DCIT, New Delhi V. M/s Surya Finvest Pvt. Ltd., New Delhi

ITA 3260/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58845 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 14-03-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 16-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S MOHANTY
• Keywords: Reassessment proceedings
• Section: 37(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI G BENC H BEFORE SMT. DIVA SINGH, JM & SHRI A.N. PAHUJA, AM ITA NO.3260/DEL/2011 ASSESSMENT YEAR: 2003-04 DCIT, CIRCLE 9(1), ROOM NO.163, C.R. BUILDING, NEW DELHI V/S . M/S SURYA FINVEST PVT. LTD., B-9, MAYAPURI INDL., INDL. AREA, PHASE-I, NEW DELHI [PAN : AACCS 3012K] (APPELLANT) (RESPONDENT) ASSESSEE BY NONE REVENUE BY SMT. S. MOHANTY, DR DATE OF HEARING 14-03-2012 DATE OF PRONOUNCEMENT 14-03-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 16.06.2011 BY THE REVENUE AGAI NST AN ORDER DATED 03-03-2011 OF THE LEARNED CIT(A)-XII, DELHI R AISES THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN LAW AND MERIT OF THE CASE IN DELETING THE ADDITION OF ` ` 1,84,87,637/- MADE BY THE AO ON ACCOUNT OF JOB WORK EXPENSES. 2. THE APPELLANT CRAVES TO AMEND, MODIFY, ALTER, ADD OR FORGO ANY GROUND OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2. AT THE OUTSET, CONSIDERING THE NATURE OF ISSUE INVOLVED IN THE APPEAL, THE BENCH REJECTED THE REQUEST FOR ADJOURNM ENT ON BEHALF OF THE ASSESSEE AND PROCEEDED TO DISPOSE OF THE APPEAL AFT ER HEARING THE LD. DR. I.T.A. NO.3260/DEL./2011 2 3. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING AN INCOME OF ` `4,61,990/- FILED ON 02.12.2003 BY THE ASSESSEE, WA S PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961(HEREINAFTER REFERRED TO AS THE ACT). SUBSEQUENTLY, THE ASSESSING OFFICER (A.O. IN SHORT) NOTICED THAT THE ASSESSEE RECEIVED TOTAL CONTRACT RECEIPTS OF ` ` 2,49,74,892/- WHILE ONLY ` `2,13,38,693/- WERE OFFERED FOR TAX. ACCORDINGLY, AFTER RECORDING THE REASONS IN WRITING, THE AO ISSUED A NOTICE U/S 148 OF THE ACT ON 25.03.2010. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAD S HOWN INCOME OF ` `2,13,38,693/-[LY- ` 39,75,310/-] ON ACCOUNT OF JOB WORK WHILE EXPENSES CLAIMED WERE ` 2,08,76,701/-[LY- ` 33,38,076/-]. SINCE THERE WAS ABNORMAL INCREASE OF EXPENSES VIS-A-VIS IMMEDIATE PRECEDING YEAR AND THE ASSESSEE DID NOT FURNISH ANY JUSTIFICATION IN SUPPORT OF HUGE EXPENSES, THE AO DISALLOWED 10% OF THE OPERATING AND ADMINISTRATIVE EXPENSES, RESULTING IN ADDITION OF ` ``1,84,87,637/-. 4. ON APPEAL, THE LD. CIT(A) DELETED THE DISALLOWA NCE IN THE FOLLOWING TERMS:- 5.1 I HAVE GONE THROUGH THE SUBMISSIONS FILED BY THE APPELLANT AND I FIND THAT THE ESTIMATED ADDITION MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED AND JUST BECAUSE THE EXPENSES DEBI TED DURING THE CURRENT YEAR WERE MUCH HIGHER THAN WHAT HAD BEEN DE BITED IN THE IMMEDIATE PRECEDING YEAR CANNOT BE THE BASIS OF MAK ING SUCH A HUGE ADDITION. IN ORDER TO JUSTIFY SUCH A HUGE ADD ITION THE ASSESSING OFFICER IS SUPPOSED TO ESTABLISH THROUGH ENQUIRY THAT THE EXPENSES DEBITED ARE NOT GENUINE. IN THE ABSENCE O F SUCH EFFORT ON THE PART OF THE ASSESSING OFFICER THE ESTIMATED ADD ITION OF ` `1,84,87,637/- IS HEREBY DELETED. 5. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A).THE LD. DR MERELY SUPPOR TED THE ORDER OF THE AO. 6. WE HAVE HEARD THE LD. DR AND GONE THROUGH THE F ACTS OF THE CASE. WE FIND THAT THE AO MADE ESTIMATED DISALLOWANCE OF 10% OF THE EXPENSES ONLY ON THE GROUND THAT THERE WAS ABNORMAL INCREASE IN E XPENSES VIS--VIS PRECEDING YEAR. THE AO NOWHERE DOUBTED THE GENUINENESS OF TH E EXPENDITURE EVEN WHEN THE ASSESSEE SUBMITTED THE REQUISITE DETAILS FOR HI S VERIFICATION, AS MENTIONED BY I.T.A. NO.3260/DEL./2011 3 THE AO IN THE ASSESSMENT ORDER.. SECTION 37(1) OF T HE ACT PROVIDES FOR ALLOWANCE OF ANY EXPENDITURE (NOT BEING EXPENDITURE OF THE NA TURE DESCRIBED IN SECTIONS 30 TO 36 AND NOT BEING IN THE NATURE OF CAPITAL EXPEND ITURE OR PERSONAL EXPENSES OF THE ASSESSEE), LAID OUT OR EXPENDED WHOLLY AND EXCL USIVELY FOR THE PURPOSES OF THE BUSINESS OR PROFESSION CARRIED ON BY THE ASSESS EE. THE APPROACH OF THE AO IN MAKING ESTIMATED DISALLOWANCE, WITHOUT EVEN PINP OINTING THE SPECIFIC ITEMS OF EXPENDITURE , WHICH WERE NOT SUPPORTED BY RELEVANT BILLS/VOUCHERS OR WHICH WERE NOT VERIFIABLE, IS NOT IN ACCORDANCE WITH LAW. WITH OUT SPECIFYING THE ITEMS OF EXPENDITURE, WHICH ACCORDING TO THE AO ARE NOT CON NECTED WITH THE BUSINESS OF THE ASSESSEE OR ARE NOT VERIFIABLE, IS HIGHLY UNREA SONABLE. SINCE THE REVENUE HAVE NOT PLACED ANY MATERIAL BEFORE US ANY MATERIAL , CONTROVERTING THE AFORESAID FINDINGS OF THE LD. CIT(A) SO AS TO ENABLE US TO TA KE A DIFFERENT VIEW IN THE MATTER, WE ARE NOT INCLINED TO INTERFERE. IN VIEW THEREOF, GROUND NO.1 IS DISMISSED. 7. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO.2 IN THE APPEAL, ACCORDINGLY TH IS GROUND IS DISMISSED. 8 NO OTHER SUBMISSION OR ARGUMENT WAS R AISED BEFORE US. 9. IN RESULT, APPEAL IS DISMISSED. SD/- SD/- (DIVA SINGH) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. M/S SURYA FINVEST PVT. LTD., B-9, MAYAPURI IN DL., INDL. AREA, PHASE-I,NEW DELHI. 2. DCIT, CIRCLE 9(1), ROOM NO.163, C.R. BUILDING, NEW DELHI 3. CIT CONCERNED 4. CIT(A)-XII, NEW DELHI 5. DR, ITAT,G BENCH, NEW DELHI ORDER PRONOUNCED IN OPEN COURT I.T.A. NO.3260/DEL./2011 4 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI