Hydrogen Systems (Asia) Ltd., New Delhi V. ITO, New Delhi

ITA 3604/DEL/2012

• Counselvise Citation: 360420114 RSA 2012
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 09-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C: NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO. 3604/DEL/2012 ASSESSMENT YEAR: 2007-2008 HYDROGEN SYSTEMS (ASIA) LTD., 6/4, WARD-1, NEAR QUTAB MINAR, MEHRAULI, NEW DELHI. PAN NO. AAACH9354H VS. ITO, WARD 12(4), ROOM NO. 331, C.R. BLDG., NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SIDDHARTH, FCA RESPONDENT BY : SH. SATPAL SINGH, SR. DR DATE OF HEARING : 24/09/2012 DATE OF PRONOUNCEMENT : 27/09/2012 O R D E R PER S.V. MEHROTRA, A.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. CIT(A) DATED 08/05/2012 FOR A.Y. 2007-08. 2. THE ASSESSEE, A LIMITED COMPANY, IN THE RELEVANT ASSESSMENT YEAR, CARRIED ON THE BUSINESS OF GENERATION AND PURIFICAT ION HYDROGEN GAS PLANTS. IT HAD FILED ITS RETURN OF INCOME DECLARING INCOME OF RS. 4,58,120/-. THE ASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS. 2 4,99,620/- AFTER MAKING FOLLOWING ADDITIONS/DISALLOWANCES: - PROFIT AS PER PROFIT & LOSS ACCOUNT RS. 458120 ADD: DISALLOWANCE OUT OF SALARY RS. 1000000 DISALLOWANCE OUT OF TRAVELING ITA NO. 3604/D/2012 2 EXPENSES RS. 300000 ADDITION U/S 68 RS. 135000 DISALLOWANCE OF CLAIM OUT OF PRINTING AND STATIONARY HEAD RS. 106500 DISALLOWANCE OF INTEREST RS. 500000 RS. 2041500 ASSESSED INCOME RS. 2499620 3. LD. CIT(A) PARTLY ALLOWED THE ASSESSEES APPEAL. 4. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E US, AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL: - 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE & IN LAW, THE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 60,000/- U/S 68 OF THE I.T. ACT , 1961 BY OVERLOOKING THE FACTS AND CIRCUMSTANCES OF THE CASE. AS SUCH, THE ADDITION OF RS. 60,000/- MA DE U/S 68 OF THE I.T. ACT MAY PLEASE BE DELETED. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE & IN LAW, THE CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF SALARY EXPENSE TO THE TUNE OF RS. 4 LAKH ON ESTIMATED BASIS WITHOUT BRINGING ANY MATERIAL ON RECORD AND IGNORING THE SUBMISSIONS MADE BY THE APPELLANT COMPANY. ACCORDINGLY, THE DISALLOWANCE OF SALARY EXPENSE TO THE TUNE OF RS. 4 LAKH MAY KINDLY BE ALLOWED. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE & IN LAW, THE CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF TRAVELLING EXPENSE TO THE TUNE OF RS. 26,586/- WITHOUT APPRECIATING THE MATERIAL O N RECORD AND ALSO BY OVERLOOKING THE FACTS AND CIRCUMSTANCES OF THE CASE. AS SUCH, THE DISALLOWANCE OF TRAVELLING EXPENSE TO THE TUNE OF RS. 26,586/- MAY PLEASE BE ALLOWED. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE & IN LAW, THE CIT(A) HAS ERRED BY NOT CONSIDERING THE SUBMISSIONS MADE BY THE APPELLANT COMPANY AND NOT PASSING A SPEAKING ORDER WITH RESPECT TO DISALLOWANCE OF PRINTING & STATIONARY EXPENSES TO THE TUNE OF RS. 1,06,500/- BY THE LD. A O. THEREFORE, THE DISALLOWANCE OF PRINTING & STATIONER Y EXPENSES TO THE TUNE OF RS. 1,06,500/- MAY PLEASE B E ALLOWED. ITA NO. 3604/D/2012 3 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE & IN LAW, THE CIT(A) HAS ERRED IN OVERLOOKING THE FACTS AND CIRCUMSTANCES OF THE CASE AND BY NOT PASSING A SPEAKING ORDER WITH RESPECT TO DISALLOWANCE OF INTEREST EXPENSES TO THE TUNE OF RS . 5 LAKH BY THE LD. AO. AS SUCH, THE DISALLOWANCE OF INTEREST EXPENSES TO THE TUNE OF RS. 5 LAKH MAY KINDLY BE ALLOWED. 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE & I N LAW, THE CIT(A) HAS ERRED IN IGNORING THE ADDITIONA L EVIDENCES FURNISHED BY THE APPELLANT UNDER RULE 46A AND AS SUCH THE ADDITIONS SUSTAINED BY HIM NOT CONSIDERING THE ADDITIONAL EVIDENCES MAY KINDLY BE DELETD. 5. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE DID NOT PRESS GROUND NOS. 1, 3 AND 6. THEREFORE, THE SAID GROUND S ARE DISMISSED AS NOT PRESSED. 6. APROPOS GROUND NO. 2, BRIEF FACTS ARE THAT ASSES SEE HAD CLAIMED A SUM OF RS. 12,06,000/- ON ACCOUNT OF SALARY TO STAF F. THE ASSESSING OFFICER NOTICED THAT THERE WAS A DRASTIC FALL IN SALES AS C OMPARED TO EARLIER YEAR. HE FURTHER NOTICED THAT ASSESSEE HAD CLAIMED ONLY R S. 6,85,500/- LAST YEAR. THE AO MADE ADDITION OF RS. 10 LAKHS, INTER-ALIA, O BSERVING THAT ASSESSEE DID NOT PRODUCE THE EMPLOYEES. 7. LD. CIT(A) AFTER CONSIDERING THE ENTIRETY OF FAC TS AND CIRCUMSTANCES, RESTRICTED THE DISALLOWANCE TO RS. 4 LAKHS. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORD OF THE CASE. 9. LD. COUNSEL SUBMITTED THAT ASSESSEE COMPANY IS E NGAGED IN THE BUSINESS OF SUPPLY OF THE EQUIPMENTS TO THE PUBLIC ENTERPRISES/REPUTED COMPANIES NAMELY BHEL, SKOWL BREWERIES LTD., NTPC, HAVELLS ETC. THE ITA NO. 3604/D/2012 4 SUPPLY AND SERVICES DEPEND UPON THE ORDER RECEIVED FROM THE CLIENTS WHICH ARE AWARDED ON THE COMPETITIVE BASIS. HE SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY COULD NOT FETCH THE FRESH ORDERS. HOWEVER, THE EMPLOYEE STRENGTH REMAINED TH E SAME. THE ASSESSEES SUBMISSIONS HAVE BEEN REPRODUCED BY LD. CIT(A) IN PARA 7.1 OF HIS ORDER. 10. AFTER CONSIDERING THE ASSESSEES SUBMISSIONS, T HE LD. CIT(A) HAS OBSERVED THAT ASSESSEE HAD ENROLLED TEN EMPLOYEES I N THE MID OF THE F.Y. 2005-06 AND THE SAME CONTINUED TO WORK IN THE NEXT F.Y. 2006-07. HE HAS FURTHER OBSERVED THAT SALARY FOR ALL TEN EMPLOYEES IN THE LAST FINANCIAL YEAR WAS RS. 90,300/- PER MONTH, WHICH WERE INCREASED TO RS. 1 LAKH PER MONTH, AFTER ROUTINE INCREMENT FOR THE EMPLOYEES IN THE F. Y. 2006-07. HE FURTHER OBSERVED THAT ASSESSEE COMPANY HAD SUBMITTED THE PA N, ADDRESS AND FORM NO. 16 OF TWO ENGINEERS, TO WHOM MORE THAN 50% OF TOTAL SALARY EXPENSES WERE PAID THROUGH ACCOUNT PAYEE CHEQUES. IN RESPECT OF BALANCE EMPLOYEES, THE ASSESSEE HAD PRODUCED MONTHL Y SALARY CASH VOUCHERS WHICH CONTAINED THE NAME, ADDRESS AND AMOU NT OF SALARY PAID TO EMPLOYEES. HOWEVER, TAKING NOTE OF THE FACT THAT A SSESSEE HAD NOT PRODUCED ATTENDANCE REGISTER, APPOINTMENT LETTER AN D PAYMENT OF SALARY IN CASH, PARTLY CONFIRMED THE AOS ACTION AND RESTRICT ED THE DISALLOWANCE TO RS. 4 LAKHS. 11. WE FIND THAT THE DISALLOWANCE HAS BEEN MADE BEC AUSE ASSESSEE FAILED TO PRODUCE THE EMPLOYEES. WE, THEREFORE, RE STORE THE MATTER TO THE FILE OF AO TO PROVIDE ONE MORE OPPORTUNITY TO ASSES SEE TO PRODUCE THE EMPLOYEES AS REQUIRED BY THE ASSESSING OFFICER. HO WEVER, IF, ASSESSEE FAILS TO PRODUCE THE EMPLOYEES THEN THE DISALLOWANC E SHOULD BE RESTRICTED TO RS. 4 LAKHS AS HELD BY LD. CIT(A). ITA NO. 3604/D/2012 5 12. IN THE RESULT, THIS GROUND IS ALLOWED FOR STATI STICAL PURPOSES. 13. AS REGARDS GROUND NOS. 4 & 5 BEFORE US, LD. COU NSEL SUBMITTED THAT THEY ARE SAME AS GROUND NOS. 5 & 6 RAISED BEFORE LD . CIT(A) WHICH HAVE NOT BEEN ADJUDICATED BY HIM. WE, THEREFORE, RESTOR E THESE GROUNDS BEFORE LD. CIT(A) FOR ADJUDICATION. IN THE RESULT, BOTH T HESE GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 14. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27/09/2012 SD/- SD/- (A.D. JAIN) JUDICIAL MEMBER (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED: 27/09/12 *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR