BEEKAYION SYNTHEICS P.LTD, MUMBAI V. ADDL CIT 11(1), MUMBAI

ITA 4073/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8887 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-01-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 14-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M V RAJGURUDR
• Assessee Lawyers: RISHABH SHAHAR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 4073/MUM/2016 ASSESSMENT YEAR: 2011-12 M/S. BEEKAYLON SYNTHETICS PVT. LTD., VS. ADDL CIT 1 1(1) 10, JASVILLE, 2 ND FLOOR, 9 NEW MARINE MUMBAI. LINES, OPP. LIBERTY CINEMA, MUMBAI 400020 PAN NO. AACB2976M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RISHABH SHAH,AR REVENUE BY: SHRI M.V. RAJGURU,DR DATE OF HEARING : 04/0 1/2017 DATE OF PRONOUNCEMENT: 04/01/2017 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2011-12. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER (APPEALS) 2, MUMBAI AND ARISES OUT O F ORDER U/S 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER:- I. ON THE FACT AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSI NG OFFICER IN DISALLOWING A SUM OF RS. 8,90,553/- ON ADHOC BASIS BEING 1% OUT OF THE TOTAL PACKING EXPENSES OF RS. 8,90,55,258/- WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. II. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN DISALLOWING A SUM OF RS. 2,11,355/- ON ADHOC BASIS B EING 1% OUT OF THE TOTAL PACKING EXPENSES OF RS. 2,11,35,583/- WITHOUT APPRE CIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO. 4073/MUM/2016 2 3. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSING OFFICER (AO) FOUND DURING THE COURSE OF ASSESSMENT PROCEEDING TH AT MOST OF THE EXPENSES IN RESPECT OF PACKING MATERIALS OF RS. 8,9 0,55,258/- AND MISCELLANEOUS EXPENSES OF RS. 2,11,35,583/- HAVE BE EN INCURRED BY RAISING SELF-MADE VOUCHERS NOT SUPPORTED BY SPECIFI C BILLS. THE AO REFERRED TO THE DISALLOWANCE @1% MADE IN RESPECT OF SIMILAR EXPENSES FROM A.Y. 2006-07 TO 2010-11 AND THEN DISA LLOWED 1% OF PACKING MATERIAL AND MISCELLANEOUS EXPENSES WHICH C OMES TO RS. 8,90,553/- AND RS. 2,11,355/- RESPECTIVELY. 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEAR NED CIT(A). WE FIND THAT THE LEARNED CIT(A) AGREED WITH THE REASON S GIVEN BY THE AO THAT THE EXPENSES ARE SUPPORTED BY SELF-MADE VOUCHE RS WHICH ARE NOT VERIFIABLE IN NATURE. THE LEARNED CIT(A) ALSO NOTED THAT THE ASSESSEE GAVE THE SAME SUBMISSION WHICH WAS GIVEN BEFORE THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS AND NO FRESH EVIDENCES CO ULD BE FILED BEFORE HIM DURING THE APPELLATE PROCEEDINGS. AS THE VOUCHERS ARE SELF-MADE ONES, POSSIBILITY OF INFLATION OF EXPENDI TURE CANNOT BE RULED OUT, THEREFORE, THE LEARNED CIT(A) CONFIRMED THE DI SALLOWANCE OF RS. 8,90,553/- AND RS. 2,11,355/- MADE BY THE AO. 5. BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE R EFERRED TO THE ORDER OF THE LEARNED CIT(A) FOR THE A.Y. 2010-11, W HEREIN THE DISALLOWANCE OF 1% OF PACKING MATERIAL EXPENSES AND MISCELLANEOUS EXPENSES MADE BY T HE AO WERE DELETED FOLLOWING THE ORDER OF THE LEARNED CIT(A) FOR A.Y. 2008-09 AND 2009-10. 6. THE LEARNED DR SUPPORTED THE ORDER OF THE LEARNE D CIT(A) FOR THE IMPUGNED ASSESSMENT YEAR CONFIRMING THE DISALLO WANCE OF THE ABOVE EXPENSES MADE BY THE AO. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT A SIMILAR ISSUE AR OSE BEFORE THE CO- ORDINATE BENCH IN THE CASE OF THE ASSESSEE FOR THE A.Y. 2005-06 [ITA NO. 6506/MUM/2008]. THE TRIBUNAL ON SIMILAR FACTS R EDUCED THE DISALLOWANCE TO RS. 50,000/- FROM THE DISALLOWANCE OF RS. 1,20,040/- MADE BY THE AO. CONSIDERING THE ENTIRE FACTS AND CI RCUMSTANCES OF THE CASE AS WELL AS THE FACT THAT THE ASSESSEE FAILED T O FILE BEFORE THE ITA NO. 4073/MUM/2016 3 LEARNED CIT(A) ANY FRESH EVIDENCE, WE ARE OF THE CO NSIDERED VIEW THAT IT WOULD BE JUST AND FAIR IF AN ESTIMATED ADDITION IS MADE TOWARDS SUCH EXPENSES AT RS. 6,00,000/-. THE AO IS DIRECTED TO RESTRICT THE DISALLOWANCE TO RS. 6,00,000/- . 8. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/01/2017 SD/- SD/ (MAHAVIR SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMB ER MUMBAI; DATED: 04/01/2017 BISWAJIT, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI