ACIT, Jaipur V. M/S WORLD WIDE STONE, Jaipur

ITA 345/JPR/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1537 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 09-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA
• Section: 80IB

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH , JAIPUR (BEFORE SHRI B.R. MITTAL AND SHRI B.R. JAIN) ITA NO. 345/JP/2012 ASSESSMENT YEAR : 2007-08 PAN: AAAFW 3673 K THE ACIT VS. M/S. WORLD WIDE STONE CIRCLE- 7 INDUSTRIAL AREA, DEOLI TONK JAIPUR JAIPUR (APPELLANT) (RESPONDENT) DEPARTMENT BY: MISS. ROSHANTA MEENA ASSESSEE BY : SHRI MAHENDRA GARGIEYA DATE OF HEARING: 04-03-2013 DATE OF PRONOUNCEMENT: 04-03-2013 ORDER PER B.R. MITTAL, JM:- THE DEPARTMENT HAS FILED THIS APPEAL FOR THE ASSES SMENT YEAR 2007-08 AGAINST THE ORDER OF THE LD. CIT(A)-III, JAIPUR ON FOLLOWING G ROUNDS. (1) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS PASSED A PERVERSE ORDER IN DELETING THE DISALLO WANCE OF DEDUCTION OF RS. 15,59,610/- MADE U/S 80IB OF THE I .T. ACT, 1961 (2) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS PASSED A PERVERSE ORDER IN RESTRICTING THE DISA LLOWANCE MADE BY THE AO OF RS. 60,869/- OUT OF PACKING EXPENSES, OFF ICE EXPENSES, ELECTRIC AND ACCESSORIES EXPENSES, RS. 1,56,927/- C LEARING AND FORWARDING EXPENSES, RS. 2,48,759/- FREIGHT AND OUT WARD EXPENSES AND RS. 5,100/- ADVERTISEMENT EXPENSE I.E. TOTALIN G RS. 471,655/- TO RS. 50,000/- ONLY ON ADHOC BASIS 2.1 THE BRIEF FACTS OF THE CASE WITH REGARD TO GROU ND NO. 1 OF THE REVENUE ARE THAT THE ASSESSEE IS ENGAGED IN THE MANUFACTURING, PROCE SSING, TRADING AND EXPORTING OF SAND STONE AND SLATE STONE. THE RETURN OF INCOME WAS FUR NISHED ON 29-10-2007 DECLARING TOTAL 2 INCOME AT RS. 44,44,890/- THE ASSESSMENT WAS COMPLE TED ON 30-12-2009 AT AN ASSESSED INCOME OF RS. 64,76,160/-. THE CLAIM OF DEDUCTION A MOUNTING TO RS. 15,59,610/- MADE BY THE ASSESSEE U/S 80IB OF THE ACT WAS REJECTED BY T HE AO HOLDING THAT THE ASSESSEE WAS NOT A MANUFACTURER. 2.2 IN FIRST APPEAL, THE LD. CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE DECISION OF ITAT, JAIPUR BENCH IN EARLIER YEARS VIDE PARA 3.3 OF HIS ORDER AFTER OBSERVING AS UNDER. 3.3 I HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS AND CIRCUMSTANCES OF THE ISSUE UNDER CONSIDERATION. IN VIEW OF THE FACT THAT THE ABOVE CLAIM HAS ALREADY BEEN ALLOWED BY HON'BLE IT AT JAIPUR BENCH IN PAST, THEREFORE, WHILE FOLLOWING THE PRINCIPAL OF JUDICIAL DISCIPLINE, I ALSO HOLD THAT THE APPELLANT IS ENTITLED TO THE CLA IM MADE U/S 80IB OF THE ACT. CONSEQUENTLY, THIS GROUND OF APPEAL IS ALLOWED . 2.3 AFTER HEARING BOTH THE PARTIES AND ON PERUSAL O F THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT THIS VERY BENCH HAS ALREADY DECIDED TH IS ISSUE IN ASSESSEE'S OWN CASE AGAINST THE REVENUE. THUS GROUND NO. 1 OF THE REVENUE IS DI SMISSED. 3.1 THE BRIEF FACTS OF THE CASE WITH REGARD TO GROU ND NO. 2 OF THE REVENUE ARE THAT AO NOTED THAT THE EXPENSES WERE SUPPORTED WITH SELF MADE VOUCHERS AND THERE WERE NO AUTHENTIC DOCUMENTS AVAILABLE. THE AO HELD THAT THE ASSESSEE HAS FAILED TO REPLY THE SPECIFIC QUERY AS TO THE NATURE OF THE EXPENSES AND ALSO PRESUMED THAT THE ASSESSEE HAD NO OBJECTION IN DISALLOWING THE SAME. THUS THE EXPENSE S DISALLOWED BY THE AO UNDER FOLLOWING HEADS ARE AS UNDER:- S.N. HEAD OF EXPENSES EXPENSES CLAIMED BY THE ASSESSEE DISALLOWED BY THE AO 1. PACKING EXPENSES OFFICE EXPENSES ELECTRIC & ACCESSORIES EXPENSES RS. 5,33,272/- RS. 48,564.- RS. 26, 855/- RS. 6,08,691/- RS.60,869/- (10% DISALLOWED) 2. CLEARING & FORWARDING EXPENSES RS. 1,04,54,941/- RS.1,56,927/- (15% DISALLOWED) 3 3. FREIGHT & OUTWARD EXPENSES RS. 1,65,77,843/- RS. 2,48,759/- (15% DISALLOWED) 4. ADVERTISEMENT EXPENSES RS. 5,100/- RS. 5,100/- 3.2 IN FIRST APPEAL, THE LD. CIT(A) RESTRICTED THE ADDITION TO RS. 50,000/- VIDE PARA 2.3 OF HIS ORDER AFTER OBSERVING AS UNDER:- 2.3 I HAVE CAREFULLY EXAMINED THE DIVERGENT VIEWS OF THE AO AND THE LD. AR I.RO. THE ISSUES UNDER CONSIDERATION AND MY OBSERVATION CUM FINDINGS ARE AS UNDER:- (I) THE AO HAS MADE THE ABOVE ADHOC DISALLOWANCES O N SOLE BASIS THAT THE SUPPORTING VOUCHERS WERE FOUND SELF PREPARED. HOWEVER, THE AO DID NOT MAKE FURTHER ENQUIRY OR BROUGHT ANY SPEC IFIC MATERIAL ON THE RECORD TO SUGGEST THAT SUCH DISALLOWANCES WERE EITH ER BOGUS OR INFLATED, IN COMPARE TO THE TREND SHOWN IN THE EARLIER YEARS, IN THESE REGARDS. (II) SIMILARLY, IT IS ALSO NOTED THAT THE TDS WERE DEDUCTED I.R.O. THE FREIGHT AND OUTWARD EXPENSES, THEREFORE, THE RE ASONABLENESS AND GENUINENESS THEREOF CANNOT BE QUESTIONED ON THE BAS IS THAT THE SAME ARE SUPPORTED BY SELF PREPARED VOUCHERS ONLY. (III) THE AO HAS NOT MADE ANY COMPARISON OF SUCH EX PENSES WITH EARLIER YEAR OR ANY OTHER COMPARABLE CASES TO ESTABLISH THAT THESE EXPENSES ARE NO HIGHER SIDE UNDER THE GIVEN CIRCUMS TANCES. THE BOOKS ARE ALSO AUDITED AND IT APPEARS THAT THERE IS NO ADVERS E COMMENT MADE BY THE AUDITOR IN THIS REGARD. (IV) AS POINTED OUT, THE AOS ABOVE STANDS ARE ALSO FOUND CONTRARY TO THE RATIO UPHELD BY THE HON'BLE JURISDI CTIONAL HIGH COURT IN THE CASE OF LAXMI ENGINEERING INDUSTRIES (298 ITR 203), WHEREIN IT HAS BEEN OPINED THAT MERELY ON THE BASIS OF SUSPICION AN EXP ENDITURE CANNOT BE DISALLOWED AND THE REASONABLENESS OF THE SAME IT TO BE JUDGED FROM THE POINT OF VIEW OF THE BUSINESSMAN AND NOT OF THE DEP ARTMENT. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, PRINC IPALLY IT IS FELT THAT THE AO IS NOT JUSTIFIED IN MAKING THE ABOVE AD HOC DISALLOWANCES AS THE SAME HAVE BEEN FOUND NOT SUPPORTED BY ANY COGEN T REASONS AND JUSTIFICATION. HOWEVER, AT THE SAME TIME, IT IS ALS O FELT THAT AN ADHOC ADDITION OF RS. 50,000/- IS REQUIRED TO BE SUSTAINE D OUT OF THE ABOVE EXPENSES TO TAKE CARE OF ANY POSSIBLE LEAKAGE OF PR OFIT I.R.O. THE MINOR SHORTCOMINGS POINTED OUT BY THE AO, AS DISCUSSED AB OVE. ACCORDINGLY, THE AO IS HEREBY DIRECTED TO RESTRICT THE TOTAL ADHOC D ISALLOWANCE TO RS. 50,000/- ONLY AS AGAINST SEPARATE ADDITION MADE I.R .O. THE ABOVE EXPENSES 4 AS PROPOSED IN ASSESSMENT ORDER. CONSEQUENTLY THIS GROUND OF APPEAL PARTLY ALLOWED. HENCE, THE DEPARTMENT IS IN APPEAL. 3.3 THE LD. DR IN HER SUBMISSIONS COULD NOT CONTROV ERT THE OBSERVATIONS AND FINDINGS OF THE LD. CIT(A), SAVE AND EXCEPT RELYING ON THE O RDER OF THE AO. 3.4 ON THE OTHER HAND, THE LD. AR SUBMITTED THAT T HE ORDER OF LD. CIT(A) IS REASONABLE AND THE SAME SHOULD BE CONFIRMED. 3.5 AFTER HEARING BOTH THE PARTIES AND ON PERUSAL O F THE MATERIALS AVAILABLE ON RECORD, WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY RESTRICTED THE ADDITION TO RS. 50,000/-. THUS GROUND NO. 2 OF THE REVENUE IS ALSO REJECTED. 4. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS D ISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 04-0 3-2013 SD/- SD/- (B.R. JAIN) (B.R. MITTAL) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 04 MARCH 2013 *MISHRA COPY FORWARDED TO:- BY ORDER 1. THE ACIT, CIRCLE- 7, JAIPUR 2. M/S. WORLD WIDE STONE, JAIPUR . 3.THE LD. CIT 4.THE LD. CIT(A) 5.THE LD. DR 6.THE GUARD FILE (IT NO.345/JP/12) A.R. ITAT: JA IPUR 5 6