M/s Janki Sons, Jalandhar V. The Joint Commissioner of Income Tax, Jalandhar city

ITA 340/ASR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8770 (ITAT-AMRITSAR)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-01-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 10-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR (CAMP AT JALANDH AR ) BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO.340(ASR)/2016 ASSESSMENT YEAR:2010-11 M/S. JANKI SONS, G.T.ROAD, JALANDHAR. PAN:AAEFJ-8527H VS. JT. CIT, RANGE-3, JALANDHAR CITY. (APPELLANT) (RESPONDENT) I.T.A NO.550(ASR)/2016 ASSESSMENT YEAR:2011-12 M/S. JANKI SONS, G.T.ROAD, JALANDHAR. PAN:AAEFJ-8527H VS. ASST. CIT, RANGE-III, JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SANDEEP VIJH (CA) RESPONDENT BY: SH. BHAWANI SHANKAR (DR.) DATE OF HEARING: 20.01.2017 DATE OF PRONOUNCEMENT: 21.02.20 17 ORDER PER T. S. KAPOOR (AM): THESE ARE TWO APPEALS FILED BY ASSESSEE AGAINST THE SEPARATE ORDERS OF LD. CIT(A), JALANDHAR, DATED10.05.2016 & 29.08.2 016, FOR ASST. YEARS: 2010-11 & 2011-12. 2. GROUND NO.1, IN BOTH APPEALS IS SIMILAR WHERE IN IN ITA NO.340(ASR)/2016, THE ASSESSEE IS AGGRIEVED WITH TH E CONFIRMATION OF ITA NOS.3 40 & 550(ASR)/2016 ASST. YEARS: 2010-11 & 2011-12 2 DISALLOWANCE OUT OF FORWARDING & DELIVERY EXPENSES TO THE EXTENT OF RS.20% OF SUCH EXPENSES WHEREAS IN ITA NO.550(ASR)/ 2016, THE ASSESSEE IS AGGRIEVED WITH THE ACTION OF LD. CIT(A), BY WHIC H HE HAS SUSTAINED SIMILAR ADDITION TO THE EXTENT OF RS.2,00,000/- OUT OF RS.4,16,515/-. IN ITA NO.550(ASR)/2016, THE ASSESSEE HAS FURTHER TAKE N A GROUND OF APPEAL, BY WHICH THE ASSESSEE IS AGGRIEVED WITH THE CONFIRMATION OF ACTION OF ASSESSING OFFICER WHEREIN HE HAD MADE A D ISALLOWANCE OF RS.30,000/- OUT OF THE EXPENSES CLAIMED UNDER THE H EAD STACKING & STORAGE, DEMONSTRATION EXPENSES, ENTERTAINMENT EXPE NSES ETC. 3. THESE APPEALS WERE HEARD TOGETHER, THEREFORE, FO R THE SAKE OF CONVENIENCE A COMMON AND CONSOLIDATED ORDER IS BEIN G PASSED. 4. AT THE OUTSET, THE LD. AR FILED A COPY OF ITAT O RDER DATED 18.10.2016, WHEREIN SIMILAR ADDITIONS WERE DEALT WI TH BY THE HONBLE TRIBUNAL WHICH HAD ALLOWED THE APPEALS OF ASSESSEE PARTLY. 5. WITHOUT PREJUDICE TO THE ABOVE TRIBUNAL ORDER, THE AR SUBMITTED THAT THE ASSESSEE DURING ASSESSMENT PROCEEDINGS HAD PRODUCED VOUCHERS FOR FORWARDING DELIVERY EXPENSES, THE PAYMENTS WERE MADE TO FOUR WHEELERS/TEMPO FROM WHICH REGULAR BILLS WERE NOT AV AILABLE AND PAYMENTS WERE EVIDENCED BY SELF MADE VOUCHERS AS RE GULAR BILLS ARE NOT ISSUED BY THEM. 6. THE LD. AR SUBMITTED THAT THOUGH IN SOME OF CASE S REGULAR BILLS WERE NOT AVAILABLE, HOWEVER, THE RATIO OF EXPENSES INCURRED BY ASSESSEE ITA NOS.3 40 & 550(ASR)/2016 ASST. YEARS: 2010-11 & 2011-12 3 UNDER THESE HEADS HAD IN FACT CAME DOWN. IT WAS SUB MITTED THAT HONBLE ITAT, AMRITSAR BENCH IN THE CASE OF M/S MAYOR & COM PANY, IN ITA NO.74(ASR)/2009 FOR ASST. YEAR 2004-05 HAD REDUCED THE DISALLOWANCE TO 5% AND THEREFORE, KEEPING IN VIEW THE FACTS AND CIR CUMSTANCES OF THE CASE, IT WAS ARGUED THAT THE DISALLOWANCE SUSTAINED BY LD. CIT(A), BE REDUCED TO 5%. 7. THE LD. DR, ON THE OTHER HAND, HEAVILY PLACED HI S RELIANCE ON THE ORDER OF AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT IN ASST. YE AR: 2009-10, SIMILAR DISALLOWANCE WERE SUSTAINED BY LD. CIT(A) AND HONB LE TRIBUNAL VIDE ORDER DATED 18.10.2016 HAS REDUCED THE DISALLOWANCE OF 20 % TO 10% BY HOLDING AS UNDER: 8. WE HAVE GONE THROUGH THE RECORD AS WELL AS AN ALYZED THE ARGUMENT RAISED BY THE PARTIES AND ALSO TO THE CASE LAWS RELIED UPON BY THE PARTIES AND THE ORDERS PLACED BEFORE US OF THE AUTHORITIES BELOW. WE FEEL IT APPROPRIATE TO REPRODUCE THE CONCLUDING PAR T OF THE ORDER OF LD. CIT(A). 5.2 I HAVE CONSIDERED THE OBSERVATIONS OF THE ASSESSIN G OFFICER AS MADE BY HER IN THE ASSESSMENT ORDER. I H AVE ALSO CONSIDERED WRITTEN SUBMISSIONS FILED BY THE ASSESSE E VIDE LETTER DATED 07.11.2015. I HAVE FURTHER CONSIDERED VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE AS WELL AS OTHER MATERIAL PLACED BY THE ASSESSEE ON RECORD. ON CAREFUL CONSIDERATION OF THE RIVAL CONTENTIONS, IT HAS BEEN NOTICED THAT MAJORITY OF THE EXPENSES CLAIMED BY TH E ASSESSEE UNDER THE HEAD 'FORWARDING AND DELIVERY EXPENSES' ARE SUPPORTED ONLY BY SELF PREPARED VOUCHERS WHICH ARE NOT INDEPENDENTLY VERIFIABLE. ALTHOUGH THE ASSESSEE TRI ED TO JUSTIFY THE EXPENSES CLAIMED UNDER THE HEAD FORWAR DING AND DELIVERY EXPENSES BY PRODUCING FEW BILLS BUT MAJOR ITY OF THE EXPENSES AS POINTED OUT BY THE ASSESSING OFFICER ST ILL REMAINS ITA NOS.3 40 & 550(ASR)/2016 ASST. YEARS: 2010-11 & 2011-12 4 SUPPORTED BY SELF MADE VOUCHERS WHICH ARE NOT AT AL L VERIFIABLE INDEPENDENTLY. MOREOVER, THE DISALLOWANC E OUT OF EXPENSES CLAIMED BY THE ASSESSEE UNDER THE HEAD FO RWARDING AND DELIVERY EXPENSES IS VERY REASONABLE AND CANNOT BE SAID TO BE EXCESSIVE LOOKING TO THE QUANTUM OF EXPENSES CLAIMED UNDER THIS HEAD WHICH ARE SUPPORTED ONLY THROUGH SE LF MADE VOUCHERS. IN SUCH CIRCUMSTANCES, NO FURTHER RELIEF CAN BE ALLOWED TO THE ASSESSEE UNDER ANY CIRCUMSTANCES AS THE ASSESSING OFFICER MADE A VERY FAIR AND REASONABLE DISALLOWANCE. 5.3 IN VIEW OF THE ABOVE STATED FACTS AND IN THE CI RCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE ASSESSING OF FICER IS FULLY JUSTIFIED IN MAKING ADDITION OF RS.5,62,612/- IN TH IS CASE ON ACCOUNT OF DISALLOWANCE OUT OF EXPENSES CLAIMED BY THE ASSE SSEE UNDER THE HEAD FORWARDING AND DELIVERY EXPENSES . THE ADDITION OF RS.5,62,612/- MADE BY THE ASSESSING OFFICER IN THIS CASE IS, THEREFORE, UPHELD. IN THE RESULT GROUND NO.1 OF APP EAL TAKEN BY THE ASSESSEE IS DISMISSED. IT IS CLEAR FROM THE ORDER PASSED BY THE LD. CIT( A) THAT THERE ARE SO MANY DISCREPANCIES FOUND IN THE BILLS, VOUCHERS AND NO SUPPORTING MATERIAL WAS PRODUCED IN SUPPORT OF SELF MADE VOUCH ERS AND THE ASSESSING OFFICER WAS UNABLE TO VERIFY INDEPENDENTL Y. EVEN OTHERWISE, THE SUBMISSIONS OF THE ASSESSEE IS NOT TENABLE THAT THE ASSESSEE HAS BEEN DOING THIS BUSINESS FOR A VER Y LONG TIME AND HAS BEEN MAINTAINING VOUCHERS IN SIMILAR FASHION AND IT IS ALSO NOT TENABLE THAT SINCE LARGE NUMBER OF VOUCHERS PERTAIN TO PAYMENTS TO RICKSHAW, AUTOS, ETC. THEREFORE, IT IS LOGICAL THAT THERE WOULD BE N O REGULAR BILLS. WE FOUND FORCE IN THE ARGUMENT OF THE LD. DR THAT E VEN OTHERWISE IF THE VOUCHERS ARE SELF MADE BUT IT SHOULD CONTAIN CO MPLETE DETAILS. THE DISALLOWANCES MADE BY THE ASSESSING OFFICER AND CON FIRMED BY THE LD. CIT(A) ARE REASONABLE AND AT THE LOWER SIDE. HOWEVER, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE THE ENDS OF JUSTICE, WOULD MEET IF THE DISALLOWANCES CA N BE RESTRICTED TO TUNE OF 10% OF THE EXPENSES AS FAIR AND REASONABLE, CONSID ERING THE FACT THAT AUTHORITIES BELOW FIT IT TO ALLOW 80% OF THE CLAIM. THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF TRIB UNAL, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE TO 1 0% OF TOTAL EXPENSES IN ASST. YEAR: 2010-11. ITA NOS.3 40 & 550(ASR)/2016 ASST. YEARS: 2010-11 & 2011-12 5 IN VIEW OF THE ABOVE, GROUND NO.1 IN ITA NO. 340(AS R)/16 FOR ASST. YEAR:2010-11 IS PARTLY ALLOWED. 9. IN ASST. YEAR: 2011-12, THE LD. CIT(A) HAS RESTR ICTED THE DISALLOWANCE OF RS.4,16,515/- (WHICH WAS ALSO 20% O F THE TOTAL EXPENSES) TO RS.2,00,000/- AND THEREFORE, LD. CIT(A) HAS ALRE ADY ALLOWED RELIEF TO THE ASSESSEE TO THE EXTENT OF RS.2,16,515/- WHICH I S MORE THAN 10% OF THE TOTAL EXPENSES AND THE RELIEF IS IN ACCORDANCE WITH THE EARLIER TRIBUNAL ORDER DATED 18.10.2016 AND THEREFORE, FOLL OWING THE ORDER OF THE TRIBUNAL DATED 18.10.2016, WE DO NOT SEE ANY INFIRM ITY IN THE SAME. THEREFORE, GROUND NO.1 IN ITA NO.550(ASR)/2016 IS D ISMISSED. 10. AS REGARDS THE OTHER GROUND RAISED IN ASST. YEA R: 2011-12, WE FIND THAT LD. CIT(A) IN HIS ORDER HAS ALREADY ALLOWED RE LIEF TO THE ASSESSEE BY HOLDING AS UNDER: 6.1 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER PASSED BY THE AO AND SUBMISSIONS MADE BE APPELLANT INCLUDING THE JUD ICIAL CITATIONS GIVEN THEREIN. THE APPELLANT HAS ALSO PLACED RELIANCE ON THE ORDER PASSED BY MY LEARNED PREDECESSOR IN THE CASE OF THE APPELLANT FO R A.Y 2010-11 IN WHICH THE SIMILAR DISALLOWANCE MADE BY THE AO HAS BEEN DE LETED. I FIND THAT AO HAS FAILED TO POINT OUT ANY SPECIFIC INSTANCE OF DE FECT IN THE VOUCHERS, WHILE MAKING THE DISALLOWANCE IN THIS YEAR ALSO. THEREFOR E, RELYING ON THE ORDERS PASSED BY THE LEARNED PREDECESSOR, I HOLD THAT THER E IS NO JUSTIFICATION IN THE ACTION OF THE AO IN MAKING THE DISALLOWANCE. AC CORDINGLY, I DELETE THE DISALLOWANCE OF RS.30,000/- MADE BY THE AO ON ESTIM ATED BASIS. ITA NOS.3 40 & 550(ASR)/2016 ASST. YEARS: 2010-11 & 2011-12 6 IN VIEW OF THE ABOVE, THE GROUND RAISED BY ASSESSEE IS NOT SUSTAINABLE AND THEREFORE, GROUND NO.2 IN ITA NO.55 0(ASR)/ 2016 IS DISMISSED. 11. IN NUTSHELL, THE APPEAL IN ITA NO.340(ASR)/201 6 IS PARTLY ALLOWED WHEREAS THE APPEAL IN ITA NO.550(ASR)/2016 IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 1.02. 2017. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCO UNTANT MEMBER DATED:21.02.2017. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER