New Modern Technomech Pvt. Ltd., Baripada V. ACIT, Central Circle, Cuttack

ITA 348/CTK/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5617 (ITAT-CUTTACK)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-05-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 13-09-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAAD KIDWAI
• Assessee Lawyers: A K TIBREWAL
• Keywords: Search and seizure; Opportunity of cross examination; Application of stay; Third party statement; Documents seized
• Section: 40A(3); 68

Judgement Text

1 NEW MODERN TECHNOMECH PVT LTD IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER IT(SS) A NO . 86 /CTK/2017 I.T.A. NO.348/CTK/2017 ASSESSMENT YEAR S: 2012 - 13 & 2013 - 14 S.P. NO.05/CTK/2018 (IN IT (SS ) A NO.86/CTK/2017) ASSESSMENT YEAR: 2012 - 2013 NEW MODERN TECHNOMECH PVT LTD., S - 2/29, CHHACHAL INDUSTRIAL ESTATE, STATION BAZAR, BARIPADA, ODISHA. VS. ACIT, CENTRAL CIRCLE, CUTTACK PAN/GIR NO. AABCN 0353 P (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI A.K.TIBREWAL REVENUE BY : SHRI SAAD KIDWAI, CIT , DR DATE OF HEARING : 1 5 / 0 5 / 201 8 DATE OF PRONOUNCEMENT : 26 / 0 6 / 201 8 O R D E R PER N.S.SAINI, AM THESE ARE APPEALS FILED BY THE ASSESSEE AGAINST SEPARATE ORDERS OF THE CIT(A) - 3, BHUBANESWAR ALL DATED 26.5.2017 FOR THE ASSESSMENT YEARS 2012 - 13 & 2013 - 14 RESPECTIVELY. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN THE RESPECTIVE ASSESSMENT YEARS AS UNDER: 20 12 - 13 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 3 / BHUBANESWAR HAS ERRED IN CONFIRMING THE ADDITION OF RS .10,93,044 / - 2 NEW MODERN TECHNOMECH PVT LTD (PAGE - 9 OF THE APPELLATE ORDER) REPRESENTING ESTIMATED ADDITION EVEN AFTER RECORDING A CATEGORICAL FINDING IN PAGE - 5 OF THE APPELLATE ORDER THAT NO EVIDENCE HAS BEEN BROUGHT ON RECORD TO JUSTIFY THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER ON ALLEGED VIOL ATION OF SECTION 40A(3) OF THE ACT PARTICULARLY WHEN SUCH CONTENTION IS AGAINST THE PROPOSITION OF SECTION 292C DEALING WITH THE PRESUMPTIONS RELATING TO DOCUMENTS SEIZED IN SEARCH. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 3 / BHUBANESWA R HAS ERRED IN CONFIRMING THE ADDITION OF RS 20,61 ,000 / - (PAGE - 33 OF THE APPELLATE ORDER) UNDER SECTION 68 OF THE ACT REPRESENTING SHARE APPLICATION MONEY RECEIVED FROM ONE COMPANIES ON THE BASIS OF THIRD PARTY STATEMENT WHO HAD NO CONNECTION WITH THE SEAR CH AND SEIZURE ACTION UNDERTAKEN ON THE APPELLANT AND WITHOUT AFFORDING ANY OPPORTUNITY TO CROSS - EXAMINE THE PARTY WHOSE STATEMENT HAD BEEN RELIED UPON BY THE DEPARTMENT DURING THE ASSESSMENT PROCEEDINGS. 201 3 - 201 4 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 3 / BHUBANESWAR HAS ERRED IN CONFIRMING THE ADDITION OF RS .10,41,002 / - (PAGE - 6 OF THE APPELLATE ORDER) REPRESENTING ESTIMATED ADDITION EVEN AFTER RECORDING A CATEGORICAL FINDING IN PAGE - 5 OF THE APPELLATE ORDER THAT NO EVIDENCE HAS B EEN BROUGHT ON RECORD TO JUSTIFY THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER ON ALLEGED VIOLATION OF SECTION 40A(3) OF THE ACT PARTICULARLY WHEN SUCH CONTENTION IS AGAINST THE PROPOSITION OF SECTION 292C DEALING WITH THE PRESUMPTIONS RELATING TO DO CUMENTS SEIZED IN SEARCH. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 3 / BHUBANESWAR HAS ERRED IN CONFIRMING THE ADDITION OF RS 75, 000 / - (PAGE - 7 OF THE APPELLATE ORDER ) REPRESENTING ESTIMATED ADDITION IN A SITUATION WHEN SUCH CONTENTION IS AGAINST THE PROPOSITION OF SECTION 292C DEALING WITH THE PRESUMPTIONS RELATING TO DOCUMENTS SEIZED IN SEARCH AND SEIZURE AND WHEN NINETY PERCENT OF THE EXPENDITURE INCURRED HAS BEEN ACCEPTED AT THE ASSESSMENT STAGE AS GENUINE . 3. GROUND NOS.1 & 2 OF APPEAL FOR BOTH THE ASSESSMENT YEARS ARE INTER - CONNECTED AND, THEREFORE, THEY ARE DISPOSED AS UNDER: 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE DISALLOWANCE OF RS.10,93,044/ - BEING 10% OF RS.1,09,30,443/ - OUT OF 3 NEW MODERN TECHNOMECH PVT LTD EXPENSES INCURRED UNDER THE HEAD FUEL AND LUBRICANT AND DISALLOWANCE OF RS.20,61,000/ - BEING 10% OF EXPENSES INCURRED UNDER THE HEAD ROW EXPENDITURE WERE MADE FOR THE ASSESSMENT YEAR 2012 - 13. 5. SIMILARLY, DISALLOWANCE OF RS.10,41,002/ - BEING 5% OF RS.2,08,20,040/ - OUT OF EXPENSES INCURRED UNDER THE HEAD FUEL AND LUBRICANT AND DISALLOWANCE OF RS.75,000/ - BEING 10% OF RS.7,50,000/ - UNDER THE HEAD ROW EXPENDITURE WER E MADE FOR THE ASSESSMENT YEAR 2012 - 13. 6. THE LOWER AUTHORITIES HAVE OBSERVED THAT ON PERUSAL OF LEDGER ACCOUNT, IT WAS FOUND THAT THE DETAILS OF RECIPIENTS WERE NOT MENTIONED AND PAYMENTS WERE MADE IN CASH. THE MAIN CONTENTION OF THE ASSESSEE IS THAT T HESE DISALLOWANCES ARE ON ADHOC BASIS AND ARE EXCESSIVE. 7. WE FIND THAT LD A.R. COULD NOT CONTROVERT THE FINDINGS OF LOWER AUTHORITIES THAT IN MANY VOUCHERS , DETAILS OF RECIPIENTS ARE NOT STATED AND THE PAYMENTS ARE MADE IN CASH. WE ALSO FIND THAT THE LOWER AUTHORITIES COULD NOT GIVE ANY BASIS FOR MAKING THE DISALLOWANCE @ 10%. KEEPING IN VIEW THE FACTS, IN OUR CONSIDERED OPINION , IT SHALL BE IN THE INTEREST OF JUSTICE TO RESTRICT ABOVE DISALLOWANCE AT 5% OF THE EXPENDITURE CLAIMED BY THE ASSESSEE. WE FIND THAT THE LOWER AUTHORITIES HAVE DISALLOWED AT 5% OUT OF TOTAL EXPENDITURES FOR THE ASSESSMENT YEAR 2013 - 14. WE FIND THAT THE DISALLOWANCE IS QUITE JUSTIFIED AND HENCE, WE CONFIRM THE SAME. WE 4 NEW MODERN TECHNOMECH PVT LTD ORDER ACCORDINGLY. THUS, GR OUND NOS.1 & 2 OF APPEAL FOR THE ASSESSMENT YEAR 2012 - 13 IS PARTLY ALLOWED AND GROUND NOS.1 & 2 OF APPEAL FOR THE ASSESSMENT YEAR 2013 - 14 IS DISMISSED. 8. GROUND NO.3 OF APPEAL FOR THE ASSESSMENT YEAR 2013 - 14 READS AS UNDER: 3. THAT THE LEARNED COMMISSIO NER OF INCOME TAX (APPEALS) - 3 / BHUBANESWAR HAS ERRED IN CONFIRMING THE ADDITION OF RS.5,96,988/ - (PAGE 7 OF THE APPELLATE ORDER) REPRESENTING ALLEGED UNACCOUNTED SCRAP SALE MADE BY THE APPELLANT DESPITE THE FACT THAT SCRAP OF LARGER QUANTITY THAN WHAT WA S FOUND IN THE SEIZED DOCUMENT HAD BEEN CONSIDERED BY THE APPELLANT IN THE REGULAR BOOKS OF ACCOUNT. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER FOUND ON VERIFICATION OF REGULAR BOOKS OF ACCOUNT WITH SEIZED MATERIALS MARKED NMTPLO - 23 THAT THE SALE OF SCRAP OF RS.5,96,988/ - WAS NOT DISCLOSED IN THE REGULAR BOOKS OF THE ASSESSEE. THE CIT(A) ALSO CONFIRMED THE ABOVE ADDITION. 10. BEFORE US, LD A.R. CONTENDED THAT THE ENTIRE SALE OF SCRAP W ERE ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNT. HOWEV ER, WE FIND THAT NO MATERIAL HAS BEEN BROUGHT BEFORE US TO SHOW THAT THE ENTIRE SALE OF SCRAP RECORDED IN THE SEIZED MATERIALS MARKED NMTPLO - 23 WERE ACCOUNTED FOR IN THE REGULAR BOOKS OF THE ASSESSEE . IN ABSENCE OF SUCH MATERIAL BROUGHT BEFORE US, WE FIN D NO GOOD REASON TO INTERFERE WITH THE ORDERS OF LOWER AUTHORITIES. THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 5 NEW MODERN TECHNOMECH PVT LTD 1 1 . IN THE RESULT, APPEAL FOR THE ASSESSMENT YEAR 2012 - 13 IS PARTLY ALLOWED AND APPEAL FOR THE ASSESSMENT YEAR 2013 - 14 IS DISMISSED. 12. THE ASSESSEE HAS FILED STAY APPLICATION FOR THE ASSESSMENT YEAR 2012 - 13 FOR STAY OF DEMAND. AS WE HAVE HEARD AND DECIDED THE APPEAL OF THE ASSESSEE, THE STAY PETITION OF THE ASSESSEE H AS BECOME INFRUCTUOUS AND ACCORDINGLY , THE SAME IS DISMI SSED . ORDER PRONOUNCED ON 26 / 0 6 /201 8 . SD/ - SD/ - ( PAVAN KUMAR GADALE) ( N.S SAINI) JUDICIALMEMBER A CCOUNTANT MEMBER CUTTACK; DATED 26 / 0 6 /201 8 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT: NEW MODERN TECHNOMECH PVT LTD., S - 2/29, CHHACHAL INDUSTRIAL ESTATE, STATION BAZAR, BARIPADA, ODISHA. 2. THE RESPONDENT. ACIT, CENTRAL CIRCLE, CUTTACK 3. THE CIT(A) - 2, BHUBANESWAR 4. PR.CIT - 2, BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//