Jayalakshmi Fertilisers, Tanuku V. THE CIT, Visakhapatnam

ITA 456/VIZ/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1191 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 16-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D KOMALI KRISHNA
• Section: 143(3)

Judgement Text

ITA NO.456/VIZAG/2014 JAYALAKSHMI FERTILISERS, TANUKU 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.456/VIZAG/2014 ( / ASSESSMENT YEAR: 2006-07) JAYALAKSHMI FERTILISERS TANUKU VS. CIT(A) VISAKHAPATNAM [PAN: AAAFJ 9533B ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI C. SUBRAHMANYAM, AR / RESPONDENT BY : SMT. D. KOMALI KRISHNA, DR / DATE OF HEARING : 25.04.2016 / DATE OF PRONOUNCEMENT : 06.05.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE AGAINST THE ORDE R OF THE CIT(A), VISAKHAPATNAM DATED 18.6.2014 FOR THE ASSESSMENT YE AR 2006-07. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFACTURE PURCHASE AND SALE OF FERTILIZERS ITA NO.456/VIZAG/2014 JAYALAKSHMI FERTILISERS, TANUKU 2 AND PESTICIDES. ASSESSEE FILED ITS RETURN OF INCOM E BY DECLARING TOTAL INCOME OF ` 18,90,231/-. THE CASE OF THE ASSESSEE WAS SELECTE D FOR SCRUTINY AND ASSESSMENT U/S 143(3) OF THE INCOME TA X ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT') WAS COMPLETED. D URING THE COURSE OF ASSESSMENT, THE A.O. HAS OBSERVED THAT ON A PERUSAL OF VOUCHERS FURNISHED IN SUPPORT OF THE CLAIM OF EXPENDITURE TO WARDS CARRIAGE OUTWARDS OF ` 45,96,175/- AND ` 6,03,683/-, IT IS OBSERVED THAT ALL THE VOUCHERS ARE SELF MADE AND DO NOT CONTAIN THE CLEAR ADDRESS OF THE PERSONS TO WHOM PAYMENTS ARE CLAIMED TO HAVE MADE. SINCE THE VOUCHERS ARE NOT AMENABLE FOR VERIFICATION, THE ASS ESSEE WAS ASKED TO FILE ITS OBJECTIONS, IF ANY FOR THE ESTIMATION OF D ISALLOWANCE OF 10%. IN RESPONSE THERETO, ASSESSEE PRODUCED WAY BILLS IN SU PPORT OF THE LORRY NUMBERS. HOWEVER, THE ASSESSEE HAS NEITHER PRODUCE D ANY EVIDENCES IN SUPPORT OF THE QUANTUM EXPENSES CLAIMED TO HAVE BEE N MADE NOR ADDRESS OF ANY PAYEE. IN THE ABSENCE OF CLEAR DETA ILS, THE PERSONS TO WHOM THE PAYMENTS ARE CLAIMED TO HAVE BEEN MADE, TH E A.O. HAS ESTIMATED DISALLOWANCE OF 10% OUT OF TOTAL EXPENDIT URE UNDER THE SAID OF ` 51,99,858/- IS MADE. ACCORDINGLY, HE HAS DISALLOW ED UNDER THE SAID OF ` 5,19,986/- AND SAME WAS ADDED TO THE INCOME OF THE ASSESSEE. ON APPEAL, CIT(A) CONFIRMED THE ORDER OF THE A.O. BY F OLLOWING THE ASSESSMENT YEAR 2009-10. ITA NO.456/VIZAG/2014 JAYALAKSHMI FERTILISERS, TANUKU 3 3. ON BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE VERY SAME CLAIM WAS MADE BY THE ASSESSEE FOR THE AS SESSMENT YEAR 2009-10. THE TRIBUNAL IN THE ASSESSEES OWN CASE I N ITA NO.332/VIZAG/2013 DATED 18.3.2016, THE DISALLOWANCE WAS SCALED DOWN TO 5% AND HE PRAYED THAT SAME MAY BE FOLLOWED. 4. ON THE OTHER HAND THE LD. D.R. SUPPORTED THE ORD ER PASSED BY THE AUTHORITIES BELOW. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIALS AVAILABLE ON RECORD. WE FIND THAT THE A.O. HAS MAD E A DISALLOWANCE OF 10% ON THE GROUND THAT ASSESSEE HAS NOT ABLE TO SUB STANTIATE HIS CLAIM OF EXPENDITURE WITH A PROPER EVIDENCE. ACCORDINGLY , HE ESTIMATED THE DISALLOWANCE OF 10% AND THE SAME WAS ADDED TO THE T OTAL INCOME OF THE ASSESSEE. WE FIND THAT VERY SIMILAR ISSUE HAS COME BEFORE THE TRIBUNAL IN THE ASSESSMENT YEAR 2009-10 IN ITA NO.332/VIZAG/ 2013, WHEREIN THE TRIBUNAL ALREADY CONSIDERED AND THE DISALLOWANCE WA S SCALED DOWN TO 5% AND DIRECTED THE A.O. TO CALCULATE THE DISALLOWA NCE. IN VIEW OF THE DECISION OF THE ASSESSEES OWN CASE, WE ARE OF THE OPINION THAT TO MEET THE ENDS OF JUSTICE, DISALLOWANCE CAN BE SCALED DOW N TO 5%. THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL IS EX TRACTED HEREUNDER: ITA NO.456/VIZAG/2014 JAYALAKSHMI FERTILISERS, TANUKU 4 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE A.O. HAS DISALLOWED 10% CARRIAGE INWARD EXPENDITURE. THE ASS ESSING OFFICER WAS OF THE OPINION THAT THE ASSESSEE HAS NOT SUBSTANTIATED THE CLAIM OF EXPENDITURE BY PRODUCING SUPPORTING BILLS & VOUCHERS. IT WAS THE C ONTENTION OF THE ASSESSEE THAT IT HAS SUBMITTED SUPPORTING DOCUMENTS SUCH AS WAY B ILLS, QUANTITY OF GOODS TRANSPORTED AND ALSO NAMES AND ADDRESSES OF THE PAY EES. THEREFORE, THE ASSESSING OFFICER WAS NOT CORRECT IN DISALLOWING 10 % OF SUCH EXPENDITURE. WE HAVE GONE THROUGH THE SUBMISSIONS OF THE ASSESSEE A ND ORDERS OF THE AUTHORITIES BELOW. THE ASSESSING OFFICER DISALLOWED THE EXPEND ITURE ON ADHOC BASIS WITHOUT POINTING OUT ANY SPECIFIC INSTANCES, WHERE SUPPORTI NG BILLS ARE NOT AVAILABLE. ON PERUSAL OF FINANCIAL STATEMENT FILED BY THE ASSESSE E, WE FIND THAT THE EXPENDITURE CLAIMED IS VERY LESS WHEN COMPARED TO RELATED TURNO VER. THE ASSESSEE IS INTO THE BUSINESS OF TRADING IN FERTILIZERS WHICH REQUIRES L OT OF CARRIAGE INWARD EXPENDITURE, AS THE GOODS ARE BULKY AND WHICH NEEDS TO BE TRANSPORTED TO VARIOUS PLACES. CONSIDERING THE NATURE AND SIZE OF BUSINESS, WE ARE OF THE OPINION THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS AT HIGHER SIDE. DURING THE COURSE OF HEARING, THE AUTHORISED REPRES ENTATIVE OF THE ASSESSEE REQUESTED FOR SCALE DOWN THE DISALLOWANCE MADE BY T HE ASSESSING OFFICER. THE LD. D.R. ON THE OTHER HAND DID NOT OBJECT FOR THE P ROPOSAL. THEREFORE, TO MEET THE ENDS OF JUSTICE, WE DIRECT THE ASSESSING OFFICE R TO DISALLOW 5% OF CARRIAGE INWARD EXPENDITURE. ACCORDINGLY, WE DIRECT THE ASSE SSING OFFICER TO DISALLOW 5% OF EXPENDITURE UNDER THE HEAD CARRIAGE INWARDS. 6. IN VIEW OF THE ABOVE, WE DIRECT THE ASSESSING OF FICER TO RESTRICT THE DISALLOWANCE TO THE TUNE OF 5% INSTEAD OF 10%. ORDERED ACCORDINGLY. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 6 TH MAY16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 06 TH MAY16 VG/SPS ITA NO.456/VIZAG/2014 JAYALAKSHMI FERTILISERS, TANUKU 5 '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT JAYALAKSHMI FERTILISERS, VENKATA RAYAPURAM, TANUKU- 534215, W.G. DIST. 2. / THE RESPONDENT THE CIT(A), VISAKHAPATNAM 3. ) / THE CIT, VISAKHAPATNAM 4. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 5 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM