Anchal Agro Chillers Pvt. Ltd., Meerut V. CIT, Meerut

ITA 3627/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86628 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 29-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 06-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A MISHRA
• Assessee Lawyers: P S KASHYAP
• Keywords: Corroborative evidences
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH A AA A : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND PRESIDENT AND PRESIDENT AND PRESIDENT AND SHRI SHRI SHRI SHRI H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU, JUDICIAL , JUDICIAL , JUDICIAL , JUDICIAL MEMBER MEMBER MEMBER MEMBER ITA NO ITA NO ITA NO ITA NO . .. . 3627/DEL/2013 3627/DEL/2013 3627/DEL/2013 3627/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2008 2008 2008 2008 - -- - 09 0909 09 M/S ANCHAL AGRO CHILLERS M/S ANCHAL AGRO CHILLERS M/S ANCHAL AGRO CHILLERS M/S ANCHAL AGRO CHILLERS PVT.LTD., PVT.LTD., PVT.LTD., PVT.LTD., 272, PRABHAT NAGAR, 272, PRABHAT NAGAR, 272, PRABHAT NAGAR, 272, PRABHAT NAGAR, MEERU MEERU MEERU MEERUT. T.T. T. PAN : AAFCA1036L. PAN : AAFCA1036L. PAN : AAFCA1036L. PAN : AAFCA1036L. VS. VS. VS. VS. COMMISSIONER OF INCOME TAX, COMMISSIONER OF INCOME TAX, COMMISSIONER OF INCOME TAX, COMMISSIONER OF INCOME TAX, MEERUT. MEERUT. MEERUT. MEERUT. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.S. KASHYAP, CA. RESPONDENT BY : SMT. A. MISHRA, CIT - DR. ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : :: : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LEARNED COMMISSIONER OF INCOME TAX, MEERUT DATED 21 ST MARCH, 2013 FOR THE AY 2008-09. 2. GROUND NO.1 OF THE ASSESSEES APPEAL READS AS UN DER:- THAT ON FACTS AND IN LAW ORDER PASSED UNDER SECTIO N 263 IS ILLEGAL AND UNWARRANTED. THE LD.CIT HAS NOT MET THE BASIC CONDITIONS FOR PASSING ORDER UNDER SECTION 263 I.E. ORIGINAL ASSES SMENT ORDER SHOULD BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE ASSESSMENT ORDER PASSED IS NEITHER ERRONEOUS NO R PREJUDICIAL TO THE INTEREST OF REVENUE. THEREFORE, THE ORDER P ASSED BY THE LD.CIT IS ILLEGAL AND VOID AB INITIO. 3. THE OTHER GROUNDS RAISED BY THE ASSESSEE ARE ONL Y ARGUMENTS IN SUPPORT OF ABOVE GROUND NO.1 4. AT THE TIME OF HEARING BEFORE US, THE LIMITED RE QUEST OF THE LEARNED COUNSEL FOR THE ASSESSEE WAS TO MODIFY THE ORDER OF THE LEARNED CIT(A) TO THE EXTENT OF HIS DIRECTION WITH REGARD TO ITA-3627/D/2013 2 DISALLOWANCE OF EXPENSES. HE POINTED OUT THAT IN T HE ORIGINAL ASSESSMENT ORDER, THE ASSESSING OFFICER HAS ALREADY NOTICED THAT THE ASSESSEE HAS NOT DONE ANY BUSINESS ACTIVITY DURING THE YEAR AND ACCORDINGLY DISALLOWED 25% OF THE EXPENSES. ON APP EAL, LEARNED CIT(A) VIDE HIS ORDER DATED 18 TH MARCH,2013 SUSTAINED THE DISALLOWANCE TO 15% OF THE EXPENSES CLAIMED BY THE ASSESSEE. THE ORDER OF LEARNED CIT(A) HAS BECOME FINAL AS NO PART Y HAD FILED THE APPEAL AGAINST THE ORDER OF LEARNED CIT(A). THAT I N THE ORDER UNDER SECTION 263 DATED 21 ST MARCH, 2013, THE LEARNED CIT OBSERVED FOR 100% DISALLOWANCE OF THE EXPENSES CLAIMED BY THE AS SESSEE. THAT SINCE THIS ISSUE HAS ALREADY BEEN ADJUDICATED BY TH E CIT(A), THE CIT WAS NOT EMPOWERED TO PASS ORDER UNDER SECTION 263 W ITH REGARD TO DISALLOWANCE OF EXPENSES. IN SUPPORT OF HIS CONTEN TION, HE REFERRED TO EXPLANATION (C) TO SECTION 263. WITH REGARD TO THE OTHER PART OF THE ORDER OF LEARNED CIT PASSED UNDER SECTION 263, THE LEARNED COUNSEL DID NOT MAKE ANY SUBMISSION. 5. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF THE LEARNED CIT PASSED UNDER SECTION 263 AND POINTED OU T THAT THE DIFFERENCE BETWEEN THE ORDER OF LEARNED CIT(A) AND LEARNED CIT IS ONLY THREE DAYS AND PROBABLY, ON THE DATE ON WHICH THE C IT PASSED THE ORDER, IT WAS NOT BROUGHT TO HIS KNOWLEDGE THAT THE CIT(A) HAS ALREADY ADJUDICATED THIS ISSUE. SHE, THEREFORE, SUBMITTED THAT THE ORDER OF LEARNED CIT PASSED UNDER SECTION 263 SHOULD BE SUST AINED. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND PERUSED RELEVANT MATERIAL PLACED BEFORE US. EX PLANATION (C) TO SECTION 263(1) READS AS UNDER:- (C) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTIO N AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJEC T MATTER OF ANY APPEAL [FILED ON OR BEFORE OR AFTER T HE 1 ST DAY OF JUNE, 1988], THE POWERS OF THE [PRINCIPAL COMMISSIONER OR] COMMISSIONER UNDER THIS SUB-SECTIO N ITA-3627/D/2013 3 SHALL EXTEND [AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED] TO SUCH MATTERS AS HAD NOT BEEN CONSIDERE D AND DECIDED IN SUCH APPEAL.]. 7. FROM THE ABOVE, IT IS EVIDENT THAT THE POWERS OF THE CIT UNDER SECTION 263 ARE EXTENDED TO THE MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN APPEAL. IN THE CASE UNDER CONSIDERA TION BEFORE US, WE FIND THAT THE CIT(A) IN THE ORDER DATED 18 TH MARCH, 2013 DECIDED THE ISSUE OF DISALLOWANCE OF EXPENSES WITH THE FOLLOWIN G FINDING:- GROUND NO.1 : IN THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. FOUND THAT THE ASSESSEE HAD NO T DONE ANY BUSINESS ACTIVITIES THOUGH HAD CLAIMED CER TAIN EXPENSES IN THE PROFIT & LOSS ACCOUNTS. THE A.O. SPECIFICALLY ASKED THE ASSESSEE TO JUSTIFY THESE EXPENSES AS CLAIMED IN THE PROFIT AND LOSS ACCOUNTS . IN RESPONSE THE ASSESSEE STATED THAT DESPITE BEST EFFO RTS NO SHOP COULD BE SOLD AND THAT THE EXPENSES WERE MINIMUM POSSIBLE TO RUN THE BUSINESS. THE ASSESSEE WAS ASKED TO PRODUCE BOOKS OF ACCOUNTS ALONG WITH SUPPORTING BILLS/VOUCHERS. IN RESPONSE THE BOOKS O F ACCOUNTS WERE PRODUCED BY THE ASSESSEE BUT THE ASSESSEE FAILED TO PRODUCE SUPPORTING BILLS AND VOUCHERS. IN THE ABOVE CIRCUMSTANCES, THE A.O. DID NOT FIND IT POSSIBLE TO VERIFY THE GENUINENESS OF THE EXPENSES WITHOUT BILLS AND VOUCHERS OR ANY OTHER EVIDENCES IN SUPPORT OF VARIOUS ITEMS OF EXPENSES B Y THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNTS. ACCORDINGLY 25% OF THE TOTAL EXPENSES CLAIMED BY TH E ASSESSEE IN PROFIT AND LOSS ACCOUNTS WAS DISALLOWED ON ESTIMATE BASIS BY THE A.O. TO PREVENT ANY POSSIBLE LEAKAGE OF REVENUE. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT IN THIS REGARD. VIDE ITS WRITTEN SUBMISS ION DATED 15/3/2013 THE APPELLANT HAS TRIED TO JUSTIFY THE GENUINENESS OF VARIOUS ITEMS OF EXPENDITURE CLAIMED BY THE APPELLANT. HOWEVER, ON BEING SPECIFICALLY ASKE D BY ME, THE AR OF THE APPELLANT EXPRESSED HIS INABILITY TO PRODUCE BILLS AND VOUCHERS OR ANY OTHER SUPPORTING EVIDENCES TO JUSTIFY THE VARIOUS ITEMS OF EXPENSES SO CLAIMED BY THE APPELLANT AS DEDUCTION. THEREFORE, IN THE ABSENCE OF PROPER BILLS/VOUCHERS OR OTHER EVIDE NCES IN SUPPORT OF VARIOUS ITEMS OF EXPENSES, I AGREE WI TH THE A.O.S CONTENTION THAT IT WAS NOT POSSIBLE TO VERIF Y THE ITA-3627/D/2013 4 GENUINENESS OF EXPENSES. AS SUCH, IN MY CONSIDERED VIEW A.O. WAS JUSTIFIED IN MAKING LUMP SUM DISALLOWANCE ON ESTIMATE BASIS. HOWEVER, IN VIEW O F SUBMISSIONS MADE BY THE APPELLANT AND ON CONSIDERATION OF FACTS AND CIRCUMSTANCES OF THE CAS E I BELIEVE THAT DISALLOWANCE @ 25% MADE BY A.O. ON ESTIMATE BASIS CERTAINLY APPEARS TO BE ON HIGHER SI DE, WHEREAS IN THE LIGHT OF FACTS AND CIRCUMSTANCES OF THE CASE A.O.S CONCERN FOR POSSIBLE LEAKAGE OF REVENUE CANNOT ALSO BE IGNORED ALTOGETHER. THEREFORE, I RE STRICT THE ESTIMATED DISALLOWANCE TO 15% OF THE EXPENSES A S CLAIMED BY THE ASSESSEE WHICH WORKS OUT TO RS.2,98,412/-. AS SUCH ASSESSEE GETS A RELIEF OF RS.1,98,942/- (I.E. RS.4,97,354/- MINUS RS.2,98,412 /-.). 8. LEARNED CIT IN THE ORDER PASSED UNDER SECTION 26 3 DATED 21 ST MARCH, 2013 MADE THE OBSERVATION THAT THE TOTAL EXP ENDITURE OF `19,89,416/- WAS DISALLOWABLE BUT THE ASSESSING OFF ICER DISALLOWED MERE 25% OF THE EXPENSES. SINCE THIS ISSUE HAS ALR EADY BEEN ADJUDICATED BY THE LEARNED CIT(A) BEFORE THE ORDER UNDER SECTION 263 WAS PASSED, IN OUR OPINION, THE CIT WAS PRECLUDED F ROM MAKING ANY OBSERVATION OR ISSUING ANY DIRECTION UNDER SECTION 263 WITH REGARD TO DISALLOWANCE OUT OF EXPENSES. WHETHER THE ORDER OF THE CIT(A) WAS BROUGHT TO THE KNOWLEDGE OF THE CIT OR NOT WOULD BE IRRELEVANT BECAUSE THE FACT REMAINS THAT THE CIT(A) HAD ALREAD Y PASSED THE ORDER ADJUDICATING THE ISSUE OF DISALLOWANCE OF EXPENSES BEFORE THE ORDER OF THE CIT PASSED UNDER SECTION 263. WE, THEREFORE, P ARTLY MODIFY THE ORDER OF THE CIT PASSED UNDER SECTION 263 AND HIS OBSERVATIONS/DIRECTIONS WITH REGARD TO DISALLOWANCE OUT OF EXPENSES ARE CANCELLED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 30 TH JANUARY, 2015. SD/- SD/- ( (( ( H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU ) )) ) (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 30.01.2015 VK. ITA-3627/D/2013 5 COPY FORWARDED TO: - 1. APPELLANT : M/S ANCHAL AGRO CHILLERS PVT.LT D., M/S ANCHAL AGRO CHILLERS PVT.LTD., M/S ANCHAL AGRO CHILLERS PVT.LTD., M/S ANCHAL AGRO CHILLERS PVT.LTD., 272, PRABHAT NAGAR, MEERUT. 272, PRABHAT NAGAR, MEERUT. 272, PRABHAT NAGAR, MEERUT. 272, PRABHAT NAGAR, MEERUT. 2. RESPONDENT : COMMISSIONER OF INCOME TAX, MEERUT . COMMISSIONER OF INCOME TAX, MEERUT. COMMISSIONER OF INCOME TAX, MEERUT. COMMISSIONER OF INCOME TAX, MEERUT. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR