Manoj Kumar Agarwalla, Dhanbad V. ACIT, Dhanbad

ITA 34/RAN/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4361 (ITAT-RANCHI)
• Duration Of Justice: 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 21-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HARSHWARDHAN PAL
• Assessee Lawyers: M K CHOUDHURY
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI CIRCUI T BENCH, RANCHI (BEFORE SHRI P.K.BANSAL, HONBLE A.M.& SHR I D,T. GARASIA, HONBLE J.M.) I.T.A. NOS. 34 & 35/RAN/2013 : ASSESSMENT YEARS : 2007-08 & 2008-09 SHRI MANOJ KUMAR AGARWALLA, DHANBAD -VS- ACIT, CIRCLE-II, DHANBAD (APPELLANT) (RESP ONDENT) APPELLANT BY : SHRI M.K.CHOUDHURY, ADVOCATE RESPONDENT BY : SHRI HARSHWARDHAN PAL, SR.D.R. DATE OF CONCLUDING THE HEARING : 30.04.2013 DATE OF PRONOUNCING THE ORDER : 30.04.2013 O R D E R PER BENCH : THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAIN ST THE ORDERS OF THE CIT(A), DHANBAD BOTH DATED 18.01.2013 FOR THE ASSES SMENT YEARS 2007-08 AND 2008-09 RESPECTIVELY. AS BOTH THE APPEALS RELATES T O THE SAME ASSESSEE, THEREFORE, FOR THE SAKE OF CONVENIENCE, THESE ARE DISPOSED OFF BY THIS COMMON ORDER. ITA NO.34/RAN/2013 : ASSESSMENT YEAR 2007-08 2. THE ASSESSEE HAS TAKEN AS MUCH AS THREE GROUNDS OF APPEAL BUT THE ONLY ISSUE INVOLVED IN ALL THESE GROUNDS RELATE TO THE D ISALLOWANCE MADE BY THE ASSESSING OFFICER OUT OF THE EXPENSES INCURRED UNDE R THE DIFFERENT HEADS DETAILED AS UNDER: I) OUT OF PURCHASE OF COAL RS. 70,000/- II) OUT OF TRANSPORTATION CHARGES RS. 60,000/- III) OUT OF TRANSPORTING, LOADING & UNLOADING RS.1 ,50,000/- 3. BRIEF FACTS OF THIS CASE ARE THAT THE ASSESSEE D ERIVED THE INCOME FROM TRANSPORTATION, PAY LOADER HIRING AND TRUCK PLYING ETC. THE ASSESSEE FILED THE 2 RETURN ALONG WITH TAX AUDIT REPORT IN RESPECT OF PR OPRIETORSHIP CONCERN. THE ASSESSING OFFICER NOTED THE PROFIT RATIO FOR THE AS SESSMENT YEARS 2005-06, 2006- 07 AND 2007-08 AND NOTED THAT DURING THE YEAR 2005- 06, THE PROFIT WAS 2.32%. THE NET PROFIT DURING THE YEAR 2006-07 WAS 2.11% AN D 2007-08 THE PROFIT WAS 2.31%. THE ASSESSING OFFICER NOTED THAT THE TRANSPO RTATION CHARGES IN RESPECT OF COAL PURCHASE FROM M/S. RAMLAL AGARWAL, M/S. RAJKOT COKE SUPPLIERS PVT. LTD. PAID THE TRANSPORTATION CHARGES IN CASH AND THROUGH SELF-GENERATED VOUCHERS. SIMILARLY, HE HAS NOTED THAT THE ASSESSEE HAS INCUR RED THE EXPENSES FOR TRANSPORTING, LOADING AND UNLOADING, ETC. FOR SUPPL Y BEING RECEIVED FROM M/S. SHREE RANI SATI CARRIERS IN CASH THROUGH SELF-GENER ATED INTERNAL VOUCHERS. THE ASSESSING OFFICER, THEREFORE, DISALLOWED 10% OF THE TOTAL EXPENDITURE CLAIMED UNDER THE HEAD PURCHASE OF COAL, TRANSPORTATION CH ARGES AND TRANSPORTATION, LOADING AND UNLOADING CHARGES AMOUNTING TO RS.70,0 00/-, RS.60,000/- AND RS.1,50,000/-. WHEN THE MATTER WENT BEFORE THE CIT( A), THE CIT(A) ALSO REDUCED THE DISALLOWANCE TO LUMP SUM AMOUNT TO RS.1 LAKH JU ST TO COVER POSSIBLE INFLATION OF EXPENSES