M/S Classic Enterprise, Lucknow V. ACIT, Lucknow

ITA 459/LKW/2011

• Counselvise Citation: 45923714 RSA 2011
• Duration Of Justice: 2 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-11-2013
• Assessment Year: misc
• Appeal Filed On: 22-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Assessee Lawyers: B P YADAV
• Keywords: Additional evidence; Corroborative evidences
• Section: 40A(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.459/LKW/2011 A.Y.:2007 - 08 M/S CLASSIC ENTERPRISES, 118/86 KHA, CANTT ROAD, LUCKNOW. PAN:AAEFC3675M VS. A.C.I.T., CENTRAL CIRCLE, LUCKNOW. (APPELLANT) (RESPONDENT) I.T.A. NO.464/LKW/2011 A.Y.:2007 - 08 DY.C.I.T., CENTRAL CIRCLE - 1, LUCKNOW. VS. M/S CLASSIC ENTERPRISES, 118/86 KHA, CANTT ROAD, LUCKNOW. PAN:AAEFC3675M (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI B. P. YADAV REVENUE BY SHRI ALOK MITRA, D.R. DATE OF HEARING 28/11/2013 DATE OF PRONOUNCEMENT 23 /12/2013 O R D E R PER A. K. GARODIA, A.M. THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE, WHICH ARE DIRECTED AGAINST THE ORDER OF LEARNED CIT ( A) - III, LUCKNOW DATED 17/02/2011 FOR THE ASSESSMENT YEAR 2007 - 2008. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 2 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN RESTRICTING THE ADDITION OF RS.32,24,027/ - MADE BY DISALLOWING 20% OF THE CLAIMED EXPENDITURE, TO RS.19,48,474/ - WITHOUT APPRECIATING THE FACT THAT THE ADDITION WAS MADE ON ACCOUNT OF UNVERIFIABLE EXPENSES CLAIMED BY THE AS SESSEE. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN RESTRICTING THE ADDITION OF RS.32,24,027/ - MADE BY DISALLOWING 20% OF THE CLAIMED EXPENDITURE, TO RS.19,48,474/ - WITHOUT APPRECIATING THE FACT THAT EVEN AT THE STAGE OF SUBMISSION OF REMAND REPORT , THE ASSESSEE DID NOT PRODUCE ORIGINAL BILLS, VOUCHERS AND DOCUMENTS FOR VERIFICATION OF THE EXPENSES. 3. THE LD. CIT ( A) HAS ERRED ON FACTS AND IN LAW IN ACCEPTING THE ADDITIONAL EVIDENCE IN THE FORM OF UNVERIFIABLE SELF MADE VOUCHERS WHICH WERE NOT SER IAL NUMBERED, AND ALLOWING RELIEF TO THE ASSESSEE ON THE BASIS OF THIS EVIDENCE. 4. THAT THE ORDER OF THE LD. CIT ( A) DESERVES TO BE VACATED AND THE ASSESSMENT ORDER PASSED BY THE A.O. BE RESTORED. 5. THAT THE APPELLANT CRAVES LEAVE TO AMEND ANY ONE OR M ORE OF THE GROUNDS OF THE APPEAL AS STATED ABOVE AS AND WHEN NEED FOR DOING SO MAY ARISE. 3. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS) - III , LUCKNOW (HEREINAFTER REFERRED TO AS THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE AD - HOC ADDITION OF RS.50,000 / - MADE BY THE ASSESSING OFFICER IN THE NAME OF PLUGGING THE LEAKAGE OF REVENUE. 2. ON THE FACTS STATED IN THE STATEMENT OF FACTS AND IN LAW THE LD. C I T(A) WAS NOT AT ALL JUSTIFIED IN CONFIRMING THE ADDITION OF RS.50,000 / - AND HENCE THE ADDITION SO CONFIRMED MAY KINDLY BE ORDERED TO BE DELETED. 3. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN MAKING ADDITION OF RS.18,98,874 / - IN THE HANDS OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SE CTION 40A(3) OF THE I.T.ACT, .1961. 3 4. ON THE FACTS STATED IN THE STATEMENT OF FACTS AND IN LAW THE LD. CIT(A) WAS NOT AT ALL JUSTIFIED IN MAKING ADDITION OF RS.18,98,874 / - IN THE HANDS OF THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE LD. CIT(A) CAN 'T MAKE ADDITION ON NEW GROUND NOT CONSIDERED BY THE LD. A.O. WHILE FRAMING THE ASSESSMENT ORDER. 5. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN NOT PROVIDING THE APPELLANT REASONABLE AND SUFFICIENT OPPORTUNITY TO HAVE ITS SAY AND TO MAKE COMPLIANCES OF T HE REASONS BEING RELIED UPON BY HIM IN MAKING ADDITION IN THE HANDS OF THE APPELLANT. 6. THE APPELLANT RESERVES IT RIGHT TO ADVANCE SUCH OTHER GROUNDS BEFORE OR AT THE HEARING, WHICH IT MAY CONSIDER FIT AND APPROPRIATE, FOR WHICH IT CRAVES LEAVES TO AMEND , ALTER OR OTHERWISE MODIFY THE GROUNDS APPEARING HEREINBEFORE WITH THE KIND PERMISSION OF THE HON'BLE BENCH. 4. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THE DISALLOWANCE OF RS.50,000/ - CONFIRMED BY LEARNED CIT(A) IS ON AD HOC BASIS, WHICH IS NOT JUSTIFIED. REGARDING DISALLOWANCE OF RS.18,98,874/ - MADE BY LEARNED CIT(A) U/S 40A(3) OF THE ACT, IT WAS SUBMITTED THAT CIT(A) CANNOT MAKE ADDITION ON NEW GROUND NOT CONSIDERED BY THE ASSESSING OFFICER. 5. AS AGAINST THIS, IT WAS SUBMITTED BY LEARN ED D.R. OF THE REVENUE THAT LEARNED CIT(A) HAS DELETED THE MAJOR AMOUNT OF EXPENSES BEING 20% OF THE EXPENDITURE CLAIMED BY THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE ADDITION WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNVERIFIABLE EXPENSES C LAIMED BY THE ASSESSEE. HE SUBMITTED THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 40A(3) OF THE ACT SHOULD BE CONFIRMED AND THE ORDER OF LEARNED CIT (A) FOR RELIEF ALLOWED BY HIM BY RESTRICTING THE DISALLOWANCE TO RS.50,000/ - OUT OF THE DISALLO WANCE MADE BY THE ASSESSING OFFICER O F RS.32,24,027/ - SHOULD BE REVERSED. 4 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN THE FACTS OF THE PRESENT CASE, WE FEEL THAT IN THE INTEREST OF JUSTICE, THIS MATTER SHOULD GO BACK TO THE FILE OF THE ASSESSING OFF ICER FOR FRESH DECISION. THE ASSESSEE WILL BE AT LIBERTY TO BRING EVIDENCE ON RECORD TO JUSTIFY THE CASH PAYMENT IN EXCESS OF RS.20,000/ - AND TO SHOW AS TO HOW SUCH DISALLOWANCE IS NOT JUSTIFIED U/S40A(3) OF THE ACT. REGARDING THE CONTENTION OF LEARNED A .R. OF THE ASSESSEE THAT THE CIT(A) CANNOT MAKE ADDITION ON NEW GROUND, WE WOULD LIKE TO OBSERVE THAT THE CIT(A) HAS ALL THE POWERS AS ARE AVAILABLE WITH THE ASSESSING OFFICER INCLUDING THE POWER OF ENHANCEMENT AND HENCE, THIS ARGUMENT IS NOT VALID. 7. RE GARDING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OF RS.32,24,027/ - BY MAKING AD HOC 20% DISALLOWANCE OUT OF TOTAL EXPENSES ON THE BASIS THAT THE EXPENSES ARE NOT VERIFIABLE, WHICH HAS BEEN REDUCED BY LEARNED CIT(A) TO RS.50,000/ - , WE HOLD THAT THE AS SESSING OFFICER SHOULD MAKE SPECIFIC DISALLOWANCE OF THOSE EXPENSES IN WHICH THE ASSESSEE IS NOT ABLE TO BRING SUPPORTING EVIDENCE ON RECORD. THE ASSESSING OFFICER SHOULD PASS NECESSARY ORDER AS PER LAW AS PER ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPP ORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS OF THE ASS ESSEE STAND ALLOWED FOR STATISTICAL PURPOSES. (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: 23 RD DECEMBER, 2013. *C.L.SINGH 5 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. ASSTT. REGISTRAR