M/s Balaji Group, Lucknow V. Dy. Commissioner of Income Tax, Lucknow

ITA 378/LKW/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100380 (ITAT-LUCKNOW)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 10-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HARISH GIDWANI
• Assessee Lawyers: A P SINHA
• Keywords: Principle of natural justice; Rule of consistency
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.378/LKW/2015 ASSESSMENT YEAR:2011 - 12 M/S BALAJI GROUP, 354, NAKA HINDOLA, AMINABAD ROAD, LUCKNOW. PAN:AAFFB4903N VS. DY.C.I.T., CENTRAL CIRCLE - II, LUCKNOW. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI A. P. SINHA, ADVOCATE RESPONDENT BY SHRI HARISH GIDWANI, D. R. DATE OF HEARING 03/08/2015 DATE OF PRONOUNCEMENT 1 6 /09/2015 O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) - III, LUCKNOW DATED 27/03/2015 FOR THE ASSESSMENT YEAR 2011 - 12. 2. IN THIS APPEAL , THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THE NOTICE ISSUED UNDER SECTION 143(2) DATED 21.01.2013WAS 'NO NOTICE' IN THE EYES OF LAW AS THE SAME HAD BEEN ISSUED AFTER EXPIRY TIME LIMIT (FOR ISSUING SUCH NOTICE) WITH REFERENCE TO THE 'RETURN' FILED ON 28.09.2011 HAD EXPIRED AND ACCORDIN GLY THE ASSESSMENT ORDER DATED 31.03.2013 AS ALSO VARIOUS DISALLOWANCES AS STAND COMPRISED THEREIN ARE LIABLE TO BE DECLARED AS VOID AB - INITIO. WITHOUT PREJUDICE TO THE AFORESAID 2 2. BECAUSE THE 'DY. CIT' HAS ERRED IN LAW AND ON FACTS IN MAKING AD HOC DI SALLOWANCE AS PER PARTICULARS GIVEN BELOW: HEAD OF EXPENSES DEDUCTION CLAIMED AMOUNT DISALLOWED %OF DISALLOWANCE SALARY & WAGES 32,82,3177 - 3,28,23 1/ - 10% 3. BECAUSE THE EXPENDITURE CLAIMED IN THE PROFIT AND LOSS ACCOUNT WERE FULLY VOUCHED AND VERIFIABLE AND THERE BEING NO SPECIFIC INSTANCE OF ANY DISALLOWANCE NATURE OF EXPENSE CLAIMED THEREIN, NO SUCH DISALLOWANCE AS AFORESAID, COULD BE VALIDLY MADE. 4. BECAUSE IN ANY CASE, THE DISALLOWANCE AS MADE BY THE 'DY. CIT' ARE ERRONEOUS, MUCH TOO HIGH AND EXCESSIVE. 5. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 6. BECAUSE IN RELATION TO THE GROUNDS TAKEN HEREINFORE THE 'APPELLANT' BEGS TO REFER AND RELY UPON THE AVERMENTS MADE IN THE 'STATE MENT OF FACTS' AS IS BEING FILED ALONGWITH MEMO OF APPEAL ITSELF. 3. REGARDING GROUND NO. 1 I.E. REGARDING NON ISSUE OF NOTICE U/S 143(2) OF THE ACT IN COURSE OF ASSESSMENT PROCEEDINGS U/S 153C OF THE ACT, WE FIND THAT IT IS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT THE RETURN OF INCOME U/S 153C WAS FILED BY THE ASSESSEE ON 21/01/2013 AND SUBSEQUENTLY, NOTICE U/S 143(2) WAS ISSUED ON THE SAME DATE I.E. 21/01/2013 FIXING THE CASE FOR HEARING ON 28/01/2013. THIS FINDING OF THE ASSES SING OFFICER IN PARA 3 OF THE ASSESSMENT ORDER COULD NOT BE CONTROVERTED BY LEARNED A.R. OF THE ASSESSEE AND THEREFORE, WE FIND NO MERIT IN THIS GROUND OF THE ASSESSEE BEING GROUND NO. 1 AND THE SAME IS REJECTED. 4 . REGARDING THE ISSUE ON MERIT RAISED BY THE ASSESSEE AS PER GROUND NO. 2 TO 6, IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT AD HOC 3 DISALLOWANCE OF 10% WAS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY LEARNED CIT(A) IN THE PRESENT YEAR BUT IN ASSESSMENT YEAR 2012 - 13, THERE IS NO SUCH D ISALLOWANCE AND IN SUPPORT OF THIS CONTENTION, HE SUBMITTED A COPY OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2012 - 13 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT ON 27/02/2015. HE POINTED OUT THAT IN THAT YEAR, ONLY ONE DISALLOWANCE WAS MADE OF RS.2,10,463/ - U/S 36(1)(III) OF THE ACT BEING INTEREST EXPENDITURE AND THERE IS NO DISALLOWANCE OUT OF SALARY EXPENSES. HE FURTHER SUBMITTED THAT IN VIEW OF THESE FACTS, AS PER THE PRINCIPLE OF CONSISTENCY, DISALLOWANCE MADE BY THE ASSESSING OFFICER IN T HE PRESENT YEAR SHOULD BE DELETED. 5 . LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT AS PER PARA 6 OF THE ASSESSMENT ORDER, THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER OF 10% OF TOTAL EXPENSES UNDER THE HEAD SALARY AND WAGES. IT IS OBSERVED BY THE ASSESSING OFFICER IN THIS PARA OF THE ASSESSMENT ORDER THAT THE ASSESSEE WAS ASKED TO PRODUCE SALARY AND WAGES REGISTER AND PERUSAL OF THE SALARY REGISTER AND VOUCHER S RELATED TO WAGES, IT WAS NOTICED THAT MANY ENTRIES IN SALARY REGISTER AND IN VOUCHERS OF WAGES, THE SIGNATURE/THUMB IMPRESSION OF EMPLOYEE IS NOT AVAILABLE. WE ALSO FIND THAT IN THE PRESENT YEAR, THE ASSESSEE HAS REPORTED GROSS SALES OF RS.1145.75 LAC A ND THE GROSS PROFIT REPORTED BY THE ASSESSEE IS RS.189.49 LAC AND THE NET PROFIT REPORTED BY THE ASSESSEE IS RS.7,44,760/ - . THE PERCENTAGE OF GROSS PROFIT COMES TO 16.54% AND NET PROFIT 0.65%. IN THE NEXT YEAR I.E. ASSESSMENT YEAR 2012 - 13, IT IS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IN PARA 4 THAT THE RATE OF GROSS PROFIT IS 16.57% AND NET PROFIT IS 0.72%. THE TURNOVER IN THAT YEAR IS RS.1622.65 LAC. THE TURNOVER IN THE NEXT YEAR IS ALMOST 50% HIGHER AS COMPARED TO THE PRESENT YEAR. 4 HE NCE, IT IS SEEN THAT ALTHOUGH THE RATE OF GROSS PROFIT AND NET PROFIT REPORTED BY THE ASSESSEE IN THE PRESENT YEAR IS IN LINE WITH THE GROSS PROFIT AND NET PROFIT REPORTED BY THE ASSESSEE IN NEXT YEAR I.E. ASSESSMENT YEAR 2012 - 13 BUT STILL THIS FACTOR IS V ERY IMPORTANT THAT IN THE SALARY REGISTER AND VOUCHERS OF W AGES FOR THE PRESENT YEAR PRODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, THE SIGNATURE/THUMB IMPRESSION OF THE EMPLOYEES IS MISSING AGAINST MANY ENTRIES. UNDER THESE FACTS, WE FEEL THAT T HE POSSIBILITY OF SOME BOGUS EXPENDITURE HAVING BEEN INCLUDED BY THE ASSESSEE IN THE EXPENSES CLAIMED BY IT, CANNOT BE RULED OUT. BUT STILL IN OUR CONSIDERED OPINION, THE DISALLOWANCE OF 10% IS EXCESSIVE AND WE REDUCE THE SAME TO 5% OF SALARY AND WAGES EX PENSES AND IN THIS MANNER, WE CONFIRM THE DISALLOWANCE OF RS.1,64,115/ - AS AGAINST THE DISALLOWANCE OF RS.3,28,231/ - MADE BY THE ASSESSING OFFICER. THE ASSESSEE GETS PART RELIEF. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED. (ORDE R WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 6 /09/2015 SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR