Ruchi Oil and Vanaspati (P) Ltd, New Delhi V. ITO, New Delhi

ITA 435/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3662 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 28-06-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 05-02-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BANITA DEVI NAREOM
• Assessee Lawyers: RAJIV BANSAL

Judgement Text

I.T.A. NO. 435 /DEL/2009 1/7 IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH F BEFORE SHRI C. L. SETHI, JUDICIAL MEMBER AND SHRI A K GARODIA, ACCOUTANT MEMBER ITA NO. 435 /DEL/2009 (ASSESSMENT YEAR 2004-05) M/S. RUCHI OIL & VANASPATI (P) LTD., VS. ITO, WARD 15(3), C/O RAJIV BANSAL & ASSOCIATES, NEW DELHI. 506, PRABHAT KIRAN, 17, RAJENDRA PLACE, NEW DELHI. (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AACR4103N APPELLANT BY: SHRI RAJIV BANSAL C.A. RESPONDENT BY: SMT. BANITA DEVI NAREOM, SR. DR ORDER PER A. K. GARODIA, AM: 1. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORDE R OF LD. CIT(A) XVIII, NEW DELHI DATED 18.11.2008 FOR THE AS SESSMENT YEAR 2004-05. THE GROUNDS NOS. 1 & 5 ARE GENERAL. 2. THE GROUND NO.2 READS AS UNDER: THAT THE DISALLOWANCE RS.4,60,463/- BEING 20% OF B ROKERAGE EXPENSES ARE ON ARBITRARY AND SURMISE BASIS, THUS I S UNJUSTIFIED AND UNLAWFUL. THE BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. ON PAGE 2 OF THE ASSESSMENT ORDER THAT THE ASSESSEE COMPANY HAS DEBITED IN P & L ACCOUNT RS.23.02 LACS ON ACCOUNT OF BROKERAGE PAID TO VARIOUS BROKERS. IT IS ALSO NOTED BY THE A.O. THAT THE LD. A.R. HAS FIL ED LISTS OF BROKERS TO WHOM BROKERAGE HAS BEEN PAID. IT IS FURTHER NOTED BY THE A.O. THAT HE I.T.A. NO. 435 /DEL/2009 2/7 WAS ASKED TO FILE THE CONFIRMATION FORM THE BROKERS BUT DESPITE A NUMBER OF OPPORTUNITIES, HE HAS FAILED TO FILE THE CONFIRM ATION FROM THE BROKERS. IN THE ABSENCE OF CONFIRMATION FROM BROKERS, THE A. O. MADE DISALLOWANCE OUT OF BROKERAGE TO THE EXTENT OF 20% AND IN THIS M ANNER HE DISALLOWED RS.4,60,483/-. BEING AGGRIEVED, THE ASSESSEE CARRI ED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO HAS CONFIRMED THE DISALLOWANC E TO THE EXTENT OF 50% OF THE DISALLOWANCE MADE BY THE A.O. I.E. TO TH E EXTENT OF 10% OF THE BROKERAGE PAID BY THE ASSESSEE. NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US REGARDING THE DISALLOWANCE CONFIRMED BY T HE LD. CIT(A). IT IS SUBMITTED BY THE LD. A.R. THAT IT HAS BEEN NO TED BY THE A.O. IN THE ASSESSMENT ORDER THAT THE BOOKS OF ACCOUNTS ALONG W ITH SUPPORTING VOUCHERS FOR THE EXPENSES WERE PRODUCED, WHICH HAVE BEEN EXAMINED ON TEST CHECK BASIS. IT IS SUBMITTED BY HIM THAT SINC E THE BOOKS OF ACCOUNTS WERE PRODUCED BEFORE THE A.O. AND EXAMINED BY HIM, NO DISALLOWANCE IS CALLED FOR. LD. D.R. SUPPORTED THE ORDERS OF AUTHO RITIES BELOW. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED T HE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT NEITHER BEFORE THE A.O. NOR BEFORE THE LD. CIT (A), THERE WAS ANY SUBMISSIONS FROM THE ASSESSEE REGARDING REASONS FOR WHICH, THE ASSESSEE WAS NOT IN A POSITION TO FILE CONFIRMATION FROM BRO KERS RELATING TO PAYMENT OF BROKERAGE. BEFORE US, IT WAS SUBMITTED BY THE LD. A.R. THAT A LETTER FROM ONE OF THE BROKERS SHRI ARUN VIZ IS APP EARING ON PAGE 6 & 7 OF THE PAPER BOOK AND THE SAME SHOULD BE CONSIDERED AS CONFIRMATION FORM HIM. WHEN WE EXAMINED THESE TWO PAGES OF THE PAPER BOOK, WE FIND THAT AS PER THIS, THE AMOUNT IS RS.16,370/- BU T AS PER LEDGER ACCOUNT OF THIS PARTY AS APPEARING ON PAGE 2 OF THE PAPER B OOK, THIS AMOUNT OF RS.16,370/- IS ONLY FOR A PERIOD FROM 1.10.2003 TO 31.03.2004 AND THERE IS ANOTHER PAYMENT TO THIS PARTY FOR THE 1 ST HALF YEAR FOR RS.15,890/-. ANOTHER COPY OF THE LEDGER ACCOUNT OF ARUN VIZ PATH ANKOT HAVING THE I.T.A. NO. 435 /DEL/2009 3/7 SAME ST/CST NUMBER IS APPEARING ON PAGE 3 OF THE PA PER BOOK AND IN THIS THE TOTAL AMOUNT OF BROKERAGE PAID DURING THE LATER HALF OF THE YEAR I.E. 1.10.2003 TO 31.03.2004 IS RS.52,122/-. IN ADDITIO N TO THIS, THERE ARE TWO OTHER AMOUNTS ALSO OF RS.51,118/- AND RS.75,950/-. IF THIS LETTER OF ARUN VIZ APPEARING ON PAGES 6 & 7 OF THE PAPER BOOK CAN BE ACCEPTED AS HIS CONFIRMATION AS HAS BEEN PLEADED BY THE LD. A.R., W E FIND THAT AS PER THE SAME, ONLY ONE PART AMOUNT OF RS.16,370/- STANDS CO NFIRMED AND NOT THE OTHER AMOUNTS. HENCE, BEFORE US ALSO, NO CONFIRMAT ION OF BROKERS ARE AVAILABLE AND NO SATISFACTORY REASON HAS BEEN GIVEN FOR ITS NON-SUBMISSION AND HENCE, WE DO NOT FIND ANY REASON TO INTERFERE I N THE ORDER OF LD. CIT(A) ON THIS ISSUE. GROUND NO.2 OF THE ASSESSEE S APPEAL IS REJECTED. 3. GROUND NO.3 OF THE APPEAL READS AS UNDER: THAT THE DISALLOWANCE OF RS.17,50,931/- BEING 20% OF FREIGHT AND CARTAGE EXPENSES ON THE BASIS OF NON FILLING OF EVERY SALES INVOICE AS THEY ARE VOLUMINOUS, IS UNJUSTIFIED AND BAD IN LAW. THE BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. ON PAGE 2 OF THE ASSESSMENT ORDER THE ASSESSEE COMPANY HAS DEBIT ED IN ITS P & L ACCOUNT RS.87.54 LACS ON ACCOUNT OF FREIGHT AND CAR TAGE ETC. IT IS FURTHER NOTED BY THE A.O. THAT THE LD. A.R. WAS ASKED TO FI LE THE PARTY WISE DETAILS OF FREIGHT AND CARTAGE EXPENSES AND IT IS N OTED BY THE A.O. THAT IN REPLY, IT WAS SUBMITTED BY THE LD. A.R. THAT INWARD FREIGHT IS BORNE BY THE SUPPLIER WHILE OUTWARD FREIGHT WAS BORNE BY THE ASS ESSEE. IT WAS ALSO SUBMITTED BY THE A.O. THAT THE FREIGHT OUTWARD IS D IRECTLY DEBITED TO THE FREIGHT AND CARTAGE ACCOUNT AND NOT TO THE PARTIES OR CARRIER AND HENCE THE ASSESSEE EXPRESSED ITS INABILITY TO PROVIDE EACH AN D EVERY DETAILS AS NUMBER OF SALES INVOICES ARE VERY HIGH. THEREAFTER , THE A.O. MADE DISALLOWANCE TO THE EXTENT OF 20% OF FREIGHT AND CA RTAGE EXPENSES ON THE BASIS THAT IN THE ABSENCE OF ANY CONFIRMATION OR DO CUMENTARY EVIDENCE, THE ASSESSEES VERSION CANNOT BE FULLY ACCEPTED. I N THIS MANNER, HE MADE I.T.A. NO. 435 /DEL/2009 4/7 DISALLOWANCE OF RS.17,50,931/-. BEING AGGRIEVED, T HE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) WHO HAS CONFIRME D THE DISALLOWANCE TO THE EXTENT OF 10% OF FREIGHT EXPENSES. NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US AGAINST THE DISALLOWANCE CONFIRMED BY THE LD. CIT(A). IT IS SUBMITTED BY THE LD. A.R. THAT THE NUMBER OF SALES INVOICES ARE NUMEROUS AND HENCE THE ASSESSEE CANNOT PROVIDE THES E DETAILS. IT WAS SUBMITTED BY HIM THAT THE SALES INVOICES ARE MORE T HAN 25,000 AND HENCE PARTY WISE DETAILS CANNOT BE FURNISHED. THE LD. D. R. FOR THE REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED T HE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. BEFORE THE AUTHORITIES BELOW AND ALSO BEFORE US, ONLY ONE REAS ON HAS BEEN GIVEN FOR NOT FURNISHING THE DETAILS. THE REASON STATED IS T HAT THE SALES INVOICES ARE MORE THAN 25,000AND HENCE PARTY WISE DETAILS OF FRE IGHT PAYMENT CANNOT BE FURNISHED. WE ARE NOT IN AGREEMENT WITH THE LD. A.R. THAT ONLY BECAUSE THERE ARE INVOICES IN EXCESS OF 25,000 NUMB ERS, PARTY WISE DETAILS OF FREIGHT CHARGES CANNOT BE PROVIDED BECAUSE NOW A DAYS, THE BOOKS ARE MAINTAINED ON COMPUTERS. THE ASSESSEE IS ALSO MAIN TAINING COMPUTERIZED BOOKS AS CAN BE SEEN IN THE PAPER BOOK BECAUSE ALL THE COPIES OF LEDGER ACCOUNTS FILED BY THE ASSESSEE OF VARIOUS PARTIES A RE PRINT OUT OF COMPUTERIZED BOOKS ONLY. WHEN THE BOOKS ARE COMPUT ERIZED, DETAILS CAN EASILY BE GENERATED AND PROVIDED BUT THIS WAS NOT D ONE BY THE ASSESSEE. AS PER THE COPY OF THE LEDGER ACCOUNT OF FREIGHT AP PEARING ON PAGES 192- 220 OF THE PAPER BOOK FOR THE PERIOD FORM 1.4.2003 TO 30.06.203, TOTAL AMOUNT IS RS.2,44,014/- IN DEBIT SIDE AND RS.1245/- ON CREDIT SIDE. AS PER NARRATION & DETAILS APPEARING IN THE LEDGER, WE FIN D THAT AGAINST THE SALE BILL, THE ASSESSEE IS CREDITING ENTIRE AMOUNT TO SA LE ACCOUNT BUT THE PARTYS ACCOUNTS ARE DEBITED WITH THE AMOUNT OF SALE (-) FR EIGHT AND THE FREIGHT AMOUNT IS DEBITED TO FREIGHT ACCOUNT. IT GOES TO S HOW THAT THE FREIGHT IS I.T.A. NO. 435 /DEL/2009 5/7 PAID BY THE CUSTOMERS AND HENCE THEIR ACCOUNT IS DE BITED BY LESSER AMOUNT. IT MAY BE STATED THAT THE FREIGHT ACCOU NT IS DEBITED DIRECTLY WITHOUT BEING ANY CORRESPONDING CREDIT ENTRY IN ANY PARTYS ACCOUNT BUT SINCE THE CUSTOMERS ACCOUNT IS LESS DEBITED BY THE ASSESSEE FROM THE LEDGER ACCOUNT OF CUSTOMERS, SUCH DETAILS CAN BE WO RKED OUT AS TO FOR WHICH CUSTOMER, HOW MUCH FREIGHT AMOUNT HAS BEEN CH ARGED BY THE ASSESSEE AND DEBITED TO FREIGHT ACCOUNT. THE ASSES SEE COULD HAVE OBTAINED CONFIRMATION FORM THE CUSTOMERS ALSO REGAR DING THE AMOUNT OF FREIGHT, WHICH HAS BEEN INCURRED BY THE ASSESSEE, P AYMENT OF WHICH WAS MADE BY THE CUSTOMERS. THERE IS ONE MORE IMPORTANT ASPECT THATS THERE MAY BE T.D.S.VIOLATION ALSO WHICH CANNOT BE EXAMINE D FOR WANT OF PROPER DETAILS. CONSIDERING THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF LD. CIT(A) BECAUSE PROPER DETAILS HAVE NOT BEEN FURNISHED BY THE ASSES SEE WITH REGARD TO FREIGHT PAYMENT. GROUND NO.3 IS ALSO REJECTED. 4. GROUND NO.4 OF THE APPEAL READS AS UNDER: THAT THE DISALLOWANCE OF RS.1 LACS FOR TRAVELLING EXPENSES ARE ALSO ON ARBITRARY MERE ON SURMISE BASIS THUS UNJUST IFIED AND BAD IN LAW. THE BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. ON PAGE 2 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS CLAIMED TRAVELLING EXPENSES OF RS.7,05,373/- DURING THIS YEAR. IT IS ALSO OBSERVE D BY THE A.O. THAT THE BILLS AND VOUCHERS OF TRAVELLING EXPENSES WERE EXAM INED ON TEST CHECK BASIS AND IT WAS OBSERVED THAT SOME BILLS ARE WITHO UT NAMES AND SOME ARE IN THE NAME OF RUCHI SOYA. SPECIFIC INSTANCES A RE ALSO NOTED BY THE A.O. BEING BILL NO.34261 ISSUED BY R K TRAVELS AND TOURS DATED 17.04.2003 FOR RS.881.25, WHICH IS IN THE NAME OF R UCHI SOYA. ANOTHER INSTANCE HAS BEEN NOTED BY THE A.O. BEING BILL NO.3 5760 DATE 03.06.2003 AND BILL NO.34461 DATED 23.04.2003 ISSUED BY R K TR AVELS & TOURS FOR I.T.A. NO. 435 /DEL/2009 6/7 RS.516.25 AND RS.2125/-, WHICH ARE ALSO IN THE NAME OF RUCHI SOYA. SINCE THE BILLS WERE EXAMINED ON TEST CHECK BASIS O NLY, THE A.O. MADE DISALLOWANCE OF RS.1 LACS OUT OF TRAVELLING EXPENSE S ON THE BASIS THAT IT WAS NOT INCURRED FOR THE BUSINESS PURPOSES OF THE A SSESSEE. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE LD. CIT(A). LD. CIT(A) HAS RESTRICTED THIS DISALLOWANCE TO THE EXTENT OF RS.50,000/- AND NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US FOR DISALLOWANCE CONFIRMED BY THE LD. CIT(A). IT WAS SUBMITTED BY THE LD. A.R. THAT THE DISALLOW ANCE CONFIRMED BY THE CIT(A) IS EXCESSIVE. THE LD. D.R. SUPPORTED TH E ORDERS OF AUTHORITIES BELOW. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT IT HAS BEEN SPECIFICALLY NOTED BY THE A.O. THA T ON EXAMINING THE TRAVELLING VOUCHERS AND BILLS ON TEST CHECK BASIS, 3 INSTANCES WERE NOTICED BY HIM WHEREIN BILLS ARE IN THE NAME OF RUCHI SOYA . IF THERE WERE THE ONLY SUCH CASES, IT WAS FOR THE ASSESSEE TO SUBMIT PHOTOCOPY OF ALL THE REMAINING BILLS BEFORE THE CIT(A) OR BEFORE US TO B RING HOME THIS POINT THAT THE REMAINING BILLS ARE IN THE NAME OF THE AS SESSEE. THIS WAS NOT DONE BY THE ASSESSEE AND CONSIDERING THESE FACTS TH AT SOME BILLS ARE NOT IN THE NAME OF THE ASSESSEE, A DISALLOWANCE OF LESS TH AN 10% OF THE TOTAL EXPENSES I.E. RS.50,000/- OUT OF RS.7.05 LACS IS NO T EXCESSIVE OR UNREASONABLE AND HENCE WE DECLINE TO INTERFERE IN T HE ORDER OF CIT(A) ON THIS ISSUE ALSO. THIS GROUND IS ALSO REJECTED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. 6. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 0 9 TH JULY, 2010. I.T.A. NO. 435 /DEL/2009 7/7 SD./- SD./- ( C. L. SETHI ) (A K GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 09 TH JULY, 2010 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI