The ITO, Ward-5(1), Baroda V. Shri Pokhraj P.Doshi, Baroda

ITA 3248/AHD/2008

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80478 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-10-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 22-09-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBE R AND SHRI ANIL CHATURVEDI, ACCOUNTAN T MEMBER INCOME TAX OFFICER, WARD-5(1), RACE COURSE CIRCLE, BARODA (APPELLANT) VS SHRI POKHRAJ P. DOSHI, NARSINHJI ESTATE, YAMUNA MILL ROAD, PRATAP NAGAR, BARODA PAN: ABOPD 2129 A (RESPONDENT) REVENUE BY: SHRI B.L. YADAV, SR.D.R. ASSESSEE BY: SHRI PARIN SHAH, A.R. DATE OF HEARING : 16-10-2014 DATE OF PRONOUNCEMENT : 31-10-20 14 / ORDER PER : ANIL CHATURVEDI, ACCOUNTANT MEMBER:- THIS IS THE REVENUES APPEAL AGAINST THE ORDER OF L D. CIT(A)-V BARODA DATED 07-07-2008 FOR A.Y. 2005-06. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL STATED TO BE ENGAGED I N THE BUSINESS OF TRADING OF IRON AND STEEL ITEMS. HE FILED HIS RETURN OF INC OME FOR AY 2005-06 ON ITA NO. 3248/AHD/2008 ASSESSMENT YEAR 2005-06 ITA NO. 3248/AHD/2008 A.Y. 2005-06 ITO VS. POKHRAJ P. DOSHI 2 30.10.2005 DECLARING TOTAL INCOME OF RS 1,96,710/- . THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U /S 143(3) VIDE ORDER DATED 31.12.2007 AND THE TOTAL INCOME WAS DETERMINED AT R S. 46,81,638/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEF ORE LD. CIT(A) WHO VIDE ORDER DATED 7.7.2003 PARTLY ALLOWED THE APPEAL OF T HE ASSESSEE. AGGRIEVED BY THE ORDER OF LD. CIT(A) ASSESSEE AND REVENUE PREFERRED APPEAL BEFORE HONBLE TRIBUNAL WHO VIDE COMBINED ORDER DATED 4.1.2013 IN ITA NO 3248/AHD/2008 DISMISSED THE APPEAL OF THE REVENUE. THEREAFTER REV ENUE PREFERRED AN MA (MA NO 156/AHD/2013) WHEREBY THE ORDER IN ITA 3248/AHD/ 2013 WAS RECALLED TO DECIDE GROUND NO 3 OF REVENUE'S APPEAL WHICH INADVE RTENTLY REMAINED TO BE DISPOSED. THUS THE PRESENT APPEAL OF THE REVENUE IS FOR THE LIMITED PURPOSE OF DISPOSING GROUND NO 3 WHICH READS AS UNDER: 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION ON DISALLOWANCES OF EXPENSES OF M/S. KAMAL STEEL & ENG. OF RS. 2,42,402/- 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS IN RESPECT OF EXPENSES OF M/S K AMAL STEEL AND ENG. CO. AO IN THE ORDER HAD NOTED THAT THE ASSESSEE DID NOT FU RNISH ANY DETAILS OF THE AGGREGATE EXPENSES OF RS 2,42,402/- AND THEREFORE A O DISALLOWED THE EXPENSES. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 7. 7.2008 DELETED THE ADDITION BY HOLDING AS UNDER: 7. NEXT GROUND OF APPEAL RELATES TO DISALLOWANCE O F RS,2,42,401/- IN RESPECT OF PAYMENTS MADE TO KAMAL STEEL & ENGINEERI NG CO. THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDIN GS COULD NOT FURNISH ANY DETAILS OF THESE EXPENSES AND WHY THEY WERE MAD E, AS REQUIRED BY THE AO BY ITS LETTER DATED 07.12.2007.IT HAS BEEN A RGUED THAT THE AO HAS MADE THIS ADDITION ON THE BASIS OF SHEER CONFUSION. IT IS ARGUED THAT THE APPELLANT HAD PRODUCED ALL THE BOOKS OF ACCOUNT INC LUDING LEDGER ACCOUNTS OF KAMAL STEEL & ENGG, CO. DURING THE COURSE OF ASS ESSMENT PROCEEDINGS. 7.1 I FIND THAT KAMAL ENGINEERING IS A PROPRIETARY CONCERN OF THE ASSESSEE. ALL THE RELEVANT BOOKS HAVE BEEN SUBMITTED BEFORE T HE ASSESSING OFFICER. THE CONCERN HAS AN INCOME OF RS 339,157 FOR THE YEA R FROM OTHER SOURCES AND MAJOR EXPENSES DEBITED AGAINST THIS RELATE TO S ALARY OF THE EMPLOYEES. ITA NO. 3248/AHD/2008 A.Y. 2005-06 ITO VS. POKHRAJ P. DOSHI 3 THESE EXPENSES BEING REGULAR EXPENSES TO RUN THE EX ISTING UNDERTAKING HAVE TO BE ALLOWED. THERE IS NOTHING TO PROVE THAT THE EXPENSES ARE NOT GENUINE. IN VIEW OF THIS, THE EXPENDITURE DISALLOWE D BY THE AO AMOUNTING TO RS. 2,42,401/- IS DELETED. 5. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 6. BEFORE US, LD DR POINTED TO THE FINDINGS AND THE SHOW CAUSE NOTICE ISSUED TO ASSESSEE WHEREBY ASSESSEE WAS ASKED TO FU RNISH THE DETAILS BUT IN THE ABSENCE OF THE DETAILS, AO DISALLOWED THE EXPENSES. BEFORE US, LD DR FURTHER SUBMITTED THE LD. CIT(A) MERELY ON THE BASIS OF SUB MISSION OF THE ASSESSEE AND WITHOUT ON THE BASIS OF ANY DOCUMENTARY EVIDENCE IN SUPPORT OF THE EXPENSES ALLOWED THE EXPENSES. HE THEREFORE SUBMITTED THAT I N SUCH A SITUATION THE AO WAS FULLY JUSTIFIED IN MAKING THE ADDITION AND THER EFORE THE ORDER OF AO NEEDS TO BE UPHELD. THE LD AR ON THE OTHER HAND REITERATED T HE SUBMISSIONS MADE BEFORE LD. CIT(A) AND SUPPORTED HIS ORDER. HE FURTHER SUBM ITTED THAT THE ASSESSEE HAD PRODUCED ALL THE BOOKS OF ACCOUNTS BEFORE AO AND TH EREFORE AO WAS NOT RIGHT IN STATING THAT THE DETAILS OF EXPENSES WERE NOT FURNI SHED BY THE ASSESSEE. HE FURTHER POINTED TO PAGE 70 TO 75 THE COPY OF THE LE DGER ACCOUNT OF KAMAL STEEL & ENGG. BEFORE US THE LD AR MADE AN ALTERNATE PLEA THAT THE EXPENSES HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS AND THEREFORE INSTEAD OF DISALLOWING THE ENTIRE EXPENSES, A REASONABLE ADHOC DISALLOWANCE BE MADE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE, IT IS AO'S CONTENTION THAT ASS ESSEE WAS SPECIFICALLY ASKED TO SUBMIT THE DETAILS OF EXPENSES BUT THE ASSESSEE COU LD NOT FURNISH THE DETAILS AND THEREFORE THE DISALLOWANCE OF EXPENSES OF RS 2,42,4 02/- WAS MADE BY THE AO. BEFORE US, THE LD AR SUPPORTED THE ORDER OF LD. CIT (A). DURING THE COURSE OF HEARING, A SPECIFIC QUERY WAS RAISED BY THE BENCH T O THE LD AR TO DEMONSTRATE THAT IT HAD FILED THE DETAILS OF EXPENSES, VOUCHERS OR ANY OTHER EVIDENCE BEFORE AO TO WHICH LD AR HAD ONLY REITERATED THAT THE BOOK S OF ACCOUNTS WERE PRODUCED BEFORE AO. THE LD. AR WAS THUS UNABLE TO CONTROVER T THE SUBMISSION OF LD. DR AND HE WAS ALSO NOT ABLE TO SATISFACTORILY DEMONSTR ATE WITH THE HELP OF ANY ITA NO. 3248/AHD/2008 A.Y. 2005-06 ITO VS. POKHRAJ P. DOSHI 4 MATERIAL THE FINDINGS OF THE AO. BEFORE US THE LD. AR APART FROM PLACING ON RECORD ONLY THE COPY OF THE LEDGER ACCOUNT OF THE E XPENSES HAS NOT PLACED ANY OTHER EVIDENCE OF EXPENSES LIKE VOUCHERS, BILLS ETC . THE PERUSAL OF THE LEDGER ACCOUNTS SHOWS THAT MOST OF THE EXPENSES HAVE BEEN INCURRED IN CASH. CONSIDERING THE FACT THAT THE PRESENT MATTER IS A R ECALLED AND OLD MATTER, THE FINDING OF LD. CIT(A) THAT THE GENUINENESS OF EXPE NSES HAS NOT BEEN DOUBTED AND IN THE ABSENCE OF FULL DETAILS, WE ARE OF THE V IEW THAT IN THE PRESENT CASE THE ENTIRE EXPENSES CANNOT BE ALLOWED IN TOTALITY. CON SIDERING THE TOTALITY OF THE FACTS, WE ARE THEREFORE OF THE VIEW THAT IN THE PRE SENT CASE, THE ENDS OF JUSTICE SHALL BE MET, IF THE DISALLOWANCE OF EXPENSES IS RE STRICTED TO RS. 1 LAC. WE THUS DIRECT ACCORDINGLY. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS PARTL Y ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (SHAILENDRA KR. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBMER ACCOUNTANT MEMBER AHMEDABAD : DATED 31/10/2014 A.K. / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,