OR LEAKAGE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH THE ORDERS OF AUT HORITIES BELOW. WE NOTED FROM THE ASSESSMENT ORDER THAT THE ASSESSEE HAS GIV EN COMPLETE DETAILS OF THE EXPENSES INCURRED BY HIM. THE ASSESSEE HAS MAINTAIN ED THE REGULAR BOOKS OF ACCOUNTS. THE BOOKS OF ACCOUNTS WERE DULY AUDITED. THE ASSESSING OFFICER DID NOT POINT OUT ANY SPECIFIC EXPENDITURE WHICH IS EIT HER NOT GENUINE OR HAS NOT BEEN INCURRED GENUINELY FOR THE PURPOSE OF THE ASSESSEE BUT DISALLOWED 10% OF THE EXPENSES UNDER EACH HEAD. EVEN THE BOOKS OF ACCOUNT S OF THE ASSESSEE WERE ALSO NOT REJECTED. THE CIT(A) ALSO JUST REDUCED THE DISA LLOWANCE TO RS.1 LAKH. THE ASSESSEE HAS ALSO NOT SUBMITTED THE BILLS OF THE EX PENSES AND ALL THE EXPENSES ARE ALSO NOT DULY VERIFIED. KEEPING IN VIEW OF THE FACT S AND CIRCUMSTANCES OF THE CASE, 3 WE REDUCE THE DISALLOWANCE TO RS.50,000/- AND THAT WILL BE, IN OUR OPINION, REASONABLE. THUS, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 35/RAN/2013 : ASSESSMENT YEAR 2008-09 5. THE FIRST ISSUE INVOLVED IN THIS APPEAL FILED BY THE ASSESSEE RELATES TO THE DISALLOWANCE OF 20% OUT OF MOTOR CAR EXPENSES. 6. THE LD. A.R. BEFORE US VEHEMENTLY CONTENDED THAT THE ASSESSEE IS IN PROPRIETORSHIP BUSINESS OF FOUR CONCERNS. THERE IS ONE CAR BEING USED FOR THE BUSINESS. THE CAR IS USED BY THE ASSESSEE AS WELL A S THE EMPLOYEES. THERE IS NO ELEMENT OF PERSONAL USE INVOLVED IN THE CAR AND THE REFORE NO DISALLOWANCE SHOULD BE MADE. IT WAS POINTED OUT THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2007-08 AND IN THE SUCCEEDING ASSESSMENT YEAR 2009- 10 AND 2010-11, NO SUCH DISALLOWANCE HAS BEEN MADE, EVEN THOUGH THE ASSESSM ENT WERE COMPLETED U/S.143(3). THE LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDER OF THE ASSESSING OFFICER. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME. WE HAVE ALSO GONE THROUGH THE ORDERS OF THE TAX AUT HORITIES BELOW. WE NOTED THAT THE ASSESSEE IS ENGAGED IN THE PROPRIETORSHIP BUSIN ESS OF FOUR CONCERNS, FROM WHICH THE ASSESSEE HAS SHOWN THE INCOME. THE ASSESS EE HAS ONLY ONE CAR. THE ASSESSEE IS OWNING THE CAR AND CLAIMED THAT IT IS B EING USED FOR THE PURPOSE OF BUSINESS BUT THERE IS NO CAR WHICH IS BEING MAINTAI NED BY THE ASSESSEE INDIVIDUALLY FOR THE PERSONAL PURPOSE. PERSONAL USE OF THE CAR HAS NOT BEEN DENIED, MAY BE PARTLY. UNDER SECTION 37 OF THE INCOME-TAX A CT, ANY EXPENDITURE WHICH IS INCURRED FOR PERSONAL USE OF THE ASSESSEE IS NOT AL LOWABLE IN COMPUTING THE INCOME CHARGEABLE IN THE PROFIT AND GAINS OF THE BU SINESS OR PROFESSION. THE FACT THAT IN THE EARLIER YEAR AND SUBSEQUENT YEAR, THE A SSESSING OFFICER DID NOT MAKE ANY DISALLOWANCE, IN OUR OPINION, THE ASSESSING OF FICER WILL NOT BE DEBARRED TO MAKE THE DISALLOWANCE DURING THE YEAR, IF THE CAR H AS BEEN USED FOR PERSONAL 4 PURPOSE. BEFORE US ALSO, NO EVIDENCE HAS BEEN FILED , WHICH MAY PROVE THAT THE ASSESSEE WAS HAVING THE CAR SEPARATELY BEING USED F OR PERSONAL PURPOSE OR BY HIS FAMILY MEMBERS. WE CONFIRM DISALLOWANCE BUT TO THE EXTENT OF 10% OF THE CAR REPAIR AND MAINTENANCE EXPENSES. THUS, THIS GROUND IS PARTLY ALLOWED. 8. THE GROUND RELATES TO THE ADDITION OF RS. 34,701 /-. THE FACTS RELATING TO THIS GROUND ARE THAT AS PER THE BOOKS OF THE ASSESSEE, T HE CREDIT BALANCE OF M/S. PATHARDIH PETROL SUPPLY COMPANY WAS RS.3,47,719/- W HILE THESE CONCERNS SHOWN BALANCE AT RS.31338/-. WHEN THE ASSESSING OFFICER A SKED FOR THE EXPLANATION, THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS NEVER MADE THE PAYMENT TO THE PARTY, WHILE THIS PARTY HAS SHOWN THE PAYMENT IN CASH AMOU NTING TO RS.34,711/-, RS.19,000/- ON 04.04.2007 AND RS.15,711/- ON 05.04. 2007. THE WHOLE OF THE PAYMENT OF THIS PARTY IS MADE ON PAYMENT TO PAYMENT BASIS THROUGH CHEQUES. THE ASSESSING OFFICER NOT BEING SATISFIED MADE THE ADDI TION OF RS.34,711/-. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) CONFIRMED THE ADDITION. 9. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CON SIDERED THE SAME. WE NOTED THAT THE ADDITION HAS BEEN MADE BY THE ASSESS ING OFFICER ON THE BASIS OF THE CONFIRMATION GIVEN BY THIRD PARTY AT THE BACK OF TH E ASSESSEE. THE ASSESSEE, IN OUR OPINION, CANNOT BE HELD RESPONSIBLE IN RESPECT OF E NTRIES MADE BY THE THIRD PARTIES IN ITS BOOKS OF ACCOUNTS. THE THIRD PARTY HAS NOT B EEN PRODUCED BEFORE THE ASSESSEE FOR CROSS-EXAMINATION. EVEN THERE IS NO CO GENT EVIDENCE OR MATERIAL WAS BROUGHT BEFORE US EXCEPT THE CONFIRMATION OF THE PA RTY THAT THE ASSESSEE HAS ACTUALLY MADE THE CASH PAYMENT TO THE THIRD PARTY. UNDER THESE FACTS, WE DELETE THE ADDITION. THUS, THE GROUND NO.2 STANDS ALLOWED. 10. GROUND NO.3 RELATES TO THE ADDITION OF EMPLOYEE S CONTRIBUTION TO PROVIDENT FUND AND EMPLOYEES STATE INSURANCE AMOUNTING TO RS .6,344/-. 5 11. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD AND WE NOTED THE SUBMISSIONS OF THE LD. A.R. WE NOTED THAT THE EMPLOYEES CONTRIBUTION HAS BEEN PAID BY THE ASSESSEE, NOT WIT HIN THE DUE DATE BUT BEFORE THE FILING OF THE RETURN UNDER INCOME TAX ACT. IN VIEW OF THIS FACT, FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT-VS-ALOX EXTRUSIONS LTD. 319 ITR 306 (SC), WE DELETE THE DISALLOWANCE. THUS, THIS GROUND STANDS ALLOWED. 12. GROUND NO.4 RELATES TO THE CHARGING OF THE INTE REST UNDER SECTION 234B. THIS GROUND BEING CONSEQUENTIAL IN NATURE, WE, THEREFORE , DIRECT THE ASSESSING OFFICER TO RE-COMPUTE THE INTEREST CHARGED UNDER SECTION 23 4B, AFTER GIVING EFFECT TO OUR ORDER. 13. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 30 TH APRIL, 2013. SD/- SD/- [D.T.GARASIA] [P.K.BANSAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH APRIL, 2013 COPY OF ORDER FORWARDED TO : 1. SHRI MANOJ KUMAR AGARWALLA, DHANBAD 2. ACIT, CIRCLE-II, DHANBAD 3. C.I.T.(A), 4. THE C.I.T., RANCHI 5. THE D.R., I.T.A.T., TRUE COPY, BY ORDER, SR. PRIVATE SECRETARY, ITAT, RANCHI [MST, SR.PS]