M/s A.B. Motors Private Limited, Patiala V. ACIT, Patiala

ITA 467/CHANDI/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95467 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 30-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: RISHABH KAPOOR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO.467/CHD/2015 ASSESSMENT YEAR: 2010-11 M/S A.B. MOTORS PVT.LTD., VS THE ACIT, THE MALL, CIRCLE, PATIALA. PATIALA. PAN: AABCA5528M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RISHABH KAPOOR RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 06.08.2015 DATE OF PRONOUNCEMENT : 11.08.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. CIT(APPEALS) PATIALA DATED 25.02.2015 FOR ASSESSMENT YEAR 2010-11. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. 3. ON GROUND NO. 1, ASSESSEE CHALLENGED THE ADHOC ADDITION OF RS. 1 LAC ON ACCOUNT OF ENHANCEMENT IN VALUE OF CLOSING STOCK OF SPARE PARTS. THE FACTS ON THIS ISSUE ARE THAT ASSESSEE FILED DETAILS OF CLOSING STOCK, H OWEVER, THE ASSESSING OFFICER NOTED THAT NUMBER OF ITEMS HA VE 2 BEEN SHOWN ARBITRARILY NOT ON THE BASIS OF PHYSICAL VERIFICATION AND SOME OF THE ITEMS ARE NOT SUPPORTE D BY PURCHASE OR SALE BILLS. THE ASSESSEE STATED THAT T HESE ARE PART OF OLD STOCK. THE ASSESSING OFFICER, LOOKING TO THE FACTS OF THE CASE, MADE ADDITION OF RS. 1 LAC. IT W AS SUBMITTED BEFORE LD. CIT(APPEALS) THAT IT IS NOT PO SSIBLE TO MAINTAIN STOCK REGISTER OF SPARE PARTS COMPRISING THOUSANDS OF DIFFERENT ITEMS. IT IS ALSO NOT POSSI BLE TO PRESERVE OLD INVOICES OR BILLS FOR THE SPARE PARTS AND CLOSING STOCK AS DETERMINED BY PHYSICAL VERIFICATIO N. THE PARTS ARE OF DIFFERENT SIZES, QUALITY AND VALUE DEP ENDING UPON MODELS OF THE CARS. IT IS ALSO SUBMITTED THAT IN THE SIMILAR FACTS, ADDITION HAS BEEN DELETED BY ITAT IN THE CASE OF M/S BHAGAT SINGH MOTOR COMPANY IN ITA 423/2010 DATED 18.06.2010. 4. THE LD. CIT(APPEALS), HOWEVER, CONFIRMED THE ADD ITION AND DISMISSED THIS GROUND OF ASSESSEE. 5. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY JUSTIFICATION TO SUSTAIN THE ADDITION. TH E ASSESSEE CLAIMED THAT THE CLOSING STOCK HAS NUMBER OF ITEMS AND ARE PART OF THE VERY OLD STOCK. SINCE NU MBERS OF ITEMS WERE INVOLVED, THEREFORE, ACCORDING TO SUB MISSION OF ASSESSEE, THE CLOSING STOCK WAS DETERMINED BY PH YSICAL VERIFICATION AND THE ASSESSEE FILED DETAILS OF THE CLOSING STOCK BEFORE ASSESSING OFFICER. IN THE SIMILAR CIRCUMSTANCES, ITAT CHANDIGARH BENCH IN THE CASE OF M/S BHAGAT SINGH MOTOR COMPANY (SUPRA) DELETED THE SIMI LAR 3 ADDITION. THE ASSESSING OFFICER WITHOUT BRINGING A NY SPECIFIC MATERIAL AGAINST THE ASSESSEE, MADE ADHOC AND ESTIMATED ADDITION AGAINST THE ASSESSEE WHICH CANNO T BE SUSTAINED IN LAW. WE, ACCORDINGLY, SET ASIDE THE O RDERS OF AUTHORITIES BELOW AND DELETE THE ADDITION OF RS. 1 LAC. THE GROUND NO. 1 IS THEREFORE, ALLOWED. 6. ON GROUND NO. 2, ASSESSEE CHALLENGED THE ADHOC ADDITION OF RS. 1 LAC ON ACCOUNT OF SUPPRESSED INCO ME ON SALE OF SCRAP. IT WAS NOTED THAT ASSESSEE HAS DIRE CTLY CREDITED THE SALE OF SCRAP TO THE PROFIT & LOSS ACC OUNT THROUGH SELF MADE VOUCHERS ON WHICH NO ADDRESS OF T HE PURCHASERS ARE MENTIONED NOR ANY QUANTITATIVE DETAI LS I.E. WEIGHT AND RATE IS MENTIONED. THE ASSESSING OFFICE R, THEREFORE, MADE ESTIMATED ADDITION OF RS. 1 LAC. 7. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) T HAT ASSESSEE IS A DEALER IN CARS AND NOT A SCRAP DEALER . THE SCRAP IS GENERATED MAINLY OUT OF THE WASTE MATERIAL OBTAINED FROM SERVICING OF THE CARS. THE SCRAP IS SOLD TO KABADIES AND HAWKERS IN LOSS. IT WAS SUBMITTED T HAT SIMILAR ADDITION HAS BEEN DELETED BY ITAT IN THE CA SE OF M/S BHAGAT SINGH MOTOR COMPANY (SUPRA). THE LD. CIT(APPEALS), FOLLOWING HIS ORDER FOR ASSESSMENT YE AR 2008-09, CONFIRMED THE ADDITION AND DISMISSED THIS GROUND OF THE ASSESSEE. 8. AFTER CONSIDERING RIVAL SUBMISSIONS, WE DO NOT F IND ANY JUSTIFICATION TO SUSTAIN THE ADDITION. THE ITA T 4 CHANDIGARH BENCH IN THE CASE OF M/S BHAGAT SINGH MO TOR COMPANY (SUPRA) IN SIMILAR CIRCUMSTANCES DELETED TH E ADDITION. THE ASSESSEE STATED THAT SCRAP WAS SOLD TO THE KABADIES AND HAWKERS AND MAINTAINED SELF MADE VOUCHERS. THE ASSESSEE IS DEALER IN CARS AND ACCOR DING TO EXPLANATION OF THE ASSESSEE, SCRAP WAS GENERATED OU T OF THE WASTE MATERIAL OBTAINED FROM SERVICING OF THE C ARS. THE ASSESSING OFFICER MERELY STATED THAT THE SALE O F SCRAP IS NOT SUBJECT TO VERIFICATION AND TO COVER UP THE POSSIBLE LEAKAGE OF THE REVENUE, ADHOC ADDITION OF RS. 1 LAC WAS MADE. THEREFORE, CONSIDERING THE FACTS OF THE CASE AND THAT ASSESSEE IS A DEALER IN CARS AND THAT ASSESSIN G OFFICER HAS NOT BROUGHT ANY SPECIFIC MATERIAL AGAIN ST THE ASSESSEE TO ENHANCE SALE OF THE SCRAP BY RS. 1 LAC, WE DO NOT FIND ANY REASON TO SUSTAIN THE ADHOC ADDITION M ADE BY THE ASSESSING OFFICER. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DELETE THE ADDITION OF RS. 1 LAC. IN THE RESULT, GROUND NO. 2 OF APPEAL OF TH E ASSESSEE IS ALLOWED. 9. ON GROUND NO. 3, ASSESSEE CHALLENGED THE ADDITIO N OF RS. 42,865/- ON ACCOUNT OF NON-DEDUCTION OF TDS UND ER SECTION 194H OF THE ACT. THE FACTS OF THE CASE ARE THAT ASSESSEE HAS PAID BROKERAGE TO SHRI MUNISH KALIA AN D SHRI VIKAS GUPTA, ON WHICH TDS HAS NOT BEEN DEDUCTE D. THE ASSESSING OFFICER, THEREFORE, ADDED THE AMOUNT. DURING APPELLATE PROCEEDINGS ASSESSEE SUBMITTED THA T THIS AMOUNT WAS PAID AS FACILITATION FEES FOR ARRANGING 5 UNSECURED LOAN AND THEREFORE, IS NOT COVERED UNDER SECTION 194H OF THE ACT. THE LD. CIT(APPEALS), HOW EVER, FOUND THAT ASSESSING OFFICER HAS DISCUSSED IN THE ASSESSMENT ORDER THAT THIS AMOUNT IS CLEARLY IN THE NATURE OF BROKERAGE PAID FOR UNSECURED LOAN ON WHICH NO TD S HAS BEEN DEDUCTED. THEREFORE, ADDITION WAS CONFIRMED. 10. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT RS. 15,800/- WAS PAID TO SHRI MUNISH KALIA AND RS. 27,0 65/- WAS PAID TO SHRI VIKAS GUPTA. THEREFORE, THE PAYME NTS MADE TO SHRI MUNISH KALIA OF RS. 15,800/- WOULD NOT ATTRACT PROVISIONS OF SECTION 194H OF THE ACT. 11. ON THE OTHER HAND, LD. DR SUBMITTED THAT THE MAXIMUM LIMIT PROVIDED UNDER INCOME TAX ACT UNDER SECTION 194H WAS RS. 5,000/-, THEREFORE, ASSESSEE W AS REQUIRED TO DEDUCT TDS ON THE AMOUNT OF BROKERAGE P AID TO SHRI MUNISH KALIA AS WELL. 12. CONSIDERING THE SUBMISSIONS OF THE PARTIES, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT IN DISPUTE THAT ASSES SEE DEBITED BROKERAGE PAID FOR UNSECURED LOANS, THEREFO RE, PROVISIONS OF SECTION 194H WILL APPLY. THE ONLY EX EMPTION WAS THAT IN CASE THE AMOUNT DOES NOT EXCEED IN AGGR EGATE, OF RS. 5,000/-, ASSESSEE MAY NOT BE REQUIRED TO DED UCT TDS. SINCE THE AGGREGATE AMOUNT IS EXCEEDING THE LI MIT PROVIDED UNDER SECTION 194H OF THE ACT, THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 6 13. ON GROUND NO. 4 & 5, ASSESSEE CHALLENGED THE CHARGING OF INTEREST UNDER SECTION 234A, B & C OF T HE ACT, WHICH IS MANDATORY AND CONSEQUENTIAL IN NATURE. TH ESE GROUNDS ARE, THEREFORE, DISMISSED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH AUGUST,2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH AUGUST,2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH