DCIT, New Delhi V. M/s. Pragati Electrocom Pvt. Ltd., Gurgaon

ITA 3987/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4921 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 10-07-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 11-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ATIZ AHMED
• Keywords: Additional evidence

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SMT BEENA A. PILLAI, JUDICIAL MEMBER ITA NO. 3987/DEL/2014 (ASSESSMENT YEAR: 2010 - 11 ) DCIT, CIRCL - 14(1), NEW DELHI VS. PRAGATI ELECTROCOM PVT. LTD, PLOT NO. 184/3, PHASE - I, IMT MANESAR, GURGAON PAN:AACCP7809B (APPELLANT) (RESPONDENT) REVENUE BY : SHRI ATIZ AHMED, SR. DR ASSESSEE BY: SHRI ANIL GUPTA, CA DATE OF HEARING 10/07 / 2017 DATE OF PRONOUNCEMENT 01 / 0 9 / 2017 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A) - XVII, NEW DELHI DATED 07.04.2014 FOR THE ASSESSMENT YEAR 2010 - 10. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW. THE ID. C1T(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1148504/ - ON ACCOUNT OF DISALLOWANCE OF CAR EXPENSES FOR PERSONAL USE IGNORING THE FACT THAT THE ASSESSEE FAILED TO PRODUCE THE LOG BOOK, WHICH IS THE ONLY AUTHE NTIC DOCUMENT TO SUBSTANTIATE THAT THE USE OF VEHICLES WAS FOR BUSINESS PURPOSES ONLY. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 7790474/ - AND RS.55128754/ - ON ACCOUNT OF VARIATION IN CLOSING STOCK AND BOOK DEBTS RESPECTIVELY WITHOUT APPRECIATING THE FINDINGS AND CALCULATIONS OF THE AO WHICH ARE BASE LOGICAL FINDINGS AND CALCULATIONS OF THE AO WHICH ARE BASED UPON EXPLANATION SUBMITTED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDIN GS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW. THE ID. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.30,50,900/ - BY ACCEPTING ADDITIONAL EVIDENCE U/'S 46A AND HOLDING THAT THE EXPENDITURE APPEARS TO BE GENUINE. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ID. CIT(A) HAS ERRED IN DELETING THE ABOVE ADDITION IGNORING THE FACT THAT THE PAGE 2 OF 5 ASSESSEE COMPANY COULD NOT PRODUCE AND DOCUMENTARY EVIDENCES TO SUBSTANTIATE ITS CLAIM OF EXPENDITURE. 3. FACTS S TATED BRIEFLY THAT ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF ENGINEERING GOODS LIKE POWER DISTRIBUTION FRAMES, ISOLATION TRANSFORMERS, AUTOMATED VOLTAGE STABILISER ETC. ASSESSEE FILED ITS RETURN OF INCOME ON 21/09/2010 D ECLARING TOTAL INCOME OF RS. 449 1131/ . THE ASSESSMENT UNDER SECTION 143 (3) OF THE INCOME TAX ACT WAS PASSED ON 08/01/2013 WHEREIN SEVERAL ADDITIONS WERE MADE TO THE REGULAR INCOME OF THE ASSESSEE. THE ASSESSEE BY FILING RETURN OF INCOME OFFERED TAXATION UNDER SECTION 115 JB OF THE INCOME TAX ACT. ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT A. AGGRIEVED BY THE ORDER OF THE LD. ASSESSING OFFICER. THE LD. CIT A, DELETED THE ADDITION MADE BY THE LD. ASSESSING OFFICER WHICH ARE CONTESTED BEFORE US. 4. HEARD THE RIVAL PARTIES AND PERUSED THE ORDERS OF LOWER AUTHORITIES. 5. THE 1 ST GROUND OF APPEAL OF THE REVENUE IS AGAINST THE DISALLOWANCE OF MOTOR CAR EXPENDITURE OF RS. 114 8504/ MADE BY THE LD. ASSESSING OFFICER BUT DELETED BY THE LD. CIT A. THE LD. ASSESSING OFFICER DISALLOWED THE ABOVE EXPENDITURE BEING 50% OF THE TOTAL EXPENDITURE OF RS. 229 7008/ ON ACCOUNT OF NON - MAINTENANCE OF LOGBOOK. THE LD. CIT A, DELETED THE ABOUT DISALLOWANCE HOLDING THAT THE ADDITION DOES NOT HAVE ANY BASIS. THE LD. CIT A WAS ALSO OF THE VIEW THAT AS ASSESSEE BEING A COMPANY THE PERSONAL USE OF VEHICLES CANNOT BE MADE IN THE HANDS OF THE ASSESSEE. HE FURTHER HELD THAT THE APPELLANT HAS ALL DOCUMENTS TO SUPPORT EXPENSES INCURRED AND THEY ARE INCURRED FOR THE PURPOSES OF THE BUSINESS. THE LD. DR COULD NOT POINT OUT THAT WHAT IS THE ERROR IN THE ORDER OF THE LD. CIT A. FURTHER, WE ALSO DO NOT SUBSCRIBE TO THE VIEW OF THE LD. ASSESSING OFFICER T HAT IF THE LOG BOOKS OF THE MOTOR CARS ARE NOT MAINTAINED AD HOC DISALLOWANCES CAN BE MADE WITHOUT POINTING OUT ANY DEFECT IN THE DETAILS PRODUCED BY THE ASSESSEE SHOWING THAT THE EXPENDITURE ARE NOT INCURRED FOR THE PURPOSES OF THE BUSINESS OF THE ASSESS EE. IN THE RESULT GROUND NO. 1 OF THE APPEAL IS DISMISSED. 6. THE 2 ND GROUND OF APPEAL OF REVENUE IS AGAINST DEL ETION OF THE ADDITION OF RS. 779 0474 AND RS. 5512 8754 ON ACCOUNT OF VARIATION IN CLOSING STOCK AND BOOK DEBTS RESPECTIVELY, WITHOUT APPRECIATING THE FINDINGS OF THE LD. ASSESSING OFFICER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD. ASSESSING OFFICER NOTED THAT THE ASSESSEE COMPANY HAS RAISED SUBSTANTIAL AMOUNT OF WORKING CAPITAL FACILITY CASH CREDIT ACCOUNT FROM STATE BANK OF PAGE 3 OF 5 INDIA AND, WH ICH IS AGAINST THE HYPOTHECATION OF BOOK DEBTS AND STOCK. THEREFORE, THE LD. ASSESSING OFFICER CALLED FOR THE STATEMENT SUBMITTED BY THE ASSESSEE UNDER SECTION 133 (6) OF THE ACT. WITH RESPECT TO THE MONTHLY STOCK STATEMENT SUBMITTED TO THE BANK. THE LD. A O FOUND CERTAIN DISCREPANCIES PERTAINING TO THE CLOSING STOCK. THE ASSESSEE EXPLAINED THAT THAT THE AMOUNT OF STOCK AS PER THE BALANCE SHEET IS HIGHER THAN THE AMOUNT OF STOCK STATEMENT SUBMITTED TO THE BANK. THE LD. AO WAS ALSO EXPLAINED ABOUT THE VARIOUS FIGURES FROM MATERIALS AND WORK IN PROGRESS STOCK AVAILABLE WITH THE ASSESSEE. THE LD. ASSESSING OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE AND MADE AN ADDITION OF RS. 7 790474. THE ASSESSEE CONTESTED THE ABOVE ADDITION BEFORE THE LD. CIT A. THE LD. CIT A, NOTED THAT THE ASSESSEE HAS TOTAL STOCK AS PER BOOKS OF ACCOUNT OF RS. 7 387 7246/ . WHEREAS THE STOCK STATEMENT GIVEN BY THE ASSESSEE TO THE BANK SHOWS THE TOTAL STOCK OF RS. 6 717 6532/ . THEREFORE, THERE IS AN EXCESS STOCK AVAILABLE WITH THE ASS ESSEE IN ITS BOOKS OF ACCOUNTS AND STOCK SHOWN HYPOTHECATED TO THE BANK. THE ONLY DIFFERENCES BETWEEN RESPECT TO THE INTERNAL CLASSIFICATION IN THE STOCK. THE ASSESSEE HAS SHOWN THE CLOSING STOCK OF RAW MATERIAL IS PER BOOKS OF ACCOUNT OF RS. 4 875 7920, W HEREAS THE STOCK STATEMENT SUBMITTED TO THE BANK SHOWED RS. 3 426 6732. THEREFORE THERE IS AN EXCESS OF RAW MATERIAL STOCK AVAILABLE IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE OF RS. 1 449 1188. WITH RESPECT TO THE WORK IN PROGRESS THE STOCK SHOWN AS PER THE BOOKS OF ACCOUNTS OF THE ASSESSEE IS RS. 2 51 19326/ WHEREAS, AS PER THE STOCK STATEMENT SUBMITTED TO THE BANK IT IS SHOWN AT RS. 3 290 9800 / - , WHICH IS SHOWING LESSER BY RS. 779 0474. AS THE LD. CIT APPEAL HAS NOTED THAT THE ASSESSEE HAS MORE STOCKS A VAILABLE IN THE BOOKS OF ACCOUNTS, THEN STOCKS SHOWN TO THE BANK BY THE ASSESSEE. IN VIEW OF THIS HE DELETED THE ADDITION. LD. DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY ERROR IN THE ORDER OF THE LD. CIT A. WE ALSO DO NOT SUBSCRIBE TO THE VIEW OF THE LD. ASSESSING OFFICER. WHEN THE TOTAL STOCK AS PER BOOKS OF ACCOUNTS EXCEEDS BY RS. 6 700 74 TO THE STOCK SHOWN TO THE BANK, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. IN THE RESULT WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT A , IN DELETING THE ADDITION OF RS. 779 0474 ON ACCOUNT OF EXCESS STOCK OF WORK IN PROGRESS SHOWN TO THE BANK COMPARED TO THE BOOKS OF ACCOUNTS. PAGE 4 OF 5 7. ON ACCOUNT OF THE ADDITION OF RS. 5 512 8754/ ON ACCOUNT OF THE DEBTORS AS PER STOCK STATEMENT ASSESSEE HAS SHOW N DEBTORS OF RS. 11496 8250/ - WHEREAS, AS PER THE BOOKS OF ACCOUNTS THE DEBTORS WERE ONLY TO THE EXTENT OF RS. 9 625 0847/ . THEREFORE, THE LD. ASSESSING OFFICER IDENTIFIED THE VARIOUS PARTIES AND NOTED THEIR DETAILS GIVEN TO THE BANKERS AND AMOUNT OUTSTAN DING AS PER BOOKS AND THEN HE MADE AN ADDITION OF RS. 5 512 8754 TO THE INCOME OF THE ASSESSEE. ON APPEAL BEFORE THE LD. CIT A, THIS ADDITION WAS DELETED. FOR THE REASON THAT ACCORDING TO HIM THE LD. ASSESSING OFFICER HAS TAKEN A WRONG FIGURE OF THE DEBTOR S. CORRECT FIGURE OF THE DEBTORS AS PER BOOKS OF ACCOUNT WAS RS. 9 62 05/08/1947 AND AS PER THE BANK STATEMENT GIVEN TO THE BANKER THE DEBTORS WERE SHOWN TO BE RS. 114968520/ . THEREFORE ACCORDING TO HIM THE ONLY DIFFERENCE WAS RS. 18717673, AND NOT RS. 5 512 8754. WE ALSO CAREFULLY PERUSED THE PARA NO. 5 OF THE SUBMISSION OF THE ASSESSEE BEFORE THE LD. CIT A, AT PAGE NO. 16 OF HIS ORDER WHERE THE ASSESSEE HAS GIVEN THE ITEM WISE DETAIL OF THE DEBTORS CONTESTING THE ABOVE ADDITION. THERE IS ONE P ARTY IN THE NAME OF VIRINDA NANO TECH PRIVATE LIMITED WHICH IS SHOWN AS PER THE STOCK STATEMENT GIVEN TO THE BANK AT RS. 3 065 5900 WHEREAS, AS PER THE BOOKS OF ACCOUNT THE BALANCE IS SHOWN TO BE NIL. THE ASSESSEE EXPLAINED THAT ASSESSEE IS BUYING AND SELLING FROM THIS PARTY AND THEREFORE THE GOODS SOLD BY THIS PARTY WAS INCLUDED IN THE LIST OF DEBTORS WHEREAS THE GOODS PURCHASED FROM THIS PARTY ARE NOT REDUCED. HOWEVER, NO SUCH DETAILS WERE AVAILABLE EITHER BEFORE THE LD. CIT OR BEFORE US. IN VIEW OF THIS WE SET A SIDE THIS GROUND OF APPEAL TO THE EXTENT OF VERIFICATION OF THE LIST OF DEBTORS OUTSTANDING IN THE BOOKS OF ACCOUNT AS WELL AS SHOWN TO THE BANKS BY THE ASSESSEE. IN THE RESULT GROUND NO. 2 OF THE APPEAL OF THE REVENUE IS SET ASIDE TO THE FILE OF THE LD. A SSESSING OFFICER TO EXAMINE THE DETAILS OF THE DEBTORS SUBMITTED TO THE BANK AS WELL AS TO THE ASSESSEE AND THE ASSESSEE MAY BE GRANTED AN OPPORTUNITY TO RECONCILE THE SAME. AFTER THAT THE LD. ASSESSING OFFICER IS DIRECTED TO DECIDE THE ISSUE AFRESH. IN TH E RESULT GROUND NO. 2 OF THE APPEAL OF THE REVENUE IS PARTLY ALLOWED WITH ABOVE DIRECTION. 8. GROUND NO. 3 OF THE APPEAL OF THE REVENUE IS WITH RESPECT TO THE DELETION OF ADDITION OF RS. 3 050900 BY THE LD. CIT APPEAL ON ACCOUNT OF CONTRACT EXPENSES WITH THE NO DETAILS WERE PROVIDED BY THE ASSESSEE BEFORE THE LD. ASSESSING OFFICER ABOUT THE NATURE OF SUCH EXPENDITURE. THE LD. CIT A, PAGE 5 OF 5 DELETED THE ABOUT DISALLOWANCE HOLDING THAT THE ABOVE EXPENDITURE ARE THE WORKS CONTRACT EXPEDIENT DEBITED TO THE PROFIT AND LOSS ACCOUNT. THE LD. CIT A, WITH RESPECT TO THIS ADDITION IS CALLED FOR THE REMAND REPORT OF THE LD. AO WERE SUBMITTED. SUCH REMAND REPORT WHICH IS REPRODUCED AT PARA NO. 10.1 OF THE ORDER OF THE LD. CIT APPEAL AND THEREFORE THE ABOVE ADDITION WAS DELETED. TH E LD. DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT BEFORE US THAT WHAT IS THE ERROR IN THE ORDER OF THE LD. CIT A. WHEN THE EXPENDITURE CLAIMED BY THE ASSESSEE WAS WITH RESPECT TO THE WORKS CONTRACT TAX AFTER OBTAINING THE REMAND REPORT. WE ALSO DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT A, IN DELETING THE ABOUT DISALLOWANCE MADE BY THE LD. ASSESSING OFFICER. THE LD. DEPARTMENTAL REPRESENTATIVE ALSO COULD NOT POINT OUT WHAT IS THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE BEFORE THE LD. CIT A . IN THE RESULT WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT APPEAL IN DELETING THE ABOUT DISALLOWANCE OF RS. 3 050, 000/ . IN THE RESULT GROUND NO. 3 OF THE APPEAL OF THE REVENUE IS DISMISSED. 9. WITH RESPECT TO GROUND NO. 4, NO ARGUMENTS WERE ADVANCED BY THE REVENUE. HENCE, THE SAME IS DISMISSED. 10. IN THE RESULT APPEAL OF THE REVENUE IS PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN COURT ON 0 1 / 0 9 / 2017 . - S D / - - S D / - ( BEENA PILLAI ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 1 / 0 9 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI