M/s. Chalimax Leather Craft P.Ltd, Jalandhar V. The Asstt. Commissioner of Income-tax, Jalandhar

ITA 391/ASR/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63613 (ITAT-AMRITSAR)
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-12-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 09-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: DINESH SARNA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.391(ASR)/2012 ASSESSMENT YEAR:2006-07 PAN :AACCC3104E M/S. CHALIMAX LEATHER CRAFT (P) LTD. VS. ASSTT. COM MR. OF INCOME-TAX, RANDHAWA MASANDAN, JALANDHAR. RANGE-II, JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.DINESH SARNA, ADVOCATE RESPONDENT BY:SH. TARSEM LAL, DR DATE OF HEARING: 10 /12/2012 DATE OF PRONOUNCEMENT:12/12/2012 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), JALANDHAR, DATED 30.07.2012 FOR THE ASSESSMENT YEA R 2006-07. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER PASSED BY THE WORTHY CIT(A) DATE D 30.07.2012 WAS AGAINST THE LAW & FACTS OF THIS CASE. 2. THAT THE WORTHY CIT(A) HAS ERRED IN LAW IN UPHO LDING ADDITION MADE BY ASSESSING OFFICER OF RS.7,83,010/- ON ACCOU NT OF FOREIGN TRAVELING EXPENSES IGNORING THE FACT THAT A SSESSEE ITA NO.391(ASR)/2012 2 COMPANY WAS HAVING EXPORT SALES DURING THE YEAR AND EXPENSES ON TRAVEL HAS BEEN INCURRED FOR THE PURPOSE OF BUSI NESS. 3. THAT THE WORTHY CIT(A) HAS ERRED IN LAW IN UPHO LDING ADDITION OF RS.2,00,000/- MADE BY A.O. BY WAY OF ADHOC DISAL LOWANCE OUT OF REPAIR & MAINTENANCE EXPENSES OUT OF TOTAL E XPENSES OF RS.6,48,170/- WHICH WERE INCURRED FOR COMMERCIAL EX PEDIENCY OF THE BUSINESS. 4. THAT APPELLANT REQUESTS TO ADD OR AMEND THE GROU ND OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OFF. 2. GROUNDS NO. 1 & 4 RAISED BY THE ASSESSEE ARE GEN ERAL IN NATURE AND THEREFORE, DO NOT REQUIRE ANY ADJUDICATION. 3. AS REGARDS GROUND NO.2, THE BRIEF FACTS AS APPEA RING FROM THE ORDER OF THE AO AT PARA 3 ARE REPRODUCED FOR THE SAKE OF CLA RITY AS UNDER: ON THE ISSUE DISCUSSED WITH THE ASSESSEE, REGARDIN G THE EXPENSES DEBITED UNDER THE HEADS OF FOREIGN TRAVEL AT RS.7,8 3,010/-, THE ASSESSEE WAS ASKED TO FILE COMPLETE DETAILS REGARDING THE FO REIGN TOUR TAKEN WITH ALL BILLS & VOUCHERS AND THE COMMERCIAL EXPEDI ENCY OF THE FOREIGN TOUR TAKEN. NO BILLS OR VOUCHERS OR SUPPORT ING DOCUMENTS WERE FILED BY THE ASSESSEE IN THIS REGARD. IT IS NOTEWOR THY THAT AN ADDITION WAS MADE IN THE A.Y. 2005-06 ALSO ON THIS ACCOUNT. IN THE ABSENCE OF ANY SUPPORTING DOCUMENT OR EXPLANATION, THE EXPENSE S CLAIMED CANNOT BE ALLOWED AND THE SAME IS ADDED BACK TO THE INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 FOR CONCEALING TRUE PARTICULARS OF INCOME UNDER THE HEA DS OF FOREIGN TRAVEL EXPENSES IS BEING INITIATED SEPARATELY. 4. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE H AS NOT PRODUCED BILLS AND VOUCHERS IN SUPPORT OF THE CLAIM MADE BY THE ASSESS EE. IN SUCH ITA NO.391(ASR)/2012 3 CIRCUMSTANCES, THE AO IS REQUIRED TO PASS BEST JUDG MENT ASSESSMENT ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. IT IS PERTIN ENT TO MENTION HERE THAT THE AO HIMSELF IN PARA 3 OF HIS ORDER, MENTIONED HEREIN ABOVE, HAS REFERRED TO THE SIMILAR ADDITION MADE IN THE PRECEDING YEAR I.E .. DURING ASSESSMENT YEAR 2005-06. AS A MATTER OF FACT, THIS IS THE MATERIAL AVAILABLE WITH THE ASSESSING OFFICER FROM WHICH HE COULD HAVE DRAWN SOME CONCLUS ION IN THE INTEREST OF JUSTICE, WHICH IN FACT, WAS NOT DONE BY THE AO IN T HE PRESENT CASE. WE ARE OF THE VIEW THAT PAST RESULTS OF THE ASSESSEE IN SUCH FACTS AND CIRCUMSTANCES OF THE CASE ARE BEST GUIDE FOR MAKING THE ASSESSMENT. IT WAS BROUGHT ON RECORD BY THE LD. COUNSEL FOR THE ASSESSEE, SH. DINESH SAR NA, ADVOCATE, THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2005-06 AL ONGWITH THE ORDER OF THE LD. CIT(A)-II, LUDHIANA DATED 26.11.2008 AT PB 40 TO 49 WHERE DISALLOWANCE OF IDENTICAL EXPENSES WAS MADE AT RS.1 3,20,296/- AS PER PB 22 BEING THE ORDER OF THE AO OUT OF THE CLAIM MADE AT RS.30,72,892/-. THE LD. CIT(A) ALLOWED THE RELIEF OF RS.2,86,752/- VIDE PAR A 6.4 OF CIT(A)S ORDER DATED 26.11.2008. ULTIMATELY, THE ASSESSEE WAS DISA LLOWED ABOUT 1/3 RD OF THE EXPENSES CLAIMED DURING THE PRECEDING YEAR I.E. ASS ESSMENT YEAR 2005-06. IT WAS ALSO ARGUED THAT THE DISALLOWANCE WAS MADE WHEN THE DIRECTOR OF THE ASSESSEE COMPANY TRAVELED ALONGWITH HIS WIFE AND CH ILDREN. IN THE PRESENT CASE, IT IS NOT UNDER DISPUTE THAT ONLY DIRECTOR HA D TRAVELED AND NOT THE WIFE ITA NO.391(ASR)/2012 4 AND THE CHILDREN. THE ASSESSEE HAVING INCURRED RS.7 ,83,010/- DURING THE YEAR, THE AO IS NOT JUSTIFIED IN MAKING THE DISALLOWANCE OF TOTAL AMOUNT OF RS.7,83,010/-. IT WAS ARGUED THAT THE ASSESSEE HAD FETCHED THE TURNOVER OF RS.12.03 CRORES AS COMPARED TO THE TURNOVER OF RS.7 .99 CRORES IN THE IMMEDIATE PRECEDING YEAR AND THE EXPENSES INCURRED ARE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. 6. THE ARGUMENTS MADE BY SH. DINESH SARNA, ADVOCATE , APPEARS TO BE CONVINCING TO LARGE EXTENT THAT THE TRAVELING IN TH E PRECEDING YEAR WAS DONE BY THE DIRECTOR ALONGWITH HIS WIFE AND CHILDREN, WH ICH FACT, HAS NOT BEEN REBUTTED BY THE LD. DR. IN THE PRESENT YEAR, THE TR AVELING HAS BEEN DONE ONLY BY THE DIRECTOR OF THE ASSESSEES COMPANY. THE ASSE SSEES TURNOVER HAS ALSO INCREASED TO RS.12.03 CRORES FROM RS.7.99 CRORES AS COMPARED TO THE PRECEDING YEAR. THOUGH THE ASSESSEE HAS NOT SUBMITT ED ANY DOCUMENTARY EVIDENCE IN SUPPORT OF HIS ARGUMENT AND THEREFORE, THERE IS EVERY POSSIBILITY OF LEAKAGE OF REVENUE IN SUCH FACTS AND CIRCUMSTANC ES. IT WILL BE IN THE INTEREST OF JUSTICE IF THE DISALLOWANCE OF 20% IS M ADE OF THE TOTAL CLAIM OF RS.7,83,010/-. THE AO IS DIRECTED ACCORDINGLY TO AL LOW THE RELIEF TO THE ASSESSEE. THUS, GROUND NO.2 OF THE ASSESSEE IS PAR TLY ALLOWED. ITA NO.391(ASR)/2012 5 7. AS REGARDS GROUND NO.3, THE BRIEF FACTS AS ARISI NG FROM THE ORDER OF THE AO AT PARA 4, WHICH FOR THE SAKE OF CLARITY ARE REP RODUCED AS UNDER: 4. ON THE ISSUE DISCUSSED WITH THE ASSESSEE REGARD ING THE EXPENSES DEBITED UNDER THE HEADS OF REPAIR & MAINTENANCE AT RS.6,48,170/-, THE ASSESSEE WAS ASKED TO FILE COMPLETE DETAILS REGARDI NG THESE EXPENSES WITH ALL BILLS & VOUCHERS. IT WAS OBSERVED ON VERIF ICATION OF BILLS & VOUCHERS THAT THE CLAIMED EXPENSES WERE NOT SUPPORT ED BY PROPER BILLS AND VOUCHERS. HENCE, AN ADDITION OF RS.2,00,000/- I S BEING MADE DUE TO VERIFIABILITY OF THESE EXPENSES. PENALTY PROCEED INGS U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 FOR CONCEALING TRUE PARTIC ULARS OF INCOME UNDER THE HEAD OF REPAIR & MAINTENANCE EXPENSES IS BEING INITIATED SEPARATELY. 8. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER. 9. IT WAS ARGUED BY THE LD. COUNSEL FOR THE ASSESSE E, SH. DINESH SARNA THAT THE ASSESSEE HAD PRODUCED ALL THE BILLS AND VO UCHERS. ALL THE DETAILS OF THE EXPENSES WERE PLACED ON RECORD BEFORE THE AUTHO RITIES BELOW. NO SPECIFIC DEFECT HAS BEEN POINTED OUT THAT WHICH BILL OR VOU CHER IS NOT PROPER. IN SUCH FACTS AND CIRCUMSTANCES, THE LD. COUNSEL FOR THE AS SESSEE, MR. DINESH SARNA ARGUED THAT NO ADDITION COULD BE MADE SIMPLY ON THE BASIS OF SURMISES AND CONJECTURES. 10. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE ARE CONVINCED WITH THE ARGUMENTS MADE BY LD. COU NSEL FOR THE ASSESSEE THAT THE BILLS AND VOUCHERS WERE PRODUCED BEFORE TH E AO ALONGWITH DETAILS ITA NO.391(ASR)/2012 6 BUT THE AO DID NOT POINT OUT ANY SPECIFIC DEFECT I. E. WHICH BILL OR VOUCHER IS NOT PROPER. IN SUCH FACTS AND CIRCUMSTANCES, NO ADD ITION ON THE BASIS OF SURMISES AND CONJECTURES CAN BE MADE. THEREFORE, TH E AO IS NOT JUSTIFIED IN DISALLOWING RS.2,00,000/- ON AD-HOC BASIS OUT OF TH E CLAIM OF RS.6,48,170/- ON THE REPAIR & MAINTENANCE. THEREFORE, THE LD. CIT (A) IS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE A.O. ACCORDINGLY, THE AO IS DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE IN TOTO AND DELETE THE AD DITION OF RS.2,00,000/- AS PER OUR FINDINGS GIVEN HEREINABOVE. THUS, GROUND NO .3 OF THE ASSESSEE IS ALLOWED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.391(ASR)/2012 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12TH D ECEMBER, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12 TH DECEMBER, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. CHALIMAX LEATHER CRAFT (P) LTD. J ALANDHAR. 2. THE ACIT, R-II,JALANDHAR. 3. THE CIT(A), JALANDHAR. 4. THE CIT, JALANDHAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR)