Vijaylaxmi Pvt. Ltd., Jharsuguda V. ACIT, Circle-1(1), Sambalpur

ITA 38/CTK/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5361 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 15-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: MAHENDRA KUMAR KEDIA
• Section: 143(3); 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ./ ITA NO. 38 / CTK /20 1 6 ( / ASSESSMENT YEAR : 20 1 0 - 20 1 1 ) VIJAYLAXMI PVT. LTD., VIJAYLAXMI MARKET COMPLEX, AT/PO : GANDHI CHOWK, BRAJRAJNAGAR, DISTRICT: JHARSUGUDA - 768218 VS. ACIT, CIRCLE - 1(1), AAYAKAR BHAWAN, AINTHAPALI, SAMBALPUR - 768004 ./ ./ PAN/GIR NO. : A ACCV 6314 M ( / APPELLANT ) .. ( / RESPONDENT ) /AS SESSEE BY : SHRI MAHENDRA KUMAR KEDIA , AR /REVENUE BY : SHRI D.K.PRADHAN, DR / DATE OF HEARING : 02 / 1 1 /201 7 / DATE OF PRONOUNCEMENT 03 / 11 /201 7 / O R D E R PER SHRI PAV AN KUMAR GADALE, JM : TH E ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF CIT(A), CUTTACK , IN I.T. APPEAL NO. 117 / 2013 - 14 , DATED 30.11.2015 , PASSED U/S. 143(3) /250 OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2010 - 2011 . 2. THE ASSESS EE HAS RAISED SUBSTANTIAL GROUNDS WITH RESPECT OF ADHOC DISALLOWANCE OF 10% OF EXPENSES OF TYRE PURCHASED AND CONSUMED AND 5% OF REPAIRS AND MAINTENANCE EXPENSES, IRRESPECTIVE OF THE FACT THAT THE ASSESSEE HAS PRODUCED THE BOOKS OF ACCOUNTS ALONG WITH THE EXPENDITURE VOUCHERS. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED AS TRANSPORT CONTRACTOR, CONSTRUCTION CONTRACT S , DEALERS IN PETROLEUM PRODUCTS OF HPCL AND FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010 - 2011 ON 09.02.2011 WITH TOT AL INCOME OF RS. 1,23,24,24,430/ - AND THE ITA NO. 38 /CTK/201 6 2 RETURN OF INCOME WAS PROCESSED U/S.143(1) OF THE ACT AND SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S.143(2) & 142(1) WERE DULY SERVED ON THE ASSESSEE . IN COMPLIANCE TO THE SAME, THE LD . AR OF THE ASSESSEE APPEARED FROM TIME TO TIME , PRODUCED THE RELEVANT BOOKS OF ACCOUNTS AS CALLED BY THE AO AND THE CASE WAS DISCUSSED. THE AO ON PERUSAL OF THE PROFIT AND LOSS ACCOUNT FOUND THAT THE ASSESSEE HAS DEBITED TOWARDS TYRE PURCHASE AND CONSUME OF RS.43,79,865/ - AND ALSO ASSESSEE CLAIMED REPAIRS AND MAINTENANCE EXPENSES OF RS.1,67,73,244/ - . THE ASSESSEE WAS CALLED FOR TO PRODUCE THE EVIDENCE IN SUPPORT OF THE CLAIMS BUT THE LD. AR PRODUCED THE LEDGER COPY ALONG WITH DEBIT VOUCHERS AND THE AO WA S NOT SATISFIED WITH THE MAINTENANCE OF VOUCHERS WHICH ARE NOT MADE ON DAY - TO - DAY BASIS AND SOME OF THE VOUCHERS ARE HANDMADE AND PAYMENTS ARE MADE IN CASH. THEREFORE, THE AO IS OF THE OPINION THAT THERE IS PROBABILITY OF HUMAN MANIPULATION AS THE VOUCHERS ARE NOT VERIFIABLE, THEREFORE, DISALLOWED 10% OF TYRE PURCHASES AND CONSUME D RS.4,37,986/ - AND 5% OF THE REPAIR AND MAINTENANCE RS.8,38,662/ - AND ASSESSED THE TOTAL INCOME AT RS.1,36,01,078/ - AND PASSED THE ORDER U/S.143(3) OF THE ACT DATED 22.03.2013. 4 . AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE HAS FILED AN APPEAL WITH THE CIT( A ). IN THE APPELLATE PROCEEDINGS LD. AR OF THE ASSESSEE ARGUED THE GROUNDS AND REITERATED THE SUBMISSIONS, WHEREAS THE LD. CIT( A ) HAVING CONSIDERED THE FINDINGS AND SUBMISSIONS O F ASSESSEE, HAS OBSERVED THE FOLLOWING AT PAGE 2 & 3 OF THE ORDER AND DISMISSED THE APPEAL : - ITA NO. 38 /CTK/201 6 3 I HAVE CAREFULLY PERUSED ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT THOUGH THE APPELLANT HAD CLAIMED THAT ALL THE VEHICLE REPAIR AND MAINTENANCE EXPENS ES AS WELL AS TYRES PURCHASED AND CONSUMED EXPENSES ARE FROM AUTHENTICATED/REGISTERED PERSON AND PAYMENTS WERE MOSTLY IN CHEQUES AS AGAINST THE AO'S FINDING THAT THE VOUCHERS ARE HAND MADE AND PAYMENTS ARE IN CASH THE APPELLANT DID NOT PRODUCE ANY EVIDENCE CORROBORATING ITS STATEMENT DURING THE APPEAL HEARING. THE APPELLANT DID NOT PRODUCE THE AUTHENTICATED EXPENSE DETAILS MENTIONING PURCHASES FROM REGISTERED SHOPS AND PAYMENTS MADE IN CHEQUE. MOREOVER FROM THE AUDIT REPORT PRODUCED BY THE APPELLANT DURING APPEAL HEARING IT IS SEEN THAT ON ACCOUNT OF REPAIR AND MAINTENANCE AN AMOUNT OF RS.94,11,367/ - OUT OF THE TOTAL CLAIM OF RS.1,67,73,224/ - MADE BY THE APPELLANT, WERE PAID TO THE SISTER - CONCERN M/S.VIJAYLAXMI MOTORS PVT. LTD. AND THE APPELLANT ITSELF MENTI ONED THAT THERE ARE COMMON DIRECTORS AND M/S.VIJAYLAXMI MOTORS PVT. LTD. IS ONE OF THE GROUP COMPANIES. SIMILARLY FROM THE SAME DOCUMENTS PROVIDED BY THE APPELLANT IT IS EVIDENT THAT THE AMOUNT OF RS.24,46,665/ - WERE PAID TO M/S.VIJAYLAXINI TYRES OUT OF TH E CLAIM OF RS.43,79,865/ - MADE BY THE APPELLANT UNDER THE HEAD TYRES PURCHASES AND CONSUMED EXPENSES WHERE DIRECTORS OF THE APPELLANT COMPANY ARE PARTNERS OF THE FIRM M/S.VIJAYLAXMI TYRES. WITH ALL THE ABOVE EVIDENCES THE FINDING OF THE AO THAT PROBABILITY OF HUMAN MANIPULATION OBVIOUSLY CANNOT BE RULED OUT. THE AO'S ACTION IN DISALLOWING AN AMOUNT OF RS.12,76,648/ - FROM THE ABOVE TWO EXPENSES CLAIMED IS SUSTAINED. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. 6. BEFORE US, LD. AR SUBMITTED THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION WITHOUT APPRECIATING THE FACTS THAT THE ASSESSEES BOOKS OF ACCOUNTS ARE AUDITED AND BILLS AND VOUCHERS WERE PRODUCED AND PRAYED FOR ALLOWING THE APPEAL . CONTRA, LD. DR RE LIED ON THE ORDERS OF LD. CIT(A) AND OPPOSED TO THE SUBMISSIONS OF LD.AR. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. LD. ARS SUBMISSION IN RESPECT OF DISPUTED ISSUE OF EXPENSE S OF TYRE PURCHASED & CONSUMED, THE ASSESSEE HAS SUBMITTED THE FINANCIAL STATEMENTS AND TAX AUDIT REPORT IN THE PAPER BOOK . THE LD. CIT(A) MADE A DETAILED FINDING IN RESPECT OF TYRES PURCHASE AND CONSUME D AND WE FIND ITA NO. 38 /CTK/201 6 4 THE AO HAS ACCEPTED THE LEDGER ACCOUNT COPIES AND DEBIT VOUCHERS AND OBSERVED THAT THE ASSESSEE HAS NOT PREPARED DAY - TO - DAY VOUCHERS AND MODE OF PAYMENT WAS IN CASH. THE AO FURTHER MADE OBSERVATION ON THE GENUINENESS OF EXPENSES WHICH CANNOT BE VERIFIABLE. WE FOUND THAT THE ASSESSEE COMPANY ACCOUNTS ARE AUDITED U/S.44AB AND HAS SUBMITTED THE INFORMATION IN THE PAPER BOOK. BUT THE FACT THAT THE ASSESSEE COULD NOT PROPERLY MAINTAIN THE VOUCHERS WHICH IS DISPUTED BY THE REVENUE AUTHORITIES. CONSIDERING THE APPARENT FACTS AS THE ASSESSEE COULD NOT SUBSTANTIATE WITH EVIDENCE BEFORE THE AUTH ORITIES AND THEREFORE CIT(A) HAS CONFIRMED THE ADDITION OF 10% . ACCORDINGLY, WE MODIFY THE ADDITION TO THE EXTENT OF 5% AND DIRECT ACCORDINGLY TO THE AO. 8. ON THE SECOND DISPUTED ISSUE OF REPAIRS AND MAINTENANCE, THE CONTENTION OF LD.AR THAT MOST OF THE P AYMENTS ARE MADE THROUGH CHEQUES AND DRAFTS BUT THE CIT(A) OBSERVED THAT THE ASSESSEE HAS NOT PRODUCED THE AUTHENTICATED EXPENSES WITH DETAILS MENTIONING THE PURCHASES AND PAYMENTS AND FURTHER OUT OF THE TOTAL REPAIR S AND MAINTENANCE EXPENSES PAID TO SISTE R CONCERN S . THE AO ASSUMED THAT THERE IS A HUMAN PROBABILITIES OF MANIPULATION BUT THERE IS NO PROOF OR EVIDENCE AS RELIED BY THE AO. FURTHER ON THE QUERY FROM THE BENCH THE RATIO OF NET PROFIT OFFERED BY THE ASSESSEE FOR EARLIER YEARS, THERE IS NO CLARITY IN THE SUBMISSION AND THE ASSESSEE COULD NOT PRODUCE DETAILS. T HE ASSESSEES BOOKS OF ACCOUNTS ARE AUDITED U/S.44AB OF THE ACT BUT ADVERSE F INDINGS BEFORE THE LOWER AUTHORITIES ARE FOR NON - PRODUCTION OF VOUCHERS SH ALL RAISE CERTAIN DOUBTS. THEREFORE, CONSIDERING TH E APPARENT FACTS, MATERIAL ON RECORD, WE ITA NO. 38 /CTK/201 6 5 RESTRICT THE DISALLOWANCE OF REPAIRS AND MAINTENANCE TO 3% IN STEAD OF 5% MADE BY THE AO. ACCORDINGLY, CIT(A)S ORDER IS MODIFIED TO THE EXTENT OF RESTRICTING TO 3% AND WE DIRECT ACCORDINGLY. 9 . IN THE RESULT, APPEA L OF THE ASSESSEE IS PARTLY ALLOWED . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 03 / 11 / 201 7 . SD/ - ( N. S. SAINI ) SD/ - ( PA V AN KUMAR GADALE ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK ; DATED 03 / 11 /201 7 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - VIJAYLAXMI PVT. LTD., VIJAYLAXMI MARKET COMPLEX, AT/PO : GANDHI CHOWK, BRAJRAJNAGAR, DISTRICT: JHARSUGUDA - 7682 18 2. / THE RESPONDENT - ACIT, CIRCLE - 1(1), AAYAKAR BHAWAN, AINTHAPALI, SAMBALPUR - 768004 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD F ILE. //TRUE COPY//