M/s Somani Iron & Steels Ltd., Kanpur V. Dy. Commissioner of Income Tax, Kanpur

ITA 429/LKW/2014

• Counselvise Citation: 42923714 RSA 2014
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-10-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 22-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA

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.429/LKW/2014 ASSESSMENT YEAR:2006 - 07 M/S SOMANI IRON & STEELS LTD., CITY CENTRE, 4 TH FLOOR, 63/2, THE MALL, KANPUR. PAN:AABCS9127N VS. DY.C.I.T. - 6, KANPUR. (APPELLANT) (RESPONDENT) APPELLANT BY NONE RESPONDENT BY SHRI ALOK MITRA, D.R. DATE OF HEARING 21/07/2014 DATE OF PRONOUNCEMENT 0 5 /09/2014 O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - I, KANPUR DATED 28/02/2014 FOR THE ASSESSMENT YEAR 2006 - 2007. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: THE APPELLATE ORDER AS PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WHILE SUSTAINING THE ADDITION BY WAY OF DISALLOWANCES OF EXPENDITURE ON ESTIMATED BASIS IS UNJUSTIFIED, UNWARRANTED, WRONG AND AS THUS DESERVE TO BE QUASHED UNDER LAW IN THE FACTS AND CIRCUMSTANCES OF THE CASE BECAUSE : - 1. WHILE SUSTAINING THE ADDITION OF RS.5,54,884 / - BEING 50% OF TOTAL ACTUAL EXPENDITURE OF RS.11,09,884 / - , THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS CONFIRMED THE MISCONCEIVED FINDING OF LD. ASSESSING OFFICER WHILE CONFIRMING THE DISALLOWANCE I N RESPECT OF 50% OF ACTUAL GENUINE EXPENDITURE BEING INCURRED TO 2 KEEP THE PRODUCTIVE STRUCTURE INTACT, ON ESTIMATED BASIS IS WHOLLY ARBITRARY AND ILLEGAL AS ALSO WHILE SUMMARILY DEALING WITH THE REPLY/SUBMISSION PUT ON HIS RECORD BY THE APPELLANT IS TOTALL Y UNJUSTIFIED UNDER LAW IN THE FACTS AND CIRCUMSTANCES OF THE CASES. 2. WHILE SUSTAINING THE ADDITION OF RS.3,91,281 / - OF OTHER ACTUAL MISCELLANEOUS EXPENSES OUT OF TOTAL MISC. EXPENSES RS.12,31,281 / - INCURRED TO KEEP THE CORPORATE ENTITY GOING IN THE EXPECTATION OF ACCEPTANCE OF REHABILITATION PACKAGE BY HON'BLE BIFR (SPECIAL PROVISIONS) ACT, 1985 ON ESTIMATED BASIS WITHOUT PROPERLY APPRECIATING THE DETAILS AND EXPLANATIONS SUBMITTED ON RECORD IS ARBITRARY/UNJUSTIFIED IN AS MUCH AS DISALLOWANCE HAS BEE N MADE BY SUMMARILY DEALING WITH THE SUBMISSIONS PUT ON HIS RECORD IS WRONG AND UNTENABLE PROCESS OF ESTIMATION IS WHOLLY DEVOID OF MERITS AND HAS NO LEGS TO STAND UPON. 3. IN ANY CASE AND WITHOUT PREJUDICE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE, WHILE SUSTAINING THE AFORESAID DISALLOWANCE, THAT THE DISALLOWANCES W ERE ARBITRARY WITHOUT ANY FINDINGS AND IN ANY CASE EXCESSIVE TOO BESIDES BEING AGAINST THE PAST HISTORY. NO DISALLOWANCE COULD HAVE BEEN MADE EITHER ON 1'ACTS OR IN LAW. 4. THAT THE ADDITION OF RS.5,54.884/ - AND THE ADDITION OF RS.3.91.281/ - IN RESPECT OF ACTUAL GENUINE EXPENDITURE INCURRED BY THE COMPANY OF WHICH DETAILS CLAIMED UNDER VAR IOUS HEADS SUBMITTED, IS ARBITRARILY AND NON MAINTAINABLE BECAUSE THE EXPENDITURE SO INCURRED ARE BASED ON BOOKS OF ACCOUNTS DULY AUDITED AND APPROVED BY THE SHAREHOLDERS OF THE COMPANY IN IT'S ANNUAL GENERAL MEETING AND ARE EXPENDITURES INCURRED BY THE CO MPANY WHICH ARE NECESSARY FOR KEEPING THE COMPANY RUNNING IN THE NORMAL COURSE OF BUSINESS. 5. THAT EACH YEAR IS AN INDEPENDENT YEAR, EXPENDITURE DISALLOWED IN A.Y. 2007 - 08 CANNOT BE MADE ON THE BASIS OF SIMILAR DISALLOWANCE OF EXPENDITURE IN THIS YEAR. T HE COMMISSIONER OF INCOME TAX(A) HAS ERRED IN NOT CONSIDERING THIS ASPECTS. 3 6. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL GIVEN ABOVE AND/OR ADD ANY FRESH GROUND AS AND WHEN IT IS CONSIDERED NECESSARY TO DO SO. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE DATE OF HEARING INSPITE OF NOTICE AND HENCE, WE PROCEED TO DECIDE THIS APPEAL OF THE ASSESSEE EX - PARTE QUA THE ASSESSEE. 4. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CO NSIDERED THE SUBMISSIONS OF LEARNED D.R. OF THE REVENUE, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT IT IS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT THE ASSESSEE COMPANY HA S ALREADY SUSPENDED ITS MANUFACTURING ACTIVITY WITH EFFECT FROM 01/12/1998 AND FOR THIS REASON , THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE REGARDING VARIOUS MANUFACTURING AND OTHER EXPENSES OF RS.11,09,884/ - AND ALSO DISALLOWED THE EXPENSES CLAIMED BY THE ASSESSEE ON ACCOUNT OF MANAGING DIRECTORS REMUNERATION OF RS.8.40 LAC AND OTHER MISC. EXPENSES INCLUDED IN TOTAL CLAIM OF THE EXPENSES OF RS.13,18,626/ - . OUT OF THIS, THE ASSESSING OFFICER ALLOWED THE CLAIM OF RS.87,345/ - ON ACCOUNT OF LE GAL EXPENSES AND DISALLOWED BALANCE CLAIM OF RS.12,38,281/ - . 6. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO HAS ALLOWED RELIEF TO THE EXTENT OF RS.5.55 LAC OUT OF TOTAL EXPENSES OF RS.11,09,884/ - CLAIMED BY THE ASSES SEE UNDER THE HEAD MANUFACTURING AND OTHER EXPENSES. THIS RELIEF WAS ALLOWED BY THE CIT(A) ON THE BASIS THAT INSPITE OF THE FACT THAT THERE IS NO PRODUCTION BUT CERTAIN ESSENTIAL EXPENSES ON WATCH & WARD, MAINTENANCE, OFFICE, ESI AND PF 4 EXPENSES HAVE TO B E INCURRED. HE ALSO ALLOWED THE CLAIM OF THE ASSESSEE REGARDING PAYMENT OF MANAGING DIRECTORS REMUNERATION OF RS.8.40 LAC AND CONFIRMED THE BALANCE CLAIM OF THE ASSESSEE OF RS.5,54,884/ - OUT OF MANUFACTURING AND OTHER EXPENSES AND RS.3,91,281/ - OUT OF M ISC. EXPENSES. WHEN THE ASSESSEES MANUFACTURING ACTIVITY HAS BEEN SUSPENDED IN THE YEAR 1998 AND TILL FEBRUARY 2014 WHEN THE ASSESSEE APPEARED BEFORE CIT(A), THE ACTIVITY HAS NOT COMMENCED, IT CANNOT BE ACCEPTED THAT THE CLAIM OF THE ASSESSEE REGARDING V ARIOUS EXPENSES IN ADDITION TO THE CLAIM ALREADY ALLOWED BY CIT(A) IS ALLOWABLE. CONSIDERING ALL THESE FACTS, WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A). 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. (ORDER 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: 0 5 /0 9 /2014. *C.L.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