DCIT, Jaipur V. SUMS SXIM P LTD., Jaipur

ITA 361/JPR/2013

• Counselvise Citation: 36123114 RSA 2013
• Duration Of Justice: 2 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 05-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 361/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-3, ROOM NO. 218, STATUE CIRCLE, JAIPUR. CUKE VS. M/S. SUMS EXIM PVT. LTD., A-1, YAMUNA PATH, SURAJ NAGAR (WEST) CIVIL LINES, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAICS 9072 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI KAILASH MANGAL, JCIT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : NONE (A.D. ON RECORD) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 21/07/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 11/08/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THE APPEAL IS FILED BY THE REVENUE AGAINST THE ORDE R OF THE LD. CIT (A)-I, JAIPUR DATED 01.01.2013 FOR THE ASSESSMENT YEAR 200 8-09. THE SOLE GROUND RAISED BY THE REVENUE IS AS UNDER :- 2 ITA NO. 361/JP/2013 A.Y. 2008-09 DCIT VS. M/S. SUMS EXIM PVT. LTD., JAIPUR. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE TO THE EXTENT OF RS. 9,77,430/- NONE APPEARED FOR THE ASSESSEE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DE ALS IN PURCHASE AND SALE OF LAND. RETURN OF INCOME WAS FILED ON 30.09.2008 DECL ARING A LOSS OF RS. 8,71,948/-. THE ASSESSEE PRODUCED BOOKS OF ACCOUNT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. AN AMOUNT OF RS. 10,00,000/ - WAS DISALLOWED OUT OF NATURE FARM DEVELOPMENT EXPENSES BY FOLLOWING OBSERV ATIONS :- ON TEST CHECKING OF BOOKS OF ACCOUNTS IT WAS NOTI CED THAT ASSESSEE HAD DEBITED NATURE FARM DEVELOPMENT EXPENS ES AT RS. 1,61,62,915/-. PERUSAL OF THE VOUCHERS REVEALED THA T MOST OF THE EXPENSES HAVE BEEN INCURRED IN CASH AND ARE SUPPORT ED BY SELF MADE VOUCHERS, SOME OF THE VOUCHERS HAVE BEEN FOUND UNSIGNED BY THE RECIPIENTS. THEREFORE, THE AUTHENTICITY OF THE SAME REMAINS UNVERIFIABLE. HENCE, TO COVER UP THE LEAKAGE LUMP S UM DISALLOWANCE OF RS. 10,00,000/- IS MADE AND ADDED IN THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL WHERE FOLLOWING SUBMISSIONS WERE MADE :- (I) THE AO HAD ACCEPTED BOOKS OF ACCOUNT OF THE ASSE SSEE AND THE RELEVANT RECORD ABOUT INCURRING OF EXPENDITURE ON F ARM DEVELOPMENT 3 ITA NO. 361/JP/2013 A.Y. 2008-09 DCIT VS. M/S. SUMS EXIM PVT. LTD., JAIPUR. WERE ALSO PRODUCED. AO HAS ACCEPTED THIS FACT AND ON LY TEST CHECKED THE BOOKS OF ACCOUNT. (II) ON THE BASIS OF TEST CHECK, AN AMOUNT OF RS. 1 0,00,000/- HAS BEEN SUMMARILY DISALLOWED ON ADHOC BASIS WITHOUT ASSIGNING ANY COGENT REASON. (III) IN FARM DEVELOPMENT INCURRING OF LOCAL CASH E XPENSES IS INEVITABLE AND AS PER PRINCIPLES OF ACCOUNTANCY SELF MADE VOUC HERS AMOUNT TO PROOF OF EXPENDITURE UNLESS SOME DEFECT IS INDICATE D BY THE AO. RELIANCE WAS PLACED ON 1) DHAKESHWARI COTTON MILLS LTD. VS. CIT, 26 ITR 775 (SC) 2) LAL CHAND BHAGAT AMBICA RAM VS. CIT, 37 ITR 288 ( SC) 3) OMAR SALAY MOHAMAD VS. CIT 37 ITR 151 (SC) 4. IN A.Y. 2006-07 AN AMOUNT OF 20% OF EXPENDITURE WAS DISALLOWED WHICH WAS RESTRICTED TO RS. 1,00,000/- @ 2% BY THE ITAT JAIP UR BENCH VIDE ORDER IN ITA NO. 1457/JP/2010. THE LD. CIT (A) AWARDED PART RE LIEF BY RESTRICTING THE DISALLOWANCE TO 2% OF UNVERIFIABLE DIRECT CASH PAYME NTS BY FOLLOWING OBSERVATIONS :- 4.3. I HAVE CAREFULLY PERUSED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE AR. IT IS SEEN THAT THE AO HAS M ADE AN ADDITION HOC DISALLOWANCE OF RS. 10 LACS BY MERELY OBSERVING THAT THE EXPENDITURE WERE MADE IN CASH AND WERE SUPPORTED BY S ELF MADE VOUCHERS. NO EVIDENCE HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE EXPENSES CLAIMED WERE BOGUS, INFLATED OR WERE FOR NO N BUSINESS 4 ITA NO. 361/JP/2013 A.Y. 2008-09 DCIT VS. M/S. SUMS EXIM PVT. LTD., JAIPUR. PURPOSES. THIS ADDITION HOC DISALLOWANCE OF RS. 10 LA KHS MADE, IN A CRYPTIC MANNER APPEARS TO BE UNJUSTIFIED, PARTICULA RLY AS THE BOOKS OF ACCOUNTS OF THE APPELLANT ARE AUDITED. MOREOVER, T HE AR OF THE APPELLANT HAD SUBMITTED THAT OUT OF THE TOTAL EXPEN DITURE OF RS. 1,61,62,915/- A SUM OF RS. 1,46,43,968/- WAS INCURRE D THROUGH THE JOURNAL ENTRY AND ONLY AN AMOUNT OF RS. 11,28,435/- WAS INCURRED THROUGH DIRECT CASH ENTRY. ON PERUSAL OF THE SUBMIS SIONS OF THE AR, IT IS SEEN THAT SIMILAR DISALLOWANCE WAS MADE IN THE CASE OF THE APPELLANT IN ASSESSMENT YEAR 2006-07 WHEREIN THE HON BLE ITAT JAIPUR VIDE ITS ORDER ITA NO. 1457/JP/2010 RESTRICT ED THE DISALLOWANCE TO 2% OF THE TOTAL EXPENDITURE BY OBSER VING THAT THE CASH EXPENDITURE ON ACCOUNT OF ADVANCES MADE TO SH. KAJOR WERE NOT FULLY VERIFIABLE. HOWEVER, ON PERUSAL OF THE LED GER ACCOUNTS OF THE EXPENSES FURNISHED FOR THIS ASSESSMENT YEAR NO ANOMALY WAS FOUND REGARDING THE CLAIM OF THESE EXPENSES. DURING THIS YEAR AS PER THE SUBMISSION OF THE APPELLANT THE DIRECT CASH EXP ENDITURE IS RS. 11,28,435/-. THE ADDITION MADE BY THE AO IS RESTRICT ED TO 2% OF THESE UNVERIFIABLE DIRECT CASH PAYMENTS OF RS. 11,2 8,435/- RESULTING IN A CONFIRMATION OF DISALLOWANCE OF RS. 22,570/-. 5. AGGRIEVED, REVENUE IS IN APPEAL. THE LD. D/R REL IED ON THE ORDER OF THE AO. 6. I HAVE HEARD LD. D/R AND PERUSED THE MATERIAL ON RECORD. THE AO HAS DISALLOWED ON ADHOC BASIS AN AMOUNT OF RS. 10,00,000 /- FROM THE ENTIRE SELF MADE CASH PAYMENTS WHEREAS A FINDING IS GIVEN THAT T HE ACCOUNTS ARE TEST CHECKED. SUCH TYPE OF ADHOC DISALLOWANCE IS NOT TENA BLE AND OBSERVING SO THE 5 ITA NO. 361/JP/2013 A.Y. 2008-09 DCIT VS. M/S. SUMS EXIM PVT. LTD., JAIPUR. ITAT JAIPUR BENCH IN A.Y. 2006-07 RESTRICTED IT TO 2 %. THE LD. CIT (A) HAS FOLLOWED THE ITAT DIRECTIONS IN THIS YEAR ALSO. THE NA TURE OF BUSINESS AND NATURE OF INCURRING OF EXPENDITURE IS NOT CLAIMED TO BE DI FFERENT. IN VIEW OF THIS, I FIND NO INFIRMITY IN THE ORDER OF LD. CIT (A) WHICH IS UPH ELD. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/08/2015. SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11/08/ 2015 DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE DCIT, CIRCLE-3, STATUE CIRCLE, JAI PUR . 2. IZR;FKHZ@ THE RESPONDENT- M/S. SUMS EXIM PVT. LTD.,JAIPU R. 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.361/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 6 ITA NO. 361/JP/2013 A.Y. 2008-09 DCIT VS. M/S. SUMS EXIM PVT. LTD., JAIPUR.