M/s Vardhman Industries, Kanpur V. Astt. Commissioner of Income Tax-1, Kanpur

ITA 327/LKW/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7164 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 19-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Non compliance; Set aside
• Section: 133(6)

Judgement Text

I.T.A. NO.327/LKW/2017 ASSESSMENT YEAR:2013-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.327/LKW/2017 ASSESSMENT YEAR:2013-14 M/S VARDHMAN INDUSTRIES, 112/109, POKHARPUR, KANPUR. PAN:AAAFV 6399 H VS. A.C.I.T.-1, KANPUR. (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LEARNED CIT(A)-1, KANPUR DATED 01/03/2017 PERTAINING TO ASS ESSMENT YEAR 2013- 2014. IN THIS APPEAL THE ASSESSEE HAS RAISED THE F OLLOWING GROUNDS OF APPEAL: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED IN CONFIRMING ADDITION OF RS.9,000.00 ON ACCOUNT OF NON-VERIFICATION FROM SPECTRUM METAL BUILDING SYSTE M AS THE NOTICE SENT UNDER SECTION 133(6) OF THE ACT WAS RET URNED BACK BY THE POSTAL AUTHORITIES WITH THE REMARK LEFT. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED IN CONFIRMING AD-HOC DISALLOWANCE AT 20% ON ACCOUNT OF TRAVELLING EXPENSES OF RS.1,39,303.00. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED IN CONFIRMING AD-HOC DISALLOWANCE AT 20% ON ACCOUNT OF TELEPHONE AND MOBILE EXPENSES OF RS.44,075.00. APPELLANT BY SHRI ASHISH JAISWAL, ADVOCATE RESPONDENT BY SHRI C. K. SINGH, D.R. DATE OF HEARING 22/07/2019 DATE OF PRONOUNCEMENT 26 / 07 /201 9 I.T.A. NO.327/LKW/2017 ASSESSMENT YEAR:2013-14 2 4. THAT THE AD-HOC DISALLOWANCE CONFIRMED BY THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS) ARE HIGHLY EXC ESSIVE. 5. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED IN NOT PROVIDING PROPER OPPORTUNITY TO TH E APPELLANT. 2. AT THE OUTSET, LEARNED A. R. SUBMITTED THAT LEAR NED CIT(A) HAS WRONGLY UPHELD THE ADDITION OF RS.9,000/- DUE TO OU TSTANDING BALANCE OF A CREDITOR AND FOR WHICH NOTICE U/S 133(6) HAD RETURN ED BACK. IT WAS SUBMITTED THAT THE OUTSTANDING AMOUNT WAS ONLY FOR DIFFERENCE IN VAT RATES. OUR ATTENTION WAS INVITED TO P.B. PAGE 11 WHERE COP Y OF INVOICE OF SUPPLIER WAS PLACED AND WHERE THE SUPPLIER HAD CONFIRMED ABO UT THE OUTSTANDING BALANCE. 3. AS REGARDS THE OTHER ISSUES, LEARNED A. R. SUBMI TTED THAT ASSESSING OFFICER HAD MADE AD HOC DISALLOWANCES WITHOUT PIN P OINTING ANY DISCREPANCY IN THE BOOKS OF ACCOUNT. IT WAS SUBMITTED THAT ALL BOOKS OF ACCOUNT, INCLUDING VOUCHERS, WERE PRODUCED BEFORE THE ASSESS ING OFFICER BUT THE ASSESSING OFFICER MADE THE DISALLOWANCE EQUIVALENT TO 20% OF THE EXPENSES. IT WAS SUBMITTED THAT CIT(A) HAS ALSO UPHELD THE AD DITION WITHOUT BRINGING ON RECORD ANY DISCREPANCY IN THE BOOKS. LEARNED A. R. IN THIS RESPECT RELIED ON A NUMBER OF CASE LAWS WHERE IT HAS BEEN HELD THA T AD HOC DISALLOWANCE, WITHOUT POINTING OUT ANY DISCREPANCY IN THE BOOKS O F ACCOUNT, IS NOT SUSTAINABLE. SPECIFIC RELIANCE WAS PLACED ON THE O RDER OF LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF BAJAJ AUTO CENTRE VS. I NCOME TAX OFFICER IN I.T.A. NO.722/LKW/2017. FURTHER RELIANCE WAS PLACED ON AN ORDER OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. S.S.P. (P ) LTD. (2011) 202 TAXMAN 386 (P&H). 4. THE LEARNED D.R. RELIED ON THE ORDERS OF THE AUT HORITIES BELOW. 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. AS REGARDS THE FIRST ADDITION OF RS.9,000/-, WE FIND THAT I.T.A. NO.327/LKW/2017 ASSESSMENT YEAR:2013-14 3 ASSESSING OFFICER HAD ISSUED NOTICE U/S 133(6) WHIC H WAS RETURNED WITH REMARKS LEFT. WE FIND THAT THERE IS NO OTHER BA SIS OF MAKING DISALLOWANCE OF RS.9,000/- EXCEPT THE ABOVE NON COMPLIANCE OF NO TICE U/S 133(6) OF THE ACT. THE COPY OF BILL OF SPECTRUM METAL BUILDING S YSTEM (THE CREDITOR) IS PLACED AT PAGE 11 OF THE PAPER BOOK, WHICH IS FOR AN AMOUNT OF RS.23,90,769/- WHEREIN THE CREDITOR HAS CONFIRMED A PAYMENT OF RS.23,81,768/- AND HAS FURTHER CONFIRMED THE BALANC E OUTSTANDING AMOUNT OF RS.9,001/-. THEREFORE, THE ADDITION SUSTAINED B Y LEARNED CIT(A) IS NOT JUSTIFIED AND THEREFORE, THE SAME IS DELETED AND GR OUND NO. 1 IS ALLOWED. 6. NOW COMING TO ADDITION SUSTAINED BY LEARNED CIT( A) ON ACCOUNT OF AD HOC DISALLOWANCE WHICH THE ASSESSEE HAD TAKEN VIDE GROUND NO. 2 & 3 OF THE APPEAL, WE FIND THAT THE ASSESSING OFFICER HAD MADE THESE DISALLOWANCES SIMPLY BY DISALLOWING 20% OF THE TOTAL EXPENDITURE CLAIMED AND NOWHERE HE HAS POINTED OUT ANY SPECIFIC DEFECT IN THE BOOKS OF ACCOUNT AND VOUCHERS. IN THE CASE OF BAJAJ AUTO CENTRE (SUPRA), THE LUCKN OW BENCH OF THE TRIBUNAL TAKING GUIDANCE FROM THE DECISION OF HON'BLE APEX C OURT IN THE CASE OF J.J. ENTERPRISES VS. CIT HAS HELD THAT ADDITION TO THE I NCOME OF THE ASSESSEE MADE ON THE BASIS OF PURE GUESS WORK WAS UNSUSTAINA BLE. SAME VIEW HAS BEEN TAKEN BY VARIOUS CO-ORDINATE BENCHES AND THE A D HOC ADDITIONS HAVE BEEN DELETED. RELYING ON VARIOUS JUDICIAL PRECEDEN TS ON THE ISSUE, WE SET ASIDE THE ORDER OF LEARNED CIT(A) AND DIRECT DELETI ON OF THESE AD HOC DISALLOWANCES. ACCORDINGLY, GROUND NOS. 2 & 3 OF T HE APPEAL ARE ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 26/07/2019) SD/. SD/. ( A. D. JAIN ) ( T. S. KAPOOR ) VICE PRESIDENT ACCOUNTANT MEMBER DATED:26/07/2019 *SINGH I.T.A. NO.327/LKW/2017 ASSESSMENT YEAR:2013-14 4 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSISTANT REGISTRAR