THEREFORE, TO PLUG THE POSSIBLE LEAKAGE OF REVENUE, HE DISALLOWED 5% OF THE EXPENSES AMOUNTING TO RS.67,41 3. THE ASSESSING OFFICER ALSO NOTICED THAT THE PAYMENT FOR PF CONTRI BUTION IN RESPECT OF EMPLOYEES SHARE AMOUNTING TO RS.72,467/- WAS DEPOSI TED LATE AFTER DUE DATE. THEREFORE, THE ASSESSING OFFICER TREATED THE SAME A S INCOME IN THE LIGHT OF PROVISIONS OF SECTION 2(24)(X) OF THE ACT AND FINAL IZED THE ASSESSMENT AT TOTAL TAXABLE INCOME OF RS.8,02,880. 4. THE AGGRIEVED ASSESSEE FILED AN APPEAL BEFORE TH E COMMISSIONER OF INCOME TAX(A)-XII, NEW DELHI WHICH WAS DISMISSED BY THE IMPUGNED ORDER UPHOLDING THE FINDINGS AND ACTION OF THE ASSESSING OFFICER. NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THIS TRIBUNAL. ITA NO.3217/DEL/2010 ASSTT.YEAR: 2006-07 3 GROUND NO.1, 2 & 3 5. ALL THESE GROUNDS TAKEN BY THE ASSESSEE PERTAIN TO THE DISALLOWANCE OF RS.67,413 MADE OUT OF GENERATOR EXPENSES AND PACKIN G MATERIAL EXPENSES ON ESTIMATED BASIS. THE ASSESSEES REPRESENTATIVE SUB MITTED THAT THE ASSESSING OFFICER MERELY NOTED THAT SOME OF THE EXPENSES WERE NOT PROPERLY VOUCHED AND HE MADE 5% DISALLOWANCE ON ESTIMATED BASIS WITH A HYPOTHETICAL REASONING THAT THE SAME HAS BEEN MADE TO PLUG THE P OSSIBLE LEAKAGE OF REVENUE. HE FURTHER SUBMITTED THAT THE ASSESSING O FFICER MADE THIS DISALLOWANCE ON ESTIMATED BASIS WITHOUT POINTING OU T EVEN A SINGLE INSTANCE AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. HE ALSO CONTENDED THAT THE ASSESSING OFFICER IGNORED THE FACT THAT COMPARISON OF GENERATOR EXPENSES WITH HEATING, LIGHTING AND POWER EXPENSES WAS NOT J UST AND PROPER. 6. LD. DR VEHEMENTLY CONTENDED THE ABOVE SUBMISSION S AND REPLIED THAT THE ASSESSEE DID NOT SUBMIT THE REQUIRED BILLS AND VOUCHERS RELATED TO THE EXPENDITURE CLAIMED BY HIM. CONSEQUENTLY, THE ASSE SSING OFFICER RIGHTLY NOTICED THAT SOME OF THE EXPENSES WERE NOT PROPERLY VOUCHED AND TO PLUG THE POSSIBLE LEAKAGE TO REVENUE, HE RIGHTLY MADE A DISA LLOWANCE OF 5% OF THE EXPENSES ON ESTIMATED BASIS IN THIS REGARD. THE DR ALSO SUBMITTED THAT NEITHER BEFORE THE AUTHORITIES BELOW NOR BEFORE THI S TRIBUNAL, THE ASSESSEE FURNISHED THE REQUIRED DETAILS PERTAINING TO THE UN VOUCHED PART OF EXPENSES ITA NO.3217/DEL/2010 ASSTT.YEAR: 2006-07 4 CLAIMED. THE DR SUPPORTED THE ORDERS OF THE AUTHOR ITIES BELOW WITH THE ABOVE SUBMISSIONS. 7. ON CAREFUL CONSIDERATION OF THE SUBMISSIONS AND PERUSAL OF THE RECORD BEFORE US, WE OBSERVE THAT THE ASSESSING OFFICER MA DE THE DISPUTED DISALLOWANCE OF 5% ON ESTIMATED BASIS AS CLAIMED BY THE ASSESSEE ON GENERATOR AND PACKING MATERIAL EXPENSES. IN THE AS SESSMENT ORDER, THE ASSESSING OFFICER HELD THAT SOME OF THE EXPENSES WE RE NOT PROPERLY VOUCHED AND HE MADE THE DISALLOWANCE ON ESTIMATED BASIS THA T WAS 5% OF THE CLAIMED AMOUNT. 8. THE COMMISSIONER OF INCOME TAX(A) UPHELD THE ASS ESSMENT ORDER WITH THE FOLLOWING OBSERVATIONS AND FINDINGS:- WHILE MAKING THE SAID DISALLOWANCE A.R. HAS BROUGHT ON RECORD THAT THE ASSESSEE COMPANY IS A P RIVATE LIMITED COMPANY & ENGAGED IN THE BUSINESS OF MANUFACTURING OF KATTHA & HAVE A TURN OVER OF RS. 2 .04 CRORE. DURING THE YEAR ASSESSEE HAD CLAIMED GENERA TOR EXPENSES' OF RS. 11,46,390/- AND PACKING MATERIAL O F RS. 2,01,866/-. A.O. OBSERVED THAT:- ''ON GOING THROUGH THE RELEVANT BILLS AND VOUCHERS IN RESPECT OF ABOVE, IT WAS FURTHER NOTICED THAT SO ME OF THE EXPENSES WERE NOT PROPERLY VOUCHED HENCE, TO PL UG THE POSSIBLE LEAKAGES OF REVENUE, I HEREBY DISALLOW RS. 67,413/- I.E. 5% OF THE ABOVE MENTIONED EXPENSES AN D ADD BACK TO THE INCOME OF THE YEAR. ' SINCE A.O. HAD BROUGHT NO SPECIFIC INSTANCES ON RECORD, DURING THE COURSE OF APPELLATE PROCEEDINGS , ASSESSEE'S BOOKS OF ACCOUNTS WERE SOUGHT FOR VERIFI CATION ITA NO.3217/DEL/2010 ASSTT.YEAR: 2006-07 5 ALONG WITH DETAILS/GENERATOR EXPENSES/ELECTRICITY EXPENSES. AS IS ESTABLISHED FROM ORDER SHEET ENTRY 07.01.2010 THE ASSESSEE DID NOT PRODUCE THE VOUCHER S IN ORIGINAL AND HENCE THE SAME COULD NOT BE VERIFIED. EVEN DURING THE ASSESSMENT PROCEEDING, EXPENSES OF RS. 11,46,390/- COULD NOT BE VERIFIED FOR WANT OF VOUCH ERS / BILLS ETC., IT IS PERTINENT TO NOTE THAT ASSESSEE H AS CLAIMED 'GENERATOR EXPENSES' AS FOLLOWS AS AGAINST POWER EXPENSES AS BELLOW:- MONTHWISE ANALYSIS OF POWER COST AND PROUCTION GENERATOR EXPENSES MONTH GENERATOR HEATING, LIGHTING & EXPENSE POWER E XPENSE APRIL RS. 74,672/- RS 142,459/- MAY RS. 76,168/- RS 169,973/- JUNE RS. 82,450/ R S 158,868/- JULY RS. 98,430/- R S 155,221/- AUGUST RS.115,800/- RS 118,274/ - SEPTEMBER RS.104,6301- RS 210,102/ - OCTOBER RS. 129,990/- RS 234,477/ - NOVEMBER RS. 86,660/- RS 182,593/- DECEMBER RS. 136,180/- RS 148,175 /- JANUARY RS. 86,660/- RS 127,775/- FEBRUARY RS. 68,090/- RS 116,645/- MARCH RS. 86,660/- RS 85,358/- GRAND TOTAL RS. 11,46,390/- RS 1 ,848,920/- __________________________________________________ PERUSAL OF THE CHART AND RECORDS ESTABLISHES THAT ASSESSEE HAS CLAIMED TO HAVE BASED DIESEL FREQUENTL Y. HOWEVER, THE 'GENERATOR EXPENSES' ARE ALSO HIGHER I N THE MONTH IN WHICH POWER EXPENSES ARE ALSO HIGHER. THIS COULD NOT BE, IF THE ELECTRICITY CONSUMPTION IS MORE THAN , THE GENERATOR EXPENSE IN THAT MONTH WOULD BE LESS, BECA USE GENERATOR IS USED ONLY WHEN THERE IS NO ELECTRICITY AVAILABLE AND HENCE AS SUCH THE STAND OF THE A.O. REGARDING THE SAME IS ACCEPTED. ITA NO.3217/DEL/2010 ASSTT.YEAR: 2006-07 6 THE STAND OF A.O. REGARDING 'PACKING MATERIAL EXPEN SES' CLAIM AND THE DISALLOWANCE ON ESTIMATE IS UPHELD BE CAUSE THE ASSESSEE HAS CLAIMED TO HAVE SPENT RS. 2,01,866/- O N ACCOUNT OF PACKING MATERIAL WHEREAS THE PURCHASE IS NOT FULLY VERIFIABLE 5% ON ESTIMATE BEING VERY REASONABLE. HENCE, THE DI SALLOWANCE MADE BY THE A.O. IS CONFIRMED. 9. IN VIEW OF ABOVE, IT IS APPARENT THAT THE ASSESS EE DID NOT FURNISH ORIGINAL BILLS AND VOUCHERS BEFORE THE ASSESSING OF FICER AND THE COMMISSIONER OF INCOME TAX(A). AFTER DUE EXAMINATI ON OF BOOKS OF ACCOUNTS, DISALLOWANCE WAS MADE BY THE ASSESSING OF FICER. SINCE THE LD. AR DID NOT PLACE BEFORE US ANY SUBSTANTIAL MATERIAL TO CONTROVERT THE FINDINGS OF THE ASSESSING OFFICER AND THE LD. COMMI SSIONER OF INCOME TAX(A) AND WE ARE UNABLE TO SEE ANY MATERIAL OR SUB MISSIONS OF THE AR THAT THE REQUIRED BILLS AND VOUCHERS RELATED TO EXPENSES OF GENERATOR AND PACKING MATERIAL WERE PLACED BEFORE THE AUTHORITIES BELOW, THEREFORE, WE ARE UNABLE TO FIND ANY SUBSTANCE IN THE CONTENTIONS OF THE ASS ESSEE. 10. IN THESE CIRCUMSTANCES, THERE IS NO REASON BEF ORE US TO INTERFERE WITH THE FINDINGS OF THE AUTHORITIES BELOW AND WE HOLD T HAT THIS APPEAL IS DEVOID OF MERITS AND DESERVES TO BE DISMISSED ON ALL THE T HREE GROUNDS. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ITA NO.3217/DEL/2010 ASSTT.YEAR: 2006-07 7 ORDER PRONOUNCED IN THE OPEN COURT ON 5.12.2012. SD/- SD/- (A.N. PAHUJA) (CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 5 TH DECEMBER 2012 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR